Impact of Brand and Product Visibility and Influencers Analysis in Multi-Brand Stores: The Case of Air-Conditioners

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Source: TURNING UP THE COOL by Kanvic, a management consulting firm

1.3 Growth of Air conditioner market in India

The room air-conditioning market represents approximately 50% of the total market, with the other 50% comprised of central and specialist air-conditioning systems. The room AC market can again be divided into two sub-segments. On one hand the residential segment which now constitutes a majority 60% market share and on the other hand the commercial segment which represents a smaller 40%.

Currently, at 28 million ACs in the country, their penetration rate about 3­3.5%. India is expected to sell about 3.86 million air conditioner units in 2015 compared with 3.3 million units a year ago. According to CEAMA, AC sales would touch 45­50 million units in the next two three years. The below graph shows the trend in Room AC market sales volume over the years.

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Source: TURNING UP THE COOL by Kanvic, a management consulting firm

2. CONSUMER NEEDS & EFFECTIVE SEGMENTATION

India’s room air-conditioning market with its current low penetration rate offers huge opportunities if the industry understand and cater to the shifting needs and wants of Indian consumers. The penetration of other white goods at comparable prices is substantially higher, pointing out several shortcomings in the current strategies of the major AC players. The presence of air-conditioning companies in India is concentrated in the country’s metros and other large cities. Over the last decade the major players have built a strong distribution network in these locations but have neglected smaller towns which they deemed less profitable. With India’s extraordinary level of development the situation is shifting and companies cannot overlook the tremendous opportunities in these emerging segments. To achieve the next level of industry growth companies will have to design their products and services around these new customer segments by catering to their exact needs and expectations. This will require not only the correct identification of their profile but a deep understanding of their behaviour. There can be four major customer segments that are currently shaping the market. However, industry players should be alert to the emergence of new segments as the Indian consumer evolves.

1. Price conscious: The consumers in this segment are lured by low price. To cater to this segment companies are investing a huge sum of money in Research & Development so that they can come up with new technologies in order to achieve economies of scale. As the cost of production per unit decreases they will be able to manufacture affordable air-conditioners.

2. Efficiency oriented: This segment of consumers are not much bothered about the price of the machines. Their main concern is overall efficiency and to reduce long-term costs. They look for such air-conditioners which are energy-efficient and which has wonderful cooling efficiency and excellent build quality.

3. Aesthetic Design: Consumers in this segment are choosing air conditioners which suit their home interiors. In order to tap this growing segment, manufacturers are trying to offer wide ranges of colours that help the product blend in with their home décor.

4. Health conscious: This segment of consumers are very much concerned about their health and hence the air-conditioners which come up with series of filters that keeps air clean and healthy by catching dust particles and other air-borne particles such as bacteria and viruses, fascinate them.

3. RESEARCH METHODOLOGY

3.1 Secondary Data

I have collected secondary data in order to the get the data of Air-conditioner industry in India and also to find out the market share of major players in the industry in recent years. I collected information about the penetration of AC in India, about the scope of growth of air-conditioner industry in India and also about the various market segments pertaining to AC through articles of various news magazines such as live mint, economic times and also from a research paper named TURNING UP THE COOL by Kanvic, a management consulting firm.

3.2 Primary Data

In the last couple of months I started my project work with a preliminary field visits to different multi-brand stores like Sales Emporium, Khosla Electronics , Mittal electronics , Harmony House and Great Eastern to name a few where I interacted with the in-shop demonstrators and also with the customers. By interacting with the customers I tried to understand the various factors they considered before buying an AC and how the various in store promotions influenced their buying decision. I also keenly observed their behaviour when they were discussing their concerns and needs while interacting with ISDs before making an actual purchase. In addition to that my interaction with the in-shop-demonstrators gave me a lot of insights about the various types of customers they dealt on a daily basis. Some of them were price sensitive and some of them gave a lot of priority to cooling efficiency, energy efficiency and of course the build quality of the machines.

After the first phase of visits then I designed 2 set of questionnaires-one for customer and the other for ISDs for a more structured survey which were approved by my mentor. I re-visited the multi-brand stores to collect the primary data from the questionnaire. At times I also asked questions like why the respondent chose AC of a particular brand when they have so many options in the market. I made sure that the respondent was understanding the questions in the questionnaire correctly and was taking interest while filling the questionnaire. This ensured collection of unbiased and accurate data. After collecting the data I used Microsoft excel to analyse the data

3.3 Bottlenecks

- Some of the floor managers, in shop demonstrators and the customers were not forthcoming with information as they thought it to be a wastage of time.

- Some customers could not provide relevant information due to lack of awareness.

- Information collected from ISDs were very biased and predictable.

3.4 QUESTIONNAIRE FOR CUSTOMERS

- Which brand of AC did