ABC Electronics Ltd. – A Wrong Analysis of Consumer Behavior
ABC Electronics Ltd. was a company established in 1983 by Mr. Manoj Kumar and over the years had emerged as one of the leaders in the growing segment of the electronics and home appliances market in India. Currently it has a market share of 30% of the home appliances market. Its product strategy has been to offer a wide range, right from mono stereo, two in ones and sophisticated music systems to televisions, refrigerators, washing machines, ovens and microwave ovens. ABC’s marketing strategy also included offering the above products so as to match the needs and budget of the middle and upper middle classes.
In 1991, Prasad, son of Mr. Manoj Kumar, took over as the Managing Director of the company. Seeing the intense competition in the post liberalization scenario, Prasad was keen to follow the principle that once you have decided on your target customer, you follow him/her relentlessly with attractive offerings. In 1994, he developed a well focused promotion and distribution strategy. The promotion strategy involved an advertising budget of Rs. 10 crores, a special training program for the sales force and offering freebies and various other sales promotion techniques. In terms of distribution, Prasad selected exclusive showrooms and franchisees to display their wide range of products. The location of the exclusive retail outlets was also selected so as to match the perceptions of the consumers as an “exclusive showroom” for them.
However, even after two years of implementing the new promotion and distribution strategy, the sales of ABC Electronics did not pick up to the extent that the company thought it would. Prasad then directed the marketing manager to conduct a study of other retail outlets to know the trend. The results revealed that there was a change in consumers’ perceptions regarding purchasing consumer durables. There seemed to be a preference for purchasing goods from multi brand,...
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