Feasibility of Plug & Socket

L & T Electrical and AutomationFeasibility of Plug & Socket Submitted by:Rahul RamanGeneral ManagementChrist University

TASKS ASSIGNED

To provide the company with an information of annual demand (approx) of the product.Help the company in making the decision of whether they should add this product in their portfolio or not.If No then providing the company with reason of doing so.If Yes then helping the company to determine the channel of distribution, Target Segment and pricing of the product.Work done for completion of above task are follwing:*The places visited are in the next slide

Annual demand of the plug & socket

From the graph based on the survey of effective sample size of 50 we can say that most of the requirement of industrial plugs and sockets lies between the range of 0-50 per year because of the high quality and less usage of the product in various fields and markets mostly in city hospitals and restaurants ATMs.50-100 is the range for malls and hotels ,similarly, the high end requirement i.e from 100-200+ is basically more in industries where there are heavy equipments and big projects which goes on a regular basis .

Which IP number is preferred:FrequencyPercentValid PercentCumulative PercentValidIP 441732.740.540.5IP 5623.84.845.2IP 65917.321.466.7IP 661223.128.695.2IP 6723.84.8100.0Total4280.8100.0MissingSystem1019.2Total52100.0

Hence it can be seen that IP-44 has the highest demand among all the other variants, due to its reasonable pricing and usage, next comes IP-66 whose demand is fairly high even though the price is high because of the fact that it is waterproof, next is IP-65 which is also being waterproof has descent demand.

The table shows the demand of IP numbers in terms of percentage, as discussed above IP-44 has highest usage percentage of 40.5% with IP-66 being the follower with 28.6%.

Significance values.Annual demandBrand namequalityfeaturediscountpricedesignAnnual demand10.6660.8900.0740.0030.0790.000Brand name0.66610.5490.0390.3210.0010.382Quality0.890.54910.2310.0230.0000.398Feature0.0740.0390.23110.0410.0330.301discount0.0030.3210.0230.04110.2350.010Price0.0790.0010.0000.0330.23510.163Design0.0000.3820.3980.3010.0100.1631

Correlation table

Correlation table help us to understand the relation between the two variables and their significance with respect to the sale and demand. It also helps in taking prolific decisions for the company. A change in one variable in significance with the other variable may help to decide what action to be taken on other related variable.RulesThe significance value i.e Pvalue should be less than 0.05 for the relation between two variables to be significant.Values such as 0.000,0.001 which are way smaller than 0.05 are highly significant values where are values such as 0.03,0.04 are less significant.

Analysis-For the company to increase the annual demand of their industrial plug and socket they have to focus on the design of the plugs and sockets as both these variables are highly significant(0.000), a good design can increase the demand for the products.The annual demand is also subjected to the discount offered by the retailer to the customer, as both these variables are highly significant(0.003),a reasonable discount by the retailer on products can influence the buyer for buying more but it should be noticed that the discount offered may not put the production cost high as compared to selling price.Brand name and price are highly significant(0.000) which means that pricing of the product has to be efficient ,if the price is high it should match the features offered then and should not be higher than the competitor given the fact that company should look into its production cost as well.Quality and price are highly significant (0.000) hence a reduction in quality may bring the price of the product down and similarly on increasing the price company should look at increasing the quality, there should not be any compromise in the quality aspect

Current market composition

From the pie chart we can clearly see that the Siemens is the market leader as many companies are using different products of which one of their plug & socket are from Siemens.In the chart the others means the local product like mennekes and the Chinese products.Legrand and Neptune bals are with same percentage.Schneider market share is very less here in Chennai market.ABB is kind of present in quite good percentage.

what is the price that you are paying for current plug& socketFrequencyPercentValid PercentCumulative PercentValid200-25023.94.04.0350-450917.618.022.0450-550713.714.036.0550-6501019.620.056.0650 above2243.144.0100.0Total5098.0100.0MissingSystem12.0Total51100.0

Feasible Price

Continued..Now from this table it is evident that 43% of the customers are paying above 650 rupees which includes the heavy users like the High end industries,Chennai Metro,Railways and the brand conscious customers who doesnt care much about the pricing and all other stuffs.After that the 550-650 range it also constitutes of medium industries.This includes the hospitals and the plastic making industries and the mid range industries.The third highest is the 350-450 range as it is the shopping malls and the tech parks.They use very less number of industrial plug & socket as mostly they are using the general ones.And after that the 450-550 range this generally given by those who are using the 32A-3pins as it is the cheaper as compared to other products.Last one the lowest range is given by the low grade industries and the households who doesnt use give high loads and thinks it as any ordinary product.So, generally the feasible price range is 650 above but I would suggest the company should come up with segment wise product like low,mid and high ranges.And they should offer discount as in the visiting time I have seen people going for discount very easily and if L&T kind of big name come with discount and segment wise product people will definetly go for it.

Suggested priceVolume based prices. Competitors are also willing to give higher discounts to their dealers and customers when faced with bigger volumes. Hence case to case volume based pricing to be followed..Bundling up strategy is required to be taken up. As far as the panel builders and system houses are concerned they buy products for specific projects where a lot of line items will be used and hencethe price offered should be bundled to remain competitive.Loyalty schemes and turn over discount to motivate and retain customersCompany can go for Premium pricing as done by the players like Siemens, Legrand & ABB. Where as companies like Teknic and Neptune have opted to go for Cost Based pricing.The best way to price the Product for L &T can be to go for Value Based Pricing. The company needs to calculate the value that the consumer will be getting by consuming this product and based on that they can price their product. it is important that the company should be able to measure the value in the quantitative terms.

The target market

what is the channel of purchasing plug & socket?FrequencyPercentValid PercentCumulative PercentValiddirect from company23.94.04.0stockiest/distributor2345.146.050.0wholesaler1733.334.084.0retailer815.716.0100.0Total5098.0100.0MissingSystem12.0Total51100.0

Channel for distribution

From the above figure we can say that the best channel to sell the product through stockiest/distributor and the big names are buying through this channel.Then comes the wholesaler with 33.3% which is also a good channel to sell and then comes the retailer and in the last direct from companies.So I would suggest that L&T should go with stockiest

And then the retailer. L&T should ensure that the network should be present in most places.

Current position of companies in Plug & socket market

High price

Wide product Range Narrow product range

Low price

SiemensMennkesLocal &chineseScheinderNeptune balsABBLegrand

PositioningPositioning of a product plays a crucial role while launching a product. Positioning strategy is vital to provide focus while launching a product in the market. There are various approaches to position the product but when we talk about Industrial Plugs & Sockets following positioning approach is best suitable for the company.Product Characteristics or Consumer BenefitsL &T can go for this approach of positioning where they can make a product that can be somewhat different from the product of the competitors. The differentiation can be in terms of characteristic of the product i.e. Shape, Size and Universal Applicability.Positioning should also be done keeping in mind the benefits that consumers are getting from the product. benefits that can be given to the customers can be like Ease of use, Better protection from getting Shocks, Durability etc.

Positioning by Price & QualityCompanies like Schneider Electric, ABB & Legrand are very well using this particular approach of positioning. Having a direct competition with these companies in the switchgear market, L&T should follow the same vary approach while launching Industrial Plugs & Sockets.

The market share of different companies on various aspects

SummaryWhether L&T should add plug & socket to its portfolio?Yes it should add this product as it is more profitable Plug and Socket is one of the major electrical equipment that is used in many Government projects, Industries, Hotels, Hospitals and Restraunts. With large number of Industries, Hotels, Hospitals and most important the upcoming metro makes this as the best time to launch this product.From the research done in this field and by the results I got it is feasible to launch this product.At what price the product should be launched?The company should focus upon the premium price range that is above INR650 as it is the heavy users but to become the market leader company should use the volume based pricing and the value based pricing.What would be the target market?The target market should be industries,hotels,hospitals,tech parks,metro &rail,restaurants,shopping malls.

Where should the plug & socket should be positioned?Product should be positioned according to price and quality of the product.L&T should focus upon the different product for different market segment.The price should be based upon the chracteristics of the product.What should be the required channel of distribution?The channel feasible will be the stockiest and through retailer as they are selling the product using their own sources.

THANK YOU