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B Plan On Consumer Electronics


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Business Plan on Consumer durables chain in India !

B Plan On Consumer Electronics

  1. 1. A BUSINESS MODEL Presented By : Ashish Bansal NMiMS,Mumbai (India)
  2. 2. OUTLINE
  3. 3. <ul><li>INTERNATIONAL MARKET </li></ul>
  4. 4. OVERVIEW <ul><li>The 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. </li></ul><ul><li>In 2005, in the U.S. alone, consumers spent more than $75 billion on consumer electronics products, 8 percent more than in 2004. </li></ul>
  5. 7. HOW THE INDUSTRY BREAKS DOWN   <ul><li>The largest are multinational conglomerates with more than 100,000 employees. </li></ul><ul><li>The smallest often have only one office with fewer than 50 employees focused on one product. </li></ul><ul><li>In the middle are manufacturers that offer a range of products within a certain category, such as speakers and audio accessories. </li></ul><ul><li>Industry observers usually break down the market by product category rather than company size. </li></ul>
  6. 8. Source: CEA
  7. 9. <ul><li>Consumer durables  are items that provide a flow of services to a consumer over a period of time. Examples include new cars, household appliances, audio-visual equipment, furniture etc. The real level of spending on durables has surged in the last eight years. </li></ul>
  8. 10. SOME OBSERVATIONS <ul><li>Among the explanations are: </li></ul><ul><ul><li>Falling prices for many durable products – arising from rapid advances in production technology and the effects of globalization which means that we can now import many of these durables more cheaply from overseas </li></ul></ul><ul><ul><li>Low interest rates which have encouraged people to spend more on “big ticket items” – there has been a surge in demand for consumer credit </li></ul></ul><ul><ul><li>Strong consumer confidence and borrowing levels. The demand for consumer durables is more income elastic than for non-durables which are usually staple items in people’s monthly budget. </li></ul></ul>
  10. 12. Major Players Top 10 Major Players, by 2005 Revenue Rank Company Revenue ($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.
  11. 13. KEY FINDINGS
  12. 14. Key Findings <ul><li>Asia-Pacific region is the most lucrative area for the consumer electronics industry, as most of the markets are still untapped. </li></ul><ul><li>MP3 players continue to drive the audio market worldwide.  </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>On the back of this strong demand, China will become the second largest market for consumer electronics, after US. </li></ul>SOME KEY FINDINGS
  13. 17. CONSUMER APPLIANCES & ELECTRONICS RETAILING IN CHINA <ul><li>The world’s fastest growing large economy, and foreign investors and market </li></ul><ul><li>High Competitive market, margins very tight and, until recently, the available market was shrinking. </li></ul><ul><li>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. </li></ul><ul><li>Official estimates for the CNY period show sales of household electric appliances grew by 17.8% over the same period in 2008.    </li></ul>*CNY : Chinese new year2009
  15. 19. CHINA DEMOGRAPHICS <ul><li>0-14 years:  20.1% (male 142,085,665/female 125,300,391)  </li></ul><ul><li>15-64 years:  71.9% (male 491,513,378/female 465,020,030)  </li></ul><ul><li>65 years and over:  8% (male 50,652,480/female 55,472,661) (2008 est.) </li></ul>
  16. 20. GLOBAL CONSUMER BEHAVIOUR <ul><li>Changing trends in women </li></ul><ul><li>A 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. </li></ul><ul><li>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. </li></ul><ul><li>Women are less enamoured of gadgets and technology for its own sake. </li></ul><ul><li>But the CEA study indicated that women are more open to advice, and when shopping they focus on portability, functionality, reliability and simplicity. </li></ul>
  17. 21. TOP 5 EMERGING NATIONS <ul><li>BRAZIL </li></ul><ul><li>CHINA </li></ul><ul><li>INDIA </li></ul><ul><li>MEXICO </li></ul><ul><li>SOUTH AFRICA </li></ul>
  18. 22. HIGHLIGHTS <ul><li>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 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. </li></ul>
  19. 23. GLOBAL INDUSTRY POSITION <ul><li>Support voluntary, market-oriented programs and initiatives, including industry-led standards, which highlight and sustain energy efficiency in the electronics industry </li></ul><ul><li>Continue to work cooperatively with governments in the development of energy efficiency initiatives that complement and support voluntary approaches and continued innovation, expanded consumer choice, and enhanced product functionality </li></ul><ul><li>Oppose government-imposed approaches that stifle innovation, reduce consumer choice, and limit product features and services </li></ul>
  20. 25. OVERVIEW OF INDIAN MARKET <ul><li>Pre liberalization dominated by a few domestic players like Godrej, Allwyn, Kelvinator, and Voltas </li></ul><ul><li>Post-liberalization many foreign companies have entered into India, dethroning the Indian players and dominating the market </li></ul><ul><li>Consumer durables sector is one of the fastest growing industries in India </li></ul><ul><li>LG and Samsung, the two Korean companies have been maintaining the lead in the industry with LG being the leader in almost all the categories </li></ul><ul><li>The rural market is growing faster than the urban markets but penetration level is very low </li></ul><ul><li>CTV segment is expected to the largest contributing segment to the overall growth of the industry </li></ul><ul><li>The rising income levels, double-income families and increasing consumer awareness are the main growth drivers of this industry </li></ul>
  21. 26. INDUSTRY CLASSIFICATION <ul><li>The consumer durables industry can be broadly classified as consumer electronics and consumer appliances </li></ul><ul><li>The consumer appliances category can be further segmented as white goods and brown goods </li></ul>
  23. 28. The existing size of this sector stands at an estimated USD 4.5 Billion with organized retailing being at 5% Source:
  25. 30. Dem ographic Profile of India Source: DEMOGRAPHICS OF INDIAN MARKET
  26. 31. 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
  27. 32. 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
  28. 33. 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
  29. 34. 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
  30. 35. BUYING BEHAVIOR –CONSUMER ELECTRONICS <ul><li>Price is a significant influence on purchase behavior but is not always the most important factor. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul>
  31. 36. <ul><li>Endorsed by opinion leaders – excellent reviews in magazines, TV shows, on blogs, by word of mouth by existing consumers, etc </li></ul><ul><li>High on quality – brand name of apple assures on quality, especially sound and music clarity as well as product durability </li></ul><ul><li>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 </li></ul>BUYING BEHAVIOR (Contd)
  32. 37. <ul><li>Lower duties, cheaper technology and strong competition with low entry barriers ensure competitive prices </li></ul><ul><li>Increase in brand and product choice </li></ul><ul><li>Value-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 </li></ul>TRENDS IN TERMS OF TECHNOLOGY AND PRODUCTS – INDIA
  33. 38. <ul><li>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) </li></ul><ul><li>With internet penetration also increasing along with growing number of service providers, the sales of modems, routers and accessories has gone up. </li></ul>
  34. 39. <ul><li>Shift from buying predominately during Diwali and other festive seasons to year round purchasing </li></ul><ul><li>Consumers more aware of brands </li></ul><ul><li>Consumers more conscious of style, looks, technical specifications </li></ul><ul><li>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. </li></ul>CONSUMER BEHAVIOUR TRENDS
  35. 40. KEY PLAYERS
  37. 42. SWOT ANALYSIS <ul><li>Strengths 1. Presence of established distribution networks in both urban and rural areas 2. Presence of well-known brands 3. 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 season 2. Demand is dependent on good monsoons 3. Poor government spending on infrastructure 4. Low purchasing power of consumers </li></ul>
  38. 43. SWOT ANALYSIS (C ONT) .. <ul><li>Opportunities 1. In India, the penetration level of white goods is lower as compared to other developing countries. 2. Unexploited rural market  3. Rapid urbanization 4. Increase in income levels, i.e. increase in purchasing power of consumers 5. Easy availability of finance Threats 1. Higher import duties on raw materials imposed in the Budget 2007-08 2. Cheap imports from Singapore, China and other Asian countries  </li></ul>
  40. 45. ENTRY BARRIERS (CONT) <ul><li>Restricted FDI entry </li></ul><ul><li>China and Korean competitors </li></ul><ul><li>Cultural Barriers </li></ul><ul><li>Heavy tax duties on exported goods </li></ul><ul><li>Competition through grey market like Alpha </li></ul><ul><li>Lack of information </li></ul>
  41. 47. VISION <ul><li>“ 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 .” </li></ul>
  42. 48. MISSION <ul><li>“ 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 .” </li></ul>
  43. 49. MISSION OF THE FORMAT <ul><li>“ 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.” </li></ul>
  44. 50. SHORT TERM STRATEGIC OBJECTIVES <ul><li>To promote and deliver energy efficient “ greener “ products to consumers and businesses over time </li></ul><ul><li>To differentiate from the competitors with superior product quality, service and unmatched shopping experience </li></ul><ul><li>To Increase the awareness of the store in the region. </li></ul><ul><li>To Increase the footfalls in the store. </li></ul><ul><li>To satisfy the unmet needs of the customers </li></ul>
  45. 51. LONG TERM OBJECTIVES <ul><li>To become a market leader through: </li></ul><ul><ul><li>Increased customer loyalty </li></ul></ul><ul><ul><li>Exceeding customer expectations </li></ul></ul><ul><ul><li>Supreme Vendor relations </li></ul></ul><ul><li>To expand to other potential areas </li></ul><ul><li>To support and sustain the greener concept and transform the market </li></ul><ul><li>Drive the society towards a more greener environment which would lead towards the upliftment and wellbeing of the society </li></ul>
  46. 52. HIERARCHY OF OBJECTIVES Company 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
  47. 55. SEGMENTATION <ul><li>We have identified the segmentation variables as: </li></ul><ul><li>Geographic </li></ul><ul><li>Demographic </li></ul><ul><li>Psychographic </li></ul><ul><li>Socioeconomic </li></ul>
  48. 56. CUSTOMER ANALYSIS <ul><li>Who the Customers Are: </li></ul><ul><ul><li>Primarily upper middle class and upper class </li></ul></ul><ul><ul><li>Analytical and quantitative in nature </li></ul></ul><ul><ul><li>Well educated </li></ul></ul><ul><ul><li>Special focus on working class, specially working women </li></ul></ul>
  49. 57. MARKET SEGMENTS Segment 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
  50. 58. MARKET SEGMENTS Segment 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
  51. 59. TOTAL PRODUCT CONCEPT Generic 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
  52. 60. FIVE AREAS FOR DIFFERENTIATION <ul><li>Quality </li></ul><ul><li>Status and Image </li></ul><ul><li>Branding </li></ul><ul><li>Convenience and Service </li></ul><ul><li>Distribution </li></ul>
  54. 62. MARKETING STRATEGY <ul><li>Phase 1: Presence </li></ul><ul><li>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 </li></ul><ul><li>Phase 2: Relevance </li></ul><ul><li>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 </li></ul>
  55. 63. MARKETING STRATEGY <ul><li>Phase 3: Performance </li></ul><ul><li>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. </li></ul><ul><li>Phase 4: Bonding </li></ul><ul><li>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 : </li></ul><ul><ul><ul><li>Sending a small token of thanks on special days of their life like birthdays and anniversaries </li></ul></ul></ul><ul><ul><ul><li>Getting a CRM team in place who would go that extra mile to please and win the trust of the customers. </li></ul></ul></ul>
  56. 64. MARKETING MIX <ul><li>Product </li></ul><ul><li>We would offer best quality differentiated products laced with advanced technologies like Laser TV’s. Would also offer bundled products </li></ul><ul><li>Price </li></ul><ul><li>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 </li></ul><ul><li>Place </li></ul><ul><li>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 </li></ul><ul><li>Promotion </li></ul><ul><li>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 </li></ul>
  57. 65. PROMOTION MIX <ul><ul><li>The promotions would be carried out in the following ways: </li></ul></ul><ul><li>Trade fairs & Exhibitions: Would be best to way demonstrate and advertise the product </li></ul><ul><li>Advertisements through catalogues </li></ul><ul><li>This would be undertaken on a routine basis so as to create relevance in the minds of the target group </li></ul><ul><li>Billboards & Revolvers </li></ul><ul><li>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. </li></ul>
  58. 68. HOW BRANDING IS DONE? <ul><li>We would be adopting proprietary brand development process </li></ul><ul><li>Branding would be done based on 3 key factors: </li></ul><ul><li>Internal </li></ul><ul><li>External </li></ul><ul><li>Service </li></ul>Inside Outside Around Leadership Culture Processes Competitors Industry Trends Customer Relationship Dynamics Our Brand
  59. 69. TEN GUIDELINES FOR BUILDING BRANDS <ul><li>Brand Identity </li></ul><ul><ul><li>Each brand should have an identity, a personality. It can be modified for different segments. </li></ul></ul><ul><li>Value Proposition </li></ul><ul><ul><li>Each brand should have a unique value proposition. </li></ul></ul><ul><li>Brand Position </li></ul><ul><ul><li>The brand’s position should provide clear guidance to those implementing a communications program. </li></ul></ul><ul><li>Execution </li></ul><ul><ul><li>The communications program needs to implement the identity and position, and it should be durable as well. </li></ul></ul><ul><li>Consistency Over Time </li></ul><ul><ul><li>Product managers should have a goal of maintaining a consistent identity, position, and execution over time. Changes should be resisted. </li></ul></ul>
  60. 70. TEN GUIDELINES FOR BUILDING BRANDS (CONT.) <ul><li>Brand System </li></ul><ul><ul><li>The brands in the portfolio should be consistent and synergistic. </li></ul></ul><ul><li>Brand Leverage </li></ul><ul><ul><li>Extend brands and develop co-branding opportunities only if the brand identity will be both used and reinforced </li></ul></ul><ul><li>Tracking </li></ul><ul><ul><li>The brand’s equity should be tracked over time, including awareness, perceived quality, brand loyalty, and brand associations. </li></ul></ul><ul><li>Brand Responsibility </li></ul><ul><ul><li>Someone should be in charge of the brand who will create the identity and positions and coordinate the execution. </li></ul></ul><ul><li>Invest </li></ul><ul><ul><li>Continue investing in brands even when the financial goals are not being met. </li></ul></ul>
  61. 71. THE BRANDING EXERCISE <ul><li>The main USP behind our branding is the service quality level & competitive pricing </li></ul><ul><li>Our brand would reflect our mission & vision along with our core competencies </li></ul><ul><li>Keeping in mind the target group that we are capturing, the brand would reflect the element of niche marketing </li></ul><ul><li>We would be adopting active branding methodology, i.e. providing credibility through our branding exercise </li></ul>
  63. 77. PROFILE OF JUHU TARA RD <ul><li>Accessible by all modes of transport and easily travelled from Santacruz, Vile Parle & Andheri stations </li></ul><ul><li>The premium section of the society resides here, rather the showbiz population </li></ul><ul><li>Hugely dominated by higher middle class of the society </li></ul><ul><li>Value for money is negligible, the only things that matter are ambience, service levels and product quality </li></ul><ul><li>Popular hangout for all classes of people in the form of Juhu beach </li></ul><ul><li>A shopper’s paradise, thereby making it a highly visited locality for the elites of the social class. </li></ul>
  64. 81. PROFILE OF MALAD(W) <ul><li>Dominated by SEC A1, A2 & B1 </li></ul><ul><li>First generation population </li></ul><ul><li>Metropolitan suburb, consisting of Marathis, Sikhs, Gujaratis & Marwaris (Rich Legacy Heirs & Spendthrifts), & Punjabis </li></ul><ul><li>Construction hotspot favoured by companies, therefore major infrastructure developments </li></ul><ul><li>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 </li></ul><ul><li>Home to 7 malls, with InOrbit being touted as the largest mall of India. </li></ul><ul><li>Therefore, perfect to enter and have a hefty pie of the wallet </li></ul>
  65. 85. PROFILE OF COLABA <ul><li>Rich Indian industrialists and business people prominently reside </li></ul><ul><li>Shoppers paradise again with all the well known brands having a retail store in this area </li></ul><ul><li>Major tourists destination, who are made for Indian arts and crafts including jewellery and accessories </li></ul><ul><li>Hippest neighbourhood in Mumbai serving as the major shopping district for both tourists and locals. </li></ul><ul><li>Hugely dominated by the elite class of the society </li></ul><ul><li>Value for money is negligible, the only things that matter are ambience, service levels and product quality. </li></ul>
  66. 86. STORE NAME <ul><li>We propose to open our stores as </li></ul><ul><li>Our Logo is </li></ul>For Greener Tomorrow…