19419943 videocon final project

8/6/2019 19419943 Videocon Final Project

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Table of Contents:

Introduction of Videocon Industries

Indian Television Industry

Product Life Cycle of CTV in India

Porters Model

Videocon in Indian Television Industry

Revenue Mix

Performance measures

STP

4 Ps

Competitors Strategies

Recommendations

A Lifestyle Statement

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Videocon Industries

More to come | More to create

Videocon deems it a privilege that it is in a position to prolong instances of joyand spirit. And lend much needed variety and flair in everyone's life.An Indian multinational, a global force in display technologies and a group onthe threshold of even bigger things.There are new horizons to breach, new frontiers to conquer and simply no pause

buttons on the Videocon play. Expect the unexpected, the uncharted and theunlimited. Keep watching.

Corporate Profile

The Videocon group emerges as a USD 2.5 Billion global conglomeratecontinuing to set trends in every sphere of its activities from a conference roomsized assembly line in 1979. It started life in 1984 as a branded manufacturer of consumer durables. In 1995, it ventured in to contract manufacturing and thenoil. The consumer electronics and oil businesses were separate entities withseparate balance sheets.

Things changed in 2005 when Videocon merged its oil subsidiary, petrocon, into the flagship VIL (Videocon Industries Limited). Now it has a balance sheetthat has the combined number both consumer electronics as well as oil. It isclear that this was primarily done to use oil revenues to shore up the saggingconsumer electronics business.

Nevertheless, it is unusual. This move has raised questions about whether Videocon is trying out too many things. An indication of market sentiment can

be got from the fact that its market cap of Rs 9,855 crores is less than even itsestimated sales (put out by domestic brokerages) of Rs 11,444 crores in FY06(it has an October-September financial calendar). One of the worlds largest andmost acknowledged CPT manufacturer in the world, the group is forging ahead

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with production and development of latest technologies like Super True FlatCPT, Slim CPT, Extra Slim CPT and HD 16:9 format CPT.

Some Big Steps

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Consumer Electronics, Home Appliances & Compressor manufacturing inIndia Videocon enjoys a pre-eminent position in terms of sales and customer satisfaction in many of our consumer products like Color Televisions, WashingMachines, Air Conditioners, Refrigerators, Microwave ovens and many other home appliances, selling them through a Multi-Brand strategy with the largestsales 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 12facilities. It has the Capacity to manufacture 4 million CTVs, 2.5 lacs washingmachines, 1 mn. DVD players, 4.8 mn refrigerators.Display industry and its components With the Thomson acquisition Videocon has emerged as one of the largestColor Picture tube manufacturers in the world operating in Mexico, Italy,Poland and China, continuing to lead through new innovative technologies likeslim CPT, extra slim CPT and High Definition 16:9 format CPT.

Color Picture Tube Glass

Videocon is one of the largest CPT Glass manufacturers in the world with ahigh level of experience and technical expertise operating through Poland andIndia. Videocon will leverage on this synergy after the Thomson acquisition tointernally source glass for its CPT manufacturing increasing efficiencies andlowering costs.

Oil and Gas An important asset for the group is its Ravva oil field with one of the lowestoperating costs in the world producing 50,000 barrels of oil per day. The grouphas ambitious plans for expansion in this sector globally.

LOGO LOGICThis is the new Videocon symbol. It reiterates the ethos of a company dedicatedto maintaining the highest international standards of excellence through quality,

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In Indian industry the Korean companies are clearly dominating the market.

PRODUCT LIFE CYCLE (PLC) of the Color TV

The PLC for television has a SCALLOPED PATTERN

Introduction Stage (1982 1983) The Color TV was introduced.

Growth Stage (1984 to 1986)-The industry was at the nascent stage where theBlack & White Television was pre-dominant. However the sale of CTVincreased.

Maturity Stage (1986 to 1989)The industry went into the maturity stage with lot of domestic competitioncoming in the market.

Decline Stage (1989-1991)Penetration levels into rural India were at low levels. Urban segment purelydominated CTV market while there was a huge untapped market.

Re-introduction Stage : Entry of MNCs Introduction1992 to 1994The MNCs entered into India resulting in a greater degree of penetration. They

brought lot of products having a lot of features.

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In order to understand the industry better, we analyze the industry usingPorters 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 isnt very easy. One of the most important featuresneeded is a good distribution system which isnt something that can bedeveloped overnight.

- Also a television today is a style statement. Therefore the brand plays animportant role in influencing the purchase decision. For a new company thenentering this market, not having a recognized brand name is a threat to entry.

Rivalry among existing firms-

- There is strong competition among the current players. The main players being LG, Samsung, Onida, Videocon, Philips, Sansui. Some of the regional players are- Hyundai and Haier are new entrants in the CTV space in additionto a number of small regional players.

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- This increased competition has ensured that advertising costs are an integral part of the players total cost. A lack of product differentiation means that priceis a competitive feature that intensifies rivalry. The highest price reductionsduring 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 reductionsfuture.

- It is expected that realizations will fall with increased competition.

Bargaining Power of Buyers-

- The TV market today is a consumers market where the consumer has theupper 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 creditfacilities on sale, to provide lower EMIs and excellent after-sales service.

- The intense dealer competition also benefits the consumer in terms of pricesand 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-

- For a television, the substitute can only be a functional substitute. Thefunctional use of a television is to watch programs, live events etc. This todaycan also be done on a computer.

- Theaters too can be a substitute to watching movies at home.

- Today with various multiplexes and theaters providing screenings of liveevents such as sports telecasts etc along with the luxury of good food and theopportunity to enjoy the event with a number of other enthusiasts, the TV can

be substituted if the TV is bought only to watch certain events.

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- However if the television on considered to be a style statement and a lifestylestatement, then consumers will seek to keep upgrading the type and the modelof their television sets.

Bargaining Power of Suppliers-- PCBs (Printed Circuit Boards) & CRTs (Cathode Ray Tube) are key rawmaterials 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 materialcosts.

- Domestic CPTs prices tend to follow Global price trends. Therefore thesuppliers do not have much of bargaining power in this regard.

-Cabinets are sourced from plastic manufacturers and as these manufacturerssupply to different industries, they therefore do have a bargaining power,especially in comparison to CRT suppliers.

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 nowhawks 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 acombined market share of around 19.6 percent, with LG at 25.9 percent andSamsung at around 13.8 percent.Overall, the shift in the power to trade is probably one of the definingdevelopments. It is important since the TV companies themselves have taken itseriously and embarked on crafting longer-term strategies to accommodate thisdevelopment. 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 theIndian TV market.

Backward IntegrationVideocon integrated backwards by getting into manufacture of componentssuch as electron guns, metal parts and deflection yokes for CTVs andcompressors, and electric motors and plastic components for householdsappliances such as washing machines, refrigerators and Air conditioners. Thegroup integrated further to get in to manufacture of glass panels and funnels, thekey components for the manufacture of color picture tubes.Videocon enjoys a unique synergy in the global CTV business from glass toCRT (Cathode Ray tubes) to CTVs. - (From Sand to CTV). Together with other components for households appliances. This high degree of backwardintegration bestows upon the company a unique benefit over competition.

Videocon's revenue mix

Performance Measures

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SEGMENTATION, TARGETING &POSITIONING

(STP)

SEGMENTATION:

Market segmentation is the process in marketing of dividing a market intodistinct subsets (segments) that behave in the same way or have similar needs.Because each segment is fairly homogeneous in their needs and attitudes, theyare likely to respond similarly to a given marketing strategy. They are likely tohave 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 whichsegments to address) and positioning (designing an appropriate marketing mixfor each segment). The overall intent is to identify groups of similar customersand potential customers; to prioritize the groups to address; to understand their

behavior; and to respond with appropriate marketing strategies that satisfy thedifferent preferences of each chosen segment.

Segments based on IncomePlasma: Income group of more than 50,000LCD: Income bracket of Rs 20,000 and aboveSlim: Consumer in the income bracket of Rs 9000-15000Flat: Consumer in the income bracket of 7000-12000

Conventional: income bracket of Rs 3000-6000

Segments based on social classPlasma: rich classLCD: upper middle class and rich classSlim: middle classFlat: middle and lower middle classConventional: lower economic class.

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 conventionalTV

Loyalty status: On the basis of Loyalty statusHardcore Loyal: brand loyal to Videocon for a long time in terms of purchasing

products of VideoconShifting Loyal: who shift loyalty from other brands to another Switchers: not loyal to any brands so attract them to Videocon and convert they

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Points-of-Difference (PODs) are attributes or benefits consumers stronglyassociates with a brand, positively evaluate, and believe that they could not findto 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 withlow cost.

Thus, Videocon is positioned itself as a reliable and value-for-moneyproduct.

4Ps

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 thecompany 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 42PDP.

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 offeringonly one product in 50 PDP and 42 PDP.

The three product-mix dimensions permit the company to expand its business inthree 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.

Width, Length & Depth

Width = 5 (Plasma, LCD, Slim, Flat, Conventional)

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In the product mix of Videocon, it is having 37 different models, which givesthem their product line Depth .

PLASMA

Plasma television technology is similar to the technology used in a fluorescentlight bulb. The display itself consists of cells. Within each cell two glass panels

Plasma LCD Slim Flat Conventional

50PDP 42 LCD 29 slim 29 flat 21 FFST

42PDP 32 LCD 21 slim 21 flat 20 conv26 LCD 15 flat 14 conv

20 LCD

19 LCD

Length

2 5 2 3 3

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are separated by a narrow gap in which neon-xenon gas is injected and sealed in plasma form during the manufacturing process.The main advantage of Plasma over CRT technology is that, by utilizing asealed cell with charged plasma for each pixel, the need for a scanning electron

beam in eliminated, which, in turn, eliminates the need for a large Cathode RayTube to produce video images. This is why traditional televisions are shapedmore like boxes and Plasma televisions are thin and flat.

Advantages of Plasma Television:

Largest Screen Formats.Superior Contrasts.

Versatile.Capable Of Displaying Full HDTV & Dtv Signal.Capable Of Displaying Xga, Svga & Vga Pc Signal.Wide Viewing Angle.Wide Rage Of Richer Color Over 16 Million.Superb Realistic Images.Less Expensive Than Lcds.Life More Than 30,000 Hours.Wide Screen Aspect Ratio around 16:9.Perfect Flat Screen.Uniform Screen Brightness.Slim & Space Saving Design.

50" PDPIntegra 5010000:1 Contrast Ratio3:2 & 2:2 Pull DownHDMI Compatible3-D Video Noise ReductionPC Input

42" PDP16.77 Million Color 10000:1 Contrast Ratio3.2 & 2:2 Pull Down

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1500cd/m 2 BrightnessHDMI Compatible3-D Video Noise Reduction

LCD

The flabs are out and now technology has switched over to sleek and slim products, LCD being the prominent amongst them. LCD technology is therecent breakthrough in consumer electronics and because of its esteemedadvantages 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 withLCDTV.This is an integration of best sound quality and excellent picture quality.What is TFT-LCD?Meaning of this term is Thin Film TransistorLiquid Crystal Display. TFTtechnology used in this category offers the best image quality in flat panels.

This technology is also called as Active Matrix Technology.

40" LCD32" LCD26" LCD20" LCD19" LCD

Slim With Continuous Research & Development Videocon brings a revolutionaryadvancement in physics & brings new Slim & Trim Television.

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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" SLIM21" SLIM

Flat

Videocon Bada Woofer withSurrounds Bass TechnologyBass Amplification by Dynamic Alignment (BADA) woofer is a revolutionarytechnology that offers a new sound to create an unbelievable sound space

Videocon unique Bazoomba Woofer TechnologyVideocon's superior Bazoomba Woofer Technology incorporates a uniqueconjugate arrangement of Woofer motors that ensures rich bass reproduction.

The Bazoomba Woofer TechnologyEnables the generation of the lowest bass frequencies from a small enclosure

(Bazoomba tube). Enables cleaner and tighter bass reproduction due to acousticcancellation of distortion in the even harmonics

29" TFT21" TFT15" TFT

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Conventional TV

21" FFST

20" CONV14" CONV

Pricing

The pricing of the Videocons various models is as following.

Plasma TV : Rs. 59,990 - 2, 40,000LCD TV : Rs. 28,400 89,900Slim TV : Rs. 10,400 18,900Flat TV : Rs. 5,500 18,400Conventional TV : Rs. 4,600 - 9,500

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 inIndia. They are having 96 service centers across India.

Promotional Activities

Focusing on LCD, Plasma and 29 Flat TVs since 2006.By institutional selling. Company used both TVC as well as print media for

promotion. The company is using outdoor media promotions in hording and busshelters to high light the feature packed advantages.Major tie ups in the background IIT alumni/ Videocon Santos ham film awards2006 with ZEE and ICC Cricket champions trophy.

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Seasonal offersTrip to Germany during FIFA world cupVideocon bonanza offer ( har din diwali) during diwaliChance to win car, motor bike and LCD TV's.

Brand ambassador Shahrukh KhanM S Dhoni

Total spending of 80 crores in 2006 on advertisements.( 35 crores for CTV)Sponsorship

Videocon is inspired heavily by the uplifting values perpetuated by sports. Itsability to draw people together irrespective of differences in race, gender,religion and country. Unity of spirit and purpose is ultimately what builds

bridges between diverse cultures. This is the core belief of a group that todayhas operations spread over a cross-cultural milieu worldwide. Also, at the heartof sports is fair play, a virtue which enjoys exalted status among valuescherished by Videocon.

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.

It is a matter of pride that Videocon's Audio Visual products entertainenthusiasts and fans passionate about watching sports worldwide.A breakdown of the statement above reveals a means and end approach,where the end is articulated at the beginning with the means linked to it.

Their famous tag lineOne of the only companies in the world to convert sand to TV

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Competitors strategies

Differentiation Strategy adopted by other players:LEADER-LG

Product localization is a key strategy used by LG.* LG came out with Hindi and regional language menus on its TV.* Introduced the low-priced Cineplus and Sampoorna range for the rural

markets.* LG was the first brand to introduce gaming in CTVs. In continuation of its

association with cricket, LG introduced the cricket game in CTVs.

CHALLENGERS- SAMSUNG

Samsung considers After Sales Service as a key differentiator for Samsung products. In order to deliver prompt and easily accessible service, SamsungIndia has set up a widespread network of company owned as well as AuthorizedService Centers to service its customers. The Samsung Service Plazas, as theCompany owned Service Centers are called, are a first in the industry.

FOLLOWERS- ONIDA AND PHILIPS

Onida

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Onidas differentiation strategy is based on its brand based advertising rather than feature based advertising. They used its brand mascot The Onida Deviland its punch line Neighbors Envy Owners Pride to create Brand awarenessof their product.

Where its competitors were focusing on advertising of the features of their products, Onida has concentrated only on their Brand. The Devil helpedOnida gain substantial market share and brand recall among the customers.

Philips

Philips Differentiation Strategy is their Simplicity Led Design. Philips believes in the unity of form and function. Their technology is easy to use. In

Philipss world, they are trying to improve the consumers life.

Philips is known for its consumer insight and empathy. Therefore, their differentiation strategy includes making technology simple to use.

NICHER-SONY

Sony is focusing on providing quality products to its customers anddifferentiating itself from the other players.

The positioning strategy adopted by other players:

Leader-LGIt is positioned as a premium brand that pioneers the most innovativetechnologies in India.

Challengers - SamsungSamsung has positioned itself as a brand that brings communication,entertainment and information in easy to use digital device.

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Nicher- SonySony Positioned as a premium product giving the best quality to cater to thedemands of its high end customers.

Recommendations (Strategies)

Product Strategy

1. Stop all curved CPT production2. Shift focus to LCD CTVs; target: by December 2007.3. Launch Slim 21 and focus Slim 29 immediately. Target is to have

almost all CRTs production shifted to Slim by 20074. Take full advantage of Digital and HDTV revolution, gain leadership in

HDTV Slim TV segment through OEM and model mix worldwidestrategy.

5. Study unique product range / pro large to fill market gaps in markets suchas Asia and Eastern Europe / CIS / South America

6. Focus on reduction of costs through reduction of glass, shift to AK mask and reduction of process rejection.

Sales Strategy

1. Improve relationship with existing clients ; Use of Thomsons excellentrelations as preferred supplier to maximize sales

2. Improve service and quality without putting pressure on price structure3. Fetch a better price and avoid crisis of huge stock.

4. Leverage Slim product offering5. Launch LCD panels assembly to be a major actor of the Flat Panel

Displays market (which is expected to account for 50% of the market by2012).

6. Benefit from OEM CTV business with the help of Videocons CTVdivision, invest for new models, introduction of new technologies.

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7. upgrade to LCD's schemeseasy EMI.Re. 1 offer.

8. Improve after sales service9. Free service camp on the wheels.

Industrial Strategy

1. Consider improvement in production lines set-up: investments, line speedup / mergers? Target is to increase output and decrease product costs byincreasing productivity of existing lines

2. This will reduce manpower and overheads per picture tube by 30% thatwill be redeployed on new activities in the sites (new technologies)

3. Improve the furnace output in the Poland Glass factory by making somechanges into furnaces including electrical boosting. Consider increasingcapacity through one more furnace.

4. t is envisaged that 100m will be invested in the next 2 years for this purpose

5. Expand into LCD panels back-end assembly (from buying LCD arraysfrom big suppliers like LG, SDI, CMO, AUO, Sharp)

Cost Strategy

1. Leverage the strong base of Videocons glass business: Thomson-Videocon partnership will have a very strong negotiation position andcan reduce impact of glass pricing volatility

2. Reduce production cost by upgrading and improving the production lines.Thomson-Videocon partnership will have its own base of additional 4million units CTV (other than India)

3. Necessary to rationalize R & D efforts, necessary to make its cost below1.5% of sales

Product Development

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1. i-TV web enabled TV at the price of 13,900 with exchange offer for anolder 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 box6. 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 statementthat 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 tointernet facilities to supreme sound etc. The opportunity for this industry lies incoming up with new features to the conventional CTV. There is therefore lot of scope for growth and innovation.

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