Consumer Durables in India by Mustufa Arsiwalla

7/30/2019 Consumer Durables in India by Mustufa Arsiwalla

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Marketing Management > Consumer Durables In India >

By Mustufa Arsiwalla

A

REPORT ON

CONSUMER DURABLE INDUSTRY

IN INDIA: AN ANALYSIS

PREPARED BY

MUSTUFA ARSIWALLA


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7. Conclusion & Recommendation.25

8. Bibliography.26

INTRODUCTION


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With Indian economy increasingly witnessing structural transformation from a

rural, agricultural one to more urban industrialized one, consumer durable goods

sector is fast emerging as an important segment of the economy.

Consumption of manufactured consumer goods is recognized as one of mostwidely accepted measures of standard of living and quality of life. Consumer

goods manufacturing industry provides the driving force for stimulating rapid

economic growth. The growth rate of manufacturing and consumer goods industry

normally surpasses that of agriculture and service sectors. It is for this reason that

the manufacturing and consumer goods durable industry is considered the

backbone of economy.

BACKGROUND

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

handful of domestic players like Godrej, Allwyn, Kelvinator and Voltas. Together,

they controlled nearly 90% of the market. They were first superceded by players

like BPL and Videocon in the early 1990s, who invested in brand-building and in

enhancing distribution and service channels. Then, with liberalization came a spate

of foreign players from LG Electronics to Sony to Aiwa.

Rs 23,000-crore consumer durables industry can be divided into two types:consumer electronics and consumer utilities. Consumer electronics is basically

entertainment systems like television, VCRs, audio systems and home theater

systems. Consumer utilities are other household appliances like refrigerators,

washing machines, air conditioners, food processors, and vacuum cleaners. On

most third world countries, consumer durables like the refrigerator and television

are most popular. Out of these, the television segment is undoubtedly the largest


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segment. Products in the white goods segment come next to the CTVs in the

purchasing hierarchy of the Indian consumer.

Over the years, demand for consumer durables has increased with rising

income levels, double-income families, changing lifestyles, availability of credit,

increasing consumer awareness and introduction of new models. Products like air

conditioners are no longer perceived as luxury products. According to Indian

Readership Surveys (1999-2004) the following durable categories have registered

a healthy double-digit growth.

Source: Indian Readership Surveys (1999-2004)

While TV draws its share from both urban and rural refrigerators and washing

machines are still inclined towards urban.

Current Scenario

Durable Categories Growth Rate (1999-2004)

Television Sets 16%

Washing Machine 17%

Refrigerators 14%


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Most of the segments in this sector are characterized by intense competition,

emergence of new companies (especially MNCs), introduction of state-of-the-art

models, price discounts and exchange schemes. MNCs continue to dominate the

Indian consumer durable segment, which is apparent from the fact that thesecompanies command more than 65% market share in the colour television (CTV)

segment.

Steady growth of CE at 13-15% (0323%)

HA falling behind CE on account of growth

Steady growth of CE+HA - yet low penetration

INDUSTRY SIZE


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

types: consumer electronics and consumer utilities. Consumer Electronic industry

has a size of around Rs. 102 billion. The Indian television industry has a size of

around Rs 96 billion, comprising colour television (CTV) of Rs 91 bn and B&WTV market of Rs 5 bn and other markets (primarily video equipment) of Rs. 4-6

billion. In terms of volumes, the CTV market was estimated at 9.05 million units

and the B&W TV market at 2 million units during calendar year 2004.

Refrigerators constitute the second largest product segment within the Indian

consumer durables sector in India, with an estimated annual turnover of Rs 39 bn

during FY2005 with an estimated sale of 4.1m units.

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

volume terms, and Rs 24 bn in value terms. Washing machines sales in India

aggregated an estimated 1.37m during FY2004 or around Rs 11 bn in value terms.

MAJOR PLAYERS

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

sectors such as air conditioners, washing machines, refrigerators & television:

Blue Star Ltd., Mirc Electronics Ltd., Whirlpool of India Ltd., Philips (India) Ltd.,


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BPL Ltd., Sony Corporation Ltd., Samsung India Ltd., LG Electronics India Ltd.,

Videocon International Ltd., Thomson Ltd. & Daewoo Ltd.


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Brands in Home Appliance

Sector Brands in Consumer Electronic Sector


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DEMAND/SUPPLY

Supply growth is high across all the segments. But the organized sector has

gained substantial market share from the unorganized segment in recent years.

However, there are fewer players in segments like dishwashers and vacuum

cleaners.

Cyclical and seasonal. Demand is high during festive season and is generally

dependent on good monsoons. There are certain factors in the consumer durables

industry, which are considered as demand drivers. They are:

1. The degree of distribution network in the market.

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

industry.

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

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

older version.

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

product features

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

schemes and consumer finance facility available

7. The market positioning of the product

8. The cost competitiveness and pricing strategy of the company


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9. The financial strength of the players

CONSUMER DURABLE: URBAN & RURAL INDIA

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

households have color televisions, 82 percent own refrigerators, and 44

percent own washing machines.

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

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

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

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

percent own washing machines.

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

households. An additional 4.6 million high-income households and 13 million

middle-income households by 2006 to 2007 will take the number of rural

households from 122.8 million to 139 million. This constitutes a huge opportunity

for marketers - 60 million households or 300 million consumers with the capacity

to buy consumer appliances and other products is an attractive market for any

global player. And it seems that global appliance players who have established

brands in the Indian market are likely to benefit from this great big push towardsconsumerism

SUCCESS FACTOR FOR CONSUMER DURABLE INDUSTRY


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Indian consumer durables industry is going through a consolidation phase

with MNC companies going in for strategies to increase market share. Certain

success factors for this industry are identified as follows:

1. Technology: Rising competition has resulted in major competitors

introducing technologically superior products at competitive prices. This

means the technology input is gaining more and more importance. In this

regard, the large MNC players score over their Indian counterparts as they

can always source technology from their parents. On the other hand, Indian

companies rely on the outside sources for their technology requirements.

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

different from other markets. Hence understanding these peculiarities is

important for the long-term survival. For example, Samsung launched the

'Super Horn" brand after it discovered that Indian consumers prefer loud

noise. Indian companies are better placed in this regard as they know the

market pretty well.

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

mindshare of the consumer has to be maintained and the product has to be

made visible. Volumes in this business are narrow and profitability comes

from volumes. To achieve volumes, deep penetration of the market is

necessary. Indian companies score a point here as being in the market for a

longer time; they have developed strong distribution channels.

4. Good brand image: Perception of a particular brand plays an importantrole in purchase decision. A typical Indian consumer looks for value for

money when he makes purchase of white goods, as the price involved is

significant and unlike developed markets, Indians do not have the buy, use


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and throw mindset. Hence, consumer also looks for reliability of the

product. All this is conveyed through strong brand awareness.

Consumer Outlook: The Change in Consumer

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

keep pace with these changes. The me too syndrome is no longer valid as consumers

seek customized products. The Indian consumer consumers evolution in the last

decade has thrown up some interesting trends:

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

countrys population is under the age of 14years.

2. Kids graduating from pester power to decision makers.

3. People with buying power living longer and developing distinct

health needs.

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

consumer trends.

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

mentality leading to high disposable income.

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

large physical mass and the consumer looks for a post buy

relationship to enhance the value of her brand decision making.

NCAERs The Great Indian Middle Class Survey: A few interesting finding:


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1. Total number of urban households will increase from 49 million to

60 million by 2006 to 2007. The number of urban households in the

high-income group will increase by 8.6 million by the year 2006 to

2007, and by 7.3 million in the upper-middle-income group.

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

by 250per cent to 1, 40,000 by 2010. They are expected to grow

from 0.2% in 1995-96 to 1.7% in 2010.

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

This is the first time that NCAER has defined the middle class as having an annual

household income of Rs 200,000 to Rs 1 million. Many of these rich and middle

class households are located in rural areas and small towns too.

SWOT ANALYSIS: CONSUMER DURABLE INDUSTRY

STRENGTH WEAKNESS


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o Accessory to Necessary Air-

conditioners are no longer

perceived to be a item of luxury.

o Advancement of technology

which gives the companies abilityto introduce new products and newproduct features.

o High Growth. Key drivers beingUrban and Rural.

o Government Policies in favour of

Industry includes infrastructuredevelopment, reduction in exciseduty and so on.

o Supply continues to outstrip Demand.

Demand Cyclical and seasonal.

o Volatile performance of the agricultural

sector have a negative impact ondemand. The sector's performance ishighly dependent on monsoon andreforms, which has failed often.

OPPORTUNITY THREAT

o Diversification. Developing new

products for new markets.

o Easy availability of finance has

stimulated consumers to buy

durables.

o Changes in Consumer Outlook

from spend now-save latermentality leading to high

o Dozen companies operating in the white

goods segment. Prices would continue toremain depressed and margins will beunder pressure.

o Threats of cheaper imports from China

and other South East Asian countries


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disposable income.

ENVIORNMENT ANALYSIS: PORTERS MODEL

POTENTIAL ENTRANTS

MEDIUM

In the CE industry, although there are not prohibitively high costs of entry, thecritical success factors are brand image, brand allegiance, and distributionnetworks.


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INDUSTRY COMPETITORS

INTER FIRM RIVALRY HIGH

The Indian industry consists of players of domestic origin as well asmultinationals. Of late, the multinationals have gained a sizeable presence in theIndian CE market at the cost of domestic players.

BARGAINING POWER OF BUYERS

HIGH

With the intensification of competition the bargaining power of the buyer hasincreased.


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SUBSTITUTES

LOW TO MEDIUM

The consumer electronics (CE) sector is characterised by continuous technologyadvances that may result in substitution within the product category.

BARGAINING POWER OF SUPPLIERS

LOW TO MEDIUM

Most of the raw materials are


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available easily and in India. Some high-end raw materials such as larger-sizepicture tubes for flat TVs are imported.


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TELEVISION: CTV

BACKGROUND

The television industry started in India in 1970 with the production of B&W TV sets.

The initial TVs were all 20-inch (or 51-cm) sets. For 13 years, this was the only size

offered in the B&W TV market, till 14-inch TVs were launched in 1984. . The

Government policy on B&W TVs in the initial period was characterized by licensing

of manufacturing units for capacity in excess of 10,000 per annum and

encouragement to the small sector industry (SSI) sector to set up production facilitieswith capacities in the range of 2,500-5,000 per annum. The year 1983 saw the

removal of restriction on capacity expansions and of the ceiling on capacity to be

licensed, although the restrictions on foreign technology continued. A notable

development was the launch of the 14-inch B&W TVs in 1984, which evoked an even

better response from the market, especially since they were affordable for households

in the lower economic strata, in both rural and urban areas.

The birth of CTV in India can be traced to the Asian Games (ASIAD) held in New

Delhi in 1982. After the ASIAD, Doordarshan Kendras were set up in many parts of

the country. The euphoria over cricket following India's victory in the Prudential

World Cup in 1983 and in the Benson and Hedges cricket championship in Australia


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in 1985 (with the high-quality telecast of Channel Nine) provided a great impetus to

CTV demand. The Government encouraged this sector, and various State

Governments came up with their own TV companies like Uptron, Keltron and

Meltron. Older players in the B&W TV market, like Weston, Dyanora andTelevista, also diversified into CTVs. By 1989, there were around 200 players in the

market.

The second phase of CTV growth came on the heels of the 1991-initiated economic

liberalization programme, after which there was a reduction in both excise and import

duties. Simultaneously, with the opening up of Indian skies to foreign satellite

channels in 1991-92 and the coming of cable TV, the demand for TVs grew further.

This was also the period when private and more aggressive domestic players like

Videocon, BPL and Mirc Electronics consolidated their presence in the CTV market

through their focus on both product promotion and technology--the latter through

collaborations with international bigwigs (BPL with Sanyo, Japan, Mirc

Electronics with JVC, Japan, and Videocon with National, Japan). Since the mid-

1990s, the Indian TV market has witnessed the entry of global brands like Akai,

Aiwa, Sansui, LG, Samsung and Toshiba. At present, while LG and Samsungoperate through fully-controlled Indian operations, the Akai, Sansui and Toshiba

brands are marketed by Videocon (Akai was initially with Baron International, and

later sold to Videocon). Aiwa is now a subsidiary of Sony. The other multinationals

(including Sony, LG, Samsung) entered on their own and quickly captured the

imagination of the market with innovations in product quality and features.

INDIA V/S GLOBAL

The penetration levels of televisions in India is just 24% as compared with 98% in

China, 11% in Brazil, 235% in France, 250% in Japan and 333% in US.


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"In the west, the colour television is replaced after every 2-3 years, for us

Indians, the period of replacement varies between 10-12 years."

PLAYERS AND MARKET SHARE


The major brands in the Indian CTV industry are LG, Samsung, BPL, Onida,

Videocon, Onida, Sansui, Sony, Akai, Aiwa, Philips, Panasonic, Sharp, Thomson and

Daewoo.Competition has also intensified with Chinese consumer electronics playerHaier, German company G-Hanz and Japan's Hitachi having leaped into the colour

TV market. The companies marketing their CTV products under these brands are as

follows:

Company Brands

BPL Limited BPL

Videocon International Limited Videocon, Akai, Sansui, ToshibaMirc Electronics Limited Onida and Igo

Sony India Private Limited Sony

LG Electronics India Limited LG

Samsung India Electronics Limited Samsung


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National Panasonic IndiaLimited/Matsushita Television and AudioPrivate Limited

Panasonic

Kalyani Sharp India Limited Sharp

Thomson Consumer Electronics IndiaLimited

Thomson

The Indian television industry has

a size of around Rs 96 billion, comprising colour television (CTV) of Rs 91 bn and

B&W TV market of Rs 5 bn. The top four players (LG, Samsung, Videocon groupand Onida) have consolidated their position. Today, they account for 69 per cent of

the market, up from 43 per cent a couple of years ago. Two or three factors have

caused this change. BPL, once a leader with over 20 per cent market share, has

dropped to 5.2 per cent. Second, multinationals brands like Sony, Panasonic,

Thomson, and Sharp have lost ground. Third, regional brands like Oscar, Texla,

Weston, and Beltek have lost market share. The reason behind this is that theconsumer electronic and the CTV market is characterized by continue innovation and

use of state of art technology which these companies have been unable to keep pace.


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REFRIGERATOR

BACKGROUND

Refrigerators have been manufactured in India since 1950s. Till the 1980s,

players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the

market. Earlier, the white goods sector was categorized as a luxury goods industry

and was subject to oppressive taxation and licensing. The situation changed after the

liberalization of the Indian economy in the early 1990s. The government removed all

restrictions, and now there is no restriction on foreign investment, and licenses are no

longer required. Post-liberalization, a number of foreign companies entered the

market and many domestic players also diversified into refrigerators. BPL and

Videocon who already had a presence in the consumer electronics market, leveraged

their strengths to enter the durables sector.


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In India, refrigerators have the highest aspirational value of all consumer

durables, with the exception of televisions. This accounts for the high growth rate of

the refrigerator market. Refrigerators are presently being manufactured in two basic

designs which are referred to as Direct Cool (DC) and Frost Free (FF) refrigerator.The direct cool segment continues to dominate Indian refrigerator market compared to

more expensive frost-free models. The growth in this segment though marginal, has

been driven by factors like availability of low priced models as due to competitive

pricing and a growing middle class. Manufacturers of refrigerators claim to have

improved the quality of the product particularly the reliability of the Compressor. In

so far as new technology is concerned, the concept of Frost Free refrigerator has been

gaining popularity. Capacity-wise also, there is a shift in Refrigerator Market. Till

about two years back, 165 Litres had a larger share and now units of capacity 185-300

Litres are having increasing market share. Manufacturers are encouraged to adopt

environment friendly technology like usage of non-CFC (non- Chloro-Fluro-Carbons)

refrigerant based air conditioners, Non-CFC refrigerators are manufactured in the

country but because of their high initial cost, the demand is somewhat sluggish.

INDIA V/S GLOBAL

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

durable in terms of penetration, is 13% compared to well over 90% in Malaysia, Australia,

Singapore, Hong Kong and Korea; around 80% in Thailand; close to 40% in Philippines and

China and 20% in Vietnam and Indonesia. When you compare the annual commercial

sales of HVAC and refrigeration equipment in the US at US $ 200 per capita and in

China at US $ 3 per capita with a dismal US $ 0.25 per capita in India.



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The refrigerator industry has become highly competitive as a number of brands have

entered the market and the consumer has a wide choice.

Company Brands

BPL Limited BPLVideocon International Limited Videocon, Akai


Samsung India Electronics Limited Samsung

Whirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. Godrej

Voltas Limited Voltas

Electrolux Kelvinator Electrolux Kelvinator, Electrolux andAllwyn

Refrigerators

constitute the second largest product segment within the Indian consumer durables

sector in India, with an estimated annual turnover of Rs 39 bn during FY2005 with an

estimated sale of 4.1m units. According to FICCI Survey April-March 2003-2004Whirlpool and Godrej are the top two players with market shares of 27 per cent and

20 per cent respectively. Electrolux Kelvinator and LG compete for third and fourth

position with market shares of 16 per cent and 14.5 per cent respectively. Videocon

(11 per cent), Samsung (6), BPL (4), Voltas and Akai are other significant players.


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AIR-CONDITIONER

BACKGROUND In

1902, Dr. Willis Haviland Carrier invented and secured the patent for a weather

control concept - air conditioning. Ever since, life hasn't been the same. The air-

conditioner market is hotting up as more and more people appear to be convinced

about the comfort of an air-conditioner (AC). The extremely hot summers have

stirred the demand for ACs and the industry is experiencing a significant

change. Types of

Air-conditioner Air conditioning

products are divided into Non Ducted products & Ducted systems .The Non

Ducted products are divided into two parts: window ACs & the mini splits. Theducted systems are divided into central plants, packaged ACs, ducted ACs.

Window ACs account for about 54% of the total market for ACs with an estimated

market size of about Rs20bn. Room air conditioners

operate on electricity or gas and are enclosed in a single cabinet. They blow the

conditioned air directly into the room and do not have air ducts leading to and

from them. The three chief types are window air conditioners, consoles and self-

contained air conditioners. Window air conditioners fit into the

lower part of a window and can be moved from window to window and thus the

name, Window ACs. Self-contained air conditioners are the large room air

conditioners. Central air conditioners also use

electricity or gas. They can supply conditioned air to a number of rooms or to an


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entire building from one central source. Fans blow the conditioned air through air

ducts from the air conditioner to the rooms. Central conditioners have a number of

advantages over other kinds. For example, all the equipment for air conditioning a

large area is located in one place. This reduces the cost of cleaning and repairing.Central conditioners can also be zoned i.e. they can supply air of different

temperature to different parts of a building.

INDIA V/S GLOBAL

According to Refrigeration and Air-conditioning Manufacturing Association

(RAMA) the penetration of household Air-Conditioners is abysmally low in India

at around 2% compared to 20% in Indonesia, 24% in China, 40% in Thailand,

45% in Malaysia.


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

terms, and Rs 24 bn in value terms. According to FICCI Air Conditioners (AC) it

reveals that Indian AC industry, which has mainly dominated by players likeCarrier and Voltas, has been taken over by the new MNCs in the last few years.

AC market is dominated by four major playersLG, Voltas, Carrier and

Samsung.

LG is the market leader with a market share of 29 per cent followed by Voltas (11)

and by Carrier and Samsung (9.2 each) in addition to other players like Hitachi

and Videocon.


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Company BrandsMirc Electronics Limited Onida

Videocon International Limited Videocon


Samsung India Electronics Limited SamsungWhirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. Godrej

Voltas Limited Voltas

Electrolux Kelvinator Electrolux

Blue Star India Ltd Blue Star

Daikin industries, ltd. Daikin
http://www.daikin.com/http://www.daikin.com/


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WASHING MACHINE

BACKGROUND

Washing machines as a consumer durable product has been in existence in India for

the last 10 years. During the last few years, in the Consumer Durable Sector themarket for Washing Machines has grown quite fast. The washing machine market

consists of two broad segments - semi-automatic and fully automatic. The first

accounts for a chunk of the market. In terms of loading type, top loading machines

sell in greater numbers than front-loading ones. In this industry, it is the fully

automatic segment, which in recent times has been getting the attention of the users as

more and more households have both partners working. Consequently manufacturers

have started paying more attention to this segment and have started introducing more

features in their products. The customers now have a wide range of world class brands

to choose from.

Major growth is projected to take place in fully automatic segment, which accounts

for above 23 per cent of the total market to about 30 per cent.

There is also a trend for purchasing smaller machines in the range of 3 to 4 kg.

capacity as compared to larger machines as there are more and more nuclear familiesrather than joint families. In regard to emerging new technologies in the washing

machines sector mention may be made of aero power, triple cascade tornado wash,

digital intelligence, unique optical sensor and other such innovations and adaptations

which are gradually being introduced by the indigenous manufacturers. Fully


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automatic machines are gaining popularity with the change in lifestyle of consumers,

increase in income, increase in number of working couples, and due to price

competitiveness.

INDIA V/S GLOBAL

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

compared to global due to many reasons. Many housewives in less affluent

households prefer to wash clothes themselves rather than invest in washing machines.

Water scarcity in many Indian cities and timely availability is another major issue.

However, it foresees that penetration of washing machine will rise by more than 6 per

cent in the next two years.


The refrigerator industry has become highly competitive as a number of brands have

entered the market and the consumer has a wide choice. Some of the company and

their brands are as follows:


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LG Electronics has registered a remarkable growth of 36 % in the Washing Machine

Segment in H1 The Fully Automatic Washing Machines segment has recorded a

remarkable performance where volumes have grown by 22% and value by 25% .Here

again LGEIL happens to be the undisputed leader with a 30.7 % market share in Fully

Automatic Washing Machine and 33.7 % market share in Semi Automatic Washing

Machine . (Source: ORG-GFK, May 2004)

Company Brands

Mirc Electronics Limited Onida

BPL Limited BPL


Samsung India Electronics Limited SamsungWhirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. Godrej

Electrolux Kelvinator Electrolux


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FUTURE SCENARIO

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

rising purchasing power of people with higher propensity to consume with preferencefor sophisticated brands would provide constant impetus to growth of white goods

industry segment makes future of consumer durable industry beneficial will rise the

expectation of consumer durable industry, While the consumer durable market is

facing a slowdown due to saturation in the urban market, rural consumers should be

provided with easily payable consumer finances schemes.

Rural India, which accounts for nearly 70 per cent of the total number of households,

has a two per cent penetration in case of refrigerators and 0.5 per cent for washing

machines, offers plenty of scope and opportunities for the white goods industry. By

the industry itself the rural market is growing faster than the urban India now. The

urban market is a replacement and up-gradation market now.

Unleashing of Consumer Durable Industry

In TV segment, the 14, 20 and 21 inches segments are expected to be the key

contributors to the overall industry growth. In the air conditioner segment,

room air conditioner market is growing at the rate of 18% per annum. Majority

of the companies, understandably, have plans to focus on these segments.


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Domestic AC manufacturers plan to beef up their distribution and service

networks, while MNCs will leverage on their brands and invest in high-

powered advertising. Given the fact that household penetration of ACs in the

country is very low (0.5%), growth potential is enormous. As running costs of

the AC are very high, manufacturers plan to introduce energy-saving models in

future. Demand for ACs in the long run will be robust due to rising income

levels and also due to higher computerization. Besides, air conditioners are no

longer perceived as luxury needs.

As per NCAER (one of the premier economic research agencies in India), the

penetration of TVs is expected to increase almost three times by FY07 as

compared to the FY99 level. Growth in even higher for other durable items like

refrigerators and washing machines. The expectations are also on the premise

that the consuming class, as a percentage of total households, is expected to

grow at a faster rate. This would benefit the consumer durable manufactures.

'000*) 1998-99 2006-07

Category Rural Urban All

India

Rural Urban All

India

TVs (colour) 48 304 121 185 723 347

Refrigerators 35 335 120 65 717 262

Washingmachines

10 167 55 20 399 135

Sewingmachines 71 172 100 85 152 103

Source: NCAER, * households


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As per CETMA, Consumer Electronic plus Home Appliances is expected

at 15-20% next five years.


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CONCLUSION AND RECOMMENDATION

It Contributes more than 5.5% to index of Industrial Production

and provides jobs to lakhs of professionals, Skilled, Semi Skilled

and unskilled workers, particularly women. It improves the quality

of life of people by providing Entertainment / information /

education / comfort and helps reduce daily chores, particularly for

housewives. But the importance of the sector in National

Economy remains unnoticed.

"Lo Penetration means opportunity: The consumer

electronic and home appliance which forms the part of

consumer durable industry is categorized by low

penetration. Television, Refrigerator and Air-conditioner have

penetration of 24%, 13% & 2% respectively. This means

huge opportunity and untapped market.

Problem Areas: Some of the reason Attributable to

Industry are as follows:

Inadequate stress on R&D

Quality - Yet an issue


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After Sale Service & Customer Satisfaction

Action for Industry for Growth

Commit sufficient resources for R&D

Need to be more quality conscious

Need to improve After Sales Services

Need to Build economies of Scale

Explore exports as a viable option.

More emphasis to develop Rural Market.

BIBLIOGRAPHY

Business World : The BW Mega Consumer Satisfaction Survey 2004

- 25th October 2004


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Impact Magazine 15th Jan 2005

Internet

www.indiainfoline.com

www.blonnet.com

www.etstrategicmarketing.com

www.lge.com
http://www.indiainfoline.com/http://www.blonnet.com/http://www.etstrategicmarketing.com/http://www.lge.com/http://www.indiainfoline.com/http://www.blonnet.com/http://www.etstrategicmarketing.com/http://www.lge.com/

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Consumer Durables in India by Mustufa Arsiwalla