Brand Positioning Of Air-Conditions

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ICLE’SMOTILAL JHUNJHUNWALA COLLEGE

OFARTS, SCIENCE, COMMERCE

AND

MANAGEMENT STUDIES

CERTIFICATEThis to certify that

Mr./Ms.______________________________________________

_

Of BMS semester _______ has undertaken &

completed the project work

titled________________________________________________

__

During the academic year __________ under the

guidance of Mr./Ms. ___________________ submitted on

____________ to this college in fulfillment of the

curriculum of Bachelor of Management Studies,

University of Mumbai.

This is a bonafide project work and the

information presented is true and original to the best

of my knowledge & belief.

Project guide External Examiner Principal T.Y.BMS examination

Research Design, Objective, and Scope

Research Design

The report is an outcome of primary data collection, secondary data collection

and analysis of the information received from these sources. The primary data collection

was done with the help of interviews with the personnel of LG and Hitachi, and

consumers. The secondary data collected, is from various websites, magazines,

newspapers and brochures.

Objective

Indian AC market is in its growing stage with many players flooding the market

after the relaxation in the exercise levels and import duties by the government. The

Indian AC market was basically governed by the central ACs and the room AC market

picked up only after the relaxation in duties . Earlier people were only interested in

buying unbranded ACs and no player in the global market thought of India as a big

market and the market had very limited players with Carrier Aircon ruling the roost for

almost ten years. LG came and revolutionerized the Indian room AC market by changing

the way people perceive the utility of an AC .They sold their ACs by positioning them as

the health air conditioners which along with cooling the air also purifies the air thus

giving cool, healthy and fresh air. This concept gelled with the Indian consumer and as a

result LG is the market leader in room ACs today.

Hitachi is also fast gaining the market share after the launch of its Logicool range

of air-conditioners this summer and is third in the room ac market behind Samsung.

People have been buying the Ac because of its smart positioning of perfection backed

with strong humour oriented advertising. The success of these players has attracted a lot

of other players in the market and suddenly the small room ac market which was worth

some Rs.500 crores in 1995 is valued at Rs.1800 crores today and continues to grow at

the rate of 20 % every year.

This project report aims to research why people are going for branded ACs in the

room sector and how the focus is shifting from positioning of product to the positioning

of brands. The report has also tried to trace the importance of positioning of a brand by

comparing the various aspects of brand positioning taking into consideration the

strategies of the two leading players LG and Hitachi.

Scope

. Consumers- The report can be of great help to any prospective buyer of an air

conditioner. The report will help him to have a look at the various players in the market

and what each one of them has to offer to the consumer. The consumer can directly refer

to the analysis of the print advertisements that will help him to identify what each brand

has to offer to its consumer. The consumer can also have a look at the market standings

of each brand with respect to the sales in the current year.

. Students-The report can be very useful to the students in understanding the

concept of branding and brand positioning as it provides an insight to these concepts. It is

important for the students to know the changing trends in the market, as they are the ones

who are going to be part of the industry and will have to apply their knowledge to carve

out a niche for themselves and their companies in the market. They can also have a look

at the various aspects that govern this ever-growing industry.

. Executives – The report can be of prime importance to the executives working

in the industry. The report is also based on some inputs provided by the consumers that

will help the personnel to know what people think about their brands and what are their

expectations from this product. Executives can learn from the positioning of LG and have

a look at the advertising strategies being followed by the various players in the market.

Also some suggestions have been offered in lieu of the analysis done in this report. The

suggestions can be implemented if they gel with the management of the concerned

brands.

Executive summary:

The project is about the Indian Air Conditioning market. It covers both the

industries viz. CAC and RAC with respect to the trend in the market, market players,

price of the market, factors influencing the demand etc. The core focus has been on the

RAC market, which is one the, few sectors growing at a rate of more than 25% per year.

This is so because the market is in the growth stage whereby the penetration level is only

2%. As a result the room AC market is getting overcrowded with players from all over

the world with a view to capture the market share of this growing market. People are

going for the branded products rather than the unbranded ones.

The project highlights the aspect of branding and the benefits of branding of

products. It also deals with the positioning strategies being used by various brands to

occupy the perpetual space in the minds of the consumer. There is an analysis of the

positioning of the various brands with respect to print advertisements. Also a comparative

analysis has been done between LG and Hitachi, which are the leading players in the

market. In the concluding part of the project some suggestions have been offered with

respect to certain issues, which will govern the Products being launched by various

brands in the room AC market in the near future.

Chapter 1

Introduction

History Of Air-conditioner

In 1902 Sackett-Wilhelms, a publishing house at Brooklyn, was getting its

printing all messed up. It was then that Willis Carrier was called upon to analyse the

problem. He discovered that owing to fluctuations in heat and humidity paper dimensions

kept changing, resulting in misalignment of coloured inks.

This was a classic temperature and humidity control problem. Carrier then

invented the world’s first air-conditioning system. Carrier waited till 1906 before

patenting this contraption of his, loosely termed as “an approach for treating air. It was

the beginning of bigger thing for carrier. He later went on to create the biggest air-

conditioning firm which now a days operates globally with name of Carrier Aircon and

has a market share of over the 40 % across the world.

Though now the market is flooded with a lot of players like National, LG,

Samsung, Daikin, Blue Star, etc. and the technology has increased tenfold, this American

giant MNC ( Carrier Aircon) and William Carrier will always be in the eyes of the world,

simply because they were the ones who gave the world an industry which is worth

billions over the global market and creates employment for millions of people.

Air-conditioner-The Product

An AC is primarily classified into three broad segments – unitary products,

packaged air-conditioners (PAC) and ducted splits and central plants. The unitary

products would include the window ACs and the mini-splits (without ducts).

Room air conditioners operate on electricity or gas and are enclosed in a single cabinet. They blow the conditioned air directly into the room and do not have air ducts leading to and from them.

Window air conditioners fit into the lower part of a window and can be moved from window to window and thus the name, Window ACs

Central air conditioners use electricity or gas. They can supply conditioned air to

a number of rooms or to an entire building from one central source. Fans blow the

conditioned air through air ducts from the air conditioner to the rooms. Central

conditioners have a number of advantages over other kinds. For example, all the

equipment for air conditioning a large area is located in one place. This reduces the cost

of cleaning and repairing. Central conditioners can also be zoned i.e. they can supply air

of different temperature to different parts of a building.

These ACs are ideal for rooms with low heat loads. They are available in the

capacity range of 0.5 TR to 3 TR. The room AC sector caters to residential premises,

offices and small establishments. Split ACs are so named because the unit is 'split' into

two parts. The compressor and the condenser forming an outdoor unit and the cooling

coil remaining as an indoor unit. Split units can be with or without ducts. In PACs, the

unit is placed in a separate room and the cold air is carried through ducting to the

required areas. It is suited to those establishments that are not large enough to go in for a

central system. Ducted splits and PACs cater to segments requiring cooling capacity of

less than 15 TR. The central air-conditioning segment is more technology

intensive and project oriented. It caters mainly to institutional clients where capacity

requirements are usually 50 TR and upwards.

The demand for nonducted products grew steadily in the latter half of the

1990s.The demand for mini-spilt ACs has grown at a higher rate as against window ACs

mainly because of a lower base. The demand switch from mid sized ducted products,

such as packaged ACs or ducted splits to mini splits is also one of the larger growth rates

in the latter segment. The demand for non-ducted products i.e. the window air

conditioners & mini splits come from both households & corporate while the demand for

ducted products comprising of the central plants & packaged air conditioners & ducted

splits come only from corporate.

Chapter 2

Market Study

Industry Size

The air-conditioning market is one of the few segments that have been growing at

the rate of 20 per cent per annum since the last three-four years. The total air-

conditioning industry is estimated to be around Rs 3000 crores with central air-

conditioning including packaged and ducted air-conditioning systems estimated to be

around Rs. 1200 crore, and windows and mini split air-conditioners estimated at Rs 1800

crores.

Evolution

Since the early 90s, the structure of the air-conditioning industry has evolved quite

differently. Till '88-89 the industry used to be dominated by the unorganised sector with

70 per cent market share. With excise duty as high as Rs 9000-10,000 during those times

the gap was wider. The participation of the organised sector remained small till the year

1995. The reduction in excise levels from 110 per cent to 32 per cent and import duties

on components from 185 per cent to 30 per cent plus CVD has not only expanded the

market but also narrowed the price gap for branded ACs. The share of the organised

sector is now 80 per cent

while the unorganised sector constitutes a little over 20 per cent of the market.

.

Current scenario

Prior to 1997, corporates, institutions and government dominated the consumer

segment. They did around 85-90 per cent of the buying. It was only in the year 1997 that

the home segment picked up. In fact, in the last two years there has been a big spurt in

buying from the home segment, which now constitutes 35 per cent of the market from the

previous 10-15 per cent. The institutional segment accounts for 65 per cent. The growth

in volumes from the home segment has been to the tune of 30-35 per cent while the

institutional segment clocked just 4-5 per cent volume growth. The average growth for

the last five years in the residential segment has been around 24 per cent. The reason for

the same is that the AC is no longer perceived as a luxury and better distribution network,

large-scale advertising and finance schemes have grown the market.

The growth in the year 2000 was only 20 per cent, which was mainly driven by

segments such as software services, retailing, healthcare, entertainment, hospitality and

telecom. In the current year, the AC industry has recorded a 12 per cent growth in the

first six months of the current year.. The WAC growth is expected to be about 20 per cent

this fiscal.

Demand drivers

Inventory holding capacity is the key to success as demand for ACs is seasonal.

Income levels

With rising levels of disposable income and the attendant change in consumption

patterns, air-conditioners have become a thing of proud possession, especially for the

emerging middle class. The fastest growing and the most potential segment, namely,

middle class households, is expected to drive demand for ACs by leaps and bounds

due to growing pollution and more disposable income.

Low Penetration Levels

The industry has a major growth potential as the penetration rate is less

than one per cent The WAC market in China has grown from 1 million to 9 million in

the last decade. This represents a huge untapped market in India thus signifying a

tremendous growth potential. Computerisation in business and growth in service

industry will act as key drivers for commercial segment of air-conditioning. The

present penetration level in India for air-conditioners is a miniscule 1-2%. This figure

compares unfavorably to countries like the USA (35%) and Singapore (30%). In

addition, the penetration level is low as compared to other consumer durables --

refrigerators - 11%, TV's - 35%, Radio - 45% and Cars - 6%. The National Council

for Applied Economic Research (NCAER) conducted survey on "Indian Market

Demographics" has indicated that ACs, rank lower than even washing machines on

the priority list of purchases. Considering that washing machines have achieved a

penetration of only 2 million households, it is unlikely that households will be the

major demand drivers in the near future. This is especially true in the case of rural

households. One reason could be the high maintenance and operational costs

associated with owning an AC. People owning a car, usually get a sum as petrol/car

allowance along with their salaries, but their monthly electricity bills are hardly

reimbursed. With rural households, the problem is of frequent power cuts and low

voltage. Competition also comes from an altogether different product - desert coolers

- widely used in central and northern India. One thing is however clear, lower

penetration level is a pointer to the vast potential that lies ahead.In the future,

earnings will be driven by rising demand for consumer durables in general.

Once upon a time, ACs used to be a luxury but now they are a necessity. Of

course, this could also be attributed to the reduction in AC prices and the rising

disposable income of the Indian middle class. The hot summer of 2001 has persuaded

people to carry one home to cool themselves off.

The last few years have seen a spectacular demand for air conditioners rising from

the household sectors.

As per the National Sample Survey Organization report of "Use of durable goods

by Indian households", the per capita total expenditure on durable goods increased from

Rs112.89 in 1987-88 to Rs148.02 in 1993-94. Similarly, NCAER estimates point to the

fact that the number of households with monthly incomes above Rs10,000 in metros and

Rs5,000 in non-metros is expected to rise from 22.7 million in 1995-96 to a huge 57.2

million in 2005-06. This will mean that firstly, there will be a perceptible shift towards

branded products and secondly, the level of aspiration buying will increase. All this

should be good news for players in the AC market.

.Price

Demand for room air-conditioners is fairly price sensitive. For demand

from households to spurt, prices have to come down significantly. A study conducted

by IMRB points to a potential of 0.35 million units for units priced at Rs18,000.

Though a 0.75 TR unit is available at these prices, their efficacy under Indian

conditions is doubtful. Ideally, prices should fall by another 20-25% bringing a 1.5

TR AC on par with a CTV priced at around Rs18,000.On the other hand, demand for

central AC systems are broadly price insensitive. This is so because the number of

players in the segment are limited (due to infrastructure and personnel requirements)

and profit margins lower than those in room ACs.

Availability Of Finance

One way of making price-sensitive consumers spend is to expand hire-

purchase schemes in the country. Here India has made substantial strides in the 90’s.

Firstly, there has been a marked change in the attitude in favour of taking loans for

purchasing household items. Secondly, the easy availability of consumer finance from

banks and other financial institutions would induce purchases during inflationary

times. Companies like Carrier Aircon, Voltas, Fedders Llyod and Godrej-GE have

introduced zero-interest installment schemes as an option for its customers.

Environment

India is a country situated in the tropical zone with the weather being

warm to hot in most parts of the country. With surroundings in most of our urban

centers becoming increasingly polluted and awareness as regards the benefits of

working in a controlled environment on the rise, the demand for ACs can only grow.

Use Of Alternatives And Its Substitution

Earnings would be affected by the presence of cheaper substitutes like

coolers that would discourage consumers in smaller towns and villages to at-least

postpone purchases, if not avoid them. But as the level of income goes up, aspiration

needs will lead to substitution or replacement of coolers with ACs.

Impact Of Reforms

Lowering of taxes will make ACs cross the threshold between necessity and

affordability. Once this happens air-conditioning will see geometric growth in

demand. In the past, the AC industry was labeled as a luxury industry making it

convenient for the government to extract revenues. This resulted in the unorganized

sector ruling the roost with a substantial market share in the window AC segment.

Individuals patronized the unorganized players because their prices were lower and

personalized after sales services were available. As the table below indicates, excise

duty rates were a high 60% for room ACs even until 1994-95. Couple this with the

fact that organized players also paid sales tax, octroi duty etc., their prices turned out

to be largely uncompetitive. Tax implementation is a very big obstacle in the healthy

growth of the consumer durables industry. The segment is heavily taxed both by the

central and state government. White goods manufacturers feel that the lower level of

duties and higher abatement on MRP-based products would push sales and drive

higher growth for the industry. On an average the duties are in the level of 20-25 per

cent but it becomes as high as 40 to 45 per cent in India, which puts Indian

manufacturers at a disadvantage. Reduction in sales tax and excise duty could

definitely spur demand.

Chapter 3

Central AC Market

Current Scenario

The Central AC (CAC) market has had a rough patch in the last two to three

years. Being dependent on user industries, it is highly susceptible to industrial growth

cycles. With new industrial activity coming to a grinding halt, demand for turnkey

central AC projects have dried up in last two years. Central AC segment is

controlled by big players like Blue Star that have the facilities, technology and

personnel required to execute turnkey projects.

One major issue facing the air-conditioner industry is that of adherence

to environmental standards. As per the 1990 Montreal Protocol, ACs should not

contain ozone-depleting material with effect from 2003 Central AC. Blue Star and

Voltas, who between themselves have a 63% market share, dominate the industry.

Carrier Aircon, which entered this segment in 1994, has a relatively modest 12%

market share. Carrier plans to increase its presence in this segment in line with its

global operations where it is the leader with a 40% world market share. Besides

equipment manufacturers, there are also players like the transnational Emirates

Trading Agency (ETA), which sources equipment from leading manufacturers,

undertaking only the installation work.

This industry has traditionally been a high margin area, but of late, margins have

come under pressure due to increased competition. With few orders, manufacturers are

undercutting each other to grab installation contracts.The traditional compressor-chiller

based market faces threat from vapor absorption machines (VAMs). These are finding

favour the world over as a cost-effective and environment friendly alternative. Although

the initial outlay is higher, low operating costs more than make up for it. Thermax is the

dominant player in the domestic VAM market with a 90% market share. Given the

environment friendliness and cost savings, VAMs could displace chillers altogether in the

long run. For the existing players in the CAC segment, it may not pose much of a

problem as all the major players like Carrier, Voltas & Blue Star have access to this

technology from their parent/ part Service and maintenance contract income is in fact

emerging as a substantial source of income for the leading players in the country. This is

especially true of players who have a large installed base of machines. This revenue

stream can be a buffer against a downtrend in AC sales. Some companies have started

subcontracting service function to widen reach.

Utility Aspects Of CACs

1 To create a cool ambience

2 For the smooth operation of the equipment/machinery

3.To preserve and store certain raw material/semi-furnished/finished goods

4.To perform various operations like testing and other manufacturing functions

under controlled temperatures

Central AC Market Shares

Company % share

Blue star 41%

Voltas 22%

Carrier 12%

Thermax 06%

Suvidha 05%

Others 14%

Blue Star

The Rs 510 crore of annual turnover Blue Star is the market leader in central ACs.

The company leads the segment with a current market share of approximately 37 per

cent. According to It is also a leader in ducted systems or the packaged AC segment.

With an almost 40 per cent increase in order inflow during FY01, the company has

significantly improved its market share from 33 per cent to the current 37 per cent.

Around 92 per cent of the company's revenues comes from ACs and commercial

refrigeration equipment business. Of this, almost 85 per cent of the revenue is contributed

by the central and ducted AC systems. Of the remaining, 10 per cent comes from window

ACs and the rest from mini split ACs. While there is intense competition in the window

and split ACs, Blue Star enjoys a competitive advantage of having over 70 per cent of

corporate and commercial customers. Blue star has laumched new turbo rotary remote

ac’s and hi-wall split ac’s .

Blue star manufactures and markets wide range of Air- conditioning and

refrigeration

systems and products. These includes large central Air –conditioning plants,

packaged

Air-conditioning systems, split and window Air-conditioners. The company has

business alliances with world – renowned technology leaders such as York international,

U.S.A.; Kolpak, U.S.A.; vest frost, Denmark, and many others, so as to offer superior

products to the customers . its Thane plant manufactures a variety of CFC-free products

for central plant Air-conditioning and refrigeration . the products for Air-conditioning

and refrigeration plant comprise centrifugal water-cooled screw chillers in the range of

150-600 tons of refrigeration, reciprocating package chillers and condensing

units.

Carrier Aircon

The Rs 385 crore Carrier Aircon was the market leader in the RAC segment with

a 21 per cent share in window ACs and 35 per cent share in split ACs. With the entry of

the various other multinational brands, there has been intense price-cutting, thus taking a

toll on Carrier’s performance for FY00.

However, for the first nine months of FY01, net sales at Rs 351 crore improved

21 per cent as compared to the corresponding previous period. Also, thanks to efforts at

cost cutting, total expenditure as a percentage of sales has reduced 300 basis points as

compared to FY00. Despite rising working capital requirements that has led to a 57 per

cent jump in interest at Rs 3.71 crore, net profit at Rs 16.76 crore is 83 per cent higher

than that for FY00. The improved performance is largely due to Carrier’s initiative at

adopting a different pricing strategy. From a distinct shift from marketing ACs only at the

premium end, Carrier started targeting the lower segments of the market. Consequently,

compared to previous price points of Rs 25,000 to Rs 32,000, it now caters to a price

range of Rs 18,500 to Rs 32,000. It marketed 41 new variants of window ACs during

FY01 as against 11 models in FY00. Also, while advertising budget has increased 60 per

cent at Rs 19 crore for FY01, the number of exclusive dealer outlets have also increased

from 414 to 1,200.

To compete with players such as National, in early 2001, Carrier launched seven

models of Toshiba RACs, three models of split ACs. Carrier envisages growing at 25 per

cent for FY02 as against the 16 per cent industry growth. Despite fierce competition,

Carrier’s dominant presence in the fast growing window AC segment bodes well for the

company.

Voltas

Voltas continues with its 15 % and 20% share in central ac’s and ducted system

respectively. The Rs 824 crore Voltas has interests in areas as diversified as engineering

products and projects, chemicals, cooling appliances and refrigerators and office

furniture. The company slipped into the red in FY97 and FY98, during which, it devised

various initiatives for a turnaround. This included stripping idle assets and hiving off loss

making subsidiaries. The efforts bore fruits as Voltas posted a net profit of Rs 12.79 crore

for FY99. However, for FY00, its topline dipped 16 per cent to Rs 824 crore. As the

company managed growth only in textile machinery, motors & modular ,furniture ,

business . the other divisions such as machine tools , fork lift trucks , air conditions ,

refrigerators ,and room air conditioners showed declining sales both in quality as well as

value terms .

Also, the net profit slid by 57 per cent to Rs 5.5 crore. According to the company,

the slowdown in the capital goods sector and engineering businesses are responsible for

the sluggish performance during FY00. However, its cooling appliances and refrigerator

businesses have also registered a near 26 per cent fall in FY00. Also, its contribution

towards total revenues have reduced from 61 per cent to 55 per cent in FY00.. Thanks to

innovative product launches and technological advancements, most of its products have

shown a healthy growth during FY01.

From the above table, it can be seen that during FY2000, the company managed

growth only in the textile machinery, hydraulic pumps, motors, and the modular furniture

business. The other divisions showed declining sales both in quantity as well as value

terms.

Company has shown an overall 64% increase in the order book position during

FY01The company has launched a new system called the Ozone Injection System, which

checks the sick building syndrome and prevents the circulation of unhealthy air.

Unhealthy air could be the cause of bad ventilation, bad air-conditioner, or poor

maintenance of air-conditioners. The new system is pioneered by Voltas in collaboration

with a Canadian company called Daks. The company expects its central AC segment to

pick up with the growing environmental concern in the coming years.

While Voltas continues with its 22 per cent market in the central AC and ducted

systems, respectively, its mini split ACs are also expected to add to the revenues of the

company.

Also, with the launch of its Verdant range of ACs, Voltas is further expected to

strengthen its room AC share. However, for FY01, 12 per cent of the revenues have come

from the retail segment with the rest coming from institutional sales. For the first nine

months of FY01, Voltas has registered a seven per cent rise in revenue.

.

Chapter 4

Room AC Market

The room AC segment comprises of window and split ACs. The market

has a size of Rs. 3800 crores in India. Window ac’s account for about 54% of the total

market for ac’s with an estimated market size of about 30 bn .

The room air-conditioning segment is characterised by large players like

Carrier Aircon, LG, Samsung, , Amtrex-Hitachi, etc. LG has been successful in

dethroning Carrier from No.1 position in the room AC segment, followed by Samsung

and Hitachi.. . Samsung, for instance, has captured a 15% share in room ACs since it

came here in May 1998. LG has wrested a creditable 19% share in less time .

A sales growth of 300 per cent in 2002 over 2003 (40,000 ACs sold in 2003 over the

10,000 in 2002) finds it talking very confidently.

It started importing in January 1998 but sensing the opportunities lying

ahead, built a plant near Delhi at Noida ,others like Hitachi, chose to pick up stake in

Amtrex. While some others have gone in for a technical arrangement (for eg. Blue Star

with York, USA). M/s. Trane of USA .

Market Share( Organized Sector)

Room ACs Share

LG 19

Samsung 15.5

Amtrex Hitachi 15

Carrier 12

National 11

Voltas 8.5

Videocon 5.4

Bluestar 5

Godrej 3

Others 5.7

The room ac segment is having a close rat race as compared to the central ac

market. LG has emerged as the leading player with respect to its innovation in offering

superior products . It changed the definition of ACs by terming them as health air

systems.

LG has registered a growth of 110%yoy in the year 2000 against an overall

industrial growth of 30%. LG’s market share jumped to 30% in 2000 from 19% in 1999.

LG now claims to be in the number 1 position in the RAC segment. LG’s entry is already

taking a toll over established companies like Carrier Aircon and Hitachi.

Korean major Samsung and Hitachi are fighting a close battle for the second

place. Both are relying on strong innovation and marketing to increase their market

shares.

Carrier Aircon is second in the RAC race with a 21% share in window ACs. Its

market share in split ACs is about 35%. During the first 9 months of FY01, net sales

stood at Rs3.51bn (up by 21%). To compete with players it has launched models of

Toshiba.

\

Amtrex Hitachi is a joint venture with Hitachi Japan and has a 11% share in the

window AC segment and 15% share in the split AC segment. After going through some

stagnant period, the company is now ready to take on the competition with its new range

of products. After a successful comeback in FY00, the company slipped into red again

during the first nine months of FY01registering a net loss of Rs7.4mn against a gain of

Rs6.2mn last year. However, the topline has soared by 31% to Rs1.6bn during the said

period. The company’s problem is that of falling operating margins due to rising total

expenditure. Amtrex has recently launched a new digital range of split &window ACs

called 'Logicool'

Its mini split ACs registered a 25% volume growth to improve its market share

from 20-25% in FY01. Also with its launch of Verdant range of ACs, Voltas registered a

28% volume growth improving its market share from 11% to 17%.

Geographical Distribution Of ACs

Cities Market Share

Delhi 28

Mumbai 35

Hyderabad 04

Kolkatta 04

Banglore 02

Chennai 07

Others 20

The above figures explain that the sale of ACs is restricted to metros. This is so

because the ACs still have a very low penetration as compared to other durable goods.

They are last in the priority list after refrigerators , washing machines, vacuum cleaners,

microwave ovens. Also people don’t have that much disposable income to operate and

maintain an AC. With increasing finance options the scenario is expected to improve but

it will take some time for ac as a product to really come into the reach of a middle class

consumer.

Entry of New Players.

A notable feature of the reform period has been the coming of foreign players

into the Indian market Among the new brands jostling for space with the older players

this summer are: Electrolux-White Westinghouse and Whirlpool from the US, Fujitso

General Ltd and Daikin from Japan and TCL from China. Needless to say, the entry of a

host of new brands will impact the AC market in India dominated by players like Carrier

Aircon, LG, Samsung, Godrej, National, Blue Star, Voltas etc.

The reasons why more and more brands are entering the Indian market is that

the penetration level of ACs in India is barely 2 per cent and so the market is extremely

attractive. Secondly, the home segment witnessed an almost 30 percent growth in the last

two years compared to the commercial segment. This is because AC is no longer

perceived to be a luxury, and better distribution network, finance schemes and large scale

advertising have grown the market.

Small wonder, Daikin Shriram, the new 80:20 JV between $ 4.5 billion Japanese

company Daikin and the Siddharth Shriram group company Siel Ltd, aims to grab a 18

per cent share of the premium AC segment. A 0.75 tonne Daikin AC costs Rs 39,000.

Meanwhile, Electrolux India has brought in its world - renowned White Westinghouse

brand of AC which offer an attractive six year guarantee and hopes to capture

approximately five per cent market share.Having test-marketed its ACs last summer,

Whirlpool launched its products earlier this summer. The new Whirlpool AC Range is

targeted primarily at the house hold segment. They are offering a comprehensive range of

8 new world class models and hope to get a 10 per cent market share by 2003.The AC

market is currently witnessing a proliferation of brands. However, a shakeout is imminent

in the next 18-24 months. Secondly, branded players will gain market share at the

expense of the unorganised sector. If the unorganised versus organised sector

marketshare ratio was 60:40 in 1997-98, it changed to 30:70 in 2000-2001. The

unorganised sector is likely to lose another 10 per cent share this year, thanks to the new

players coming in the market.

Evasive Action By Established Players

Brand proliferation will also make life difficult for the branded players. Most of

them, therefore, are investing heavily in advertising and marketing besides offering a

wider choice of models. . Considering that there has virtually been no change in the AC

prices this year, the market is likely to see a 20 per cent growth. Considering that besides

microwaves, this is the only category in consumer durables that is growing at over 20 per

cent, AC manufacturers are going all out to woo the Indian consumers.

The established players are taking the following steps to consolidate their position

in the market.

Samsung

Korean major Samsung too has added two new models to its range and hiked its

spends on ACs by 15 per cent. It is also using the Internet for speedy order and delivery

of spare parts. It is offering a combination of better services, features and a zero per cent

finance schemes to garner more market share. To fortify their position the company plans

to expand their dealer network to 2000 from current 1500.

LG Electronics

LG has increased its advertising budget to Rs 25 crores and is planning to invest

over 200 crore in R&D along with increasing its distribution network. It is working on

incorporating its plasma technology in window ACs as well. It would be pumping $ 230

mn in India by 2005 to expand manufacturing facilities.

Carrier Aircon

Carrier is launching 40 models this year to regain its leadership. Carrier's

advertising budget this year is Rs 17 crore while the company is expanding the

distribution network for the home segment from 440 to 1,250 retail outlets.

Hitachi

Hitachi is relying on its new range of Logicool air conditioners to increase its

market shares backed by strong promotional budget which has been increased from 8

crores last year to 20 crores for the year 2001-02.

Chapter 5

Analysis Of Room AC Market

Complexity Of Room AC Market

The room AC market is very complex unlike central AC market because there are

lot of players which are targeting various consumer segments according to their specific

needs. In the central AC market the corporation is spending the money and the reasons

for buying an Ac are altogether different for buying an AC as compared to that for

personal use. Decisions are taken by corporate heads in case of central ACs and the

priority is given to factors such as cooling capacity, after sales service, safety, price etc.

The brand is not given much importance as far as the motives are being fulfilled. On the

other hand a room AC is purchased for the following reasons

1.To create a cool ambience

2.To provide clean and fresh air

3.Status symbol

4.To Provide aesthetics to the room.

Thus the traditional concept of an AC being a cooling machine is not applicable

any more. Today a consumer looks into other attributes and is becoming brand conscious

because these attributes are being offered by the branded products only.

Attributes Affecting Selection Of A Brand

1. Durability

2. After Sales Service

3. Finance Options

4. Less Power Consumption

5. Technology with respect to cooling, clean and fresh air and easy operations

6. Sleek looks

7. Suitable Price

8. Brand Image

Thus it is becoming more and more important for a company to establish its brand

rather the product alone. A consumer today looks to identify with the brand he is going to

own and therefore the players in the market are trying to establish their brands and

position them in such a manner that they are able to relate to the psychology of their

target and potential customer and provide him with a product which would be ideal for

him. In order to analyze the complexities in the Room AC market it is necessary to

understand certain terms and concepts related to brands , branding and brand positioning.

Also it is necessary to look understand what are the benefits and requirements for

developing these concepts.

Chapter 6

Branding

Concept & Definition

Branding is the art and corner stone of marketing. The American marketing

association defines a brand as: a name, sign, symbol, or design, or a combination of them,

intended to identify the goods and services of one seller or group of sellers and to

differentiate them from those of competitors. Thus a brand identifies the seller or maker.

Under trademark law, the seller is granted exclusive rights to the use of the brand name in

perpetuity. Brands differ from other assets such as patents and copyrights, which have

expiration dates.

A brand is a complex symbol that can convey up to six levels of meaning

Attributes: a brand brings to mind certain attributes. Mercedes suggests

expensive, well-build, well-engineered, durable, high prestige automobiles.

Benefits: attributes must be translated into functional and emotional benefits. The

attribute “durable “could translate into the function benefit “I wont have to buy another

car for several years”. The attribute “ expensive “ translate into emotional benefit. “ the

car makes me feel important and admire”.

Values: the brand also says something about producer’s values. Mercedes stands

for her performance, safety, and prestige.

Culture: The brand may represent a certain culture. The Mercedes represents a

Garman culture: organized, efficient, high quality.

Personality: the brand can project a certain personality. Mercedes may suggest a

no nonsense boss (person), or an austere palace (object).

User: The brand suggests the kind of consumers who buys or uses the product.

We would expect to see a fifty five year old top executive behind the wheel of a

Mercedes, not a twenty-year-old secretary.

The word "brand", when used as a noun, can refer to a company name, a product

name, or a unique identifier such as a logo or trademark. In a time before fences were

used in ranching to keep one's cattle separate from other people's cattle, ranch owners

branded, or marked, their cattle so they could later identify their herd as their own. The

concept of branding also developed through the practices of craftsmen who wanted to

place a mark or identifier on their work without detracting from the beauty of the piece.

These craftsmen used their initials, a symbol, or another unique mark to identify their

work.

Not too long afterwards, high quality cattle and art became identifiable in the

consumer's mind by particular symbols and marks. Consumers would actually seek out

certain marks because they had associated those marks in their minds with tastier beef,

higher quality pottery or furniture, sophisticated artwork, and overall better products. If

the producer differentiated their product as superior in the mind of the consumer, then

that producer's mark or brand came to represent superiority.

Today's modern concept of branding grew out of the consumer packaged goods

industry and the process of branding has come to include much, much more than just

creating a way to identify a product or company. Branding today is used to create

emotional attachment to products and companies. Branding efforts create a feeling of

involvement, a sense of higher quality, and an aura of intangible qualities that surround

the brand name, mark, or symbol.

A brand also stands for the immediate image, emotions, or message people

experience when they think of a company or product. A brand represents all the tangible

and intangible qualities and aspects of a product or service. A brand represents a

collection of feelings and perceptions about quality, image, lifestyle, and status. It is

precisely because brands represent intangible qualities that the term is often hard to

define. Intangible qualities, perceptions, and feelings are often hard to grasp and clearly

describe. Brands create a perception in the mind of the customer that there is no other

product or service on the market that is quite like theirs.. A brand promises to deliver

value upon which consumers and prospective purchasers can rely to be consistent over

long periods of time

Brand Positioning

The concept of perpetual space forms the theoretical basis for positioning . The

consumer’s mind is thought of as geometric space and brands are plotted in that space to

represent consumer judgments. This is done with the help of perpetual maps that helps a

marketer to see which brands are closer to his brand and that helps him to find out his

closest competitors. The task of the marketer is to mould consumer perceptions so as to

occupy the desired position for his brand. Some thoughts offered by various authors with

respect to Brand Positioning are as follows:

1)Subroto Sengupta gives a comprehensive three point definition for positioning.

According to him

a) The position of a brand is the perception it brings about in the minds of the

target consumer.

b) This perception reflects the essence of the brand in terms of its funcional and

non-functional benefits in the judgement of that consumer.

c) It is relative to the perceptions , held by that consumer, of competing brands ,

all of which can be represented as points or positions in his or her perpetual space and

together make up a product class.

2) According to Reilbstein , David J “ Positioning refers to the place a brand

occupies in the mind in relation to a given product class. This place was originally a

product related concept concerning market structure .The concept now refers to the place

that the brand holds in the consumers mind relative to perception and preferences”.

3) Michael J Baker defines Brand Positioning as “ the policy used to ensure that

the brand has a distinctive position in the market place , identifiable by the consuming

public. Brand Positioning (has) to ensure the brand a distinct niche in the market ”.

4) Mittelstadt, Charles “Positioning refers to how you want your brand ‘ thought

about’ in connection with competitors in its product category . Positioning needs to be

specific to your brand aimed at specific target audiences

The benefits of Branding and Brand Positioning

A well positioned brand influences the buying decision and shapes the ownership

experience.

Branding creates trust and an emotional attachment to a product or company. This

attachment then causes a brand’s market to make decisions based, at least in part, upon

emotion-- not necessarily just for logical or intellectual reasons.

A strong brand can command a premium price and maximize the number of units

that can be sold at that premium.

Branding helps make purchasing decisions easier. In this way, branding delivers a

very important benefit. In a commodity market where features and benefits are virtually

indistinguishable, a strong brand will help customers trust it and create a set of

expectations about its products without even knowing the specifics of product features.

Brand positioning help to "fence off" customers from the competition and protect

market share while building mind share. Once a brand has mind share, the customers will

automatically think of the brand first when they think of that particular brand’s product

category.

A brand is something that nobody can take away from anyone. Competitors may

be able to copy the products, the patents will someday expire, trade secrets will leak to

the competition, the proprietary manufacturing plant will eventually become obsolete, but

a strong brand will live on and continue to be unique. In fact, a strong brand name may be

the most valuable asset for any company.

A strong brand can make actual product features virtually insignificant. A solid

branding strategy communicates a strong, consistent message about the value of the

company. A strong brand helps to sell value and the intangibles that surround products.

A strongly positioned brand signals that it want to build customer loyalty, not just

sell product. A strong positioning campaign will also signal that a brand is serious about

marketing and that it intends to be around for a while. A well positioned brand impresses

a firm's identity upon potential customers, not necessarily to capture an immediate sale

but rather to build a lasting impression of itself and its products.

A brand helps to articulate a company's values and explain why they are

competing in your market.

People do not purchase based upon features and benefits. People do not make

rational decisions. They attach to a brand the same way they attach to each other.

Similarly, purchase decisions are made the same way, first instinctively and impulsively

and then those decisions are rationalized. A strong brand helps mold and shape that

emotional reaction in people, which is a very strong influencer in the purchasing

decisions they make. Once they have an emotional attachment to a brand, then they will

justify their purchase decision based upon product features and benefits.

Chapter 7

Brand Positioning Of Room ACs

Introduction

Positioning is the pursuit of differential advantage. Brands can create franchises

of loyal consumers only when they are seen to be different in some way which is

persuasive for the target market. There is no such thing as commodity. All goods and

services are differentiable. One of the major contributions of positioning theory of

marketing strategy has been to bring out the concept of distance and dissimilarity

between brands in the ‘perpetual space’ of the prospect and to uncover the many

opportunities for such perceived differentiation based upon the capabilities of the product

and its antecedents.

Strategies Of Positioning

A marketing manager has an array of differentiating strategies.. He has to judge

which of these strategies can help him locate a niche in the market where his brand may

be perceived by his target segment as unique and where it will hold a competitive

advantage. Some of the positioning strategies used by AC brands are as follows:

1) Category- Related Positioning

This is an important differentiating strategy that is used when an existing product

category is too crowded to take the same basic product and position it in another

category, provided the attributes of the product can match consumer expectations from

that category. This is referred to in the jargon as ‘macro-positioning’ or inter-set

positioning’. Eg. LG decided to position its ACs as LG Health Air System Air

Conditioners thanks to its Plasma technology in split air conditioners .They

revolutionarized the AC market by positioning their brand in the health category because

it was an unoccupied platform which had a lot of potential.

2) Positioning By Price –Quality

This is a simple concept but a powerful one in a developing economy like that of

India. The consumer looks at the products in a category , at different levels of price,

offering different standards of quality, and decides which price-cum quality level is most

suitable for a given need. The consumer in a country like India still is still conscious of

price and doesn’t mind compromising on quality if there is a significant difference in

price.

Eg. National ACs have been positioned using this strategy. The tagline itself

defies its positioning- “IF ITS NATIONAL , ITS AFFORDABLE”

3) Positioning By Product User-

This approach associates a product with a user or a class of users. This kind of

strategy is used by developing the personality of the brand which is aimed at a class of

users to identify with the personified personality of the brand and find the same

characteristics and values which will strike an emotional chord with the consumer and in

turn make them purchase the brand.

Eg. Hitachi ACs “ For Those Who Seek Perfection” User Driven Positioning.

4) Positioning With Respect To Use Or Application-

This strategy is used when a particular brand has an added advantage over other

players in the market and wants to ride high on it.It is the most logical thing to do

because positioning is all about creating a differential advantage and placing it in the

mind of the consumer.

Eg. Samsung ACs have been doing this by using the tagline “Ab Garmi

Choo Mantar”

They are making such claims because their ACs have a unique 4 coil condenser

as compared to the other brands which have 2 coil condensers. This technology gives

their ACs an edge both in cooling and in efficiency.

Eg: Godrej is doing this by using the tag line “nothing cools faster” .

They are making this claim because their AC’S are fitted with silent

energy efficient compressor and they have a very high cooling capacity

Components Of Positioning

The positioning strategies of all the AC brands in the market are based upon the

four basic components of positioning. They are as follows

1. Product Class-A product class or product market can be defined as the set of

products and brands which are perceived as substitutes to satisfy some specific consumer

need. The term, product category, is also used interchangeably with product class and

product market. A brand cannot decide upon its positioning unless it knows the structure

of the market and positioning of other brands so it can lodge itself accordingly in the

perpetual space of the consumer.

With respect to the AC market the knowledge of the market comprises of the

kinds of brands available namely Indian, Japanese, Korean , their market shares, the

capacity of ACs ranging from 1 to 3 tons, the technology being offered and at what

prices. Also the players have to consider the unorganized market and the substitutes like

coolers which have a sizeable demand in the northern region of India..

2. Consumer Segmentation- It is impossible for a brand to think of a positioning

strategy without at the same time considering the segment for which it wants to offer the

benefit and whether that benefit is being offered by any other brand in the market.. This is

so because all the aspects related to the positioning of the product such as the pricing,

advertising and placement will be done keeping in mind the end consumer.

ACs are basically classified as the whitegoods which have a penetration as low as

2 % in a country like India. This is so because India is a developing country where

majority of the population is lower middle class. AC is targeted at the middle-middle

class and upper classes because of its high purchase price and also high operating cost.

According to the statistics given by Business World the middle income level group share

is going to increase by 2005 expanding the AC market. Already there are players such as

National, Hitachi that appeal to the middle income group because of their pricing which

ranges from 15,000 to 20,000 . There are players which target the niche market such as

LG, Samsung , Carrier and Hitachi with an average price of about 30,000. Then there are

players who are between the two markets such as Voltas, Godrej. In order to expand their

markets already brands like LG, Carrier , Hitachi have started offering various finance

options to their consumers.

3. Consumer Perception- It is a very important component of positioning.

Before positioning of a particular brand it is very important for the brand to know what

does a consumer think about the product or service which is going to be launched by the

brand . With the help of this the customers need or expectations from the product , its

ideal pricing etc.can be found out. At the same time brands also try to find out about the

other brands and their image in the minds of the consumer. This involves an intensively

planned research methodology that helps a manager to plot a graph with respect to the

results received and get an idea about the perpetual spacing of the mind of the consumer.

This ultimately helps a brand to identify the ideal positioning strategy that will occupy

the desired image in the mind of the customer.

In the AC market the general perception about the AC as a product was that it

was a cooling machine. In the middle nineties players of the market were basically

fighting on the grounds of technology ,prices offering varied features, designs , exchange

offers to lure the customers with American giant Carrier Aircon ruling the roost. Then

came a new breed of air conditioners lead by LG which gave a new dimension to the

industry by introducing health Air system air conditioners . Brands like Hitachi, Samsung

also came up with new technology and innovative products leaving players like Carrier,

Voltas, National far behind who had taken the Indian consumer for granted and never

bothered to bring new products until the entry of Korean and Japanese brands. These

brands have managed to make people believe that there is more to an air conditioner than

cooling. People now perceive brands differently and know what to expect from each

brand thanks to their unique positioning. They perceive LG as a Health focused brand,

Samsung as efficient and high-end technology brand, National as a low-end price brand

and Daikin as a low noise-creating brand. Thus the current breed of ACs are being

perceived by consumers in a different vein with respect to each AC thanks to aggressive

and distinct positioning.

Perpetual Spacing Map In The Mind Of Consumer

The concept of perpetual spacing has already been discussed in the report earlier.

It is the perception that the consumers have regarding the various brands in the market.

The above map has been designed keeping in mind the response received from the

primary data collection with the help of questionnaire filled by the consumers. The

perpetual space occupied by the brand in the mind of the consumer is basically because

of the experience, advertising, and discussions with friends, relatives. Every brand tries

its best to create the correct image in the mind of the consumer. In order to succeed in

their motives they spend heavily in advertising and creating the right message that will

give a clear idea to the customer about what they should expect from the concerned

brand. As a result there is a trend of developing suitable taglines that try to highlight the

specialized service being provided by the brand.

The following Taglines are used by the brands in the market to occupy the desired

space in the minds of the consumer. They help the consumer to build their perception

about a particular brand:

Brand Tagline

Hitachi For those who seek perfection

CarrierDifferent Needs for Different

People

Voltas Ache Achon ko Thanda Kar De

LG Purest Way to Breathe

Bluestar Breathe Easy

Samsung Ab Garmi Chu Mantar

Daikin If its National its Affordable

WhiteWestingH

ouse (Electrolux)Enjoy the Freshness

Kenstar The Way the World Lives

General The Extreme Machine

Godrej – Nothing Cools Faster

4. Benefits Offered By A Brand

The benefits offered by a brand form the final and the most important of the four

components of positioning. A consumer expects certain benefits from each product and

for reaping those benefits he pays a price which incidentally is the cost of the product

offered by he brand.. When a consumer is going in for a purchase he has only those

benefits in his mind which he feels he wants to reap and is on a look out for a brand

which can provide the desired benefits. It is very important for a brand to know which are

the ideal benefits a consumer is seeking and make sure that they are able to provide those

to the customer which in turn would grant them an immediate position in the mind of the

customer and would put them on the priority list of the customer amongst all others

because the consumer would be able to identify with it the most as the brand is giving

them what they expect from it.

Today when a consumer goes to purchase an AC he is aware of the various

benefits being offered by the brand thanks to aggressive advertising, exhibitions, trade

fairs, web-sites, magazines, catalogues, friends, relatives etc. There were times during

mid-nineties when all an AC was expected to do was cool the room. Now people treat it

as a status symbol and want it to improve the aesthetics of the room, be easy to operate

and improve and maintain health by providing cool, pure and healthy air. Thus a

consumer is willing to purchase only that AC which is providing these benefits and at a

reasonable price which again has been a major factor in a developing economy like India.

Brands like LG, Hitachi and Samsung have been able to provide all the perceived

benefits and that is the reason that they have been able to dethrone American MNC giant

Carrier Aircon and other Indian brands such as Voltas, Godrej, etc. It is not only

important to make an AC which can provide the required benefits but is equally

important to position it in the right manner so as to reach the desired consumer. LG has

been most successful in this aspect by positioning its health concept to perfection and is

now reaping the benefits by becoming the market leader in the ever-growing room AC

market.

Chapter 8

Analysis Of Positioning Strategies Of BrandsThrough

Print Advertisements

Advertising is one of the most important modes which companies use to position

their brands. With the help of advertisements the consumers can be induced to buy the

brand by making them aware of the benefits of buying their brand over other brands. Like

all other markets Ac market is no different and here also the advertising is heavy but

seasonal. The peak period of ACs is March to May followed by a lull of about three

months before the sales pick up again in the month of September but that too for a couple

of months because then winter strikes most of the country. Also most of the players

prefer Print media as compared to Audio-Visual media due to cost factor as the demand

is not much. Also consumers like to know in detail about the features , prices, finance

options which can be expressed explicitly only in the print media. There are some big

players like LG, Hitachi, Carrier which advertise frequently on T.V during the season but

otherwise print media is the preferred medium. Taking these reasons into consideration

the analysis is based on the print adds for the months of March, April and May.

1) Samsung : Samsung has been mainly focussing on the product feature

advertising. They have tried to create a distinct image in the minds of the customer as a

power saving AC with high efficiency and generator of pure and healthy air. Tabu is

endorsing the brand.

2) Hitachi : The advertisements stress on the features of microprocessor. The

adds differ from talking about the self-adjustment of AC to room temperature or its

function of automatically switching on with the right temperature as keyed in earlier or its

power saving feature. All this thanks to its microprocessor. Some advertisements also talk

about the 0 percent interest finance schemes.

3) Verdant from Voltas: The ads have been stressing on features like pure and

healthy air, temperature adjustment, electricity savings. They also have icons to give

details regarding the features. But unlike Samsung they don’t have any celebrity

promoting their products. The focus is on the model Verdant which they have placed as

the future high tech air conditioners. Some of the ads also focus on their cooling system

that suggests that the room will be cooled thoroughly irrespective of its placement.

4) Godrej Intelli- There has been only one ad talking about its ability to get

programmed to consume the units of electricity as desired by the consumer. It is this

feature that separates it from the other ACs but the advertising with respect to this is very

mild.

Godrej Smartcool: This add covered all the models [with photographs ] being

offered by Godrej and the various features such as energy saver, sleep mode, rotary

compressor etc. The punch line in this ad talks about taking the woollen clothes out

which suggests that AC might just be too cool for a person to be comfortable . The

function of an air conditioner is not all about creating a cold environment but to condition

the air in the environment and make it most suitable and comfortable for the person

sitting in the room. The ad might just give a wrong idea to any prospective customer.

5) General : They have also advertised just once in the last one month. They have

been trying to lure the customers by calling their AC as the most powerful AC with

respect to their cooling capacity and cooling speed. The ad is not effective as it does not

give any idea to the customer about the product features or other details such as price,

models etc.

6) Kenstar: There have been just 2 advertisements in the last couple of months.

The first one spoke about the price while the second one was also revolving around price

with the concept of exchange offer. Thus they are trying to lure the customers by offering

them price parity with respect to other ACs. One of their punch lines says Bring in the

winter which is trying to project that the ACs are all about cooling. In one particular ad

they have compared their features and price with other brands and showed their

superiority over them.

7) National: Their advertisements have been focusing on the 0 percent interest

finance scheme. They are also advertising the competition which guarantees the return of

money spent to buy their AC in case of the slogan of the buyer is worthy enough which

he has to fill in the form while purchasing the AC.

8) Fedders Lloyd : Their advertisements are also price oriented. They are trying

to persuade the consumers by printing the prices in bold and using punch lines such as

ACs for 19500.

9) White Westinghouse from Electrolux: They have been focusing on their

triple filtration process which results in pure and fresh air. Also the advertisements stress

that the ACs can withstand voltage fluctuations thanks to its HDEE compressor.

10) LG- The advertisements have been mainly focusing on the concept of pure

and healthy air thanks to its plasma technology. They have been effectively using their

catch line- Pamper your lungs. There have advertisements regarding their 4th anniversary

offering free gifts on purchase of LG ACs. Sometimes the advertisements have focused

on low noise creation. They have advertised the most in the months of April-May as

compared to other brands.

11) Carrier: They are the market leaders in the AC market today. Their

advertising differs from product oriented where by they talk about the efficiency, low

noise creation, pure air etc to price oriented where by they offer various interest free

finance schemes.

12) Daikin: They have been targeting the customers with their catch line –

complete silence. They have promoted their ACs as no noise polluting ACs. They have

not been speaking about other product features or price. The customer doesn’t get a fair

idea about the product from their advertisements. The ads boast of it being the NO. 1 AC

of JAPAN.

13) Bluestar: They have also advertised heavily in the months of March and

April. Their advertisements have been focusing on the product features and prices. The

features promoted are same as other ACs namely pure and healthy air, sleep mode, power

saving compressor etc. they have used models in some ads to add value to the ads. .

Striking Points With Respect To Advertisements

1.Features: Almost all the brands have been talking about features that are

common to each other except for the features advertised by Godrej intelli of their power

controller. has launched its new range of EON air conditioners with a revolutionary

technology in split air conditioners for the first time in India.

These air conditioners are built with Godrej’s advanced i-Sence Technology, which

ensures that the temperature around you is exactly what you wish to have in the room or

hall.

2.Warranty: Not everyone has been talking about the warranty period. But there are a

selected few like Kenstar, Fedders Lloyd, Voltas, LG which are offering a 3-5 year

warranty on the compressor.

3. After Sale Service: Every brand has given the list of their dealers and service

centres. But Fedders Lloyd have also focussed on their 24 hour service call stressing on

their dedication towards the consumer satisfaction. Voltas have also mentioned about

their customer care service that places these two brands as customer friendly in the minds

of the customer.

4.Icons: The icons are basically used by the brands to give an insight to the

consumer about the other features of the product other than USP of the product. Most of

the brands are effectively using the icons but for Godrej, Feddders Lloyd, National,

Carrrier , Amtrex Hitachi, Daikin, BlueStar. These brands have been focusing only on

their strengths and are not talking about features that are common to all.

5.Finance Options: Many brands offer easy finance options so as to make the

product available even to people who cannot afford to buy the AC buy paying the amount

at a stretch. This way the companies are able to target and tap a wider market. Brands like

National, Carrier, Samsung, LG are offering 0 percent interest finance option to

consumers making it easier for the consumers to buy their product. Also Voltas and

Hitachi have different finance schemes to attract the consumers towards their product.

Chapter 9

COMPARITIVE BRAND POSITIONING Of

LG ,GODREJ & Hitachi

A well-positioned brand is that which has been able to identify with the pulse of

the customers by being accepted by them. If one goes by statistics then LG is the market

leader in room AC segment followed by Samsung and Hitachi. They are the ones who

have been able to change the face of the Indian market by displacing Carrier Aircon who

has been ruling the roost for last ten odd years. Logically to compare the positioning

strategies of two brands LG and Samsung could have been chosen but then there are

reasons for choosing Hitachi over Samsung. Both LG and Samsung originate from Korea

with each owning a 100% subsidiary in India while Hitachi is a Japanese brand having a

joint venture with Amtrex . Both of them have a strong presence in India with respect to

other durables where as Hitachi is not strong in other durable markets. Also Hitachi has

been quiet innovative and aggressive in its positioning along with LG where as Samsung

has kept a low profile with respect to it positioning. Also Hitachi is expected to garner

more share in the coming period because of its new range of Logicool ACs which have

already become very popular and are expected to Hitachi in the second place ahead of

Samsung. All these make Hitachi a better proposition for comparison with LG which has

revolutionarized the market with their positioning.

The analysis is based on the information obtained with the help of dealer survey,

consumer survey and interviews with the personnel of LG and Hitachi.

Analysis is done on the basis of some aspects that form the basis of positioning.

1) Corporate Background

A) LG - It is a Korean company which is a major player in the consumer

electronic segment as well as the durable goods segment all over the globe. Their

products all over the world have been positioned on the health platform. They have their

plant located at Noida near Delhi.It is that category which has found an instant rapport

with the consumers all over the world. It is a universally accepted fact that Health is

Wealth and everyone has become over-cautious with the issue of health in this era where

deadly diseases like AIDS, Cancer, Asthma, Bronchitis etc. are spreading like a forest on

fire. People have become fitness conscious and believe in prevention rather than cure.

Health was one category that was left unoccupied by the major players in the entire

appliances category as all the major brands were running after technology and innovation

because they thought that a consumer wanted comfort and technology. LG realized that

innovation is important but today’s consumer is equally bothered about the environment,

society and most of all personal health because it is the most basic factor of any

individual’s life. Thus it decided to position its brand in the health category and the

results have been overwhelming. This is because all global players have been fighting a

technological battle where as LG has gone ahead and created a new category called

where they have been using innovations to create comfortable as well as healthy lives for

people. Thus they have created a corporate image of a brand, which will create a better

and healthy tomorrow for the consumer.

B) GODREJ GE: is the joint venture between GODREJ and GE appliances,

which is subsidiary of US General Electric Corporation. The joint venture is of 40:60 i.e.

40% of equity investment is by Godrej and 60% by GE Appliances.

Godrej GE started its AC business five years ago in 1999. Their market share is

very low i.e. only 3%. They manufacture their AC’s at BADDI in Rajasthan. At present

their turnover is 32 crores.

C) Amtrex-Hitachi : It is a joint venture between Hitachi Ltd, and the Japan a

Lalbhai Group, Amtrex Hitachi Appliances Ltd. centered in Ahmedabad with its

manufacturing facilities based at Kadi and Silvassa. The annual capacity of the company

is around 0.1 million per annum.

Ahmedabad based Amtrex Appliances & Hitachi, Ltd., headquartered in Tokyo

Japan announced a new strategic alliance for the Indian Room Air-conditioning

market.way back in 1998. . Japanese giant Hitachi entered into a strategic alliance with

AC manufacturer Amtrex in a bid to strengthen its presence in the Indian market. Hitachi

and Lalbhai group are equal shareholders in Amtrex Hitachi Appliances holding 35.2 per

cent each and balance held by the public .The alliance has range of ACs which includes

0.75 Tr to 2 Tr of window ACs, 1 Tr to 4 Tr of split ACs, decorative split ACs such as

Quadra and Tower, concealed split units, ductable ACs, packaged ACs and recently-

introduced Logicool range of ACs which the company claims saves up to 34% power.

2) Branding

A) LG : When a product is being launched into the market it is very important to

brand it in the most unique and different manner as compared to the products of the other

companies. When LG decided to launch its air -conditioners in India in 1998 it decided to

follow the corporate branding strategy because it had already established its brand in the

home appliance segment as a trustworthy and popular brand. Also all the other players in

the home appliance segment were also following the corporate branding strategy. This is

so because consumers tend to compare the quality standards and performance of the

various appliances and start forming an opinion and trust about the brand as a whole with

respect to the various products offered by the brand. LG had created an image with

respect to their early home appliance range that they knew would help them in gaining

the market share of air conditioners because the consumers would be immediately able to

identify with the brand. Thus LG decided to stick to the corporate branding because when

a consumer would go in for a purchase they will definitely carry the image of innovation ,

technology and great after sales service offered by the brand with respect to the other

products which in turn will instigate them to have faith in the ACs of the brand and

influence their buying decision.

B) Godrej GE appliances follows dual branding strategy relying on both Godrej

and GE brands . there are no products carrying Godrej GE label . Godrej brand has

strength in refrigerators , washing machines , Air-conditioners and cooking range

segments ; GE added more strength through imported ranges of refrigerators , washing

machines and , dehumidifiers . Godrej GE’s strength is in customer care and after sales

service .

C)Amtrex-Hitachi : It follows the dual branding strategy wherein Hitachi brand

appeals to individual buyers and Amtrex provides good value proposition to the across-

the-table buyers like Government, Corporates & Commercials. Thus the two brands have

their own value proposition for different segments. Retail consumers, household

purchases have certainly shown an inclination towards MNC brands. Therefore, AHAL

will not be marketing Amtrex brand anymore through retail outlets. However, bulk

buyers and institutional air-conditioning business where prices are negotiated, Amtrex

will continue to offer its range of products. The company will now focus on building the

Hitachi brand name and so have already increased their promotional budget from 8 crores

to 20 crores this year. The recently launched Logicool range collection is being promoted

under Hitachi brand name only. Behind the name Hitachi stands a long and proud

tradition of bringing together the most innovative, technically advanced products to

customers.The name "Hitachi" literally means "sunrise", reflecting the founding

philosophy of contributing to people and society through technology. This vision has

helped Hitachi become one of the world's largest corporations. AHAL introduced its

Hitachi brand this February and adopted the dual brand strategy, offering the Hitachi and

Amtrex brands at different price points. While Amtrex is for the masses carrying a price

tag ranging from Rs 25,000- 28,000, Hitachi is aimed at the premium segment costing

between Rs 36,000 - 40,000.

3) Brand Postioning:

A) Category Related Positioning- LG analysed all the positioning strategies like

Benefit -related positioning, Positioning by usage occasion and time, Price-Quality

positioning and Category related positioning strategies being used by the various players

in the market and finally decided to use the category -related positioning. The question

was to enter the technological category which was already overcrowded with other

players like Samsung, Hitachi , Carrier or to create an all together new category which

would help to create a distinct position in the mind of the consumer. LG had been

positioning its brand in the health category across all the appliances throughout the globe

and they decided to do the same with air-conditioners in India. They took the first step by

branding them as LG Health Air System Air conditioners which itself created a distinct

place for their brand in the market because people had never come across this concept of

an air conditioner acting as a health air system. ACs are priced at upper middle class with

the average income per month exceeding Rs. 40,000 Consumers had come across brands

talking about efficient ACs, programmable ACs , stylish ACs but no brand anytime

during its positioning spoke about pure and healthy air until LG established their health

positioning strategy. Its a different story that after the success of LG everyone has

suddenly discovered the hidden technology of their ACs or redesigned their ACs to

provide cool and healthy air. The baseline of the brand says “ The purest Way To

Breathe” which suggests that they have tried to tap the most basic and important facet of

human life and that is respiration. Pure and clean environment is what an individual

craves for in today’s polluting times thanks to the rapid industrialization and

development. After a hectic day’s work a person wants to relax and wants a soothing

ambience and that is what LG air conditioners provide cool, clean and healthy air. The

success of their air conditioners lies in the fact that people are becoming more and more

health conscious and when the issue is that of clean and pure environment they don’t

want to take the chances because breathing is the crux of human life and no one is going

to compromise on this aspect provided they have the resources.

B) positioning according to use: Positioning with respect to use : the people now

a days need things that can get the work done very fast because they have very less time

in their stressful and bussy life . so godrej has used the tagline “ nothing cools faster”

which can attract such kind of people. Home segment is their target market . so if we look

at it from one angle then it has a better scope because if people come tired from their job

they have to wait after putting on ther AC so that it should give cool air .this creates

frustrations for them as they have to wait. So the people will be attracted towards godrej

as it is the fastest cooling AC people don’t have to wait for it . this is the reason people go

in for buying godrej .moreover the people owing this AC feel proud in telling other

people who are having other AC that “my AC is faster than yours “. Thus the brand is

giving psychological satisfaction to the people .

C) User Driven Positioning- Hitachi has a devised a very catchy and focused tagline

for the brand “ For Those Who Seek Perfection” which clearly classifies their positioning

as user driven. ACs are priced at upper middle class with the average income per month

exceeding Rs. 40,000. As their advertising campaign suggests they are targeting that

segment of consumers which are very particular about each and every thing they do be it

their work or the appliance they own. Thus if you look at it from one angle the

positioning seems to very limited in its scope because there are not many people who

have this kind of an attitude. But the other angle will suggest that the positioning is smart

because human nature is such that it craves to associate itself with the best in the business

and perfection is that trait which every individual would like to flaunt. Anyway owning

an AC itself is a status symbol and owning an AC that personifies itself as perfectionist

only adds value to the already hyped status of the owner. Thus the brand is playing with

the human psychology with respect to its positioning and has been largely successful in

their efforts.

Advertising& Publicity

It is very important for a brand to know its target market, the buying behaviour

and the pattern of consumer so that it can effectively formulate its advertising strategy to

position its brand. The peak sales period in the room AC market is from March to may

followed by a lull in the market and then sales pick up again in the month of October.

A) LG- LG’s advertising account is handled by American MNC Lowe Lintas.

The annual advertising budget is around 93 crores for the year 2001-02. . LG has

advertised aggressively both in the print media as well as audio-visual media such as

newspapers, magazines, and T.V etc.during the months of March to may. The advertising

has mainly been mainly a mix of brand and product positioning. The initial ads

showcased the story of a senior citizen who wishes to go for a walk but is unable to do so

because of rains and then he is suggested by his daughter to take a walk in the house itself

as the LG AC would make sure that the air is fresh and healthy, with respect to its plasma

filter technology. The ad ends with the person walking on the exercising machine with a

smile on the face.

LG-Health and Happiness in every breath.

It advertisement features a small girl standing on feet of her father and father is

catching her hands and walking.

The other advertisement is father after playing with his child takes him in his

palms and starts walking because the child is tired. This shows the good health of the

father as he breath fresh air of LG Air-conditioner.

Its another advertisement featured that a father beats his son with a pillow before

going to sleep and then Childs mother and sister starts beating the father rescuing the

child. This shows their health and happiness

Then there was another Switzerland “To Hai Right Idhar” popular advertisement

where in a man is shown going to Switzerland where by he just moves from one room to

another one fitted with LG Plasma air conditioner, stating that thanks to the cool, pure

and healthy air pumped by LG Switzerland’s ambience is created right in his bedroom.

They have now started advertising about the technology aspects of Plasma filters with

respect to the many Goalkeepers commercial and a lot of print ads. Another one of their

popular ads has been that of positioning their Brand as a tool to respire on land just as an

oxygen cylinder is required to breathe under water. Thus they have captured the health

category with respect to the concept of cool, clean and healthy air with smart and

innovate adverisements. Their advertisements also talk about their service that is perhaps

the best in the business and the 0% finance options available for the consumers. They

have also been using corporate advertising where by they advertise all the products under

the LG brand. This is generally done during their anniversaries or festive seasons or slack

periods to offer gifts, discounts etc.depending upon the need of the situation. They use

banners and billboards very selectively, mostly during festive seasons and off seasons to

promote sales and reduce the expenditure on advertising but at the same time be in the

eyes of the customer. They always try to be in the news by participating in exhibitions,

fairs , sponsorships etc. They have already been declared the N0.1 Brand in the room ac

segment where they have displaced the American MNC giant Carrier Aircon that was

ruling the roost for the last ten years. It has targeted mainly to the higher income group or

the double income families of the society.

B) Godrej’s advertising account is handled by THOMSON ASSOCIATES . the

annual advertising budget is 6% of the turnover i.e. 2.16 crores .

Its advertisement features that all the family members were sitting for having

lunch . the members included grand father , grand mother , father , mother , and two

childrens . the childrens feel very cold because of godrej AC and they go and sit on the

laps of their grand parents .

Its second advertisement shows that all the family members are sitting on

different beds for watching television but as the godrej Ac gets on after few minutes the

family members start to shiver and come and sit on one bed by sticking each other.

Its third advertisement shows that corporate people had came to attend the

meeting but they go and sit by sticking each other on two-three chairs and leave other

chairs empty.

C) Amtrex Hitachi: The advertisements of Hitachi are targeted at SEC A and A1

males above 35 years of age and car owners. The advertising is being handled by

Orchard, Mumbai. The brand has a catchy tagline, ‘For those who seek perfection.

Hitachi’s advertising handled by Orchard B was aimed at developing the personality of

the brand, first with the help of humour driven T.V adds and then strong product oriented

print adds showcasing the benefits offered by the new Logicool range of ACs . Seeing the

competition in the market hotting up Hitachi has increased their advertising and

promotion expenditure to Rs 20 crore in 2001 from Rs.8 crore in 2000. The initial adds

showcased the perfectionist nature of the bald man with respect to every work being done

by him. The latter TV adds focused on the features and functions of ACs thanks to the

Logicool processor where by the bald man is shown programming the temperature of the

room that he wants on his arrival in the evening. When he returns in the evening he first

checks the temperature from the keyhole and then enters once he is satisfied with the

necessary ambience. They have advertised heavily in the months of March, April and

May talking about the benefits offered by their Logicool range of ACs. The humorous

adds have worked well for the brand because the brand awareness and recall is high. The

negative aspect has been that though people remember the adds, the message and the

positioning of the new Logicool range and the benefits offered have somewhat not

penetrate the minds of the customer on the basis of which the brand is planning to expand

its market. The reason can be that people are not exactly thrilled by the benefits being

offered and they prefer other brands like LG and Samsung which have a better image in

terms of the benefits being offered as they have established their technology and

innovation in other white goods as compared to Hitachi which doesn’t have a strong

foothold in the other white goods market. They are also trying to publicize their ACs by

distributing free ACs through the popular programme “Khul Ja Sim Sim”. The ACs are

given to the winners of the show. This has been a nice way of promoting the brand in the

off seasons. They have effectively used the in show mode of publicity which is fast

gaining momentum. Already major MNCs like Coke, Hyundai have been endorsing their

products through shows, serials and movies. Another interesting event with Jet Airways

had been organized by the company in March, where in Hitachi ACs were given to one

full planeload as well as to the best hostess on the flight, subject to fulfillment of

conditions laid down. Thus The company has been using innovative and aggressive

modes to publicize their brand.

5) Brand Personality

Brand personality is created by brands to give a human character to the brands.

This is done because now days in the age of technology and innovation each brand is

becoming a commodity and a personality of a brand helps it to distinguish itself in the

overcrowded market. Each brand develops certain values and characteristics that strike an

emotional chord with the varied range of consumers. This strategy helps to retain more

customers who sometimes go for a brand because they see their likes, dislikes and

behavior in the brand. Advertising agencies play an important role in developing the

personality of the brand. They create campaigns that are able to make the consumers

believe that the brand will has the same characteristics if they look at them from a

personified point of view.

A) LG - Lowe Lintas has tried effectively to create the personality of the brand on

the basis of its underlined positioning of health. The brand has not relied much on the

personality aspect unlike Hitachi or Carrier. This is because the base health positioning

has been so strong that they never bothered to develop this aspect of this brand. If the

advertisements of the brand are noticed they have not taken any particular model or actor

to promote the brand as Samsung has Tabu endorsing the products for the brand or the

bald man creating the personified image of perfection for the brand. LG has been using

different people to promote the brand and they have not relied much on this concept but

still the personality of the brand can be best described with the words healthy and

caretaker because a person can rest assured that LG will make sure that the air in the

vicinty is fresh, pure and healthy.

B) Hitachi -Hitachi Brand has a tagline “ For Those who Seek Perfection” which

itself underlines the personality of the brand. They have tried to personify their brand

with the help of their effective advertising campaign created by Orchard B. The series of

adds shown on T.V first developed the personality of the brand with the help of the bald

middle-aged male model who was shown to be seeking perfection in each and every work

he did. Gradually the adds shifted to the script which showed the man using a Hitachi AC

because it gives him all the benefits which he seeks like having the desired room

temperature when he returns from office in the evening thanks to the new Logicool range

of ACs from Hitachi.. It is the only brand that has used the concept of brand personality

so effectively. The adds with their humourous concept have managed to create the

personality of the brand. If only they could have managed to rope in Aamir Khan it

probably could have done wonders to the personality of the brand because he has such a

strong perfectionist image in the minds of the people that probably they wouldn’t have

had to build the personality of the brand through initial adds as they had to in the case of

the current brand endorser. Also the sales would have got further boost as compared to

current sales that have put them in the third place in the room AC segment behind LG

and Samsung.

Brand Image

A) LG – It has got the image of being the best brand in the market. Consumers

believe that it is the only brand that can do justice to the concept of cool, clean and

healthy air thanks to the Plasma filter technology. It also has the image of being the most

customer friendly brand with special emphasis being paid on the after sales service. At

LG they have a system of Happy Calls where by the consumer who has bought a LG AC

gets a call from their CRM department congratulating them on their purchase and

inquiring about the performance of the AC. Thus strong product concept along with

innovative positioning and able public relations has established LG as the most reliable

brand in the AC market.

B)GODREJ: It has got the image of growing and developing brand . according to

THOMSON ASSOCIATES product is more important as compared to its positioning . it

has the image of being the fastest cooling AC and so people are attracted towards it.

C) Hitachi : Hitachi is fast developing an image of the most innovative and

technology driven brand. Its features are making the life more and more comfortable for

the users. It is very user -friendly in spite of high-end technology. People who have

purchased the brand speak highly about its silent operations. It works at a noise level of

42 decibels where as the average for the industry is around 52 decibels .Its after sales

service is not good and is one area where it needs to improve upon.

7) Technology

Technology is that aspect of ACs, which is getting standardized in the Indian

market. The market is full of foreign brands from Japan, United States of America, Korea

that are big players in the major part of the world. All of them are spending a lot on

research and development to provide the same functions and features as the other brands

are providing so as to compete on an equal platform. LG has been able to differentiate its

technology with respect to PLASMA technology in their split ACs that have the most

systematic and reliable technology to generate pure and healthy air. They have been able

to carve out a niche for themselves in the room ac market becoming the no1 player in the

market thanks to their focused attitude and strategy towards providing health air

conditioners. All other brands have now started offering pure air benefits by

incorporating filters etc. as part of their technology.

A) LG Health Air System Window ACs

1) Unique Anti- Bacteria Filter

It removes all dust from the air in the room. It inhibits bacteria proliferation and

prevents other disease causing germs from entering the room.

2) Louvre Fins and Grooved copper Tubing

Each louvre fin has small heat radiating pores that boost heat exchange

effectiveness and improve cooling efficiency. While the grooved copper tubing ensures

maximum exposure of the inner tube surface to the refrigerant, thus enhancing heat

transfer.

3) Hydrophilic Coating

Thanks to the hydrophilic coated aluminium fins, the angle of contact between

water droplets ( that form due to condensation of atmospheric moisture)and the fin is less

than 80 degrees as in the case for uncoated aluminium. This minimises air resistance and

ensures optimal cooling performance.

4) 4-Way Air Deflection System and Auto Swing

Adjustable Front louvres help to direct air flow both horizontally and vertically,

while the air circulation vents swing constantly from side to side, directing cool air to

every corner of the room.

5) Tropical Rotary Compressor

The new Tropical Rotary Compressor not only offers more cooling during the

peak of summer, it also resists voltage fluctuation. Thereby considerably reducing power

consumption and providing more comfortable surrounding, which leads to higher

efficiency and performance.

6) Reversible Open Air Grille & One Touch Air Filter

This arrangement realizes easy ejection of air filter from the unit regardless of

installation place.

1) LG Health Air System Split Air conditioners

1) Air Purifying Filter

The filtering sytem utilizes two filters. The Electrostatic Filter removes the

finest dust particles and even tobacco,smoke and pollen.The De -odourizing filter

removes unpleasant odours, especially those caused by airbone fungi

a) Anti- Fungus Filter

It prevents the breeding of germs such as bacteria and mould which are

harmful to the human respiratory tract.

b) Electrostatic and De-odourising Filter

It removes minute dust particles by electric dust collection method and

effectivelty eliminates odours by the appliction of a high efficiency De-odourzing Filter.

c) Anti-Bacteria Filter

This function is for quick cooling.In this mode , strong and cool.air is

blown at high speeds for 30 minutes until the temperature reaches 18 degrees celsius.

4) Air Flow System

These air conditioners utilize a stremlined air fan and a unique design

which create smooth air flow from the air conditonerso that it operates under the lowest

noise level.The cross fan , stabilizer and rear guide which cause noise have been

redesigned by hydraulic engineering. The number of revolutions have been decreased

while incresing the amount of wind. With the best structure gor the air path, the amount

of friction has been decreased which has helped to reduce the noise level drastically.

5) Frost -proof Evaporator Pipe

The outdoor fan motor stops when the indoor coil temperature falls

below 3 degree celsius and restarts after the coil temperature rises above 6 degree celsius

after 90 seconds. It prevents damage to the compressor by ensuring that the refrigerant

does not freeze.

6) Auto Operation

It sets the temperature , swithches the fan speed, swings the vertical air

direction louvres up and down by a single selecton auto operation mode. All in

accordance with fuzzy logic, dependingg on the current temperature.

7) Sleep Mode Auto Control

A touch of the sleep mode button automatically programs the air conditioner

to turn off, controls the indoor fan speed and adjusts the setting temperature. Thus it

ensures a more comfortable sleep.

8) Auto Restart Function

When the power comes back after a sudden failure , the air conditioner

restarts automatically in the same operation condition as before the power cut

.

9) 4 Way Auto Swing

This function blows air simultaneously in four directions, distributing cool

air evenly across the room.

10) With the use of a newly designed compressor , humidity is eliminated to

create a comfortable atmosphere without over-cooling the room. Thus, avoiding any

abrupt, unhealthy drop or increase in body temperature.

11) Efficient Energy Utilization

The advanced grooved copper tubing and Z -louvre fins maximise heat

exchange efficiency. Thus helps to reduce power consumption and thus reduces the bills.

12) 2 Way Auto Swing

Hot or cold air gets evenly distributed throughout the room as the auto

swing function blows the air in two directions.

13) Child Lock Function

The function prevents children or others from tampering with the control

buttons on the unit.The buttons on the indoor display panel can be locked. The unit can

then be controlled by the remote.

14) 7 hour On/Off Timer

This function allows a person to set the timer from 1 hour to a maximum of 7

hours. The AC comes with a fully operational remote control..

2) LG Plasma Spliit Air Coditioners

The Plasma Air Purifying System within the air conditioner removes

microscopic contaminants and dust to eliminate offensive odours and prevent allergic

reactions. It can also be used as an air -purifying unit when the air-cooling function is off.

What is Plasma?

It is the 4th energy created by high voltage electricity (6,500 volts).It is pulse

energy which changes dust particles with positive(+) electrodes and cultivates the photo

and radical power to brake odour molecules.The air passes through the following channel

. Polluted Air--Plasma Ionizer-Case-Mesh-Dust Collector-Cover-Clean Air . Plasma

technology is the only and the most important superiority in these ACs above the simple

LG split air conditoners. All the other features are common amongst the two classes of

ACs including the fully operational remote control.

LG has been successful in creating a new category in the air conditioning

market and that is health. They have been able to redifine the scope of air conditioning

thanks to their technology which gives and creates pure air as no other Ac iin the maket

can. At the same time they have able to provide other features which give all the benefits

which are common amongst all the ACs and are expected from an air conditioner. This

combination of health and cooling has done wonders to them and has placed them at the

top of the market.

GODREJ WINDOW AIR – CONDITIONERS

It’s Window ac’s are having rotary compressor and have voltage range of

200-250 .it consumes 1300 watts of power and have synthetic filter.

Super silent compressor:

Godrej Air-Conditioner has a highly efficient Rotary Compressor

which helps to add to comfort level by keeping noise levels to it's bare minimum.

Digital Temperature Display:

The Digital Temperature Display allows people to set and view the

desired ambient temperature. So they can constantly monitor the cooling best suited to

their needs.

Memory Back up :

This feature ensures that even after a power cut, Air-Conditioner

returns back to its original setting. So people don't need to reset it.

Dehumidifier:

Gives people that crisp hill-station cooling by removing excess moisture.

12 Hour-On-Off- Timer :

Allows people to turn ON or turn OFF the Air-Conditioner at any time

preset by them. So no hassles of constantly keeping track of the functioning of the Air-

Conditioner.

3 Way Air Swing:

The Godrej Air-Conditioner comes with a 3 way Air Swing which

ensures quick and uniform cooling.

Fully Functional Remote Control:

Convenience of controlling all the functions of peoples Air Conditioner

at their fingertips.

GODREJ SPLIT AIR CONDITIONERS:

It has the voltage range of 198-264 and consumes 1800 watts of power.

Anti Bacteria Filter:

Godrej Air-Conditioner comes with a unique Anti-Bacteria Filter

that helps eliminate germs and bacteria from the air thereby giving people healthy air to

breathe.

Digital Temperature Display:

The Digital Temperature Display on the remote handset allows

people to view the set temperature.

Dehumidifier:

Gives you that crisp hill-station cooling by removing excess moisture.

24 Hour-On-Off- Timer :

Allows you to turn ON or turn OFF the Air-Conditioner at any time

preset by you. So no hassles of constantly keeping track of the functioning of the Air-

Conditioner.

Sleep Mode:

The set temperature changes automatically and increases by 2oC

after 2 hours ensuring you get a comfortable night's sleep and also maximum energy

efficiency.

Super Silent Compressor:

Godrej Air-Conditioner has a highly efficient Rotary Compressor

which helps to add to your comfort level by keeping noise levels to it's bare minimum

Hitachi Logicool Window ACs

Logicool - The Logicool microprocessor controls for unmatched efficiency.

Remocon-A full function remote that is extremely user friendly.

One Touch Intellikey -The Ac is free from complicated knobs for operating

convenience.

Kaimin Mode-It adjusts temperature to the body of the person in the night. This

helps to save power upto 34%.

Smart Sensor-It senses the temperature around the person and not around the AC

grille.

Power Saver Mode-It helps to save power upto 25%.

Auto Return-In the unlikely event of the power turning off, the Logicool

controller memorises the last settings to restart, on restoration of power.

Dialogue Window-It displays the selected mode perfectly for the convenience.

Detachable Grills-This arrangement helps to clean the ac and place them back

easily.

Hitachi Logicool Split Air-conditioners

1) Logicool - This helps to set the temperature required for a later period. It varies

fan speed automatically.

2) Remocon - It has got a full function remote which makes the operation easy.

3) Sleep Function - This helps to adjust the temperature to a person’s body

temperature through the night.Thus it also helps to save the power upto 34%.

4) Filter Clean Indicator - It gives intimation for filter cleaning.

5) Real Time Clock - It displays the time.

6) On/Off Timer. - It helps to programme the on and off sequence electronically

as per the requirements.

7) Auto Dry - This removes excess humidit, to make the room more comfortable.

8) Dialogue Window - It displays the selected mode forthe convenience o the

user.

9) Power Saver mode - It helps to save power upto 25%.

10) Wonder Flap - It ensures uniform distribution of air.

11) Powerful Mode - It accelerates cooling for quick pulldown of heat.

12) New Age Filament Filter - It cleans pollen and dust. It provides better indoor

air quality.

13) Auto Swing - It ensures optimum distribution of air flow in the room.

14) Koukin Filter - It is an anti bacteria filter which helps to purify the air.

Hitachi Logicool air-conditioners are also doing very well in the market. They

have helped the brand to increase its market share from 12% to 15% in the room AC

segment. Their use of technology is mainly restricted to make the operations easy and

convenient. They have not been able to provide any other path breaking service in

comparison to LG. The features offer only those benefits that are present in the other

brands also thus reducing the scope for individuality. Whatever features are different

from other ACs can also not act as the USP because they are not value driven and only

add glamour to the product

Chapter 10

Suggestions

.

The following suggestions have been offered to the brands in the

market regarding certain aspects that a consumer would look forward to from the brands

in the Indian AC industry. The suggestions are being offered taking into consideration the

analysis of the results of the consumer survey.

1) Environment Friendly Products: All the brands that are currently operating

in the market have launched the products that use CFCs in their compressors. The

emissions from CFCs are responsible for depletion of the Ozone layer. Ozone layer is

responsible for protecting the earth from the harmful ultraviolet rays of the sun Already

ozone layer has been depleted somewhat over the Antarctica region which has lead to

people suffering from diseases like Skin Cancer and Cataract .In the western market due

to the monetary protocol which calls for using of environment friendly goods brands like

LG, Carrier and Samsung have already started using HFCs in their ACs which do not

harm the environment in any manner. In the new millennium the brands will have to be

careful about the technology being offered in the Indian market. This is so because the

Indian consumer and the environmentalists won’t tolerate the products that offer

technology that is responsible for degradation of the environment in which they live.

2) Technology- Technology is one aspect that changes very fast in today’s world.

Almost all the players in the global market have been spending millions in research and

development to provide something extra than the other players in the market. LG has

been largely successful in creating the technology which all the brands in the market

envy. They have been able to incorporate the Plasma technology in their split air

conditioners that have redefined the image of air conditioners. This has also been the

reason for their success in India. The Indian customer would now expect more from the

brands. The players will have to launch their newer models very soon. They should soon

launch the air-conditioners that can be operated with the help of Blue booth technology

viz.. ACs that can be run through PCs or telephones etc .The players should also try to

incorporate some better technology for purification in the window AC just like Plasma is

being used for the split air conditioner. They should come out with smaller compressors

that will increase the efficiency of the air conditioners. Godrej has already introduced an

AC which can be programmed to consume only those many units of electricity as is

desired by the consumer. This kind of technology would be really of great help because

it will reduce the operating cost considerably which in turn would boost the sales. Many

people don’t buy AC because of the high operating cost and this feature would induce

them to by the AC. They should also come up with in built stabilizers that will make sure

that the ACs are not getting damaged in case of severe voltage fluctuations.

3) Pricing- Price is going to be an important factor in the success of the air

conditioning as an industry as Indian customer is very price sensitive. The Indian

government has done their job by reducing the taxation on this industry for its

development and growth. Its now up to the players to control the prices and expand their

market share. The players will have to increase the penetration level of ACs by offering

discounts, 0% finance schemes and other sales promotion schemes. Already some players

have started offering finance schemes to push their sales. Once the penetration is

increased it will help players to reduce their prices as they will be able to still earn their

profits by selling more no of units as opposed to selling few ACs at reduced prices This

will help them to have economies of scale.

4) Warranty And After Sales Service- When a consumer is buying a braded

product he expects certain benefits that he won’t get from an unbranded one. Warranty

and after sales service are part of those benefits. Once a person invests a reasonably big

amount in the purchase of an AC he wants to rest assured about the quality and the

service. Warranty is important because in case of power fluctuations compressors can get

tampered and if they need to be replaced the consumer doesn’t have to spend the money

in case the product comes under the warranty period. There is more chance of such a

thing happening in a country like India because of frequent power cuts, especially in the

north. Thus a consumer feels safe in case of a decent warranty period. In India mostly all

brands offer warranty is for one year with special warranty being provided on the

compressors for three years because of obvious reasons. After sales service is also going

to be a very important feature because the technologies are going to become common and

it will be left o the people of the company to create a better image in the minds of the

customer through their able public relations and after sales service. At LG they have a “

happy call” system through which they call the consumers who have purchased an LG

product and inquire them about the performance of the AC. This is a suitable example for

good public relations. The consumer won’t be willing to buy a product that is not backed

by strong after sales service. If the AC breaks down in the middle of the night the

consumer would expect it to be repaired immediately. LG has been giving special

training to its technicians to handle the consumer complaints effectively. This explains

why LG has got the image of being the most customer friendly brand. The other brands

have a lot of ground to cover in order to enter the good books of the Indian consumer.

5) Online Selling - This is again going to be a key issue in the air conditioning

market in the near future. It will not be important because all the sales will be through the

net but will be important because it show the attitude and professionalism of the brand

towards the consumer. Hardly 5% of the sales are being carried through LG’s website,

lgezbuy.com but consumers respect them for this. This is so because a consumer can go

and have a look at the range of products and their prices sitting at home thanks to LG’s

site. It gives him a fair idea about the product he is going to buy or wants to buy. LG has

got another website lgservie.com which gives the consumer an opportunity to place its

complaints in front of the company. This shows that they care for their customers and

want to give hem what they want rather than milking their own money. Other brands will

have to learn from LG and create their existence on net and make people aware about

their service. This will have to be done through strong marketing.

6) Social Responsibility- Every industry works within the sphere of the society

and air conditioning industry is no different. It is therefore important for the players in

this industry to follow certain rules and fulfill certain obligations towards society.

Today’s era is the societal era where each and every individual wants to create a healthy

place to live in. Consumers also appreciate those industries that contribute to the welfare

of the society by acting as a socially responsible company. The various companies will

have to take care of these aspects by playing their role to the hilt towards the various

components of the society. The companies will have to follow the environmental norms

of non-pollution and make sure that they are using environment friendly components in

their products. They will have to fulfill the consumer satisfaction by providing quality

goods and at affordable prices. Workers will have to be given both monetary and non-

monetary benefits. The companies will have to make sure that they are not indulging in

any malpractices and paying their taxes regularly to the government. Lastly they should

be contributing towards the development of India by participating in or sponsoring

literacy programs. greenery mission, AIDS welfare programs , population control

program .etc.. If they are able to create the right image of a socially responsible company

in the minds of the consumer then it would greatly help them to make permanent

impressions in the Indian AC market.

7) Retailing- The Indian consumer is very difficult to please. He wants to be very

sure about everything before he goes in for a purchase .The problem with the AC brands

has been that they have not been able to expand and control their retail network. The

brands will have to expand their network and make sure that the ACs are being treated as

other durables. When the consumers can have a look at the TVs, Refrigerators, washing

machines then why can’t they have a look at the AC they would like to purchase. A

consumer would like to see and feel the AC on which he would be spending 30,000 Rs.

He would like to see the looks and the designing of the product. The consumers want to

visit a nice and a clean showroom., and have a look at the displayed durables. The brands

will have to make these things understand to their retailers to push the sales. Even if the

retailer doesn’t have the space for the full product display he can always fit a board with

just the grilles, which is what a customer wants to see. This will help the customers to

take decisions as they will be able to see and feel the product, and this one aspect might

just influence their decisions.

Chapter 11

Conclusion

In the new millennium it will be very important for a marketer to

understand the psychology of the Indian customer with respect to certain aspects that

have been discussed in the suggestions offered. Indian Room AC market had been in its

introduction stage for quiet a while thanks to players like Carrier, Voltas, National etc.

which dominated the Indian market The products which were launched in the market

were not according to the global standards. One reason for this could be the low

penetration level of 2% and the other can be the price factor. India being a developing

country probably wouldn’t have been able to afford the high end technology. The market

entered the growth stage with the entry of players like LG, Samsung and Hitachi who

brought new technology with them that resulted in the downfall of players like Carrier

and Voltas who were giving outdated technology to the Indian consumer. Now these

players have again started launching newer models to regain the lost ground. The

perception of AC as a product is also changing in the minds of the consumer. Earlier it

was perceived as a luxury good which was targeted only at the upper end of the society.

Today it is being looked at as a good which is in the reach of the middle class consumer

also, thanks to the finance schemes being offered by the various brands in the market.

Earlier it was just looked at as a cooling machine while today people buy an AC to

improve their health, give them status and to improve the aesthetics of the room. They

also expect their AC to be user-friendly The Indian consumer is going to get more

demanding in the coming millennium The Brand that will be able to understand the

consumer behaviour with respect to their likes, dislikes and requirements and use it

accordingly in their positioning strategy will take the biggest slice of the market in the

coming millennium. As for now it seems LG is in the best position to do so but the future

can never be predicted and it is better to wait and watch as to what will happen in the

prospective million dollar Indian Room AC segment.

ACKNOWLEDGEMENT

I would like to take this opportunity to thank all the people without whose

support, this project report wouldn’t have been possible. First of all, I would like to thank

our Principal Dr. S.N. SHETTY .I would also like to thank MR.ABHIJIT BAGADE,

Executive Sales and Marketing, LG Air-Conditioners ,MR. SANJAY

PARULKAR ,Executive Sales and Marketing ,Hitachi Air-Conditioners and

MR.HIMANSHU JAIN GM instititutional sale , GODREJ for providing insight about

the brand positioning strategies of the respective brands.

I would surely like to thank the one person who has remained as the guiding force

and was there for me as a pillar of strength in my times of difficulty of formulating the

project. My Project Guide Mr. RAKESH YADAV is the person to whom I shall be ever

indebted to.

Lastly, I would always be thankful to all my friends, colleagues and family

members whose constructive criticism and unconditional help went long a way in the due

course of this project.

MEHUL JOSHI

TYBMS

Bibliography

Magazines

A & M

Business World

Business India

Business Today

Newspapers

TOI

Economic Times

Financial Express

Catalogs & Brochures of LG , GODREJ, Hitachi.

Web sites

www.indiainfoline.com

www.lge.com

www.igindia.com

www.hitachiaircon.com

www.business-standard.com

www.catalogs.indiamart.com

www.indiatimes.com

www.godrej .com

Reference Books:

Marketing Management- Philip Kotler

Brand Positioning Strategies for competitive Advantage – Subroto Sengupta

Creating Powerful Brands –Leslie de Chernatony and Malcom H.B. Mcdonald

Annexure

Questionnaire For Executive

Questionnaire For Consumers

Questionnaire For Executive

1. Why do you think people have started purchasing branded ACs?

2. Why do you think it is important to position the brand today and not the

product?

3. What is the positioning strategy of your brand?

4. Which Ad Agency is having your account?

5. What is your promotional budget?

6. What are your modes for positioning other than advertising?

7. What is the message you are trying to give through your advertisements?

8. How is the response for online selling and how do you see it in the future?

9. Who do you think is your closest competitor?

10. What is the peak season for the sale of ACs ?

11. What are the aspects that a consumer looks into before going in for a

purchase?

12. What is your target market?

13. Which region is your biggest market?

14. How do you plan to sustain your leadership the coming years as the market

has had an influx of new players?

Questionnaire For Consumers

1. Do you have an AC, if Yes, which one and why?

□ Unbranded □ Branded

If branded which one?

□ LG □ Hitachi □ Samsung □ Voltas □ Carrier Aircon □ Blue Star □ Godrej

If No, which one would you like to purchase and why?

□ Unbranded □ Branded

If branded which one?

□ LG □ Hitachi □ Samsung □ Voltas □ Carrier Aircon □ Blue Star □ Godrej

2. What do you think is the advantage of buying a branded AC?

□ Quality □ Status □ After Sales Service □ Looks □ Finance Options

3. According to you what are the aspects you considered or will consider in the

purchase of a branded AC?

□ Technology □ User convenience □ Price □ Market Standing □ Running Cost

4. Which of the ACs you think is the best with respect to the price and

performance?

□ LG □ Hitachi □ Samsung □ Voltas □ Carrier Aircon □ Blue Star □ Godrej

5. How many brands are you aware of, out of the following brands?

□ LG □ Samsung □ Hitachi □ Carrier Aircon □ Blue Star □ National

□ Daikin □ Godrej □ Voltas □ Fedders Lloyd □ Kenstar

□ White Westinghouse (Electrolux) □ All

6. Are you aware which of the following is most easily available through retailers

□ LG □ Samsung □ Hitachi □ Carrier Aircon □ Blue Star □ National

□ Daikin □ Godrej □ Voltas □ Fedders Lloyd □ Kenstar

□ White Westinghouse (Electrolux) □ All

7. Do you think ACs should also be sold like other durables and made available

for the consumers to see and feel the product:

□ Yes □ No

8. Are you aware of the current leader in the room AC market?

9. Whose advertising do you prefer the most:

□ LG □ Hitachi □ Samsung □ Voltas □ Carrier Aircon □ National □ Godrej

10. How do you perceive the utility aspect of an AC?

□ Necessity □ Luxury

11. What would you like to buy?

□ Window AC □ Split AC

12. Are you aware of any brand offering finance options for the purchase of their

product?

13. What is the ideal price you are willing to pay for a 1.5 Ton window AC?

□ 22-25 thousand □ 25-28 thousand □ 28-31 thousand

15. What aspects do you think will govern the AC market in the current

Millennium?

□ Price □ Technology □ Eco-Friendly Products □ After Sales Service

□ Maintenance And Running Cost

Index

Chapter No. Topic Page No.

1 Introduction

1.1 History Of Air-Conditioner

1.2 Air-Conditioner-The Product

2 Market Study

2.1 Industry size

2.2 Evolution

2.3 Current scenario

2.4 Demand Drivers

3 Central AC Market

3.1 Current scenario

3.2 Utility Of CACs

3.3 Market Shares

3.4 Major Players

4 Room AC Market

4.1 Current Scenario

4.2 Market Shares

4.3 Geographical Distribution Of Sales

4.4 Entry Of New Players

4.5 Evasive Action By Established Brands

5 Analysis Of Room AC Market

5.1 Complexity Of Room AC Market

5.2 Attributes Affecting Selection Of A Suitable

Room AC Brand

6 Branding

6.1 Concept &Definition

6.2 Brand Positioning

6.3 Benefits Of Branding & Brand Positioning

7.1 Introduction

7.2 Brand Positioning Strategies

7.3 Components Of Positioning

8. Analysis Of Positioning Strategies Of Brands

Through Print Advertisements

9 Comparative Brand Positioning Of LG & Hitachi

10 Suggestions

11 Conclusion

UNIVERSITY OF MUMBAI

PROJECT REPORT ON

“BRAND POSITIONING OF AIR-CONDITION”

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

BACHELOR OF MANAGEMENT STUDIES

SEMESTER-V ( 2004-2005)

UNDER THE GUIDANCE OF

MR. RAKESH YADAV

SUBMITTED BY

JOSHI .R. MEHUL

Date- SEPTEMBER 15, 2004

From: Himanshu Jain <hjain@godrej.com>

To: "'mehul joshi'" <sonal_mohite@hotmail.com>

Cc: "'rakeshyadav1109@rediffmail.com'" <rakeshyadav1109@rediffmail.com>

Subject: RE: REGARDING CERTIFICATE

CERTIFIED MAIL

GODREJCorporate Personal & Administration Dept; Plant 11,Pirojshahnagar,Vikhroli,Mumbai-400079This is to confirm and certify that Mr. Mehul joshi had visited my office to collect information on AC industry and to clarify his queries on the same. The information provided by him is true and reliable. I am also happy to say that he has a good grasping knowledge and had taken keen interest in learning about various aspects of marketing.

Regards

Himanshu Jain

GM- Institutional Sales

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