2.1 Introduction to the topic:

The Consumer Durables industry consists of durable goods and appliances for domestic use

such as televisions, refrigerators, air conditioners and washing machines. Instruments such as

cell phones and kitchen appliances like microwave ovens were also included in this category.

The sector has been witnessing significant growth in recent years, helped by several drivers

such as the emerging retail boom, real estate and housing demand, greater disposable income

and an overall increase in the level of affluence of a significant section of the population. The

industry is represented by major international and local players such as BPL, Videocon,

Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc. The consumer durables industry

can be broadly classified into two segments: Consumer Electronics and Consumer

Appliances. Consumer Appliances can be further categorized into Brown Goods and White

Goods. The key product lines under each segment were as follows. In this

research I have study about the factors that effect the consumer buying

preferences in the consumer durables mainly electronics.The important

factors are promotion,brand loyality,features,price,after sale service like

guarantee,warrantyetc

2.2 Industry Size, Growth, Trends:

The consumer durables market in India was estimated to be around US$ 5 billion in 2007-08.

More than 7 million units of consumer durable appliances have been sold in the year 2006-07

with colour televisions (CTV) forming the bulk of the sales with 30 percent share of volumes.

CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of the sales

in terms of the number of units sold. In the refrigerators market, the frost-free category has

grown by 8.3 per cent while direct cool segment has grown by 9 per cent. Companies like

LG, Whirlpool and Samsung have registered double-digit growth in the direct cool

refrigerator market. In the case of washing machines, the semi-automatic category with a

higher base and fully-automatic categories have grown by 4 per cent to 526,000 units and by

8 per cent to 229,000 units, respectively. In the air-conditioners segment, the sales of window

ACs have grown by 32 per cent and that of split ACs by 97 per cent. Since the penetration in 1

the urban areas for these products is already quite high, the markets for both C-TV and

refrigerators were shifting to the semi-urban and rural areas. The growth across product

categories in different segments is assessed in the following sections.

2.3 Consumer Electronics:

The CTV production was 15.10 million units in 2007-08 and is expected to grow by at least

25 per cent. At the disaggregated level, conventional CTV volumes have been falling while

flat TVs have grown strongly. Market sources indicate that most CTV majors have phased

out conventional TVs and have been instead focusing more onflat TVs. The flat segment of CTVs now account for over60 per cent of the total domestic TV production and is likely to be

around 65 per cent in 2007-08.High-end products such as liquid crystal display (LCD)and

plasma display CTV grew by 400 per cent and 150 percent respectively in 2009-10 following

a sharp decline in prices of these products and this trend is expected to continue. The

audio/video player market has seen significant growth rates in the domestic market as prices

have dropped. This trend is expected to continue through 2009- 2010, as competition is likely

to intensify to scale and capture the mass market.

2.4 Evolution of Organized retailing in world:

An important aspect of the current economic scenario in India is the emergence of Organized

retail. There has been considerable growth in organized retailing business in recent years and

it is poised for much faster growth in the future. Major industrial houses have entered this

area and have announced very ambitious future expansion Plans. Transnational corporations

are also seeking to come to India and set up retail chains in collaboration with big Indian

companies. However, opinions are divided on the impact of the growth of organized retail in

the country. Concerns have been raised that the growth of organized retailing may have an

adverse impact on retailers in the unorganized sector. It has also been argued that growth of

organized retailing will yield efficiencies in the supply chain, enabling better access to

markets to producers (including farmers and small producers) and enabling higher prices, on

2

the one hand and, lower prices to consumers, on the other. In the context of divergent views

on the impact of organized retail, it is essential that an in-depth analytical study on the

possible effects of organized retailing in India is conducted.

• Effect on small retailers and vendors in the unorganized sector keeping in

Mind the likely growth in the overall market.

• Effect on employment.

• Impact on consumers.

• Impact on farmers and manufacturers.

• Impact on prices.

• Overall impact on economic growth.

International Retail:

upply chain in these countries.

Consumer Durables

Several key factors are driving growth in the consumer durables sector: disposable income

levels are rising, consumer financing has become easier and urban and rural markets are

growing at the annual rates of 7 per cent to 10 per cent, and 25 per cent, respectively, with

organized retail expected to garner about 15 per cent share by 2015 from the current 5 per

cent. Consumer durables is one of the fastest growing industries in India. Industry sales were

estimated to be about US$ 5 billion in value in 2007-08, a growth of more than 25 percent

over 2006-07, and are expected to grow at 20 percent in 2008-09. Some of the prominent

global players in the consumer durables sector include Philips, Samsung, Sony and Nokia.

Overview:

With the increase in income levels, easy availability of finance, increase in consumer

awareness, and introduction of new models, the demand for consumer durables has increased

significantly. Products like washing machines, air conditioners, microwave ovens, color

evisions (CTVs) are no longer considered luxury items. However, there are still very few

players in categories like vacuum cleaners, and dishwashers.

Consumer durables sector is characterized by the emergence of MNCs, exchange offers,

discounts, and intense competition. The market share of MNCs in consumer durables sector

3

is 65%. MNC's major target is the growing middle class of India.

MNCs offer superior technology to Consumers whereas the Indian companies compete on the

basis of firm grasp of the local market, their well-acknowledged brands, and hold over wide

distribution network. However, the penetration level of the consumer durables is still low in

India. An important factor behind low penetration is poor government spending on

infrastructure. For example, the government spending is very less on electrification programs

in rural areas. This factor discourages the consumer durables companies to market their

products in rural areas.

2.13 KEY CONSUMER DURABLES, & GROWTH TRENDS:

The consumer durables market in India was estimated to be around US$ 4.5 billion in 2006-

07. More than 7millionunits of consumer durable appliances have been sold in the year 2006-

07 with color televisions (CTV) forming the bulk of the sales with 30 per cent share of

volumes. CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of

the sales in terms of the number of units sold.

The research has found significant factors which affects consumers purchase decisions, it has

been observed that the purchase decisions are affected by a combination of two or more

factors, the final part of the thesis will try to draw a clearer picture on these factors,& how do

they affect the purchase decisions. Many factors inside the factor of ― Family Influence ―are

also present, family members from time to time play many roles of

influencer , decider , gatekeeper etc.( These are explained in the annexure). It has also been

found that, a factor which is most common during purchase of CTV,the same factor may not

be having equal importance during the purchase of refrigerators, Computers etc. The

consumer durables industry in India is set for sustained growth over the long term, fuelled by

favourable consumer demographics, overall growth in services and industrial sectors and

infrastructure development in suburban and rural areas. Several Indian and MNC players are

looking to strengthen their presence in India to leverage this opportunity. Findings till date :

Product -wise Analysis CTV The CTV production was 15.10 million units in 2006-07 and is

expected to grow by at least 25 per cent. At the disaggregated level, conventional CTV

volumes have been falling while flat TVs have grown strongly. Market sources indicate that

4

most CTV majors have phased out conventional TVs and have been instead focusing more on

flat TVs. The flat segment of CTVs now accounts for over 60 per cent of the total domestic

TV production and is likely to be around 65 per cent in 2007-08. High-end products such as

liquid crystal display (LCD) and plasma display CTV grew by 400 per cent and 150 percent

respectively in 2006-07 following a sharp decline in prices of these products and this trend is

expected to continue. Refrigerators are one of the most sought after appliances in Indian

middle class homes. The refrigerator market has two segments: Direct Cool and the relatively

new Frost-Free type. The market for refrigerators in 2006-07 was about 6.5 million units. The

growth of refrigerator segment is projected to be between 18 to 22 per cent over the next5

years. A critical success factor for the refrigerator market, given its widespread use, is deeper

reach into the market and increased penetration. Recently, the market is getting reinforced by

the replacement segment as well.

5

Company Profile

Consumer goods like washing machines, motorcars, TV sets, audio-video systems etc, which

yield services or utility over time rather than being completely used up at the moment of

consumption can be termed as the consumer durables. Most consumer goods are durables to

some degree, and the term is often used in a more restricted sense to denote relatively

expensive, technologically sophisticated goods ‗consumer durables' such as the examples

given above which implies high involvement at the time of purchase.

The consumer durables segment can be segregated into consumer electronics (TVs,

VCRs/VCPs and audio systems) and consumer appliances (also known as white goods) like

refrigerators, washing machines, air conditioners (ACs), microwave ovens, vacuum cleaners

and dishwashers.

Over the years demand for consumer durables has increased with the rising level of incomes,

double income families, changing lifestyles, availability of credit, increasing consumer

awareness and the introduction of new models by the Indian as well as multinational

companies. Consumer durable industry was once considered to be luxury item with targeting

the upper-middle class for consumption. With increasing competition, price wars, branding

and promotional strategies, the concept has melted down to the masses and has become a part

of the household's necessities even in the lower-middle class and rural part of the countries.

Most of the segments in this sector are characterized by intense competition, emergence of

new companies (especially MNCs), and introduction of state-of-the-art models, price

discounts and exchange schemes. Despite of that MNCs are entering in to Indian market

because growing Indian middle class of around 250 millions. Also it is widely accepted that

consumer durable penetration increases rapidly after per capita income (PCI) crosses a

threshold limit of $2000. In India, the PCI is low at $370, though it is equivalent to $600 on

PPP (Purchasing Power Parity) basis and expected to see a consistent growth of over 6% over

the next years to come.

According to NCEAR survey estimates, the number of households in the higher and middle-

6

income categories will rise rapidly. There will also absolute reduction in the number of

households in the low incomes. This will lift large number of households to income levels at

growth and higher income levels will drive growth in volumes, any reduction in the duties

will leads to lower down of the values and this will bring more customers for the durable

products.

The biggest attraction for MNCs is the growing Indian middle class (approx. 250 m). This

market is characterized with low penetration levels. MNCs hold an edge over their Indian

counterparts in terms of superior technology combined with a steady flow of capital, while

domestic companies compete on the basis of their well-acknowledged brands, an extensive

distribution network and an insight in local market conditions.

The Indian middle class market of 250 million is the biggest attraction for the MNCs along

with the level of the penetration of consumer durables in the India has more attracted

Multinationals to the India, in the case of consumer durables penetration levels of TV is

believed to the highest, and after that the penetration of the refrigerator comes.

In the future, earnings will be driven by rising demand for consumer durables in general. As

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

households", the per capita total expenditure on durable goods increased from Rs112.89 in

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

number of households with monthly incomes above Rs 10,000 in metros and Rs 5,000 in

non-metros is expected to rise from 22.7 million in 1995-96 to a huge 57.2 million in 2005-

06. This will mean that firstly, there will be a perceptible shift towards branded products and

secondly, the level of aspiration buying will increase. which they can become purchasers of consumer durable products. Continuous economic

7

Now considering consumer durables industry in general, the drivers that will leads to the

growth of the industry in general will be:

The degree of distribution network in the market.

The advertising and marketing strategy adopted by the players in the industry.

The brand image of the product as perceived by the consumer.

The technology used by the company viz. state-of-the art technology or and older version.

The ability of the company to introduce newer products and newer product features.

The capability of the company to service its products.

The discount schemes and consumer finance facility available.

The market positioning of the product.

The cost competitiveness and pricing strategy of the company.

The financial strength of the players.

The competition in the industry has intensified after the liberalization and more and more

MNC are coming to India to target the huge middle class of the country. The competition is

dependent upon the brand strength and distribution network. In other words, the advertising

and marketing expenses play a vital role in competition. As a result of the increased competitive activity, the advertising and marketing costs as a percentage of operating income

ave increased over the years. This ratio for the industry has increased from 4.4 percent in

1993 to 6.7 percentage in 2000.

However, the export prospects are least or minimal because indigenous manufacturers do not

possess adequate brand equity or excellent product quality. There are even constraints like

transportation due to poor infrastructure and relatively under developed markets in the

neighboring countries.

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Changes In The Strategies:

There is a shift in trend as the emphasis has moved from the manufacturing process to

marketing and advertising strategies. In other words, the marketing game has become a vital

factor for driving sales as against the manufacturing process of the products in the past.

Players are now concentrating on the creation of brand image in order to economize their

scale of operations and to increase their brand strength. The advertising expenses of the

companies operating in this segment are going high every year and the returns are

diminishing still the brand will play a major role in selling of the product.

Because of this, most of the manufacturers like, Videocon and Electrolux are acting as OEM

manufacturers for manufacturing refrigerators of Samsung and LG. Even, players have

increased the percentage of their advertising and marketing costs as a percentage to operating

income over the years; the ratio for the industry has increased from 4.6% in 1993 to around

7% in 2000. The brand building is very critical in the industry and constant advertising is

necessary.

Computers:

Purchase decisions for computers are largely affected by the factor of Assembled & Branded.

The topic of the study is not about finding the factor behind buying assembled or branded

PC/laptops. Thus the study is mainly focused on finding the major factors affecting

consumers Purchase decisions while buying branded computers. Brands account for 10 per

cent of the total consumer goods market in India, while organized retailing is around 2 per

cent of the total industry. Though branded computers are perceived to be costlier than non-

branded computers, the penetration of branded products is increasing. The relative shares of

branded computers at the organized sector indicate that a significant share of branded

products is being sold through unorganized channels. This highlights the need for a strong

9

distribution network to penetrate deeper into the potential market.

4.1 Major players:

The major players in the consumer durables industry, operating in different sectors such as air

conditioners, washing machines, refrigerators & television include:

COMPETITION OVERVIEW:

Samsung India (CURRENT MARKET SHARE-37%):

Initially the strategy of Samsung in India was to create premium image by emphasizing

global brand. After facing stiff competition from another Korean major- LG, Samsung also

started playing price game. In 2004 it reverted back to its premium positioning, although it

resulted in some loss of market share. In line with the Global Digital Initiative of the Parent

Company.

Samsung India:

Acquired digital leadership in India by introducing its digital ready televisions like the 40"

LCD Projection TV, 43"Projection TV and the Plano series of Flat Colour televisions.

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LG India (CURRENT MARKET SHARE-23%):

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. It is an aggressive marketer. It focuses on low and medium price products.

Toshiba India:

Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics

giant Toshiba Corporation and was incorporated in India on September 2001. Toshiba had a

presence in India since 1985 and was represented in India through their Liaison Office.

Sony India (CURRENT MARKET SHARE-21-22%):

Sony Corporation, Japan, established its India operations in November 1994. In India, Sony

has its distribution network comprising of over 7000 channel partners, 215 Sony World and

Sony Exclusive outlets and 21 direct branch locations. The company also has presence across

the country with 21 company owned and 172 authorized service centres.

Sharp India Ltd:

Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt

11

Ltd, the company was converted into a public limited company in the same year. The name

was changed to Kalyani Sharp India in 1986. The company was entered into a joint venture

with Sharp Corporation, Japan - a leading manufacturer of consumer electronic products to

manufacture VCRs/VCPs/VTDMs. The company manufactures consumer electronic goods

such as TVs, VCRs, VCPs and audio products. The products were sold under the Optonica

brand name. Sharp has a production base in 26 countries with 33 plants, and its products are

used in 133 countries. The company was accredited with the ISO-9001 certification in the

month of February, 2001.

Hitachi India:

Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing and sells a

wide range of products ranging from Power and Industrial Systems, Industrial \Components

& Equipment, Air Conditioning & Refrigeration Equipment to International Procurement of

software, materials and components. Some of HIL's product range includes Semiconductors

and Display Components. It also supports the sale of Plasma TVs, LCD TVs, LCD

Projectors, Smart Boards and DVD Camcorders.

Mirc Electronics (ONIDA):

The company commands strong brand equity among consumers largely owing to the success

of its Onida brand. High-quality designs have made the company a leading player in the

electronics and entertainment business. Its popular devil ad although had engendered a strong

emotional pull towards the brand, Technologically it represented no advancement. The

12

company plugged the gap by touting its digital technology. Like Videocon, it has also been

able to hold its market share. The world-class quality of Onida has enabled the company to

make a breakthrough on the export front. Onida is a leading brand in Gulf market and also

exports its models to Africa, Bangladesh, Sri Lanka and Nepal. It has technical tie-up with

the Japan Victor Company, better known as JVC. So focused is Onida on positioning itself on

the premium, high-tech plank that it is even planning to push its own envelope on

obsolescence, much like Intel has been doing in its own industry. 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 multiple market segments. Besides understanding the

strategy adopted by different players, several other factors- industry growth, concentration

and balance, corporate stakes, fixed cost, and product differences need to be analyzed to

determine the extent of rivalry between the existing players.

Videocon (CURRENT MARKET SHARE-12%):

It is the market leader in the consumer electronics and home appliances segments in India;

the company manufactures home appliances such as refrigerators, microwave ovens,

compressors, air conditioners and washing machines.

It has plans to acquire Daewoo's consumer electronics businesses worldwide to bring LCD

TVs, plasma TVs and components into its fold; the move would also help it acquire a

consuming partner for the recently-acquired Thomson's picture tube business. Videocon has

always been a price player and has an image of a low price brand. This entails providing

more features at a given price vis-à-vis competitors. It has taken over multinational brands to

cater to un served segments, like Sansui- to flank the flagship brand Videocon in the low to

mid priced segment, essentially to fight against brands like BPL, Philips, and Onida and

13

taken over Akai- tail end brand or brands like Aiwa. Videocon is one of the largest

manufacturers of television and its components in India and thus has advantages of

economies of scale and low cost due to indigenization. It has the widest distribution network

in India with more than 5000 dealers in the major cities .It also has a strong base in the semi-

urban and rural markets. Due to its multi-brand strategy, it has at present multiple brands at

the same price point. This has led to a state of diffused positioning for its brands. It has also

led to a cannibalization of sales among these brands. The flagship brand Videocon has lost

market share due to the presence of Sansui in the same segment. Because of reduction in

import duties on CPT the cost advantage of Videocon is also on the decline. Hence it is

facing rough weather and also trying to boost exports.

Panasonic India (CURRENT MARKET SHARE-6%):

Panasonic Corporation based in Osaka, Japan is a worldwide leader in the development and

Manufacture of electronic products for a wide range of consumer, business, and industrial

needs. Panasonic Electric Works Co., Ltd. traces its roots to the company started in 1918 by

Konosuke Matsushita. Panasonic India plans to invest USD 100 million in its new plasma TV

production facility in 2011.

The company currently has five production units in the country, at Noida, Gurgaon,

Vadodara, Chennai and Delhi. It also launched the worlds slimmest, 1-inch plasma TV called

Vierra PDP Z1.According to Panasonic The market potential for plasma TV was much

greater in India than China, The demand for such high-end sets was increasing at a rate of 4-

10 per cent in the country. The company has priced its plasma TV between Rs 24,000 and Rs

30 lakh (for a 103-inch screen). It has already sold ten such units this month.

Agrawal Group - Manufactures consumer electronic products; radios, tape-recorders,

14

car stereos and CD systems. View profile.

Anchor - Manufactures electrical switches, accessories, lighting luminaries, and PVC

wires, domestic appliances like electrical irons, mixers, grinders, toasters and fans.

Bajaj International - Exporters of electrical fans, household appliances, lamps,

fluorescent tube lights, light fittings, hoists etc. Imports steel and engineering items.

BOSS Portable Blenders - Manufacturer and exporter of portable blender and

home appliances includes hand held mixers, juice makers, stainless steel blender and more.

E.P.C Industrial Fans & Motors - Manufacturers & Exporters of industrial

fans, domestic fans, instrument cooling fans, cabin fans, electric fans & electric motors.

Eureka Forbes - Details on consumer products include vacuum cleaners, floor care

equipment, high pressure water jet cleaners and electronic security systems.

Global Wonders - The fastest search engine, directory, map and web guide for

information on the most popular websites. Features list of wholesaler, retailer along with

products list, consumer durable and more.

Hot shine Appliances - U.P - Manufacturers of gas cookers & stoves & electrical

appliances, product range includes cooking ranges, steam irons, oven toaster and grillers.

15

Kelvin Systems - Dealers for Carrier Aircon Ltd (air-conditioning equipment), Honda

(Siel) Power Products Ltd (portable electric generators), and Eureka Forbes Ltd (vacuum

cleaners)

Mangal Singh & Sons - Dealers in home appliances, consumer goods and electrical

appliances, includes television, refrigerator, audio products, washing machines, vacuum

flask, cooking range, oven and dining sets.

Moniba - Manufactures chemical pump, air operated pump, water purifier, health care

product, and bacteria free water, home appliances and chemical plant machinery.

Nadi Industrial Fans - Manufacturers of fans; product range includes axial fans,

centrifugal fans and special fans.

Onida - Provide an online showroom to purchase the entire range of Onida products.

Offers free delivery.

Orient Fan - Specialized in manufacturing mini motors, deluxe decorative ceiling fans,

shaded pole motors, box fans, food blender, food mixer, fruit juicer, vacuum cleaner etc.

Padmini Appliances - Manufacturers of gas stoves, oven-toaster-griller, juicer-

mixer-grinder, electric hot plates, washing machines, ceiling fans, water heaters, irons etc.

16

Philips - Details for consumer electronics, lighting, domestic appliances, semi conductors,

components, enabling technologies, multi media projectors etc.

PICASSO Home Products - Manufacturer and Exporter of various home

appliances like roti maker, mixer grinder, sandwich maker, oven toaster griller, Non Stick

Appliances and more.

Salora - Manufactures black-and-white & color television sets, Panasonic fax machines,

printers, and digital cameras; color monitors and cordless phones.

Sansui - India - Manufacturer of electronic products, audio systems, home theatres,

projection TVs, video CDs and home appliances.

Singer - Manufacturers of sewing machines, food processors, refrigerators, televisions,

oven, toasters, washing machines, electric irons etc.

Sony India - Details of product ranges from color TVs, hi-fi music systems, video CDs,

home theatre systems, DVDs, portable audio systems, digital cameras, RMEG products,

Wega T.V etc.

Sony World - Features wide ranges of products: car audios, handy cams, digital

cameras, VCD, LD, DVD players, cordless phones, walkman, and disc mans, and

Televisions.

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Sumeet - Manufacturers of mixer-grinders. Offers details about the machines, recipes,

Sumeet outlets and more.

Sunflame Appliances - Manufacturers of kitchen appliances, home appliances and

electrical appliances in India.

Usha International - Manufacturer of sewing machines, fans, air conditioners, water

coolers, home appliances, agricultural and domestic pump sets, and auto products.

Usha Lexus - Makers of home appliances like sandwich toasters, juicer, mixer grinders,

ovens, ventilating fans, irons and room coolers.

Videocon - Suppliers of home appliances, TVs, refrigerators, ACs, air conditioners,

audios, tape recorder, colour monitors, digital organizers, Kenwood digital hi-fi systems,

television sets etc.

Vijay Sales - Dealers in consumer durables includes details for their product, customer

care, schemes, consumer finance, and more.

Voltas Limited - Makers of room air conditioners and refrigeration equipment, water

coolers, cranes, pumps and office furniture; includes machine tools, industrial chemicals etc.

L.G India - Details of product ranges from colour TVs, hi-fi music systems, video CDs,

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home theatre systems, DVDs, portable audio systems, digital cameras, RMEG products, T.V

etc. Features wide ranges of products: car audios, handy cams, digital cameras, VCD, LD,

DVD players, Cdma mobiles, walkman, and disc mans, and Televisions.

Samsung Electronics India Ltd - Details of product ranges from colour TVs, hi-

fi music systems, video CDs, home theatre systems, DVDs, portable audio systems, digital

cameras, RMEG products, T.V etc. Features wide ranges of products: car audios, handy

cams, digital cameras, VCD, LD, DVD players, mobiles, walkman, and disc mans, and

Televisions. There has been strong competition between the major MNCs like Samsung, LG,

and Sony.

LG Electronics India Ltd has announced its extension plan in 2006. The company

is going to invest $250 million in India by 2011 and is planning to establish a manufacturing

facility in Pune.

TCL Corporation is also planning to establish a $22 million manufacturing facility in

India. The Indian companies like Videocon Industries and Onida are

also

planning to expand. Videocon has acquired Electrolux brand in India. Also, with the

acquisition of Thomson Displays by Videocon in Poland, China, and Mexico, the company is

marking its international presence.

According to supply Corporation (Applied Market Intelligence), country's fiscal policy has

19

encouraged Indian consumer electronic industry. The reduction on import duty in the year

2005-06 has benefited many companies, such as Samsung, LG, and Sony. These companies

import their premium end products from manufacturing facilities that are located outside

India. Indian consumers are now replacing their existing appliances with frost-free

refrigerators, split air conditioners, fully automatic washing machines, and color televisions

(CTVs), which are boosting the sales in these categories.

Some companies like Samsung Electronics Co. Ltd. and LG Electronics India Ltd. are now

focusing on rural areas also. These companies are introducing gift schemes and providing

easy finance to capture the consumer base in rural areas.

Growth in 2005-06

Consumer Durables

Air Conditioner

Refrigerator

Microwave Ovens

Washing Machines

Color Televisions (CTVs)

Black & White Televisions

Clock

Watch

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VCDs

Consumer Electronics (Overall) Some Facts:

1. Bargaining power of suppliers in consumer durables sector is limited due to threat of

imports and intense competition.

2. Some of the entry barriers in consumer durables sector are distribution network, capital,

and ability to hire purchases.

3. Demand is seasonal and cyclical.

4. Competition among players is on the basis of difference in prices and well-acknowledged

brands.

4.2 Sector Outlook:

Consumer durables Sector ca n be classified as

follows:

1. Consumer Electronics includes VCD/DVD, home theatre, music players, color

televisions (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc.

2. White Goods include dishwashers, air conditioners, water heaters, washing machines,

refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances, microwaves,

built-in appliances, tumble dryer, personal care products, etc.

3. Molded Luggage includes plastics.

4. Clocks and Watches

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.3 Consumer buying process:

22

Need Recognition & Problem Awareness

Information Search

Evaluation of Alternatives

Purchase

Post- Purchase Evaluation

3.4 Industry classification:

The consumer durables industry can be broadly classified as consumer electronics and

consumer appliances. The consumer appliances category can be further segmented as white

goods and brown goods.

3.5 The key players and their products:

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3.6 Market analysis:

Industry sales were US$ 4.5 billion in value in 2006-07 and more than 7 million units in

volume terms.

Plasma display panels and liquid crystal display TVs have registered an average growth of

more than 250% 2006-07 and the trend is expected to continue.

Split ACs have been growing at a much faster rate than window ACs- growth of 97% in

the year 2006-07 and the trend is expected to continue.

Mobile phone production is expected to grow at a compound annual growth rate of 28.3%

from 31 million units in 2006 to 107 million units in 2001

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The sectors which have recorded excellent growth rates of more than 20 per cent in

terms of quantity produced are Air Conditioners (25 per cent), Split Air Conditioners (42.6

per cent) Micro Wave Woven (27.3 per cent), DVDS (25 per cent) VCD/MP3 (20 per cent),

Color Picture Tube (23 per cent,).

The sectors which have recorded high growth rates between 10 and 20 per cent in

April-March 2004-05 over the corresponding previous period are Color Television (12%),

Window Air Conditioners (18.8 per cent), Washing Machines (18.1 per cent Watch (10%),

Frost Free Refrigerators (13.8%),

Some sectors which have recorded moderate growth of 0 to 10 per cent are refrigerators

(5 per cent),), clock (8 per cent), Direct Cool Refrigerator (2.8 per cent)

The sector recording negative growth is B&W TV (- 16.7%)

The Refrigeration Industry has reached 3.9 million units in 2004-05 from 3.7 million

units in the last year with a growth of 5 per cent.

The Air-Conditioners Industry has reached at 1.2 million units during 2004-05 with a

growth of 25 per cent from 9.8 lakh units in 2003-04.

Washing Machines is estimated to have grown by 18.1 per cent from 1.35 million units

in 2003-04 to 1.6 million units in 2004-05.

Microwave ovens has grown by 27.3 per cent growth with 3.5 lakh units compared to

2.75 lakh units in 2003-04.

The Indian Colour Television industry has grown by 12.1 per cent in 2004-05 by

25

reaching 9.25 million units in 2004-05 from 8.25 million units in 2003-04.

The B&W TV has recorded a negative growth of 16.7 per cent from 3 million units in

2003-04 to 2.5 million units in 2004-05.

Watch and clock have registered growth of 10 per cent and 8 per cent from 20.6 mn

units and 26.3 million units in 2003-04 to 22.6 mn units and 28.4 mn units in 2004-05.

The VCD/MP3 industry has registered 20% growth and has achieved production of 8.4

million units. The unorganized sector has occupied a major share in manufacturing and

supplying VCD/MP3.

DVD Players are estimated to have grown by 25 per cent in 2004-05 with the volume

estimated to be 625000 units.

The first half of the year and the first quarter of the financial year, 2005 has seen a little

setback for the domestic consumer electronics and durables industry with the two largest

segments of the industry - color televisions (CTV) and refrigerators facing decline in

production and sales during the period. But the Air conditioners and washing machines

market have grown at the rate of 20% .

Thede-growth seen in the first quarter of the current fiscal has been mainly due to

the value added tax (VAT) regime introduced in April, 2005, as held by the industry

representative.

Overall, the refrigerator segment had achieved a negative growth of 4.3 per cent in volume

terms and two per cent in value terms during the period.

Key growth drivers for consumer durables:

26

Rise in disposable income: The demand for consumer electronics has been rising with the

increase in disposable income coupled with more and more consumers falling under the

double income families. The growing Indian middle class is an attraction for companies who

are out there to woo them.

Availability of newer variants of a product: Consumers are spoilt for choice when it comes

to choosing products. Newer variants of a product will help a company in getting the

attention of consumers who look for innovation in products.

Product pricing: The consumer durables industry is highly price sensitive, making price the

determining factor in increasing volumes, at least for lower range consumers. For middle and

upper range consumers, it is the brand name, technology and product features that are

important.

Availability of financing schemes: Availability of credit and the structure of the loan

determine the affordability of the product. Sale of a particular product is determined by the

cost of credit as much as the flexibility of the scheme.

Rise in the share of organized retail: Rise in organized retail will set the growth pace of the

Indian consumer durables industry. According to a working paper released by the Indian

Council for Research on International Economic Relations (ICRIER), organized retail which

constituted a mere four percent of the retail sector in FY07 is likely to grow at 45-50% per

annum and quadruple its share in the total retail pie 16% by 2011-2012. The share will grow

with bigger players entering the market.

Innovative advertising and brand promotion: Sales promotion measures such as discounts,

free gifts and exchange offers help a company in distinguishing itself from others.

27

Festive season sales: Demand for color TVs usually pick up during the festive seasons. As a

result most companies come out with offers during this period to cash in on the festive mood.

This period will continue to be the growth driver for consumer durable companies.

Consumer Durables: Industry size, growth and trends:

During FY07, volume share of the single largest consumer durable was color TVs at 30%,

followed by refrigerators and air conditioners at 18% and 13% respectively. Washing

machines and other assorted consumer durables captured a share in the total volume by 5%

Television Sets: Growth in sales:

28

FY07 witnessed the highest number of TV sets being sold when compared to the previous

two corresponding years. As per CMIE, growth in sale of TV sets was slower at 14.3%

during FY07 when compared to a 21% growth in the previous year. On the demand side,

domestic consumption of refrigerators declined by almost 4% between FY05 and FY08,

while imports climbed. The imposition of anti-dumping duties on import of colour picture

tubes will hit the manufacturing costs of CTVs produced in India. Further, the reduction in

the general rate of excise duty (CENVAT) from 16% to 14% as proposed in the Union

Budget for FY09 will not have any effect on the selling price of colour TVs. This is because

the combined effect of rising input costs and a higher interest burden will negate the effect of

such reduction.

29

30

Refrigerator: demand and supply side dynamics:

According to CMIE statistics, domestic consumption of refrigerators witnessed a decline between

FY05 and FY08, while exports grew. From 3% of the total consumption in FY05, exports grew

to7% of the total consumption in FY08. On the supply side, domestic production of refrigerators

in the total supply remained at the same levels in the past three years ended FY08. At 99%

each in FY06-08, the share of production reported a mere 100 basis point increase over FY05,

as imports slided. The refrigerator industry posted a sluggish performance since the beginning

of

FY09 on the back of volatile steel prices. The first quarter saw a production growth of a mere 50

basis points to 2.18 mn units, as per CMIE.

Sales of Consumer Electronic Companies:

The consumer electronic goods industry underwent a slowdown during the last quarter of

FY08. According to CMIE, the industry witnessed a slower 10.5% growth in the Mar 08

quarter compared to a substantial 17.4% growth in the previous corresponding quarter.

Domestic consumer electronics companies together reported a subdued sales growth of

almost 17% in FY07, on the back of a robust 40.5% growth in FY06. While the larger

companies reported robust growth in sales, it was the smaller ones whose sales were

negatively affected that eventually brought down the industry sales growth.

Changing attitudes of Today's customers:

Today customer likes to indulge in buying spree. No more the customers buy only to fulfill

their basic needs and emphasise on savings itself.

31

Indian consumers have become value sensitive and are not much price sensitive as was the

case earlier. If they feel that a particular product offers them more value and its price is high,

even then they are willing to buy the product.

The Indian consumers strictly follow their culture, tradition and values, as a result of which

foreign companies were forced to give an Indian touch to them in order to succeed in India.

McDonalds, MTV, Pepsi, Star TV, Coca Cola India and many more had to Indianise

themselves to flourish in India. Karva Chauth is celebrated with more zeal and enthusiasm

than the Valentine Day. The Indian consumer of today gives preference to features of a

product rather than its brand name. The trend that higher segment consumers only buy the top

brands has also come to an end.

Even after liberalization Indian companies and brands are doing very well. It is clearly

evident from the fact that despite many foreign brands being sold in India, Raymond is still

India's largest textile company and Haldiram is doing well despite the presence of

McDonalds and Pizza Hut. The consumers today are not confined to a single brand and prefer

change rather than sticking to the same brand. Not often do we see any home with cars of the

same brand or household products of the same brand. The use of credit card for shopping is a

new emerging trend in India. Also consumers are availing credit or loan from banks and other

financial institutions to fulfill their needs and wants.

luxury products.

Indian consumers have shown another major change in their buying behaviour. They just

don't want availability of products, they also want better experience, services and ambience.

32

This has led to the growth of shopping malls where shopping, entertainment and better

facilities are all available under one roof. To a great extent the presence of heavy weight such

as the pantaloons, big bazaar, croma , nilgiris etc has given a huge fillip to the growing

market by not only selling products but also the experience. The Indian consumer are much

more inclined to the organized sector.

The rural Indian consumers are also showing signs of change. They have all the modern

amenities at their home and their standard of living is fast improving. The rural households

have earned huge money due to price rise in real estate. They are also shifting towards

industrial and services sector, hence their purchasing power is increasing. It is reflected in

their living standard and possession of all electronic gadgets and luxury cars. There is a stiff

competition in the Indian market today and it has become a buyer's market from seller's

market. Customers are the ultimate beneficiary of the fierce competition in the market.

Competition has reduced prices to a great extent and has forced the manufacturer to maintain

product quality to sustain in the highly competitive market.

Though in a small way internet and and telemarketing have also caught the attention of the

Indian customers. Dell. Amazon .com, etc have carved a good niche for them in the sector.

The consumers today do not mind availing credit as when needed. So credit availability has

become a key factor for determination of a buying a good. Consumers are also availing the

information available on net through various forums and websites.

Marketers response to Consumer attitude:

With change in consumer buying behavior the companies also made necessary changes in

their marketing strategies. The changes include:

1) Launching of premium products by companies to fulfill requirements of high class

consumers.

33

2) Since purchasing power of rural India has increased, the companies have started shifting

their focus towards rural India to capture untapped rural market. This has reaped huge

benefits for companies like in cases of PepsiCo, Coca Cola India and other FMCG

companies.

3) Companies not only aim to sell their products but also aim to provide better after sales

services to its consumers. For example companies have provisions to send their technicians to

repair the cars struck at highways or other outer locations due to technical failure or in case of

a mishap. This improves the company's credibility and helps to build its customer base .

4) Companies design their products on the basis of market segmentation so that they have

products to suit every pocket and requirement.

5) Due to sharp growth in the communication sector, companies are providing many

schemes and plans to attract customers. For example mobile service providers provide

lifetime option and free calls to other mobile users under a specific plan of the company.

6) Due to fierce competition in the electronics market and people's willingness to purchase

hi-tech products the rates of LCD and plasma TVs have been slashed by 25%-30%. Through

The Indian consumers are spending thick and fast on premium and

this strategy electronic companies received very good response from the consumers in the

recent past and were able to build a considerable market for their

products.

7) Indian consumers have developed a liking for foreign tours and holidays. This has led to

34

development of many travel agencies that provide a planned foreign tour at a reasonable

price. What is even more interesting is that the customer does not have to pay the amount in

lump sum; instead, he has the facility to make the payment in monthly installments according

to his convenience.

8) Consumers of India have developed a tendency to save travel time. For such consumers

low fare or low cost carriers are available that provide air travel facility at a very affordable

price.

9) Consumers of India want better housing facilities. The construction companies are

fulfilling this requirement of consumers by providing them luxurious houses, exquisite interiors, round the clock water and electricity supply, full time security, club house,

gymnasium, etc. within the premises.

10) Indian consumers are increasingly becoming aware of the importance of health and

hygiene. Hence companies are making products to suit their health like low calorie, low fat

food. As far as hygiene is concerned companies have fully mechanized their plants to

maintain hygiene and pack the food in such a way that it remains fresh for longer period of

time and does not lose its nutritive value before consumption.

11) The need for internet is fast growing. To fulfill this need of consumers, mobile

manufacturing companies are providing internet access facility on mobile phones. This has

revolutionized the communication sector and provided a means of communication that was

never ever in anybody's dreams till a few years back.

12) Indian consumer's liking for credit is also increasing rapidly. Hence many financial

institutions have come into existence in India and are flourishing. Banks have also become

liberal in their loan and credit policies.

35

3.7 The road ahead:

The rising rate of growth of GDP, rising purchasing power of people with higher propensity

to consume with preference for sophisticated brands would provide constant impetus to

growth of white goods industry segment.

Penetration of consumer durables would be deeper in rural India if banks and financial

institutions come out with liberal incentive schemes for the white goods industry segment,

growth in disposable income, improving lifestyles, power availability, low running cost, and

rise in temperatures.

While the consumer durables market is facing a slowdown due to saturation in the urban

market, rural consumers should be provided with easily payable consumer finance schemes

and basic services, after sales services to suit the infrastructure and the existing amenities like

electricity, voltage etc.

Currently, rural consumers purchase their durables from the nearest towns, leading to

increased expenses due to transportation. Purchase necessarily done only during the harvest,

festive and wedding seasons — April to June and October to November in North India and

October to February in the South, believed to be months `good for buying', should be

converted to routine regular feature from the seasonal character.

Rural India that accounts for nearly 70% of the total number of households, has a 2%

penetration in case of refrigerators and 0.5% for washing machines, offers plenty of

scope and opportunities for the white goods industry.

36

The urban consumer durable market for products including TV is growing annually by 7 to

10 % whereas the rural market is zooming ahead at around 25 % annually. According to

survey made by industry, the rural market is growing faster than the urban India now.

The urban market is a replacement and up gradation market now.

The other factor for surging demand for consumer goods is the phenomenal growth of media in

India. The flurry of television channels and the rising penetration of cinemas will continue

to spread awareness of products in the remotest of markets.

The vigorous marketing efforts being made by the domestic majors will help the industry.

The Internet being now used by the market functionaries that will lead to intelligence sales of

the products. It will help to sustain the demand boom witnessed recently in this sector.

The ability of imports to compete is set to rise. However, the effective duty protection is still

quite high at about 35-40 per cent. So, a flood of imports is unlikely and would be rather need

based.

Reduction in import duties may significantly lower prices of products such as microwave

ovens, whose market size is quite small in India. Otherwise, local manufacturing will

continue to stay competitive. At the same time, there will be some positive benefits in the

form of reduction in input costs. Washing machines and refrigerators will also benefit from

lower input costs.

According to a study by the McKinsey Global Institute (MGI), Indian incomes are likely to

grow three-fold over the next two decades and India will become the world's fifth-largest

consumer market by 2025. In the given scenario, urban markets will continue to fuel the

Indian economy for quite some time to come. Moreover, expenditure by the middle class

37

accounts for the bulk of India's urban consumer expenditure. About 61 per cent of total urban

income comes from households that can be classified as middle class—earning between US$

1,493 and US$ 9,955 a year.

Further, India is likely to see rapid urbanization, with around 45 per cent of Indians living in

urban areas by 2050, up from 30 per cent in 2007-08, according to a study co-authored by

National Council of Applied Economic Research's (NCAER) Rajesh Shukla and Future

Capital Research's Roopa Purushothaman.

According to a report by McKinsey, India's overall retail sector is likely to grow to US$

419.93 billion by 2015.

According to global real estate consultant, CB Richard Ellis, India has moved up to the 39th

most preferred retail destination in the world in 2009, up from 44 last year. The turnover of

the organized retail segment in India is pegged at around US$ 8.1 billion. It is expected to

reach US$ 51 billion by 2010.

Retail opportunity is slated to rise by about US$ 160 billion in India in five years. In urban

India, modern retail is likely to grow from the current 9.6 per cent of total retail to 26 per cent

in the next five years, as per Technopak Advisors

The Indian consumer durables market seems to be relatively untouched by the economic

slowdown. The consumer durable goods output witnessed a 2.5 per cent rise in durables

output in the first quarter of 2009, according to a report by the Development Bank of

Singapore (DBS). Colour televisions have seen an increase in sales, growing 2 per cent to

2.8 million units in January-March 2009, according to the figures released by ORG-GFK.

Whirlpool is on the expansion mode and is targeting a 22 per cent share of the US$ 423.28

38

million washing machine market in India by the end of 2009, and is launching a range of new

products with an investment of US$ 4 million for the same. Moreover, a large number of hi-technology durables are expected to flood the US$ 4.03

billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among

companies planning new product launches in the coming months

39

According to a study by the McKinsey Global Institute (MGI), 'Bird of Gold': The Rise of

India's Consumer Market, Indian incomes are likely to grow three-fold over the next two

decades and India will become the world's fifth largest consumer market by 2025, moving up

from its 2007 position as the world's 12th largest consumer market.

India ranks second in the Nielsen Global Consumer Confidence survey released on January 7,

2010—an indication that recovery from the economic downturn is faster in India with

consumers more willing to spend. The survey showed that in addition to the emerging

markets of Indonesia and India, eight of the top ten most confident markets in the fourth

quarter of 2009 came from the Asia Pacific region.

Retail

Estimates by the Retailers Association of India (RAI), the apex body of organized, modern

retailers, have shown that the country's US$ 21.05 billion organized retail segment has grown

20 per cent in the September quarter 2009-10.

Approximately 315 hypermarkets are expected to come into existence in tier-I and tier-II

cities across India by the end of 2011, says a joint study by consultancy firm KPMG and

industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM)

named `Reinventing India's Retail Sector'.

The country's largest retailers—Future Group, Spencer's Retail and Shoppers Stop—have

lined up investments of at least US$ 128.3 million for 2010.

Rural Consumers

As socio-economic changes sweep across India, the country is witnessing the creation of

many new markets and a further expansion of the existing ones. According to Pradeep

Kashyap, chief executive officer of MART Rural Solutions, speaking at the Calcutta

Management Association Rural Marketing Meet, over 300 million people would move up

from the category of rural poor to rural lower middle class between 2005 and 2025 and rural

consumption levels are expected to rise to current urban levels by 2017.

40

Mega retail chains are looking to build a high-quality supply chain—retailers such as Bharti-

Wal-Mart, Carrefour and Reliance are working to strengthen their supply chain formula by

roping in farmers as stakeholders. Despite being the biggest names in the trade, these retailers

are ploughing rural areas to teach innovative farming methods and find the best suppliers

among them.

FMCG

According to a FICCI-Technopak report, despite the economic slowdown, India's fast moving

consumer goods (FMCG) sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion

by 2018. The report states that implementation of the proposed Goods and Services Tax

(GST) and the opening of Foreign Direct Investment (FDI) are expected to fuel growth

further and raise the industry's size to US$ 47 billion by 2013 and US$ 95 billion by 2018.

The Ministry of Food Processing Industries is also planning to double the market size of the

food processing industry to US$ 165.1 billion by 2009-10 and trebling it to US$ 271.8 billion

by 2014-15.

Demand for personal care products such as shampoos, toothpastes and hair-oils grew faster in

rural areas than urban areas during April-September 2009, a period that includes the peak

monsoon months, as per the numbers released by market researcher AC Nielsen.

Consumer Durables

A combination of changing lifestyles, higher disposable income, greater product awareness

and affordable pricing have been instrumental in changing the pattern and amount of

consumer expenditure leading to strong growth in the consumer durables industry.

Companies such as LG Electronics India Ltd (LGEIL), Samsung India and Whirlpool are

reporting strong sales figures. Samsung has posted a growth of nearly 80 per cent in its

refrigerator category. In 2009, overall industry sales of LCD televisions grew by 93-94 per

cent over the earlier year. Multimedia mobile phones have grown from 800,000 units in 2008

to 1.8 million in 2009.

41

Japanese consumer durables company Panasonic expects to double its sales in India to US$

945.09 million in the 2010 fiscal and subsequently expects the contribution from the country

to its global business to increase by 10 per cent by 2014.

Consumer Durables

IBEF: December 02, 2009

Several key factors are driving growth in the consumer durables sector: disposable income

levels are rising, consumer financing has become easier and urban and rural markets are

growing at the annual rates of 7 per cent to 10 per cent, and 25 per cent, respectively, with

organized retail expected to garner about 15 per cent share by 2015 from the current 5 per

cent.

Consumer durable is one of the fastest growing industries in India. Industry sales were

estimated to be about US$ 5 billion in value in 2007-08, a growth of more than 25 percent

over 2006-07, and are expected to grow at 20 percent in 2008-09. Some of the prominent

global players in the consumer durables sector include Philips, Samsung, Sony and Nokia.

Then, there are historical reasons. When the government opened up the sector, recalls

Mirchandani, incumbent players ―were not ready for competition and most of them died or

are still bleeding.‖ Videocon's Dhoot holds heavy taxation responsible for industries' woes.

―Total tax incidence in India even now stands at around 25-30 per cent, whereas the

corresponding tariffs in other Asian countries are between 7 and 17 percent,‖ he says.

Poor infrastructure is another reason that seems to have held back the industry. ―Regular

power supply is imperative for any consumer electronics product. But that remains a major

hiccup in India,‖ says Ravinder Zutchi, Deputy Managing Director, Samsung.

Indeed, over 80 percent of the rural market in India remains irrelevant for the industry

because of these reasons. But the fact remains that these problems are not going to be

42

RESEARCH METHODOLY

Research methodology is a way to systematically solve the research objective. It may be understood as a science of studying how research is done scientifically.

In it we study the various steps that are generally adopted by researcher in studying his research objective along with logic behind it. It is necessary for the researcher to know not only the research methods/ techniques but also the methodology. Researcher not only need to know how to apply particular research technique, but also need to know which of these methods or techniques are relevant and which are not and what would they mean and indicate and why. All this means that it is necessary for the researcher to design his methodology for his objective under study as the same may differ objective to objective.

Thus when we talk of research methodology we not only talk of the research method but also consider the logic behind the methods we use in the context of a research study and explain why we are using a particular method or techniques and so that research results are capable of being evaluated.

Redman and Mory define research as a “systemized effort to gain new knowledge.” Some

people consider research as a movement, a movement from the known to the unknown.

Research is an academic activity and as such the term should be used in a technical sense.

According to Clifford Woody, research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;

making deductions and reaching conclusions; and at last carefully testing the conclusions to

determine whether they fit the formulating hypothesis.

Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research methods or techniques but also the methodology

Research can be defined as the search for knowledge or any systematic investigation to

establish facts. The primary purpose for applied research (as opposed to basic research) is

discovering, interpreting, and the development of methods and systems for the advancement

43

of human knowledge on a wide variety of scientific matters of our world and the universe.

Research can use the scientific method, but need not do so.

Scientific research relies on the application of the scientific method, a harnessing of

curiosity. This research provides scientific information and theories for the explanation of the

nature and the properties of the world around us. It makes practical applications possible.

Scientific research is funded by public authorities, by charitable organizations and by private

groups, including many companies. Scientific research can be subdivided into different

classifications according to their academic and application disciplines.

Historical research is embodied in the scientific method.The term research is also used to

describe an entire collection of information about a particular subject

Types of Research

Research can be classified by purpose or by method. If we categorise it by purpose, it would

fall into two major categories: Basic Research and Applied Research, while in case of

method, it would be deductive research and inductive research.

BASIC RESEARCH

Also called Pure or fundamental Research, it is undertaken for increase in knowledge. There

is no direct benefit as it is a research for the sake of research. It is conducted to satisfy any

curiosity such as: (a) what makes things happen, (b) why society changes and (c) why social

relations are in a certain way. In fact, it is the source of most new theories, principles and

ideas. Basic research rarely helps anyone directly. It only stimulates new ways of thinking.

The main motivation is to expand man's knowledge. There is absolutely no commercial value

to the discoveries resulting from such research.

However, in the long run, it forms the basis of applied research or development

commercial products. If basic work is done first, then applied spin-offs often

eventually result from this research. As Dr. George Smoot of LBNL says, "People

cannot foresee the future well enough to predict what's going to develop from

44

basic research. If we only did "applied research", we would still be making better

spears."

To sum up, basic research is purely theoretical to increase our understanding of

certain phenomena or behavior but does not seek to solve any existing problem.

APPLIED RESEARCH

It is use of basic research or past theories, knowledge and methods for solving an existing

problem. It deals with practical problems. It is opposed to pure research which is not problem-

oriented but for the increase in knowledge which may or may not be used in future.

In the present world situation, more emphasis is being given to applied research to solve

problems arising out of overpopulation and scarcity of natural resources.

Applied research should not be treated the same as Research & Development (R&D) which is

involved in developing products demanded by the existing clients. Applied Research, on the

other hand, focuses on uncovering what needs are not being met and use that information in

designing products or services that would create their own demand. Thus, applied research

brings in new customers and also provides better products and services to the existing

customers. In old days, the mobile phone was expensive, bulky and had a short range.

Applied Research foresaw that this product would have a limited market and stressed on cost-

cutting, reduced weight and long-distance communication. Such measures caused a heavy

demand.

JUSTIFICATION:

In the KATARIA AUTOMOBILES there exists the APPLIED RESEARCH because this

research gives the clear knowledge about the existing problems like How to satisfy the

consumer? This research also takes the information from the Basic Research and also this

research helps the dealer to create the good competitive marketing strategies.

45

Objectivesofstudy: The research was aimed at studying the purchase pattern of consumers for consumer durable.

To study the factors affecting purchase of consumer durables

To study brand preference of consumers for consumer durable goods

To study brand preference of consumers towards organized & unorganized outlet for

the consumer durable goods.

Scope of the study:

The research is conducted in sohna city to study purchase pattern of consumer durables

which includes major factors affecting the decision, brand preference and preference towards

organized and unorganized formats to purchase the same.

Research design:

Research design is descriptive in nature. Preference of people is analyzed and quantified to

know the factors responsible for their preference. Further preference is quantified in terms of

organized and unorganized retail formats.

46

Data Collection

Data collection methods are credible with validated surveys and/or other methods are clearly

described such as observational strategies, the data or information is current. The data

collection is focused on a limited sample of population and has minimal application in terms

of generalizing the findings.

Primary Data: It can be collected directly or indirectly. It was done through a well

structured and designed questionnaire which contain 16 number of questions which

were asked directly to the customers of Sachin Hyundai Bareilly showroom and Koral

Motars.

Secondary Data: It refers to data which have been collected and analyzed by

someone else. It consists of internet and books etc. Secondary data has also been

collected through the Hyundai Sales training handout.

Sample Size: A sample size of 40 respondents was taken to conduct the study of

Questionnaire

.Secondary Data:

Information regarding the project, secondary data was also required. These data were

collected from various past studies and other sources like magazines, newspapers, and

websites which qualified as reliable.

Data Co l l e c t i on Source

Information for this project was collected primarly through secondary sources.The data

collected from the secondary sources are called as Secondary data.

Secondary Data:Any data, which have been gathered earlier for some other purpose, are

secondary data in the hands of researcher. Those data collected first hand, either by the

researcher or by someone else, especially for the purpose of the study is known as primary

data.

The data collected for this project has been taken from the secondary source.

Sources of secondary data are :-47

Internet

Magazines

Publications

Newspapers

Brouchers

Primary Data:

These data was collected through survey of consumers with the help of questionnaire.

.Research instrument:

Structured questionnaire

Sampling plan:

Target population: Households of sohna&gurgaon

Sampling unit: households & People purchasing consumer durables from stores at the time of

research

Sampling method: convenience and Step out sampling

Sample size: 200

Analytical tools:

Graphical presentation

Hypothesis

Weighted average

Contribution of the study

The study reveals preferential criteria for the purchase of consumer durables. it also gives

insights into the preference towards organized and unorganized store along with reasons

which may become helpful to the marketers to redesign strategies

Limitation of the Study:

As the time given to complete the project is lesser than actual time required completing

48

similar studies, the quality of findings may get affected. The sample size s 200 (hundred),

thus the findings from the same may not be representative of the actual population.

resolved in the near future. And the companies will have to factor them in when they draw

new growth plans. Which they have now done. Shorter replacement cycles, especially in

urban areas, also give companies cause for hope. Over the next few years, the topography of

the industry will likely change, with some companies gaining at the expense of others.

Eventually, however, the market itself will grow, as rural markets evolve and companies

create specific products for them.

The biggest limitation of this project was time , due to lack of time the necessary data

were collected from the secondary sources..

Due to tough competition in the market the companies are not willing to disclose their

strategies adopted to face the competition so sufficient information were not collected

and the information collected are not 100% accurate.

Prior to liberalization, the Consumer Durables sector in India was restricted to a handful of

domestic players like Godrej, Allwyn, Kelvinator and Voltas. Together, they controlled

nearly 90% of the market. They were first super ceded by players like BPL and Videocon in

the early 1990s, who invested in brand-building and in enhancing distribution and service

channels. Then, with liberalization came a spate of foreign players from LG Electronics to

Sony to Aiwa.

Both rising living standards, especially in urban India, and easy access to consumer finance

have fuelled the demand for consumer durables in the country. Also, the entry of a large

number of foreign players means the consumer is no longer starved for choice. But this has

also resulted in an over-supply situation in recent times as growth levels have tapered off.

49

50

5.2 SWOT Analysis:

Restricted working hour Hiring part-time workers difficult

TAXES

High corporation tax

Opportunities:

• India is amongst the least saturated of all major global markets in terms of penetration

of modern retailing formats

• Players emerging across formats and product categories

• Rapid Expansion for all players

• The Shopping Mall formats are fast evolving

• Partnering among Brands, retailers, franchisees, investors and malls

51

Threats:

• Barriers to FDI which limits entry of global players and limits exposure to best

international practices

• Poor Infrastructure which restricts retail growth, creates supply chain bottlenecks

and increases wastage of farm produce

• 2008's economic crisis create some bad effect on sector.

Here, in survey the 69% are male respondents & rest of the respondents are female.

Male are more concerned about the consumer durables & also more attracted towards these

electronics.

52

As it can be seen that most of the respondents are responded which are in the category of the

graduate. It can be said that the respondents who have replied kindly are having at least the

knowledge of the industry. Area of living is considered because as the customers are

preferable for any one buying area or not that is seen. Generally, the Satellite & ambavadi

area are more preferable for the consumer durables. Also the respondents are generally

belongs to these particular areas from Ahmedabad.

53

Most of the Respondents were salaried, the students & the self-employed. Because of that the consumer durable survey can be mass segmented. As it can be seen that the 57 no. of the

respondents are salaried respondents. While very less are the retired respondents.

As here it is to be seen that not more of the female & the retired persons are interested in

p

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Technology is the most important criteria while purchasing any laptop or any desktop. Then

the price is given the 2nd most prefered & People do not give much importance to scheme and

durability while purchasing compuers.

55

While purchasing mobiles, the most important characteristic is the price that is to be preferred first. Then the least preferred is the

durability while purchasing

56

Music Systems

Services are given to the most preferred out of all the characteristic while purchasing the

airconditioners. & the durability is the least prefered while purchasing A.C.

57

Services are given to the most preferred out of all the characteristic while purchasing the

airconditioners. & the durability is the least prefered while purchasing A.C.

58

The respondents are preferred the technology 1st while purchasing the digital camera.While

the least prefer is durability as per the research.

59

60

Most of the respondents perchase consumer durables from organized outlets. In the category

of mobiles and computer, people also purchase from unorganized because of price and

service61

.

62

Key findings 17 Availability of all brands at a time should be there in unorganized retail outlet.

18 More than 60% of the respondents are preferred financial schemes to purchase the

consumer durables.

19 Approximately 80% of the respondents purchases consumer durables while discounts

are available during festivals & promotional schemes.

20 Approximately 35% are respondents which are not the brand specific if they get the

promotional schemes.

21 Most of the Respondents are generally not preferred the exclusive showrooms.

22 Sales India & Croma are the most relevant & preferred brand stores according to the

consumers.

23 Sales India & croma is also the retail outlet which is very famous & brand recall is

there in the mind of the consumers.

24 Generally consumers are not preferred much of the retail outlets for the mobile & all

little accessories purchase.

25 Consumers who are brand conscious, they are generally not switch over the brand for

the any type of financial or the promotional scheme.

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CONCLUSION AND SUGGESTION

In this study, we found that the Organized & Unorganized retail outlet both are preferable.

But generally consumers see the preference of the product & as per the product & the

schemes, it differs. Purchase pattern of the consumers are differ from the product to product

& store to store. Generally sales India & croma is the most preferable organized outlet.

The study for the how frequently the consumers buy the products, which are generally less

than a year, or more than that. So generally, by product wise it differs. The availability of all

the products is the main criteria behind purchasing from the organized outlet. While the last

reason for purchasing from the organized outlet is only the display of all the products.

Home delivery of all the products is the main & important criteria behind purchasing the

unorganized outlet. Convenience is the last reason behind purchasing the unorganized outlet.

Financial schemes are generally preferred for the purchasing consumer durables. Promotional

schemes are also preferred for the consumer durables by consumers. Normally, the discount

schemes are also preferred by the consumers.

Some consumers are also brand specific for the some of the products. Like the laptop is

preferred only of sony vaio by the most of the consumers. While some of the consumers have

dream for that sony vaio laptop. Generally exclusive showrooms are not so much preferred

for the consumer durable electronics.

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QUESTIONNAIRE

Dear Sir/Madam,

We are the students of BSAITM, MBA CAMPUS, FARIDABAD and

presently doing a project on STUDY ON CONSUMER BUYING PREFENCES TO

WARDS CONSUMER DURABLE(ELECTRONICS)We request you to kindly fill the

questionnaire below and assure you that the data generated shall be kept

confidential.

Gender : M FAg e :Educational Qualification : 10th or below 10+2 or below

Graduate Post Graduate and above Others(please specify)

Area :

Occupation : Salaried Self Employed

Retired Housewife Student NRI

1. According to you what is best outlet for consumer durables? 1organised

2 unorganised

2. According to you what is unorganized&organised outlet for consumer durables?

___________________________________________________________________________ ___________________________________________________________________________ __________________________________________________________________

65

3. While purchasing consumer durables, which characteristics of following do you consider? (Rank appropriate, as 1 for the Highest & 5 for the Lowest.)

Characteristics CATEGORY Durability Price Schemes Technology Service

CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Others

4. How frequently you change your consumer durables?

CATEGORY Less than 1-3 3-5 5-10 More than 10 a year years years years years

CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Others

5. From where do you prefer to buy consumer durables?

Always Organized Retail Always Unorganized Retail Both

66

6. What is your preference for the following : (Rank from 1 to 5, as rank 1 is for highest)

CATEGORY

CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera

Sales India

Organized Outlet

Croma NEXT X-cite e-zone

Unorganized (give name) Purchasing

area

7. Rank the given reason behind purchasing from the organized retail? (from 1 to 10, as 1 to be highest & 10 to be lowest)

Organized Unorganized Reasons

Display

Availability of all brands

Status

Promotional Schemes

Financial Schemes

Sales person's interaction

Home delivery

Rank Reasons

Proximity/Convenience

Trusted brands (by providers)

Trustworthiness in owner

Home delivery of all products

Promotions

Availability of financial services

After sales services

Rank

67

After sales

services

Proximity/

convenience

Replacement

8. As per your opinion what is to be provided for better services in organized retail?

1 _________________________________________________________________ 2 _________________________________________________________________ 3 _________________________________________________________________

9. As per your opinion what is to be provided for better services in unorganized retail?

1 _________________________________________________________________ _________________________________________________________________ 3 _________________________________________________________________

10. Do you prefer financial schemes to purchase consumer durables?

Y es No

11. Would you wait for available discounts for purchase consumer durables?

Y es No

If yes, then give details about when you generally go for a purchase.

During During

CATEGORY

CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera

At Occasions

At Festivals

Financial Schemes

Promotional Schemes

Others

12. Do promotion schemes change your brand preferences?

Y es No

13. Do you prefer the Exclusive showroom of a particular company for the brands you purchase consumer durables?

Y es No

Bibliography

Consumer Behavior published by ICFAI Publications

Integrated marketing Communications published by ICFAI Publications

Consumer Behavior , Text and Cases.by Satish Batra and S.H.H.Kazmi

―It happened in India‖ by Biyani; Kishore

Kotler Philip,‖ Marketing Management‖, New Delhi, Pearson Education Inc,

2006.

Kothari,C.R,Research Methodology methods and techniques ,New Delhi, New

Age International (p) Ltd,1990.

MARKETING RESEARCH- AN APPLIED ORIENTATION

By- Naresh K. Malhotra.

BUSINESS RESEARCH METHOD - By-COOPER & SCHINDLER 10TH

ED., TATA McGRAWHILL,2008

Consumer Behaviour published by ICFAI Publications

Integrated marketing Communications published by ICFAI Publications Consumer

Behavior , Text and Cases.by Satish Batra and S.H.H.Kazmi

―It happened in India‖ by Biyani; Kishore

2) Newspapers

The Economic Times/Brand Equity

The Telegraph/Metro

The Business line / Brand line

3) Magazines

The Business line

Retail Biz

Business Standard

4) Websites

http://www.cci.in/pdf/surveys_reports/consumer-durables-sector.pdf

www.ibef.org/economy/ consumer market.aspx

www.cci.in/pdf/surveys_reports/ consumer - durables -sector.pdf

www.thehindubusinessline.com/2010/02/.../2010021650300400.htm

www.indiaonestop.com/ consumermarket s.htm

www.ncaer.org/downloads/PPT/TheGreatIndian Market .pdf