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Consumer Buying Behavior & Brand Loyalty
In consumer Durable products
(Segment Colour T.V. )
Submitted by
Thakur Mandar Dnyaneshwar
MMM SEM V Roll No. 96
Under the Guidance of
Prof. Shri. Shailesh Kale
In Partial Fulfillment of
MMM course
University Of Mumbai
(2007-2010)
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Executive SummeryBefore the liberalization of the Indian economy, only a few
companies like Kelvinator, Godrej, Allwyn, and Voltas were the major
players in the consumer durables market, accounting for no less than 90%of the market. Then, after the liberalization, foreign players like LG,
Sony, Samsung, Whirlpool, Daewoo, and Aiwa appeared. Today, few of
these players control the major share of the consumer durables market.
Consumer durables market is growing very fast because of rise in
living standards, easy access to consumer finance, and wide range of
choice, as many foreign players are entering in the market
With the increase in income levels, easy availability of finance, increase
in consumer awareness, and introduction of new models, the demand for
consumer durables has increased significantly. Products like washing
machines, air conditioners, microwave ovens, color televisions (CTVs)
are no longer considered luxury items. However, there are still very few
players in categories like vacuum cleaners, and dishwashers
Consumer durables sector is characterized by the emergence of MNCs,
exchange offers, discounts, and intense competition. The market share of
MNCs in consumer durables sector is 65%. MNC's major target is the
growing middle class of India and increasing floating population. MNCs
offer superior technology to the Consumers whereas the Indian
companies compete on the basis of firm grasp of the local market, their
well-acknowledged brands, and hold over wide distribution network.
However, the penetration level of the consumer durables is still low in
India.
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Strengths:
1. In term of purchasing power parity (ppp), India is the 4th largest
economy in the world and overtake Japan in the near future becomethe 3rd largest.
2. Indian consumer durable market is expected to reach $400 billion byon 2010
3. India has the youngest population amongst the major countries. Thereare lot of people in the different income categories nearly the twothird population is below the age of 35 and nearly 50% is below 25.
4. There are 56 million people in middle class, who are earning
us$4,400-US$21,800 a year. And there are 6 million rich household inIndia.
5. The upper-middle and high-income household in urban areas areexpected to growing
Opportunity :
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 level, i.e.increase in purchasing power of
consumers.
5. Easy availability of finance.
Threats :
1. Higher import duties on row materials.
2. Cheap imports from Singapore, China and from other Asian countries.
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SCOPE OF THE PROJECT:
Taking in to consideration over all view of the situation, project
scoped down to understand the role of Consumer Buying Behaviorin
this transformation in Consumer Durable Products.
Factors affecting consumer decision making.
Understand the role of the Brand loyalty in Consumer Durables.
Study the position of leader in the segment.
Path Forward:
Study Secondary data for industry overview,
Collect primary data for more insight,
Derive conclusions based on the Primary and Secondary,
Address research findings based on theory of Consumer Buying
Behaviorand Brand loyalty.
Study the various marketing moves of the market leader for better
understanding of the
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Research Method
Data type : Primary Data
Research Tool : Questionnaire,
Literature Survey,
Internet.
Business Magazines,
Peoples Interactions
Sample Units : Individual Consumers, Family members,
Sampling Method: Random Sampling,
Assumptions :
Samples collected are representative of the entire
population.
Modern consumer is conscious and awareness is high.
He/ She is more curious about the product, quality, price
and features offered.
Try to obtain maximum information before actual
decision making.
Being in the Indian context family plays a important role.
Research Objective:
In this study more focus was to understand the Consumer
Buying Behaviorwhile purchasing Colour Television.
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In the changing market scenario, and post globalization
do Brand Loyalty really exist?
India has an increasingly affluent middle class population that, on the back of rapid economic growth, has made the countries consumer
electronics industry highly dynamic. The industry had been witnessing
significant growth in recent year due to several factors such as retails
boom, growing disposable income and availability of easy finance
scheme. But still the consumers electronics goods such as Colour T.V.
refrigerator, microwave, and washing machine have low penetration in
the country., representing vast room for growth . This is attracting many
foreign players in country.
Since the penetration of several products T.V. refrigerators are reaching
saturation in the urban areas the markets for this products are shifting to
the semi urban and rural area.
The Indian consumer durables industry has witnessed a considerable
change in the past couple of years. Changing lifestyle, coupled with
greater affordability and a surge in advertising has been instrumental in
bringing about a sea change in the consumer behavior pattern.
This industry consists of durable goods used for domestic purposes such
as televisions, washing machines, refrigerators, microwave ovens, mobile
phones etc. The growth in the consumer durables sector has been driven
primarily by factors such as the boom in the real estate & housingindustry, higher disposable income, emergence of the retail industry in a
big way coupled with rising affluence levels of a considerable section of
the population.
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As per the survey conducted by the FICCI on Indian consumer durables
industry, a shift in the consumer preferences towards higher end,
technologically advance branded products has been quite discernable.
This shift can be explained by narrowing differentials between the prices
of branded and unbranded products added with the high quality of after
sales service provided by thebranded players. . The shift has also been
triggered by the availability of foreign branded products in India owing
to lower import duties coupled with other liberal measures as introduced
by the government.
The key growth drivers for Indian consumer durables industry are :
Rise in disposable income: The demand for consumer electronics hasbeen rising with the increase in disposable income coupled with moreand more consumers falling under the double income families. Thegrowing Indian middle class is an attraction for companies who areout there to woo them.
Availability of newer variants of a product: Consumers are spoiltfor choice when it comes to choosing products. Newer variants of a
product will help a company in getting the attention of consumerswho look for innovation in products.
Product pricing: The consumer durables industry is highly price
sensitive, making price the determining factor in increasing volumes,at least for lower range consumers. For middle and upper rangeconsumers, it is the brand name, technology and product features thatare important.
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Availability of financing schemes: Availability of credit and thestructure of the loan determine the affordability of the product. Sale ofa particular product is determined by the cost of credit as much as theflexibility of the scheme.
Rise in the share of organised retail: Rise in organised retail will setthe growth pace of the Indian consumer durables industry. Accordingto a working paper released by the Indian Council for Research onInternational Economic Relations (ICRIER), organised retail whichconstituted a mere four percent of the retail sector in FY07 is likely togrow at 45-50% per annum and quadruple its share in the total retail
pie 16% by 2011-2012. The share will grow with bigger players
entering the market.
Innovative advertising and brand promotion: Sales promotionmeasures such as discounts, free gifts and exchange offers help acompany in distinguishing itself from others.
Festive season sales: Demand for colour TVs usually pick up duringthe festive seasons. As a result most companies come out with offersduring this period to cash in on the festive mood. This period willcontinue to be the growth driver for consumer durable companies.
Major hurdles and challenges plaguing the Indian consumer durables
sector:
Threat from new entrants, especially global companies: Thedomestic consumer durables sector faces threat from newercompanies, especially from global ones who have technologicallyadvanced products to offer.
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Rivalry and competition: Presence of a large number of players inthe domestic consumer durables industry leads to competition andrivalry among companies. Threat from rivalry and competition poses athreat to domestic companies.
Potential markets remaining yet untapped: A large segment of thedomestic market, mostly the rural market is yet to be tapped. Tappingthis yet untapped and unorganised market is a major challenge for theIndian consumer durables sector.
Threat from substitute products/services: The domestic consumer
durables industry is plagued by threats from substitute products. Easyaccessibility to theatres/multiplexes, especially in urban areas hasturned off the viewership from TV to a large extent. With the adventof a horde of FM radio stations, radio sets have now substituted TVs.
Customer power with respect to availability of choice: Theavailability of a wide product line on account of most products beinghomogeneous, poses a threat for companies operating in the consumer
durables sector. Customers have the choice of both domesticallyproduced and imported goods, with similar features.
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Importance of studying this topic :
This study will give an important insight of customer who
goes to buy consumer durables mainly Colour TV in
showrooms. What does he thinks while purchasing a Colour
TV. What factors influence his decisions of purchasing TV?
A seller in showroom does not know what all goes in mind of
consumer when he enters his shop to purchase TV. They
have to rely on trial and error basis this research will tell
what factor consumer wants so that he comes to your shop.
Thus he can convert maximum of potential customer into
buyers if he knows what exactly triggers the customer
decision.
A company gets to know from this research what factors
influence the purchase decision of customer. Accordingly
directs its marketing effort so that it can get maximumpotential customer to purchase companies TV. Seller or
company would get an insight to consumer behavior
regarding purchases like what does consumer thinks while
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purchasing a Colour TV?, What factors influence his decisions
of purchasing TV?
Industry Classification
The consumer durable industry can be broadly classified as consumer
electronics and consumer appliance. The consumer appliances category
can be further segmented as white goods and brown goods.
Classification of Consumer goods under following three category
White Goods
Brown Goods / Kitchen
appliances
Consumer
Electronics
Refrigerators Mixers and grinders Mobile Phones
WashingMachines Microwave oven, cooking range Televisions
A/C Irons MP3 Players
AudioEquipments Electric fans DVD players
Etc Etc Etc
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 countrys real GDP grew by 9% during FY08; a tad lower
than 9.6% in the previous fiscal. The consumer durables segment
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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.
Consumer durables: Industry size, growth and trends:During FY 07, volume share of consumer durables was as follows
Consu mer Durables Volume S
Air
Conditioner
13%
Washing
Machine , 5
Others, 34
Colour
Television, 30
Refrigerator
18%
Colour Televis ion Refrige ra tors Air Cond itioners
Washing Machine Others
The consumer durable market in India was estimated to be around US $
4.5 billion in 2006 07. More than 700 million units have been sold in
the year 06-07. Colour T.V. forming the bulk of the sales with 30% share
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of volume. CTV, refrigerator and Air conditioner together constitute
more than 60 % of the sales in terms of the number of units sold.
The CTV production was 15.10 million units in 06-07 and is expected to
grow by at least 25 % . At the disaggregated level conventional CTV
volumes have been falling while flat TVs have grown strongly. The flat
segment of the CTV now accounts for more than 60% of the total
domestic TV production.
High end products such as Liquid crystal display ( LCD), and plasma
display TV grew by 400 % and 150 % respectively in 06-07 with sharp
decline in the price of these products.
Now lets see who all are the market players in this colour T.V. segment.
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TV company and relative market share table and pie chart
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MARKET SHARE SHARE
LG
36%
SAMSUNG
28%
ONIDA
18%
VEDIOCON
16%
OTHERS
2%
From the market share analysis it is clear that LG India is market leader
in the Colour TV segment.
Indian Colour T.V. industry comprises of 30 % of total market share inconsumer durable industry. For any company getting the chunk of this
market will always be delightful. But in todays competitive market
which is dominated by consumers, understanding the consumer buying
Behaviorwill always be important. To get the insight of the consumer
buying Behaviorin a better way, it was decided to conduct market survey
and interpret the results. Based on the findings the various consumer
behavioral aspects will be explained and studied.
To interact with the consumer on-line survey as well as interviews were
conducted.
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Questioner was prepared and mailed across various recipients.
Various consumers from different strata were selected.
Live interviews were taken for better understanding of the consumer
psychic.
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DATA ANALYSIS
AND
INTERPRETATION
Q.1 What is your age group?
Age Group
Option % of Respondent
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20 yrs - 25 yrs 27.50%
25 yrs - 30 yrs 47.50%
30 yrs - 35 yrs 12.50%
40 yrs - 45 yrs 8%
45 yrs and above 4.50%
0.00%
5.00%
10.00%
15.00%20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
20yrs
-25
y
25yrs
-30
y
30yrs
-35
y
40yrs
-45
y
45yrs
and
abo
Age Group
Age Group V/S % of Respondent
Interpretation :
From the above findings it is clear that maximum no of respondent
(47.5%) who responds to the survey are between age group 25 30 yrs. We
can interpret based on this that maximum consumer for this category is
young in age. So, product should be attractive towards young generation.
Targeting and positioning should be done by keeping in mind this age group.
Q2. Gender
GenderOption % Respondent
Male 85
Female 15
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0
10
20
30
40
50
60
70
80
90
Male Female
Gender
Gender V/S % Respondent
Interpretation :
During survey and interviews it was observed that most of the respondent
(85%) are male. Even after globalization and many changes which had
occurred in the countrys social structure, male dominance can not be
ignored. Or other way it can be interpreted that male counter parts are given
liberty to take such high involvement decision.
So, Electronic industry is male dominated decision making industry.
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Q3. Monthly Income :
Monthly Income
Option % respondent
Rs 10K - Rs. 20K 15.00%
Rs 20K - Rs. 30K 27.50%
Rs 30K - Rs. 40K 22.50%
Rs 40K - Rs. 50K 20.00%
Rs. 50K and above 15.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Rs10K
-Rs.
20
Rs20K
-Rs.
30
Rs30K
-Rs.
40
Rs40K
-Rs.
50
Rs.50K
and
abov
Monthly Income V/S % respondent
Interpretation :
From the collected data, monthly income of almost 50% respondent lies
between Rs. 20K Rs.40 K. Companies should take this in to account while
fixing price for the Colour T.V.
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Q 4. Which brand of electronics are you currently using?
.
Brand of Electronics
Option % respondent
BPL 3.61%
LG 15.66%
Sony 18.07%
Panasonic 1.81%
Vedeocon 8.43%
Samsung 12.05%
Whirlpool 6.63%Godrej 9.64%
Philips 10.24%
Sharp 1.81%
Onida 4.82%
Others 7.23%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
BPL LG
Sony
Panasonic
Vedeocon
Samsung
Whirlp
ool
Godrej
Philip
sSharp
Onida
Othe
rs
Brand of Electronics % respondent
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Q 4. Which brand of electronics are you currently using?
Brand Of Colour T.V.
Option % Respondent
BPL 8%
LG 28%
Sony 23%
Panasonic 4%
Vedeocon 16%
Samsung 10%Sharp 2%
Onida 4%
Others 5%
0%
5%
10%
15%
20%
25%
30%
BPL LG
Sony
Panasonic
Vedeocon
Samsung
Sharp
Onida
Othe
rs
Brand Of Colour T.V. % Respondent
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Q 4. Which brand of electronics are you currently using?
This question was used to check the various brands which have entered in
the consumers home through various appliances. Also, this gives the fair
idea about which brand of colour T.V. consumer is currently using
Interpretation :
As the data suggest, electronic brands which have strong foot hold in the
consumers house hold are LG, SONY, SAMSUNG, PHILIPS, Which are
comprising of 56.02% . Indian consumer market is dominated by these
International players. Where as Domestic big shot players like GODREJ,
VEDEOCON, ONIDA, BPL, hardly comprises of 26.5%
But , when we see colour T.V. industry, LG is dominating market by 28%
followed by SONY 23%. Vedeocon is on IIIrd position with 16% market
share.
This clearly indicate that Indian consumers, post globalization are more
attracted toward the International Brands, instead of Domestic Brands.
They are ready to experiment by leaving age old Brands if proper quality
and value for money is offered.
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Q5. When you think of colour T.V. which brand name strikes to your
mind ?
Brand Of Colour T.V.
Option % Respondent
BPL 2%
LG 16%
Sony 16%
Panasonic 6%
Vedeocon 12%
Samsung 16%
Sharp 3%
Onida 11%Philips 4%
Sharp 3%
Others 11%
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0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
BPL LG
Sony
Panasonic
Vedeocon
Samsung
Sharp
Onida
Philip
sSharp
Othe
rs
Brand Of Colour T.V. recall
Interpretation:
Recall value in the consumers mind plays a very important role in purchase
decision. Various factors such as brand image, Advertising impact, plays a
major role in creating a recall.
More the recall, more are the chances that the prospective customer will get
converted in to a active buyer. Data interpretation shows that international
brands like LG, Sony, Samsung are having more recall value. Where as in
domestic segment Vedeocan is followed by Onida.
LG should think of this, as even though being a market leader in the industry
the recall value for the SONY is high compare to LG. Samsung is almost on
the same ground as that of LG. LG. is having a immediate threat from
SONY and SAMSUNG in near future.
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Q 6. Which type of colour TV are you having?
Type of colour TV
Option % Respondent
Conventional TV 35%
Flat TV 48%
LCD TV 10%
Plasma TV 8%
Ultra slim TV 0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Conventional
TV
Flat TV LCD TV Plasma TV Ultra slim TV
Type of colour TV
Interpretation:
Even though the companies are more concentrating on flat screen TV, LCD
TV, there are still considerable consumers (35%) who are still using
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conventional TV. This means, these consumers can be aspiring consumers
for the Flat screen or LCD TV. But market is not that much responding to
the Plasma or Ultra slim TV. Reason could be high price line or target
consumers (Top of the pyramid).
Q7. Do you own multiple TV units? (for bedroom, living room etc)
No of T.V. Sets
Option % Respondent
YES 12.82
NO 87.18
0
10
20
30
40
50
60
70
80
90
YES NO
No of T.V. Sets % Respondent
Interpretation :
Only 12.82 % respondent says that they are having multiple TV units in the
house hold. This means still Indian consumer perceive the Colour TV to be a
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family using item and not for individual usage. So, while customizing the
product company should keep in mind this family factor value in mind,
There is still scope for improvement for companies to introduce some
variant which will fulfill the room specific requirement at affordable price.
Q8. How old is your current TV set?
No of years
Option % Respondent
0 - 03 Yrs 29.27
04 Yrs - 06 Yrs. 26.8307 Yrs - 09 Yrs 14.63
10 Yrs - 12 Yrs 12.20
13 Yrs - above 17.07
0.00
5.00
10.00
15.00
20.00
25.00
30.00
0-03
Yrs
Yrs-
06Yrs.
7Yrs
-09Y
rs
0Yrs
-12Y
rs
13Yrs-
above
No of years % Respondent
Interpretation :
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Purchasing cycle of the product is very important. Respondent where
subjected to this question to know the purchase cycle of the Colour TV. If
we see the data, almost 56.10 % consumers had changed there colour TV in
last 6 years. Hence, 5 years purchase cycle can be considered by companies
for future strategies.
Q9. Do you intent to buy colour TV in near future? And within how
much time frame?
Intent to buyOption % Respondent
YES 60
NO 40
Time period
Option % Respondent
with in three months 5.00
Next six months 2.50
Within a year 25.00
with in next Three yrs 15.00
with in next Six yrs 52.50
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0.00
10.00
20.00
30.00
40.00
50.00
60.00
with in three
months
Next six
months
Within a year with in next
Three yrs
with in next
Six yrs
Time period %Respondent
Interpretation:
This findings also support to the earlier suggestion. Almost 52.5%
consumers intent to buy CTV in next 6 years.
Q10. What features would you like to have in your TV?
This was a descriptive question asked to respondent. Idea behind this
question was to know about the consumers perception about the GOOD
FEATURES in the colour TV.
All the expectations of the consumers were jotted down and to bring the
uniformality among the suggestions, they were grouped based on the
characteristics. Following are the expectations of the consumer from a good
colour TV.
Affordable price
Good clarity
Good sound quality
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Long term durability
Good Performance
Over all features
After sales service,
As a part of consumer behaviour, every Brand has some USPs to which the
consumers always associate the brand with. Respondent were asked to name
brand against the feature mentioned. The results for the same are as follows.
Q10 A) Which Brand of colour TV is best in terms of PRICE?
PriceOption % Respondent
Samsung 24
LG 20
Onida 20
Vediocon 25
Sony 11
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0
5
10
15
20
25
Samsung LG Onida Vediocon Sony
Price % Respondent
Interpretation:
Consumers are having a perception of Vediocon and SAmsung among the
top brand based on the pricing.
Q 10 B) Which brand of colour TV is best in terms of clarity?
Clarity
Option % Respondent
Samsung 19
LG 27Onida 16
Vediocon 10
Sony 28
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0
5
10
15
20
25
30
Samsung LG Onida Vediocon Sony
Clarity % Respondent
Interpritation
As per the consumer perception Clarity of Sony Colour TV is good,
followed by LG and Samsung
Q 10 C) Which Brand of colour TV is good in terms of sound quality?
Sound Quality
Option % RespondentSamsung 22
LG 28
Onida 10
Vediocon 12
Sony 28
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0
5
10
15
20
25
30
Samsung LG Onida Vediocon Sony
Sound Quality % Respondent
Interpretation:
Again the survey findings are in favor of the LG and Sony for sound clarity.
Q 10 D ) Which brand is best in terms of Durability?
Durability
Option % Respondent
Samsung 28
LG 34
Vediocon 14
Sony 24
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0
5
10
15
20
25
30
35
Samsung LG Vediocon Sony
Durability % Respondent
Interpretation :
Taking in to consideration the consumer perception, LG again lead the
competition.
Consumers perceive LG products more durable compare to competition.
Q10 E) Which brand of colour TV is best in terms of performance?
Performance
Option % Respondent
Samsung 24
LG 30
Vediocon 18
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Sony 28
0
5
10
15
20
25
30
Samsung LG Vediocon Sony
Performance % Respondent
Interpretation:
Consumers rate LG ahead of all the brands in case of performance.
Q 10 F) Which brand of the colour TV is best in terms of the after sales
service?
Performance
Option % Respondent
Samsung 22
LG 29
Vediocon 16
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Sony 33
0
5
10
15
20
25
30
35
Samsung LG Vediocon Sony
After Sales Service % Respondent
Interpretation:
Sony provides best after sales service through the CRM of the company.
Q 11. Will you buy the same company which you are currently owning?
Same company
Option % Respondent
YES 42.5
NO 57.5
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0
10
20
30
40
50
60
YES NO
Same company % Respondent
Interpretation:
There is not much difference in the consumers response. Reason for this
could be consumers are unsatisfied with current brand, or they are eager to
try out some new product from different brand.
Q12. From where would you collect data / information about new colour
TV set?Information Processing
Option % Respondent
Friends 22.05%
Showroom Survey 22.83%
News paper/ magazine 18.11%
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Internet 17.32%
T,V, Commercials 15.75%
Others 3.96%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Friends
Showroo
mSurve
y
News
paper/m
agazine
Intern
et
T,V,Com
mercials
Othe
rs
Information Processing % Respondent
Interpretation:
Consumers like to acquire required information from traditional methods of
information processing and that is friends, magazines. Due to retail growth
in India the showroom survey is more comfortable for consumers. Internet
information gathering is also on the raising side.
Q 13)What would you take in to consideration while making buying
decision?
Factors
Options % ResponsePrice 14.9
Quality 18.27
Features Offered 15.87
Style 6.25
Latest Technology 13.46
Aftersale service 13.46
Gifts Offered 3.85
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Brand 13.94
0
2
4
6
8
10
12
14
16
18
20
Price
Qua
lity
Featur
esOffe
re
Style
Latest
Techn
olog
Aftersaleservic
GiftsOffere
Brand
Factors % Response
In previous few questions we have seen that how consumer perceive various
Brands with various features. Now to understand the consumer decision
making process in a better way, it is important to know what are the factors
which consumer take in to account while making decision making. As listed
above various factors are taken in to account by the consumers. Quality,features and price are on the top of the mind while making buying decision.
Q14. Would you take in to consideration your family members opinion?
Family members Opinion
Option ResponseYes 85
No 15
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0
10
20
30
40
50
60
70
80
90
Yes No
Family members Opinion Response
Interpretation:
Consumer electronics market is considered to be a complex decision making
market. In such a complex market consumer do lot of information
processing . Various external factors influences consumers decision making
process. One of the influencing factor in this process is FAMILY
MEMBERS. In Indian context , Consumers family plays a very important
role. To check the influence of the family members above question was
asked to respondent. As expected 85% of the respondent replied that they
will take in to consideration the family members opinion.
Q15. Whose opinion will matter you most ?
OpinionOption Response
Friends 23.68
Parents 25
Spouse 25
Children 13.16
Salesman 4
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Others 9.16
0
5
10
15
20
25
Friends Parents Spouse Children Salesman Others
Opinion Response
Interpretation :
As discussed earlier, consumers family plays a very important role in
decision making. But apart from family members what all are the factors
which influence the consumers in buying decision? Friends, parent,
spouse , children, salesman, others (office colleague , word of mouth,
brand ambassadors) are influencers. There opinion is count by the
purchaser before making buying decision.
Q16. From where would you prefer to buy your colour TV set. ?
Purchase PointOption ResponseCompany Showroom 42.5
Electrical mall 26.5
Local Vendor 12.5
Exhibitions 0
Multi Branded Showroom 18.5
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0
5
10
15
20
25
30
35
40
45
Company
Showroom
Electrical mall Local Vendor Exhibitions Multi Branded
Showroom
Purchase Point Response
Interpretation:
Point of purchase is another important factor which always come to
buyers mind. Being a high involvement product, consumers want to buy
the product from the reputed and trustworthy purchase point. When
response from the respondent was analyzed it can be seen that almost
42.5% respondent want to buy product from the companies showroom.
Electronic mall, and multi branded showroom comprise of 44.5% share.
Various exhibitions which company get in to do not form part of the
favorite consumer purchase ponit.
Q17. As a future product what features would you like to add in to colour
T.V.?
Interpretation:
Understanding the consumers need, adding a desire in that need,
converting the same in to want and providing the product to fulfill the
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want is the main key for any marketer. For this purpose , by this survey I
tried get insight of what consumer is expecting form the product in near
future? What are the needs of the consumers? What future development
do the consumer want in the product?
If we study and try to understand what need the colour TV basically
address then the question would be need for entertainment, need for
pleasure, need to experience the LIFE by visual and hearing senses.
But is this all that a consumer want from the colour TV?
Survey findings gave a total new insights about the consumers changing
lifestyle patterns, new expectation, creative demands and lot more
possibility to bring the totally innovative products.
Following are the few key expectations of the consumers from the
product :
1. Quality Picture,
Good Resolution,
3D Picture,
Big Screen,
Can be converted in to proxima when needed for theatre
like experience (actual Home Theatre).
Screen at both the side !!!
2. Quality Sound,
Surround Sound
No of speakers, for better sound quality,
Natural sound reproduction.
3. Additional features:
Ergonomic view.
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Ready Set Top Box inside the TV,
Wire less connectivity,
Less power consumption when in use,
Additional features like inbuilt games, music system.
Artificial intelligence.
4. Techno savvy features:
Blue tooth connectivity with other devices such as
mobile, computer, camera, camcorder, music system.
Touch screen menu and remote control,
USB connect,
Wireless communication,
WI FI enabled device,
User friendly interaction,
Artificial intelligence (to change the program as per the
mood of user).
In a glance at the features expected by the consumers, we will come to know
that the preferences of the consumer had changed. Now days consumers not
only want entertainment but far more than that. During interaction with
consumers it was observed that Quality Picture, Quality Sound are
considered as the in built features in the product. Those are no more product
differentiation factors. Today consumer had become more demanding in
terms of creative factors. Techno savvy had become need for time.
Expectations from future product are more on this features. Connectivity,
compatible inter phase between various instrument. If we study the features
required by the consumers then it is very much clear that they are more of
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technology oriented. Connectivity, USB connection, blue tooth, wire less
connectivity are all in more hype.
So, while developing the future products any organization should keep this
thing in mind.
TOTAL PRODUCT CONCEPT
Following is the diagram of total product concept. Total product
concept talks about the basic, core product. Followed by formal
product, in this, concept talks about what primary need those are
fulfilled by the core product. Then comes the augmented product,
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which tells what all are the other benefits the product is offering
which will attract consumer to buy the product. Then followed by
the future product, consumers idea or the expectations from the
future product.
CONSUMER BEHAVIOR
The aim of marketing is to meet and satisfy target customers needs and
wants. The field of consumer Behaviorstudies how individuals, groups, and
organizations select, buy, use, and dispose of goods, services, ideas, or
experiences to satisfy their needs and desires. The consumer buyer
ColourTV
Picture clarity
Sound clarity
Features offered
No of channels
Videoout put
Audio out put
Tube, screentype
Variousbrands
After sales service
Dealer reputation
Exchange offer
O % finance
Gift vouchers
Guarantee
Warranty
Free installment
Any time helpCall centre
Customer relationshipmanagement
Great resolution
Big Screen
Big Screen
Inbuilt proxima
Screen at bothThe side
Surroundsound
Natural soundReproduction
3 D view
Ergonomic view
Wirelessconnectivity
Ready set topbox
Less powerconsumption
Inbuilt games
Artificial intelligence
Blue toothconnectivity
Touch screen menuand remotecontrol
WI FI User friendlyinteractions
COREProduct
FormalProduct
AugmentedProduct
FutureProduct
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Behavioris the buying Behaviorof final consumerindividuals and
households who buys goods and services for personal consumption.
Understanding consumer Behaviorand knowing customers are
never simple. Customers may state their needs and wants but act otherwise.
They may not be in touch with their deeper motivations. They may respond
to influences that change their mind at the last minute. Nevertheless,
marketers must study their target customers wants, perceptions, preferences,
and shopping and buying behavior:
Studying consumers provides clues for developing new products, product
features, prices, channels, messages, and other marketing-mix elements.
A Model of Consumer Behavior
At one time, marketers could understand consumers through the daily
experience of selling to them. But the growth of companies and markets has
removed many marketing managers from direct contact with customers.
Increasingly, managers have had to rely on the 7 Os framework for
consumer research to answer the following key questions about any market:
Who constitutes the market? Occupants
What does the market buy? Objects
Why does the market buy? Objectives
Who participates in the buying? Organizations
How does the market buy? Operations
When does the market buy? Occasions
Where does the market buy? Outlets
The starting point for understanding buyer behavior is stimulus-response
model shown below. Marketing and environmental stimuli enter the buyers
consciousness. The buyers characteristics and decision process lead to
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certain purchase decisions. The Marketers task is to understand what
happens in the buyers consciousness between the arrival of outside stimuli
and the buyers purchase decisions. They must answer two questions:
How do the buyers characteristics-cultural, social, personal, and
psychological-influence buying behavior?
How does the buyer make purchasing decisions?
Marketingstimuli
Other stimuli Buyerscharacteristics
Buyers decisionprocess
Buyersdecision
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Cultural
Social
Personal
Psychological
Problem
Recognition
Information search
Evaluation
Decision
Post PurchaseBehavior
Product choice
Brand choice
Dealer choice
Purchase Timing
Purchase amount
TYPES OF CONSUMER PURCHASING DECISION :
The process by which the consumers make purchasing decision must be
understood in order to develop a strategic application. Consumer decision
making is not a simple process. Deciding to buy a car is different than the
deciding to buy a tooth paste. Following figure presents a typology of
consumer purchasing decisions based on two dimensions:
Extent of decision making
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The degree of involvement in purchase.
Complex DecisionMaking
(Autos, Electronics Appliances)
Variety seeking(Cereals)
Inertia(canned Vegetables,
Paper Towels)
Brand Loyalty(Cigarettes, Perfumes)
High InvolvementPurchase Decision
Habit(Little or no InformationSearch, consideration of
only one brand)
Low InvolvementPurchase Decision
Decision Making(Information Search,
consideration ofbrand alternatives)
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The first dimension represent a continuum from decision making to habit.
Consumers can base their decision on a cognitive process of information
search and evaluation of brand alternatives. On the other hand, little or
no decision making may take place when consumer is satisfied with a
particular brand and purchase it consistently.
The second dimension depicts a continuum from high to low
involvement product. High involvement purchase are those that are
important to the consumers. Such a purchases are closely tied to the
consumers ego and self image and involve some financial, social,
personal risk. In such cases it worth consumers time and energy for
information search. Low involvement purchase are not important to
consumer and risk involve is less.
Decision making versus habit and low versus high involvement produces
four types of consumer purchase processes. The first process is called as
Complex decision making, it takes place when involvement is high and
decision making occurs. In such a types of cases consumers have the time
for active information search and process it in more details. They use this
information to evaluate and consider the alternate brand by applying specific
criteria such as economy, durability, and service.
Complex decision making will not occur every time the consumer purchase
a brand. When choice is repetitive the consumers learns from the past
experience and with little or no decision making buys the brand that is most
satisfactory. Such a Brand loyalty is the result of repeated satisfaction and
strong commitment to a particular brand. In such cases purchase is important
for the consumers. Also it should be noted that decision process are
consumer specific rather than product specific. That is the degree of
involvement and decision making depend more on the consumers attitude
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toward the product than on the products characteristics. One consumer
might be involved with the product because of some specific characteristics.
Another might not give importance to these characteristics and switch brand
in search of variety.
CONSUMER INVOLVEMENT AND COMPLEX DECISION
MAKING:
As seen earlier two conditions for complex decision making are
Decision process require extensive information
processing,
High degree of consumer involvement with the product.Therefore to understand the complex decision making, we will first consider
the nature of the consumer involvement and then describe the nature of the
consumer decision process.
INVOLVEMENT AND INFORMATION PROCESSING :
The reason that involvement is link to complex decision making is,
generally, higher level of involvement the greater the search for the
information (refer fig ). Such a information processing defines complex
decision making.
Also, a high level of involvement does not always lead to complex decision
making. In some cases consumer may be involved with product and consider
only one brand (refer fig). Such a brand loyal consumers are satisfied with a
brand based on repeat purchase and do not feel the need to engage in
extensive information processing.
Even when decision making does take place, involve consumers are likely to
vary greatly in the extent of information processing. And consider
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alternative brand in the next purchase. The only choice may be model and
option. Even when decision making takes place, involve consumers are
likely to vary greatly in the extent of information processing. Some may
evaluate just few brands on one or more attribute. Others may evaluate a
larger no of brands on many attributes. This means that extent of information
processing should be regarded as continuum from high to low and the degree
of decision making should be regarded on a continuum from low to
complex.
There are two types of involvement with the products, namely Situational
involvement occurs only in specific situation and is temporary. Where as
enduring involvement is continues and is more permanent. Both these are
likely to result in the complex decision making.
High level ofinvolvement
ExtensiveInformationprocessing
ComplexDecisionMaking
Little or noInformationprocessing
BrandLoyalty
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A different approach is needed in targeting those with enduring versus
situational involvement. The deep seated nature of enduring involvement
means that symbol and images are likely to used to connect the consumer
with the product. In targeting the situational involvement more specific
appeals to particular context of purchase will be made.
COMPLEX DECISION MAKING :
In complex decision making consumers evaluate brands in details and
comprehensive manner. More information is sought and more brands are
evaluated than in the other types of decision making situations.
Conditions for complex decision making are as follows,
High priced product,
Products associated with the performance risk,
(medical products, automobiles)
Complex products ( Electronic gadgets, personal
computers)
Products associated with ones ego.
The nature of the product is not the only conditions for complex decision
making. Certain facilitating conditions need to exist. The most important is
adequate time for extensive information search and processing.
Complex decision making will not occur if a decision must be made quickly.
Also consumers may not have time to devote to extensive information
processing because of business and social obligations may have higher
priority.
Second condition for complex decision making is the availability of
adequate information to evaluate alternative brands. Consumers some times
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delay in decision making because of insufficient and inaccurate information.
Decision making is delayed when there are too many products
characteristics and features to consider.
THE BUYER DECISION PROCESS
The buyer decision process consist of Five Stages-:
Need recognition,
Information search,
Evaluation of alternatives,
Purchase decision, and
Post purchase behaviour.
Clearly the buying process starts long before actual purchase and continues
long after. Marketer need to focus on the entire buying process rather than
on just the purchase decision.
1. NEED RECOGNITION- The first stage of the buyer decision
process in which the consumer recognizes a problem or need.
2. INFORMATION SEARCH- The stage of the buyer decision
process in which the consumer is aroused to search for more
information; the consumer may simply have heightened attention or
may go into active information search.
3. EVALUATION OF ALTERNATIVES - The stage of the buyer
decision process in which the consumer uses information to evaluate
alternative brands in the choice set.
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4. PURCHASE DECISION- The stage of the buyer decision process in
which the consumer actually buys the product.
5. POST PURCHASE BEHAVIOUR-The stage of the buyer decision
process in which the consumer take further action after purchase
based their satisfaction or dissatisfaction.
As seen in the above figure and as explained in the above points consumer
buying Behavior is a five step process. This process starts with need
recognition and completes its loop with post purchase evaluation feedback
to the consumer. It is an on going process. It never stops even after the
purchase is happened. Consumers feedback may initiate the purchase
decision of the other buyer. Hence it becomes very important for the
company to make the entire experience of the buying a memorable one for
Need
Arousal
PurchasePost
purchase
Evaluation
ConsumerInformation
Processing
BrandEvaluation
Feedback
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the consumer. So, that he/she become self impose Brand ambassador for the
product and endorse the product in the market.
But is it so easy for any consumer to buy the product? How does the
decision making happens in various products? Is it same complexities in all
products?
For colour TV as a product, it is a COMPLEX DECISION MAKING
process. Because in the buying process of the color TV purchasing,
consumers involvement is very high. In Indian context still the buying of
colour T.V. is considered as the high risk and high emotional and
economical involvement procedure. Still for majority of the house hold
buying a colour TV is a buying luxuries thing. Consumer him self , family
members all get involved in the entire process. As the survey finding
suggest, many consumers would like to do lot of information processing
from various information sources. Consumers dont mind doing a show
room surveys, going through various news papers, magazines, active search
for information is also involved from Internet.
Survey findings also suggest that 86.05% consumers will take in to
consideration the family members opinion. This clearly indicates that the
there is high involvement of the family members. Now, about the
information processing, if we see the survey findings then it can be seen that
consumer take in to account various factors such as ,
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Quality
Features offered,
Style
Latest technology,
After sales service,
Gifts offered,
Brand
8. PriceConsumer takes in to account so many factors while evaluating the
Product !!!
It clearly shows how complex the decision making process is.
If we see the survey findings for buying the same product or from same
company to that matter. Consumers are not very much sure about the
decision. Only 44.19 % consumers responded positively where as
remaining things otherwise. Now what does this means? Consumers are
not very sure about their association with a particular Brand. Probably
Consumers want to try different Brand next time. So, slowly, slowly
Brand loyalty is getting diluted from this segment of the market. Which
was not the case earlier. Consumers used to be very much Brand loyal
with the particular brand for years. But changing globalization and
market environment is shifting the Consumers focus from being Brand
Loyal.
MARKETING MIX
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Marketing mix can be defined as the set of controllable tactical marketing
tools product, price, place, promotion-that the firm may blend to produce
the response it wants in the target market.
PRODUCT-Product means the goods and services combination the
company offers to the target market. In case of color television it includes
variety, quality, design feature, brand name, packaging, services that are
offered along with the television.
PRICE- It is the amount of money the customer have to pay to obtain the
product (CTV). It includes list price, discount, allowances, payment period,
credit terms.
PLACE- It includes company activities that make the product available to
target consumers. Channels, coverage, assortments, locations, inventory,
transportation, logistics becomes the part of place
PROMOTION- Promotion means activities that communicate the merits of
the product and persuade target consumer to buy it. various promotional
activities are advertising, personal selling, sales promotion, public relations.
FACTORS AFFECTING CONSUMER BEHAVIOR
Consumer purchases are influenced strongly by cultural, social, personal, and
psychological characteristics. For most marketer cannot control such factors, but
they must take them into account.
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(a) CULTURAL FACTORS
Cultural factors exert the broadest and deepest influence on the
consumer behavior the marketer needs to understand the role played by
the buyers culture, subculture, and social class.
Culture- the set of basic values, perception, wants and behavior learned by
the member of the society from family and other important institutions.
Subculture- a group of people with shared values system based on common
life experiences and situations.
Social class- relatively permanent and division in a society house members
share a similar values, interests, and behavior.
(b) SOCIAL FACTORS
A consumers behavior is influenced by social factors, such as the
consumers small group, family and social roles and status
o Group- Two or more people who interact to accomplish individual
or mutual goals.
o Family- The family members (husband, wife, children) can
strongly influence buyer behavior
o Role and Status- Role consist of the activities people are expected
to perform according to the persons around them.
Status reflect the general esteem given to it by the society.
people often choose the products that show their status in the
society.
(c) PERSONAL FACTOR
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A buyer decision also are influenced by personal characteristics
such as the buyers age life style, and life cycle stage, occupation ,economic
situation , lifestyle , and personality and self concept.
o Age and Life cycle stage- People change the goods and
services they buy over their lifetime. Tastes of the people
undergo change with their age.
o Family life cycle- the stages through which families might pass
as they mature over time.
Occupation A persons occupation also affect the
goods and services they bought Life Style- A persons pattern of living as expressed in
his/her activities, interest, and opinion.
Personality-A persons distinguishing psychological
characterstics that lead to relatively consistent and lasting
responses to his or her own environment.
(d) PSYCHOLOGICAL FACTORS
A persons buying choices are influenced by four major
psychological factors: motivation, perception, learning, and beliefs and
attitudes.
(i) Motivation- A need that is sufficiently pressing to direct the person to
seek satisfaction of the need.(ii) Perception- The process by which people select, organize, and
interpret information to form a meaningful picture of the world.
(iii) Learning- Changes in the individuals behavior arising from
experience.
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(iv) Beliefs and Attitude- Belief is a descriptive thought a person hold
about something.
Attitude is a persons consistently favorable or unfavorable
evaluation, feelings, and tendencies towards an object or idea.
FOLLOWING THE MARKET LEADER
During the entire Survey and study one thing was observed that even after
being the late entry in the market and being a MNC, LG India had out
performed in all segment of consumer durable and consumer electronic market.
For most of the consumers LG is having maximum recall value. Hence in the
ending up sessions of the project, L India was studied for the understanding of
the success of the leader.
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TODAY Consumer durables sector is characterized by the emergence of
MNCs, exchange offers, discounts, and intense competition. The market
share of MNCs in consumer durables sector is 65%. MNC's major target is
the growing middle class of India. MNCs offer superior technology to the
consumers. LG, SAMSUNG the two Korean companies has been
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maintaining the lead in the industries with LG being leader in almost all the
categories.
The company, having a turnover of Rs 9,500 crore and market share of 26
per cent, is investing Rs 360 crore on brand-building and other marketing
initiatives and around Rs 140 crore on research and development, besides
launching new platforms in information technology and related areas.
LG Electronics is one of the leading companies in the field of
electronics with a global presence in many countries. Before briefing, have
divided the introduction part into three main sub parts.
1. LG Global2. LG India3. LG
History of company:
The company was originally established in 1958 as Gold Star, producing
radios, TVs, refrigerators, washing machines, and air conditioners.
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1958-1969-GoldStar The Electronics Industry Dream
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1970-79 GoldStar symbol of The Technolgoy
1980-88 :- INTERNATIONALIZATION
1989-94 INOVATION
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1995-98 GLOBAL LEADERS LG ELECTRONICS
1999-2003-DIGITAL MANAGEMENT
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2004-2006 GREAT PEOPLE GREAT DESIGN
2007-THE PEOPLE COMPANY
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The LG Group was a merger of two Korean companies, Lucky and Gold
Star, from which the abbreviation ofLG was derived. The current "Life's
good" slogan is a backronym. Before the corporate Name change to LG,
household products were sold under the Brand name ofLucky, while
electronic products were sold under the brand name ofGold Star. The Gold
Star brand is still perceived as a discount brand.
In 1995, Gold Star was renamed LG Electronics, and acquired Zenith
Electronics of the United States.
Global Operation:
LG Electronics is playing an active role in the world market with its
assertive global business policy. As a result, LG Electronics controls 110
local subsidiaries in the world with around 82,000 executive and employees.
LG Group
1. LG.Philips LCD
2. LG Chemical
3. LG Telecom
4. LG Powercom
5. LG Twins
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6. LG Dacom
Business areas and main products
Mobile communications
(a) CDMA Handsets,
(b)GSM Handsets,
(c) 3G Handsets,
(d) Cellular Phones
Digital appliance
a) Air Conditioners,
b) Refrigerators,
c) Microwave Ovens,
d) Washing Machines,
e) Vacuum Cleaners,
f) Home Net,
g) Compressors for Air Conditioners and Refrigerators
Digital display
a) Plasma TVs,
b) LCD TVs,
c) Micro Display Panel TVs,
d) Monitors,
e) PDP Modules,
f) OLED Panels,
g) USB Memory,
h) Flat Panel Computer Monitors
Digital media
a) Home Theater Systems,
b) DVD Recorders,
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c) Super Multi DVD Rewriters,
d) CDRW,
e) Notebook PCs,
f) Desktop PCs,
g) PDAs,
h) PDA Phones,
i) MP3 Players,
j) New Karaoke Systems,
k) Car Infotainment
VISION
Global Top 3 by 2010
Global Top 3 Electronic/Telecommunication company
GROWTH STRATEGY
Fast innovation, Fast growth
CORE COMPETENCY
Product leadership, Market leadership, People leadership
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CORPORATE CULTURE
No excuse, we not I, Fun workplace
SLOGAN
"Life's Good" represents LG's determination to provide
delightfully smart products that will make your life good.
The LG Electronics Life's Good signature consists of the LG logo,
seal, and the slogan, "Life's Good" set in Charlotte sans typeface
curved around the LG symbol. The curving of the slogan reinforces LG's
personality and uniqueness. The consistent usage of this signature clearly
establishes the unique identity of the company and unifies every division
and product from LG Electronics across the globe.
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THE SYMBOL
The symbol of LG is the face of future. The letter L and G in acircle symbolizes world, future, youth, humanity & technology.LG philosophy is based on humanity. It also represents LGsefforts to keep close relationship with our customers around theworld.
The symbol consists of two elements.
1. The logo in LG gray2. The stylized image of human face in the unique LG red color.
Red color represents friendliness and gives a strong impression ofLGs commitment to deliver the best.
The circle symbolizes The Globe. The stylized image of a smilingface in the symbol conveys Friendliness and Approachability.
The one eye on the symbol represents Goal-oriented, Focused &Confident.
The slogan of LG is Lifes Good. It expresses Brands Value ,Promises, Benefits , Personality .
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THE PARTNERSHIP
LG Electronics chooses to promote harmony and build constructively on a
labor-management relationship rather than an employee-employer
relationship. This illustrates that management and workers are not in a
vertical relationship, but in a horizontal one.
This culture is necessary for LG Electronics as it strives to become one of
the world's top companies. Such a relationship is transformed into a value-
creation relationship whereby both parties endeavor to address mutual
problems and create new values together.
STRATEGIC ALLIANCE
LG Electronics is making technical advances and identifying business
opportunities through various associative relationships with some of the
world's leading companies.
LG Electronics is striving to become number one in the world by
mingling in various business and technological fields and making strategic
alliances with world famous companies. "Strategic association betweencorporations," in which companies with different infrastructures cooperate in
the fast-developing 21st century business field, is of key significance in
terms of strengthening the existing industry and creating a new one.
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LG Electronics will do its best to create new products and services with an
open mind, while developing new technologies and business fields through
various associations with some of the world's most successful companies.
1. 3M
2. SUN
3. YAHOO
4. PHILLIPS
5. TOYOTA
6. MICROSOFT
7. HP
8. GOOGLE
9. GE
10.INTEL
11.NORTEL
12.HITACHI
13.PRADA
14.RENESAS
15.TOSHIBA
16.BESTBUY
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And the number follows many more..
In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance. Yahoo
mobile services will be available from LG mobile. This service is targeting
10 million LG mobile phones in over 70 countries.
In Mar. 2007 LG Electronics and Google formed a strategic alliance. Both
companies will work together to release, market, and offer LG mobile
phones with Google services (search engine, map, email, and blogs).
LG BRAND IDENTITY:-
The brand of LG is delightfully smart. LG strives to enhance the customers
life and lifestyle with intelligent features, institutive functionality and
exceptional performance.
The brand platform:-
The LG brand is composed of four basic elements
1. Value
2. Promise
3. Benefits
4. Personality
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The Brands core Value that never changes.
a. Trust,
b. Innovation,
c. People
d. Passion
The benefits that are consistently delivered to the customer includes
a) Reliable products
b) Simple design
c) Ease of use
d) Extraordinary Experience
Personality describes the human characteristic that are expressed to thecustomer through
Trustworthy, Considerate
Practical, Friendly
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The Internal Culture of LG:
LG practices four cultures
1. Learning Culture
2. Boundary less Environment
3. A Carrier
4. Growth
According to LG, the Learning Culture continuously helps the employee to
learn more and more to develop the habit of continuous learning.
Boundary less Environment means that there is no difference between the
levels of employees. There is transparency between the work and mutual
understanding between all the employees.
A carrier is highly growing in LG and one who is the employee can develop
their carrier largely. A new comer will feel fully comfortable in the company
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and for a new comer the company is very helpful in the overall growth of
personality.
Growth in LG is very high for those who are in the company and for those
who want to join in LG. The company is growing with fast innovation and
the BLUE Ocean strategy is one of the examples of growth.
Mission
The mission of LG is to provide the customers with utmost satisfaction
through leadership. The fundamental policy of development is to secure
product leadership that the Customers may have the utmost satisfaction.
Product LeadershipWe are focusing on six development areas to become the product leader.
1. New Machine
2. Reliability
3. Conventional Installation
4. Environment Friendly Product
5. Low Noise & Vibration
6. Energy Saving
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Quality Innovation
The policy of quality assurance is to provide customers with
utmost satisfaction by supplying zero defects.
LG proceeds in a hierarchal manner. It is named asLG WAY.
From top to bottom:
No.1 LG is the VISION
Jeong-DO Management is LGs unique application to ethics. LG will
succeed through fair management practices and constantly developing our
business skill.
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A) Honest with our customer
b) Providing great values to customer through constant
innovation & and development.
c) Equal opportunities
d) Equal Treatment
Management Principle - Creating value for customer
Code of conduct of LG
1. Responsibility and obligations to customers :
Respect for Customers
Creating Value
Providing Value
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2. Fair competition
Pursuit of Free Competition
Compliance with Laws and Regulations
3. Fair Transaction :
Equal Opportunity
Fair Transaction Procedure
Support and Aid for Business Partners
4. Basic Ethics for Employees
Basic Ethics
Completion of Duty
Self Development
Fairness in Performance
Avoidance of conflict with company interest
5. Corporate Responsibilities to employees
Respect for human dignity
Fair Treatment
Promoting Creativity
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6. Responsibilities to society and country
Rational Business Development
Protection of stock holder interest
Contribution to social development
Environmental Conservation
LG INDIALG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG
Electronics, South Korea was established in January 1997 after clearance
from the Foreign Investment Promotion Board (FIPB). LG set up a state-of-
the art manufacturing facility at Greater Noida, near Delhi, in 1998, with
an investment of Rs 500 Crores.
LG corporate office is located at Plot no.51, Udyog Vihar, Kasna Road,
Greater Noida, India. This facility manufactured Color Televisions, Washing
Machines, Air-Conditioners and Microwave Ovens.
''Company is setting up a chain of exclusive premium showrooms. LG plans
to launch 60 premium Brand Shoppes by the end of the first quarter of this
year. At present, LG has a total of 83 LG stores across the country, of which
45 are shops and 38 are exclusive stores. Brand shops will be placed in the
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premium segment and the target audience will comprise buyers interested in
premium and high end products.
LG Brand Shoppe goes beyond the concept of a normal exclusive store by
having a more interactive environment and additional lifestyle orientation on
display so that the customer can actually experience the LG products in his
or her own home settings.
LG Electronics India Ltd (LGEIL), consumer durables leader with 27%
market share, is planning a brand new image. To attract inspirational and
young consumers across India, company will roll out a new marketing
strategy. The exercise will cost the company Rs 360 crore.
LG Electronics India is the fastest growing company in the consumer
electronics, home appliances, and computer peripherals industry today. LG
Electronics is continually providing, superior technology products & value
for money to more than 50 lakh households in India.
LG Soft India the innovation wing of LG Electronics in Bangalore is LG
Electronics' largest R&D centre outside Korea. We at LGSI focus on
niche technology areas such as mobile application development, digital
video broadcast and biometrics software and support LG Electronics with
our expertise. Motivated by a passion for technology, a strong work culture
and loyalty to the organization, we are determined to see LG become one ofthe top threebrands globally.
Prominent consumer electronic company, LG Electronics Inc. has said that it
expects the sale of its products in India to up by 15 per cent in 2008. Moon
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Bum Shin, managing director of LG Electronics India has said that the
company has earmarked 4.8 billion rupees for investment purpose in India.
The said money will be used to market as well as manufacture new products.
LG Electronics, which is originally a South Korean Company with branch in
India, informed that its sales of GSM mobile phones, color televisions, air
conditioners and other household goods in the Indian market was to the tune
of 95 billion rupees ($2.4 billion) in 2007. As per Shin's estimate, the sales
in 2008 would be around 110 billion rupees. In order to achieve its target,
Shin said LG Electronics will concentrate on catering to the high-end
consumer market which will help boost sales this year. India churns out six
(6) per cent of LG Electronics global revenues of $42 billion. The Indian
branch of LG exports to 40 countries.
India challenges
The challenges faced by LG when entered in Indian market
1. Low brand awareness about LG in India.
2. One of the last MNCs entered in India (Samsung, Panasonic
entered in 1995 in India).
3. High import duty
4. Compitition from local market players and other MNCs in
consumer durable segment.
5. Price sensitiveness of the Indian consumer
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LGEI over comes these challenges to emerge as
Innovative marketing strategy
1. Launch new technologies in consumer electronic and home
appliances.
2. LG was the first brand to enter in cricket in big way, a way
by sponsoring the 1999 world cup followed it up in 2003 as
well.
3. LG brought in four captains of the Indian cricket team to
endorse its products. LG invested more then US$ 8 million
on advertising and marketing in this sport.
4. LG has differentiated its product using technology and
health benefits. CTV has Golden eye technology Air
conditioner has Health airsystem and microwave ovens
have the Health wave system.
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Local and efficient manufacturing to reduce the cost
To overcome high import duties LG manufactures TV refrigerator in India at
manufacturing facility at Noida and . LGEI had already commissioned
contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has
helped LGEI to reduce cost. LGEI implementing the Digital manufacturing
system (DMS) as the cost cutting innovation this system is follow-up to the
six sigma exercise LGEI had initiate earlier.
R&D potential
LG has the research and development facilities in Bangalore and Pune. Both
the unit carry out R&D department for the domestic as well as the parent
company it also dose customize R&D for the specific countries to which it
export product.
Regional channel and wide distribution network
1. LG has adopted the regional distribution channel in India.
All the distributers work directly with the company. This
has resulted in quicker rotation of the stock and better
penetration into B, C, D, class market.
2. LG also follows the stock rotation policy rather then
dumping stock on channel partners.
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Product localization:-
1. Product localization is the key strategy used by the LG
2. LG came out with Hindi and regional language menus on its TVs.3. Introduced the low-priced Cineplus and Sampooma for the rural
market.
4. LG was the first brand to introduce gaming in TVs in continuations of its
association with cricket LG introduce cricket game in CTVs
MAJOR KEY SUCCESS FACTORS:
1. Innovative marketing - LG was the first brand to enter cricket
in a big way, by sponsoring the 1999 World Cup and followed
it up in 2003 as well.
2. Local and efficient manufacturing to reduce cost - To overcome
high import duties, LG manufactures PC monitors andrefrigerators in India at its manufacturing facility at Noida,
Delhi.
3. Commissioned contract manufacturing at Mohali, Kolkata and
Bhopal for CTVs.
4. Product localization - Product localization is a key strategy
used by LG. It came out with Hindi and regional languagemenus on its TV.
5. Regional distribution model - This has resulted in quicker
rotation of stocks and better penetration into the B, C and D
class markets.
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6. Leveraging Indias IT advantage - LG Electronics has awarded
a contract to develop IT solutions to LG Soft India (LGSI). The
project involves development and support for ERP, SCM, CRM
and IT-enabled services for LG.
Strategies adopted by the organization:
LG follows 10 commandments which are as follows.1. Foster working environment-5S Environment
2. Fast execution is key to success
3. Transparent and fast communication-open communication
4. Update market -knowledge Demographics
5. Win Win relationship with the trade partners
6. Customer is the king
7. Even Billing Road to ach supplier A
8. Be in touch with the market (70% Market, 30% Office).
9. Plan and Execute annual marketing Calendar-Time to market
10.Display share of 50% -to get 50% consumer share.
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LG market share of consumer appliances and consumer
electronic:-
LG position of CTV in various states in INDIA
LG position of REF in various states in INDIA
LG position of washing machine in various states in INDIA
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LG position of AC in various states in INDIA
LG position of Audio & Home Theatre in various states INDIA
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LG position of DVD in various states in INDIA
This analysis is based on the ORG survey conducted by LG which represent
the LG position of different consumer durables in various states in India. Weselected different brand in different category as per the market share and the
demand of product in market. This analysis represents the LG market
position during the period of March 2008. It shows that LG has captured
maximum market share almost in every category. LG and Samsung have the
maximum market in consumer durable market but LG dominate the almost
all the category in consumer durable. Prominent consumer electronic
company, LG Electronics Inc. has said that it expects the sale of its products
in India to up by 15 per cent in 2008. Moon Bum Shin, managing director of
LG Electronics India has said that the company has earmarked 4.8 billion
rupees for i