Marketing Management > Consumer Durables In India >

By Mustufa Arsiwalla

REPORT ON

CONSUMER DURABLE INDUSTRY

IN INDIA: AN ANALYSIS

PREPARED BY

MUSTUFA ARSIWALLA
 TABLE OF CONTENTS

1. Introduction……………………………………………………………3

2. Television: CTV………………………………………………………13.

3. Refrigerator…………………………………………………………..17

4. Air-conditioner……………………………………………………….19

5. Washing Machine…………………………………………………….21

6. Future Scenario………………………………………………………23
7. Conclusion & Recommendation…………………………………….25

8. Bibliography………………………………………………………….26

INTRODUCTION
With Indian economy increasingly witnessing structural transformation from a
rural, agricultural one to more urban industrialized one, consumer durable goods
sector is fast emerging as an important segment of the economy.
Consumption of manufactured consumer goods is recognized as one of most
widely accepted measures of standard of living and quality of life. Consumer
goods manufacturing industry provides the driving force for stimulating rapid
economic growth. The growth rate of manufacturing and consumer goods industry
normally surpasses that of agriculture and service sectors. It is for this reason that
the manufacturing and consumer goods durable industry is considered the
backbone of economy.

BACKGROUND

Prior to liberalization, the Consumer Durables sector in India was restricted to a

handful of domestic players like Godrej, Allwyn, Kelvinator and Voltas. Together,
they controlled nearly 90% of the market. They were first superceded by players
like BPL and Videocon in the early 1990s, who invested in brand-building and in
enhancing distribution and service channels. Then, with liberalization came a spate
of foreign players from LG Electronics to Sony to Aiwa.

Rs 23,000-crore consumer durables industry can be divided into two types:

consumer electronics and consumer utilities. Consumer electronics is basically
entertainment systems like television, VCRs, audio systems and home theater
systems. Consumer utilities are other household appliances like refrigerators,
washing machines, air conditioners, food processors, and vacuum cleaners. On
most third world countries, consumer durables like the refrigerator and television
are most popular. Out of these, the television segment is undoubtedly the largest
segment. Products in the white goods segment come next to the CTVs in the
purchasing hierarchy of the Indian consumer.

Over the years, demand for consumer durables has increased with rising
income levels, double-income families, changing lifestyles, availability of credit,
increasing consumer awareness and introduction of new models. Products like air
conditioners are no longer perceived as luxury products. According to Indian
Readership Surveys (1999-2004) the following durable categories have registered
a healthy double-digit growth.

Durable Categories Growth Rate (1999-2004)

Television Sets 16%
Washing Machine 17%
Refrigerators 14%

Source: Indian Readership Surveys (1999-2004)

While TV draws its share from both urban and rural refrigerators and washing
machines are still inclined towards urban.

Current Scenario
Most of the segments in this sector are characterized by intense competition,
emergence of new companies (especially MNCs), introduction of state-of-the-art
models, price discounts and exchange schemes. MNCs continue to dominate the
Indian consumer durable segment, which is apparent from the fact that these
companies command more than 65% market share in the colour television (CTV)
segment.

• Steady growth of CE at 13-15% (’03–23%)

• HA falling behind CE on account of growth

• Steady growth of CE+HA - yet low penetration

INDUSTRY SIZE
 Rs 23,000-crore consumer durables industry can be divided into two
types: consumer electronics and consumer utilities. Consumer Electronic industry
has a size of around Rs. 102 billion. The Indian television industry has a size of
around Rs 96 billion, comprising colour television (CTV) of Rs 91 bn and B&W
TV market of Rs 5 bn and other markets (primarily video equipment) of Rs. 4-6
billion. In terms of volumes, the CTV market was estimated at 9.05 million units
and the B&W TV market at 2 million units during calendar year 2004.

Refrigerators constitute the second largest product segment within the Indian
consumer durables sector in India, with an estimated annual turnover of Rs 39 bn
during FY2005 with an estimated sale of 4.1m units.

The size of the room Air-conditioners industry is estimated at 1.1 m in

volume terms, and Rs 24 bn in value terms. Washing machines sales in India
aggregated an estimated 1.37m during FY2004 or around Rs 11 bn in value terms.

MAJOR PLAYERS

The major players in the consumer durables industry, operating in different

sectors such as air conditioners, washing machines, refrigerators & television:
Blue Star Ltd., Mirc Electronics Ltd., Whirlpool of India Ltd., Philips (India) Ltd.,
BPL Ltd., Sony Corporation Ltd., Samsung India Ltd., LG Electronics India Ltd.,
Videocon International Ltd., Thomson Ltd. & Daewoo Ltd.
 Brands in Home Appliance
Sector Brands in Consumer Electronic Sector
DEMAND/SUPPLY

Supply growth is high across all the segments. But the organized sector has
gained substantial market share from the unorganized segment in recent years.
However, there are fewer players in segments like dishwashers and vacuum
cleaners.

Cyclical and seasonal. Demand is high during festive season and is generally
dependent on good monsoons. There are certain factors in the consumer durables
industry, which are considered as demand drivers. They are:

1. The degree of distribution network in the market.

2. The advertising and marketing strategy adopted by the players in the

industry.

3. The brand image of the product as perceived by the consumer.

4. The technology used by the company viz. state-of-art technology or an

older version.

5. The ability of the company to introduce newer products and newer

product features

6. The capability of the company to service its products 'The discount

schemes and consumer finance facility available

7. The market positioning of the product

8. The cost competitiveness and pricing strategy of the company

 9. The financial strength of the players

CONSUMER DURABLE: URBAN & RURAL INDIA

1. In the top 5 million households, in affluence terms, 96 percent of

households have color televisions, 82 percent own refrigerators, and 44
percent own washing machines.

2. In the next 7 million households, penetration of color TVs is 69 percent,

58 percent for refrigerators, and 19 percent for washing machines.

3. In the next tier of affluent households - numbering approximately 12

million - 50 percent own color TVs, 35 percent own refrigerators, and 8
percent own washing machines.

Rural India too is set to see an increase in the number of high-income

households. An additional 4.6 million high-income households and 13 million
middle-income households by 2006 to 2007 will take the number of rural
households from 122.8 million to 139 million. This constitutes a huge opportunity
for marketers - 60 million households or 300 million consumers with the capacity
to buy consumer appliances and other products is an attractive market for any
global player. And it seems that global appliance players who have established
brands in the Indian market are likely to benefit from this great big push towards
consumerism

SUCCESS FACTOR FOR CONSUMER DURABLE INDUSTRY

 Indian consumer durables industry is going through a consolidation phase
with MNC companies going in for strategies to increase market share. Certain
success factors for this industry are identified as follows:

1. Technology: Rising competition has resulted in major competitors

introducing technologically superior products at competitive prices. This
means the technology input is gaining more and more importance. In this
regard, the large MNC players score over their Indian counterparts as they
can always source technology from their parents. On the other hand, Indian
companies rely on the outside sources for their technology requirements.

2. Knowledge of the local market: Indian consumer durables market is

different from other markets. Hence understanding these peculiarities is
important for the long-term survival. For example, Samsung launched the
'Super Horn" brand after it discovered that Indian consumers prefer loud
noise. Indian companies are better placed in this regard as they know the
market pretty well.

3. Strong distribution network: Tough competition means that a proper

mindshare of the consumer has to be maintained and the product has to be
made visible. Volumes in this business are narrow and profitability comes
from volumes. To achieve volumes, deep penetration of the market is
necessary. Indian companies score a point here as being in the market for a
longer time; they have developed strong distribution channels.

4. Good brand image: Perception of a particular brand plays an important

role in purchase decision. A typical Indian consumer looks for value for
money when he makes purchase of white goods, as the price involved is
significant and unlike developed markets, Indians do not have the buy, use
 and throw mindset. Hence, consumer also looks for reliability of the
product. All this is conveyed through strong brand awareness.

Consumer Outlook: The Change in Consumer

India is a country in a hurry – changing continuously and also trying hard to

keep pace with these changes. The ‘me too’ syndrome is no longer valid as consumers
seek customized products. “The Indian consumer consumer’s evolution in the last
decade has thrown up some interesting trends:

1. Consumer base becoming younger. Nearly a third of the

country’s population is under the age of 14years.

2. Kids graduating from pester power to decision makers.

3. People with buying power living longer and developing distinct

health needs.

4. Multi-tasking consumers fighting paucity of time and new

consumer trends.

5. Huge increase in High Income Groups and spend now-save later

mentality leading to high disposable income.

6. Consume wants to be treated as an individual not as part of a

large physical mass and the consumer looks for a ‘post buy’
relationship to enhance the value of her brand decision making.

NCAER’s The Great Indian Middle Class Survey: A few interesting finding:
 1. Total number of urban households will increase from 49 million to
60 million by 2006 to 2007. The number of urban households in the
high-income group will increase by 8.6 million by the year 2006 to
2007, and by 7.3 million in the upper-middle-income group.

2. By 2005-2006, the number of these rich households would increase

by 250per cent to 1, 40,000 by 2010. They are expected to grow
from 0.2% in 1995-96 to 1.7% in 2010.

3. Middle class will rise to 12.8%, from the current 2.8%.

This is the first time that NCAER has defined the middle class as having an annual
household income of Rs 200,000 to Rs 1 million. Many of these rich and middle
class households are located in rural areas and small towns too.

SWOT ANALYSIS: CONSUMER DURABLE INDUSTRY

STRENGTH WEAKNESS
 o Supply continues to outstrip Demand.
o “Accessory to Necessary” Air- Demand Cyclical and seasonal.
conditioners are no longer
perceived to be a item of luxury.

o Volatile performance of the agricultural

o Advancement of technology
which gives the companies ability
to introduce new products and new
product features.
sector have a negative impact on demand.
The sector's performance is highly
dependent on monsoon and reforms,
which has failed often.

o High Growth. Key drivers being

Urban and Rural.

o Government Policies in favour of

Industry includes infrastructure
development, reduction in excise
duty and so on.

OPPORTUNITY THREAT

o Diversification. Developing new o Dozen companies operating in the white

products for new markets. goods segment. Prices would continue to
remain depressed and margins will be
under pressure.
o Easy availability of finance has
stimulated consumers to buy
durables.
o Threats of cheaper imports from China
and other South East Asian countries
o Changes in Consumer Outlook
from spend now-save later
mentality leading to high
disposable income.
ENVIORNMENT ANALYSIS: PORTER’S MODEL

POTENTIAL ENTRANTS

MEDIUM

In the CE industry, although there are not prohibitively high costs of entry, the
critical success factors are brand image, brand allegiance, and distribution
networks.
 INDUSTRY COMPETITORS

INTER FIRM RIVALRY HIGH

The Indian industry consists of players of domestic origin as well as

multinationals. Of late, the multinationals have gained a sizeable presence in the
Indian CE market at the cost of domestic players.

BARGAINING POWER OF BUYERS

HIGH

With the intensification of competition the bargaining power of the buyer has
increased.
 SUBSTITUTES

LOW TO MEDIUM

The consumer electronics (CE) sector is characterised by continuous technology

advances that may result in substitution within the product category.

BARGAINING POWER OF SUPPLIERS

LOW TO MEDIUM

Most of the raw materials are

available easily and in India. Some high-end raw materials such as larger-size
picture tubes for flat TVs are imported.
 TELEVISION: CTV

BACKGROUND

The television industry started in India in 1970 with the production of B&W TV sets.
The initial TVs were all 20-inch (or 51-cm) sets. For 13 years, this was the only size
offered in the B&W TV market, till 14-inch TVs were launched in 1984. . The
Government policy on B&W TVs in the initial period was characterized by licensing
of manufacturing units for capacity in excess of 10,000 per annum and
encouragement to the small sector industry (SSI) sector to set up production facilities
with capacities in the range of 2,500-5,000 per annum. The year 1983 saw the
removal of restriction on capacity expansions and of the ceiling on capacity to be
licensed, although the restrictions on foreign technology continued. A notable
development was the launch of the 14-inch B&W TVs in 1984, which evoked an even
better response from the market, especially since they were affordable for households
in the lower economic strata, in both rural and urban areas.

The birth of CTV in India can be traced to the Asian Games (ASIAD) held in New
Delhi in 1982. After the ASIAD, Doordarshan Kendras were set up in many parts of
the country. The euphoria over cricket following India's victory in the Prudential
World Cup in 1983 and in the Benson and Hedges cricket championship in Australia
in 1985 (with the high-quality telecast of Channel Nine) provided a great impetus to
CTV demand. The Government encouraged this sector, and various State
Governments came up with their own TV companies like Uptron, Keltron and
Meltron. Older players in the B&W TV market, like Weston, Dyanora and
Televista, also diversified into CTVs. By 1989, there were around 200 players in the
market.

The second phase of CTV growth came on the heels of the 1991-initiated economic
liberalization programme, after which there was a reduction in both excise and import
duties. Simultaneously, with the opening up of Indian skies to foreign satellite
channels in 1991-92 and the coming of cable TV, the demand for TVs grew further.
This was also the period when private and more aggressive domestic players like
Videocon, BPL and Mirc Electronics consolidated their presence in the CTV market
through their focus on both product promotion and technology--the latter through
collaborations with international bigwigs (BPL with Sanyo, Japan, Mirc
Electronics with JVC, Japan, and Videocon with National, Japan). Since the mid-
1990s, the Indian TV market has witnessed the entry of global brands like Akai,
Aiwa, Sansui, LG, Samsung and Toshiba. At present, while LG and Samsung
operate through fully-controlled Indian operations, the Akai, Sansui and Toshiba
brands are marketed by Videocon (Akai was initially with Baron International, and
later sold to Videocon). Aiwa is now a subsidiary of Sony. The other multinationals
(including Sony, LG, Samsung) entered on their own and quickly captured the
imagination of the market with innovations in product quality and features.

INDIA V/S GLOBAL

The penetration levels of televisions in India is just 24% as compared with 98% in
China, 11% in Brazil, 235% in France, 250% in Japan and 333% in US.
 "In the west, the colour television is replaced after every 2-3 years, for us
Indians, the period of replacement varies between 10-12 years."

PLAYERS AND MARKET SHARE

PLAYERS AND MARKET SHARE

The major brands in the Indian CTV industry are LG, Samsung, BPL, Onida,
Videocon, Onida, Sansui, Sony, Akai, Aiwa, Philips, Panasonic, Sharp, Thomson and
Daewoo. Competition has also intensified with Chinese consumer electronics player
Haier, German company G-Hanz and Japan's Hitachi having leaped into the colour
TV market. The companies marketing their CTV products under these brands are as
follows:

Company Brands
BPL Limited BPL
Videocon International Limited Videocon, Akai, Sansui, Toshiba
Mirc Electronics Limited Onida and Igo
Sony India Private Limited Sony
LG Electronics India Limited LG
Samsung India Electronics Limited Samsung
 National Panasonic India Panasonic
Limited/Matsushita Television and Audio
Private Limited
Kalyani Sharp India Limited Sharp
Thomson Consumer Electronics India Thomson
Limited

The Indian television industry has

a size of around Rs 96 billion, comprising colour television (CTV) of Rs 91 bn and
B&W TV market of Rs 5 bn. The top four players (LG, Samsung, Videocon group
and Onida) have consolidated their position. Today, they account for 69 per cent of
the market, up from 43 per cent a couple of years ago. Two or three factors have
caused this change. BPL, once a leader with over 20 per cent market share, has
dropped to 5.2 per cent. Second, multinationals brands like Sony, Panasonic,
Thomson, and Sharp have lost ground. Third, regional brands like Oscar, Texla,
Weston, and Beltek have lost market share. The reason behind this is that the
consumer electronic and the CTV market is characterized by continue innovation and
use of state of art technology which these companies have been unable to keep pace.
 REFRIGERATOR

BACKGROUND

Refrigerators have been manufactured in India since 1950s. Till the 1980s,
players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the
market. Earlier, the white goods sector was categorized as a luxury goods industry
and was subject to oppressive taxation and licensing. The situation changed after the
liberalization of the Indian economy in the early 1990s. The government removed all
restrictions, and now there is no restriction on foreign investment, and licenses are no
longer required. Post-liberalization, a number of foreign companies entered the
market and many domestic players also diversified into refrigerators. BPL and
Videocon who already had a presence in the consumer electronics market, leveraged
their strengths to enter the durables sector.
 In India, refrigerators have the highest aspirational value of all consumer
durables, with the exception of televisions. This accounts for the high growth rate of
the refrigerator market. Refrigerators are presently being manufactured in two basic
designs which are referred to as Direct Cool (DC) and Frost Free (FF) refrigerator.
The direct cool segment continues to dominate Indian refrigerator market compared to
more expensive frost-free models. The growth in this segment though marginal, has
been driven by factors like availability of low priced models as due to competitive
pricing and a growing middle class. Manufacturers of refrigerators claim to have
improved the quality of the product particularly the reliability of the Compressor. In
so far as new technology is concerned, the concept of Frost Free refrigerator has been
gaining popularity. Capacity-wise also, there is a shift in Refrigerator Market. Till
about two years back, 165 Litres had a larger share and now units of capacity 185-300
Litres are having increasing market share. Manufacturers are encouraged to adopt
environment friendly technology like usage of non-CFC (non- Chloro-Fluro-Carbons)
refrigerant based air conditioners, Non-CFC refrigerators are manufactured in the
country but because of their high initial cost, the demand is somewhat sluggish.

INDIA V/S GLOBAL

The penetration of household refrigerators in India, the fifth largest consumer

durable in terms of penetration, is 13% compared to well over 90% in Malaysia, Australia,
Singapore, Hong Kong and Korea; around 80% in Thailand; close to 40% in Philippines and
China and 20% in Vietnam and Indonesia. When you compare the annual commercial
sales of HVAC and refrigeration equipment in the US at US $ 200 per capita and in
China at US $ 3 per capita with a dismal US $ 0.25 per capita in India.

PLAYERS AND MARKET SHARE

 The refrigerator industry has become highly competitive as a number of brands have
entered the market and the consumer has a wide choice.

Company Brands
BPL Limited BPL
Videocon International Limited Videocon, Akai
LG Electronics India Limited LG
Samsung India Electronics Limited Samsung
Whirlpool of India Ltd Whirlpool
Godrej & Boyce Mfg. Co. Ltd. Godrej
Voltas Limited Voltas
Electrolux Kelvinator Electrolux Kelvinator, Electrolux and
Allwyn

Refrigerators
constitute the second largest product segment within the Indian consumer durables
sector in India, with an estimated annual turnover of Rs 39 bn during FY2005 with an
estimated sale of 4.1m units. According to FICCI Survey April-March 2003-2004
Whirlpool and Godrej are the top two players with market shares of 27 per cent and
20 per cent respectively. Electrolux Kelvinator and LG compete for third and fourth
position with market shares of 16 per cent and 14.5 per cent respectively. Videocon
(11 per cent), Samsung (6), BPL (4), Voltas and Akai are other significant players.
 AIR-CONDITIONER

BACKGROUND In
1902, Dr. Willis Haviland Carrier invented and secured the patent for a weather
control concept - air conditioning. Ever since, life hasn't been the same. The air-
conditioner market is hotting up as more and more people appear to be convinced
about the comfort of an air-conditioner (AC). The extremely hot summers have
stirred the demand for ACs and the industry is experiencing a significant
change. Types of
Air-conditioner Air conditioning
products are divided into Non Ducted products & Ducted systems .The Non
Ducted products are divided into two parts: window ACs & the mini splits. The
ducted systems are divided into central plants, packaged ACs, ducted ACs.
Window ACs account for about 54% of the total market for ACs with an estimated
market size of about Rs20bn. 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. The three chief types are window air conditioners, consoles and self-
contained air conditioners. 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. Self-contained air conditioners are the large room air
conditioners. Central air conditioners also 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.

INDIA V/S GLOBAL

According to Refrigeration and Air-conditioning Manufacturing Association
(RAMA) the penetration of household Air-Conditioners is abysmally low in India
at around 2% compared to 20% in Indonesia, 24% in China, 40% in Thailand,
45% in Malaysia.

PLAYERS AND MARKET SHARE

The size of the room Air-conditioners industry is estimated at 1.1 m in volume

terms, and Rs 24 bn in value terms. According to FICCI Air Conditioners (AC) it
reveals that Indian AC industry, which has mainly dominated by players like
Carrier and Voltas, has been taken over by the new MNCs in the last few years.
AC market is dominated by four major players—LG, Voltas, Carrier and
Samsung.
LG is the market leader with a market share of 29 per cent followed by Voltas (11)
and by Carrier and Samsung (9.2 each) in addition to other players like Hitachi
and Videocon.

Company Brands
Mirc Electronics Limited Onida
Videocon International Limited Videocon
LG Electronics India Limited LG
Samsung India Electronics Limited Samsung
Whirlpool of India Ltd Whirlpool
Godrej & Boyce Mfg. Co. Ltd. Godrej
Voltas Limited Voltas
Electrolux Kelvinator Electrolux
Blue Star India Ltd Blue Star
Daikin industries, ltd. Daikin
 WASHING MACHINE

BACKGROUND

Washing machines as a consumer durable product has been in existence in India for
the last 10 years. During the last few years, in the Consumer Durable Sector the
market for Washing Machines has grown quite fast. The washing machine market
consists of two broad segments - semi-automatic and fully automatic. The first
accounts for a chunk of the market. In terms of loading type, top loading machines
sell in greater numbers than front-loading ones. In this industry, it is the fully
automatic segment, which in recent times has been getting the attention of the users as
more and more households have both partners working. Consequently manufacturers
have started paying more attention to this segment and have started introducing more
features in their products. The customers now have a wide range of world class brands
to choose from.

Major growth is projected to take place in fully automatic segment, which accounts
for above 23 per cent of the total market to about 30 per cent.
There is also a trend for purchasing smaller machines in the range of 3 to 4 kg.
capacity as compared to larger machines as there are more and more nuclear families
rather than joint families. In regard to emerging new technologies in the washing
machines sector mention may be made of aero power, triple cascade tornado wash,
digital intelligence, unique optical sensor and other such innovations and adaptations
which are gradually being introduced by the indigenous manufacturers. Fully
automatic machines are gaining popularity with the change in lifestyle of consumers,
increase in income, increase in number of working couples, and due to price
competitiveness.
INDIA V/S GLOBAL

The penetration level of Washing Machine is relatively low in India as

compared to global due to many reasons. Many housewives in less affluent
households prefer to wash clothes themselves rather than invest in washing machines.
Water scarcity in many Indian cities and timely availability is another major issue.
However, it foresees that penetration of washing machine will rise by more than 6 per
cent in the next two years.

PLAYERS AND MARKET SHARE

The refrigerator industry has become highly competitive as a number of brands have
entered the market and the consumer has a wide choice. Some of the company and
their brands are as follows:

Company Brands
Mirc Electronics Limited Onida
BPL Limited BPL
LG Electronics India Limited LG
Samsung India Electronics Limited Samsung
Whirlpool of India Ltd Whirlpool
Godrej & Boyce Mfg. Co. Ltd. Godrej
Electrolux Kelvinator Electrolux
LG Electronics has registered a remarkable growth of 36 % in the Washing Machine
Segment in H1 The Fully Automatic Washing Machines segment has recorded a
remarkable performance where volumes have grown by 22% and value by 25% .Here
again LGEIL happens to be the undisputed leader with a 30.7 % market share in Fully
Automatic Washing Machine and 33.7 % market share in Semi Automatic Washing
Machine . (Source: ORG-GFK, May 2004)

FUTURE SCENARIO

Rising rate of growth of GDP, growth in disposable income, improved lifestyles,

rising purchasing power of people with higher propensity to consume with preference
for sophisticated brands would provide constant impetus to growth of white goods
industry segment makes future of consumer durable industry beneficial will rise the
expectation of consumer durable industry, While the consumer durable market is
facing a slowdown due to saturation in the urban market, rural consumers should be
provided with easily payable consumer finances schemes.
Rural India, which accounts for nearly 70 per cent of the total number of households,
has a two per cent penetration in case of refrigerators and 0.5 per cent for washing
 machines, offers plenty of scope and opportunities for the white goods industry. By
the industry itself the rural market is growing faster than the urban India now. The
urban market is a replacement and up-gradation market now.

Unleashing of Consumer Durable Industry

• In TV segment, the 14, 20 and 21 inches segments are expected to be the key
contributors to the overall industry growth. In the air conditioner segment,
room air conditioner market is growing at the rate of 18% per annum. Majority
of the companies, understandably, have plans to focus on these segments.

• Domestic AC manufacturers plan to beef up their distribution and service

networks, while MNCs will leverage on their brands and invest in high-
powered advertising. Given the fact that household penetration of ACs in the
country is very low (0.5%), growth potential is enormous. As running costs of
the AC are very high, manufacturers plan to introduce energy-saving models in
future. Demand for ACs in the long run will be robust due to rising income
levels and also due to higher computerization. Besides, air conditioners are no
longer perceived as luxury needs.

• As per NCAER (one of the premier economic research agencies in India), the
penetration of TVs is expected to increase almost three times by FY07 as
compared to the FY99 level. Growth in even higher for other durable items like
refrigerators and washing machines. The expectations are also on the premise
that the consuming class, as a percentage of total households, is expected to
grow at a faster rate. This would benefit the consumer durable manufactures.
 '000*)

1998-99 2006-07
Category Rural Urban All Rural Urban All
India India
TVs (colour) 48 304 121 185 723 347
Refrigerators 35 335 120 65 717 262
Washing 10 167 55 20 399 135
machines
Sewing 71 172 100 85 152 103
machines

Source: NCAER, * households

• As per CETMA, Consumer Electronic plus Home Appliances is expected

at 15-20% next five years.

CONCLUSION AND RECOMMENDATION

It Contributes more than 5.5% to index of Industrial Production

and provides jobs to lakhs of professionals, Skilled, Semi Skilled
and unskilled workers, particularly women. It improves the quality
of life of people by providing Entertainment / information /
education / comfort and helps reduce daily chores, particularly for
housewives. But the importance of the sector in National
Economy remains unnoticed.

"Lo Penetration means opportunity: The consumer

electronic and home appliance which forms the part of
consumer durable industry is categorized by low
penetration. Television, Refrigerator and Air-conditioner have
penetration of 24%, 13% & 2% respectively. This means
huge opportunity and untapped market.

Problem Areas: Some of the reason Attributable to

Industry are as follows:

 Inadequate stress on R&D

 Quality - Yet an issue

 After Sale Service & Customer Satisfaction

Action for Industry for Growth

 Commit sufficient resources for R&D

 Need to be more quality conscious

 Need to improve After Sales Services

 Need to Build economies of Scale

 Explore exports as a viable option.

 More emphasis to develop Rural Market.

 BIBLIOGRAPHY

 Business World : The BW Mega Consumer Satisfaction Survey 2004

- 25th October 2004

 Impact Magazine – 15th Jan 2005

 Internet

www.indiainfoline.com

www.blonnet.com

www.etstrategicmarketing.com

www.lge.com