2.

1 Introduction to the
topic:

The Consumer Durables industry consists of durable goods and appliances for domestic use
such as televisions, refrigerators, air conditioners and washing machines. Instruments such as
cell phones and kitchen appliances like microwave ovens were also included in this category.

The sector has been witnessing significant growth in recent years, helped by several drivers
such as the emerging retail boom, real estate and housing demand, greater disposable income
and an overall increase in the level of affluence of a significant section of the population. The
industry is represented by major international and local players such as BPL, Videocon,
Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc. The consumer durables industry
can be broadly classified into two segments: Consumer Electronics and Consumer
Appliances. Consumer Appliances can be further categorized into Brown Goods and White
Goods. The key product lines under each segment were as follows. In this
research I have study about the factors that effect the consumer buying
preferences in the consumer durables mainly electronics.The important
factors are promotion,brand loyality,features,price,after sale service like
guarantee,warrantyetc

2.2 Industry Size, Growth, Trends:

The consumer durables market in India was estimated to be around US$ 5 billion in 2007-08.
More than 7 million units of consumer durable appliances have been sold in the year 2006-07
with colour televisions (CTV) forming the bulk of the sales with 30 percent share of volumes.
CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of the sales
in terms of the number of units sold. In the refrigerators market, the frost-free category has
grown by 8.3 per cent while direct cool segment has grown by 9 per cent. Companies like
LG, Whirlpool and Samsung have registered double-digit growth in the direct cool
refrigerator market. In the case of washing machines, the semi-automatic category with a
higher base and fully-automatic categories have grown by 4 per cent to 526,000 units and by
8 per cent to 229,000 units, respectively. In the air-conditioners segment, the sales of window
ACs have grown by 32 per cent and that of split ACs by 97 per cent. Since the penetration in

1
the urban areas for these products is already quite high, the markets for both C-TV and
refrigerators were shifting to the semi-urban and rural areas. The growth across product
categories in different segments is assessed in the following sections.

2.3 Consumer Electronics:

The CTV production was 15.10 million units in 2007-08 and is expected to grow by at least
25 per cent. At the disaggregated level, conventional CTV volumes have been falling while
flat TVs have grown strongly. Market sources indicate that most CTV majors have phased
out conventional TVs and have been instead focusing more onflat TVs. The flat segment of
CTVs now account for over60 per cent of the total domestic TV production and is likely to be

around 65 per cent in 2007-08.High-end products such as liquid crystal display (LCD)and
plasma display CTV grew by 400 per cent and 150 percent respectively in 2009-10 following
a sharp decline in prices of these products and this trend is expected to continue. The
audio/video player market has seen significant growth rates in the domestic market as prices
have dropped. This trend is expected to continue through 2009- 2010, as competition is likely
to intensify to scale and capture the mass market.

2.4 Evolution of Organized retailing in world:

An important aspect of the current economic scenario in India is the emergence of Organized
retail. There has been considerable growth in organized retailing business in recent years and
it is poised for much faster growth in the future. Major industrial houses have entered this
area and have announced very ambitious future expansion Plans. Transnational corporations
are also seeking to come to India and set up retail chains in collaboration with big Indian
companies. However, opinions are divided on the impact of the growth of organized retail in
the country. Concerns have been raised that the growth of organized retailing may have an
adverse impact on retailers in the unorganized sector. It has also been argued that growth of
organized retailing will yield efficiencies in the supply chain, enabling better access to
markets to producers (including farmers and small producers) and enabling higher prices, on

2
the one hand and, lower prices to consumers, on the other. In the context of divergent views
on the impact of organized retail, it is essential that an in-depth analytical study on the
possible effects of organized retailing in India is conducted.
• Effect on small retailers and vendors in the unorganized sector keeping in
Mind the likely growth in the overall market.
• Effect on employment.
• Impact on consumers.
• Impact on farmers and manufacturers.
• Impact on prices.
• Overall impact on economic growth.
International Retail:
upply chain in these countries.
Consumer Durables
Several key factors are driving growth in the consumer durables sector: disposable income

levels are rising, consumer financing has become easier and urban and rural markets are
growing at the annual rates of 7 per cent to 10 per cent, and 25 per cent, respectively, with
organized retail expected to garner about 15 per cent share by 2015 from the current 5 per
cent. Consumer durables is one of the fastest growing industries in India. Industry sales were
estimated to be about US$ 5 billion in value in 2007-08, a growth of more than 25 percent
over 2006-07, and are expected to grow at 20 percent in 2008-09. Some of the prominent
global players in the consumer durables sector include Philips, Samsung, Sony and Nokia.

Overview:
With the increase in income levels, easy availability of finance, increase in consumer
awareness, and introduction of new models, the demand for consumer durables has increased
significantly. Products like washing machines, air conditioners, microwave ovens, color

evisions (CTVs) are no longer considered luxury items. However, there are still very few
players in categories like vacuum cleaners, and dishwashers.
Consumer durables sector is characterized by the emergence of MNCs, exchange offers,
discounts, and intense competition. The market share of MNCs in consumer durables sector
is 65%. MNC's major target is the growing middle class of India.
3
MNCs offer superior technology to Consumers whereas the Indian companies compete on the
basis of firm grasp of the local market, their well-acknowledged brands, and hold over wide
distribution network. However, the penetration level of the consumer durables is still low in
India. An important factor behind low penetration is poor government spending on
infrastructure. For example, the government spending is very less on electrification programs
in rural areas. This factor discourages the consumer durables companies to market their
products in rural areas.

2.13 KEY CONSUMER DURABLES, & GROWTH TRENDS:

The consumer durables market in India was estimated to be around US$ 4.5 billion in 2006-
07. More than 7millionunits of consumer durable appliances have been sold in the year 2006-
07 with color televisions (CTV) forming the bulk of the sales with 30 per cent share of
volumes. CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of
the sales in terms of the number of units sold.

The research has found significant factors which affects consumers purchase decisions, it has
been observed that the purchase decisions are affected by a combination of two or more
factors, the final part of the thesis will try to draw a clearer picture on these factors,& how do
they affect the purchase decisions. Many factors inside the factor of ―Family Influence ―are
also present, family members from time to time play many roles of
influencer,decider,gatekeeper etc.( These are explained in the annexure). It has also been
found that, a factor which is most common during purchase of CTV,the same factor may not
be having equal importance during the purchase of refrigerators, Computers etc. The
consumer durables industry in India is set for sustained growth over the long term, fuelled by
favourable consumer demographics, overall growth in services and industrial sectors and
infrastructure development in suburban and rural areas. Several Indian and MNC players are
looking to strengthen their presence in India to leverage this opportunity. Findings till date :
Product -wise Analysis CTV The CTV production was 15.10 million units in 2006-07 and is
expected to grow by at least 25 per cent. At the disaggregated level, conventional CTV
volumes have been falling while flat TVs have grown strongly. Market sources indicate that
most CTV majors have phased out conventional TVs and have been instead focusing more on

4
flat TVs. The flat segment of CTVs now accounts for over 60 per cent of the total domestic
TV production and is likely to be around 65 per cent in 2007-08. High-end products such as
liquid crystal display (LCD) and plasma display CTV grew by 400 per cent and 150 percent
respectively in 2006-07 following a sharp decline in prices of these products and this trend is
expected to continue. Refrigerators are one of the most sought after appliances in Indian
middle class homes. The refrigerator market has two segments: Direct Cool and the relatively
new Frost-Free type. The market for refrigerators in 2006-07 was about 6.5 million units. The
growth of refrigerator segment is projected to be between 18 to 22 per cent over the next5
years. A critical success factor for the refrigerator market, given its widespread use, is deeper
reach into the market and increased penetration. Recently, the market is getting reinforced by
the replacement segment as well.

5
Company Profile
Consumer goods like washing machines, motorcars, TV sets, audio-video systems etc, which
yield services or utility over time rather than being completely used up at the moment of
consumption can be termed as the consumer durables. Most consumer goods are durables to
some degree, and the term is often used in a more restricted sense to denote relatively
expensive, technologically sophisticated goods ‗consumer durables' such as the examples
given above which implies high involvement at the time of purchase.

The consumer durables segment can be segregated into consumer electronics (TVs,
VCRs/VCPs and audio systems) and consumer appliances (also known as white goods) like
refrigerators, washing machines, air conditioners (ACs), microwave ovens, vacuum cleaners
and dishwashers.

Over the years demand for consumer durables has increased with the rising level of incomes,
double income families, changing lifestyles, availability of credit, increasing consumer
awareness and the introduction of new models by the Indian as well as multinational
companies. Consumer durable industry was once considered to be luxury item with targeting
the upper-middle class for consumption. With increasing competition, price wars, branding
and promotional strategies, the concept has melted down to the masses and has become a part
of the household's necessities even in the lower-middle class and rural part of the countries.

Most of the segments in this sector are characterized by intense competition, emergence of
new companies (especially MNCs), and introduction of state-of-the-art models, price
discounts and exchange schemes. Despite of that MNCs are entering in to Indian market
because growing Indian middle class of around 250 millions. Also it is widely accepted that
consumer durable penetration increases rapidly after per capita income (PCI) crosses a
threshold limit of $2000. In India, the PCI is low at $370, though it is equivalent to $600 on
PPP (Purchasing Power Parity) basis and expected to see a consistent growth of over 6% over
the next years to come.

According to NCEAR survey estimates, the number of households in the higher and middle-
income categories will rise rapidly. There will also absolute reduction in the number of
households in the low incomes. This will lift large number of households to income levels at

6
growth and higher income levels will drive growth in volumes, any reduction in the duties
will leads to lower down of the values and this will bring more customers for the durable
products.

The biggest attraction for MNCs is the growing Indian middle class (approx. 250 m). This
market is characterized with low penetration levels. MNCs hold an edge over their Indian
counterparts in terms of superior technology combined with a steady flow of capital, while
domestic companies compete on the basis of their well-acknowledged brands, an extensive
distribution network and an insight in local market conditions.

The Indian middle class market of 250 million is the biggest attraction for the MNCs along
with the level of the penetration of consumer durables in the India has more attracted
Multinationals to the India, in the case of consumer durables penetration levels of TV is
believed to the highest, and after that the penetration of the refrigerator comes.

In the future, earnings will be driven by rising demand for consumer durables in general. 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 Rs 10,000 in metros and Rs 5,000 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.
which they can become purchasers of consumer durable products. Continuous economic

7
Now considering consumer durables industry in general, the drivers that will leads to the
growth of the industry in general will be:
 The degree of distribution network in the market.
 The advertising and marketing strategy adopted by the players in the industry.
 The brand image of the product as perceived by the consumer.
 The technology used by the company viz. state-of-the art technology or and older version.
 The ability of the company to introduce newer products and newer product features.
 The capability of the company to service its products.
 The discount schemes and consumer finance facility available.
 The market positioning of the product.
 The cost competitiveness and pricing strategy of the company.
 The financial strength of the players.

The competition in the industry has intensified after the liberalization and more and more
MNC are coming to India to target the huge middle class of the country. The competition is
dependent upon the brand strength and distribution network. In other words, the advertising
and marketing expenses play a vital role in competition. As a result of the increased
competitive activity, the advertising and marketing costs as a percentage of operating income
ave increased over the years. This ratio for the industry has increased from 4.4 percent in

1993 to 6.7 percentage in 2000.

However, the export prospects are least or minimal because indigenous manufacturers do not
possess adequate brand equity or excellent product quality. There are even constraints like
transportation due to poor infrastructure and relatively under developed markets in the
neighboring countries.

Changes In The Strategies:

8
There is a shift in trend as the emphasis has moved from the manufacturing process to
marketing and advertising strategies. In other words, the marketing game has become a vital
factor for driving sales as against the manufacturing process of the products in the past.
Players are now concentrating on the creation of brand image in order to economize their
scale of operations and to increase their brand strength. The advertising expenses of the
companies operating in this segment are going high every year and the returns are
diminishing still the brand will play a major role in selling of the product.

Because of this, most of the manufacturers like, Videocon and Electrolux are acting as OEM
manufacturers for manufacturing refrigerators of Samsung and LG. Even, players have
increased the percentage of their advertising and marketing costs as a percentage to operating
income over the years; the ratio for the industry has increased from 4.6% in 1993 to around
7% in 2000. The brand building is very critical in the industry and constant advertising is
necessary.

Computers:

Purchase decisions for computers are largely affected by the factor of Assembled & Branded.
The topic of the study is not about finding the factor behind buying assembled or branded
PC/laptops. Thus the study is mainly focused on finding the major factors affecting
consumers Purchase decisions while buying branded computers. Brands account for 10 per
cent of the total consumer goods market in India, while organized retailing is around 2 per
cent of the total industry. Though branded computers are perceived to be costlier than non-
branded computers, the penetration of branded products is increasing. The relative shares of
branded computers at the organized sector indicate that a significant share of branded
products is being sold through unorganized channels. This highlights the need for a strong
distribution network to penetrate deeper into the potential market.

9
4.1 Major players:
The major players in the consumer durables industry, operating in different sectors such as air
conditioners, washing machines, refrigerators & television include:

COMPETITION
OVERVIEW:

Samsung India (CURRENT MARKET SHARE-37%):

Initially the strategy of Samsung in India was to create premium image by emphasizing
global brand. After facing stiff competition from another Korean major- LG, Samsung also
started playing price game. In 2004 it reverted back to its premium positioning, although it
resulted in some loss of market share. In line with the Global Digital Initiative of the Parent
Company.

Samsung India:

Acquired digital leadership in India by introducing its digital ready televisions like the 40"
LCD Projection TV, 43"Projection TV and the Plano series of Flat Colour televisions.

LG India (CURRENT MARKET SHARE-23%):

10
LG Electronics rightly understood the consumer motivations to create magnetic products,
price them strategically, position them sharply and keep making the magnetism more potent.
Having understood the finer differences in consumer motivations, it opted for sharp-arrow
‗reasons-to buy' differentiation over the ‗blanket-all approach' taken by most of the other
players. It is an aggressive marketer. It focuses on low and medium price products.

Toshiba India:

Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics
giant Toshiba Corporation and was incorporated in India on September 2001. Toshiba had a
presence in India since 1985 and was represented in India through their Liaison Office.

Sony India (CURRENT MARKET SHARE-21-22%):

Sony Corporation, Japan, established its India operations in November 1994. In India, Sony
has its distribution network comprising of over 7000 channel partners, 215 Sony World and
Sony Exclusive outlets and 21 direct branch locations. The company also has presence across
the country with 21 company owned and 172 authorized service centres.

Sharp India Ltd:

Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt
Ltd, the company was converted into a public limited company in the same year. The name
was changed to Kalyani Sharp India in 1986. The company was entered into a joint venture
with Sharp Corporation, Japan - a leading manufacturer of consumer electronic products to
11
manufacture VCRs/VCPs/VTDMs. The company manufactures consumer electronic goods
such as TVs, VCRs, VCPs and audio products. The products were sold under the Optonica
brand name. Sharp has a production base in 26 countries with 33 plants, and its products are
used in 133 countries. The company was accredited with the ISO-9001 certification in the
month of February, 2001.

Hitachi India:

Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing and sells a
wide range of products ranging from Power and Industrial Systems, Industrial \Components
& Equipment, Air Conditioning & Refrigeration Equipment to International Procurement of
software, materials and components. Some of HIL's product range includes Semiconductors

and Display Components. It also supports the sale of Plasma TVs, LCD TVs, LCD
Projectors, Smart Boards and DVD Camcorders.

Mirc Electronics (ONIDA):

The company commands strong brand equity among consumers largely owing to the success
of its Onida brand. High-quality designs have made the company a leading player in the
electronics and entertainment business. Its popular devil ad although had engendered a strong
emotional pull towards the brand, Technologically it represented no advancement. The
company plugged the gap by touting its digital technology. Like Videocon, it has also been
able to hold its market share. The world-class quality of Onida has enabled the company to
make a breakthrough on the export front. Onida is a leading brand in Gulf market and also
exports its models to Africa, Bangladesh, Sri Lanka and Nepal. It has technical tie-up with
12
the Japan Victor Company, better known as JVC. So focused is Onida on positioning itself on
the premium, high-tech plank that it is even planning to push its own envelope on
obsolescence, much like Intel has been doing in its own industry. The strategy is aimed at
further broad basing the product offering of the company, which has largely dominated the
top-end of the television market, across multiple market segments. Besides understanding the
strategy adopted by different players, several other factors- industry growth, concentration
and balance, corporate stakes, fixed cost, and product differences need to be analyzed to
determine the extent of rivalry between the existing players.

Videocon (CURRENT MARKET SHARE-12%):

It is the market leader in the consumer electronics and home appliances segments in India;
the company manufactures home appliances such as refrigerators, microwave ovens,
compressors, air conditioners and washing machines.

It has plans to acquire Daewoo's consumer electronics businesses worldwide to bring LCD
TVs, plasma TVs and components into its fold; the move would also help it acquire a
consuming partner for the recently-acquired Thomson's picture tube business. Videocon has
always been a price player and has an image of a low price brand. This entails providing
more features at a given price vis-à-vis competitors. It has taken over multinational brands to

cater to un served segments, like Sansui- to flank the flagship brand Videocon in the low to
mid priced segment, essentially to fight against brands like BPL, Philips, and Onida and
taken over Akai- tail end brand or brands like Aiwa. Videocon is one of the largest
manufacturers of television and its components in India and thus has advantages of
economies of scale and low cost due to indigenization. It has the widest distribution network
in India with more than 5000 dealers in the major cities .It also has a strong base in the semi-
urban and rural markets. Due to its multi-brand strategy, it has at present multiple brands at
13
the same price point. This has led to a state of diffused positioning for its brands. It has also
led to a cannibalization of sales among these brands. The flagship brand Videocon has lost
market share due to the presence of Sansui in the same segment. Because of reduction in
import duties on CPT the cost advantage of Videocon is also on the decline. Hence it is
facing rough weather and also trying to boost exports.

Panasonic India (CURRENT MARKET SHARE-6%):

Panasonic Corporation based in Osaka, Japan is a worldwide leader in the development and
Manufacture of electronic products for a wide range of consumer, business, and industrial
needs. Panasonic Electric Works Co., Ltd. traces its roots to the company started in 1918 by
Konosuke Matsushita. Panasonic India plans to invest USD 100 million in its new plasma TV
production facility in 2011.

The company currently has five production units in the country, at Noida, Gurgaon,
Vadodara, Chennai and Delhi. It also launched the worlds slimmest, 1-inch plasma TV called
Vierra PDP Z1.According to Panasonic The market potential for plasma TV was much
greater in India than China, The demand for such high-end sets was increasing at a rate of 4-
10 per cent in the country. The company has priced its plasma TV between Rs 24,000 and Rs
30 lakh (for a 103-inch screen). It has already sold ten such units this month.

Agrawal Group - Manufactures consumer electronic products; radios, tape-recorders,

car stereos and CD systems. View profile.

Anchor - Manufactures electrical switches, accessories, lighting luminaries, and PVC

wires, domestic appliances like electrical irons, mixers, grinders, toasters and fans.

14
Bajaj International - Exporters of electrical fans, household appliances, lamps,

fluorescent tube lights, light fittings, hoists etc. Imports steel and engineering items .

BOSS Portable Blenders - Manufacturer and exporter of portable blender and

home appliances includes hand held mixers, juice makers, stainless steel blender and more.

E.P.C Industrial Fans & Motors - Manufacturers & Exporters of industrial

fans, domestic fans, instrument cooling fans, cabin fans, electric fans & electric motors.

Eureka Forbes - Details on consumer products include vacuum cleaners, floor care
equipment, high pressure water jet cleaners and electronic security systems.

Global Wonders - The fastest search engine, directory, map and web guide for
information on the most popular websites. Features list of wholesaler, retailer along with
products list, consumer durable and more.

Hot shine Appliances - U.P - Manufacturers of gas cookers & stoves & electrical

appliances, product range includes cooking ranges, steam irons, oven toaster and grillers .

Kelvin Systems - Dealers for Carrier Aircon Ltd (air-conditioning equipment), Honda
(Siel) Power Products Ltd (portable electric generators), and Eureka Forbes Ltd (vacuum
cleaners)
Mangal Singh & Sons - Dealers in home appliances, consumer goods and electrical

15
appliances, includes television, refrigerator, audio products, washing machines, vacuum
flask, cooking range, oven and dining sets.

Moniba - Manufactures chemical pump, air operated pump, water purifier, health care

product, and bacteria free water, home appliances and chemical plant machinery.

Nadi Industrial Fans - Manufacturers of fans; product range includes axial fans,

centrifugal fans and special fans.

Onida - Provide an online showroom to purchase the entire range of Onida products.
Offers free delivery.

Orient Fan - Specialized in manufacturing mini motors, deluxe decorative ceiling fans,
shaded pole motors, box fans, food blender, food mixer, fruit juicer, vacuum cleaner etc.

Padmini Appliances - Manufacturers of gas stoves, oven-toaster-griller, juicer-

mixer-grinder, electric hot plates, washing machines, ceiling fans, water heaters, irons etc.

Philips - Details for consumer electronics, lighting, domestic appliances, semi conductors,
components, enabling technologies, multi media projectors etc.

PICASSO Home Products - Manufacturer and Exporter of various home

appliances like roti maker, mixer grinder, sandwich maker, oven toaster griller, Non Stick
Appliances and more.
16
Salora - Manufactures black-and-white & color television sets, Panasonic fax machines,

printers, and digital cameras; color monitors and cordless phones.

Sansui - India - Manufacturer of electronic products, audio systems, home theatres,

projection TVs, video CDs and home appliances.

Singer - Manufacturers of sewing machines, food processors, refrigerators, televisions,

oven, toasters, washing machines, electric irons etc.

Sony India - Details of product ranges from color TVs, hi-fi music systems, video CDs,
home theatre systems, DVDs, portable audio systems, digital cameras, RMEG products,
Wega T.V etc.

Sony World - Features wide ranges of products: car audios, handy cams, digital
cameras, VCD, LD, DVD players, cordless phones, walkman, and disc mans, and

Televisions.

Sumeet - Manufacturers of mixer-grinders. Offers details about the machines, recipes,

Sumeet outlets and more.

Sunflame Appliances - Manufacturers of kitchen appliances, home appliances and

electrical appliances in India.

17
Usha International - Manufacturer of sewing machines, fans, air conditioners, water
coolers, home appliances, agricultural and domestic pump sets, and auto products.

Usha Lexus - Makers of home appliances like sandwich toasters, juicer, mixer grinders,
ovens, ventilating fans, irons and room coolers.

Videocon - Suppliers of home appliances, TVs, refrigerators, ACs, air conditioners,

audios, tape recorder, colour monitors, digital organizers, Kenwood digital hi-fi systems,
television sets etc.

Vijay Sales - Dealers in consumer durables includes details for their product, customer
care, schemes, consumer finance, and more.

Voltas Limited - Makers of room air conditioners and refrigeration equipment, water
coolers, cranes, pumps and office furniture; includes machine tools, industrial chemicals etc.

L.G India - Details of product ranges from colour TVs, hi-fi music systems, video CDs,
home theatre systems, DVDs, portable audio systems, digital cameras, RMEG products, T.V
etc. Features wide ranges of products: car audios, handy cams, digital cameras, VCD, LD,

DVD players, Cdma mobiles, walkman, and disc mans, and Televisions.

Samsung Electronics India Ltd - Details of product ranges from colour TVs, hi-
fi music systems, video CDs, home theatre systems, DVDs, portable audio systems, digital
cameras, RMEG products, T.V etc. Features wide ranges of products: car audios, handy

18
cams, digital cameras, VCD, LD, DVD players, mobiles, walkman, and disc mans, and
Televisions. There has been strong competition between the major MNCs like Samsung, LG,
and Sony.

LG Electronics India Ltd has announced its extension plan in 2006. The company
is going to invest $250 million in India by 2011 and is planning to establish a manufacturing
facility in Pune.

TCL Corporation is also planning to establish a $22 million manufacturing facility in

India. The Indian companies like Videocon Industries and Onida are

also

planning to expand. Videocon has acquired Electrolux brand in India. Also, with the
acquisition of Thomson Displays by Videocon in Poland, China, and Mexico, the company is
marking its international presence.

According to supply Corporation (Applied Market Intelligence), country's fiscal policy has
encouraged Indian consumer electronic industry. The reduction on import duty in the year
2005-06 has benefited many companies, such as Samsung, LG, and Sony. These companies
import their premium end products from manufacturing facilities that are located outside
India. Indian consumers are now replacing their existing appliances with frost-free
refrigerators, split air conditioners, fully automatic washing machines, and color televisions

(CTVs), which are boosting the sales in these categories.

Some companies like Samsung Electronics Co. Ltd. and LG Electronics India Ltd. are now
focusing on rural areas also. These companies are introducing gift schemes and providing
19
easy finance to capture the consumer base in rural areas.

Growth in 2005-06
Consumer Durables

Air Conditioner

Refrigerator

Microwave Ovens

Washing Machines

Color Televisions (CTVs)

Black & White Televisions

Clock

Watch

VCDs

Consumer Electronics (Overall) Some Facts:

1. Bargaining power of suppliers in consumer durables sector is limited due to threat of

imports and intense competition.

2. Some of the entry barriers in consumer durables sector are distribution network, capital,
and ability to hire purchases.

20
3. Demand is seasonal and cyclical.

4. Competition among players is on the basis of difference in prices and well-acknowledged

brands.

4.2 Sector Outlook:

Consumer durables Sector ca n be classified as

follows:
Need Recognition & Problem
1. Consumer Electronics includes VCD/DVD, home theatre, music players, color
Awareness
televisions (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc.

2. White Goods include dishwashers, air conditioners, water heaters, washing machines,
refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances, microwaves,
built-in appliances, tumble dryer, personal care products, etc.
Information Search
3. Molded Luggage includes plastics.

4. Clocks and Watches

Evaluation of Alternatives

.3 Consumer buying process:

Purchase

Post- Purchase21 Evaluation

3.4 Industry classification:
The consumer durables industry can be broadly classified as consumer electronics and
consumer appliances. The consumer appliances category can be further segmented as white
goods and brown goods.

22
3.5 The key players and their products:

23
3.6 Market analysis:

Industry sales were US$ 4.5 billion in value in 2006-07 and more than 7 million units in
volume terms.

 Plasma display panels and liquid crystal display TVs have registered an average growth of
more than 250% 2006-07 and the trend is expected to continue.

 Split ACs have been growing at a much faster rate than window ACs- growth of 97% in
the year 2006-07 and the trend is expected to continue.

 Mobile phone production is expected to grow at a compound annual growth rate of 28.3%
from 31 million units in 2006 to 107 million units in 2001

 The sectors which have recorded excellent growth rates of more than 20 per cent in
terms of quantity produced are Air Conditioners (25 per cent), Split Air Conditioners (42.6
per cent) Micro Wave Woven (27.3 per cent), DVDS (25 per cent) VCD/MP3 (20 per cent),
Color Picture Tube (23 per cent,).

 The sectors which have recorded high growth rates between 10 and 20 per cent in
April-March 2004-05 over the corresponding previous period are Color Television (12%),
Window Air Conditioners (18.8 per cent), Washing Machines (18.1 per cent Watch (10%),
Frost Free Refrigerators (13.8%),

 Some sectors which have recorded moderate growth of 0 to 10 per cent are refrigerators
(5 per cent),), clock (8 per cent), Direct Cool Refrigerator (2.8 per cent)
The sector recording negative growth is B&W TV (- 16.7%)

 The Refrigeration Industry has reached 3.9 million units in 2004-05 from 3.7 million
units in the last year with a growth of 5 per cent.

24
The Air-Conditioners Industry has reached at 1.2 million units during 2004-05 with a
growth of 25 per cent from 9.8 lakh units in 2003-04.

Washing Machines is estimated to have grown by 18.1 per cent from 1.35 million units
in 2003-04 to 1.6 million units in 2004-05.

Microwave ovens has grown by 27.3 per cent growth with 3.5 lakh units compared to
2.75 lakh units in 2003-04.

 The Indian Colour Television industry has grown by 12.1 per cent in 2004-05 by
reaching 9.25 million units in 2004-05 from 8.25 million units in 2003-04.

The B&W TV has recorded a negative growth of 16.7 per cent from 3 million units in
2003-04 to 2.5 million units in 2004-05.
 Watch and clock have registered growth of 10 per cent and 8 per cent from 20.6 mn
units and 26.3 million units in 2003-04 to 22.6 mn units and 28.4 mn units in 2004-05.

The VCD/MP3 industry has registered 20% growth and has achieved production of 8.4
million units. The unorganized sector has occupied a major share in manufacturing and
supplying VCD/MP3.
 DVD Players are estimated to have grown by 25 per cent in 2004-05 with the volume
estimated to be 625000 units.

 The first half of the year and the first quarter of the financial year, 2005 has seen a little
setback for the domestic consumer electronics and durables industry with the two largest
segments of the industry - color televisions (CTV) and refrigerators facing decline in

25
production and sales during the period. But the Air conditioners and washing machines
market have grown at the rate of 20% .

 Thede-growth seen in the first quarter of the current fiscal has been mainly due to
the value added tax (VAT) regime introduced in April, 2005, as held by the industry
representative.

 Overall, the refrigerator segment had achieved a negative growth of 4.3 per cent in volume
terms and two per cent in value terms during the period.

Key growth drivers for consumer durables:

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

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

Product pricing: The consumer durables industry is highly price sensitive, making price the
determining factor in increasing volumes, at least for lower range consumers. For middle and
upper range consumers, it is the brand name, technology and product features that are
important.

Availability of financing schemes: Availability of credit and the structure of the loan
determine the affordability of the product. Sale of a particular product is determined by the
cost of credit as much as the flexibility of the scheme.

26
Rise in the share of organized retail: Rise in organized retail will set the growth pace of the
Indian consumer durables industry. According to a working paper released by the Indian
Council for Research on International Economic Relations (ICRIER), organized retail which
constituted a mere four percent of the retail sector in FY07 is likely to grow at 45-50% per
annum and quadruple its share in the total retail pie 16% by 2011-2012. The share will grow
with bigger players entering the market.

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

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

Consumer Durables: Industry size, growth and trends:

During FY07, volume share of the single largest consumer durable was color TVs at 30%,
followed by refrigerators and air conditioners at 18% and 13% respectively. Washing
machines and other assorted consumer durables captured a share in the total volume by 5%

27
Television Sets: Growth in sales:

FY07 witnessed the highest number of TV sets being sold when compared to the previous
two corresponding years. As per CMIE, growth in sale of TV sets was slower at 14.3%
during FY07 when compared to a 21% growth in the previous year. On the demand side,
domestic consumption of refrigerators declined by almost 4% between FY05 and FY08,
while imports climbed. The imposition of anti-dumping duties on import of colour picture
tubes will hit the manufacturing costs of CTVs produced in India. Further, the reduction in
the general rate of excise duty (CENVAT) from 16% to 14% as proposed in the Union
Budget for FY09 will not have any effect on the selling price of colour TVs. This is because
the combined effect of rising input costs and a higher interest burden will negate the effect of
such reduction.

28
29
Refrigerator: demand and supply side dynamics:

According to CMIE statistics, domestic consumption of refrigerators witnessed a decline

between
FY05 and FY08, while exports grew. From 3% of the total consumption in FY05, exports grew
to7% of the total consumption in FY08. On the supply side, domestic production of refrigerators
in the total supply remained at the same levels in the past three years ended FY08. At 99% each
in FY06-08, the share of production reported a mere 100 basis point increase over FY05, as
imports slided. The refrigerator industry posted a sluggish performance since the beginning of
FY09 on the back of volatile steel prices. The first quarter saw a production growth of a mere 50
basis points to 2.18 mn units, as per CMIE.

Sales of Consumer Electronic Companies:

The consumer electronic goods industry underwent a slowdown during the last quarter of
FY08. According to CMIE, the industry witnessed a slower 10.5% growth in the Mar 08
quarter compared to a substantial 17.4% growth in the previous corresponding quarter.
Domestic consumer electronics companies together reported a subdued sales growth of
almost 17% in FY07, on the back of a robust 40.5% growth in FY06. While the larger
companies reported robust growth in sales, it was the smaller ones whose sales were
negatively affected that eventually brought down the industry sales growth.

Changing attitudes of Today's customers:

Today customer likes to indulge in buying spree. No more the customers buy only to fulfill
their basic needs and emphasise on savings itself.

30
Indian consumers have become value sensitive and are not much price sensitive as was the
case earlier. If they feel that a particular product offers them more value and its price is high,
even then they are willing to buy the product.

The Indian consumers strictly follow their culture, tradition and values, as a result of which
foreign companies were forced to give an Indian touch to them in order to succeed in India.
McDonalds, MTV, Pepsi, Star TV, Coca Cola India and many more had to Indianise
themselves to flourish in India. Karva Chauth is celebrated with more zeal and enthusiasm
than the Valentine Day. The Indian consumer of today gives preference to features of a
product rather than its brand name. The trend that higher segment consumers only buy the top
brands has also come to an end.

Even after liberalization Indian companies and brands are doing very well. It is clearly
evident from the fact that despite many foreign brands being sold in India, Raymond is still
India's largest textile company and Haldiram is doing well despite the presence of

McDonalds and Pizza Hut. The consumers today are not confined to a single brand and prefer
change rather than sticking to the same brand. Not often do we see any home with cars of the
same brand or household products of the same brand. The use of credit card for shopping is a
new emerging trend in India. Also consumers are availing credit or loan from banks and other
financial institutions to fulfill their needs and wants.

luxury products.

Indian consumers have shown another major change in their buying behaviour. They just
don't want availability of products, they also want better experience, services and ambience.
This has led to the growth of shopping malls where shopping, entertainment and better
facilities are all available under one roof. To a great extent the presence of heavy weight such

31
as the pantaloons, big bazaar, croma , nilgiris etc has given a huge fillip to the growing
market by not only selling products but also the experience. The Indian consumer are much
more inclined to the organized sector.

The rural Indian consumers are also showing signs of change. They have all the modern
amenities at their home and their standard of living is fast improving. The rural households
have earned huge money due to price rise in real estate. They are also shifting towards
industrial and services sector, hence their purchasing power is increasing. It is reflected in
their living standard and possession of all electronic gadgets and luxury cars. There is a stiff
competition in the Indian market today and it has become a buyer's market from seller's
market. Customers are the ultimate beneficiary of the fierce competition in the market.
Competition has reduced prices to a great extent and has forced the manufacturer to maintain
product quality to sustain in the highly competitive market.

Though in a small way internet and and telemarketing have also caught the attention of the
Indian customers. Dell. Amazon .com, etc have carved a good niche for them in the sector.
The consumers today do not mind availing credit as when needed. So credit availability has
become a key factor for determination of a buying a good. Consumers are also availing the
information available on net through various forums and websites.

Marketers response to Consumer attitude:

With change in consumer buying behavior the companies also made necessary changes in
their marketing strategies. The changes include:

1) Launching of premium products by companies to fulfill requirements of high class

consumers.

2) Since purchasing power of rural India has increased, the companies have started shifting
their focus towards rural India to capture untapped rural market. This has reaped huge

32
benefits for companies like in cases of PepsiCo, Coca Cola India and other FMCG
companies.

3) Companies not only aim to sell their products but also aim to provide better after sales
services to its consumers. For example companies have provisions to send their technicians to
repair the cars struck at highways or other outer locations due to technical failure or in case of
a mishap. This improves the company's credibility and helps to build its customer base .

4) Companies design their products on the basis of market segmentation so that they have
products to suit every pocket and requirement.

5) Due to sharp growth in the communication sector, companies are providing many
schemes and plans to attract customers. For example mobile service providers provide
lifetime option and free calls to other mobile users under a specific plan of the company.

6) Due to fierce competition in the electronics market and people's willingness to purchase
hi-tech products the rates of LCD and plasma TVs have been slashed by 25%-30%. Through

The Indian consumers are spending thick and fast on premium and

this strategy electronic companies received very good response from the consumers in the
recent past and were able to build a considerable market for their
products.

7) Indian consumers have developed a liking for foreign tours and holidays. This has led to
development of many travel agencies that provide a planned foreign tour at a reasonable
price. What is even more interesting is that the customer does not have to pay the amount in
lump sum; instead, he has the facility to make the payment in monthly installments according
33
to his convenience.

8) Consumers of India have developed a tendency to save travel time. For such consumers
low fare or low cost carriers are available that provide air travel facility at a very affordable
price.

9) Consumers of India want better housing facilities. The construction companies are
fulfilling this requirement of consumers by providing them luxurious houses, exquisite
interiors, round the clock water and electricity supply, full time security, club house,
gymnasium, etc. within the premises.

10) Indian consumers are increasingly becoming aware of the importance of health and
hygiene. Hence companies are making products to suit their health like low calorie, low fat
food. As far as hygiene is concerned companies have fully mechanized their plants to
maintain hygiene and pack the food in such a way that it remains fresh for longer period of
time and does not lose its nutritive value before consumption.

11) The need for internet is fast growing. To fulfill this need of consumers, mobile
manufacturing companies are providing internet access facility on mobile phones. This has
revolutionized the communication sector and provided a means of communication that was
never ever in anybody's dreams till a few years back.

12) Indian consumer's liking for credit is also increasing rapidly. Hence many financial
institutions have come into existence in India and are flourishing. Banks have also become
liberal in their loan and credit policies.

3.7 The road ahead:

The rising rate of growth of GDP, rising purchasing power of people with higher propensity
34
to consume with preference for sophisticated brands would provide constant impetus to
growth of white goods industry segment.

Penetration of consumer durables would be deeper in rural India if banks and financial
institutions come out with liberal incentive schemes for the white goods industry segment,
growth in disposable income, improving lifestyles, power availability, low running cost, and
rise in temperatures.

While the consumer durables market is facing a slowdown due to saturation in the urban
market, rural consumers should be provided with easily payable consumer finance schemes
and basic services, after sales services to suit the infrastructure and the existing amenities like
electricity, voltage etc.

Currently, rural consumers purchase their durables from the nearest towns, leading to
increased expenses due to transportation. Purchase necessarily done only during the harvest,
festive and wedding seasons — April to June and October to November in North India and
October to February in the South, believed to be months `good for buying', should be
converted to routine regular feature from the seasonal character.

Rural India that accounts for nearly 70% of the total number of households, has a 2%
penetration in case of refrigerators and 0.5% for washing machines, offers plenty of
scope and opportunities for the white goods industry.

The urban consumer durable market for products including TV is growing annually by 7 to
10 % whereas the rural market is zooming ahead at around 25 % annually. According to
survey made by industry, the rural market is growing faster than the urban India now.
35
The urban market is a replacement and up gradation market now.
The other factor for surging demand for consumer goods is the phenomenal growth of media in
India. The flurry of television channels and the rising penetration of cinemas will continue
to spread awareness of products in the remotest of markets.

The vigorous marketing efforts being made by the domestic majors will help the industry.
The Internet being now used by the market functionaries that will lead to intelligence sales of
the products. It will help to sustain the demand boom witnessed recently in this sector.

The ability of imports to compete is set to rise. However, the effective duty protection is still
quite high at about 35-40 per cent. So, a flood of imports is unlikely and would be rather need
based.

Reduction in import duties may significantly lower prices of products such as microwave
ovens, whose market size is quite small in India. Otherwise, local manufacturing will
continue to stay competitive. At the same time, there will be some positive benefits in the
form of reduction in input costs. Washing machines and refrigerators will also benefit from
lower input costs.

According to a study by the McKinsey Global Institute (MGI), Indian incomes are likely to
grow three-fold over the next two decades and India will become the world's fifth-largest
consumer market by 2025. In the given scenario, urban markets will continue to fuel the
Indian economy for quite some time to come. Moreover, expenditure by the middle class
accounts for the bulk of India's urban consumer expenditure. About 61 per cent of total urban
income comes from households that can be classified as middle class—earning between US$
1,493 and US$ 9,955 a year.

Further, India is likely to see rapid urbanization, with around 45 per cent of Indians living in
urban areas by 2050, up from 30 per cent in 2007-08, according to a study co-authored by
36
National Council of Applied Economic Research's (NCAER) Rajesh Shukla and Future
Capital Research's Roopa Purushothaman.

According to a report by McKinsey, India's overall retail sector is likely to grow to US$
419.93 billion by 2015.

According to global real estate consultant, CB Richard Ellis, India has moved up to the 39th
most preferred retail destination in the world in 2009, up from 44 last year. The turnover of
the organized retail segment in India is pegged at around US$ 8.1 billion. It is expected to
reach US$ 51 billion by 2010.

Retail opportunity is slated to rise by about US$ 160 billion in India in five years. In urban
India, modern retail is likely to grow from the current 9.6 per cent of total retail to 26 per cent
in the next five years, as per Technopak Advisors

The Indian consumer durables market seems to be relatively untouched by the economic
slowdown. The consumer durable goods output witnessed a 2.5 per cent rise in durables
output in the first quarter of 2009, according to a report by the Development Bank of
Singapore (DBS). Colour televisions have seen an increase in sales, growing 2 per cent to
2.8 million units in January-March 2009, according to the figures released by ORG-GFK.

Whirlpool is on the expansion mode and is targeting a 22 per cent share of the US$ 423.28
million washing machine market in India by the end of 2009, and is launching a range of new
products with an investment of US$ 4 million for the same.
Moreover, a large number of hi-technology durables are expected to flood the US$ 4.03
billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among
companies planning new product launches in the coming months

37
According to a study by the McKinsey Global Institute (MGI), 'Bird of Gold': The Rise of
India's Consumer Market, Indian incomes are likely to grow three-fold over the next two
decades and India will become the world's fifth largest consumer market by 2025, moving up
from its 2007 position as the world's 12th largest consumer market.

India ranks second in the Nielsen Global Consumer Confidence survey released on January 7,
2010—an indication that recovery from the economic downturn is faster in India with
consumers more willing to spend. The survey showed that in addition to the emerging
markets of Indonesia and India, eight of the top ten most confident markets in the fourth
quarter of 2009 came from the Asia Pacific region.

Retail

Estimates by the Retailers Association of India (RAI), the apex body of organized, modern
retailers, have shown that the country's US$ 21.05 billion organized retail segment has grown
20 per cent in the September quarter 2009-10.

Approximately 315 hypermarkets are expected to come into existence in tier-I and tier-II
cities across India by the end of 2011, says a joint study by consultancy firm KPMG and
industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM)
named `Reinventing India's Retail Sector'.

The country's largest retailers—Future Group, Spencer's Retail and Shoppers Stop—have
lined up investments of at least US$ 128.3 million for 2010.

Rural Consumers

As socio-economic changes sweep across India, the country is witnessing the creation of
many new markets and a further expansion of the existing ones. According to Pradeep
Kashyap, chief executive officer of MART Rural Solutions, speaking at the Calcutta
Management Association Rural Marketing Meet, over 300 million people would move up
from the category of rural poor to rural lower middle class between 2005 and 2025 and rural
consumption levels are expected to rise to current urban levels by 2017.

38
Mega retail chains are looking to build a high-quality supply chain—retailers such as Bharti-
Wal-Mart, Carrefour and Reliance are working to strengthen their supply chain formula by
roping in farmers as stakeholders. Despite being the biggest names in the trade, these retailers
are ploughing rural areas to teach innovative farming methods and find the best suppliers
among them.

FMCG

According to a FICCI-Technopak report, despite the economic slowdown, India's fast moving
consumer goods (FMCG) sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion
by 2018. The report states that implementation of the proposed Goods and Services Tax
(GST) and the opening of Foreign Direct Investment (FDI) are expected to fuel growth
further and raise the industry's size to US$ 47 billion by 2013 and US$ 95 billion by 2018.

The Ministry of Food Processing Industries is also planning to double the market size of the
food processing industry to US$ 165.1 billion by 2009-10 and trebling it to US$ 271.8 billion
by 2014-15.

Demand for personal care products such as shampoos, toothpastes and hair-oils grew faster in
rural areas than urban areas during April-September 2009, a period that includes the peak
monsoon months, as per the numbers released by market researcher AC Nielsen.

Consumer Durables

A combination of changing lifestyles, higher disposable income, greater product awareness

and affordable pricing have been instrumental in changing the pattern and amount of
consumer expenditure leading to strong growth in the consumer durables industry.

Companies such as LG Electronics India Ltd (LGEIL), Samsung India and Whirlpool are
reporting strong sales figures. Samsung has posted a growth of nearly 80 per cent in its
refrigerator category. In 2009, overall industry sales of LCD televisions grew by 93-94 per
cent over the earlier year. Multimedia mobile phones have grown from 800,000 units in 2008
to 1.8 million in 2009.

39
Japanese consumer durables company Panasonic expects to double its sales in India to US$
945.09 million in the 2010 fiscal and subsequently expects the contribution from the country
to its global business to increase by 10 per cent by 2014.

Consumer Durables
IBEF: December 02, 2009

Several key factors are driving growth in the consumer durables sector: disposable income
levels are rising, consumer financing has become easier and urban and rural markets are
growing at the annual rates of 7 per cent to 10 per cent, and 25 per cent, respectively, with
organized retail expected to garner about 15 per cent share by 2015 from the current 5 per
cent.

Consumer durable is one of the fastest growing industries in India. Industry sales were
estimated to be about US$ 5 billion in value in 2007-08, a growth of more than 25 percent
over 2006-07, and are expected to grow at 20 percent in 2008-09. Some of the prominent
global players in the consumer durables sector include Philips, Samsung, Sony and Nokia.

Then, there are historical reasons. When the government opened up the sector, recalls
Mirchandani, incumbent players ―were not ready for competition and most of them died or
are still bleeding.‖ Videocon's Dhoot holds heavy taxation responsible for industries' woes.
―Total tax incidence in India even now stands at around 25-30 per cent, whereas the
corresponding tariffs in other Asian countries are between 7 and 17 percent,‖ he says.

Poor infrastructure is another reason that seems to have held back the industry. ―Regular
power supply is imperative for any consumer electronics product. But that remains a major
hiccup in India,‖ says Ravinder Zutchi, Deputy Managing Director, Samsung.

Indeed, over 80 percent of the rural market in India remains irrelevant for the industry
because of these reasons. But the fact remains that these problems are not going to be

RESEARCH METHODOLY
40
Research methodology is a way to systematically solve the research objective. It may be
understood as a science of studying how research is done scientifically.

In it we study the various steps that are generally adopted by researcher in studying his
research objective along with logic behind it. It is necessary for the researcher to know not
only the research methods/ techniques but also the methodology. Researcher not only need to
know how to apply particular research technique, but also need to know which of these
methods or techniques are relevant and which are not and what would they mean and indicate
and why. All this means that it is necessary for the researcher to design his methodology for
his objective under study as the same may differ objective to objective.

Thus when we talk of research methodology we not only talk of the research method but also
consider the logic behind the methods we use in the context of a research study and explain
why we are using a particular method or techniques and so that research results are capable of
being evaluated.

Redman and Mory define research as a “systemized effort to gain new knowledge.” Some
people consider research as a movement, a movement from the known to the unknown.

Research is an academic activity and as such the term should be used in a technical sense.
According to Clifford Woody, research comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by a researcher in studying his research problem
along with the logic behind them. It is necessary for the researcher to know not only the
research methods or techniques but also the methodology

Research can be defined as the search for knowledge or any systematic investigation to
establish facts. The primary purpose for applied research (as opposed to basic research) is
discovering, interpreting, and the development of methods and systems for the advancement
of human knowledge on a wide variety of scientific matters of our world and the universe.
Research can use the scientific method, but need not do so.

41
Scientific research relies on the application of the scientific method, a harnessing of
curiosity. This research provides scientific information and theories for the explanation of the
nature and the properties of the world around us. It makes practical applications possible.
Scientific research is funded by public authorities, by charitable organizations and by private
groups, including many companies. Scientific research can be subdivided into different
classifications according to their academic and application disciplines.

Historical research is embodied in the scientific method.The term research is also used to
describe an entire collection of information about a particular subject

Types of Research

Research can be classified by purpose or by method. If we categorise it by purpose, it would

fall into two major categories: Basic Research and Applied Research, while in case of
method, it would be deductive research and inductive research.

BASIC RESEARCH

Also called Pure or fundamental Research, it is undertaken for increase in knowledge. There
is no direct benefit as it is a research for the sake of research. It is conducted to satisfy any
curiosity such as: (a) what makes things happen, (b) why society changes and (c) why social
relations are in a certain way. In fact, it is the source of most new theories, principles and
ideas. Basic research rarely helps anyone directly. It only stimulates new ways of thinking.
The main motivation is to expand man's knowledge. There is absolutely no commercial value
to the discoveries resulting from such research.

 However, in the long run, it forms the basis of applied research or development
commercial products. If basic work is done first, then applied spin-offs often
eventually result from this research. As Dr. George Smoot of LBNL says, "People
cannot foresee the future well enough to predict what's going to develop from
basic research. If we only did "applied research", we would still be making better
spears."

42
  To sum up, basic research is purely theoretical to increase our understanding of
certain phenomena or behavior but does not seek to solve any existing problem.

APPLIED RESEARCH

It is use of basic research or past theories, knowledge and methods for solving an existing
problem. It deals with practical problems. It is opposed to pure research which is not problem-
oriented but for the increase in knowledge which may or may not be used in future.

In the present world situation, more emphasis is being given to applied research to solve
problems arising out of overpopulation and scarcity of natural resources.

Applied research should not be treated the same as Research & Development (R&D) which is
involved in developing products demanded by the existing clients. Applied Research, on the
other hand, focuses on uncovering what needs are not being met and use that information in
designing products or services that would create their own demand. Thus, applied research
brings in new customers and also provides better products and services to the existing
customers. In old days, the mobile phone was expensive, bulky and had a short range. Applied
Research foresaw that this product would have a limited market and stressed on cost-cutting,
reduced weight and long-distance communication. Such measures caused a heavy demand.

JUSTIFICATION:

In the KATARIA AUTOMOBILES there exists the APPLIED RESEARCH because this
research gives the clear knowledge about the existing problems like How to satisfy the
consumer? This research also takes the information from the Basic Research and also this
research helps the dealer to create the good competitive marketing strategies.

43
Objectivesofstudy:
The research was aimed at studying the purchase pattern of consumers for consumer durable.
To study the factors affecting purchase of consumer durables
To study brand preference of consumers for consumer durable goods
To study brand preference of consumers towards organized & unorganized outlet for
the consumer durable goods.

Scope of the study:

The research is conducted in sohna city to study purchase pattern of consumer durables
which includes major factors affecting the decision, brand preference and preference towards
organized and unorganized formats to purchase the same.

Research design:
Research design is descriptive in nature. Preference of people is analyzed and quantified to
know the factors responsible for their preference. Further preference is quantified in terms of
organized and unorganized retail formats.

44
Data Collection

Data collection methods are credible with validated surveys and/or other methods are clearly
described such as observational strategies, the data or information is current. The data
collection is focused on a limited sample of population and has minimal application in terms
of generalizing the findings.

 Primary Data: It can be collected directly or indirectly. It was done through a well
structured and designed questionnaire which contain 16 number of questions which
were asked directly to the customers of Sachin Hyundai Bareilly showroom and Koral
Motars.

 Secondary Data: It refers to data which have been collected and analyzed by
someone else. It consists of internet and books etc. Secondary data has also been
collected through the Hyundai Sales training handout.

 Sample Size: A sample size of 40 respondents was taken to conduct the study of
Questionnaire

.Secondary Data:

Information regarding the project, secondary data was also required. These data were
collected from various past studies and other sources like magazines, newspapers, and
websites which qualified as reliable.

D a t a C o l l e c t i o n S o u rc e

Information for this project was collected primarly through secondary sources.The data
collected from the secondary sources are called as Secondary data.

Secondary Data:Any data, which have been gathered earlier for some other purpose, are
secondary data in the hands of researcher. Those data collected first hand, either by the
researcher or by someone else, especially for the purpose of the study is known as primary
data.

The data collected for this project has been taken from the secondary source.

Sources of secondary data are :-

45
  Internet
 Magazines
 Publications
 Newspapers
 Brouchers

Primary Data:
These data was collected through survey of consumers with the help of questionnaire.

.Research instrument:
Structured questionnaire

Sampling plan:
Target population: Households of sohna&gurgaon
Sampling unit: households & People purchasing consumer durables from stores at the time of
research
Sampling method: convenience and Step out sampling
Sample size: 200

Analytical tools:
Graphical presentation
Hypothesis
Weighted average

Contribution of the study

The study reveals preferential criteria for the purchase of consumer durables. it also gives
insights into the preference towards organized and unorganized store along with reasons
which may become helpful to the marketers to redesign strategies

Limitation of the Study:

As the time given to complete the project is lesser than actual time required completing
46
similar studies, the quality of findings may get affected. The sample size s 200 (hundred),
thus the findings from the same may not be representative of the actual population.

resolved in the near future. And the companies will have to factor them in when they draw
new growth plans. Which they have now done. Shorter replacement cycles, especially in
urban areas, also give companies cause for hope. Over the next few years, the topography of

the industry will likely change, with some companies gaining at the expense of others.
Eventually, however, the market itself will grow, as rural markets evolve and companies
create specific products for them.

 The biggest limitation of this project was time , due to lack of time the necessary data
were collected from the secondary sources..
 Due to tough competition in the market the companies are not willing to disclose their
strategies adopted to face the competition so sufficient information were not collected
and the information collected are not 100% accurate.

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 super ceded 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.

Both rising living standards, especially in urban India, and easy access to consumer finance
have fuelled the demand for consumer durables in the country. Also, the entry of a large
number of foreign players means the consumer is no longer starved for choice. But this has
also resulted in an over-supply situation in recent times as growth levels have tapered off.

47
48
5.2 SWOT Analysis:

Restricted working hour Hiring part-time workers difficult

TAXES
High corporation tax

Opportunities:
• India is amongst the least saturated of all major global markets in terms of penetration
of modern retailing formats
• Players emerging across formats and product categories
• Rapid Expansion for all players
• The Shopping Mall formats are fast evolving
• Partnering among Brands, retailers, franchisees, investors and malls

49
Threats:
• Barriers to FDI which limits entry of global players and limits exposure to best
international practices
• Poor Infrastructure which restricts retail growth, creates supply chain bottlenecks
and increases wastage of farm produce
• 2008's economic crisis create some bad effect on sector.

Here, in survey the 69% are male respondents & rest of the respondents are female.
Male are more concerned about the consumer durables & also more attracted towards these
electronics.

50
As it can be seen that most of the respondents are responded which are in the category of the
graduate. It can be said that the respondents who have replied kindly are having at least the
knowledge of the industry. Area of living is considered because as the customers are
preferable for any one buying area or not that is seen. Generally, the Satellite & ambavadi
area are more preferable for the consumer durables. Also the respondents are generally
belongs to these particular areas from Ahmedabad.

51
 Most of the Respondents were salaried, the students & the self-employed. Because of that
the
consumer durable survey can be mass segmented. As it can be seen that the 57 no. of the
respondents are salaried respondents. While very less are the retired respondents.
As here it is to be seen that not more of the female & the retired persons are interested in
p

52
Technology is the most important criteria while purchasing any laptop or any desktop. Then
the price is given the 2nd most prefered & People do not give much importance to scheme and
durability while purchasing compuers.

53
 While purchasing mobiles, the most important characteristic is the price that is to be preferred
first. Then the least preferred is the
durability while purchasing

54
 Music Systems

Services are given to the most preferred out of all the characteristic while purchasing the
airconditioners. & the durability is the least prefered while purchasing A.C.

55
Services are given to the most preferred out of all the characteristic while purchasing the
airconditioners. & the durability is the least prefered while purchasing A.C.

56
The respondents are preferred the technology 1st while purchasing the digital camera.While
the least prefer is durability as per the research.

57
58
Most of the respondents perchase consumer durables from organized outlets. In the
category
of mobiles and computer, people also purchase from unorganized because of price and
service

59
.

60
Key findings
17 Availability of all brands at a time should be there in unorganized retail outlet.

18 More than 60% of the respondents are preferred financial schemes to purchase the
consumer durables.

19 Approximately 80% of the respondents purchases consumer durables while discounts

are available during festivals & promotional schemes.

20 Approximately 35% are respondents which are not the brand specific if they get the
promotional schemes.

21 Most of the Respondents are generally not preferred the exclusive showrooms.

22 Sales India & Croma are the most relevant & preferred brand stores according to the
consumers.
23 Sales India & croma is also the retail outlet which is very famous & brand recall is
there in the mind of the consumers.
24 Generally consumers are not preferred much of the retail outlets for the mobile & all
little accessories purchase.
25 Consumers who are brand conscious, they are generally not switch over the brand for
the any type of financial or the promotional scheme.

61
CONCLUSION AND SUGGESTION

In this study, we found that the Organized & Unorganized retail outlet both are preferable.
But generally consumers see the preference of the product & as per the product & the
schemes, it differs. Purchase pattern of the consumers are differ from the product to product
& store to store. Generally sales India & croma is the most preferable organized outlet.

The study for the how frequently the consumers buy the products, which are generally less
than a year, or more than that. So generally, by product wise it differs. The availability of all
the products is the main criteria behind purchasing from the organized outlet. While the last
reason for purchasing from the organized outlet is only the display of all the products.

Home delivery of all the products is the main & important criteria behind purchasing the
unorganized outlet. Convenience is the last reason behind purchasing the unorganized outlet.
Financial schemes are generally preferred for the purchasing consumer durables. Promotional
schemes are also preferred for the consumer durables by consumers. Normally, the discount
schemes are also preferred by the consumers.

Some consumers are also brand specific for the some of the products. Like the laptop is
preferred only of sony vaio by the most of the consumers. While some of the consumers have
dream for that sony vaio laptop. Generally exclusive showrooms are not so much preferred
for the consumer durable electronics.

62
 QUESTIONNAIRE

Dear Sir/Madam,

We are the students of BSAITM, MBA CAMPUS, FARIDABAD and

presently doing a project on STUDY ON CONSUMER BUYING PREFENCES TO
WARDS CONSUMER DURABLE(ELECTRONICS)We request you to kindly fill the
questionnaire below and assure you that the data generated shall be kept
confidential.

Gender : M F
Age :
Educational Qualification : 10th or below 10+2 or below
Graduate Post Graduate and above
Others(please specify)
Area :

Occupation : Salaried Self Employed

Retired Housewife
Student NRI

1. According to you what is best outlet for consumer durables?

1organised
2 unorganised
2. According to you what is unorganized&organised outlet for consumer durables?

___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________

3. While purchasing consumer durables, which characteristics of following do you consider?

63
(Rank appropriate, as 1 for the Highest & 5 for the Lowest.)

Characteristics
CATEGORY Durability Price Schemes Technology Service
CTV/LCD/PLASMA
Refrigerator
Washing Machine Microwave Oven
Laptop/Desktop computer
Mobiles
Music system
Air conditioner
Camcorder/Digital camera
Others

4. How frequently you change your consumer durables?

CATEGORY Less than 1-3 3-5 5-10 More than 10

a year years years years years
CTV/LCD/PLASMA
Refrigerator
Washing Machine
Microwave Oven
Laptop/Desktop computer
Mobiles
Music system
Air conditioner
Camcorder/Digital camera
Others

5. From where do you prefer to buy consumer durables?

Always Organized Retail Always Unorganized Retail Both

6. What is your preference for the following : (Rank from 1 to 5, as rank 1 is for highest)

64
 Organized Outlet Unorganized
CATEGORY Purchasing
Sales Croma NEXT X-cite e-zone (give name)
area
India
CTV/LCD/PLASMA
Refrigerator
Washing Machine
Microwave Oven
Laptop/Desktop computer
Mobiles
Music system
Air conditioner
Camcorder/Digital camera

7. Rank the given reason behind purchasing from the organized retail? (from 1 to 10, as 1 to
be highest & 10 to be lowest)

Organized Unorganized
Reasons Rank Reasons Rank
Display Proximity/Convenience
Availability of all Trusted brands (by
brands providers)
Status Trustworthiness in
owner
Home delivery of all
Promotional Schemes
products
Financial Schemes Promotions
Sales person's Availability of
interaction financial services
Home delivery After sales services

65
 After sales
services
Proximity/convenienc
e
Replacement

8. As per your opinion what is to be provided for better services in organized retail?

1 _________________________________________________________________ 2
_________________________________________________________________ 3
_________________________________________________________________

9. As per your opinion what is to be provided for better services in unorganized retail?

1 _________________________________________________________________
_________________________________________________________________ 3
_________________________________________________________________

10. Do you prefer financial schemes to purchase consumer durables?

Yes No

11. Would you wait for available discounts for purchase consumer durables?

Yes No

If yes, then give details about when you generally go for a purchase.

During During
At At Financial Promotional Others
CATEGORY Occasions Festivals Schemes Schemes

CTV/LCD/PLASMA
Refrigerator
Washing Machine
Microwave Oven
Laptop/Desktop computer
Mobiles
Music system
Air conditioner
Camcorder/Digital camera
12. Do promotion schemes change your brand preferences?

Yes No
 13. Do you prefer the Exclusive showroom of a particular company for the
brands you
purchase consumer
durables?

Yes

No

Bibliography
Consumer Behavior published by ICFAI Publications
Integrated marketing Communications published by ICFAI Publications
Consumer Behavior , Text and Cases.by Satish Batra and S.H.H.Kazmi
―It happened in India‖ by Biyani; Kishore

Kotler Philip,‖ Marketing Management‖, New Delhi, Pearson Education Inc,

2006.
Kothari,C.R,Research Methodology methods and techniques ,New Delhi, New
Age International (p) Ltd,1990.
MARKETING RESEARCH- AN APPLIED ORIENTATION
By- Naresh K. Malhotra.

BUSINESS RESEARCH METHOD - By-COOPER & SCHINDLER 10 TH

ED., TATA McGRAWHILL,2008

Consumer Behaviour published by ICFAI Publications

Integrated marketing Communications published by ICFAI Publications Consumer
Behavior , Text and Cases.by Satish Batra and S.H.H.Kazmi
―It happened in India‖ by Biyani; Kishore

2) Newspapers

The Economic Times/Brand Equity

The Telegraph/Metro
The Business line / Brand line
3) Magazines

The Business line

Retail Biz
Business Standard

4) Websites

http://www.cci.in/pdf/surveys_reports/consumer-durables-sector.pdf

www.ibef.org/economy/consumermarket.aspx

www.cci.in/pdf/surveys_reports/consumer-durables-sector.pdf

www.thehindubusinessline.com/2010/02/.../2010021650300400.htm

www.indiaonestop.com/consumermarkets.htm

www.ncaer.org/downloads/PPT/TheGreatIndianMarket.pdf