[Type text]

UNIVERSITY OF WALES INSTITUTE CARDIFF

Master of Business Administration

MBA 403

Marketing

(Assignment 2)

LETURER: MR David Goh

STUDENT’S NAME: KOTHA SHIV SHANKER REDDY

Student ID Number: 0910/5978

TABLE OF CONTENTS:
§ EXECUTIVE SUMMARY
§ PRESENT SCENARIO OF REFRIGERATOR IN INDIA
§ COMPETETORS IN THE INDUSTRY
§ COMPETETOR ANALYSIS OF INDIAN REFRIGERATOR MARKET
§ DIRECT RIVAL PROFILE
§ LG INDIA
§ PRODUCT PROFILE
 § CONSUMER DECISION MAKING PROCESS
§ TARGET MARKET
§ MARKETING OBJECTIVES
§ RESEARCH METHODS
§ REFERENCES

EXECUTIVE SUMMARY
The consumer durable industry in India has witnessed a major change in the past few years. The change
in lifestyle, increase in household income along with more affordability and an increase in advertising
standards have been instrumental in bringing phenomenal changes in consumer behaviour pattern.
Indian consumer durables market used to be dominated by a few domestic players like Godrej, Allwyn,
Kelvinator, and Voltas. But post-liberalization many foreign companies have entered into India,
dethroning the Indian players and dominating the market. The major categories in the market are
CTVs, refrigerators, air-conditioners and washing machines.
India being the second fastest growing economy with a huge consumer class has resulted in consumer
durables as one of the fastest growing industries in India. 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.
A New Report on Indian Consumer Durables Market by Koncept Analytics
By Koncept Analytics Pvt Ltd
Dated: Jun 03, 2008
According to a survey conducted by FICCI on the consumer durable industry, there has been a notable
change in the preferences of consumers towards more tech-savvy, high end quality branded products.
The major reasons for this shift can be explained as very low difference in prices between branded and
unbranded products, and the excellent quality of after sales service provided by some of the branded
companies. One of the major reasons is the entry of foreign companies due to low import duty and
other beneficials provided by the government.

REFRIGERATOR INDUSTRY IN INDIA

PRESENT SCENARIO
The present scenario in India is that refrigerators have the most aspirational value after televisions. This
shows that the growth rate of refrigerator is high. Today refrigerators are being manufactured in two
basic designs which are:
a) Direct Cool Refrigerator
b) Frost Free Refrigerator
In these two designs of refrigerators, the direct cool design market is much more than the expensive
frost-free models. Although the growth is marginal in the direct cool models, the major factor for its
growth is the availability of low priced models. A T Kearney’s 8th Annual Global Retail Development
Index (GRDI) of 2009 ranked the Indian market as the most promising emerging market for investment
in the retail sector.
According to ‘The Rise of The Indian Consumer Market’ (A McKinsey report), the Indian consumer
market is predicted to grow four times by 2025
Overview
Indian refrigerator market is valued at Rs 4000 crore. Refrigerators hold only 16% of consumer durable
market that is valued at around Rs. 20,000-25,000 crore in India. Its market is growing at the rate of 7-
8% annually.

Projected sales for the year 2007-2008

CHALLENGES FACED BY COMPANIES IN REFRIGERATOR SEGMENT

Despite the fact that refrigerators have immense utility to housewives and provide a solution to avoid
food wastage, the penetration level is still below 20% and its market is growing at a very small pace.
This may be because:
• People in small towns and rural areas do not consider it as a necessary product and are
unaware of its utility value.
• Non-availability of power.
(Reference- http://www.naukrihub.com/india/fmcg/overview/refrigerator/ )
According to an article from economic times, due to the increase in excise duty to 10% from 8%, the
immediate net impact on mass items including televisions, washers and refrigerators will be a modest
100-200 rupees
http://economictimes.indiatimes.com/news/news-by-industry/cons-products/durables/Budget-to-have-
positive-impact-on-consumer-durable-cos/articleshow/5620068.cms.

http://www.business-standard.com/india/news/lg-eyes-32-share-in-refrigerator-market/21/11/56713/on
http://www.samsung.com/in/news/newsRead.do?news_seq=12993&gltype=
http://www.domain-
b.com/companies/companies_w/Whirpool_India/20090817_product_development.html

COMPETETORS IN THE INDUSTRY

The major players and competitors of LG electronics in the refrigerator segment are :
Ø SAMSUNG
Ø WHIRLPOOL
Ø KELVINATOR
Ø GODREJ

COMPETITOR ANALYSIS OF INDIA’S REFRIGERATOR

MARKET

INDUSTRIAL STRUCTURE: the industry structure comes in the category of oligopoly as there
are 6-7 players in the market but only 3-4 have a good market share.
BRAND IDENTITY: brand identity is very crucial in this industry as the buyers are aware when
choosing brands. The company with a strong brand identity will definitely succeed in this industry.
HIGH EXIT BARRIERS: the two major exit barriers are
a) Very difficult to sell already installed machinery as it is very expensive.
b) The difficulty in selling off the existing inventory.
NEW ENTRANTS: the new entrant threat is low; it is very difficult for new entrants because of
the government policies, high setup cost, increasing import duties, and due to the existence of
strong players in the market.
ECONOMIES OF SCALE: the established players who operate at higher costs benefit from
economies of scale, as the production costs are high; it is a major factor for new entrants.
HUGE ADVERTISING COSTS: to create awareness and to make an established position in
the refrigerator industry, huge advertising costs are required.

DIRECT RIVAL PROFILE:

HISTORY OF SAMSUNG:

BRAND VALUE: since its inception into the Indian consumer durable market, the company has
been growing both in revenue as well as brand value. Today Samsung is one of the major players in the
consumer durables industry with it’s high brand value and latest technological developments.
TARGET MARKET: Samsung Company is spread all over the world and has vast product lines.
Samsung believes in constant innovation and giving out new products at a steady rate. Samsung
currently is focussing on upper middle class segments and has targeted specific segments. Samsung
also focuses on middle class segments.
COMPETETOR STRATEGIC FOCUS: Samsung produces high quality products with constant
innovation and Samsung’s goal is to be the leader in refrigeration manufacturing globally through
innovative design and up to date technology. This shows Samsung’s research objective and prove that
Samsung is striving to be the international trendsetter in manufacturing high-end refrigerators.

LG INDIA
Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG
Electronics, South Korea. In India for a decade now, LG is the market leader in consumer
durables and recognised as a leading technology innovator in the information technology
and mobile communications business. LG is the acknowledged trendsetter for the
consumer durable industry in India with the fastest ever nationwide reach, latest global
technology and product innovation.

One of the most formidable brands, LGEIL has an impressive portfolio of Consumer
Electronics, Home Appliances, GSM mobile phones and IT products.

LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South

Korea was established in January, 1997 after clearance from the Foreign Investment
Promotion Board (FIPB).

. Established In: May 1997

. Managing Director : Mr. Moon B. Shin

. Corporate Office: Plot no 51, Udyog Vihar, Surajpur Kasna Road, Greater Noida (UP)

. Corporate Website: http://www.in.lge.com

. Manufacturing Units : Greater Noida (U.P.) & Pune (Maharashtra)

Business Areas & Main Products Business Areas & Main Products
Category Main Products
LCD TV , Plasma Display , Display Panel, Colour Television,
Consumer Electronics Home Theatre System, Music system, DVD Recorder/Player,
MP3 & MP4 Player
Room Air Conditioner, Commercial Air Conditioner ,
Home Appliances Refrigerator, Washing Machine, Dishwasher, Microwave,
Vacuum Cleaner
Laptop, Personal Computer, LCD monitor, CRT monitor,
Computer Products
Optical Storage Devices
Premium trend setter phone , Camera Phone , Music Phone ,
Mobile Phone
Colour Screen GSM Handset
http://www.in.lge.com/AboutUs/aboutus-companyProfile-factsnfig.aspx
PRODUCT PROFILE:

Model: GR-M712YSQ
Capacity: 604 litres

Green Ion Door Cooling Technology

External Micom
Child Lock
Convertible Veg Box
Opti Fresh
Vitamin plus
One Touch Twist Ice Tray
Catechin Deodorizer
Cell Fresh Crisper
Humidity Controller
Anti Bacteria Door Gasket
Freezer Lamp
VCM Door Finish

Consumer decision making process:

NEED RECOGNITION: need recognition occurs when customers are faced with an imbalance
between actual and desired states. Need recognition is triggered when a consumer is exposed to internal
or an external stimulus. Today’s consumers are looking for refrigerators with innovative design and
latest technology. Nowadays people are looking for more complex features like smart door finishes,
humidity controller, anti bacteria and additional features green ion door cool technology.
INFORMATION RESEARCH:
Customers get their information by two ways of research:
Ø Internal Research
Ø External Research
Internal Research: internal research is basically a process of recalling past information stored in
the memory.
External Information research:
Non-marketing-controlled information source: product information source that is not associated with
advertising or promotion. For example information from friends, relatives, journals etc....
Market-controlled information source: product information source that originates with markets
promoting the product. For example information via advertising, news paper articles, in magazines
etc.......
Buyer’s evoked set: group of brands, resulting from an information research, from which a buyer can
choose.

EVALUATION OF ALTERNATIVES:
Customers evaluate alternatives based on different criteria like pricing, availability of the product, after
sales service, brand loyalty.

PURCHASE:
After thorough evaluation of the alternatives, the consumer takes a decision to purchase a
product which is more appealing and affordable and which will satisfy their needs.

POST PURCHASE BEHAVIOR:

One of the major factors that affect the customer buying behaviour is the after sales service. In
electronic industry, after sales services is considered as a part of the product, so for gaining
customer satisfaction, these services become a key element in adding the product features which
further can help in gaining competitive advantage.

TARGET AUDIENCE:

TARGET MARKET APPROACH: there can be two types of market approaches:

Ø Market Segmentation Approach
Ø Mass marketing Approach
Market segmentation approach is the most preferred approach as it gives a clear idea to create a
specific tuned product and in deciding the pricing for the specific segment.
IDENTIFING THE SEGMENT
Market segmentation can be done on the basis of :
Ø Geographic
Ø Demographics
Ø Behavioural
A. Geographic Segmentation:
Region: all metro cities and suburbs.
B. Demographics:
Family size: 1-2, 3-4, 5+
Gender: male, female.
Income: 3, 00, 000Rs and above.
Social class: working class, middle class and upper middle class.
Psychographic:
Lifestyle: culture oriented, health oriented.
Behavioural:
Occasions: festivals and regular occasions.
Benefits: quality, service.
Loyalty status: none, medium, strong, absolute.
Readiness stage: unaware, aware, interested, desirous, intending to buy.

MARKETING OBJECTIVES:

Ø Servicing the health conscious segment by fulfilling their needs by

providing the right product.
Ø To maintain its competitive edge over the competitors.
Ø Increasing its share in the market by catering to new market segments.

RESEARCH METHODS:
Secondary Research Method:
Ø Journals.
Ø News paper articles and other articles.
Ø Text Books.
Ø Internet

Page | 15