7/29/2019 Air Conditioners - Product analysis

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Product AnalysisAir Conditioners

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Agenda

Product categorization

Industry structureIndian Scenario

Facts and figures

Major players

Market share

Strategies

Demand side

Supply side Strategies for growth

Future prospects

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Product Categorization

Room air conditioners: (RAC)

Window air conditioners

Split air conditioners Packaged air conditioners

Central air conditioners

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Industry Structure (2005-06) More of a utility item rather than a luxury item

A robust 19% growth volume aggregating 1.5 million units

Significant price reductions over the past 2 years Market dynamics: Negligible rural demand

Key drivers of growth

GDP/Capita growth

Reduced indirect taxes

Import duties

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The AC Market in India

20.40%

11.20%

25.60%

42.70%

Industrial

Ducted, Split andPackaged

Central

Room

Data pertaining to FY2006

Net Value: Rs 46.79 billion

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The RAC Market in India

30.20%

69.80%

Split

Window

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Sectorwise RAC Demand

15%

15%

15%20%

20%

5%10%

Small pvt sector

Public sector

Govt

Med and large pvtcosHousehold

Hospital

Small business

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39

27

22

32

28

28

1210

01020304050

North

East

West

South

Split

Window

Regionwise Distribution of RACs

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Share of Organized

Sector in RACs

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Major Players:

Units Sold and Market ShareCompany Units Percentage share

LG 500,000 33.3%

Voltas 200,000 13.3%

Samsung 180,000 12.0%

Videocon 130,000 8.7%

Hitachi 100,000 6.7%

Carrier 80,000 5.3%

Others 310,000 20.7%

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Product Portfolio

Comparison

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Focus

Product development

Aggressive promotion, has been the cornerstone of LGsstrategy

Positioning

Health Air system as a USP

New Initiative

Launched a range of commercial ACs targeted at the

corporate segment

Major Players #1 : LG

Electronics

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Focus

More on engineering excellence

Positioning As an original equipment manufacturer for global brands

like LG and Electrolux

New Initiatives

Launched new models targeted at the consumer segment.

Entered into a contract manufacturing agreement with Haier

for refrigerators and ACs

Major Players #2 : Voltas

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Focus

To differentiate itself on the basis of product features

Positioning Target the higher-value commercial market segment

New Initiative

Recently announced plans to invest US$5 million to

manufacture heat exchange components for ACs

Major Players #3:

Samsung Electronics

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Videocon International Limited

Differentiated its products by the launch of `Quadra Heat Exchanger

Technology, which claims to provide better cooling and economy

Carrier Aircon Limited

Commenced distribution of Toshiba ACs

Hitachi Home and Life Solutions Ltd.

Expanded product range - launched new models with technology

support from Hitachi, Japan

Implementing a new branding exercise at select dealer shops and

multiplexes in India, with the objective to enhance brand visibility

Major Players: Others

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Market Share in 2005-06

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Strategies for Growth

Facilitate growth in the domestic market

Position the AC as a productivity enhancer to deepen penetration in offices

Educating consumer on running cost of AC and ways to reduce it

Tie-up with contractors, architects to optimally design rooms for least AC

running cost

Facilitate growth in exports

Benchmark Indian plants to the best in the world

Understand best practices in operations and educate Indian players

Participate in tradeshows, conferences in target markets Work with government to shape policies

Ensure implementation of safety standards

Ensure national level quality/performance standards

Define clear procedures/paperwork for imports/exports

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Future Prospects

Rapid growth

Affordability

Higher temperatures

More value added models

Higher competition

Global players Removal of restrictions

Higher R&D