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  1. 1. Consumer Durable Industry<br />
  2. 2. Consumer Durables- Overview<br /> Mass market heavy goods such as washing machines, refrigerator etc. intended to last 3 or more years. Also called hard goods<br />
  3. 3. Consumer Durable Industry<br />White/Brown<br />
  4. 4. Characteristics - Consumer Durable Industry<br />Rapid Innovation<br />Dynamic market place<br />Highly competitive industry<br />Significant ‘time to market’ pressure<br />Significant cost pressure<br />Rapid rate of market penetration<br />Rapid transition of technology<br />
  5. 5. Consumer Durable Sales (USA)<br />Source: Consumer Electronics Association<br />
  6. 6. Key Findings - Global <br /><ul><li>Asia-Pacific region is the most lucrative area for the consumer electronics industry, as most of the markets are still untapped.
  7. 7. MP3 players continue to drive the audio market worldwide. 
  8. 8. 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.
  9. 9. 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.
  10. 10. The strongest growth in consumer electronics segment is expected to come from China by 2012, as the demand for consumer electronics is rising with the rapid pace of economic development and low cost consumer electronics manufacturing.
  11. 11. On the back of this strong demand, China will become the second largest market for consumer electronics, after US.</li></li></ul><li>Top 5 Emerging Nations (Consumer Electronics)<br />CHINA<br />INDIA<br />BRAZIL<br />MEXICO<br />SOUTH AFRICA<br />The 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<br />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.<br />China is the leading country among the Top 5 emerging nations, with market revenues of $21.6 billion in 2007<br />Source: Consumer Electronics Association<br />
  12. 12. Indian Consumer Durables- Overview<br />Pre liberalization , 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% of the market. <br />Post liberalization, foreign players like -LG, Sony, Samsung, Whirlpool, Daewoo, Aiwa came into the picture. <br />Today, these players control the major share of the consumer durables market<br />43%<br />
  13. 13. Indian Durable Industry- PESTAnalysis<br />Political Factors:<br />Anti-dumping duty on imported color picture tubes.<br />FDI (100%), High Tax Incidence<br />Resolution to reduce emission of carbon footprints in the atmosphere<br />
  14. 14. Effect of GST & DTC<br />Reduction in overall tax incidence (14-16% from 20- 25%)<br />More disposable income<br />Efficient SCM <br />Prices of goods to reduce in the medium term<br />
  15. 15. Indian Durable Industry- PESTAnalysis<br />Economic Factors:<br />Growth of retail sector – expected to reach 16% by 2011-12 from 4% in FY07<br />Easy fin schemes to consumer<br />Economic reforms by the government –higher purchasing power<br />Emergence of organized retail market with large players like Croma, next, reliance digital etc – leading to lower prices and higher varieties<br />Indian incomes are likely to grow three-fold over the next two decades<br />
  16. 16.
  17. 17. Indian Durable Industry- PESTAnalysis<br />Social Factors :<br />Disposable Income roughly doubled since 1985<br />Changing perception of luxury to necessity<br />Rural market – constraints<br />Demand of the consumer durables is seasonal <br />Decrease in average household size<br />Source- CRISIL, NKP Research<br />
  18. 18. Indian Durable Industry- PESTAnalysis<br />Technological <br />Power efficient<br />Higher quality products <br />Technological advancements <br />
  19. 19. Indian Durable industry - SWOT<br />
  20. 20. Indian Durable Industry- Porter’s 5 forces<br />Supplier Power<br />Indigenous supply base limited - most raw materials are imported<br />Threat of New Entrants<br />• Most current players are global players<br />• New entrants will need to invest in Brand, Technology and Distribution<br />Competitive Rivalry<br />• Number of well established players, with new players entering<br />• Good technological capability<br />• Many untapped potential markets<br />Customer Power<br />Multitude of brands across price points - wide variety of choice for customers<br />Threat of Substitutes<br />Technological Enhancement<br />
  21. 21. Indian Durable Market<br />The Indian durables market, with a market size of US$ 27.38 billion in 2008–09, has grown by 7.1 per cent over the previous year. <br />The compounded annual growth rate (CAGR) for the industry has been recorded at 20.3 per cent between 2004 and 2009.<br />
  22. 22. Consumer Electronics<br />Production in the consumer electronics industry is US$ 6.7 billion in 2009–2010.<br />The segment registered a growth of 18 per cent in 2009–2010 from US$ 5.5 billion in the previous year.<br />The consumer electronics segment contributes about 27 per cent to the total hardware production in the country.<br />Source: Department of Information Technology, Minister of Communication & IT, Government of India., &<br />
  23. 23. Consumer Electronics<br />Sources: “Consumer durables: Durable enough for tough times,” The Economic Times, December 13, 2009; Department of Information Technology, Minister of Communication & IT, Government of India.<br />
  24. 24. Consumer Appliances<br />The consumer appliances market is estimated at US$4.34 billion, with imports valued at US$ 1.22 billion in 2009–2010. <br />Most imports are in the finished goods categories such as watches, electric coffee makers, food grinders, electric heaters, etc.<br /><br />Source-<br />
  25. 25. Key Players<br />
  26. 26. Key Players<br />
  27. 27. Product Mix Of Key Players By volume<br />
  28. 28. Electronic Goods EX-IM <br />Every year India imports electronics and appliances in huge quantity. <br />More that 70 per cent of Indian electronics market depends on import of both finished goods and components.<br />India imported worth US$ 18.5 billion and exported worth US$ 3.69 billion of electronics goods between April 2008 and February 2009<br />*excluding computer in physical form<br />Source: Ministry of Commerce and Industry, Government of India, Annual Report 2008–09.<br />
  29. 29. Sales Trend- Consumer Electronics<br />Source- CRICIL<br />
  30. 30. Consumer Durable- Growth Drivers<br />Appreciation of Indian Rupee<br />
  31. 31. Consumer Durable- Growth Drivers<br />Availability of financing<br />Source- CRISIL, NKP Research<br />
  32. 32. Consumer Durable- Growth Drivers<br />Income Growth<br />
  33. 33. Refrigerator Market Share <br />Source- CRICIL<br />
  34. 34. Television Market Share<br />Source- CRICIL<br />
  35. 35. Washing Machine Market Share<br />Source- CRICIL<br />
  36. 36. Mobile Phone Market Share<br />Source- CRICIL<br />
  37. 37. DTH TV Market Share<br />Source- CRICIL<br />
  38. 38. Consumer Durables SCM <br />IMPORTANCE:<br /><ul><li> Product Proliferation
  39. 39. Multiple players
  40. 40. High competition
  41. 41. Benchmarking and TQM
  42. 42. Production Demand mismatch
  43. 43. Ever Increasing Targets
  44. 44. Bargaining power of Retailers</li></ul>OBJECTIVES: <br /><ul><li> Efficient Sourcing
  45. 45. Demand Planning
  46. 46. Inventory Optimization
  47. 47. Order Management
  48. 48. Tracking
  49. 49. High Inventory for High Demand Periods
  50. 50. Reverse Logistics</li></li></ul><li>Benefits of Efficient SCM<br /><ul><li>Reduced vendor payments due to better on-time delivery and improved availability
  51. 51. Increased revenues from improved availability of high fast moving inventory
  52. 52. Working capital reduction due to improved inventory management and reduced order cycle times
  53. 53. Fixed capital reduction due to effective asset utilization</li></li></ul><li>Consumer Durables Channel<br />Traditional Retailing<br />Company Managed Stores<br />Franchisee Showrooms<br />Reverse Logistics<br /> E-Retailing<br />Individual Consumers<br />Institutional Consumers<br />
  54. 54. Consumer Durable Supply Chain<br />COMPANYSHOWROOM<br />E Retail<br />
  55. 55. Planning and Forecasting<br />Annual Forecasts based on previous year sales and current trends. These sales are disaggregated into monthly sale plans<br />Catering for the seasonal variations in demand<br />Interaction between production and marketing departments for better quality of forecasts and demand utilization.<br />
  56. 56. Consumer Durable Value Chain<br />
  57. 57. Durable- Top 10 Players (Indian) by sales FY 2009-10 <br /><ul><li>India being the second largest growing economy with huge consumer class has resulted in consumer durables as the fastest growing industries in India
  58. 58. LG, SAMSUNG the two Korean companies has been maintaining the lead in the industries with LG being leader in almost all the categories. </li></ul>Nokia India<br />LG Electronics India Ltd<br />Samsung India Electronics<br />Sony India<br />Philips India<br />Whirlpool Appliances<br />Titan Industries<br />Siemens<br />Videocon Industries<br />Blue star<br />Source:<br />
  59. 59. LG Electronics<br />
  60. 60. LG Global Presence<br />
  61. 61. LG Leading Player In Many<br />
  62. 62. LG Electronics India Ltd<br />The parent company was originally established in1958 as Goldstar producing Radio, TV, Refrigerator & AC<br />LG group was the merger of two companies Lucky and Goldstar<br />A wholly owned subsidiary of LG Electronics, South Korea<br />Established in India in January, 1997<br />State-of-the art manufacturing facility at New Delhi / Pune<br />Vision was to become a 'Health Partner' for its consumers<br />•The CTV range offered by LG has 'Golden Eye' technology<br />•Entire range of LG air-conditioners have 'Health Air System'<br />•Microwave ovens have the 'Health Wave System’<br />•Refrigerators have the 'PN System’<br />•Washing machines have 'Fabricare System'<br />
  63. 63. Vision- “Global Top 3 by 2012”<br />"Life's Good“<br />Represents LG's determination to provide delightfully smart products that will make your life good<br />
  64. 64. LG- Product Portfolio<br />gdfhdhdnhgngfngfnnnfgfbgggggggggggggggggggggggggggggggggggggggggggggggggggggggggg<br />
  65. 65. LG- Product Portfolio<br />Mobile communications<br />CDMA Handsets<br />GSM Handsets<br />3G Handsets <br />Cellular Phones<br />Digital appliance<br /><ul><li>Air Conditioners
  66. 66. Refrigerators
  67. 67. Microwave Ovens
  68. 68. Washing Machines </li></ul>Digital media<br /><ul><li>Home Theater Systems
  69. 69. DVD Recorder
  70. 70. Notebook PCs
  71. 71. Desktop PCs
  72. 72. Car Infotainment</li></ul>Digital display<br /><ul><li>Plasma TVs
  73. 73. LCD TVs
  74. 74. Micro Display Panel TVs
  75. 75. Monitors</li></ul>Source: Corporate Website :<br />
  76. 76. LG Technology Collaboration <br />
  77. 77. LG Global Financials<br />209%<br /><br />
  78. 78. The challenges faced by LG when entered in Indian market<br />Low brand awareness about LG in India.<br />One of the last MNCs entered in India (Samsung, Panasonic entered in1995 in India).<br />High import duty<br />Competition from local market players and other MNCs in consumer durable segment.<br />Price sensitiveness of the Indian consumer<br />LGEI over came these challenges to emerge as the Market Leader!<br />
  79. 79. LG Electronics India Ltd<br />Source-<br />Source-<br />
  80. 80. LGIL- SWOT Analysis <br />Strength:<br />Manufacturing Unit at tax incentive area<br />Wide range of products to serve all category<br />Widest distribution network in the industry (47 branches, 10000 trade partners)<br />Highest share in home appliance market<br />Weakness:<br /><ul><li>Transportation cost
  81. 81. Demand fluctuation handling capacity
  82. 82. Service quality</li></ul>Opportunities:<br /><ul><li>Fast growth of home appliances market
  83. 83. Growing rural market in India
  84. 84. New technology
  85. 85. Increase in income level</li></ul>Threat:<br /><ul><li>Cut throat competition
  86. 86. Korean rivals in Indian market
  87. 87. Raw material import duties
  88. 88. Price sensitiveness of the Indian consumer</li></li></ul><li>Market share in a few categories<br />Leader in all the above categories<br />Source- CRICIL<br />
  89. 89. LG Logistic Organization Structure <br />
  90. 90. The Situations of Supply Chain<br />LGE Transportation with its annual expense exceeding $40 million, was recognized as one of the critical areas within the companies operations that would deliver significant value to both the top and bottom line.<br />Transportation Cost account for approximately 51% of total logistic cost and was recognized as a primary target for reduction.<br />In order to extend the value of Oracle ERP and EXEWMS systems deeper into the distribution network ,LGE needed to integrate a best of breed transportation management into its existing enterprise management systems.<br />
  91. 91. The Challenge In Supply Chain<br /><ul><li>The challenge for LGE was to achieve transparency between market demand variability and distribution planning and execution.
  92. 92. To effectively manage this, LGE set out to establish integrated best practice workflows across the entire transportation and distribution organization.
  93. 93. The selection criterion was focused on partnering with the best in class transportation management solution provider, followed by the lowest overall total cost of ownership the least rest and a rapid time to value.</li></li></ul><li>Innovative Market Strategy<br /><ul><li>LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world cup followed it up in 2003 as well.
  94. 94. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more then US$ 8 million on advertising and marketing in this sport.
  95. 95. Launch new technologies in consumer electronic and home appliances.
  96. 96. LG has differentiated its product using technology and health benefits. CTV has “Golden eye technology” Air conditioner has “Health air system” and microwave ovens have the “Health wave system”.
  97. 97. LG has adopted the regional distribution channel in India.
  98. 98. Introduced the low-priced “Cineplus” and “Sampoona” for the ruralmarket.</li></li></ul><li>Key Trends<br />
  99. 99. LG- Future Outlook <br />Although uncertainties exist, market demand is expected to increase along with the IT industry recovery<br />Plan to focus on premium products for the monitor business and expand buyers for commercial display business while entering new markets to secure profitability <br />Focus on profitability by launching premium smart phones and differentiated tablet PC products along with recovering cost competitiveness for feature phones<br />Maintain market dominance in refrigerators and washing machines while securing competitiveness for future businesses <br />