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TCL: BROAD STRATEGIES FOR REVIVAL

CIA: COMPONENT 2.2

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Group-7(M2):
ANIRUDH GUPTA 1727708
MADHAV DHAMIJA 1727719
SAMARTH ARYA 1727727
SHUBHAM PATHAK 1727728
SOURAV ADHYA 1727729
SUHAS VARMA 1727732
SURABHI SINHA 1727761 

 

 

 

 

 

 

TCL Corporation

 

TCL
Corporation (Telephone
Communication Limited) is a Chinese company that manufactures and sells products like television
sets, mobiles, A.C
units, washing machines, refrigerators etc.  In 2013, it
was third-largest television producer by market share. TCL is organized into 5 main business categories:  TV sets, cell phones, AC units, Washing machines,
smart watch.

In India TCL
corporation started their operation in 2016 with 3 product categories.

1) TV 2) smart watch 3) Smart phone. In 2 years of operation they gain
1% market share in TV.

 

Facts about the case:

·        
Stagnating market share
of 16% i.e. a marginal internal growth of 10% where the market was growing by
30%.

·        
Below par performance
by the existing dealers.

·        
No increase in dealer
network to meet the market growth.

·        
Skewed sales mix i.e.
products with lower gross margin was selling more than products with higher
gross margin.

·        
Declining profits.

 

Solution
required:

·        
Create a ROI for trade
partners to motivate them to keep more of TCL products.

·        
Strategy to improve
sales mix & expand the market.

·        
Improve performance of
existing dealers & create new dealers.

 

 

 

Current
TCL India TV market turnover in Rupee for Bangalore market

 

Segmenting market on the basis of income group.

Total
population of Bangalore = 1,08,96,198   

10,00,000 = 28%

Considering target
group from the slot of income 3 lakh and above.

Therefore,

Total number of
possible buyers in percentage from total population

= 73% (11%+15%+28+19%)

Or,

Total number of
possible buyers in number from total population = 79,54,225

Considering 4 members constitute
a family and considering 1 TV per family =79542254

                                                                                                                  =
 19,88,556 (approx)

Estimated Market
Potential (MP) = N*P*Q

Where,

MP= Market Potential

N = Number of possible
buyers

P = Average selling
price

Q = Average annual
consumption

Now,

 Estimated Market Potential = 1988556*25000*1 =
49,71,39,00,000

{reason for considering
average price as 25,000 because TCL India TV prices have a wide range of
12000-more than 1 lakh }

From
the above calculated value TCL India holds only 2% of the TV market in India as
per latest survey of 2017.

Therefore,

Total revenue TCL India
could generate in one year on considering Rs. 25000 as an average amount

2% of total Estimated
Market Potential in Rupees = 2%*49,71,39,00,000

                                                                                        
= Rs 99,42,78,000/-

 

 

 

 

 

 

 

 

Create a ROI for trade partners to motivate them to keep more
of TCL products

 

Dealer Motivation:

1)     
Seamless supply chain: The order should be provided on time to dealers.
Launch of new products and variants should also reach the dealers on time, so
that the customer coming in for enquiry after advertisements can be lured by
showing the product and the sale takes place.

2)     
Target motivation:
Going in line with other consumer durable strategies, where the dealers and
distributors get gifts and rewards for achieving the sales target. e.g. TCL
smart watch, Lucky draw trip to Thailand, TCL HD TV, TCL smart phone.

3)     
Special seasonal sale offers. e.g. providing match tickets to World Cup/ IPL
finals.

4)     
Special training to sales representative of the
dealers, who will pay special
attention to customers coming to buy TCL TV’s in a shop, as well as specialized
service personnel to be trained by the company.

5)     
Authorized
dealer certificates and some
associated perks, so as to offer a slightly higher margin than the normal
dealers.

6)     
Attractive advertisement banners for the store. The advertisements and banners should be changed
from time to time.

7)     
Special
remuneration on backing B2B sells in
local area by the dealers.

 

Marketing

1)      
One of the
biggest disadvantages of TCL is its low brand awareness and therefore a wide
media coverage both online and offline is needed.

2)      
Omni channel
distribution plan.

·         
Series of
advertisements: showcasing stories of use and cost friendly products of TCL in
different product categories.

·         
e.g.  a) 32’inch LED TV (HD Ready) available at
Rs.12666/-. The advertisement can showcase the story of a farmer listening to
farm news on radio then switching to TCL, due to its low cost, where he can
also access farm shows telecasted by other countries.

3)        Strategic partnership with video streaming
sites for free 3-6 months subscription. E.g. Amazon prime, Netflix, TVF play,
ALT Balaji etc. 

4)        Seasonal offers:

·         
Match tickets during IPL/ ISL/ Pro
Kabbadi League etc.

·         
TCL Smart watch/ smart phone to lucky
draw winners during festive season like Deepawali, Christmas, new year etc.

5)       One
year extended warranty for online sales specially during the famous online
sales like Flipkart’s Big Billion Days, Amazon’s Great India Sales etc. The
extended warranty offer will increase the customer’s belief in the brand, which
usually comes with low priced goods and TCL being a Chinese brand, rides low on
customer trust.

6)        Bundling on special occasions can also boost
sales compared to its competitors. TCL can bundle its own products, or of
accessory specific companies. Bundling can have: Speakers, smart wearable,
Gaming consoles etc.

7)        Advertising tie-ups:

·         
Sports league tie-up. E.g. TCL third
umpire in IPL/ World Cup or any other sport.

·         
Tie up with movies or web series:
Situations can be created in the story of the movie or web series to showcase
the product. As, OLA had with Permanent Roommates, Tata Tiago had with TVF
Tripling etc.

8)        Substantial attention to B2B sell, as they
have an advantage due to their fairy low price compared to competitors, and can
showcase their international credibility. It will give them wide presence and
bring brand awareness to public.

9)        Brand Ambassador: having a brand ambassador
helps in brand recognition and that is where TCL lacks in India. Going on the
popular line the most famous brand ambassador and industry that majority of
population relates to is Bollywood / Cricket. 
It will be beneficial to have a bollywood youth icon or young cricketer.
As over the years new entrants in consumer durables has made good brand
awareness by association with such stars. E.g. Vivo – Ranveer Singh, Oppo –
Hrithik Roshan & Sonam Kapoor, iBall – Kareena Kapoor etc.

10)    Product Mix enrichment: More of consumer
durable products. This will help to rope in new dealers. Presence of different
products will create brand awareness.

 

 

(According
to ONLINE SOURCES)

TCL India is giving
tough fight to Sony, Samsung and LG in 32′ to 42′ TV size, its because there
comparative market price is more than the price of TCL India. Also 55% of the
total TV market is under 32′ – 42′.

Also, TCL is expecting
to increase the Market Share from 2% to 5%.

So if our strategies
work as per our plan than in Bangalore market TCL can grow with a good number.

Therefore expected
market growth could be following:

Target Income Group =
3,00,001 – 5,00,000

  = 11%
(we consider this income group people will more likely to buy 32″-42″ inch TV)

That is 11% of  1,08,96,198 = 11%*1,08,96,198

                                              = 11,98,582

We consider 1 TV for 4
person in a family, so number of unit sell in Bangalore = 11,98,582/4

                                                                                                                             
 = 299645

Estimated Market
Potential = N*P*Q

                                             =299645 *15,000*1

                                             = Rs. 4494675000

{Reason for considering
average price as 15,000 is because maximum market covers TV of 32′-42′ about
55% and also the price of 40′ TCL INDIA TV is 20,900 and people of the
considered income group prefer a cheaper TV.}

Now,

Expected Market Share
growth of TCL India in TV market = 5%

Therefore,

 

5% of 4494675000

= Rs. 224733750

So, 22.47cr will be the
TCL market volume if the strategies work properly in 32-42 inch TV segment.

Though market is
growing by 30%, and TCL forecasting is growth rate of more than 100%. As it’s
very new in Indian market, it has potential to grow with a high rate with
proper planning & strategies.

 

 

 

 

 

 

 

 

 

 

 

 

 

Creating
new dealer

A
Step towards Offline Market (Channels Management)

Offline Channel has
various mediums to enter.

For TCL,

1.      The
company should contact Multi Brand Family Outlets and enter into a contract for
sales of company’s products. Examples of these outlets are the retail chains
like Vijay Sales, Vivek, etc. Many people prefer to buy electronic items from
these outlets.

 

2.      The
intermediator Cycle is one of the traditional ways of selling in the Physical
market. Here, TCL company has to establish good contacts with the big players
of this retail chain that are manufacturers, wholesalers, retailers, dealers,
etc.

In
terms of offering high margins, this distribution network can be influenced for
better sales of company’s products.

3.      Getting
into contract with the dominant Multi Brand Outlets like Croma and Reliance
Digital for the purpose of sales, will offer a great advantage to TCL. TCL
would have a great platform to display and sell their products.

 

4.      One
of the latest trends is the Franchise Model. Franchising allows the business
owner to grow business by means of selling the rights to use the brand and
particularly business model, instead of building the new units.

TCL
should offer Franchise stores to interested people, so that people get chance
to invest in new business and also benefit to the company.

 

Competitor
analysis:

TCL

Samsung

Sony

32′ inch LED TV
(HD Ready)

Rs. 12666

Rs. 18400

Rs. 22728

40’inch LED TV
(Full HD)

Rs. 19350

Rs. 35999

Rs. 41213

43′ inch LED TV
(Ultra HD 4k Smart)

Rs. 33490

Rs. 55967

Rs. 58230

49′ inch LED TV
(Full HD Smart)

Rs. 32999

Rs. 59999

Rs. 59700

55′ inch LED TV
(4K Ultra HD Smart)

Rs. 48999

Rs. 105512

Rs. 136130

Source: Amazon.in

 

 

 

 

 

 

Strategy to improve the sales mix & expand the market.

TCL has
been operating in the Indian market for the last two years, and they have not
introduced their white good products in the Indian market which they are very
famous for in the foreign markets.

So,
it’s time to introduce the A.C units and washing machines in the market so as
to increase their product mix. As for the smart phone in the Indian market,
they should now introduce the Tab to increase their product line.

Instead
of giving discount to customers, they can go for bundling Pricing Strategy (TV
+ wearable device) which will help them to sell product at least at
manufacturing cost & have more presence in market.

Along with B2C TCL should focus on B2B
(like Hospitals, College, Hotels & Restaurants, Railway station, metro station,
Bus station, Shopping mall etc.) which will increase their business cycle. In
this category there is a huge potential to grow. As in all these place
organization buy bulk TV with medium configuration. Their low product price
will give them  high competitive
advantage over others and will lead them to gain higher market share.

They can target the cab service
organizations to sell their smart phone in B2B contract.

 

 

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