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PROJECT SUBMISSION

Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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2011

Zicom Retail
Introduction: Electronic security is use of technology to safeguard assets by preventing unauthorized access to a property and to protect its occupants. Incorporated in the year 1995, Zicom is part of the electronic security industry primarily based on electronic sector. It is a pioneer in the field of Electronic Security in India. It was co founded by Mr.Manohar Bidaye who is currently Chairman of the company. Prior to this Mr. Bidaye was a successful Consultant in Corporate Laws and Finance. Zicoms sustained growth and success has always been based on innovations and on unique concepts of marketing Electronic Security Systems and Services. Prior to the business transfer deal with Schneider, it was made up of four subsidiaries: Zicom Retail Products Pvt Ltd. Zicom CNA Automation Ltd Unisafe Fire Protection Specialists LLC, Dubai Zicom Manufacturing Company HK Ltd.

Zicom Retail Products Pvt. Ltd. was the wholly owned subsidiary of Zicom set up to cater to the electronic security needs of homes, individuals, builders, and more. This subsidiary came into existence in 2007 focused to handle the retail arm of the company. Zicom Retail sells varied products like Home Alarm Systems, Video Door Phones, Biometric Locks, CCTVs, and Multi Apartment Video Door Phones which cater to homes, Small and Medium enterprises, SOHO's and other retail segments. Zicom Retail has also added the Personal Security Products range that comprises of Anti-sleep Alert, Safety Alarm, Anti-loss Kids and more that cater to the security needs of individuals. This is the first company in India to launch exclusive electronic security shops and Shop-InShops on a PAN India basis. Its service network is spread across 66 cities across India. In the year 2009-10, the company sold its Special projects and Building Solutions Group to Schneider Electric (a multinational) for considerate amount of Rs.2250 Million. Both groups contributed 46 % of the group turnover and 51 % of the profit for FY 2009-10. Moving forward, Zicom retained the brand name Zicom and planned to expand its market footprint in the Security business through its subsidiary in retail business, Zicom Retail Products Pvt Ltd. now, Zicom retail has been merged with the parent company. Zicom retail had achieved revenue of Rs.944 Million and incurred a net loss of Rs.12 Million in FY 2009-10. Even then, the company believed that it had a huge potential to grow beyond its existing limits due to the huge potential in Indian Market. However, the threat that looms in front of Zicom Retail is the low quality product being offered by Asian players. This results in customer getting the products which are of low quality. Also, unlike previously when Zicom first started, purchase decision of consumers in current market conditions is mainly influenced by massive price under cutting by new system integrators. The market now is a new battle ground between those that provide a good value proposition against those who do not.

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This paper is an analysis of Zicoms current market performance in India and provides a marketing strategy that Zicom should follow for Indian market to maintain a sustained growth curve in sale of its Home Alarm Systems (HAS) and Video Door Phones(VDP) in the coming five years. Acronyms used in this paper ES : Electronic Security HAS : Home Alarm System VDP : Video Doorphone SOHO : Small office/ Home office

Electronic Security Market & The Indian Share In Security

The Global security industry is estimated to be over US$150 billion. This industry has given a number of companies both public and private an opportunity to work on. As companies and people grow they understand the need for security. These requirements can be in the form of RFIDs, smart cards, access controls or alarm monitoring services. All these requirements create an opportunity for global security industry both as products and services. China and India jointly account for about 1 per cent of the global market in security industry, but are expected to grow rapidly, creating a combined market of 5 billion dollars by 2015. India is one of the fastest growing economies in the world with a consistent annual GDP growth of 8 % for next 8 years. The Indian Market is uniquely diverse and versatile. It has presented innumerous opportunities for people who believed in it. But the key to survival in this market is not just implementing a strong marketing plan but factors beyond it. Electronic Security industry is no different. India has transformed from an agriculture based economy to a manufacturing/services based economy. The IT sector has grown at a rate of 30 % annually. This sector has created employment opportunities for the youth and has increased the per capita income among urban public. This has resulted in a continuous large scale migration of population from the Indian rural to urban and suburban environments. The economic prosperity in cities has also created a disparity in the income levels of the various population segments. As more and more people migrate to the cities, it puts a lot of pressure on the current administration/ infrastructure/ police. This has created a security need due to increased incidences of break-ins etc. The other factors leading to the increased demand in security products is the increasing gap between Rich and Poor. The constant changes in economy have put inflation rates at the highest. The inflation hits the poor much harder than the affluent. The gap is constantly growing. The rich grow richer, the poor become poorer. The increase in demand for security has meant increased security establishments and increase in police force. While there are efforts to augment the police force and also review the police to population ratio, the developments are on the slower end, leading to greater public awareness on security needs. Police in major cities now consider citizens as partners in tackling crime and have launched several campaigns to actively involve residents / people using neighborhood watch schemes. There is also has led to an increased emphasis and recommendations from Police asking residents to secure their 3 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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premises to prevent any incidents of unauthorized break-ins. Electronic security systems; (Video door phones, burglar alarm etc) also help in filling this gap and help house owners/ small business owners to secure their premises. The Indian electronic security market primarily comprises of Security equipment and Security services. The devices category can be further sub-divided into four parts:Indian Security Market

Closed Circuit Television (CCTV)

Electronic Access Control

Intrusion Alarm systems

Fire Detection & Alarm System

The market drivers for the CCTV and Intrusion alarm include growth factors from retail and residential sector, increase in thefts etc. The Indian security industry does not have a regulatory body and these results into continued growth of the unorganized sector. The market is scheduled to grow at 21 % CAGR. However, the industry faces the key challenge of high duties and taxation and competition from unorganized sector. The major market drivers for electronic access control include increased incidences of security breaches, rise in employable population and need for better security infrastructure in office and residential buildings. The key challenges remain the poor level of general awareness about security. The market drivers for Fire Alarm and detection include growth in construction industry and mandate by regulatory bodies. The market is scheduled to grow at 33 % CAGR. Zicom is quiet established in the security market in India with its brand name and with the potential of the security business in India and abroad. But increased competition in the security market from existing players and from new well-known international players and its subsidiary companies could pose a challenge for Zicom in maintaining their margins.

A Detailed Analysis of Zicom vs. Electronic Security Market:

Zicom Company: Zicom is one of the leading forces in the Security and Surveillance space. Innovations are the key to survival of Zicom in the market. Zicom was the first Indian company to conceptualize the setup of central monitoring station and video monitoring station in for electronic security. Among its customers are several large Indian and Foreign MNCs from the eld of Information Technology, telecom, media, banking, nance, manufacturing etc. Others include public sector companies, schools, institutions, and

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government organizations and many more. It has 16 offices located across India with over 400 employees and 2,400 partners at present. The Mission and Vision statements of Zicom are listed below:

Source: Zicom financial reports

Zicom Retail now wholly a part of Zicom caters to the requirements of home and retail. It is the first company in the country to introduce Wireless Security Equipments in the Home and Retail segment. It has products that can be classified as home products and commercial products. Home products by Zicom (Also known as SAFEHOMES) are Home Alarm Systems, Video door phones, finger print locks and multi-apartment video door phones. SAFE HOMES is a unique value proposition that Zicom claims to provide. According to this unique Value proposition it claims that the consumers security and safety needs are not the only needs that are looked after. The consumers also are given good ROI by improving their savings due to reduced downtime in repair of electrical and electronic appliances. In the business category, they sell this product as a package of CCTV Systems, Fire Alarm Systems and Access Controls. Many installations dictate reliability and ruggedness in extreme environments. In most cases, the smallest amount of malfunctioning is unacceptable. To tackle these issues Zicom also provides value-added services like i-Alert, CMS and VMS as a post-purchase service to the product sold. IAlert is their 24*7 support team which monitors the security aspects via CMS (Central monitoring service) and VMS (Video Monitoring service) in case of emergency alarms. During emergencies like break-ins or re, Zicoms CMS team executives are obliged to contact the emergency numbers given. They see to it that the alarm has been attended to.

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The SWOT analysis for Zicom retail is as given below STRENGTHS 1) 2) 3) 4) Has indigenous manufacturing capability Strong brand presence in India Sale backed by good service team Multiple retail channels like Direct sales, Online channel, sale through large stores OPPORTUNTIES 1) Growth in urban population. 2) Increase in perceived Security threat due to house break- ins / burglaries 3) Rising disposable income in Indian households. WEAKNESS 1) Dependency of technology on foreign partners. No indigenous Research and Development capabilities.

THREATS 1) Fast obsolescence of technology in Security field 2) Increased competition in Indian market 3) Price pressure from unorganized sector of the market

Current market scenario in context of Zicom: Zicom is now in an age where security is of paramount importance to everyone. Needless to say, Security and Surveillance are the most happening things in the business world in current scenarios. Security spending is being earmarked in everyone's financial budget. To add further to our problems, there are constant security woes within the country. With rapidly increasing urbanization and economic liberalization, the criminal activities at different levels of the society have become a common practice in India. Moreover, the growing incidences of terrorist attacks have significantly changed the perception of Indian consumer for better safety and security needs. The terrorist attack in Mumbai on November 26, 2008 has indicated a clear need of deploying and upgrading security equipments to modern and hi-tech across the country. Government and public institution are biggest potential customers of security devices. The business outlook for electronic security is bright as never before. The need for safety exists in all. The perceived security threats to the individuals, corporate and the government, as well as, the conversions of technologies and reduced hardware prices are creating a demand for security equipments and solutions. As a result, customers are looking for solutions based on technology and convenience. The age old issue of a lack of awareness in the electronic security industry is slowly getting over in India. With the growing uncertainties, government institutions and individuals are looking for cost effective solutions to address their security needs. Nuclear family structure within the community also has been the main driver for increased security needs. 6 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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The Indian security industry is currently estimated at Rs. 2,125 crore for 2010 and expected to reach Rs. 3,210 crore by 2012. However, these figures are just a rough estimate as there are no specific methods to justify the number. The main reason for a skewed estimate of Indian ES market is because this market is highly unorganized. In India, there are about 5,000 companies in the electronic security field, around 150 of these are from the organized sector (with ISO Certification) and account for 80% of the total security solutions market (by value), the remaining 20% contributed by the unorganized sector. India imports ES devices mainly from Israel, China, Taiwan, Korea, the UK and the US, among others. Israel and India are partners in homeland security. The major challenges of electronic security market in India are: Lack of awareness about the security concept and the high expenses involved with security products deter Indian customers from implementing security systems There are several mental barriers, which include: 1. A perception that a watchman is sufficient, although their backgrounds are rarely investigated and so remains a potential threat. 2. Some member of the house is always at home 3. A double-door provides the best security 4. Trouble relating to a security breach 5. Perception that security spending is a waste of money. The industry also pays a high customs duty of 35-40% and a VAT of 12.5% in many locations Please see Annexure I with rough estimates of the growth in the entire Electronic security Solution market published by Zicom in its Annual report for growth pattern from 2007 - 2010. The YoY performance of Zicom is given in Annexure II. Zicom Retail in the financial year 2009-10 had a share of 94 Cr. and estimates that among this the HAS product alone is competing in market which is approx. 10% of the total market for Indian security solutions. However, Zicom management is not looking at this figure as a source of achievement and remains extra-vigilant as the market is bound to increase many folds in the coming few years and the real test for a sound growth comes then. The large number of players and the cheaper products from the East Asia are already a threat to the local players. This could further increase if the company does not match up to the expectations of the customers.

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Below given is an article from Times of India which clearly says the demand for Home security is on the rise:

House owners willing to pay 'extra' for security

Kapil Dixit May 25, 2011, 01.50pm IST

ALLAHABAD: Safety gadgets like digital video recorder (DVR), video door phone (VDP) and alarm systems are gaining popularity among house owners in the city. And for this, people are ready to spend extra money. Interestingly, the sale of gadgets is on the rise, as 63 cases of thefts were reported from the city in the last four months. Some of the common gadgets, which have entered the city market, include videophones for doors, burglar alarm systems, seven-lever latches, complicated safes and CCTV cameras. According to Saumya Srivastava, who deals in security gadgets, CCTV is the most sought after gadget in the city. "Its clientele includes schools, educational institutions, big showrooms, and retail stores.

Source : The Times of India

Consumer requirements: The consumer needs for HAS and VDP is always a difficult aspect to judge. One essential reason for this is different people have different security needs. These needs can be better understood if we study them in individual categories. 1. Consumer demands from Home Alarm Systems: Home alarm systems provide security and peace of mind for many homeowners, but differing needs prompt homeowners to search for an array of security system features. A recent customer analysis survey by Godrej, another major player in the HAS and VDP products, had obtained the following data regarding HAS consumer requirements: Basically, an effective home alarm system is one that works as per the requirements of the consumer. Each home has a different requirement. The home alarms systems are of two types, hard wired and wireless, with many options to choose from each of the category. Hard-wired alarms are alarms that are directly connected to the users telephone line or landline. These are cheaper and work well in homes where the telephone lines are not very easily exposed to outsiders. In homes where the landline is exposed, burglars can cut the connection. On the contrary, Wireless alarms use telephone lines, but they are not hard wired into the house. Wireless systems are easily portable and can be easily used in any new settings. These systems usually consist of cabled Internet connections and mobile network system that contacts the central station via a cellular network independent of the cell phone service network. This operates on a different frequency. Those who do not want to cut through walls and doors to install

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wires, and those who want to take the system to a new home in the future, normally prefer wireless systems. It was observed that consumers always wanted the company serving them with the product, to evaluate the most effective alarm systems before they even brought one. They wanted the company to tell them the service coverage area of the devices and options that best fitted their circumstances and budget. The HAS system was also valued by the various types of sensors that were available along with the product. Door and window sensors were preferred by consumers to detect if a door or window was opened, while some others preferred motion sensors to detect motion based on body heat. These motion sensors were expected to have sensitivities that were beyond the control of consumers like in the case of Homes with pets. Pets often move through the house and that starts the motion sensors. So some consumers expect the device to automatically differentiate between a human and an animal. Apart from the motion and window sensors, some consumers also wanted glass break sensors that are used to detect when a window is broken since window sensors cannot detect glass breaks. Sensors like fire sensors which detect heat and smoke was also among the list of preferred sensors. Whichever sensor needs to be used had to be switched into the control panel. The control panel usually commands the system, and the keypad allows them to program the system and turn it, or its components, on and off. The other main consideration by the consumers was if the wireless system could perform up to the distance of the farthest zone. Besides sensors giving live inputs to people within the house, some consumers also preferred round the clock monitoring by a central station (costs extra) or an auto calling enabled to reach the police or a neighbor or a close-ones cell phone. While many home security systems communicate with a center that monitors and responds to alarms, some systems do not support monitoring. Homeowners who prefer monitoring looked for companies that perform background checks on employees, have established themselves in the industry and have proper licenses, including insurance, in place. Some consumers preferred unmonitored setups as monitored systems were costly to handle. Consumers also expressed that unmonitored systems are better than monitored systems as there was no guarantee that the systems were being monitored well and felt it unimportant to pay for the unmonitored time. A less expensive alternative was a basic sensor system with a dialer accessory that connects the system to the phone lines and dials preselected numbers if the house's security is breached. Other main issues quoted by the consumers are issues related to lifestyle. Some family members often get up in the middle of the night for a snack or have a pet that roams the house at night. These circumstances influence the type of motion sensor needed and installed. It added up to the extra cost else there would be unnecessary false alarms. Furthermore, the consumers considerations also included the ease of use, installation cost, maintenance cost and understanding the codes which the device threw during an emergency alarm.

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2. Consumer demands from Video Door phones: The consumer demands from the video door phone were also similar to HAS but some minute differences do exist. A Video door phone is powerful interactive communication tool by which one can communicate with other person without having physical interaction. It enhances security at greater level. Video door phones come with a remote control, by which you can keep watchful eye on your main door from any part of the building. There is no compromise with security of your assets. In India, market offers varieties of video door phone systems. The price range of video door phone depends upon the features it has. Firstly, Consumers always preferred those VDPs which had external camera, speaker and entire body that were 100% waterproof, dust proof and resistant against heat and hard wind. The case of video camera door phone should resist any vandalism. There must be transparent plastic, which protects the camera lens. Consumers also mentioned that the night capabilities of the VDP were important to identify visitor in poor light conditions and was the second main criteria for buying a VDP. Thirdly, Consumers mentioned a basic Video door phone must support two-way audio communications with total scope of video door phones vision covering maximum mat space. The wider the view, more area is under surveillance. Also, consumers looked for Video door phones that were equipped with an alarm system as that would scare someone who tries to interfere with the system. Some consumers also said they looked out for Video door phones that have multi-option installations as that would make it easier to answer the door from any part of the house. Finally, the main criteria that users looked out for was the type of camera used, camera clarity, inbuilt memory to store the logs of visitors etc. 3. Consumer analysis for Zicoms products: Some of the best sources of information about consumer analysis can be understood from web reviews of a companys product by the consumer. The web is often considered to be used by a well educated and literate customer. These reviews can be a good source for change in marketing strategy. Some of the reviews for Zicoms HAS and VDP are included in Annexure III. These reviews are best means to know what the actual needs of the customers are and whether the R&D team at Zicom is taking them with a positive attitude. These reviews are directly written by consumers in a public forum where most potential customers look out for details regarding the products they want to buy. These form essential means to base an opinion about a product. Any negative comment can be harmful for the brand and could result in a shrinking market share. These reviews give us a good view about how Zicom and its product are performing. 10 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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Competition:

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The Indian security industry is very fragmented. There are more than 150 companies in this industry. This not only makes it difficult to gives the consumer the freedom to switch, it also pressurizes the existing companies to give a better offering. Some of the major competitors for Zicom are as given below. This image also shows their respective market caps and sales turnover in India.

Source Moneycontrol.com

See Annexure IV for all the electronic security companies that are into product sales of HAS and VDP, worldwide. The prominent competitors for Zicom in India for HAS and VDP sales are Bosch & Godrej. These companies are represented in the Indian market by their System Integrators. All the companies have little product price differences but the differentiation is based on quality and customer perception. For example: Godrej provides Home alarm systems that are battery operated and extremely easy to maintain. Ideally their alarm systems cost approx INR 16,000 similar to Zicom. Also, Godrej has a wide network of sales and service executives panning India with over 1,000 retailers. The response to any query is given within 24 hours, thereby ensuring complete support to the consumers. These services are similar to Zicom. However, Godrej enjoys a 25% share amongst the organized players of HAS and VDP market. In Chennai Market alone it earns approximately 70-80 Cr. INR. Zicom also has good returns in the south. The growth comes from key markets like Chennai, Coimbatore, Trichy and Madurai. As of now the Chennai market makes up for 10% of the 500 Cr. worth electronic security industry in the country. Zicom has maximum earnings from the CMS services. Zicom has also pioneered in this concept of Security as a Service (SaaS) model where customers pay Zicom a monthly services as a monitoring fee. Partnerships: Most of the foreign companies have partnered in India with System Integrators, who act as a face in Indian market. The System Integrators handle the sales of the product while technology is provided by the foreign partner. ES majors Honeywell and Bosch also deal through this model. However, Zicom 11 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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being an Indian company has an advantage of better internal network. The downside to this is the easy availability of raw materials. The production costs often are higher due to demand for raw materials from foreign markets. Zicom uses its subsidiary in Hongkong to overcome this issue. For product sales the company uses various channels. Sales Partners can register on their site and be a part of their sales group. In line with this the customers can purchase the products from Zicom using any of the following convenient channels: S.No 1 2 3 4 5 6 Channel Zicom Direct Selling Agents (ZDSAs) Zicom Selling Partners (ZSPs) Outbound Stores (OBS) Shop In Shop (SIS) www.zicomretail.com www.indiatimes.com (Shopping)

Apart from these channels, the company also provides insurance against threats via tie ups with insurance partner Future Generali India. Zicom Direct Selling Agents (ZDSAs) perform direct sale of Zicom products. These people either work on the door to door delivery skills based on the target groups or use exhibitions or huge congregations as a place to sell. People interested are made to write down their address and the agent sends a person to perform the install of the device. Zicom Selling Partners (ZSPs) and the remaining channels are partners who register with Zicom to be part of the sale group. These are usually resellers who are front end for Zicom retail product sales. Post Schneider sale Zicom retail has preferred ZSPs and other channels over ZDSAs as that gives them better efficiency. However, installation of security devices needs expertise. To overcome these issues, Zicom conducts training for its partners in security device installation. Moreover, Zicom has opened up Institute of Advanced Security Training & Management Private Limited to focus on special provide training needs of external partners and students who plan to make a career in electronic security.

Current Market Strategy:

Segmentation of ES market: The segmentation of ES markets can be done based on end-users, based on geography and based on income groups. The segmentation for VDP and HAS also follow the same model similar to ES market as a whole. A secondary source of market data, Boston Analytics has broken down the Indian ES market from end users perspective as given below:

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Market Segmentation by End-users (2007)

Source : Boston Analytics

According to this pie chart, Public/ Government are the biggest beneficiaries of security systems. However, this does not show what the value of sale from each sector is. While some others divide this Indian ES industry into two sections of end users: S.No 1 Type Individuals / SMEs Description Small and Medium Enterprises (SMEs) generate the largest demand for security product in the low end market. Also, high end residence owners have security needs. They generally buy cheaper standalone products. They are conscious purchasers and they tend to buy large complex systems due to complex needs that cannot be fulfilled by standalone products.

Corporates

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Market Segmentation by Geography (2007)

Source: Boston Analytics

Market Segmentation by earnings He market can also be segmented based on earnings. The Indian consumer expenditure spectrum divides the diverse income segments based on earning per year: Earning Lower Income Segment Rs. / Year 0 < 1.5 Lakhs

Lower Middle Class Middle Middle Class Upper Middle Class Top end Segment

1.5 3 Lakhs 3 - 5 Lakhs 5 10 Lakhs Above 10 Lakhs

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The top end consumer segment is a small segment comprising of 5 % of urban households in India and 6 % of urban population. Despite being small this segment contributed to a third of the consumer expenditure, making it one of the sought after market segments. The urban population in the country is expected to touch 21 crores by end of 2011 and 53 crores by 2021 as stated by the Minister of State for Urban Development Saugata Roy in Rajya Sabha during question hour. (Source: India Today). Approximately 35 % of this population would be above the age of 65. Also in this age of nuclear families, Senior citizens live on their own, away from their children and are the most potential customers of HAS and VDP systems. The Heart share and Mind Share for security products like VDP and HAS is very high but how many actually convert into a sale is based on the organizations value proposition. Target groups: HAS and VDP Systems Indian market is expected to grow from USD 21.7 million in 2007 to USD 55.4 million by 2012. During this period the systems market is expected to show a CAGR of 21 percent. The key drivers of this market include a high growth in real estate, an increase in thefts and increase in aging people. Wireless systems are a new trend and gaining popularity in the market. However, factors such as lack of any guidelines by the insurance industries, are limiting the growth of the market. Zicom targets the Upper Middle class and Top end market segment & It also targets the senior citizens living in the cities by having tie ups with insurance agencies. As top end segment is affluent, they have a need to protect their premises from theft / break ins. Both these income segments in India are used to investing in jewellery and they have a tendency to keep the same at home. Also, some of them even tend to keep large sums of cash at home, making them an easy target for burglary/ break-in. They live in large apartments/ independent houses, which may have multiple entrances. Many of these households have been targeted by burglars for break-ins in the past. Many Senior citizens are targeted during most house break-ins. Most of these happen once the door to the house is opened by the Senior citizens. The VDPs are most sold to these target customers. The HAS systems target the multi-apartment house owners and the affluent. These people can easily fund for their security and form the demand segment to target. Zicom usually targets these segments. These customers also get well with value proposition of Zicom by using its offering to the maximum. The CMS service gives the company continuous income increasing the equity of the consumer.

Differentiation & Positioning: Zicom tries to differentiate itself by offering indigenously manufactured products better suited to Indian environment at a reasonable cost Made in India. This is backed by a team of professionally trained service engineers, who offer service on call. Most of the other suppliers in the Indian market tend to sell imported products. In case of any defects/ malfunction, these need to be replaced as local service is rarely possible. Customers are becoming aware of this and many of them prefer dealing with an Indian company selling products suited to Indian needs. 15 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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It has also set-up online blogs and has a presence on other social networking sites like twitter and facebook. The company spends time to understand the customers and their needs. It understands their experience after using the products and uses this to improve its products/ services. Its website also has a customer testimonials section, wherein the company claims to have 98 % satisfied customers. The other strong differentiator for Zicom is its brand image in India. Earlier, its projects business (now sold to Schneider electric) has supplied and installed a lot of systems in prominent banks. Hotels, restaurants & showrooms. Cameras with the Zicom logo are visible at many of these venues. Also, Zicom Security worked closely with the city police in Mumbai/ Pune/ other major cities, Railways to install cameras at major traffic junctions. This provides Zicom an unparalled advantage as its brand value is already recognized by customers for a quality product. Anand Swaminathan, Director, Product and Solution, Safe Home Zicom when asked about the USP of his companys retail brands has said that Brand Zicom is synonymous with physical security. Our USP is our ability to slice and dice the market by customizing our offerings to the market verticals with the right product mix, service and value added services such as Insurance, CMS, Onsite support etc. (Source: media Interview) However, there is a significant difference in implementation and planning. The differentiation and Positioning of Zicoms retail products are not very clear. They usually position their systems as coming with an additional benefit of Monitoring services. But the price constraints associated with CMS monitoring are major drawbacks that eat into the business. Below given is an excerpt of an interview given by Anand Swaminathan where he particularly focuses on the CMS monitoring services of the company when asked about its differentiation and positioning "All products come with a standard one year warranty. In the case of home alarm systems, our customers have the option to subscribe to our annual CMS services where we cover maintenance as well. There is AMC for non-CMS customers." He points out that there is scope for the market to grow. "The demand in home segment is quite low compared to the market size. But it is a pent-up demand and is waiting to explode. The reason is living style in our country. We have got used to feeling safe and secure in the presence of extended families, a strong sense of neighborhood security, and security guards." These statements clearly say that Zicom has decided to consider its CMS services as a positioning factor and a differentiation from other players who only supply hardware but what really was not considered was returns of this positioning. The constant income from CMS always was a benefit but the focus to provide quality equipment degraded. Some of the other best positioning stance are those taken by Godrej. Godrej emphasizes on the tamper-proof features of it HAS and VDP systems. They constantly work on the quality of its products and also on the CMS services. But the primary USP of Godrej is not CMS but the product quality itself. This gives them an advantage in future growth.

Current Market Offering By Zicom:

Home Alarm System is a unique Electronic security device to provide security 24X7 and 365 days in a year. This product is being sold along with Glass break detector, Motion sensor and a smoke detector. This is packed with a service of i-Alert. The system can be armed / disarmed by the user. All the sensors detect the break-in and send a wireless signal to the main control panel, which then activate the hooter. 16 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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The system is designed to raise an alarm, in case of a break-in, which can then help in alerting the neighborhood watchman. The i-alert service sends the information about the break-in to a centralized monitoring station, from where the designated key contacts are notified about the break-in.

Source: Zicomretail.com

Video Door Phones: The basic video door phone has a main door camera mounted beside the main door. This camera captures the image of any visitor, when it rings the bell. The indoor color monitor/ telephone with LCD option rings and once the phone is picked up, it displays the face of the visitor. If the visitor is recognizable the house occupant opens the door, by releasing the lock. If the visitor is a stranger, the house occupant has the option of talking to the visitor using a speaker phone that acts as an intercom. Once the identity of the visitor is established, the door is released. This product helps protect the consumer by preventing forced break-ins, which happen in many big cities like Delhi/ Mumbai, especially in residences of senior citizens belonging to the high end income segment.

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Source: Zicomretail.com

The VDP system is competitively priced at Rs.15,990/- for a high end piece. The price range fluctuates between Rs.7,990/- to 15,990/-. These are charges for the device alone. The device is priced based on the facilities like the camera type, memory of the phone records etc. The monitoring and additional charges are based on the requirement. On the same lines of VDP, the HAS is priced at Rs.15,990/- with CMS service at Rs.3,310/-. The HAS is a complete system of sensors. Additional sensors can also be brought separately each ranging from Rs.3,500/ to 6,000/-. The price for installation is free of cost but this could be charged if extra functionality or anything apart from a regular service is asked for. Often construction company use these services of providing HAS systems to new house owners and so take help from Zicom to have these included as parts of the construction plan.

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The other benefit which Zicom provides is the Point-Of-Sale (PoS). Sale can be done directly via website or by reaching its retail store. The number of retail stores for Zicom is the highest when compared to its competitors. The network experience gained by Zicom over the years in Indian market also is an advantage that makes Zicom stand apart from its competitors. To promote their products Zicom retail advertises on all national channels about How an Old woman and her granddaughter, visited by thieves, save themselves using a Zicom VDP attached to the main door. This advertisement was aired during peak time. Zicom also promotes its products by participating in consumer exhibitions and safety related meets. The brand positioning is also improved by printing the Z logo with maximum visibility on its products.

Observations:
After carefully studying the ES market for HAS and VDP and the performance of Zicom in this segment space, we have come up with the following observations. 1. It has been observed that Zicom has used concentrated marketing focusing on niche target of affluent-Multi Apartment consumers. They also target construction companies who provide HAS and VDPs to their clients as an offering of security. 2. Zicom also targets only in the Tier1 and Tier 2 city. Though the retail presence of Zicom is starting in the Tier3 cities. It has not given them an advantage to boast about. 3. Currently, Zicom does have competitors from the organized ES companies but has no real threat in the industry except for the cheap substitutes from the Chinese markets. 4. The heart share of the consumers in India calls for security devices but the mind share and actual conversion of sale i.e. Return on Effort is very low. This has affected Zicom as well. 5. It has also been observed that the differentiator and positioning factor has not been successful.

Expected Value Proposition and A Successful Offering:

It has been observed that any new market with huge potential has an unorganized group of competitors and makes it a fragmented market. This could also mean no clear market leader can be analyzed or judged easily. The market for HAS and VDP also follow the same path. The market for HAS and VDP has always been a potentially high growth market but the need for security is emotional and behavioral. The Social class does affect the needs and wants of the consumer but not every need is stated. These needs are more often secret needs. To utilize the market to its full potential and make it organized Zicom must make efforts to act as a market leader and make people understand the need for security. A market leader is one who sets the price of a product and defines the course of action by their competitors. To become a market leader Zicom needs to not only put forward its best value proposition but also prevent the consumer from facing a post purchase dissonance. The best value proposition that Zicom should provide is Quality. Having targeted a niche group, Zicom needs to work on the quality of its product improving the reliability and durability of the product. The negative reviews of Zicom clearly suggest the need to improve the quality of manufactured goods. 19 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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Zicom has set-up a factory at Parwanoo, Himachal Pradesh, which has an installed capacity to manufacture 300,000 units per year of all security products. This helps the company save the logistics cost for raw materials that are usually imported from Hong Kong. This factory also gives a benefit in Tax terms. This place of Himachal Pradesh is a tax free zone and helps Zicom gain an edge over others in terms of price strategy. It depends on the company if it plans to give this benefit to the customer or keep it for itself. This cost benefit that Zicom has could be moved towards improving the quality of the product casing and chip cards. The growth in chip technology has also meant reduced hardware costs. Zicom should also focus on setting up R & D lab and management which looks after its innovations and patents for the technology they develop to prevent cheap substitutes from being sold in the market. Other major changes that Zicom should consider are the needs to take initiatives in helping the government understand the need for stringent laws on usage of Electronic security devices with Quality control mechanisms in place. The other areas of growth for Zicom are to work on better technologies and to adjust with the changes in technology. The technology outlook for Zicom in the coming few years needs to be more towards the following trends: 1. In HAS and VDP, the usage of GPRS and 3G technologies for two way video connection with the monitoring centre. 2. Good cameras for better view and wider angle. 3. Phone records with more memory to keep records for longer periods. 4. IP based surveillance to reduce call costs and improve availability. 5. Intelligent monitoring techniques.

The other major challenge which Zicom faces is the need for invoking the need for security by increasing its advertisements and not creating panic in the minds of people. It needs to promote that Security should be a habit and not a necessity. The disadvantages to these advertisements of need for security devices can go in favor of any company but what differentiates the leader from its follower is the brand value based on quality. CMS can be a good positioning factor but Quality is a better positioning factor for Zicom and could mean positive results from its advertisements. This could mean more advertising costs in the initial years but the costs can be recovered by increased sales. One of the best examples of promoting a security need was showcased by Godrej, a competitor of Zicom. This was named the Break-In Challenge. It is a timed interactive game that Godrej put up at various malls in cities across India. Contestants were asked to find various valuables in the most conventional hiding places within a house that Godrej recreated at its stall. Once found, they had to quickly put it all in a dual protected Godrej home safe that could only be opened with a swipe card. The game made the customer realize how vulnerable he was and also how the secure their valuables were in a safe. 20 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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Though this promotion only showcased a use of a safe it got the attention of the consumers and improved the sale during that period. This is an example on the same lines of HAS and VDP promotion. A similar promotion by Zicom could help it gain better brand value.

Special Focus on Customer Relationship Management:

Zicom claims to have 98 % satisfied customers. However, considering some of the reviews it has received from customers as in Section 3, it needs to work hard on streamlining its post purchase service network and also invest into training its staff on better customer interaction. It also needs to focus upon improving the products based on the customer feedback. To improve the post-purchase dissonance Zicom needs to maintain its relationship with the customer and understand them. An annual customer satisfaction report that studies the performance of its product at different stages of the lifecycle and its customer satisfaction levels at those stages can be of immense help in understanding the customer behavior towards Zicoms products. Other important change for Zicom would be better visibility of retail shops and interactive e-Shopping site. The site zicomretail.com is a good site to perform an online sale but isnt to the international standards expected. This could be better designed making it more interactive. The site should also provide a virtual tour of its products and give better methods to interact with the sales team. Live Chat is the most successful method of interaction and the newest form of front end for an organizations customer-relationship department. Every query could be answered real-time and help reduce the time to market. The zicom retail website lacks a live chat option and could be a good addition to the website to reach out to potential customers.

Conclusion:
To summarize the paper, the best market strategy that Zicom should follow for Indian market to maintain a sustained growth curve in sale of its Home Alarm Systems (HAS) and Video Door Phones(VDP) is not just by improving the offering value by improving its quality but also by raising its promotion and brand value. The company should also look at methods to reach the customers better either via internet methods or via more advertisements. The company should also invest in improving its R&D team to come up with better products and be accustomed to the quick changes in technology. This would not only improve its market position in this highly unorganized market but would also make it less susceptible to cheaper substitutes that flood the market.

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Annexure I
Source: Zicom financial reports

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Annexure II
Source: CRISIL reports

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Annexure III
Customer Product reviews (Source: Mouthshut.com)

1. Video door phone

Zicom is known for Electronic Surveillance Products. However, one of the Products I have been using i.e. the Video Door Phone is pathetic. The products power unit smokes out and the product becomes completely defunct. I have replaced the unit earlier when (luckily) it was within warranty. And they mentioned that the unit is not robust and becomes defunct if there is power fluctuation. While most of the other appliances in the home are safe and sound over the years, only the Zicom Product suffers such failures. The service engineers are also pretty much aware of the problem, but the company seems to be sleeping. And, now that my warranty is over and there is no annual contract (AMC) in place (as confirmed by the Service Engineer), the company asks for Rs. 450/- for just a visit and Rs. 2500/- to replace the unit. Who would pay Rs. 2500/- year after year for a flawed product? Needless to say, Service charge plus replacement cost comes out to be 30% of the product cost. I hope other users would take notice of this bad product quality perspective before making a purchase decision. This product is sturdy and good for a start-up. It is like buying your first car. You get comfortable with driving etc and then upgrade yourself. This product is exactly like that. I had this and then I upgraded myself to the colour model from the same company. The product is definitely extremely useful. You can check who is come to the door without going up to the door all the time.....so you save so much trouble for people who are old. So many people coming every now and then. courier guy, phool wala, bhajiwala, machiwala. My Father-in-law has Polio and he just checks who is there at the door without going upto the door and speaks to the visitor through the video door phone itself......it is kept at a place where he spends maximum time of the day.

2. Home Alarm System

I am sure when someone takes time out to write a review he has either gone through a very good experience or very very bad experience. In my case I am writing my first review on any product so far. Zicom. The features are excellent the product idea is great. Its just that it can spoil ur day in a second. Following are reasons for which I DO NOT recommend this product unless you want to get it fixed before you buy..... i. False alarm: You want to have this system because u r not in the house most of the time. And in this case when you get false alarm u have to get panicked and leave your job and come back to see that its a false alarm. ii. Worst customer service: When you register complain(s) for false alarm u DO NOT expect the engineer to come and fix the problems unless it has repeated at least 3-4 times or you start barking at them. BUT 24 Zicom Retail By Ramprasad Peesa & Avinash Ramnath

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u r assured every time that someone will attend the complain in 24 hrs. I believe they use clock of some other galaxy. iii. BUG in the product: When someone dials your house number which is connected to the Zicom unit then if the call is not picked up in 8-9 rings, the zicom system itself picks up the call and sends back a fax tone sound. U dont want ur guests to get annoyed with this bug. Zicom team is still trying to address my complain since last one year!!? I mean couple of times ppl came and said they will escalate this issue as its out of their scope etc. The basic reason for fitting a security system is to feel safe. But here you do not know if you should activate the alarm system when u r going out especially out of town as you do not want to spoil your mood by the false alarm. You might think this is a small issue. But NO there were already two thefts in my house and every alarm i receive I want to take it seriously. SO I am looking out for a product that is a real CHALLENGE to zicom...please let me know if you know of any.

Other Testimonials (Source: Zicom Website)

"First of all thank you for the support and co-ordination which Mr Ravi and ZICOM team did when burglary happened at my home on 28May11 @2:15AM. His co-ordination is really appreciated, and I am sure that helped in reducing the losses. Theft entered into my locked home premises on 28th May 11. At that time I was going to my home town in Andhra. I have received call at 2:16AM which is immediately, after the SMS at 2:15AM, from Mr Ravi. This really helped us to alert our neighbors. Though thefts entered into house, broke doors, locks and made mess, the call from Mr Ravi along with my neighbors support helped in preventing further losses which could happen to electronics goods. I really appreciate the kind of co-ordination Mr Ravi did by calling me multiple times and trying to reach me & alerting us. " - Gopi Rudra

"I would like to place on records that after sales services rendered by Zicom is the best is the industry. The policy and the standards set by you for installation and maintenance is systemic and meticulous. We congratulate you on your success and wish you all the best for your future growth." Sebastian Serrao

"I would like to thank u for alerting me at the right time, as soon as I recd. the phone call from you, I went to my diagnostic centre and I saw that my shutter locks were broken n the shutter was half open, I checked inside superficially but I grossly think everything is ok , they must have run away as soon as the alarm started ringing. I was literally shaken by the incident. I once again want to thank u personally and thank to the Zicom Systems for their promptness. " Amal Parikh

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Annexure IV Source : www.esai.com, Electronic Security Association of India

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