colour TVs

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The industry is also facing hectic competition from both domestic and

international players, which have resulted in thin margins. It is now more a game

of numbers, wherein pushing up sales volumes brings in profits. As a result, the

selling and distribution costs ranges between 10-15% of the sale value. The name

of the game is aggressive ad spends, and as a result, new players the market are

incurring higher selling costs.

CURRENT SCENARIO

The consumers durable industry has witnessed an all round growth in sales in the

quarter ended June'02 over the corresponding previous quarter. The CTV

production saw a spectacular 40% spurt in the quarter ended June'02, as against

-10% in the quarter ended June'01, over the corresponding previous quarter. The

index of industrial production of Consumer durable increased by 11.6% in FY

2001-02. However, as the growth was spectacular at 14.5% in the corresponding

previous year, the growth has only decelerated in FY 2001-02.

CTV, audio products, clocks and watches have also witnessed 7%, 5% and 10%

growth in production respectively. However, black and white TV production fell

sharply by 25% during the above period. The top three players in the domestic TV

market are BPL, Videocon and Onida, with a market share of 17.6%, 10.7% and

10.4% respectively in the year ended Dec'01. While BPL and Onida lost market

shares from 18.7% and 11.9% in the year ended Dec'00, Videocon actually

improved its market share from 10.5% and thereby wrested the second slot from

Onida. The entry of several new brands like Samsung, LG, Sansui, Aiwa and TCL

has eaten into the market shares of the leading domestic players, with Samsung

Electronics improving its market share from 7.9% in 2000 to 8.8% in 2001, while

LG's market share improved from 6.2% to 7.6% during the above period.

With more high-end products attracting the upper middle class, there is a growing

market for home theatres, superior sound systems, and Internet-enabled consumer

S.K.P.I.M.C.S. / Grand Project / /M.B.A. II / 2001-03 2

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durable in the niche segment. While the volumes in these segments are quite low,

the margins are quite superior. However, what attracts the MNCs more are the

growing consumerism amongst the middle class segment, which is estimated to be

around 315 million people.

DEMAND DRIVERS

Increasing disposable income, availability of institutional finance, fall in prices,

urbanization are demand drivers. Good monsoons, festival season and new

product introductions also spur demand. The penetration levels of consumer

durable are very low. Besides this, increasing income and finer financial options

and growing consumerism will act as demand drivers. For instance, the

penetration level of ACs is less than 2% that of Washing Machines is less than

4%, Refrigerators is less than 9% and CTVs less than 10%.

The convergence of information technology, e-commerce and entertainment will

lead to Internet-enabled consumer durable like TVs, refrigerators and micro-wave

ovens generating fresh demand from tech-savvy consumers. The urge to improve

lifestyle and the huge and growing middle class population is likely to spur strong

demand growth in this sector.

Major events like the World Cup can also spur demand for CTVs. Similarly, very

hot summer can spur demand for refrigerators and ACs.

RISK FACTORS

Obsolescence and products becoming out of fashion on account of new

introductions are very high. Likewise, the country depends heavily on imports for

many components and parts. Unless it can increase the local content, without

diluting the superior technological features at reasonable costs, the domestic

industry will find it tough to face the competition from MNCs. Already, MNCs

have grabbed substantial market share in many products, wherein the domestic

players were market leaders until a few years ago.


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KEY BARRIERS TO GROWTH:

The industry has not been able to achieve the expected growth potential because

of four key barriers.

- Firstly, low quality / penetration of basic infrastructure that is power, water

etc.

- Secondly, lack of real product innovation for the Indian market and the low

demand for replacement due to lack of benefit led technological advancement.

- Thirdly, the Societal factors such as low percentage of working women; and

- Fourthly, the Economic factors that is relatively high price vis-à-vis low

disposable income and lack of innovative / attractive financing schemes.

To spur market growth, the industry will have to focus on increasing the value to

the consumers by decreasing price in a highly price sensitive Indian market and

also enhancing the offerings to the consumer through quality, features and

improved technology. Building a strong brand image with respect to four key

brand drivers namely, Quality; Technology; Status and Internationalism was also

critical to push demand in the industry.

CRITICAL SUCCESS FACTORS

Constant product innovation, brand building, superior technologies are critical for

the domestic industry's survival. Intense competition has squeezed the margins,

and hence the industry has become a volume game. Only players with deep

pockets, aggressive marketing, brand recall and innovative product introductions

with latest technology will survive in the long run.

Cost competitiveness, e-integration, brand building are critical as the industry is

highly price-elastic that volume growth will be attained only through high-pitch

marketing, value enrichment and superior products.


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Also, there is a need for reducing the overall tax rate for consumer durable.

Reducing the taxes would benefit the consumer; thereby support the growth in the

market. The industry, in turn should also invest in technology, which will lead to

development of low cost products suited for the Indian markets.

India can take a dominant position in the world consumer durable industry by

effectively utilizing its large base of low cost - high skill labour force. In order to

exploit this potential, it was imperative for the Indian industry to upgrade the

scale, technology and quality of manufacturing.


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A. CATEGORY/ COMPETITOR DEFINITION

The CTV industry is fall under the category of the consumer electronics/durable,

which is a part of entertainment industry as a whole. Consumer electronics includes

Televisions (TVs), VCR, VCP and Audio Systems while Consumer Appliances

includes refrigerators, Washing Machines, Air Conditioners (ACs), Microwave

Ovens, Vacuum Cleaners, Dishwashers, etc. in Entertainment industry we can include

Multiplex, Theater, Holiday Package, Music, Games, Shopping, etc.

In each Consumer Durable and Entertainment industry number of companies are

available and they are providing quality products at a reasonable price to be remain in

the competition. The leading listed companies in TV are BPL, Videocon, Philips, and

MIRC Electronics. Similarly, Electrolux, Whirlpool, Videocon and BPL are the

leading companies in domestic refrigeration segment. In ACs, Carrier Aircon, Voltas,

Amtrex Hitachi, Videocon and Blue Star dominate the market. Leading unlisted

companies in the segment are LG Electronics, Samsung, Daewoo, Godrej-GE and

National.

The obsolescence rate is higher in Indian consumer durable industry as newer models

with latest technologies catch market fancy, adversely affecting the demand for the

earlier models. The drive for latest technology calls for frequent up gradations and

new product introductions, leading to fluctuations in cost structure.

The industry is also facing hectic competition from both domestic and international

players, which have resulted in thin margins. It is now more a game of numbers,

wherein pushing up sales volumes brings in profits. As a result, the selling and

distribution costs ranges between 10-15% of the sale value. The name of the game is

aggressive ad spends, and as a result, new players the market are incurring higher

selling costs.


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B. CATEGORY ANALYSIS

1. Category Size:

• Manufacturers say the market for colour TVs in the country will growth from the

present 5.3 million per annum to al most 20 million in the next three years.

• The 55 million black and white television users are expected to start converting to

colour TVs within two years, when the price differential between a black and

white TV and a 14-inch or 20-inch colour TV will become negligible. People

owning colour TVs from the 1982 Asian Games days are also likely to upgrade.

First time colour TV buyers and repeat purchase are expected to grow. All this

will be backed by a decline in prices as volumes take off.

• Moreover, new transmission technology and high quality entertainment softwareare likely to lure more consumers to colour TVs. Add to this, the advent of digital

transmission and DTH broadcasting.

2. Category Growth:

• The CTV industry expects a 20% growth in 2002-03.The CTV in the country

will grow from the present 5.3 million to almost 20 million sales by 2005.

Sales of Colour Television

21.6

30.6

37

4851

55.7

0

10

20

30

40

50

60

Sales Units

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

Year

Sales ( in lakh units)


(In lakh units)

Years Sales

1996-97 21.6

1997-98 30.6

1998-99 37

1999-00 48

2000-01 51

2001-02 55.7

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Growth in CTV Market:

23.25

41.33

21.03

29.73

6.25 9

.20

0

5

10

15

20

25

30

35

40

45

Percentage

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

Year

Growth in CTV Market

3. Stage in The Product Life Cycle:

Each and every product has a life cycle through which it has to pass. Usually there are

4 stages through which it passes. They are introduction, growth, maturity and decline.The times for which different products remain in one stage are different.

The first stage is the introduction stage in which the product is introduced into the

market. Here it is possible that the company may have initial losses. In the second

stage of PLC i.e. growth stage, the growth rate of the industry is very high. The

competition is increasing and the promotion expenses of companies also increase. In

the maturity stage the growth rate of the industry is somewhat constant and finally

product reaches to the last stage of decline where the growth rate is decreasing and

demand decreases. Some companies are able to get their products back on the growth

rate from the decline stage.


* Over previous year

Years % Growth*

1996-97 23.25

1997-98 41.33

1998-99 21.03

1999-00 29.73

2000-01 6.25

2001-02 9.20

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The CTV industry is in the maturity stage where the growth rate is somewhat constant

and is not growing at a higher rate. Here the marketing strategy of the company is

very much important to get more number of customers. The new features and

technological development strategies are very helpful to the company.

The Colour TV industry is running in the Maturity Stage as compared to the B&W

TV is already is in the Decline Stage. The reasons for CTV Maturity stage are:

• As the demand for the CTV is reduced as well as the growth of is somewhat

constant.

• The demand for the new technology and quality product is still there. As the old

user of the B&W TV user is switched to the CTV.

• Another factor is the competition from the local as well as the from MNCs has

been increased during last few years.

4. Sales Cyclicity:

According to Industry Sources: “ Today, China sells only colour TVs, and 30 million

units per annum. In three years the India colour TV industry will sell 20 million units

per annum. The five million B & W television sold every year will completely

convert to colour television by 2004. 7 million old technology CTV owners will also

convert, even as normal sales continue to grow at the rate of 20 % to 25 % annually.

The ctv industry is bound to grow to 20 million by 2004-05. The models will become

cheaper it will offer 14’’ and 20’’ ctv as cheap as B & W TV in a year from now. The

optimism contradicts the findings of a study by Francis Kanoi marketing research,

commissioned by Consumer Electronics & TV Manufacturers Association (CETMA)

last year. The research firm said by 2005 CTV volumes close to 10 million units.

Says CETMA Secretary general, Suresh Khanna; “the 10th plan pegs the GDP growth

rate at 8 % that may be a little optimistic. But even if we take a conservative outlook

the industry volume will be close to 15 million CTV in 3 years”. The association is

optimistic about the current year because there are signs of pick up in the economy.

Consumer spending is likely to increase with growing disposable income. With the


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football and cricket world cup sales of CTV are boomed. Price, which fell 15 to 20%

last year, would decline another 10 %.

5. Seasonality:

Generally, Urban customers make their purchase at the time of the festival or some

mega event is running.

Rural customers purchase is depend on the climate of the country, as India is an

agriculture-based economy. About 70% of the people are dependent on the

agriculture. They make their purchase after the monsoon season is over and get good

return from it.

6. Profits:

The Conventional Colour Television business is the less margin business. While the

high technology product is having a higher margins. The investment required to

establishment is comparatively higher as well as it is necessary for the company to

make continuous R & D and innovation expenditure to remain in the market.


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C. CATEGORY FACTORS

1. Porter’s Five Force Model

The Porter's five forces affect the company in the following manners:

Threats of New Entrants:

Due to the liberalization policy of the government the entry of the foreign player

has increased. Therefore, the local player has a tough time. Earlier BPL had

threats of the local player such as Videocon, Onida, Crown, Salora, etc.which has

fewer resources as compared to the foreign player. After 1991, the competitionfrom the multinationals has increased such as LG, Samsung, Akai, Aiwa,

Samsung, etc. Due to this the local players market share has been reduced. These

new entrant in the CTV industry has achieved No. 1 spot. The MNCs are having

much more competency than local players in terms of finance, marketing,

economies of scale and other.

Threats of Substitutes:

The substitute for the CTV is the entertainment industry like theater, holiday

package, music, etc. Now people want to have multiple things at the same time

and at the same place. In multiplex people not only enjoyment and rest but also

they can have a cinema, games, shopping etc. at a same time and at the same

place.

Rivalry among the Competing Seller's:

It can be seen from the present scenario about the rivalry among the firms.

Because of liberalization policy followed by Indian government there is an entry

of big multinationals in India like LG, Samsung, etc. These players are giving


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tough competition to the local players in India like BPL, Onida, Videocon, etc.

The number one player i.e. BPL for the last plenty year is now at the forth place

up to the data available of October 2002. Now the South Korean company i.e. LG

is on the number one position in the Indian CTV industry. These companies are

giving more technologically updated products to the customers than the Indian

companies can able to do. More over the price at which they are offering these

products is also very much reasonable. They are penetrating in Indian market by

appointing more and more number of dealers and starting more number of service

stations in India. The new product development process of these MNCs is also

very short.

As BPL has overtook LG, which is just a six years old firm this proves that an

aggressive competition is prevailing among the sellers. The existing companies in

this sector introduce various promotional schemes to get more and more number

of customers. They are introducing newer and newer version of CTV in which

high technology is used and it is offered at a reasonable price.

Suppliers' Bargaining Power:

The bargaining power of supplier is very much high but as the manufacturer of

the colour picture tube (CPT) are very high they are having less degree of the

control. Few CTV companies are manufacturing its own CPT or importing from

the Korea, Taiwan, China etc. In this case, the local manufacturer of the local

CPT has less bargaining power. There is lot of pressure on CTV companies to

reduce the prices of their end product and hence there is a pressure on the Picture

Tube Manufacture to reduce the prices of Picture Tubes. Some manufacturers

have already reduced their prices. Samtel is the largest CPT manufacturer in the

country will launch its pure flat CPTs by the end of the year and it also working

hard on the pricing strategy to provide the better quality at a cheaper rate.


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Domestic TVs manufacturer including MNCs, today rely on imports of flat tubes.

As on date, the landed price of an imported 21" CPT ranges between Rs.4150 and

Rs.4480. This is based on an FOB price of $62-67 depending on the country from

were the product is being shipped. Chinese CPTs are the cheapest, followed by

Taiwan, Malaysia and Korea.

Hence the suppliers bargaining power is less because of the increase competition

in final product industry i.e. CTV industry.

Buyers' Bargaining Power:

The bargaining power of customers is increasing, as the number of players is

increases in the CTV industry. Customers are having more number of choices

available now than the choices available few years ago. This allows the buyers to

bargain high. As well as the customer expectations are increased with the same

price.


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2. Category Production, Sales And Key Statistics:


PRODUCTION OF TV ( IN '000)

YEAR 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01

VIDEOCON INTERNATIONAL 2378.8 2574.2 2607 3811.6 4763.6 5058.6

BPL 641.4 598 681.9 833.2 1039.6 886.4

LG ELECTRONICS INDIA 121.1 354.2 472

SAMSUNG INDIA ELECTRONICS 266.8 411.8 529.2

SALORA 350.8 253.5 248.8 268.3 261.8 218.2

CROWN 140.7 140.7 82.2 42.3 42.3

ONIDA 154.9 93.6 64.1 48.9 51.9 39.8

PHILIPS 180 159 157 45

TOTAL PRODUCTION 7750 8600 9240 10260 11330 12000

TOTAL SALES (IN CRORES)

Particulars 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01VIDEOCON INTERNATIONAL 935.44 1071.54 1135.69 1353.52 1763.27 1741.87

BPL 823.52 914.52 1012.17 1107.04 1319.16 1094.89

LG ELECTRONICS INDIA 215.52 538.29 723.13

SAMSUNG INDIA ELECTRONICS 397.92 521.35 612.43

SALORA 183.22 57.83 79.05 90.35 92.64 74.89

CROWN 85.14 85.14 80.4 52.26 52.26

ONIDA 85.36 63.49 20.5 33.14 39.41 25.8

PHILIPS 279.5 407.75 362.57 366.23 408.54 245.42

TOTAL SALES 3643.12 4300 5500 6500 7450 7500

KEY STATISTICS

YEAR 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01

PRODUCTION ( in'000 ) 7750 8600 9240 10260 11330 12000

EXPORT QUANTITY ( in'000 ) 134.6 52 40.2 56.4 144.9

EXPORT VOLUME ( in crores) 127.6 107.3 45.9 43.2 51.3 95.5

IMPORT QUANTITY ( in'000 ) 5.6 13.8 28.6 14.8 17.5

IMPORT VOLUME ( in crores) 40.7 11.6 23.6 44.1 24.4 15.7

SALES VALUE 3643.1 4300 5500 6500 7450 7500

MARKET SIZE (VALUE) 3683.8 4311.6 5523.9 6544.1 7474.4 7515.7

DOMESTIC CONSUMPTION (VALUE) 3556.2 4204.3 5478 6500.8 7423.1 7420.2

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3. Current Scenario:

The Consumer Durable industry has witnessed an all round growth in sales in the

quarter ended June'02 over the corresponding previous quarter. The CTVproduction saw a spectacular 40% spurt in the quarter ended June'02, as against

-10% in the quarter ended June'01, over the corresponding previous quarter.

The index of industrial production of Consumer durable increased by 11.6% in

FY 2001-02. However, as the growth was spectacular at 14.5% in the

corresponding previous year, the growth has only decelerated in FY 2001-02.

CTV, audio products, clocks and watches have also witnessed 7%, 5% and 10%

growth in production respectively. However, black and white TV production fell

sharply by 25% during the above period.

The top three players in the domestic TV market are BPL, Videocon and Onida,

with a market share of 17.6%, 10.7% and 10.4% respectively in the year ended

Dec'01. While BPL and Onida lost market shares from 18.7% and 11.9% in the

year ended Dec'00, Videocon actually improved its market share from 10.5% and

thereby wrested the second slot from Onida. The entry of several new brands like

Samsung, LG, Sansui, Aiwa and TCL has eaten into the market shares of the

leading domestic players, with Samsung Electronics improving its market share

from 7.9% in 2000 to 8.8% in 2001, while LG's market share improved from

6.2% to 7.6% during the above period.

With more high-end products attracting the upper middle class, there is a growingmarket for home theatres, superior sound systems, and Internet-enabled consumer

durable in the niche segment. While the volumes in these segments are quite low,

the margins are quite superior. However, what attracts the MNCs more are the

growing consumerism amongst the middle class segment, which is estimated to be

around 315 million people.


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Current Position Of The CTV Industry Players:

CTV brands

(Jan-Dec)

2000 2001 2002(Up to Oct.)

LG 6.2 7.6 15

SAMSUNG 7.9 8.8 13.5

BPL 18.7 17.6 10

VIDEOCON 10.5 10.7 7.3

ONIDA 11.9 10.4 12

(In Percentage)

0

2

4

6

8

10

12

14

16

18

20

Percantag

LG

SAMSUNG

BPL

VIDEOCON

ONIDA

Company & Year

Market Share ( In Percentage)

2000

2001

2002(Up to Oct.)

BPL Ltd, once the leader in the CTV market, has now dropped out of the first

three slots in the CTV market share statistics, according to ORG-GFK estimates

for October '02. LG Electronics, the Korean heavyweight, now leads the market

with a share of 15 per cent, followed by another Korean company, Samsung, with

a market share of 13.5 per cent. Domestic company Onida is in third place with

12 per cent, while BPL is No 4 at 10 per cent. LG has come to lead the market on

the back of an aggressive marketing strategy, coupled with its huge array of

reasonably priced CTV models.


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Other brands in the top ten slots are Videocon with 7.3 per cent market share,

followed by Sansui (part of the Videocon group) at 6.7 per cent and Philips at 6.3

per cent.

R Zutshi, vice-president of Samsung India, says Samsung's high sales were due to

the success of its consumer promotions and a 22-model product line-up. The

company has set an internal target of 8.5 lakh in domestic sales by the end of '02,

he said.

Company officials in BPL who did not wish to be named admitted to abysmal

sales in October. Surprisingly for BPL, the dip in primary sales coincided with the

festive season bonanza the company had announced for the trade. It had wooed

dealers by announcing a scheme to take the top 125 dealers to South Africa for

the World Cup cricket finals. An official said the decline in sales was due to

production constraints, which would be overcome.

For BPL, CTVs have been the flagship business, with annual sales crossing one

million in the last three years. Industry experts say BPL may not be able to meet

sales projections of 1.25 million sets in the current financial year.

The timing is unfortunate, as the CTV industry is expecting sales to touch sales of

seven million units in 2002-03, up from 5.6 million last year, due to the Cricket

World Cup in February.

The TPG Nambiar family, promoters of BPL, is in the midst of a financial

restructuring to tackle a debt burden in excess of Rs 750 crore. It hopes to

complete the exercise by early next year and be ready to tap the cricket mania.

Companies invested Rs 15-20 crore on consumer promotions in October '02. The

Indian colour television companies sold 9 lakh CTVs to the trade in the month of

October, which was one of the best for business in recent years.


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III. ENVIRONMENTAL FACTORS (PEST Analysis):

1. Political Factors:

In the electronic goods item the role of government is noticeable. As the

growth of it depends on the government policy. If it is favorable than

company as well as consumer benefits it from it. No single party is

dominated in India therefore the stability of government is depends on

the support of other parties. Therefore, many investor and companies are

not came forward.

After liberalization the government policy is favorable towards the foreign

investor/company. Therefore, the competition from MNCs is increased. But

on the other side the local manufacture is in trouble due foreign corporations

are much more resources than the local firm.

In the 2003 budget, the government has reduced the tax on CTV. Therefore,

the prices of CTV are reduced up to Rs 1000 due to decrease in excise duty.

The Cable TV Act is also affects the Television Industry. The sales of CTV

are increasing because of the Cable television in India. In India, as per one

estimation, the total number of Cable Connection will be 6 Crores in year

2005.

Major Political Issues Affecting The Business Climate:

• National elections were held in March 1998 and a 13 party coalition

government led by the Bharatiya Janata Party (BJP) was elected with a slim

majority. The BJP has continued the economic reform program initiated in

1991 by the Congress' Rao government. The direction of these reforms, which

move India from a planned to a market economy, is likely to remain

unchanged for the foreseeable future. BJP leaders have said they will pursue

economic reforms through national consensus and have encouraged for eign

investment in core (infrastructure) sectors. They have agreed to honor all

WTO obligations made by previous governments and said they will not


http://www.domain-b.com/scripts/recommend/recommend.asp






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abrogate any treaties. BJP leaders have quietly distanced themselves from

their campaign rhetoric which advocated "computer chips and not potato

chips" in foreign Investment and a "swadeshi" (made in India) economy.

• India's dynamic, influential and confident private sector will also not yield the

gains they have made without a fight. To deal with this, BJP leaders have

projected a "swadeshi" or nationalist image, and called for India to be built by

Indians. We believe that these leaders can embrace nationalism without

antagonizing foreigners, by establishing policies that are fair and consistent,

and that address India's economic needs.

• Nevertheless, on balance, India continues to develop an attractive business

environment, and most industrialized nations are expanding their commercial

presence in the country.

2. Economic Factors

India is developing country the labour resources is very cheap and easily

available for production facilities due to the higher unemployment. During

last few years the interest rate is continually decreased. Therefore, borrowed

capital is much cheaper than other financial option such as shareholder equity.

GDP: $390 billion.

Real growth rate (1998-99): 6.8%.

Per capita GDP: $420.

Natural resources: Coal, iron ore, manganese, mica, bauxite, Chromite,

Thorium, Limestone, Barite, Titanium Ore, Diamonds, Crude Oil.

Agriculture (25% of GDP): Products--wheat, rice, coarse grains, oilseeds,sugar, cotton, jute, tea

Industry (29% of GDP): Products--textiles, jute, processed food, steel,

machinery, transport equipment, cement, aluminum, fertilizers, mining,

petroleum, chemicals, computer software.


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Trade: Exports--$34 billion: agricultural products, engineering goods,

precious stones, cotton apparel and fabrics, handicrafts, tea. Imports--$42

billion: petroleum, machinery and transport equipment, edible oils, fertilizer,

jewelry, iron and steel.

Major trades partners--U.S., EU, Russia, Japan, Iraq, Iran, central and eastern

Europe.

Inflation:- 5.4%

The current economics slow down and the stock market slumps have hit

volumes in urban areas, while better agriculture growth in FY has seen

volumes is rising in rural region.

Overall industry size of consumer durable is 7.2 $ billion.

3. Social Factors

In India, there are large numbers of middle class families. In fact, time was

when customer had a penchant for a particular brand. Cut to the current

present, while buying, a TV, one wants to go in for a ‘Golden Eye’ or ‘Eye Fi’

TV first and brand later.

And the reason are not far to fetch: Consumer awareness, spread of information, flooding of the store with numerous brands, innovation sales

push by sales person, attractive offers and finance options.

Customers’ choice is changing and they want something new from the CTV

producers. Now the Conventional Televisions are less preferred than the Flat

Screen Television, it is so because the price gap between the Conventional

Television and Flat Screen Television is narrowing down.

Many customers buy the high tech, high priced television because they

looking it as status symbol.


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Stretching Of Surface (Brand Penetration):

In $ billion

Particulars

Share of

brands

Industry

Size

Food, Grocery & Tobacco 5 134Consumer Durable 3.7 7.2

Clothing and Apparel 2.5 12.4

(Source Economic Times, 20th January 2003)

5

134

3.77.2

2.5

12.4

0

20

40

60

80

100

120

140

In $ Billio

n

Food,

Grocery &

Tobacco

Consumer

Durable

Clothing

and

Apparel

Particulars

Share of brands

Industry Size

4. Technology:

The challenge is to anticipate future technology changes and manufacture

products at a price that consumers will be delighted to pay. It also believe

manufacturers need to provide convergence between its several products and

allow for interplay through requisite protocols.

BPL Research & Development and technology initiatives revolve aroundproviding the latest technologies to consumers at the optimum prices.

The challenge is to anticipate future technology changes and manufacture

products at a price that consumers will be delighted to pay. It also believe


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manufacturers need to provide convergence between its several products and

allow for interplay through requisite protocols.

BPL use intensive technology to create in 3-D formats, which enable mass

production through superior tooling methods. Its aim is to develop technology

intelligence with appropriate products. It wants to give you the best and our R&D

center is constantly working towards that. Our strategic partners in technical

collaboration are Sanyo and Toshiba and Philips, NS, Infineon, TI, ADI,

Broadcom and Connexant for the latest technologies.

In making of television the basic work in R & D is not required. Most of the time

market requirements come as add on features. Therefore R & D concentrates

mainly on extra features. R & D efforts were dedicated towards development of

product and process technologies, improvement of product performance and

quality, and reduction in cost with a view to retaining market leadership. Several

new products were including design for single chips chasis for almost all

transmission systems in the world. In addition, BPL’s R & D initiated work with

Indian academic institutions on digital television design. In this connection BPL

have been awarded by the government for having the best in-house R & D. this

work in recognized both nationally as well as internationally. The design made by

them is meant for safety, simplicity of design and best budget televisions. At present the organization’s R & D unit for development of television does such

things as lay-out, prototype development, testing, evaluation and pre-production.

For export orders, BPL gets requirements for tele-text facility or scans circuit,

which require R & D to make add on circuit. For new product development R&D

gets input from two sources. First from domestic market requirements whereby

marketing managers determines the type of model and features required. The

second is from there collaborators Sanyo, who provides these features. While

most of the time they get the design from Sanyo, R & D also works on its own.


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C. COMPANY AND COMPETITORS ANALYSIS

I. Objectives

The objective of BPL Company is to become customer-oriented company. They want

to provide better services to its customers. They want to be at the number one spot in

this competitive world.

The objective of LG Company is also to be the number one in Indian CTV industry

by providing value for money to its valued customers. Its objective is to appoint more

number of dealers to penetrate in the urban and rural market of India. It is also having

the objective of coming with newer and newer technology in the Indian CTV

industry.

II. Business Strategy

Globally, the US and Japan are the largest CTV markets of 22mn and 7mn CTVs

respectively. By 2003, this market is likely to stagnate. The Indian market, on the

other hand, will double from its present level of 5.7mn sets to 11mn with

`customized’ being the USP (unique selling proposition) for the CTVs.

The consumer electronics sector is exposed to many realities, a few of them are

mentioned below:

• Huge surplus after meeting domestic and exports requirements. (Thus, demand is

elastic).

•

Competition due to international brands and established domestic players.• High potential in the rural sector.

• Indian market is `value-for-money’ driven and highly segmented.

• Technology is the key driver.


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• Along with a sophisticated product, customers look for services, discounts,

attractive schemes etc.

• Growth in the CTV industry is not due to government incentives, but primarily

because of innovative marketing strategies and cost cutting exercises adopted by

various companies.

To achieve the desired target, the companies have formulated various marketing

strategies to meet their specific targets. Each player may have a unique set of

strengths and weaknesses. The company will have to chalk out different marketing

strategies based on a systematic study of the underlying opportunities in the light of

existing strengths and barriers. While some have concentrated on price-cutting, brand

building, some have looked at improving distribution, quality perception, product

competitiveness, etc. Let us see how these companies have tapped the underlying

potential so far and won in this highly competitive market.

Samsung spent a huge Rs90mn for its six-week long 1998 Soccer World Cup

campaign. It was also one of the official sponsors for the 1998 Asian Games and

sponsored the Indian contingent. The company believes that in this way, they wouldconvey the message: `Like a sportsman, Samsung is also pushing old boundaries by

developing new technology and products’. Hence, its ad-line `Challenge the limits’.

With its manifest support to the Indian contingent, the company hopes to increase

interest in their products.

So far, Samsung has achieved good results due to a mixture of aggressive marketing,

increasing product portfolio, use of information technology in logistics and customer

service, enhanced productivity and fiscal management. In future, it intends to focus

on introducing new models in every category of a product line, some of them with a

unique selling proposition.


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BPL wants the customer to feel "smart" and not "cheap". Hence, BPL's strategy is to

reinforce brand values and not just put forth an offer. The company has gone beyond

just discounting thus delivering added value to the consumer and the brand. The

company wants to add a badge value to the customer. Accordingly, the company has

spent heavily on promotion in the print and electronic media (Rs80mn). In a strategic

shift in its brand strategy, the company has adopted a multi-brand strategy, by

introducing two more brands in the CTV market, one at the bottom end of the market

and another at the very top. The objective is to plug the gaps in the CTV portfolio of

BPL and use these new brands to get incremental volumes.

On offer to the consumers are hosts of schemes to choose from. During FY2002,

different models of CTVs, refrigerators, washing machines were bundled together in

the New Home Plan, Flexi Home Plan under which discounts were offered and

financing could be availed on individual product purchase. Not desiring to miss out

on family realignments through marriages, BPL has also put in place a Wedding Plan.

It also facilitates exchange offers. The idea is to offer a range of attractive schemes to

diversified user groups and fulfill the latent demand. To top it all, the company had a

slogan competition among bundled plan purchasers that promised an all expenses

paid trip to Singapore for 36 families. The company wants the customers to have a

unique experience and to this end, the company is taking 'customer relationship' very

seriously.

LG Electronics rightly understood the consumer motivations to create magnetic

products, price them strategically, position them sharply and keep making the

magnetism more potent. Having understood the finer differences in consumer

motivations, it opted for sharp-arrow 'reasons-to-buy' differentiation over the 'blanket-

all approach' taken by most of the other players. LG's strategy is to make their dealers

its partners. The company believes that its future lies in e-commerce. The objective is

to have at least one million hits on their website in 2000 and develop 2000 Internet

dealers in FY2001 in addition to the existing 3000 dealers nationwide. LG is the first

company to offer consumer electronics on its website. LG offers attractive online


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financing options. The company's ad spend has increased from Rs240mn (FY1997) to

Rs700mn this year (FY2002). The company also plans to enter into co-operative

marketing tie-ups with various companies to extend their reach.

LG Electronics has also tried to cash in on the festive spirit by launching a special

discount scheme during the Durga Puja and Diwali festivals in states like West

Bengal, Orissa and the states of the North-East. The reason – these festivals are

treated as a special occasion for buying new household items. Customers were lured

with loyalty rewards on the purchase of any LG product. The reward would enable

them to get a discount of 10% on their next purchase.

In a bid to increase market penetration, Philips is looking at strengthening its

distribution channels. The company is also looking at optimizing its counter share at

the dealer and distributor level to raise its flagging market shares. As a part of the

same exercise, the company will also weed out inefficient dealer counters and infuse

fresh blood into the trade. With its new strategy of consolidating its ranking in the

Indian market by introducing the latest technology and products, the company has

launched what is being touted as the world's most advanced home cinema solutions.

The company's marketing strategy proposes to flood the market with state-of-the-art

products, which would dispel the myth that Philips is a lower-end company. Apart

from this, it also aims at investing in branding as well as in the organization and

employees of the MNC. The key initiatives for the company include a broad and fully

integrated marketing approach as well as a brand marketing approach. The company

also aims to use technology as a competitive advantage, which is why it plans to use

star products and technology as vitality drivers.

The company plans to invest Rs300mn towards its promotional activities out of which

Rs180mn has been earmarked for the CTV segment. It has planned to introduce 15

CTV models in this calendar year.


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The Videocon group built up significant volumes in the market by taking one of the

lowest price points in the industry. A number of competitors consider Videocon

prices as the benchmark while fixing the prices of their products. The group now

proposes to project Videocon as a competitive brand, offering more value in terms of

features offered at a given price point than those from the multinational companies.

Under the new marketing strategy for the brand, Videocon will continue to be the

flagship brand, which would be flanked by multinational brands in the group's fold.

Thus, Akai, Sansui, Toshiba and Kenwood will flank Videocon with each of them

having a unique position. Videocon has so far used sub-branding aggressively as a

marketing tool for its range of colour televisions. However, due to its multi-branding

strategy, the mother brand Videocon has been losing its market share. Videocon

needs labels to service its burgeoning capacities and distribution strengths. But the

company will have a tough time managing the inherent tactical differentiation

between its brands, and their individual needs.

The 2003 cricket World Cup had proved to be a godsend to those companies who

now have an opportunity to increase their product awareness levels through increased

visibility. Companies like LG, Aiwa, Videocon, Thomson etc had come up with

grandiose sales promotion schemes. Aiwa, for example, had promised buyers that

they would be refunded a certain portion of their purchase cost depending on how

well the Indian team did at the World Cup. Thus for a 21" CTV priced at Rs8, 990,

the customer would have got back Rs6, 990 if India had won the finals.

Sony, for the first time, is cutting prices and re-defining its premium image. Their

business strategy has been transformed to, "retain price and increase features in some

cases, and retain features and reduce prices in others". The company is putting in

place a network of exclusive Sony outlets called Sony World. These outlets will

display the entire Sony range of top-of-the-line products along with those which have

been launched in the Indian market. One, these swank outlets will help Sony retain

some resemblance of a premium image without relying too much on price. Two, they


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will help the company compete with the grey market as the entire range will be

available with an additional promise of efficient after-sales service.

Despite efforts to strengthen its distribution channels by beefing up its dealer and

service network, Sony India's new strategy is still seen as being skewed towards

'value' which is an approach the company should have identified itself with much

earlier.

Aiwa will be introducing a new product range as well as a new category in the Indian

market starting with CTVs in the premium range such as the 25" and 29" CTVs,

DVDs, flat screen CTVs.

1. Rural Marketing

As majority of Indians live in villages, companies foresee the rural markets as the

markets of tomorrow. The increasing competition in the urban market and its near-

saturation has forced marketers to look for greener pastures, and the corporate sector

seems to have found them too. The recent data provided by NCAER also strengthensthe belief of the corporate in the rural market, especially after the success some

companies like Videocon, BPL have had.

But, going rural is not that much simple. Apart from the distribution nightmare of

reaching the products to rural markets, with 13 major languages and thousands of

dialects, 1,700 ethnic groups and hundreds of caste groups, arriving at the correct

manner of communication for the rural community is mind-boggling. An

indiscriminate marketing strategy with a replication of what is used for the urban

customer will not work with his rural counterpart. The latter has a different set of

priorities, which necessitates a different approach, both in terms of developing

appropriate products to suit them and using appropriate communication strategies,

which they will comprehend better.


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IRS '02 reveals that non-agricultural occupations, such as shopkeepers, traders,

government employees, bankers, teachers and so on, have grown and are around 21%

of the rural households, accounting for 45-60% of rural consumer durable purchase.

Though the land-holding farmer is still an important consumer group, there is a

decline in consumption over time.

Characteristics Of A Rural Customer

A rural customer though not well educated, has good common sense and is wise and

sharp in many ways. He/she is very conscious of 'value for money'. He/she does not

always look for cheap products but wants good quality. Rural customers sense a

patronizing attitude and erect formidable barriers to protect themselves. It is not easy

to introduce new products for them. They are bigger brand loyalists than their urban

counterparts. The rural brands are mostly recognized through symbols, logos and

colour. There is a very high degree of involvement in the purchase of any product,

more so of expensive consumer durable. A typical rural customer checks and

rechecks the expensive product he/she is buying. A rural customer cannot be pushed

too far as there is no urgent requirement for the product. Inter-personal

communication still accounts for 80% of the rural communication process in villages.This means that word-of-mouth recommendation by users and sheer familiarity

influences rural folks in their purchase decisions. During a study conducted by

Anugrah Madison Advertising Pvt. Ltd. for Philips in Tamil Nadu, it was found that

almost an entire village owned a single brand of TV such as BPL or Videocon.

Very often, dealers act as consultants and so their influence carries a lot of weight at

the point of purchase. Decisions regarding the brand of consumer durable are taken

by the men in the household, in consultation with others in the community.

Videocon, a market leader in the B&W TV segment, has tried to address itself to the

rural market by sponsoring a Hindi film-based radio program every Friday evening.

The media chosen is strategic because of the fact that radios have a high rural


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penetration level. The ad jingle heard during the program relates to only B&W TVs

and no other product.

With purchasing power on the rise especially in the rural market, Onida has adopted

an innovative arrangement to widen its reach in the mofussil areas. The company has

approached rural co-operative societies (tea garden societies in Assam, sugar co-

operatives in Maharastra and coffee plantations in Tamil Nadu) and sold them TVs at

marginal prices. These societies then sell them in villages. The TVs sold are mostly

B&W with certain modern features including 100 channels and an on-screen display

facility in Hindi. A special remote function to help explain the operations is also

available. Such a move forms a part of Onida’s long-term strategy to gain the

confidence of the rural market before the expected onslaught of the MNCs.

Samsung has drawn up a blueprint to expand its penetration in India with a special

focus on rural markets. The company has earmarked a separate budget branch-wise,

especially for rural markets. It expects more than 10% of its sales to come from the

rural markets in the year ending Dec 2000. Specially designed CTVs for the rural

markets in the 14" and 20" categories, semi-automatic washing machines and direct

cool refrigerator range are being planned by the company. All these products have

been priced below the psychological barrier of Rs10, 000.

Finance packages have been designed with zero percent loans on specific product

categories to push volumes in these areas. Rural vans have also been introduced in

each region to tour states. This van will display all Samsung products and thus

enhance brand awareness levels in the rural areas. The company has also tied up with

local distributors to showcase the Samsung range in local melas and fairs.

Salora International, which has a 7% market share in the rural market, has decided

to change tracks and fight it out in the highly competitive urban CTV market at a time

when the other television majors are trying to make inroads into the rural market. Its

sales of B&W TVs have declined from Rs350.9mn in FY1998 to Rs306.3mn in


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FY1999. Salora has made a mistake of not launching new models regularly. The

company has seven models in CTVs and about 11 models in the B&W segment. It

plans to have new launches every few months.

LG Electronics launched Sampoorna, India's first TV with a Devanagri script on-

screen display. Priced at Rs12, 900, it was affordable, consumer-friendly and aimed at

semi-urban and rural India. This has set the rural mind at ease and paved the way for

its other products in the rural areas.

However, the consumer electronics market has seen their rural marketing strategies

going awry. All these years it was felt that the rural markets could not afford premium

products, but models specially designed for the rural markets have found more takers

in the urban markets while premium models have sold more in rural areas. Rural

buyers have made cash down payments ignoring the financing options available in

places like Jodhpur.

LG's Golden Eye and Onida's KY Thunder have found more takers in the rural areas

while Sampoorna, which was launched by LG mainly for the rural areas are seeing

more buyers in the urban markets. Companies are finding the concept of rural markets

being poor to be wrong.

2. Building Brands

BPL has successfully used umbrella branding to create a certain image for itself. The

brand's underlying credo of building winning competencies, abilities and

infrastructure is a valuable asset. This, along with a huge amount of money put into

brand building, has helped the company metamorphose into a contemporary, yet an

Indian entity. Realizing that the levels of sophistication of the Indian consumer were

going up all the time, the brand made it its mission to meet these aspirations. Today,

the company is perceived as an Indian 'multinational'.


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The brand has had a strong presence at the top end and it now wants to go down the

line by introducing Evelux into selective markets. BPL has put together a separate

management team to shepherd Evelux into the market. This brand requires strong

distribution, deep penetration and service support and is primarily introduced to take

on competition from the Chinese and local brands. The company also plans to

introduce a premium sub-brand Digital BPL that will include high-end convergence

products. The mother brand BPL will operate in the middle and upper-middle

segments of the CTV market. The company plans to spend Rs2.5bn for brand

building in FY2001 as compared to Rs1.7bn spent in the previous year.

Philips, the number two CTV brand worldwide and number one in Europe, stands at

number three in the Asia Pacific region. The company aims to be in the top three

CTV brands in India by the FY2003. The company has launched 15 new color TV

models. It plans to introduce one model every second week in the price range Rs

9,000-Rs 9 lakh across the 14" to 54" range. The new models will be promoted under

the existing sub-brands -- Match Line and Power Vision. The company has changed

its pricing policy to establish itself as a premium player in the Indian market. Philips

wants its brand personality to reflect technology sophistication.

Videocon has adopted a multi-brand strategy where it promotes Akai, Toshiba,

Sansui and Kenwood along with the mother brand Videocon. Underlying the

importance of having multi-brands, the company stresses that in a CTV market;

growth stagnates after a market share of 20%. The company wants the customers to

perceive Videocon as a product with value and having the latest technology.

Videocon has used sub-branding as a marketing tool for its range of CTVs.

Mirc Electronics has planned a revamp of its brand strategy by spinning off the

existing Onida sub-brands -- Igo and Candy -- into independent brands. Igo will take

on the lower-end of the television market while Candy will look at the medium

segment. The strategy is aimed at further broad basing the product offering of the

company, which has largely dominated the top-end of the television market, across


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multiple market segments. Onida will continue to address the top end of the television

market. The Onida brand is valued at around Rs9-10bn. In a recent survey, Onida was

adjudged the second most popular brand in the country in terms of brand awareness.

The company plans to invest Rs6bn in building its brands over the next five years.

LG plans to spend 30-35% of its ad budget on giving the LG brand and its products

an edge over competition. The company has armed itself with five new CTVs. It will

also launch new commercials for different product segments. The idea is not just to

create awareness for the product but also create top of the mind (TOM) recall. After

the World Cup cricket promotions, TOM has increased to 31% and this year’s target

is 60%. The company had systematically chalked out three phases of operations:

• During the first phase (till mid-1998), the emphasis was on communicating global

credentials and establishes differentiation.

• The aim of the second phase was to build higher awareness with focus on the

"esteem factor" and differentiation.

• During the third phase of their operations (FY2001), the company wants to build

on the relevance and recommendation scores, which result in higher market shares.

• LG's brand strength lies in a great product at a honest price. The company aims at

building a large brand, which is beyond the product itself. The brand personalityrelates to consumer's perception of an ideal brand.

3. Product Customization and Differentiation

A company needs to consistently innovate and improvise its products that suit the

customer preferences and pockets. Some instances of product innovations have

remained confined to removing the frills from a CTV set. Akai, for e.g., sold its CTVs

at an unbelievable price of Rs10, 000 to lure price-sensitive consumers. This strategy

paid off for some time in the urban areas.

Onida has come out with something unique in the Indian television market. It has

launched 14" TV sets, nicknamed Candy, with colored cabinets. They come in four

colors – green, red, yellow and blue. The product is essentially customized for the 12-


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25 year olds who are increasingly looking out for personalized products. In order to

cater to their tastes, these TVs come with a wireless headphone to listen to MTV

Grind when the other members of the family are sleeping. Secondly, the remote can

be arranged for different channel configurations as per the choices of different

members of the family. Onida has come out with new and divided range of products.

The range consists of a ‘unique’ collection and a ‘techno-value’ collection. Both the

collections will have better technology products like big and better sounding TVs. A

current ad campaign for the ‘unique’ collection, which has caught everyone’s

attention, highlights the new 3D-360 degree sound technology.

The company will also be launching Duet, which will come in sizes of 14" and 20".

Colours are expected to be Black Currant, Raisen Cream and Berry Delite. Onida KY

Thunder redefines the idiot box with a powerful 650-watt sound output. This comes

with a unique and newly developed bass blaster technology, which delivers the best

sound ever, witnessed in a television. The Brand named Web Cruiser offers access to

Internet besides being a normal television. Also on the anvil is the Mail TV which

will help users access e-mail on TV. In future, video games would be distributed free

as part of their plans to boost sales.

Salora International has tied up with US-based audio and voice technology

specialist company -- SRS Labs -- to introduce a range of CTVs with SRS patented

technology. The first SRS-certified colour TVs with SRS 3D sound will be launched

in the next few months. Philips, trying to solve the problem of space, has successfully

invented a 'slim' TV, which could even be hung on a wall.

With the coming age of digital technology, today’s products may become obsolete in

the first few years of the next millennium. Already in the US, high definition TVs

(HDTVs) and digital videodiscs (DVDs) have caught the consumer fancy with sales

slated to grow at a rapid pace.


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Samsung has spent Rs215mn at its R&D centre at Noida to roll out CTVs tailored to

the Indian customer needs. The company has launched its Plano flat television range

with the DynaFlat technology in the Samsung 'Plano' range. This technology ensures

perfectly flat images that have no visible curvature when viewed from any angle and

remarkable colour purity.

BPL plans to launch a 'Convergence TV' under the name BPL Digital that will

combine the Internet and cellular services with a television's traditional features.

Korean major LG Electronics has introduced nine new CTV models, falling under

the "Golden Eye" series, incorporating the best available technology. The Golden Eye

series will have a mechanism to detect the slightest variation in any of the six aspects

of light – brightness, color, contrast, sharpness, tint and balance – and the TV will get

automatically adjusted.

The Golden Eye ‘Flatron’ has the world’s flattest picture tube, which eliminates

image distortion caused by the screen curvature and expands the effective viewing

angle to a maximum of 180 degrees. The Golden Eye ‘Swing’ model has an auto-

swing concept. Introduced for the first time, it permits a rotation of 15 degrees in

either direction for added convenience and better viewing. The Golden Eye ‘Pride’

incorporates the ‘Nicam’ stereo, which gives crystal clear CD quality sound. The

Golden Eye ‘Supreme’ has a multi-language on-screen display and Nicam stereo.

With the new yuppie listener’s tastes driven by countdown charts, TV has become a

medium of incidental listening. The A&M magazine, in one of its market

examinations, has described the make-up of a typical young music listener. He/she

wants music, which sounds good, real and is loud. No wonder then those companies

has not hesitated to exhibit their superior quality sound in their advertising

campaigns. There is a Samsung ‘Super Horn’ for every Videocon ‘Bazooka’ with

`life-like’ sound features.


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Aiwa is also looking at launching the latest technology to enter the Indian market in a

big way. The company plans to introduce the Pure Flat Television in India, which has

been very successful in Japan. Aiwa will first look out for companies, which will

provide the key components for marketing the product. Another technology

demonstrator from Aiwa, the Plasma Display Panel, is also likely to make an entry

into India. However, this product has not been commercially successful.'

4. Distribution Network

A strong distribution network is important for any industry. Not only does it

guarantee a country-wide reach for a company’s products but is also necessary for

providing good after-sales services. In today’s competitive scenario, what needs to be

emphasized is a strategic partnership between the company and its dealers. This

necessarily means that the company would not abandon its dealers in times of distress

and instead provide incentives for liquidating their stocks.

LG Electronics has acknowledged the importance of a well spread-out network

within a short span of time. In FY2001, LG sold in 1,800 towns and cities with a

population of 100,000 and above. LG changed the rules of the game in just four-and-

a-half months. It put the onus of credit management on the dealers. This measure not

only saved capital but also indirectly provided an incentive to the dealers to make

intelligent demand projections and make the products move faster off the shelves.

This helped the dealers maintain their own cash flows. The company currently has

3,000 dealers nationwide and plans to develop 2,000 Internet dealers in FY2001. This

will happen across 18 branches and 76 franchisee service centres.

Samsung has a widespread service network which includes 123 exclusive service

centres (will be increased to 200 by FY2001) and 200 distributors in any town withmore than one lakh population, besides Noida and 13 metro branch locations which

service all Samsung products. The company is expanding its dealer network to 2,500

from 1,750 this year with a separate strategy for the rural markets. There has been

hardware and software standardization among all the service centres, with uniform


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spares prices, and a monitoring system which ensures that customer calls are serviced

within 24 hrs, 7 days a week.

Videocon has built up one of the strongest distribution networks in India. The

company is currently implementing a large ERP system, costing Rs100mn, which

will help in integrating the manufacturing, marketing, procurement, distribution

services with the corporate office.

Philips, in a bid to increase market penetration, is increasing the number of channels

distributing its product range. The company has increased its channels of distribution

to include five levels as opposed to the erstwhile two-layered -- dealer and distributor

-- set-up supplying to retailers. While the high-end televisions and audio products will

be stocked with 1,300 dealers nationally, the high volume mass products will be sold

through 100 distributors. In a low-cost effort to increase penetration, the distributors

will be expected to appoint sub-distributors to reach out to the remote pockets within

the area they are servicing. These 100 odd sub-distributors will work on an advance

payment basis. The company has also initiated various programmes including training

its dealers in 31 cities across the country.

Further, PIL will establish a dedicated set of 100 institutional distributors to address

institutional demand. By the end of June 2000, these distributors will take care of

bulk purchasers such as hotels, cross-promotions and the defense segment. The new

structure is expected to increase Philips’s retail strength to 5,000 from the current

level of 4,000 retailers by the end of this year.

Sony is putting in place a network of exclusive Sony outlets called Sony World that

will display the entire Sony range of top-of-the-line products along with those which

have been launched in the Indian market. There are eight such outlets at the moment,

but the company is planning to add four or five every year.


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Till last year, limited distribution reach had restricted the company's expansion into

smaller towns. Initially, Sony had relied on distributors mainly because it was easier

to handle one party in an area rather than too many dealers and payment schedules

were more regular. The flip side is that the distributor is also an additional

intermediary in the chain and tends to distance the company from the consumer.

Baron's aggression forced the company to take a re-look at its distribution. In October

1998, Sony sold directly to 23 authorized dealers, with the remaining 60 towns being

serviced by distributors. Today the company claims to have put 1,500 authorized

dealers in place and expects to increase the number to 2,000 over the next two years.

Almost 75 per cent of these would be in smaller towns. The company has some 34

distributors, which are gradually being replaced with authorized dealers.

All BPL dealers are linked via VSAT nodes, ensuring online availability of

information on inventory status and sales movement. This has allowed its production

facilities to coordinate with the supply chain in accordance with latest demand data.

Dealer relations have also improved, with money being recovered faster than ever

before.

Onida has 5,000 main and 3,000 sub-dealers across the country. The company has

restructured the entire distribution system and has also taken over the distribution

activities of northern and the eastern India from its group companies.

5. Research and Development

While the manufacturing of most of the durable are neither capital nor technology

intensive. The need for constant product improvisation makes R&D a key factor in

the consumer electronics industry. The entire development of research and

technology for Mirc (Onida) is done in-house through a division called Onida

Technologies. Mirc is likely to provide a separate focus for this division in the

coming months.


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LG has gained the 4th position in CTVs with an 11% market share and a sale of

0.13mn units. Today, it is 862-strong with 30 people devoted solely to R&D. Every

product is manufactured and packaged under one roof in a state-of-the-art factory at

Noida.

Understanding the importance of customization, the company intends to target the

hotel industry and manufacture TVs, which fulfill their specific needs. LG has

decided to design a TV with specialized features, which would make it possible to

block certain functions of the set, like volume etc, and fix internal settings so as to

allow only minimum adjustments with a remote. It introduced a TV having a Hindi

on-screen display facility, which would cater to the less sophisticated buyer in the

rural market.

Samsung has a Rs215mn R&D centre at Noida to roll out CTVs tailored to the Indian

customer needs. With the joint R&D efforts of Korean and Indian engineers at Noida,

the company has come out with Metallica, which was launched globally a few months

back and is now customized with special features like 360 watts of power. Other

features include on-screen-graphic equalizer, transparent on-screen display, five-

language OSD and game mode. Philips has tried to understand the problem of space

and has invented a 'slim' TV, which could even be hung on a wall.

In the near future, media technology will merge to give us products, which will

combine the features of a TV and a computer. Already, Videocon has taken the first

step in launching a ‘computer’ TV in India. Baron International (marketers for the

Aiwa brand) is planning to launch a product that would combine the resolution power

of a TV with the maneuverability and elasticity of a PC monitor.

With the expected growth in multi-media services, Thomson is gearing up to launch

the next generation TV sets in India for which it has tied up with global majors like

Alcatel and Microsoft for the purpose. These would offer a host of multimedia

services such as electronic program guides, Internet access and inter-activity features.


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Thomson is already preparing for the future when direct-to-home broadcasting would

no longer be a source of controversy and signals will be telecast in the digital mode.

However, the product in the Thomson stable, which will stand out, will undoubtedly

be the plasma CTV which aims at enhancing performance by way of reduced power

consumption, improved brightness and picture quality. CTV models of 29" and 33"

sizes with features like super flat shape, flicker proof, zero distortion and computer

compatibility are also in the pipeline.

By adopting a technology savvy image, the company hopes to reposition itself so as

to change its image of a company in the business of production and marketing of CE

products to a virtual provider of all kinds of products and services. The only

imponderable will be the price. With such high prices, these products will attract only

those for whom quality matters more than money. Thomson has also recently

introduced the smallest CTV with a 10" monitor having a unique splash proof panel

and remote control. This product is targeted at people who are generally on the move

and can be installed in any room and run on DC or a car battery.


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III. Differential Advantage/Resource Analysis

1. Customers’ loyalty:

BPL is the very old CTV manufacturing company in India. It is having a good brand

name and very strong customer base. The products offered by BPL is not that much

different from the competitors. They are producing the same type of product for long

time. But as the competition increasing in this sector it is necessary for BPL to come

up with newer and newer technologically correct colour television in the market. The

products are of good quality but it is not having more variety of products to offer.

2. Ability to conceive and design new product:

In making of television the basic work in R & D is not required. Most of the time

market requirements come as add on features. Therefore R & D concentrates mainly

on extra features. R & D efforts were dedicated towards development of product and

process technologies, improvement of product performance and quality, and

reduction in cost with a view to retaining market leadership. Several new products

were including design for single chips chasis for almost all transmission systems in

the world. In addition, BPL’s R & D initiated work with Indian academic institutions

on digital television design. In this connection BPL have been awarded by the

government for having the best in-house R & D. this work in recognized both


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nationally as well as internationally. The design made by them is meant for safety,

simplicity of design and best budget televisions.

At present the organization’s R & D unit for development of television does such

things as lay-out, prototype development, testing, evaluation and pre-production. For

export orders, BPL gets requirements for tele text facility or scans circuit, which

require R & D to make add on circuit. For new product development R & D gets

input from two sources. First from domestic market requirements whereby marketing

managers determines the type of model and features required. The second is from

there collaborators Sanyo, who provides these features. While most of the time they

get the design from Sanyo, R & D also works on its own.

In contrast LG offers wide range of CTV in the market to capture more number of

customers from the market. It has introduced wide variety of products in very short

time. It is the first company, which has introduced “Golden Eye” television in Indian

CTV market. It is also the first company, which has introduced “Flat Screen”

television in Indian CTV market. LG also cash on the foreign brand, as it is the

multinational company form South Korea.

Another multinational company Samsung is also cash on the foreign brand and now

having much more stronger customer base in India.

Both LG and Samsung run their promotional schemes very frequently and try to be

there in the minds of customers. But BPL is not running the promotional campaign in

the market. Moreover the advertisement expense incurred by LG and Samsung is very

higher than the Indian corporate BPL. Moreover advertisement of BPL is confusing.

For example, the advertisement of BPL Quandra Point Focus television is not

conveying anything to customers, as the communication was not clear in the

advertisement.


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The technology advantage is not with BPL, as they are not producing highly

technologically correct CTV as compared to LG and Samsung. They are coming with

newer and newer design in the market.

Some Korean companies such as LG and Samsung are having mastering in

manufacturing large number of color picture tubes which is much more cheaper than

others because of they are importing from Korea where it is produced in very large

number and having the advantage of economies of scale. As well as they have vital

financial and marketing resources, which enable them to compete globally. They

have ability to

3. Ability to deliver service:

Here company should able to provide the after sales services to its customers as early

as possible. Customers should not get frustrated. They should get required service at a

time when customers require it.

For this purpose LG have decided to appoint more and more number of dealers and

service centers to satisfy its customers. While BPL and other local players do not

have that much ability to serve the customer needs.

4. Ability to finance:

The multinational companies i.e. LG, Samsung, etc has very good financial condition

as they are getting the finance from their home country. Because of this, they can

spend more on promotional schemes to attract more and more number of customers.

While the financial condition of local players is not that much sound and thus cannot

able to spend more on promotional schemes.

5. Will to succeed in this sector:


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BPL is the oldest player in the CTV industry and had number one spot till last year

but now it is on the forth place. It is because of the foreign player like LG who want

to be a number one player in Indian CTV market. They have ability to produce, have

financial strength, have large distribution system and thus we can say that it has that

will to succeed in this market. BPL also has this ability but it has some internal

problem in the top management and also having some financial problems. It is having

a debt burden in excess of Rs 750 crore.

D. CUSTOMER PROFILE:

Customers are very important for any company. Without the customers not a single

company can survive in this competitive world. Moreover getting the customers is not

the only task of the company but it has to maintain its customers for the longer time

to get more and more business out of that also.

Here in the consumer durable industry the customers are very conscious of what they

are purchasing because they will use it for a considerably long period of time.

Moreover Indian customers are very price conscious and also want to have value for

their money. They want good quality product.

In this industry customers are making more inquiry before they actually make

purchase. This is because of the reason given earlier in this chapter. Most of the

customers are getting information about the desired product from the relatives,

neighbors, dealers, etc. Thus the word of mouth promotion is very much used in this

industry, as customers believe what their relatives says not what company is saying.

There is a very high degree of involvement in the purchase of any product. They want

each and every information related to the product.


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The customer in this industry mostly purchasing this type of products at a time of off-

season, festival, etc. Like in the cricket world cup fever the sales of color television is

increased. To attract more number of customers in that time each and every television

company has announced their promotional schemes like,

LG had sponsored cricket world cup and used the promotional schemes like

purchase LG’s product and see the world cup in South Africa.

Videocon had announced the scheme in which customer would get at least VCD

worth of Rs.4000 and maximum prize is worth of Rs. 4,00,000.

Onida had announced world cup to world cup 4 years extended warranty.

Samsung had also announced India first offer in which customer could have won

the prizes worth of Rs. 25 crores.

Customers are purchasing these products mostly from the authorized dealers, as the

after-sales service is very much important in this sector. They compares various

products available in the market of various company and select the best product that

gives them value for money. Numbers of dealers are available in near area of

potential customers and hence dealers also offers additional offer other than the

company is providing to attract more and more customer.

I. How they choose the product?

As per the survey done by us various factors that customers are considering while

making any purchase are like,

Brand name

Perceived quality

Price

After-sales service

Features availability

Promotional offer

Finance available

II. What do they buy and how do they use it?


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Actually, the customer is buying the enjoyment in terms of the CTV. For buying CTV

the extensively search it and then actually buy after they fully satisfy with that brand.

As CTV falls under the category of consumer durable product, they see it as long-

term value providing, because the repeat purchase will after many years.

III. Where do they buy?

Customers are purchasing this type of products from the authorized dealers because in

consumer durable product the service aspect is very much important and that’s why

they are putting more emphasis on the purchase from the authorized dealers.

Sometimes dealers are providing more discounts to its customers to get more sales.

They are giving their own discount to customers to get faster sales. Thus the

distribution channel for the consumer durable company is very important.

IV. When do they buy?

Customers are mainly buying this CTV at the time of festival or when some mega

events are taking place like Cricket World Cup. They are purchasing such products at

the time when companies are offering more discounts to its potential customers or

when they running any promotional schemes.

V. Why they prefer a product?

Customers prefer television for mainly entertainment purpose. They can have

programmes, pictures, etc in home. There is variety of options available. They prefer

this because other entertainment options are very much costly and require extra time

and efforts.

VI. How they respond to marketing programmes?

They respond to the marketing programmes positively as the Indian customer are very

much price conscious and more attracted to the promotional offers provided by the

various companies. They purchase products when such offers are introduced and also

postponed purchase till such type of promotional schemes introduced.

VII. Will they buy it again?


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Television is a consumer durable product and last for a long period of time, may be

for 10-12 years. Hence the same customer will not purchase it very soon in the future

but now customers wants to have a new television set after a short period of time, it

may be 4-5 years. But the time for repurchase is very long as compared to FMCG

goods.

If the experience of having the particular brand of television is good then that

customer will buy that particular brand of television in his/her future purchase. Hence

the product quality and the after-sale service are very important in television industry.

VIII. Long-term value of customers

All Customers purchasing the CTV would like to get value for their money. They do

not want to go at the service center too often to repair their CTV. They want non-stop

entertainment. Thus company should able to give the value for money to its

customers to get favorable word of mouth advertisement. It should thus provide

quality product, which can able to satisfy the needs of the customers.

IX. Segmentation:

The CTV industry can be put in various segments. It can be based on the size of

colour television or on the bases of type/features of television or region wise.

The segments as per size are,

14 - inch

15 - inch

20 - inch

21 - inch

25 - inch

29 - inch

34 - inch


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The segments as per type/features of television,

Black & White television

Colour television:

• Conventional television

• Flat screen television

• Internet television

• Golden eye television

The segments as per region wise,

Urban

Rural

Analysis:

The 20’’ and 21’’ colour television segment is very important for the companies in

the CTV industry, as it is the fast growing segment in the industry. It is the highest

selling segment and the growth is also very high. There is also growth of 29’’ colour

television as there is the price reduction by mostly all the company.

The rural segment is also growing at a very fast rate. No company has yet able to

penetrate in this market. Rural customers are very price conscious and can be

attracted by price reduction.

The growth of Flat Screen television and Golden eye television is also very good.

Internet television is also growing as it is positioned as cheaper way to access

Internet.


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E. CATEGORY AND PRODUCT SALES FORECASTS

According to Industry Sources: “ Today, China sells only colour TVs, and 30 million

units per annum. In three years the India colour TV industry will sell 20 million units

per annum. The five million B & W television sold every year will completely

convert to colour television by 2004. 7 million old technology CTV owners will also

convert, even as normal sales continue to grow at the rate of 20 % to 25 % annually.

The ctv industry is bound to grow to 20 million by 2004-05. The models will become

cheaper it will offer 14’’ and 20’’ ctv as cheap as B & W TV in a year from now. The

optimism contradicts the findings of a study by Francis Kanoi marketing research,

commissioned by Consumer Electronics & TV Manufacturers Association (CETMA)

last year. The research firm said by 2005 CTV volumes close to 10 million units.

Manufacturers say the market for colour TV in the country will grow from the present

5.3 million per annum to almost 20 million in the next three years. The 55 million B

& W TV users are expected to start converting to colour TVs within two years, when

a B & W TV and a 14 – inch or 20 – inch colour TV will become negligible. People

owing colour TVs from 1982 Asian Game days are also likely to upgrade. First time

colour TV buyers and repeat purchases are expected to grow.


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A. AN INTRODUCTION TO BPL (I) LTD.

BPL is the flagship company of the Rs 30bn BPL group. The Company was

incorporated as a private company British Physical Laboratories Ltd. in April 1963.

The company started of as manufacturers of hermetically sealed panel instruments in

Kerala, in collaboration with BPLT Instruments Ltd., UK. Later in 1979, they started

manufacturing plain paper copiers. Gradually by 1982, the company diversified into

consumer electronics. It had its maiden public issue way back in March 1994. Though

the company was successful in consumer durable, it wanted a manufacturing base in

Northern India to minimize distribution and transportation cost. Subsequently the

company took over Uptron in 1996. In 1997, the company diversified into

manufacturing of alkaline batteries and set up facilities for the same in Karnataka for

Rs1.2bn. BPL once had nearly one-fourth share of the domestic television industry. It

remained the leader, but with figures considerably smaller.

The ORG-MARG data on the color television (CTV) industry during 2001 gives BPL

a volume share of 17.6 per cent ahead of its closest rival Videocon, at 10.7 per cent.

But the fall in its share of the pie continues as it surrendered one per cent share during

the course of the year. The downward trend has been consistent since 1999, when its


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share slipped below 20 per cent. And now they have lost the market share to the

Korean Company LG and slipped down to second position with 13.0% of market

share.

BPL Business Summary

Incorporated in 1963, BPL was promoted by T P G Nambiar of the BPL group. Other

group companies include Electronic Research, BPL Systems and Projects, BPL

Sanyo, Dynamic Electronics, etc. The company came out with a public issue in

Mar.'94. Products manufactured by BPL include televisions, test and measuring

equipments, medical electronic equipments and office automation products. The

technical tie-up with Sanyo, Japan, has helped the company widen its product range

making it a formidable player in the Indian electronic industry. BPL is the only

company to be awarded with the BZT reputation for export to Germany.

BPL was granted recognition as an export house in 1993. It had won the Elcina award

(1991-92) for export of electronic equipment like color TVs, oscilloscopes, copiers,

PCBs, etc to competitive markets of GCA countries. Nokia Phones has appointed

BPL as its local distributor in India.

It was awarded the Certificate of Merit for outstanding export performance in

consumer electronics from the Export Promotion Council in 1995-96. In 1996-97, the

company successfully completed an export-oriented project for the manufacture of

alkaline batteries at a cost of Rs. 120 crores at Dobaspet, Tumkur district, Karnataka,

with technical collaboration from Sanyo, Japan. In 1998-99, BPL Automation, one of

the subsidiaries of the company was amalgamated with the company. The

amalgamation benefit the company in terms of better control over the affairs of

plastic moulding and tool room division. BPL is India's first television company to

cross the one million mark (sales in volume). It continues to retain its No 1 position in

the Colour television market across all segments with a composite retail market share

of 19%. BPL acquired 2 crore equity shares of BPL PTI Limited which was engaged

in the manufacture and marketing of dry cell batteries. This company is now a


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subsidiary of BPL with effect from Aug.'00. During the 4th qtr of 2001-02 the

company introduced the first integrated Home Theatre Solution with 4000 MW

PMPO output.

B. CORPORATE OBJECTIVES OF BPL (I) LTD.

"BPL is committed to achieve a leadership position in all its groups through

utilization of the best and most appropriate technologies, applying the finest

manufacturing disciplines and most efficiently marketing high quality products and

services to consistently give its customers the best value for their money."

The main objective of BPL is to deliver superior value to investors and

customers over the long-term. And the mission is strengthened by 4 core beliefs:

Dedication to manufacturing.

Complete control over core components & technology.

Nurturing & leveraging a powerful brand

Pursuing ethical business practices.

C. DIVISIONAL OBJECTIVES OF BPL (I) LTD.

“At BPL, we are dedicated to bringing the best of technology and products to meet

the needs of consumers and make their lives comfortable. We make televisions,

refrigerators, washing machines, microwaves, audio equipment and many more

products that provide entertainment and facilitate the business of life.”


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D. MARKETING OBJECTIVES OF BPL (I) LTD.

The company’s product is over 9 million homes across India. The aim is to make

BPL the first choice of consumers all over India. That is why quality is a priority

and constant innovation, a quest. Our consumers expect the best from us. Living upto their challenges make us strive to improve, innovate and perform constantly,

sustaining growth and profitability. The very nature of the company’s business and

the lengths to which we go to bring you the best from the world, have earned us the

reputation of being an "International Indian".

Its collaborators are Sanyo, Toshiba, Octel, Media One and Nokia among others,

whose expertise and international experience have helped us to provide the best in

India.

E. SECONDARY OBJECTIVES OF BPL (I) LTD.

To penetrate in the rural market

To come up with high technological products

To be on both high end price and low end price products

To reduce cost of final product

F. SWOT ANALYSIS OF BPL (I) LTD.

The SWOT analysis for BPL Company is as under:

Strengths:

• Reputed Brand Name in the market. As the company is local, therefore people

are very much trusting on the company.

• The most preferred CTV brand.

• The "No.1 Durable Brand on Ad Recall"

• Emphasis on Research.

• Successful in other consumer durable like Walkman, Music System etc.


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• Having an in-house production facility (Vertically integrated).

Weaknesses:

• Not much range of products.

• Low advertising expenditure.

• Lack of New Product Development process.

Opportunities:

• Large untapped market to be covered (Rural Market).

• Can use brand name for other market penetration.

• Can also use its brand name for other electronic businesses.

Threats:

•

New entrants of MNC companies.• Erosion of market share.

PRODUT/BRAND STRATEGY ADOPTED BY BPL (I) LTD.

BPL wants the customer to feel "smart" and not "cheap". Hence, BPL's

strategy is to reinforce brand values and not just put forth an offer.

The company has gone beyond just discounting thus delivering added value to

the consumer and the brand. The company wants to add a badge value to the

customer. Accordingly, the company has spent heavily on promotion in the print

and electronic media.

In a strategic shift in its brand strategy, the company has adopted a multi-

brand strategy, by introducing two more brands in the CTV market, one at

the bottom end of the market and another at the very top. The objective is to plug

the gaps in the CTV portfolio of BPL and use these new brands to get incremental

volumes.


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On offer to the consumers are hosts of schemes to choose from. During

FY2002, different models of CTVs, refrigerators, washing machines were

bundled together in the New Home Plan, Flexi Home Plan under which

discounts were offered and financing could be availed on individual product

purchase. Not desiring to miss out on family realignments through

marriages, BPL has also put in place a Wedding Plan. It also facilitates

exchange offers. The idea is to offer a range of attractive schemes to diversified

user groups and fulfill the latent demand. To top it all, the company had a

slogan competition among bundled plan purchasers that promised an all

expenses paid trip to Singapore for 36 families.

The company wants the customers to have a unique experience and to this

end, the company is taking 'customer relationship' very seriously.

BPL is dedicated to bringing the best of technology and products to meet the

needs of consumers and make their lives comfortable. It makes televisions,

refrigerators, washing machines, microwaves, audio equipment and many moreproducts that provide entertainment and facilitate the business of life.

You will find BPL’s products in over 9 million homes across India. It’s aim is to

make BPL the first choice of consumers all over India. That is why quality is

a priority and constant innovation, a quest. Consumers expect the best from it.

Living up to their challenges make us strive to improve, innovate and perform

constantly, sustaining growth and profitability. The very nature of our business

and the lengths to which we go to bring you the best from the world, have earned

us the reputation of being an "International Indian".


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BPL’s collaborators are Sanyo, Toshiba, Octel, Media One and Nokia among

others, whose expertise and international experience have helped it to provide the

best in India.

Most interestingly, BPL is a future-oriented company. Having realized that

increases in bottom line were not going to be achieved by any increase in the

selling price of television sets, the company embarked on an ambitious exercise to

cut inventory. By linking the shop floor more closely to the shelf space at the

dealer's end, the company figured that if it replaced the goods sold faster

than before, it could save interest costs. BPL can slash its inventory from Rs 1

billion to Rs 500 million, then it can save Rs 75 million on interest each year.

That's a straight Rs 3 per share increase in pre-tax profits. And the indications are

that the company has done precisely this in the first half of the current financial

year.

BPL has successfully used umbrella branding to create a certain image for

itself. The brand's underlying credo of building winning competencies, abilities

and infrastructure is a valuable asset. This, along with a huge amount of money

put into brand building, has helped the company metamorphose into acontemporary, yet an Indian entity. Realizing that the levels of sophistication of

the Indian consumer were going up all the time, the brand made it its mission to

meet these aspirations. Today, the company is perceived as an Indian

'multinational'.

But more on the brand synergy, it simply sells BPL. It sells the brand, it sells the

image, and it sells perception. So when BPL advertises for mobile phone in

Bombay, sales of colour TVs rise. When BPL advertises washing machines,

refrigerators sell. BPL's power of advertising voice as a group has finally reached

that critical mass where it is able to outsell Indian and international

competition because it is a highly visible brand. If you extend this logic, single


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product companies are likely to get edged out as multi-product single brands

start capturing market share.

The company also plans to introduce a premium sub-brand Digital BPL that will

include high-end convergence products. The mother brand BPL will operate in the

middle and upper-middle segments of the CTV market. The company plans to

spend Rs2.5bn for brand building in FY2001 as compared to Rs1.7bn spent in the

previous year.

A Company needs to consistently innovate and improvise its products that suit the

customer preferences and pockets. Some instances of product innovations have

remained confined to removing the frills from a CTV set.

BPL plans to launch a 'Convergence TV' under the name BPL Digital that will

combine the Internet and cellular services with a television's traditional features


information on inventory status and sales movement. This has allowed its

production facilities to coordinate with the supply chain in accordance with latest

demand data. Dealer relations have also improved, with money being recovered

faster than ever before.

They produce excellent quality products and keep changing their models every

few months. This has an interesting impact where you least expect it: the dealer.

Just when the dealer is convinced that what a great quality this BPL model with

Nicam stereo is, BPL goes and launches the FQR 21 inch which is possibly the

best set that you can get for reasonable money in India. The dealer gets only a

three-week credit period from BPL so he doesn't like to see the models sitting


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on his shelf-space. The faster they move out, the better. And because the

quality is right, the brand positioning is right, the models move. Just when the

dealer is absolutely comfortable with the new model, BPL goes one step further: it

introduces a newer model with better features. So the dealer stocks more and sells

more. BPL does not offer the best margins to dealers among the range of

colour TV manufacturers in the country and yet these dealers end up making

more money from the sale of BPL CTVs. So if the dealer push is right, the

manufacturer does well. This is BPL's big plus.

SUPPORTING MARKETING PROGRAMS:

A. BRAND COMMUNICATION

Consumers are constantly interacting with its brands in different environments, for

different purposes. To make this interaction memorable and delightful, its brands are

presented with high impact communication that is larger- than-life.

BPL has always given importance to brand communication. Consumers come across

advertisements for its brands everywhere - television, print, posters, Internet and

through sponsorships and goodwill campaigns. With the changing face and speed of

communication today, BPL focused on using media specific to audiences.


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B. ADVERTISING

Advertising its products is an integral part of its brand communication and making

the brand visible in daily life, is its challenge.

BPL experience and initiatives in brand communication through the years have

effectively produced a team of communication specialists, who sustain the brand

vision of the company.

BPL use television, the most powerful visual medium in the country today, as the

primary medium for advertising its brands. The huge growth in television

ownership and the arrival of Internet provides many opportunities for one-to-one

communication. BPL's first commercial for BPL colour TVs was broadcast in 1982,

the very first colour TV commercial in India.

C. CUSTOMER CARE

BPL’S service mission is to support the vision of the company becoming the most

customer-oriented company in the country, by building a proactive service

organization that continuously strives to create customer satisfaction, by internalizing

the best practices of customer relationships management.

It has invested 6,500 man-days and Rs.2.6 million to train our technical and non-

technical customer care employees. Today, BPL has 280 exclusive authorized service

centers, 30 BPL service centers, (18 direct branches & 12 supervisory branches) and

5 call centers. BPL service employs directly and through exclusive franchisee

network approx 2500 front line executives for attending to the customer requirements.


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D. CHANNEL PARTNERS

A consistent brand policy and close partnership with the dealer community is the key

strengths of BPL.

BPL’S IT infrastructure and the Internet will connect its business partners and

integrate re-engineered processes to deliver the best value to the customer. It will

leverage the existing physical and electronic distribution and information

infrastructure as a service to third party businesses.

BPL’S distribution network is a combination of 37 C&FAs, 33 Branch Offices, above

300 Service Centers with 400 sales personnel across product groups working to reach

over 2500 dealers and distributors, over 1000 distributors (FMCG) and over 300,000

retailers (FMCG).

With the integration of trade and supply chain, its dealers and distributors will be

converted into enterprise partners, improving service levels, leveraging reach and

connectivity.

E. DISTRIBUTION NETWORK

A strong distribution network is important for any industry. Not only does it

guarantee a country-wide reach for a company’s products but is also necessary for

providing good after-sales services. In today’s competitive scenario, what needs to be

emphasized is a strategic partnership between the company and its dealers. This

necessarily means that the company would not abandon its dealers in times of distress

and instead provide incentives for liquidating their stocks.


information on inventory status and sales movement. This has allowed its production

facilities to coordinate with the supply chain in accordance with latest demand data.


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Dealer relations have also improved, with money being recovered faster than ever

before.

They produce excellent quality products and keep changing their models every few

months. This has an interesting impact where you least expect it: the dealer. Just

when the dealer is convinced that what a great quality this BPL model with Nicam

stereo is, BPL goes and launches the FQR 21 inch which is possibly the best set that

you can get for reasonable money in India. The dealer gets only a three-week credit

period from BPL so he doesn't like to see the models sitting on his shelf-space.

The faster they move out, the better. And because the quality is right, the brand

positioning is right, the models move. Just when the dealer is absolutely comfortable

with the new model, BPL goes one step further: it introduces a newer model with

better features. So the dealer stocks more and sells more. BPL does not offer the

best margins to dealers among the range of colour TV manufacturers in the

country and yet these dealers end up making more money from the sale of BPL

CTVs. So if the dealer push is right, the manufacturer does well. This is BPL's big

plus.

F. PARTNERSHIP/JOINT VENTURE:

BPL’s collaborators are Sanyo, Toshiba, Octel, Media One and Nokia among

others, whose expertise and international experience have helped us to provide

the best in India. With the help of this type of joint venture BPL is able to get more

technological assistance to fight with the multinational competitors.

G. SALES

The sales of the BPL company was increasing till the year 1999-00 but now it is

decreasing because of the tough competition prevailing in the colour television


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industry. In 1998-99 the total sales of the company was Rs.1107.04 crores, in 1999-

00 it was Rs.1319.16 crores and in Rs.2000-01 it was 1094.89 crores. But in 2001-02

it further decrease to about Rs.1000 crores.

H. PRICES

The prices of the various products offered by BPL are very much competitive now as

the competition is increasing in this sector. Each and every colour television company

is offering their products at a very reasonable rate to attract more and more number of

customers. The pricing is base on the features available in the colour television like

flat screen, size of screen, remote, etc. The prices of BPL’s product are ranging from

Rs.10000 to Rs. 40000.

SUGGESTIONS:

BPL should come up with newer and newer products into the market to get back its

number one position in the CTV industry in India.

It should use higher technology to compete successfully with the multinational

players in the market.

It should diversify in the related business to cash on its strong brand name and

reputation.


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BPL should focus more on the promotional aspects of the marketing, as its

promotional expenses are much lower than its competitors.

It should cut down its cost, as the pricing is the important factor in the customer

purchase.

It should come out from the huge debt burden of Rs. 750 crores so that the amount

saved in interest term can be used in the Research & Development.

CONCLUSION:

From the all above information gathered we can conclude that whatever the

competition level and the technology comes into the market the customers will

always be benefited. They will get quality products at a reasonable rate. Each and

every company want to get more market share and for that they are ready to give

away higher margin and provide products and after sale services at a lower rate.

CTV industry is now in the saturation stage and not having that much high growth

rate. And thus companies try to attract customers by giving more price cuts and more

features at a same price or at a low price same number of features are available.


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BPL in particular having a good brand name and reputation is now not able to

increase its market share. Even it is not able to maintain its current market share in

the industry. It is because of the lack of new product development and the

promotional policy followed by it. Now it is at the forth place in the industry and if it

want to be at the number one again it has to start manufacturing high technology

CTVs and also have to spend on promotion. One option available to BPL is to expand

in the global market or diversify in the related industry where it can able to use its

brand name.

BIBLIOGRAPHY:

NEWS PAPERS / MAGAZINES:

Materials from Gujarat Chamber of Commerce

The Economic Times

Business Standard

The Times OF India

Hindustan Times

WEB SITES:


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www.google.com

www.bplworld.com

www.indiainfoline.com

www.lgindia.com

colour TVs

Documents

Transcript of colour TVs