Case study

Building Home browsing PC Segment

Introduction
The world is becoming more networked with the passing of time. There is an increase in the interconnection amongst individuals, businesses, and governments and also increased in recognition of connectivity. New technology is adopted by the next generation to enhance the connectivity by using Wi-Fi and WIMAX. WI FI technology is used to connect the organization indoor and short range inside the organization. Internet use increase the demand of mobiles ,pc computers at on global scale .so cutting edge in technology which are essential for organization to sustain their competitive advantages in the global scale .Pc industry has huge potential to the Indian market although India is slowing down the connectivity. According to update World Economic Outlook (WEO) of international Monetary Fund (IMF) released in July 2008, global real GDP growth on a purchasing power expected is 5.0 per cent and in 2007, 2008, 2009 GDP is 4.1, 3.7, and 3.8 respectively. Inflation has become the global problem .inflation pressure raised serious concerns in emerging market economics and supply and demand become imbalance. Senior policy makers recently survey conducted by the World Economic Forum (WEF) assess the risk assessment the result shows that the increase in the risk which will be resulted in the increase in the inflation rate and resulted in poor economic growth and slow down in the countrys economic growth It is expected that corporate spending on technology will divide and people will spend lesser amount of money on computer hardware. This will be great threat to the pc industry market but FMCG companies decided to cut the freebies in the festival seasons and concentrate on customer service and product innovation owing the high customer demand in the Indian market

Indian Pc Market
In Indian market IDC estimate that pcs are formed 40% branded category and rest 60% unbranded category. Individuals were among biggest buyer of unbranded pcs. But on the commercial side buyers were increasingly choosing the multinational brands. Pc sale in India is increased last few years by 20%. In 2006 sale is 5.6 million and currently sale is 6.5 million .notebook pc previous sale is 980,000 but now reaches to 1.8 million. Sale of notebook, desktop pc, consumer PC commercial client pc is increased by 81, 7, 23, and 19 per cent respectively .HP computers are market leaders in the India. Sale of white box is growing very slowly 1-2 % per year but in the other hand customized PC market is growing and consumers are shifting from CRT TO TFT or LCD monitors. The market for printers actually shrank with 82 per cent decline for line printers, 24 per cent for dot matrix, 9 per cent for lasers and 2 per cent for inkjet. Falling of laptop prices catalyst in the soaring sales of notebook/laptops. Expected client pc growth in 2010 is 40%. The used laptops have caused in the peripheral market which directly sells bundled products .IIT Mumbai and Indian institute of science build the world's cheapest laptop that will be priced at $100.the innovation of new laptop prove to be breakthrough device that could solve the problems of low computers literacy and e learning in India. IDC study presents an updated look at the worldwide PC marketplace going forward. This study provide forecast and growth figures for PC shipments at the world wide level and key regional market .latest forecast growth rate is 11.1 % which is equal to 252.9 million units . In 2006-2007 the IT industry growth rate is 32% in rupee terms and in dollar term 30% . Export earnings of RS.153,744 crore Domestic market of RS.73,135 crore Contributed to the revenue of Rs 226,879 crore. Export revenue increases 35% and domestic market at a consistent 27.2 % ,

According to the DQ top 20 annual survey the IT industry oh India exports crossed the trillion rupee. After the consistent 30% plus growth for over three years ,this achievement marks a truly a proud for the India IT's Industry . The top 20 players accounted for as much as 77% of the software services exports by growing at 44.2% the highest in the first seven years of the millennium. The top three players are: Tata Consultancy Service(TCS) Infosys and Wipro These player raised the growth up to 134% and the next 20m players contributed 11.4% to the growth .The Dataquest study noted that application development and still contributed nearly two -third of total software export revenues . Infrastructure services and engineering services contributed 5 % and 4 % of the revenues ,respectively . The Company It is a mid-sized PC manufacturer based in India . Ramesh GM marketing , CFO Manoj Bayan , Marketing Manager ashutosh are worried about the dipping demand of pcs in Indian market and try to find out the reasons of dipping demand.

Decline in Demand PC sales in India during the first quarter of 2008-09 decline by 4% In next fiscal quarter it is estimated that demand would be decline by the 12.5% White boxes has 40% market share so it's the time for company to make new plans

Factors contributing to decline demand The branded PC manufacturers lacking the value to the customer. Distribution channels needs to be tuned according to the needs of the customer. Lacking of the after sales service by PC manufacturers

Home PC browser segment is clearly neglected about 1.8 million PC are sold in 2007-8 and one third of the PC are found their way to the internet parlous .One of the main reason is that there is no channel which will cater the needs of the

Segment 1

Segment 2

Segment3

home PC browsing segment.

Needs and complaints of the home PC segment Most of the owners of home pcs complain that service engineers do not respond promptly and some dealers do no give them free service. Home PC browser need a reliable after sale service from the vendors. These are the main reason that people opt for local manufacturers and white boxes. Another main characteristic of the home user is the fear of obsolesce that people want those chips which will remain last for minimum next 5 years and support the upgraded soft wares.

Sub dividing the home PC segment Ashutosh marketing manager of the company sub divided the segment into three groups according to their differentiated need, which is currently served as same needs by distribution channels.

Not knowlegable about Somewhat knowlegable Very knowledgeable computers about computers about computers

Needs reliable ,prompt, Needs prompt ,reliable after sale service after sale service and on ways to upgrade

Does not need after-sales service

Needs training Are willing to pay little

Does not need training

Does not need training

Are willing to pay a Very price sensitive premium for these services

Segment 1 These people are not knowledgeable about computers ,affordability and price is most sensitive .The thing they require the most is reliable after sale service .

Usually they purchase computers for their children's learning in schools .The feel comfortable buying pcs from nearby shop Segment 2 In this segment customers wants availability, broad assortments, multiple brands and reliable after-sales service and are willing to sacrifice some price benefits to get them .Computer specialist are ideal for servicing these people. Segment 3 This consist of people who are very well-versed about computers and are selfreliant, but who are price sensitive and therefore buy from gray market .These peoples enough know about computers to service small faults in their own. What aqua marina do next.. Prepare macroeconomic forecast projecting inflation, interest rates, consumer spending and other variables. A survey of buyers. Take demand estimates from sale representatives, dealers and trade associations. Identify Which segment is easy to serve.

Conclusion Company had to grow in order to survive in the recession and here was the home PC browsing segment that had been neglected and that ought to explode in the years to come, with increasing awareness about pcs increasing the buyer power and the advent of the internet.

Questions 1. How did Ramesh , GM marketing of aqua marina technologies decide on which home browsing segment to enter, taking into account the potential and capabilities available or to be made available to the firm? Answer: Ramesh should keep in mind things like purchasing power of each segment, number of rivals exist in each segment, potential interest of users and aligning them with company existing capabilities. Because aqua marina is mid-sized company, segment 2 might be correct option for aqua marina because they are willing to pay premium for services. 2. Explain the various dimensions of PC industry analysis like actual and potential industry size , growth opportunities available for small technology-based firms, strategic options available to them by analyzing industry market potentials and usage gaps among home browsing segments. Answer: PC sales in india is growing from last few years by 20% and laptops are become the first choice of first time users. Immense potential available for small or midsized companies because people are more cautious about price and want to have more sale service , small firms can interact with users more effectively and can cater their needs. As we see there is a gap between the needs of three home PC browser segments, a mid sized company cannot invest heavily but could provide training and after sale service to the customers. By this way they can get market share which lead to revival from recession due to economic forces.

3. Comment on the relevance and significance of five forces model for Aqua Marina Technologies for understanding the PC industry. Answer: Again the 5 forces model is highly important for the Aqua Marina to analyze the industry environment. Substitute product offering is immensely high in the industry many choices are available to the Aqua Marina, supply of finished and semi finished goods is high many suppliers available due to market saturation its an opportunity for the firm.

Buyer bargaining power is also high in this industry because buyer have many options readily available and they can switch to one brand to other brand which is an opportunity and threat to the firm that one can attract others customer by offering differentiated product in market. Potential for new entrants is low because industry is currently saturated and new investor might not invest in this industry due to financial losses.