FINAL PROJECT

Business Environment
Environmental factors and constraints are largely if not totally, external and beyond the control of individual industrial enterprises and their managements. These are essentially the givers within which firms and their managements must operate in a specific country and they vary often greatly from country to country. This above definition is give by Barry M. Richman & Melvyn Copen. In this assignment the environmental analysis of Consumer Durable Industry is given where factors affecting this particular industry based on their environment are given.

OVERVIEW OF THE CONSUMER DURABLE INDUSTRY:Consumer durable industry is characterized by various companies who produces and sells consumer durable goods. Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. Durable goods are typically characterized by long interpurchase timesthe time between two successive purchases. The consumer durables sector can be segmented into consumer electronics, such as, VCD/DVD, home theatre, music players, color televisions (CTVs), etc. and white goods, such as, dish washers, air conditioners, water heaters, washing machines, refrigerators, etc Examples of consumer durable goods include cars, appliances, business equipment, electronic equipment, home furnishings and fixtures, house ware and accessories, photographic equipment, recreational goods, sporting goods,

toys and games.

Growth in 2005-06

Consumer Durables
Air Conditioner Refrigerator Microwave Ovens Washing Machines Color Televisions (CTVs) Black & White Televisions Clock Watch

Growth
20-25% 5-10% 25% 5-10% 15-20% -20% 10% 10%

VCDs Consumer Electronics (Overall)

30% 9%

These are the players in the consumer durable industry.

Players in Consumer Durable Industry

1. AIWA 2. Akai India 3. BenQ Corporation 4. Blue Star Ltd. 5. Bose Corporation 6. BPL 7. Canon India 8. Carrier Aircon Ltd. 9. Daewoo India 10. ElectroluxKelvinator 11. Godrej 12. Haier India 13. Hitachi Ltd. 14. Khaitan India Ltd. 15. LG Electronics India Ltd. 16. MIRC Electronics Ltd. 17. Mitsubishi Electronics Corporation 18. Nokia India 19. Onida 20. Pace Micro Technology 21. Panasonic 22. Philips India 23. Samsung India 24. Samtel 25. Sansui India 26. Siemens 27. Sony India 28. Thomson Ltd. 29. Titan Industries 30. Toshiba Corporation 31. Videocon Industries 32. Whirlpool Appliances

(*In this table names which are bolded are top players in the industry.)

ENVIRONMENTAL STUDY

These are two environments external to the business affect each and every industry.

MACRO ENVIRNMENT
Major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic, demographics, legal, political, and social conditions, technological changes, and natural forces. An organization's macro environment consists of nonspecific aspects in the organization's surroundings that have the potential to affect the organization's strategies.

Economic Environment

This environment includes the current and anticipated stage of the business cycle, as well as inflation and interest rates. This will define how an organization can effectively utilize the availability of resources to the best of its utility. It consists of factors that affect consumer purchasing power and spending pattern. Following factors as important elements: o Increase in family income o Availability of cheap sources of borrowing funds o Availability of attractive sales promotional schemes o The changes in the rate of taxes and duties levied by the government o Availability of surplus funds (saving) o Availability of additional sources of income o Pricing strategies of companies o The perceived risk in terms of technological obsolescence. It is clear that increase in family income accounted for an average score of 3.4 having a medium level of influence in purchase of the durable products. Secondly, the availability of attractive sales promotional schemes announced by companies accounted for an average score of 3.3 showing a medium level of influence in purchase of durable products. . Thirdly, the pricing strategies of companies accounted for an average score of 3.2 also having a medium level of influence in purchasing durable products. Whenever the consumer purchases any durable product, the product quality and price of the product have major influences. Fourthly, the availability of surplus funds and the perceived risk in terms of technological obsolescence each had accounted for an average score of 3.1 respectively. Since, technological improvement is often inevitable due to foreign

collaborations any consumer prefers to make use of the most recent technological advancement. The changes in the rate of taxes and duties levied by central / state government and availability of cheap sources of borrowing funds accounted for an average score of 2.9 and 2.8 respectively showing a medium level of influence. Hence, the above results showed that the economic factors as a whole have an average medium level influence in purchase of durable products.

Demographic Environment
Demographic environment consists of following factors that affects the consumer durable industry; o Density, o Fertility, o Growth o Language o Literates o Migration o Primitive Tribe Group o Population o Religion o Residential o Houses and Households o Sex ratio

o Workers

Socio-Cultural Environment
The task of any marketing executive is becoming more complex because our cultural patterns life style, social values and beliefs, which are changing more quickly than they used to. A

consumers behavior also is influenced by social factors, such as the consumers small groups, family and social roles and status. These factors are shared by a society and are transmitted from generation to generation i.e., the influence of older and younger generation and vice versa. In recent times, extensive exposure has led the younger generation into more influence in changing 'Cultural Revolution' that has resulted in replacement of new attitudes on culture. For measuring the influence social and cultural factors hold over the purchase of durable products these factors are useful up to a great extent; o Increase in the number of nuclear families o Influence of reference groups o Chance of more interactions among family members o The desire for leisure time o Ones standard of living / status o Need for comfort / sophistication o Education and level of occupation o Dominance of elderly person in family o The influence of younger generation in a family o Compulsions of religious values / moral values o Individual values and attitudes o Experience etc o Influence of sentimental / traditional values o Social conditions and freedom of living and learning attitudes of individuals

Technological Environment

Due to the open market condition, many foreign companies have entered into the Indian market with advanced technology. This has led to change in life style of our Indian consumers that has in turn resulted in a challenge to our existing Indian companies to reconsider their strategies of production and marketing.

MICRO ENVIRNMENT
Micro or Task environmental factors are those that influence a company's or product's development but that are outside of the company's control.

Customers
The study of consumer behavior is much more important than the number of consumers in the market because each consumer is unique. Their behavior, attitude, temperament, mentality, and personality have their own say on what he wants and how his/her needs could be satisfied. A persons buying choices are mostly influenced by four major psychological factors o Motivation o Perception o Learning

o Beliefs and attitudes These are the factors that affect consumers while purchasing durable products; o Increase in competitions among sellers of various brands o Price differentials among various brands/ sellers o Technological superiority seen among the products o Influence of promotional efforts/ additional benefits o Life expectancy of the product o Various product attributes o Sources of information o Assurance of prompt after sales service o Resale value of an item o Frequency of usage of the product o Increasing consumers expectations o Availability of choice leading to complexity in purchase o Brand loyalty among consumers o Sentimental/ traditional values o The availability of leisure time o Convenience in usage of the product o Realization of his ego needs

Due to competition more number of foreign brands have entered and occupied the Indian market in durable products industry. It has given an enormous scope to Indian consumers through a range of choices in their mind. Secondly, the technological superiority seen among the products and increasing consumers expectations. Basically, our Indian consumers are price conscious, while they purchase any product. Knowing this, all foreign brands started launching their products with the latest technology at a competitive price. This has led to Indian brands reconsidering their position and opting for latest technology at competitive price level with the foreign brands. Of course, our Indian consumers basically hold loyalty towards the particular brand to which they are associated. Indian consumers normally hold their beliefs on certain sentiments like seeing an auspicious day, time, color, place etc., or they simply follow the traditions followed by their ancestors. Further they also look at a reasonable resale value for the investment made on purchasing the durable products. Likewise all above factors have their own bearing on purchase decision in case of durable products.

Competitors
Competitors strategies: A companys competitive environment obviously is a major influence on its marketing programs. Skillful marketing executives constantly monitor all

aspects of competitors marketing activities their products, pricing, distribution systems and promotional programs. Moreover, the destiny of many Indian firms today is affected by international competition due to our new economic policy of government called liberalization. This has really challenged many Indian companies to reconsider the strategies adopted for their survival.

Challenges To The Consumer Durable Industry

1. Heavy Taxation:
Heavy taxation in the country is one of the challenges for the players. At its presentstructure the total tax incidence in India even now stands at around 25-30 per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17 per

2. Potential markets remaining yet untapped:

A large segment of the domestic market, mostly the rural market is yet to be tapped. Tapping this yet untapped and unorganized market is a major challenge for the Indian consumer durables sector. About 65 per cent of Indian population that lives in its villages still remains relevant for some consumer durables companies. Its also true that companies are trying hard to make their marketing channels more and more efficient.

3. Poor Infrastructure:
Poor infrastructure is another reason that seems to have held back the industry. Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India.

4. Threat from new entrants, especially global companies:

The domestic consumer durables sector faces threat from newer companies, especially from global ones who have technologically advanced products to offer.

5. Rivalry and competition:

Presence of a large number of players in the domestic consumer durables industry leads to competition and rivalry among companies. Threat from rivalry and competition poses a threat to domestic companies.

6. Threat from substitute products/services:

The domestic consumer durables industry is plagued by threats from substitute products. Easy accessibility to theatres/multiplexes, especially in urban areas has turned off the viewership from TV to a large extent. With the advent of a horde of FM radio stations, radio sets have now substituted TVs.

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Opportunities To The Consumer Durable Industry

1. Rising rate of growth of GDP:
The rising rate of growth of GDP, 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.
2. The urban consumer durable market:

As durable products are not available at their nearest place rural people purchase them from their nearest hometown, hence, it results

into increase in demand at urban markets. The urban market is a

replacement and up gradation market now.

3. Attractive financing schemes:

Consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network. This has a direct bearing on future demand.

4. Growth of media:
The other factor for surging demand for consumer goods is the phenomenal growth of media in India. The flurry of television channels and the rising penetration of cinemas will continue to spread awareness of products in the remotest of markets.

5. Rise in disposable income:

The demand for consumer electronics has been rising with the increase in disposable income coupled with more and more consumers falling under the double income families. The growing Indian middle class is an attraction for companies who are out there to woo them.

6. Availability of newer variants of a product:

Consumers are spoilt for choice when it comes to choosing products. Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products.

7. Rise in the share of organized retail:

Rise in organized retail will set the growth pace of the Indian consumer durables industry. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER), organized retail which constituted a mere four percent of the retail sector in FY07 is likely to grow at 45-50% per annum and quadruple its share in the total retail pie 16% by 2011-2012. The share will grow with bigger players entering the market.

8. Innovative advertising and brand promotion:

Sales promotion measures such as discounts, free gifts and exchange offers help a company in distinguishing itself from others.

9. Festive season sales:

Demand for colour TVs usually pick up during the festive seasons. As a result most companies come out with offers during this period to cash in on the festive mood. This period will continue to be the growth driver for consumer durable companies.

10.

Customer power with respect to availability of choice:

The availability of a wide product line on account of most products being homogeneous, poses a threat for companies operating in the consumer durables sector. Customers have the choice of both domestically produced and imported goods, with similar features 11. 12. U Ji

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