BM&C Final ProjectGroup 5

Abhishek Bhowmik 15020841005

Anand Gupta 15020841007

Arjun Parekh 15020841070

Harish R 15020841136

Krithika Aravindan 15020841028

Rohan Bharaj 15020841046

Syed Mujtaba 15020841055

Market Potential & Trends

The refrigerator market has been growing at a rate of about

15% per year, while the consumer durables industry as a whole has grown at almost 8%.

The size of the refrigerator market is estimated to be 3.5- 4

million units approximately, valued at Rs 50 billion.

The domestic penetration rate of refrigerators is about 9%.

The penetration of refrigerators is considerably higher in urban areas, which account for 75% of

the demand, with rural areas constituting the other 25%.

Status Quo: Indian Refrigerator Industry

The refrigerator market which is broadly divided into two categories such as direct cool and frost free, both segments would continue to be strong for future years however in long run frost free models will occupy the larger market share.

The most common sizes are 180 litres in direct cool refrigerator and 250 litres in frost free refrigerators. Direct cool segment models with capacities ranging from 185-225 litres have the highest market share however 165-184 litres are almost equally preferable by Indian consumers. In frost free segment models with storage capacities ranging from 226 to 270 litres recorded the largest sales while lesser capacity with less than 225 had modest market share.

The frost free refrigerator market of India is gaining massive popularity and momentum over traditional refrigerator models. There is a trend for double door refrigerator which starts from 200 litre capacity to maximum 500 litres. The demand for

refrigerator in India is mainly from urban areas

Indian Refrigerator Industry

General Trends - Indian Refrigerator Market

Refrigeration appliances is expected to grow by a retail volume CAGR of 11% and a 12% value CAGR at constant 2015 prices over the forecast period.

The penetration rate of refrigerator in India is still at very low when compared to other emerging market or developed countries.

Southern region of India leads the refrigerator market in sales volume followed by Northern, western and eastern region

Source: “India Refrigerator Market Overview“ – By Research and Markets Published May-2016

Major growth drivers of the Industry

Rising household income

Improving living standards

Rapid urbanization

Increasing number of nuclear families

Large untapped market

Environmental changes

Source: India Refrigerator Market Overview“ – By Research and Markets Published May-2016

Two Categories: Direct cool and

frost free

Frost free is more popular.

Urban area accounts for 75

% Market Share.

Direct cool refrigerator(18

0 liters)

Major Features

Energy star rating

Capacity

Price

Brand

Appearance & Colour

Competitive Structure: Major Players and Brands

Key Players in Industry

• LG -29%• Samsung -18%• Videocon- 18%• Godrej-18%• Whirlpool -12%• Others -5%

LG29%

Samsung18%

Videocon18%

Godrej

18%

Whirlpool12%

Others, 0.05

Source: Euromonitor report 2015

Others include: Electrolux Hitachi Haier Siemens Sharp Bosch Toshiba Voltas

Sales

Battle of market leaders: LG vs Samsung

Both LG and Samsung, multinational companies from Korea have managed to capture a combined 50% market share in the refrigeration industry in India.

LG has 24% volume share LG has two refrigerator manufacturing units in India.LG is the overall market leader in terms of mkt share.

Samsung has 23% volume shareSamsung has none and relies on imports to maintain its market shareSamsung holds maximum share in the frost free segment because of its smart feature refrigerators and different variants.

Characteristics & Ratings

Brand 5 Star 4 Star 3 Star 2 Star 1 Star Grand Total

LG 22 33 34 10 0 99

Samsung 22 26 19 0 0 67

Whirlpool 13 6 4 8 0 31

Videocon 4 3 10 0 1 18

Electrolux 4 0 3 0 0 7

Panasonic 3 1 1 0 0 5

Godrej 2 6 3 4 3 18

Haier 2 3 5 10 0 20

Gem 0 8 6 0 0 14

Kelvinator 0 1 2 0 0 3

BPL 0 1 0 0 0 1

Hitachi 0 0 9 6 1 16

Bosch 0 0 2 6 3 11

Siemens 0 0 0 4 2 6

• The demand is also higher in the northern and western parts of the country than in the east. The south also has high demand as the warmer weather of the south requires a refrigerator running throughout the year.

• Refrigeration appliances is expected to grow by a retail volume CAGR of 11% and a 12% value CAGR at constant 2015 prices over the forecast period.

• The improved economic situation, higher disposable incomes and longer summers will be key reasons for growth.

LG USP: Energy Efficient

Whirlpool USP: 6th Sense

Godrej USP: Superior Quality & Affordability

Panasonic USP: Depth & Diversity of Research Capabilities

Videocon USP: Technologically advanced products

SamsungUSP: Experience in Electronics

Price Range of various brands

• Capacity (In liters) is one of the most important factors in selection of a refrigerator. • Below, we have compared the price range of the three most selling sizes in India

250-300 lts 300-400 lts 400+ lts

Questionnaire and Survey Analysis

Brand Recall Analysis

• This was an open ended question, where we tried to analyse the brand recall that the respondents had towards various brands of a fridge.

• For the graph, it shows that nearly 34% of the respondents had a recall of LG.

• This was closely followed by Godrej at 22% and whirlpool also at 22%

Brand Recall Analysis (Cont.)

• Here we tried to plot the brand recall at various age groups of the respondents.

• In the age group of 18-21, there is no brand recall at all, this is maybe because this age group has never made a decision to buy a refrigerator or has little say in the family decision making process.

• In age 22-25, the bachelor group or the young married couples, have a sincere recall of L.G.

• The final group of 26-35 has a recall of LG and whirlpool

Important Decision Making Factors

• When purchasing a fridge, we tried to map the important factors that the people consider while purchasing on the basis of their occupation.

• The business people on an average looked for high power saving, low price and high capacity

• The salaried workers looked for high power saving and low price

• The students did not clearly prioritize any particular factor over the other. But brand played an important role for them.

Important Decision Making Factors

• We did the same mapping for different age groups.

• The people belonging to the age group of 18-21 did not define any particular factor

• 22-25 age group gave importance to price

• The 26-35 age group gave importance to brand.

Redundancy Of Extra Features

• With the refrigerator industry stalling, companies start innovating by adding features.

• Respondents rated ice cube maker as the most important additional feature that they wanted to see in their fridge.

• The next most important additional factor was a smart refrigerator.

• The least important being freezer on bottom.

Factor Analysis

F1 F2[Brand] 0.464 0.136[Power saving ]0.551 0.253[Capacity (in litre)]0.575 0.525[Price] 0.402 0.454[Appearance and colour ]0.489 0.148[Multi-door] 0.114 -0.289[Freezer-on bottom]0.390 -0.500[Smart Refrigerator ]0.328 -0.350[Freezer-Refrigerator converter ]0.433 -0.260[Ice-cube maker ]0.401 -0.178[Inclusion of water purifier ]0.463 -0.501

The scree plot depicts the number of factors = 2The Factor 1 contains all the items in bold in F1 and the same for F2

Factor Analysis

• In factor analysis, the interlinkage between the different variables is understood.

• For example in factor 1 (F1), price, capacity, power, brand, appearance are interlined and this explains almost 18% of the variation in the data.

• When the customer makes a purchasing decision it considers the following variables while making the purchasing decision and the shift in one variable of this factor influences the shift in the other variable.

BLACK HOLE

HIGH PRICE

HIGH FEATURES

LOW PRICE

LOW FEATURES

PERCEPTUAL MAP

About Freeza

Analyzing the above factors and perceptual map, we identified that ‘Power Savings’, ‘Affordability’ and ‘No. of Features’ are the most important factors for customers while buying a refrigerators.

LG also banks on the USP of Energy Efficiency. So we intend to launch, ‘Freeza’, going one step ahead and innovating the most advanced technology which can help save energy.

The target market is the niche, which focuses more on the Power Saving refrigerators at comparatively low price. The components used in the product shall be eco-friendly and energy efficient.

Marketing Segmentation

DEMOGRAPHICAge group – 25 to 35Marital Status – Married with kidsFamily Income – 6 Lakhs p.aOccupation – Salaried or Business

PSYCHOGRAPHICOpen to try new brands (Early Adopters)

Very organized in his/her financesDisciplined behavior

BEHAVIORALQuality consciousRegular and potential usersEnergy Efficient (Power Saving)

GEOGRAPHICMetros , Tier I & Tier II cities

SEGMENTATION &

TARGETING

Positioning

Power Saving

• Most efficient power saving refrigerator with 5 Star rating that reduces electricity bills by 20%

Eco-friendly

• Body of the refrigerator made of recycled plastic• Extremely low emission of CFCs and HFCs that lead to global warming

Price

• Our product will be priced at a slightly lower price that will not be a Smart Refrigerator but will have all the basic features

As most of our respondents considered power saving to be the most important factor while buying a refrigerator, we will position our brand in the following way:

Conclusion:The people in India are very price conscious and they are always attracted towards products that help them save costs.

By positioning our product in the above mentioned way, we will be able to target the vacant space (Black Hole) in the perceptual map i.e. Low price and basic features.

Thank You