Submitted by Nitish Chugh MBA/11/45 VIDEOCON INDUSTRIES PVT. LTD.

on the topic MARKETING of

Submitted in partial fulfillment of the requirements of Master of Business Administration (MBA) Kurukshetra University, Kurukshetra

Submitted By Nitish chugh Roll. No. MBA/11/45 2nd sem

Department of Management Studies NC College of Engineering Israna, Panipat SESSION 2011 – 2013 INDEX

S NO TOPICS PAGE NO 1. CERTIFICATE 1 2. ACKNOWLEDGMENT 2 3. Introduction 3  literature 6  Business of company 7  Achievements 8 4. Founder & board of directors 9 9. Distribustion Channels 10 10. Promotions done by company 12 11. Secondary Data 12. Industry Analysis 13. Products of the Company 14. Recommendation & Suggestions 15. Bibliography

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Chapter 1 COMPANY PROFILE

The company currently manufactures Colour TVs, Black & White TVs and Audio product

Videocon produces a sophisticated range of Home Audio Systems, Stereo Radio, Recorders and Personal Stereos, as well as the conteporary international range of Kenwood Digital Hi Fi Systems

Continuous upgradation and indigenous manufacturing has been and continues to be an integral part of the company's philosophy. Perceived as an innovator in its fieVideoconhas notched up many exciting firsts, by exploring the world's most advanced technologies. In Colour TVs, Videocon was the first Indian Company to introduce Picture-In-Picture, Turbo Sound, Surround Sound, Larger Screen Sizes, the Full Flat Square Tube, Bazooka technology and the Freedom series : affordable high quality range of Colour TVs for the price-conscious consumer.

Global Ambition

Looking beyond India, Videocon is now a global player, acknowledged by the world. It is the first Indian company to win the prestigious CE approval for exporting its Colour TV to Europe. Videocon is now entering world market with its operations in the Middle East, Europe, and .

Videocon Narmada Glass (VNG): a division of Videocon International Ltd., has the distinction of having set up India's first plant for the manufacture of Glass Shells for Picture Tubes, in technical collaboration with Techneglas Inc., USA (formerly known as OI-NEG TV Products Inc., USA), world leader in Glass Shell Technology.

The projects in 1990, when the then Prime Minister of India, the late Shri Rajiv Gandhi, laid the foundation stone for the project.

The , with the objective of backward integration, joined hands with Gujarat Narmada Valley Fertilizers Co. Ltd., (GNFC) for the implementation of this 100% import substitution project, the largest investment (Rs. 450 crores) in electronic component industry in the country. The plant, with an installed annual capacity of 1.7 million Glass Shells for Color Picture Tubes and 0.25 million glass Bulbs for Black & white Picture Tubes and Monochrome Monitor Tubes, is located at Village Chavai, District Bharuch, Gujarat.

The Heights of Success

VNG has some remarkable achievements to its credit, starting with the successful absorption of sophisticated technology from Techneglas Inc., USA. The CTV Glass Shells manufactured by VNG are at par with international standards and the Color Picture Tubes made with VNG glass have already received VDE approval. The facilities inlcude a state- of-the-art Tool Room and Mould Shop to manufacture and maintain its mould requirements. Having initially successfully established its 20V, 19V and 13V CTV glass parts, VNG has now developed the 20V 2R the latest models.

A Picture Perfect Future

Till 1994, Indian manufacturers of CTV Picture Tubes were importing Glass Shells. VNG's production has replaced these imports, thereby saving almost Rs.200 crores of precious foreign exchange every year.

VNG has now surpassed the norms of performance guaranteed by the collaborator, Techneglas Inc., USA. and is operating the plant with 150% capacity utilization - with efficiencies exceeding international standards. Where fields of sugarcane grow tall and proud. Where bushes of cotton bud bloom. Where tourists flock to the world-famous caves of Ajanta and Ellora.

Where India's NO.1 and Home Appliances take shape, to take millions of Indians into a better, brighter future.

This is Marathwada, India, where the Dhoot family launched Videocon International Limited in 1984, with the avowed purpose of producing world-class Colour Television through a technical tie-up with Corporation of . Within a decade, Videocon emerged as India's leading brand of both Colour and Black & White Televisions and continues to dominate this highly competitive market.

The leader innovates. The leader forges ahead. The leader breaks new ground. Harnessing the advanced technology, relentlessly pursuing quality to achieve various international standards of Quality Control. Breaking through, time and again, with innovative products for a better life. Profiles of Leadership

Futuristic Neuro Fuzzy Logic Washing Machines, User-friendly - No-Frost Refrigerators, the very latest music systems. The most sophisticated Colour Television and VCRs. High- Tech Air-conditioners. Videocon today, is a multi-faceted group, with 9 state -of-the-art manufacturing facilities all over India. Highly qualified engineers, trained in Japan, backed by 6500 technical and support staff, work together in close unison to produce India's leading branch of consumer electronic products and home appliances.

Leadership through People

Videocon lays great emphasis on the training and development of its work force, providing every opportunity for growth and advancement, including training stints overseas.

FROM ELECTRONICS TO ENERGY - The Heart of Nation

1995 was a landmark year for Videocon. It clearly reaffirmed its leadership in Color TVs, Black & White TVs, VCRs and VCPs, Washing Machines as well as No-Frost Refrigerators. Then Videocon began to reach out to the core HISTORY

Videocon is an Indian multinational with interests in Consumer Electronics, Home Appliances, Colour Picture Tube Glass, and Oil & Gas. Videocon was founded in 1987 by Nandlal Madhavlal Dhoot. At that time it used to manufacture TV and . In 1989-90, Videocon started manufacturing Home Entertainment Systems, Electric Motors & AC. Videocon entered Refrigerators and coolers segment in 1991. In 1995, Videocon started manufacturing Glass shells for CRT and in 1996 it ventured into Kitchen appliances and crude oil segment. By 1998, Videocon started manufacturing Compressors & Compressor Motors. In the year 2000, Videocon tookover Philips Color TV Plant. In 2005, Videocon tookover 3 plants of India and acquired Thomson CPT. In March 2010, Videocon Industries Ltd.'s unit, Videocon Telecommunications Ltd., launched mobile services based on the global system for mobile platform.

Today, it has evolved into a giant with annual revenues of over U$4.1 billion, making it one of the largest consumer electronic and companies in India. Since 1998, it has expanded its operations globally, especially in the Middle East. Business of Videocon

Consumer Electronics & Home Appliances: Videocon enjoys leadership position in consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators, Microwave ovens and numerous other home appliances. Videocon’s manufacturing enjoys synergy with its inhouse compressor manufacturing technology in Bangalore.

Display industry and its components: After the acquisition of Thomson in 2005, Videocon has emerged as one of the largest Colour Picture tube manufacturers in the world. It has plants in , , and China and manufactures a range of high- tech products such as slim CPT, extra slim CPT and High Definition 16:9 format CPT.

Colour Picture Tube Glass: Videocon is one of the largest CPT Glass manufacturers in the world. It has plants in Poland and India. Videocon’s CPT Glass manufacturing complements its Colour Picture tube manufacturing business.

Oil and Gas: Videocon Group has interests in oil & gas exploration, prospecting and intends to get into gas distribution. It produces 7% of all oil in the private sector in India. Videocon’s Ravva oil field has one of the lowest operating costs in the world and it produces 50,000 barrels of oil per day. Videocon is also actively looking for exploration and production opportunities in countries like Oman, and the Timor Sea near Indonesia.

The company reported revenues of (Rupee) INR 119,808.58 million during the fiscal year ended September 2008, a decrease of 5.37% from 2007. The operating profit of the company was INR 14,403.34 million during the fiscal year 2008, an increase of 55.69% over 2007. The net profit of the company was INR 10,989.31 million during the fiscal year 2008, an increase of 57.20% over 2007. Major Achievements of Videocon Industries Ltd:

• The largest panel production facility in the world under one roof providing very high economies of scale • One of the world’s largest and most respected CRT glass manufacturers • Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft • One of the few companies in the world to convert sand to TV • One of the largest and most acknowledged CPT manufacturer in the world • Manufactured India’s first rust-free Washing Machine . BOARD OF DIRECTORS

• Mr. Venugopal N Dhoot • Mr. Pradeepkumar N Dhoot • Mr. K C Srivastava • Mr. Satyapal Talwar • Mr. S Padmanabhan • Maj. Gen. S C N Jatar • Mr. Arun L Bongirwar • Mr. Radhey Shyam Agarwal • Ms. Gunilla Nordstrom (Nominee - AB Electrolux (Publ) ) • Dr. B N Singh (Nominee - IDBI Limited) • Mr. Ajay Saraf (Nominee - ICICI Bank Limited)

DISTRIBUTION CHANNELS IN THE INDUSTRY

The Refrigerator companies in the industry use different distribution channels to reach the customer. These are as follows:

1. In this type of channel the company uses its sales representatives to deal with the dealers directly. The dealers place the order through the sales representatives who visit them periodically, and the products are delivered directly from the company. Some companies appoint Direct Dealers who act as their Franchisee Outlets or their Exclusive showrooms.

BPL uses this channel

2. In this channel of distribution the company appoints distributors on the basis of District/ Population /No of Dealers to be handled by one distributor. The area of operation and its potential is also taken into consideration. Some of the companies make the distributor totally responsible from appointing the dealers to providing after sales service.

Kelvinator and Godrej use this channel

3. In this channel of distribution the company appoints Distributors as well as Direct Dealers. The company appoints distributors to deal with small dealers who order small quantities. With the dealers who have good potential and sales the company deals directly.

Videocon and use this channel: The Korean Multinational follow this channel where they appoint Distributors for upcountry towns and direct dealers for big cities and major towns eg. Ahmedabad.

4. In this channel the company appoints a C&F agent who acts on behalf of the company. The C&F agent is totally responsible for appointment of Distributors and Direct Dealers. He sells to both the Distributors and the Direct Dealers at t Promotions done by the company

1. Videocon gives displays

2. Promotional schemes are taken out in festivals

3. Bio fresh Videocon

4. 0% finance by Videocon

5. Exchange offer by Videocon

6. Kismat offer by Videocon

7. High incentives by Videocon

8. 0% interest by Videocon and finance facility by Videocon

9. Carry back scheme Videocon

10. Exchange offer by kelvinator

11. Pentacool new advertisement by electrolux SECONDARY DATA

COLLECTION AND

ANALYSIS

REFRIGERATOR INDUSTRY AT A GLANCE

• Refrigerators are being manufactured in India for the last four decades.

• Till early nineties only direct cool refrigerators were used in India.

• Videocon introduced frost-free refrigerators in 1991.

• In 2007-08 the market was as follows:

Segment Price % Market Share Direct Cooling Low 85% Frost Free 35-40% more than DC 15% • Based on the Capacity and price the market was divided as follows in 2007-08

Segment Price Capacity % Share Top >20000 >300 Ltrs 3% High 15-20000 >230 Ltrs 7% Medium Upto 15000 165-230 Ltrs 85% Low <8-9000 Upto 90 Ltrs 5%

• In 2007-08 the penetration levels were approx. 9%

• In 2007-08 the demand distribution as per the Income class was as follows:

Income Class Penetration %

Low 0.7% Lower Middle 5.3%

Middle 19.8%

Upper Middle 43.5%

High 59.9%

Total 8.61%

• In 2007-08 the demand distribution as per markets was as follows:

Urban Rural Total

Penetration % 25.23 2.04 8.61

Share of Purchase% 75.7 24.3 100

Past trends

• Demand for refrigerators grew from 11,000 units in 1968-69 to about 2.25 million units in 2007-08 • Demand for refrigerators has grown at a CAGR of around 22% from 1.04 mn units in 1992-93 to 2.18 mn units in 2007-08.

• The total stock went up from 3.3 million units in 1968-69 to 17.2 million units in 1996-97, but still covering only about half of the total households in middle and high-income groups.

Current Scenario

• The current demand for refrigerators is approx. 2.9 mn units per annum.

• The 165-200 Ltrs of refrigerators comprise of 80% of the total demand.

• Frost Free refrigerators contribute 15% of the total demand with 5% coming from the premium range.

• The market structure is as follows:

Segment Share(%)

North 25%

East 14%

West 32%

South 29%

Rural 25%

Urban 75%

Household 85%

Institutional 15%

• The replacement demand is about 20% of the total demand and shows preference for larger and technically advanced models.

• Demand for the frost-free refrigerator is increasing rapidly. • Feature based differentiation and various price points for same capacity emerge in the top and high categories. Some of the features, individually or together are used for differentiation.

• No and type of doors.

• Crushed ice and water dispenser

• Quick chilling zones

• Multiple temperature zones

• Adjustable racks and shelves

• Multiple use compartments

• Refrigerant – CFC free Vs CFC

• Energy efficient compressor

• Freezer space vis a vis Refrigeration space

Future Trends

• Replacement market is expected to increase to 25-30% on account of faster replacement (further induced by exchange scheme).

• Refrigerator market is expected to grow at a CAGR of 14% in the medium term aided by the rising per capita income and growing consumerism.

• The demand for refrigerators is expected to be about 3.6 million units in 2000-01 with a penetration rate of about 13% • As specified by the Montreal Protocol the use of refrigerants such as CFC-11 and

CFC-12 need to be phased out by 2010. COMPANIES IN THE REFRIGERATOR MARKET

The leading companies in the market with their market share in first half.

TOTAL MARKET FROST FREE SEGMENT

BRAND Sales(Units) % Share Sales(Units) % Share

Godrej 396000 25.6% 25000 14.3%

Whirlpool 349000 22.5% 8000 4.6%

Videocon 199000 13.0% 21000 12.0%

Kelvinator 194000 12.6%

Allwyn 178000 11.6%

Voltas 83000 5.4%

BPL 85000 5.5% 83000 7.4%

GE 14000 0.9% 14000 %

LG 10000 0.7% 7000 4.0%

Samsung 8000 0.5% 8000 4.6%

Electrolux 1000 1.5%

Total 1535000 100% 180000 100%`

Kelvinator has acquired and Allywn and thus their total market share comes to 29.6% of the total refrigerator market. INDUSTRY ANALYSIS

(REFRIGERATOR INDUSTRY IN INDIA)

PORTERS FIVE FORCES MODEL

1.THREAT OF ENTRY

Barriers of entry

Economies of scale

The players like Godrej, BPL , Whirlpool, Videocon and Voltas have achieved economies of scale. Godrej has a capacity utilization of 75% and the highest capacity in the industry. This declines their unit cost of every function of business and enables them to keep their prices low. This will force the entrant to come in at a large scale and risk strong reactions from them or come at a small scale and accept a cost and price disadvantage.

Godrej also possesses economies of vertical integration as it manufactures its own compressors, which constitutes a substantial part of the manufacturing cost. The other players like BPL and Videocon who are currently outsourcing their compressors also plan to set up their own manufacturing units for compressors in the long run.

Product differentiation

The companies like Godrej, BPL and Videocon, being very old players in the Indian market enjoy high brand awareness and consumer loyalties. These brand names are associated with trust and reliability in the Indian market.

The Korean players like LG and Samsung who engaged in heavy advertising and brand promotion during the last year have also created a niche for them in the premium segment. Their brand awareness has grown tremendously after the recent Cricket World Cup Tournament, during which they advertised heavily.

These create a barrier to entry by forcing the entrant to spend heavily to overcome existing consumer loyalties and to build a brand image.

Capital Requirements Huge Capital requirements are posed in front of the new entrant in terms of advertising, product development, Production facilities, Distribution channel credit, inventories and for covering up the start-up losses.

Access to the distribution channels

The Indian players like Godrej, Videocon ,Voltas and Allwyn which are catering to the mass market have a strong distribution and dealer network.. They have a presence in the urban as well as the rural areas. Moreover these companies have established developed ties with the channel members over the period of time, which are hard to break. Whirlpool has also developed a strong network of 4000 dealers in urban and semi urban areas in a period of few years.

The South Korean Majors like Samsung and LG have a dealer network of more than 1500, mainly in urban areas and plan to expand it in rural and semi urban areas also. This poses a major th7reat in front of the new entrant as the existing firms already serve the channels and the new entrant will have to persuade the channels to accept its product through high margins, promotional allowances, better credit facilities and advertising support, which will reduce the profits.

Cost disadvantage independent of scale

Learning or Experience curve: The old players like Godrej, BPL, Videocon are high on the experience curve, as they know the Indian Market well. This Experience lowers their costs in production, marketing, and distribution and in other areas of business, thus giving a cost disadvantage to the new entrant.

Government policy

The Government policies of levying duties on the imported Refrigerators and refrigerator parts gives an advantage to the Indian Players and in a way protect them from price competition in the market with the MNCs.

Expected retaliation The industry as a whole faces excess capacity and the supply exceeds demand and so the existing competitors are expected to respond forcefully to a new entrant. The new entrant will face competition based on the segment to which it tries to cater.

If the company enters in the Direct cool segment Godrej, Kelvinator, and Whirlpool will pose the major threat.

If the company enters in the Frost free, high capacity segment (above 300 Ltrs) it will have to face main competition from LG, Samsung, Kelvinator, BPL and Whirlpool.

2. INTENSITY OF RIVALRY AMONG THE EXISTING COMPETITORS

The companies in the Refrigerator industry of India can be divided into four strategic groups based on the price and the perceived quality of the products. These groups also differ in their target segments and the strategies adopted to cater to it. High Price Medium Price Low Price High 1.PREMIUM 2. HIGH VALUE 3. SUPER VALUE

STRATEGY STRATEGY STRATEGY Perceived

(1)LG, Samsung, (2) Whirlpool, BPL Quality Kelvinator Moderate 4. OVER 5. MEDIUM VALUE 6. GOOD VALUE

CHARGE STRATEGY STRATEGY Perceived STRATEGY (3) Godrej , Kelvinator (4) Videocon Quality Low 7. RIP OFF 8. FALSE ECONOMY 9. ECONOMY

STRATEGY STRATEGY STRATEGY Perceived

(5)Voltas, Allwyn Quality

LG, Samsung, Kelvinator

This strategic group includes the South Korean MNCs. These are the players who are operating only in the frost-free segment and carry a large product length. They have products only in the above 300 Ltrs segment. These brands follow the Premium strategy of high quality at high price. They are targeting to the upper income as well as the higher middle class of the society with the products that are associated with status. These companies have shown a tremendous growth in few years.

BPL, Whirlpool BPL, the market leader in the Frost-free segment and Whirlpool of India, the subsidiary company of the US giant Whirlpool form this group. They have frost-free models in the below 300 Ltrs capacity segments as well as the above 300 Ltrs segment. The models in above 300 Ltrs segment cater to the replacement market and to the higher middle class. These aim at providing high quality at a moderate price.

The models in the below 300 Ltrs are targeted at the first time buyers of middle class and are not high in price.

Godrej, Kelvinator

These are the old brands of India, which have high brand awareness and presence in urban as well as the rural Markets. These are mainly serving to the Direct cool segment and have few models in the frost-free segment. These brands are catering to the middle class and are not very high in prices.

Videocon

This is the company, which introduced Frost-free refrigerators in India. The products are value for money products. With the lowest prices in the market it is catering to the middle class of the society.

Voltas Allwyn

These companies cater to the middle and lower middle class of buyers with their low priced ranges. The companies in the market witness a tough competition from the other members of its strategic group as they fight for the same chunk of the market. As their products do not differ much in the features, they try to differentiate their brands through copy differentiation in advertising.

3. PRESSURE FROM THE SUBSTITUTES

The domestic refrigerators have no substitutes and so it faces no threats in terms of that.

4. BARGAINING POWER OF THE BUYERS The bargaining power of the consumers is high due to the presence of many competitive products in the market.

The refrigerator models available are not much differentiated in terms of the features, and so the buyers can switch between the different brands based on other criteria like Price, service, warranty, promotion and financing schemes.

5. BARGAINING POWER OF THE SUPPLIERS

Not very High

PRODUCTS OF VIDEOCON Refrigerator Home

Direct Cool

Frost free

Water matic

Washing Machine Home

Air Conditioner Home

Microwave Home

RNV271 DIGITAL SENSI FLOW

DURAFRESH

PLATINUM

DEODORISER

GREEN HOUSE

CRISPER

SIX YEARS

WARRANTY

RNV275 DIGITAL SENSI FLOW

DURAFRESH PLATINUM DEODORIZER

GREEN HOUSE

STYLISH EURO HANDLE

6 YEARS WARRANTY

RNR312

SENSI FLOW SYSTEM

DURAFRESH PLATINUM DEODORIZER

GREEN HOUSE CRISPER

RECESSED HANDLE

6 YEARS WARRANTY

RNV312 SENSI FLOW SYSTEM

DURAFRESH PLATINUM DEODORIZER

GREEN HOUSE CRISPER

VERTICAL HANDLE

6 YEARS WARRANTY

D380MF No Frost Multi Flow System

Antibiotic Deodorizer

New Edge Door design

New Style Vertical Handle

6 Years Warranty

D452MF INBUILT DEODORIZER

FULLY AUTOMATIC DEFROSTING

SYSTEM

MULTIFLOW COOLING SYSTEM

6 YEARS WARRANTY

 Customers main preference while buying refrigerators

a) Brand = 64% say that the customers prefer brand name

b) Price = 84% of the customers look for price

c) Feature = 90% see the features while buying.

d) Service= 20 % see for services

e) Promotion schemes= 12% see the promotional scheme.

f) Word of mouth = 18 % go for word of mouth.

g) Dealers advise= 32% go for the dealers advise. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% f

e s e n

e o e d r c h c o r e i i t s i n e i d t l r u v u a m t r v r a o P r o a e o d e e B m e h a m S D W F c o r S P

Findings and recommendations

• Freezer should be small

• No crystal, grill shelf should be there

• No MRP is written. So MRP should be written

• Date of manufacturing is not written

• Model change should be there constantly

• Double door refrigerator should be provided. • In today’s world of competition, the company should pay more attention

towards:

 Best sales service

 Displays

 In festivals we do promotions

 0% finance

 Exchange offer

 High incentives

 0% interest

 Carry back scheme

BIBLIOGRAPHY

Books

Philip Kotler for Marketing Management

Web site:

• www.videoconinternational.com