A 

REPORT ON

 

CONSUMER DURABLE INDUSTRY

 

 

 

 

 

  

TABLE OF CONTENTS

1.     Introduction……………………………………………………………

2.     Television: CTV………………………………………………………

 

3.     Refrigerator…………………………………………………………..

 

4.     Air-conditioner……………………………………………………….

  

5.     Washing Machine…………………………………………………….

 

6.     Future Scenario………………………………………………………

 

7.     Conclusion & Recommendation…………………………………….

 

8.     Bibliography………………………………………………………….

 

 

 

 

  

INTRODUCTION

 With Indian economy increasingly witnessing structural transformation from

a rural, agricultural one to more urban industrialized one, consumer durable

goods sector is fast emerging as an important segment of the economy.

Consumption of manufactured consumer goods is recognized as one of most

widely accepted measures of standard of living and quality of life. Consumer

goods manufacturing industry provides the driving force for stimulating

rapid economic growth. The growth rate of manufacturing and consumer

goods industry normally surpasses that of agriculture and service sectors. It

is for this reason that the manufacturing and consumer goods durable

industry is considered the backbone of economy.

 

BACKGROUND 

 

    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

superceded by players like BPL and Videocon in the early 1990s, who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.

Rs 23,000-crore consumer durables industry can be divided into two

types: consumer electronics and consumer utilities. Consumer electronics is

basically entertainment systems like television, VCRs, audio systems and

home theater systems. Consumer utilities are other household appliances like

refrigerators, washing machines, air conditioners, food processors, and

vacuum cleaners. On most third world countries, consumer durables like the

refrigerator and television are most popular. Out of these, the television

segment is undoubtedly the largest segment. Products in the white goods

segment come next to the CTVs in the purchasing hierarchy of the Indian

consumer.

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

income levels, double-income families, changing lifestyles, availability of

credit, increasing consumer awareness and introduction of new models.

Products like air conditioners are no longer perceived as luxury products.

According to Indian Readership Surveys (1999-2004) the following durable

categories have registered a healthy double-digit growth.

              

 

 

 

Source: Indian Readership Surveys (1999-2004)

Durable Categories Growth Rate (1999-

2004)

Television Sets 16%

Washing Machine 17%

Refrigerators 14%

 

While TV draws its share from both urban and rural refrigerators and

washing machines are still inclined towards urban.

Current Scenario

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

emergence of new companies (especially MNCs), introduction of state-of-the-

art models, price discounts and exchange schemes. MNCs continue to

dominate the Indian consumer durable segment, which is apparent from the

fact that these companies command more than 65% market share in the

colour television (CTV) segment.

        Steady growth of CE at 13-15% (’03–23%)

        HA falling behind CE on account of growth

        Steady growth of CE+HA - yet low penetration

 

 

 

INDUSTRY SIZE

        Rs 23,000-crore consumer durables industry can be divided into two

types: consumer electronics and consumer utilities. Consumer Electronic

industry has a size of around Rs. 102 billion. The Indian television industry

has a size of around Rs 96 billion, comprising colour television (CTV) of Rs 91

bn and B&W TV market of Rs 5 bn and  other markets (primarily video

equipment) of Rs. 4-6 billion. In terms of volumes, the CTV market was

estimated at 9.05 million units and the B&W TV market at 2 million units

during calendar year 2004.             

       Refrigerators constitute the second largest product segment within the

Indian consumer durables sector in India, with an estimated annual turnover

of Rs 39 bn during FY2005 with an estimated sale of 4.1m units.

         The size of the room Air-conditioners industry is estimated at 1.1 m in

volume terms, and Rs 24 bn in value terms. Washing machines sales in India

aggregated an estimated 1.37m during FY2004 or around Rs 11 bn in value

terms.

 

 

 

 

 

MAJOR PLAYERS

The major players in the consumer durables industry, operating in

different sectors such as air conditioners, washing machines, refrigerators &

television: Blue Star Ltd., Mirc Electronics Ltd., Whirlpool of India Ltd., Philips

(India) Ltd., BPL Ltd., Sony Corporation Ltd., Samsung India Ltd., LG

Electronics India Ltd., Videocon International Ltd., Thomson Ltd. & Daewoo

Ltd.

 

 

 

 

 

 

 

 

 

  

DEMAND/SUPPLY

Supply growth is high across all the segments. But the organized sector

has gained substantial market share from the unorganized segment in recent

years. However, there are fewer players in segments like dishwashers and

vacuum cleaners.

Cyclical and seasonal. Demand is high during festive season and is generally

dependent on good monsoons. There are certain factors in the consumer durables

industry, which are considered as demand drivers. They are:

1.      The degree of distribution network in the market.

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

the industry.

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

4.      The technology used by the company viz. state-of-art technology or

an older version.

5.      The ability of the company to introduce newer products and newer

product features

6.      The capability of the company to service its products 'The discount

schemes and consumer finance facility available

7.      The market positioning of the product 

8.      The cost competitiveness and pricing strategy of the company

9.      The financial strength of the players

 CONSUMER DURABLE: URBAN & RURAL INDIA

1.      In the top 5 million households, in affluence terms, 96 percent of

households have color televisions, 82 percent own refrigerators,

and 44 percent own washing machines.

2.      In the next 7 million households, penetration of color TVs is 69

percent, 58 percent for refrigerators, and 19 percent for washing

machines.

3.      In the next tier of affluent households - numbering approximately

12 million - 50 percent own color TVs, 35 percent own

refrigerators, and 8 percent own washing machines.

Rural India too is set to see an increase in the number of high-income

households. An additional 4.6 million high-income households and 13 million

middle-income households by 2006 to 2007 will take the number of rural

households from 122.8 million to 139 million. This constitutes a huge

opportunity for marketers - 60 million households or 300 million consumers

with the capacity to buy consumer appliances and other products is an

attractive market for any global player. And it seems that global appliance

players who have established brands in the Indian market are likely to benefit

from this great big push towards consumerism

SUCCESS FACTOR FOR CONSUMER DURABLE INDUSTRY

Indian consumer durables industry is going through a consolidation

phase with MNC companies going in for strategies to increase market share.

Certain success factors for this industry are identified as follows:

1.      Technology: Rising competition has resulted in major competitors

introducing technologically superior products at competitive prices.

This means the technology input is gaining more and more importance.

In this regard, the large MNC players score over their Indian

counterparts as they can always source technology from their parents.

On the other hand, Indian companies rely on the outside sources for

their technology requirements.

2.      Knowledge of the local market: Indian consumer durables market is

different from other markets. Hence understanding these peculiarities

is important for the long-term survival. For example, Samsung

launched the 'Super Horn" brand after it discovered that Indian

consumers prefer loud noise. Indian companies are better placed in

this regard as they know the market pretty well.

3.      Strong distribution network: Tough competition means that a

proper mindshare of the consumer has to be maintained and the

product has to be made visible. Volumes in this business are narrow

and profitability comes from volumes. To achieve volumes, deep

penetration of the market is necessary. Indian companies score a point

here as being in the market for a longer time; they have developed

strong distribution channels.

4.      Good brand image: Perception of a particular brand plays an

important role in purchase decision. A typical Indian consumer looks

for value for money when he makes purchase of white goods, as the

price involved is significant and unlike developed markets, Indians do

not have the buy, use and throw mindset. Hence, consumer also looks

for reliability of the product. All this is conveyed through strong brand

awareness.

 

Consumer Outlook: The Change in Consumer

             India is a country in a hurry – changing continuously and also trying hard

to keep pace with these changes. The ‘me too’ syndrome is no longer valid as

consumers seek customized products. “The Indian consumer consumer’s

evolution in the last decade has thrown up some interesting trends:

1.      Consumer base becoming younger. Nearly a third of the

country’s population is under the age of 14years.

2.      Kids graduating from pester power to decision makers.

3.      People with buying power living longer and developing

distinct health needs.

4.      Multi-tasking consumers fighting paucity of time and new

consumer trends.

5.      Huge increase in High Income Groups and spend now-save

later mentality leading to high disposable income.

6.      Consume wants to be treated as an individual not as part of a

large physical mass and the consumer looks for a ‘post buy’

relationship to enhance the value of her brand decision

making.

NCAER’s The Great Indian Middle Class Survey: A few interesting

finding:

1.      Total number of urban households will increase from 49 million

to 60 million by 2006 to 2007. The number of urban households

in the high-income group will increase by 8.6 million by the year

2006 to 2007, and by 7.3 million in the upper-middle-income

group.

2.      By 2005-2006, the number of these rich households would

increase by 250per cent to 1, 40,000 by 2010. They are expected

to grow from 0.2% in 1995-96 to 1.7% in 2010.

3.      Middle class will rise to 12.8%, from the current 2.8%.

 

This is the first time that NCAER has defined the middle class as having an

annual household income of Rs 200,000 to Rs 1 million. Many of these rich and

middle class households are located in rural areas and small towns too.

 

 

SWOT ANALYSIS: CONSUMER DURABLE INDUSTRY

 

STRENGTH WEAKNESS 

 

o       “Accessory to Necessary” Air-conditioners are no longer perceived to be a item of luxury.

 

o       Advancement of technology which gives the companies ability to introduce new products and new product features.

 

o       High Growth. Key drivers being Urban and Rural.

 

o       Government Policies in favour of Industry includes infrastructure development, reduction in excise duty and so on.

 

 

o       Supply continues to outstrip Demand. Demand Cyclical and seasonal.

 

o       Volatile performance of the agricultural sector have a negative impact on demand. The sector's performance is highly dependent on monsoon and reforms, which has failed often.

 

 

 

OPPORTUNITY THREAT 

o       Diversification. Developing new products for new markets.

 

o       Easy availability of finance has stimulated consumers to buy durables.

 

o       Changes in Consumer Outlook from spend now-save later mentality leading to high disposable income.

 

 

 

o       Dozen companies operating in the white goods segment. Prices would continue to remain depressed and margins will be under pressure.

 

o       Threats of cheaper imports from China and other South East Asian countries

 

 

 

 

 

 

ENVIORNMENT ANALYSIS: PORTER’S MODEL

 

POTENTIAL ENTRANTS

MEDIUM

 

 

In the CE industry, although there are not prohibitively high costs of entry, the critical success factors are brand image, brand allegiance, and distribution networks.

 

INDUSTRY COMPETITORS

INTER FIRM RIVALRY HIGH

 

The Indian industry consists of players of domestic origin as well as multinationals. Of late, the multinationals have gained a sizeable presence in the Indian CE market at the cost of domestic players.

 

BARGAINING POWER OF BUYERS

HIGH

 

With the intensification of competition the bargaining power of the buyer has increased.

SUBSTITUTES

LOW TO MEDIUM

 The consumer electronics (CE) sector is characterised by continuous technology advances that may result in substitution within the product

category.

BARGAINING POWER OF SUPPLIERS

LOW TO MEDIUM

 

Most of the raw materials are

available easily and in India. Some high-end raw materials such as larger-size picture tubes for flat TVs are imported.

 

 

 

 

 

 

 

 

 

TELEVISION: CTV

 BACKGROUND

The television industry started in India in 1970 with the production of B&W TV

sets. The initial TVs were all 20-inch (or 51-cm) sets. For 13 years, this was the

only size offered in the B&W TV market, till 14-inch TVs were launched in 1984. .

The Government policy on B&W TVs in the initial period was characterized by

licensing of manufacturing units for capacity in excess of 10,000 per annum and

encouragement to the small sector industry (SSI) sector to set up production

facilities with capacities in the range of 2,500-5,000 per annum. The year 1983

saw the removal of restriction on capacity expansions and of the ceiling on

capacity to be licensed, although the restrictions on foreign technology

continued. A notable development was the launch of the 14-inch B&W TVs in

1984, which evoked an even better response from the market, especially since

they were affordable for households in the lower economic strata, in both rural

and urban areas.

The birth of CTV in India can be traced to the Asian Games (ASIAD) held in New

Delhi in 1982. After the ASIAD, Doordarshan Kendras were set up in many parts

of the country. The euphoria over cricket following India's victory in the

Prudential World Cup in 1983 and in the Benson and Hedges cricket

championship in Australia in 1985 (with the high-quality telecast of Channel

Nine) provided a great impetus to CTV demand. The Government encouraged

this sector, and various State Governments came up with their own TV

companies like Uptron, Keltron and Meltron. Older players in the B&W TV

market, like Weston, Dyanora and Televista, also diversified into CTVs. By

1989, there were around 200 players in the market.

The second phase of CTV growth came on the heels of the 1991-initiated

economic liberalization programme, after which there was a reduction in both

excise and import duties. Simultaneously, with the opening up of Indian skies to

foreign satellite channels in 1991-92 and the coming of cable TV, the demand for

TVs grew further. This was also the period when private and more aggressive

domestic players like Videocon, BPL and Mirc Electronics consolidated their

presence in the CTV market through their focus on both product promotion and

technology--the latter through collaborations with international bigwigs (BPL

with Sanyo, Japan, Mirc Electronics with JVC, Japan, and Videocon with

National, Japan). Since the mid-1990s, the Indian TV market has witnessed the

entry of global brands like Akai, Aiwa, Sansui, LG, Samsung and Toshiba. At

present, while LG and Samsung operate through fully-controlled Indian

operations, the Akai, Sansui and Toshiba brands are marketed by Videocon

(Akai was initially with Baron International, and later sold to Videocon). Aiwa is

now a subsidiary of Sony. The other multinationals (including Sony, LG,

Samsung) entered on their own and quickly captured the imagination of the

market with innovations in product quality and features.

 

INDIA V/S GLOBAL

The penetration levels of televisions in India is just 24% as compared with

98% in China, 11% in Brazil, 235% in France, 250% in Japan and 333% in US. 

"In the west, the colour television is replaced after every 2-3 years, for

us Indians, the period of replacement varies between 10-12 years."

PLAYERS AND MARKET SHARE

The major brands in the Indian CTV industry are LG, Samsung, BPL, Onida,

Videocon, Onida, Sansui, Sony, Akai, Aiwa, Philips, Panasonic, Sharp, Thomson

and Daewoo. Competition has also intensified with Chinese consumer electronics

player Haier, German company G-Hanz and Japan's Hitachi having leaped into

the colour TV market. The companies marketing their CTV products under these

brands are as follows:

Company Brands

BPL Limited BPLVideocon International Limited Videocon, Akai, Sansui, Toshiba

Mirc Electronics Limited Onida and IgoSony India Private Limited SonyLG Electronics India Limited LGSamsung India Electronics Limited SamsungNational Panasonic India Limited/Matsushita Television and Audio Private Limited

Panasonic

Kalyani Sharp India Limited SharpThomson Consumer Electronics India Limited

Thomson

 

The Indian television industry has a size of around Rs 96 billion, comprising

colour television (CTV) of Rs 91 bn and B&W TV market of Rs 5 bn. The top four

players (LG, Samsung, Videocon group and Onida) have consolidated their

position. Today, they account for 69 per cent of the market, up from 43 per cent a

couple of years ago. Two or three factors have caused this change. BPL, once a

leader with over 20 per cent market share, has dropped to 5.2 per cent. Second,

multinationals brands like Sony, Panasonic, Thomson, and Sharp have lost

ground. Third, regional brands like Oscar, Texla, Weston, and Beltek have lost

market share. The reason behind this is that the consumer electronic and the

CTV market is characterized by continue innovation and use of state of art

technology which these companies have been unable to keep pace.

 

 

 

 

 

 

 

 

 

REFRIGERATOR

 

BACKGROUND 

 

          Refrigerators have been manufactured in India since 1950s. Till the 1980s,

players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the

market. Earlier, the white goods sector was categorized as a luxury goods

industry and was subject to oppressive taxation and licensing. The situation

changed after the liberalization of the Indian economy in the early 1990s. The

government removed all restrictions, and now there is no restriction on foreign

investment, and licenses are no longer required. Post-liberalization, a number of

foreign companies entered the market and many domestic players also

diversified into refrigerators. BPL and Videocon who already had a presence in

the consumer electronics market, leveraged their strengths to enter the durables

sector.

           In India, refrigerators have the highest aspirational value of all consumer

durables, with the exception of televisions. This accounts for the high growth

rate of the refrigerator market. Refrigerators are presently being manufactured

in two basic designs which are referred to as Direct Cool (DC) and Frost Free

(FF) refrigerator. The direct cool segment continues to dominate Indian

refrigerator market compared to more expensive frost-free models. The growth

in this segment though marginal, has been driven by factors like availability of

low priced models as due to competitive pricing and a growing middle class.

Manufacturers of refrigerators claim to have improved the quality of the product

particularly the reliability of the Compressor. In so far as new technology is

concerned, the concept of Frost Free refrigerator has been gaining popularity.

Capacity-wise also, there is a shift in Refrigerator Market. Till about two years

back, 165 Litres had a larger share and now units of capacity 185-300 Litres are

having increasing market share. Manufacturers are encouraged to adopt

environment friendly technology like usage of non-CFC (non- Chloro-Fluro-

Carbons) refrigerant based air conditioners, Non-CFC refrigerators are

manufactured in the country but because of their high initial cost, the demand is

somewhat sluggish.

 

INDIA V/S GLOBAL

               The penetration of household refrigerators in India, the fifth largest consumer

durable in terms of penetration, is 13% compared to well over 90% in Malaysia,

Australia, Singapore, Hong Kong and Korea; around 80% in Thailand; close to 40% in

Philippines and China and 20% in Vietnam and Indonesia. When you compare the

annual commercial sales of HVAC and refrigeration equipment in the US at US $

200 per capita and in China at US $ 3 per capita with a dismal US $ 0.25 per

capita in India.

 

PLAYERS AND MARKET SHARE

           The refrigerator industry has become highly competitive as a number of brands have

entered the market and the consumer has a wide choice.

Company Brands

BPL Limited BPLVideocon International Limited Videocon, Akai

LG Electronics India Limited LG

Samsung India Electronics Limited SamsungWhirlpool of India Ltd  WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejVoltas Limited VoltasElectrolux Kelvinator Electrolux Kelvinator, Electrolux and

Allwyn

 

           Refrigerators constitute the second largest product segment within the

Indian consumer durables sector in India, with an estimated annual turnover of

Rs 39 bn during FY2005 with an estimated sale of 4.1m units. According to FICCI

Survey April-March 2003-2004 Whirlpool and Godrej are the top two players

with market shares of 27 per cent and 20 per cent respectively. Electrolux

Kelvinator and LG compete for third and fourth position with market shares of

16 per cent and 14.5 per cent respectively. Videocon (11 per cent), Samsung (6),

BPL (4), Voltas and Akai are other significant players.

 

 

 

 

 

 

AIR-CONDITIONER

BACKGROUND                                                                                      

In 1902, Dr. Willis Haviland Carrier invented and secured the patent for a

weather control concept - air conditioning. Ever since, life hasn't been the

same. The air-conditioner market is hotting up as more and more people

appear to be convinced about the comfort of an air-conditioner (AC). The

extremely hot summers have stirred the demand for ACs and the industry is

experiencing a significant change.                                                                                                   

Types of Air-conditioner                                                                             Air

conditioning products are divided into Non Ducted products & Ducted

systems .The Non Ducted products are divided into two parts: window ACs &

the mini splits. The ducted systems are divided into central plants, packaged

ACs, ducted ACs. Window ACs account for about 54% of the total market for

ACs with an estimated market size of about Rs20bn.                                            

Room air conditioners operate on electricity or gas and are enclosed in a

single cabinet. They blow the conditioned air directly into the room and do

not have air ducts leading to and from them. The three chief types are

window air conditioners, consoles and self-contained air conditioners.                                

Window air conditioners fit into the lower part of a window and can be

moved from window to window and thus the name, Window ACs. Self-

contained air conditioners are the large room air conditioner. Central air

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

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

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

Central conditioners have a number of advantages over other kinds. For

example, all the equipment for air conditioning a large area is located in one

place. This reduces the cost of cleaning and repairing. Central conditioners

can also be zoned i.e. they can supply air of different temperature to different

parts of a building.

INDIA V/S GLOBAL                                                                                                  

According to Refrigeration and Air-conditioning Manufacturing Association

(RAMA) the penetration of household Air-Conditioners is abysmally low in

India at around 2% compared to 20% in Indonesia, 24% in China, 40% in

Thailand, 45% in Malaysia.

     PLAYERS AND MARKET SHARE

The size of the room Air-conditioners industry is estimated at 1.1 m in

volume terms, and Rs 24 bn in value terms. According to FICCI Air

Conditioners (AC) it reveals that Indian AC industry, which has mainly

dominated by players like Carrier and Voltas, has been taken over by the new

MNCs in the last few years. AC market is dominated by four major players—

LG, Voltas, Carrier and Samsung.          

LG is the market leader with a market share of 29 per cent followed by Voltas

(11) and by Carrier and Samsung (9.2 each) in addition to other players like

Hitachi and Videocon.

 

 

 

 

 

Company Brands

Mirc Electronics Limited OnidaVideocon International Limited Videocon

LG Electronics India Limited LGSamsung India Electronics Limited SamsungWhirlpool of India Ltd  WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejVoltas Limited VoltasElectrolux Kelvinator ElectroluxBlue Star India Ltd Blue StarDaikin industries, ltd. Daikin

WASHING MACHINE

BACKGROUND

Washing machines as a consumer durable product has been in existence in India

for the last 10 years. During the last few years, in the Consumer Durable Sector

the market for Washing Machines has grown quite fast. The washing machine

market consists of two broad segments - semi-automatic and fully automatic. The

first accounts for a chunk of the market. In terms of loading type, top loading

machines sell in greater numbers than front-loading ones. In this industry, it is

the fully automatic segment, which in recent times has been getting the attention

of the users as more and more households have both partners working.

Consequently manufacturers have started paying more attention to this segment

and have started introducing more features in their products. The customers

now have a wide range of world class brands to choose from.

Major growth is projected to take place in fully automatic segment, which

accounts for above 23 per cent of the total market to about 30 per cent.

There is also a trend for purchasing smaller machines in the range of 3 to 4 kg.

capacity as compared to larger machines as there are more and more nuclear

families rather than joint families. In regard to emerging new technologies in the

washing machines sector mention may be made of aero power, triple cascade

tornado wash, digital intelligence, unique optical sensor and other such

innovations and adaptations which are gradually being introduced by the

indigenous manufacturers. Fully automatic machines are gaining popularity with

the change in lifestyle of consumers, increase in income, increase in number of

working couples, and due to price competitiveness.

INDIA V/S GLOBAL

         The penetration level of Washing Machine is relatively low in India as

compared to global due to many reasons. Many housewives in less affluent

households prefer to wash clothes themselves rather than invest in washing

machines. Water scarcity in many Indian cities and timely availability is another

major issue. However, it foresees that penetration of washing machine will rise

by more than 6 per cent in the next two years.

PLAYERS AND MARKET SHARE

  The refrigerator industry has become highly competitive as a number of brands

have entered the market and the consumer has a wide choice. Some of the

company and their brands are as follows:

 

 

 

 

 

LG Electronics has registered a remarkable growth of 36 % in the Washing

Machine Segment in H1 The Fully Automatic Washing Machines segment has

recorded a remarkable performance where volumes have grown by 22% and

value by 25% .Here again LGEIL happens to be the undisputed leader with a 30.7

% market share in Fully Automatic Washing Machine and 33.7 % market share in

Semi Automatic Washing Machine . (Source: ORG-GFK, May 2004)

Company Brands

Mirc Electronics Limited OnidaBPL Limited BPL

LG Electronics India Limited LGSamsung India Electronics Limited SamsungWhirlpool of India Ltd  WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejElectrolux Kelvinator Electrolux

FUTURE SCENARIO Rising rate of growth of GDP, growth in disposable income, improved

lifestyles, 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 makes future of consumer durable

industry beneficial will rise the expectation of consumer durable industry, While

the consumer durable market is facing a slowdown due to saturation in the

urban market, rural consumers should be provided with easily payable

consumer finances schemes. Rural India, which accounts for nearly 70 per cent

of the total number of households, has a two per cent penetration in case of

refrigerators and 0.5 per cent for washing machines, offers plenty of scope and

opportunities for the white goods industry. By the industry itself the rural

market is growing faster than the urban India now. The urban market is a

replacement and up-gradation market now. 

Unleashing of Consumer Durable Industry

        In TV segment, the 14, 20 and 21 inches segments are expected to be the

key contributors to the overall industry growth. In the air conditioner

segment, room air conditioner market is growing at the rate of 18% per

annum. Majority of the companies, understandably, have plans to focus on

these segments.

        Domestic AC manufacturers plan to beef up their distribution and service

networks, while MNCs will leverage on their brands and invest in high-

powered advertising. Given the fact that household penetration of ACs in

the country is very low (0.5%), growth potential is enormous. As running

costs of the AC are very high, manufacturers plan to introduce energy-

saving models in future. Demand for ACs in the long run will be robust due

to rising income levels and also due to higher computerization. Besides, air

conditioners are no longer perceived as luxury needs.

        As per NCAER (one of the premier economic research agencies in India),

the penetration of TVs is expected to increase almost three times by FY07

as compared to the FY99 level. Growth in even higher for other durable

items like refrigerators and washing machines. The expectations are also

on the premise that the consuming class, as a percentage of total

households, is expected to grow at a faster rate. This would benefit the

consumer durable manufactures.

'000*)

1998-99 2006-07

Category Rural Urban All India

Rural Urban All India

TVs (colour) 48 304 121 185 723 347

Refrigerators 35 335 120 65 717 262

Washing machines

10 167 55 20 399 135

Sewing machines

71 172 100 85 152 103

 

 

Source: NCAER, * households 

 

        As per CETMA, Consumer Electronic   plus Home Appliances is expected

      at 15-20% next five years.

CONCLUSION AND RECOMMENDATION

It Contributes more than 5.5% to index of Industrial Production and provides

jobs to lakhs of professionals, Skilled, Semi Skilled and unskilled workers,

particularly women. It improves the quality of life of people by providing

Entertainment / information / education / comfort and helps reduce daily

chores, particularly for housewives. But the importance of the sector in

National Economy remains unnoticed.

"Low Penetration means opportunity: The consumer electronic and

home appliance which forms the part of consumer durable industry is

categorized by low penetration. Television, Refrigerator and Air-

conditioner have penetration of 24%, 13% & 2% respectively. This

means huge opportunity and untapped market.

Problem Areas: Some of the reason Attributable to Industry are as

follows:

     Inadequate stress on R&D

     Quality - Yet an issue

     After Sale Service & Customer Satisfaction

Action for Industry for Growth

      Commit sufficient resources for R&D

      Need to be more quality conscious

      Need to improve After Sales Services

      Need to Build economies of Scale

      Explore exports as a viable option.

      More emphasis to develop Rural Market.

 

 

BIBLIOGRAPHY

 

     Business World : The BW Mega Consumer Satisfaction Survey

                                                                

     Impact Magazine

     Internet

            www.indiainfoline.com

            www.blonnet.com

            www.etstrategicmarketing.com

            www.lge.com