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Fresco Profile
Fresco was founded in US right in early nineties.For more than a hundered years it had
a huge appetite for expansion and by the millennium the company had become a leading
producer of the residential and industrial coolers. Fresco residential product portfolio
consists of Dry and Cool, Standing Air Cooler, Room Cooler, Outdoor Cooler and
Digitally Controlled air coolers. Sales of Fresco in the Indian market are around 10% of
companys total sales. Dry and cool air cooler make up to 75% of companys revenues in
India. However, their profit margin is only 5% as the market is saturated and the
competition is tough. On the other hand outdoor cooler and room cooler contribute
remaining 25% to companys revenues(16% and 9% respectively) and contribute
with 9% profit margin. Fresco has recently developed the iconic energy efficient
and stunningly designed standing air coolers. But it costs around 5 million to
undertake such a big project and takes around 1-2 years to design,test and lunch
the product. Despite its established market, the company has to deal with
weaker demand in its main market as people prefer ACs more these days. Its
competetiors, Pure4U is a new entrant in the market. It has recently launched
the 3-side cooling air cooler which is a new innovation and has been successful in
capturing the market,Since its a new technology, production of 3-side cooling
coolers is costing quite a high amout.Pure4Us main product line is Air
conditionars, which is not doing well from the last few years and has been
running into losses.
In order to determine the best course of action, the management of Fresco has hired
you to provide sound strategic advice.

Good luck with Engagement!





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Air Cooler Market Outlook in India

Market trends:-
Consumers demand noiseless and more efficient products.
3-side cooling records impressive retail volume growth of close to 150% in the
year 2013. Growth is driven by increased availability of the product and the
decline in unit price levels
Consumers are becoming environmentally aware-as a result leading players
are positioning their product in congruence to this trend
The average unit price continues to decline marginally, resulting in negative
value change

Competitive Landscape:-
Fresco remains the leading player in the air coolers market, 35% of total sales
volume. It is one of the most innovative companies with standard air coolers.
Fresco recorded volume share growth in the air coolers category in the year
2013, driven by innovative digitally controlled coolers.
The fastest growth is in the category of 3-side cooler.Pure4U dominates the
segment, but there are new entrants in the market in this segment. The brand
continues to benefit from the first mover advantage
Design, color, low noise and energy efficiency are all key drivers of the
differentiation in the air coolers in India
Rising consumer demand for sustainable technologies is set to remain strong
in India
3-way air coolers have not yet reached the maturity stage of product life cycle,
so the growth is expected to stay strong. New entrants in this category during
2013 appear to have optimistic growth prospectus
The 3-way air coolers are majorly preferred for larger rooms and also need
servicing every 4 months. In case of any damage(s) servicing takes time as its
a recently launched product.

Main economic Indicators:-
Population : 1,270,272,105 (1.27 billion)
GDP per capita :$1,504(nominal) $4,077(PPP)
Inflation Rate: 8.9%
Unemployment Rate:7.6%
Population Growth: 1.58%


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Standard Air Coolers Available in the Market
Dry and Cool-Low power consumption air cooler. Firm cabinet is
made up of 100% new PP material and has more than 10 years of
lifetime. Hard water pipe and open type water distributor: drive
water evenly and refilling not needed before 8 hours .Mostly
preferred in offices because of its small size and sophisticated
looks.

Standing Air Cooler-High cooling efficiency and installed with
5090 cooling pad. It has service life of 5 years. Patented fan
system with stable wind and low noise. Preferred for open events
cooling such as exhibition, party and outdoor cafe


Room Cooler- Streamline design Durable cooling type
condenser is punched by high speed punching machine. Cooling
fan's quality is reliable. It uses imported steel tubes and full
automatic bent tube welding technique which greatly enhances
oxygen leak-proof and avoids the leaking of cooling mediums. This
type of condenser is more fit for the district where lack water or
where water hardness is high.


Outdoor Cooler-The casing is made of high strength polymers,
which is UV- proof, anti-aging, and resistant to deformation. Use
specially designed axial fan, with large airflow, low noise and
energy-saving with large application. It has high quality
aluminum housing motor, with good heat dissipation, high
protection grade, waterproof and moisture-proof

Digitally Controlled Cooler-Has digital controlled system and
efficient in purifying air. Also has high quality motor which has
good heat dissipation. It is very loud and consumes lot of enery as
compared to other air coolers.Mostly prefrred by hotels and
resturants


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51%
49%
48%
49%
49%
50%
50%
51%
51%
52%
Room Coolers Dry and Cool Models
COMPETITORS
UNITS SOLD











6% 6%
72%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Dry and Cool Standing Air
Cooler
Room Cooler Outdoor
Cooler
15%
72%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
3-side Cooler Room Cooler Outdoor Cooler
Home Clean
Company was established 50
years ago and for a very long
time was manufacturing only
room coolers. Recently they
have expanded their product
portfolio through acquisition
of small foreign company. It is
one of the players that
manufacture standing air
cooler.


HSC
It is known for wide variety of
outdoor coolers. It offers
various designs, efficiency
and size options. It is the only
producer selling product
bundle: small and medium
size air coolers in one box.
HSC has spent 3 years in the
3-side air coolers product
development and have not
been very successful
SpotFree
It is a premium air cooler
producer. Its products are
known for very good
quality, high functionality
but its products are a little
expensive. Even though it
sells more room cooler it is
known for its dry and cool
models.


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100%
0%
20%
40%
60%
80%
100%
120%
3-side Air Cooler









Main Economic Indicators

Air Coolers showed 6% of total sales volume and 10% of total value sales of small
appliances in 2012.The total CAGR for 2012-2017 is expected to stay at 2%.The
growth is slow due to high penetration rates in mature markets. In addition, air
coolers are considered as inefficient in emerging markets due to low labor costs.3-
Side Cooler is the top performer, showing CAGR for 2012-2017 of 17%. The growth is
Pure4U
First movers in the 3-side
air cooler category and
people seem to like this
project and there is
growing popularity.
Companys mission is to
serve as an industry
catalysts and revive air
coolers market.

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driven by developed market such as China. Traditional cylinder Air Coolers saves
the largest share of global sales volumes. Up-gradation to new innovative products is
the key driver in the developed economies, while the growth of middle class is the
determining factor for increase in the demand for appliances in the growing
economies. The common driver is the demand for innovation and variety of products
at affordable prices.

Air Coolers Market Outlook in China
Market trends:
China is a developed market
3-Side Air coolers show high volume growth. The wider variety of choices are
available, which came in line with the unit price increase
Profitability is not changing(15% for standard Air Coolers and around 15-20%
for 3-side air cooler)
New customers choose basic entry level models, while experienced users are
looking for more efficient models
Prospects:
The market is expecting to see a positive growth performance with higher
penetration and more brands entering the market
Some customers may shift brands while others may shift towards new
technology
Current market players are about to upgrade their products, targeting high-
income consumers, by adding energy efficient and ecological products


What should Fresco do about its new competitors?

Pure4U entered India market with high expectation to occupy standard air
Coolers producers. Fresco is worried about its future and is seeking for your
assistance.

Following given are the strategic suggestions to what could be done, however
company is open to new ideas also
Acquire the Competitor:- Get ready for negotiations, know their price and
potentially buy the competitor
Try to develop their own:-Create a new division responsible for 3-side air
cooler creation and production
Ignore:-Give way to competitors and focus on improving their current products

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Identify the way Fresco should react to the changing market and
increased competition
Prepare and discuss strategic plan for the next 4 years to capture
market in India and china.
Prepare a detailed plan for advertising and promotion of standing type
air coolers. Budget allocated for the same is 5 Crore coolers. Budget
allocated for the same is 5 crore.
Estimate the impact on the overall sales of the Frescos line of air
coolers

Argumentation of your proposal, wellidentified merits and proposal
Clear and to the points proposals
Assumptions for your estimation
Strategies
Use of external research sources is permitted to get industry
specification and details. Logical assumptions can be made where
necessary. Please ensure that all external sources, data, and
assumptions are captured explicitly in your deliverable.
Eligible contestants must form teams consisting of two to three
members who meet the aforementioned requirements.
o A student cannot be a member of more than one team. If a
participant from one team is found to be a member of 2 or more
teams, then all the members of teams will be disqualified.
o An ideal team mix may have representation from 1st Year as well
as 2nd Year batch.
o Mention the team name and college name in the given format-
College Name Team Name

Please make all submissions in PowerPoint format, limiting the main
deliverable to a maximum of ten slides (including one-slide executive
summary). Appendix can be used to capture external research,
assumptions, or any other references/analysis in detail


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