BALAJI INSTITUTE

OF
MODERN MANAGEMENT

SECTORAL ANALYSIS

OF
REFRIGERATOR INDUSTRY

SUBMITTED BY:
PGDM-C RAJLAXMI GOGOI
GROUP NO.-6 RICHA SABBERWAL
RUBAL KAUR
SAKSHI BHARGAVA
SUCHITA KHANNA
TITASH BAGCHI
BACKGROUND
 Refrigerators have been manufactured in India since 1950s. Till the 1980s, players like Godrej,
Kelvinator, Allwyn and Voltas controlled almost 90% of the market.

Earlier, the white goods sector was categorized as a luxury goods industry and was subject to
oppressive taxation and licensing.The situation changed after the liberalization of the Indian
economy in the early 1990s. Post-liberalization, a number of foreign companies entered the
market and many domestic players also diversified into refrigerators. BPL and Videocon who
already had a presence in the consumer electronics market, leveraged their strengths to enter the
durables sector.

OVERVIEW
 Indian refrigerator market is valued at Rs4000 crore

 Refrigerators hold only 16% of consumer durable market that is valued at around Rs.
20,000-25,000 crore in India.

 Its market is growing at the rate of 7-8% annually.

 Refrigerators constitute the second largest product segment within the Indian consumer
durables sector in India, with an estimated annual turnover of Rs 39 bn during FY2005
with an estimated sale of 4.1m units.

Projected sales for the year 2007-2008

INDUSTRY ANALYSIS: PORTER’S FIVE FORCE MODEL

POTENTIAL ENTRANTS

MEDIUM

 In the Refrigerator industry, although there are not prohibitively high costs of entry, the critical
success factors are brand image, brand allegiance, and distribution networks.

  INDUSTRY COMPETITORS

INTER INDUSTRY RIVALRY HIGH

 The Indian industry consists of players of domestic origin as well as multinationals. Of late, the
multinationals have gained a sizeable presence in the Indian refgeritor market at the cost of
domestic players.

  BARGAINING POWER OF BUYERS

HIGH

  With the intensification of competition the bargaining power of the buyer has increased.

SUBSTITUTES
 LOW TO MEDIUM

  The refrigerator sector is characterized by continuous technology advances that may result in
substitution within the product category.

BARGAINING POWER OF SUPPLIERS

LOW TO MEDIUM

  Most of the raw materials are available easily in India. Some of the raw materials use in
refrigerator such as Fiber, Plastic, Glass, Metals, etc and few components such as thermostat,
condenser, heaters and fans are easily available in the market.

Market Player taken for analysis

Whirlpool (Challenger) Samsung,Godrej (Follower)

LG(Leader) IFB
(Niche)

Source: CRISIL research,industry

“Your key to healthier lifestyle”

VISION
Globally top three by 2010

Global top three electronic/Telecommunication Company.

GROWTH STRATEGY
“Fast innovation, fast growth”

CORE COMPETENCY
Product leadership
Market leadership
People leadership

Market share: 30%

TYPES OF PRODUCTS SEGMENTS IN REFRIGERATOR

1. FROST FREE REFRIGERATORS

2. DIRECT COOL REFRIGERATORS

3. SIDE BY SIDE DOOR REFRIGERATORS

 TV-DIOS REFRIGERATORS

FROST FREE REFRIGERATORS

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

 280 – 471 litres are available.

 There are 9 models available in this segment.

Called as “Intellocool” refrigerators

TARGET:
Middle and middle upper class people.
PRICE:
The price range varies between Rs.14450 to Rs.39880

DIRECT COOL REFRIGERATORS

 Called as “INTELLO COOL”

 Available in the range of 175litres To 270litres.

 There are 14 models in this segment.

TARGET:

Middle and middle upper class people.

PRICE:

 The price range varies between Rs.6500 to Rs.11800

SIDE BY SIDE REFRIGERATORS

 Two doors side by side. One side refrigerator and other side freezer with through the door
ice / water dispensers.

 580 – 750 liters are available.

  There are 5 models available in this segment.

 Refrigerator with TV & Radio is also available.

 TV-DIOS
LG India launched the World’s First TV Refrigerator – TV DIOS with a 13-inch hi-
definition TFT LCD TV installed at the center of its door. The 600 liters TV DIOS also
has a built-in radio tuner providing access to FM stations and is supported by built-in
speakers. It has an astounding silver nano-antibacterial and nano-carbon deodorizing
technology.

Called as “Intellocool” refrigerators

TARGET:

Middle Upper and Upper / premium class people.

PRICE:

 The price range varies between Rs.59900 to Rs.130000

CDV:
 4 /5 STAR Rating (BEE)

 Works without Stablizer

 Intello Compressor

 Dispenser

Threats to the company

Despite the fact that refrigerators have immense utility to housewives and provide a
solution to avoid food wastage, the penetration level is still below 20% and its market is
growing at a very small pace. This may be because:

 People in small towns and rural areas do not consider it as a necessary product and are
unaware of its utility value.

 Non-availability of power.
OPPORTUNITIES
 Untapped market of rural India can be explored.

Whirlpool is transforming into a completely customer-centered company where the customer lies
in the core of every of our functions .

 The transformation is made up of five elements:

 Market leadership through customer loyalty

 Innovation

 Diversity with inclusion and core competencies

 Passion for customer excellence

 Operational excellence
Whirlpool has swiftly moved from being a World Class Manufacturer to a World Class Marketer
using the brand-building framework.

Vision and mission

 The pervasive vision of Whirlpool is

“ Every Home, everywhere, with pride, passion and performance ”.

 This rests on the pillars of innovation, operational excellence, customer-centric approach

and diversified talent.

 Market share and growth rate :

 Currently Whirlpool commands 25% of the domestic refrigerator industry and trying to
achieve 27% by this year.

Segmentation of market :
The segmentation variables for refrigerator market are

 Age/ lifecycle stage

 Marital status: eg: Refrigerator is a very necessary household for newly married people.

 Social class and income.

 Occupation : eg: “Instant cool” feature is convenient for working women families.

Targeting and positioning :

 Whirlpool is targeting the women of every Indian families and accordingly it has
successfully positioned itself as the best home-maker in the world.

 The positioning statement is –

“You and whirlpool –the world’s best home maker”

The USP for the frost free segment is its 6th sense cooling system which automatically adjusts the
level of cooling .

Products
 The products in refrigerator category includes

 Direct cool : Low range products. Product variants are named as “Genius”.

 Frost control : Medium range products. Product variants are named as “fusion”.

 Frost free: Premium and high capacity products. Product variants are named as
“Professional, ice bergs , masterminds and delight”.

 Whirlpool refrigerator Fusion is available in two models which is designed to operate

even with an irregular power supply, which is a common problem in many Indian cities.

 Whirlpool has introduced new Delight frost-free refrigerators in eight models in 230-L,
260-L and 300-L capacities. A unique feature is LED lighting, a white light that is
“evenly distributed and optimally positioned” to enable the contents of the refrigerator
to be clearly visible even when it is fully loaded.
SAMSUNG
• Samsung has launched nine new refrigerator models, both frost-free and direct-cool.

• Samsung, which is the market leader in the over-350 litre frost-free refrigerator segment,
is seeking to consolidate its position by launching three new, advanced, feature-rich
models in 375 litres, 400 litres and 704 litres in the Indian market. The company
currently has a range of 42 frost-free models priced between Rs13,000 and Rs 1.5 lakh.

• In the direct cool refrigerator segment, the company has extended the category by
introducing two new models of 180 litres and 195 litres.

• Expecting to expand refrigerator channel by 25 per cent this year.

• Targeting a market share of 18 per cent in the refrigerator segment this year from 15.8
per cent last year.

 Samsung plans to reach out to more tier-II cities. Showcasing products in 135 cities this
year against 120 last year.

 The South had emerged as a key contributor to the company's overall revenues.

 The share of Southern sales has gone up from 24 per cent to 31 per cent, equaling the
contribution from the Northern States.
  In a bid to cash in on the growing interest in the South, the company has lined up 11
`Dream Home' roadshows in the region this year. The number of `brand shops' would go
up by 30 per cent from 82 currently.

Positioning
 Samsung positions itself as technology leader and not only as a volume player and a price
warrior.

 Strategy is value driven, not price driven.

 Expecting leadership on the basis of top quality, leading edge technology, priced
competitively and backed by strong after sales service,"

 Global CEO Yun Yong's vision: "We want to be the Mercedes of home electronics.“

 The drivers this time at Samsung -- in fact, the company has put these well above the
traditional 4 Ps of marketing -- are design and innovation.

 "Good designs and innovative technology will be the most important differentiator for
Samsung from competition

"If you are able to deliver the latest technology at an affordable price, the consumer will not be
willing to go back to outdated technology

 How many customers actually pay attention to differentiation on the basis of

technological innovations such as Twin Cooling or Silver Nano (for refrigerators), or
even one based on design?

 The sales staff at the showrooms are not able to point out the key differentiators.

 To tackle this issue, last year, the company started the Samsung Marketing Academy,
which conducts regular training programmes to educate the sales forces, shop-owners and
company employees on the company's technology and design, how it is different from
what competitors are offering, and how to better explain the difference to the consumer.

 By equipping the salespeople to sell knowledge-oriented lifestyle products, the company

is hoping to provide customers a more informed buying experience, which will translate
into higher sales.
Godrej

Marketing Strategy
Godrej & Boyce’s appliances division is focusing on consolidating its business and achieving the
top position in the refrigerator.It is training its sights on capturing the leadership position in
refrigerators by 2012.Godrej officials said the company aimed to be among the top two players
in cooling, its core competence, and among the top three in the other segments.Mr George
Menezes,Chief Operating Officer, Appliances Division, Godrej & Boyce Manufacturing Co Ltd,
said the company, to be able to hold its own against global giants such as LG, Samsung and
Whirlpool, “is being different on a scale where they cannot compete with us.” To this end, it is
working on “offering technology which is relevant to the Indian consumer, products which are
down-to-earth and which will touch her heart and soul,” he said.The company will also make a
foray into small kitchen appliances as well as commercial cooling products such as freezers and
cool cabinets — it is now identifying opportunities in these segments.Mr Menezes also said other
priorities for the company included constantly improving the energy efficiency of its appliances.
It is also exploring use of new materials for refrigerators for better formability and finish and
new technology to make the refrigerator compressors noiseless, he added.

SEGMENTATION OF GODREJ

Geographic Segmentation:
metro cities , Tier 2, Tier 3 cities and rural areas.
Family size approx 5
Income:Rs 2, 00, 000 and below.
Social class: mainly lower class

Behavioural:
Occasions: festivals and regular usage

Targeting of godrej:
1) Model named Champion-

Capacity- 165 litre

 Priced - Rs 6,790

Rural area like Uttar Pradesh, Tamil Nadu and Andhra Pradesh

2) Model named Chotukool

Capacity- 43 litre

Priced - Rs 3250

Lower class ,rural areas and bachelors

Positioning
Godrej has won innumerable awards and recognition bear a testimony to Godrej's demand and
position in the market. Godrej refrigerators has been voted as the most preferred refrigerator
brand by the consumers themselves. In spite of the tough competition in the market, Godrej has
time and again proved itself by maintaining its top position.By choosing Preity Zinta as its brand
ambassador Godrej has successfully shifted its brand perception from being an old refrigerator to
a young and cool one. Godrej has courageously experimented with varied colors of refrigerator
and has been successful in it too.