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Threat of
New
Entrants
Rivalry
Bargaining among Bargaining
Power of Existing Power of
Supplies Competitor Buyers
s
Threat of
Substitute
Products or
Services
Porter’s Five Forces Analysis
• SUPPLIER POWER:
a) Haier developed vertical integration in 1990s for controlling its supplies.
b) Haier also formed a good relation and collaboration with their suppliers to secure their support for price,
quantity and facilities.
• BARRIERS TO ENTRY:
a) In this business the company has set the high barrier of entry such as large capital for manufacturing set up
and innovation.
b) The company has also well positioned its brand globally and has applied effective marketing strategy to
create barrier of new entry.
• BUYER POWER:
a) Haier streamlines its business up to distribution to supply to the retailer.
b) Haier patterned all its products and focused on the after sales services to create a differentiation in the
market through innovation, quality and price.
• THREAT OF SUBSTITUTEs:
a) In 1984, there were 100 refrigerator makers to compete in China market. Now, the number has increased to
a great extent. Haier has realized the competition and invested more in R&D for improvement and
innovation.
b) With the advancement of technology, duplication of products is a threat.
• COMPETITIVE RIVALRY:
a) As Haier business has become huge with its large capital, other companies struggle more to stay in market.
b) With the current economy downturn, most companies are tending to reduce prices to capture a greater
market share. Some companies even use this strategy for penetration into the market.
Haier’s
Targets for Indian Market
• T.K. Banerjee was appointed as the president of Haier’s
Indian operation.
• Banerjee wanted Haier to be in the top three brands in
the home appliances in India.
• A policy of “Three-in-one” Localization was followed.
• The target was to gain 20% of India’s white good market
in first 5 years and to be among the top three players in
the industry in 7 years, i.e. by 2010.
• Planned to launch an India-centric product line for
Indian consumers.
• For sales, it developed a network of direct dealers and
distributors in India.
Haier’s Expansion Strategy
Haier India Strategy Timeline
Felt that it might benefit from its local partner’s knowledge of a host nation’s
competitive conditions, culture, language, political systems and business systems.
Consumer Consumer
Appliances Electronics
White Goods
(Refrigerator, Televisions
Washing Machines, Mobile Phones
AC)
Brown Goods
(Mixers, Microwave Audio Equipments
Ovens, Iron, Fans, MP3/DVD Players
Dish Washers)
Evolution
Late 2000s
Early 2000s
Consolidation
Mid and Increasing
late 1990s Growth penetration of high-
end products
Increasing availability
and affordability of Introduction of new
consumer finance aspirational
1980s and Liberalization products such as
Low penetration of HDTVs
early 1990s Liberalization of high-end products
markets like AC
Shift in focus from
promotion to
Pre-liberalization
innovation
Closed Market
Influx of players like
Increased product LG and Samsung
availability
Increased media
penetration & advertising
Market Share of Indian Consumer
durables in FY’13
Advantage India
• Rising disposable income • Rural and semi-urban market
• Easy access to credit contribute to 35% of total sales
• Increasing electrification in rural • Combined market size CAGR is
areas 25% from 2010-15
• Wide usability of online sales • Huge untapped rural market
Growing
Opportunities
demand
Increasing Policy
investments support
9%
8% 9%
24% 22% 20% 47%
51% 48%
Total size = 133 Rs. Total size = 229 Rs. Total size = 397 Rs.
Billion Billion Billion
Recommendations
2000
2000
1500
1503
1000 1203
972
825
500
0
2010 2011 2012 2013 2014 P
Haier India CAGR – 24.98%
Consumer durables Industry CAGR (2010-15) – 15%
Key facts about Haier India
• The media mix - TV, online, local print ads and radio. Current focus is on television-
‘Jhukna mat’ and “Inspired by You” campaigns.
• For product categories, the monsoon season sees sales of washing machines increase,
the onset of winter sees the increase in sales of water heaters, and LED TV sales increase
at times of festivals and sporting events like IPL.
• Haier India manufactures all low end products locally such as DC-330, Window ACs and
CRT TV. While all the high end products are imported.
• Refrigerators contribute nearly 35 per cent Haier's total turnover, while the consumer
electronics panel business is the next big segment with nearly 30 per cent of the
turnover. The AC sales contribute nearly 14 per cent of the total sale, washing machines
at 10 per cent.
• As per "Indian Consumer Electronics Market Outlook 2015", Flat panel television, Tablet
and Smartphone are expected to be the top performing segments in the market.
• As per a survey, 64% were not aware of Haier brand. This suggests revaluation of
marketing strategies for enhancing brand visibility.
• 36% of people surveyed knew about Haier but only 20% of people surveyed had look on
Haier product before making a purchase decision. This shows unavailability of brand in
the customer preferred multi-brand store. (Concerned with place strategy of Haier)
References
• http://www.sunday-guardian.com/business/consumer-durables-players-see-potential-in-
rural-market
• http://www.dnaindia.com/money/report-haier-to-manufacture-all-products-in-india-by-
2016-1809683
• http://www.way2franchise.com/resource/article/haier_strengthening_its_india_franchise
_network_of_dealers_and_service_franchise_aims_1000_cr_biz
• http://www.livemint.com/Industry/hlfCJssTzLLBgNZD1y5YIP/Consumer-electronics-firms-
to-invest-3500-crore-in-India.html
• http://www.authorstream.com/Presentation/magrawal26-549892-haier/
• http://www.navhindtimes.in/business/haier-india-launches-71-new-products-state
• http://www.campaignindia.in/Article/339512,haier-ups-marketing-spend-from-rs-55-cr-
to-rs-80-cr.aspx
• http://www.slideshare.net/Rahulkamble56/16034641-projectreport
• http://www.slideshare.net/pareshgupta007/competitive-analysis-of-companies-
competing-haier-8374312
• http://www.quickmba.com/marketing/mix/
• http://afternoondc.in/business-investment/haiers-aggressive-strategy/article_16479
• http://www.displaysearch.com/cps/rde/xchg/displaysearch/hs.xsl/111010_india_flat_pan
el_tv_shipment_cagr_forecasted_through_2015.asp
• http://www.flatpanelshd.com/news.php?subaction=showfull&id=1329393118
• http://www.prnewswire.com/news-releases/203568471.html