Consumer durable industry is characterized by various companies who produces and sells consumer durable goods.

Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. Durable goods are typically characterized by long inter-purchase timesthe time between two successive purchases.

 Manifold increase in the income. Paradigm shift in the purchasing behavior of the people. Discernible shift in the consumers preference. Increasing competition. The rising income levels, double-income families and increasing consumer awareness are the main growth drivers of this industry. The young nature of population and easy finance options are fuelling the market and its dynamics.

 Consumers today are more indulgent in market place

than their predecessors. Shift in the definition of needs and wants. Example: Mobile phones.

White Goods

Kitchen appliance/Brown goods

Consumer electronics

Refrigerators Washing machines Air conditioners

Mixers Grinders Microwave oven

Mobile phones Televisions MP 3 Players

Speakers and audio

equipment

Irons

DVD Players

Electric fans Cooking range Chimneys

VCD Players

Income growth and availability of financing Falling prices increasing affordability

Indian Consumer Durables Industry

Appreciation of the Rupee

Growth of organized retail

Increased competition due to entry of large players

 Rise in disposable income

Availability of newer variants of a product

Product pricing Availability of financing schemes

Rise in the share of organized retail

Innovative advertising and brand promotion Festive season sales

MAKE DIAGRAM OUT OF THIS SLIDE

COMPANY VIDEOCON INDUSTRIES GODREJ WHIRLPOOL OF INDIA MIRC ELECTRONICS PANASONIC VOLTAS BPL LIMITED ELECTROLUX SAMSUNG HOOVER

PRODUCTS REFRIGERATOR,WASHING MACHINES,T.V.,A.C, MICRO WAVE REFRIGERATOR, AIR CONDITIONER REFRIGERATOR, WASHING MACHINES TELEVISION TELEVISION REFRIGERATOR, WASHING MACHINES REFRIGERATOR, TELEVISION VACCUM CLEANER, REFRIGERATOR VACCUM CLANER, REFRIGERATOR, T.V, MOBILE PHONES VACCUM CLEANER

LG ELECTRONICS EUREKA FORBES SONY BLUESTAR BAJAJ ELECTRONICS

WASHING MACHINES,REFRIGERATOR.T.V.,MOBILE PHONES VACCUM CLEANER TELEVISION, MOBILE PHONES, DVD PLAYER AIR CONDITIONER GEYSERS, ELECTRIC FANS

Macro Environment

Micro Environmrnt

Business Functioning

 Forces which have economic impact on business.

Includes the current and anticipated stage of the

business cycle, as well as inflation and interest rates. Following factors as important elements: Increase in family income Availability of cheap sources of borrowing funds Availability of attractive sales promotional schemes The changes in the rate of taxes and duties levied by the government

 Availability of surplus funds (saving)

Availability of additional sources of income Pricing strategies of companies

The perceived risk in terms of technological

obsolescence. Family income, the availability of attractive sales promotional schemes announced by companies accounted for having a medium level of influence. The product quality and price of the product have major influences. Availability of surplus funds and the perceived risk in terms of technological obsolescence also had a considerable influence.

Consists of following factors that affects the consumer durable industry; Age structure Migration Gender Religion Language Nationality Income distribution Family size Occupation Education

Policies pertaining to consumer durable industry from international environment: Foreign investment up to 100 per cent is possible in Indian consumer electronics industry. It is now possible to import duty-free all components and raw materials, manufacture products and export it. EHTP (Electronic Hardware Technology Park) provides benefits like export credits, no duties on imported components or capital equipment, business tax incentives, and an expedited import-export process.

 The government has changed the tariff structure

significantly to encourage manufacturing of electronics in India. Customs duty on Information Technology Agreement (ITA-1) items (217 items) has been abolished from March 2005. Customs duty on specified capital goods, raw materials / inputs used for manufacture of electronic components or optical fibres / cables has been abolished. Excise duty on computers has been removed. Microprocessors, hard disc drives, floppy disc drives and CD ROM drives continue to be exempt from excise duty.

 The Government of India has developed a robust IP act to

facilitate innovation, growth and development in the consumer electronics sector. Several amendments to the Copyright Act, creation of a new Trademark Act, a new Designs Act and amendments to the Patents Act show Indias continued effort to protect IPR. In the current WTO regime, India is a party to Trade Related Aspects of the Intellectual Properties (TRIPs) Agreement and has accordingly, amended most of its IPR Acts and rules. Trademarks and Merchandise Marks Act 1959 was overtaken by a new Trademark Act 1999. The Industrial Design Act 1911 was effectively replaced by The Design Act 2000, and the Layout Design of Semiconductor integrated Circuit Act 2000 was enacted.

The task of managing this environment is more complex because cultural patterns life style, social values and beliefs, changes more quickly than they used to. For measuring the influence social and cultural factors hold over the purchase of durable products these factors are useful up to a great extent; Increase in the number of nuclear families Influence of reference groups Chance of more interactions among family members The desire for leisure time Ones standard of living / status

Cont.
Need for comfort / sophistication

Education and level of occupation

Dominance of elderly person in family The influence of younger generation in a family

Compulsions of religious values / moral values

Individual values and attitudes Experience etc Influence of sentimental / traditional values Social conditions and freedom of living and

learning attitudes of individuals

 Governments have the power to change and make

laws, having a major role and influence on the business environment. The federal government has the greatest effect over the macroeconomic business environment through the making of policies. To meet the economic objectives, the government must place policies such as fiscal, monetary, trade and income policies.

 Industry has always exhibited impressive growth despite

strong competition, constant price cutting and global recession. Growing interest for new age products such as LCD-TVs and DVD players. Urban consumer durables market growing at 10 %p.a. while rural durables market growing at 25% p.a. industry has witnessed a considerable change in the past couple of years due to many economic factors. Retailers are joining banks and finance companies to market their goods which are expensive and change in policy, zero customs duty on imports of all telecom equipment(WTO).

 Due to the open market condition, many foreign

companies have entered into the Indian market with advanced technology. This has led to change in life style of our Indian consumers that has in turn resulted in a challenge to our existing Indian companies to reconsider their strategies of production and marketing.

 The study of consumer behavior is much more

important. A persons buying choices are mostly influenced by four major psychological factors Motivation Perception Learning Beliefs and attitudes

 Number of foreign brands have entered and occupied

the Indian market in durable products industry and competition has thus increased. Technological superiority seen among the products and increasing consumers expectations. All foreign brands started launching their products with the latest technology at a competitive price. This has led to Indian brands reconsidering their position and opting for latest technology at competitive price level with the foreign brands.

Consumer spending. For long, the consumer has been the poster-boy of the India growth story. The demographic shift in favor of a younger working population and the upward-bound income levels have been cited to support the view that, no matter what goes wrong with the global economy, the Indian consumer will continue to splurge. But this assumption is now being challenged, with the prospect of pay cuts and even layoffs beginning to materialize.

 No more the customers buy only to fulfill their basic

needs and emphasize on savings itself. Indian consumers strictly follow their culture, tradition and values, as a result of which foreign companies were forced to give an Indian touch to them in order to succeed in India. Despite many foreign brands being sold in India, Raymond is still Indias largest textile company and Haldiram is doing well despite the presence of McDonalds and Pizza Hut.

 The consumers today are not confined to a single brand

and prefer change rather than sticking to the same brand. The Indian consumers are spending thick and fast on premium and luxury products. They just dont want availability of products; they also want better experience, services and ambience. The Indian consumers are much more inclined to the organized sector. The rural Indian consumers are also showing signs of change. Though in a small way internet and telemarketing have also caught the attention of the Indian customers. Dell, Amazon .com, etc have carved a good niche for them in the sector.

 Launching of premium products

Companies have started shifting their focus towards

rural India to capture untapped rural market. Companies not only aim to sell their products but also aim to provide better after sales services to its consumers. Design their products on the basis of market segmentation. Companies are providing many schemes and plans to attract customers.

 Indian consumers have developed a liking for foreign

tours and holidays. Consumers of India have developed a tendency to save travel time. Consumers of India want better housing facilities. Indian consumers are increasingly becoming aware of the importance of health and hygiene. The need for internet is fast growing. Indian consumers liking for credit is also increasing rapidly.

 The destiny of many Indian firms today is affected by

international competition due to liberalization.

 High-end colour TVs

Split air conditioners.

Mobile phones WRITE IN PAPER POINTS 2 EXPLAIN DIS SLIDE

Market positioning and branding

Product technology

Addressing key customer requirements

Providing technologies that benefit

that act as a demand drivers by proactive customers through low power marketing and establishing strong brand association. consumption, low service requirement and low cost of consumption.

Distribution and service network From saturated urban regions to low penetration rural areas, distribution

Attractive locations With raw-materials forming a significant chunk of costs, production facilities

network and brand recognition continues located near ports to import cheaper rawto play significant role. materials could provide an advantage.

 Rising rate of growth of GDP. The urban consumer durable market. Attractive financing schemes. Growth of media. Rise in disposable income. Availability of newer variants of a product. Rise in the share of organized retail. Innovative advertising and brand promotion. Festive season sales. Customer power with respect to availability of choice.

 Heavy Taxation Potential markets remaining yet untapped Poor Infrastructure Threat from new entrants, especially global companies Rivalry and competition Threat from substitute products/services

 The consumer durables market in India is valued at

more than US $ 1o billions currently. In 2006, microwave ovens and air conditioners registered a growth of about 25%. Refrigerator sales amounted to 4.2 millions in 2006, whereas the production of the refrigerators went up by 17% as compared to the preceding year.

Demand and Penetration Level of White Goods in India

1995-1996 2005-2006 2009-2010

Demand Penetration level

3.43 million

8.72 million

13.14 million

149 per 1,000 households

319 per 1,000 households

451 per 1,000 households

The Indian consumer remains one of the most upbeat globally. The Nielsen Global Consumer Confidence study, conducted by Nielsen, a market research company revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months." In fact, it is widely believed that the Indian market will fuel the growth of multinational companies in the coming years. While most leading companies are cutting costs in the US and Europe, they see India as a strategic market, which can fuel their growth.