Professional Documents
Culture Documents
When India opened its economy to foreign competition in the early 1990s, it was termed a phased liberalization. Government decided to retain full control over certain sectors deemed sensitive by not allowing any foreign investment. Insurance, retail, domestic airlines and telecommunications were some of those sensitive industries that were protected for a long time. Telecommunications and insurance were the first of these sectors that were gradually opened to foreign direct investment (FDI). Domestic airlines followed suit in the last two years and the resulting boom is proof enough of the future potential of that industry. The retail sector is protected against any FDI. But a couple of developments recently have created a lot of buzz in the Indian business community. A quick look at the Indian retail sector gives reason for such buzz. The Indian retail market is valued at US$200 billion and is projected to increase substantially in size over the 10-15 years. Organized retail - or well established retail chains - accounts for only a meager US$8 billion. The rest of the bulk is accounted for by the more than 12 million neighborhood outlets and mom and pop shops. Given the huge current market and the future potential, it is only natural for the retail biggies such as Wal-Mart, Carrefour and others to look for entry modes into the Indian market. Recently the Indian government allowed joint ventures (JV) in the retail sector where by a foreign company can set up a JV with an Indian company, with the Indian company being the majority shareholder in the venture. As such globalization has become a corporate buzz word in international business. But is all such cases, the brands have been careful to project a unified brand image with its brand identity and brand personality intact. After all that is the underlying logic of globalization - standardize the brand identity and experiences across markets so as to offer customers the overall brand experience but customize the brand communications, points of contact and personal interaction to suit the tastes and preferences of local cultures.
the fashion footwear brands entered India quite late, but the brands into sports footwear like Nike, Adidas and Reebok have been available since long. India was the first among these to enter India in 1995, followed by Nike and Adidas. Ninewest a fashion footwear brand entered India in 2002. Another footwear brand in the Indian market is Bally. Aldo, one of the most desired brands in India was launched in Mumbai, in 2005. These brands not just supply the footwear but offer accessories as well. International apparel brands, also, have ventured the Indian retail market. Brands like Mango, Nautica, Channel, Guess, and Tommy Hilfiger etc. have tremendously hit the market. India has witnessed foreign investments and joint ventures on a large scale in the food and beverages industry. Food brands like McDonalds, Pizza Hut are very popular among the youth. McDonalds tops the list of popularity as it offers low cost food products, which are affordable by common man. Luxury retail shops, which were initially found only in the five star hotels, are now present in almost every mall. International brands which took the initial risks are making a massive profit, today. India surely has a great potential to be the best in the retail business.
annum. There are already some 60 Hong Kong brand names available, including Ocean Eyewear (Hong Kong), Auto-Winner and Uni-Clip Custom Clip-Ons, with the territory controlling about 6% of the import market. That share could grow exponentially, as could the raw materials, individual frames and lens segments, with the opening up of the entire Indian optical sector. In fact, the Indian eyewear market is hugely untapped, even as the market is witnessing growth driven mainly by sales in the country's bigger cities.
Autocar India, with 80,000 subscribers. Haymarket doesnt own a stake, but helps with research and management. Now, it can invest, provide funds to print more copies, market more strongly and use Autocar as a platform to bring its other brands. Bombays Tata Infomedia, a $30 million publisher of yellow pages and trade magazines, also has already started to solicit business with foreigners, sources say.
jobs, with their technical and engineering qualifications, are highly sought after. But there are tax benefits to producing cars locally that make it attractive for the Korean brand to have local market access. Aside from the usual array of robots and modern plant technology that could as easily be in Cologne as Chennai, the facility also features a large test facility that includes an outdoor track, on which every car that comes off the production line is tested. That means every i10 or i20 built in Chennai and sold in Europe has completed not only the usual quality inspections but also a series of suspension and cornering tests on the track before leaving the Chennai plant.
10
Franchising in India:
India is one the worlds largest and the fastest-growing emerging markets, and franchising has become a successful business model for many local companies. Globalization and market liberalization has fuelled brand awareness among the Indian masses making the importation of foreign brands to Indian shores an attractive business opportunity for local businessmen. Foreign brands such as McDonald's and Pizza Hut have studied India's tastes and needs and customized their products and menus to suit local preferences. Many foreign companies consider franchising to be a convenient method of entry into the geographically vast and culturally diverse Indian market, which offers a very favorable franchising environment.
Education:
The increased acceptance of the importance of education by the Indian population and the proven success of education franchising in India has led to a boom in the amount of business owners wanting to expand their education brands using the franchise route. According to a recent survey, India is one of the largest markets for education in the world in terms of the number of students, offering vast franchising opportunities. Currently, out of the 1,200 franchises in the country, 32 per cent are in the education sector. Professional and vocational courses in the fields of aviation, hospitality, retail, financial services and insurance capture almost a third of the total share of education provided through franchises, followed training in the IT sector. Franchising in the pre-school sector has grown particularly in the past decade. For an emerging market such as India, franchising has the effect of creating cross-border economic relationships and helps foreign franchisors establish themselves and cater for a diverse population in the fastest way. It is evident that foreign franchisors have realised the unparalleled potential for franchising in India, and there is no doubt that franchising as a business concept has a very bright future in this country.
12
PROCESSED FOOD Import cost and conditions: Customs duty of 35-70 per cent; products must carry maximum retail price in rupees and details of the manufacturer. Impact: Many global brands of juices, syrups, ketchups, biscuits and sweets already in metro markets. Imports will expand to cover more products and cities. Prices will standardise, may even fall. Comment: "Choice for consumers will multiply and competitions for producers increase." DAIRY AND POULTRY PRODUCTS Import cost and conditions: Customs duty of up to 60 per cent on milk and 100 per cent on poultry products. Impact: A flood of European cheese, mostly in premium category. Chicken legs to be imported cheap. New varieties of meat products, but prices may not fall. Comment: "Expect new varieties of cheese and meat. Prices will standardise after MRP is imposed. FRUITS AND FOODGRAINS Import cost and conditions: Customs duty of 35-80 per cent; classified sensitive for close monitoring of imports.Grain imports only through state agencies. Impact: American and Japanese apples (price range Rs 100-300 a kg), kiwi fruit (Rs 240 a kg) already available in select markets. More imports, low prices. Comment: "Prices of imported fruits will continue to fall."
13
AUTOMOBILES Import cost and conditions: Customs duty of up to 105 per cent on cars, 35 per cent on bikes; Import only from country of manufacture and through Mumbai port. Used cars not to be more than three years old. Impact: Car imports more prohibitive and expensive than before; auto companies could import new models. Imported bikes may be cheaper. Comment: "Car makers have been treated fairly." APPLIANCES Import cost and conditions: Customs duty of 35-40 per cent. Impact: Cheap imports of products like calculators, lamps, irons and telephones will intensify-mostly from China. Comment: "Appliances not covered by any warranties will be imported heavily. LIQUOR Import cost and conditions: Customs duty of 100 per cent on beer and wine, 210 per cent on rum, whiskey, gin and vodka. Impact: Imports will be expensive, but pub owners and restaurateurs expect beer and wine imports to rise. Comment: "My customers are looking forward to newer brands of beer.
STATIONERY & WATCHES Import cost and conditions: Customs duty of 35 per cent. Impact: Domestic stationery industry does not face threat. Only premium and new kinds of products like magnetic clips, correction tapes and heavy-duty staplers will be imported. Most premium watch brands already in India, but import of cheaper wrist watches and wall clocks will intensify. Comment: We can now import watches to test-market in India.
14
CONSUMER ELECTRONICS Import cost and conditions: Customs duty of 35 per cent. Impact: No surge in imports likely since most foreign brands already in India. Companies could import some high-price, low-volume models from their manufacturing facilities for sale in India. White goods like frost-free refrigerators already being imported by foreign companies. Comment: There is no threat of imports to consumer electronics companies. CLOTHES & FABRICS Import cost and conditions: Customs duty of up to 35 per cent; in some cases specific duties per meter or kilo of imported fabric. Impact: No increase in imports of premium brands of clothing likely, but non-branded garments from east Asia could come in. Deluge of Chinese fabric very likely. Comment: Garments imports wont surge. TOYS Import cost and conditions: Customs duty of 35 per cent Impact: Imports of most types of toys has been opened in the past three years. Chinese toys of all kinds electric, non-electric, metallic, non-metallic already flood the market. Even big Indian brands like Leo and Funskool India facing the heat. Comment: Indian toy makers cant compete with the Chinese in price or quality.
15
1. Quality Signal:
Consumers watch the fierce battles that transnational companies wage over quality and are impressed by the victors. A focus-group participant in Russia told us: "The more people who buy [a] brandthe better quality it is." A Spanish consumer agreed: "I like [global] brands because they usually offer more quality and better guarantees than other products." That perception often serves as a rationale for global brands to charge premiums. Global brands "are expensive, but the price is reasonable when you think of the quality," pointed out a Thai participant. Consumers also believe that transnational companies compete by trying to develop new products and breakthrough technologies faster than rivals. Global brands "are very dynamic, always upgrading themselves," said an Indian. An Australian added that global brands "are more exciting because they come up with new products all the time, whereas you know what you'll get with local ones." That's a significant shift. Until recently, people's perceptions about quality for value and technological prowess were tied to the nations from which products originated. "Made in the USA" was once important; so were Japanese quality and Italian design in some industries. Increasingly, however, a company's global stature indicates whether it excels on quality. We included measures for country-of-origin associations in our study as a basis for comparison and found that, while they are still important, they are only one-third as strong as the perceptions driven by a brand's "globalness."Consumers all over the world associate global brands with three characteristics.
2. Global Myth:
Consumers look to global brands as symbols of cultural ideals. They use brands to create an imagined global identity that they share with like-minded people. Transnational companies therefore compete not only to offer the highest value
16
products but also to deliver cultural myths with global appeal. "Global brands make us feel like citizens of the world, and they somehow give us an identity," an Argentinean consumer observed. A New Zealander echoed: "Global brands make you feel part of something bigger and give you a sense of belonging." A Costa Rican best expressed the aspirations that consumers associate with global brands: "Local brands show what we are; global brands show what we want to be." That isn't exactly new. In the post-World War II era, companies like Disney, McDonald's, Levi Strauss, and Jack Daniel's spun American myths for the rest of the world. But today's global myths have less to do with the American way of life. Further, no longer are myths created only by lifestyle and luxury brands; myths are now spun by virtually all global brands, in industries as diverse as information technology and oil.
3. Social Responsibility:
People recognize that global companies wield extraordinary influence, both positive and negative, on society's well-being. They expect firms to address social problems linked to what they sell and how they conduct business. In fact, consumers vote with their checkbooks if they feel that transnational companies aren't acting as stewards of public health, worker rights, and the environment. As infamous cases have filled the airwavesNestl's infant-formula sales in Africa since the 1980s, Union Carbide's Bhopal gas tragedy in 1984, the Exxon Valdez spill in 1989, the outcry over Shell's plan to sink its Brent Spar oil rig and the protests at its Nigerian facilities in 1995people have become convinced that global brands have a special duty to tackle social issues. A German told us: "I still haven't forgiven Shell for what they [did] with that oil rig." An Australian argued: "McDonald's pays back locally, but it is their duty. They are making so much money, they should be giving back." The playing field isn't level; consumers don't demand that local companies tackle global warming, but they expect multinational giants like BP and Shell to do so. Similarly, people may turn a blind eye when local companies take advantage of employees, but they won't stand for transnational players like Nike and Polo adopting similar practices. Such expectations are as pronounced in developing countries like China and India as they are in developed countries in Europe.
17
Based on questioning:
Qualitative marketing research: Generally used for exploratory purposes, small number of respondents not generalizable to the whole population, statistical significance and confidence not calculated. Examples include focus groups, in-depth interviews, and projective techniques Quantitative marketing research : Generally used to draw conclusions, tests a specific hypothesis - uses random sampling techniques so as to infer from the sample to the population, involves a large number of respondents. Examples include surveys and questionnaires. Techniques include choice modeling, maximum difference preference scaling, and covariance analysis. The following is a research conducted in our locality as to what are the opinion of people about Indian brands and Foreign brands, their usage pattern, way of adapting it, utility provided and many such aspects. The size of the sample is 30 people and the questionnaire was distributed to them and feedback was obtained.
18
The feedback forms are then classified in various diagrammatic forms like chart, pie diagram, bar graphs etc. 1. What do you prefer the most?
12 18
2. Do you think government should allow more foreign brands in our country?
17 16 15 14 13 YES NO Series1
No Series1 Yes 0 5 10 15 20
19
4. Do you think Indian brands have the capability of meeting the standards of foreign brands?
Yes 15 15 No
5. Do you think foreign brands are affordable to the rich class only?
11 19
Yes No
6. What do you think are the main reasons for the increase of foreign brands in India?
20 15 10 5 0 Better Quality Reliability supports FDI All Series1
20
7. When you talk about popular foreign brands, which category of the following comes first to your mind?
1 6
16
Any other
8. Do you cross-culture exchange serves an important link in improving relations among nations at the global level?
NO Series1 Yes 0 10 20 30
11 19
21
10. According to you which foreign brand is dominating in India? We got different brands name such as: Mobile sector. Automobiles sector. Electronics sector. Sports wear. Fashion wear. Laptops and desktops. Perfumes and watches. Furniture sector. Cosmetics. Optical sector. Print media. FMCG products.
22
CONCLUSION:
This project gave us a wider knowledge about the different brands existing in India with both foreign and Indian brands. We also came to know about foreign brands which are dominating Indian brands. The topics which we had included in our project such as dominating brands, various franchise existing in India, consumer behavior towards international brand, retailing sector in India etc. gave us a vast information about the market. And also the primary data conducted by us gave an opinion about the impact of foreign brands on Indian brands, consumer preference, what should be done to stop foreign brands to dominate Indian market. Atlast we would like to conclude by saying that government should do something to stop foreign brands to dominate Indian brands. And also Indian brands should match the quality standard like international brands so that people purchase Indian brands. There should be more export then import our brands should also dominate foreign market.
23
RECOMMENDATIONS:
1. Atleast allow controlled FDI in the form of JVs with local players. 2. To cater to the local needs of each area and have a multiple format stores as per the requirement of the region. 3. Invest in technology and supply chain management, especially in Cold Storage facilities as food constitutes about 62% of retail sales. 4. Put in place a system of Reverse Logistics which is pretty non-existent in India. 5. Look for potential in the rural areas. 6. 700 million Sq. Ft. of quality retail space will be required by year 2010 as compared to a supply of 200 million Sq feet creating a gap of 500 million Sq. ft. 7. Have high Quality measures so as to keep the confidence of the retail customers. 8. Big retail players should participate with local Kirana stores by giving them franchises and smaller outlets. 9. Invest enough in education & training to sustain the boom and have proper man power to handle it. 10.Giving the sector an Industry status by the Government. Despite some of the negative areas of the retail boom it seems INDIA CAN SURELY SUSTAIN THE COMPETITION ON THE GLOBAL STAGE.
24
BIBLIOGRAPHY:
The information of this project has been taken from following sources:
25