Wednesday, October 12, 2005

Future of Consumer Durables - conventional to high end

We know that in Rs 400 billion consumer durable industry, price margins are very low. This has led to exit of many players like Kelvinator, Weston etc.

There are main 4 categories:
1. Colour Television
2. Refrigerator
3. Washing Machine
4. Microwave Oven

LG is the leader in all the above categories.

The promising sectors in future are frost free refrigerators, fully automatic washing machines, micriwaves, ACs, hobs, hoods and built-in ovens.

There is a specific segment of Indian consumers who are shedding their value of money image and opting for high end durable products, despite "high cost" factor.

A) Conventional CTV saw a 19.8% decline in sales, the high end flat screen ones on the other hand saw a 78.3% volume growth
B) 14% growth for normal air conditioners in first six months of 2005, while split air conditioners the growth was 30%
C) Samsung expects the value contribution of their high end CTVs to their total CTV range to gro from 4 to 10% this year

Last year, 65% of LG's total revenues of Rs. 65 billion came from non-urban sources. This is much more than industry average of 25 to 30%.

So Marketers have to keep a balance of Coventional and high end consumer durables.

Bottom of Pyramid vs Diamond Peak of Pyramid !!