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Cheaper brands boost durables’ organised sector

04-June-2004
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Cheaper brands boost durables’ organised sector

The consumer durables industry in India has witnessed a major shift in favour of the organised sector with the share of unorganised sector coming down to 8-10 per cent from a high of 40-50 per cent less than a decade ago.

Further, the price difference between branded and unbranded goods has narrowed down substantially over the past few years because of easy availability of branded products (due to lowering of import duties). The consumer preference has shifted as a result of better after-sales service and support offered to the consumers, says a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci).

The survey further says that the industry is poised for a surge in growth because of emerging opportunities and strong fundamentals of the economy.

The survey, covering all the three segments of the industry - white goods, consumer electronics and electronic components for the period April 2003-March 2004, confirms that the rate of growth in production has been more in terms of quantity (in volume) rather than in value terms for a number of products. This has happened because of constantly falling prices over the years due to competition among the major players, aggressive marketing strategies and declining import tariffs.

Quality products with superior technology and technology upgradation have helped the industry achieve higher volume growth and higher value realisation. Removal of licensing restrictions has encouraged capacity addition by both the domestic and multinational companies (MNCs). Competitive strategies revolve around strong brand differentiation and prices, says the survey.

The consumer durables industry has two clearly differentiated segments. The MNCs have an edge over their Indian counterparts in terms of technology and a steady flow of capital.

The domestic companies compete on the basis of their well-acknowledged brands, an extensive distribution network and an insight in local market conditions.

With the availability of multiple brands, the bargaining power of customers has risen substantially, the survey adds.

The demand is cyclical and seasonal. It is high during festive season and is generally dependent on good monsoons. Purchase necessarily is done only during the harvest, festive and wedding seasons - April to June and October to November in North India and October to February in the South. Rural India, which accounts for nearly 70 per cent of the total number of households, offers plenty of scope and opportunities for the white goods industry.

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