Industry/Competitive Analysis:

Refrigerator Industry in India

Refrigerators are manufactured in India by predictability keeping in mind the tropical
climate as more than 8 months in a year, 90% part of India faces hot humid weather. Now
almost in all households refrigerators are used as they have become the necessity of daily life. It
comes in the category of White goods. Till the 1980s, players like Godrej, Kelvinator 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. Post-liberalization, a
number of foreign companies entered the market and many domestic players also diversified
into refrigerators. The Refrigerator market today is moderately regulated by-Bureau of Energy
Efficiency; the statutory energy conservation body under the Power ministry has tightened
energy norms by 2 levels. This implies that the 5 star models as per energy norms of 2013 will
be 3 star models as per energy norms of 2014; Environmental Protection Agency; Indian
Standards Institution (IS 1474-1959) among others. Heavy taxation in the country is one of the
challenges for the players. At its present structure the 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 per cent.
The Indian Refrigerator industry is highly competitive. The refrigerator market has
more than 100 players present including global brands which provide wide choice to
consumers and there is effective distribution network in both urban and rural areas.
In India, refrigerators have the highest aspiring value of all consumer durables, with the
exception of televisions. This accounts for the high growth rate of the refrigerator market.
Rising household income, improving living standards, rapid urbanization, increasing number of
nuclear families and environmental changes are growth drivers for the refrigerator industry. The
Refrigerator industry has the highest demand penetration rate of 31% out of all the durables
as of 2013.
Industry Performance and Projections
Currently, about 4 million refrigerators are sold in India each year. Although the market
does contain a component due to replacements of old refrigerators, growth is dominated by the
entrance of households to the expanding middle class. For 2007-2013, we relied on an estimate
of sales provided by Euro monitor, a marketing research firm. We assume that although the
refrigerator market will grow, it will grow at a decreasing rate than before. This maybe because
of the threats including poor infrastructure, non availability of regular power supply which is an
imperative for electronics products, cheaper imports from China and concessional duty imports
under FTA from ASEAN countries.
The refrigerator industry has grown at an average rate of 17.4% during 2007- 2013. The
projected average growth rate during 2014-2016 will be 8%.


X axis shows the years and Y axis
shows the market size of
refrigerators in INR BILLIONS.

MARKET SHARE IN ORGANISED AND UNORGANISED AND FUTURE
PROJECTIONS
The market share for refrigerators was expected to be around 45% in the organised retail
market and is growing at a fast pace. The refrigerator and electronics industrys retail is
increasing and so is the shift from unorganised to organised sector.
In next 3years, the market share in organised sector is expected to increase.
FEW ELECTRONIC RETAILERS
Godrej Lifespace: On Apr 1, 2003, Godrej & Boyce Manufacturing Company Ltd launched a
new retail division. The division was established to present a new concept in retailing by
displaying and selling under one roof the Godrej range of home and office furniture,
appliances, security equipment and locks. Later in 2005, the showrooms were branded as
Godrej Lifespace Stores.
eZone: eZone is an electronics specialty retail format from HSRIL by Kishore Biyani-led
Future Group. The first eZone store was launched in 2006 in Indore and was followed with a
second one in Bangalore. eZone offers a range of personal products like computers, laptops,
handy cams, MP3 players and mobile phones, entertainment products like plasma/LCD, flat
TVs, home theatre systems, DVD players, and stereosystems, home products like
refrigerators, air conditioners, washing machines and microwave ovens, among other kitchen
appliances.
Viveks: In 1965, B A Lakshmi Narayana Setty founded Viveks in a 200-square-feet-shop in
Chennai. Today Viveks is one of the largest consumer electronics and home appliances retail
chains in India. Viveks Ltd is a public limited company that runs two retail brands Viveks and
Jainsons. The store was transformed into a public company from a family-run company when
14 stores of Jainsons were bought over in 1999. Later on in 2001 two stores of Premier and in
2002 Spencers Super Store were purchased. Viveks has recently absorbed Spencers into the
Premier brand. Viveks grew from three stores in 1995 to more than 35 stores as on Dec 2008.
0
10
20
30
40
50
60
70
80
90
100
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
MARKET SHARE OF TOP 5 PLAYERS IN THE REFRIGERATOR INDUSTRY IN
LAST 2 YEARS
Major players in this industry are LG, Samsung, Videocon, Godrej and Whirlpool.
2011-2012

2012-2013


37%
20%
16%
13%
13%
1%
MARKET SHARE OF REFRIGERATOR
INDUSTRIES 2011-12
LG
SAMSUNG
VIDEOCON
GODREJ
WHIRLPOOL
OTHERS
29%
18%
18%
18%
12%
5%
MARKET SHARE OF REFRIGERATOR
INDUSTRIES 2012-13
LG
SAMSUNG
VIDEOCON
GODREJ
WHIRLPOOL
OTHERS
OTHER INFORMATION:
The refrigerators are broadly divided in to two categories- Direct Cool (DC) and Frost Free (FF)
refrigerators. The DC segment occupies around 75 percent of total market share and rest of 25
percent occupied by FF models.
LG and Samsung lead the frost free refrigerator market and it has a big market in the future.
In the next 5years, market shares of Frost free markets is expected to go up.

SOURCES:
http://www.currentweek.com/top-refrigerator-brands-in-india-2013-growth-market-share-of-top-
companies/
http://www.adi-media.com/PDF/TVJ/annual_issue/009-Refrigerators.pdf
http://articles.economictimes.indiatimes.com/2012-09-20/news/33977105_1_whirlpool-india-
home-appliances-market-refrigerator-market
http://articles.economictimes.indiatimes.com/2012-04-01/news/31270371_1_godrej-appliances-
george-menezes-godrej-group
Indirect Competitors of Godrej Refrigerator

Ri val r y among compet i ng f i r ms i s t he most power f ul of t he
f i ve compet i t i ve f or ces i . e. , t he ongoing war between the firms competing in the
same industry for gaining customer share in order to increase their revenues and profits.
The competition is more intense if the firm pursues strategies that give it a competitive
advantage over the strategies pursued by its rivals. Developing new strategies is easier than
retaining the uniqueness of the strategies so as to gain a competitive edge over the rivals in
the industry. Changes in strategy by one firm may be met with retaliatory
countermoves, such as lowering the prices, enhancing quality, adding
features, providing services, extending warranties and increasing advertising.
Competition in the home appliance industry is intense. In addition to traditional competitors such
as Electrolux, GE, and Kenmore, there are expanding foreign competitors such as LG, Bosch
Siemens, Samsung, Fisher & Paykel, and Haier. Competition in markets is based upon a wide
variety of factors, including cost, selling price, distribution, performance, innovation, product
features, quality, and other financial incentives. These financial incentives include cooperative
advertising, co-marketing funds, sales person incentives, volume rebates, and terms. We
believe that we can best compete in the current environment by increasing productivity,
improving quality, lowering costs, focusing on research and development including introducing
new products through innovation, building strong brands, enhancing trade customer and
consumer value with our product offerings, continuing to expand our global footprint, expanding
trade distribution channels, and taking other efficiency-enhancing measures.
Marketing Mix
LG
1. Product
LG pays attention to upper and upper middle classes and provides products for those
consumers. The products include TV audio video, mobile phones, home appliances, IT
products, and air conditioning (LG Electronics, 2010).

2. Price
The pricing strategy of LG is cost plus fixed mark up. Following the pricing policy, LGs formula
is import cost + reasonable gross profit. The formula is used to cover the market cost and
make profits in any market.

3. Promotion
One effective way of promotion is advertisement. As a famous brand, LG advertises its products
to get promoted .It are accustomed to inviting famous stars to advertise its merchandise.

4. Place
LGs merchandise is sold throughout the world, especially developed regions. There are
numbers of LG retailers in big cities. In addition, LG sells its products in home appliance interlink
retail enterprises.

SAMSUNG
1. Product
As same as LG, Samsung also provides mobile devices, TV audio video and home appliances.
However, there are some products that LG lacks, such as camera camcorder, PC
peripherals, print solutions, and memory cards. Moreover, focusing on the future of wireless
communications, Samsung launched futuristic products such as the mobile phone watch, the
PDA-phone, the digital camera cum mobile phone, the MP3 mobile phone and its latest model
of 3G mobile phones.

2. Price
The price of Samsung products is similar with LG.

3. Promotion
Samsung constantly holds sales promotional events. For example, there was an event called
Samsung Smart TV Promotion in HongKong. Customers can get a FREE Samsung
1TB external Hard Drive and 3D Starter Gift Pack upon purchasing eligible model of 3D LEDTV
and 3D LCD TV. The promotion is able to help Samsung expand its sales.

4. Place
Samsung sells its products by retailers and home appliance interlinks retail enterprises Suning
and Gome as well as LG. Nevertheless, Samsung not only sells products in cities, but also in
countryside. Samsung was one of the companies that help rural people improve their living
standard.
Sony
1. Product
Sony Refrigerator supports features such as Frost Free, 2 door bottom freezer, Refrigerant
134a,Twin Bio attacker, Triple Ice tray, Premium look and Design, Quiet and more reliable
Compressor etc. Sony has to spend a lot of money in innovation and R&D to use all resources
which are included in its refrigerators. Furthermore, Sony holds on to its brand value. The name
Sonys stands for quality, technology, and market leadership which could be achieved with its
previous product mix. Moreover, the name has a good reputation and is associated with a high
customer loyalty. Additionally, the design of the refrigerators is modern and is available in three
neutral colours- black, white, and silver. The sizes are available from 180 litres to 568 litres.

2. Price
Due to the fact, that the Sony refrigerator offers the best technology and a plenty of
functionalities, the price for it is more expensive as the product of its competitors. Nevertheless,
Sonys high price is a character for its high product quality.
Furthermore, Sony tries to adapt its price to the particular environment and region. It pursues a
versioning price policy. It involves offering a product line and let users choose the version of the
product most appropriate them. Consumers can decide if they want to pay a higher price for the
premium edition with some extra features, or prefer a lower price with fewer extra features.
Additionally, Sony has to allow credits to its major retailers and to offer discounts according to
the quantity of sales.

3. Place
One part of Sonys place strategy is to be the last one to release its refrigerators on the market.
Sony offers only a limited quantity of products at the beginning of its rollout. This is a really
powerful marketing tool, because it ensures that early adopters really want to have the product.
Following such an approach, such people stand in lines for hours in front of shops just to get
one exemplar of the new refrigerators. It is important to convince and get early adopters,
because the long-term success of a new product can be based on how those feel about it. A
limited of products creates a passion to get one and it results in communication about the
product. Early adopters speak about the product and promote it. They write about the product in
blogs, create web-sites and connect the product to others in a way that other people will follow.
4. Promotion
Sonys most important promotion tool for its refrigerators is the television advertisements &
exhibitions. Additionally, Sonys promotion strategy also includes sponsoring.

PESTLE Analysis

PEST is macro environmental scanning tool which is very helpful to scan environment. But the
model has been recently extended furthermore now it calls PESTLE analysis which provides
more efficiency towards scan the environment for future strategic planning.
PESTLE stands for Political, Economical, Socio-cultural, Technological, Legal, and
Environmental, and it is very useful tool in development of a new plan.


Political Factor: -
Political factors influence organisations in many ways. Political factors can create advantages
and opportunities for organisations. Conversely they can place obligations and duties on
organisations. Political factors include the following types of instrument:
- Legislation such as the minimum wage or anti discrimination laws.
- Voluntary codes and practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime e.g. communist, democratic, dictatorship
Non conformance with legislative obligations can lead to sanctions such as fines, adverse
publicity and imprisonment. Ineffective voluntary codes and practices will often lead to
governments introducing legislation to regulate the activities covered by the codes and
practices.

Economic factor: -
All businesses are affected by national and global economic factors. National and global interest
rate and fiscal policy will be set around economic conditions. The climate of the economy
dictates how consumers, suppliers and other organizational stakeholders such as suppliers and
creditors behave within society.
An economy undergoing recession will have high unemployment, low spending power and low
stakeholder confidence. Conversely a booming or growing economy will have low
unemployment, high spending power and high stakeholder confidence. Cheaper labour in
developing countries affects the competitiveness of products from developed countries.
A truly global player has to be aware of economic conditions across all borders and needs to
ensure that it employs strategies that protect and promote its business through economic
conditions throughout the world.

Socio-cultural factor: -

Social factors include the cultural aspects and its influences vary region to region. This
includes:
Life style
Age
Religion
Education
Godrej is among the largest Conglomerate Company in India. Millions of people in India enjoy
the products of the company every day. It means company have huge impact on the people life
style. Also, Godrej focus on pollution free working. These are a few responsibilities that
company consider very seriously.

Technological factor: -
Technology is necessary for the success for competitive advantage and is provide power to
globalisation. This includes:
R&D Activity
Informational Technology
New machines

Legal factor:-
Legal factors have huge impact on the business for develop new strategies. These factors can
affect, how company operates, its costs, and the demand for its products. It includes:
Political stability
TAX Regulation
Trade Regulation
Employment Laws
Environment Laws
Health and safety laws
Employment laws
Consumer laws
Environmental factor:-
Growing awareness about climate change is affecting companies very hardly and it can be
create new markets or destroy existing markets. It includes:
Climate change
Diseases
Weather
Now a day's climate change is big issue for companies. People like to buy the products which
will not be harmful for environment. Sustainability is a business issue.

Market Analysis:
Segmentation, Targeting and Positioning:
Segmentation:

Based on geography:
Urban
Semi urban
Rural
Based on economy:
Upper class
Upper-middle class
Middle class
Lower-middle class
Lower class
Targeting:

Based on geography:
Urban
Semi urban.
Based on economy:
Middle class
Lower-middle class
Positioning:

Innovative, Customer-oriented Products

Identification of needs being met:

Our new product Cool-M-Cool is a refrigerator with separate space for water storage. Cool-M-
Cool is designed for middle class and lower middle class customers. It has the water storage
unit Aqua Kool (capacity 25 liters) at the top and the refrigerator unit below the water storage
unit. The capacity of water storage unit has been kept to 25 liters by assuming 5 members in a
middle class family, and 5 liters water consumption per person. The water will be put into Aqua
Kool from top. There is a tap at the bottom of Aqua Kool to get the water. The concept behind a
separate water storage unit is to provide better and efficient cooling to products kept inside
refrigerator unit. Each family opens the refrigerator approx. 50-80 times daily just to drink water.
This in turn affects the cooling process of the refrigerator. So, if we have a separate unit for
water storage, there will be no need to open the refrigerator door for water, and this will result
into better cooling.
Cool-M-Cool has a capacity of 150 liters (excluding Aqua Kool). Thus, it will not take much
space and it will be a perfect fit to middle and lower middle class people, who have less space.
Cool-M-Cool has more space for vegetables and Fruits, and is equipped with Frost Free
Technology. It also has an inbuilt stabilizer to avoid voltage fluctuation. We have planned to
keep the price of the product low (in range of 7,000-8,000 INR).
Salient Features of Cool-M-Cool:
Separate space for water storage.
Capacity 150 L + 25 L water storage space.
Efficient cooling.
More space for vegetables and Fruits.
Frost Free Technology.
Affordable price (Range 7,000-8,000 INR)
In built stabilizer to avoid voltage fluctuation.

Performance Review
Past performance of the existing products and promotion of the chosen
company
Types of products:
Appliances
o Offerings in the refrigerator, washing machine, air conditioner and microwave
oven ranges.
Furniture
o Furniture for home, office, educational institutions, establishments, labs,
hospitals, shipyard
FMCG
o Cinthol, Good Knight mosquito repellent, Hair Color and Hair Dye.
Real Estate
o Residential, commercial and township developments.
Agriculture
o Animal feed, oil palm plantations, agrochemicals and poultry.
AV Solutions
o Display solutions, audio video conferencing solutions, electronic copy boards.
Batteries
o Godrej and GP Batteries offer a range of zinc chloride, alkaline & rechargeable
batteries and a range of chargers.
Chemicals
o Oleochemicals and surfactants.
Construction
o Variety of construction services like real estate development, ready mix concrete,
horticulture and enviro-tech.
Electricals and Electronics
o Industrial automation, power distribution, compressed air solutions & green
business commissioning.
IT & Software Solutions
o Solutions for engineering and service industry.
Locks
o Godrej, the name etched in metal, secures almost every door in India. Since its
inception in 1897 by Ardeshir Godrej, the name Godrej has become
synonymous with trust, protection and integrity. Today, after a period of more
than 100 years, his legacy continues to ensure a high degree of security to
consumers with the implementation of latest technology and constant innovation.
With exports of Godrej Locking Solutions & Systems spanning across various
countries, the brand has come a long way in delivering world class locking
solutions.
Material Handling
o Counter balance trucks, forklift trucks, tyre handlers, all terrain trucks,
attachments and accessories.
Motors
o Specialized custom built compressor motors. Calibration & Inspection Services
Precision Engineering
o Critical custom-built precision engineering equipments for multiple applications.
Precision Systems
o Godrej Precision Systems, engaged in the Hi-Tech Aerospace Mfg. Activities,
had its beginning in a small way, back in 1985, with development of critical, high
precision spacecraft components, made out of exotic alloys. With the launch of
Chandrayaan 1, we have added another medallion to the Godrej group.
Process Equipment
o Godrej Process Equipment is a leader in fabricating unit static equipment for
process industries. Established in 1976, Godrej Process Equipment
manufactures the entire range of process equipment for end-users in core
industry segments like Refineries, Petrochemicals, Fertilizers, Oil & Gas,
Chemicals, Pharmaceuticals and Power around the world.
Security Solutions
o Safes, lockers, banking automation products, electronic security systems,
premises security & hi-tech doors.
Storage Solutions
o Warehousing solutions, automation and consulting.
Tooling
o Die casting dies, press tools, special purpose machines and engineering
services.
Vending
o High quality table top beverage vending machines, services and beverages.
Performance Review

Profit & Loss Rs.(Crores)
Year 2013 2012 2011 2010 2009
Net sales
turnover
6,964.32 5,688.22 4,415.81 3,458.02 3,295.18
Other income 218.23 191.77 215.63 367.05 394.6
Total income 7,191.31 5,840.39 4,589.68 3,797.93 3,571.94
Profit and
loss
291.61 195.26 249.57 168.21 98.07

Social Impact:
Godrej has been able to make a connection with people not only through their products
but also through their initiatives. The top quality product and customer oriented
products make Godrej one of the most trusted brands in India.
Godrej has launched its product named ChotuKool for rural market in India.
Godrej has a philanthropic arm that has built schools, dispensaries and a residential
complex for their employees. Trusts established by Godrej continue to invest in
education, healthcare and upliftment of the underprivileged.
Godrej locks are the most trusted locks in India.
Stock Market Performance:

Year Mar'14 Mar'13 Mar'12 Mar'11 Mar'10 Mar'09
Stock
value
836.8 772.2 477.25 389.9 256.2 126.1

From the above figures we can see that the stock prices of Godrej have grown at a healthy rate.
This gives us an idea about its stable marketing model and a strong brand value of Godrej.

Promotion Techniques

E-commerce
Godrej Bargainz: It was the first ever online sales promotion by an FMCG company. They
collaborated with iBaya.com and provided entire range of Godrej consumer products such as
soaps, detergents, toiletries, hair colors, shampoo, hair oil, fruit beverages, processed foods,
wheat atta, packaged foods, bakery items and household insecticides.
Consumer oriented sales promotion
Buy one get one offer
Free samples
Vouchers and coupons
Competition and Prize draws
Discounts
Refund and rebate
Trade oriented sales promotion
Retailers prefer price off as it guarantees increase of sales
Display and advertising allowance
Buy back allowance: The agreed upon sum of money that is offered by a seller of an
item or service should the purchaser either return the item or be unhappy with the
service that was received.
Trade coupons
Advertising
Celebrity Power: For example, Cinthol being endorsed by Hrithik Roshan. The Godrej
EON range endorsed by Aamir Khan.
Cabvertisements: Using cabs to advertise their product .
Display of the brands product on hoardings.

Rural Promotion
Influencers and opinion leaders
Local political leaders
Organising Haats or melas
NGOS: Example Nehru yuvak kendra sanghatan(NYKS), Vatavaran
Collaborate with regional super stars. Eg:Ravi kissen and Manoj tiwary to cater to the masses of
UP and Bihar.
Objectives:

The marketing plan forms the basis for the introduction of an innovative product by Godrej,
which is one of the well-known brands in India. The consumer durable industry as a whole is
growing at a rate of 8% per year in India, whereas Refrigerator industry is growing at a much
higher rate, approx. 15-18% per annum, in India. Also, the average income level in India is
expected to triple by 2025, and as a result, urban and semi urban consumption expenditure is
expected to rise 62% by 2025, compared to 43% in 2006. Our new product Cool-M-Cool is an
innovative refrigerator by Godrej. This product is designed for middle class and lower middle
class customers. As Godrej has always been known for its quality, innovative and customer-
oriented products, Cool-M-Cool will help us to grow by leaps and bounds in the coming years.
As India is growing fast from lower class to lower middle class and middle class, it is expected
that the lower middle class and middle class sector will increase by 5 times by 2025. Also,
Indian refrigerator market accounted for sales of 14 million units in 2013 and the sales volume is
growing at a rate of 15-18% per year. Godrej, as the leading Indian brand in refrigerators, holds
4
th
position with market share of 18%. Godrej has sold about 2.5 million units of refrigerators in
2013-2014 FY. With the launch of Cool-M-Cool, we are targeting to sell 3.2 million units by the
end of this year and increasing our market share to 20%. The Frost Free technology at a lower
price is also a plus point for Cool-M-Cool. We are expecting that smaller size with almost all
facilities is going to attract middle class and lower middle class customers.
Parameters 2014-2015 (Exp.) 2013-2014 Growth(Exp.)
Sales Volume 3.2 million 2.5 million 28%
Market Share 20% 18% 11%