Thursday, August 21, 2008

Electric Fan market

Electric Fans is a high market penetration product category and is very high in terms of purchase priority amongst durables. It is a matured product category with a stagnant growth rate during the period 1990-2002. The domestic market size of fans in India is around 20 Million units. The share of the organised sector stands at 45 per cent and of the unorganised sector at 55 per cent. The figures were exactly the opposite in the early Nineties. Low technology manufacturing process, quality norms, lower overheads and tax evasion methods have enabled the un-organised sector to gain larger share of the market by ensuring a significant price difference. The local/unorganised brands are quite appealing to a large section of the price-conscious Indian consumers, for their lower price points.

The organised sector is dominated by national brands that have built their brand image over a period of time, through sustained advertising and a good dealer network. The market size in value terms of the fans category is quite large at around Rs.1500 Crores and it is the largest selling item in the brown goods category. Bajaj had a basic presence in the Fans Business since the Fifties and was a respected household name in the country. It had the potential to achieve a stronger presence in the Fans market and become a leading player in the category. What was required was to get the marketing, sales and the organisation act right.

There are 6 major brands in the organised sector namely: Crompton, Orient, Polar, Khaitan, Usha and Bajaj. All large players in the industry have their own manufacturing facilities, which is helping them in reaping the benefits of economies of scale. Intense competition in the market has transformed the fan industry into a high-volume, low-margin business. To remain profitable and competitive, it becomes imperative to have high-volumes and a reasonable market-share, to enjoy the related economies of scale.

With liberalisation of imports, low cost world-class manufacturers of Table, Pedestal and Wall fans from China offer an active threat to Indian manufacturers. There has to be a sustained effort that the low priced manufacturer could survive from the Chinese threat.

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