IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICIENT Today’s business dynamics is very fast, environment is changing. To understand the changing market behaviour the organization has to do a systematic study. A project behaviour is a scientific and systematic study intended to catch the nerves of the problem or issue with the application of management concept and skills. I was assigned to do a competitive market analysis on retail outlets offering consumer electronics. This report has been complied preliminary in partial fulfillment of the requirement for the award of the degree of management studies programme. I have included a brief introduction about consumer electronics in India and my findings.
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IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICIENT
Today’s business dynamics is very fast, environment is changing. To understand the
changing market behaviour the organization has to do a systematic study. A project
behaviour is a scientific and systematic study intended to catch the nerves of the problem
or issue with the application of management concept and skills. I was assigned to do a
competitive market analysis on retail outlets offering consumer electronics.
This report has been complied preliminary in partial fulfillment of the requirement for the
award of the degree of management studies programme.
I have included a brief introduction about consumer electronics in India and my findings.
HASSAN AL BANNA
PGPRM 2008-10
COMPETITIVE ANALYSIS ON CONSUMER ELECTRONICS
CONTENT pageELECTRONICS IN INDIA………………………………………………….. 2-3
KEY PLAYERS IN CONSUMER DURABLES SEGMENT………………. 4-5
CONSUMER ELECTRONIKS INDUSTRY – A CHALLENGE…………...6-11
ABOUT BIG BAZAAR……………………………………………………
7P ANALYSIS OF BIG BAZAAR…………………………………………
BRAND EXTENSION AND FUTURE POSSIBILITIES………………….
CONSUMER INSIGHT AND PERCEPTION……………………………...
ADVERTISING CONCEPT………………………………………………..
FACTORS THAT SHAPED BIG BAZAAR DURING ITS LIFE CYCLE..
STRATEGIC DECISION TAKEN…………………………………………
SWOT OF BIG BAZAAR………………………………………………….
12-13
14-16
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18-19
20
21-22
23-24
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COMPETITIVE STUDY OF THE COMPANIES
BIG BAZAAR………………………………………………………………
SPENCER……………………………………………………………………
KHOSLA ELECTRONICS………………………………………………….
GREAT EASTERN………………………………………………………….
E-ZONE……………………………………………………………………...
SALES EMPORIUM ……………………………………………………….
CAPITAL ELECTRONICS…………………………………………............
HARMONY…………………………………………………………………..
FUNDAMENTAL……………………………………………………………
LG SHOPPE………………………………………………………………….
SAMSUNG……………………………………………………………………
SONY WORLD…………………………………………………….................
25
26
27
28
29
30
31
32
33
34-35
36-37
38
COMPETITIVE ANALYSIS TABLE……………………………………… 39-40
POSITIVE ASPECTS ………………………………………………………. 41
NEGATIVE ASPECTS……………………………………………………… 42
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ELECTRONICS IN INDIA
Electronics companies in India offer consumer electronics ranging from kitchen
appliances to daily utility systems. As the lives of people are gaining speed everything
from kitchen to offices have been mechanized to make the work easier and quicker. Daily
chores that used to take up hours have now reduced down to just a few minutes of
exercise. We can find a large variety of electronic gadgets catering to every demand of
our day-to-day life. The electronic shops present kitchen appliances like
o Refrigerators
o Microwave ovens
o Oven/toaster/grillers
o Food processors
o Juicer/ mixer/grinders
o Electric chimneys etc
o In varying sizes, prices and brands. To buy Electronic products and accessories In
India, all one needs to do is visit any of the electronic shops or electronics
showrooms and check out the entire range available. Electronic gadgets from
China are gaining popularity for their affordable price range.
Majority of these companies have their own retail electronics showrooms all over India
along with service centers in every city. The electric products for sale are broadly divided
into four categories:
o Mobile Phones - GSM, CDMA
o TV, Video, Audio - Televisions, DVD Player, I pods, Camcorders, Audio
systems, Home Theatre systems, Mp3 Players, Mp4 Players, Digital Still
Cameras.
o Information Technology Products - Computers, Laptops, Monitors, Hard Disk
Drives, CD/ DVD ROM, CD/DVD Writer, Laser printers and laser based multi
functional products, Fax etc.
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o Home Appliances - Microwave oven, Air-conditioner, washing machine,
refrigerator etc.
Each of these electronic products have their own usage and importance in our lives.
Mobile Phones have become a part of our daily wardrobe. Televisions and Audio
Systems; Food Processors and Refrigerators; Washing Machines and even Computers
have become some of the mandatory items in our lives. DVD Players, Mp3 and Mp4
Players have become toys for teenagers and the still older people have Laptops, I-Pods,
Digital Cameras, Camcorders and Home Theatre Systems as their toys. As the population
density in the metros is increasing the buildings are clustering together which is eating up
the space required for everything. The demand for lighter and more compact electronic
gadgets is on a high. Electronics that require minimum space with minimum power
utilization and maximum output are high on the priority levels of the buyers. We can find
top companies like LG, Samsung, Philips, Panasonic, BPL, Sony etc. offering electronic
appliances to suit all pocket and usage needs. The Indian consumer is now aware of the
international standards and the Latest electronic items available in the market. Imported
electronic goods are breaching the Indian electronics market that has shown a huge
appetite to all the imported appliances.
China takes the flagship in this case. The middle class accounting to the mass of the
Indian population swears by Chinese electronic goods that are far more affordable than
their Indian or other international counterparts. Many electronic products manufactured
In China are imported and assembled in the local markets. India is one of the largest
electronic products markets in Asia with all the latest and quality electronics for sale.
Indian electronic companies like BPL; Godrej etc. have shown great potential in the
international market and have been expanding their reign across the globe. The
consumers chose smartly the electronics satisfying their requirements and providing best
value for money.
3
KEY PLAYERS IN CONSUMER DURABLES SEGMENT :-
COMPANIES PRODUCTS
Videocon Industries Refrigerator, Washing machine ,Television, Air conditioner, Oven.
Godrej Refrigerator, Washing machine, Air conditioner, Oven
Whirlpool India Refrigerator, Washing machine, Air conditioner, Oven
Voltas Refrigerator, Air conditioner.
Panasonic Television, DVD players, Air conditioner, Refrigerator.
Sony Television, Music system/DVD players.
Samsung Television, DVD players, , Air conditioner, Refrigerator, Washing machine, Oven.
LG Television, DVD players, Refrigerator, Washing machine, Air conditioner , Oven.
Electrolux Refrigerator, Vacuum cleaner, Washing machine, Air conditioner, Oven.
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Bajaj electronics Geysers, Toaster, Juicer/mixer, Electric fan.
Eureka forbes Vacuum cleaner, Water purifier.
Philips Television, Oven, DVD players, Juice/mixer, Iron.
Onida Television, Oven, Air conditioner, DVD players.
Hitachi Refrigerator, Washing machine, Air conditioner.
Haier Refrigerator, Washing machine, Television, Music system.
Others Sharp- Television, Refrigerator.Blue Star – Air conditioner.IFB- Washing machine, Oven.Morphy- Oven, Toaster, Iron.Sanyo- Television, Refrigerator, Washing machine.Kenstar- Water purifier, Juicier/mixer, Oven.Usha- Fans, Juicer/mixer.Glen- Chimney.
5
CONSUMER ELECTRONICS INDUSTRY – A CHALLENGE
Driven by factors including a rise in disposable income among the rapidly growing
middle class and increasing acceptance of newer technologies and products among the
masses, the Indian consumer-electronics industry reached $3.4 billion in 2005, up 14
percent from $3 billion in 2004, according to iSuppli Corp.
iSuppli projects that the Indian consumer-electronics industry will expand at a Compound
Annual Growth Rate (CAGR) of 11 percent through 2010, when it will exceed $5.8
billion. Figure 4 presents iSuppli's forecast of India's domestic consumer-electronics
industry.
Figure 4: India Consumer Electronics Industry Forecast (Revenue in Millions of U.S.
Dollars)
Source : iSuppli Corp. | Jan 2009
Video boom
"An estimated 90 percent of India's consumer-electronics market is being driven by
demand for video products, including color TVs, set-top boxes and DVD players," said
Jagdish Rebello, principal analyst with iSuppli.
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"iSuppli expects this robust growth to continue through the next few years. The Indian
economy is expanding strongly, with GDP growth projected at a healthy rate of between
7 and 8 percent annually. This economic growth is causing a rise in disposable incomes,
especially among the middle class."
Giving credit
The credit culture also is starting to gain traction among India's middle class, Rebello
noted. Higher consumer confidence is leading to greater credit uptake, which now is at its
highest level in history, resulting in increased sales of consumer electronics products.
Manufacturers are taking advantage of the increased propensity for credit buying by
teaming with financial institutions to offer attractive loans to consumers.
Manufacturing momentum
Domestic manufacturing of electronics within India also is gaining momentum. In
product categories like televisions, DVD players and set-top boxes, there have been
tremendous increases in the proportion of products that are locally manufactured and/or
assembled. Domestic manufacturing is allowing companies to tackle price erosion, and to
gain flexibility in order to cater to local demand as well as to the export market.
However, iSuppli believes that manufacturing in India of digital consumer products, such
as Digital TVs (DTVs), will not increase significantly in the immediate future. India now
lacks the infrastructure for sophisticated electronics manufacturing.
Consumer challenges
Despite the growth projected for the consumer-electronics industry in India, significant
challenges remain for companies targeting the nation's market.
New players are entering the market and existing OEMs and Electronics Manufacturing
Services (EMS) providers are increasing their manufacturing capacity. This is spurring a
glut in supply which, together with aggressive price wars, is adversely affecting the
margins and profitability of companies.
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Furthermore, although the industry has been experiencing healthy growth over the past
few years, the penetration of consumer electronics products has been low, especially in
rural India.
In order to tap the rural markets, which are growing at a good pace, companies will need
to strengthen their distribution networks in semi-urban and pastoral areas. These channel
expansions will be expensive and the Return On Investment (ROI) will be lower,
especially at the start. This will be a significant challenge for players to judiciously plan
their expansions to increase their sales.
Finally, new product launches tend not to catch on quickly among a large portion of the
population in India. This is because of a lack of awareness about products or
technologies, although a consumer base exists for them.
Companies will need to develop ways to popularize these products. Given the Indian
consumers' aversion to new products, this aspect becomes important. Higher uptake of
newer technologies will help companies to improve their top line.
Despite these challenges, India remains an attractive market for multinational players in
the consumer-electronics industry.
Consumer Durables: Industry size, growth and trends
During FY08, volume share of the single largest consumer durable was colour TVs at
30%, followed by refrigerators and air conditioners at 18% and 13% respectively.
Washing machines and other assorted consumer durables captured a share in the total
volume by 5% and 34% respectively.
8
Source : supply Corp. | Jan 2008
Television Sets: Growth in sales
FY08 witnessed the highest number of TV sets being sold when compared to the previous
two corresponding years. As per CMIE, growth in sale of TV sets was slower at 14.3%
during FY08 when compared to a 21% growth in the previous year. On the demand side,
domestic consumption of refrigerators declined by almost 4% between FY05 and FY08,
while imports climbed. The imposition of anti-dumping duties on import of colour
picture tubes will hit the manufacturing costs of CTVs produced in India. Further, the
reduction in the general rate of excise duty (CENVAT) from 16% to 14% as proposed in
the Union Budget for FY09 will not have any effect on the selling price of colour TVs.
This is because the combined effect of rising input costs and a higher interest burden will
negate the effect of such reduction.
Sales of Consumer Electronics Companies
The consumer electronic goods industry underwent a slowdown during the last quarter of
FY08. According to CMIE, the industry witnessed a slower 10.5% growth in the Mar 08
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quarter compared to a substantial 17.4% growth in the previous corresponding quarter.
Domestic consumer electronic companies together reported a subdued sales growth of
almost 17% in FY07, on the back of a robust 40.5% growth in FY06.
Source : supply Corp. | Jan 2007
While the larger companies reported robust growth in sales, it was the smaller ones
whose sales were negatively affected that eventually brought down the industry sales
growth.
Industrial Growth
The industrial sector grew in moderation during FY08 at 8.5% on the back of a
comparatively higher growth of 11.5% during the previous fiscal. The country’s real
GDP grew by 9% during FY08; a tad lower than 9.6% in the previous fiscal.
Source : supply Corp. | Jan 2008
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The consumer durables segment witnessed a fall in production particularly for items
where consumer preferences have shifted towards newer products. Shifting in the
consumption pattern coupled with rising input costs of steel, iron ore etc, may further
affect the production levels of these goods. On the supply side newer variants of
consumer durables on the back of technological advancements have flooded the market,
whereas on the demand side it is the prospering middle class and consumerism which
have led to changing demand patterns.
Foreign Direct Investment
Source : supply Corp. | Jan 2008
The net Foreign Direct Investment (FDI) inflows to India increased from US $ 22 bn in
FY07 to US $ 32.3 bn in the following fiscal. During 2007 and 2008, the share of FDI in
the electronic goods segment remained flat at 0.2%, coming on the back of a 1.5% share
in CY06.
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ABOUT BIG BAZAAR
Big Bazaar is Indian personification of retail. It’s like an Indian bazaar or Mandy or
meal, the environment created by traders to give shoppers a sense of moment. Its
personality is of being an entity away from fancy or pretty and being authentically "no-
frills". Inshore Binyamin never hired any foreign consultant for Big Bazaar which is
evident from Indian-specific personality of the brand. The brand’s personality is self-
explanatory by its tag-line only. This statement places Big Bazaar at the top of
customer’s mind. It reflects that entrepreneurship and simplicity are the essence of
character of Big Bazaar. To use predatory pricing is not in the personality of Big Bazaar,
they never sell goods below the price they have purchased it. Big Bazaar, the "Indian
Wal-Mart", is the modern Indian family's favorite store. Big Bazaar symbolizes modern
retail, the business which isn’t looked up to in our country, is now in the eyes of many
multi-national biggies. Big Bazaar has shown a robust growth in recent years.
Source :- economic times 2008
Big Bazaar is not just another hypermarket. It caters to every need of your family. Where
Big Bazaar scores over other stores is its value for money proposition for the Indian
customers.
At Big Bazaar, you will definitely get the best products at the best prices - that’s what we
guarantee. With the ever increasing array of private labels, it has opened the doors into
the world of fashion and general merchandise including home furnishings, utensils,
crockery, cutlery, sports goods and much more at prices that will surprise you. And this is
just the beginning. Big Bazaar plans to add much more to complete your shopping
experience.
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7P Analysis of Big Bazaar
7P Marketing Mix is more useful for services industries and knowledge intensive
industries. Successful marketing depends on number of key issues. The seven keys issues
are explained as: -
Product
Big Bazaar offers a wide range of products which range from apparels, food, farm
products, furniture, child care, toys, etc. Products of all the major brands are available at
Big Bazaar . Also, there are many in house brands promoted by Big Bazaar. Big Bazaar
sold over 300,000 pairs of jeans, 50,000 DVD-players and 25,000 microwave-ovens. In
all, the fashion, electronics and travel segments made up about 70% of sales. Last year,
these categories made up only about 60%.
Price
The tag-line is "Is se siesta aura ache aura chain nail". They work on the model of
economics of scale. There pricing objective is to get "Maximum Market Share". The
various techniques used at Big Bazaar are: -
Value Pricing (EDLP - Every Day Low Pricing): Big Bazaar promises
consumers the lowest available price without coupon clipping, waiting for
discount promotions, or comparison shopping.
Promotional Pricing: Big Bazaar offers financing at low interest rate. The
concept of psychological discounting (Rest. 99, Rest. 49, etc.) is used as
promotional tool. Big Bazaar also caters on Special Event Pricing (Close to Dial,
Guido Padua, and Durra Poona).
Differentiated Pricing: Time pricing, i.e., difference in rate based on peak and
non-peak hours or days of shopping is also a pricing technique used in Indian
retail, which is aggressively used by Big Bazaar.
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Bundling: Selling combo-packs and offering discount to customers. The combo-
packs add value to customer.
Place
Big Bazaar stores are located in 50 cities with 75 outlets. Big Bazaar has presence in
almost all the major Indian cities. They are aggressive on their expansion plans.
Promotion
Big Bazaar started many new and innovative cross-sell and up-sell strategies in Indian
retail market. The various promotion techniques used at Big Bazaar include "saal ke
sabse saste teen din", Future Card (the card offers 3% discount), Shakti Card,
Brand Endorsement by M. S. Dhoni, Exchange Offer - ‘Junk Swap Offer’, Point-of-
Purchase Promotions.
Advertising has played a crucial role in building of the brand. Big Bazaar advertisements
are seen in print media, TV, Radio (FM) and road-side bill-boards.
People
They are one of the key assets for any organization. The salient features of staff of Big
Bazaar are: -
Well-trained staff, the staff employed by Big-Bazaar are well-suited for modern retail.
Well-dressed staff improves the overall appearance of store.
Employees are motivated to think out-of-the-box. Retail sector is in growth stage, so staff
is empowered to take innovative steps.
Employs close to 10,000 people and recruits nearly 500 people every month.
Use of technology like scenario planning for decision making.
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Multiple counters for payment, staff at store to keep baggage and security guards at every
gate, makes for a customer-friendly atmosphere.
Process
The goods' dispatch and purchasing area has certain salient features which include: -
Multiple counters with trolleys to carry the items purchased.
Proper display / posters of the place like (Television, Oven, etc.).
Home delivery counters also started at many places.
Physical Evidence
It deals with the final deliverable or the display of written facts. This includes the current
system and available facilities.
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Brand extensions and Future possibilities
Future Group is planning to split Big Bazaar into two entities. One will be front-end
consumer-oriented entity and other will be for back-end operations. Back-end entity may
enter into joint venture with leading international cash and carry retailers. Foreign
partners like Carrefour, Metro, Costco, etc., are in the race, and their role will be to
improve efficiency in sourcing and logistics, which will help drive down prices and boost