Ac Product Analysis

Lauranne Baudran: (1016/12)

Jeremie Tardieu:  (1018/12)

Muktesh Waghmare: (0412/48)

Product Management

Write up

AIR CONDITIONERS

In spite of Indian tropical climate, penetration of Air Conditioners (ACs) was very low until recently

Perception as an extreme luxury possession

New situation: not only institutional buyers, also households

Category Review

Two keys of entry: cooling capacity and the nature of cooling application

* Room Air Conditioners

* Split ACs

* Packaged ACs

* Central ACs

Customer segmentation

RAC segment dominated by the household segment = growing share of market

Commercial segments

Consumer Behaviour towards AC

* A very specific good, not so common for Indian family

AC generally viewed as Luxury items = Out of reach of many middle income households

High operating cost

Lack of continuous supply of electricity, voltage fluctuation

In middle class families, coolers still popular because of their affordability and low operating cost

→domination of the market by unorganized sector, providing low quality ACs at much cheaper price

* Situation is changing fast = major impact on sales growth

Increase disposable income

Reduction in price

Upper-middle income families are found to be favorably disposed to install at least one AC in their home

Factors affecting demand

(from Product Management in India, Ramanuj Majumdar)

RAC Demand |   |   |   |

  |   |   |   |   |

  |   |   |   |   |

Price |   | Level of competition |

|   | Cost of inputs |

|   | Selling/Distribution costs |

  |   |   |   |   |

Affordability |   | Level of competition |

|   | Cost of inputs |

  |   |   |   |   |

Summer season |   |   |   |

  |   |   |   |   |

Dealer network/push |   |   |   |

Current trends

The AC market is growing at a fast rate, ranging from 250,000 units in 1993 to 1,500,000 in 2006 (three-fold increase).

However, in spite of this growth this AC are still not...