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Table of Contents:
Porter’s Model
Revenue Mix
Performance measures
STP
4 P’s
• Competitors Strategies
• Recommendations
A Lifestyle Statement
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Videocon Industries
Corporate Profile
Things changed in 2005 when Videocon merged its oil subsidiary, petrocon, in
to the flagship VIL (Videocon Industries Limited). Now it has a balance sheet
that has the combined number both consumer electronics as well as oil. It is
clear that this was primarily done to use oil revenues to shore up the sagging
consumer electronics business.
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Consumer Electronics, Home Appliances & Compressor manufacturing in
India
Videocon enjoys a pre-eminent position in terms of sales and customer
satisfaction in many of our consumer products like Color Televisions, Washing
Machines, Air Conditioners, Refrigerators, Microwave ovens and many other
home appliances, selling them through a Multi-Brand strategy with the largest
sales and service network in India. Refrigerator manufacturing is further
supported by our in-house compressor manufacturing technology in Bangalore.
Videocon has the largest distributed manufacturing base across India – 12
facilities. It has the Capacity to manufacture 4 million CTVs, 2.5 lacs washing
machines, 1 mn. DVD players, 4.8 mn refrigerators.
Display industry and its components
With the Thomson acquisition Videocon has emerged as one of the largest
Color Picture tube manufacturers in the world operating in Mexico, Italy,
Poland and China, continuing to lead through new innovative technologies like
slim CPT, extra slim CPT and High Definition 16:9 format CPT.
LOGO LOGIC
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This is the new Videocon symbol. It reiterates the ethos of a company dedicated
to maintaining the highest international standards of excellence through quality,
technology and innovation. For over a decade now, Videocon has been bringing
the latest and very best in Consumer Electronics and Home Appliances.
Successfully adapting the best of international technology to suit Indian needs,
and crafting it to improve the quality of life – as million of satisfied customers
will agree.
The new symbol of Videocon asserts its passion for global impact, and the two
‘E’s on either side represent the Group’s wide spectrum of interests ranging
from ‘Electronics to Energy’. Along with the steely glint, this communicates the
group's global ambition, its strength, sterling credentials and innovative drive. A
symbol that proclaims a paradigm shift. A sign that represents the new force
that is Videocon. Thus recapitulating our principle of reaching out and touching
the lives of millions of people Worldwide.
Vision and Mission:
Videocon would like to derive optimum value out of CRT assets. In case of TVs
Videocon intend to be present in the global brand space through Daewoo
acquisition and build on strong domestic position especially in the emerging
market of the world where the demand is being lead by increasing propensity of
erstwhile non consumer to consume.
Videocon also intend to build further on the OEM route. It already has its
presence in the European market through operation base at Anagni in Italy,
where Videocon will sell 1.5 mn TV sets of Plasma LCD and CRTs
Technologies to complete its TV vertical, Videocon will be present in the FPD
(Front panel Display ) space, by setting a plasma panel line in Italy.
Growth Stage (1984 to 1986)-The industry was at the nascent stage where the
Black & White Television was pre-dominant. However the sale of CTV
increased.
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The MNC’s entered into India resulting in a greater degree of penetration. They
brought lot of products having a lot of features.
Growth (1995 to 1999) - The CTV Market grew at a very fast rate. The demand
for CTV s increased Manifold with aggressive marketing techniques, resulting
in increased penetration and cut throat competition between domestic players
and MNC’s. The growing demand for flat CTVs was propelled by the declining
price differentials between FCTV and CCTV segments.
Maturity Stage (2000 to 2002-03) - The market of FCTV and CCTV were
consolidating. After 2002-03- Cycle Continues the Product Life Cycle has been
going through a lot of Stages where before the decline of the product, a newer
version has been launched in the market and the PLC has gone through the
phases again. These innovations include LCD, Plasma in the past. Now HDTV
has also been launched and that has led to a rising PLC.
Industry
Suppliers Buyers
Competetitors (Buyer
(Supplier
(Segment rivalry) Power)
Power)
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Substitutes
(Threat of
substitutes)
In order to understand the industry better, we analyze the industry using Porter’s
Five Force Model-
- Threat to entry
- Rivalry of among existing firms
- Bargaining power of buyers
- Bargaining Power of Suppliers
- Threat of Substitutes
Threat to Entry-
- Entering the CTV market isn’t very easy. One of the most important features
needed is a good distribution system which isn’t something that can be
developed overnight.
- There is strong competition among the current players. The main players
being LG, Samsung, Onida, Videocon, Philips, Sansui. Some of the regional
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players are- Hyundai and Haier are new entrants in the CTV space in addition
to a number of small regional players.
- This increased competition has ensured that advertising costs are an integral
part of the players’ total cost. A lack of product differentiation means that price
is a competitive feature that intensifies rivalry. The highest price reductions
during 2002-03 to 2005-06 were in the 20inch and 21inch CCTV category.
- With the future being in LCDs, this market is likely to see price reductions
future.
- The TV market today is a consumer’s market where the consumer has the
upper hand with him having the power of choosing from a variety if brands.
- This bargaining power of the buyer has forced the players to offer credit
facilities on sale, to provide lower EMIs and excellent after-sales service.
- The intense dealer competition also benefits the consumer in terms of prices
and offers available.
- Inventory carrying costs for television companies are high. This is a boon for
the consumers as it translates into higher bargaining power for the consume
Threat of Substitutes-
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- However if the television on considered to be a style statement and a lifestyle
statement, then consumers will seek to keep upgrading the type and the model
of their television sets.
- PCBs (Printed Circuit Boards) & CRTs (Cathode Ray Tube) are key raw
materials in the production of CTVs.
- CRT accounts for 46-48 per cent of the total raw material costs of a CTV.
PCBs and housing components account for 33-39 per cent of total raw material
costs.
- Domestic CPTs prices tend to follow Global price trends. Therefore the
suppliers do not have much of bargaining power in this regard.
VIDEOCON'S STRATEGIES
Multi-brand strategy
Videocon International was the first Indian company to adopt the strategy of
multi-brands. Apart from its mid-priced brand Videocon, the company now
hawks Toshiba, a premium brand, and the low-priced brands Akai and Sansui.
The multi branding technology paid off as Videocon managed to hold on to a
combined market share of around 19.6 percent, with LG at 25.9 percent and
Samsung at around 13.8 percent.
Overall, the shift in the power to trade is probably one of the defining
developments. It is important since the TV companies themselves have taken it
seriously and embarked on crafting longer-term strategies to accommodate this
development. The effectiveness of their strategy and the responses of the other
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players promise to deliver a few more years of enterprising developments in the
Indian TV market.
Backward Integration
Performance Measures
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SEGMENTATION, TARGETING &
POSITIONING
(STP)
SEGMENTATION:
Market segmentation is the process in marketing of dividing a market into
distinct subsets (segments) that behave in the same way or have similar needs.
Because each segment is fairly homogeneous in their needs and attitudes, they
are likely to respond similarly to a given marketing strategy. They are likely to
have similar feelings and ideas about a marketing mix comprised of a given
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product or service, sold at a given price, distributed in a certain way and
promoted in a certain way.
The process of segmentation is distinct from targeting (choosing which
segments to address) and positioning (designing an appropriate marketing mix
for each segment). The overall intent is to identify groups of similar customers
and potential customers; to prioritize the groups to address; to understand their
behavior; and to respond with appropriate marketing strategies that satisfy the
different preferences of each chosen segment.
Benefit Segmentation:
Conventional, Flat screen Slim, LCD, and Plasma can also segmented on the
basis of benefits that an end consumer would receive from them.
User Status:
TV market can be classified into non users of TV and potential users in term of
graduating to a higher segment like slim, LCD,Plasma from basic conventional
TV
In premium segments like flat screens and FDPs the growth in sales has been
many times the industry growth. More importantly, high end product sales are
no longer restricted to metros. Consumer in tier-2 cities seems to be as evolved
in lifestyle needs. The consumer profile, too, has changed. Higher disposable
incomes, greater aspirations and younger demographic have increased demands
for the technologies. And Videocon is targeting this segment.
POSITIONING:
Positioning has come to mean the process by which marketers try to create an
image or identity in the minds of their target market for its product, brand, or
organization. It is the 'relative competitive comparison' their product occupies in
a given market as perceived by the target market.
Once the competitive frame of reference for positioning has been fixed by
defining the customer target market and nature of competition, marketers can
define the appropriate points-of-difference and points-of parity associations.
Points of Parity (POPs) are associations that are not necessarily unique to the
brand but may infact be shared with other brands. They represent necessary-but
not necessarily sufficient-conditions for brand choice.
Videocon's Points-of-Parity are good quality Picture and good sound.
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Points-of-Difference (PODs) are attributes or benefits consumers strongly
associates with a brand, positively evaluate, and believe that they could not find
to the same extent with a competitive brand.
Videocon's POD is the quality product with low cost.
With the strong backward integration Videocon can provide the products with
low cost.
4P’s
The 4Ps includes the Product, Price, Place and promotion.
Product Mix
Product mix is the set of all product and items a particular seller offers for sale.
Product mix consists of various product lines.
The width of a product mix refers to how many different product lines the
company carries. The Videocon television has product mix width of five lines.
I.e. plasma, LCD, Slim, flat and Conventional.
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The length of a product mix refers to the total number of items in the mix.
I.e. for the line of LCD the length is 2 as it has two items 50” PDP and 42” PDP.
The depth of the product mix refers to how many variants are offered of each
product in the line.i.e. For LCD the depth will be 2. As Videocon is offering
only one product in 50” PDP and 42” PDP.
The three product-mix dimensions permit the company to expand its business in
three ways.
It can add new product lines, thus widening its product mix.
It can lengthen each product lines.
It can add more product variants to each product and deepen its product mix.
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Plasma LCD Slim Flat Conventional
Length
2 5 2 3 3
PLASMA
50" PDP
Integra 50
10000:1 Contrast Ratio
3:2 & 2:2 Pull Down
HDMI Compatible
3-D Video Noise Reduction
PC Input
42" PDP
16.77 Million Color
10000:1 Contrast Ratio
3.2 & 2:2 Pull Down
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1500cd/m2 Brightness
HDMI Compatible
3-D Video Noise Reduction
LCD
The flab’s are out and now technology has switched over to sleek and slim
products, LCD being the prominent amongst them. LCD technology is the
recent breakthrough in consumer electronics and because of its esteemed
advantages this segment is growing day by day.
Videocon are launching this range under the sub brand “Integra”.
“INTEGRA” term indicates the integration of various systems connectivity with
LCDTV.
This is an integration of best sound quality and excellent picture quality.
What is TFT-LCD?
Meaning of this term is Thin Film Transistor–Liquid Crystal Display. TFT
technology used in this category offers the best image quality in flat panels.
This technology is also called as Active Matrix Technology.
40" LCD
32" LCD
26" LCD
20" LCD
19" LCD
Slim
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The Most significant feature of the Slim & Trim Television is its one kind of
super slim picture tube technology. This has enables us to make the TV 42%
Slimmer.
Slim Picture tube is a product with reduced depth providing the TV and monitor
producers with opportunity to design Slim, flat and stylish TVs comparable to
plasma or LCD panels maintaining Good picture Quality
29" SLIM
21" SLIM
Flat
29" TFT
21" TFT
15" TFT
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Conventional TV
21" FFST
20" CONV
14" CONV
Pricing
The pricing of the Videocon’s various models is as following.
Place
Videocon has its presence all throughout India.
They have their presence in 25 states and each state has at least 2 divisions per
state. In total they are having 78 divisions.Videocon has around 1800 dealers in
India. They are having 96 service centers across India.
Promotional Activities
Brand ambassador
Shahrukh Khan
M S Dhoni
Total spending of 80 crores in 2006 on advertisements.( 35 crores for CTV)
Sponsorship
The group has been deeply involved in supporting sports. Its sponsorship of
cricketing events across the globe underlies its commitment and passion for
sports as well as its goal to connect with a global audience.
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Competitor’s strategies
LEADER-LG
CHALLENGERS- SAMSUNG
Onida
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Onida’s differentiation strategy is based on its brand based advertising rather
than feature based advertising. They used its brand mascot ‘The Onida Devil’
and its punch line “Neighbor’s Envy Owner’s Pride” to create Brand awareness
of their product.
Philips
Philips is known for its consumer insight and empathy. Therefore, their
differentiation strategy includes making technology simple to use.
NICHER-SONY
Leader-LG
It is positioned as a premium brand that pioneers the most innovative
technologies in India.
Challengers - Samsung
Samsung has positioned itself as a brand that brings communication,
entertainment and information in easy to use digital device.
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Nicher- Sony
Sony Positioned as a premium product giving the best quality to cater to the
demands of its high end customers.
Recommendations (Strategies)
Product Strategy
Sales Strategy
Industrial Strategy
Cost Strategy
Product Development
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1. i-TV – web enabled TV at the price of 13,900 with exchange offer for an
older version.
2. TVs With hard disk to store programs.
3. Wall mounted Flat CTVs at the price of 12,990.
4. Aimed at fulfilling needs of customer who can not buy LCDs but prefer
to do away with CTV models which occupy space in living rooms.
5. CTVs with inbuilt set top box
6. Tie up with DTH player and provide annual subscription offer.
7. to provide Direct to home services.
8. Bluetooth enabled CTV.
New Product Line
Introduce CCTVs as it has the demand in several areas like restaurants, airport,
railways stations,banks, hospitals, shopping malls, company offices.
“A lifestyle statement”
People do not see the television as a mere electronic device providing sight &
sound. It has now become an entertainment experience and a lifestyle statement
that people are willing to pay for. Since consumers are ready to shell out money
for a lavish entertainment experience, there is today no limit to the number
facilities that a television can envision of offering. From in built recording to
internet facilities to supreme sound etc. The opportunity for this industry lies in
coming up with new features to the conventional CTV. There is therefore lot of
scope for growth and innovation.
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