Chapter No.L RATIONALE and SIGNIFICANCE of STUDY

Chapter No.l

RATIONALE AND SIGNIFICANCE OF STUDY 1.1 A REPORT ON GLOBAL TELEVISION MANUFACTURERS

INDUSTRY

A significant change in consumer and industiy dynamics are currently happening in the TV set industry. Rapid changes in technology and industry structure present unique challenges to all players in the value chain of video content development and delivery. Understanding these dynamics, designing strategies to benefit from them and executing business operations is vital for TV set manufacturers and adjacent industries to thrive in this dynamic industiy. TVs are a fundamental staple of the consumer electronics market, consistently representing around 30% of annual global consumer electronics product sales. Manufacturers shipped an estimated 210 million TV sets in 2009, representing a modest 3.1% CAGR in the last 5 years. As global economic growth has slowed in the last two years since 2007, TV set growth fell to 2.5%o annually. Stark regional differences exist in TV set shipments but global growth overall is slow and likely to be slowing further.

In the developed world, consumers are replacing their tube TV sets with flat-panel TVs. in 2009, 36million such sets were shipped to the US and 45 million were shipped to Europe, a 12.4%) compound annual growth rate since 2007.But growth will slow quickly in these regions as the replacement cycle of tube TVs by flat panels matures. The developing world has seen flat to slightly negative growth in TV set shipments in the last two years, reflecting a modest slowdown in wealth accumulation. Market maturity in the developed world and the near end of the replacement cycle portends slow growth in global TV shipments despite

V . Pu(^® modest growth in the developing world. Market maturity tends to shrink margins and force manufacturers to look for growth in other lines of business. The research firm, Display Search, projects flat-panel television shipments will increase by 6% inlOlO Y/Y but the fastest selling segment of LCDs will be with screens smaller than 40"; indicating some large- screen market maturity and price conscience consumer purchasing behavior. Diminishing profit margins in TV manufacturing will force competitors to pursue market share to contribute absolute margin in lieu of percentage margin. Scale will enable the reduction of some operating costs and help larger firms compete as prices drop. For manufacturers, scale is almost always vital. As flat-panel technology matures and sales figures weaken, sustainable competition will hinge on price. The 5 largest manufacturers in 2009 represented 63% of global shipments, up from 57% in 2007.Smaller firms will be forced to compete on premium technology.

Removing the tubes from televisions has boosted Asian exporters. Flat- panel televisions are cheaper to ship than their tube predecessors. Asia has been able to triple down on its manufacturing process, its lower labor costs and now lower shipping costs. China shipped a whopping 90% of the world's televisions in 2009Televisions are increasingly connected to a wide variety of content from an array of sources in addition to traditional network and cable. The average number of available channels in the U.S. have more than doubled since 2000Additional content sources sometimes called Over-The-To (OTT) include gaming devices, the internet, video applications in audio streaming. TV set ownership per connected household in the U.S. has grown from 2.00 sets in 1990 to 2.8sets in 2009, representing about 325 million sets installed in the U.S.

2 Major Television brands in the global market place

In the TV segment, Samsung's market position is dominant. For the four years since 2006, the company has been in the top spot in terms of the number of TVs sold, which is expected to continue in 2010 and beyond. In the global LCD panel market, the company has kept the leading position for eight years in a row. Only ten years ago, Samsung's only goal was to catch up with Japanese rivals. But now it is outperforming major Japanese electronics makers in many categories: in terms of global market share, Samsung is No. 1 in flat-panel TVs and memory chips; it is No. 2 in mobile handsets; it is one of the top suppliers in other home appliances.

In 2005, Samsung surpassed Japanese rival Sony for the first time to become 20th world's largest and most popular consumer brand as measured by Interbrand. In 2006, Business Week rated Samsung as 20th on its list of global brands, 2nd in the electronics industry. Business Week also ranked Samsung as 20th in innovation. In 2009, Samsung overtook Siemens of Germany and Hewlett-Packard of the USA with a revenue of $117.4 billion to take the No. 1 spot as the world's largest technology company. To become the top brand in the electronics business, Samsung has spent enormous sums on marketing and branding. As part of fulfilhng this strategy, the company devised in 1996 a plan to sponsor major sporting events. It succeeded in becoming an official sponsor for the 1998 Nagano Winter Olympics. Samsung today is the name that almost always appears in many big games.

Despite being a giant in the global technology business with abundant growth, Samsung, along with its chairman Lee Kun-hee, is famous for fretting over its future and coming crises. Global consumers' brand recognition of Samsung Electronics has increased steadily: According to the top-100 brand list compiled by Millward Brown, the British brand consultancy, Samsung, ranked at 68th on its list, was one of the world's most valuable brands whose growth has been most pronounced during the 2009-2010 period. Its brand value, estimated at as much as US$1.1 billion, grew by 80 percent.

In the "World's Most Reputable Companies 2010" ranking published by Reputation Institute of the United States, Samsung was placed at 22nd, a large advancement from the previous year's 74th. This ranking, compiled by the U.S. consulting company since 2006, reflects survey results collected from consumers in 24 different countries for global 600 large corporations in terms of annual revenue and its GDP share in respective countries. The respondents answer questions in seven categories including products and services, inventiveness, work conditions, corporate governance, social responsibility, leadership, and financial performance. Samsung was also ranked 11th in the "50 Most Innovative Companies 2010" list put out by Business Week, a five-notch increase fi"om the previous year's 16th. The ranking, collated jointly by the U.S. weekly magazine and Boston Consulting Group since 2005, is based on answers to innovation-related survey questions asked to executives of global corporations. While survey answers take an 80-percent weight to the compilation of the ranking, the remaining 20 percent is accounted for by annual share appreciation (10%) and three-year average sales revenue and profit margin (5% each), respectively.

Samsung had emphasized innovation in its management strategy since the early 2000s and it again highlighted innovation as part of core strategies when it announced the Vision 2020 in which the company set an ambifious goal of reaching the $400-billion sales revenue within 10 years. In order to cement its leadership in the areas of memory chip and TV production, Samsung has invested aggressively in research and development. The company currently has 24 R&D centers around the world. In the 2010 Business Week innovation ranking, Apple Computer and Google retained the leading positions as in the 2009 list, followed by Microsoft, which gained one notch from 2009's fourth place.

Meanwhile, Samsung took the 33rd place in the "World's Most Valuable Brands 2010" list made public by the Forbes magazine. Forbes said that Samsung's brand value was as much as $12.8 billion with an average sale revenue growth rate of 17 percent for the past three years. Samsung Electronics' TVs and display products have undergone a race toward ever- slimmer panels. In 2009, the company succeeded in developing the super- slim panel for 40-inch LED TVs, with the thickness of 3.9 millimeters

5 (0.15 inch). Dubbed the "Needle Slim," the panel is as thick (or thin) as two coins put together. This is about a twelfth of the conventional LCD panel whose thickness is approximately 50 millimeters (1.97 inches).

While reducing the thickness substantially, Samsung could maintain the performance as before, including full HD resolution, 120 Hz refresh rate, and 5000:1 contrast ratio. In October 2007, Samsung broke the 10- millimeter barrier by introducing the 10-mm thick 40-inch LCD TV panel, followed in October 2008 by the world's first 7.9-mm panel. Samsung is leading the industry by developing panels for 24-inch LCD monitors (3.5 mm) and 12.1-inch laptops (1.64 mm). According to Samsung officials, the biggest factor in reducing the panel thickness was the LED backlight. They are optimistic that their company could cut TV width by 40 percent within two years from now.

For years in a row, Samsung has taken the top spot in the world TV market, with the launch of best-selling items. In 2009, it sold as many as 31 million flat-panel TVs, maintaining the top position for four consecutive years in terms of world market share. In early 2010, the company had set the year's sales goal at 39 million units (including 10- million LED TVs). According to DisplaySearch, the U.S. market research and consulting firm, Samsung is forecast to take a 27-percent share for the global TV market in the second quarter of 2010 while LG Electronics accounts for 26.2 percent of the market. The market researcher predicted that Samsung's leadership would continue in 2011. Samsung Electronics is creating a new market by introducing the "Finger-Slim" LED TV. Launched in March 2009, the super-slim LED TV has thus far been sold as many as 2.6 million units. In 2009 alone, it was sold more than 2 million units, which brightens the future prospect.

Samsung has led the flat-panel TV market for the past five years with the 2006 introduction of its "Bordeaux" line, followed by the 2007 Bordeaux model, the 2008 "Crystal Rose" line, and the "Finger-Slim" in 2009. The company retained the leading position by successfully selling more than 1 million 3D TVs as of August 2010. This company is developing new LED TV models too. After expanding its TV lineups, Samsung became the industry-first 10-million-seller challenge. One of the new products to watch is the full HD 3D LED TV that was launched the first time in March 2010. Combining LED features with 3D functionality, the new 3D TV is expected to lead the market for years to come. Samsung showcased the new TV in the International Consumer Electronics Show (CES 2010) held in Las Vegas early this year.

In 2009, Samsung TVs were selected in major U.K. publications and retailers as the best TV of the year. For example, Samsung's LED TV 7000 series was the winner of the "Gadget Awards 2009" by T3, U.K.'s most prestigious electronics magazine. The T3 magazine in its news article on "ten reasons why you should buy Samsung LED TV" listed as the reasons superior picture quality, slim design, energy efficiency and connectivity. Samsung sold more than 1 million 3D TVs within six months of its launch. This is the figure close to what many market researchers forecast for the year's worldwide 3D TV sales (1.23 million units). It also introduced the 3D Home Theater (HT-C6950W) that allows the user to enjoy 3D image and surround sound at the same time. With the launch of 3D Home Theater, Samsung became the first company in the industry to have the full

7 line of 3D offerings, including 3D TV, 3D Blue-ray play, 3D content, and 3D glasses.

The company is trying offer the 3D content streaming service on its 3D TVs. Just like iTunes store, the Samsung 3D TV aims to allow the user to connect to its own online store, Samsung Apps, and download applications on the user's hard disk drive. Samsung introduced the Internet TV in 2007, enabling the viewer to receive information from the Internet while at the same time watching conventional TV programming. Samsung later developed "'Smart LED TV\ (now renamed to '"Samsung Smart TV') which additionally supports downloaded apps. In 2008, the company launched the Power Infolink service, followed in 2009 by a whole new Internet @ TV. In 2010, Samsung started marketing the 3D TV while unveiling the upgraded Internet @ TV 2010, which offers free (or for-fee) download of applications from its Samsung Apps store, in addition to existing services such as news, weather, stock market, YouTube videos, and movies.

Samsung Apps offers for-fee premium services in a few countries including Korea and the United States. The services will be custom- tailored for each region. Samsung plans to offer family-oriented applications such as health care programs and digital picture frames as well as games.

SamyGO community created at 2009 for hacking Samsung B series TV firmwares, and later supported A and C series TV's also, under GPLv2 license and deployed new applications like a tool increasing subtitle size and changing its color, enabling PVR functionality of TV, enabling internal video player on low end models, supporting DTS codec on B Series TVs, work around for DLNA problems by playing movies from SAMBA and NFS shares support etc. Also placed web browser right into TV with mouse and keyboard support and many more applications... Samsung started to release restricted firmware updates starting from Feb 2010 for fixing security issues those used by SamyGO community and disabled firmware downgrade option from TV menus, which believed to disable the SamyGO project. But hackers find workarounds for those new restricted firmwares.

Samsung was followed by LG with a market share of 14.8 per cent, Panasonic at 6.9 per cent, TCL Electronics at 6.6 per cent and Sony lagging behind at 5.9 per cent. Between them, these five vendors account for 51.4 per cent of the total TV market. Samsung's rise in the TV market has been nothing short of meteoric. In 2006, it finally surpassed Sony to become the world's biggest contender in the TV market, and the company has doubled in size since that time. It shipped 38 million TVs in 2009, up from 33 million in 2008, and plans to ship 45 million in 2010. Samsung expects that LCD and plasma will account for 39 million of those units.

LG Electronics, the global leader and technology innovator in consumer electronics, mobile communications and home appliances has introduced smart TVs, a breakthrough product and has gained honors from some of the world's most notable sources for tech-product reviews. The LG Cinema 3D TV rated No.l in the '3D TV & Smart TV category by PC World in the US, where it received the honor of 'Favorite 3D TV and 'Favorite Smart TV, in addition to receiving first ranking as 'Best Buy' by Consumer Reports. And LG Cinema 3D TV qualities have many superior features, some of which compHmented its very good depth, color accuracy, great protrusion of extreme foreground effects, and its wide viewing angle. As for LG TVs' leadership in smart features, tributes underlined high quality applications, overall excellent internet experience, very good service selection, and the Magic Motion Remote Control. This proves that LG always delivers what it promises in its endeavor as the world leading technology innovator." It is worth noting that the LG Pentouch TV was selected by the Independent as one of IFA's top ten gadgets for its innovative on-screen writing and drawing attributed, and the HX976TZW Home Theater System ranked first for its finer quality and features, which perfectly complement LG's overall, incomparable 3D experience, alongside the range of LG Cinema 3D TVs.

Royal Philips Electronics has entered into a term sheet to transfer its Television business into a joint venture with TPV Technology as part of a long-term strategic partnership. The new company will be 70% owned by TPV and 30% by Philips. The partnership will help create the scale and focus needed for their Television business to return to profitability and to be successful in the very dynamic industry. The partnership will leverage the strength of Philips brand, innovation power and trade relationships, with the additional scale and manufacturing strengths of TPV. This decisive step is a landmark for the television business. Consumer Lifestyle and Philips as a whole. The joint venture will be responsible for the design, manufacturing, distribution, marketing and sales of Philips' Television business worldwide, with the exception of mainland China, India, United States,

10 Canada, Mexico and certain countries in South America. As part of the transaction, Philips will grant the joint venture the right to use the Philips brand, under certain strict quality and customer care standards, for the Television business worldwide, excluding the above-mentioned territories. In exchange. Philips will receive revenue-based royalty payments. The existing brand license agreements in China, India and North America will not move to the joint venture. This new joint venture will ensure a stronger future for Philips Television, focused on growth. And this partnership will enable the newly reshaped Consumer Lifestyle sector to focus on becoming a leading player in health and well-being in the majority of their chosen markets.

Philips will grant the joint venture the right to use the Philips brand for an initial term of five years with an automatic renewal for another five years, subject to the joint venture meeting certain key performance indicators.

The signing of definitive agreements is expected to take place in the third quarter, with closing expected to take place before the end of 2011. Between the date of this announcement and signing of the definitive agreements. Philips will engage in the applicable employee consultation procedures and TPV will perform a confirmatory due diligence on the Television business.

n 1.2: A REVIEW OF COLOUR TELEVISION MARKET IN INDIA

The consumer electronics market is one of the largest segments in the electronics industry in India. Catering to a population of more than 100 crores of Indian population, the consumer electronics industry in India is poised for strong growth in the years to come. It is predicted that the Indian audio/video consumer electronics industry will grow to Rs.26,931.13 crores ($6.59 billion) by end of 2011, rising at a Compound Annual Growth Rate (CAGR) of 10.0 per cent from Rs. 18,390 crores ($4.5 billion) in 2007.The growth will be aided by a multitude of factors including Growing consumer confidence due to rising disposable incomes; Easy financing schemes that are making purchases possible; Increased local manufacturing; Expanding distribution networks and Sporting events, such as the Cricket World Cup.

Television continues to be the mainstay of the consumer electronics industry in India with the transition slowly occurring to newer technologies such as LCD and PDP. The history of the Indian television industry dates back to 1982, the year when India hosted the Asian Games. There was a huge demand for colour televisions all through the 80s. In 1984-1985, the colour television industry was growing at an astounding rate of 140.3%. However, m 1985-86, it fell to 68.6%, 15% in 1988-89 and finally in the year 1989-90 it touched a rock bottom level of 5%. In 1991-92, the Indian economy was going through a balance of payment crisis. As a result of this, for the first time in the history of Indian colour television, one saw a deceleration in the sales of colour televisions at -14.5%). During this period, the prices of colour televisions skyrocketed due to the high import duties imposed on colour picture tubes.

12 1.3 THE COLOUR TV INDUSTRY POST LIBERALISATION:

The Colour TV industry in India has seen a gamut of changes in the past one decade as liberaHzation set in the Indian subcontinent making its market highly competitive and consumer driven. With the fast changing liberalization policies, changing and growing demands of the consumers made the industry competitive. The constant desire of the companies (domestic or international) to have a major share in the market often leads them to die many deaths which has became a hackneyed phenomenon in this sector of Liberalized India if the companies are not in able to cope with changing reforms and the changing tastes and preferences of the consumers.

The foreign player entered the Indian market since the Indian economy is increasingly interdependent almost over the last one and half decades. Consumers in India with open markets on an average are enjoying lower prices, improved consumption, improved savings and rising standards of living. Before liberalization in India, the consumer was at the mercy of the producer and savings management was prevailing in the sense that individuals saved and then consumed. This might be because of no financing facilities, no credit card facilities and moreover demand side economic were prevailing. After liberalization the total scenario has changed- consumers in India moved from savings management to expenditure management. This is because of the availability of goods and services at lower price, availability of credit cards, availability of finance at low interest and in some cases zero interest and moreover the death of power of monopoly in many sectors because of the entry of the foreign players. Producers have become price takers rather than price setters. The

13 tastes and preferences, life style and consumption patterns of the consumers have also changed. Like other third world countries, people in India have started spending much more money on eating out; started buying a flat or a car because of the availability of credit cards and easy financing facilities; more number of people have been travelling abroad after liberalization and there has been a distinct shift from joint family system to that of nuclear families.

As per the estimates of the confederation of Indian Industry (CII) the Indian consumer durable industry is Rs 20,000 crores business industry. The industry is highly dominated by the foreign players occupying the top slots in the market shares. From a recent data obtained from the Equitymaster.com the market share of all the MNCs in the colour TV segment is about 65%. The biggest attraction for these players is the growing Indian middle class, which is approximately 250 million, and also low penetration levels characterize this market. Most of the segments in this sector are characterized by intense competition, emergence of new companies (especially MNCs), introduction of state-of-the-art models, price discounts and exchange schemes. There is a significant shift today. 15-20 years ago, it was a Seller's market. Customers had to buy what was available. There was absolutely no choice. But today, it is entirely different. It is a Buyer's market. There is plenty of choice, both in terms of brands and the items. It has helped in widening the product base of consumer durables. Also, technological changes have helped the boom in the industry. TV sets are still the fastest growing category among household durables. During the last two years 11.5% of Indian homes bought a TV set. This figure is even higher among the top eight metres at

14 21.3% about one in every five home in these cities acquired a TV set in the last two years. As a result of which the entrenched position of the Indian market leaders in CTVs' like Videocon, BPL and Onida has been challenged by the MNCs such as LG, AIWA, Akai, Panasonic, Samsung, Sony, Philips and Sharp; some in a perceptible way and others threatening to do so.

1.4 KEY GROWTH DRIVERS FOR INDIAN TELEVISION

INDUSTRY:

> Increased awareness: Over the years Television has become a central dimension of our everyday lives, and in India it has grown at a phenomenal pace. In India television was introduced 25 years after its invention and 30 years after its inception through government efforts to introduce public service broadcasting. The idea was primarily education and access to vest rural populations. But in 1991, the gulf war introduced us to the charms of satellite television courtesy the American cable News Network and few people suspected then that cable and satellite T.V. would spread through India like a forest fire. And it did. The perforation of cable and satellite TV channels has penetrated in all corners of the country cutting across demographic and geographic barriers. On this respect TV has enabled a level playing opportunity and has become homogenizes of socio-economic differences, unlike no other policy instrument of the state.

Today over 10 million Indian homes have cable and satellite connections. The viewer has access to information from local, national and global levels. The sheer number of channels gives him a plethora of options. Today TV is a powerful medium with extraordinary reach.

>^ Changing economy and increase in disposable income: India is poised for a dramatic expansion of domestic consumption that will make the country one of the largest consumer markets in the world. However, many voices in the country have expressed concern that this explosion of spending power will compromise India's ability to invest for the future. New research by the McKinsey Global Institute (MGI) finds that these fears are misplaced. If overall economic growth remains on a long-term path of 7 to 8 percent, as most economists expect, then consumption will soar. It is estimated that real consumption will grow from 17 trillion Indian rupees today to 70 trillion Indian rupees by 2025, a fourfold increase. This will vault India into the premier league among the world's consumer markets.

Presently India's consumer market ranks 12th. By 2015 it will be almost as large as Italy's market. By 2025, India's market will be the fifth largest in the world, surpassing Germany. In short, India has now entered a virtuous long-term cycle in which rising incomes lead to increasing consumption, which, in turn, creates more business opportunities and employment, further fuelling GDP and income growth. The research study shows that a significant expansion in consumption is not dependent on an equally significant decline in savings. There are three major factors driving increased consumption, by far the most important being rising incomes, which is estimated to account for 80 percent of total growth over the next two decades.

The second driver will be population growth, which will account for a further 16 percent of the overall rise in consumption. The third factor will be savings but developments on this front will play a relatively minor role. It is expected that India's household savings rate will peak and gradually decline from its current level of 28 percent of disposable income to 22 percent in 2025 as India's demographics become more youthful. However, this change will account for just 4 percent of fliture consumption growth. Even if household savings were to remain flat, consumption would still grow substantially.

The primary driver of India's growth as a consumer economy will thus be increasing incomes. MGl analysis shows that average real household disposable income is set to grow from 113,744 Indian rupees in 2005 to 318,896 Indian rupees by 2025, a compound annual growth rate of 5.3 per cent. This is much more rapid than the 3.6 percent annual growth of the past 20 years and, with the exception of China, much quicker than income growth in other major markets. Income growth is, in turn, dependent on sustaining overall economic growth in the years ahead. Researchers are optimistic on this front because of the substantial scope for Indian businesses to increase their productivity, the growing openness and competitiveness of the Indian economy, and favorable demographic trends. And the income estimate assumes real compound GDP growth of 7.3 percent a year from 2006-2025, acceleration from

17 the 6 percent growth of the previous two decades, but in hne with most estimates of India's long-run sustainable growth path.

India's economic reforms, and the increased growth that has resulted, have already proved to be the most successful anti-poverty program in India's history. In 1985, 93 percent of the population had an annual household income of less than 90,000 Indian rupees—an income bracket categorized as deprived. By 2005, this had dropped by about two-fifths to 54 percent of the population. By 2025, we see the deprived segment shrinking even further to only 22 percent of the total population. Rising incomes will also create a sizeable and largely urban middle class. It is observed that the middle class is spanning real annual household disposable incomes of 200,000 Indian rupees to 1,000,000 Indian rupees.

In 2005, the Indian middle class was still relatively small with 50 million people or some 5 percent of the population. However, if India achieves the growth forecasted, its middle class will swell to 583 million people or 41 percent of the population. In addition, households with real earnings more than 1,000,000 Indian rupees a year, which is referred to as global, will comprise nearly 2 percent of the population, but earn almost a quarter of its income. Widespread concern that India does not save enough and that investment will suffer if consumption becomes the driving force of the economy is not warranted based on the study. Negative comparisons about India's level of savings are usually made against China whose gross national savings rate has risen from

18 33.6 percent in 1985 to 50.4 percent in 2005—arguably too high a rate and driven by inefficiencies in China's financial sector. Against other high-saving countries such as South Korea and Japan, India's savings rate is actually relatively high.

The important issue with Indian savings is not the trade-off with consumption, but rather the composition and total level of Indian national savings. National savings are made up of three sources: households, businesses, and government. Indian households are among the most frugal in the world, saving even more than their Chinese counterparts. The slight decline in their savings rate would merely bring them closer to levels seen in other fast-growing economies. But India's businesses and government save far less than they should and this leaves the country's national savings skewed and heavily dependent on households. While India's services-driven economy has not been as capital-hungry as China's manufacturing-based one, and household savings have been sufficient for the required investments so far, rectifying this imbalance offers the key to accelerating India's growth rate in the future.

However there are three issues that need to be addressed in order to rebalance the composition of Indian savings. First, as other MGI work has shown, reforming India's financial system will be critical to making the allocation of capital in India more efficient, increasing the depth of its capital markets, and raising real returns in the economy, thus encouraging capital formation. Poor capital allocation coupled with India's heavy regulation of many industries continues to discourage the

19 formation of medium- and large-size enterprises. This leaves much of India's capital inefficiently tied up in small-scale, informal businesses and classified as household savings. Both the financial system and regulations on industry need to be reformed over time. Second, the Indian government needs to play its part in maintaining fiscal responsibility and growing its own contribution to net national savings.

Finally, it will be important to acknowledge that foreign direct investment (FDI) can also play a growing role in supplying India with investment capital and should be encouraged. While FDI is still modest relative to the size of India's economy (and dwarfed by the flows of FDI going to China and other parts of Asia), it has increased almost 18-fold from $315 million in 1992 to about $15 billion in 2006. Therefore it is expected that FDI will continue to increase significantly, especially if the regulatory and business environment continues to evolve in directions that welcome it.

Growth in Indian incomes and consumption will deliver substantial societal benefits, with further declines in poverty and the growth of a large middle class. The good news for the long-term health of the economy is that India's growth as a consumer superpower doesn't depend on Indians saving less, but rather on high overall growth continuing to translate into rising incomes. However, this positive outcome does depend on Indian businesses making their contribution by saving more, and the government being fiscally responsible while continuing to reform the economy to ensure that India has sufficient capital to invest in its future growth.

20 An NCAER (National Council for Applied Economic Research) study identified twenty key cities (which accounted for $100 billion of consumption expenditure in 2007-08) and grouped them into three broad buckets, Megacities : Largest cities in terms of population/market, as Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune and Boomtowns: Next set of big population cities with high expenditure per household, as Surat, Kanpur, Jaipur, Lucknow, Nagpur, Bhopal and Coimbatore. The third group are referred to as Niche cities: Smaller in terms of overall population, but still hit well above their weight in spending per household, as Faridabad, Amritsar, Ludhiana, Chandigarh and Jalandhar.

The study found that more than half of Indian households will be middle class by 2016 and the high-income segment will triple by 2016, quadruple in boomtowns. Megacity households spend the least on average on education and recreation. And Surplus income rates in the top cities are nearly double the national average while 19% of households prefer to keep surplus income at home. Moreover households overwhelmingly draw on savings to cope with shocks. Niche cities have the highest asset penetration, but lowest financial penetration while Nagpur leads in insurance penetration and Coimbatore and Jaipur have the highest credit card penetration.

> Emergence of nuclear families: Reflecting the rise of the nuclear family in urban India, these households are small in size—88% have 3-

21 4 members and there are no senior citizens in these households. Just 11% have more than two children—again a pointer to how well entrenched the small family norm has become in the urban landscape. In Indian cities, families aspire to an improved lifestyle, which they recognize is possible with fewer children. They would like to provide the best in basics such as food and education, and at the same time, are looking to upgrade their vehicles, home entertainment gadgets, cellphones, etc. This segment, therefore, forms a market for all aspirational products, especially those for children. These are the families that would be seen in cinema halls and malls on Sundays and eating out as well.

Since these are nuclear families, most households run solely on the earnings of the chief wage earner—-just 15% of the spouses are employed. Yet, these small households are relatively well off—the median household income is Rs2.24 lakh per year and a little more than a quarter of the households in this segment earn at least Rs5 lakh annually. So while nearly half the households in the C5 segment own the houses they live in, the rest stay in rented houses and are in the market for an "ownership flat". These families are also looking for appropriate long-term financial products for housing, children's education, insurance, etc. The educational qualifications of the chief wage earner are quite good, with a slightly higher proportion of graduates. A look at the industry of employment shows the diversity across the board with 'education, health and social work' leading with a 21% share and public administration coming in second, followed by manufacturing, and wholesale and retail trade.

22 > Competition: India is fast emerging as the key driver in the global television market - both as a manufacturer as well as consumer. The television market in India is changing rapidly from the conventional CRT technology to flat panel display televisions (FPTVs), in common parlance called the liquid crystal display (LCD) and plasma televisions. Currently, the split between CRT and FPTV is around 97 per cent and 3 per cent, respectively. Plasma TV has been with us for some time now and is preferred by many consumers. As per ORG-GFK data for 2009, shipments of LCD TVs with LED backlights are predicted to reach 4.5 million units, up by more than a factor of 10 from 438,000 in 2008. By 2013, shipments will rise to 98.8 million, accounting for 42.5 per cent of the global LCD TV market. Currently, LCD and plasma TV markets contribute 1.8 per cent to the overall colour TV (CTV) market.

The Commonwealth Games in Delhi in October 2010 resulted in branded consumer electronics manufacturers' growth of LCD and plasma TVs compared to CRT TV sets. However, major Korean brands like Samsung and LG and Indian brands like Videocon and Onida are heavily focusing on promotional efforts around LCD TVs alone. This clearly indicates that customers prefer LCD TVs to plasma. Both models look almost identical - flat, elegant and offering sharp and clear picture - but besides price, there are fundamental differences between the two technologies. Over the last couple of years, LCD prices have dropped by around 30 per cent annually, which is giving a tough competition to plasma TVs.

23 Some of the important factors that boosted this growth include the increasing awareness of the advantages of LCD TVs, growing availabihty of the product across dealer counters and attractive finance schemes being offered by the manufacturers,. Currently, there is a price gap of 10-20 per cent between LCD and plasma TV. Samsung has 23 LCD TVs models in the 55.88cm (22 inches) and 139.7cm (55 inches) screen size, which are priced between Rs 17,000 and Rs 1,75,000. In comparison, four models of plasma TVs in 106.68cm (42 inches) to 160.02cm (63 inches) screen size are in the price range of Rs 52,000 to Rs 3,30,000.

Consumer electronic firms have invested so much in promoting LCD in the mind of an ordinary consumer, through which LCD TV has become synonymous with flat panels. While the growth of plasma TVs is slowing down due to tough competition from LCD models, the market for plasma TVs with more than 127cm screen size is expected to grow by 15 in 2012 and Plasma TVs in large screen sizes will see a moderate growth. A new generation of Indian consumer has emerged who desires aspirational and high end quality products. Value enhanced features, quality and convenient lifestyle are important to him.It is great to see Indian consumers become increasingly receptive to advanced technologies and because of this the demand for LCDs is expected to grow. This behavior is also due to various economic factors and changes in consumers' behaviour and lifestyle that has increased the demand for LCD TVs and this growth story of the TV industry, particularly LCD TV, holds a lot of promise for the suppliers of SMT equipment, components as well as leading players in this segment.

24 Future players can also plan their investment in this sector and adopt sales strategy for generating more demand.

The growth of SMT equipment and components market is bound to increase in India along with the growth of LCD and plasma TV market. Therefore, irrespective of all hindrances, manufacturing of components should happen in India, which is likely to flourish, predict industry analysts. But unfortunately, the present component base is very weak. However, manufacturing of electronic components in India being less, manufacturers and assemblers of TV face problems in sourcing components from local manufacturers. Most TV makers are, therefore, importing components or complete component kit from countries like China. The qualitatively better raw materials imported from other countries are much cheaper than the domestic ones and that is restricting the growth of manufacturing components in India.

Many local manufacturers are hesitating to enter this sector as the situation here is not conducive for manufacturing components. As the component manufacturers are concerned that TV makers are increasingly importing components or kits, 60 per cent of the TV market is captured by unbranded products with their components being sourced from local manufacturers and almost 70 per cent of components are being imported, the advantage of low labour costs in India gets nullified by duty charges for importing components. Moreover the industry is catching up when it comes to domestic component manufacturing for CTVs in terms of technology and infrastructure. While the quality of Indian components is on par with

25 international ones, they remain costlier than the international ones as they are produced in less quantity. Manufacturers of CTVs are, therefore, forced to import. A broader range of components should be produced within the country according to CTV manufacturers. But with the demand rising, the Indian component market is also growing with time.

Indian manufacturers need to be aware that it is a great time to be in the components business. Despite all setbacks, they need to take risks and manufacture more number of varieties so that TV manufacturers don't feel the need to import. Also, the buyers of components for CTVs should be aware that some of the Indian components are better in design and quality. Most importantly, the Indian components can be customised as per requirements. So, if the manufacturers and buyers of components understand each others' needs, there is no stopping for the Indian LCD and plasma market to take a great leap.

The trends in the market indicate that high end or technology led products are doing better in India, so a better acceptance of LCD TVs is expected in India. If we look at the global projections for LCD TVs and map them against the Indian market, the LCD market should double every year for the next couple of years. This robust LCD TV market is driven by the changed mindset of the consumer, who now uses TV as a commodity and not as a luxury item. With fierce competition among players to capture market shares, survival of manufacturers has no doubt become challenging and most manufacturers have, therefore, resorted to drastic price cuts. They are also adopting various marketing

26 strategies, shifting their focus from dealers to consumers. According to reports, LCD TV is doing excellent in metropolitan cities and tier II cities. In the next six to eight years, there will be a huge boom in the LCD TV market. A survey predicts that more than 23 million Indians will own LCD TVs by 2016.

> Declining prices: Colour television industry (CTV) has witnessed drastic changes in the intensity of competition. Exchange schemes, free gifts, price offs, prizes, deferred payment schemes and other incentives as promotional tools have been deployed by the players, which certainly have made the market, vibrant and pulsating. A major factor contributing to the growth has been availability of consumer financing schemes. Profit margins of all the players have decreased due to falling prices and increasing marketing and R&D costs. Although LG is the market leader, its average realisation is lower than the industry average due to competitive pricing. India is one of the biggest global markets for LG, therefore its strategies are much more aggressive to ensure huge growth. On the other hand, Samsung is far stronger than LG globally, and while India is a key market, there is no crushing need to ensure immediate big growth numbers. The Company sells a large portion of its wares on a cash-and-carry basis, and has a return on capital employed of 43%. Despite being big in size, the company is operating in a tough market, which explains why it has a net profit margin of only 5%.

Videocon, another major player has managed to hold its own in the midst of the onslaught from the Korean majors, though profits have

27 suffered. Other large Indian companies in the top of the Hst are Mire Electronics. One of the notable developments have been that the rate of growth in production has been more in terms of quantity or in volume terms rather than the growth in value terms. This has happened because of the constantly falling prices over the years due to competition among major players, aggressive marketing strategies and declining import tariffs. With penetration levels being deplorably low, the industry is focusing on semi urban and rural segment for scaling up demand.

For basic models, the market is reaching saturation limit in urban market, and hence value addition, differentiation and superior and new product introduction only can bring high growth in urban areas. It is also observed that although the top players have drastically reduced prices, they have gained more volume due to increasing market size and higher penetration levels, coupled with conscious shift towards flat colour televisions (FCTVs). Producers have become price takers rather than price setters. Reduction in import duties have significantly resulted in lower prices of products. Therefore consumers in India with open markets on an average are enjoying lower prices, improved consumption, and improved savings and high standards of living.

> Low cost skilled labour: In the past, India did not tap into its manufacturing exports potential to the fullest. Going forward, however, 'Made in India' could become the next big manufacturing exports story. The global trend to manufacture and source products in low-cost countries (LCCs) is likely to gather strength over the next ten years, particularly in the skill-intensive industries where India has a significant

28 competitive advantage. If India were to take advantage of this trend, manufacturing exports from India could increase from US$40 billion in 2002 to approximately US$300 billion by 2015, leading to a share of approximately 3.5 per cent in world manufacturing trade. Along with robust domestic demand growth, this is likely to create 25-30 million new jobs in manufacturing and add 1 per cent to India's annual GDP growth rate.

Achieving this acceleration in manufacturing exports will require that Indian players adopt a global mindset, carefully select product segments and rapidly build cost excellence and marketing capability; that MNCs proactively develop India as one of their top three sourcing hubs; and that, the government implement key reforms in taxation, infrastructure, clusters (SEZs), labour and skill development to help unlock India's manufacturing potential. Manufacturing offshoring to LCCs is a well- established trend. Labour-intensive industries (toys, apparel and footwear) and select skill-intensive industries (computer hardware and consumer electronics) constituted the first wave of this offshoring. Going forward, the offshoring wave will encompass skill-intensive industries such as auto components, specialty chemicals and industrial electronics. As a result, offshoring to LCCs is expected to increase from the current US$1,300-US$ 1,400 billion to US$4,000-US$4,500 billion by 2015. The skill-intensive industries will drive most of this increase.

29 Four factors will drive this growth: continued margin pressure on players in home markets; the emergence of a strong supplier base in LCCs; explosive demand growth in LCCs; and the dismantling of regulatory barriers by the World Trade Organisation (WTO). India can — and should — aspire to become one of the three largest exporters of manufactured goods among LCCs by 2015. This will require growing manufacturing exports from US$40 billion in 2002 to approximately US$300 billion by 2015, and consequently increasing India's share of world manufacturing trade from the current 0.8 per cent to 3.5 per cent by 2015.

The aspiration, though ambitious, is attainable. India has several advantages in skill intensive industries, such as auto components and pharmaceuticals, where the next set of offshoring opportunities will arise. Apart from low wage rates, these advantages include engineering skills (process, product and capital engineering), established raw material bases, a mature supply base and a growing domestic demand. In-depth assessment shows that out of this approximately US$300 billion of total manufacturing exports, US$70-US$90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products. In electrical and electronic products, world trade already exceeds US$1 trillion and countries such as China, Taiwan, Malaysia and Thailand all have a significant lead.

LCC offshoring is expected to increase from US$345 billion in 2001 to at least US$600 billion by 2015. Of this, India should aspire to capture

30 US$15-US$18 billion, as compared to exports of US$1.2 billion in 2002. This will require India to become a top three-five player with a 1- 1.5 per cent market share of world trade as compared to the over 5 per cent market share of countries like Taiwan and China. The vast majority of Indian manufacturing companies today are largely domestic market-focused and sub-scale, and pursue mostly undifferentiated business models. A few companies, however, are taking the initiative to grow globally and have achieved a measure of success. For India to fully capture the potential from manufacturing exports, the export focus needs to get broad-based across sectors and across companies within a sector.

In order to be successful, Indian companies will need to adopt a global mindset to build scale and achieve cost excellence; acquire market access rapidly, including using inorganic routes such as acquisitions where required; strengthen design and innovation skills; build a global or regional operating footprint; and master the ability to manage a world-class talent pool and organisation. These actions will form the foundation for ambitious global growth and will need to be supported by a judicious choice of market segments and business models. In electrical and electronic products, Indian companies can choose to focus on: (a) manufacturing only; (b) design and manufacturing; (c) design, manufacturing and branding. Given the trend towards outsourcing of design and India's strengths in both design and manufacturing, it is suggested that Indian companies focus on the second model — design and manufacturing.

31 Success for Indian companies in this sector will require an aggressive mindset focused on establishing cost- or capabilities based leadership; selecting the right product segment based on its attractiveness and fit with India's strengths and the company's access to relevant technology; and locking in customers and technology through innovative approaches. Electronics components contributed 18 per cent to the overall electronics production. Production in this sector was US$ 1,961 million during 2004-05 compared to US$ 1,719.3 million in 2003-04; a growth of 14 per cent. The key product groups that have driven growth in components include CTV picture tubes, optical discs, PCBs, connectors, ferrites, etc. Growth in this segment has been primarily due to growth in the user segments, viz, CTVs, PCs, etc. As such, the outlook remains positive. Availability of skilled human resources in India at competitive cost is a key advantage for the electronics sector. India's human resources advantage derives from three key features - availability in terms of numbers, capability in terms of the right skills and low costs. India has the potential to ensure adequate availability of manpower to support the electronics industry well into the future.

India's population was predominantly young - in 2001, nearly 54 per cent of the population was less than 25 years of age. By 2013, nearly 200 million more people will join the nation's productive age bracket representing a quantum growth in the consumption class. This implies that India will have a large pool of productive manpower well into the future. India's manpower is trained and has a good mix of capabilities. India produces over 500 PhDs, 200,000 engineers, 300,000 non- engineering postgraduates and 2,100,000 other graduates each year. The

32 Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs) produce graduates and post graduates with best-in- class skills and capabilities in technical and management fields. India's capabilities in IT and engineering make it an attractive location for sourcing engineering services such as R&D and design.

Labour costs in India are extremely competitive when compared to other developing countries. India's cost of skilled labour is among the lowest in the world. For example, average labour rate per employee in the electronics sector is about $3,000 per year. Labour cost as a percentage of value added is only 21 per cent in India as compared to 23 per cent in China and 30 per cent in Taiwan. Taking advantage of this many MNCs have set up manufacturing bases in India for domestic consumption as well as exports. Many multinational companies in the electronics sector have leveraged India's manpower advantage to grow in the domestic market, as well as source products and services from India. The Indian market provides favourable demand conditions for the electronics sector to grow. India has been experiencing a strong growth in the demand of consumer products and durables in recent years, driven by consumer demographic trends. This has facilitated growth in the electronics sector both directly and indirectly. Growth in demand of consumer durables such as CTVs, VCDs / MP3 players and PCs directly benefits the sector.

> Tax free zones (SEZs): Special Economic Zones (SEZs) have been recognised as an important mechanism for trade and investment promotion, creation of infrastructure, employment generation,

33 promotion of regional development, increase in foreign exchange earnings, improving export competitiveness and transfer of skills and technology. These are considered as growth drivers in the developing countries. The SEZs have been in existence for decades, but have attracted renewed attention world-wide in recent years due to globalisation of trade and financial markets. Historically, SEZs were the result of the spurt in economic growth. It is well recognised that the SEZs are instrumental in developing local and regional infrastructure facilities, which in turn are necessary for overall economic development of a country.

The financing specifications in the SEZ Act and Rules prescribed that a minimum investment of Rs. 1,000 crore and net worth criteria of Rs. 250 crore for the multi-product SEZs. Sector-specific SEZ developers must make a minimum investment of Rs.250 crore or have net worth of Rs. 50 crore. The SEZ Act allows for 100 per cent FDI in the manufacturing sector through the automatic route, barring a few sectors, for establishment of units in the SEZs and also 100 per cent FDI to develop townships within the SEZs. External commercial borrowings of up to $500 million can be raised by the SEZ units in a year without any maturity restrictions and with flexibility to keep 100 per cent of export proceeds in an EEFC account. SEZ units are eligible to make overseas investments up to any amount under the automatic route to be funded out of EEFC balances of the unit. Such investments will be subject to an overall ceiling of US$ 500 million.

34 As of December 2008, the total investments in the SEZ units stood at Rs.93,507 crore. There is much more vahdity in this argument as SEZs promises both administrative simpHcity, and economic incentives. Among them, the former represents the waiver of routine custom shipment inspections, and no licensing for production reserved for micro and small enterprises (MSEs). Economic incentives range from time-bound income-tax exemptions under Section lOA to zero duties on domestic and imported inputs. The theoretical basis of a trade-neutral policy, which assigns no special preference to either exports or imports, is violated by the SEZ schemes. The revenue losses due to excessive fiscal concessions to the SEZs could be sizeable but at the same time the SEZs would generate more production and exports and thereby more revenue accruals, which would compensate the revenue losses incurred during the course of SEZ development. In addition, pick up in organised sector employment arising from the new SEZs should lead to improved tax administration which could partly offset losses due to tax concessions.

However, free trade zones like Santacruz in Mumbai grant very limited privileges but are working as successful SEZs. In fact, it is difficult to precisely estimate the cost-benefit of incentives and these incentives might often cost more than the benefits from the activity. The whole purpose behind the SEZ concept was to liberalize the trade and investment scenario in India where by a conducive and hassle-free environment was created for industry to grow and propel the development and growth of the particular area and the country. SEZ scheme which got implemented in 2006 has already provided direct

35 employment to 2,55,000 persons while another 7,50,000 persons have benefited through indirect employment generated. It is estimated that the infrastructure sector will require USD 500 billion investments between 2007 and 2012 to sustain India's growth. For manufacturing in SEZ, for sale in domestic tariff area, the rate would equal to custom duty rate plus applicable excise rate but SAD of 4% is exempt. The duty differential duty works out to 5% compared to import & sale.

And however, the raw material and packing material required to manufacture are exempt from excise, customs, CST and VAT. In case, unit is set up in the duty free zones like HP and North eastern States, excise duty is either exempt or refunded to the manufacturer. The manufacturer, however, has to pay excise duties on raw material and packing material. In effect, manufacture in excise free zone is comparatively advantageous than other location. The distribution of the goods attracts VAT/CST as well as entry tax in some States. Goods cleared from 100% EOU unit for sale in domestic tariff area attracts concessional basic duty (i.e. 50% of customs duty) plus applicable local taxes. EOU unit can clear the goods into domestic tariff area up to 50% of the FOB value of the exports. The procedure for clearance is not easy to manage and the requirement of having a positive Net Foreign Exchange (NFE ) to sell in DTA are hindrances for DTA sale.

^ Untapped domestic market: The Consumer electronics industry contributes about 33.80 per cent of the total electronics production in India. The total production of consumer electronics was US$3.74 billion in 2004-05, registering a growth of 13 per cent over production

36 in the previous year. The growth has been primarily powered by colour televisions (CTV), which grew from 8.9 million units in 2003-04 to over 10 million in 2004-05. CTV growth in turn is driven by growth in Flat Screen TVs (FST) that is estimated to constitute nearly 20 per cent of the CTV market. Other growth segments in consumer electronics include microwave ovens and VCD/MP3 players - the microwave oven industry is estimated to be growing at the rate of 25-30 per cent. These trends are a reflection of increasing consumption and aspiration levels among Indian consumers, driven by demographic and lifestyle changes. As these trends are positive for the future, the outlook for consumer electronics segment is quite positive. Indian television market has matured over the years with world's best manufacturers offering their most enriched and latest range of TVs to successfully cater to the demands of the Indian consumers.

An average Indian buyer fully understands what he is looking for in a television and the market more often than not is able to live up to his expectations. He not only knows what he would prefer to watch on his television be it family soaps, sports, reality shows or news but he also knows which television brand whether Samsung, Sony or LG he would pay to watch all these on. Considering the unlimited size and ever expanding nature of Indian television market and the diversity in terms of consumer tastes and preferences it is but natural that Indian market perhaps has more than its fair share of television brands. But even among so many options there are some brands which clearly stand out and can proudly claim to be India's top TV brands.

37 The success of any TV brand in India like in any market in the world is a direct fall out of the ability of that brand to effectively meet the needs of the target audience. The most crucial deciding factor for a large majority of Indian households still happens to be the congruence between price of the TV and their designated budget for the same. In spite of that the interesting fact is that only around 50% of the Indian households have a TV set of their own and there is a great market potential for TVs in India.

> Excellent supply base for glass and colour picture tubes: Today, India is one of the few emerging countries to have an excellent component supply base in terms of manufacturing facilities for glass and color picture tubes, so it helps it a good choice for all those companies who are looking to take benefit of this emerging market. Videocon is one of the largest CPT Glass manufacturers in the world with a high level of experience and technical expertise operating through Poland and India. The company leveraged on this synergy after the Thomson acquisition to internally source glass for its CPT manufacturing thereby increasing efficiencies and lowering costs.

Samtel Glass Limited (sgl) is a hi-tech plant, which was set up in 1993 to manufacture Glass Parts for Black and White Picture tubes in joint venture between Samtel Group, Corning Incorporated USA and Samsung Coming, South Korea. This unit was established keeping in mind the Samtel Group's objective of becoming a fully integrated picture tube manufacturer. The plant was converted to manufacture funnels for Color Picture Tubes in Sept. 2000 by modifying the presses

38 and putting up finishing processes and started manufacturing funnels for color picture tubes in October 2000. Today, SGL meets over 60% color picture tube glass requirement of the Indian color picture tube industry.

SGL is transforming itself from being a manufacturer of world-class glass products to a solutions provider by moving up the value chain of picture tube glass and providing products and services that make color picture tube glass more versatile and user-friendly. The market and technology leader in the Indian Picture Tube Glass Industry, SGL continues to add to its customer base and service offerings, while maintaining and enhancing product quality. Its ongoing efforts, to provide high quality products and reliable and excellent service to its customers, are the key factors for SGL's sustained success and leadership position in the Indian color picture tube glass industry. Currently, Funnels suitable for Color Picture Tubes in 14", 15", 20", 21" and 29" sizes are being manufactured, and the company has plans to cater to the demand for all sizes as per future needs of the customers. And now SGL is the pioneer in the country in manufacturing of TV glass.

> Custom duty on colour picture tubes (CPT's) lowered to 20% from 25%: The demand for colour picture tubes (CPT) has been rising steadily. But at the same time owing to customs and import liberalisation, they had to face competition from imports during 1993- 1997. A sharp reduction in import duty from 85% to 40% between

39 1994-96 and further down to 20% by 2004 was announced to gear the manufacturers of picture tubes to face competition from foreign players. As a result of spurt in demand in 1990s, the CPT manufacturers expanded capacities, which resulted in excess capacity in the domestic market. Samtel Colour, LG Hotline and JCT Electronics are the major domestic CPT Manufacturers. The picture tube industry is both technology and capital-intensixe industry.

Samtel India imports technology from Mitsubishi and JCTE from Hitachi. Uptron had collaboration with Toshiba. BPL has entered into a strategic alliance with Toshiba Corporation of Japan to manufacture pure flat picture tubes for the first time in India. Philips Electronics and LG Electronics have formed a joint venture to become a global giant with almost $6 bn sales (CIER, 2002). Hence manufacturers are dependent on suppliers for important components and hence suppliers enjoy high bargaining power. Many manufacturers have integrated backwards to gain cost advantage over their competitors. At the same time bulk orders in raw material procurement fetch more discounts, which give the larger players an advantage over their smaller counterparts. The CPT, the most critical component in a CTV has no alternate use and therefore, the CPT industiy is solely dependent on CTV players, mainly domestic and partly exports. Hence larger players like LG, Samsung and Mire etc. are able to negotiate better deals unlike other players.

40 1.5 COMPETITION OVERVIEW - SELECT TELEVISION

BRANDS IN INDIA :

Videocon (2009 MARKET SHARE-12%)

It is the market leader in the consumer electronics and home apphances segments in India; the company manufactures home apphances such as refrigerators, microwave ovens, compressors, air conditioners and washing machines. It acquired 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-a-vis competitors. It has taken over multinational brands like Sansui- to flank the flagship brand Videocon in the low to mid priced segment, essentially to fight against brands like BPL, Philips, Onida and taken over Akai to cater to un-served segments - tail end brand or brands like Aiwa.

Videocon is in a steady climb to be amongst the top global consumer durable companies and believes it has to constantly evolve to fit the needs of the consumer. The company offers a full range of products in televisions (conventional, flat and LCD), washing machines, air-conditioners, refrigerators, audio products, home theatre systems and microwave ovens. Videocon introduced the 2-2-2 service initiative, whereby it attends, sorts out problems and replaces defective products with minimal inconvenience to the consumer. Videocon also introduced a new concept of mobile service centre - christened "Videocon on Wheels", it offers door-to-door

41 service to customers in locations where an authorised service centre might not exist. Videocon's comprehensive service network includes 100-plus mobile vans, 500 authorized service centres, and call centres at 30 strategic locations across the country. It also consists of a team of 1,000 service engineers and more than 100 spare-parts dealers, while efforts are on to further expand this network. Videocon also has a significant sales presence globally and sells its made-in-India appliances to markets in the Middle East and Europe, West Asia, Latin America, Nigeria and Indonesia, contributing to expanding consolidating the company's global footprint today. 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 indigenisation. 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 the same price point. This has led to a state of diffused positioning for its brands. It has also led to a cannibalisation 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 alsoon the decline. Hence it is facing rough weather and also trying to boost exports.

LG (2009 MARKET SHARE-23%)

LG Electronics rightly understood the consumer motivations to create magnetic products, price them strategically, position them sharply and

42 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.

LGEIL has achieved a turnover of Rs 13,089 crores in 2009. LGEIL's manufacturing unit at Greater Noida is one of the most eco-friendly units among all LG manufacturing plants in the world. The second Greenfield facility is located at Ranjangaon; Pune has the capacity to manufacture GSM Phones, Colour Televisions, Air Conditioners, LCD TVs, washing machine, refrigerators and Optical Disc Drives. This is India's first mobile phone manufacturing unit and also Asia's largest Optical Disc Drive manufacturing plant.

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 the Japan Victor Company, better known as JVC. So focused is Onida on

43 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 analysed to determine the extent of rivalry between the existing players.

Philips PE Electronics Ltd is a new business unit that brings together two premium brands Philips (range of television products) and Electrolux (range of Home Appliances) that complement each other as a single entity under a unique brand licensee agreement. Set up in April 2010, PE Electronics Ltd. is headquartered in Mumbai and will operate in 9 zones with 24 branch offices across the country. As part of PE Electronics, the Philips product range will consist of High definition LEDs, LCDs and Ultra Slim Color TV's. The Electrolux product range will consist of Refrigerators, Washing Machines, Microwave Ovens and Air- Conditioners. Philips had recently launched its new range of LED, LCD and Ultra Slim TVs equipped with new features focusing on the pulse of the Indian market and catering to their demand of a more fulfilling movie experience at home. The Philips TV range includes 15 models of LED TVs with sizes ranging from 24" - 55", 8 models of LCD TVs with sizes ranging from 24" - 46" and 5 models of Ultra Slim TVs in 14" and 21" .The price range of

44 the LED TVs start from Rs 27,500, LCD TVs start from Rs 17,500 and the range for Ultra slim TVs start from Rs 5,290.

Samsung (2009 Market share-37%) Initially the strategy of Samsung in India was to create premium image by emphasising 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 Piano series of Flat Colour televisions.

45 1.6 GROWTH OF TELEVISION MARKET IN INDIA:

In India, where 70 percent of citizens earn less than $5,000 a year, buying a television is not an option for many consumers. Surprisingly, however, Indians have shown remarkable interest in buying televisions, even the more-expensive flat-panel sets, mostly because of increased awareness, rising availability and declining prices. "India is emerging as a major force in the global television market in terms of domestic consumption as well as in production of sets", while there remain disparities in terms of the economic status of television buyers, set sales in India are experiencing strong growth.

India's television market is set to grow to 18.7 million units by end of 2011, expanding at a Compound Annual Growth Rate (CAGR) of 9 percent from 12.1 million units in 2006. On the revenue side, overall television sales will reach $4 billion by 2011, rising at a CAGR of 9.6 percent, up from $2.5 billion in 2006. While Flat-Panel-Display (FPD) televisions are gaining sales momentum in India, CRT televisions still have a leading position in the nation because the higher prices of Liquid Crystal Display Televisions (LCD-TVs) and plasma sets have discouraged their adoption in most parts of the country. Many consumers in India buying their first television sets are looking at 21-inch and smaller CRTs as starter sets. However, this carries over to the replacement market as well, where consumers are attracted to 29-inch flat-face CRT TVs as alternatives to LCD-TVs because of their lower prices. It is the urban areas, where consumers are looking for replacement sets or buying second televisions, where there is a likelihood of flat panels gaining some market share.

46 Manufacturing on the rise Television set manufacturing continues to rise in India, with both domestic and overseas firms increasing their production bases in the country. Factories in India are cropping up in less-developed regions because of tax breaks given by the government in order to improve the living conditions of citizens as well as to promote investments in television production in the country. India has an excellent component supply base in terms of manufacturing facilities for glass and colour picture tubes so it makes it a good fit for companies striving to take advantage of this emerging market.

47 1.7 FUTURE SCOPE FOR TELEVISIONS IN INDIA:

Demand forecasting and sales forecasting are important for any marketing planning and control as it serves the basis for comparison over a period of time. Forecasting helps in identifying and solving marketing and sales problems. Further, they are also used for setting performance standards. If the marketer knows the different tools and their application and is familiar with the market forces, most often, 90-95% of the forecast is good. Besides, it is increasingly felt that the forecast should generally be in a range rather than just having a single point forecast. Forecasting exercise involve understanding market potential. Consider the example of a product such as a T.V set.

To estimate the market potential for T.V sets in India, we have to know the number of households .Assuming that each household will have a T.V set, we can say that that the market potential for T.V sets is equal to the number of households in the country .And if we assume that six people constitute a household, we have about 142 million households Ideally, this is the market .But then , we know that 25% of Indian population is below the poverty line and hence will not be able to buy T.V sets Besides, almost 40% of Indians are in low income group and given the prices of T.V sets, they too may not be able to afford it. So, one is left with only 35% of the total population which is the real market that needs to be targeted. The reason being that size of any market is based on the number of buyers who might exist for a particular Marketing offer.

48 These buyers need to have characteristics hke Interest in the product, Income to be able to afford the product and Access to the product. Based on these characteristics .we have arrived at 35% of the total Indian population to be the size of the target market. Market potential is the limit approached by the market demand as industry's marketing expenditures approach infinity, for a given environment, in other words, market potential refers to the upper limit of market demand. It is important for us to understand that there are three key terms involved in defining the market potential i.e.. Market demand. Marketing expenditure by the industry and Defined market environment. Market demand refers to the total volume that could be bought by a defined customer group in a defined geographical area in a defmed time period in a defined marketing environment under a defined marketing programme. It is important to note that demand could be measured in physical or monetary terms.

Demand is always for a specific time frame. An important dimension to be understood is also the fact that market demand is not a fixed number but a function of specific conditions. It is for this reason that it is called market demand funcUon of market response function. In the above example of T.V sets, as more income is generated in the Indian economy following higher economic growth rate, the demand for T.V sets will increase .The demand for Colour T.V sets boomed in 1982-84 as Doordarshan started colour telecast, went commercial and beamed popular soap operas. We know that at any given time there is only one level of industry marketing expenditure.

The market demand corresponding to this level is called market forecast. Marketing demand as a function of industry marketing expenditure

49 (assumes a given marketing environment)- Marketing demand in two different marketing environments. This refers to a company's share of the total market demand, it is subject to all the determinants of the market demand, plus the determinants of the company's market share. Company Potential is the limit approached by company demand as its marketing effort increases relative to its competitors. The absolute limit to this potential is the market potential and this will be so only in a monopolistic situation. Sales Forecast refers to the estimates of future sales of company's products.

Various research reports had analysed the trends and opportunities within the India market and predicts that by 2012, LCD TV shipments will surpass those of CRT TVs in India. India has the second largest population in the world and an annual GDP growth rate of more than 8 per cent from 2002 to 2012, with a TV market that is projected to be 1.3 crores (13 million) units in 2008. CRT TV accounts for 92.9 per cent of those units in 2008, followed by LCD TV with 6.6 per cent and PDP TV with 0.5 per cent. However, research finds that the India flat panel TV market is just at the beginning of a real growth curve, with Year-on-Year growth of more than 100 per cent expected for each of the next five years. Growth will be driven by enhanced purchasing power, the digital broadcast (DTH, IPTV, STB cable) transition as well as consumer awareness and affordability of flat panel TVs.

India's growing upper middle class is projected to be the greatest source of LCD TV purchasing power. Research analyses the favourable demographics where more than 23 Million Indians— greater than the

50 entire population of Australia—will enter this demography in the next five years. Meanwhile, major brands like Samsung, LG and Philips and Indian local brands like Videocon and Onida are all focusing promotional efforts around LCD TV. Several Chinese brands are also targeting India with their first exports.

51 1.8: MARKETING AND BRANDING ACTIVITIES OF SELECT

TELEVISION BRANDS

VIODEOCON

Videocon is an industrial conglomerate with interests all over the world, and is a Indian multinational company. The group has 17 manufacturing sites in India and plants in China, Poland, Italy and Mexico. It is also the third largest picture tube manufacturer in the world. The group is a USD 4 billion global conglomerate, making it the largest consumer electronic and home appliance companies in India. Since 1998, it has expanded its operations globally, especially in the Middle East.

Today the group operates through six key sectors:

Consumer electronics: In India the group sells consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators, Microwave ovens and many other home appliances, selling them through a Multi-Brand strategy with the largest sales and service network in India. In India after LG entering into market Videocon was not able to stand in market with such a tough Competitor and it has seen a down fall in profits and faced a huge loss.

Mobile Phones: In November 2009 Videocon launched its new line of Mobile Phones. Videocon has ever since launched a no. of Innovative handsets ranging from Basic Colour FM phones to High End Android Devices. And in February 2011, Videocon Mobile Phones launched the

52 revolutionary concept of ZERO paise per second with pre-bundled sim cards of Videocon mobile services along with 7 of its Handset Models.

Colour picture tube glass: Videocon is one of the largest CPT Glass manufacturers in the world, operating in Mexico, Italy, Poland and China.

Oil and Gas: An important asset for the group is its Ravva oil field with one of the lowest operating costs in the world producing 50,000 barrels of oil per day.

DTH: In 2009, Videocon launched its DTH product, called 'd2h'. As a pioneering offer in the Indian DTH market, Videocon offered LCD & TVs with built-in DTH satellite receiver with sizes 19" to 42". This concept in the DTH service is relatively new in the presence of other players like ZEE tv's Dishtv, Tata Sky, Air tel Digital Tv and Reliance's BIG TV providing only the set top box.

Telecommunication: Videocon Telecommunications Limited has license for mobile service operations across India. It launched its services on 7 April 2010 in Mumbai.

Acquisition of Thomson SA: Videocon through its Wholly Owned Offshore Subsidiary acquired the Color Picture Tube (CPT) businesses from Thomson S.A having manufacturing facilities in Poland, Italy, Mexico and China along with support research and development facilities. The acquisition came at a time when Thomson was facing a fall in demand in developed markets for television with CPTs and was moving more towards Flat-screen and Plasma Television. However, Videocon saw an opportunity in the emerging countries for CPTs and hence pursued with the

53 acquisition. Besides, the acquisition gave Videocon, the access to advanced technology giving the company control over an R&D facility in Agnani, Italy.

The major reasons behind this acquisition were: Cost cutting - Videocon was better positioned to shift the activities to low-cost locations and also it could integrate the operations with the glass panel facility in India with the CPT manufacturing facilities acquired from Thomson S.A. Videocon wanted to leverage its position in the existing parts of the business and this acquisition would give it a strong negotiation position and could reduce impact of glass pricing volatility. Videocon could also reduce the costs by upgrading and improving the existing production lines. Vertical Integration - The acquisition helped Videocon in vertically integrating its existing glass-shell business where it had been enjoying substantially high margins. Videocon's glass division had the largest glass shell plant in a single location. This gave the company an unrivalled advantage in terms of economies of scale and a leadership position in the glass shell industry.

The acquisition also gave Videocon a ready-market for its glass business and it was part of Videocon's long-term strategy to have a global vertically-integrated manufacturing facility. Rationalization of Product Profile - Videocon modified its product profile to cater to the changing market needs like moving away from very large size picture tubes to smaller ones. Apart from the overall strategy Videocon also had a plan on the technological front. It wanted to improve the setup for the production line and line speed post-merger. Its focus was to increase sales while reducing the costs and thereby improving the productivity of the existing line. The company also wanted to foray in a big way into LCD panels 54 back-end assembly. On the sales front the company wanted to leverage on the existing clients of Thomson and build relation as a preferred supplier to maximise sales. Also, Videocon could benefit from OEM CTV business with the help of Videocon's CTV division, invest for new models and introduction of new technologies.

In 2004 Thomson planned entry into the high-growth digital media and technology business. Also, Thomson wanted to exit consumer and electronics businesses as they were incurring significant losses. After sale of its TV business to Chinese group TCL, and Tubes to Videocon, Thomson divested from the audio/video accessories business which was the last unit of its consumer electronics business. The need to divest are quite evident from the losses that it incurred in these businesses particularly that the unit that it sold off to Videocon, the Optical Modules activity, and the Audio/Video & Accessories businesses which totaled around €749 million for 2005. Moreover Thomson had done some acquisitions that were in line with boosting their revenues in the following years.

When Videocon entered the race for the colour picture tubes manufacturing capacity of Thomson SA in November 2004, there were 16 other bidders. Videocon stood slim chances given the fact that it had to battle it out with players like LG, Philips, Samsung and Matsushita, Daewoo and several Chinese manufacturers but finally managed to close the deal. The deal catapulted Videocon into the No. 3 slot in the global pecking order for CPTs. An official of Videocon said on the deal "The word is out in the world that India and Indian companies are not just a good bet by themselves, but also a hedge against China.

55 CPT industry is affected by many competitive factors such as change in the consumer preferences, the product offer strategy of retailers, the progress made by alternative technology manufacturers, capacity adjustment facility of competitors etc. Based on all of these factors there were two scenarios that emerged from the 2005 budget of Videocon. The first scenario is a conservative one. It mainly assumes Price pressures similar to those in the past(-8 to -12%),capacity reduction over a period of two years, a gradual shift to newer technologies like True Flat and good amount of growth for LCD makers.

The second scenario is a more aggressive one in term of trends predicted. It assumes that the switch to TrueFlat would be faster, more overcapacity, more competition from LCD manufacturers and rising price strategy pressures in general. The second scenario obviously requires an industrial strategy which is more adapted to the environment. However even if the second scenario arises, Videocon believes there is an opportunity in the CRT business. Though it is very obvious that in the developed markets of the western world the demand is shifting towards the flat panel side (FPD it is expected to contribute 70% of TV market in these regions), in the emerging markets like BRIC CRT still holds fort. CRT holds a dominant 70% share in these markets. When translated into number of units the demand is more than 100 million units. As Videocon is primarily based in these countries, it hopes to harness the value of the Thomson acquisition in the coming years.

Videocon has not been able to turn the plant around in Italy still. However it is getting support from the local government (which wants to prevent job cuts) in form of grants. The government is in fact trying to set up a 56 Greenfield venture in form of a LCD manufacturing facility in partnership with Videocon. The banks are also supporting Videocon and with help from all these quarters Videocon expects to turn around the plant in Italy. The Thomson plant has not turned around in Mexico as well and in fact production has been reduced over there. In Poland, the situation is more promising and Videocon hopes that plant over there will get in black in the very near future. However the surprise has been in the Chinese market .Despite facing a highly competitive market Videocon has managed to turn a plant around while the other is on its way.

In China Videocon is adopting a different strategy for manufacturing CTVs as the local players dominate the market .It plans to supply these players by taking advantage of low-cost nature of mainland(the number targeted by it about 6 million CPTs). The LCD television segment is one of the fastest in terms of growth rate in Italy. The compounded growth rate is projected to be around 70% in the next few years. Videocon in partnership with the local government is going for a Greenfield venture in this segment. The Italian central government is giving a euro 180 million grant whereas the regional authorities are giving a 40 million grant. Videocon would itself pitch in with about euro 300 million whereas bank loans would provide a further 700 million.

In the Thomson plant located in China the local Chinese Government is the minority shareholder. When Videocon acquired Thomson's CPT business, it also gained control of Thomson's Mexican plants. However Videocon Industries has a view that it would expand in the country only if the government gives it enough incentives. Videocon is demanding a 25-30% cash benefits from the government of Mexico. Thomson is looking to sell 57 out its stake in Videocon (a 10 percent stake via GDRs) and in most likelihood it would be bought by Videocon itself. Thomson would be exiting at a loss as it had acquired the stake at around Rs 400 per share (approximately equal to $10 per share).The deal is expected to happen at current market prices.

<• Videocon Brand Ambassador and Bollywood Superstar Shah Rukh

Khan unveils the consumer durables major's new logo and identity in

San Francisco; signals renewed focus on class-leading product

appeal, ownership delight and service quality.

While the venue chosen was a testament to the present reach and also the future ambitions of Videocon's large Consumer Durables division, brand ambassador Shah Rukh Khan embodied the very spirit of the new, hardworking and youthful Global Indian - aware, in sync and winning recognition and accolades across the world today. The world and India are growing younger day by day, and in the quest to continue to successfully reach out and touch its citizens, Videocon, with its long track record of manufacturing and selling high quality, yet value-oriented consumer durables, has embarked on a high-energy journey to create the right kind of buzz for its youthfiil consumers across the continents.

The rationale behind Videocon's brand evolution comes from the brand's constant endeavour to listen and respond to the changing market dynamics in India and overseas. With Videocon completely adapting the new tagline - 'Experience change', in every sphere of operations, had started creating a sea-change for customers of consumer durable goods. The primary focus

58 was towards developing the latest technologies with an emphasis on quality, innovation and value. Videocon started expanding aggressively the service penetration in all markets of their operation. This should give a 360 degree approach to brand reinvention and a need to keep the employees engaged, energized and rewarded as only a strong workforce will result in even stronger products. The brand should aim at a completely out-of-the- box and a refreshingly new communication strategy for the consumer durable division.

The all-new Videocon logo with green colour and caption 'Experience Change' speaks about an environment friendly company. The 'V in the new Videocon logo is representative of the new identity of this leading consumer durables brand - an identity that is fresh, dynamic, and has been provided a life of its own. The new 'V is composed of two animated green, lava-like shapes - called Chouw and Mouw, with distinct identities of their own. Chouw and Mouw are 'live' characters depicting a positive dimension of Videocon's new tagline, "Experience Change." Both have certain personality traits, based on their physical attributes. The bigger one, Chouw, is slow but earnest; strong and silent; he is patient, good natured, kind, and maybe a little romantic too. The smaller one, Mouw, is quick witted, energetic- bordering on restless, curious, and funny. Physically, they can coerce their bodies into rudimentary shapes that help them to get on with tasks at hand.

The mascots Chouw and Mouw appear to be very vibrant and interactive; representing the change Videocon brings into the lives of its customers,

59 through innovation in its product lines, by offering great value, and by delighting its customers with superlative products and services.

•> Videocon celebrated its new during the festive season by launching some truly exciting offers. The company had announced a series of promotional schemes and spent a few crores on gifts alone apart from the other market spends. The gifts include on-the-spot cash-back up to 1 crore, Cars, two-wheelers, LCDs, Ultra Slim CTVs, Air-conditioners, DVD Players amongst others. The scheme was promoted through a high-decibel advertisement campaign aimed to add new dimensions to the celebrations. The special offer was 'Videocon Banaye Crorepati', wherein a consumer who purchases the applicable products under the scheme during the period will get a scratch card, wherein upon scratch he can avail assured cash back from Rs. 100 to a crore.

<• Videocon Group announced a unique 'Paisa Vasool Offer', providing double benefits on Videocon Satellite LCDs purchase. Aimed to make LCD ownership more accessible, "Paisa Vasool" was a unique opportunity of owning a world class Videocon Satellite LCD that combines twin benefits of free Videocon d2h services for 2 years (24 months) worth Rs.9000 plus a cash/money back. Under "Paisa Vasool", one can get benefits worth Rs20, 000 on the purchase of Videocon Satellite LCD worth Rs25, 990. This unique offering from Videocon provides an opportunity to customers to switch from CTV to satellite LCDs thereby offering superior experience in entertainment. Under the scheme, one can get benefits worth Rs20, 000 on the purchase of Videocon Satellite LCD worth Rs25, 990. There were other attractive offers on other models from 19" LCD to 32"

60 Full HD model. This marketing campaign was targeted at customers who are driven by 'value'. Videocon projected to be a customer-centric company and focused on delighting customers with unique offerings which not only allow customers to experience technologically advanced, innovative products and services but also provides them value-for-money propositions.

<• Videocon unveiled yet another diwali bonanza in 2010. There were assured gifts if customers buy any Videocon products ranging from televisions, LEDs, LCDs, Satellite LCDs, Air Conditioners, Refrigerators, to Washing Machines. Interest-free finance scheme was a great attraction where customers can pay a down payment of Rs.2500 and pay the balance money in 10 easy installments. The company aimed at 200% sales growth in hi-end product categories like LCDs, LEDs, Satellite LCDs, fully automatic washing machines. During the offer period, customers were given gifts like Videocon d2h Set top Box with free 1 month subscription on the purchase of Videocon LCDs, LEDs, flat panel TV range. Stylish Videocon preloaded SIM phones worth Rs. 3195/- with features like Bluetooth, MP3 Player and Camera on the purchase of Videocon's Front Load Washing Machines, Split Air Conditioners and the newly launched Satellite LCDs and assured gifts like stylish rice cookers worth Rs.2095/-, Reebok watches worth Rs. 2499/- and dry Iron worth Rs.695/- on purchase of products like washing machines, refrigerators and microwave ovens. Videocon Festival Bonanza was a perfect opportunity for India to enjoy the festive season like never before. The company also provided one-on-one service support to customers especially in remote areas in Andhra Pradesh, Karnataka and Maharashtra.

61 • Videocon's best TVC were the campaigns for 'Ultra Slim Series', 'baby', 'doll' for 'branding' and LED commercials. The chart below shows inconsistency in their TV ad spends due to the brand make over. The brand has a Pan-India presence for all marketing communications and with advertisements across national, regional and local channels.

Table No. 1

VIDEOCON K1 >) J«) 1 777^7SS 7U,7l» Jl)r,7(l 1 U.IJIUI •)N<)')1 250000 -

•D 225000 - c o 200000 - u 01 l/> 175000 - c 150000 - o(/I 125000 - z 100000 - • - BQl UJ a. 75000 - I/) I . I "02 O 50000 - 1 1 < L z 25000 - 1 II • • - ^03 g ^ j_|._ (/I 2005 2006 2007 2008 2009 2010 • Q4 > UJ _J • Ql 540 80910 116665 720 23340 360 UJ 1- • Q2 20290 43545 1905 930 5100 39920 • Q3 11760 90910 87250 720 75020 9855 • Q4 49350 62010 10970 47250 57940 239780

62 LG

LG Electronics is a global electronics and telecommunications company headquartered in Yeouido, Seoul, South Korea. The company operates its business through five divisions: mobile communications, home entertainment, home appliance, air conditioning and business solution. LG Electronics is the world's second-largest manufacturer of television sets and third-largest producer of mobile phones. It is a flagship subsidiary company of LG Group, one of the world's largest electronic conglomerates. The company has 75 subsidiaries worldwide that design and manufacture televisions, home appliances, and telecommunications devices. LG Electronics owns Zenith Electronics and controls 37.91 percent of LG Display. Its mobile communications division provides mobile communication terminals, personal computers and communication devices.

The home entertainment division offers liquid crystal display (LCD) televisions (TVs), plasma display panel (PDP) TVs, PDP modules, and audio, video and storage devices. The home appliance division provides refrigerators, washing machines, microwave ovens, cleaners, compressors, motors and others. The air conditioning division provides air conditioners and solar cells. Its business solution division provides integrated solutions of hardware, software, network, contents and systems. By 2005, LG was a Top 100 global brand, and in 2006, LG recorded a brand growth of 14%. Its affiliate, LG Display, is now the world's largest plasma panel manufacturer.

The company was originally established in 1958 as GoldStar, producing radios, TVs, refrigerators, washing machines, and air conditioners. The LG Group was a merger of two Korean companies. Lucky and GoldStar, from

63 which the abbreviation of LG was derived. The current "Life's Good" slogan is a backronym. Before the corporate name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of GoldStar. In January 2009 LG was able to buy the domain name LG.com, for a price reportedly to be more than $100 million, placing it among the companies who own their two letter brand's domain name.

In 1994 GoldStar gained sponsorship from The 3D0 Company to make the first 3D0 Interactive Multiplayer. In 1995, GoldStar was renamed LG Electronics, and acquired Zenith Electronics of the United States. LG Solar Energy is a subsidiary formed in 2007 to allow LG Chem to supply poly- silicon to LG Electronics for production of solar cells. In 2008, LG took its first dive into the solar-panel manufacturing pool, as it announced a preliminary deal to form a joint venture with Conergy. Under the deal, set to be completed by year's end, LG would acquire a 75 percent stake in Conergy's Frankfurt solar-panel plant.'^^ LG has produced camcorders called ARTCAM and DSLRs

The various business divisions are:

Home Entertainment: Plasma TVs, LCD TVs, PDP Modules, OLED Panels, USB Memory, Flat Panel Computer Monitors, Home Theater Systems, Blu-ray Disc players, DVD Recorders, Super Multi DVD Rewriters, CD±RW, Notebook PCs, Desktop PCs, MPS Players

Mobile Communications: Electronics is the world's third largest handset maker behind leader Nokia, and Samsung. LG said it expects a significant

64 increase in mobile phone sales this year 2010, while 20 new smartphones present and aims to become one of the leading manufacturers in the sector by 2012. The Korean company hopes to sell 140 million phones in 2010, said Skott Ahn, CEO of mobile phone unit. That would mean an increase compared to the past year, where an estimated 117 million sold units. Ahn said LG Electronics reported a global market share in double digits in 2009 for the first time, despite a 5% contraction in the global market. In the 3rd quarter of 2010, LG's market share of the global mobile phone market had dropped to 6.6% (compared to 10.3% in 3Q09).^'°^ Overall, LG sold 116.7 million mobile phones in 2010, corresponding to a market share of 8.4%. LG mobile devices are made for GSM networks as well as for CDMA networks worldwide. LG phones are available also in unlocked versions that can be used on any GSM network worldwide and not just for a specific carrier's network.

Home Appliances: The Home Appliances division makes products like refrigerators and washing machines. Its 2007 sales totaled KRW 11.8 trillion, accounting for 29% of the company's total revenue. The division's profit was KRW 717.1 billion. About 35% of the company's home appliance revenue comes from the North American market.

Air Conditioning: Various Air condifioning units.

Business Solutions: Monitors, Car Infotainment, Telematics, Digital Signage Solutions

Products: LG Electronics manufactures products in a number of categories:

65 Computers, Televisions, Mobile phones, Home appliances. Semiconductor; DRAM, SDRAM, flash memory

Smart TVs and apps: LG Electronics introduced their first Internet TV in 2007, originally branded as "NetCast Entertainment Access"

In the Guide the company scored badly on the Energy criteria, being criticized for setting a weak target for the reduction of greenhouse gas emissions and not making renewable energy part of its low carbon strategy. LG scored most points in the Sustainable Operations category with the company providing take-back for obsolete phones in 52 countries and being in the process of addressing the issue of conflict minerals. However, the guide warned that LG risks incurring a penalty point in future editions

66 as it was still being listed as a client of Asia Pulp and Paper (APP) who have been linked to illegal logging and deforestation in Indonesia.

Choice magazine, in independent tests of popular LG fridge models in 2010, found the energy consumption in two models was higher than claimed by LG. LG was aware of the problem and had offered compensation to affected customers. In 2004, LG made 4A-rated water efficiency claims for numerous washing machines before they were certified. LG gave undertakings to the Australian Competition and Consumer Commission (ACCC) to provide appropriate corrective notices and upgrade and maintain its trade practices compliance program. In 2006, LG overstated energy efficiency on five of its air conditioner models and was again required to offer consumers rebates to cover the extra energy costs. LG Electronics sponsored the English football club and Weyside Rovers (Guildford) from 2000 until 2002.

LG Electronics currently sponsors the English football clubs Fulham F.C deals pulled together at that time by the ex-Marketing Director John Bernard, who now works for the competition, Sony Ericsson. LG also sponsor the Fremantle Football Club (an Australian Football League team), the Costa Rican football club: Liga de Alajuense, the Australian club National Rugby League team Cronulla Sharks, and the Argentinian club Boca Juniors. LG is one of the leading sponsors of Cricket. It sponsors the International Cricket Council, world's governing body for cricket and other cricket tournaments like Cricket World Cup. It also sponsors ICC Awards. During the period 2001-2003 the company sponsored the snooker Grand Prix. During these years the tournament was known as the LG Cup.

67 LG now also sponsors London Fashion Week and the LG Arena in Birmingham: In 2008 LG became sponsors of the Extreme Sport 'FS04 Freeze' festival and in January 2009 LG became a Global Partner and Technology Partner of Formula One. This electronics company is now an official supplier to Virgin Racing, as well as Lotus Racing and engine manufacturer Cosworth. In addition to this LG in cooperation with local electronics retailer BAKOND and Ministry of Education of Azerbaijan Republic is sponsor of Azerbaijan's most popular intellectual TV Show - LG Knowledge Academy . So far more than 200 000 students from all over Azerbaijan participated in LG Knowledge Academy. In 2009 after huge success organizing committee decided to start second season of game (2009-2010).

LG sponsored the LG Mobile World Cup texting competition. In 2008, LG won 11 red dot design awards, 11 iF product design awards, and 13 Innovation Awards at CES, where the 50-inch PG6000 1080p Plasma HDTV was "Best of Video Display." In 2009 LG has won 15 Design & Technology honors at CES including the CES 'Best of Innovations' in the Wireless Communications Category for LG Dare (VX9700) and Home Appliances Category for Steam Laundry Pair; Steam Washer with Allergiene Cycle and SteamDryer(WM3001H). Seven 2009 products have been awarded with iF product design awards and another seven received red dot design awards.

Two LG washing machines have also achieved Asthma and Allergy Friendly Certification based on the Allergiene Steam cycle. The Asthma and Allergy Friendly Certification Program is a science based Certification mark that is awarded to products that are proven to be more suitable for 68 those suffering from asthma and allergies. The Allergiene cycle of the LG washing machines has been proven to be capable of reaching thermal killing temperatures for the house dust mite, and also that any allergen present will be removed following washing. More recently LG's LUV300B Kompressor vacuum cleaner has also been certified as Asthma and Allergy Friendly. Vacuum cleaners that are certified as Asthma and Allergy Friendly have been scientifically tested for their ability to remove allergen from carpets and have also been assessed for particle generation during vacuuming.

In 2010, LG Electronics got awards for Excellence in Design and Innovation in 7 categories and "Best of Innovations" award in the Video Display category for a dramatic new 55-inch class FULL LED HDTV with 3D capability and Internet. The Brand Trust Report, India Study, 2011, conducted by the Trust Research Advisory ranked LG Electronics as the Fourth most trusted brand in India

<• LG CINEMA 3D TV RECEIVES FULL HD CERTIFICATION

LG Electronics (LG) premium television product CINEMA 3D TV (47LW570S-ZD) has been certified FULL HD in 3D-Mode by VDE, one of the largest technical and scientific international associations in Europe. This certification proved beyond doubt that LG's CINEMA 3D TVs, which provide the most comfortable 3D viewing experience, also deliver 3D in FULL HD. The dispute over LG's TV had centered on whether the company's CINEMA 3D TVs truly qualified as FULL HD,

69 defined as a horizontal image containing 1,080 lines of definition. LG's Film Patterned Retarder (FPR) technology, used on the CINEMA 3D TVs, creates the perception of 3D depth by delivering two 540 line images, one for each eye, that are then combined via the glasses to create a unified 1080p image. The ruling from the VDE delivers the clearest affirmation to date of the validity of LG's FPR technology.

CfNEMA 3D TV has already received a string of endorsements from other institutions and agencies. The China Electronic Chamber of Commerce had ruled that both the vertical and horizontal resolution of LG CINEMA 3D TVs meet the lOSOp TV standard, a position that allows LG to use the FULL HD logo in China. TUV and Intertek, two top European quality assurance and safety certification agencies, awarded LG's CINEMA 3D TVs "Flicker-Free" certification, providing official backing for LG's sharp 3D images. Furthermore, a top US consumer magazine recendy named an LG CINEMA 3D TV the best 3D TV in the US market. The review noted clear advantages for the TV's viewing angle, 3D glasses and bright images.

*l* LG electronics appoints Akshay Kumar as Brand Ambassador for Flat Panel Displays and thereby an aggressive new positioning for its Flat Panel TV business in India.

LG Electronics India, a premier name in style and functionality in the Home Entertainment industry appointed Akshay Kumar as its Brand Ambassador for LG Flat Play Display (FPD) segment. Positioning itself as a frontrunner in the increasingly competitive digital TV market, LG Electronics aims to constantly develop and communicate groundbreaking products and next generation technologies in the FPD segment. The 70 company has a vision to deliver innovative digital products through increased fun and functionality, the association with Akshay will further epitomize the brand attributes, showcasing premium and next generation technology.

Akshay is promoting the new LED range from the LG stable on all National multi-mediums. An aggressive 360 degree marketing and advertising campaign has been devised to ensure optimum visibihty and lucid messaging to the consumer. The advertisements created are a brand endorsement with a creative storyline in a visually impactful ambience. LG has planned a tactful multi-media campaign strategically covering all media vehicles like print, television, radio, outdoor, cinema and internet. LG aims to be No. 1 in Flat Panel TV Market with a targeted Market share of 33% in 2010 through a whole new series of Full LED LCD TV's. The Full LED range known as Infmia is loaded with Superior features like 3D display, broadband TV, Wireless solutions and Full LED's.

The new Infmia TV range is promising to take TV Viewing experience altogether to the different heights. Its slim design gives a style statement. Akshay Kumar is chosen as the brand ambassador for LG FPDs to personify the LG brand. He is a big style icon, gizmo and action freak. The product is sleek and thin and it looks like a piece of art on a wall. It is borderless and it has got 3D technology. The quality of the picture will make viewer stay inside the whole day and watch TV as the LG LED TV's gives cinematic pleasure at home. Videocon targeted a double digit growth in 2010 due to increasing penetration in flat panel display segment. LG's new line up is a perfect amalgamation of superb design, latest technology and superior performance.

71 *> LG Electronics becomes Global Partner of Formula 1 London, England LG Electronics (LG), a global leader and technology innovator in consumer electronics signed an agreement to become a Global Partner of Formula 1 and a Technology Partner of Formula 1. As part of this top level association LG acquires exclusive designations and marketing rights as the official Consumer Electronics, Mobile Phone and Data Processor of Formula 1. The multi-year agreement commenced from January 2009. As Formula One represents the absolute peak of technological innovation and style, it coincides with the vision of LG Electronics brand. And similar to excitement and electricity created by Fl which is unmatched by any sport, LG wants to have the same passion and energy to beat its competitors. LG will enjoy privileges as the Official Data Processor of Formula 1 and will be credited on the official live timing service at Formula One events and in the associated timing and data TV graphics. They also enjoy a comprehensive package of premium marketing rights worldwide in association with the Formula 1 brand. This is a strategic expenditure in today's economic climate, investing on the brand.

*X* LG Unveils New LCD TV for Festive Season - Jazz for Sound Lovers!

Maintaining its technology leadership in Flat Panel Display LG Electronics took a step forward and launched the all new 'Jazz' Full High Definition LCD televisions in India. This TV has first time ever Auto sliding speakers, 500w sound, built-in 3.1-channel virtual surround sound and in built woofers. The speakers tuned by high end audio maestro Mr. Mark

72 Levinson (LG's Chief Sound Advisor) automatically slide out when it is turned on. This feature adds a bit more excitement and "wow factor" to LG's high performance TV and helps improve sound quality, a feature that customers consider to be very important. This launch incorporates LG's latest innovation enhancing sleek design, audio performance and rich image resolution delivering a truly captivating viewing experience. Jazz is expected to redefine qualities for television sound. This TV is positioned as an excellent fit for people who want a full entertainment experience from their TVs and who want to entertain others as well. It has built in 3.1- channel surround sound, sliding speakers and excellent picture quality, all built on LG's cutting edge technology.

The company aims to gamer 30% market share in the FPD Segment by constant expansion of product portfolio, by offering customized display solutions to Indian audience. Aesthetics fused with stylized design and smart technology plays a major role in capturing customer loyalty and LG's plan to launch revolutionary products like Jazz will complement the urban lifestyle of Indian audience and can strengthen its position in the Indian market.

*l* LG launches world's first frameless Plasma TV

The product which resembles a seamless black sheet of glass is a unique combination of frameless design and amazing viewing experience. This new product not only represents LG's latest innovation enhancing sleek design, audio performance but also a rich image resolution for delivering a truly captivating viewing experience. The brand PG61 is a recipient of the Best of Innovations Award at the 2008 CES Consumer Electronics Show.

73 Consumer surveys revealed that consumers wanted to see something more than just a conventional plain black TV. This launch brought in the market the first TV to incorporate single-layer technology, completely eliminating the usual screen border. LG's concept of Life's Good is a brand promise which LG always tries to fulfill through its products.

*l* LG to invest 360 crores on brand building

LG Electronics India Pvt. Limited (LGEIL) announced investment of 360 crores in brand building and other marketing initiatives this year. The prime focus of the company will be to combine its expertise in design and technology with a fresh premium appeal to the brand, adding an aspirational value for the Indian consumer. The differentiating factor for the brand is its focus on customer service. LG has started an innovative 211 campaign to provide quality after-sales- service. The campaign includes company response to customer complaint within 2 hours. The fixing time for complaints would vary from 1 hour to a maximum of 24 hours. The IT infrastructure for 211 campaign has been extended to 40 cities. LG has enhanced the consumer durable shopping experience by launching 60 premium brand shoppes in 2008.

••• LG takes on the mantle of Golf Sponsorship

LG takes on the mantle of sponsorship for the Indian Golf Union's National Amateur Tour from 2007 to 2009. The LG Indian Amateur Golf Tour touched 11 cities incorporating 13 events, making it a nation-wide

74 tour. The opening event of the 13-leg LG Indian Amateur Tour started off with the Eagleton Amateur at Eagleton Golf Resort in Bangalore. LG's association with the niche game of golf stood for technologically superior products which blend perfectly with the game. The LG Indian Amateur Golf Tour saw an elite band of partners. Leading event management company Tiger Sports Marketing was managing the Tour while Times of India were Associate Sponsors. CNN which is the Official News Channel was also the Hole-in-one Sponsor. Ten Sports was the 'Official Sports Channel' and Pepsi and Gatorade were the official beverage partners. International apparel company Kappa was the Official Styling Partner.

<• LG unleashes ICC Cricket World Cup Fever 2007 In an endeavor to achieve a closer connect with their esteemed customers prior to the ICC Cricket World Cup 2007; LG Electronics launched their Limited Edition Cricket Series - the Official Televisions for the ICC World Cup 2007. By offering customers an official television for the World Cup, LG planned to strengthen its leadership position in the CTV category thereby targeting a growth of 75 % in CTV sales during the World Cup. The Slim TV model available in this range has aesthetics which are in sync with the color of a cricket ball and is 30% slimmer than normal CRT TVs.

*X* LG Electronics announces phenomenal festive season sales LG Electronics saw phenomenal sales especially in the display category which includes Conventional CRT TV and Flat Panel Displays (PDPs, LCDs and Flat screen TVs), LG's contribution in the month of October

75 alone was above 5.7 lakh units, which was a growth of 21 % over previous years sales in the same period. India has been a priority market for LGE and aggressive festive campaigns have been extremely favorable for LG India. The festive offers were appreciated across the country and LGEIL has received an overwhelming response from its customers. LG Electronics had earmarked a marketing budget of Rs 100 crores for the festive season in 2006. The festive period promotion covered Onam, Ganesha , Durga Puja & Diwali.

••• LG Electronics strengthens their customer service training initiatives

LG had undertaken unique training programmes to enhance their customer service network and re-iterate the company's commitment towards its valued customers. Through these initiatives LG set new benchmarks in customer service, enhanced brand credibility and eventually increased customer base. The highlight of LG's training module was its focus on the technical and behavioral aspects, over and above the field training itself LG had set up 4 training centers across India in Greater Noida, Pune, Chennai and Kolkata to train engineers and plans to spend a considerable sum of Rs. 12.4 million annually on training.

The company believed that customer delight and satisfaction are crucial factors determining the growth trajectory of a company and to give it a competitive edge. This knowledge had prompted LG to streamline customer service efforts and adopt various training modules. In keeping with this vision, LG started the concept of doorstep training program, wherein the chief trainer from LG goes out in the field to train service engineers on different levels. The company added another effort to its 76 credit by providing highly customized training to service engineers, depending on whether they are hired to service high end products or mass products. Recognizing the difference in expectations of customer who own premium LG products, the company has introduced the facihty of Standby Sets, wherein a replacement of the product being taken for servicing is provided to the consumer to minimize inconvenience.

LG currently has a total of 13 trainers providing training for varying durations, depending on the profile and level of the service executive, the product category for which the training is being imparted and past experience of the engineer. The engineers are evaluated periodically by the training academy at LG.. The company also inaugurated two very unique LG Service Malls in New Delhi, one in South Delhi and other in North Delhi, with an exclusive purpose to streamline and address service related concerns of LG customers as promptly and efficiently as possible. These are one stop shops established to cater to servicing issues arising in any of the products under the LG portfolio, which double up as a training ground for service engineers as well.

*l* LG Electronics emerged as leader in the Reader's Digest "Asia's

Trusted Brands Survey "

LG was voted as one of Asia's Top Performing Brands by consumers in

2006. These awards are considered the ultimate seal of consumer approval, and are highly significant as they are a direct reflection of consumers'

77 choice. The company was conferred the Gold Trusted Brand Award for

LCD / Plasma TV. About LG PDPs & LCDs LG Electronics established

itself as the undisputed leader in PDPs and achieved new dimensions of technological excellence.

Table No.2

141900 29080 87695 526195 325725 279490

250000

225000

^ 200000 o O 175000 u UJ 1 z 150000

i 125000 1 lU a. 1 a 100000 1 < J ^ 75000 1 1 • 1- 50000

25000 h2005 20016 20017 i 2008 \h2009 2010 • Ql 20765 2340 0 74925 2065 91955 • Q2 61340 26720 0 95865 69475 29975 • Q3 27800 0 0 95355 78185 300 • Q4 31995 20 87695 260050 176000 157260

78 QNIDA

Onida is an electronics brand, based in India. It was established as "MIRC Electronics" in 1981. Onida was started by G.L. Mirchandani and Vijay Mansukhani in 1981 in Mumbai. In 1982, Onida started assembling television sets at their factory in Andheri, Mumbai. Since then, Onida has evolved into a multi-product company in the consumer durables and appliances sector. Onida achieved a 100% growth in AGs and microwave ovens and a 40% growth in washing machines last year. ONIDA came out with the famous caption 'Neighbour's envy, Owner's Pride', another popular theme of the ads was a devil complete with horns and tail in the 1980s. The devil was replaced by a married couple- Siddharth and Ritu. Onida has a network of 33 branch offices, 208 Customer Relation Centers and 41 depots spread across India. As on 31 March 2005, Onida had a market capitalization of c301.46 crore.

Mire Electronics won an "Award for Excellence in Electronics" in 1999, from the Ministry of Information Technology, Government of India. Onida with its Sales & Marketing office in Dubai reported a 215 per cent export growth in two years, setting the base for an increased robust international presence. The shipments to the Gulf contribute almost 65 per cent of Onida's export revenue, while shipments to the fast growing East African market (Uganda, Tanzania, Kenya and Ethiopia) and the SAARC countries accounted for 16 per cent of export revenues. In addition to the Gulf countries ONIDA has a presence in Russia, Ukraine and neighboring CIS countries. Apart from Television Exports to Russia, Onida also exports DVD Players and High end LCD Televisions. Ranked 34th Most trusted

79 brands in India according to The Brand Trust Report published by Trust Research Advisory.

Onida's range of products include: LCD TVs, Plasma TVs, Televisions, DVD and Home Theater Systems, Air Conditioners, Washing machines. Microwave Ovens, Presentation Products, Inverters, Mobile phones, LED TV, LCD monitor and LCD TV.

*l* Onida bid good bye to devil and planned a brand makeover.

In the face of India's changing consumer tastes, Onida decided to re-launch the brand and said goodbye to 'devil', the company's mascot that for years aroused envy of neighbours who did not own its TV sets. At the time this famous campaign was launched owning a television was a matter of pride for Indians. The mascot was once discontinued in 1998 and was brought back in 2004. In the face of liberalization, the market for domestic and global brands expanded and so was the spending capability of consumers.

Onida introduced a completely new brand mascot as just owning a TV was no more a subject of neighbour's envy and the devil was no longer considered relevant in today's market.

<• Onida replaced the iconic 'devil' with a new age couple.

A 'new age couple' was chosen to replace the iconic 'devil' brand mascot.

The advertisers decided that the once legendary ad campaign had outlived its utility in the Rs.50,000 crores and growing consumer durables industry.

80 The Indian consumers have become lot more individuaUstic and the new campaign depicts a newly-married couple, personified by the boUywood actors Siddharth and Ritu. This also projects Onida as a cross-category player, rather than its earlier image of a television company. The new brand campaign showcases the surprising thoughtfulness of Onida's product features.

•t* Onida launched excusive stores in India

Onida opened exclusive retail stores both company-owned and franchisee- operated across the country.

*l* Onida was the first to launch 24-inch FHD LCD TV in India

In an attempt to break the bar, Onida launched 24-inch FHD LCD TV at a low price range when compared to 32-inch FHD LCD TV of the competitors. It was the only LCD TV in its range with full HD capacity.

These features packed LCD TV mclude Movie TV, 2.0 USB port that allows user to play movie, listen to music and pictures. •> ONLINE MEDIA: Onida consistently advertises in different online

media.

PUBLICATION PERIOD CREATIVE

BRIEF

www.business.outlookindia.com Dec Branding

2010

www.timesofindia.indiatimes.com Dec New product

2010 development

www.economictimes.indiatimes.com Oct Product

2010 Promotion

www.economictimes.indiatimes.com Oct Product

2010 Promotion

www.businesstoday.com Sep Product

2010 Promotion

www.hindu.com Sep Product

2010 Promotion

www.economictimes.indiatimes.com Sep Branding

2010

www.gnagri.net Sep Product

82 2010 Promotion www.latestprice.com Sep Product

2010 Promotion www.indianexpress.com Sep Product

2010 Promotion www.ld2.in Sep Product

2010 Promotion www.technicstoday.com Sep Product

2010 Promotion www .techshout. com Sep Product

2010 Launch www.thetimesofmdia.com Sep Product

2010 Launch www.techgadgets.com Sep Product

2010 Launch www.4to40.com Aug Product

2010 Launch www.lokprabha.com Aug Product

2010 Launch

83 www.infibeam.com Aug Product

2010 Launch

www.technics.com Aug Product

2010 Launch

www.timesofmdia.com Aug Product

2010 Launch

www.worldamazinggadgets.com Aug Product

2010 Promotion

www.thehindu.com Aug Branding

2010

www.mvdigitalfc.com Aug Product

2010 Promotion

www.adgullv.com Aug Product

2010 Promotion

www. andhrabusiness. com Aug Product

2010 Launch

www.audiencematters.com Aug Product

2010 Launch

www.indiainfoline.com Aug Product

84 2010 Launch www.indianinteracts.in Aug Product

2010 Launch www.indianexpress.com Aug Product

2010 Launch www.archives.indiainfoline.com Sep Branding

2009 www.ibnlive.in.com Sep Branding

2009 www.beta.thehindu.com Sep Branding

2009 www.indianexpress.com Sep Branding

2009 www.indianteIevision.com Sep Branding

2009 www.investing.businessweek.com Sep Branding

2009 www.business.rediff.com Sep Branding

2009

^c^:-^^.. www.moneycontrol.com Sep Sales

2009 promotion www.livemint.com Sep Branding

2009

www.ptinews.com Sep Branding

2009

www.news.yahoo.com Sep Branding

2009

www.mynews.in Sep Branding

2009

www.livemint.com Sep Branding

2009

www.dailvme.com Sep Branding

2009

www.in.reuters.com Sep Branding

2009

www.news.in.msn.com Sep Branding

2009

www.zikkir.com Sep Branding

86 2009 www.afaqs.com Sep Branding

2009 www.afaqs.com Sep Product

2009 Launch www.afaqs.com Sep Branding

2009 www.audiencematters.com Sep Branding

2009 www.business-standard.com Sep Branding

2009 www.businessstandard.com Sep Product

2009 Launch

www.campaignindia.com Sep Branding

2009

www.centralchronicle.com Sep Branding

2009

87 www.chennaivision.com Sep Branding

2009 www.dainikbhaskar.com Sep Product

2009 promotion www.dainikbhaskar.com Sep Product

2009 promotion www.deccanchronicle.com Sep Branding

2009 www. dnaindia. com Sep Retail

2009 www.fmancialexpress.com Sep Retail

2009 www.franchiseindia.com Sep Retail

2009 www.franchise-plus.com Sep Retail

2009 www.dnaindia.com Sep Product

2009 promotion www.domain-b.com Sep Branding

88 2009

www.televisionpoint.com Sep Branding

2009

www.thehindu.com Sep Branding

2009

ELECTRONIC MEDIA • Onida has quiet consistently spent in television advertisements. The company had controlled ad spends prior to the brand makeover and have regained marketing communication after the launch of new brand identity.

ONIDA

200000 329690 386825 69630 105790 212780 218095 180000 o z 160000 o u 140000 120000 / 1 I/) 100000 / Q 1 z 80000 /" aUJ. I • 1 1 (/) 60000 Q 1 • 1 1 ^ < 40000 1 • 1 1 20000 1 • 1 L •.1 -k• li u 2005 2006 2007 2008 2009 2010 • Ql 73185 144170 150 15280 165 1500 • Q2 0 120890 50 9880 48875 22110 • Q3 121560 39700 57800 3660 107595 13080 • Q4 134945 82065 11630 76970 56145 181405

•t* Onida 's publicity campaigns in electronic media

89 MIRC Electronics had continuous publicity campaigns across national, regional channels. The top management team was always in news highlighting the performances, corrections and changes being brought about in the company. Publicity campaigns were used for logo change, new brand identity, makeover of the brand, new positioning and the much discussed change of brand mascot. Here is a snapshot of the brand's presence in TV media for recent publicity campaigns.

CHANNEL PROGRAM THEME

Zee Business Mobiles & New technology

Gadgets

CNBC TV 18 Midcap Radar Future plans

CNNIBN 8 PM Prime Brand makeover

UTVi Business 360 Promotions

CNNIBN Breakfast India Brand makeover

ETNow Business First New brand identity

IBN Lokmat Dhoparchya New brand mascot

Baatmiya

UTVi Logo New brand mascot

Manorama News News(Interview) The new mantra

90 CNBC TV Storyboard New ad campaigns

UTVi India Business Branding

day plus

UTVi Newsroom Onida rebranded

CNBC TV Markets Midday Rural promotions

ETNow Technoholic New products

CNBC TV 18 After the bell Future plans

CNBC TV Markets Today Promotions

ETNow Technoholic Product launch

Zee Business Gadgets and more New products

NDTV Profit Profit @ Night Promotions

NDTV Profit Profit @ Night Brand makeover

CNBC TV 18 After the bell Brand makeover

CNBC TV Markets Midday Brand makeover

IBN News Future plans

Gemini TV News New mantra

ET Now Technoholic Branding PHILIPS

Koninklijke Philips Electronics N.V. {Royal Philips Electronics), more commonly known as Philips is a multinational Dutch electronics company. Philips is one of the largest electronics companies in the world. In 2010, its sales were €25.42 billion. The company employs 119,000 people in more than 60 countries. Philips is organized in a number of sectors: Philips Consumer Lifestyle (formerly Philips Consumer Electronics and Philips Domestic Appliances and Personal Care), Philips Lighting and Philips Healthcare (formerly Philips Medical Systems). The Philips Company was founded in 1891 by Gerard Philips and his father Frederik as a family business. Frederik Philips, being a banker in Zaltbommel, financed the purchase and setup of a modest, empty factory building in Eindhoven, where Philips started the production of carbon-filament lamps and other electro-technical products in 1892. This first factory has been adapted and is used as a Museum devoted to light sculpture.

In 1895, after the first difficult years and going nearly bankrupt, Gerard and his father brought in the 16-years younger brother Anton. Having earned an engineering degree, he started work as a sales representative, but soon contributed many important business ideas. After that, the family business began to expand rapidly, resulfing in 1907 in the foundation of the N.V. Philips' Metaalgloeilampfabriek (the Philips Lightwire-bulb Factory Inc) in Eindhoven, followed in 1912 by the foundation of the N.V. Philips' Gloeilampenfabrieken. (the Philips Light-bulbs Factories Inc). After Gerard and Anton Philips changed their family business by founding the

92 Philips Incorporation, they laid the base of the later electronics multinational.

In the 1920s, the company started to manufacture other products, such as vacuum tubes. In 1939 they introduced their electric razor, the Philishave (marketed in the USA using the Norelco brand name). Philips was also instrumental in the revival of the Stirling engine. On 11 March 1927 Philips went on the air with shortwave radio station PCJJ (later PCJ) which was joined in 1929 by sister station PHI. PHI broadcast in Dutch to the Dutch East Indies (now Indonesia) while PCJJ broadcast in English, Spanish and German to the rest of the world. The international program on Sundays commenced in 1928, with host Eddie Startz hosting the Happy Station show, which became the world's longest-running shortwave program. Broadcasts from the Netherlands were interrupted by the German invasion in May 1940. The Germans commandeered the transmitters in Huizen to use for pro-Nazi broadcasts, some originating from Germany, others concerts from Dutch broadcasters under German control.

Philips Radio did not resume after Liberation. Instead' the two shortwave stations were nationalised in 1946 and renamed as Radio Netherlands Worldwide, the Dutch International Service. Some PCJ programs, such as Happy Station, continued on the new station. On 9 May 1940, the Philips directors learned that the German invasion of the Netherlands was to take place the following day. Having prepared for this, Anton Philips and his grandson Franz Otten, as well as other Philips family members, fled to the United States, taking a large amount of the company capital with them. Operating from the US as the North American Philips Company, they managed to run the company throughout the war. At the same time, the

93 company was moved (on paper) to the Netherlands Antilles to keep it out of American hands.

Frits Philips, the son of Anton, was the only Philips family member to stay in the Netherlands. He saved the lives of 382 Jews by convincing the Nazis that they were indispensable for the production process at Philips. In 1943 he was held at the internment camp for political prisoners at Vught for several months because a strike at his factory reduced production. For his actions in saving the hundreds of Jews, he was recognized by Yad Vashem in 1995 as a "Righteous Among the Nations". After the war the company was moved back to the Netherlands, with their headquarters in Eindhoven. Many secret research facilities had been locked and successfully hidden from the invaders, which allowed the company to get up to speed again quickly after the war.

In 1949, the company began selling television sets. In 1950, it formed Philips Records. Philips introduced the audio Compact Audio Cassette tape in 1963, and it was wildly successftil. Compact cassettes were initially used for dictation machines for office typing stenographers and professional journalists. As their sound quality improved, cassettes would also be used to record sound and became the second mass media alongside vinyl records used to sell recorded music. Philips introduced the first combination portable radio and cassette recorder, which was marketed as the "radiorecorder," and is now better known as the boom box. Later, the cassette was used in telephone answering machines, including a special form of cassette where the tape was wound on an endless loop. The C- cassette was used as the first mass storage device for early personal computers in the 1970s and 1980s. Philips reduced the cassette size for the 94 professional needs with tlie Mini-Cassette, although it would not be as successful as the Olympus Microcassette. This became the predominant dictation medium up to the advent of fully digital dictation machines.

In 1972 Philips launched the world's first home video cassette recorder, in England, the N1500. Its relatively bulky video cassettes could record 30 minutes or 45 minutes. Later one-hour tapes were also offered. As competition came from Sony's Betamax and the VHS group of manufacturers. Philips introduced the N1700 system which allowed double-length recording. For the first time, a 2-hour movie could fit onto one video cassette. In 1977, the company unveiled a special promotional film for this system in the UK, featuring comedian Denis Norden. The concept was quickly copied by the Japanese makers, whose tapes were significantly cheaper. Philips made one last attempt at a new standard for video recorders with the Video 2000 system, with tapes that could be used on both sides and had 8 hours of total recording time. As Philips only sold its systems on the PAL standard and in Europe, and the Japanese makers sold globally, the scale advantages of the Japanese proved insurmountable and Philips withdrew the V2000 system and joined the VHS Coalition.

Philips had developed a laser disk early on for selling movies, but delayed its commercial launch for fear of cannibalizing its video recorder sales. Later Philips joined with MCA to launch the first commercial laser disk standard and players. In 1982, Philips teamed with Sony to launch the Compact Disc; this format evolved into the DVD and later Blu-Ray, which Philips launched with Sony in 1997 and 2006 respectively. In 1991, the company's name was changed from N.V. Philips Gloeilampenfabrieken to Philips Electronics N.V. At the same time. North American Philips was 95 formally dissolved, and a new corporate division was formed in the U.S. with the name Philips Electronics North America Corp.

In 1997 the company officers decided to move the headquarters from Eindhoven to Amsterdam along with the corporate name change to Koninklijke Philips Electronics N.V. The move was completed in 2001. Initially, the company was housed in the Rembrandt Tower, but in 2002 they moved again, this time to the Breitner Tower. Philips Lighting, Philips Research, Philips Semiconductors (spun off as NXP in September 2006) and Philips Design, are still based in Eindhoven. Philips Healthcare is headquartered in both Best, Netherlands (just outside Eindhoven) and Andover, Massachusetts, United States (near Boston). As a chip maker. Philips Semiconductors was among the Worldwide Top 20 Semiconductor Sales Leaders.

In December 2005 Philips announced its intention to make the Semiconductor Division into a separate legal entity. This process of "disentanglement" was completed on 1 October 2006. On 2 August 2006, Philips completed an agreement to sell a controlling 80.1% stake in Philips Semiconductors to a consortium of private equity investors consisting of Kohlberg Kravis Roberts & Co. (KKR), Silver Lake Partners and Alplnvest Partners. The sale completed a process, which began December 2005, with its decision to create a separate legal entity for Semiconductors and to pursue all strategic options. Six weeks before, ahead of its online dialogue, through a letter to 8,000 of Philips managers, it was announced that they were speeding up the transformation of Semiconductors into a stand-alone entity with majority ownership by a third party. It was stated then that "this is much more than just a transaction: it is probably the most significant

96 milestone on a long journey of change for Philips and the beginning of a new chapter for everyone - especially those involved with Semiconductors".

Philips was one of few companies that successfully made the transition from the electrical world of the 19th century into the electronic age, starting its semiconductor activity in 1953 and building it into a global top 10 player in its industry. On 21 August 2006, Bain Capital and Apax Partners announced that they had signed definitive commitments to join the expanded consortium headed by KKR that is to acquire the controlling stake in the Semiconductors Division. On 1 September 2006, it was announced in Berlin that the name of the new semiconductor company founded by Philips is NXP Semiconductors. The Philips physics laboratory has scaled down. As of 2010, the company does not try to be innovative in consumer electronics through fundamental research, but continues to improve its many consumer lifestyle products. Due to net profit slumped 85 percent in Q3 2011, Philips has announced to cut 4,500 jobs to match part of an EuroSOO million ($1.1 billion) cost-cutting scheme to boost profits and meet its financial target.

Major inventions of Philips include:

Compact Cassette: In 1962 Philips invented the compact audio cassette medium for audio storage. Although there were other magnetic tape cartridge systems, the Compact Cassette became dominant as a result of Philips's decision to license the format free of charge.

97 Laserdisc: Laserdisc was a 30 cm disc designed with MCA meant to compete with VHS and even replace it. It was not as generally popular as VHS, because of the initial investment costs of players, somewhat higher costs of movie titles, and the read-only format. But like Betamax, it enjoyed extensive success among serious video collectors. The technologies created for Laserdisc would later be used again for the Compact Disc.

Compact Disc (CD): Although Philips' and MCA's Laserdisc project never reached the VHS mass market level, Philips still thought the format should be able to succeed, and, in collaboration with Sony, launched the smaller CDm 1982.

98 Digital Versatile Disc or Digital Video Disc (DVD): The DVD (Digital Versatile Disc or Digital Video Disc), the eventual successor of the CD (Compact Disc), met a long road of setbacks. Philips wanted to continue with the CD in a new format called MultiMedia Compact Disc (MMCD), while another group (led by Toshiba) was developing a competing format, then named Super Density (SD) disc. Their representatives approached IBM for advice on the file system. IBM also learned of Philips' and Sony's initiative. IBM convinced a group of computer industry experts (among them Apple, Dell, etc.) to form a working group. The Technical Working Group (TWO) voted to boycott both formats unless they merged to prevent another format war (like the videotape format war). The result was the DVD specification, finalized in 1995. The DVD video format was first introduced in Japan in 1996, later in 1997 in the U.S. as limited test run, then across Europe and the other continents from late 1998 onwards.

Blu-ray Disc: Blu-ray Disc, yet again primarily developed by Philips and Sony, utilizes blue-violet coloured diodes to create an even shorter wavelength beam than CD or DVD. Because of this, the capacity is much more than that of CD or DVD, being 25 GB single-layered or 50 GB dual- layered.

In 2004, Philips abandoned the slogan "Let's make things better" in favour of a new one: "Sense and simplicity". ASM Lithography is a spin-off from a division of Philips. Origin, now part of Atos Origin, is a former division of Philips. Its record division, PolyGram, was sold to Seagram in 1998 and was merged into Universal Music Group. Philips Records continues to operate as part of UMG, its name licenced from its former parent. Philips Intellectual Property and Standards, is the company's division dealing with 99 licensing, trademark protection and patenting. Philips currently holds about 55,000 patent rights, 33,000 trademark registrations, and 49,000 design registrations.

Companies acquired by Philips through the years include Amperex, Magnavox, Signetics, Mullard, VLSI, Agilent Healthcare Solutions Group, Marconi Medical Systems, ADAC Laboratories, ATL Ultrasound, portions of Westinghouse and the consumer electronics operations of Philco and Sylvania. Philips abandoned the Sylvania trademark which is now owned by Havells Sylvania except in Australia. Canada, Mexico, New Zealand, Puerto Rico and the USA where it is owned by the Osram unit of Siemens. Formed in November 1999 as a equal joint venture between Philips and Agilent Technologies, the light-emitting diode manufacturer Lumileds became a subsidiary of Phillips Lighting in August 2005 and a fully owned subsidiary in December 2006.

In 2000, Philips bought Optiva Coiporation, the maker of Sonicare electric toothbrushes. The company was renamed Philips Oral Healthcare and made a subsidiary of Philips DAP. In 2006 Philips bought out the company Lifeline Systems headquartered in Framingham, Massachusetts. In August 2007 Philips acquired the company Ximis, Inc. headquartered in El Paso, Texas for their Medical Informatics Division. In October 2007, it purchased a Moore Microprocessor Patent (MPP) Portfolio license from The TPL Group. On Friday, 21 December 2007 Philips and Respironics, Inc. announced a definitive merger agreement pursuant to which Philips will commence a tender offer to acquire all of the outstanding shares of Respironics for US$66 per share, or a total purchase price of approximately €3.6 billion (US$5.1 billion) to be paid in cash upon completion. vn - ] o>i

100 On 21 February 2008 Philips had completed its acquisition of VISICU Baltimore, Maryland through the merger of its indirect wholly owned subsidiary into VISICU. As a result of that merger, VISICU has become an indirect wholly owned subsidiary of Philips. VISICU was the creator of the elCU concept of the use of Telemedicine from a centralized facility to monitor and care for ICU patients. Polymer Vision, the maker of The Readius, is a spin out from Philips Electronics. In May 2011, Polymer Vision designed and manufactured a 6-inch screen that displays black and white e-ink text and images at 800x600 pixels and can roll around a tube the circumference of a dime. APRICO Solutions is a venture within Philips Intellectual Property and Standards.

Philips also forayed into the pharmaceuticals market in a company best known as Philips-Duphar (Dutch Pharmaceuticals). Philips-Duphar made products for crop protection, veterinary medicine and products for human use. Duphar was sold to Solvay, now Solvay Pharmaceuticals. In subsequent years divisions have been sold of, by Solvay, to other companies (crop protection was sold to UniRoyal, now Chemtura and the veterinary division was sold to Fort Dodge, a division of Wyeth). Philips also acquired Dynalite, an Australia based lighting control company in 2009, in order to provide its customer a complete lighting solution. Traditionally Philips has a vested interest in sports, originally as a means to provide a healthy form of recreation for its employees. In 1913, in celebration of the Centenary of Dutch independence from France, Philips founded a sports club called Philips Sport Vereniging (Philips Sports Club), or PSV, as it is now known. The sports club encompasses all kinds of sports, but is currently most famous for its Premier League football team and its swimming team. Philips owns the naming rights to PhiHps Stadion, located in Eindhoven, which is home to Dutch football team PSV Eindhoven.

Abroad, Philips sponsors and has sponsored numerous sport clubs, sport facilities, and events. Philips recently (November 2008) extended its very successful Fl partnership with AT&T Williams to include many more product groups. Furthermore, Philips owns the naming rights to the Philips Arena in Atlanta, Georgia and to the Philips Championship, the premier basketball league in Australia, traditionally known as the National Basketball League. Between 1988 and 1993 Philips were also the major sponsors of The Balmain Tigers, an Australian rugby league team. Outside of sports Philips sponsors the Philips Monsters of Rock festival, held in many countries all over the world.

Philips also used to sell major household appliances (whitegoods) under the name Philips. After selling the Major Domestic Appliances division to Whirlpool Corporation it changed via Philips Whirlpool and Whirlpool Philips to Whirlpool only. Whirlpool bought a 53% stake in Philips' major appliance operations to form Whirlpool International. Whirlpool bought Philips' remaining interest in Whirlpool International in 1991. Philips is a member of the Hybrid Broadcast Broadband TV (HbbTV) consortium of broadcasting and Internet industiy companies (also including SES Astra, Humax, OpenTV and ANT Software) that is promoting and establishing an open European standard (called HbbTV) for hybrid set-top boxes for the reception of broadcast TV and broadband multimedia applications with a single user interface.

102 Philips Australia was founded in 1927 and has been involved in many activities over the years, especially manufacturing. Philips Australia has its headquarters in North Ryde, New South Wales. The company employs over 400 people nationwide. Regional sales and support offices are located in Melbourne, Brisbane, Adelaide and Perth. IT infrastructure Services are provided by IBM under the APAC regional River contract and managed by Philips ITI.

Current operating sectors/activities include;

• Philips Healthcare (also responsible for New Zealand operations) • Philips Lighting (also responsible for New Zealand operations) • Philips Consumer Lifestyle (also responsible for New Zealand operations) • Philips Dictation Systems • Philips Dynalite (Lighting Control systems, acquired in 2009) • Philips Lumileds (Lumiled-LED lights, used in cellphones as a camera flash. One example is the Sony Ericsson W995 flash.)

As of 2009 philips removed the majority of its AV products from Australia. It is now only a small appliance reseller. These products are sold by a distributor.

Philips do Brasil was founded in 1924 Rio de Janeiro. In 1929, Philips started to sell radio receivers. In the 1930s, Philips was making its light bulbs and radio receivers in Brazil. From 1939 to 1945, World War II forced Brazilian branch of Philips to sell bicycles, refrigerators and insecticides. After the war. Philips had a great industrial expansion in

103 Brazil, and was among first groups to establish in Manaus Free Zone. In the 1970s, Philips Records was a major player in Brazil recording industry. Nowadays, Philips do Brazil is one of the largest foreign-owned companies in Brazil.

Philips Canada was founded in 1934. It is well known in medical systems for diagnosis and therapy, lighting technologies, shavers, and consumer electronics. The Canadian headquarters are located in Markham, Ontario. For several years, Philips manufactured lighting products in two Canadian factories. The Windsor, Ontario, plant opened in 1971. It produced A19 lamps (including the "Royale" long life bulbs), PAR38 lamps and T19 lamps (originally a Westinghouse lamp shape). Philips closed the factory in May, 2003. The Trois-Rivieres, Quebec plant was a Westinghouse facility which Philips continued to run it after buying Westinghouse's lamp division in 1983. Philips closed this factory a few years later, in the late 1980s.

In early 2008 Philips Lighting, a division of Royal Philips Electronics, opened a small engineering center to adapt the company's products to vehicles in Asia. Philips Hong Kong began operation in 1948. Philips Hong Kong houses the global headquarter of Philips' Audio Business Unit. It also house Philip's Asia Pacific regional office and headquarters for its Design Division, Domestic Appliances & Personal Care Products Division, Lighting Products Division and Medical System Products Division. Philips also has a Light Factory in Hong Kong, with 11 automatic production lines installed which is capable of producing 200 million pieces a year. The Philips Light Factory was established in 1974, now certified with 1809001:2000 & ISO14001, its product portfolio ranges from Prefocus, 104 Lensend to ElO miniature ligiit bulbs. Philips France has its headquarters in Suresnes. The company employs over 3600 people nationwide. Philips Lighting: Manufactures in Chalon-sur-Saone (fluorescent lamps), Chartres (automotive lighting), Lamotte-Beuvron (architectural lighting by LEDs and professional indoor lighting), Longvic (lamps), Miribel (outdoor lighting), Nevers (professional indoor lighting).

Philips started operations in India at Kolkata (Calcutta) in 1930 under the name Philips Electrical Co. (India) Pvt Ltd, comprising a staff of 75. It was a sales outlet for Philips lamps imported from overseas. In 1938, Philips India set up its first Indian lamp-manufacturing factory in Kolkata. After the Second World War in 1948, Philips started manufacturing radios in Kolkata. In 1959, a second radio factory is established near Pune.

• In 1957, the company is converted into a public limited company, renamed "Philips India Ltd". • In 1965 on 3 April, the millionth Philips radio is manufactured in India. • In 1970 a new consumer electronics factory is started in Pimpri near Pune. (This factory was shut down in 2006.) • In 1982, Philips brought colour television transmission to India with the supply of four outdoor broadcast vans to DD National during the IX Asian Games. • In 1996, the Philips Software Centre was established in Bangalore (It is now called the Philips Innovation Campus). . In 2008, Philips India entered a new product category, water purifiers designed and made in India, and exported to other countries. 105 • In 2011, The Brand Trust Report, India Study, has ranked Pilips as the 25th most trusted brand in India.

Philips has been active in Israel since 1948 and in 1998 set-up a wholly owned subsidiary, Philips Electronics (Israel) Ltd. The company has 600 employees in Israel and generated sales of over $300 million in 2007.

• Philips Medical Systems Technologies Ltd. (Haifa) is a developer and manufacturer of Computerized Tomography (CT), diagnostic and Medical Imaging systems. The company was founded in 1969 as Elscint by Elron Electronic Industries and was acquired by Marconi Medical Systems in 1998, which was itself acquired by Philips in 2001. • Philips Semiconductors Israel, now part of NXP Semiconductors • Philips Mexicana SA de CV corporate office is based in Mexico City.

There are several manufacturing plants in Mexico. Some of them are:

Philips Lighting in:

• Monterrey, Nuevo Leon • Ciudad Juarez, Chihuahua

• Tijuana, Baja California

Philips Consumer Electronics in:

• Ciudad Juarez, Chihuahua

106 Philips Domestic Appliances used to be manufactured in a large factory in Industrial Vallejo sector of Mexico City but was closed in 2003-2004. Philips has been active in Pakistan since 1948 and has a wholly owned subsidiary, Philips Electrical industries of Pakistan Limited. Philips Pakistan is mainly focused on three areas:

• Philips Lighting • Consumer appliances • Healthcare

It has manufacturing in Karachi and two regional sales offices in Lahore and Rawalpindi.

Philips UK has its headquarters^^^'^ in Guildford, Surrey. The company employs over 2500 people nationwide.^"'^^

• Philips Healthcare Informatics, Belfast develops healthcare software products. • Philips Business Communications, Cambridge offers voice and data communications products, specialising in Customer Relationship Management (CRM) applications, IP Telephony, data networking, voice processing, command and control systems and cordless and mobile telephony. In 2006 the business was placed into a 60/40 joint venture with NEC. As of 2010 this business now forms part of NEC Unified Solutions with headquarters in Hilversum, Netherlands. Now 100% owned subsidiary of NEC Corporation of Japan. • Philips Consumer Products, Guildford provides sales and marketing for televisions, including High Definition televisions, DVD

107 recorders, hi-fi and portable audio, CD recorders, PC peripherals, cordless telephones, home and kitchen appliances, personal care (shavers, hair dryers, body beauty and oral hygiene ). • Philips Dictation Systems, Colchester, Essex. • Philips Lighting: sales from Guildford and manufacture in Hamilton, Lanarkshire. • Philips Healthcare, Reigate, Surrey. Sales and technical support for X-ray, ultrasound, nuclear medicine, patient monitoring, magnetic resonance, computed tomography, and resuscitation products. • Philips Research Laboratories, Cambridge (Until 2008 based in Redhill, Surrey. Originally these were the Mullard Research Laboratories.) • Philips Semiconductors, Hazel Grove, Stockport, Greater Manchester and Southampton, Hampshire, both also earlier part of Mullard. These now become part of NXP.

In the past. Philips UK also included

• Consumer product manufacturing in Croydon • Television Tube Manufacturing Mullard Simonstone, Lancashire • Philips Electronics Blackburn Lancashire; vacuum tubes, capacitors, delay-lines, Laserdiscs, CDs. • Philips Domestic Appliances: Electric kettles and Fan Heaters production at Hastings • London Carriers, logistics and transport division. • Mullard Equipment Limited (MEL) which produced products for the military • Pye Telecommunications Ltd of Cambridge 108 • TMC Limited of Malmesbury, Wiltshire

Philips' American headquarters is Philips Electronics North America Corporation, 3000 Minuteman Rd., Andover, Massachusetts. For many years, the North American headquarters was located in New York, but with the company's footprint in healthcare ever increasing, it made sense to co- locate its headquarters office with its largest business sector (healthcare). Philips Lighting has its corporate office in Somerset, New Jersey with manufacturing plants in Danville, Kentucky; Bath, New York; Salina, Kansas; Paris, Texas and distribution centers in Mountain Top, Pennsylvania; Ontario, California; Memphis, Tennessee. Philips Healthcare is headquartered in Andover, Massachusetts. The North American sales organization is based in Bothell, Washington. There are also manufacturing facilities in Andover, Massachusetts; Bothell, Washington; Baltimore, Maryland; Cleveland, Ohio; Foster City, California; Milpitas, California; Reedsville, Pennsylvania; One factory in Knoxville, Tennessee has closed. Philips Consumer Lifestyle has its corporate office in Stamford, Connecticut. It has a manufacturing plant in Snoqualmie, Washington which makes Sonicare electric toothbrushes. Philips Research has a laboratory in Briarcliff Manor, New York.

In 2007, Philips has entered into a definitive merger agreement with North American luminaires company Genlyte Group Incorporated, which provides the company with a leading position in the North American luminaires (also known as ^lighting fixtures"), controls and related products for a wide variety of applications, including solid state lighting. The company also acquired Respironics, which was a significant gain for its healthcare sectore. On 21 February 2008 Philips had completed its 109 acquisition of VISICU Baltimore, Matyland through the merger of its indirect wholly owned subsidiary into VISICU. As a result of that merger, VISICU has become an indirect wholly owned subsidiary of Philips. VISICU was the creator of the elCU concept of the use of Telemedicine from a centralized facility to monitor and care for ICU patients.

Philips has received many awards for its design, innovation and business standards. It is considered by many as one of the world's leading innovators in technology, particularly for healthcare, lighting and consumer products. Consumer electronics product timeline:

• 1949, began selling television sets. • 1951, introduced the Philishave two-headed rotary shaver, marketed in the USA under the Norelco name. • 1963, introduced the Compact Cassette. • 1963, introduced the first domestic home video tape recorder, the 405 line 1" tape reel model EL3400. • 1978, introduced the Laserdisc player, using technology invented in the 1960s. • 1978, introduced the Philips Videopac G7000 (pictured at right), a home video game console developed by its Magnavox division. Marketed in the United States as the Odyssey^ console. Variations of the console are sold worldwide through 1984. • 1979, introduced the Video 2000-system: a technically superior design, but a commercial failure. • 1982, launched the Compact Disc in partnership with Sony.

10 • 1983, participated in developing the MSX home computer standard. This computer standard was mainly popular in Japan and the Netherlands. • 1991, introduced the CD-i, the Compact Disc Interactive system which had many video-game console-type features,'^^^ but was not a sales success . • 1992, launched the ill-fated Digital Compact Cassette format. • 1995, manufactured the Atari Jaguar's CD add-on for Atari. • 1999, launched the Super Audio CD in partnership with Sony. • 2000, launched the luminaire Iridium. • 2001, successfully launched the Senseo coffeemaker, first in the Netherlands and from 2002 onwards, in other countries across Europe. It produces coffee by brewing from custom-made pads containing coffee grounds. The original Senseo pads are produced by Douwe Egberts. The Senseo has been available in the US since 2004. • 2004, Philips HomeLabs research center created the Mirror TV technology used in their MiraVision television line. • 2006, introduced the Blu-ray Disc in partnership with Sony. . 2008, introduced flatscreen with WOW VX technology. (3D TV) • 2008, introduced the Relationship Care range of Philips Intimate Massagers to the UK market. The company receives a royalty on every DVD manufactured. • 2009, introduced the Philips Cinema 21:9 TV in a widescreen mode for HDTVs with an LCD display using the aspect ratio.

In Greenpeace's 2011 Guide to Greener Electronics that ranks electronics manufacturers on sustainability, climate and energy and how green their

111 products are, Philips ranks 5th place (down from 3rd place) with a score of 4.5/10. The company was the top scorer in the Energy section due to its energy advocacy work calling upon the EU to adpot a 30% reduction for greenhouse gas emissions by 2020. It is also praised for its new products which are free from PVC plastic and BFRs. However, the guide criticizes Phillips' sourcing of fibres for paper, arguing it must develop a paper procurement policy which excludes suppliers involved in deforestation and illegal logging. Philips have made some considerable progress since 2007 (when it was first ranked in this guide), in particular by supporting the Individual Producer Responsibility principle, which means that the company is accepting the responsibility for the toxic impacts of its products on e-waste dumps around the world.

For its "green products". Philips is using Philips Green Logo, which identifies products that have a significantly better environmental performance than their competitors or predecessors. Also, the company is running the EcoVision4 initiative in which it committed to a number of environmentally positive improvements by 2012. In 2011, Philips won a $10 million cash prize from the Department of Energy's L-Prize competition, which rewarded the company with first place for its LED replacement bulbs.

112 SAMSUNG

Samsung Electronics is a South Korean multinational electronics and information technology company headquartered in Samsung Town, Seoul. It is the flagship subsidiary of the Samsung Group. With assembly plants and sales networks in 61 countries across the world, Samsung has approximately 160,000 employees. In 2009, the company took the position of the world's biggest IT maker by surpassing the previous leader Hewlett- Packard. Its sales revenue in the areas of LCD and LED displays and memory chips is number one in the world. In the TV segment, Samsung's market position is dominant. For the four years since 2006, the company has been in the top spot in terms of the number of TVs sold, which is expected to continue in 2010 and beyond. In the global LCD panel market, the company has kept the leading position for eight years in a row.

With the Galaxy S model mobile phone, Samsung's smartphone lineup has retained the second-best slot in the world market for some time. In competition to Apple's iPad tablet, Samsung released the Android powered Samsung Galaxy Tablet.

Samsung Electronics was founded in 1969 in Daegu, South Korea as Samsung Electric Industries, originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air conditioners and washers. By 1981, the company had manufactured over 10 million black and white TVs. In 1988, it merged with Samsung Semiconductor & Communications. It is noteworthy that Samsung Electronics has grown in leaps and bounds in a business notorious for cyclical fluctuations. Founded in 1938 as a food processing and textile purveyor, the parent group entered

113 the electronic business as late as in 1969 when it created under its wings an electronic component subsidiary. It was a decision made after considering the fast-growing domestic demand for electronic goods.

Just one year after its founding, the Samsung Group established in 1970 another subsidiary Samsung-NEC jointly with Japan's NEC Corp. to manufacture electric home appliances and audio-visual devices. In 1974, it expanded into the semiconductor business by acquiring Korea Semiconductor, one of the first chip-making facilities in the country at the time. It was soon followed by the 1980 acquisition of Korea Telecommunications, an electronic switching system producer. In February 1983, Samsung's founder Lee Byung-chuU made an epoch-making announcement, dubbed the "Tokyo declaration," that his company would enter the DRAM (dynamic random access memory) business. And only one year after the declaration did Samsung became the third company in the world that developed the 64k DRAM after the United States and Japanese predecessors. The march from then onward as the pioneer in the memory chip-making industi^ has continued to this day for almost three decades.

Although Samsung Electronics was already one of the biggest companies in Korea as early as the 1990s, it now is by far the most important company with unrivaled influence on the economy through a large network of supplier and partner companies as well as through its own revenue- generating power. Since the onset of the 1997 Asian financial crisis, the company has become more powerful: While most other high-tech companies were hit by cash-flow problems after the crisis, Samsung could avoid financial difficulties by broad-based structural reforms. After the

114 crisis subsided, Samsung emerged as a global corporation. For four consecutive years from 2000 to 2003, it posted more than 5-percent net earnings when 16 large conglomerates out of 30 top companies of the nation went out of business in the wake of the unprecedented crisis.

On 2009 and 2010, the US and EU fined Samsung Electronics with 8 other memory chip makers for its part in a price fixing scheme from 1999 to 2002. Other companies fined included Infineon Technologies, Elpida Memory (Hitachi and NEC) and Micron Technology. In December 2010, The EU granted immunity to Samsung Electronics for its part in informing on other members (LG Display, AU Optronics, Chimei InnoLux, Chunghwa Picture Tubes and HannStar Display) of a price fixing scheme. On April 2011, Samsung Electronics Co. have sold their HDD commercial operation to Seagate Technology for about $1.4 billion with payment of 45.2 million of (Samsung-Seagate) shares (9.6 percent of shares) with value of $687.5 million and the rest will be paid in Cash.

Only ten years ago, Samsung's only goal was to catch up with Japanese rivals. But now it is outperforming major Japanese electronics makers in many categories: in terms of global market share, Samsung is No. 1 in flat- panel TVs and memory chips; it is No. 2 in mobile handsets; it is one of the top suppliers in other home appliances. In 2005, Samsung surpassed Japanese rival Sony for the first time to become 20th world's largest and most popular consumer brand as measured by Interbrand. In 2006, Business Week rated Samsung as 20th on its list of global brands, 2nd in the electronics industry. Business Week also ranked Samsung as 20th in innovation. In 2007, Samsung Electronics' handset division overtook American rival Motorola, making it the world's second-largest mobile 115 phone maker. In 2009, Samsung overtook Siemens of Germany and Hewlett-Packard of the USA with a revenue of $117.4 billion to take the No. 1 spot as the world's largest technology company.

The semiconductor division of Samsung Electronics is the world's largest memory chip and second largest semiconductor manufacturer worldwide. This has been the case for DRAM and SRAM for over a decade. To become the top brand in the electronics business, Samsung has spent enormous sums on marketing and branding. As part of fulfilling this strategy, the company devised in 1996 a plan to sponsor major sporting events. It succeeded in becoming an official sponsor for the 1998 Nagano Winter Olympics. Samsung today is the name that almost always appears in many big games. Despite being a giant in the global technology business with abundant growth, Samsung, along with its chairman Lee Kun-hee, is famous for fretting over its future and coming crises.

Global consumers' brand recognition of Samsung Electronics has increased steadily: According to the top-100 brand list compiled by Millward Brown, the British brand consultancy, Samsung, ranked at 68th on its list, was one of the world's most valuable brands whose growth has been most pronounced during the 2009-2010 period. Its brand value, estimated at as much as US$1.1 billion, grew by 80 percent. In the "World's Most Reputable Companies 2010" ranking published by Reputation Institute of the United States, Samsung was placed at 22nd, a large advancement from the previous year's 74th. This ranking, compiled by the U.S. consulting company since 2006, reflects survey results collected from consumers in 24 different countries for global 600 large corporations in terms of annual revenue and its GDP share in respective countries. The respondents answer 116 questions in seven categories including products and services, inventiveness, work conditions, corporate governance, social responsibility, leadership, and financial performance.

Samsung was also ranked 11th in the "50 Most Innovative Companies 2010" list put out by Business Week, a five-notch increase from the previous year's 16th. The ranking, collated jointly by the U.S. weekly magazine and Boston Consulting Group since 2005, is based on answers to innovation-related survey questions asked to executives of global corporations. While survey answers take an 80-percent weight to the compilation of the ranking, the remaining 20 percent is accounted for by annual share appreciation (10%) and three-year average sales revenue and profit margin (5% each), respectively.

Samsung had emphasized innovation in its management strategy since the early 2000s and it again highlighted innovation as part of core strategies when it announced the Vision 2020 in which the company set an ambitious goal of reaching the $400-billion sales revenue within 10 years. In order to cement its leadership in the areas of memory chip and TV production, Samsung has invested aggressively in research and development. The company currently has 24 R&D centers around the world. In the 2010 Business Week innovation ranking, Apple Computer and Google retained the leading positions as in the 2009 list, followed by Microsoft, which gained one notch from 2009's fourth place. Meanwhile, Samsung took the 33rd place in the "World's Most Valuable Brands 2010" list made public by the Forbes magazine. Forbes said that Samsung's brand value was as much as $12.8 billion with an average sale revenue growth rate of 17 percent for the past three years.

117 Samsung Electronics focuses on four areas: Digital Media, Semiconductor, Telecommunication Network, and LCD Digital Appliance. The Digital Media business area covers computer devices such as laptop computers and laser printers; digital displays such as televisions and computer monitors; and consumer entertainment devices such as DVD players, MP3 players and digital camcorders; and home appliances as refrigerators, air conditioners, air purifiers, washers, microwave ovens, and vacuum cleaners. The Semiconductor business area includes semiconductor chips such as SDRAM, SRAM, NAND flash memory; smart cards; Mobile Application Processors; Mobile TV receivers; RF transceivers; CMOS Image sensors, Smart Card IC, MP3 IC, DVD/BD/HD-DVD Player SOC and multi-chip package (MCP); and storage devices such as optical disc drives and hard disk drives.

The Telecommunication Network business area includes multi-service DSLAMs and fax machines; cellular devices such as mobile phones, PDA phones, and hybrid devices called Mobile Intelligent Terminals (MITs); and satellite receivers. The LCD business area focuses on producing TFT- LCD and organic light-emitting diode (OLED) panels for laptops, desktop monitors, and televisions. Samsung Print was established in 2009 as a separate entity to focus on B2B sales and has released a broad range of multifunctional devices and printers and more.

Samsung Electronics manufactures products in a number of categories namely, Semiconductor: DRAM, SDRAM, flash memory; Hard drives; Digital display: LCD displays, LED displays, plasma displays and OLED displays Semiconductors: For more than 20 years since 1993, Samsung has kept the title of the world's largest memory chip maker. In 2009, it began a strategy of "Green Memory" by which it increased the global DRAM market share to 33 percent. It also started mass-producing 30 nm-class NAND flash memories in the same year whose world share rose as high as 42 percent. It succeeded in 2010 in mass-producing 30 nm-class DRAMs and 20 nm-class NAND flashes, both of which were the first time in the world. According to market research firm Gartner, during the second quarter of 2010 Samsung Electronics took the top position in the DRAM segment due to brisk sales of the item on the world market. Gartner analysts said in their report, "Samsung cemented its leading position by taking a 35-percent market share. All the other suppliers had minimal change in their shares." Samsung took the top slot in the ranking, followed by Hynix, Elpida, and Micron, said Gartner. Another market researcher IC Insights predicted that Samsung would become the world's biggest semiconductor chip supplier by 2014 when it surpasses Intel. For the ten- year period from 1999 to 2009, Samsung's compound annual growth rate (or CAGR) has been 13.5 percent, compared with that for Intel paltry 3.4 percent. Extrapolating this trend to the future, Samsung will be able to catch up with Intel by the year 2014, estimated IC Insights. IC Insights also said that Intel's 2009 sales revenue had been 52 percent higher than that for Samsung, but that differential narrowed to only 21 percent during the second quarter of 2010.

Another hitherto not-well-publicized area where Samsung had significant business in for years is the foundry segment. Samsung had begun investment in the foundry business since 2006 and now positioned it as one of the strategic pillars for semiconductor growth.

Samsung Electronics' TVs and display products have undergone a race toward ever-slimmer panels. In 2009, the company succeeded in developing the super-slim panel for 40-inch LED TVs, with the thickness of 3.9 millimeters (0.15 inch). Dubbed the "Needle Slim," the panel is as thick (or thin) as two coins put together. This is about a twelfth of the conventional LCD panel whose thickness is approximately 50 millimeters (1.97 inches). While reducing the thickness substantially, Samsung could maintain the performance as before, including full HD resolution, 120 Hz refresh rate, and 5000:1 contrast ratio. In October 2007, Samsung broke the 10-millimeter barrier by introducing the 10-mm thick 40-inch LCD TV panel, followed in October 2008 by the world's first 7.9-mm panel. Samsung is leading the industry by developing panels for 24-inch LCD monitors (3.5 mm) and 12.1-inch laptops (1.64 mm). According to Samsung officials, the biggest factor in reducing the panel thickness was the LED backlight. They are optimistic that their company could cut TV width by 40 percent within two years from now.

OLED Displays: By 2004 Samsung, South Korea's largest conglomerate, was the world's largest OLED manufacturer, producing 40% of the OLED displays made in the world, and as of 2010 has a 98% share of the global AMOLED market. The company is leading the world OLED industry, generating $100.2 million out of the total $475 million revenues in the global OLED market in 2006. As of 2006, it held more than 600 American patents and more than 2800 international patents, making it the largest owner of AMOLED technology patents. Samsung's latest AMOLED

120 smartphones use their Super AMOLED trademark, with the Samsung Wave S8500 and Samsung i9000 Galaxy S being launched in June 2010. In January 2011 Samsung announced their Super AMOLED Plus displays - which offer several advances over the older Super AMOLED displays - real stripe matrix (50% more sub pixels), thinner form factor, brighter image and an 18% reduction in energy consumption.

Televisions: For years in a row, Samsung has taken the top spot in the world TV market, with the launch of best-selling items. In 2009, it sold as many as 31 million flat-panel TVs, maintaining the top position for four consecutive years in terms of world market share. In early 2010, the company had set the year's sales goal at 39 million units (including 10- million LED TVs). According to DisplaySearch, the U.S. market research and consulting firm, Samsung is forecast to take a 27-percent share for the global TV market in the second quarter of 2010 while LG Electronics accounts for 26.2 percent of the market. The market researcher predicted that Samsung's leadership would continue in 2011. Samsung Electronics is creating a new market by introducing the 'Tinger-Slim" LED TV. Launched in March 2009, the super-slim LED TV has thus far been sold as many as 2.6 million units. In 2009 alone, it was sold more than 2 million units, which brightens the future prospect. Samsung has led the flat-panel TV market for the past five years with the 2006 introduction of its "Bordeaux" line, followed by the 2007 Bordeaux model, the 2008 "Crystal Rose" line, and the "Finger-Slim" in 2009. The company retained the leading position by successfully selling more than 1 million 3D TVs as of August 2010.

121 This company is developing new LED TV models too. After expanding its TV lineups, Samsung became the industry-first 10-million-seller challenge. One of the new products to watch is the full HD 3D LED TV that was launched the first time in March 2010. Combining LED features with 3D functionality, the new 3D TV is expected to lead the market for years to come. Samsung showcased the new TV in the International Consumer Electronics Show (CES 2010) held in Las Vegas early this year. In 2009, Samsung TVs were selected in major U.K. publications and retailers as the best TV of the year. For example, Samsung's LED TV 7000 series was the winner of the "Gadget Awards 2009" by T3, U.K.'s most prestigious electronics magazine. The T3 magazine in its news article on "ten reasons why you should buy Samsung LED TV" listed as the reasons superior picture quality, slim design, energy efficiency and connectivity.

3D experience: Samsung sold more than 1 million 3D TVs within six months of its launch. This is the figure close to what many market researchers forecast for the year's worldwide 3D TV sales (1.23 million units). It also debuted the 3D Home Theater (HT-C6950W) that allows the user to enjoy 3D image and surround sound at the same time. With the launch of 3D Home Theater, Samsung became the first company in the industry to have the full line of 3D offerings, including 3D TV, 3D Blu-ray play, 3D content, and 3D glasses.The company is trying offer the 3D content streaming service on its 3D TVs. Just like iTunes store, the Samsung 3D TV aims to allow the user to connect to its own online store, Samsung Apps, and download applications on the user's hard disk drive.

Smart TVs and apps: Samsung introduced the Internet TV in 2007, enabling the viewer to receive information from the Internet while at the 122 same time watching conventional TV programming. Samsung later developed ''Smart LED TV\ (now renamed to ''Samsung Smart TV) which additionally supports downloaded apps. In 2008, the company launched the Power Infolink service, followed in 2009 by a whole new Intemet@TV. In 2010, Samsung started marketing the 3D TV while unveiling the upgraded Intemet@TV 2010, which offers free (or for-fee) download of applications from its Samsung Apps store, in addition to existing services such as news, weather, stock market, YouTube videos, and movies. Samsung Apps offers for-fee premium services in a few countries including Korea and the United States. The services will be custom-tailored for each region. Samsung plans to offer family-oriented applications such as health care programs and digital picture frames as well as games.

Mobile phones: Samsung Electronics sold 235 million mobile handsets in the year 2009. At the end of Q3 2010 Samsung had surpassed the 70

123 million unit mark in shipped phones, giving it a global marketshare of 22% trailing Nokia by 12%. Overall, Samsung sold 280 million mobile phones in 2010, corresponding to a market share of 20.2%. Following the success of its "Anycall" brand mobile phones in Korea, the company introduced numerous mobile handset models including premium phones, full-touch screen phones, and environmentally friendly phones. Samsung's flagship mobile handset line is the Galaxy S, which many consider a direct competitor of Apple's popular iPhone. It was initially launched in Singapore, Malaysia and South Korea in June 2010 followed by US variants called Vibrant and Captivate in July and Epic and Fascinate in August and September. It sold more than 1 million units within the first 45 days of in the US alone.

Samsung's 19000 Galaxy S and S8500 Wave smartphones were the winners of the 2010 European EISA Awards in the smartphone and social media phone categories. The 19000 Galaxy S was recognized for its superior-quality screen and excellent connectivity while the S8500 Wave for its Bada operating system with unparalleled social networking and location-based services. Samsung's 2010 smartphone shares worldwide are rising rapidly. The share in the United States has doubled in the second quarter of the year from the previous quarter. In the second quarter the company shipped as many as 3 million smartphones, a 173-percent increase from the same period last year. While many other handset makers tend to focus on supporting one (or at most two) operating system, Samsung has kept supporting a wide range of operating systems in the market. Although the Galaxy S adopts Google Android as the primary operating system, it also supports other competing operating systems such

124 as Symbian, Microsoft Windows Phone, Linux-based LiMo, and Samsung's proprietary Bada.

The company set the sales goal of the 2010 yearend at 20 million units. Samsung faces challenges in the phone market. An alliance of Chinese low wage and Taiwanese technology is catching up closely. Smartphone makers such as Apple, RIM, and HTC are busy coming up with new models, and Samsung is working to maintain its top position. Partially owing to strong sales of Samsung's Galaxy range of smartphones, Samsung overtook Apple in smartphone sales during Q3 2011, with a total market share of 23.8%, compared to Apple's 14.6%.

Home appliances: In 2009, the year of worldwide recession due to the 2008 global credit crisis, Samsung's sales revenue rose 27 percent from the previous year, the biggest increase in the industry. In the home market, Samsung held the leading position thanks to strong sales of its flagship items, Zipel-brand side-by-side and kimchi refrigerators. In the North American, European, and Russian markets, it solidified its image as a premier home appliance maker by selling so many refrigerators, washing machines, air-conditioners, as well as new steam microwave ovens and "robof vacuum cleaners. In a market clearly split into two extremes of upmarket and budget categories, Samsung employs a two-pronged strategy to emphasize its premium image for affluent consumers while marketing lower-end items with fewer bells and whistles for emerging economies consumers. In 2009, Samsung introduced a host of new products including a premium mini-laptop computer N310 and slim-sized laptop X420. The N310 and the X420 are the third-generation laptops with all the advanced

125 features as well as portability and connectivity. Thanks to these new market entrants, Samsung could sell as many as 6 million laptops for the year.

In the printer business division, one of the next-generation strategic areas, Samsung launched mono-laser printer, multifunction printer, and enterprise-use high-speed digital multifunction printer models. Samsung was ranked second in the world in the area of letter-size (A4) laser printers. In other segments such as mono-laser printers, multifunction printers, and color laser printers, Samsung was first or second place in the world. In the laser multifunction printer segment, it became No. 1 the first time in its history, all of which indicates that Samsung is growing fast in the printer business despite under the condition of severe economic recession. In 2010, Samsung introduced many new products boasting energy efficiency and eco-friendliness, including the premium laptop R580, netbook N210, the world's smallest mono-laser printer ML-1660, and color laser multifunction printer CLX-3185.

In the area of wireless networking, the mobile telecom protocols such as Mobile WiMax and WiBro, the protocols developed by Samsung and adopted in 2007 as international standards, are in wide commercial use in many overseas markets. Since mobile telecom service providers in the United States, Japan, and Russia began deploying the standards, more and more providers (as many as 139 providers in 75 countries) are readying to take it up. Digital cameras and camcorders are the areas Samsung cannot overlook. The company has introduced several models in these areas such as the WB550 (the premium camera), the ST550 (the dual-LCD-mounted camera), and the HMX-H106 (64GB SSD-mounted full HD camcorder). Samsung in 2009 took the third place in the compact camera segment.

126 Since then, the company has focused more on high-priced items. In 2010, the company launched the NX 10, the next-generation interchangeable lens camera, thereby commencing the race toward the new category of camera market.

In the area of storage media, Samsung in 2009 succeeded in grabbing more than 10 percent of the world market share by introducing a new hard disk drive capable of storing 250Gb per 2.5-inch disk. In 2010, the company started marketing the 320Gb-per-disk HDD, the largest in the industry. In addition, it is focusing more on selling external hard disk drives. In the MP3 player segment, Samsung is doing quite well. It is launching a host of new products including the Ml, the premium MP3 player model, and the world's smallest DivX MP3 player Rl.

Behind Samsung's rapid rise there lies design power. In the early 1990s, the firm began emphasizing the importance of design in its products. In its high-rise headquarters in Kangnam, south of Seoul, it locates the corporate design center in which more than 900 full-time designers are housed. In the beginning, there were only two designers in the whole company, whose number rose to 510 in 2005. Samsung overhauls its design in every two years. For the first year, it scrutinizes all the design trends of the world, followed by product strategies. It then maps out new design plans during the second year. Samsung's effort to improve design paid off since 2006, it has won as many as 210 awards from internationally prestigious design institutions. For example, it received the iF (International Forum) and IDEA design awards. Samsung was the winner in eight categories in the 2009 IDEA awards, the company that received the most awards.

127 There is compelling reason for Samsung's rise as a design powerhouse. Korea had for so long been considered a backwater for design excellence, especially compared to the Japanese counterparts famous for churning out eye-catching gadgets. Samsung established as many as seven design centers in the world's major cities including Milan and London, as well as in Seoul. The professional designers working in these centers constantly monitor latest design trends in their cities while scanning cultural and lifestyle changes. In the 2010 iF Material Awards, Samsung won the Gold Award for five of its products including the external hard disk drive. The iF Material Awards are given by the International Forum Design GmbH of Hannover, one of the world's most prestigious design awards for design materials and process technologies. In 2010, the German company selected a total of 42 products in the areas of home appliance, furniture, and industrial design. Samsung won the awards in five categories including external hard disk, full-touch screen phone, "side-by-side" refrigerator, compact digital camera, and laser printer toner.

All Samsung mobile phones and MP3 players introduced on the market after April 2010 are free from polyvinyl chloride (PVC) and brominated fiame retardants (BFRs). The company is listed in Greenpeace's Guide to Greener Electronics, which rates electronics companies on policies and practices to reduce their impact on the climate, produce greener products, and make their operations more sustainable. In November 2011 Samsung was ranked 7th out of 15 leading electronics makers with a score of 4.1/10. In the newly re-launched guide Samsung moved down two places (occupying 5th position in October 2010) but scored maximum points for providing verified data and its greenhouse gas emissions and also scored

128 well for its Sustainable Operations with the guide praising its relatively good e-waste take-back programme and information. However, the company was criticized for not setting an ambitious target to increase its use of renewable energy and for belonging to a trade association which has commented against energy efficiency standards.

In June 2004, Samsung was the first major electronics company to publicly commit to eliminate PVC and BFRs from new models of all its products. The company however failed to meet its deadlines to be PVC- and BFRs- free, and has published new phase out dates. Greenpeace activists protested at the company's Benelux headquarters in March 2010 for what Greenpeace calls Samsung's broken promises. Samsung Electronics has been taking the lead in industry efforts to reduce greenhouse gas emissions, the company has been awarded as one of global top 10 companies in the Carbon Disclosure Leadership hidex (CDLI). Samsung Electronics was the only Asian company among top 10 companies. As well, Samsung is listed in Dow Jones Sustainability Index (DJSI). Samsung's achievement ratio of products approaching the Global Ecolabel level ("Good Eco-Products" within the company) is 11 percentage points above the 2010 goal (80%). As of the first half of 2010, Samsung earned the Global Ecolabel for its 2,134 models, thereby becoming the world's No. 1 company in terms of the number of products meeting Global Ecolabel standards.

The company is also accelerating its effort to recover and recycle electronic wastes. The amount of wastes salvaged throughout 60 countries during 2009 was as much as 240,000 tons. The "Samsung Recycling Direct" program, the company's voluntary recycling program under way in the United States, was expanded to Canada. For its recycling effort, Samsung 129 was in 2008 praised by the U.S. advocacy group Electronics Take Back Coalition as the "best eco-friendly recycHng program." Samsung Electronics' corporate name "Samsung" comes from the word "three stars" that shine brightly. The hanja character "sam" has the double meaning of three and strong while "sung" connotes "star" and "bright" (or "shining"). The corporate name has auspicious meaning in it, meaning that it foretells success.

Samsung's logo design emphasizes flexibility and simplicity while conveying a dynamic and innovative image through the ellipse, the symbol of the universe and the world stage. The openings on both ends of the ellipse where the letters "S" and "G" are located are intended to illustrate the company's open-mindedness and the desire to communicate with the world. The English rendering is a visual expression of its core corporate vision, excellence in customer service through technology. The basic color in the logo is blue, the color that Samsung has had used in its logos for years. The blue color symbolizes stability and reliability, which are precisely what the company wishes to accomplish with its customers. It also stands for social responsibility as a corporate citizen.

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