and
In Association with
Carrier Air Conditioning & Refrigeration Ltd.
Presents
Abhyutthan -11
Knowledge Partners
Abhyutthan 11
Carrying forward Carrier
It was time for a review of the summer season sales of Carrier India and the Regional Manager of Mumbai was sitting with the reports of the market share post the extensive marketing initiatives taken by his team during the summer season. The reports showed that they had done spectacularly well on the light commercial side however the residential segment did not follow the same trend. This got the regional manager thinking as to how they could increase their hold in the Residential Air Conditioner market.
Company Background
Carrier is a part of United Technologies Corporation conglomerate based in USA which operates in the high technology space. The UTC group operates in aerospace and building systems through subsidiary companies like Carrier (air-conditioning), Otis (Elevators), Pratt & Whitney (Jet- engines), Sikorsky (Helicopters), UTC Fire & Security (Chubb & Kidde), Hamilton
Sundstrand and UTC Power. UTC was ranked 37th on the 2009 Fortune 1000 List of America's Largest Corporations.
The company was founded in 1915 by Dr. Willis Carrier, the inventor of modern air-conditioning. Carrier Corporation provides heating, ventilation, air conditioning and refrigeration (HVACR) systems, components, controls and services for residential, commercial, industrial and transportation applications and food service equipment. It has operations in more than 170 countries, employing approximately 41,000 people worldwide and revenues of $11.4 billion in 2009. Over the decades, Carrier has tried to inspire reliability, innovation, commitment, superior technology, cutting-edge manufacturing and world-class performance with its brand. It also has one of the most prestigious installation bases in the world.
Carrier in India
Carrier started its operations in India with setting up of companies namely Carrier Aircon
Limited in 1986, and Carrier Refrigeration Private Limited in 1992. Carrier brought to the Indian consumer, access to advanced technology and air-conditioning and refrigeration products from the worldwide product portfolio of Carrier. In October, 2006, Carrier Aircon merged with Carrier Refrigeration and the name of the merged entity was changed to Carrier Air conditioning & Refrigeration Limited (Carrier India). Carrier classifies its market into three segments, namely residential, light commercial and commercial.
|
This case has been exclusively developed for Abhyutthan by Club Marktrix under the guidance of Prof. Dinesh Sharma and Research Scholar Sagari Dey at SJMSOM, IIT Bombay.
Copyright 2011 Shailesh J. Mehta School of Management, IIT Bombay
Abhyutthan 11
Within India the company works with two brands, the one being Carrier and the second is Toshiba
which is predominantly in the residential segment. The company has built a strong distribution
network on a platform of partnership and trust. It was the first to develop an exclusive dealer network in the country. Today the company boasts of a strong network of over 630 sales and service dealers and 1000 distributors and retailers. Carrier India has many firsts to its credit and it was the first air conditioning company to introduce the concept of comfort shop. It has pioneer in technology and has set up the Willis Carrier Engineering Centre to provide technological support to develop new products and upgrade existing ones.
The companys vision is to be recognized as the leader in every segment. It operates by being
customer focused and delivers the best in class quality through its products as well as after sales service. The company aspires to be environmentally conscious and aims to optimize energy consumption in all its endeavours. Residential Air Conditioning Market in India The Indian Air Conditioning market can be broadly divided into three segments as per the usage and installation types. The three segments being residential, light commercial and commercial applied. The total market size of the HVAC market (heating, ventilation, and air conditioning) which deals with indoor and automotive environmental comfort division is $ 1.3 billion; the bifurcation of which is given in the Exhibit 2. In earlier times an air conditioner was considered to be a lifestyle product, but it has entered the mainstream and is increasingly regarded as more of a necessity now. Increased disposable income, rising mercury levels and high humidity in addition to the declining unit prices has boosted the demand for air conditioners in recent times. The availability of easy access to finance has improved the demand for air conditioners even in smaller cities as well as more households join the buoying middle-class segment. Despite expensive running and maintenance costs, air conditioners recorded strong retail volume sales growth of 33% in 2009 and 32% in 2010.
With the household penetration rate as low as 3% in 2010, air conditioners are expected to register the fastest retail volume CAGR of 18% over the forecast period of five years. This clearly signifies that there is huge scope for the segment. Sales of spilt air conditioners are predicted to grow by a 21% retail volume CAGR compared to a 10% CAGR for window air conditioners.
|
This case has been exclusively developed for Abhyutthan by Club Marktrix under the guidance of Prof. Dinesh Sharma and Research Scholar Sagari Dey at SJMSOM, IIT Bombay.
Copyright 2011 Shailesh J. Mehta School of Management, IIT Bombay
Abhyutthan 11
Competition Scenario For the first time after March 2009, index of consumer durables recorded a single digit growth in November 2010. The index recorded 4.26% growth in November 2010 compared with 36.33% increased recorded in the same month a year ago. The market currently has 15 players fighting over the market.
LG is the leading player in air conditioners with a 25% share of retail volume sales in 2010. Despite growing competition the company has maintained its leading position in India. The reasons for LGs success are credited to wide product portfolio which is supported by high brand equity and after sales services and an extensive distribution network. While Samsung is the second-ranked player in air conditioners, it is aggressively strengthening its position by launching new, customized products in India. The company is raising its brand awareness in semi-urban areas through promotional initiatives like Dream Home road shows and mobile vans. Samsung recorded the biggest retail volume share growth in air conditioners in 2009 and 2010 to reach 22%. There are Japanese companies like Hitachi and Daikin which have been present in the premium segment. However they have currently launched entry-level ACs at competitive prices. This initiative has led to a gain in the market share of these players in this segment. The other significant players include Whirlpool, Videocon Industries, Blue Star, Godrej & Boyce, Electrolux, MIRC Electronics, and Panasonic.
The companies in this market strive to push their products not only on the strength of their competitive pricing but also through auxiliary attributes for instance anti-bacterial systems, vita air, power cool, oxygen, aroma pure system, 30 minutes fast forward cooling, and eco patrol to attract customers. Product The company caters to three segments - Commercial, Light Commercial and Residential. In the commercial segment, it provides air control and refrigeration solutions to industries. In the light commercial segment, it provides high quality and high tonnage air conditioners to educational institutes, offices and so on. The residential segment takes care of the retail household purchases.
In the light commercial segment the company has products ranging from Cassette ACs which fit into the ceiling just like an audio cassette fits into a cassette player. These ACs are highly effective and efficient. Slimpack ACs are floor standing ACs and are compact. Ducted ACs |
This case has been exclusively developed for Abhyutthan by Club Marktrix under the guidance of Prof. Dinesh Sharma and Research Scholar Sagari Dey at SJMSOM, IIT Bombay.
Copyright 2011 Shailesh J. Mehta School of Management, IIT Bombay
Abhyutthan 11
provide central cooling solutions used for large buildings. In the Residential Segment it provides Window ACs and Hi Wall ACs (Split ACs) which are two to five star-rated products. Carrier provides these AC solutions at a competitive price range, the details of which are given in the Exhibit 4. Distribution Channels In India air conditioners are largely distributed through independent and multiple consumer durable retailers. In general, independent durable goods retailers accounted for a 59% share of retail volume sales in air treatment products in 2010.
Carrier was the first company to partner with its dealers and let them provide after sales services. It provides the dealers with technician training to help them provide better service. The backbones of the distribution network for carrier are the Willis Carrier Club Dealers (WCCD). These are exclusive dealers of the company who sell only Carrier products. They are loyal dealers of the company since many years and the main sales drivers of the company. Apart from WCCDs Carrier also has Exclusive Sales & Service Dealers (ESSD). These are the exclusive dealers of Carrier who provide sales and after sales service. They differ from WCCD as they are relatively younger dealers and their sales contribution is lower than WCCD. For an ESSD to qualify for becoming a WCCD and avail the corresponding benefits they either have to increase their sales and they have to stay with the company for a long duration. These dealers are trained by Carrier for dealer and technician services. The entire Air conditioning industry faces a problem with ESSDs that there is less loyalty and after the firms have invested in their training these dealers prefer to go the multi-brand way. This default not only causes a loss in channel volume but also results in a waste of money and effort invested in training.
Carrier heavily focuses on quality and does not compromise it for anything else. High quality comes at a high cost of manufactured goods and in view of the fact that the competitive scenario does not allow increase in pricing. This results in a low margin for the company and consequently for the others involved in the entire supply chain. Apart from these, Carrier also uses Multi Brand Sales & Service Dealers (MSSD) which keep not only Carrier products but also products of other companies and retailers. The retail distribution is further bifurcated into modern retailers and traditional retailers. The modern retailers comprise of outlets such as Vijay Sales, Croma and Snehanjali.
|
This case has been exclusively developed for Abhyutthan by Club Marktrix under the guidance of Prof. Dinesh Sharma and Research Scholar Sagari Dey at SJMSOM, IIT Bombay.
Copyright 2011 Shailesh J. Mehta School of Management, IIT Bombay
PDF to Word
