Comparative Analysis and Market Research of Electrolux A report submitted towards the partial fulfillment of the requirements of the two years full-time post Graduate Diploma in (Business) Management. SUBMITTED BY [pic] ASIA-PACIFIC INSTITUTE OF MANAGEMENT Jasola, Sarita Vihar, New Delhi-110044 Phone: (011)26947838, 26951542, Fax: (011)26951541 Website: http://www. asiapacific. edu PREFACE Theoretical study is incomplete without the practical knowledge, now a day’s theory without practical is of no use. No doubt theory provides examines the elements of truth lying in the theory.
To achieve this purpose, I have done a project on Electrolux India Pvt. Ltd. Delhi. During the project of 15 days, I have been trained to know how to find out 1. The changes in market. 2. Changes in customer’s behavior. 3. Changes in companies with change in customer’s behavior. Having Marketing specialization we have studied that marketing is the business function that identifies current unfulfilled needs and wants, design and measured their magnitude, determines which target markets, the organizations can best serve and decides on appropriate products, services and programmed to serve there markets.
While going through this report, the reader can understand and estimate what and how much I have learned through my practical experience with Electrolux India Pvt. Ltd. ACKNOWLEDGEMENT Exchange of ideas generates a new object, which helps a person to work in a better way. When a person is helped and co-opted by others, his heart is found to pay gratitude and commutative appreciation. This report bears the imprint of many people for this I first express my deep sense of gratitude to our Director, who has been the constant source of inspiration to us.
I express my profound sense of gratitude to my guide Ms. Shyama Labh, for all the encouragement and inspiration given to me during the preparation of this report and having made valuable critical comment of it. I would be failing from my duty if I do not express my gratitude to all Faculty members, for all the encouragement and inspiration given to me during the preparation of project report and for there valuable teaching and guidance throughout. I cannot express my gratitude in words to Mr. Ananda Chakraborty, branch head, Electrolux India Pvt.
Ltd. I am highly indebted to him for his interest shown in my project. Last but not least I am indebted to office staff of the company for their assistance. To all those people and to those unmentioned my heart felt thanks. PGDM & MBA ASIA- PACIFIC INSTITUTE OF MANAGEMENT, NEW DELHI EXECUTIVE SUMMARY The objective of the project was to find out the different sales promotional strategies in Electronics industry. Electronics industry got the research carried out to find what the current trends are in the market and what the competitors’ playing.
Also, market share of different player of the electronics industry was to be found and the recommendations to increase the market share for each individual player of electronics industry globally were to be given. The purpose of the study is to find out the market potential of different electronics player compared to other industry. Specifically, the research objectives are to: • Gauge the consumer sentiment on the various sales promotional strategies provided by the various electronics industry players. Identify areas of improvement on the various services provided by the industry. • Determine the type of promotional strategies needed by the consumers. • Identify the important and attractive attributes in services to retain the existing consumers. • Determine the type of selling parameters most popular with the consumer. • Identify the important characteristics that make the electronics company attractive to buy their product. • Gather and analyze the future aspirations of the customers with respect to the electronics. Rank and evaluate the relative importance the various players’ parameters associated with the electronics industry. For this purpose a primary research was conducted in the region of New Delhi and NCR regions. The target consumers were various automobile dealer and the target customers. The total field work was done for 15 days in which a total sample size of 100 consumers was covered. The questions cover a wide range of issues including: • Identifying the types of sales promotional strategies maintained by an automobile dealer and whether he or she is happy with he services. Obtain the likelihood of the respondent applying for a specific type sales promotion while availing the services. • Determine the characteristics of the various automobile dealers while giving the sales promotion. • Finally it will seek demographic information of the respondents. • Analyze the demographic information of the respondents with the sales promotional strategies parameters. • Predict the automobile industry behavior of the respondents with reference to the demographic information.
For the purpose of this research it was absolutely imperative for us to find out what the consumers want from their industry. It was also necessary to find out the consumer’s profile, i. e. his age, monthly income, occupation and sex. This required us to get a detailed questionnaire filled by the concerned person. All the analysis in the report is drawn out of these questionnaires. For carrying out the competitor analysis further help was taken from industry websites and journals.
This research will provide automobile industry with information like the current market share of different players and also a detailed analysis of the services offered by other players and what are the most important criteria for selecting a particular automobile industry player. The automobile industry can also get data on prospective customers by designing its product offerings and marketing strategy in a way so as to attract more clients in the near future. Table of Contents |Sr. no |Topics |Page no. | | | | |1 |Purpose of the study |6 | |2 |Objective of the study |7 | |3 |Introduction |8-11 | |4 |Competition Analysis |12-14 | |5 |Strategy |15-25 | |6 |Branding |26-28 | |7 |Methodology |29 | |8 |Limitations |30 | | 9 |Data Analysis |31-53 | |10 |Conclusion |54 | |11 |Bibliography |55 | | | | | | | | | PURPOSE OF THE STUDY The need for study arose because of the high competitiveness of the market and use of different sets of marketing mix alternatives by different companies to enhance the sale of their products.
Customers’ satisfaction has become the most important factor to remain in the business so, it is necessary for an organization to know the preference of the customer so that it is able to fulfill the requirements of the customers. Following are the purpose of study, 1. To the present market scenario. 2. To know the changing demand of customers. 3. To know the changes that companies are bringing with respect to the changes in customers demand. 4. To have the practical knowledge of the market so that it could be applied in the world of corporate in the near feature. OBJECTIVE OF THE STUDY 1) To find out the changes in market demand of various Electrolux product i. e. Refrigerator, Washing Machine, Air Conditioner, Microwave Oven 2) To study the changes in consumer behavior and demand. ) To find out the changes in companies manufacturing pattern to change in market behavior. 4) To determine the percentage shift with respect to demand of product like. a. Refrigerator: Shift of customers from direct cool to Frost Free. b. Air Conditioner: Shift of customers from Windows AC to Split AC. c. Washing Machine: Shift of customers from Semi Auto Washing Machine to Fully Auto Washing Machine. d. Microwave Oven: Change in demand Of Microwave Oven. 5) To compare the data collected for the year 2007 with year 2006. INTRODUCTION The Electrolux Group is dedicated to being a responsible employer and a good corporate citizen, with products and solutions that contribute to improving people’s lives around the world.
All our activities – including the manufacture, distribution and sale of our products – must be conducted with respect and consideration for human rights, for human safety and health and for the environment. We strive for continuous improvement with sustainability as a core concern in all our operations. It is the responsibility of all employees and management to ensure compliance with this Code of Conduct. In incidents of non-compliance, employees are encouraged and expected to report this to relevant internal officers and are assured that there will be no retaliation or other negative consequences. Electrolux is working intensively to improve profitability.
Competitive production, new products based on consumer insight, and a strong and global brand are components in a strategy which in coming years would generate profit margins on a level with the best in the industry. Electrolux is a global leader in home appliances and appliances for professional use, selling more than 40 million products to customers in 150 countries every year. The company focuses on innovations that are thoughtfully designed, based on extensive consumer insight, to meet the real needs of consumers and professionals. Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners and cookers sold under esteemed brands such as Electrolux, AEG-Electrolux, Eureka and Frigidaire. In 2008, Electrolux had sales of SEK 105 billion and 57,000 employees.
The Electrolux Group is a Swedish corporation which manufactures home appliances and appliances for professional use, selling more than 40 million products to customers in 150 countries every year. Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners and cookers sold under brands such as Electrolux, AEG-Electrolux, Zanussi, Eureka (vacuum cleaner) and Frigidaire. In 2006, Electrolux had sales of SEK 100 billion and 57,000 employees. Electrolux has 22 factories in Europe and holds a 28% share of the household appliances market in the world. Electrolux was founded in 1910 as Elektromekaniska AB, and changed its name to Electrolux after merging with Lux AB in 1919. The spelling was changed to Electrolux in 1957.
The company was organized as a holding company in 1928, and under the leadership of Hans Werthen Electrolux grew rapidly during the 1970s. In North America, the Electrolux name was long used by a vacuum cleaner manufacturer, founded by a Swedish businessman who emigrated to the U. S. In 1998, that company transferred its rights to the trademark in North America to the Electrolux Group, and now operates under the name Aerus LLC. Following the return of the trademark, Electrolux of Sweden has added a line of Electrolux home appliances in the U. S. and Canada to its previous products. In 2002 Hans Straberg was appointed president and CEO. ELECTROLUX INDIA
Electrolux India is one of the largest companies, which deals with consumer durables. It has a vast segment of product. Its product includes refrigerator, vacuum cleaner, washing machine, microwaves and Air conditioners. Electrolux is committed to enrich the life of the Indian consumers. Each Electrolux product is designed with consumers needs in mind. Before making any new home appliances the company tries to understand every day needs and desires of the consumers. It is the only company in India producing products using the Life Nourishing System technology. Based on consumer insight and cutting edge technology, the life-nourishing products have been developed matching customer changing needs and desires.
With the consumer foresight and the understanding of the emerging customers needs, EKL is constantly developing innovating products to satisfy their expectations in terms of technology, aesthetics, design and functionality. The R facility at Shahijanpur is aimed at developing environment friendly and intelligent products, keeping in focus both the current and future customers. Evidence of its marketing ingenious, its Ozone brand of refrigerator is today ranked as the fastest growing refrigerator brand in the country in the no-frost category. Electrolux has also launched Bijlee- Worlds first fridge that runs event without electricity, Tamanna – Indian first fridge with FM radio and message recorder, Oxyaquaswing refrigerator – India’s first Hand free refrigerator with water through the door technology.
Also Electrolux has launched Worlds first talking washing machine, the Washy Talky, which is the winner of Ripley’s Believe it or Not and is also featured in “Limca book of Records”. Washy talky is now available in three regional languages. In India Electrolux products are manufactured by Videocon Ltd. But the product range, design, quality and brand are in the hand of Electrolux groups. Electrolux products in India are manufactured and distributed by EKL Appliances Ltd. The Electrolux group specifies the product range, design, quality, and brand communications so that it conforms to the global standard of Electrolux. HISTROY Founded: 1910 Headquarters’: Stockhlom, Sweden Employees: 57,000
Starting out with a single vacuum cleaner, after 80 years of innovations and acquisitions, The Electrolux Group today is a global leader in home appliances and appliances for professional use. [pic] How it all started About 90 years ago, while walking through the streets of Vienna, Austria, Axel Wenner-Gren, spotted a vacuum cleaner in a shop window. “There should be one of these in every home,” he said to himself. The rest, as they say, is history. This documentary film follows the company from a businessman’s revolutionary idea to market vacuum cleaners door-to-door to today’s global appliance business. [pic] The Lux 1 – The first vacuum cleaner Collaboration between Lux and Axel Wenner-Gren begins. The first vacuum cleaner, the Lux 1, is produced at Lilla Essingen.
Axel Wenner-Gren becomes the agent for Lux in Germany, United Kingdom and France. [pic] The absorption refrigerator Swedish engineering students, Baltzar von Platen and Carl Munters, present a sensational invention – a machine that produces cold through heat using a new and brilliant application of the absorption process. COMPETITION ANALYSIS OF ELECTROLUX Market situation and Electrolux THE refrigerator market is witnessing a chilling battle this season in which most top-line domestic brands are steadily losing to deep-pocket MNCs. But the real battle appears to be getting confined to two global white goods majors — Sweden’s Electrolux and US-based Whirlpool.
Electrolux’s dual brand (Kelvinator and Allwyn) strategy — similar to Coca-Cola’s Coke-Thumps Up combine pitted against Pepsi — seems to be paying off. According to January-June 2000 figures provided by market researchers ORG-Marg, Kelvinato r and Allwyn have together notched up 24. 7 per cent market share against Whirlpool’s 23. 9 per cent. Incidentally, during the same period in 1999, the Whirlpool brand commanded 25 per cent against the other two brands’ cumulative market share of 23. 4 per cent. While Whirlpool’s market share has dropped a notch and Allwyn’s share has fallen marginally from 5. 5 per cent to 5. 3 per cent, Kelvinator’s has grown from 17. 9 per cent to 19. 4 per cent. Globally, Electrolux practices a multi-brand strategy. In India, we have emulated that with Kelvinator and Allwyn, and the ORG figures reflect our success. Hindustan Lever together commands around 70 per cent of the soap market with several small brands,” points out Mr. Ram Rams under, CEO of Electrolux India. Incidentally, while `old favourite’ Kelvinator is on an upswing, its more popular compatriot, Godrej, has shown a decline. During the first half of the year, even while it remains among the popular brands, Godrej’s market share has declined from 24. 5 per cent to 17. 6 per cent. Total refrigerator sales in the first six months also grew marginally (2. per cent) with as many as 14, 87,900 units being sold during January-June 2000 compared to 14, 54,000 units in January-June 1999. But fortunes are fluctuating. Multinationals are penetrating the market deeper with new marketing and competitive pricing strategies, leaving the domestic bigwigs behind. The Koreans — LG, Samsung and even Daewoo — have shown remarkable improvement d uring January-June 2000. Samsung’s marketshare grew from 1. 6 per cent to 4. 2 per cent, LG’s from 3. 8 per cent to 7. 1 per cent and Daewoo’s from 0. 7 per cent to 2 per cent. Says Mr. J. H. Park of Samsung, “Our USP is new technology and innovative campaigns like the one we have done with film actress Tabu.
In the second half, we expect to command at least 55 per cent of the over 300-litre frost-free segment. ” LG rubbishes the ORG figures. “Our sales are much higher,” says Mr. Ajay Kapila, Vice-President, Sales and Marketing, LG Electronics India Ltd. Among the three other significant domestic brands apart from Godrej and Allwyn, Voltas has shown a decline from 5. 2 per cent marketshare in January-June 1999 to 2. 2 per cent in the same period this year. The marketshare of Videocon and BPL, on the other hand, increased from 9. 5 per cent and 5. 9 per cent, to 11. 6 per cent and 6. 4 per cent respectively. As the figures suggest, Indian consumers still prefer direct-cool over frost-free makes.
Frost-free sales during the first six months accounted for nearly 12. 3 per cent, with sales of a total 1, 82,600 units. Domestic home appliance major BPL has maintained its lead in the overall frost-free refrigerator market, with a 23. 9 per cent cumulative market share. But its share has declined from 34. 7 per cent in the first half of last year. On the other hand, Whirlpool is catching up with 20. 2 per cent. Daewoo, Samsung and LG follow with 11. 6 per cent, 9. 9 per cent and 8. 9 per cent. The Koreans have also performed remarkably well in the over 310 liters frost-free segment, with a cumulative 79. 1 per cent market share. Competitive advantage of Electrolux
Electrolux occupies a market share of 23-24% which is the 3rd largest in North America and is expected to grow at 5% mainly from up gradation of appliances through new electronics. The market in Asia-Pacific, Eastern Africa & Eastern Europe is going to grow by 3. 9%. To increase sales the firm should look at revolutionary ideas in marketing, sales, product development because the product a man buys shows his personality. Electrolux is trying to increase global competitiveness through innovative products and speed-to-market. For this reason Electrolux & Sharp are looking towards product planning, assessment of products for manufacturing environment friendly frost free refrigerators.
A very different way for increasing market share can be like replacing 15% or 40% of its product range by a different product range of the same company. The main weakness that Electrolux faces is a possible economic downturn in the Europe & US because of their high cost of production base. Thus Electrolux is shifting 60% of their production base to low cost regions like Poland (in Eastern Europe) & Asia-Pacific. The plus point is the share price has outperformed Sweden’s OMX index by 20%. Electrolux-Zanussi which is a joint venture with an Italian firm has created equal opportunities group for both men & women which shows there is no glass ceiling in Electrolux. The other redundancy is loss of 500 jobs at Spennymoor UK and 1000 more jobs if Electrolux closes operations.
Electrolux has tied up with Zhongyi group to manufacture in China. The venture is setting up a design & global sourcing centre in Shanghai as well as an electronics component & R&D centre in Shenzhen. The main factors behind its success would be build retailer- Customer partnerships for long term value creation & accelerated production through cost reduction. This is possible through the joint venture in China or shifting base to Asia & Eastern Europe. Managers and employees should go through phases like on the job training, job rotation to explore competencies to understand which are the products to be changed & understand how to make more environment friendly products.
Moreover employee safety advantages should also be created in the company. Moreover few joint ventures & alliances specially in case of cooking oven & dishwashers mainly by sourcing few components from low cost production bases can definitely help in maximizing sales. Employee motivation and choosing like minded employees for different localities is an added advantage. Understanding consumer needs and creating a long term relationship both with shareholders & customers is also a very big quality. These factors can help in Electrolux become an employer of choice & a good corporate citizen. STRATEGY Electrolux is working intensively to improve profitability.
Competitive production, new products based on consumer insight, and a strong and global brand are components in a strategy which in coming years would generate profit margins on a level with the best in the industry. PRODUCT DEVELOPMENT In 2006, products that had been launched during the two previous years accounted for more than 40 percent of Electrolux sales. The increased investment in product development based on consumer insight is definitely generating effects. Consumer insight is the foundation of all product development at Electrolux. Understanding the needs of consumers as well as how they think, feel and act when they use household appliances enables development work to be more accurate.
Even better products are developed, and sales rise for products that consumers are willing to pay a higher price for. Resources for product development are in turn increased, and a positive spiral is created. Thoughtful design Consumer interest in design is increasing continuously, which also increases the importance of design as a competitive tool. More and more people are willing to pay for good design. The Group’s investments in design, which is a part of the product-development process, help to strengthen the brand and contribute to greater demand as well as higher margins. High rate of investments Since 2002, investments in product development have increased from approximately 1 percent of sales to 1. 8 percent in 2006.
At the same time, development has become more efficient through global cooperation and coordination of launches between different product categories. Investment as a percentage of sales is expected to increase somewhat in coming years. The focus is on developing products in profitable segments and high-growth areas, simultaneously making launches more accurate. Electrolux has only one promise and one language. Consumers must always recognize the values that Electrolux stands for, irrespective of which product or service they buy. Electrolux is a strong, global and leading brand for both consumers and professionals. For a consumer-goods company like Electrolux, the brand is one of the most important assets.
Since a household does not buy appliances often, consumers have only limited knowledge of what the market has to offer since their last purchase. A strong brand with a leading position that stands for quality and innovative products is attractive to both consumers and retailers. The brand can justify a higher price and provide a stimulus for repeat buying, and also contribute to higher profitability and additional resources for investing in development of new products. It is therefore of great importance to maintain the Electrolux brand as strong, global and in the lead. “Thinking of you” – the global message All Group market communication shall create a uniform image of Electrolux, in every product category and in every geographical market.
In 2006, the new global communication platform was launched – “Thinking of you”. It highlights Electrolux strong focus on consumer insight for development of new products, and profiles Electrolux as a “Thoughtful Design Innovator”. [pic] Investing in the brand Investments in market communications in 2006 amounted to 1. 5 percent of net sales. Over the next few years this figure will rise to more than 2 percent. Investment in the Electrolux brand accounted for approximately 70 percent of resources for market communication process in 2006. Strong local brands are combined with the Electrolux brand in order to reinforce the link to Electrolux and make marketing more powerful.
The share of Group products sold under the Electrolux brand, inclusive of double-branded products, rose from 18 percent in 2000 to approximately 45 percent in 2006. COST In an industry featuring tough global competition, maintaining low cost levels and efficient production is a prerequisite for success. Electrolux is achieving savings in production and purchasing, chiefly by moving production to low-cost countries and increasing purchasing there. This is part of a proactive program for creating long-term competitiveness. Restructuring program in an intensive phase The Group started a restructuring program in 2004 aimed at creating a competitive production structure in the long term. The costs of this program are estimated at approximately SEK 8 billion.
When it is completed in 2010, more than half of the Group’s products will be originated in low-cost countries, and savings will amount to approximately SEK 3 billion annually from 2010. Electrolux will maintain continuous efforts to increase efficiency, but a program on the scale of the one that is currently being implemented will not be required again in the foreseeable future. Electrolux has reached more than the half-way mark of the comprehensive restructuring program. The share of production in low-cost countries will reach 40 percent after the decisions made in 2006 are implemented in 2007. The costs of the program to date amount to more than half of the expected total costs. Savings realized according to plan in 2006 amounted to approximately SEK 1 billion More efficient production with EMS
In parallel with the relocation of production, the Group is implementing a global program for more efficient production, the Electrolux Manufacturing System (EMS). It is based on proven methods for improving production that have been developed both in-house and externally. Safety and the working environment for personnel are improved, as well as product quality. Savings in purchasing The largest cost for production refers to raw materials, which account for more than half of total Group costs. Materials and components from more than 4,000 suppliers are delivered annually to the global network of Group plants. Electrolux has succeeded in making this complex flow of goods more efficient. GROWTH
Electrolux will achieve profitable growth through competitive production, innovative product development and a strong global brand that is in the lead. The focus is on improving the product offering and identifying areas – product categories, regions and sales channels – that can drive growth. Growth in products All the new products that Electrolux launches are created by the Group’s process for development based on consumer insight. This increases the probability that the products will be successful. Identifying product areas with a potential for rapid growth is a continuous priority. The trend is being driven by new, innovative products with good design, practical functions and good environmental properties. Growth in regions The Group’s strategy is aimed at profitable growth.
As a leading player in the market, this means that Electrolux has to follow market growth in developing countries and selectively expand operations in specific product categories. The Group has a strong presence in growth regions such as Eastern Europe, Latin America and parts of Asia in terms of both production and the market. Demand for modern household appliances is increasing strongly in developing countries. Local presence and the broad experience of growth markets that Electrolux has acquired create opportunities for continued expansion. Growth in sales channels The share of kitchen specialists in the network of Electrolux dealers is growing rapidly in Europe and Australia.
A strong and stable brand together with new and innovative products will enable Electrolux to increase sales through these specialists. Prior to a purchase, the Internet is often a consumer’s first contact with household appliances. Electrolux has a strong position on the web, and substantial investments will be made to further increase it. Growth via acquisitions In addition to organic growth, Electrolux has opportunities for growth through acquisitions. The top priority is given to technology, products and brands that can help the Group increase its market share in the premium segment. DISTRIBUTION STRATEGY Like their North American counterparts, European appliance manufacturers find themselves forced to operate in a pressure-cooker environment.
Driven by consumers, the push for lower prices has caused appliance manufacturers to drive out costs from all parts of their operations in order to remain competitive. As Halvar Jonzon, head of European integration for appliance manufacturer Electrolux (headquartered in Stockholm) puts it, “in regard to external consumer price developments, in recent years prices have been on the whole falling. The average price of a fridge or freezer on the whole is lower. ” In fact, he says, prices were higher even 10 years ago. Such cost pressure has caused Electrolux, like many or most other appliance manufacturers, to examine its cost structure and try to improve the efficiency of all links in the supply chain.
Among purchasing and supply management initiatives implemented by Electrolux are inventory-reduction efforts, supplier consolidation, and creation of a “pull” demand system initiated by consumers, logistics improvement, early supplier involvement and cross-functional training. Last year net sales for the Electrolux Group reached over 13 billion U. S. dollars, with white goods representing 80% of the total. The Group also owns Frigidaire Home Products in the States. (Electrolux Corp. of America is entirely separate from the Group, although the two have a similar heritage. ) Taking inventory out of the chain Close on the heels of a long series of acquisitions, Electrolux recently emerged from a vigorous two-year restructuring program, consolidating its operations at all levels.
In the company’s year-end report, President and CEO Michael Treschow notes that “between 1997 and 1999 the number of Electrolux Home Products warehouses was reduced from 52 to 33, and inventories measured in days were cut by more than 20%. ” Manufacturing flexibility is at the center of the company’s operational strategy with the emphasis placed on customization rather than standardization. Jonzon explains that the just-in-time (JIT) philosophy the company employed on the supply side 10 years ago now is being shifted downstream to large retail customers. “We need to move our focal point for the JIT concept away from the assembly line toward the shop floor of the retailer,” says Jonzon. That is where the JIT philosophy needs to be applied in order to be competitive. We can no longer run our plants based on manufacturing efficiency and measure performance by the number of appliances per man hour. That will only lead to us producing finished product that eventually we will then have to push out to the market. Instead, we need to make sure that what we make in the plant is really what the customer wants, and at the time when he wants it. ” A spokesperson at Electrolux’s purchasing organization, headed by Jean-Michel Paulange, puts it this way: “Why should it not be possible to have a direct link from when Mrs. Simpson wants to buy a cooker to where the supplier supplies a heating element for this cooker?
Make the demand a pull situation, where each time we have a demand from our customer, it creates a direct pull back to our supplier. ” Pull system requires frequent planning This intense customer-driven focus is no small task with 22 manufacturing entities located throughout Europe and responsibility for managing a total of 15,000 SKU’s. In order to help make the concept work, Electrolux has begun a program to manage the inventories of the company’s larger retail customers and has succeeded in bringing the “frozen” period in manufacturing-the amount of time around which schedules are built-down to less than one week. This requires daily planning.
In fact, an even tighter planning schedule currently is being tested at one of the company’s manufacturing facilities in southern Europe. As Paulange explains, “We are testing production planning where we do it more than once a day. We change the planning one, two, three, and sometimes we approach four times a day, informing our suppliers via the Net, for example. ” Obviously this requires a high degree of coordination with suppliers, and Paulange, who is responsible for an $8 billion purchasing spend, is taking the fat out of the system, and reducing the supply base by 15% each year during the consolidation process. Key to this reduction is a shift to module purchasing. We have an aggressive program to reduce the number of suppliers,” says Paulange, “because we are moving toward a global purchasing policy. But in this process we are moving from buying raw materials and components to buying more modules or systems. That also will help us to reduce the number of suppliers. ” Supplier performance measurement Electrolux has about 5,000 suppliers. Three hundred of these furnish systems or complete modules. Paulange maintains supplier accountability with a number of evaluative tools, including a supplier classification model. Classifications include “preferred,” “active,” “restricted,” “disqualified,” and “potential. Preferred suppliers must meet rigorous quality criteria, provide appropriate cost targets, and be on the leading edge in technical innovation. Active suppliers meet at least the minimum requirements and are used if preferred suppliers are not available. Potential suppliers are identified and evaluated in terms of their ability to support future needs. To change a classification, a supplier must go through an approval process that is administered at various organizational levels. Supplier performance is measured with a supplier-profile tool that rates suppliers on a scale of one to nine according to a list of 12 categories, as well as commodity-specific criteria. The first two categories relate to quality, the third to capacity, and the fourth to delivery performance.
These ratings generate a supplier profile, which is then mapped against a minimum-to-preferred supplier performance model. Logistics initiatives Delivery performance is measured through logistics management up and down the chain, and purchasing and logistics work hand in hand to manage inbound direct materials. Otto Olson, general manager of European logistics, is coordinating an effort with Paulange to make transportation fees more transparent, instead of being buried in the price of goods. This allows logistics to “chase” a logistics contract, offering it to a supplier as a way to reduce transport costs. “Frankly speaking,” says Ohlson, “that is an area where some of our suppliers make a mistake, giving us transportation at too low a cost.
The important thing is that we can help our suppliers improve their transport cost and performance. ” Ohlson also has been involved in reducing costs on the retail end of logistics, and he envisions a time in the future when entirely dedicated trains-operating within an organized hub system-will deliver goods according to precise timetables. “Fuel is up almost to a dollar a liter in Europe,” he explains. “It’s heavily taxed because of environmental concerns. Therefore we are constantly looking to other means of transportation, and the most viable is, or should be, train transport. It’s more environmentally friendly since there is lower energy consumption and fewer emissions per ton of freightage.
The absolute best speed is not the most important thing, but rather if we say we can deliver it in two days, then we should be able to do so. Otherwise, I don’t think we can live up to the future demands of our customers when it comes to service levels. ” It’s not rocket science An earlier logistics initiative took the form of an investigation by Paulange and Ohlson, where they conducted a study to look at the response times between various factories and their suppliers. At that time, they discovered a twelve-week spread in lead-times. Interestingly enough, it was the plants that had the closest working relationship with suppliers that enjoyed the shortest lead-times.
As Ohlson puts it, “You don’t need space technology to have quick response times. The best factories have a scheme to make sure the need for components does not come as a total surprise. They keep the supplier informed ahead of time, and the supplier feels confident and secure in the relationship. When you have established a good relationship with a supplier, it helps if you can optimize the way you give information-through EDI and the Internet, for example. But still you have to have confidence and trust with the supplier. ” Paulange echoes this conviction. “There is this level of trust,” he explains. “It’s a commitment between the supplier and Electrolux that we are depending on each other.
We are depending on the supplier for technology, for flexibility, and the supplier is depending on us because maybe we represent 25% of his turnover. ” “Front loading” supplier expertise Paulange goes on to stress the importance of including suppliers as early as possible in the planning stages-in next-generation planning and R&D, for example. “Then we know what we have in the pipeline for the next, let’s say, the next coming years. These are ways we front load our activities with our suppliers. This early involvement needs to occur even before product development. ” And what about the risk of leaking information to competitors? “Certainly there is an element of risk,” Paulange notes. “But it’s really a total commitment on both sides.
In electronic development, for example, you have to select your suppliers extremely early. First of all, because maybe you don’t have so many suppliers that can provide you with the right technology. And, secondly, the technologies are so sharp now, there has to be a lot of integration. “Furthermore, if these suppliers should share some of this information with your competitors, this would endanger their business with you. And, suppliers also benefit because they won’t build the wrong inventory; they won’t have the wrong raw materials in their factories. It’s like in a marriage. It’s not because you have a good contract that you can make it work. What you need is confidence between partners. ” Electrolux Purchasing University
Purchasing at Electrolux employs a total-cost assessment tool that includes a number of cost components, including issues relating to quality, logistics, tooling and a number of other factors. This sourcing model also is taught in a purchasing program established with a European university. The “Electrolux Purchasing University” has been in place for two years, and people involved in non-purchasing roles, as well as purchasing managers, participate in the program. Paulange sees the need, for example, for people from sales and marketing, R and other parts of the organization to understand purchasing disciplines. “If you want to be successful it’s important that you have a good understanding of R&D activity, but it’s also important that R&D people understand how you work in purchasing. So it’s best if you can mix the people. The program consists of two modules, and some of the topics covered include: Trends in purchasing, best practices, the Electrolux strategy and process, total-cost methodology, risk management, supplier sourcing, financial evaluation, supplier relationships, product development and “front loading,” environmental issues, and working in cross-cultural settings. Fifty percent of the training focuses on the importance of involving suppliers as early as possible in all purchasing processes. There is also an emphasis on shared decision-making, with an attempt to equip those with various educational backgrounds and professional skills to function as cooperative members on cross-functional teams.
This cross-pollination of expertise also helps to shape Paulange’s overall recruitment policy, whereby he provides four to five years of training in purchasing to people schooled in other disciplines, and then sends them out to function in various capacities in the company. “We want to provide job rotation opportunities,” he says. “We have had very successful moves with young people coming from R, spending four or five years in purchasing, and then moving to product marketing, for example. ” BRANDING Every brand represents a promise to its market: “buy me and you will get this experience”. Strong brands are trusted brands; they have built a reputation with customers over time by living up to their promises of quality, innovation and leadership. We have many strong brands in our portfolio.
Its main focus is to continue to build Electrolux, our biggest and most important brand, known and trusted by both consumers and professional users around the world. It also has a range of other strong brands for both consumers and the professional market. Some of these brands have an international reputation, such as AEG-Electrolux and Frigidaire. Others are local brands that are mainly known by consumers in a particular country, or professional brands known by users in a special field, such as Molteni for professional chefs. Electrolux has divided its brands into mainly three groups like: 1. Electrolux Master Brand 2. National consumer brands 3. Special brands Electrolux master brand
The name Electrolux is found on a large number of our products, satisfying a wide range of consumer and professional needs. Sometimes the name appears on its own, and sometimes it is double-branded with one of our strong local brands, such as Rex in Italy, Arthur Martin in France or Chef in Australia. With AEG-Electrolux, we aim to bring out the best of functional German form and technology to demanding consumers in Europe and elsewhere. Electrolux Professional satisfies the demands of even the most discerning professional chefs and commercial laundry operators around the world. Electrolux master brand: • Electrolux • Electrolux-Arthur Martin • Rex-Electrolux • Juno-Electrolux Electrolux-Chef • Electrolux-Dishlex • Electrolux-Kelvinator • Zanussi-Electrolux • AEG-Electrolux • Electrolux Professional National consumer brands Due to a history of acquisitions, Electrolux today has a large portfolio of brands that enjoy strong positions in their home markets. These brands are trusted by consumers who look for innovation, design and durability at affordable price levels. Click on the brand names for more information about each brand. | | | | | |[pic] |[pic] |[pic] [pic] | | | | | | |[pic] |[pic] |[pic] |[pic] | |[pic] | | | | | |[pic] |[pic] |[pic] | | | | | | |[pic] |[pic] |[pic] |[pic] | Special brands We enjoy a leading position with professional users in the industries we serve around the world, such as professional food-service equipment and commercial laundry systems. Electrolux Professional and Zanussi Professional provide an extensive range of professional-grade products and solutions from our major international brands, but in addition we also have a number of specialist brands serving particular demands of professional users. These brands are like: • Electrolux Professional • Dito-Electrolux • Molteni • Zanussi Professional METHODOLOGY
The research problem given to us was investigated on the basis of primary data collection and secondary data collection. I had intervened several dealers in Delhi. A structured schedule (questionnaire) was prepared and the relevant information was gathered from various dealers on the basis of questions of different sorts. Several information was also gathered from retailers and other information from website, internal files, in house journals, records and on the basis of our discussions held with different members of the branch team. Sampling Sampling is a method by which one can collect the various information about the population by just taking its sample. Here the sampling method undertaken was, Random sampling was done with the dealers.
Convenience sampling of Electrolux product. Data Collections Tools Collection of data cannot be done without proper planning and use of right method. Thus the tools used for collection of data was, a. Observation in different areas. b. Interview with dealers. c. Questionnaire for dealer. Limitations 1. The study was limited in terms of geographical coverage as it was limited to the city of Delhi, this makes the findings not fit for other areas. 2. The whole study was completed in a short period of fifteen days. It was difficult to cover large sample. 3. Some dealers gave biased response and did not give importance to the survey. This may affect the accuracy of the findings. 4.
In estimates of market share of Electrolux, I was not provided with the exact sales data by some dealers. 5. During the survey some respondent had also shown a none corporate attitude towards the data collection. 6. Some dealers gave irrelevant data regarding there sales which caused some difficulties in data analysis. Some dealers hesitant about telling the exact no. of units sold and regarding the turn over. DATA ANALYSIS AND DATA INTERPRETATION Project report and project interpretation are not complete unless and until the data analysis and data interpretations are interpreted in the true form. In this study of mine, an attempt has been made to investigate and explore the market changes in terms of its products.
This chapter definitely takes care of the specific interpretations and shall go a ling way in explaining the logic behind the research problem. Analysis of Change In Customer Behavior For analyzing the change in customer’s behavior in terms of refrigerator, I had visited several dealers. This can only be done by comparing the data collected from the market in year 2006 with the data of year 2005. The data collected regarding sales of refrigerators in a month are as follows, Avg. Sales of Refrigerator per month in year 2006 RefrigeratorDCFF TOTAL Total Sales5942101 %age42%58% Avg. Sales of Refrigerator per month in year 2005 RefrigeratorDCFFTOTAL Total Sales6523 88 %age73. 6%26. 14% 32 Graphical Representation of Data For year 2006 [pic] For year 2007 [pic] Data interpretation From the above given data we can make following interpretation. In the year 2006, sales of DC refrigerator were 73. 86% were as sales of FF were 26. 14% and in the year 2007, sales of DC refrigerator decreased to 42%, were as sales of FF increased up to 56%, With this we can make the conclusion that, there is a certain change in customers’ behavior as they are shifting from Direct Cool Refrigerator to Frost Free Refrigerators. AVG TOTAL SALES PER MONTH Data interpretation From the above data we can make the following interpretation 1.
The total sales of refrigerator have increased in year 2007 as compared to year 2006. 2. With this we can also conclude that the customers are increasing. There may be various reasons for this change in customer’s behavior. a. Increase in customer’s income. b. Awareness for the latest technologies c. Status in society d. Advertisement PERCENTAGE CHANGE IN SALES IN THE YEAR 2007-2008 Refrigerator DCFF %change20%121% Data interpretation 1. From the above data we can find out the percent shift of Direct Cool Refrigerator to Frost Free between years 2006 –2007. 2. There is only 20% increase in sales of Direct Cool Refrigerator were as we can see an immense change sales of Frost Free Refrigerator that is 121%. 3.
From here we can also conclude that there is an immense change happening is consumer’s behavior as the sales of DC is decreasing and sales of FF is increasing. 4. Also the companies has realized this and they are giving more stress in increasing the sales of Frost Free Refrigerator’s as they have realized that this change is the demand of today’s market. ANALYSIS HAS BEEN DONE ON THE BASIS OF THE FOLLOWING QUESTIONNER I. Sample of question asked to all the dealers in Delhi. FOR AIR CONDITIONERS 1. What is the preferred company when it comes to AC? a. LG b. Samsung c. Ken star d. Voltas e. W-Pool f. Electrolux 2. Which company is having the best sales in your outlet? (Choose from the above listed companies) 3.
Do you see any changes in customer’s behavior in past few years? 4. If yes, that type of changes? In terms of a. Technology b. Outlook c. Features d. Size service 5. Out of the two which one is more in demand? a. Split AC b. Windows AC 6. Are the companies able to fulfill the demand of consumers in time? a. Yes b. No. 7. Are there any other features that the customers are demanding for? 8. If ‘yes’ specify? (Thank you for your valuable time and support) FOR MICROWAVE 1. What are the preferred companies when it comes to AC? a. LG b. Samsung c. Ken star d. Voltas e. W-Pool f. Electrolux 2. Which company is having the best sales in your outlet? (Choose from the above listed companies) 3.
Do you see any changes in customer’s behavior in past few years? 4. If yes, that type of changes? In terms of a. Technology b. Outlook c. Features d. Size service 5. What is the demand for Microwave? a. High b. Medium c. Low 6. Are the companies able to fulfill the demand of consumers in time? a. Yes b. No. 7. Are there any other features that the customers are demanding for? 8. If ‘yes’ specify? (Thank you for your valuable time and support) FOR REFRIGERATOR 1. What is the preferred company when it comes to AC? a. LG b. Samsung c. Ken star d. Voltas e. W-Pool f. Electrolux 2. Which company is having the best sales in your outlet? (Choose from the above listed companies) 3.
Do you see any changes in customer’s behavior in past few years? 4. If yes, that type of changes? In terms of a. Technology b. Outlook c. Features d. Size service 5. Out of the two which one is more in demand? a. Direct Cool b. Frost Free Refrigerators 6. Are the companies able to fulfill the demand of consumers in time? a. Yes b. No. 7. Are there any other features that the customers are demanding for? 8. If ‘yes’ specify? (Thank you for your valuable time and support) FOR WASHING MACHINE 1. What is the preferred company when it comes to AC? g. LG h. Samsung i. Ken star j. Voltas k. W-Pool l. Electrolux 2. Which company is having the best sales in your outlet? (Choose from the above listed companies) 3.
Do you see any changes in customer’s behavior in past few years? 4. If yes, that type of changes? In terms of a. Technology b. Outlook c. Features d. Size service 5. Out of the two which one is more in demand? a. Semi Auto Washing Machine b. Fully Auto Washing Machine 6. Are the companies able to fulfill the demand of consumers in time? a. Yes b. No. 7. Are there any other features that the customers are demanding for? 8. If ‘yes’ specify? (Thank you for your valuable time and support) II. Sample of questioner prepared to know the average sales of various companies in different outlets of Delhi. Questioner format NAME OF THE DEALER: ADDRESS: PHONE NUMBER: AVG. SALES PER MONTH OF THE FOLLOWING |L.
G |SAMSUNG |VIDEOCON |W-POOL |ELECTROLUX |VOLTAS | | | | | | | | THANK YOU FOR YOUR VALUABLE TIME AND CO-OPERATION PRESENT MARKET SCENE FOR DC & FF, SA & FF, W-AC & S-AC AND MICROWAVE OVEN To find out the present market scene of the above given product, I had to visit various shops in Delhi to collect the data. For that I had prepared a questionnaire such that all the wanted data could be extracted form shopkeepers. The questionnaire is attached in the appendix. Data collected from various dealers at Delhi. (Year 2008) |NAME |DC |FF |SA |FA |MWO |W-A. C |S-A.
C |TOTAL | |OM SHIV |10 |3 |3 |3 | |1 | |20 | |KAMALIA |40 |25 |25 |30 |20 | | |140 | |VDC |15 |5 |5 |3 |5 |2 |5 |40 | |BSM |20 |5 |10 |2 |2 |14 |2 |55 | |AECS |15 |10 |10 |10 |5 |12 |3 |65 | |PLAZMA |18 |5 |15 |2 |3 |5 |2 |50 | |BHARAT |20 |10 |10 |5 |5 |10 |5 |65 | |ALKA |15 |10 |10 |5 |5 |10 |5 |60 | |JAYANT |15 |4 |8 5 |5 |5 |2 |44 | |ASHSH |25 |10 |10 |5 |3 |8 |4 |65 | |EASTERN |5 | |5 | | | | |10 | |KUNDAN |5 |5 |5 | |2 |8 |10 |35 | |C & H |10 |10 |5 |15 |5 |15 |5 |65 | |COOLER |5 | |4 | |2 |6 | |17 | |PERFECT |5 |4 |4 |3 |2 |5 |2 |25 | |AR |10 |5 |10 |5 |2 |8 |5 |45 | |TOTAL |233 |111 |139 |93 |66 |109 |50 | | Graphical Representation of the above Data [pic] Data interpretation From the above data Direct Cool Refrigerator’s having more sale than Frost Free.
DC is having sales of 233 units were as the sale of FF Refrigerators is 111 units. 1. In washing machines the sales of semi auto washing machines are more than fully auto washing machines. Semi auto is having sales of 139 units were as fully auto is having sales of 93 units. 2. In air conditioner the sales of windows AC is more than that of split AC. Where split AC is having sales of 50 units, windows AC is having sales of 109 units. 3. Avg. Sales of microwave oven is 66 units. Data collected from Electrolux Dealers (Year 2008) Data collected from Electrolux dealers for sale of various segments of its product. Avg. sales per month for year 2008 |DC |FF |MIC |W-AC |S-AC |SA |FA |TOTAL | |OM SHIV |8 |2 |0 |2 |0 |6 |2 |20 | |KAMALIA |12 |18 |10 |5 |4 |5 |6 |60 | |ASHISH |10 |6 |6 |8 |5 |4 |2 |41 | |BEESEN |8 |4 |0 |4 |2 |2 |2 |22 | |PERFECT |5 |2 |0 |4 |1 |2 |1 |15 | |KUNDAN |8 |5 |4 |6 |3 |5 |4 |35 | |C&H |8 |5 |4 |5 |5 |5 |3 |35 | |TOTAL |59 |42 |24 |34 |20 |29 |20 | | Graphical representation of the above data [pic] Data interpretation From the above data collected from Electrolux dealers we can see that, 1. Sales of Direct Cool Refrigerators are more than Frost Free. Avg. onthly sale of DC refrigerators are 59 units were as sale of FF refrigerator is 42 units. 2. Sales of Windows AC is more than that of Split AC. Windows AC is having avg. monthly sales of 34 units were as Split AC is having avg. monthly sales of 20 units. 3. Sales of Semi – Auto Washing Machine is more than Fully – Auto Washing Machine. SA washing machine is having avg. monthly sales of 29 units were as FA washing machine is 20 units. 4. Avg. monthly sale of Microwave Oven is 24 units. Comparison of Data Collected for year 2007 with year 2006 It would be very easy for us to understand the present market scene when we will compare the data of avg. monthly sale for year 2005 and 2006.
Avg. monthly sale for year 2007 |Products | DC | FF | MIC | W-AC |S-AC | SA | FA | |Total sale |59 |42 |24 |34 |20 |29 |20 | Graphical representation [pic] Avg. monthly sale for year 2006 This data has been given from the records of EKL Appliances. |PRODUCT | DC | FF | MIC | W-AC | S-AC | SA | FA | |TOTAL |65 |23 |22 |18 |10 |27 |2 | Graphical representation [pic]
Percentage difference between sales in year 2006 – 2007 |PRODUCT | DC | FF | MIC | W-AC | S-AC | SA | FA | |% CHANGE |-9% |82% |9% |89% |100% |7% |900% | Graphical representation [pic] Data interpretation From the above data, we can easily make the following interpretation. 1. Sales of DC refrigerators have decreased from year 2006 to 2007. In year 2006 sales of DC refrigerators was 65 units were as in year 2007 it was 59 units. 2. We can also see there has been decline of DC refrigerator of 9% in year 2007. 3.
From the above data we can also see that there has been increase in sales of FF refrigerators. In year 2006 the sales of FF refrigerators was 23 units were as in year 2007 the avg. monthly sales is 42 units. 4. There is an increase of 82% in sales of FF refrigerators. 5. Sales of windows AC have also decreased in year 2007. In year 2006 sale of windows AC was 18 units were as in year 2006 avg. sales per month is 34 units. 6. We can see an increase of sales by 89% in year 2007. 7. Sales of split AC has also increased in year 2007 in year 2006 it had monthly sales of 10 units were as in year 2007 its sales was 20 units. 8. Its sales increased by 100% in yea 2007. 9.
There has been certain increase in sales of in sales of SA & FA washing machine. In year 2006 sales of SA & FA washing machine was 27 & 2 units per month were as in year 2007 its sales increased to 29 & 20 units per month. 10. The percent increase in sales of SA washing machine is 7% and FA washing machine is 900%. NAME OF ELECTORLUX DEALERS IN DELHI 1. SOUTH EXT. 2. CANUGHT PLACE 3. NEHRU PLACE 4. MAYUR VIHAR 5. R K PURAM 6. SAFDAR JANJ 7. LAJPAT 8. NOIDA 9. LAXMI NAGAR 10. MUKHERJEE NAGAR Competitive analysis of the electronics industry: The electronic market is marked by heavy competition, with the major players in the market being the national and the multinational companies.
These companies have off lately started aggressive marketing of their product and provide a variety of features to their customers. Some of the major benefits for the customers for heavy sales promotional strategy are: • Value added services: With the wide reach of the electronic industry, the customer gets an easy access throughout the country with the help of the dealership services. • Safety: A lot of safety facility is provided to the customer like insurance. • Easy Payment: various companies are providing several EMI schemes. • Loans: Easy loans for products and other special purpose become available to the customer. • The major competitors in this industry are:- | | | |[pic] | | | | |[pic] |[pic] | | | | | | | |[pic] | |[pic] |[pic] | | | | | | |[pic] |[pic] |[pic] | | | | | SWOT Analysis OF automobile industry | |WEAKNESSES | |STRENGTHS | | |Strong Bran