Consumer Durables Industry IN Rural Marketing-
The Indian consumer durables industry has witnessed considerable changes in the past couple of years.
Changing lifestyles, higher disposable incomes coupled with greater affordability and a surge in advertising has been instrumental in bringing about a change in consumer behaviour patterns.
Categories of products and players
This industry consists of durable goods used for domestic purposes such as TV, washing machines, refrigerators, microwave ovens, mobile phones, etc.
Consumer durables are the products whose life
expectancy is at least 3 ys.
The consumer durables industry can be broadly classified into consumer electronics and consumer
appliances.
The consumer appliances category can be further segmented as white goods and brown goods
Most of the segments in this sector are characterized by intense competition, emergence of new
companies (especially MNCs), introduction of state-of-the-art models, price discounts and exchange schemes.
MNCs continue to dominate the Indian consumer durables segment and this is apparent
from the fact that these companies command more than 65 % market share in the color TV (CTV) segment.
The major players are LG, Samsung, Sony, Whirlpool, Videocon, Godrej, Philips, Nokia Bajaj
Electricals and Maharaja Appliances.
Their product mix includes the major categories of white goods.
Penetration levels
The penetration level of consumer durables is very low in India when compared with other countries.
This translates into a vast unrealized potential.
Demand drivers
The demand for consumer durables is driven by changes in the environment and industry Environmental factors
There are many environmental factors favorable to the emergence of a competitive & prosperous consumer durables industry
Double-income families and the resulting increase in incomes have spurred the demand for better lifestyle products. The Rural Employment Guarantee scheme and good agricultural production
over the last four years has created disposable incomes in rural areas.
Technology advancements set into motion the digital revolution that enabled production of a host of products spanning the entire technology spectrum.
MP3 music files, personal video recorders, game machines, digital cameras, appliances with embedded devices & other media & services f,ave set of a battle for dominance among corporate enterprises and they are in turn wooing urban and rural consumers.
Availability of credit for purchase of durables has made a big impact.
Apart from steady income gains, consumer financing has become a major driver in the consumer-durables industry
In the Case of more expensive white goods such as refrigerators, washing machines, colour televisions & personal computers, retailers are joining forces with banks and finance companies to market their goods more aggressively.
Rural electrification programme has provided electricity to many villages and very soon the electricity
factor will not be an obstacle for the use of durables'
Industry factors
Competitive strategies: As per a survey conducted by FICCI on the Indian consumer durables industry, a shift in consumer preferences towards higher-end, technologically advanced branded products has been quite visible.
This shift can be explained by the narrowing differentials between the prices of branded and
unbranded products added with the high quality of after-sales service provided by the branded 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
Promotional strategies of companies-
With increasing competition, companies are working hard to promote their products through heavy advertising & sales promotion measures.
They are offering heavy discounts & long-term warranties to win over customers.
Increasing share of organized retail- Organized reIai is growing and it is estimated that it would garner a l0 per cent share by 2010
Growth rates and size
The urban consumer durables market is growing at an annual rate of 7-10% & the rural durables market is growing at 25 %
Some high-growth categories within this segment include mobile phones, TVs & music systems.
The consumer electronics registered an overall growth rate of 9% in 2005-2006 and now, it is over 10 %
The consumer durables industry set to grow by more than 15% in the financial yr 2009- 2010 .
The market for consumer durables (including entertainment electronics, communitarian and IT products) is estimated to be at Rs 32 billion (USD 7.1 billion).
Recession and reactive strategies
In spite of a deficient monsoon in 2009; which led to 316 districts in 13 states being declared drought hit, rural markets have proven to be resilient because of two reasons.
One, the agricultural prices and agricultural output have been growing very well over the last 5 years.
Though there was a drought, agricultural prices have risen.
As a result, rural discretionary income has grown.
The second reason is prevailing positive sentiment.
Together these reasons have ensured that these markets remain lucrative
& attractive destinations for those selling goods & services in the countryside.
A survey carried out by RMAAI has revealed that 59% of durables sales come from rural markets.
Different companies have taken different measures eyeing the rural markets.
The following examples are illustrative of such initiatives.
LG has set up 45 area offices and 59 rural & remote-area offices.
Moreover, it has outlined plans to invest around USD 40 million towards the development of entry-level products targeted at rural markets.
Samsung has also rolled out its "Dream Home" road show that was to visit 48 small towns in 100 days in an effort to increase brand awareness ofits products.
Samsung expects that its rural revenues would increase to USD 287 .7 milion in 2009 from USD 164.4 million last year.
The company also plans to expand its sales channel by 25-30% in rural India.
Whirlpool has plans to reach villages with a population between 100,000 and 500,000 in the first phase.
In the long run, it proposes to provide access to potential customers in villages with a population of 50,000.
Videocon is planning to offer a wide basket of I 8 models of LCDs, 17 models of refrigerators & 9 automatic washing machines.
It proposes to increase the number of its "Digi World" outlets to around 100 this year from the existing 9 by penetrating into Class B and C cities.
Prospects for consumer durables
The consumer durables industry has good prospects as many companies are overcoming weaknesses by adopting new technologies, investing in R&D and streamlining operations to reduce costs.
The opportunities are very attractive & the threats can be overcome by strengthening distribution networks and service operations.
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