IFIM BUSSINES SCHOOL

BANGALORE

A
REPORT
ON
CUSTOMER AND PRODUCT ANALYSIS OF PANASONIC INDIA
LCD, LED &PLASMA

SUBMITTED TO
Dr. DN MURTHY
Panasonic India ltd

SUBMITTED BY
MV VINOD KUMAR
KUMAR ABHISHEK
SUMMARY:-
The project has been aimed at giving an insight to contemporary industrial trend in
consumer durables specially LCDS, LEDS and PLASMAS. It also talks about the
current position of different competitors to Panasonic India and the reasons of the
places attained. The project has a list of observations and recommendations from
our side. Considering the rapid growth rate in urban as well as rural market, the
intensive growth strategy with product development strategy has been suggested.
The project has its certain limitations yet will be an effective and significant tool
while decision analysis.

ACKNOWLEDGEMENT
We would like to express our sincere gratitude to all those who have been
instrumental in the preparation of this project report.
We would like to thank Dr.Murthy, for his guidance and support in our project.
We wish to place on record our deep sense of gratitude to Panasonic India ltd for
imparting us an opportunity to observe the real marketing conditions as well as the
peculiar and unpredictable consumer buying behavior. We are also thankful to the
“Girias” & “Adishwars” store staffs for their expert advice and assistance.
We are deeply obliged to IFIM B-School and its Management for its support in the
project.
Last but not least, we would like to thank The Almighty, our parents and friends
for their help and support that has largely contributed to the successful completion
of the project.
OVERVIEW

INDUSTRIAL PROFILE OF CONSUMER DURABLES:

The Indian consumer durable industry is growing at CAGR of 23% from 2007 onwards. The
industry is expected to grow around US$ 40 billion by 2010.

LCD TV Demand in the World

LCD TV Demand in the World

2011(E)

2010(E)
MN Units

2009(E)

2008

0 20 40 60 80 0 0 2 0 4 0 6 0 8 0
1 1 1 1 1

“Source: The Hindu Business Line; Cygnus research”

According to a study by the McKinsey global institute (MGI), Indian per capita income is likely
to grow three fold over the next two decades and India will become world’s fifth largest
consumer market by 2025 moving up from the position in 2007 as the 12 th largest consumer
market. By 2010 the annual commercial spending in India is estimated to be at US$ 2.6 trillion.

Key Trends:

Rising income and availability of finance:

In this competitive era, the income level of individuals is rising and disposable income has
increased to a great extent. Consumer financing has become easier with all the banks coming
forward to lend the consumers at affordable rates of interest.

Improved Affordability of products:

Advanced technology and increasing competition are narrowing the price gap and the expensive
appliances are becoming cheaper. Products that were once beyond the reach of middle class
Indians are now affordable. There is consistent growth trend in demand for products are being
depicted by consumer behavior. Once considered as luxuries (air-conditioners, washing
machines and high end LCD and LED) have become the wants of the consumer which is the
reflection of future prospects.

High end customized products gain ground:

The Indian consumer durables market is going for high end customization with aesthetic appeal.
Manufacturers are steadily going for innovations to develop advanced and user friendly products
for satisfying the needs of a varied class of customers. The trend is worldwide and it’s mirrored
in India too. The LCD TV demand worldwide is expected to grow from 98mn units in 2008 to
around 148mn units by 2011.

Competition to Drive sales:

Major consumer durables companies are coming up with new product lines. International
companies such as Haier as part of its expansion strategy in India, plans to launch television, air-
conditioners refrigerators and washing machines, This would provide consumers with ample
choices and drive up sales in the sector.

Organized retail gaining momentum:

Urban and rural markets are growing at the annual rates of and 11% and 18% respectively, with
organized retail expected to garner 10% share by 2010, from a mere 3% share at present. While
there are established distribution networks in both rural and urban India, the presence of well
known brands in the organized sector is increasing. The trend will also boost sales of private
label products and will have a positive impact on the consumer durables industry, as organized
retailing would not only streamline the supply chain, but also facilitate increased demand,
especially for high end and branded products.

Entry of large retail players:

Low penetration in the consumer durables industry has allowed the entry of large retailers to the
Indian market. This is resulting in rise in competition due to large players such as CROMA, E-
ZONE and Reliance Digital. Part of growth momentum in high end segments of consumer
electronics could be attributed to the competitive evolution of organized retail, stimulating the
demand through exposure to high end shopping experiences.

Investment option in high end colour TVs:

Plasma display panels and liquid color displays TVs have registered average growth of more
than 250% in 2006-07 and trend is expected to continue. The rise in income level and easy
availability of credit facilities would further fuel the growth of high end colour TVs in the
country.
Key factors in this sector:

The following factors are critical for manufacturers in the sectors:

Product technology:

While the market is continuously expanding there are several concerns that will have to be
addressed while moving focus towards tier-3 towns and rural area. Total cost of ownership
would be a key factor driving purchases in the regions.

Distribution and service network:

As the market spreads out from saturated urban regions to low penetrated rural areas and tier 2 or
3 towns, distribution network and brand recognition will continue to play even more significant
roles in determining market share and profitability. The emergence of international style multi
brand showrooms would help to drive sales of consumer durables as they offer a wide range of
products under one roof.

Innovation and advertising and promotions:

Increasing competition and technology adoption has led to a situation where the basic functions
of most of the consumer durable goods have been largely commoditized. This has created a
situation where identifying a unique differentiating factor and promoting it effectively has
become imperative. The advertising and promotion spending in the industry have been growing
steadily.

Attractive locations:

Since raw material accounts for more than 75% of the manufacturing cost of consumer durables
and with a significant part of it being imported, locations in Maharastra, Gujrat and Tamilnadu
nearby ports could be better choices to meet high demand for durables goods and factor
consolidation in the manufacturing sector.

INDUSTRY ANALYSIS- PORTER’S 5 FORCES MODEL

Michael Porter’s Five Forces Model provides a robust and time-tested framework for analyzing
any industry, reflected in the strength of the five forces (industry competitors, potential entrants,
and threat of substitutes, bargaining power of buyers and bargaining power of suppliers). The
collective strength of the five forces determines the ultimate profit potential in an industry, where
profit is measured in terms of long term returns on capital invested. The elements of each of the
above forces and the extent and /or effect of each element in the context of the television
industry have been analyzed and enumerated below.
THREAT OF NEW ENTRANTS (moderate)

• It is considered to be moderate as

a. Selective & exclusive distribution.

b. Economies of scale enhance the entry barrier.
c. Huge capital requirement for setting up manufacturing unit, importing the
components. Good amount of money required for positioning and capturing the
customers’ mind share.
d. Central & state level regulations & policies.

• New entrants would be from china and domestic market, as Chinese products are likely to be
cheaper and Indian market is very price sensitive.

THE BARGAINING POWER OF BUYERS (high)

• It is inclined towards high. As customers have become

a. Brand conscious and Brand loyal that make them buy a particular brand only.
b. Knowledgeable & wise with the help of internet/media/word of mouth
communication.
c. Tech savvy as they look for the latest technological trends and superb audio visual
outputs.
d. Price sensitive -multitude of brands across price points, wide variety of choice for
them & switching cost leans moderately.

THE BARGAINING POWER OF SUPPLIERS (low)

a. It is low due to indigenous supply base & most raw materials are imported.
b. Backward integration possible and depicted by a few players.

COMPETITIVE RIVALRY (very high)

a. Number of well-established players; several new players entering

b. Chinese manufacturers
c. Good technological capability
d. Many untapped potential markets and players

THREAT OF SUBSTITUTES (low to moderate)

• Unbranded products and cheaper imports could enter the market. Overall, the sector is a
dynamic one, with significant growth opportunities and rapid technological changes.
LCD TV MARKET IN INDIA:

India’s LCD TV Market Doubling Every Year: Display Search Report Reveals.

“Austin, Texas, September 10, 2008—Display Search, the worldwide leader in display market
research and consulting, recently released a new topical report called India TV Market: TV’s
Emerging Land of Opportunity that analyzes the trends and opportunities within the India market
and predicts that by 2012, LCD TV shipments will surpass those of CRT TVs in India. India has
the second largest population in the world and an annual GDP growth rate of more than 8%
from2002 to 2012, with a TV market that is projected to be 13 million units in 2008. CRT TV
accounts for 92.9% of those units in 2008, followed by LCD TV with 6.6% and PDP TV with
0.5%. However, Display Search finds that the India flat panel TV market is just at the beginning
of a real growth curve, with Y/Y growth of more than 100% expected for each of the next five
years. Growth will be driven by enhanced purchasing power, the digital broadcast (DTH, IPTV,
STB cable) transition as well as consumer awareness and affordability of flat panel TVs. India’s
growing upper middle classis projected to be the greatest source of LCD TV purchasing power.”
Display Search analyzes the favorable demographics where more than 23M Indians—greater
than the entire population of Australia—will enter this demographic in the next five years.

Meanwhile, major brands like Samsung, LGE, Sony and Philips and Indian local brands like
Videocon and Onida are all focusing promotional efforts around LCD TV. Several Chinese
brands are also targeting India with their first exports. Figure 1 shows the India TV forecast by
technology.
Among the imports of LCD TV into India, approximately 25% were imported in as CBU
(Complete Built Unit) and 75% were imported as SKD (Semi-Knock Down) or CKD (Complete
Knock Down).

In 2007, the leading India LCD TV brands were Samsung, with more than 30% share, followed
by Sony (19%), and LG (16%). The leading PDP TV brands are LGE, Samsung and Panasonic.
LGE also leads the CRT TV market in India with more than 25% market share, followed by
Samsung and Videocon.

Thailand has a special FTA (Free Trade Agreement) with India on duty benefits. Therefore,
companies like Sony and Panasonic are making LCD TVs in Thailand and then shipping them to
India.

21” flat CRT TVs have a 55% share of the total CRT TV market in India.

There are still some concerns about India’s LCD TV market growth: poor power supply vague
progress toward India digital TV broadcasting; a complex TV import-duty structure; and
regulations that are very complicated and very inefficient.

In 2008, the share of 32” will be more than 45% in India LCD TV market, followed by 20-26”
with 31% share. 40-47” accounts for only 15% in India LCD TV market.CRT TV OEM is a key
business in India as many brands ship components into the country and then subcontract to local
OEM makers to assembly CRT TVs for them. Sony, Samsung and LGE have the most exclusive
shops in India.

The growing LCD TV market in India has encouraged Indian company Videocon group to set up
a TFT LCD panel manufacturing unit.

PANASONIC PROFILE:

Panasonic Corporation, formerly known as Matsushita Electric Industrial Co., Ltd is a Japanese
multinational consumer electronics corporation headquartered in Kadoma, Osaka, Japan. Its
main business is in electronics manufacturing and it produces products under a variety of names
including Panasonic and Techniques. Since its founding in 1918, it has grown to become the
largest Japanese electronics producer. In addition to electronics, Panasonic offers non-electronic
products and services such as home renovation services. Panasonic was ranked the 89th-largest
company in the world in 2009 by the Forbes Global 2000 and is among the Worldwide Top 20
Semiconductor Sales Leaders.

Vision

Panasonic aims to be the No.1 Green Innovation Company in the Electronics Industry in 2018,
the 100th anniversary of its founding year.

Mission

Panasonic recognizes that diversity is a business necessity and also an opportunity to achieve
greater business success accordingly.

SWOT Analysis of Panasonic India

 Strengths

1. Presence of established distribution networks in both urban and rural areas

2. Well known brand in India.
3. In recent years, organized sector has increased its share in the market vis a vis
in the unorganized sector. 
4. Price leadership in the LCD market.
5. Product width and depth enable the reach to rural and urban house hold.

 Weaknesses

1. Demand is seasonal and is high during festive season

 2. Demand is dependent on good monsoons
3. No continuous technological innovation.
4. Design is not appealing customers.
5. Slow in adopting new technology (USB OPTION).
6. Minimal promotional activities.

 Opportunities

1.Unexploited rural market.

2. Rapid urbanization.
3. Increase in income levels, i.e. Increase in purchasing power of consumers due
to easy availability of finance & affordable pricing.
4. In industry LCD is expected to have 56.2% market share in the segment
of flat panel TV. Hence scope for growth is very high.

 Threats

1. Higher import duties on raw materials imposed in the Budget 2009-010

2. Cheap imports from Singapore, China.
3. Competitors innovation.
4. Expansion plans of in house manufacturers.  
5. Low quality products and private label manufacturers and china companies will
dominate market with their low pricing.

COMPETITION OVERVIEW:

SAMSUNG INDIA (CURRENT MARKET SHARE-37%)

Initially the strategy of Samsung in India was to create premium image by emphasizing global
brand. After facing stiff competition from another Korean major- LG, Samsung also started
playing price game. In 2004 it reverted back to its premium positioning, although it resulted in
some loss of market share. In line with the Global Digital Initiative of the Parent Company,
Samsung India acquired digital leadership in India by introducing its digital ready televisions
like the 40" LCD Projection TV, 43"Projection TV and the Plano series of Flat Colour
televisions.

LG INDIA (CURRENT MARKET SHARE-23%)

LG Electronics rightly understood the consumer motivations to create magnetic products, price
them strategically, position them sharply and keep making the magnetism more potent. Having
understood the finer differences in consumer motivations, it opted for sharp-arrow ‘reasons-to-
buy differentiation over the ‘blanket-all approach’ taken by most of the other players. It is an
aggressive marketer. It focuses on low and medium price products.

TOSHIBA INDIA

Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics
giant Toshiba Corporation and was incorporated in India on September 2001. Toshiba had a
presence in India since 1985 and was represented in India through their Liaison Office.

SONY INDIA (CURRENT MARKET SHARE-21-22%)

Sony Corporation, Japan, established its India operations in November 1994. In India, Sony has
its distribution network comprising of over 7000 channel partners, 215 Sony World and Sony
Exclusive outlets and 21 direct branch locations. The company also has presence across the
country with 21 company owned and 172 authorized service centers.

SHARP INDIA Ltd

Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt
Ltd, the company was converted into a public limited company in the same year. The name was
changed to Kalyani Sharp India in 1986. The company was entered into a joint venture with
Sharp Corporation, Japan - a leading manufacturer of consumer electronic products to
manufacture VCRs/VCPs/VTDMs. The company manufactures consumer electronic goods such
as TVs, VCRs, VCPs and audio products. The products were sold under the Optonica brand
name. Sharp has a production base in 26 countries with 33 plants, and its products are used in
133 countries. The company was accredited with the ISO-9001 certification in the month of
February, 2001.

HITACHI INDIA

Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing and sells a wide
range of products ranging from Power and Industrial Systems, Industrial \Components &
Equipment, Air Conditioning & Refrigeration Equipment to International Procurement of
software, materials and components. Some of HIL’s product range includes Semiconductors and
Display Components. It also supports the sale of Plasma TVs, LCD TVs, LCD Projectors, Smart
Boards and DVD Camcorders.

MIRC ELECTRONICS (ONIDA)

• The company commands strong brand equity among consumers largely owing to the success of
its Onida brand.

• High-quality designs have made the company a leading player in the electronics and
entertainment business. Its popular devil ad although had engendered a strong emotional pull
towards the brand, technologically it represented no advancement. The company plugged the gap
by touting its digital technology. Like Videocon, it has also been able to hold its market share.
The world-class quality of Onida has enabled the company to make a breakthrough on the export
front. Onida is a leading brand in Gulf market and also exports its models to Africa, Bangladesh,
Sri Lanka and Nepal. It has technical tie-up with the Japan Victor Company, better known as
JVC. So focused is Onida on positioning itself on the premium, high-tech plank that it is even
planning to push its own envelope on obsolescence, much like Intel has been doing in its own
industry.

The strategy is aimed at further broad basing the product offering of the company, which has
largely dominated the top-end of the television market, across multiple market segments. Besides
understanding the strategy adopted by different players, several other factors- industry growth,
concentration and balance, corporate stakes, fixed cost, and product differences need to be
analyzed to determine the extent of rivalry between the existing players by Panasonic india.

VIDEOCON (CURRENT MARKET SHARE-12%)

• It is the market leader in the consumer electronics and home appliances segments in India; the
company manufactures home appliances such as refrigerators, microwave ovens, compressors,
air conditioners and washing machines.

• It has plans to acquire Daewoo’s consumer electronics businesses worldwide to bring LCD
TVs, plasma TVs and components into its fold; the move would also help it acquire a consuming
partner for the recently-acquired Thomson’s picture tube business. Videocon has always been a
price player and has an image of a low price brand. This entails providing more features at a
given price vis-à-vis competitors. It has taken over multinational brands to cater to unserved
segments, like Sansui- to flank the flagship brand Videocon in the low to mid priced segment,
essentially to fight against brands like BPL, Philips, Onida and taken over Akai- tail end brand or
brands like Aiwa.

Videocon is one of the largest manufacturers of television and its components in India and thus
has advantages of economies of scale and low cost due to indigenization. It has the widest
distribution network in India with more than 5000 dealers in the major cities .It also has a strong
base in the semi-urban and rural markets. Due to its multi-brand strategy, it has at present
multiple brands at the same price point. This has led to a state of diffused positioning for its
brands. It has also led to a cannibalization of sales among these brands. The flagship brand
Videocon has lost market share due to the presence of Sansui in the same segment. Because of
reduction in import duties on CPT the cost advantage of Videocon is also on the decline. Hence
it is facing rough weather and also trying to boost exports.
Our observations:

a) Product:-
1. Design :-
 Panasonic LCDs & LEDs lack in enticing customers due to its old
fashioned and outdated looks. These products don’t have super
finishing touch what other major competitors like LG, Sony, Samsung
have. However the design of the plasma, 32u20 is very good but other
models have dearth of it.
2. Line extensions:-
 The current generally available lines of LCD models are – 24inch,
32inch, 42inch. There is a huge gap between 32inch and 42inch.
3. Features:
 Clarity of all Panasonic models are delighting and unbeatable,
especially 32u20 with the ushering of IPS alpha technology.
 However these basic models lack in additional value for money
like USB and internet connectivity.
 Sound quality is good yet need for further advancement.
b) Price:-
 Price leadership by adopting aggressive pricing strategy for deeper
penetration. Making difficult for competitors to be in the fray if they don’t
revise the pricing strategies.
c) Inventory:-
 Highly unsatisfactory inventory management especially during peak
seasons.
 Lack of insight and management for running out of stock and not making
available different models in time. That results in customer dissatisfaction
and finally ending up in non conversion of sale.
d) Promotions:-
 No proper in store displays. Externally affected due to small display area
regulated by the store manager (in multi brand shops).
 Promoters are less trained and less motivated for increasing sales
conversion
 Panasonic has paid heed towards advertisement yet partially unsuccessful
in creating the strong brand image.
 Brochures are not very informative and luring to pull customers.
CUSTOMER ANALYSIS:

 We found in majority cases customers rarely come to the store with a purchase intention,
they come with an attitude of comparative research and make themselves aware of
technology and product clearly.
 Customers visit many stores near by. An effective demo of the product plays a very
important role in the decision making by them. Generally they get more attracted towards
the brand where they experience more demos.
 We witnessed few customers who come to stores guided by television advertisement,
they are very particular about model and brand. Even though sales representatives show
them superior product and the best quality, they will buy only the product they have seen
in the TV ads.
 In India many people buy product as it is bought by neighbors, relatives and friends.etc.
Existing customers also influence new customer to a large extent.
 Majority of sales happen because of easy finance option with negligible interest rate and
processing fee. According to store managers more than 65% of sales happen because of
finance option.
 Customers generally visit store with their peer groups hence their opinion influence a lot
in purchasing a LCD.
 Now a day’s customers are more knowledgeable about product. More software
companies and growth in usage of internet is grown rapidly. Many employees and
educated segment depend and trust more on internet reviews. Even this will act as a
decision factors for customer. This kind of customer never listens to the promoter.
 Customers are motivated with free gifts, good striking features and certainly with on
going buying trends. In general, they pretend to know each and everything about every
brand and the latest technologies but in reality they do not.
Impact of the influencers on the purchase decision of the durables:

Actual buying or the purchase decision in durables gets influenced by the family members,
the friends and relatives, the company sales men, and the dealers.

From the analysis it was found that the family members, the company sales men, and the
dealers had a significant influence on purchase decision of the consumer goods but the
friends and relatives had a relatively lower influence in purchase decision of the products.
The innovative clusters members are greatly influenced by the company sales persons and
the dealers when compared to the purchase interested and the family oriented cluster
members. The influence of the family members on the purchase decision of the durables is
very high among the family oriented cluster. The purchase interested cluster is moderately
influenced by all the three sources namely the family members the company sales person and
the dealers.
 Recommendations:

Rural market penetration:-

It is perfectly said that “The future lies with those companies who see the low and middle
income group as their customers.” In recent years, rural markets have acquired significance,
as the overall growth of the economy has resulted into substantial increase in the purchasing
power of the rural communities. Since rural India is growing at high pace, every sector is
expanding its reach to these areas. Be it electronics, consumer durables or FMCG.

As per a study done by Television Audience Measurement Group, TAM, along with its
parent companies—AC Nielsen and Kantar Media Research/IMRB, the estimated total
number of TV households in India is about 135 million. Both urban and rural digital growth
is mainly coming from pay-DTH; the growth rate of the same is specifically higher in rural
areas. The share of pay-DTH among all DTH households has been 86% for urban compared
to 64% for rural areas. But if we compare the statistics in 2008, the growth in the digital
segment in the rural sector was 34%, in 2009 it was 49% and in 2010 it was 64%. What
prevails over everything else is that DTH has been observed as the growth provider for
digital TV in both strata, whereas cable STB penetration remains stable across urban and
rural India.

As Rural Indian market is growing because rural consumers’ purchasing power is increasing
and the increase in procurement prices has contributed to a rise in rural demand, Panasonic
has great business opportunities in rural India if it comes up with specific range of products
bundled with DTH.

Urban Market Penetration:-

According to the statistics provided by the TAM report, Maharashtra, Gujarat, Uttar Pradesh,
Madhya Pradesh, and Delhi have performed better with a higher growth rate than the all-
India figures for TV and C&S (cable and satellite). Considering the growth trend in these
geographies Panasonic should strategize on distribution channel, integrated marketing
campaign and consistent innovation in product lines.

Product: To offer in built USB drive and others value additions like internet connectivity,
free DTH and FM. The basic models should be integrated with fabricated looks and enticing
variants.The wide model variant gaps should be bridged by introducing 36u20 or 36x24.

Corporate tie ups for fast paced sales:

As Samsung has tied up with Bosch and Bosch gives employees free coupons by which they
can buy Samsung models from Adishwars stores. The same way Panasonic can tie up with
such corporate and stores to increase sales.

Potential targeting group:-Panasonic should think of establishing a direct marketing team

to approach new hotels and such places where requirement for LCDs, LEDs or PLASMAS
exist. With the co-ordination and support of data mining team, telemarketing team and sales
executive higher sales growth can be achieved.

Promotion:-
a. Panasonic should concentrate upon branding and positioning should be done
highlighting IPS alpha technology.
b. Make available basic equipments like “blue ray disc player” and sound system for
proper demonstration. Proper training to sales force, specially the ISDs (promoters).
c. The brochures design and content should be improved.

Scope & Limitations of our observations:-

This observational analysis is confined to the multi brand stores situated at Girias ,Gandhi
nagar and Adishwars, Marathalli in banglore city. Certain observations and suggestion are
purely our notions. Our observations are own experiences which could be situational biased .

However the report will certainly help Panasonic India ltd in re-strategy formulations and
heading towards better profitability by capturing customers mind share as well as market
share.