July 2012/ Volume 2/Issue 7/Article No-5/1155-1163

ISSN: 2249-7196

INTERNATIONAL JOURNAL OF MANAGEMENT RESEARCH AND REVIEW

IMPACT OF ADVERTISEMENT ON PURCHASE PATTERN OF LG ACS A STUDY Dr. I. Anand Pawar*1, D.Bhanu Kumar2
1

Dept. of Commerce, Dr. B.R. Ambedkar Open University, Hyderabad-33 (A.P). Faculty Member, Global College of Management, Moinabad, Hyderabad (A.P)

ABSTRACT This paper discusses the growing market for Air Conditioners (ACs) in India since 2005-06 to 2010-11. As per the latest statistics, the usage rate of ACs in India is only one per cent when compared to other countries like, Indonesia is about 20 per cent, which is lowest one in AC users and 46 per cent in Malaysia which is highest consumer market for ACs. However, the Indian market for ACs is increasing year after year and it was 10 per cent in 2005-06 and rose to 20 per cent in 2010-11 and it will grow more in future particularly in urban areas. India is growing in all respects including literacy and earning capacity of an individual. In recent times, due to affluent society and services sector development. Development of service sector is leading to increased disposable income of an individual and leading to more demand for electronic goods in general and AC products in particular. At the same time numbers of players of national and internationals are also increased in electronic industry and showing their efforts in terms of sales. It is in this connection, the present study is undertaken to know the impact of advertisement on purchase pattern of LG ACs as a case study in Hyderabad city during September December, 2011. INTRODUCTION Indian society is more affluent and growing market for seasonal products (now these products become essential one) like Air Conditioners (ACs). It is due to increased disposable income and the life style of people particularly in urban areas and it is more in major towns and metro cities. India is one of the growing country and now attracting more foreigners as business players particularly in service sector industry. Development of service industry like, software, healthcare, hospitality and tourism, banking, communication, entertainment etc, creating greater market for ACs products and which is evident from the recent past it was $1170 mm in 2001-02, $1481 million in 2004-05, $1803 million in 2007-08, $2337 million in 2008-09, $ 3486 million in 2009-10 and to reach figure of 71676 million in 2010-11. Growth of Air Conditioners Market in India It is growing at the rate of 10 per cent from 2004-05 to 2005-06 and 20 per cent per annum in 2010-11. The housing ACs market is expected to grow at 20 per cent per annum. The housing ACs segment of the heating (H), ventilation (V) and AC HVAC industry driven by the growth of the residential purposes/segment has been growing at the rate about 25 per cent an average since the year 2005. The number of household ACs very low in India and it could be
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1 per cent when compared to 20 per cent in Indonesia, 24 per cent in China, 40 per cent in Thailand and 46 per cent in Malaysia. However, lower prices, increase disposable income, availability of easier finance and urge of life style has all attracting to help growth of ACs market in India (Vyas & Sharma, 2006). The size market for room ACs both for window and split is $ 311 million and $223 million for ducted split AC system and for commercial purposes is current $188 million. Estimated market for ACs is likely to overcome around 5 to 7 per cent till the year 2010. Many branded products even from foreign companies presently dominate the Indian ACs market and there are ten major players (branded ACs) occupied the total market in India. Altogether sharing nearly 45 per cent of total sales and almost all of them have technical tie-ups with either companies from USA or Japanese. Major competitors in the ACs industry are Blue Star, Carrier Aircon and Voltas. Other brands such as Godrej, Hitachi and Videocon also have a considerable share in the Indian ACs market. Later the Koean brand like Samsung is also showing considerable impact on the existing ones. Other brands include Daikin, Fuji General, National, Onida, Electrolux and Whirlpool to have introduced their AC products and catering to the household demand. All these entrants could able to make their presence in the Indian market due to simplified norms and removal of several restrictions on import duties, excise duties of Government if India has further aid in importing ACs from foreign countries. During recent times particularly after the year 2000, LG EIL, gaining more market acceptance multiple products ranging from ACs to mobile phone hand sets in urban areas when compared to other competitors as mentioned above that is not only in ACs market but also for other products too. To assess the same, the present study is undertaken with the following objectives. OBJECTIVES OF THE STUDY The objectives of the study are to: Understand the growing market for Air Conditioners (ACs) in India; Examine the usage pattern and impact of advertisements on the customers of LG ACs in Hyderabad city; and Analyzing the perception of users of LG Air Conditioners with regard to after sales services. SCOPE AND METHODOLOGY The present research study is based on primary data collected from 105 respondents i.e., present household users of ACs located in central Hyderabad region of Begumpet area. The reason for taking only 105 (1%) sample respondents is out of a total of 10,054 LG ACs were sold during this period of six years (2004-05 to 2010-11) by the single dealer (Thirumala Music Centre) Begumpet Hyderabad. To elicit the relevant information, a well-structured questionnaire was distributed among the households of LG AC users (particularly 1.5 tone capacity) as per the information available from the retailers. The questionnaire consists of questions related to: awareness of various brands and the reason for buying only LG ACs, warranty, usage pattern of ACs, overall impressions of users on LG ACs, explore the
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July 2012/ Volume 2/Issue 7/Article No-5/1155-1163

ISSN: 2249-7196

information regarding sources of information for measuring their awareness, users expectations and experiences and also their opinion on after sales services as provided by the service personnel of the retailers and LG Electronic India Limited behalf. RESULTS AND DISCUSSIONS The present study is conducted after collecting the information from a sample of 105 household users of LG ACs which is most popular and major market share in the main city area of Hyderabad. It is popular because several other products such as refrigerators and Vacuum cleaner including mobile phones. In order to know the customers perception on the performance of LG ACs and the level of satisfaction with regard to after sale services. Now a days LG is one of the leading electronic company with multiple products in the market. Its pricing strategy also within the reach of all segments of customer. LG with suitable promotional strategies are high in reaching larger market share. As a result, it become more popular brand and within the reach of price. Table 1: Profile of Sample Respondents (LG ACs Users) Particulars Purchase of LG products Air Conditioners Refrigerators Televisions Audio/Videos Washing machines Mobile phones Vacuum Cleaners Micro Ware Over Year-wise purchase of LG ACs 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Warranty status of LG ACs Under warranty Out of warranty Preferred mode of payment Cash Cheque EMI (Finance) Usage pattern of ACs Regular (above12hrs) Often (6-12hrs) Very often (below 6hrs) Source: Field data
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No of Sample Respondents 105 36 22 10 14 09 06 03 04 06 10 17 25 43

Percentage

51.24 17.56 10.73 04.87 06.83 04.39 02.92 01.46 03.80 05.71 09.52 16.19 23.80 40.95

68 37 48 42 15 79 22 04

64.76 35.24 45.71 40.00 14.29 75.30 20.90 03.80

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Table-1 presents that the existing customers using different products of LG and what is the reason for purchasing ACs from the same company. Customers of LG ACs have been taken from the year 2001 to 2006 and there were 3.80 per cent of respondents or households using LG ACs since 2001, 5.71 per cent of them since 2002, 5.92 per cent of respondents since 2003, 16.19 per cent since 2004, 23.80 per cent since 2004 and 40.95 per cent respondents using ACs during 2006. It shows the percent of sales increasing year after year which indicates the demand for and also increasing disposable income of respondents leading to more sales. Distribution of respondents by warranty status on the purchase and about 65% of user-respondents reported that their ACs were under warranty period since company keeps two year as warranty period and about 35% of them are out of warranty period that they crossed warranty period of two years. With regard to purchase mode, majority i.e., 45.71% of AC users purchased on cash, 40% of them paid by cheque and only 14.29% of AC owners bought under finance scheme and paying EMIs. Regarding usage pattern of ACs, 75% of respondents using regularly i.e., above 12 hours a day, 20.90% respondents reported that they use often (6-12 hours), and only 3.80% of users using their ACs very often (below 6 hours). Table 2: Source of Information to purchase of ACs Source of information Television Advertisements Newspaper Advertisements Magazines Friends & Relatives Neighbors Dealers Other sources Total Source: Field data Table-2 presents the source of information before to purchase ACs. Majority of them (39%) opined that Television advertisement as a source of information. Nearly 31.43% of respondents used Newspapers as their source of information, 13.33% of them came to know through friends and relatives, 8.57% of users through neighbors, 5.71% of respondents used others sources and very few number of respondents utilized magazines as their source of information to arrive at a decision to purchase ACs. It is evident that the advertisements share in the greater impact on the users. Table-3 examines the awareness of various others brands but less consideration of those brands while buying LG ACs. However, Electrolux and Samsung emerged as the nearest competitors followed by Videocon and Blue Star. Further the respondents were aware of almost all brands available in the market. But they have been influencing by the family friends and relatives after advertisement. No of Sample Respondents 41 33 02 14 09 -06 105 Percentage 39.04 31.43 01.90 13.33 08.57 -05.71 100.00

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July 2012/ Volume 2/Issue 7/Article No-5/1155-1163 Table 3: Awareness of brands while buying LG ACs S.No 01 02 03 04 05 06 07 08 09 10 Other Brands Blue Star Carrier Daikin Electrolux Hitachi Onida Samsung Videocon Voltas Whirlpool Source: Field data Table 4: Overall Impression of Users on LG ACs
Impression/ Para meters Quality Cooling Noise level Reliability Power consumption Quality ASS N 28 41 24 13 09 43 Responses UD % N % 53.33 12 11.43 24 17 21 51 14 22.86 16.19 20.00 48.57 13.33

ISSN: 2249-7196

No of Respondents 36 31 20 48 18 25 42 40 25 32

Percentage 34.29 29.52 19.05 45.71 17.14 23.81 40.00 38.09 23.80 30.48

SA % 26.67 39.04 22.86 12.38 8.57 40.95

A N 56 19 53 56 29 30

DA N 07 16 11 08 --% 06.66 15.09 10.48 07.62 --N 02 05 -07 16 18

SDA % 01.90 4.76 -06.67 15.24 17.14

18.09 50.48 53.33 27.62 28.57

Source: Field data Quality and Cooling - As shown in the table-4, presents the overall impressions (experience) of users on LG ACs., after using certain period and felt that 53.33% of respondents perceived as good, 26.67% opined that excellent, 11.42% of users reported as an average and 6.66% and 1.90 % of respondents expressed that quality aspect of LG ACs were poor and very poor respectively. Regarding cooling aspect, majority (39%) of respondents said excellent, about 23% them and an average and almost 20% of them user felt as poor and very poor result. Noise level and Reliability - However, 50% of AC users are happy with less noise and about 27% were felt noise. Overall experience of respondents on the reliability aspect of LG ACs were good 50.48%, 23% felt as excellent, 16.19% and 10.48% of ACs users in the opinion of poor and very poor reliability of LG ACs respectively. Power consumption and Quality After Sales Services - Majority (48.57%) of ACs users expressed that LG AC consuming higher power, where as 27.62% felt as moderate consumption and 8.57% of respondents said that power consumption is normal. Electronic goods are very sensitive and requires after sales services and in this aspect, Majority of respondent (40.95%) expressed as excellent quality service, 28.57% as good after sales
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services, 17.14% of respondent-users opined as very poor after sales services. It is evident from this, no respondents felt as poor services. USERS PERCEPTION ON THE AFTER SALES SERVICES OF LG ACS Proper guidelines provided on the Usage of ACs - Overall perception of LG ACs users on the after sales services are presented here. Nearly 52% of respondents have agreed with regard to proper guidelines were provided on the usage of LG ACs. There are 30.48% were strongly agreed, 7.62% of then disagreed 6.67% of them strongly disagreed and very less number of respondents (3.81%) were unable to decide, on the issue and user guidelines. Proper demonstration has been provided- LG Company generally demonstrates before the buyer on its usage. Nearly 56% of respondents agreed with proper demonstration given by the company, only 7% were strongly agreed,16% of users said that undecided and only 2.6% and 4.76% of users disagreed and strongly disagreed with the demonstration aspect of ACs. Satisfactory level of explanation provided on every small problem - Majority of respondents (52.38%) have agreed with satisfactory level of explanation provided by the sellers where as 30.48% were strongly agreed, 8.57% of users undecided to say anything and about 9% of them disagreed and strongly disagreed. Table 5: Users perception on the After Sales Services of LG ACs
After Sales Services (ASS) SA N % Proper guidelines provided on 32 30.48 the Usage of ACs Proper demonstration has 07 06.67 been provided Satisfactory level of 32 30.48 explanation provided on every small problem Promptness in providing 10 09.52 services Patient enough to listen users 24 22.86 grievances Technical staff of LG 23 21.90 attentive in problem solving LG Company believes in 26 24.76 improving product quality LG users would recommend 19 18.09 LG products to others LG Company is a progressive 70 66.67 one A N 54 59 55 % 51.43 56.19 52.38 Responses UD N % 04 03.81 17 09 16.19 08.57

N 08 27 03

DA % 07.62 25.71 02.86

N 07 05 06

SDA % 06.67 04.76 05.71

48 52 51 38 39 23

45.71 49.52 48.57 36.19 37.14 21.90

11 21 13 28 31 12

10.47 20.00 21.90 26.67 29.52 11.43

29 03 09 13 18 --

27.62 02.86 08.57 21.90 17.14 --

07 05 10 ----

06.67 4.76 09.51 ----

Source: Field data

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Promptness in providing services -Almost 55% (45.71% and 8.57%) Strongly agreed and agreed with the programmes in providing after sales services and equal number of respondents (45%) was felt as no promptness services provided to them. Majority of AC users agreed with the patient enough to listen their grievances and 23% of respondents strongly agreed and another almost 28% of AC users unhappy for their grievances handling. Patient enough to listen users grievances - Electronic goods required technical expertise while attending any problem. LG Company provides technical staff to sort out their problems on demand. Technical staff of LG attentive in problem solving - There are 48.57% of AC users agreed for attending technical staff to solve their problem, 21.90% were strongly agreed and reaming respondents with other perception. LG Company believes in improving product quality - LG company believe in improving product quality responses of respondents were 36.19% agreed, 24.76% strongly agreed, 26.67% of respondents undecided and almost 22% of the strongly disagreed; with this statement. LG users would recommend LG products to others - To a given statement that the LG ACs users would recommend other to buy products from LG Company Majority (37%) of users agreed, 18% strongly agreed where as 30% of LG users undecided and another 17% of them disagreed to recommend other to purchase LG products. It is observed that almost an equal number of LG users not in a position to recommend other. The reason could be insufficient after sales services provided by the company. LG Company is a progressive one - Last statement is on the LG Company and its progressive trend or growing one. There are 67% of respondents strongly agreed, 22% of then agreed where as only 11.43% of respondents undecided in saying as such. But no reacted as disagreed and strongly disagreed. FINDINGS AND SUGGESTIONS 1. In spite of several players in the market, LG enjoying the larger market share with regard to ACs are concerned and it is also well accepted even for other electronic products too. It is because of frequent advertisements given in different media to promote and capture the larger market. 2. Sales of LG ACs have been improving year after year as shown in the table -1 i.e., 3.80% in 2001 and 41% in 2006. It will grow even more in future. But for this, company should plan several other models in such away to give better performance and also by improving quality aspect in the existing one. 3. Usage pattern increased that is up to acceptable level and there are 96% of respondents using regularly. It is inferred to be more demand for this product as a result of higher income and changing life style. Therefore it is suggested to introduce as many models as possible to reach even a common man whose income below the Rs. 20,000 or less per month.

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4. The study reveals that neighbors, friends and relatives playing active role in purchase decision of ACs on par with television advertisements which paid form and hence, it is suggested the company to maximize its after sales services at the customers satisfactory level because satisfied customers and their ward of moth sometimes gives more impact / weightage in buying then advertisements. 5. Overall experience of users gives good impression in terms of quality, cooling and reliability but power consumption is little high when compared to few other brands like Blue Star ACs. Therefore, it is suggested to design different models with relative / less power consumption and also by improving after sales services. 6. Overall measurement of users perception through different statements and it is found that almost 45% of respondent disagreed with the demonstration aspect of LG Company has not been provided sufficient level as customer desire. It demands more attention to proper/ required level of demonstration should be given to satisfy the buyer. 7. It is also fund that after sales services are not given promptness i.e., 45% of respondents feeling that LG company need to strengthen its services more promptness to keep customers satisfied and whose satisfactory level would be more effective communication to others and leading to more sales. 8. Another 40% of respondent do not believe the company in improving product quality. Therefore, the company should adopt innovative models by improving product quality as per the growing demand/ life style of people particularly from middle income group. There are other companies for instance, Videocon modifying their products at different models, size and quality level in order to meet the requirements of different segment of customers, especially to attract middle income group of customers. CONCLUSION LG EIL is growing electronic goods in all respects due to competitive price and availability out lets in almost all major towns and cities. This is because of global and international brands exist in the market. Electronic industry also grown parallel level particularly after the Indian Governments liberalized regulation has been removed import and excise duties on almost all electronic goods. Growing needs of public are also determined by the awareness created by different sources of media advertisement. Further, improved and satisfactory level of after sales services determines the future demand for electronic products in general and AC products in particular. LG is not exception to this and the company particularly with regard to after sales services should take enough care. Because of ensured or quality and required after sales services will have greater impact on consumers and the development of the industry to be transformed into wealth maximization with efficient, trained technical staff (representative) will help in keeping customer satisfied which make them as ambassadors in suggesting others to purchase from the same company. Satisfied customer is the senior and loyal customers propagate the companys value and brand image which further enhances its profitability and market share.

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July 2012/ Volume 2/Issue 7/Article No-5/1155-1163 REFERENCES Business Line Internet Edition. Business World March 8, 2011. Financial Daily, The Hindu on Friday, May 7, 2010 News letters from LG Electronic India (P) Limited, 2004-05 to 2010-11.

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Vyas PH, Sharma D. A Consumer Study on Measurement of After Sales Services. The Indian Journal of Commerce 2006; 59: 98-107. The Economic Times, Friday, September 17, 2011. www.lgezbuy.com.

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