Over the years the consumer durables industry (color television, refrigerators, air conditioners and washing machines) has undergone a sea change. Liberalization has opened the floodgates to multinational companies in a big way. Tariff barriers have come down. The dotcom crash, the IT squeeze telecom meltdown, the accounting scandals, the global stock market paranoia, the US Iraq war, have shaken the roots of consumer confidence very badly. The industry to compound the problem further, is subject to rapid technological change. There is hardly any room for players who fail to innovate adapt and come out with models that are in tune with market expectations. As a result, in the last eight to 10 years the prices of consumer durables have fallen to levels where players have to live by wafer – thin ( 2%) margins. Sample this: the price of CTVs has gone down 40 per cent (20 inch CTV in 1995 Rs 12,500 now in 2003 Rs 7,500 ); air conditioners (from Rs 3200 to Rs 2000) and PCs a whopping 60 percent (NCAER survey, business Today, 13-4- 2003) Local brand leaders like Videocon, BPL have gone for capacity expansion when the demand growth was either sluggish or even negative – due to misplaced enthusiasm and serious miscalculation. Not surprisingly the 20 odd national and international players are jostling for the same space in the Rs 25,000
Crore consumer electronics and home appliances market now. In such a cut throat competitive environment consumers are not complaining. The proliferation of brands, the discount wars, aggressive financing schemes, have only gladdened their hearts in the recent past. Let’s us examine the trends more closely by focusing attention on the segment wise strategies followed by individuals players.
A Snapshot of the Top players
LG Electronics India:
100% subsidiary of Korean Chaebol; Kwang Ro Kim, the MD did everything to bring LG to the top of the ladder during the last 6 years; Rs 2700 crore turnover in 2002; product portfolio includes: CTVs, refrigeration, washing machines, ACs, microwave ovens; Rs 130 crore ad budget and LG topped CTV sales post world cup
Samsung India Electronics Ltd (SIEL):
Korean conglomerate entered India in 1995 with its range of consumer appliances, electronic products, Telecommunications and IT hardware. Rs 1600 crore turnover in 2002, It has set up assembly lines in India; CTV manufacturing unit in 1997, microwave oven units in 1999, CTV R&D center in 2000 color monitor plant in 2001, washing machine unit in 2001. AC unit in 2002; SIEL stood second in CTV sales with 16% market share after the World cup.
Mirc Electronics (ONIDA):
Neighbor’s envy, owners’ pride goes the Onida and which has caused an upheaval in the television market in India. G 1 Mirchandani’s Onida brand grew in style over the years from Rs 225 crore in 1993-94 to over Rs 900 crore in 2002-03. The discount wars unleashed by Kabir Mulchandani of Baron International has pushed the company to the wall in recent times. Chinese, Korean and Japanese brands have halted its progress in the premium segment of the CTV market, ORG sales chart puts Onida at the number three slot in CTV sales after the world cup.
The Videocon group with over 26 percent market share in CTV market (1994) seems to have slipped badly with its forays into power, petroleum internet office automation in addition to its core business in consumer electronics and home appliances. With diluted focus after acquiring brands such as Akai, Sansui, Kenstar, Videocon are stuck at the same level (27% market share even after 9 years!) starved of cash the group‘s ad spend was cut to Rs 30 crore when its rivals were dancing during the recent world Cup.
Source: Strategic Management