Consumer durables

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Introduction

• A Durable good or a hard good is a good which does not quickly wear out.

• More specifically, it yields services or utility over time rather than being completely used up when used once.

• These products are hard goods that cannot be used up at once.


WHAT IS CONSUMER DURABLES??

Consumer durables involve any type of products purchased by consumers that are manufactured for long-term use.


EXAMPLES OF CONSUMER DURABLES…


Overview

• Demand for consumer durables has increased significantly

• Characterized by the emergence of MNCs• Major target is the growing middle class of

India• Bargaining power of suppliers in consumer

durables sector is limited due to threat of imports and intense competition.

• Some of the entry barriers in consumer durables sector are distribution network, capital, and ability to hire purchases.

• Demand is seasonal and cyclical• Competition among players is on the basis

of difference in prices and well-acknowledged brands.


SCOPE

In terms of Purchasing Power Parity (PPP), India is the 4th largest economy in the world and is expected to overtake Japan in the near future to become the 3rd largest.

Indian consumer goods market is expected to reach $400 billion by 2012.


CURRENT SCENERIO

The consumer durables market in India is valued at US $ 4.5 billions currently. In 2009, microwave ovens and air conditioners registered a growth of about 25%. Frost-free refrigerators have registered significant growth as many urban families are replacing their old refrigerators. Refrigerator sales amounted to 4.2 millions in 2009, whereas the production of the refrigerators went up by 17% as compared to the preceding year Washing machines, which have always seen poor growth, have seen reasonable growth in 2006.


More and more Indians are now buying electrical appliances due to change in electricity scenario.

The penetration level of color televisions (CTVs) is expected to increase 3 times by 2012.

CURRENT SCENERIO


FUTURE SCENERIO

With easy availability of finance, Emergence of double-income families, Fall in prices due to increased competition,Government support,Growth of media, Availability of disposable incomes, Improvements in technology, Reduction in customs duty, Rise in temperatures, Growth in consumer base of rural sector,

the consumer durables industry is growing at a fast pace.


DEMAND

Demand is high during festive season and is generally dependent on good monsoons

There are certain factors in the consumer durables industry, which are considered as demand drivers. They are:

1. The degree of distribution network in the market.2.The advertising and marketing strategy adopted by the players in the industry.3.The brand image of the product as perceived by the consumer.


SUPPLY

Supply growth is high across all the segments. But the organized sector has gained substantial market share from the unorganized segment in recent years. However, there are fewer players in segments like dishwashers and vacuum cleaners.


CLASSIFICATION OF CONSUMER DURABLES

White Goods• Refrigerators• Washing Machines• Air Conditioners• Speakers and Audio Equipment

Kitchen Appliances/Brown Goods• Mixers• Grinders• Microwave Ovens• Iron• Electric Fans• Cooking Range• Chimneys

Consumer Electronics• Mobile Phones• Televisions• MP3 Players• DVD Players• VCD Players


Several key trends are driving growth in the sector

Income growth and availability of financing

Increased affordability of products

Increasing share of organized retail

Entry of heavyweight retail players is increasing competition


Success factor for consumer durable industry

Technology

Knowledge of the local market

Strong distribution network

Good brand image


STAGES IN BUYING DECISION PROCESS

Postpurchase Behavior

Postpurchase Behavior

PurchasePurchase

Evaluation of Alternatives

Evaluation of Alternatives

Information SearchInformation Search

Need RecognitionNeed Recognition

CONSUMER CONSUMER BUYINGBUYING

DECISION DECISION PROCESSPROCESS

CONSUMER CONSUMER BUYINGBUYING

DECISION DECISION PROCESSPROCESS


SWOT

Strength

Advancement of technology which gives the companies ability to introduce new products and new product features.

High Growth. Key drivers being Urban and Rural.

Government Policies in favour of Industry includes infrastructure development, reduction in excise duty and so on.


SWOT

Weakness Supply continues to outstrip Demand. Demand Cyclical and seasonal.

Volatile performance of the agricultural sector has a negative impact on demand. The sector's performance is highly dependent on monsoon and reforms, which has failed often.


SWOT

Opportunity

Diversification. Developing new products for new markets.

Easy availability of finance has stimulated consumers to buy durables.

Changes in Consumer Outlook from spend now-save later mentality leading to high disposable income.


SWOT

Threat

Dozen companies operating in the white goods segment. Prices would continue to remain depressed and margins will be under pressure.

Threats of cheaper imports from China and other South East Asian countries


SWOT Analysis of Consumer Durables Sector


Challenges and Outlook

Growth Drivers Major Hurdles

• 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

• Threat from new entrants, especially global companies

• Rivalry and competition• Potential markets

remaining yet untapped

• Threat from substitute products/services

• Customer power with respect to availability of choice


MAJOR PLAYERS


A successful MNC in India – sample case

Nokia’s Key Strategy• Being focused and ahead of the curve •Invested in each vertical of the handset ecosystem manufacturing, distribution and design R&D • Parent company is always ready to invest more in India

SituationMobile phone landscape in 1995 was one open business opportunity for all the players to capture and succeed



Manufacturing Edge• Nokia has several R&D centers and labs in India including a $150 million handset manufacturing facility in Chennai set up in 2005

Key Success Factors• Strong Distribution Network • India has some 95,000 outlets that sell mobile phones with a conservative estimate of 50,000 of them selling only Nokia



Local Products• Custom-made mobiles for Indian conditions: Nokia 1100, having a torch built into a mobile phone helps in a country with frequent power cuts - distinct and tangible benefit

The Mother Brand• Whether it is N series or the E series, the key focus is the Mother Brand – Nokia

Such examples highlight the key success factors to succeed in the Indian market


Micromax - case study

•It was founded in 1991 by Rajesh Agarwal as a distributor of computer hardware for brands like Dell, HP and Sony.

In 1998, three more people SumitArora, Rahul Sharma and Vikas Jain joined Micromax as co-founders.

History


PRODUCTS


Strategies

•Focus on the unique functionalities

•To further develop their reputation •Innovation


AWARDS AND RECONITIONS

•Micromax is now India’s third-largest GSM mobile phone vendor with a market share of 6 % after Nokia & Samsung

•Awarded the Most Impactful Launches in 2010 by Pitch India.

Recognized as a Major Challenge for Nokia &

Samsung Mobiles

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Consumer durables

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