Download - Panasonic Air Conditioners
Panasonic
Air Conditioners INDIVIDUAL FIELD RESEARCH PROJECT
Arun Menon Vellatheri - 14020241042 9/14/14 Essentials of Marketing
Management
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PANASONIC AIR CONDITIONERS
INDIVIDUAL FIELD RESEARCH PROJECT
submitted by
14020241042 ARUN MENON V
under the guidance of
Mr. Rajesh P.J
in partial fulfillment of the requirements for Essential of Marketing
Management course
of
MASTER OF BUSINESS ADMINISTRATION
IN
INTERNATIONAL BUSINESS
SYMBIOSIS INSTITUTE OF INTERNATIONAL BUSINESS
SYMBIOSIS INTERNATIONAL UNIVERSITY
PUNE
SEPTEMBER 2014
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Contents Introduction .................................................................................................................................................. 3
About Panasonic Air Conditioning Group ................................................................................................. 3
History of Air Conditioning Group ............................................................................................................ 3
STP Strategy .................................................................................................................................................. 3
Segmentation ............................................................................................................................................ 3
Demographic and Geographic Segmentation: .......................................................................................... 4
Income group Segmentation ................................................................................................................ 4
Commercial Segmentation.................................................................................................................... 4
Primary Market of Air Conditioners. ......................................................................................................... 5
Positioning strategy .................................................................................................................................. 7
World positioning.................................................................................................................................. 7
Indian positioning ................................................................................................................................. 7
Future Company Plan .................................................................................................................................... 8
BtoB facilities business: Establish foundation of highly profitable businesses for the medium and long
terms. ........................................................................................................................................................ 8
BtoB devices business: Improve profitability by business strategy transformation................................. 8
Creating New Businesses for the Future ................................................................................................... 9
Current scenario ....................................................................................................................................... 9
Advertising strategy .................................................................................................................................. 9
MARKET SURVEY ......................................................................................................................................... 11
Executive Summary ..................................................................................................................................... 12
Field research .............................................................................................................................................. 13
Dealers with place catering to Panasonic air conditioners. .................................................................... 13
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Introduction
About Panasonic Air Conditioning Group The Global Trusted Air Conditioning Brand 53 years since its establishment, Panasonic Air Conditioning
Group has grown into a global company. Through continuous quest for product innovations, the Group has
evolved from manufacturing Compressor to providing Comprehensive Air Conditioning solutions. This has
earned Panasonic, the reputation as the trusted brand for superior quality and reliable products in the industry
The Panasonic Air Conditioning Group has grown into a global company through its continuous quest for
product innovations and technology. The group has evolved from manufacturing compressors to providing
comprehensive air conditioning solutions. This has earned Panasonic, the reputation as the most trusted
brand for superior energy-efficiency and reliable products.
History of Air Conditioning Group 1958-2014
1958: Started production and sales of Home Coolers The Electrical Appliance Business Group (Kadoma)
started cooler production in March
1958: Started sales in May under the "Home Cooler" name.
1961: Started exports of Home Coolers
1990: Launched world's first Compact Scroll Compressor-equipped Air Conditioner
1992: Developed industry's smallest outdoor air conditioning unit: “Chi-size"
2008: In 2008 Energy Conservation Grand Prizes, EcoCute won its first Director General Prize of Agency
of Natural Resources and Energy while Panasonic air conditioner won the Chairman Prize of the Energy
Conservation Center of Japan Started Air to Water heat pump business in Europe
2011: Integration of Sanyo HVAC USA into Panasonic Corporation of North America.
2013: Celebrated its 30th Anniversary - Servicing the US in the ductless market.
2013: Introduced EXTERIOS Series to the US market.
2014: Launched System 5 and Wireless Communication.
STP Strategy
Segmentation The Air Conditioner market in India includes many players. These include both foreign and Indian brands
such as LG, Voltas, Samsung, Daikin, Panasonic, Hitachi, Blue star, Godrej etc. The fore market in air
conditioners appears to be competitive. The focus of the research is on the aftermarket of the air conditioners.
This includes the servicing and maintenance of the product, availability of spare parts, extension of warranty
etc. Here the competitiveness of the primary market may or may not result in the competitiveness of the
aftermarket. This would require further consideration of various aspects. The primary market and aftermarket
need to be considered from the point of view of the Competition Act, 2002, primarily, from the point of view
of the Sections 3 and 4.These sections deal with the anti-competitive agreements and abuse of dominant
position in the relevant markets. The practices followed by the companies are considered under the act, not
only from the point of view of anti-competitiveness, but also by way of promoting and sustaining competition
in markets, protecting the interests of the consumers and ensuring freedom of trade carried on by other
participants in markets.
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Air Conditioning Market comprises of Central and Specialty Air Conditioning which comprises 50% of the
total market and room air conditioning the other 50%. Room air conditioning consists of both commercial and
residential air conditioning.
Demographic and Geographic Segmentation: This kind of segmentation analyses the market on the parameters like age, gender, occupation, income,
education, ethnicity, religion, region, population, urban/ rural market or climatic variations etc.
Income group Segmentation
Low Income Group o Comprises of 25% - 35% of
population o Comprises of 10% - 15% of urban
population o Low growth rate of approx.1% - 2% o Mostly rent accommodation o Capacity required 1 ton. o 25% of households owns an AC o Installation charges are up to INR
1,500-2,000 for a unit sold.
Middle Income Group o Comprises of 25% - 30% of
population
o High growth rate of upto 1000% projected-McKinig Global Institute.
o In comparison, total population growth of 20% - 30%.
o Own house accommodation o Capacity required, 1.5 ton. o 45% of household owns an AC
Upper Income Group o Comprises of 20% - 25% of
population.
o Low growth rate of 2% - 3% o 1.5 tons for Small owned houses. o 2 tons for rented, bigger house. o 100% of households owns an AC o Installation charges are up to INR
Rs 19,000-21,000 for split AC
High Income Group o Comprises of 10% or less of total
urban population
o Growth rate is insignificant.
o Own house accommodation.
o Every house and rooms have AC. o 100% of households owns an AC
Commercial Segmentation
Small and Medium Enterprises o Comprises upto 90% of total industries
in India o Approximately 35 mill units in India in
India. o Average growth rate around 10 – 12% o Average cost of installation per SME
unit = INR 75,000 o Low percentage of units with good
solutions installed
Large Scale Enterprises o Comprises upto 10% of total
industries in India. o Approx. growth rate < 10%. o Average cost of installation =
INR 4,00,000 o Approximate no. of units = 4.4
million o Almost all units installed are
with good solutions.
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Product segmentation with various income groups.
Primary Market of Air Conditioners.
There are several brands in the Air Conditioning primary markets. It majorly includes LG, Samsung, Voltas,
Hitachi, Panasonic, Daikin, Godrej, Bluestar and several others. These companies have sold around 3 million
units in the year 2011-12 are now having the market value of INR 3.4-million year 2013-2014. Here the
market share of Assembled Air Conditioners has not been considered. The market share among the major
players is shown as follows
The market structure seems to be competitive due to large number of players involved. Also, the market
share has been distributed evenly among various manufacturers that encourages in fairness in the market.
Though it does involve a huge initial capital outlay which may create an entry barrier, it, however, also
provides the benefit of economies of scale and thereby reduces such threats.
In fact there have been new players entering the market and have been growing at reasonable pace. For
example, Godrej entered the air conditioner market in the year 2005 and carries a reasonable pie of the total
market share. Several other players such as Electrolux, Mitsubushi, Croma etc have entered the market.
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The Air Conditioners has a penetration of 3.8% for air conditioners in urban areas. However the air
conditioners market has been growing at a rate of more than 17% of Compounded Annual Growth rate
(CAGR) and is expected to become a total of Rs 52000 Crores market by 2015. This would also raise the
penetration levels in the rural markets that were at a 5% level in 2013-14.In addition, there has been
consistent decline in the prices of the ACs that is the result of striving innovation and increasing
competition.
Herfindahl-Hirschman Index (HHI), a measure of the size of the firms in relation to the industry and an indicator of the amount of competition among them, can be used to determine the market structure of the industry. It is defined as the sum of squares of the market shares within the industry where market share is expressed as fractions. The value of the index varies from 0 to 1, where 0 implies perfect competition and 1 implies a monopolistic market structure. For the above market share of the various companies, HHI can be calculated for the 19 firms in the industry as follows-
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Here, the value of 0.122815 implies that the market share does not have a monopolistic power in favor of any firm. The value also suggests that the market structure is not even oligopolistic. This is similar to the interpretation that was deduced on the basis of the understanding of the market mentioned above. This gives us a clear view even though the company Panasonic is huge the air conditioning segment of Panasonic is not as big as what it would have expected on its conception also down the lane since started operations in 2005 in India.
Positioning strategy
World positioning
Indian positioning
Country FY13 FY12
China 3.2 4%
Brazil 0.6 4%
India 0.5 15%
Russia 0.4 3%
Vietnam 0.1 5%
Total 4.8 5%
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Future Company Plan
In 2013 Panasonic Air conditioners revamp established. Further plans to expand BtoB till the year 2018.
By 2018 Panasonic Air conditioners aims at completion towards Global No.1 Company. In the current
financial year Panasonic air conditioners Consumer durables major Panasonic has lined up INR 120 crore
investments during this financial year, aiming to garner a 20 per cent market share in the split air—
conditioner segment. In 2008, Panasonic had less than one per cent market share and it soared to six per
cent in 2010. Currently, the market share stands at 15 per cent in the air—conditioners segment. In
addition to its existing line up and growth achieved till now, Panasonic plans to invest INR 120 crore in
financial year 2013 in the split air—conditioner segment and aims to capture around 20 per cent of market
share by end of this fiscal year. Panasonic India has been witnessing a 80 to 100 per cent growth in the
split air—conditioners segment and has been ranked number one in Gujarat, Maharashtra, Tamil Nadu
and Rajasthan. The company said since its launch of air—conditioners in 2008, it had registered one
million sales in the country.
BtoB facilities business: Establish foundation of highly profitable businesses for the
medium and long terms.
The AP Company aims to strengthen model lineups and the sale service structure. In large-sized air-
conditioning systems, we will introduce low-cost products to China and elsewhere in Asia. At the same
time, we will strengthen sales and the support structure. In cold chain equipment, we plan to strengthen
our lineup of environmentally conscious models and strengthen business in Asia. Moreover, in build-in
and commercial appliances and fuel cells, we intend to accelerate the pace of business development
overseas.
BtoB devices business: Improve profitability by business strategy transformation.
The AP Company will look to raise the proportion of sales to other companies outside the Panasonic Group
by leveraging its core technologies. For example, in the nano-e devices business, we will expand sales to
the automotive and facility markets. In the business of compressors for air conditioners, we will make
package proposals and reduce the size of products. In compressors for refrigerators, we plan to reinforce
businesses in high-profit fields by increasing the proportion of sales generated by inverters and in other
ways. Moreover, in vacuum insulation panels (VIPs), where we are looking to expand business overseas,
we aim to dramatically raise the share of sales of panels manufactured in Thailand, while in gas meter
devices we will expand sales in Europe.
FY2014- FY2016
Expand Business
FY2014- FY2016
Establish Foundation
FY2017- FY2019
Completion towards Global No.1 Company
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Creating New Businesses for the Future Over the medium to long terms, we will work to establish new business models by utilizing smart home
appliances, including offering healthy recipes and menu suggestions. Furthermore, we aim to create new
businesses beyond the existing appliances area. Examples include utilizing sensor technologies to visualize
the soil environment.
Current scenario
Advertising strategy There are several varieties of marketing plans from tactical marketing plans, to specific project or
functional plans, to strategic marketing plans. The most common type of marketing plan is the tactical
marketing plan, which often is in the form of an annual marketing activity plan, along with corresponding
budgets and schedules. This plan is used by construction brands and corporate America to efficiently
coordinate and implement the multitude of marketing activities. The tactical plan doesn’t focus on
FY2014
- In red for 3 consecutive years
- Funding risk
- No divident
Reorganised "corporate Structure
•Head office reform, introduction of business Division & Divisional Companies
Unprofitable business
•Guidelines for major unprofitable business & reform
Reviewed transferring business/ growth strategy
•Formulated and strategy new mid-term plan 'CV2015'
Escaping from financial crisis
•Group-wide activity to generate cash
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strategic issues like market segmentation, or competitive intelligence; but instead focuses on identifying
the specific details of all known marketing programs, campaigns or initiatives. For example, vertical email
campaign to design engineers; monthly frequency, content themes include frequently asked questions,
design tips, and testimonials; goal of 2000 leads.
Through authorized Dealer purchases of Panasonic projector products, Co-Op funds for preapproved
promotional activities can be made available to authorized Dealers that can support a wide range of
marketing activities, including but not limited to the following:
• Web Advertising (web pages, banner ads, opt in e-mail)
• Newspaper and Magazine Advertising
• Print and Electronic Catalog Advertising
• Product Bundling
• Telephone Directories (Yellow Pages)
• Radio and Television Advertising
• Direct Mail and Newsletters
• Open Houses and Local Trade Shows
• Point-of-Sale Materials and Promotional Merchandise
• Sales Contests and Promotions
Use of brand ambassadors like Katrina Kaif has boosted the advertisement sector to the required
estimate.
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MARKET SURVEY
Of the total of 112 people surveyed find the following graph having the following segmentation.
0
5
10
15
20
25
30
35
40
45
Panasonic Sharp LG Videocon
Market Survey
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Executive Summary
The Panasonic Group refers to solutions for resolving any customer problems by combining the
Group’s strengths of a wide range of products with its accumulated software technologies for proposal
and operations management in four stages to offer a “combined value” providing a variety of different
products and “linking value,” to establish a “value chain business” which includes maintenance and
service businesses, and to create entire solutions business models based on the three values, as
mentioned just before, as the “Comprehensive Solutions.”
- In order to promote this business, “Corporate Division for Comprehensive Solutions Business”
with more than 100 employees will be established inside the “Eco Solutions Company” in the new group
organizational structure that will be implemented in January 2012. This division will play a central part in
making the business project and product plans as well as promoting sales and marketing activities for
comprehensive solutions business across the group.
- Going forward, the division will launch “Operation 100 Arrows” in cooperation with other
internal companies to create one hundred concrete comprehensive solutions business models with one
trillion yen sales target. The business operation will be developed in the target markets including
residential houses, buildings and stores centering on sales and marketing offices to be placed in each
region of Japan, China, Asia/Pacific, North America and Europe to accelerate business creation globally.
In particular, mergers and acquisitions of local companies in North America and Europe will be
considered to establish operational infrastructure.
- In the energy related business, Panasonic will promote full-scale development of storage
battery business for detached houses. Specifically, high-capacity and compact lithium-ion storage
batteries and highly-efficient power conditioners will be launched. Also for condominiums, buildings and
stores, it will offer smarter energy management solutions that realize comfortable and yet eco-friendly
living environment as well as provide safety and peace of mind, while making efforts to support new
infrastructure such as smart grids and electric vehicles that are expected to become more popular in the
near future.
-The Panasonic Group will strategically invest 10 billion yen more or less to strengthen the
business foundation of the comprehensive solutions business in FY2013 (the fiscal year ending March
31, 2013) and aim to achieve more than 300 billion yen in sales in FY2016
Even though Panasonic is in the top companies in this world the air conditioning segment is
weak. And a lot more marketing and financial barriers are yet to be overcome to be the market leader in
India.
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Field research
Dealers with place catering to Panasonic air conditioners.
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