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 _______ has undertaken &
completed the project work
titled________________________________________________
__
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.

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 Principal

T.Y.BMS examination
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 air-
conditioning 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 air-
conditioning industry is estimated to be around Rs 3000 crores with central air-
conditioning 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 hire-

purchase 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 % share
Blue star 41%
Voltas 22%
Carrier 12%
Thermax 06%
Suvidha 05%
Others 14%

Central AC Market FY01

14% Blue star

5%
Voltas
6% 41%
Carrier
Thermax
12% Suvidha
22% Others

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 Share
LG 19
Samsung 15.5
Amtrex Hitachi 15
Carrier 12
National 11
Voltas 8.5
Videocon 5.4
Bluestar 5
Godrej 3
Others 5.7
 Room AC's Market
LG
Samsung
Amtrex
3% 6%
5% 20% Carrier
National
5% Voltas
Videocon
8% Bluestar
Godrej
15% Others
11%
12% 15%

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 Market Share

Delhi 28
Mumbai 35
Hyderabad 04
Kolkatta 04
Banglore 02
Chennai 07
Others 20
 Geographical Distribution of ACs

Delhi
20%
28% Mumbai
7%
Kolkatta
2%
Hyderabad
4% Bangalore
4% Chennai
35%
Others

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. The unorganised sector is
likely to lose another 10 per cent share this year, thanks to the new 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 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 positioning- IF ITS NATIONAL , ITS AFFORDABLE

3) Positioning By Product User-

This 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 Application-
This 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 Tagline
Hitachi For those who seek perfection
Different Needs for Different
Carrier
People
Voltas Ache Achon ko Thanda Kar De
LG Purest Way to Breathe
Bluestar Breathe Easy
Samsung Ab Garmi Chu Mantar
Daikin If its National its Affordable
WhiteWestingH
Enjoy the Freshness
ouse (Electrolux)
Kenstar The Way the World Lives
General The Extreme Machine
Godrej Nothing Cools Faster
 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
Lalbhai Group, Amtrex Hitachi Appliances Ltd. centered in Ahmedabad with its
manufacturing facilities based at Kadi and Silvassa. The annual capacity of the company
is around 0.1 million per annum.

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 recently-
introduced 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 across-
the-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 Air-
Conditioner.

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 Air-
Conditioner.
Sleep Mode:
The set temperature changes automatically and increases by 2 oC
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 non-monetary
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. Topic Page No.

1 Introduction
1.1 History Of Air-Conditioner
1.2 Air-Conditioner-The Product
2 Market Study
2.1 Industry size
2.2 Evolution
2.3 Current scenario
2.4 Demand Drivers
3 Central AC Market
3.1 Current scenario
3.2 Utility Of CACs
3.3 Market Shares
3.4 Major Players
4 Room AC Market
4.1 Current Scenario
4.2 Market Shares
4.3 Geographical Distribution Of Sales
4.4 Entry Of New Players
4.5 Evasive Action By Established Brands
5 Analysis Of Room AC Market
5.1 Complexity Of Room AC Market

5.2 Attributes Affecting Selection Of A Suitable

Room AC Brand
6 Branding
6.1 Concept &Definition
6.2 Brand Positioning
6.3 Benefits Of Branding & Brand Positioning
7.1 Introduction
7.2 Brand Positioning Strategies
7.3 Components Of Positioning
8. Analysis Of Positioning Strategies Of Brands
Through Print Advertisements
9 Comparative Brand Positioning Of LG & Hitachi
10 Suggestions
11 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,Mumbai-
400079
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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