A BUSINESS MODEL

Presented To: Mrs. Sangeeta Saraf

Presented By:Anshul Agarwal-01

Ashish Bansal-03Vikram Bothra-06

Kumar Vivek-16Rahul Rathi-21

Gaurav Surana-30

OUTLINE

INTERNATIONAL MARKET

OVERVIEWThe consumer electronics industry manufactures and

distributes everything from telephones, stereo components, televisions, alarm clocks, and calculators to digital cameras, video cameras, VCRs, and DVD, MP3, laptop PC are also now part of the industry.

In 2005, in the U.S. alone, consumers spent more than $75 billion on consumer electronics products, 8 percent more than in 2004.

HOW THE INDUSTRY BREAKS DOWN The largest are multinational conglomerates with

more than 100,000 employees. The smallest often have only one office with

fewer than 50 employees focused on one product.

In the middle are manufacturers that offer a range of products within a certain category, such as speakers and audio accessories.

Industry observers usually break down the market by product category rather than company size.

Source: CEA

Consumer durables are items that provide a flow of services to a consumer over a period of time. Examples include new cars, household appliances, audio-visual equipment, furniture etc. The real level of spending on durables has surged in the last eight years.

SOME OBSERVATIONSAmong the explanations are:

Falling prices for many durable products – arising from rapid advances in production technology and the effects of globalization which means that we can now import many of these durables more cheaply from overseas

Low interest rates which have encouraged people to spend more on “big ticket items” – there has been a surge in demand for consumer credit

Strong consumer confidence and borrowing levels. The demand for consumer durables is more income elastic than for non-durables which are usually staple items in people’s monthly budget.

GLOBAL PLAYERS

Major Players Top 10 Major Players, by 2005 Revenue

Rank Company Revenue ($M) 1-Year Change (%) Employees

1 General Electric Co. 148,019 –2.2 307,000

2 Siemens AG 90,670 17 461,000

3 Matsushita 81,298 13.0 334,752

4 Samsung Electronics Co., Ltd. 78,250 44.2 123,000

5 Sony Corp. 66,912 –7.2 151,400

6 Microsoft Corp. 39,788 8.0 61,000

7 Royal Philips Electronics NV 35,972 –12.4 231,161

8 Sharp Corp. 23,616 10.5 46,751

9 Sanyo Ltd. 24,174 –1.4 96,023

10 LG Electronics Inc. 23,542* 39.4* 66,614*

*2004 figures. Sources: Hoover's; WetFeet analysis.

KEY FINDINGS

Key Findings

Asia-Pacific region is the most lucrative area for the consumer electronics industry, as most of the markets are still untapped.

MP3 players continue to drive the audio market worldwide.  Wi-Fi networking is expected to become a key enabler for the delivery and

redistribution of content in homes, particularly for retail consumer electronics hardware.

Mobile camera phone market has emerged as the single largest market for image sensors, surpassing the entire consumer electronics segment, including digital still cameras worldwide.

The strongest growth in consumer electronics segment is expected to come from China by 2010, as the demand for consumer electronics is rising with the rapid pace of economic development and low cost consumer electronics manufacturing.

On the back of this strong demand, China will become the second largest market for consumer electronics, after US.

SOME KEY FINDINGS

CONSUMER APPLIANCES & ELECTRONICS RETAILING IN CHINAThe world’s fastest growing large economy, with humungus

foreign investments High Competitive market, margins very tight and, until recently,

the available market was shrinking.Presence of Rural rebate scheme for reduced price goods to rural

consumers has made the available market a lot bigger though, over the past few years.

Official estimates for the CNY period show sales of household electric appliances grew by 17.8% over the same period in 2008.   

*CNY : Chinese new year2009

URBAN VS RURAL- CHINA

CHINA DEMOGRAPHICS 0-14 years: 20.1% (male 142,085,665/female

125,300,391) 15-64 years: 71.9% (male 491,513,378/female

465,020,030) 65 years and over: 8% (male

50,652,480/female 55,472,661) (2008 est.)

GLOBAL CONSUMER BEHAVIOURChanging trends in womenA Consumer Electronics Association (CEA) study has found that

women are more comfortable with technology than ever before, are heavy users of CE products, and have a major influence on technology purchases for the household.

Female customers are distinct in their beliefs about technology, in what they desire from consumer electronics, and in the way that they shop for these products, the study indicated.

Women are less enamoured of gadgets and technology for its own sake.

But the CEA study indicated that women are more open to advice, and when shopping they focus on portability, functionality, reliability and simplicity.

TOP 5 EMERGING NATIONSBRAZILCHINAINDIAMEXICOSOUTH AFRICA

HIGHLIGHTSThe Top 5 Emerging countries contributed $37.6

billion to the global consumer electronics industry in 2007, with a CAGR of 10.9% between 2003 and 2007

In 2012, the market is forecast to have a value of $51.2 billion, with a CAGR of 6.4% over the 2007-2012 period.

China is the leading country among the Top 5 emerging nations, with market revenues of $21.6 billion in 2007.

OVERVIEW OF INDIAN MARKETPre liberalization dominated by a few domestic players like

Godrej, Allwyn, Kelvinator, and Voltas Post-liberalization many foreign companies have entered into

India, dethroning the Indian players and dominating the market Consumer durables sector is one of the fastest growing

industries in IndiaLG and Samsung, the two Korean companies have been

maintaining the lead in the industry with LG being the leader in almost all the categories

The rural market is growing faster than the urban markets but penetration level is very low

CTV segment is expected to the largest contributing segment to the overall growth of the industry

The rising income levels, double-income families and increasing consumer awareness are the main growth drivers of this industry

INDUSTRY CLASSIFICATIONThe consumer durables industry can be broadly classified

as consumer electronics and consumer appliancesThe consumer appliances category can be further

segmented as white goods and brown goods

CLASSIFICATION OF CITIES AND TOWNS

The existing size of this sector stands at an estimated USD 4.5 Billion with organized retailing being at 5%

Source:http://www.valuenotes.com/one-time/IndianRetailSector_11oct06.asp?ArtCd=86179&Cat=&Id

RETAIL FORMAT IN CE MARKET

Sourse:http://www.valuenotes.com/one-time/IndianRetailSector_11oct06.asp?ArtCd=86179&Cat=&Id

Demographic Profile of India

Source:http://www.valuenotes.com/one-time/IndianRetailSector_11oct06.asp?ArtCd=86179&Cat=&Id

DEMOGRAPHICS OF INDIAN MARKET

INCOME GROUPINGS AND OWNERSHIP(OWNERSHIP PER HOUSEHOLD)

Source: The Great Indian Market August 9, 2005 Results from the NCAER’s Market Information Survey of Households

DEMAND OF CONSUMER DURABLES(FIGURES IN '000)

Source: The Great Indian Market August 9, 2005 Results from the NCAER’s Market Information Survey of Households

PENETRATION OF CONSUMER DURABLES (NUMBER OF HOUSEHOLDS OWNING GOODS PER '000 HOUSEHOLDS)

Source: The Great Indian Market August 9, 2005 Results from the NCAER’s Market Information Survey of Households

RURAL DEMAND- CONSUMER DURABLES(% OF ALL INDIA)

Source: The Great Indian Market August 9, 2005 Results from the NCAER’s Market Information Survey of Households

BUYING BEHAVIOR –CONSUMER ELECTRONICS

Price is a significant influence on purchase behavior but is not always the most important factor.

Consumer age, brand, type of product, current product diffusion, and lifecycle stage of a product must be viewed in concert with price to understand purchase process behavior.

For example, buyers of certain products, including game consoles, high-definition DVD players, DVRs, and photo printers, are more likely to consider product features and capabilities over price.

Endorsed by opinion leaders – excellent reviews in magazines, TV shows, on blogs, by word of mouth by existing consumers, etc

High on quality – brand name of apple assures on quality, especially sound and music clarity as well as product durability

Associated with the ‘aspirational group’ for a consumer – with a trend setting product like an iPod, it has become a symbol of status and ‘cool’ and hence become a must-have to fit in with the popular groups

BUYING BEHAVIOR (Contd)

Lower duties, cheaper technology and strong competition with low entry barriers ensure competitive prices

Increase in brand and product choiceValue-for-money pricing lead consumers to

upgrade – from corded to cord-less phones, from conventional CRT to flat-screen or plasma/LCD TVs, from 15- to 17-inch computer monitors, from 1- to 3-megapixel cameras, from monochrome to colour phones, etc

TRENDS IN TERMS OF TECHNOLOGY AND PRODUCTS – INDIA

Huge boom in mobile phone purchases with high penetration even in rural markets (launch of value for money, no frills, reliance phones gave an impetus to rural penetration)

With internet penetration also increasing along with growing number of service providers, the sales of modems, routers and accessories has gone up.

Shift from buying predominately during Diwali and other festive seasons to year round purchasing

Consumers more aware of brands Consumers more conscious of style, looks,

technical specifications More research is done on technically advanced

gadgets, but there has also been an increase in impulse buying with increasing disposable incomes, competitive prices and wide choice.

CONSUMER BEHAVIOUR TRENDS

KEY PLAYERS

SOME KEY STATISTICS

SWOT ANALYSIS Strengths

1. Presence of established distribution networks in both urban and rural areas2. Presence of well-known brands3. In recent years, organized sector has increased its share in the market vis a vis the unorganized sector. 

Weaknesses

1. Demand is seasonal and is high during festive season2. Demand is dependent on good monsoons3. Poor government spending on infrastructure4. Low purchasing power of consumers

SWOT ANALYSIS (CONT)..Opportunities

1. In India, the penetration level of white goods is lower as compared to other developing countries.2. Unexploited rural market 3. Rapid urbanization4. Increase in income levels, i.e. increase in purchasing power of consumers5. Easy availability of finance

Threats

1. Higher import duties on raw materials imposed in the Budget 2007-082. Cheap imports from Singapore, China and other Asian countries 

ENTRY BARRIERS

ENTRY BARRIERS (CONT) Restricted FDI entryChina and Korean competitorsCultural Barriers Heavy tax duties on exported goodsCompetition through grey market like AlphaLack of information

VISION “To offer the most technologically advanced,

reliable and Greener electronic products and related services of the highest quality to individual and institutional consumers in the country and make these products and services available at the most fair and competitive prices, creating and sustaining the long-term goodwill of the consuming public.”

MISSION“To constantly monitor international

developments in electronic products and initiate efforts to source them to meet present and emerging requirements in the market and to delight and deliver beyond the expectations of the consumers.”

MISSION OF THE FORMAT“To continuously enhance the competency

level of personnel through training and motivation, to expand the sales and network to serve a larger segment of consumers and to render the best after-sales service possible.”

SHORT TERM STRATEGIC OBJECTIVESTo promote and deliver energy efficient “greener “

products to consumers and businesses over time

To differentiate from the competitors with superior product quality, service and unmatched shopping experience

To Increase the awareness of the store in the region.

To Increase the footfalls in the store. To satisfy the unmet needs of the customers

LONG TERM OBJECTIVESTo become a market leader through:

Increased customer loyaltyExceeding customer expectationsSupreme Vendor relations

To expand to other potential areasTo support and sustain the greener concept and

transform the marketDrive the society towards a more greener

environment which would lead towards the upliftment and wellbeing of the society

HIERARCHY OF OBJECTIVESCompany Mission/Vision

Corporate objectives

Corporate strategies

Divisional objectives

Divisional strategies

Product/brand objectives

Brand strategies

Program objectives

Tactics

Level I

Level 0

Level III

Level II

Level IV

SEGMENTATIONWe have identified the segmentation variables

as:GeographicDemographicPsychographicSocioeconomic

CUSTOMER ANALYSIS Who the Customers Are:

Primarily upper middle class and upper class

Analytical and quantitative in natureWell educatedSpecial focus on working class, specially

working women

MARKET SEGMENTSSegment Size Characteristics Distinctive Attribute

Globetrotters 10% Age 45-54; mostly male; employed in senior positions

Innovators, would prefer to buy niche products like Laser TV's

Road Warriors 20% Mostly in corporate management and sales, property management and real estate

Would prefer to buy high end products, tech savvy

Corporate Wanderers 12% Travel less than Globetrotters or Road Warriors; spend most time visiting employees within their own companies

Would prefer to buy high end laptops and PDA’s

High e-mail users

MARKET SEGMENTSSegment Size Characteristics Distinctive Attribute

Collaborators 8% Age 25-44

Well educated young professionals, tend to hold advanced degrees

Team leaders, project managers

Innovators

Frequently change gadgets

Not very mobile but need mobile products

Corridor Cruisers 15% Similar profile to Collaborators Not as likely to adopt new products as Collaborators

Hermits 8% Least mobile;

Youngest segment (many under 35)

Seldom work with others

Mostly finance and telemarketing

Users of standard electronic goods

Prefer moderate purchase

Solo Practitioners 16% Like Hermits but older

Diverse collection of technical professionals in small to medium-size companies

Typically connect to corporate network when traveling so likely to buy sophisticated gadgets via exhaustive demonstration

Small-Site Bosses 11% Run small business Look for value-for-products

TOTAL PRODUCT CONCEPTGeneric product

Expected product

Augmented product

Potential product

Regular White and Brown Goods

New Brands &Technologies

Latest Products Laser TVs & Handheld PCs

CE spare parts & add ons

FIVE AREAS FOR DIFFERENTIATION

1. Quality2. Status and Image3. Branding4. Convenience and Service5. Distribution

MARKETING STRATEGY

PRESENCEPRESENCE RELEVANCE

RELEVANCE

PERFORMANCE BONDING

MARKETING STRATEGYPhase 1: Presence A publicity drive would have to be undertaken to

create a buzzword in the markets by having stalls in exhibitions and fairs, having a press release for every market they enter into

Phase 2: Relevance Next phase would be of reasoning our presence in the

market. Our brand proposition and objectives would be conveyed through the markets in this phase. Our marketing in this phase would be through catalogues

MARKETING STRATEGYPhase 3: Performance After creating our niche in the market, we therefore, need to create a

foothold and respect in the market, and this can be done only via our financial reports. Our financial reports should clearly mark us as a growing profitable and trustworthy company in terms of product and prices.

Phase 4: Bonding We are a successful brand by now, so our next step would be to create a

rapport/bond with our customers so as to make them feel prized and special. This could be done by :

Sending a small token of thanks on special days of their life like birthdays and anniversaries

Getting a CRM team in place who would go that extra mile to please and win the trust of the customers.

MARKETING MIXProduct We would offer best quality differentiated products laced with advanced

technologies like Laser TV’s. Would also offer bundled productsPrice Pricing would depend from product to product, therefore no fixed price range.

Price would be correlated to unique products attributes. At the same time our prices would be competitive so as to draw walk-ins in the store and have a higher conversion rate

Place We would have company owned exclusive retail outlets in cities of the country.

We would go preferably for standalone shops where competition levels are low. We want to create our store as a destination outlet and not any other roadside retailer

Promotion For the initial years we would spend on advertising and branding activities till

the time we have created a niche market for ourselves. Based on the previous year‘s sales figures we would contribute a certain % to promotional and marketing activities so as to reach the present year‘s sales targets

PROMOTION MIXThe promotions would be carried out in the following ways:

Trade fairs & Exhibitions: Would be best to way demonstrate and advertise the product

Advertisements through catalogues This would be undertaken on a routine basis so as to

create relevance in the minds of the target group Billboards & Revolvers One of the cheapest form of branding. Though the

conversion rate in this case would be debatable but it would perfectly accomplish our goal of popularising the brand.

HOW BRANDING IS DONE?Inside

OutsideAround

LeadershipCultureProcesses

LeadershipCultureProcesses

CompetitorsIndustryTrends

CompetitorsIndustryTrends

CustomerRelationshipDynamics

CustomerRelationshipDynamics

Our BrandOur Brand

We would be adopting proprietary brand development process

Branding would be done based on 3 key factors: Internal External Service

TEN GUIDELINES FOR BUILDING BRANDS1. Brand Identity

Each brand should have an identity, a personality. It can be modified for different segments.

2. Value PropositionEach brand should have a unique value proposition.

3. Brand PositionThe brand’s position should provide clear guidance to those

implementing a communications program.4. Execution

The communications program needs to implement the identity and position, and it should be durable as well.

5. Consistency Over TimeProduct managers should have a goal of maintaining a

consistent identity, position, and execution over time. Changes should be resisted.

TEN GUIDELINES FOR BUILDING BRANDS (CONT.)

6. Brand System The brands in the portfolio should be consistent and

synergistic.7. Brand Leverage

Extend brands and develop co-branding opportunities only if the brand identity will be both used and reinforced

8. Tracking The brand’s equity should be tracked over time, including

awareness, perceived quality, brand loyalty, and brand associations.

9. Brand Responsibility Someone should be in charge of the brand who will create

the identity and positions and coordinate the execution.10. Invest

Continue investing in brands even when the financial goals are not being met.

THE BRANDING EXERCISEThe main USP behind our branding is the service

quality level & competitive pricingOur brand would reflect our mission & vision

along with our core competenciesKeeping in mind the target group that we are

capturing, the brand would reflect the element of niche marketing

We would be adopting active branding methodology, i.e. providing credibility through our branding exercise

WORSE VALUE PERCEIVED ASEXPLOITATIVE

PREMIUMPERCEPTION

HIGH VALUEPERCEIVED – VALUE

ENHANCEMENTC

om

pet

itiv

e Q

ual

ity

HIGH

LOW Relative Price

LOW

HIGH

Croma

Our store

Vijay Sales

NextNext

POSTIONING OF OUR BRAND

OUR ROAD MAP

We would concentrate in regional penetration in our initial 2 years of our operations In the 2nd phase we would expand nationally bursting into other regions of India

Our 3rd phase of expansion would consist of entering International markets with opening up of stores in Sri Lanka, Nepal

PROFILE OF JUHU TARA RDAccessible by all modes of transport and easily travelled

from Santacruz, Vile Parle & Andheri stationsThe premium section of the society resides here, rather

the showbiz populationHugely dominated by higher middle class of the societyValue for money is negligible, the only things that matter

are ambience, service levels and product qualityPopular hangout for all classes of people in the form of

Juhu beachA shopper’s paradise, thereby making it a highly visited

locality for the elites of the social class.

PROFILE OF MALAD(W)Dominated by SEC A1, A2 & B1First generation populationMetropolitan suburb, consisting of Marathis, Sikhs, Gujaratis &

Marwaris (Rich Legacy Heirs & Spendthrifts), & PunjabisConstruction hotspot favoured by companies, therefore major

infrastructure developments IT Hub of Mumbai, throwing light on the fact that the younger

higher disposable segment of the populations travels and some even reside in this area

Home to 7 malls, with InOrbit being touted as the largest mall of India.

Therefore, perfect to enter and have a hefty pie of the wallet

PROFILE OF COLABARich Indian industrialists and business people

prominently resideShoppers paradise again with all the well known brands

having a retail store in this areaMajor tourists destination, who are made for Indian arts

and crafts including jewellery and accessoriesHippest neighbourhood in Mumbai serving as the major

shopping district for both tourists and locals.Hugely dominated by the elite class of the societyValue for money is negligible, the only things that

matter are ambience, service levels and product quality.

GOING NATIONALAs we break even in Mumbai market in around 1 to

11/2 years, we will venture into North Indian markets like Delhi where we can target areas like South Ex, NCR

In phase 3, we will open up our stores in South India like Bangalore

Our International saga would begin by entering into markets like Sri Lanka, where the penetration of CE industry is not as high as India

STORE NAMEWe propose to label our category as

Our Logo is

For Greener Tomorrow…