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Strategic Analysis of Onida Assignment for Strategic Marketing 10/23/2010 Submitted by: Sam Alex - 85 Vikas Nigam - 115

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Page 1: Onida Strategic Analysis

Strategic Analysis of Onida

Assignment for Strategic Marketing

10/23/2010

Submitted by: Sam Alex - 85

Vikas Nigam - 115

Page 2: Onida Strategic Analysis

Strategic Analysis of Onida

ONIDA An Introduction

It all began with just a vision. In the year of 1981, Mr. GL Mirchandani and Mr. Vijay

Mansukhani started a company called Onida with just a goal of manufacturing television sets

and going beyond convention. By the end of that year, they started assembling television sets

at their factory in Andheri, Mumbai. With the passage of time, superior products and the

Combination of a distinctive voice, a cutting-edge advertising strategy, and purposeful

Marketing ensured that Onida became a household name.

Onida achieved being a household name through impressive advertisements (People still

remember the devil – Owners pride and neighbours envy) and innovative products (Candy).

After that period, due to certain internal conflicts, Onida started losing its focus. They

introduced various products, changed their promotions, their positioning was blur and the

service and quality eroded. Onida is currently into:

Televisions,

DVD players,

Microwaves,

Washing Machines,

Mobiles,

Air Conditioners and

Projectors.

Our attempt is to analyse the position of Onida using various matrices and recommend what

needs to be done to achieve its past glory.

Org: Vikas and Sam Page 2 of 13

Page 3: Onida Strategic Analysis

Strategic Analysis of Onida

Analysis of Onida

To analyse Onida with the help of various matrices, we understood how difficult it is when we didn’t notice the products in Forum, E- store, Croma, etc. We called Just Dial to get the list of their dealers near electronic city and the closest one according to Just dial was somewhere deep in some lane in Koramangala.

There was no way we could find the place and we had to call the owner twice to get to the place, upon reaching there, we told him we are interested in buying Onida TV and he gave us a blank look and asked us - When you have Videocon and other brands why do you want to buy ONIDA. In the entire range of TVs, there was just one Onida TV. Later we told him that we were doing an analysis on Onida and he was helpful. We also struck the GOLD POT as the manager of Onida - Mr. Ravi Kiran, incharge of distribution in Bangalore was sitting right there.

Please find below the information we got (For Bangalore), which we classified into Internal and External factor environment:

Org: Vikas and Sam Page 3 of 13

Page 4: Onida Strategic Analysis

Strategic Analysis of Onida

IFE and EFE

Internal factors Evaluation (IFE) :Key Internal Factors Weight Rating Weighted Score

High brand recall 0.1 4 0.4Innovative brand image 0.1 3 0.3Premium pricing (Price Value Strategy) 0.075 3 0.225Good distribution facility 0.05 3 0.15High quality LCD TV’s (Less requirement for service) 0.1 3 0.3Strong In Shop training Demonstration (ISD) 0.075 3 0.225

Less promotion 0.125 2 0.25Volatility in positioning 0.125 1 0.125Family feud 0.075 3 0.225Weak in service 0.1 4 0.4Reluctance to pay market price for service technicians 0.075 4 0.3Total 1 2.9

Strengths

Weaknesses

External factor Evaluation (EFE) :Key External Factors Weight Rating Weighted Score

Increase in Competition 0.2 2 0.4High bargaining power of Speciality stores 0.05 3 0.15

Increase in salary of Technicians in the industry 0.05 1 0.05

Growing Middle class 0.075 4 0.3Sustainable economic growth 0.05 2 0.1

Increase in disposable income 0.05 2 0.1

Growing semi-urban and rural market 0.1 3 0.3Easier financial assistance from banks 0.075 2 0.15

Globalization leading to lowering of costs for products

0.05 3 0.15

Total 1 3

Opportunities

Increase in consumerism leading to increase in entertainment needs

0.1 4 0.4

Improvement in technology and lowering of price in segments like mobile and LCD TV

0.2 3 0.6

Threats

IFE & EFE need to be quantified, more factors could be added

Org: Vikas and Sam Page 4 of 13

Page 5: Onida Strategic Analysis

Strategic Analysis of Onida

Other Localized Data:

1. They make up for their low promotion and advertisement through strong Secondary driven sales.

Secondary driven sales is where the sales is pushed by the representatives of the respective

companies. For Onida, the representative meets the dealer around 2 – 3 times a month whereas

for other brands like Sony, Videocon, L.G. the visits are just around once a month.

2. Onida provides strong ISD - In Shop Demonstration Training to the staff at dealer’s location.

3. Strong tie up with Chain counters like Pai and co. where they greatly benefit.

4. Dealers are motivated by offering domestic and International trips (FTA - Foreign Tourist

Scheme) every years if they achieve their targets. Domestic trips are normally conducted in June

and International trips in November/ December.

5. DVD player is their worst product as they have a lot of complaints and there is no proper service

for back up, hence dealers normally don’t sell DVD players or give a new one in case of

complaints.

6. LCD TV’s are the best so far with high quality and no complaints so far. Noramlly the dealer

discourages people from buying ordinary TV of Onida and encourage them to buy Onida LCD

TV.

7. Onida commands a premium price for their normal TV’s. For the same product, Onida charges

more than Rs. 1,200/- compared to Videcon.

8. There is fault in positioning as they consider themselves premium in TV segment, Middle class

positioning for Washing machines and other appliances and they are the cheapest in the Mobile

segment ( Same features compared to Micromax and Karbonn – Onida Rs. 3,000, Micromax: Rs

3,500 and Karbonn: more than Rs. 4,000)

9. Onida sells more than 5,000 DVD players per month and they are very proud of it but this is one

major factor which would bring about a negative connect with the dealers and customers. The

distributor took us to the store room and showed us the DVD players which were returned by the

customers.

Org: Vikas and Sam Page 5 of 13

Page 6: Onida Strategic Analysis

Strategic Analysis of Onida

10. In the Microwave segment, LG is #1 with sales of more than 1,500 per month. Onida and

Samsung is at #2 with around sales of 1,000 units per month.

11. In the LCD segment, Onida is at #5 (1. Sony, 2. Samsung, 3. LG, 4. Panasonic) with sales of

around 1000 per month.

12. In the washing machine segment, Onida is at # 5 after LG, Whirlpool, Samsung and Godrej.

Onida sells around 1,500 units per month.

Org: Vikas and Sam Page 6 of 13

Page 7: Onida Strategic Analysis

Strategic Analysis of Onida

Internal Strength

1. High brand recall2. Innovative brand image3. Premium pricing (Price

Value Strategy)4. Good distribution facility5. High quality LCD TV’s

(Less requirement for service)

6. Strong In Shop training Demonstration (ISD)

Internal Weakness

1. Less promotion2. Volatility in positioning3. Family feud4. Weak in service5. Reluctance to pay market

price for service technicians

External Opportunity

1. Growing Middle class2. Sustainable economic

growth3. Increase in disposable

income4. Growing semi-urban and

rural market5. Easier financial assistance

from banks6. Increase in consumerism

leading to increase in entertainment needs

7. Globalization leading to lowering of costs for products

1. Create a positioning in the minds of the consumer with promotions. (S1,S2,S3 O1, O2,O3)

2. Create an effective distribution system to tap the potential customers. (S4, O4,O5)

3. Greater focus on LCD TV’s. Should work on innovation to be at the top of the market. (S5, S6,O6,O7)

1. Invest in promotions with proper and consistent positioning to increase sales of profitable and quality product which requires less service eg. promote LCD TV’s. This will lead to greater revenue (W1, W2, O1, O2,3,4,5)

2. Should invest in service technicians to improve the service in order to capture the growing market. (W4,W5,O1,O2,O3,O4)

3. Sort out family problems legally and confidentially (W3)

External Threats

1. Increase in Competition2. High bargaining power

of Speciality stores3. Increase in salary of

Technicians in the industry

4. Improvement in technology and lowering of price in segments like mobile and LCD TV

1. Focus on core strength and areas where innovation is high, for differentiation. (T1,S1,2,3)

2. Keep abreast with latest technology esp. with core products and develop ability to see around the corner. (T4, S5,S6)

3. Increase the number of quality Chain counters and negotiate with speciality stores Eg. Croma, Next, Big Bazaar, Central, etc (T2, S4)

1. Develop the current service, to promote confidence amongst Dealers and customers to prevent the co. from further falling behind. (W4,W5,T3)

2. Co. should consider to create positioning ( Consumers are confused), visibility (Increase the number of quality outlets) and improve the service (esp. for DVD players). ???

TOWS

good

Org: Vikas and Sam Page 7 of 13

Page 8: Onida Strategic Analysis

Strategic Analysis of Onida

BCG Matrix

Products Manufacturer ShareRelative Market Share 01:06 Market Leader Sony 25%

Market Growth 10% Onida 4%Relative Market Share 01:46 Market Leader Nokia 60%

Market Growth 50% Onida 1.30%Relative Market Share 01:02.7 Market leader LG 27%

Market Growth 15% Onida 10%Relative Market Share 01:01.3 Market Leader Samsung 15.50%

Market Growth 2.90% Onida 12%Relative Market Share 01:05 Market Leader LG 27%

Market Growth 22% Onida 5%Relative Market Share 01:02.5 Market Leader Philips 24%

Market Growth 20% Onida 10%

Credentials

LCD

Mobiles

Air Conditioner

TV

Washing Machine

DVD Players

????????????

LCD, Air Conditioner, Mobiles,

Washing Machines, DVD PlayersCash Cow

Television

Dog

RELATIVE MARKET SHARE

MAR

KET

GRO

WTH

Stars

Considering the position of Onida Televisions in the question mark zone Onida should either

look to build up on their current position or divest their business. But since they are into

LCDs and LEDs which are doing well they should go for building up their current position.

For this they should go for:

1. Horizontal integration

2. Product innovation

3. Invest in R&D facilities

4. Improve their presence in the rural market

Org: Vikas and Sam Page 8 of 13

Page 9: Onida Strategic Analysis

Strategic Analysis of Onida

5. Divest the business, as they currently have a good brand name.

IE MATRIX

The position of Onida televisions can be easily plotted in the IE Matrix as per the Now, according to

the Internal-External Matrix Onida Televisions business is positioned in the Grow and Build category.

Thus, intensive and aggressive tactical strategies are recommended. The strategies should focus on

market penetration, market development, and product development. From the operational perspective,

a backward integration, forward integration, and horizontal integration should also be considered.

SPACE STRATEGY MATRIX

Org: Vikas and Sam Page 9 of 13

Page 10: Onida Strategic Analysis

Strategic Analysis of Onida

SPACE MATRIX TABLE (Television)

Internal Strategic Position External Strategic PositionCompetitive (CA) (-6 worst to -1 best)

Industry (IS) (1 worst to 6 best)

Axi

s X

-4 Product Share 3 Barriers to entry -2 Market Quality 4 Growth Potential -2 Brand Image 3 Access to Financing -3 Product Life Cycle 3 Consolidation

Average -2.75 Average 3.25Total Axis X score = .50

Axi

s X

Financial (FS) (1 worst to 6 best) Environmental (ES) (-6 worst to 1best) 2 ROA 3 Inflation 2 Leverage 3 Technology 2 Liquidity 2 Demand elasticity 2 Cash Flow 3 Taxation

Average -2 Average 2.75Total Axis Y score = .75

6

1

-6 -1 1 6

-6

Aggressive

Defensive

SPACE MATRIX

Conservative

Competitive

GRAND STRAEGY MATRIX

Org: Vikas and Sam Page 10 of 13

Page 11: Onida Strategic Analysis

Strategic Analysis of Onida

Now, the growth of television market in India is very high but growth for Onida is low. Thus, the Onida Television comes in the first Quadrant in the Grand Strategy Matrix. From this following can be the possible strategies for Onida Televisions to Move ahead:

1. Market development2. Market penetration3. Product development4. Horizontal integration

SPACE needs explanation, Grand Strategy matrix is not defined properly in the report

QSPM

Org: Vikas and Sam Page 11 of 13

Page 12: Onida Strategic Analysis

Strategic Analysis of Onida

Key factors WeightAttractiveness

Score

Total Attractiveness

Score WeightAttractiveness

Score

Total Attractiveness

ScoreStrengths

High brand recall 0.15 4 0.6 0.075 4 0.3Innovative brand image 0.1 4 0.4 0.1 3 0.3Premium pricing (Price Value Strategy) 0.025 3 0.075 0.1 2 0.2Good distribution facility 0.05 3 0.15 0.055 3 0.165High quality LCD TV’s (Less requirement for service) 0.1 3 0.3 0.075 2 0.15Strong In Shop training Demonstration (ISD) 0.075 4 0.3 0.05 3 0.15

WeaknessLess promotion 0.075 2 0.15 0.1 2 0.2Volatility in positioning 0.1 1 0.1 0.15 2 0.3Family feud 0.075 2 0.15 0.1 1 0.1Weak in service 0.175 3 0.525 0.15 3 0.45Reluctance to pay market price for service technicians 0.075 3 0.225 0.045 2 0.09

Sum Total 1 2.975 1 2.405100% 100%

OpportunitiesGrowing Middle class 0.1 4 0.4 0.08 2 0.16Sustainable economic growth 0.05 2 0.1 0.05 2 0.1

Increase in disposable income 0.05 2 0.1 0.05 2 0.1

Growing semi-urban and rural market 0.075 3 0.225 0.1 3 0.3Easier financial assistance from banks 0.1 3 0.3 0.075 2 0.15

Globalization leading to lowering of costs for products0.05 3 0.15 0.05 3 0.15

ThreatsIncrease in Competition 0.175 2 0.35 0.2 3 0.6High bargaining power of Speciality stores 0.05 3 0.15 0.05 3 0.15

Increase in salary of Technicians in the industry 0.05 1 0.05 0.05 2 0.1

Sum Total 1 2.825 1 2.5100% 100%

Alternative Strategy 1 Alternative Strategy 2

Aggressive - Turnaround Onida though investment in Promotion, service, innovation

and quality products Horizontal Integration

Increase in consumerism leading to increase in entertainment needs

Improvement in technology and lowering of prices in segments like LCD TV

0.2 3 0.6 0.195 2 0.39

0.1 4 0.4 0.1 3 0.3

Thus, from the QSPM analysis we can say that the company should go for the aggressive strategy.

Common Recommendations based on the matrices:

1. The company should be aggressive and they should focus on its core products like

LCD TV, air conditioners and mobile where the market growth is high and they have

an average market share. (except in Television segment, where its higher)

2. They should create a proper clear positioning strategy differentiating each segment.

E.g LCD TVs are not as expensive compared to Samsung, LG, Videocon, etc but in

the colour TV’s it is much more expensive and is considered as a premium product.

Even the employees are confused about the positioning strategy of Onida, so one can

imagine the confusion of the customers. There is a disconnect between Brand identity

and brand image.

Org: Vikas and Sam Page 12 of 13

Page 13: Onida Strategic Analysis

Strategic Analysis of Onida

3. As they have a good share of market for DVD players, they should invest in the

quality of products and service before it too late. They should either improve the

quality of DVD players or move out of this segment as this is one rotten apple which

is destroying the entire cart of apples.

4. As part of their aggressive strategy, Onida should negotiate with Speciality, category

retailers to sell more of their products. This will greatly increase visibility, sales and

lead to greater revenue.

5. Employ service employees at least at the market rate to bring about confidence in the

minds of the dealer and consumers.

In QSPM, option 1 is too elaborate, too many suggestions in one. Overall it is a good attempt by the team

Reference??/

11/15

Org: Vikas and Sam Page 13 of 13