Ideate 2012 Cooking

7/31/2019 Ideate 2012 Cooking

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Business plan for

WhirlpoolsCooking category

2012

WHIRLPOOL OF

INDIA LTD


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A case s tudy on Cooking category

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Days gone by

In the days before electricity and piped natural gas, family kitchens in modestly sized homes

were large but very simple. They contained a heat source (like a wood burning stove) for

cooking and a built-in sink with or without running water. Everything else was a piece of

furniture. The family kitchen was the central work and social place of the home where family

members and sometimes friends performed most domestic chores and socialized with each other.

When electricity and gas brought many timesaving devices to the kitchen fewer people were

needed to prepare meals, losing the kitchen's social importance. With more leisure time,

socializing was delegated to other living areas of the house because, in most instances, the

kitchen was too small.

The social kitchen

Most societies have now come full circle and realized the importance of the kitchen. More

people are choosing to entertain within the comfort of their home. Plans have incorporated the

kitchen as a social room again. Almost all new apartments have a breakfast/family room incomplete view of the kitchen. The new kitchen is designed to once again be the central hub for

gathering in the house. The kitchen atmosphere itself breeds easy hospitality and social ambiance

by lending itself to flexible numbers; you can always pull up another chair. It is certainly the

most used room of the house.

Contemporary Modular Kitchens:

Designing a perfect modular kitchen requires an in depth understanding of anthropometric data,

knowledge of various aspects of interior design like lighting, material, texture, etc. & its effect

on human psychology, an in-depth understanding of nuances of civil engineering and a keen eye

for detail. A designer is supposed to address all kinds of issues ranging from serious usagerelated issues such as optimal storage space in a kitchen to seemingly tepid yet important details

such as how sealants can effectively make the kitchen hygienic and longer lasting by blocking

water leakage and dust.

Another important aspect of kitchen design is the interaction between furniture and appliances.

Till a few years back, this aspect of creating a modular kitchen was less focused, since kitchen

was expected to house basic cook-top and practically nothing else. In the last few years, with the

onset of globalization, this aspect of kitchen design has moved from being the most ignored to

one which is most focused.

Modular Kitchens in India:

Advent of modular kitchens in India can be traced back to early 1990s when a few Indian

traders set up shops selling modular kitchens imported from Europe. It took lot of time to gain

consumer acceptance since kitchens in India have never enjoyed the kind of status and

importance that it enjoys in the West. Recent years have seen rapid influx of boutiques and


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outlets selling modular kitchens, as the economy evolved and more influences from West started

making inroads into mainstream cultural lexicon of India.

The market today is growing at a scorching pace of over 25%, with almost all the major kitchen

sellers making plans for entering this industry.

Business models

Top of the pyramid is the company-owned showroom model. Mostly found at the premium end

of the market, kitchen makers in this model retail all by themselves. They do not believe in

franchising their business, either from fear that their design-quality-service proposition will get

diluted, or that their high prices will encourage weak franchisees to dabble in similar looking

cheaper products on the sly. Such makers are equipped with state-of-the-art machinery and

processes for cabinetry so that high quality becomes a given, and they push themselves to master

design. They are creative, and love to incorporate technology into their creations. They love

value, but do not chase volumes. They glorify design and pander their clients. Magppie recentlycreated a Swarovski crystal back wall for a client who was insistent about having a high-tech

kitchen with a different look.

Another operating model entails standalone retailers who source cabinetry from OEM suppliers,

and are not attached to any kitchen brand. These retailers fend for themselves as they have no

support for design, installation or other best practices except perhaps of the hardware supplier.

They are often positioned in the lowest price segment and frequently get into competition with

the carpenter who builds kitchens at site. Such retailers form bulk of the kitchen marketing

network as it exists today.

Amongst the smallest but also the fastest growing model is that of franchising. Under this style

of retailing, the franchisee benefits from the branding and volume muscle of the principal in the

form of recognition and uniform pricing, and receive support towards design, retail identity and

post-sales support.

Franchisers are leveraging the economies that accrue from flat pack furniture manufacturing and

shipping, and their alliances with appliance and hardware suppliers. They invest heavily on

branding and support their franchisees with training and qualified manpower. International

kitchen brands have found this model ideal for marking entry into the difficult Indian market.

Over 20 such brands are present here, most having remained one or two outlet operations even

three-five years since their arrival, but are fast changing track.

The franchising model is proving to be attractive for its ability to return high profits on

investment. For one, theres a growing demand for modern kitchens in new as well as re-

modelling projects and gross margins remain high. Another is that the franchise does not have to


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carry inventory, since flat pack architecture of the furniture allows it to be shipped quickly and

directly to client sites. In effect investment remains limited to displays and maintenance of the

outlet, in addition to the local promotion on a shared basis with the franchiser.

The fourth model is of big organized retailers like Home Town and Evok, which are specialist

home improvement stores. Modular kitchen offerings are one of their major revenue earners.

Both have the advantage of high foot falls due to their wider home improvement category, and

also possess a greater clout with their vendors.

Emerging Opportunities

Real Estate boom offers the biggest emerging opportunity for this industry. According to a recent

report from real estate consulting firm Knight Frank, during 2010 and 2011, a total of 5,33,954

residential units were launched across just top seven cities including Mumbai, NCR, Pune,

Kolkata, Bengaluru, Chennai and Hyderabad.

Another emerging opportunity is coming from European kitchen makers attracted by the huge

nascent market that India offers are making a beeline for Indian shores. Established European

Kitchen manufacturing companies seek partners who can interpret their brand philosophy the

right way and do not let it get diluted, besides having a sound financial background.

As the market evolves and demand increases, investments and improvements in infrastructure,

software, education, manpower, installation, after sales service, logistics, etc. is bound to happen.

This will kick off a virtuous cycle of profitable growth.

Built-In Appliance IndustryPhenomenal growth of Kitchen Industry also led to emergence of the built-in kitchen appliance

category In the initial years, the onus of developing the market was led by local players, often in

technological collaboration with western brands, like Faber (in JV with Faber Italy), Sunflame

(in partnership with Elica Italy), Kaff (a brand built by a local entrepreneur sourcing product

from OEM suppliers from China and Europe) and host of other local brands.

The past couple of years have seen not just established white good majors like IFB, Siemens and

Electrolux, bringing forth a class of products to suit the modularity of cabinets. These brands are

increasingly discovering value in developing the kitchen outlet channel as a parallel network to

their existing white goods channel. High end Specialist brands like Miele, Fisher & Paykel, and

Foster are also lining up a comprehensive range for discerning Indian consumer. Demand for

appliances such as Built In refrigerators and dishwashers is on the up. Niche appliances like

Built-In Coffee machines are starting to appear on the wish-list of a few high end consumers.

The significance of appliances can be gauged from the fact that they together make up for no less


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that 30%-50% of the investment that goes into a new kitchen, even surpassing the cost of

cabinetry.

IFBs recent foray into the modular kitchen business is another confirmation of the Siamese

relationship that these two businesses have.

Given the industry scenario described above, Whirlpool intends to tap into this emerging

opportunity.

Strategic objective

Establishing Whirlpool as No. 1 Brand in Built In Appliance category

Drive Whirlpool towards leadership on recall and imagery

Strategy for the organization to compete with brands straddling across price spectrum

ranging from Faber & Kaff in mass and mass premium segment and Miele in the

premium segment.

Evaluation:

Analysis of external environment including macro-economic variables, consumer

Understanding of key competitors including their product portfolio, go-to-market and

promotion

SWOT analysis for Whirlpool

Key Deliverables:

Detailed business plan capable of delivering the strategic objectives. The key deliverable of the

exercise must include

Strategy on all 4Ps.

Comprehensive Go-to-market strategy

Financials (Volumes, margins etc.)

Please state clearly the assumptions considered while responding to above questions.

Documents

Ideate 2012 Cooking