SECTORAL ANALYSIS

OF REFRIGERATORS

Presented by: Sheetal Kumbhare

A chilled glass of water, a large mug of beer, a tall glass of

refreshing laaemonade, a nice bowl of cold salad and a big helping of a frozen dessert. Summer dreams are made of these. But ever imagined what would happen to those dreams if not for a big, vertical, rectangular box called the refrigerator?

SECTORAL ANALYSIS OF REFRIGERATORS

Before the invention of the refrigerator, ice houses were used to provide cool storage for most of the year.

History

At the start of the 20th Century ice boxes were used to store the food products.

The first refrigerator to see widespread use was the General Electric "MonitorTop" refrigerator introduced in 1927 .

Gradually with the development of technology different types of refrigerators are manufactured and today it is one of the most common household .

Ice boxes

Monitor-top refrigerator of GE

BACKGROUND
Refrigerators have been manufactured in India since 1950s. Till the 1980s, players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the market. Earlier, the white goods sector was categorized as a luxury goods industry and was subject to oppressive taxation and licensing.The situation changed after the liberalization of the Indian economy in the early 1990s. Post-liberalization, a number of foreign companies entered the market and many domestic players also diversified into refrigerators. BPL and Videocon who already had a presence in the consumer electronics market, leveraged their strengths to enter the durables sector.

Present Scenario In India, refrigerators have the 2nd highest

aspirational value of all consumer durables, with

the exception of televisions. This accounts for the high growth rate of the refrigerator market.

Refrigerators are presently being manufactured in two basic designs which are referred to as Direct Cool (DC) and Frost Free (FF) refrigerator. The direct cool segment continues to dominate Indian refrigerator market compared to more expensive frost-free models. The growth in this segment though marginal, has been driven by factors like availability of low priced models as due to competitive pricing and a growing middle
class.

 Indian refrigerator market is valued at Rs4000 crore

OVERVIEW

Refrigerators hold only 16% of consumer durable market

that is valued at around Rs. 20,000-25,000 crore in India. Its market is growing at the rate of 7-8% annually. Refrigerators constitute the second largest product segment within the Indian consumer durables sector in India, with an estimated annual turnover of Rs 39 bn during FY2005 with an estimated sale of 4.1m units. Projected sales for the year 2007-2008

INDIA V/S GLOBAL

The penetration of household refrigerators in India, the fifth largest consumer durable in terms of penetration, is 13% compared to well over : 90% in Malaysia, Australia, Singapore, Hong Kong and Korea; around 80% in Thailand; close to 40% in Philippines and China and 20% in Vietnam and Indonesia. When you compare the annual commercial sales of AC and refrigeration equipment in the US at US $ 200 per capita and in China at US $ 3 per capita with a dismal US $ 0.25 per capita in India.

Strengths 1. Presence of established distribution networks in both urban and rural areas 2. Presence of well-known brands 3. In recent years, organized sector has increased its share in the market vis a vis the unorganized sector.

SWOT

Opportunities 1. In India, the penetration level of white goods is lower as compared to other developing countries. 2. Unexploited rural market 3. Rapid urbanization 4. Increase in income levels, i.e. increase in purchasing power of consumers 5. Easy availability of finance

Weaknesses 1. Demand is seasonal and is high during festive seasonal 2. Demand is dependent on good monsoons 3. Poor government spending on infrastructure 4. Low purchasing power of consumers Threats
1. Higher import duties on raw materials imposed in the Budget 2007-08 2. Cheap imports from Singapore, China and other Asian countries

Types of refrigerators :

On the basis of technology the refrigerators are of two types : (a) Direct cool (b) Frost free Direct cool refrigerators are the low range/price products and frost free refrigerators are the premium products with advanced features. Direct cooling ones are mostly single door refrigerators and frost-free refrigerators are mostly double and multiple doors.

 Also on the basis of capacity the refrigerators

are of different types: Mini (50 to 100 ltrs)- Right for a bachelor Small (170 to 200 ltrs)- Right for a couple and a small kitchen Medium(200 to 450 ltrs)- This is for nuclear household, not too small nor too big. Large (450 to 800 ltrs)- This is for big home and big budget

Category Wise Market Share (Units)

Frost Free 29%

Direct Cool 71%

Categoy Wise Market Share (Revenue)

,Frost Free 43% ,246.74

,Direct Cool 57% ,327.37

Product Hierarchy
Need Family Convenience Product Family Consumer Durables Product Class Home Appliances

Product Line Refrigerators

Product Type Direct Cool, Frost Free Brands LG, Whirlpool, Samsung, Godrej, Kelvinator SKUs 165ltrs, 180 ltrs, 200 ltrs, 350 ltrs

MARKET SHARE ANALYSIS2001-06

Performance Measures
Parameters Purchase exp. At the store Rerigerator Industry 61 LG 60 Samsung 54 Whirlpool 65 BPL 66 God rej 58

Billing process
Delivery process Product usage & performance After sales service

55
57 65 68

58
53 64 76

49
56 66 64

58
57 73 64

52
59 63 67

60
58 62 63

Customer schemes and promotion Advertising & comm.

47 53

44 59

47 53

44 53

49 49

49 52

Customer Satisfaction Index

Customer Satisfaction Index
Electrolux Videocon Whirlpool Godrej BPL Samsung LG 46 47 48 49 50 51 52 53 CSI Score

CSI Score

MARKET SHARE OF VARIOUS BRANDS IN 2006-07

29%

30% LG SAMSUNG WHIRLPOOL OTHERS

25%

16%

Loyalty Segment
Industry Average Electrolux Whirlpool Godrej BPL Videcon LG Samsung 0% 20% 40% 60% 80% 100% High risk Trapped Accesible True loyals

MAJOR PLAYERS
refrigerator industry has become highly competitive as a number of brands have entered the market and the consumer has a wide choice.

Company
BPL Limited Videocon International Limited LG Electronics India Limited BPL

Brands
Videocon, Electrolux , Kelvinator and Allwyn LG

Samsung India Electronics Limited Samsung Whirlpool of India Ltd Whirlpool

Godrej & Boyce Mfg. Co. Ltd.

Voltas Limited

Godrej
Voltas

Market players taken for analysis

LG Electronics

Whirlpool India

Samsung

REFRIGERATORS -Your key to healthier lifestyle

COMPANY HISTORY

Established in 1997, LG electronics India Pvt. Ltd

operates in India through a wholly owned subsidiary LG electronics, South Korea.

LG set up a state-of-the art manufacturing

facility at Greater Noida. This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit.
companies in the country that has an internal Energy, Environment, Safety and Health Department. This function caters to activities like Energy Conservation, Environmental Issues, Work Place Fire and Safety as well as Occupational Health for the benefit of the employees.

Besides all this, LG India is one of the very few

 LG India has also been taking on a slew of

initiatives as a part of Corporate Social Responsibility. LGEIL is proud to have adopted about 24 villages around our Greater Noida facility. LG extends Free Medical Care, which comprises of free check ups and a free distribution of medicines on a daily basis. Its positioning statement is high volume and lower margin.

 Its vision was to become a 'Health Partner'

for its consumers worldwide and therefore formulated its corporate philosophy to make peoples' lives better, convenient and healthier like refrigerators have the 'PN System', which preserve the nutrition in food. The company has achieved a turnover of Rs 7500 crore in 2005. LG India has also been taking on a slew of initiatives as a part of Corporate Social Responsibility. LGEIL is proud to have adopted about 24 villages around our Greater Noida facility. LG extends Free Medical Care, which comprises of free check ups and a free distribution of medicines on a daily basis.

LG REFRIGERATORS
Special feature to preserve nutrition with

green ion door cooling refrigerators. LG refrigerators has been rated 5 star by Bureau of Energy Efficiency (BEE). Recently they have launched the first TVRefrigerator in India

TYPES OF PRODUCTS SEGMENTS IN REFRIGERATOR

1. FROST FREE REFRIGERATORS

2. DIRECT COOL REFRIGERATORS

3. SIDE BY SIDE DOOR REFRIGERATORS

TV-DIOS REFRIGERATORS

FROST FREE REFRIGERATORS

Frost forms when water vapor hits the cold coils. The water vapor condenses - turns to liquid water. When the water condenses onto the coils, it immediately freezes and forms frost. After certain intervals, the timer turns on the heating coil which is wrapped among the freezer coils. The heater melts the ice off the freezer coils. When all of the ice is gone, the temperature sensor senses the temperature rising above 32 degrees Fahrenheit and turns off the heater. 280 471 litres are available. There are 9 models available in this segment.

Called as Intellocool refrigerators

TARGET: Middle and middle upper class people.

PRICE: The price range varies between Rs.14450 to Rs.39880 CDV:
4 /5 STAR Rating (BEE) Works without Stablizer

Intello Compressor

 Called as INTELLO COOL Available in the range of 175litres

DIRECT COOL REFRIGERATORS

To 270litres. There are 14 models in this segment. TARGET: Middle and middle upper class people.

PRICE: The price range varies between Rs.6500 to Rs.11800 CDV:

4 /5 STAR Rating (BEE) Works without Stablizer

Intello Compressor

SIDE BY SIDE REFRIGERATORS

Two doors side by side. One side refrigerator and

other side freezer with through the door ice / water dispensers. 580 750 litres are available. There are 5 models available in this segment. Refrigerator with TV & Radio is also available. TV-DIOS LG India launched the Worlds First TV Refrigerator TV DIOS with a 13-inch hidefinition TFT LCD TV installed at the center of its door. The 600 litres TV DIOS also has a built-in radio tuner providing access to FM stations and is supported by built-in speakers. It has an astounding silver nano-antibacterial and nanocarbon deodorizing technology.

Called as Intellocool refrigerators

TARGET: Middle Upper and Upper / premium class people.

PRICE: The price range varies between Rs.59900 to Rs.130000

CDV:
4 /5 STAR Rating (BEE) Works without Stablizer

Intello Compressor Dispenser

PROMOTION / MARKETING STRATEGY

Like the marketing of FMCG products, LG's marketing

was heavily dependent on advertising. Its ad spend to sales ratio at 5-6% of sales was very close to that of FMCG giant HLL. PROMOTION: The campaign, 'Cricket First,' which featured captains of the 14 teams participating in World Cup 2003, highlighted the spirit of cricket with a tagline, 'Captains announced that it would spend around Rs 400-500 million on advertising during the World Cup. ADVERTISING: Abhishek Bachchan, the brand ambassador for LG promotes the LG INTELLO COOL range of refrigerators.

of Cricket World, for the Captain of Consumer Electronics and Home Appliances.' The company

Threats to the company

Despite the fact that refrigerators have immense utility to housewives and provide a solution to avoid food wastage, the penetration level is still below 20% and its market is growing at a very small pace. This may be because: People in small towns and rural areas do not consider it as a necessary product and are unaware of its utility value. Non-availability of power.

OPPORTUNITIES Untapped market of rural India can be explored.

RURAL & URBAN PENETRATION IN INDIA 2005

CRITERI A

RURAL HOUSE HOLD 000

11014

PENETR ATION %
8%

URBAN HOUSE HOLD 000

29515

PENETR ATION %
48%

TOTAL HOUSE HOLD 000

40529

PENETR ATION %
20%

REFRIGE RATORS

RURAL MARKETING
LG India- tripled the number of its retail &

distributor outlets in rural areas from 2004 to 2006 It also tapped local forms of entertainment like annual haats and fairs and made huge investments in infrastructure for distribution and marketing.

Rural Marketing - Promotion Support initiatives of LG

Mobile Van at Kasargod

Exhibition at Rajamundry

Cookery Classes at different locations for Rural Housewives

1000 In Store Demonstrators at Dealer counters in Rural Cities

Road Show at Satna

History

1911: founded by Louis Upton 1987: Whirlpool tied-up with Sundaram Clayton Ltd. of India to form TVS Whirlpool Ltd. 1995: Whirlpool Corp. acquired majority of stake in the TVS Whirlpool Ltd. 1996: Whirlpool Washing Machines Ltd. and Kelvinator India Ltd. merged together to form Whirlpool of India Ltd .

 2003:

A new mission statement of "Everybody creating loyal customers for life" was adopted. Whirlpool Corporation acquires Maytag and become the Worlds largest white goods company.

2006:

 Success

mantra of Whirlpool :

Know a customer a Be a customer Serve a customer To share cust.

Knowledge & insight Who are the customers How to treat them How to add value How to create brand loyalty Creating customer touch-point value Sharing empathy

Whirlpool is transforming into a completely customer-centered company where the customer lies in the core of every of our functions . The transformation is made up of five elements:
Market leadership through customer loyalty Innovation Diversity with inclusion and core competencies Passion for customer excellence Operational excellence Whirlpool has swiftly moved from being a World Class Manufacturer to a World Class Marketer using the brand-building framework.

The pervasive vision of Whirlpool is Every Home, everywhere, with pride, passion and performance .

Vision and mission

This rests on the pillars of innovation, operational excellence, customer-centric approach and diversified talent. Market share and growth rate : Currently Whirlpool commands 25% of the domestic refrigerator industry and trying to achieve 27% by this year.

 Segmentation

The segmentation variables for refrigerator market are

of market :

Age/ lifecycle stage Marital status: eg: Refrigerator is a

very necessary household for newly married people. Social class and income. Occupation : eg: Instant cool feature is convenient for working women families.

Targeting and positioning :

Whirlpool

is targeting the women of every Indian families and accordingly it has successfully positioned itself as the best home-maker in the world. The positioning statement is You and whirlpool the The USP for the frost free segment is its 6th sense cooling system which automatically adjusts the level of cooling .

worlds best home maker

 The

products in refrigerator category includes Direct cool : Low range products. Product variants are named as Product variants are named as

Products

Genius. Frost control : Medium range products. fusion. Frost free: Premium and high capacity
products. Product variants are named as Professional, ice bergs ,

masterminds and delight.

 Whirlpool refrigerator Fusion is available in two models which is designed to operate even with an irregular power supply, which is a common problem in many Indian cities. Whirlpool has introduced new Delight frost-free refrigerators in eight models in 230-L, 260-L and 300-L capacities. A unique feature is LED lighting, a white light that is evenly distributed and optimally positioned to enable the contents of the refrigerator to be clearly visible even when it is fully loaded.

PROMOTION and ADVERTISING

 Promotional

Whirlpool spends six to seven times less in promotion and advertising than the competitors like LG . They have been spending the money smartly. Instead of giving ads every day, they are skewing their ads towards weekends when the customers go to shops and make enquiries. Their ads are frequently coming on days such as Dussehra, Karva Chowth, Dhanteras, etc

strategies :

and advertising

Also, they have done some smart negotiations with the major dailies and magazines by taking a twelve-month contract and blocking the primary positions like front page or back page. So they deal with competitors with greater muscle power in terms of money through smart buying and smarter planning. Regarding ads. the brand ambassadors are Ajay Devgan and Kajol

 Strategies They

season:

for the coming festival

are promoting the sixth sense technology which they are saying that a womans sixth sense

captured by technology.
For

the coming Diwali season the message is magic chalao dream

home sajao

Samsung India is the hub for Samsungs South West Asia Regional operations. Responsible for Samsung business in Nepal, Sri Lanka, Bangladesh, Maldives and Bhutan besides India.

Samsung India commenced operations in India in December 1995, today enjoys a sales turnover of over US$ 1Bn in just over a decade of operations in the country. Samsung has been the "fastest growing brand in the world. Headquartered in New Delhi, Samsung India has a network of 20 Branch Offices and 40 Area Sales Offices located all over the country. " With a total brand value estimated to be US$10.8billion, Samsung now ranks 25th in BusinessWeek's Top 100 Global Brands

Samsung (2007-08)
Samsung has launched nine new refrigerator models, both frostfree and direct-cool. Samsung, which is the market leader in the over-350 litre frostfree refrigerator segment, is seeking to consolidate its position by launching three new, advanced, feature-rich models in 375 litres, 400 litres and 704 litres in the Indian market. The company currently has a range of 42 frost-free models priced between Rs13,000 and Rs 1.5 lakh. In the direct cool refrigerator segment, the company has extended the category by introducing two new models of 180 litres and 195 litres. Expecting to expand refrigerator channel by 25 per cent this year. Targeting a market share of 18 per cent in the refrigerator segment this year from 15.8 per cent last year.

 Samsung plans to reach out to more tier-II cities. Showcasing products in 135 cities this year against 120 last year. The South had emerged as a key contributor to

the company's overall revenues.

The share of Southern sales has gone up from 24 per cent to 31 per cent, equaling the

contribution from the Northern States.

In a bid to cash in on the growing interest in the South, the company has lined up 11

`Dream Home' roadshows in the region this year. The number of `brand shops' would go up by 30 per cent from 82 currently.

TV, Video & Audio

TV

PRODUCTS

Information Technology Products

Monitors

DVD
CAMCODER Audio Home Theater MP3

Hard Disk Drive

Optical Disk Drive Laser Printers Fax

Home Appliances
Washing Machine Refrigerator Microwave Oven Air Conditioner

Mobile Phones
GSM CDMA

 Samsung positions itself as technology leader and not only as a

Positioning

volume player and a price warrior.

Strategy is value driven, not price driven. Expecting leadership on the basis of top quality, leading edge

technology, priced competitively and backed by strong after sales service," home electronics.

Global CEO Yun Yong's vision: "We want to be the Mercedes of

The drivers this time at Samsung -- in fact, the company has put

these well above the traditional 4 Ps of marketing -- are design and innovation.

"Good designs and innovative technology will be the most

important differentiator for Samsung from competition "If you are able to deliver the latest technology at an affordable price, the consumer will not be willing to go back to outdated technology

 How many customers actually pay attention to

differentiation on the basis of technological innovations such as Twin Cooling or Silver Nano (for refrigerators), or even one based on design?
out the key differentiators.

The sales staff at the showrooms are not able to point To tackle this issue, last year, the company started the

Samsung Marketing Academy, which conducts regular training programmes to educate the sales forces, shopowners and company employees on the company's technology and design, how it is different from what competitors are offering, and how to better explain the difference to the consumer. lifestyle products, the company is hoping to provide customers a more informed buying experience, which will translate into higher sales.

By equipping the salespeople to sell knowledge-oriented

Technology and Innovations

Twin

Cooling System- uses two independent evaporators that provide optimum level of cooling to the refrigeration compartment and the freezer.
with three cold air outlets-at the back and on the right and left sides of the refrigerator interior, resulting in all round cooling action. refrigerator, achieve 99.9% removal of bacteria and create the perfect environment to keep food super fresh.

The i-Cool System- is an intelligent cooling system

Silver Fresh Technology- The Silver ions inside the

Direct Cool Frost Free

Side By Side

Direct Cool
Target : Middle Class No. of models : 6. Available both in 180/200 ltrs. capacity. Price Low price due to high competition Rs.8,700 to Rs.10,900

Frost Free Refrigerators

Category

No. of Models 6

Price

Frost Free (Less Than 350 L) 6 Frost Free (Greater Than 350 L) 3 Frost Free

Rs.13,000-Rs.22,000

Rs.29,000-Rs.56,000

Rs.38,000 & Rs.56,000

(Bottom Freezer)

Side By Side
Target: Premium Product

Targeted at Niche Market.

No. of Models: 13
Capacity: 545 Ltrs to 880 Ltrs Price: Rs. 56,000 Rs. 1,41,000

ENRICHING THE RETAIL EXPERIENCE To display Samsung products in a more lifestyle ambience and to communicate the product benefits in a more interactive manner, Samsung India has set up a widespread network of Samsung Digital Worlds, Digital Homes and Digital Plazas all over the country.

The Samsung Brand shop network complements the over 8500 retail points for Samsung products located across the length and breadth of the country. Samsung plans to continue enhancing its penetration levels in the country to reach out to more and more Indian consumers

RETAINING CUSTOMERS
Samsung considers 'After Sales Service' as a key differentiator for Samsung products. In order to deliver prompt and easily accessible service, Samsung India has set up a widespread network of company owned as well as Authorized Service Centers to service its customers.

The Samsung Service Plazas, as the Company owned Service Centers are called, are a first in the industry.
.

The Samsung Service Plazas serve as a one-stop shop for Samsungs walk in customers. Customers also get a chance to see the Samsung range of products and interact with Samsung product specialists to know more about the companys products and services.

After Sales Service

Speed, Smile, Sure
is the motto for Samsung Service, as the Company seeks to satisfy more and more of its customers with prompt and accurate service. A Service Helpline number gives access to Samsung Service throughout the country. Samsung India organises a Free Service Camp on an All India basis, every year, for proactively reaching out to customers and servicing their Samsung products.

10 second to loose a customer, 10 years to gain them back forms the guiding principle for Samsung Service
Team as it strives to satisfy the growing expectations of Indian customers.

Promotions

Future Scenario
With easy availability of finance, emergence of double-income families, fall in prices due to increased competition, government support, growth of media, availability of disposable incomes, improvements in technology, reduction in customs duty, rise in temperatures, growth in consumer base of rural sector, the consumer durables industry is growing at a fast pace. Given these factors, a good growth is projected in the future, too.

The penetration level of consumer durables is very low in India, as compared with other countries. This translates into vast unrealized potential.

Demand and Penetration Level of White Goods In India