Market leader LG plans to invest USD166.

7 million in capacity expansion for various product

categories and India specific R&D and USD145.8 million in marketing and branding in 2013.

Key Consumer Durables Market (Consumer Durables Industry size Rs

Billions)

Appliances

FY04

FY09

FY14

Colour TV

68

110

185

AC

23

47

95

Refrigerators

31

51

81

Washing
Machines

11

21

36

Key Trends:
Increasing presence of organized retail:

The Indian retail market is currently worth USD500 billion and is likely to expand
at a CAGR of 14.6 per cent to USD1.3 trillion by 2020.
The penetration of modern retail is 12.0 per cent in consumer durables segment

Expansion into new segments:

Companies are expanding their product portfolio to include products like high-definition
televisions (HDTVs), tablets and smart phones, etc, demand for which are rising with
consumers income, easy availability of credit and wide use of online sales

Increased affordability of products:

Advancement in technology and higher competition are driving price reductions across
various consumer durable product segments such as computers, mobile phones,
refrigerators and TVs
Focus on energy-efficient and environment-friendly products:
Leading companies have introduced star-rated, energy-efficient ACs and refrigerators
Companies also plan to increase the use of environment-friendly components and
reduce e-waste by promoting product recycling.

Opportunities for rural areas:

Increasing rural income with higher non-farm income. Lower penetration generating demand for
first time buyers.Increasing reach of companies and customised products for the rural market
Key success factors:

Growing demand:
Higher real disposable incomes:
Increasing availability and affordability of consumer finance provides impetus to income.

Easy consumer credit:

Easy access to credit due to demand growth is likely to accelerate with rising disposable
incomes .
Growing consumer base:
In rural markets, durables like refrigerators as well as consumer electronic goods are likely to
witness growing demand in the coming years as the government plans to invest significantly in
rural electrification

Policy support
SettingupofEHTPs
Electronic Hardware Technology Park (EHTP).For encouraging exports of electronic hardware items
including hard disk drives, computers, television, etc

Increasing liberalisation, favourable FDI climate:

Liberalisation of markets. Shift in focus from promotion to product innovation.More FDI flow due to
budget policies.
Policies like National Electronics Mission:
Digitisation of television: Companies are expanding their product portfolio to include products
like high-definition televisions (HDTVs), tablets and smart phones, etc, demand for which are
rising with consumers income, easy availability of credit and wide use of online sales

Increasing investments

Expanding production and distribution facilities in India

Increased R&D activity
Providing support to global projects from India

Industry analysis:
Threat of New Entrants (Medium)
Most current players are global players
New entrants will need to invest in Brand, Technology and Distribution.
Due to more FDI and investment policies high threat of new entrants
Supplier Power (Medium)
Indigenous supply base limited - most raw materials are imported
Competitive Rivalry (High)
Number of well established players, with new players entering
Good technological capability
Many untapped potential markets like rural areas
Customer Power (High)
Multitude of brands across price points - wide variety of choice for customers
Penetration into rural market would enhance the customer power
Threat of Substitutes (Medium)
Unbranded products and cheaper imports could enter the market

SWOT ANALYSIS:

PESTEL:
Political:
1. CRT TVs exempted from customs duty to help poor
2. Basic custom duty on LCD and LEDs below 19 inch reduced to zero from 10 per cent

Economical:

Growth in demand from rural and semi-urban markets to outpace demand from urban
markets.
Sector has attracted significant investments over the years
100 per cent FDI allowed in the electronics hardware-manufacturing sector under the
automatic route; Approval of 51 per cent in multi-brand would further fuel the growth in
this sector .

Social:
Demand for consumer durables in India has been growing on the back of rising incomes
This trend is set to continue even as other factors like rising rural incomes, increasing
urbanization, a growing middle class, and changing lifestyles aid demand growth in the
sector.
Technological:

To meet varying demand of consumer,to meet packaging ,transportation,to improve

time and place utility of the product there is immense need of improvement in
technology.