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Brand Positioning Of Air-Conditions

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ICLES

MOTILAL JHUNJHUNWALA COLLEGE


OF ARTS, SCIENCE, COMMERCE AND

MANAGEMENT STUDIES

CERTIFICATE
This to certify that Mr./Ms.______________________________________________ _ Of BMS semester the _______ has undertaken & completed __ During the academic year __________ under the guidance of Mr./Ms. ___________________ submitted on ____________ to this college in fulfillment of the curriculum of Bachelor of Management Studies,
University of Mumbai.

project

work

titled________________________________________________

This is a bonafide project work and the information presented is true and original to the best of my knowledge & belief.

Project guide

External Examiner
T.Y.BMS examination

Principal

Research Design, Objective, and Scope


Research Design

The report is an outcome of primary data collection, secondary data collection and analysis of the information received from these sources. The primary data collection was done with the help of interviews with the personnel of LG and Hitachi, and consumers. The secondary data collected, is from various websites, magazines, newspapers and brochures.

Objective
Indian AC market is in its growing stage with many players flooding the market after the relaxation in the exercise levels and import duties by the government. The Indian AC market was basically governed by the central ACs and the room AC market picked up only after the relaxation in duties . Earlier people were only interested in buying unbranded ACs and no player in the global market thought of India as a big market and the market had very limited players with Carrier Aircon ruling the roost for almost ten years. LG came and revolutionerized the Indian room AC market by changing the way people perceive the utility of an AC .They sold their ACs by positioning them as the health air conditioners which along with cooling the air also purifies the air thus giving cool, healthy and fresh air. This concept gelled with the Indian consumer and as a result LG is the market leader in room ACs today. Hitachi is also fast gaining the market share after the launch of its Logicool range of air-conditioners this summer and is third in the room ac market behind Samsung. People have been buying the Ac because of its smart positioning of perfection backed with strong humour oriented advertising. The success of these players has attracted a lot of other players in the market and suddenly the small room ac market which was worth some Rs.500 crores in 1995 is valued at Rs.1800 crores today and continues to grow at the rate of 20 % every year. This project report aims to research why people are going for branded ACs in the room sector and how the focus is shifting from positioning of product to the positioning of brands. The report has also tried to trace the importance of positioning of a brand by comparing the various aspects of brand positioning taking into consideration the strategies of the two leading players LG and Hitachi.

Scope

. Consumers- The report can be of great help to any prospective buyer of an air conditioner. The report will help him to have a look at the various players in the market and what each one of them has to offer to the consumer. The consumer can directly refer to the analysis of the print advertisements that will help him to identify what each brand has to offer to its consumer. The consumer can also have a look at the market standings of each brand with respect to the sales in the current year. . Students-The report can be very useful to the students in understanding the concept of branding and brand positioning as it provides an insight to these concepts. It is important for the students to know the changing trends in the market, as they are the ones who are going to be part of the industry and will have to apply their knowledge to carve out a niche for themselves and their companies in the market. They can also have a look at the various aspects that govern this ever-growing industry. . Executives The report can be of prime importance to the executives working in the industry. The report is also based on some inputs provided by the consumers that will help the personnel to know what people think about their brands and what are their expectations from this product. Executives can learn from the positioning of LG and have a look at the advertising strategies being followed by the various players in the market. Also some suggestions have been offered in lieu of the analysis done in this report. The suggestions can be implemented if they gel with the management of the concerned brands.

Executive summary:

The project is about the Indian Air Conditioning market. It covers both the industries viz. CAC and RAC with respect to the trend in the market, market players, price of the market, factors influencing the demand etc. The core focus has been on the RAC market, which is one the, few sectors growing at a rate of more than 25% per year. This is so because the market is in the growth stage whereby the penetration level is only 2%. As a result the room AC market is getting overcrowded with players from all over the world with a view to capture the market share of this growing market. People are going for the branded products rather than the unbranded ones. The project highlights the aspect of branding and the benefits of branding of products. It also deals with the positioning strategies being used by various brands to occupy the perpetual space in the minds of the consumer. There is an analysis of the positioning of the various brands with respect to print advertisements. Also a comparative analysis has been done between LG and Hitachi, which are the leading players in the market. In the concluding part of the project some suggestions have been offered with respect to certain issues, which will govern the Products being launched by various brands in the room AC market in the near future.

Chapter 1 Introduction

History Of Air-conditioner

In 1902 Sackett-Wilhelms, a publishing house at Brooklyn, was getting its printing all messed up. It was then that Willis Carrier was called upon to analyse the problem. He discovered that owing to fluctuations in heat and humidity paper dimensions kept changing, resulting in misalignment of coloured inks. This was a classic temperature and humidity control problem. Carrier then invented the worlds first air-conditioning system. Carrier waited till 1906 before patenting this contraption of his, loosely termed as an approach for treating air. It was the beginning of bigger thing for carrier. He later went on to create the biggest airconditioning firm which now a days operates globally with name of Carrier Aircon and has a market share of over the 40 % across the world. Though now the market is flooded with a lot of players like National, LG, Samsung, Daikin, Blue Star, etc. and the technology has increased tenfold, this American giant MNC ( Carrier Aircon) and William Carrier will always be in the eyes of the world, simply because they were the ones who gave the world an industry which is worth billions over the global market and creates employment for millions of people.

Air-conditioner-The Product

An AC is primarily classified into three broad segments unitary products, packaged air-conditioners (PAC) and ducted splits and central plants. The unitary products would include the window ACs and the mini-splits (without ducts). Room air conditioners operate on electricity or gas and are enclosed in a single cabinet. They blow the conditioned air directly into the room and do not have air ducts leading to and from them. Window air conditioners fit into the lower part of a window and can be moved from window to window and thus the name, Window ACs Central air conditioners use electricity or gas. They can supply conditioned air to a number of rooms or to an entire building from one central source. Fans blow the conditioned air through air ducts from the air conditioner to the rooms. Central conditioners have a number of advantages over other kinds. For example, all the equipment for air conditioning a large area is located in one place. This reduces the cost of cleaning and repairing. Central conditioners can also be zoned i.e. they can supply air of different temperature to different parts of a building. These ACs are ideal for rooms with low heat loads. They are available in the capacity range of 0.5 TR to 3 TR. The room AC sector caters to residential premises, offices and small establishments. Split ACs are so named because the unit is 'split' into two parts. The compressor and the condenser forming an outdoor unit and the cooling coil remaining as an indoor unit. Split units can be with or without ducts. In PACs, the unit is placed in a separate room and the cold air is carried through ducting to the required areas. It is suited to those establishments that are not large enough to go in for a central system. Ducted splits and PACs cater to segments requiring cooling capacity of

less than 15 TR. The central air-conditioning segment is more technology intensive and project oriented. It caters mainly to institutional clients where capacity requirements are usually 50 TR and upwards. The demand for nonducted products grew steadily in the latter half of the 1990s.The demand for mini-spilt ACs has grown at a higher rate as against window ACs mainly because of a lower base. The demand switch from mid sized ducted products, such as packaged ACs or ducted splits to mini splits is also one of the larger growth rates in the latter segment. The demand for non-ducted products i.e. the window air conditioners & mini splits come from both households & corporate while the demand for ducted products comprising of the central plants & packaged air conditioners & ducted splits come only from corporate.

Chapter 2 Market Study

Industry Size
The air-conditioning market is one of the few segments that have been growing at the rate of 20 per cent per annum since the last three-four years. The total airconditioning industry is estimated to be around Rs 3000 crores with central airconditioning including packaged and ducted air-conditioning systems estimated to be around Rs. 1200 crore, and windows and mini split air-conditioners estimated at Rs 1800 crores.

Evolution
Since the early 90s, the structure of the air-conditioning industry has evolved quite differently. Till '88-89 the industry used to be dominated by the unorganised sector with 70 per cent market share. With excise duty as high as Rs 9000-10,000 during those times the gap was wider. The participation of the organised sector remained small till the year 1995. The reduction in excise levels from 110 per cent to 32 per cent and import duties on components from 185 per cent to 30 per cent plus CVD has not only expanded the market but also narrowed the price gap for branded ACs. The share of the organised sector is now 80 per cent while the unorganised sector constitutes a little over 20 per cent of the market. .

Current scenario Prior to 1997, corporates, institutions and government dominated the consumer segment. They did around 85-90 per cent of the buying. It was only in the year 1997 that the home segment picked up. In fact, in the last two years there has been a big spurt in buying from the home segment, which now constitutes 35 per cent of the market from the previous 10-15 per cent. The institutional segment accounts for 65 per cent. The growth in volumes from the home segment has been to the tune of 30-35 per cent while the institutional segment clocked just 4-5 per cent volume growth. The average growth for the last five years in the residential segment has been around 24 per cent. The reason for the same is that the AC is no longer perceived as a luxury and better distribution network, large-scale advertising and finance schemes have grown the market. The growth in the year 2000 was only 20 per cent, which was mainly driven by segments such as software services, retailing, healthcare, entertainment, hospitality and telecom. In the current year, the AC industry has recorded a 12 per cent growth in the first six months of the current year.. The WAC growth is expected to be about 20 per cent this fiscal. Demand drivers Inventory holding capacity is the key to success as demand for ACs is seasonal. Income levels With rising levels of disposable income and the attendant change in consumption patterns, air-conditioners have become a thing of proud possession, especially for the emerging middle class. The fastest growing and the most potential segment, namely, middle class households, is expected to drive demand for ACs by leaps and bounds due to growing pollution and more disposable income.

Low Penetration Levels The industry has a major growth potential as the penetration rate is less than one per cent The WAC market in China has grown from 1 million to 9 million in the last decade. This represents a huge untapped market in India thus signifying a tremendous growth potential. Computerisation in business and growth in service industry will act as key drivers for commercial segment of air-conditioning. The present penetration level in India for air-conditioners is a miniscule 1-2%. This figure compares unfavorably to countries like the USA (35%) and Singapore (30%). In addition, the penetration level is low as compared to other consumer durables -refrigerators - 11%, TV's - 35%, Radio - 45% and Cars - 6%. The National Council for Applied Economic Research (NCAER) conducted survey on "Indian Market Demographics" has indicated that ACs, rank lower than even washing machines on the priority list of purchases. Considering that washing machines have achieved a penetration of only 2 million households, it is unlikely that households will be the major demand drivers in the near future. This is especially true in the case of rural households. One reason could be the high maintenance and operational costs associated with owning an AC. People owning a car, usually get a sum as petrol/car allowance along with their salaries, but their monthly electricity bills are hardly reimbursed. With rural households, the problem is of frequent power cuts and low voltage. Competition also comes from an altogether different product - desert coolers - widely used in central and northern India. One thing is however clear, lower penetration level is a pointer to the vast potential that lies ahead.In the future, earnings will be driven by rising demand for consumer durables in general.

Once upon a time, ACs used to be a luxury but now they are a necessity. Of course, this could also be attributed to the reduction in AC prices and the rising disposable income of the Indian middle class. The hot summer of 2001 has persuaded people to carry one home to cool themselves off. The last few years have seen a spectacular demand for air conditioners rising from the household sectors. As per the National Sample Survey Organization report of "Use of durable goods by Indian households", the per capita total expenditure on durable goods increased from Rs112.89 in 1987-88 to Rs148.02 in 1993-94. Similarly, NCAER estimates point to the fact that the number of households with monthly incomes above Rs10,000 in metros and Rs5,000 in non-metros is expected to rise from 22.7 million in 1995-96 to a huge 57.2 million in 2005-06. This will mean that firstly, there will be a perceptible shift towards branded products and secondly, the level of aspiration buying will increase. All this should be good news for players in the AC market. .Price Demand for room air-conditioners is fairly price sensitive. For demand from households to spurt, prices have to come down significantly. A study conducted by IMRB points to a potential of 0.35 million units for units priced at Rs18,000. Though a 0.75 TR unit is available at these prices, their efficacy under Indian conditions is doubtful. Ideally, prices should fall by another 20-25% bringing a 1.5 TR AC on par with a CTV priced at around Rs18,000.On the other hand, demand for central AC systems are broadly price insensitive. This is so because the number of players in the segment are limited (due to infrastructure and personnel requirements) and profit margins lower than those in room ACs.

Availability Of Finance One way of making price-sensitive consumers spend is to expand hirepurchase schemes in the country. Here India has made substantial strides in the 90s. Firstly, there has been a marked change in the attitude in favour of taking loans for purchasing household items. Secondly, the easy availability of consumer finance from banks and other financial institutions would induce purchases during inflationary times. Companies like Carrier Aircon, Voltas, Fedders Llyod and Godrej-GE have introduced zero-interest installment schemes as an option for its customers. Environment India is a country situated in the tropical zone with the weather being warm to hot in most parts of the country. With surroundings in most of our urban centers becoming increasingly polluted and awareness as regards the benefits of working in a controlled environment on the rise, the demand for ACs can only grow.

Use Of Alternatives And Its Substitution Earnings would be affected by the presence of cheaper substitutes like coolers that would discourage consumers in smaller towns and villages to at-least postpone purchases, if not avoid them. But as the level of income goes up, aspiration needs will lead to substitution or replacement of coolers with ACs.

Impact Of Reforms Lowering of taxes will make ACs cross the threshold between necessity and affordability. Once this happens air-conditioning will see geometric growth in demand. In the past, the AC industry was labeled as a luxury industry making it convenient for the government to extract revenues. This resulted in the unorganized sector ruling the roost with a substantial market share in the window AC segment. Individuals patronized the unorganized players because their prices were lower and personalized after sales services were available. As the table below indicates, excise duty rates were a high 60% for room ACs even until 1994-95. Couple this with the fact that organized players also paid sales tax, octroi duty etc., their prices turned out to be largely uncompetitive. Tax implementation is a very big obstacle in the healthy growth of the consumer durables industry. The segment is heavily taxed both by the central and state government. White goods manufacturers feel that the lower level of duties and higher abatement on MRP-based products would push sales and drive higher growth for the industry. On an average the duties are in the level of 20-25 per cent but it becomes as high as 40 to 45 per cent in India, which puts Indian manufacturers at a disadvantage. Reduction in sales tax and excise duty could definitely spur demand.

Chapter 3 Central AC Market

Current Scenario
The Central AC (CAC) market has had a rough patch in the last two to three years. Being dependent on user industries, it is highly susceptible to industrial growth cycles. With new industrial activity coming to a grinding halt, demand for turnkey central AC projects have dried up in last two years. Central AC segment is controlled by big players like Blue Star that have the facilities, technology and personnel required to execute turnkey projects. One major issue facing the air-conditioner industry is that of adherence to environmental standards. As per the 1990 Montreal Protocol, ACs should not contain ozone-depleting material with effect from 2003 Central AC. Blue Star and Voltas, who between themselves have a 63% market share, dominate the industry. Carrier Aircon, which entered this segment in 1994, has a relatively modest 12% market share. Carrier plans to increase its presence in this segment in line with its global operations where it is the leader with a 40% world market share. Besides equipment manufacturers, there are also players like the transnational Emirates Trading Agency (ETA), which sources equipment from leading manufacturers, undertaking only the installation work.

This industry has traditionally been a high margin area, but of late, margins have come under pressure due to increased competition. With few orders, manufacturers are undercutting each other to grab installation contracts.The traditional compressor-chiller based market faces threat from vapor absorption machines (VAMs). These are finding favour the world over as a cost-effective and environment friendly alternative. Although the initial outlay is higher, low operating costs more than make up for it. Thermax is the dominant player in the domestic VAM market with a 90% market share. Given the environment friendliness and cost savings, VAMs could displace chillers altogether in the long run. For the existing players in the CAC segment, it may not pose much of a problem as all the major players like Carrier, Voltas & Blue Star have access to this technology from their parent/ part Service and maintenance contract income is in fact emerging as a substantial source of income for the leading players in the country. This is especially true of players who have a large installed base of machines. This revenue stream can be a buffer against a downtrend in AC sales. Some companies have started subcontracting service function to widen reach.

Utility Aspects Of CACs


1 To create a cool ambience 2 For the smooth operation of the equipment/machinery 3.To preserve and store certain raw material/semi-furnished/finished goods 4.To perform various operations like testing and other manufacturing functions under controlled temperatures

Central AC Market Shares

Company Blue star Voltas Carrier Thermax Suvidha Others

% share 41% 22% 12% 06% 05% 14%

Central AC Market FY01


14% 41% Blue star Voltas Carrier Thermax Suvidha Others

5% 6% 12%

22%

Blue Star

The Rs 510 crore of annual turnover Blue Star is the market leader in central ACs. The company leads the segment with a current market share of approximately 37 per cent. According to It is also a leader in ducted systems or the packaged AC segment. With an almost 40 per cent increase in order inflow during FY01, the company has significantly improved its market share from 33 per cent to the current 37 per cent. Around 92 per cent of the company's revenues comes from ACs and commercial refrigeration equipment business. Of this, almost 85 per cent of the revenue is contributed by the central and ducted AC systems. Of the remaining, 10 per cent comes from window ACs and the rest from mini split ACs. While there is intense competition in the window and split ACs, Blue Star enjoys a competitive advantage of having over 70 per cent of corporate and commercial customers. Blue star has laumched new turbo rotary remote acs and hi-wall split acs . Blue star manufactures and markets wide range of Air- conditioning and refrigeration systems and products. These includes large central Air conditioning plants, packaged Air-conditioning systems, split and window Air-conditioners. The company has business alliances with world renowned technology leaders such as York international, U.S.A.; Kolpak, U.S.A.; vest frost, Denmark, and many others, so as to offer superior products to the customers . its Thane plant manufactures a variety of CFC-free products for central plant Air-conditioning and refrigeration . the products for Air-conditioning and refrigeration plant comprise centrifugal water-cooled screw chillers in the range of 150-600 tons of refrigeration, reciprocating package chillers and condensing units.

Carrier Aircon

The Rs 385 crore Carrier Aircon was the market leader in the RAC segment with a 21 per cent share in window ACs and 35 per cent share in split ACs. With the entry of the various other multinational brands, there has been intense price-cutting, thus taking a toll on Carriers performance for FY00. However, for the first nine months of FY01, net sales at Rs 351 crore improved 21 per cent as compared to the corresponding previous period. Also, thanks to efforts at cost cutting, total expenditure as a percentage of sales has reduced 300 basis points as compared to FY00. Despite rising working capital requirements that has led to a 57 per cent jump in interest at Rs 3.71 crore, net profit at Rs 16.76 crore is 83 per cent higher than that for FY00. The improved performance is largely due to Carriers initiative at adopting a different pricing strategy. From a distinct shift from marketing ACs only at the premium end, Carrier started targeting the lower segments of the market. Consequently, compared to previous price points of Rs 25,000 to Rs 32,000, it now caters to a price range of Rs 18,500 to Rs 32,000. It marketed 41 new variants of window ACs during FY01 as against 11 models in FY00. Also, while advertising budget has increased 60 per cent at Rs 19 crore for FY01, the number of exclusive dealer outlets have also increased from 414 to 1,200. To compete with players such as National, in early 2001, Carrier launched seven models of Toshiba RACs, three models of split ACs. Carrier envisages growing at 25 per cent for FY02 as against the 16 per cent industry growth. Despite fierce competition, Carriers dominant presence in the fast growing window AC segment bodes well for the company.

Voltas

Voltas continues with its 15 % and 20% share in central acs and ducted system respectively. The Rs 824 crore Voltas has interests in areas as diversified as engineering products and projects, chemicals, cooling appliances and refrigerators and office furniture. The company slipped into the red in FY97 and FY98, during which, it devised various initiatives for a turnaround. This included stripping idle assets and hiving off loss making subsidiaries. The efforts bore fruits as Voltas posted a net profit of Rs 12.79 crore for FY99. However, for FY00, its topline dipped 16 per cent to Rs 824 crore. As the company managed growth only in textile machinery, motors & modular ,furniture , business . the other divisions such as machine tools , fork lift trucks , air conditions , refrigerators ,and room air conditioners showed declining sales both in quality as well as value terms . Also, the net profit slid by 57 per cent to Rs 5.5 crore. According to the company, the slowdown in the capital goods sector and engineering businesses are responsible for the sluggish performance during FY00. However, its cooling appliances and refrigerator businesses have also registered a near 26 per cent fall in FY00. Also, its contribution towards total revenues have reduced from 61 per cent to 55 per cent in FY00.. Thanks to innovative product launches and technological advancements, most of its products have shown a healthy growth during FY01. From the above table, it can be seen that during FY2000, the company managed growth only in the textile machinery, hydraulic pumps, motors, and the modular furniture business. The other divisions showed declining sales both in quantity as well as value terms. Company has shown an overall 64% increase in the order book position during FY01The company has launched a new system called the Ozone Injection System, which checks the sick building syndrome and prevents the circulation of unhealthy air.

Unhealthy air could be the cause of bad ventilation, bad air-conditioner, or poor maintenance of air-conditioners. The new system is pioneered by Voltas in collaboration with a Canadian company called Daks. The company expects its central AC segment to pick up with the growing environmental concern in the coming years. While Voltas continues with its 22 per cent market in the central AC and ducted systems, respectively, its mini split ACs are also expected to add to the revenues of the company. Also, with the launch of its Verdant range of ACs, Voltas is further expected to strengthen its room AC share. However, for FY01, 12 per cent of the revenues have come from the retail segment with the rest coming from institutional sales. For the first nine months of FY01, Voltas has registered a seven per cent rise in revenue. .

Chapter 4

Room AC Market
The room AC segment comprises of window and split ACs. The market has a size of Rs. 3800 crores in India. Window acs account for about 54% of the total market for acs with an estimated market size of about 30 bn . The room air-conditioning segment is characterised by large players like Carrier Aircon, LG, Samsung, , Amtrex-Hitachi, etc. LG has been successful in dethroning Carrier from No.1 position in the room AC segment, followed by Samsung and Hitachi.. . Samsung, for instance, has captured a 15% share in room ACs since it came here in May 1998. LG has wrested a creditable 19% share in less time . A sales growth of 300 per cent in 2002 over 2003 (40,000 ACs sold in 2003 over the 10,000 in 2002) finds it talking very confidently. It started importing in January 1998 but sensing the opportunities lying ahead, built a plant near Delhi at Noida ,others like Hitachi, chose to pick up stake in Amtrex. While some others have gone in for a technical arrangement (for eg. Blue Star with York, USA). M/s. Trane of USA . Market Share( Organized Sector) Room ACs LG Samsung Amtrex Hitachi Carrier National Voltas Videocon Bluestar Godrej Others Share 19 15.5 15 12 11 8.5 5.4 5 3 5.7

Room AC's Market


5% 5% 8% 15% 11% 12% 15% 3% 6% 20%
LG Samsung Amtrex Carrier National Voltas Videocon Bluestar Godrej Others

The room ac segment is having a close rat race as compared to the central ac market. LG has emerged as the leading player with respect to its innovation in offering superior products . It changed the definition of ACs by terming them as health air systems. LG has registered a growth of 110%yoy in the year 2000 against an overall industrial growth of 30%. LGs market share jumped to 30% in 2000 from 19% in 1999. LG now claims to be in the number 1 position in the RAC segment. LGs entry is already taking a toll over established companies like Carrier Aircon and Hitachi. Korean major Samsung and Hitachi are fighting a close battle for the second place. Both are relying on strong innovation and marketing to increase their market shares. Carrier Aircon is second in the RAC race with a 21% share in window ACs. Its market share in split ACs is about 35%. During the first 9 months of FY01, net sales stood at Rs3.51bn (up by 21%). To compete with players it has launched models of Toshiba. \

Amtrex Hitachi is a joint venture with Hitachi Japan and has a 11% share in the window AC segment and 15% share in the split AC segment. After going through some stagnant period, the company is now ready to take on the competition with its new range of products. After a successful comeback in FY00, the company slipped into red again during the first nine months of FY01registering a net loss of Rs7.4mn against a gain of Rs6.2mn last year. However, the topline has soared by 31% to Rs1.6bn during the said period. The companys problem is that of falling operating margins due to rising total expenditure. Amtrex has recently launched a new digital range of split &window ACs called 'Logicool'

Its mini split ACs registered a 25% volume growth to improve its market share from 20-25% in FY01. Also with its launch of Verdant range of ACs, Voltas registered a 28% volume growth improving its market share from 11% to 17%.

Geographical Distribution Of ACs


Cities Delhi Mumbai Hyderabad Kolkatta Banglore Chennai Others Market Share 28 35 04 04 02 07 20

Geographical Distribution of ACs


20% 7% 2% 4% 4% 35% Delhi Mumbai Kolkatta Hyderabad Bangalore Chennai Others

28%

The above figures explain that the sale of ACs is restricted to metros. This is so because the ACs still have a very low penetration as compared to other durable goods. They are last in the priority list after refrigerators , washing machines, vacuum cleaners, microwave ovens. Also people dont have that much disposable income to operate and maintain an AC. With increasing finance options the scenario is expected to improve but it will take some time for ac as a product to really come into the reach of a middle class consumer.

Entry of New Players.


A notable feature of the reform period has been the coming of foreign players into the Indian market Among the new brands jostling for space with the older players this summer are: Electrolux-White Westinghouse and Whirlpool from the US, Fujitso General Ltd and Daikin from Japan and TCL from China. Needless to say, the entry of a host of new brands will impact the AC market in India dominated by players like Carrier Aircon, LG, Samsung, Godrej, National, Blue Star, Voltas etc.

The reasons why more and more brands are entering the Indian market is that the penetration level of ACs in India is barely 2 per cent and so the market is extremely attractive. Secondly, the home segment witnessed an almost 30 percent growth in the last two years compared to the commercial segment. This is because AC is no longer perceived to be a luxury, and better distribution network, finance schemes and large scale advertising have grown the market. Small wonder, Daikin Shriram, the new 80:20 JV between $ 4.5 billion Japanese company Daikin and the Siddharth Shriram group company Siel Ltd, aims to grab a 18 per cent share of the premium AC segment. A 0.75 tonne Daikin AC costs Rs 39,000. Meanwhile, Electrolux India has brought in its world - renowned White Westinghouse brand of AC which offer an attractive six year guarantee and hopes to capture approximately five per cent market share.Having test-marketed its ACs last summer, Whirlpool launched its products earlier this summer. The new Whirlpool AC Range is targeted primarily at the house hold segment. They are offering a comprehensive range of 8 new world class models and hope to get a 10 per cent market share by 2003.The AC market is currently witnessing a proliferation of brands. However, a shakeout is imminent in the next 18-24 months. Secondly, branded players will gain market share at the expense of the unorganised sector. If the unorganised versus organised sector marketshare ratio was 60:40 in 1997-98, it changed to 30:70 in 2000-2001. players coming in the market. Evasive Action By Established Players Brand proliferation will also make life difficult for the branded players. Most of them, therefore, are investing heavily in advertising and marketing besides offering a wider choice of models. . Considering that there has virtually been no change in the AC prices this year, the market is likely to see a 20 per cent growth. Considering that besides microwaves, this is the only category in consumer durables that is growing at over 20 per cent, AC manufacturers are going all out to woo the Indian consumers. The unorganised sector is likely to lose another 10 per cent share this year, thanks to the new

The established players are taking the following steps to consolidate their position in the market. Samsung Korean major Samsung too has added two new models to its range and hiked its spends on ACs by 15 per cent. It is also using the Internet for speedy order and delivery of spare parts. It is offering a combination of better services, features and a zero per cent finance schemes to garner more market share. To fortify their position the company plans to expand their dealer network to 2000 from current 1500. LG Electronics LG has increased its advertising budget to Rs 25 crores and is planning to invest over 200 crore in R&D along with increasing its distribution network. It is working on incorporating its plasma technology in window ACs as well. It would be pumping $ 230 mn in India by 2005 to expand manufacturing facilities. Carrier Aircon Carrier is launching 40 models this year to regain its leadership. Carrier's advertising budget this year is Rs 17 crore while the company is expanding the distribution network for the home segment from 440 to 1,250 retail outlets. Hitachi Hitachi is relying on its new range of Logicool air conditioners to increase its market shares backed by strong promotional budget which has been increased from 8 crores last year to 20 crores for the year 2001-02.

Chapter 5 Analysis Of Room AC Market

Complexity Of Room AC Market


The room AC market is very complex unlike central AC market because there are lot of players which are targeting various consumer segments according to their specific needs. In the central AC market the corporation is spending the money and the reasons for buying an Ac are altogether different for buying an AC as compared to that for personal use. Decisions are taken by corporate heads in case of central ACs and the priority is given to factors such as cooling capacity, after sales service, safety, price etc. The brand is not given much importance as far as the motives are being fulfilled. On the other hand a room AC is purchased for the following reasons 1.To create a cool ambience 2.To provide clean and fresh air 3.Status symbol 4.To Provide aesthetics to the room. Thus the traditional concept of an AC being a cooling machine is not applicable any more. Today a consumer looks into other attributes and is becoming brand conscious because these attributes are being offered by the branded products only.

Attributes Affecting Selection Of A Brand


1. Durability 2. After Sales Service 3. Finance Options 4. Less Power Consumption 5. Technology with respect to cooling, clean and fresh air and easy operations 6. Sleek looks 7. Suitable Price 8. Brand Image

Thus it is becoming more and more important for a company to establish its brand rather the product alone. A consumer today looks to identify with the brand he is going to own and therefore the players in the market are trying to establish their brands and position them in such a manner that they are able to relate to the psychology of their target and potential customer and provide him with a product which would be ideal for him. In order to analyze the complexities in the Room AC market it is necessary to understand certain terms and concepts related to brands , branding and brand positioning. Also it is necessary to look understand what are the benefits and requirements for developing these concepts.

Chapter 6 Branding

Concept & Definition


Branding is the art and corner stone of marketing. The American marketing association defines a brand as: a name, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. Thus a brand identifies the seller or maker. Under trademark law, the seller is granted exclusive rights to the use of the brand name in perpetuity. Brands differ from other assets such as patents and copyrights, which have expiration dates. A brand is a complex symbol that can convey up to six levels of meaning Attributes: a brand brings to mind certain attributes. Mercedes suggests expensive, well-build, well-engineered, durable, high prestige automobiles. Benefits: attributes must be translated into functional and emotional benefits. The attribute durable could translate into the function benefit I wont have to buy another car for several years. The attribute expensive translate into emotional benefit. the car makes me feel important and admire. Values: the brand also says something about producers values. Mercedes stands for her performance, safety, and prestige.

Culture: The brand may represent a certain culture. The Mercedes represents a Garman culture: organized, efficient, high quality. Personality: the brand can project a certain personality. Mercedes may suggest a no nonsense boss (person), or an austere palace (object). User: The brand suggests the kind of consumers who buys or uses the product. We would expect to see a fifty five year old top executive behind the wheel of a Mercedes, not a twenty-year-old secretary. The word "brand", when used as a noun, can refer to a company name, a product name, or a unique identifier such as a logo or trademark. In a time before fences were used in ranching to keep one's cattle separate from other people's cattle, ranch owners branded, or marked, their cattle so they could later identify their herd as their own. The concept of branding also developed through the practices of craftsmen who wanted to place a mark or identifier on their work without detracting from the beauty of the piece. These craftsmen used their initials, a symbol, or another unique mark to identify their work. Not too long afterwards, high quality cattle and art became identifiable in the consumer's mind by particular symbols and marks. Consumers would actually seek out certain marks because they had associated those marks in their minds with tastier beef, higher quality pottery or furniture, sophisticated artwork, and overall better products. If the producer differentiated their product as superior in the mind of the consumer, then that producer's mark or brand came to represent superiority.

Today's modern concept of branding grew out of the consumer packaged goods industry and the process of branding has come to include much, much more than just creating a way to identify a product or company. Branding today is used to create emotional attachment to products and companies. Branding efforts create a feeling of involvement, a sense of higher quality, and an aura of intangible qualities that surround the brand name, mark, or symbol. A brand also stands for the immediate image, emotions, or message people experience when they think of a company or product. A brand represents all the tangible and intangible qualities and aspects of a product or service. A brand represents a collection of feelings and perceptions about quality, image, lifestyle, and status. It is precisely because brands represent intangible qualities that the term is often hard to define. Intangible qualities, perceptions, and feelings are often hard to grasp and clearly describe. Brands create a perception in the mind of the customer that there is no other product or service on the market that is quite like theirs.. A brand promises to deliver value upon which consumers and prospective purchasers can rely to be consistent over long periods of time

Brand Positioning
The concept of perpetual space forms the theoretical basis for positioning . The consumers mind is thought of as geometric space and brands are plotted in that space to represent consumer judgments. This is done with the help of perpetual maps that helps a marketer to see which brands are closer to his brand and that helps him to find out his closest competitors. The task of the marketer is to mould consumer perceptions so as to occupy the desired position for his brand. Some thoughts offered by various authors with respect to Brand Positioning are as follows:

1)Subroto Sengupta gives a comprehensive three point definition for positioning. According to him a) The position of a brand is the perception it brings about in the minds of the target consumer. b) This perception reflects the essence of the brand in terms of its funcional and non-functional benefits in the judgement of that consumer. c) It is relative to the perceptions , held by that consumer, of competing brands , all of which can be represented as points or positions in his or her perpetual space and together make up a product class. 2) According to Reilbstein , David J Positioning refers to the place a brand occupies in the mind in relation to a given product class. This place was originally a product related concept concerning market structure .The concept now refers to the place that the brand holds in the consumers mind relative to perception and preferences. 3) Michael J Baker defines Brand Positioning as the policy used to ensure that the brand has a distinctive position in the market place , identifiable by the consuming public. Brand Positioning (has) to ensure the brand a distinct niche in the market . 4) Mittelstadt, Charles Positioning refers to how you want your brand thought about in connection with competitors in its product category . Positioning needs to be specific to your brand aimed at specific target audiences

The benefits of Branding and Brand Positioning


A well positioned brand influences the buying decision and shapes the ownership experience. Branding creates trust and an emotional attachment to a product or company. This attachment then causes a brands market to make decisions based, at least in part, upon emotion-- not necessarily just for logical or intellectual reasons. A strong brand can command a premium price and maximize the number of units that can be sold at that premium. Branding helps make purchasing decisions easier. In this way, branding delivers a very important benefit. In a commodity market where features and benefits are virtually indistinguishable, a strong brand will help customers trust it and create a set of expectations about its products without even knowing the specifics of product features. Brand positioning help to "fence off" customers from the competition and protect market share while building mind share. Once a brand has mind share, the customers will automatically think of the brand first when they think of that particular brands product category. A brand is something that nobody can take away from anyone. Competitors may be able to copy the products, the patents will someday expire, trade secrets will leak to the competition, the proprietary manufacturing plant will eventually become obsolete, but a strong brand will live on and continue to be unique. In fact, a strong brand name may be the most valuable asset for any company.

A strong brand can make actual product features virtually insignificant. A solid branding strategy communicates a strong, consistent message about the value of the company. A strong brand helps to sell value and the intangibles that surround products. A strongly positioned brand signals that it want to build customer loyalty, not just sell product. A strong positioning campaign will also signal that a brand is serious about marketing and that it intends to be around for a while. A well positioned brand impresses a firm's identity upon potential customers, not necessarily to capture an immediate sale but rather to build a lasting impression of itself and its products. A brand helps to articulate a company's values and explain why they are competing in your market. People do not purchase based upon features and benefits. People do not make rational decisions. They attach to a brand the same way they attach to each other. Similarly, purchase decisions are made the same way, first instinctively and impulsively and then those decisions are rationalized. A strong brand helps mold and shape that emotional reaction in people, which is a very strong influencer in the purchasing decisions they make. Once they have an emotional attachment to a brand, then they will justify their purchase decision based upon product features and benefits.

Chapter 7 Brand Positioning Of Room ACs

Introduction
Positioning is the pursuit of differential advantage. Brands can create franchises of loyal consumers only when they are seen to be different in some way which is persuasive for the target market. There is no such thing as commodity. All goods and services are differentiable. One of the major contributions of positioning theory of marketing strategy has been to bring out the concept of distance and dissimilarity between brands in the perpetual space of the prospect and to uncover the many opportunities for such perceived differentiation based upon the capabilities of the product and its antecedents.

Strategies Of Positioning
A marketing manager has an array of differentiating strategies.. He has to judge which of these strategies can help him locate a niche in the market where his brand may be perceived by his target segment as unique and where it will hold a competitive advantage. Some of the positioning strategies used by AC brands are as follows:

1) Category- Related Positioning This is an important differentiating strategy that is used when an existing product category is too crowded to take the same basic product and position it in another category, provided the attributes of the product can match consumer expectations from that category. This is referred to in the jargon as macro-positioning or inter-set positioning. Eg. LG decided to position its ACs as LG Health Air System Air Conditioners thanks to its Plasma technology in split air conditioners .They revolutionarized the AC market by positioning their brand in the health category because it was an unoccupied platform which had a lot of potential. 2) Positioning By Price Quality This is a simple concept but a powerful one in a developing economy like that of India. The consumer looks at the products in a category , at different levels of price, offering different standards of quality, and decides which price-cum quality level is most suitable for a given need. The consumer in a country like India still is still conscious of price and doesnt mind compromising on quality if there is a significant difference in price. Eg. National ACs have been positioned using this strategy. The tagline itself defies its positioningIF ITS NATIONAL , ITS AFFORDABLE

3) Positioning By Product UserThis approach associates a product with a user or a class of users. This kind of strategy is used by developing the personality of the brand which is aimed at a class of users to identify with the personified personality of the brand and find the same characteristics and values which will strike an emotional chord with the consumer and in turn make them purchase the brand. Eg. Hitachi ACs For Those Who Seek Perfection User Driven Positioning.

4) Positioning With Respect To Use Or ApplicationThis strategy is used when a particular brand has an added advantage over other players in the market and wants to ride high on it.It is the most logical thing to do because positioning is all about creating a differential advantage and placing it in the mind of the consumer. Eg. Samsung ACs have been doing this by using the tagline Ab Garmi Choo Mantar They are making such claims because their ACs have a unique 4 coil condenser as compared to the other brands which have 2 coil condensers. This technology gives their ACs an edge both in cooling and in efficiency. Eg: Godrej is doing this by using the tag line nothing cools faster . They are making this claim because their ACS are fitted with silent energy efficient compressor and they have a very high cooling capacity

Components Of Positioning
The positioning strategies of all the AC brands in the market are based upon the four basic components of positioning. They are as follows 1. Product Class-A product class or product market can be defined as the set of products and brands which are perceived as substitutes to satisfy some specific consumer need. The term, product category, is also used interchangeably with product class and product market. A brand cannot decide upon its positioning unless it knows the structure of the market and positioning of other brands so it can lodge itself accordingly in the perpetual space of the consumer. With respect to the AC market the knowledge of the market comprises of the kinds of brands available namely Indian, Japanese, Korean , their market shares, the capacity of ACs ranging from 1 to 3 tons, the technology being offered and at what prices. Also the players have to consider the unorganized market and the substitutes like coolers which have a sizeable demand in the northern region of India.. 2. Consumer Segmentation- It is impossible for a brand to think of a positioning strategy without at the same time considering the segment for which it wants to offer the benefit and whether that benefit is being offered by any other brand in the market.. This is so because all the aspects related to the positioning of the product such as the pricing, advertising and placement will be done keeping in mind the end consumer. ACs are basically classified as the whitegoods which have a penetration as low as 2 % in a country like India. This is so because India is a developing country where majority of the population is lower middle class. AC is targeted at the middle-middle class and upper classes because of its high purchase price and also high operating cost. According to the statistics given by Business World the middle income level group share

is going to increase by 2005 expanding the AC market. Already there are players such as National, Hitachi that appeal to the middle income group because of their pricing which ranges from 15,000 to 20,000 . There are players which target the niche market such as LG, Samsung , Carrier and Hitachi with an average price of about 30,000. Then there are players who are between the two markets such as Voltas, Godrej. In order to expand their markets already brands like LG, Carrier , Hitachi have started offering various finance options to their consumers. 3. Consumer Perception- It is a very important component of positioning. Before positioning of a particular brand it is very important for the brand to know what does a consumer think about the product or service which is going to be launched by the brand . With the help of this the customers need or expectations from the product , its ideal pricing etc.can be found out. At the same time brands also try to find out about the other brands and their image in the minds of the consumer. This involves an intensively planned research methodology that helps a manager to plot a graph with respect to the results received and get an idea about the perpetual spacing of the mind of the consumer. This ultimately helps a brand to identify the ideal positioning strategy that will occupy the desired image in the mind of the customer. In the AC market the general perception about the AC as a product was that it was a cooling machine. In the middle nineties players of the market were basically fighting on the grounds of technology ,prices offering varied features, designs , exchange offers to lure the customers with American giant Carrier Aircon ruling the roost. Then came a new breed of air conditioners lead by LG which gave a new dimension to the industry by introducing health Air system air conditioners . Brands like Hitachi, Samsung also came up with new technology and innovative products leaving players like Carrier, Voltas, National far behind who had taken the Indian consumer for granted and never bothered to bring new products until the entry of Korean and Japanese brands. These brands have managed to make people believe that there is more to an air conditioner than cooling. People now perceive brands differently and know what to expect from each

brand thanks to their unique positioning. They perceive LG as a Health focused brand, Samsung as efficient and high-end technology brand, National as a low-end price brand and Daikin as a low noise-creating brand. Thus the current breed of ACs are being perceived by consumers in a different vein with respect to each AC thanks to aggressive and distinct positioning.

Perpetual Spacing Map In The Mind Of Consumer

The concept of perpetual spacing has already been discussed in the report earlier. It is the perception that the consumers have regarding the various brands in the market. The above map has been designed keeping in mind the response received from the primary data collection with the help of questionnaire filled by the consumers. The perpetual space occupied by the brand in the mind of the consumer is basically because of the experience, advertising, and discussions with friends, relatives. Every brand tries its best to create the correct image in the mind of the consumer. In order to succeed in their motives they spend heavily in advertising and creating the right message that will give a clear idea to the customer about what they should expect from the concerned brand. As a result there is a trend of developing suitable taglines that try to highlight the specialized service being provided by the brand. The following Taglines are used by the brands in the market to occupy the desired space in the minds of the consumer. They help the consumer to build their perception about a particular brand: Brand Hitachi Carrier Voltas LG Bluestar Samsung Daikin WhiteWestingH ouse (Electrolux) Kenstar General Godrej People Ache Achon ko Thanda Kar De Purest Way to Breathe Breathe Easy Ab Garmi Chu Mantar If its National its Affordable Enjoy the Freshness The Way the World Lives The Extreme Machine Nothing Cools Faster Tagline For those who seek perfection Different Needs for Different

4. Benefits Offered By A Brand

The benefits offered by a brand form the final and the most important of the four components of positioning. A consumer expects certain benefits from each product and for reaping those benefits he pays a price which incidentally is the cost of the product offered by he brand.. When a consumer is going in for a purchase he has only those benefits in his mind which he feels he wants to reap and is on a look out for a brand which can provide the desired benefits. It is very important for a brand to know which are the ideal benefits a consumer is seeking and make sure that they are able to provide those to the customer which in turn would grant them an immediate position in the mind of the customer and would put them on the priority list of the customer amongst all others because the consumer would be able to identify with it the most as the brand is giving them what they expect from it. Today when a consumer goes to purchase an AC he is aware of the various benefits being offered by the brand thanks to aggressive advertising, exhibitions, trade fairs, web-sites, magazines, catalogues, friends, relatives etc. There were times during mid-nineties when all an AC was expected to do was cool the room. Now people treat it as a status symbol and want it to improve the aesthetics of the room, be easy to operate and improve and maintain health by providing cool, pure and healthy air. Thus a consumer is willing to purchase only that AC which is providing these benefits and at a reasonable price which again has been a major factor in a developing economy like India. Brands like LG, Hitachi and Samsung have been able to provide all the perceived benefits and that is the reason that they have been able to dethrone American MNC giant Carrier Aircon and other Indian brands such as Voltas, Godrej, etc. It is not only important to make an AC which can provide the required benefits but is equally important to position it in the right manner so as to reach the desired consumer. LG has been most successful in this aspect by positioning its health concept to perfection and is now reaping the benefits by becoming the market leader in the ever-growing room AC market.

Chapter 8 Analysis Of Positioning Strategies Of BrandsThrough Print Advertisements


Advertising is one of the most important modes which companies use to position their brands. With the help of advertisements the consumers can be induced to buy the brand by making them aware of the benefits of buying their brand over other brands. Like all other markets Ac market is no different and here also the advertising is heavy but seasonal. The peak period of ACs is March to May followed by a lull of about three months before the sales pick up again in the month of September but that too for a couple of months because then winter strikes most of the country. Also most of the players prefer Print media as compared to Audio-Visual media due to cost factor as the demand is not much. Also consumers like to know in detail about the features , prices, finance options which can be expressed explicitly only in the print media. There are some big players like LG, Hitachi, Carrier which advertise frequently on T.V during the season but otherwise print media is the preferred medium. Taking these reasons into consideration the analysis is based on the print adds for the months of March, April and May. 1) Samsung : Samsung has been mainly focussing on the product feature advertising. They have tried to create a distinct image in the minds of the customer as a power saving AC with high efficiency and generator of pure and healthy air. Tabu is endorsing the brand.

2) Hitachi : The advertisements stress on the features of microprocessor. The adds differ from talking about the self-adjustment of AC to room temperature or its

function of automatically switching on with the right temperature as keyed in earlier or its power saving feature. All this thanks to its microprocessor. Some advertisements also talk about the 0 percent interest finance schemes. 3) Verdant from Voltas: The ads have been stressing on features like pure and healthy air, temperature adjustment, electricity savings. They also have icons to give details regarding the features. But unlike Samsung they dont have any celebrity promoting their products. The focus is on the model Verdant which they have placed as the future high tech air conditioners. Some of the ads also focus on their cooling system that suggests that the room will be cooled thoroughly irrespective of its placement. 4) Godrej Intelli- There has been only one ad talking about its ability to get programmed to consume the units of electricity as desired by the consumer. It is this feature that separates it from the other ACs but the advertising with respect to this is very mild. Godrej Smartcool: This add covered all the models [with photographs ] being offered by Godrej and the various features such as energy saver, sleep mode, rotary compressor etc. The punch line in this ad talks about taking the woollen clothes out which suggests that AC might just be too cool for a person to be comfortable . The function of an air conditioner is not all about creating a cold environment but to condition the air in the environment and make it most suitable and comfortable for the person sitting in the room. The ad might just give a wrong idea to any prospective customer.

5) General : They have also advertised just once in the last one month. They have been trying to lure the customers by calling their AC as the most powerful AC with

respect to their cooling capacity and cooling speed. The ad is not effective as it does not give any idea to the customer about the product features or other details such as price, models etc. 6) Kenstar: There have been just 2 advertisements in the last couple of months. The first one spoke about the price while the second one was also revolving around price with the concept of exchange offer. Thus they are trying to lure the customers by offering them price parity with respect to other ACs. One of their punch lines says Bring in the winter which is trying to project that the ACs are all about cooling. In one particular ad they have compared their features and price with other brands and showed their superiority over them. 7) National: Their advertisements have been focusing on the 0 percent interest finance scheme. They are also advertising the competition which guarantees the return of money spent to buy their AC in case of the slogan of the buyer is worthy enough which he has to fill in the form while purchasing the AC. 8) Fedders Lloyd : Their advertisements are also price oriented. They are trying to persuade the consumers by printing the prices in bold and using punch lines such as ACs for 19500. 9) White Westinghouse from Electrolux: They have been focusing on their triple filtration process which results in pure and fresh air. Also the advertisements stress that the ACs can withstand voltage fluctuations thanks to its HDEE compressor.

10) LG- The advertisements have been mainly focusing on the concept of pure and healthy air thanks to its plasma technology. They have been effectively using their

catch line- Pamper your lungs. There have advertisements regarding their 4th anniversary offering free gifts on purchase of LG ACs. Sometimes the advertisements have focused on low noise creation. They have advertised the most in the months of April-May as compared to other brands. 11) Carrier: They are the market leaders in the AC market today. Their advertising differs from product oriented where by they talk about the efficiency, low noise creation, pure air etc to price oriented where by they offer various interest free finance schemes. 12) Daikin: They have been targeting the customers with their catch line complete silence. They have promoted their ACs as no noise polluting ACs. They have not been speaking about other product features or price. The customer doesnt get a fair idea about the product from their advertisements. The ads boast of it being the NO. 1 AC of JAPAN. 13) Bluestar: They have also advertised heavily in the months of March and April. Their advertisements have been focusing on the product features and prices. The features promoted are same as other ACs namely pure and healthy air, sleep mode, power saving compressor etc. they have used models in some ads to add value to the ads. .

Striking Points With Respect To Advertisements

1.Features: Almost all the brands have been talking about features that are common to each other except for the features advertised by Godrej intelli of their power controller. has launched its new range of EON air conditioners with a revolutionary technology in split air conditioners for the first time in India. These air conditioners are built with Godrejs advanced i-Sence Technology, which ensures that the temperature around you is exactly what you wish to have in the room or hall. 2.Warranty: Not everyone has been talking about the warranty period. But there are a selected few like Kenstar, Fedders Lloyd, Voltas, LG which are offering a 3-5 year warranty on the compressor. 3. After Sale Service: Every brand has given the list of their dealers and service centres. But Fedders Lloyd have also focussed on their 24 hour service call stressing on their dedication towards the consumer satisfaction. Voltas have also mentioned about their customer care service that places these two brands as customer friendly in the minds of the customer. 4.Icons: The icons are basically used by the brands to give an insight to the consumer about the other features of the product other than USP of the product. Most of the brands are effectively using the icons but for Godrej, Feddders Lloyd, National, Carrrier , Amtrex Hitachi, Daikin, BlueStar. These brands have been focusing only on their strengths and are not talking about features that are common to all. 5.Finance Options: Many brands offer easy finance options so as to make the product available even to people who cannot afford to buy the AC buy paying the amount at a stretch. This way the companies are able to target and tap a wider market. Brands like National, Carrier, Samsung, LG are offering 0 percent interest finance option to consumers making it easier for the consumers to buy their product. Also Voltas and Hitachi have different finance schemes to attract the consumers towards their product.

Chapter 9 COMPARITIVE BRAND POSITIONING Of LG ,GODREJ & Hitachi

A well-positioned brand is that which has been able to identify with the pulse of the customers by being accepted by them. If one goes by statistics then LG is the market leader in room AC segment followed by Samsung and Hitachi. They are the ones who have been able to change the face of the Indian market by displacing Carrier Aircon who has been ruling the roost for last ten odd years. Logically to compare the positioning strategies of two brands LG and Samsung could have been chosen but then there are reasons for choosing Hitachi over Samsung. Both LG and Samsung originate from Korea with each owning a 100% subsidiary in India while Hitachi is a Japanese brand having a joint venture with Amtrex . Both of them have a strong presence in India with respect to other durables where as Hitachi is not strong in other durable markets. Also Hitachi has been quiet innovative and aggressive in its positioning along with LG where as Samsung has kept a low profile with respect to it positioning. Also Hitachi is expected to garner more share in the coming period because of its new range of Logicool ACs which have already become very popular and are expected to Hitachi in the second place ahead of Samsung. All these make Hitachi a better proposition for comparison with LG which has revolutionarized the market with their positioning. The analysis is based on the information obtained with the help of dealer survey, consumer survey and interviews with the personnel of LG and Hitachi. Analysis is done on the basis of some aspects that form the basis of positioning.

1) Corporate Background A) LG - It is a Korean company which is a major player in the consumer electronic segment as well as the durable goods segment all over the globe. Their products all over the world have been positioned on the health platform. They have their plant located at Noida near Delhi.It is that category which has found an instant rapport with the consumers all over the world. It is a universally accepted fact that Health is Wealth and everyone has become over-cautious with the issue of health in this era where deadly diseases like AIDS, Cancer, Asthma, Bronchitis etc. are spreading like a forest on fire. People have become fitness conscious and believe in prevention rather than cure. Health was one category that was left unoccupied by the major players in the entire appliances category as all the major brands were running after technology and innovation because they thought that a consumer wanted comfort and technology. LG realized that innovation is important but todays consumer is equally bothered about the environment, society and most of all personal health because it is the most basic factor of any individuals life. Thus it decided to position its brand in the health category and the results have been overwhelming. This is because all global players have been fighting a technological battle where as LG has gone ahead and created a new category called where they have been using innovations to create comfortable as well as healthy lives for people. Thus they have created a corporate image of a brand, which will create a better and healthy tomorrow for the consumer. B) GODREJ GE: is the joint venture between GODREJ and GE appliances, which is subsidiary of US General Electric Corporation. The joint venture is of 40:60 i.e. 40% of equity investment is by Godrej and 60% by GE Appliances. Godrej GE started its AC business five years ago in 1999. Their market share is very low i.e. only 3%. They manufacture their ACs at BADDI in Rajasthan. At present their turnover is 32 crores.

C)

Amtrex-Hitachi : It is a joint venture between Hitachi Ltd, and the Japan a centered in Ahmedabad with its

Lalbhai Group, Amtrex Hitachi Appliances Ltd. is around 0.1 million per annum.

manufacturing facilities based at Kadi and Silvassa. The annual capacity of the company

Ahmedabad based Amtrex Appliances & Hitachi, Ltd., headquartered in Tokyo Japan announced a new strategic alliance for the Indian Room Air-conditioning market.way back in 1998. . Japanese giant Hitachi entered into a strategic alliance with AC manufacturer Amtrex in a bid to strengthen its presence in the Indian market. Hitachi and Lalbhai group are equal shareholders in Amtrex Hitachi Appliances holding 35.2 per cent each and balance held by the public .The alliance has range of ACs which includes 0.75 Tr to 2 Tr of window ACs, 1 Tr to 4 Tr of split ACs, decorative split ACs such as Quadra and Tower, concealed split units, ductable ACs, packaged ACs and recentlyintroduced Logicool range of ACs which the company claims saves up to 34% power.

2) Branding A) LG : When a product is being launched into the market it is very important to
brand it in the most unique and different manner as compared to the products of the other companies. When LG decided to launch its air -conditioners in India in 1998 it decided to follow the corporate branding strategy because it had already established its brand in the home appliance segment as a trustworthy and popular brand. Also all the other players in the home appliance segment were also following the corporate branding strategy. This is so because consumers tend to compare the quality standards and performance of the various appliances and start forming an opinion and trust about the brand as a whole with respect to the various products offered by the brand. LG had created an image with respect to their early home appliance range that they knew would help them in gaining the market share of air conditioners because the consumers would be immediately able to identify with the brand. Thus LG decided to stick to the corporate branding because when

a consumer would go in for a purchase they will definitely carry the image of innovation , technology and great after sales service offered by the brand with respect to the other products which in turn will instigate them to have faith in the ACs of the brand and influence their buying decision. B) Godrej GE appliances follows dual branding strategy relying on both Godrej and GE brands . there are no products carrying Godrej GE label . Godrej brand has strength in refrigerators , washing machines , Air-conditioners and cooking range segments ; GE added more strength through imported ranges of refrigerators , washing machines and , dehumidifiers . Godrej GEs strength is in customer care and after sales service . C)Amtrex-Hitachi : It follows the dual branding strategy wherein Hitachi brand appeals to individual buyers and Amtrex provides good value proposition to the acrossthe-table buyers like Government, Corporates & Commercials. Thus the two brands have their own value proposition for different segments. Retail consumers, household purchases have certainly shown an inclination towards MNC brands. Therefore, AHAL will not be marketing Amtrex brand anymore through retail outlets. However, bulk buyers and institutional air-conditioning business where prices are negotiated, Amtrex will continue to offer its range of products. The company will now focus on building the Hitachi brand name and so have already increased their promotional budget from 8 crores to 20 crores this year. The recently launched Logicool range collection is being promoted under Hitachi brand name only. Behind the name Hitachi stands a long and proud tradition of bringing together the most innovative, technically advanced products to customers.The name "Hitachi" literally means "sunrise", reflecting the founding philosophy of contributing to people and society through technology. This vision has helped Hitachi become one of the world's largest corporations. AHAL introduced its Hitachi brand this February and adopted the dual brand strategy, offering the Hitachi and Amtrex brands at different price points. While Amtrex is for the masses carrying a price

tag ranging from Rs 25,000- 28,000, Hitachi is aimed at the premium segment costing between Rs 36,000 - 40,000. 3) Brand Postioning: A) Category Related Positioning- LG analysed all the positioning strategies like Benefit -related positioning, Positioning by usage occasion and time, Price-Quality positioning and Category related positioning strategies being used by the various players in the market and finally decided to use the category -related positioning. The question was to enter the technological category which was already overcrowded with other players like Samsung, Hitachi , Carrier or to create an all together new category which would help to create a distinct position in the mind of the consumer. LG had been positioning its brand in the health category across all the appliances throughout the globe and they decided to do the same with air-conditioners in India. They took the first step by branding them as LG Health Air System Air conditioners which itself created a distinct place for their brand in the market because people had never come across this concept of an air conditioner acting as a health air system. ACs are priced at upper middle class with the average income per month exceeding Rs. 40,000 Consumers had come across brands talking about efficient ACs, programmable ACs , stylish ACs but no brand anytime during its positioning spoke about pure and healthy air until LG established their health positioning strategy. Its a different story that after the success of LG everyone has suddenly discovered the hidden technology of their ACs or redesigned their ACs to provide cool and healthy air. The baseline of the brand says The purest Way To Breathe which suggests that they have tried to tap the most basic and important facet of human life and that is respiration. Pure and clean environment is what an individual craves for in todays polluting times thanks to the rapid industrialization and development. After a hectic days work a person wants to relax and wants a soothing ambience and that is what LG air conditioners provide cool, clean and healthy air. The success of their air conditioners lies in the fact that people are becoming more and more health conscious and when the issue is that of clean and pure environment they dont

want to take the chances because breathing is the crux of human life and no one is going to compromise on this aspect provided they have the resources. B) positioning according to use: Positioning with respect to use : the people now a days need things that can get the work done very fast because they have very less time in their stressful and bussy life . so godrej has used the tagline nothing cools faster which can attract such kind of people. Home segment is their target market . so if we look at it from one angle then it has a better scope because if people come tired from their job they have to wait after putting on ther AC so that it should give cool air .this creates frustrations for them as they have to wait. So the people will be attracted towards godrej as it is the fastest cooling AC people dont have to wait for it . this is the reason people go in for buying godrej .moreover the people owing this AC feel proud in telling other people who are having other AC that my AC is faster than yours . Thus the brand is giving psychological satisfaction to the people . C) User Driven Positioning- Hitachi has a devised a very catchy and focused tagline for the brand For Those Who Seek Perfection which clearly classifies their positioning as user driven. ACs are priced at upper middle class with the average income per month exceeding Rs. 40,000. As their advertising campaign suggests they are targeting that segment of consumers which are very particular about each and every thing they do be it their work or the appliance they own. Thus if you look at it from one angle the positioning seems to very limited in its scope because there are not many people who have this kind of an attitude. But the other angle will suggest that the positioning is smart because human nature is such that it craves to associate itself with the best in the business and perfection is that trait which every individual would like to flaunt. Anyway owning an AC itself is a status symbol and owning an AC that personifies itself as perfectionist only adds value to the already hyped status of the owner. Thus the brand is playing with the human psychology with respect to its positioning and has been largely successful in their efforts.

Advertising& Publicity
It is very important for a brand to know its target market, the buying behaviour and the pattern of consumer so that it can effectively formulate its advertising strategy to position its brand. The peak sales period in the room AC market is from March to may followed by a lull in the market and then sales pick up again in the month of October. A) LG- LGs advertising account is handled by American MNC Lowe Lintas. The annual advertising budget is around 93 crores for the year 2001-02. . LG has advertised aggressively both in the print media as well as audio-visual media such as newspapers, magazines, and T.V etc.during the months of March to may. The advertising has mainly been mainly a mix of brand and product positioning. The initial ads showcased the story of a senior citizen who wishes to go for a walk but is unable to do so because of rains and then he is suggested by his daughter to take a walk in the house itself as the LG AC would make sure that the air is fresh and healthy, with respect to its plasma filter technology. The ad ends with the person walking on the exercising machine with a smile on the face. LG-Health and Happiness in every breath. It advertisement features a small girl standing on feet of her father and father is catching her hands and walking. The other advertisement is father after playing with his child takes him in his palms and starts walking because the child is tired. This shows the good health of the father as he breath fresh air of LG Air-conditioner. Its another advertisement featured that a father beats his son with a pillow before going to sleep and then Childs mother and sister starts beating the father rescuing the child. This shows their health and happiness

Then there was another Switzerland To Hai Right Idhar popular advertisement where in a man is shown going to Switzerland where by he just moves from one room to another one fitted with LG Plasma air conditioner, stating that thanks to the cool, pure and healthy air pumped by LG Switzerlands ambience is created right in his bedroom. They have now started advertising about the technology aspects of Plasma filters with respect to the many Goalkeepers commercial and a lot of print ads. Another one of their popular ads has been that of positioning their Brand as a tool to respire on land just as an oxygen cylinder is required to breathe under water. Thus they have captured the health category with respect to the concept of cool, clean and healthy air with smart and innovate adverisements. Their advertisements also talk about their service that is perhaps the best in the business and the 0% finance options available for the consumers. They have also been using corporate advertising where by they advertise all the products under the LG brand. This is generally done during their anniversaries or festive seasons or slack periods to offer gifts, discounts etc.depending upon the need of the situation. They use banners and billboards very selectively, mostly during festive seasons and off seasons to promote sales and reduce the expenditure on advertising but at the same time be in the eyes of the customer. They always try to be in the news by participating in exhibitions, fairs , sponsorships etc. They have already been declared the N0.1 Brand in the room ac segment where they have displaced the American MNC giant Carrier Aircon that was ruling the roost for the last ten years. It has targeted mainly to the higher income group or the double income families of the society. B) Godrejs advertising account is handled by THOMSON ASSOCIATES . the annual advertising budget is 6% of the turnover i.e. 2.16 crores . Its advertisement features that all the family members were sitting for having lunch . the members included grand father , grand mother , father , mother , and two childrens . the childrens feel very cold because of godrej AC and they go and sit on the laps of their grand parents .

Its second advertisement shows that all the family members are sitting on different beds for watching television but as the godrej Ac gets on after few minutes the family members start to shiver and come and sit on one bed by sticking each other. Its third advertisement shows that corporate people had came to attend the meeting but they go and sit by sticking each other on two-three chairs and leave other chairs empty. C) Amtrex Hitachi: The advertisements of Hitachi are targeted at SEC A and A1 males above 35 years of age and car owners. The advertising is being handled by Orchard, Mumbai. The brand has a catchy tagline, For those who seek perfection. Hitachis advertising handled by Orchard B was aimed at developing the personality of the brand, first with the help of humour driven T.V adds and then strong product oriented print adds showcasing the benefits offered by the new Logicool range of ACs . Seeing the competition in the market hotting up Hitachi has increased their advertising and promotion expenditure to Rs 20 crore in 2001 from Rs.8 crore in 2000. The initial adds showcased the perfectionist nature of the bald man with respect to every work being done by him. The latter TV adds focused on the features and functions of ACs thanks to the Logicool processor where by the bald man is shown programming the temperature of the room that he wants on his arrival in the evening. When he returns in the evening he first checks the temperature from the keyhole and then enters once he is satisfied with the necessary ambience. They have advertised heavily in the months of March, April and May talking about the benefits offered by their Logicool range of ACs. The humorous adds have worked well for the brand because the brand awareness and recall is high. The negative aspect has been that though people remember the adds, the message and the positioning of the new Logicool range and the benefits offered have somewhat not penetrate the minds of the customer on the basis of which the brand is planning to expand its market. The reason can be that people are not exactly thrilled by the benefits being offered and they prefer other brands like LG and Samsung which have a better image in terms of the benefits being offered as they have established their technology and

innovation in other white goods as compared to Hitachi which doesnt have a strong foothold in the other white goods market. They are also trying to publicize their ACs by distributing free ACs through the popular programme Khul Ja Sim Sim. The ACs are given to the winners of the show. This has been a nice way of promoting the brand in the off seasons. They have effectively used the in show mode of publicity which is fast gaining momentum. Already major MNCs like Coke, Hyundai have been endorsing their products through shows, serials and movies. Another interesting event with Jet Airways had been organized by the company in March, where in Hitachi ACs were given to one full planeload as well as to the best hostess on the flight, subject to fulfillment of conditions laid down. Thus The company has been using innovative and aggressive modes to publicize their brand.

5) Brand Personality Brand personality is created by brands to give a human character to the brands. This is done because now days in the age of technology and innovation each brand is becoming a commodity and a personality of a brand helps it to distinguish itself in the overcrowded market. Each brand develops certain values and characteristics that strike an emotional chord with the varied range of consumers. This strategy helps to retain more customers who sometimes go for a brand because they see their likes, dislikes and behavior in the brand. Advertising agencies play an important role in developing the personality of the brand. They create campaigns that are able to make the consumers believe that the brand will has the same characteristics if they look at them from a personified point of view.

A) LG - Lowe Lintas has tried effectively to create the personality of the brand on the basis of its underlined positioning of health. The brand has not relied much on the personality aspect unlike Hitachi or Carrier. This is because the base health positioning has been so strong that they never bothered to develop this aspect of this brand. If the advertisements of the brand are noticed they have not taken any particular model or actor to promote the brand as Samsung has Tabu endorsing the products for the brand or the bald man creating the personified image of perfection for the brand. LG has been using different people to promote the brand and they have not relied much on this concept but still the personality of the brand can be best described with the words healthy and caretaker because a person can rest assured that LG will make sure that the air in the vicinty is fresh, pure and healthy. B) Hitachi -Hitachi Brand has a tagline For Those who Seek Perfection which itself underlines the personality of the brand. They have tried to personify their brand with the help of their effective advertising campaign created by Orchard B. The series of adds shown on T.V first developed the personality of the brand with the help of the bald middle-aged male model who was shown to be seeking perfection in each and every work he did. Gradually the adds shifted to the script which showed the man using a Hitachi AC because it gives him all the benefits which he seeks like having the desired room temperature when he returns from office in the evening thanks to the new Logicool range of ACs from Hitachi.. It is the only brand that has used the concept of brand personality so effectively. The adds with their humourous concept have managed to create the personality of the brand. If only they could have managed to rope in Aamir Khan it probably could have done wonders to the personality of the brand because he has such a strong perfectionist image in the minds of the people that probably they wouldnt have had to build the personality of the brand through initial adds as they had to in the case of the current brand endorser. Also the sales would have got further boost as compared to current sales that have put them in the third place in the room AC segment behind LG and Samsung.

Brand Image
A) LG It has got the image of being the best brand in the market. Consumers believe that it is the only brand that can do justice to the concept of cool, clean and healthy air thanks to the Plasma filter technology. It also has the image of being the most customer friendly brand with special emphasis being paid on the after sales service. At LG they have a system of Happy Calls where by the consumer who has bought a LG AC gets a call from their CRM department congratulating them on their purchase and inquiring about the performance of the AC. Thus strong product concept along with innovative positioning and able public relations has established LG as the most reliable brand in the AC market.

B)GODREJ: It has got the image of growing and developing brand . according to THOMSON ASSOCIATES product is more important as compared to its positioning . it has the image of being the fastest cooling AC and so people are attracted towards it. C) Hitachi : Hitachi is fast developing an image of the most innovative and

technology driven brand. Its features are making the life more and more comfortable for the users. It is very user -friendly in spite of high-end technology. People who have purchased the brand speak highly about its silent operations. It works at a noise level of 42 decibels where as the average for the industry is around 52 decibels .Its after sales service is not good and is one area where it needs to improve upon.

7) Technology Technology is that aspect of ACs, which is getting standardized in the Indian market. The market is full of foreign brands from Japan, United States of America, Korea that are big players in the major part of the world. All of them are spending a lot on research and development to provide the same functions and features as the other brands are providing so as to compete on an equal platform. LG has been able to differentiate its technology with respect to PLASMA technology in their split ACs that have the most systematic and reliable technology to generate pure and healthy air. They have been able to carve out a niche for themselves in the room ac market becoming the no1 player in the market thanks to their focused attitude and strategy towards providing health air conditioners. All other brands have now started offering pure air benefits by incorporating filters etc. as part of their technology. A) LG Health Air System Window ACs 1) Unique Anti- Bacteria Filter It removes all dust from the air in the room. It inhibits bacteria proliferation and prevents other disease causing germs from entering the room. 2) Louvre Fins and Grooved copper Tubing Each louvre fin has small heat radiating pores that boost heat exchange effectiveness and improve cooling efficiency. While the grooved copper tubing ensures maximum exposure of the inner tube surface to the refrigerant, thus enhancing heat transfer. 3) Hydrophilic Coating Thanks to the hydrophilic coated aluminium fins, the angle of contact between water droplets ( that form due to condensation of atmospheric moisture)and the fin is less

than 80 degrees as in the case for uncoated aluminium. This minimises air resistance and ensures optimal cooling performance. 4) 4-Way Air Deflection System and Auto Swing Adjustable Front louvres help to direct air flow both horizontally and vertically, while the air circulation vents swing constantly from side to side, directing cool air to every corner of the room. 5) Tropical Rotary Compressor The new Tropical Rotary Compressor not only offers more cooling during the peak of summer, it also resists voltage fluctuation. Thereby considerably reducing power consumption and providing more comfortable surrounding, which leads to higher efficiency and performance. 6) Reversible Open Air Grille & One Touch Air Filter This arrangement realizes easy ejection of air filter from the unit regardless of installation place.

1) LG Health Air System Split Air conditioners 1) Air Purifying Filter The filtering sytem utilizes two filters. The Electrostatic Filter removes the finest dust particles and even tobacco,smoke and pollen.The De -odourizing filter removes unpleasant odours, especially those caused by airbone fungi a) Anti- Fungus Filter It prevents the breeding of germs such as bacteria and mould which are harmful to the human respiratory tract.

b) Electrostatic and De-odourising Filter It removes minute dust particles by electric dust collection method and effectivelty eliminates odours by the appliction of a high efficiency De-odourzing Filter. c) Anti-Bacteria Filter This function is for quick cooling.In this mode , strong and cool.air is blown at high speeds for 30 minutes until the temperature reaches 18 degrees celsius. 4) Air Flow System These air conditioners utilize a stremlined air fan and a unique design which create smooth air flow from the air conditonerso that it operates under the lowest noise level.The cross fan , stabilizer and rear guide which cause noise have been redesigned by hydraulic engineering. The number of revolutions have been decreased while incresing the amount of wind. With the best structure gor the air path, the amount of friction has been decreased which has helped to reduce the noise level drastically. 5) Frost -proof Evaporator Pipe The outdoor fan motor stops when the indoor coil temperature falls below 3 degree celsius and restarts after the coil temperature rises above 6 degree celsius after 90 seconds. It prevents damage to the compressor by ensuring that the refrigerant does not freeze. 6) Auto Operation It sets the temperature , swithches the fan speed, swings the vertical air direction louvres up and down by a single selecton auto operation mode. All in accordance with fuzzy logic, dependingg on the current temperature.

7) Sleep Mode Auto Control A touch of the sleep mode button automatically programs the air conditioner to turn off, controls the indoor fan speed and adjusts the setting temperature. Thus it ensures a more comfortable sleep. 8) Auto Restart Function When the power comes back after a sudden failure , the air conditioner restarts automatically in the same operation condition as before the power cut . 9) 4 Way Auto Swing This function blows air simultaneously in four directions, distributing cool air evenly across the room. 10) With the use of a newly designed compressor , humidity is eliminated to create a comfortable atmosphere without over-cooling the room. Thus, avoiding any abrupt, unhealthy drop or increase in body temperature. 11) Efficient Energy Utilization The advanced grooved copper tubing and Z -louvre fins maximise heat exchange efficiency. Thus helps to reduce power consumption and thus reduces the bills. 12) 2 Way Auto Swing Hot or cold air gets evenly distributed throughout the room as the auto swing function blows the air in two directions. 13) Child Lock Function The function prevents children or others from tampering with the control buttons on the unit.The buttons on the indoor display panel can be locked. The unit can then be controlled by the remote.

14) 7 hour On/Off Timer This function allows a person to set the timer from 1 hour to a maximum of 7 hours. The AC comes with a fully operational remote control..

2) LG Plasma Spliit Air Coditioners The Plasma Air Purifying System within the air conditioner removes microscopic contaminants and dust to eliminate offensive odours and prevent allergic reactions. It can also be used as an air -purifying unit when the air-cooling function is off. What is Plasma? It is the 4th energy created by high voltage electricity (6,500 volts).It is pulse energy which changes dust particles with positive(+) electrodes and cultivates the photo and radical power to brake odour molecules.The air passes through the following channel . Polluted Air--Plasma Ionizer-Case-Mesh-Dust Collector-Cover-Clean Air . Plasma technology is the only and the most important superiority in these ACs above the simple LG split air conditoners. All the other features are common amongst the two classes of ACs including the fully operational remote control. LG has been successful in creating a new category in the air conditioning market and that is health. They have been able to redifine the scope of air conditioning thanks to their technology which gives and creates pure air as no other Ac iin the maket can. At the same time they have able to provide other features which give all the benefits which are common amongst all the ACs and are expected from an air conditioner. This combination of health and cooling has done wonders to them and has placed them at the top of the market.

GODREJ WINDOW AIR CONDITIONERS Its Window acs are having rotary compressor and have voltage range of 200-250 .it consumes 1300 watts of power and have synthetic filter. Super silent compressor: Godrej Air-Conditioner has a highly efficient Rotary Compressor which helps to add to comfort level by keeping noise levels to it's bare minimum. Digital Temperature Display: The Digital Temperature Display allows people to set and view the desired ambient temperature. So they can constantly monitor the cooling best suited to their needs. Memory Back up : This feature ensures that even after a power cut, Air-Conditioner returns back to its original setting. So people don't need to reset it. Dehumidifier: Gives people that crisp hill-station cooling by removing excess moisture. 12 Hour-On-Off- Timer : Allows people to turn ON or turn OFF the Air-Conditioner at any time preset by them. So no hassles of constantly keeping track of the functioning of the AirConditioner. 3 Way Air Swing: The Godrej Air-Conditioner comes with a 3 way Air Swing which ensures quick and uniform cooling.

Fully Functional Remote Control: Convenience of controlling all the functions of peoples Air Conditioner at their fingertips. GODREJ SPLIT AIR CONDITIONERS: It has the voltage range of 198-264 and consumes 1800 watts of power. Anti Bacteria Filter: Godrej Air-Conditioner comes with a unique Anti-Bacteria Filter that helps eliminate germs and bacteria from the air thereby giving people healthy air to breathe. Digital Temperature Display: The Digital Temperature Display on the remote handset allows people to view the set temperature. Dehumidifier: Gives you that crisp hill-station cooling by removing excess moisture. 24 Hour-On-Off- Timer : Allows you to turn ON or turn OFF the Air-Conditioner at any time preset by you. So no hassles of constantly keeping track of the functioning of the AirConditioner. Sleep Mode: The set temperature changes automatically and increases by 2oC after 2 hours ensuring you get a comfortable night's sleep and also maximum energy efficiency. Super Silent Compressor: Godrej Air-Conditioner has a highly efficient Rotary Compressor which helps to add to your comfort level by keeping noise levels to it's bare minimum

Hitachi Logicool Window ACs Logicool - The Logicool microprocessor controls for unmatched efficiency. Remocon-A full function remote that is extremely user friendly. One Touch Intellikey -The Ac is free from complicated knobs for operating convenience. Kaimin Mode-It adjusts temperature to the body of the person in the night. This helps to save power upto 34%. Smart Sensor-It senses the temperature around the person and not around the AC grille. Power Saver Mode-It helps to save power upto 25%. Auto Return-In the unlikely event of the power turning off, the Logicool controller memorises the last settings to restart, on restoration of power. Dialogue Window-It displays the selected mode perfectly for the convenience. Detachable Grills-This arrangement helps to clean the ac and place them back easily.

Hitachi Logicool Split Air-conditioners 1) Logicool - This helps to set the temperature required for a later period. It varies fan speed automatically. 2) Remocon - It has got a full function remote which makes the operation easy. 3) Sleep Function - This helps to adjust the temperature to a persons body temperature through the night.Thus it also helps to save the power upto 34%. 4) Filter Clean Indicator - It gives intimation for filter cleaning. 5) Real Time Clock - It displays the time. 6) On/Off Timer. - It helps to programme the on and off sequence electronically as per the requirements. 7) Auto Dry - This removes excess humidit, to make the room more comfortable. 8) Dialogue Window - It displays the selected mode forthe convenience o the user. 9) Power Saver mode - It helps to save power upto 25%. 10) Wonder Flap - It ensures uniform distribution of air. 11) Powerful Mode - It accelerates cooling for quick pulldown of heat. 12) New Age Filament Filter - It cleans pollen and dust. It provides better indoor air quality.

13) Auto Swing - It ensures optimum distribution of air flow in the room. 14) Koukin Filter - It is an anti bacteria filter which helps to purify the air.

Hitachi Logicool air-conditioners are also doing very well in the market. They have helped the brand to increase its market share from 12% to 15% in the room AC segment. Their use of technology is mainly restricted to make the operations easy and convenient. They have not been able to provide any other path breaking service in comparison to LG. The features offer only those benefits that are present in the other brands also thus reducing the scope for individuality. Whatever features are different from other ACs can also not act as the USP because they are not value driven and only add glamour to the product

Chapter 10 Suggestions
. The following suggestions have been offered to the brands in the market regarding certain aspects that a consumer would look forward to from the brands in the Indian AC industry. The suggestions are being offered taking into consideration the analysis of the results of the consumer survey. 1) Environment Friendly Products: All the brands that are currently operating in the market have launched the products that use CFCs in their compressors. The emissions from CFCs are responsible for depletion of the Ozone layer. Ozone layer is responsible for protecting the earth from the harmful ultraviolet rays of the sun Already ozone layer has been depleted somewhat over the Antarctica region which has lead to people suffering from diseases like Skin Cancer and Cataract .In the western market due to the monetary protocol which calls for using of environment friendly goods brands like LG, Carrier and Samsung have already started using HFCs in their ACs which do not harm the environment in any manner. In the new millennium the brands will have to be careful about the technology being offered in the Indian market. This is so because the Indian consumer and the environmentalists wont tolerate the products that offer technology that is responsible for degradation of the environment in which they live. 2) Technology- Technology is one aspect that changes very fast in todays world. Almost all the players in the global market have been spending millions in research and development to provide something extra than the other players in the market. LG has been largely successful in creating the technology which all the brands in the market envy. They have been able to incorporate the Plasma technology in their split air conditioners that have redefined the image of air conditioners. This has also been the reason for their success in India. The Indian customer would now expect more from the

brands. The players will have to launch their newer models very soon. They should soon launch the air-conditioners that can be operated with the help of Blue booth technology viz.. ACs that can be run through PCs or telephones etc .The players should also try to incorporate some better technology for purification in the window AC just like Plasma is being used for the split air conditioner. They should come out with smaller compressors that will increase the efficiency of the air conditioners. Godrej has already introduced an AC which can be programmed to consume only those many units of electricity as is desired by the consumer. This kind of technology would be really of great help because it will reduce the operating cost considerably which in turn would boost the sales. Many people dont buy AC because of the high operating cost and this feature would induce them to by the AC. They should also come up with in built stabilizers that will make sure that the ACs are not getting damaged in case of severe voltage fluctuations. 3) Pricing- Price is going to be an important factor in the success of the air conditioning as an industry as Indian customer is very price sensitive. The Indian government has done their job by reducing the taxation on this industry for its development and growth. Its now up to the players to control the prices and expand their market share. The players will have to increase the penetration level of ACs by offering discounts, 0% finance schemes and other sales promotion schemes. Already some players have started offering finance schemes to push their sales. Once the penetration is increased it will help players to reduce their prices as they will be able to still earn their profits by selling more no of units as opposed to selling few ACs at reduced prices This will help them to have economies of scale. 4) Warranty And After Sales Service- When a consumer is buying a braded product he expects certain benefits that he wont get from an unbranded one. Warranty and after sales service are part of those benefits. Once a person invests a reasonably big amount in the purchase of an AC he wants to rest assured about the quality and the service. Warranty is important because in case of power fluctuations compressors can get tampered and if they need to be replaced the consumer doesnt have to spend the money

in case the product comes under the warranty period. There is more chance of such a thing happening in a country like India because of frequent power cuts, especially in the north. Thus a consumer feels safe in case of a decent warranty period. In India mostly all brands offer warranty is for one year with special warranty being provided on the compressors for three years because of obvious reasons. After sales service is also going to be a very important feature because the technologies are going to become common and it will be left o the people of the company to create a better image in the minds of the customer through their able public relations and after sales service. At LG they have a happy call system through which they call the consumers who have purchased an LG product and inquire them about the performance of the AC. This is a suitable example for good public relations. The consumer wont be willing to buy a product that is not backed by strong after sales service. If the AC breaks down in the middle of the night the consumer would expect it to be repaired immediately. LG has been giving special training to its technicians to handle the consumer complaints effectively. This explains why LG has got the image of being the most customer friendly brand. The other brands have a lot of ground to cover in order to enter the good books of the Indian consumer. 5) Online Selling - This is again going to be a key issue in the air conditioning market in the near future. It will not be important because all the sales will be through the net but will be important because it show the attitude and professionalism of the brand towards the consumer. Hardly 5% of the sales are being carried through LGs website, lgezbuy.com but consumers respect them for this. This is so because a consumer can go and have a look at the range of products and their prices sitting at home thanks to LGs site. It gives him a fair idea about the product he is going to buy or wants to buy. LG has got another website lgservie.com which gives the consumer an opportunity to place its complaints in front of the company. This shows that they care for their customers and want to give hem what they want rather than milking their own money. Other brands will have to learn from LG and create their existence on net and make people aware about their service. This will have to be done through strong marketing.

6) Social Responsibility- Every industry works within the sphere of the society and air conditioning industry is no different. It is therefore important for the players in this industry to follow certain rules and fulfill certain obligations towards society. Todays era is the societal era where each and every individual wants to create a healthy place to live in. Consumers also appreciate those industries that contribute to the welfare of the society by acting as a socially responsible company. The various companies will have to take care of these aspects by playing their role to the hilt towards the various components of the society. The companies will have to follow the environmental norms of non-pollution and make sure that they are using environment friendly components in their products. They will have to fulfill the consumer satisfaction by providing quality goods and at affordable prices. Workers will have to be given both monetary and nonmonetary benefits. The companies will have to make sure that they are not indulging in any malpractices and paying their taxes regularly to the government. Lastly they should be contributing towards the development of India by participating in or sponsoring literacy programs. greenery mission, AIDS welfare programs , population control program .etc.. If they are able to create the right image of a socially responsible company in the minds of the consumer then it would greatly help them to make permanent impressions in the Indian AC market. 7) Retailing- The Indian consumer is very difficult to please. He wants to be very sure about everything before he goes in for a purchase .The problem with the AC brands has been that they have not been able to expand and control their retail network. The brands will have to expand their network and make sure that the ACs are being treated as other durables. When the consumers can have a look at the TVs, Refrigerators, washing machines then why cant they have a look at the AC they would like to purchase. A consumer would like to see and feel the AC on which he would be spending 30,000 Rs. He would like to see the looks and the designing of the product. The consumers want to visit a nice and a clean showroom., and have a look at the displayed durables. The brands will have to make these things understand to their retailers to push the sales. Even if the retailer doesnt have the space for the full product display he can always fit a board with just the grilles, which is what a customer wants to see. This will help the customers to take decisions as they will be able to see and feel the product, and this one aspect might just influence their decisions.

Chapter 11 Conclusion
In the new millennium it will be very important for a marketer to understand the psychology of the Indian customer with respect to certain aspects that have been discussed in the suggestions offered. Indian Room AC market had been in its introduction stage for quiet a while thanks to players like Carrier, Voltas, National etc. which dominated the Indian market The products which were launched in the market were not according to the global standards. One reason for this could be the low penetration level of 2% and the other can be the price factor. India being a developing country probably wouldnt have been able to afford the high end technology. The market entered the growth stage with the entry of players like LG, Samsung and Hitachi who brought new technology with them that resulted in the downfall of players like Carrier and Voltas who were giving outdated technology to the Indian consumer. Now these players have again started launching newer models to regain the lost ground. The perception of AC as a product is also changing in the minds of the consumer. Earlier it was perceived as a luxury good which was targeted only at the upper end of the society. Today it is being looked at as a good which is in the reach of the middle class consumer also, thanks to the finance schemes being offered by the various brands in the market. Earlier it was just looked at as a cooling machine while today people buy an AC to improve their health, give them status and to improve the aesthetics of the room. They also expect their AC to be user-friendly The Indian consumer is going to get more demanding in the coming millennium The Brand that will be able to understand the consumer behaviour with respect to their likes, dislikes and requirements and use it accordingly in their positioning strategy will take the biggest slice of the market in the coming millennium. As for now it seems LG is in the best position to do so but the future can never be predicted and it is better to wait and watch as to what will happen in the prospective million dollar Indian Room AC segment.

ACKNOWLEDGEMENT
I would like to take this opportunity to thank all the people without whose support, this project report wouldnt have been possible. First of all, I would like to thank our Principal Dr. S.N. SHETTY .I would also like to thank MR.ABHIJIT BAGADE, Executive Sales and Marketing, LG Air-Conditioners ,MR. SANJAY PARULKAR ,Executive Sales and Marketing ,Hitachi Air-Conditioners and MR.HIMANSHU JAIN GM instititutional sale , GODREJ for providing insight about the brand positioning strategies of the respective brands. I would surely like to thank the one person who has remained as the guiding force and was there for me as a pillar of strength in my times of difficulty of formulating the project. My Project Guide Mr. RAKESH YADAV is the person to whom I shall be ever indebted to. Lastly, I would always be thankful to all my friends, colleagues and family members whose constructive criticism and unconditional help went long a way in the due course of this project.

MEHUL JOSHI TYBMS

Bibliography

Magazines A&M Business World Business India Business Today Newspapers TOI Economic Times Financial Express Catalogs & Brochures of LG , GODREJ, Hitachi. Web sites www.indiainfoline.com www.lge.com www.igindia.com www.hitachiaircon.com www.business-standard.com www.catalogs.indiamart.com www.indiatimes.com www.godrej .com

Reference Books: Marketing Management- Philip Kotler Brand Positioning Strategies for competitive Advantage Subroto Sengupta Creating Powerful Brands Leslie de Chernatony and Malcom H.B. Mcdonald

Annexure
Questionnaire For Executive Questionnaire For Consumers

Questionnaire For Executive 1. Why do you think people have started purchasing branded ACs? 2. Why do you think it is important to position the brand today and not the product? 3. What is the positioning strategy of your brand? 4. Which Ad Agency is having your account? 5. What is your promotional budget? 6. What are your modes for positioning other than advertising? 7. What is the message you are trying to give through your advertisements? 8. How is the response for online selling and how do you see it in the future? 9. Who do you think is your closest competitor? 10. What is the peak season for the sale of ACs ? 11. What are the aspects that a consumer looks into before going in for a purchase? 12. What is your target market? 13. Which region is your biggest market? 14. How do you plan to sustain your leadership the coming years as the market has had an influx of new players?

Questionnaire For Consumers 1. Do you have an AC, if Yes, which one and why? Unbranded Branded If branded which one? LG Hitachi Samsung Voltas Carrier Aircon Blue Star Godrej If No, which one would you like to purchase and why? Unbranded Branded If branded which one? LG Hitachi Samsung Voltas Carrier Aircon Blue Star Godrej 2. What do you think is the advantage of buying a branded AC? Quality Status After Sales Service Looks Finance Options 3. According to you what are the aspects you considered or will consider in the purchase of a branded AC? Technology User convenience Price Market Standing Running Cost 4. Which of the ACs you think is the best with respect to the price and performance? LG Hitachi Samsung Voltas Carrier Aircon Blue Star Godrej 5. How many brands are you aware of, out of the following brands? LG Samsung Hitachi Carrier Aircon Blue Star National Daikin Godrej Voltas Fedders Lloyd Kenstar White Westinghouse (Electrolux) All

6. Are you aware which of the following is most easily available through retailers LG Samsung Hitachi Carrier Aircon Blue Star National Daikin Godrej Voltas Fedders Lloyd Kenstar White Westinghouse (Electrolux) All 7. Do you think ACs should also be sold like other durables and made available for the consumers to see and feel the product: Yes No 8. Are you aware of the current leader in the room AC market? 9. Whose advertising do you prefer the most: LG Hitachi Samsung Voltas Carrier Aircon National Godrej 10. How do you perceive the utility aspect of an AC? Necessity Luxury 11. What would you like to buy? Window AC Split AC 12. Are you aware of any brand offering finance options for the purchase of their product? 13. What is the ideal price you are willing to pay for a 1.5 Ton window AC? 22-25 thousand 25-28 thousand 28-31 thousand 15. What aspects do you think will govern the AC market in the current Millennium? Price Technology Eco-Friendly Products After Sales Service Maintenance And Running Cost

Index
Chapter No. 1 1.1 1.2 2 2.1 2.2 2.3 2.4 3 3.1 3.2 3.3 3.4 4 4.1 4.2 4.3 4.4 4.5 5 5.1 5.2 6 6.1 Topic Introduction History Of Air-Conditioner Air-Conditioner-The Product Market Study Industry size Evolution Current scenario Demand Drivers Central AC Market Current scenario Utility Of CACs Market Shares Major Players Room AC Market Current Scenario Market Shares Geographical Distribution Of Sales Entry Of New Players Evasive Action By Established Brands Analysis Of Room AC Market Complexity Of Room AC Market Attributes Affecting Selection Of A Suitable Room AC Brand Branding Concept &Definition Page No.

6.2 6.3 7.1 7.2 7.3 8. 9 10 11

Brand Positioning Benefits Of Branding & Brand Positioning Introduction Brand Positioning Strategies Components Of Positioning Analysis Of Positioning Strategies Of Brands Through Print Advertisements Comparative Brand Positioning Of LG & Hitachi Suggestions Conclusion

UNIVERSITY OF MUMBAI

PROJECT REPORT ON
BRAND POSITIONING OF AIR-CONDITION

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE BACHELOR OF MANAGEMENT STUDIES SEMESTER-V ( 2004-2005) UNDER THE GUIDANCE OF MR. RAKESH YADAV

SUBMITTED BY JOSHI .R. MEHUL Date- SEPTEMBER 15, 2004

From: Himanshu Jain <hjain@godrej.com> To: "'mehul joshi'" <sonal_mohite@hotmail.com> Cc: "'rakeshyadav1109@rediffmail.com'" <rakeshyadav1109@rediffmail.com> Subject: RE: REGARDING CERTIFICATE

CERTIFIED MAIL GODREJ Corporate Personal & Administration Dept; Plant 11,Pirojshahnagar,Vikhroli,Mumbai400079

This is to confirm and certify that Mr. Mehul joshi had visited my office to collect information on AC industry and to clarify his queries on the same. The information provided by him is true and reliable. I am also happy to say that he has a good grasping knowledge and had taken keen interest in learning about various aspects of marketing. Regards Himanshu Jain GM- Institutional Sales

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