TABLE OF CONTENTS
Swot of consumer durable industry
Porter’s 5 forces model for consumer durable industry 3.
Marketing strategies followed by samsung
Problems & suggestions
Conclusion and the road ahead
INTRODUCTION ABOUT THE INDUSTRY
Before the liberalisation of the Indian economy, only a few companies like Kelvinator, Godrej, Allwyn and Voltas were the major players in the consumer durables market, accounting for no less than 90 per cent of the market after liberalisation,foreign players like LG, Sony, Samsung, Whirlpool, Daewoo and Aiwa came into the picture. Today, these players control a major share of the consumer durables market. With the increase in income levels, easy availability of finance, increase in consumer awareness and introduction of new models, the demand for consumer durables has increased significantly. Products like washing machines, air-conditioners, microwave ovens and colour televisions (CTVs) are no longer considered luxury items. However, there are still very few players in catego ries like vacuum cleaners and dishwashers. The consumer durables sector is characterised by the emergence of MNCs, exchange offers, discounts and intense competition. The market share of MNCs in the consumer durables sector is 65 per cent. MNCs’ major target is the growing middle class of India. This offer superior technology to the consumers, whereas Indian companies compete on the basis of firm grasp of the local market, their well-acknowledged brands and hold over wide distribution network.
As per a survey conducted by FICCI on the Indian consumer durables industry, a shift in consumer preferences towards higher‐end, technologically advanced branded products has been quite discernable. This shift can be explained by narrowing differentials between the prices of branded and unbranded products added with the high quality of after sales service provided by the branded players. The shift has also been triggered by the availability of foreign branded products in India owing to lower import duties coupled with other liberal measures as introduced by the government. Some facts about the consumer durables industry
• Consumer Durables Industry in India to post ~15% CAGR growth over next five years. • We believe that the consumer durables industry’s growth has been two pronged (a) driven by lower penetration in rural markets and (b) new innovations and replacement demand in urban markets. • Key growth drivers include:
1. Continued economic growth demonstrated through 8.4% CAGR growth in GDP over last 5years 2. Favorable demographics; 64% of the population in working age category 3. Increasing Urbanization, nuclear families
4. Increase in disposable incomes; which drives consumption
5. Increasing affordability coupled with declining prices of products 6. Lower consumer product penetration
7. Availability of new products and technologies,
8. Easy financing schemes and
9. Increase in organized retail
• However, increasing raw material prices, intense competition and increased cost of service and distribution are major challenges being faced by industry. • Valuation and view: In a scenario of shorter product life cycles and increasing competition, we believe that the companies with strong R&D, wide distribution network, strong brand would dominate the segment. Indian consumer durables sector has limited stock selection available for value investors. Key Industry Dynamics
Industry Size: Rs. 350bn
Key Categories: White Goods, Brown goods and Consumer electronics. Competitive landscape: dominated by Korean majors like LG and Samsung in most of the segments Margin Profile: Low margin, dependant on volumes
Growth opportunities: Lower penetration coupled with increasing disposable income The Indian Consumer Durables Industry can be segmented into 3 Key Group
Sources : IBEF, GEPL Capital Research
Consumer Durables - Share by Volume...
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