V-Guard Big Idea Business Plan

2012

V-Guard Business Idea Executive Summary
V-Guard Industries
Business Plan and marketing concepts to ensure V-Guard emerges as a winner in the
north segment. Innovative concepts to introduce V-Guard’s household appliance in the
south segment.

TEAM BG09
11/1/2012

V-Guard Business Idea - Executive Summary

Table of Contents
Synopsis _______________________________________________________________1
Company Summary ______________________________________________________2
Mission _______________________________________________________________3
Keys to Success __________________________________________________________3
Market Analysis Summary _________________________________________________4
Impact of power crisis in the north ____________________________________________ 4
Urbanisation in the North ___________________________________________________ 4
Entry of International Brands in the Indian Market ______________________________ 4
Consumer knowledge _______________________________________________________ 5
Prevalence of gated communities _____________________________________________ 5
Brand loyalty in the South ___________________________________________________ 6
Shortage of Gas Cylinders____________________________________________________ 6

Competition ____________________________________________________________6
Strategy and Implementation Summary_______________________________________7
Product Portfolio __________________________________________________________ 9
Product Positioning and Core Strategy _________________________________________ 9

The Market ___________________________________________________________ 10
Market Description _____________________________________________________ 10
Marketing strategy – UPS inverters ________________________________________ 11
Market Research __________________________________________________________ 11
Product/Service Innovation ________________________________________________ 12

Voice over facility for changing modes __________________________________________________ 12
After purchase service strategy _______________________________________________________ 12

Sales Strategy _____________________________________________________________ 13

Living in communities demand more safety ______________________________________________ 14
Improving consumer knowledge in rural areas ____________________________________________ 14
Taking advantage of international industries ______________________________________________ 15
Urbanisation leading to development of office areas_________________________________________ 15
Establishing brand identity in retail outlets _______________________________________________ 15

Sales Forecast_____________________________________________________________ 16
Distribution Channels _____________________________________________________ 16
Advertisement and Promotion ______________________________________________ 17
Competition _____________________________________________________________ 17
Risk/Opportunity_________________________________________________________ 17

Marketing strategy – Stabilizers and LT cables ________________________________ 18
Market Research __________________________________________________________ 18
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Sales Strategy _____________________________________________________________ 19
Boosting morale in retailers__________________________________________________________ 19
Ensuring availability of products ______________________________________________________ 19
Tie up with other products to increase sales ______________________________________________ 20

Distribution Channels _____________________________________________________ 20
Sales Forecast_____________________________________________________________ 21
Advertising and Promotion _________________________________________________ 21
Competitors______________________________________________________________ 21
Risks/Opportunities_______________________________________________________ 21

Marketing Strategy – Induction Stove _______________________________________ 22
Market Research __________________________________________________________ 22
Product/Service Innovation ________________________________________________ 23

Backup power during electricity outage _________________________________________________ 23
Saving energy for a greener environment ________________________________________________ 23
Interactive Tutorials for Easy Learning __________________________________________________ 23

Sales Strategy _____________________________________________________________ 24
Familiarising with the product ________________________________________________________ 24
Taking advantage of E-Marketing ______________________________________________________ 24
Offers for utensils and detergents _____________________________________________________ 24

Sales Forecast_____________________________________________________________ 25
Distribution channel ______________________________________________________ 25
Advertising and Promotion _________________________________________________ 25
Induction Chef Contest to promote Viral Marketing ________________________________________ 26

Competition _____________________________________________________________ 26
Risk/opportunity _________________________________________________________ 26

Financial Plan _________________________________________________________ 27
Conclusion ____________________________________________________________ 29
Exhibits ______________________________________________________________ 30
Current Financial Statements for the year 2008-2010 _____________________________ 30
Current Sales Revenue and Profit After of V-Guard Products for the year 2009-2010 _________________ 30
Current percentage of sales for the various products in 2010-2011 ______________________________ 31
Profit After Tax of V-Guard Industries 2010-2011 _________________________________________ 32

Survey Questionnaire for UPS inverters _______________________________________ 33
Survey Questionnaire for Induction Cook tops _________________________________ 33
Reference Materials _______________________________________________________ 33

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Synopsis
V-Guard is a Rs. 3 million turnover company supplying electronic and electro-mechanical products for the
past 30 years, and a recognized market leader in the south for stabilizers. V-Guard is aimed at extending its
leadership to the North market and expanding their product portfolio through introduction of household
appliances.
The current scenarios which have a huge impact on consumers all over India are the electricity shortage
and cap on gas cylinders. We believe the company can find a competitive advantage in this situation, by
focusing on various sales strategy and promotional campaigns to gain a brand reputation among consumers
and distributors alike.
Our team conducted focused marketing surveys to analyse the consumer’s expectation on the main
products of V-Guard: Stabilizers, Inverters, and LT cables. Surveys also focused on how consumers would
respond to V-Guard’s extension of products to household appliances. These surveys have enabled us to
create strategies for V-Guard’s product innovation, service; sales and diverse marketing campaigns which
will empower V-Guard emerge as a market leader in the Non-South sectors.
Our financial statement highlights the projected sales, and sales revenue that can be achieved if our
marketing and sales strategies are implemented. Though the expenses incurred for gaining brand
recognition are initially high, the forecasted sales turnover in the future years confirm that V-Guard will
emerge as a market leader in the North and have maximum reach in the household appliances segment,
thereby justifying the marketing investment.

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Company Summary
V-Guard Industries is a Kerala based company. Incorporated in February 1996, it was promoted by Mr
Kochouseph Chittilappilly. The company operates in three segments 



Electronics (where it makes voltage stabilisers, UPS and digital home UPS),
Electrical/ electro-mechanical products (PVC insulated cables, pumps, water heaters, fans)
Others (solar water heaters, gas water heaters, water level controller, windmill energy etc).

V-Guard has been an established player in the stabiliser business since the last 30 years with a
market share of ~50% in south India. The company has a network of 16 branches, 7,000 retailers,
177 distributors and 235 service centres spread across 12 states in the country. It has a diversified
product mix; with electronics contributing 33% of total revenues in FY10, electrical/ electromechanical
(63%) and others (5%). This product mix helps the company reduce its dependence on a
particular product.
V-Guard ventured into Maharashtra, Haryana, Madhya Pradesh, Orissa, Himachal Pradesh,
Chhattisgarh, Uttar Pradesh and Gujarat in FY10, with an eye to develop a pan-India presence. Its
northern markets contributed 15% to total revenues, while the southern region
contributed 85%.
6,00,000
5,00,000
4,00,000
Sales

3,00,000

Gross Margin
Net Profit

2,00,000
1,00,000
0
Year 1

Year 2

Year 3

Figure 1 Highlights

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Mission
V-Guard’s mission is to increase sales in the northern part of India and develop brand recognition in the
north segment. The market share of V-Guard is very low in the north, compared to the market share in the
south. V-Guard has emerged as a market leader for stabilizers and UPS in the south market, but is in strong
competition with other industries in the north and is trying to establish its market with the target market in
the northern parts of India.
Due to the success of the electronic components in the south, V-Guard has extended its product line by
introducing small household appliances for consumers. V-Guard is aimed at achieving leadership in the
household segment as well, in the south market.






Create a brand recognition in the North
Sell the electronics(voltage stabilizer, UPS and digital UPS, Solar water heaters) of V-Guard in
the rural areas at a lower margin and higher sales turnover
Take advantage of the electricity crisis faced by the northern states and sell their electronics to the
consumers and industries.
Establish the presence of household appliances in the south with V-Guard’s main positioning of
providing safety for consumers through their product.
Take advantage of the shortage of gas cylinders in the south, and market V-Guard’s core
household appliances - Induction Stove.

Keys to Success
The major success factors that can attribute to sales of V-Guard in the north are the following:






Expedient and convenient electrical services.
Growing and maintaining a referral network of customers.
Focus expertise in data, communication and electrical installation and maintenance.
Rapid order and delivery of electrical components.
Point of Purchase, Word of Mouth, Direct Sales to focus on specific groups of consumers.

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Market Analysis Summary
Impact of power crisis in the north
The main areas in the north, which are deeply affected by the power failures, are Delhi, Haryana, Punjab
and Rajasthan. Other cities in the north also have had an impact in their daily lives due to the sudden
shortage of electricity. It has become a growing concern for commuters, companies and industries looking
forward to establish plants and manufacturing units in the northern states.
Though, the north is highly developed with proper amenities, the electricity shortage has posed a huge
problem for office goers and industries. Another segment which is deeply affected by the power shortage is
the rural areas, which comprises areas in the outskirts of the metro cities. Though the metro cities are
affected, the electricity shortage had the most impact on the rural areas.

Electricity Shortage

60%

Urban areas
Rural Areas

Figure 2 Electricity shortage - North India

Urbanisation in the North
The second analysis in the north market was the level of urbanisation in the economy. Companies were
hugely dependent on office areas and buildings in order to accommodate maximum number of employees
to enforce internal marketing. Employee satisfaction has become the “need of the hour” and all the
company executives ensure employees are within reach and easily accessible. Though various modes of
communication have become prominent, companies prefer all the employees to be in a single office area.
For this purpose, metro cities in the north have developed tall storied buildings and the tallest buildings in
India are situated in the northern parts such as Mumbai, Delhi, Jaipur, Madhya Pradesh etc. Sudden power
cut for these buildings pose a huge threat as people in the highest floor will be unable to walk all the way to
the ground floor.

Entry of International Brands in the Indian Market
The third analysis made in the northern parts is the entry of international brands into the Indian market.
Industries from abroad are interested in setting up manufacturing units and plants in the north to enable
sales in the developing economy. India is a growing economy, and many international industries are eager
to set up their units in the country and mainly in the metro cities.

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Consumer knowledge
The fourth analysis is the lack of knowledge consumers have about UPS, voltage stabilizers and solar water
heaters. Implementation of the Go Green strategy in India has helped people think about saving electricity
and consuming less electricity, but they do not know how to implement their ideas. For example, people
are not aware that using stabilizers not only prevents from sudden short circuits and shocks, but also helps
in regulating the electricity consumption to the specified watts/voltage. A survey was conducted in the
northern areas and apart from industrial companies, surprisingly a moderate percentage of people were not
aware of the electrical equipments
5
4.5

4
3.5
3

Voltage Stabilizers

2.5

UPS

2

Digital UPS

1.5
1
0.5

0
Delhi

Mumbai

Maharashtra

Gujarat

Figure 3 Consumer knowledge

Prevalence of gated communities
Another analysis made on the social factors in the north was the gated communities and societies in these
areas. The north states mainly consists of gated communities with people living in apartment complexes
that had around 400 flats and 8 to 9 blocks of apartments. Real estate industries focused on building huge
apartments with a minimum of 10 to 12 flats, as the north had their own communities and large families.
Nuclear families and joint families preferred gated communities for safety, comfort within their own
societies, and support from neighbours, and companions for their children.

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Brand loyalty in the South
In relation to the south, V-Guard had established a brand loyalty among consumers, and all the consumers
could relate to the brand as trustworthy and safe. People believed all V-Guard products were true to its
tagline “name you can trust” and are regular users of the brand. They believe that V-Guard is not only
trustworthy, but also safe to use and durable in the long run. Since it mainly manufactures electrical
components, trust, safety from shocks, durability and quality play an important role. V-Guard has gained
the consumer’s loyalty in these aspects in the south market.

V-Guard Consumers
4.6
4.4
4.2

V-Guard Consumers

4
3.8
3.6

Retention

Trust

Satisifaction

Figure 4 V-Guard Market in the South

Shortage of Gas Cylinders
The growing concern in the south is the shortage of gas cylinders, where the government has restricted the
use of gas cylinders to only six per year. This has led to consumers using less of gas stove and is becoming
more open to other methods of cooking such as using induction stoves, microwave ovens, and electric
cookers and so on. Though the consumers are not accustomed to this kind of cooking and have been
practising cooking in gas stoves for centuries, the shortage of cylinders have let them come out of the shell
and try new areas of cooking.

Competition
The main competitors in the north for V-Guard are



Su-Kam
Havells

The main competitors in the south for the household appliances are:




Prestige
Butterfly
Other branded products (Philips,Panasonic etc)

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Strategy and Implementation Summary
The strategy that needs to be implemented in the north market is twofold:



Concentrate on rural areas through direct sales, WOM and Point of Purchase
Concentrate on urban areas through social media channels and contracts with building areas for
office as well as the gated communities’ real estate.

Urban Market

Rural Market

Contracts with office
areas

Direct sales

Launch of international
manufacturers

Word of Mouth

Contracts with real estate

Live demonstration

Social media

Availability

Electronic retail stores

Low margin

Higher Margin
Figure 5 Urban Vs Rural Market

Maharashtra and Gujarat are two northern states that are familiar with southern products and have a
respect for them. Promoting V-Guard initially in these areas would be a good move and would be easier to
establish a brand recognition of the product.
The following marketing strategies can be implemented in the rural areas of the north:





Direct sales where sales representatives can go to individual houses and explain about the product
and the benefits of using UPS and stabilizers during times of power shortage crisis. The LIC
model!
Word of Mouth in rural areas, as they are the most effective form of advertising. People in rural
areas are closer to each other than people in urban areas.
Demonstration of the product to the potential consumers during direct sales.
Availability of the products in local supermarkets and wholesale distributors.

The pricing strategy in the rural areas can focus on wholesale profit and lesser margin in sales:





Provide a commission for sales representatives on sale to consumers.
Sell UPS and stabilizers for a lower margin to the consumers and retailers.
Offer UPS to the distributors stores for a low margin, making them brand loyal.
Tie ups with retailers to sell fridges, ac’s and other electronic goods along with voltage stabilizers.

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The following marketing strategies can be implemented in the urban areas of the north:







Tie-ups with building contractors of office areas for digital UPS and UPS at a competitive price.
Initiate meetings with international companies that are going to set up base in India and educate
them about the current electricity demand in India and the use of V-Guard UPS.
Tie up with gated communities offering UPS service for all the apartments through the
apartment’s maintenance service.
Contracts with real estate companies such as DLF, Hiranandani, TVH etc. to include their UPS
service along with the building contracts to ensure stable power supply during electricity
shortage.
Provision of V-Guard products in electronic retail stores to establish status and brand recognition
such as Reliance Chroma, E-Zone etc.
Direct sale of V-Guard products through Social Media channels such as Snapdeal, Shopclues,
DesiDime and so on.

The pricing strategy in urban areas can focus on brand status and higher margin to compensate for the sales
in the rural areas.
Household appliances can be promoted through aggressive campaigns focusing on the trust and safety of
the brand.

Safety and Trust
Live demonstration, trade shows
Competitive edge
Social media marketing
Live streaming and podcasts
Figure 6 Promotion in the South Market

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





Advertisements should focus on the safety of the product and the fact that consumers can trust the
products as it is a part of V- Guard.
Live demonstrations and trade shows can be held highlighting on the importance of using
induction stoves and electric cookers with the shortage of gas cylinders in the city.
V-Guard has a competitive edge over other companies, as it is an established brand and it must
focus on the emotional insight of the consumers by focusing on the quality, durability and safety
of the product.
V-Guard can use the opportunity of social media marketing and promote their products through
websites such as snapdeal.com, desidime.com, shopclues.com and so on offering coupons and
introductory offers on the products.
V-Guard can also promote the product through live streaming on the use of induction stoves
using YouTube and other streaming podcasts.

Product Portfolio
Given the Market Analysis in the North, V-Guard can focus on 3 main products in the North segment, to
establish a brand identity and slowly increase their product portfolio to emerge as a market leader in the
North.




UPS Inverters – for Household and Industries
Stabilizers – for different electrical appliances
LT cables

Similarly, based on our market analysis V-Guard can focus on obtaining a market for induction cook tops in
the South as the shortage of gas cylinders, has emerged as the main problem for this target market.

Product Positioning and Core Strategy
We can position UPS inverters as unique from other competitors through the following strategies:






Additional features for easy interface
Sleek design to match the décor of the house
Unique after purchase service model to cater to customers and distributors
Following the LIC model to boost sales in rural market
Initiating a Go-Green strategy to conserve energy

We can position Induction Cook tops as unique from competitors using the following strategies:




Backup facility for 5,10, or 20 minutes during power outage
Utensils that suit faster cooking using induction stove
Green manual to help cook faster and save electricity

Stabilisers and LT cables can accommodate a unique way of distribution to increase sales through
penetrative pricing in the north market.

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The Market1
An estimated 1.8 million inverters are sold in India per year with over half of them in the 1.5kVA range.
Power outages (planned power cuts) are the main business driver for inverters. Sales of inverters pick up
in the summer season when power shortages peak. Over the past few years, a trend of purchasing higher
rating inverters-those that can support air conditioners apart from other low-wattage appliances-is being
seen. The highest revenue earning segment is the 10-100kVA segment coming from industrial UPS like the
online and line-interactive systems.
The voltage stabiliser market in the country is estimated at Rs 1,250 crore, out of which V-Guard has
garnered a revenue of Rs 200 crore in FY. This year, the company is hoping to achieve a 25 per cent
growth.
Cables demand forms a part of every industrial capex project. However, the requirements and orders for
cables normally accrue only after 50% of the industrial capex project is complete. The wire industry in
India touched approximately Rs.50-55 billion in FY 09. It was estimated that the 8-year CAGR for the
wires & cables industry was 12%.
Government’s decision on gas cylinders has become a boon for sale of induction cook tops as it has clocked
Rs 1 billion in 2011, and this fiscal year is expected to earn Rs 1.5 billion. While the gas stove market in
India is at Rs 13 billion, the induction stove market has already reached Rs 12 billion in just a few years and
is growing at 30 to 40 per cent.

Market Description
Product

Suitable
Segmentation
Approach
Benefit

Rationale
Focus on benefits that the industries can achieve through purchase of
the products. Eg: Energy saving, aesthetic appeal, additional
features.

UPS Inverter
Sales strategy in urban and rural areas to benefit both segments in
terms of price and usage.
Stabilizers and
LT Cables

Geographic
Demographic
Demographic

Induction
Cook tops
Benefit

1

Concentrate on tie ups and providing incentives for electrical
companies and electricians.
Bachelors, newly married couples and old couples form the main
target consumers for this category.
Shortage of gas cylinders in the South makes this a necessary
commodity in households. Knowledge enhancing strategies and
cooking methods are the benefits that consumers can inculcate
through the marketing strategies.

Reference from Economic Times

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Marketing strategy – UPS inverters
The main target for UPS inverters is:





Industries
Gated Communities
International industries with base in North
Rural areas – SEC classification

Market Research
We performed a market survey on the problems that are faced by users of UPS inverters and analysed the
following information:




28% of users are hassled by the beep sounds in the inverters, which do not give any information
about the problem faced such as battery low, inverter on etc.
40% of users confine UPS Inverters to hidden areas like attics & basements due to their bulky size
and minimalistic design (usually come in rectangular or box designs), and are too technical to be
“mainstream enough” to be kept inside the home.
32% users believe service from UPS companies is usually not satisfactory, as they do not cater to
the customers effectively after purchase of product. Since they are technical in nature, customers
are in a helpless situation when they do not receive proper service.

Market Survey Results
Sound

Design

Service

40%
32%

28%

Market Research
Figure 7 Survey Results

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Product/Service Innovation
V-Guard can gain a competitive edge over other products, by implementing the following features in their
UPS inverters in order to cater to the customer’s needs.

Sleek Design and Usability
According to the research, customers believed that the bulky design and interface of the inverter was very
unpleasant and had to be hidden away in order to keep with the décor of the house. Implementing the
design in Figure 7, would make the UPS inverter look visually appealing and also user friendly. This is
critical need for most flat owners
Tabletop to place mobile
phones/magazines
Plug Sockets
Handle bar

Extendable loft for battery
The aesthetic appeal of the UPS inverter and the additional small accessories avoids a place in the
attic/basement of the house and can be included as part of the furniture at home.

Voice over facility for changing modes
Customers complain of constantly checking the UPS inverter, whenever it activates the beep sound to alert
the customer on the change in mode. For example, if the inverter has been overloaded, a system to alert
the customer so that they can immediately make the change without looking at the inverter would be an
add-on feature. For this purpose, a voice over with 5 main commands can be included in the inverter to
enable the customer to know about the problem without having to physically view the inverter.
The 5 main commands can include the following:






Inverter On – specifies when the electricity is cut, and inverter is in working mode
Inverter Off – specifies when the electricity is back on and inverter is in dormant mode
Battery Low – specifies when battery is low and needs to be charged
Inverter Overload – specifies when the consumption of power is more than specified
Power Off – specifies when the inverter is switched off

After purchase service strategy
The main feedback of inverter users is the service rendered to them after 3 months of buying the product.
Customers believe that the service provided by most of the inverter companies is not adequate and
efficient, since they are dealing with products that are more technical in nature and require proper
attention from customer service representatives.
To implement this idea, V-Guard can excel in their after sales service to achieve satisfaction among
customers after post-purchase behaviour.


Mobile technology – Customers can send a message to the customer service helpline, which will
trigger an alert in the customer service section and the representative can get back to the
customer within 5 hours.

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




Customer Helpline 24/7
Using Social Media to address customer needs with a committed set of customer service
representatives monitoring the activity in various media platforms
o Facebook page which is publicly accessible by all users to write comments and give
feedback.
o Discussion Forums, addressing concerns of consumers regarding suitable products such
as basic UPS, digital UPS and solving less technical problems, providing product
knowledge and so on.
A user interface in the website, which provide options for the number of household appliances
that need power during electricity shortage and number of hours required for backup. Based on
the input provided, the website can display the best suited inverters with price and product
description.

Figure 8 User Interface

Sales Strategy
V-Guard can adopt a sales strategy based on the marketing initiatives taken to promote the uniqueness of
Inverters and the brand positioning. UPS inverters are priced at a range of Rs.5000 (basic category) to
Rs.8900.

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Gated
Communities

Rural
Haats/House
holds

Retail
outlets

Inverters

Industrial
Buildings

International
Industries

Figure 9 Sales Initiatives

Living in communities demand more safety
Gated communities are a growing trend among real estates in the coming year, as families enjoy special
privileges and monitored safety for their children. Around 40% of North India consists of gated
communities, as the culture followed in the north mainly contribute joint families and closely knit
relations. Due to this, the demand for safety and commitment to provide comfort from the prevailing
electricity shortage in the cities has been a growing concern for real estate industries.



V-Guard can promote advertising among real estate industries and offer UPS inverters for their
gated communities.
Contracts with construction companies for long term relationship

A good margin of sales can be obtained in gated communities as it consists of mainly upper middle class
people and real estate industries that are willing to shell out money for a high quality product.

Improving consumer knowledge in rural areas
As per the market analysis, it was noticed that a large percentage of consumers did not have proper
knowledge about the use of UPS inverters and the various types of UPS products that are offered based on
the number of appliances available at home to the number of hours of backup power required. The
untapped potential of rural market was unknown due to this lack of consumer knowledge.




V-Guard can initiate promotion of products in rural haats, by explaining the usefulness of an
inverter in the impending power crisis, and the normalisation of price depending on the VA
output.
Basic UPS inverters can be sold in these areas (backup power for maximum of 2 fans and one TV)
at a lower price.
Consumers can be offered incentives or commission for reference of potential consumers, if they
purchase the product. Similar to LIC model, to promote and create sales team within every
household.

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Referring
potential
consumers for
commission of
sales

Sale of
inverters to
consumers at
nominal price
Product knowledge in
rural haats and
demonstration

Figure 10 Indirect sales

Lower margin with wholesale price can be the sales strategy that can be implemented in rural areas as the
target market consists of lower middle class, who concentrate only on their basic needs being met. VGuard can concentrate their sales strategy in rural areas initially in parts of Gujarat and Maharashtra as they
have a certain amount of knowledge on South Indian products. After establishing a brand in these areas, the
company can concentrate on the metropolitan cities.

Taking advantage of international industries
As India is slowly transforming into a developed country, many international brands are interested in
opening up a manufacturing unit or a product base in India. Especially northern metropolitan cities are the
main targets for international industries due to technological advancements, availability of land and labour.
V-Guard can focus on establishing contracts with these industries by explaining to them the threat of
power shortage in India and the hourly power cuts imposed by the government in order to conserve
electricity.
Opportunity for a New Product:
Industries are now concentrating on “making the world a greener place”, and are trying to include
initiatives to conserve electricity and save energy. Keeping this in mind, V-Guard can introduce the Solar
UPS product, which converts solar energy to recharge batteries and provide electricity.
V-Guard can focus on selling inverters at a competitive price amongst other companies, in order to gain
brand recognition among all the industries. Sales to industries mainly rely on how soon we reach the
industry and the value for money that they will incur.

Urbanisation leading to development of office areas
Many companies have office areas in high-raised buildings in order to contain all the employees within one
geographic location. Therefore, tall –storied buildings have been constructed and are one of the main
business drivers for construction companies such as DLF, TVH and so on. The electricity outage problem
has created a major impact in these buildings.
V-Guard can exchange contracts with corporate buildings for a lower margin in order to develop a long
term relationship with the construction companies.

Establishing brand identity in retail outlets
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V-Guard can distribute their inverters in electronic retail outlets such as Reliance Chroma, E-Zone, Big
Bazaar etc. This will focus on the urban sector and also establish a brand recognition among consumers.
Another way of creating sales is through local retail stores that are situated near the rural areas as research
shows that rural consumers purchase electronics that are closest to their areas, as they look for basic needs
and not branded items.

Sales Forecast

Sales Forecast
14
12
10
8

Retail Outlets

6

Contracts

Personal Selling

4
2
0
1

2

3

4

5

6

7

8

9

10

11

12

Figure 11 Projected sales of inverters

Distribution Channels
V-Guard can initially focus on enhancing consumer knowledge about inverters in the rural market and
target Maharashtra, Gujarat, Bengal and so on. After establishing a brand identity and initial sales, they can
slowly increase their market to the metropolitan cities such as Mumbai, Calcutta, Delhi through retail
outlets and tie up with building contracts.

Retail Outlets
Contract with builders
Wholesalers

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Advertisement and Promotion

Print
ads

• Hoardings in dhabas
• Newspaper ads

Indirect • Word of mouth
Advertising • Direct sales
Advertising
and
promotion
Promotion

• Rural haats
• Retail outlets

Competition2
Leading players catering to the Indian UPS market are APC (a unit of Schneider), Emerson, Numeric
Power Systems, DB Power, Eaton, etc. These five players account for half of the market size, in terms of
revenue.

Risk/Opportunity3
One trend that experts feel would emerge in the coming years are efficient and greener equipment. A solar
powered inverter is a case in point. Currently, these inverters are expensive but as technology evolves,
they might become more affordable.
While one can be assured of a steadily growing demand for power conditioning equipment in India, there
are concerns about the maturity of the industry. There is very little production of power electronics
components in India. As such, India is heavily dependent on imports. There is need for the component
industry to evolve, which can make the industry survive the onslaught of imported equipment from China
and Taiwan where the industry is fully integrated.

2
3

Business Line India
Economictimes.com

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Marketing strategy – Stabilizers and LT cables
V-Guard is a market leader in sales of stabilizers as around 70% of their revenue accounts for stabilizers.
LT cables are a new market that V-Guard has extended along with its other products, and is in competition
with local and branded companies selling LT cables.

Market Research
On refrigerator, A/C and motor driven machines a drop in voltage below a certain limit would cause
those appliances to draw large currents that may lead to overheating and consequent failure. Stabilizers are
used when the supply is unreliable.
The main target market for stabilizers is the electrical companies and retail outlets.
According to our market survey, around 80% of consumers who buy household appliances do not have
enough knowledge about the use of stabilizer apart from the fact that it regulates voltage in AC, Fridge,
TV and so on. Therefore they rely on the experts at retail showrooms and electricians to suggest the best
stabilizers and LT cables that can be used for their appliances. Keeping this in mind, V-Guard can adopt a
sales strategy to satisfy the retail distributors and wholesalers in order to give first preference for their
stabilizers and LT cables.

Product Knowledge

Retailers
Customers

Figure 12 Market Survey results

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Sales Strategy
Usually any marketing strategy considers that “Customer is King”, but in order to boost sales and revenue
of stabilizers and LT cables, V-Guard must consider as “Retailers and Distributors are Kings”. Stabilizers
are sold at a price range from Rs.810 for basic models to Rs.8000 for advanced versions.

Sales target
Availability
Tie up

•
•
•
•
•
•
•

Commission
Incentives
Mobile SMS
Helpline IRS
Interaction
Inverters
Household
appliances

Boosting morale in retailers
It is important to maintain a strong relationship with retailers and distributors, while selling technical
products such as stabilizers and LT cables as they are the main source of sales for the company.
We can boost the competition and confidence of retailers and wholesalers by initiating the following sales
strategies:



Provide commission to retailers on the number of stabilizers and LT cables they can sell to
customers
Provide incentives or bonus prizes such as a paid vacation, if they achieve or exceed expectations
on the sales target that is provided to them.

Ensuring availability of products
Since most of the retailers deal with various products, it is important to ensure constant availability of
products and immediate replenishment whenever required.
For enabling a seamless process of replacing products or stocking new ones, we can include the following
strategies:




SMS facility for retailers to inform us for replacement of damaged goods or replenishing the
products. Retailers can send an SMS mentioning “Stock Over” or “Damaged” in their regional
languages to a specified number for immediate assistance.
An helpline facility for retailers and distributors, with an automatic IRS System that enables the
retailers to log in details of the number of stock required, number of damaged goods to be
replaced, assistance by an executive, or addition of a new retailer or distributor.
Quarterly or half yearly meetings in every region can be arranged among all retailers and
wholesalers, to interact with them on the sales achieved by the company, contribution of retailers
in the success of sales and any other new initiatives taken with relation to the product and sales.

The helpline facility will store the retailer information when entered for the first time, and contact the
retailers based on the information provided in the helpline system. Similar to the IRS system for gas
cylinders in India!

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Tie up with other products to increase sale s
LT cables are the most competitive products of V-Guard as there are many branded and unbranded
companies manufacturing LT cables and selling at competitive prices. Therefore, apart from providing
commission to dealers, it is also important to take advantage of the other products in V-Guard to increase
sales of the cables.
As mentioned in the marketing strategy for UPS inverters, V-Guard can establish contracts with Real
Estate builders and construction companies for industries. Along with this, V-Guard can offer LT cables
for the purpose of wiring in gated communities and industrial buildings at the wholesale price.
A specified amount (in metres) of LT cables can be offered to the clients for a lower margin and wholesale
rate for a best bargain along with the inverters. Since the companies are already convinced to purchase
inverters from the company, there is high probability that they will save time in search of LT cables and
buy them at a competitive price.
This ensures a wider reach for LT cables and if the clients require more cable, they can purchase it at the
regular price that is offered for other industries. Since a brand identity has already been established during
initial purchase, V-Guard can focus on excellent service and quality product ion instead of reducing the
price again.
V-Guard can also establish tie ups with manufacturers of household appliances such as Fridge, TVs and ACs
by selling their stabilizers at a lower margin along with the household appliances to customers.

Distribution Channels
The following channels are used for distribution of stabilizers and LT cables:

Retailers
Wholesalers

Direct sales to construction companies

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Sales Forecast

Sales Forecast
retail outlets

electric compainies
30

20

19
15

10

1

9

19
17 18

19

14

12

2

22

7

3

4

5

6

7

17
17
15 14 16
13
10
6

8

9

10

11

20
9

12

Figure 13 Projected sales for stabilizers and LT cables

Advertising and Promotion
Apart from the above mentioned sales strategy, V-Guard can promote their stabilizers in focused retail
showrooms such as Reliance Chroma, E-Zone, Big Baazar and other outlets dealing with electrical and
household appliances in order to address the 20% of consumers who have substantial knowledge about the
use of stabilizers.

Competitors




Havells
Servo
Local manufacturers of LT cables and stabilizers

Risks/Opportunities4
The main threat faced in the product line is the seasonal nature of many of the white goods and the
aggressive campaign by the manufacturers of the white goods stating that the appliance contains in-built
stabilizers. Besides these, the increasing inflation rate, competition from the unbranded segment,
improved power distribution etc., may hamper the future growth of the product.
4

Indianinfoline.com

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Marketing Strategy – Induction Stove
The main target market for Induction Cook tops are the following:




Bachelors and working women
Newly married couples
Joint families

Market Research
We conducted market surveys in the South on how the cap on the number of gas cylinders has affected the
sales of induction stoves in retail outlets and the problems faced by consumers of induction stove. Though
the sale of Induction cook tops has increased rapidly, consumers face the following problems:




56% of consumers do not have adequate knowledge on the technology to use induction stoves and
often burn or undercook the food.
30% of consumers feel that induction cook tops consume more electricity and can pose a problem
during the frequent electricity power cuts, while they are cooking.
14% of consumers are apprehensive about moving away from the traditional method of cooking
with gas stoves.

Market Survey Results
Consumer Knowledge

Electricity Outage

Traditional Method

56%
30%
14%

Market Research
Figure 14 Market Survey Results

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Product/Service Innovation
Keeping in mind the problems faced by the consumers, V-Guard can include a few additional features for
their induction stoves to meet the needs of the consumers.

Backup power during electricity outage
The current power crisis scenario in India, has led to consumers using the best possible ways to reduce
electricity usage in their daily activities in order to be prepared for sudden power cuts. Especially while
cooking in induction stove, consumers are worried if a sudden power cut would temporarily halt their
cooking and in turn spoil the food.
To cater to this immediate need, V-Guard can develop an additional feature in the Induction Stove which
has a battery backup facility for 5, 10, 20, to 30 minutes that can be switched on when the consumer is
cooking during a power cut. This ensures that the consumer can rely on 20 to 30 minutes to finish cooking
food and not be worried about completing cooking without electricity. This new facility makes Induction
Cook tops a premium product and can be catered for niche marketing.

Saving energy for a greener environment
According to research on consumption of energy in gas cylinders and induction stoves, it was concluded
that induction stoves, if used the right way consumes less energy than gas cylinders and plays a vital role in
contributing towards a greener environment.
An environment friendly world is the need of the hour today, and everybody wants to play a role in saving
energy for a greener world. Keeping this in mind, V-Guard can provide a Go Green user manual apart
from the regular user manual, to give tips and instructions on how to use induction cook tops to conserve
less energy along with healthy recipes such as:




The type of utensils to use in order to transfer heat faster from the stove to the utensil
Switching off the cook top 10 minutes before you finish cooking as the heat from the stove cools
down slowly
Amount of time it takes to cook different vegetables and other items

This strategy will improve the consumer’s knowledge on how to use an induction stove and also help them
contribute towards a better environment.

Interactive Tutorials for Easy Learning
As per the survey, the maximum percentage of potential customers does not have knowledge on the
features and usage of induction cook tops. Since the main target market is confined to the urban areas, we
can assume that the consumers are educated and come from a middle class society.
In order to improve knowledge on induction cook tops, e-learning tutorials with visual scenarios and
interactive sessions can be created for the purpose of educating the consumers on how to use the product.
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The tutorials can be included in CD-Roms along with the purchase of the product, or it can be uploaded
on You Tube and on the company website. The link can be printed along with the user manual and the
packaging of the product.

Sales Strategy
The price range of Induction Cook tops are between Rs.2000 to Rs.8000.

Specialized
Market
•Trade shows
•Exhibition
• IT Offices
• Shopping Malls

Social Media

Offers

•Shopclues.com
•Snapdeal.com
•Pepperfry.com

•Complementing
utensils
•Free detergent
and scrubs

Familiarising with the product
V-Guard can promote induction cook tops by having live demonstrations in IT offices, Shopping Malls,
trade shows and exhibitions conducted in various parts of the city to enable familiarity of the product
among consumers and a direct touch and feel of the product and its uses. A proper demonstration on how
to use the induction cook top will gain the consumer’s trust on the product and will be more appealing to
purchase them.
V-Guard can also promote its product to restaurants and marriage caterers as a complement to gas stoves
to increase the production rate during high demand.

Taking advantage of E-Marketing
Urban society has already adjusted to the growing popularity of social media such as Facebook, Twitter
which has gained attention of e-marketing through websites such as flipkart.com, snapdeal.com etc.
V-Guard can provide introductory offers in popular websites such as snapdeal.com, pepperfry.com and
shpoclues.com for a discount on purchase of induction cook tops to increase brand recognition and sales.
Apart from offers, coupons can also be provided for discount on utensils and cleaning detergents on
purchase of induction cook tops.

Offers for utensils and detergents
There are specific type and shape of utensils that are best suited for cooking in induction cook tops in order
to gain durability and faster cooking. Instead of educating the consumers on the type of utensils to
purchase, we can sell the utensils along with the induction cook tops for a premium price garnering
attention of the bachelors and newly married couples.
Since induction cook tops are a new technology dealing with cooking on a magnetic surface, consumers
will be unsure on the type of detergent or cleaning soap to use in order to clean the surface of the cook
top. For this purpose, V-Guard can provide a free scrub along with the detergent that can be used to clean
the induction cook top with ease and in turn generate sales for the detergent company. This will mainly
attract the joint families and older couples as it is essential for them to keep their kitchen clean.

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Sales Forecast

Sales Forecast
Retail Outlets
20
15
15

20

15
12

56

1

6

17
14

16

15
12

98

8

2

Social Media

9
5

3

4

5

6

7

8

4

9

5

6

10

11

8
4

12

Figure 15 Projected Sales for Induction Cook tops

Distribution channel
The following channels are used for distribution of induction cook tops:

Retailers
Direct Sales
E-Marketing

Advertising and Promotion
Since V-Guard is introducing a product in a completely new segment, it is important to have an aggressive
advertising campaign and promote the product to gain the trust of consumers. V-Guard has a competitive
edge over other companies as the consumers in the south are already familiar and are loyal to V-Guard
products
Majority of population spend at least 40% to 70% of their time in the kitchen, and therefore it is important
for the appliances to be safe, durable and good in quality. Emerging as a market leader in the south, VGuard can use their brand loyalty to its advantage and advertise their induction cook tops as safe, durable
and of high quality as similar to their existing products.

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Tv and print
advertisements
Viral marketing

Online Media

Advertising
and
Promotion
Induction Chef Contest to promote Viral Marketing
V-Guard can promote their product and increase sales and brand value through viral marketing by
introducing an all round South India contest for the best chef using induction cook tops.
1. Participants need to register, create a recipe using V-Guard’s induction cook tops and post the
video on You Tube.
2. This will result in many You Tube posts of V-Guard’s induction stove, which indirectly promotes
the product through social media.
3. As the number of videos increase, V-Guard becomes one of the key videos displayed in You
Tube’s website, which in turn promotes viral marketing.
4. Apart from creating a brand value for the product, it will also increase the awareness of the
product among potential consumers, which in turn increases sales.
5. The winner can avail a cash prize or an exclusive dealership of V-Guard products.
This is a tried and tested strategy which promotes one of the current trends of marketing and promotion.
V-Guard can advertise the contest details during TV shows with highest TRP ratings such as famous TV
serials and in Newspapers.

Competition
The main competitors for V-Guard are:



Prestige
Preethi

Risk/opportunity5
The overall inflationary trend and steady increase in key metal prices are matters of concern. However VGuard can continuously improve its efficiencies and is hopeful of maintaining healthy margins and return
on capital employed.

5

Crisil report

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Financial Plan
Implementing our marketing and sales strategies, we believe that the sales growth will considerably be
affected as shown below:
300
250
200
150

2011
2012

100
50
0
stabilizer

wires

pumps

water
heater

ups

fan

ltcables

others

Based on the following assumptions, we present the financial statement analysis for the year 2012-14:

Particulars

2011
(Rs in
millions)

2012
( Rs in millions)

2013
(Rs in millions)

2014
(Rs in millions)

Sales

7266.22

10172.71

13224.52

16530.65

Exp

6535.87

9664.073

12166.56

14877.59

730.35

508.6354

1057.962

1653.065

Other Inc

17.08

25.43177

33.0613

41.32663

Dep & Am

79.37

79.37

79.37

79.37

EBIT

668.06

454.6972

1011.653

1615.022

interest

113.34

152.5906

198.3678

247.9598

PBT

554.72

302.1066

813.2851

1367.062

Tax

164.73

90.63197

243.9855

410.1186

EBITDA

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Pat

389.99



211.4746

569.2996

956.9433

Growth of sales in the consecutive year 2012 ,2013,2014 is 40%,30%,25% respectively
Individual contributions for the year 2012
Stabilizer-31%
LT cables-7%
Ups and digital ups-13.5%
Induction stoves-1.5%
Expenses include advertisements, selling and distribution expense, administration expenses.
Since new product is being introduced in 2012 and as we adopting follow an aggressive
advertisement and service strategy , the expenses are high which is 95%
For the consecutive 2013 and 2014 the operating expenditure is 92% and 90% of sales respectively
It is assumed that straight line method of depreciation is followed
Tax is assumed at a flat rate of 30%.
Due to the new product innovation and advertising strategies, we incur high amount of expenditure,
so profit after tax for the current year is lower when compared to the successive year.








projected revenue of vguard (financial year
2010-14)
16000
14000
12000
10000
8000

projected revenue of vguard
(financial year 2010-14)

6000
4000
2000
0
fy 10

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fy11

fy12

fy13

fy14

Page 28


projected pat of vguard (financial year 201114)
1200
1000
800
600

projected pat of vguard (financial
year 2011-14)

400
200

0
fy11

fy12

fy13

fy14

Conclusion
Based on our market survey, implementation strategies and financial statement analysis, V-Guard can
establish a huge presence in the north market and take advantage of the current situations in the states.

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Exhibits
Current Financial Statements for the year 2008-2010
Our projected sales revenue and sales growth where calculated based on the following data:

Current Sales Revenue and Profit After of V-Guard Products for the year
2009-2010

6000
5000

4000
Revenue

3000

PAT

2000
1000
0
2008

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2009

2010

Page 30


Current percentage of sales for the various products in 2010 -2011

Sales
stabilizer
pumps
water heater
digital ups

fan
lt cable
ups
solar water heater
wires
others

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Profit After Tax of V-Guard Industries 2010-2011

PAT
900
800
700
600
500
PAT

400
300
200
100
0
fy10

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fy11

fy12

fy13

fy14

Page 32


Survey Questionnaire for UPS inverters
1. Where do you normally keep your UPS inverters? And why?
2. Would you prefer buying Inverters which are visually appealing, even if offered at a premium
price?
3.

Which brand strikes your mind when it comes to electrical safety?

4. What is the feature in the UPS Inverter, which you would like to change?
5. How would you rate the service provided by companies after purchase of inverters?
6. On a scale of 1-5, where does V-Guard stand?

Survey Questionnaire for Induction Cook tops
1. What would you look out in an induction cook top?( choose any one of 3)
a. Variety
b. Functions
c. Quality
d. Appearance
e. Power back up
2. What do you think about induction stove? Do you prefer it compared to traditional gas stove?
3.

Do u own an induction stove? If yes, what brand and its cost?

4. Will you be interested to own an induction stove with battery back up? If yes, how much are you
willing to pay?

Reference Materials
www.moneycontrol.com
www.indiainfoline.com
www.economictimes.com
Business Line
Crisil Report

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Page 33

V-Guard Big Idea Business Plan

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