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Buyer behavior in consumer electronics market

                      DISSERTATION REPORT

            “Buyer Behavior in Consumer E...
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Subhojit Dey D/o Sh.Prasanta Kumar Dey, having roll no- 1029 of Batch 2009-2011, do hereby
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Buyer behavior in consumer electronics market

  1. 1. A DISSERTATION REPORT ON “Buyer Behavior in Consumer Electronics Market” Report by Subhojit Dey Submitted to the Department of Management Studies In Partial fulfillment Of the Requirements For the 2-Year full-time PGDM course In Partial Fulfillment of the Requirement for the 2-year Full-Time PGDM Course PRESIDENCY INTERNATIONAL INSTITUTE OF MANAGEMENT VIDHYADER NAGAR, JAIPUR ROLL NO.1029 BATCH YEAR 2009-11 SPECIALIZATION:MARKETING, FINANCE
  2. 2. Certificate of Originality Subhojit Dey D/o Sh.Prasanta Kumar Dey, having roll no- 1029 of Batch 2009-2011, do hereby certify and declare that this research report titled Buyer Behavior In Consumer Electronics Market is the result of my own work. This report contains no materials or information which has been previously submitted for any other academic diploma or degree, except where indicated otherwise. Date: Signature of the Student SUBHOJIT DEY
  3. 3. Approval page This report, entitled Buyer Behavior in Consumer Electronics Prepared and submitted by SUBHOJIT DEY, in partial fulfillment of the requirements for the degree of PGDM is hereby accepted. GAURAV VARSHNEY (Faculty Guide) Accepted as partial fulfillment of the requirements for the second year full-time PGDM COURSE.
  4. 4. ACKNOWLEDGEMENT The moment of acknowledgement is one of the prides that gives up a feeling of cherish about”. I take this opportunity to express our sincere gratitude to all, contributed to making this work possible within very limited time. I am also thankful to all mine faculty specially MR KAMLESH KUMAR JANGID under her guidance which has really a source of inspiration and supporting to accomplish my project fairly and effectively. I am greatly thankful to my colleagues, friends and parents for their regardless help and appreciation in my each and every moment of internship. I am very thankful to God who blessed me with energy, potential and will power to complete the internship and also the project with best of my worth. SUBHOJIT DEY PGDM 4th SEMESTER
  5. 5. TABLE OF CONTENTS 1. Industry Introduction 2. Consumer electronics industry analysis 3. Consumer Buying Behavior 4. Existing Players in the Indian market 5. Research Methodology 6. Key findings 7. Some statistics 8. Challenges to the electronics industry 9. Limitation of the project. Bibliography
  6. 6. 1).Introduction- 1.1 Worldwide consumer electronics market The consumer electronics industry has witnessed a unique growth over the past few years. This growth can be attributed to the increasing effect of state of the art electronic devices on the market. The consumer electronics industry is ushering in the dawn of Convergence. It is the confluence and merging of hitherto separated markets of digital based audio, video and information technology, removing entry barriers across the market and industry boundaries. This convergence of technologies has resulted in a greater demand for consumer devices, be they portable, in-home (mobile phones, digital camera) or in-car (CD/DVD players), offering multiple functions. The revolution brought about by Digital technology has enabled the consumer electronics sector to profit from the growing interaction of digital applications such as: camcorders, DVD player/recorder, still camera, computer monitor, LCD TV etc. It has also witnessed the emergence of mobile telecommunications technology, incorporating both digital visual and digital MP3 capabilities. The computer industry has also benefited by being able to make its way into consumer's living rooms. HDTV's with VGA connections and SD/MMC card slots, personal media players, and Microsoft-based Media Center PCs have pushed the two industries even closer together than before. The India Consumer Electronics Report provides industry professionals and strategists, corporate analysts, electronics associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's consumer electronics industry. India‟s consumer electronics devices market, defined as the addressable market for computing devices, mobile handsets and AV products, is projected at about US$29.4bn in 2011. This is expected to increase to US$50.6bn by 2015, driven by rising incomes and growing affordability. Only nine out of 1,000 people in India own a computer, one-fifth of the level in China, while Indian handset population penetration is about 57%. Spending on consumer electronics devices is projected to grow at an overall CAGR (compounded annual growth rate) of 14% through 2015, with the key segments including low-cost mobile handsets, colour TVs, set-top boxes and notebook computers. In 2010 demand for LED TV sets grew strongly, and touchscreen phones were another growth area. Consumer electronics manufacturers, after suffering a rare dip in sales last year, are hoping to bounce back in 2010 with smartphones, e-readers and smaller laptops leading the way.
  7. 7. 1.2 Consumer expenditure on durable goods Consumer durables are items that provide a flow of services to a consumer over a period of time. Examples include new cars, household appliances, audio-visual equipment, furniture etc. The real level of spending on durables has surged in the last eight years. 1.3 Segment Definition In general consumer electronics refers to a variety of electronic equipment used by private customers. This industry can be divided into many segments: 1. „Traditional‟ Consumer Electronics: audio and video equipment
  8. 8. 2. Computing Devices: Computers, Calculators, Laptops 3. White Goods: Household /Domestic Appliances such as washing machines, irons, vacuum cleaners, grinders, etc 4. Personal Care: Hair Dryers, shavers, electric toothbrushes. In addition to this, the emergence of telecommunication has lead to the convergence of mobile technology into the consumer electronics industry and hence this paper will only deal with traditional consumer electronics, mobile phones and computing devices which can be termed as Brown Goods as per industry definitions. Henceforth in this paper consumer electronics will refer to Brown Goods. In 2008, the market size was estimated to be $22 billion and growing. With the growing population in India, exceeding 1 billion, the consumer electronic Industry is all geared up for fast growth in the coming years. The predicted figure for the consumer electronic market by 2013 is around $46 billion, growing at a compound annual growth rate (CAGR) of 16%. This astounding growth is due to many factors, the major ones including Rising disposable incomes coupled with increasing consumer exposure Increase in manufacturing in the local grounds Credit/Financing schemes which make purchase easy Growing competition , leading to better deals Increased reach due to better distribution networks 1.4. Consumer electronics market in India India has an increasingly affluent middle class population that, on the back of rapid economic growth, has made the country‟s consumer electronics industry highly dynamic. The industry has been witnessing significant growth in recent years due to several factors, such as retail boom, growing disposable income and availability of easy finance schemes. But still, the consumer electronics goods, like refrigerators, microwave and washing machines have low penetration in the country, representing vast room for future growth. The report finds that since the penetration of several products like TVs and refrigerators are reaching saturation in the urban areas, the markets for these products are shifting to the semi- urban and rural areas. This analytical research evaluates the Indian consumer electronics industry. It briefly discusses about the current and emerging trends in the industry, underlining the future potential areas and key issues crucial for the industry development. It provides an insight into the emerging and potential future trend in all the categories and highlights the key strategies that need to be worked upon to get success in the highly competitive industry.
  9. 9. The report thoroughly analyzes the historic performance and future prospects, offering 4-year industry forecast, of following consume electronics products: - Washing Machines (Semi-automatic & Fully Automatic) - Television - Set-top Box - Refrigerator (Frost-free & Direct Cool) - Air Conditioner - Microwave Oven - MP3 Players - Digital Camera & Camcorder - Mobile Handsets - PCs (Desktop & Notebook)
  10. 10. 1.5 Classification of consumer durable Goods Classification of consumer durable goods Cameras & camcorders Computers Digital camera Laptops Movie camera Desktops Camera accessories Monitors Kitchen Appliances Peripherals Cooking range Comp Hand blender Telephone & Mobiles uter Toaster maker Mobile phones acces Water purifiers Land line telephones sories Vaccum cleaners Fax Food processor Mobile accessories &mixer,grinder Television Water heater CRT/LCD/Plasma CD/DVD player DTH
  11. 11. 1.6..SWOT Analysis Of Electronics-  Strengths 1. Presence of established distribution networks in both urban and rural areas 2. Presence of well-known brands 3. In recent years, organized sector has increased its share in the market vis a vis the unorganized sector.  Weaknesses 1. Demand is seasonal and is high during festive season 2. Demand is dependent on good monsoons 3. Poor government spending on infrastructure 4. Low purchasing power of consumers  Opportunities 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 levels, i.e. increase in purchasing power of consumers 5. Easy availability of finance  Threats 1. Higher import duties on raw materials imposed in the Budget 2007-08 2. Cheap imports from Singapore, China and other Asian countries 1.7. Trends in electronic market Propelled by growing middle class population, changing lifestyle and rapid urbanization, the Indian consumer electronics industry is forecasted to grow at a rapid rate of 10% to 12% in the coming few years Volume sales of washing machine will be driven by growth in fully automatic category during 2008-09 to 2011-12. The market for televisions in India is changing rapidly from the conventional CRT technology to Flat Panel Display Televisions (FPTV). Currently, the split between CRT and FPTV is around 97% and 3% respectively, and the share of FPTV is projected to increase at robust rate in near future. Frost-free refrigerator sales, certainly growing at a much faster pace than the direct-cool category, are anticipated to drive the Indian refrigerators market over the forecast period The AC market in India is projected to grow at 30% to 35% for the coming few years. Driven by young population, demand for MP3 players and digital video appliances are anticipated to surge at double-digit rate in near future
  12. 12. The low penetration level of consumer electronics goods coupled with increasing preference for comfort and luxurious goods are widely attracting the foreign as well as domestic players to the industry. TRENDS IN TERMS OF TECHNOLOGY AND PRODUCTS – INDIA Lower duties, cheaper technology and strong competition with low entry barriers ensure competitive prices Increase in brand and product choice Value-for-money pricing lead consumers to upgrade – from corded to cord-less phones, from conventional CRT to flat-screen or plasma/LCD TVs, from 15- to 17-inch computer monitors, from 1- to 3-megapixel cameras, from monochrome to colour phones, etc Huge boom in mobile phone purchases with high penetration even in rural markets (launch of value for money, no frills, reliance phones gave an impetus to rural penetration)
  13. 13. 2.) Consumer electronics industry analysis Porter’s Five Forces Model Although the Indian Consumer electronics market is highly competitive, the high growth rates that it promises make it a good industry to enter. Threat of New Entrants Low to Moderate Bargaining Power Rivalry Amongst Bargaining Power of Suppliers Existing Firms of Customers Low Moderate Moderate to High Threat of Substitutes Low Threat of New Entrants Capital Requirements and Economies of Scale: In the case of retail stores, there is lack of good distribution network and lack of knowledge of consumer buying patterns which calls for large investment in distribution channels and research to improve the reach. Economies of scale is required in as there are large fixed costs associated with setting up a manufacturing plant as there are problems of under-developed infrastructure, erratic supply of water and electricity in many areas, a high cost of capital and continuous up gradation of technical and managerial skills. Supply Chain Issues: The existence of too many intermediaries in the supply chain coupled with issues in logistics, management of POS data, pilferage and distribution and inventory management, eats away the profits of the retailer, making it unattractive for new entrants
  14. 14. Product Differentiation: Though the awareness is increasing amongst the Indian consumers, retailers and manufacturers are unable to increase brand loyalty. The Indian consumer is very price sensitive and hence he keeps hoping from one place to another, hunting for good deals. Switching costs vary amongst the electronic categories. For instance, the switching costs in mobile phones are high, as consumers who are used to one brand find it difficult to use another brand. However, for televisions, cameras, and even laptops, consumers are ready to try new brands based on price for features offered and service quality or reputation of the brand. Government Policy: By encouraging manufacturing zones and improving the infrastructure, the government is developing the entire manufacturing sector, which will help in boosting the electronics production in India, which has traditionally been a very small slice of the overall manufacturing segment. While the government is trying to encourage the growth of the retail and manufacturing industries in India, there are some policies which need to be looked at. · The duty structure for electronics adds up to 30% which is a significant amount. This is mainly due to the multiple tax structure which consists of 12% VAT, 8% excise, 4% Goods and Service Tax, 2% Central Sales Tax and Local taxes. · The FDI policy limits to 51% stake for foreign investors, which forces foreign retailers to use franchise arrangements, and in the manufacturing sector, the FDI is 100% favouring foreign investors · Existence of the grey market due to poor government regulations to keep counterfeits at bay coupled with the lack of consumer knowledge and legal recourse encourages manufacturers to churn out spurious products which can lead to lost sales of the tune of 10-15%. · Red tapes and bribery in the Indian government system is also a stumbling block for new retailers or manufacturers. Taking into consideration the positives and negatives, India still offers a good chance for new entrants and hence the threat is considered to be low to moderate. Bargaining Power of Buyers With the emergence of new channels like the internet, auction sites like rediff.com, the general consumer (buyers) who usually purchase electronic goods from electronic retailers, hypermarts, music and book stores, can easily compare prices and go for the best deals in town. Though the better brands can command a higher price, buyers are constantly comparing prices, service quality and product features and hence commands a moderate to high power in this industry. Large chain stores like Tata Croma, E-Zone have distinct advantage over the smaller stand alone stores as they can demand good discounts suppliers. As brands play an important role in the
  15. 15. electronics market, the retailers find it difficult to integrate backwards to produce their own electronic goods as in the case of private food labels. Considering the market dynamics and the size of the market, the buyers have moderate to high power in the consumer electronics industry Bargaining power of suppliers The biggest threat is the trend of large suppliers integrating forward as in the case of Dell, Apple, Nokia, by setting up their own retail outlets. However, in the Indian electronic context, there are a large number of suppliers in the market who face overcapacities, poor distribution, large duties, and declining margins and hence the bargaining power for suppliers is less and competitive pricing comes into play. With more companies setting up the manufacturing plants in India, like Nokia in the south, the bargaining power of suppliers is definitely low to medium. Product differentiation is more and more difficult in the consumer electronics industry and the existence of cheap Chinese suppliers also adds woes to the suppliers. Intensity of Rivalry amongst existing players There are few key players in the consumer electronic market, but as they are part of big Indian business groups, they have a lot of muscle power and hence the intensity of rivalry can be placed at a mid level. Though factors such as high transport and storage costs, lack of differentiation, large investments, and low switching costs tend to intensify the rivalry, the fact that the market is only at the nascent stage with promises of high growth rates of 16% coupled with the diverse needs of customer groups, and an untapped rural market; the existing players seem to be enjoying a relatively low rivalry. Threat of Substitutes The threat of substitutes for the manufacturers of these electronic goods is medium to high unlike the case of white goods. As new technology enters the market at increasing pace, the manufacturers and retailers need to understand the consumer needs. For instance the VCR was replaced by the DVD player which will soon be replaced by a Blue Ray Player. The incorporation of camera in the mobile phones is definitely a threat to the camera market. Hence product innovations in this segment are very high and players in this industry need to mindful of this.
  16. 16. 3) Consumer buying behavior  WHAT IS BUYER BEHAVIOUR? The wealth of products and services produced in a country make our economy strong. Almost all the products, which are available to buyers, have a number of alternative suppliers: substitute products are available to consumers, who make decision to buy products. Therefore a seller most of his time, seeks buyers and tries to please them. In order to be successful, a seller is concerned with.  · Who is the customer?  · What do consumers buy?  · When do consumers buy?  · How do consumers buy?  · From where do consumers buy?  · Why do consumers buy? A buyer makes a purchase of a particular product or a particular brand and this can be termed “ product buying motives” and the reason behind the purchase from a particular seller is “ patronage motives” When a person gets his pay packet, and if he is educated ,sits down along with his wife and prepares a family budget, by appropriating the amount to different needs. It may happen that after a trip to the market, they might have purchased some items, which are not in the budget, and thus there arises a deviation from the budgeted items and expenditure. all the behaviour of human beings during the purchase may be termed as “buyer behaviour”.  HOW CONSUMERS BUY 1. Need/Want/Desire is Recognized In the first step the consumer has determined that for some reason he/she is not satisfied (i.e., consumer‟s perceived actual condition) and wants to improve his/her situation (i.e consumer‟s perceived desired condition). For instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed. External factors can also trigger consumer‟s needs. Marketers are particularly good at this through advertising, instore displays and even the intentional use of scent (e.g., perfume counters).
  17. 17. 2. Search for Information Assuming consumers are motivated to satisfy his or her need, they will next undertake a search for information on possible solutions. The sources used to acquire this information may be as simple as remembering information from past experience (i.e., memory) or the consumer may expend considerable effort to locate information from outside sources (e.g., Internet search, talk with others, etc.). How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need, familiarity with available solutions, and the amount of time available to search. 3. Evaluate Options Consumers‟ search efforts may result in a set of options from which a choice can be made. It should be noted that there may be two levels to this stage. At level one the consumer may create a set of possible solutions to their needs (i.e., product types) while at level two the consumer may be evaluating particular products (i.e., brands) within each solution. For example, a consumer who needs to replace a television has multiple solutions to choose from such as plasma, LCD and CRT television. 4. Purchase In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest. However, this may change when it is actually time to make the purchase. The “intended” purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock, a competitor offers an incentive at the pointof- purchase (e.g., store salesperson mentions a competitor‟s offer), the customer lacks the necessary funds (e.g., credit card not working), or members of the consumer‟s reference group take a negative view of the purchase (e.g., friend is critical of purchase). 5. After-Purchase Evaluation Once the consumer has made the purchase they are faced with an evaluation of the decision. If the product performs below the consumer‟s expectation then he/she will reevaluate satisfaction with the decision, which at its extreme may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product. Such evaluations are more likely to occur in cases of expensive or highly important purchases. To help ease the concerns consumers have with their purchase evaluation, marketers need to be receptive and even encourage consumer contact. Customer service centers and follow-up market research are useful tools in helping to address purchasers‟ concerns. 
  18. 18.  Why Consumers Buy : Customers make purchases in order to satisfy needs. Some of these needs are basic and must be filled by everyone on the planet (e.g., food, shelter) while others are not required for basic survival and vary depending on the person. It probably makes more sense to classify needs that are not a necessity as wants or desires. In fact, in many countries where the standard of living is very high, a large portion of the population‟s income is spent on wants and desires rather than on basic needs. For example, in planning for a family vacation the mother may make the hotel reservations but others in the family may have input on the hotel choice. Similarly, a father may purchase snacks at the grocery store but his young child may be the one who selected it from the store shelf. So understanding consumer purchase behavior involves not only understanding how decisions are made but also understanding the dynamics that influence purchases 3.1..TYPES OF CONSUMER PURCHASE BEHAVIOUR Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some decisions are more complex than others and thus require more effort by the consumer. Other decisions are fairly routine and require little effort . In general, consumers face four types of purchase decisions: · Minor New Purchase – these purchases represent something new to a consumer but in the customer‟s mind is not a very important purchase in terms of need, money or other reason (e.g., status within a group). · Minor Re-Purchase – these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought to other product options (i.e., consumer is brand loyalty). · Major New Purchase – these purchases are the most difficult of all purchases because the product being purchased is important to the consumer but the consumer has little or no previous experience making these decisions. The consumer‟s lack of confidence in making this type of decision often (but not always) requires the consumer to engage in an extensive decision-making process.. · Major Re-Purchase - these purchase decisions are also important to the consumer but the consumer feels confident in making these decisions since they have previous experience purchasing the product For marketers it is important to understand how consumers treat the purchase decisions they face. If a company is targeting customers who feel a purchase decision is difficult (i.e., Major New Purchase), their marketing strategy may vary greatly from a company targeting customers who view the purchase decision as routine. In fact, the same company may face both situations at the same time; for some the product is new, while other customers see the purchase as routine. The implication of buying behavior for marketers is that different buying situations require different marketing efforts
  19. 19. “Nothing is more difficult and therefore, more precious, than to be able to decide is quoted to be the words of Napoleon. This is amply true in the case of consumer too. It is for this reason that the marketers are bound to have a full knowledge of the consumer – buying decision process. However it should be remembered that the actual act of purchasing is only one stage in the process and the process is initiated at the several stages prior to the actual purchase. Secondly even though we find that purchase is one of the final links in the chain of process, not all decision processes lead to purchase. The individual consumer may terminate the process during any stage. Finally not all consumer decisions always include all stages. Persons engaged in extensive decision making usually employ all stages of this decision process. Where as those engaged in limited decisions making and routine response behaviour may omit some stages. The consumer decision process is composed of two parts, the process itself and the factors affecting the process. A survey conducted by the marketing team of shoppers stop Ltd. Reveals the psychography of the modern shopper. Accordingly the survey classifies customers in to the four segments namely · Convenience Shoppers · Value Shoppers · Image Shoppers · Experience Shoppers Convenience shoppers for instance ,are people who consume relatively less amount of time while shopping. Also they look out for the width and depth of the range they purchase and conduct their annual shopping at one shot. Value Shoppers always hunt for value for money ; Prefer quality reassurance and benchmark offerings among other related attributes. Image Shoppers are fashion- conscious and look out for the latest trends and labels. On the other hand , Experience Shoppers are attentive and prefer personalized services look out for the right ambience, prefer giving personal advice on clothing at the time of purchase , and prefer not to buy at one sold.
  20. 20. 3.2..Cultural factors Influencing Consumer Behaviour Cultures, which only goes on to make the marketer's job tougher. Some of the few cultural factors that influence buyer behaviour are: 1. Product (colour, size, design, and shape) There are many examples that support this point. A good example would be Philips audio systems. Urban India looks at technology with the viewpoint of „the smaller the better‟ . However, in rural India, the viewpoint is totally opposite. That is the main reason for the large acceptance of big audio systems. Thus Philips makes audio systems, which are big in size and get accepted in rural India by their sheer size. 2. Social practices There are so many different cultures, and each culture exhibits different social practices. For example, in a few villages they have common bath areas. Villagers used to buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 75-gram soap bars, which could be used individually. 3. Decision-making by male head The male in Indian culture has always been given the designation of key decision maker. For example, the Mukhiya‟ s opinion (Head of the village), in most cases, is shared with the rest of the village. Even in a house the male head is the final decision maker. In rural areas, this trend is very prominent. 4. Changes in saving and investment patterns From Gold, Land, to Tractors, VCR‟ s, LCD TV‟ s etc. 3.3..MARKETING IMPLICATIONS OF CONSUMER’S DECISION PROCESS It was during 1960‟s that a number of theories to explain the consumer „s decision process started appearing. The three leading theorists were Howard-sheth , Engel Kollat- Blackwell and Nicosia. Since then a considerable research on the marketing implications of the process has been developed and tested the applications of many elements of marketing. Many of the marketing strategies and tactics will have to be developed in relation to consumer attitudes. Marketing strategies,if effectively used, will go a long way in initiating and developing consumer attitudes in favour of the products. THE IMPORTANT MOTIVES, INFLUENCING THE ULTIMATE BUYING BEHAVIOUR OF CUSTOMERS.
  21. 21. 1. Fear : To overcome theft, you may purchase a burglar alarm(out of fear) 2. Desire for money : Purchasing when the price falls down. 3. Vanity : Getting costly items to be admired by others 4. Pride : Possessing luxurious items for high position in the society 5. Love and affection : When you purchase toys, dresses for your sister, it is out Of affections. 6. Sex and romance : Spending much on dresses, ornaments etc. 7. Fashion : Imitation motives : Old people dress like young ones. 8. Possession : This refers to collection of stamps, coins etc. 9. Health and Physical : Purchasing health foods, vitamins etc. Well being 10. Comfort and : Purchasing equipments like refrigerator, pressure cookers etc 3.4..Consumer Electronics Market Rapid Innovation Dynamic Market Place Highly Competitive Industry Significant Time-To-Market Pressures Significant Cost Pressures Rapid Rates of Market Penetration Rapid Transition from One Technology to another 3.5..ECONOMIC FACTOR AFFECT THE BUYER’S BEHAVIOUR 1. Disposal personal income : The economists made attempts to establish a relationship between income and spending. Disposal personal income represents potential purchasing power that a buyer has. The change in income has a direct relation on buying habits.
  22. 22. 2.Size of family income : The size of family and size of family income affect the spending and saving patterns. Generally large family spend more and short family spend less, in comparison. 3. Income expectations : The expected income to receive in future has a direct relation with the buying behaviour. The expectation of higher or lower income has a direct effect on spending plans. 4.Propensity to consume and to save : This goes to the habit of spending or saving with the disposal income of buyers. If the buyers give importance to present needs, then they dispose of their income. And buyers spend less if they give importance to future needs. 5. Liquidity of Fund : The present buying plans are influenced greatly by liquidity of assets i.e., cash and assets readily convertible into cash, e.g. bonds, bank balances etc., 6. Consumer Credit : “ Buy now and pay later” plays its role effectively in the rapid growth of markets for car, scooter, radio, furniture and the like. Economic model suggests behavioural hypothesis : Lower the price of the product, higher the sales. Lower the price of substitute products, lower the sales of this product Higher the real income, higher the sales of the product. Higher the promotional expenses, higher the sales. 3.6..Factors influencing consumer purchase behaviour The factors affecting consumer behaviour are discussed from the perspective of Internal influences, Environmental influences (external influences) Marketer –initiated influences 1. Internal influences – not directly observable - are those factors which are internalized to the consumer and affect the consumer‟s selection of products. They are: motivations, perceptions, learning, attitudes, personality and lifestyle. These factors are related to one another. For example, to some extent, our level of motivation and our specific motives have an effect on those stimuli we perceive in our environment and on how we perceive them. Information gathered through these
  23. 23. perceptions enables us to learn about our environment and the specific products and brands in our environment. Learning is essential for the development of attitudes. Motives - the initial stage of the consumer decision process represent the recognition of a need or problem. According to A. Maslow, needs are arranged in the following hierarchy: 1. Psychological needs (nutritional necessities, sleep, sensory pleasure, maternal behaviour, activity and exercise); 2. Safety needs (security, stability, dependency, protection, freedom, need for laws); 3. Belongingness and love needs (to give and receive love and affection, to develop relationships); 4. Esteem needs; 5. Self-actualization needs (self-fulfilment, self – development). Unless a certain level of needs has been satisfied, higher levels of needs will not serve to motivate the individual. Thus, once a level of needs has been satisfied, it no longer serves as a motivator. The amount of unsatisfied needs influences the effort that the individual will expend in seeking need gratification. The object of the individual‟s behaviour is determined also by its ability to satisfy the particular motivating need. Perceptions. Marketers are concerned with the way consumers perceive their product offers. Consumers are faced with an increasingly complex environment which bombards them with thousands of stimuli every day. Perception is the process by which the sensory stimuli are selected, organized and given meaning. For example our perception of “quality” may be based on known standards of performance. When there are no objective standards, our perception of quality may be based on subjective factors such as brand name, the store in which the product is stocked, an advertising slogan or price. Learning may be defined as a change in the response tendency of an individual because of the effect of experience with the environment. Consumers learn to respond in a particular way by studying the consequences of their purchase behaviour. For example, people continue to purchase a particular brand if they are satisfied with that brand. The most significant outcome of a consumer‟s use of a product is satisfaction with the product. Some marketers consider repetitive advertising as an important tool for establishing associations between product symbols (packing, logos) and brand names, thus creating familiarity with the product among customers. These familiar brands are much more likely to be considered by customers than brands they have not heard of before. Concerning brand loyalty (the greater probability that a consumer will purchase a certain brand repeatedly) the consumer even may be aware that other brands might offer greater satisfaction, yet is not interested in those brands. The brand currently being purchased may provide enough satisfaction and not exploring new brands reduces the consumer‟s risk of unknown consequences. But recent research
  24. 24. found out that brand-loyal consumers have been declining. The erosion of brand loyalty and the growth of non-brand products determine challenges for firms that invested much in building brand names. Attitudes. Marketers‟ concern is to understand how attitudes toward brands are formed, maintained and changed since they are important determinants of consumer‟s behavior. Consumers favour products and brands for which they have positive attitudes and avoid those for which they have negative attitudes. For example, consumers who agree that some nutrients are healthy will have a positive attitude for products containing them. But on contrary, consumers who believe that caffeine is harmful have the tendency to avoid cola products. Attitudes toward products and brands are also shaped by family and peer groups. Consumers hold beliefs about the attributes of a particular brand or about the benefits which it provides. For example, a woman believes that Pantene Shampoo has a nice smell, rinses out easily (are attributes) and makes her hair shiny and attractive (benefits). Consumers make an overall evaluation of a brand on the basis of their beliefs about its attributes or benefits. When consumers have favourable evaluations of brands they tend to purchase. When the evaluations are unfavourable they tend not to purchase. Generally, the consumer looks at only one or a few attributes of a product. The marketer‟s task is to identify the relevant product attributes and their benefits, communicate them to the consumer and provide an opportunity for their easy in –store evaluation. For example, in a supermarket, consumers who want to purchase a new product that they have not used before, they pick the product on the shelf and examine it (read the label, smell it). Personality refers to the way a person acts which makes that person different from others. This is a fundamental aspect of human behaviour which influences purchase behaviour. People are very different and their personalities influence the purchasing process but marketing researches faced difficulty in trying to use personality to explain specific consumer purchases. Therefore, marketers have turned to lifestyle research. Lifestyle represents a broad composite of what a person does, the way the lives, what products and services are bought and how they are used. Lifestyle is in fact what the individual does with available resources – financial, social and time. This dimension influences consumer behaviour. According to their lifestyles people purchase different products and services, from different places or stores, at different periods. Considering foodstuffs purchasing, there are people who go shopping many times a week, once a week, twice a month and so on according to their time, money and needs. There are people who prefer spending a large amount of money for a larger quantity of foodstuffs at a time but others cannot afford it and buy smaller quantities of products more often. Some people prefer an expensive one - week vacation to a cheaper fortnight vacation. 2. Environmental influences refer to economic factors, cultural factors, social class, reference groups and random environmental factors.
  25. 25. Economic factors. It is obvious that consumers cannot spend more money than they have or use more credit than is available to them. The consumer‟s available income is an important influencer of behaviour because it can limit total expenditures, eliminate alternatives, change expectations of product attainments and influence the amount of time devoted to gathering information on the alternatives. The cost of living is another influencer because if it rises at a rate less than the rate of personal income, consumers either will have a real increase in income and will spend their money for more goods and services or will increase their savings. Otherwise, if income increases do not keep pace with rises in the cost of living, real income declines and consumers find that their paychecks do not buy the same amount of goods and services as before. To compensate for this decline in real income, they will seek less expensive items or retail outlets with fewer services but lower mark-ups. Cultural factors. Culture is the broadest of the external social influences on consumer‟s behaviour. Values are learned through the process of consumer socialization in which younger members of society develop attitudes toward products, brands and the purchasing process. Social learning is the result of social influences on consumer behaviour. For example, a child is taught to buy or how to shop for bargains or a child may imitate the consumption patterns of family members and peers. Marketing abroad requires particular attention to cultural differences. Many companies, when they begin to market abroad, make serious errors because they are unaware of the subtle differences in local cultural values. As concerns subcultures, orthodox people, Mormons, or other religion-based subcultures have rules which include what their members can and cannot consume. When subcultures contain enough people, they can be considered as market segments justifying separate marketing strategies. Hispanics represent the main important subculture in the United States. Their attitudes toward brands are often distinct. Thus companies such as McDonald‟s, Coca –Cola advertise in Spanish language. Social class. Moreover, people do not live with uniformly equal status. Every society is stratified into different levels of social status which give rise to many of our social motivations. Sometimes people attempt to climb the social ladder purchasing certain products (the tendency to buy certain brands of cars considered conventionally the best ones). Reference group is any aggregation of people who influence an individual‟s attitudes or behaviour. Someone will buy Nike trainers because a famous sportsman wears that brand. Family is considered to have the greatest influence on purchase behaviour. Besides adult roles, parents set examples of adult consumers. But parents may be influenced by their children. The child can request a certain brand of cereal, chocolate or toy seen on TV. Family buying patterns vary according to the type of products being purchased. For example, the husband has the dominant influence in purchasing the car and different types of insurance but the wife has the dominant
  26. 26. influence in purchasing cleaning products, food, and clothing. From changes in family composition, a study has drawn the following implications for marketers: Declining family size affects marketers who sell products that appeal to large families (large package sizes of products). The young divorced stage may be a good segment for small appliances, personal services (health spas and sports clubs) Middle–aged childless couples and divorced individuals with no children to support may represent a good market for luxury goods and services. Middle – aged divorce parents may seek low-priced products. Random environmental factors also can shape consumer‟s behaviour. Weather, for example, determines the demand for specific products. Hot weather areas increase the demand for air-conditioners and cooling beverages. Also, epidemics or a disease may request purchasing specific medications. A government announcement can affect consumer‟s attitudes and purchase behaviour. A disease largely spread among animals may cause a drop in demand for meat or related products. International situations can influence consumer‟s behaviour. The oil crisis affected the way consumers evaluated automobiles. Changing technology is constantly influencing consumer‟s behaviour. Video projectors replaced other projection equipment. 3. Market-initiated influences. Buyer behaviour influences which are controllable by the marketer‟s own organisation are of major interest. In formulating the marketing programme of a firm, the marketing decision-maker should view the different components (product, price, distribution, personal selling, and advertising) as an integrated package, which the consumer will perceive as a single offering. Marketing elements are seen by the consumer as only part of the total purchase environment. A price can be high or low relative to the consumer‟s income, need for quality and perceived quality of the brand. Consumer‟s behaviour concerns the study of the following questions: what, when, how, where and why people do or do not buy products. It attempts to understand the consumer decision making process, both individually and in groups. It studies characteristics of individual consumers and behavioural variables in an attempt to understand people's needs and wants and also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Consumer‟s behaviour is a complex process comprising all the activities people engage in when they search for, select, purchase, use, evaluate and dispose products and services in order to satisfy their needs and desires.
  27. 27. CONSUMER BEHAVIOUR TRENDS Shift from buying predominately during Diwali and other festive seasons to year round purchasing Consumers more aware of brands Consumers more conscious of style, looks, technical specifications More research is done on technically advanced gadgets, but there has also been an increase in impulse buying with increasing disposable incomes, competitive prices and wide choice 3.7..Different Segments of Indian Consumer The Socialites Socialites belong to the upper class. They prefer to shop in specialty stores, go to clubs on weekends, and spend a good amount on luxury goods. They are always looking for something different. They go for high value, exclusive products. Socialites are also very branding conscious and would go only for the best known in the market. The Conservatives The Conservatives belong to the middle class. The conservative segment is the reflection of the true Indian culture. They are traditional in their outlook, cautious in their approach towards purchase; spend more time with family than in partying and focus more on savings than spending. Slow in decision making, they seek a lot of information before making any purchase. They look for durability and functionality but at the same time is also image conscious. The Working Women The working woman segment is the one, which has seen a tremendous growth in the late nineties. This segment has opened the floodgates for the Indian retailers. The working woman today has grown out of her long-standing image of being the homemaker. Today, she is rubbing shoulders with men, proving herself to be equally good, if not better. Working women have their own mind in decision to purchase the products that appeal to them. The Youth The “rise of next generation” has been written about with unbridled optimism and enthusiasm, based on the coming of age of liberalization children. They are global in their worldwide view and have been exposed to enormous information unlike their parents raised amidst a consumption-friendly and consumption encouraging social discourse. They are expected to be at the forefront of creating a new, modern, west-embracing consumer society, as well as yield the demographic dividend that will drive economic growth
  28. 28. Revolution in Indian Consumer Behaviour · Rising disposables incomes(higher buying power) · Male no longer the sole income generator · Enjoys travelling, shopping and eating out · Increased indulgence in entertainment and lifestyle products · Pester power, Seeking variety · Seeking value for money(High quality and price consciousness) · Technology Savvy (Internet, Mobiles, Voice Recognition…) · Getting used to speed of service · Convenience seekers
  29. 29. 4)Existing Players in the indian market Before 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 came into the picture. Today, these players control the major share of the consumer durables market. Consumer durables market is expected to grow at 10-15% in 2007-2010. It 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. 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. 4.1..Classification of consumer durables sector The Consumer Durables industry consists of durable goods and appliances for domestic use such as televisions,refrigerators, airconditioners and washing machines. Instruments such as cellphones and kitchen appliances like microwave ovens are also included in this category. The sector has been witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom, real estate and housing demand, greater disposable income and an overall increase in the level of affluence of a significant section of the population. The industry is represented by major international and local players such as BPL, Videocon, Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc. The consumer durables industry can be broadly classified into two segments: Consumer Electronics and Consumer Appliances. Consumer Appliances can be further categorised into Brown Goods and White Goods. The key product lines under each segment are as follows. Kitchen Applicances/Brown Goods Consumer Electronics
  30. 30. Consumer Durables Consumer Consumer Others Like Appliances Electronics Jewellery,Watche s etc Mobile phones Brown Goods/Kitchen Television White goods Appliances MP3 Player Mixer DVD Player Refrigerator Grinder VCD Player Washing machine Iron Computers Air Electric fans Telephones Conditioner Cooking range Camera/camcorders Speakers & Chimneys Home Theatres Audio components Microwawe oven Sewing machines Electric Fans Cleaning equipments
  31. 31. 4.2..Scope 1. In term of purchasing power parity (ppp), India is the 4th largest economy in the world and overtake Japan in the near future become the 3rd largest. 2. Indian consumer durable market is expected to reach $400 billion by on 2010 3. India has the youngest population amongst the major countries. There are lot of people in the different income categories nearly the two third 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 in India. 5. The upper-middle and high-income household in urban areas are expected to grew to 38.2 million in 2007 as against 14.6 million in 2000. 4.3..BRANDS IN CONSUMER ELECTRONICS SECTOR MNCs NATIONAL REGIONAL LG ) SAMSUNG ) KOREA ONIDA BUSH HYUNDAI) VIDEOCON CROWN BPL SALORA TCL ) CHINA GODREJ T-SERIES HAIER ) VOLTAS WESTON IFB OSKAR PHILIPS ) HOLLAND PANASONIC ) SHARP ) HITACHI ) SANSUI ) JAPAN AKAI ) AIWA WHIRLPOOL ) India‟s Consumer Durable industry is dominated by some of the top players like Voltas, Kelvinator, Allwyn and Godrej, but after liberalization many foreign companies has also entered the consumer durable industry in India.
  32. 32. Some of the major category of good coming under consumer durable industry is washing machines, air-conditioners, refrigerators and CTVs. Some of the top players presently dominating the consumer durable industry in India are: Top players in consumer durable industry: • Nokia India • LG Electronics India Limited • Philips India • Titan Industries • Samsung India Electronics • Whirlpool Appliances • Siemens • Sony India • Videocon Industries • Blue Star Some of the details regarding these top players in the consumer durable industry in India is given below: Nokia India: Nokia India is a world leader in mobile phone industry and they have built a diverse product portfolio with a view to meet the mobile phone requirement of different types of consumer. Their product ranges from an entry-level mobile phone to an advance mobile phones with several applications and multimedia facilities like gaming, music and imaging. LG Electronics India Limited: LG Electronics India Limited came into existence in the year 1997 and they have manufacturing units at Pune, Delhi and greater Noida for manufacture of consumer durable goods like televisions, IT products, vacuum cleaners, audio devices, microwave ovens, washing machines, refrigerators, air conditioners, etc… Philips India: Philips India are leaders in the production of different consumer durable products like domestic appliances, personal care products, etc… Their product range includes household products, kitchen appliances, personal care products, accessories, phones, PC products, portable entertainment and televisions.
  33. 33. Titan Industries: Titan Industries came into existence in the year 1984 and it is a joint venture between Tamil Nadu Industrial Development Corporation and the Tata Group. They are dealing with consumer durables like sunglasses, jewelry and watches. Their jewelry business is being done in the name of Tanishq. Samsung India Electronics: Samsung India came into existence in the year 1995 and they are dealing with different businesses like household business, consumer electronics business and IT business. Their product range includes washing machines, refrigerators, color monitors and color televisions. Whirlpool Appliances: Whirlpool Appliances came into India in the late 1980s and this company was established in joint venture with TVS group. They are having their business in 170 countries and in the year 1995, they acquired Kelvinator India Ltd, which was a consumer durable company by itself. Siemens: Siemens have their operations in more than 190 countries and they have an employee base of more than 4 lakh employees all over the world. They have more than 15 sales offices and manufacturing units in India. They are engaged in different businesses like lighting, transportation, healthcare, information and communications, energy and automation & control. Sony India: Sony India came into existence in the year 1994 and they have more than 7000 channel partners, more than 200 Sony exclusive outlets in the name of Sony World and more than 20 direct branch locations. They are dealing with nearly 20 different products in the consumer durable industry in India. Videocon Industries: Videocon is actually based in India and they are dealing with a variety of home appliances and consumer electronics. Their product variety include consumer electronics, glass, Thompson products, Oil & gas. Blue Star: The main product dealt by Blue Star is central air conditioners. They are the leading producers of Air-conditioners in India and they have made their presence felt in different countries like Africa, South East Asia and Middle East. These consumer durable companies are operating with the main objective of meeting the requirement of a wide range of consumers belonging to different financial strata and these companies have reached this place mainly because of the satisfaction they offered to their customers.
  34. 34. 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 LG, SAMSUNG the two Korean companies has been 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
  36. 36. 2)Market share of consumer appliances and consumer electronic:-
  37. 37. 3)Position of CTV in various states in India-
  38. 38. 4)Position of AC in various States in India-
  39. 39. 5)Position of Audio & Home Theater in various in India-
  40. 40. 6)Position of DVD in various in India- This analysis is based on the survey which represent the position of different consumer durables in various states in India. I select different brand in different category as per the market share and the demand of product in market. This analysis represents the market position of different consumer durables during the period of March 2010. 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 2010. Moon Bum Shin, managing director of LG Electronics India has said that the company has earmarked 4.8 billion rupees for investment purpose in India this year. The said money will be used to market as well as manufacture new products.
  41. 41. 5.)….RESEARCH METHODOLOGY Research methodology is considered as the nerve of the project. Without a proper well-organized research plan, it is impossible to complete the project and reach to any conclusion. The project was based on the survey plan. The main objective of survey was to collect appropriate data, which work as a base for drawing conclusion and getting result. Therefore, research methodology is the way to systematically solve the research problem. Research methodology not only talks of the methods but also logic behind the methods used in the context of a research study and it expl ains why a particular method has been used in the preference of the other methods 5.1..MEANING OF RESEARCH – Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. The Advanced Learner‟s Dictionary of Current English lays down the meaning of research as a careful investigation or inquiry especially through search for new facts in any branch of knowledge. Redman and Mory define research as a “systematized effort to gain new knowledge.” Some people consider research as a movement from the known to the unknown. It is actually a voyage of discovery. Research is an academic activity and such a term should be used in a technical sense. According to Clifford Woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting organizing and evaluating data; making deductions and reaching conclusions to determine whether they fit the formulating hypothesis. D.Slesinger and M.Stephenson in the Encyclopedia of Social Sciences define research as “the manipulation of things, concepts or symbols for the purpose of generalizing to extend, corrector verify knowledge, whether that knowledge aids in construction of theory or in the practice of art.” Research is thus an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research. The systematic approach concerning generalization and the formulation of a theory is also research. As such the term „research‟ refers to the systematic method consisting of enunciating the problem, formulating a hypothesis, collecting facts or data, analyzing the facts and reaching certain conclusion either in the form of solutions towards the concerned problem or in certain generalization for some theoretical formulation
  42. 42. 5.2..Marketing Research Process- Defiene the Problem & Research Objective Define the Reserch Plan Collect the Information Analyze The information Present the Findings in Report Step 1: Define the problem and the research objectives The 1st step in research is formulating a research problem. It is most important stage as poorly defined problems will not yield useful results. Also the marketing management must be careful not to define the problem too broadly or too narrowly. In order to identify the research problem, three categories of symptomatic situations, namely, overt difficulties, latent difficulties and unnoticed opportunities should be studied. Overt difficulties are hose which are quite apparent and which manifest themselves. Latent difficulties are those which are not so apparent and which, if not checked, would soon become evident. Unnoticed opportunities indicate the potential for growth in a certain area of marketing. Such opportunities are not clearly seen and dome effort is required to explore them. Step 2: Develop the research plan Designing a research plan calls for decisions on data sources, choice of research design, research approaches, research instruments, sampling plan and contact methods. Step 3: Collect the information Our research group collected the information over a period of 15 days and from various locations such as malls, residential complexes, colleges and schools and also retailers
  43. 43. Step 4: Analyze the information After the process of gathering information was completed we tabulated the data and developed frequency distributions and extracted the findings from the survey. Step 5: Present the findings Finally we prepared a project report on our survey and along with the findings we also presented our recommendations. Step 6: Make the decision 5.3..Research design: Research design is important primarily because of the increased complexity in the market as well as marketing approaches available to the researchers. In fact, it is the key to the evolution of successful marketing strategies and programmers. It is an important tool to study buyer‟s behavior, consumption pattern, brand loyalty, and focus market changes. A research design specifies the methods and procedures for conducting a particular study. According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of investigation conceived as to obtain answers to research questions and to control variance. A research design is the detailed blueprint used to guide a research study toward its objectives. The process of designing a research study involves many interrelated decisions. The most significant decision is the choice of research approach, because it determines how the information will be obtained. To design something also means to ensure that the pieces fit together. The achievement of this fit among objective, research approach, and research tactics is inherently an iterative process in which earlier decisions are constantly reconsidered in light of subsequent decisions 5.4..DATA COLLECTION The task of data collection begins after problem has been identified. While deciding about the method of data collection to be used for the study the researcher should keep in mind two types of data viz, primary data and secondary. The primary data are those, which are collected afresh and for first time and thus happen to be original in character. The secondary are those which have been collected by someone else and which have already been passed through statistical process. The researcher would have to decide which sort of data he would be using for his study. The method collecting primary and secondary data differ since primary data are to be originally collected while in case of secondary data the nature of data collection work is merely that of compilation.
  44. 44. There are several ways of collecting primary data. They are as follows: 1.Observation method 2. Interview method 3. Through questionnaires 4. Through schedules OBSERVATION METHOD Observation becomes a scientific tool and the method of data collection for the researcher when it serves a formulated research. Purpose is systematically planned and recorded and is subjected to checks and controls on validity and reliability. Under the observation method the information is sought by way of investigators own direct observation without asking from respondent Survey(questionnaire to public) Surveys are concerned with decribing,recording,analyzing, and interpreting conditions that exist or existed.the researcher does not manipulate the variable or arrange FOR EVENTS TO happen.surveys are only concerned with conditions or relationships that exist., opinions that are held, process that are going on,effects that are evident or trends that are developing.they are primarily concerned with present but at times do consider past events and influences as they relate to current conditions. 1)surveys type research usually have larger samples because percentage of responses generally happen to be low ,as low as 20% to 30% ,especially in mailed questionnaire studies.thus,the survey method gathers data relatively from the larger number of cases at a pecular times. 2)surveys are the example of field research and are concerned with hypothesis formulation and testing analysis of the relationships between non-manipulated variables. 3)surveys may either be census or sample surveys they may also be classified as social surveys,public opinions surveys. COLLECTION OF SECONDARY DATA Secondary data means that are already available that is they refer to the data, which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has to look into various sources from where he can obtain them. In this case he is certainly not confronted with the problems that are usually associated with the collection of original data. Secondary data may be either published or unpublished data. Usually published data are available in: -Various publications of the central, state and local government.
  45. 45. -Various publications of foreign government or of international bodies and their subsidiary organization. -Technical and trade journals. -Books magazines and newspapers. -Reports publication of various associations connected with business and industry, banks, stocks exchanges etc. -Reports prepared by various scholars‟ universities economists etc in different field. Public records and statistics, historical documents and other sources of publish information. The sources of unpublished data are many; they may be found in diaries, letters unpublished biographies and autobiographies and also may be available with scholar‟s research workers. Trade organization, labor bureaus and other public/private organizations. Researcher must be careful in using data. He must make a minute because it is just possible that the secondary data may be unsuitable or maybe be inadequate in the context of a problem which the researcher wants to study. 5.5Selection of appropriate methods for data collection - Nature scope and object of enquiry: This constitutes the most important factor affecting the choice of a particular method .the method selected should be such that it suits the type of enquiry that is to be conducted in the researcher, this factor is also important in deciding whether the data already available are to be used not yet available are to be collected Availability of funds: Availability of funds for the research project determines to a large extent the method to be used for the collection of data. When the funds at the disposal of the researcher are very limited, he will have to select a comparatively cheaper method. Finance in fact is big constraint in practice and the researcher has to act within this limitation Time factor: Availability of time has also to be taken into account in deciding particular method of data collection. Some methods take relatively more time whereas with others the data can be collected in a comparatively shorter duration. The time at the disposal of the researcher thus affects the selection of the method by which the data is collected. Precision required: Precision required is yet another important factor to be considered at the time of selecting the method of collection of data
  46. 46. 5.6..DATA COLLECTION METHODS: After the research problem, we have to identify and select which type of data is to research. At this stage; we have to organize a field survey to collect the data. One of the important tools for conducting market research is the availability of necessary and useful data. Primary data: For primary data collection, we have to plan the following four important aspects.  Sampling  Research Instrument  Secondary Data - The Company‟s profile, journals and various literature studies are important sources of secondary data.  Data analysis and interpretation 1.Questionnaires 2.Pie chart and Bar chart Questionnaires: This is the most popular tool for the data collection. A questionnaire contains question that the researcher wishes to ask his respondents which is always guided by the objective of the survey. Pie chart: This is very useful diagram to represent data , which are divided into a number of categories. This diagram consists of a circle of divided into a number of sectors, which are proportional to the values they represent. The total value is represented by the full create. The diagram bar chart can make comparison among the various components or between a part and a whole of data. Bar chart: This is another way of representing data graphically. As the name implies, it consist of a number of whispered bar, which originate from a common base line and are equal widths. The lengths of the bards are proportional to the value they represent. Preparation of report: The report was based on the analysis and presented with the findings and suggestions. The sample of the questionnaires is attached with the report itself.
  47. 47. 5.7..Sampling Methodology: Details of the sampling methodology, I have made questionnaire. The one is made for the Customer. No. of questions in questionnaires for customer: 09 No. of question related to consumer behavior 04 No. of people met during the research: 200 No. of respondents during the research: 50 Sample unit Professionals  usiness man B Employees House wife Working women Students 5.8..ANALYSIS- Q1. Have you purchased any consumer durable during Exhibitions?  Yes  No
  48. 48. 0% 0% 35% Yes 65% No Inferences 1. 65 % of Customer have not purchased any consumer durable from exhibitions. 2. Only 35 % people have purchased. 3. It shows that consumers are coming in the exhibition for knowledge of product and also they want to know that weather there is actual price difference in exhibition and shop or not. 4. Consumers also want to compare to the different brand which are available in the exhibition. 5. So exhibitions are more useful to increases brand awareness. 6.People are less interested to purchase product from the exhibition Q.2 While purchasing consumer durable which parameter influences you? Price Product feature Brand Service Durability
  49. 49. 9% 30% 16% Price Product Feature Brand 26% service 19% Durability Inference 1. 30% of customer gives importance to price. So it shows that Indian consumers are very price sensitive. They give more importance to price over the brand. 2. 26% give importance to brand. So price and Brand matter a lots for the costumers. And they are also want best brand in best price. 3. 19% to product feature Service 16% and durability 9% Service is also a big factor for the customer they are less interested in the durability Q3. From where you prefer buying consumer durables? Exhibitions Co.shoppee Showroom
  50. 50. 0% 17% 47% Exhibitions Co.shoppee 36% Showroom Inference: 1. A majority of customers prefer to buy from showrooms. Very less proposition of customers buys from Exhibitions. 2. 47% customers are prefer to buy from the showrooms because the showrooms are more convenient to customers they also think that these shops give more discounts. 3. People are less interested to buy from the exhibition they only visit the exhibition for price quotation of the product and the comparison of the product Q.4. you prefer to buy from the same as you have mentioned in Q.3 because of following reasons?  Attractive Price  Service  Demonstrations
  51. 51.  Offers  Convenience 29% 35% Service Demonstration Offers 18% Convenience 18% Inference 1. Customers buy from showrooms because of the service and convenience. These are two main factors 2. Customers are preferred to buy from the showroom because of they think that these convenient store may provide good after sell service. 3. Customer also thinks that there is more chance to bargain and they can get more discounts in these showrooms. 4. Price is also a factor that attract the customer in these showrooms. Q.5… How frequently you change your consumer durables?  1-3 years  3-5 years  5-10 years  More than 10 years
  52. 52. 4% 19% 1-3 Years 54% 3-5 Years 23% 5-10 Years More than 10 Years Inference 1. Customers prefer to change consumer durables in more than 10 years. In India people do not change consumer durable frequently. 2. 23% customers change their consumer durable within 10 year. 3. It represent that Indian consumer do not prefer to change their consumer durable frequently. Q.6.. Has your friends/relatives opinions influenced you to buy electronics products? a) Strongly agree b) Agree c) Average d) Disagree e) Strongly disagree
  53. 53. 5% 10% 40% Strongly Agree Agree 20% Average Disagree Strrongly disagree 25% Inference- 1. Majority of the customers are influenced by friends/ family opinion in buying electronic products. Among them Youth are the most. 2. There are very few customers who does not influence by their relatives or friends opinion. They are quite conservative. Q.7. what influence you the most while making buying decision? 1. Personality 2. Lifestyle 3. Self- esteem.
  54. 54. 4. Reference groups 20% 20% Personality Lifestyle 30% 30% Self-Esteem Reference group Inference- 1...Majority of the customers are interested in buying electronic products for their personality and Life style. 2. Some people also buy because of their self-esteem means for their acceptance, recognition in society. Q.8.. What initiated you to purchase consumer durables for the first time? A) Word of mouth b) Friends c) Need Recognition
  55. 55. d) Celebrities/Movies 10% 10% 30% Word of mouth Friends 50% Need recognition Celebrities/Movies Inferences- 1. People prefer to buy consumer durables when they recognize need for it or when they are influenced by their friends/relatives. 2. Very few decide to purchase by influencing with the Celebrities & word of mouth. Q.9..Which segment of consumer mostly influence purchase decision? A) Socialites b) Conservatives c) Working Women
  56. 56. d) Youth 25% 35% Socialities Conservatives Working womer 10% Youth 30% Inference- 1. Youth and working Women Plays an important role in Purchase decision. 2.Although socialites play lesser role than youth and working women, but yet they can‟t be ignored.
  57. 57. 6)Key findings The sector has been witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom, real estate and housing demand, greater disposable income and an overall increase in the level of affluence of a significant section of the population. The industry is represented by major international and local players such as BPL, Videocon, Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc. The electrical appliances industry, which had been focused on the urban market, is now reaching out to semi-urban and rural markets as well, because of the shift in living style of the population, increasing electrification of villages and relatively higher purchasing power of consumers. As the market penetrates into the core middle class segment in both urban and rural areas, it is expected to expand phenomenally, offering large volumes to the industry. Computers Computers accounted for around 33% of Indian consumer electronics spending in 2009. BMI forecasts Indian domestic market PC sales (including notebooks and accessories) of US$6.4bn in 2010, up from US$5.3bn in 2009. Sales were up by as much as one-third in Q110 compared with the same period of the previous year. With PC penetration currently around 2%, computer hardware compound annual growth rate (CAGR) for the 2010-2014 period will be around 15%. AV India‟s domestic video, audio and gaming device market is expected to grow to a value of US$19.5bn in 2014. Television will remain the core product in this category, with sports events such as India Premier League cricket and the 2010 Commonwealth Games in Delhi helping to drive demand for TV set upgrades. LCD TV set sales grew almost 100% in 2009 and are projected to reach around 2.5mn units in 2010. Mobile Handsets Indian mobile handset sales accounted for around 33% of Indian consumer electronics spending in 2009. Total Indian market handset sales are expected to grow to 220.7mn units in 2014, as mobile subscriber penetration soars towards 133%. Vendors are likely to increase their focus on semiurban rural customers, with penetration in rural areas estimated at less than 15%, far below the national level. Smartphones and touch-screen models are a strong growth area, with Indian and multinational vendors competing to offer phones with perceived high-end features at affordable prices.
  58. 58. Other reasons- Young Population with rising incomes 45% of the Indian population is below 25 years which accounts to close to 500 million consumers (18+) of which 230 million are in Urban India. With the rising incomes and education levels, the discretionary expenditure is increasing.  Availability of Easy Credit Options With all the major players offering easy EMI schemes and with the increased penetration of Credit cards, the Indian consumers now have an easier access to consumer electronics  Changing Consumption Patterns Gone are the times when people bought electronics with the intension of using it for years together. With increasing speed of innovations and as new technologies come in, the Indian consumer wants the latest and the best. Now mobile phones are changed every year, laptops once in 2 years ,etc. People want to be trendy and are becoming gizmo frenzy.  Falling Prices of Consumer Electronics With new models, products and more competition, prices are being driven even further down. Especially in the mobile phone segment, prices fall as much 20% after 6 months after introduction.
  59. 59. CUSTOMER SURVEY FINDINGS 1. Secondary supports play an important role in the customers mind and create awareness among the customers. The secondary support includes Demonstration, Exhibition & Even Sponsors. 2. From the survey it was found out that the majority of customers don‟t buy consumer durables from exhibitions. They just visit the exhibitions to see the co. latest model. 3. They want to buy from the showrooms or from co. showrooms. For them service is important .Beside convenience and other factors service is key factor. 4.Also majority of customers do not want any financing scheme for purchasing the durables. 5. Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand. 6. In survey we found that LG has captured maximum market share in every category. LG dominates CTV, LCD, and Refrigerator, and Washing machine, category. 7. LG and Samsung have bottle neck competition in TV and REF. category. 8. The product is well aware and it is on top of mind of customer
  60. 60. 7)Some Statistics- Consumer electronics (durables) sector continues to be the main stay of the Indian electronic industry contributing about 32 per cent of the total electronic hardware production. By the end of 2005-06, the market for consumer durables (including entertainment electronics, communitarian and IT products) was Rs 180 billion (US $4.5 billion). The market is expected to grow at 10 to 12 per cent annually and is expected to reach Rs 60 billion (US$13.3 billion) by 2008. The urban consumer durables market is growing at an annual rate of seven to 10 per cent, the rural durables market is growing at 25 per cent annually. Some high-growth categories within this segment include mobile phones, TVs and music systems. Source:- Isuppli Markets(Indian market intelligence service)
  61. 61. 8)Challenges to the electronics industry-  Price Wars With the increase in price wars due to the entry of new players in the market and increase in manufacturing capacity by some original manufacturers, the profitability and margins of the companies are adversely affected. Hence companies need to increase focus on product / store differentiation to address various segmental specific needs  Lack of Distribution Networks and Logistics Management Getting stock into a store in India is a massive challenge given the poor city roads and complex intra city transportation regulations , high cost of moving goods between starts, inefficient storage ( e.g. small store backrooms owing to expensive real estate). It is of utmost importance to design an efficient network. Transportation, including railway systems, highways has to meet global standards. Airport capacities, power supply, warehouse facilities and timely distribution are other areas which need to be enhanced. The distribution network is also highly fragmented and is very poor in semi-urban and rural areas.  Presence of Gray Market in Consumer Electronics Presence of gray market in consumer electronics products, especially in DVD player, music players is definitely eating into the sales of the retailers. Counterfeit products are present across a wide range of products.  Increasing Awareness of the Indian Consumers With the increase in access to Internet information, and availability of wide range of choices, consumers have become quite smart. They want the product that is easy-tohandle, good in quality and low in price. Most importantly, consumers want some guarantee for the product that they are buying. The role of electronic companies doesn't end on the sale of the product, but continues till the end of guarantee period.  Trained manpower shortage in India There is lack of talent in consumer electronics retailing. Retailers need to spend heavily on training its sales force to match the expectations of the Indian consumers both in terms of technical knowledge and soft skills.
  62. 62. 10)Limitations of the project- Every study has certain limitations. In my study, also there were certain limitations, which I could not able to solve. 1. The research was conducted in a very small area. 2. My research work period witness the biggest ups and downs in product sale of different brands, which affected the perception of the customer. This was biggest drawback of my study. 3. The customer filled the questionnaire mostly in careless manner, so it was difficult to make them hold for time. 4. I had only found the upper-middle class family to fill up the questionnaire, but generally, an Average middle class family was required for the study. 5.The sample size is also very small which represent my research on consumer behavior
  63. 63. Conclusion The consumer durables industry in India is set for sustained growth over the long term, fuelled by favourable consumer demographics, overall growth in services and industrial sectors and infrastructure development in suburban and rural areas. Several Indian and MNC players are looking to strengthen their presence in India to leverage this opportunity. Success in the long-term will require firms to develop a wide and robust distribution network, differentiate their products in areas of relevance to the consumer and innovate in the areas of promotion, product financing, etc. The product and approach to market need to be customised to suit the unique needs of the Indian market.
  64. 64. BIBLIOGRAPHY  www.lgindia.com  www.google.com  www.wikipedia.com  “India Consumer Electronics Report Q4 2010”  “India Consumer Electronics Report Q2 2011”