Buying Behavior Of Consumer For Sanitary Products

GROHE India Pvt. Ltd.

Summer Project Report on Consumer behavior of luxury sanitary ware

May – June 2009

Under the guidance of --

-Prof.

P.C.Tungare (Faculty Guide) Anan d Dixit (Company Guide) -- Submitted by -Jayant Singh Raghav Ref. no. KH2008PGDMF128

Institute for Technology & Management, Kharghar, Navi Mumbai

Institute for Technology & Management, Kharghar, Navi Mumbai

GROHE India Pvt. Ltd. A Summer Project Report On Consumer behavior of Luxury sanitary ware By Jayant Singh Raghav Under the guidance of Prof. P.C. Tungare (Faculty Guide) & Mr. Anand Dixit (Company Guide)

Institute for Technology & Management, Kharghar, Navi Mumbai

I. Acknowledgement

Expressions have their own boundaries but this citation is an attempt to acknowledge the support given to me during the tenure of project. I would like to express my gratitude towards my Faculty guide Prof. P.C. Tungare sir, for his timely steering. Without his valuable guidance this project wouldn’t have been successful. I would also like to thank my company guide Mr. Anand Dixit sir, Territory manager- Pune GROHE India Pvt. Ltd. for his prop up and encouragement. I am extremely grateful to GROHE India Pvt. Ltd. for giving me the opportunity to complete this assignment in their esteemed organization. I am thankful to Mr. Pradeep Patnaik sir, Regional sales manager for his counseling and help in facilitating smooth execution of this project. This assignment could not have been successfully completed without his sincere guidance & Company guide Mr. Anand Dixit sir Territory manager-Pune. I am also appreciative towards other interns from same company for their co-operation & sharing outlook. Above all, I am thankful to the almighty ‘Bhagwan’ for empowering me and ushering my way to sufficiently address my duties.

Executive Summary Institute for Technology & Management, Kharghar, Navi Mumbai

This project deals specially with the behavior of end consumers of luxury sanitary ware. Today faucets & showers are no more just the requirement for the consumer, but a luxury commodity. India is a growing market touching world standards in sanitary market. With the advent of local guerillas in sanitary market, competition for a new entrant is tough in lower segment. Since upper middle class income group in South Asian countries like India is growing very rapidly, the consumption of luxury item will also increase at a faster pace .Indian Sanitary ware industry is worth $ 700 million. We have focused on the brand awareness among builders, contractors, architects and end consumer and tried to sneak into those factors which they look for while buying any sanitary product. We also found out what are those cues and parameters which are prompting a consumer from awareness to consideration. During this we also made some viral advertisement to create awareness among Indian buyers. Since internet today, is the most cost effective and extensive reach for consideration set. Amid we also studied distribution channel for the GROHE and its competitors. Report contains detailed analysis of distribution channel of GROHE India Pvt. Ltd. Our study area is Pune, Maharashtra. Pune is the second fastest growing city in India with more than 350 running projects. During Commonwealth Games-08, around 15 five-star hotels have begun construction. These facts make this area most suitable to undertake our study.

Institute for Technology & Management, Kharghar, Navi Mumbai

Institute for Technology & Management, Kharghar, Navi Mumbai

Contents

1. Introduction 2. Grohe – A brief history 3. 4-P’s of Grohe 4. Internship Objectives & Tasks 5. Research Proposal 6. Observations 7. PCSW Analysis – Indian Sanitary ware Market 8. Suggestions 9. Appendices 9.1. Questionnaire 9.2. Research Calculations A. Reference B. Glossary C. Index

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1.Introducti on

B

athrooms and kitchens were once considered just as one portion of home where people usually visit early in the morning to perform their daily routine. But today they are one of the important considerations for a buyer when he buys is flat or builds one for him. Today various sanitary companies across globe are providing innovative & Institute for Technology & Management, Kharghar, Navi Mumbai

creative solutions to their consumers. Bathrooms are becoming more and more intelligent & eco friendly which not only saves water but also gives unbelievable facility to their users. Bathrooms are becoming comfort zone today. From faucets to showers, cisterns to waterless urinals, each & every equipments are being designed to give more comfort. The sanitary industry in India is neglected in early nascent stage but now is creating news with many international players are entering into the market with their ground-breaking out of the box solutions. Indian Sanitaryware industry is currently in its growth stage. Indian sanitary market is currently leaded by Hindustan Sanitary Ind. Ltd. (HSIL), EID Parry’s comes next. The other major players are Cera, Jaquar, Marc etc.The market statistics have become interesting after the introduction of international brands into the market through joint ventures. Name a few are Toto from Indonesia and American Standard from Thailand, Hans Grohe ,Grohe AG both from Germany, Sanitec Group of Finland .HSIL has roped in Hans-Grohe, Sanitec group to complete its product range. Although market has huge potential but all International brands comprise of only 10% of total market pie. But with their presence felt in market, Indian companies are making aggressive moves. In past 12 months Hindware has launched around 50 products. Cera not being behind has provided its product in more than 18 colors range. So what is it that is attracting many international brands to the country? The reasons are high augmentation of still to be penetrated higher middle income group in the country, & unparalleled growth of infrastructure. If words of an industry expert are to be believed only Faucet market in India is of around $ 200 million alone. These companies’ products are two to seven times more expensive than Indian products but in the near future they will be setting up production unit in India also. Companies are trying to capture the emerging market with new pioneering ideas of marketing with emphasize on customer service. During my tete-a-tete with various Builders and Senior persons I came to know that today’s consumer is very brand conscious, and he look for branded instrumentalities whenever come to visit sample house. “Today’s consumer is very intelligent and knows one n’ all brands. Sometimes they demand one brand over other.” Companies taking cues from these ideas are trying to cross the threshold of consumer mind.

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International brands are making their presence felt by their novel offerings and giving value to the consumer money. Mostly they are targeting the upper segment of market and keeping their eye on high end customers who do not mind to give some extra in order to get a bathroom of their dreams. They are putting a lot of weight over their past experience, in the world market. Sanitary ware companies are getting into entire bathroom solutions in order to provide their customers with a one-stop-shop. Cera & Hindware are coming up with studios which will help them establishing them as premium brands in country. Grohe is backed with a full gamut of products. Its faucets range from Rs.2, 000/- to 20,000/- . But they are promoting themselves as a finest International brand available in India. Hindware had just at home with a new concept saying Bathrooms are no more Bathrooms, but glamourooms. Although this concept is not new but still able to catch attention. Distribution channels today are backbone of any industry. In this industry developing distribution channel is a big challenge. Margins are really low with infuriating prices of raw materials. Companies winning strategy is to play with their operations. Companies like Grohe have adopted practices which are helping them to make their process more efficient. Grohe lean® came up emulating Toyota Production system which cut their waste by unbelievable 35%. Parry’s are working on intelligent supply chain systems taking help of an IT company. So cutting cost, not raising price is the real mantra. During survey I came to know some interesting facts like builders are providing not only branded fittings but also in some cases let the buyers choose from selected products. This is interesting because now even builders know the preference of their consumers and providing them what they want. This even helps builders to select a product for future projects. Finding their preference to select a brand we come to know that affordability is at higher priority & a big concern for them. Brand image of any product is also looked at. To reach their target audience and to communicate the right message in the right manner is the major concern for any company. Companies are using various ways for promotion like Promotional allowances, Public reviews in newspaper, magazines and advertisings. But one thing that gained my attention is “word of mouth”. People use what people believe in. They even recommend others to use what they have trusted. Other promotional tricks are warranties & service contracts. I find out builders in Pune region are having affinity for a product because of their service support. Today everyone wants his consumer to be happy and satisfied so that he will become a repeat consumer of that product. Bathroom appliances Institute for Technology & Management, Kharghar, Navi Mumbai

are durable goods, so they are bought once in 6-7 years or until renovation take place. So keeping customers tracked and building a long term relationship must be worked out.

2.GROHE –concise history

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G

ROHE AG, a GEuropean manufacturer of sanitary fittings, including kitchen and bathroom Gfaucets, and Gshower systems was headed by Friedrich Grohe in year 1936. According to World production Index, Grohe has roughly 10% of the World in market for such products in year 2006. The Grohe corporate center is located in GDüsseldorf, GGermany, and it has offices in many parts of the world. Its employee strength counts up to 5,100. It continues to expand its presence in all economic regions worldwide in order to strengthen its competitiveness and safeguard our company's independence. Grohe focuses on water technology products and systems & is continually advancing the standards of quality, functionality and design. Their products and services respond to customers' expectations and increase their willingness to buy. This ensures that services are in line with market trends and guarantee high levels of customer satisfaction. Modest Beginnings and Postwar Construction Boom Grohe's history began in the first half of the 20th century in Germany. Company founder Friedrich Grohe was the second son of German entrepreneur Hans Grohe. Hans Grohe, the sixth son of a weaver, grew up near Berlin and learned the weaving craft himself. However, in 1901 he started his own business in Schiltach, a small town in the Black Forest. At first he made metal casings for alarm clocks for the German firm Junghans, then the largest watchmaker in the world. Soon his business grew into a mini-factory for stovepipe rings, shower heads, spigots, faucets, and other bathroom fixtures, and employed about 100 people by 1928. Friedrich Grohe joined his father's company for a time, but left in 1934 to strike out on his own. In 1936 he acquired Berkenhoff & Paschedag, a manufacturer of bathroom fixtures that had been in business since 1911 and was located in the small German town Hemer near Dortmund in Westphalia. Two years passed before Grohe's company received its first orders from abroad. World War II then interrupted the firm's development. After the war, in 1948, the company was renamed after the owner: Friedrich Grohe Armaturenfabrik. Grohe greatly benefited from the Institute for Technology & Management, Kharghar, Navi Mumbai

postwar construction boom. The exploding demand for kitchen and bathroom fixtures put the company on the track to dynamic growth. In 1956 Grohe bought Carl Nestler, a manufacturer of thermostats which was located in the small town Lahr in the Black Forest. Grohe's first subsidiary was renamed Grohe Thermostat GmbH. In 1957, to help promote his products, Grohe started providing special training for retailers that carried Grohe's kitchen and bathroom fixtures and for the plumbers who installed them. Six years later, a brand-new manufacturing plant for thermostats was erected in Lahr.

Ownership and Global Expansion after 1960 The 1960s brought a major change in the company's ownership. In 1961, Friedrich Grohe became CEO of his father's firm in Schiltach, which his brother Hans had been in charge of until his death. Although the two firms had coordinated their product lines to minimize direct competition--Hans Grohe focused on drains and shower heads, Friedrich Grohe on faucets and hot-and-cold-water mixers--and although they used the same distribution channels, the two families decided not to merge the two businesses. Instead, Friedrich Grohe sold a 51 percent majority stake in his company to the American telephone giant ITT (International Telephone & Telegraph) in 1968. In the same year Hans Grohe's third son, Friedrich's brother Klaus, entered the older Grohe family enterprise, while Friedrich Grohe kept a 27-percent stake in his brother's firm. During the 1960s and 1970s Friedrich Grohe expanded internationally. In 1961 the company founded its first foreign subsidiary, in France. A second was established in Austria in 1965, followed by a third subsidiary abroad in Italy two years later. In 1973 Grohe set up its fourth European subsidiary, in the Netherlands. Five years later, the company expanded into Great Britain and Spain, and in 1979 into Belgium. The death of company founder Friedrich Grohe in 1983 closed a chapter in the firm's history. The following year, Friedrich Grohe's heirs bought back ITT's majority stake in Friedrich Grohe and sold their 26percent stake in Hansgrohe to the American Masco Corporation in Indianapolis. Due to growing competitive pressures, the two companies abandoned the idea of staying off each other's turf. To the contrary, over a period of several years they fought over the Grohe brand name rights. The conflict would not be settled until the early 1990s when it was decided that Friedrich Grohe would use the brand name Grohe while Hans Grohe would market its products under the Hansgrohe label. Entering the U.S. Market in 1975 Institute for Technology & Management, Kharghar, Navi Mumbai

The establishment of Friedrich Grohe's first subsidiary in the United States in 1975 marked a new chapter in the company's history. A small office was opened in the outskirts of Chicago, and the first sales representative, Urell, Inc. in Massachusetts, started selling the Europeanstyle kitchen and bathroom fixtures to American builders, retailers, and plumbers. In 1976 the new venture was incorporated as Grohe America, Inc. and moved into a small warehouse-office complex. Two years later Al Corwin became Grohe America's CEO and successfully steered the young company through its initial growth phase, establishing Grohe as one of the leading brands in the top price segment for upscale bathroom design. Trying to catch up with the steadily rising demand, Grohe America kept moving to bigger facilities.

In 1978 the company occupied one section of a larger warehouse facility; in 1986, it moved to a new 64,000 square foot warehouse in Wood Dale; and finally it settled into a brand-new custom-built 90,000 square foot facility in Bloomingdale, Illinois, in 1993. Calvin retired in 1995 and was succeeded by Bob Atkins as CEO. Although the faucets Grohe started selling in 1975 in the United States had a different look and functioned a little differently from the ones American consumers were used to, they increasingly gained acceptance. Grohe's single-hole fixtures were easy to use and install. Another factor that contributed to sales figures doubling every year was the constant stream of innovations in cutting-edge designs that Friedrich Grohe introduced to the market. In 1983 Grohe America launched Ladylux, the first pull-out spray kitchen faucet in the U.S. market. In 1989 Europlus, another pull-out spray kitchen faucet was introduced, which became a bestseller. While the first models had a plastic finish, they were replaced by the industry's first versions in solid stainless steel in the late 1990s. Another innovation, the Grohmix thermostat line, was launched in 1992. Equipped with a new kind of valve that automatically regulated water temperature as well as pressure, consumers could set the desired water temperature just as they would do for their heating or air conditioning systems. With an accuracy within one degree Fahrenheit, the Grohmix line allowed bath safety for households with small children, the physically disabled, or elderly persons. Depending on their budget, Institute for Technology & Management, Kharghar, Navi Mumbai

consumers could choose between a chrome, white, polished brass, or 23karat gold finish. In the late 1980s Grohe became known for its innovative custom shower systems. During this time Grohe America invested in a range of marketing efforts to increase the company's reach and boost sales. To promote the company's custom shower systems, Grohe began advertising directly to consumers. The print campaign featured the image of a naked couple taking a shower together in a large custom shower. In 1989 Grohe introduced a new product line for commercial customers. Five years later the company introduced its Select Showroom program for wholesalers. In 1996 Grohe America launched its first television ad campaign and introduced a limited lifetime warranty in 1997. By the mid-1990s Grohe America sold European-style fixtures worth $38 million, reaching a market share of approximately 1.7 percent.

Positioning in the Changing Market of the 1990s By the end of the 1980s Friedrich Grohe had become one of Europe's top manufacturers of kitchen and bathroom fixings. Sales had climbed to over DM 700 million and exports accounted for 70 percent of the total. Up until that time, the company's main concern had been on adjusting production capacity and logistics to meet an ever-growing demand. The situation changed fundamentally in the 1990s. After the unexpected construction boom brought about by the reunification of East and West Germany in 1990 began drying up, the German market stagnated. Moreover, the company was suffering significant losses from volatile exchange rates caused by weakening currencies in several countries around the world. To secure further growth, Friedrich Grohe had to develop a new strategy. After a brief and ultimately unsuccessful attempt to venture into other bath-related products such as ceramics in the late 1970s, the company had stuck to its niche. This niche was nearing its growth limits. There were two types of enterprises competing in the international market--specialists and all-arounders. Although Grohe had become the Institute for Technology & Management, Kharghar, Navi Mumbai

leader among the specialists, the top players in the global league of bathroom outfitters offered the complete range of products from the shower divider to the floor tiles. Becoming an all-arounder would have required enormous investments. Friedrich Grohe decided to keep its focus on an expanded range of fixtures. The company grew through a number of acquisitions, continued to expand its international reach, and positioned itself as a world leader in water technology. In 1991 Friedrich Grohe was transformed into a public stock company under the name Friedrich Grohe AG. The Grohe family retained a majority stake in the enterprise, while the IPO filled the company's bank account with cash to finance further growth. In the first half of the 1990s Friedrich Grohe acquired the German plumbing fixture makers H.D. Eichelberg & Co. GmbH, Herzberger Armaturen GmbH, and DAL-Georg Rost & Soehne GmbH Armaturenfabrik, including its subsidiaries Aqua Butzke AG and Eggemann GmbH. The acquisition of the privately owned DAL/Rost group catapulted Friedrich Grohe's sales over the DM 1 billion mark. DAL/Rost's line of bathroom installation and flushing systems and Aqua Butzke's automatic bathroom fixtures for public buildings complemented Grohe's product range. As part of the deal, the Grohe family--which owned all the company's common stock--gave up 26 percent to the Rost family. In the mid-1990s increasing numbers of Asian competitors flooded the European markets with less expensive plumbing fixtures, putting established manufacturers, including Friedrich Grohe, under growing price pressure. At German building centers, do-it-yourself customers could buy a cheaper Asian fixture for around DM 50.

Friedrich Grohe, by comparison, sold its high-quality fixtures through specialized retailers and directly to plumbing firms, with prices starting at DM 200. As a countermeasure, Grohe started moving a part of its production abroad. A new factory in Thailand started putting out cheaper fixtures for the southern Asian mass market in 1996. Two years later Friedrich Grohe's second foreign production plant in Portugal started operations. In 1997 the company bought a 70-percent majority stake in Rotter GmbH & Co. KG, a supplier of sanitary equipment to businesses and public institutions. To position Friedrich Grohe as a "world leader in water technology" the company invested over DM 50 million in a massive marketing campaign. Under the auspices of the Grohe name, the firm established Institute for Technology & Management, Kharghar, Navi Mumbai

four sub-brands: bathroom fixtures for consumers, such as faucets and hot-and-cold-water mixers, were sold under the label Groheart; thermostats, valves and other plumbing fixtures for kitchens and bathrooms were marketed under the Grohetec label; flush toilet fittings and tanks were labeled Grohedal; fixtures for professional water management in public buildings were sold under the brand name Groheaqua. The marketing campaign included ads in German plumbing trade magazines, as well as special interest and general interest consumer titles. The campaign not only raised Friedrich Grohe's public recognition but received a German marketing award in 1996. In addition to the ad campaign the company also initiated the Profi Club, which not only offered training to Germany's plumbing firms in how to use Grohe products and innovations, but also offered training in making their own enterprises more efficient. Up to 10,000 plumbers annually attended such training sessions and received the quarterly club magazine. Going Private in 2000 In June 1999, to the surprise of the business community and shareholders, Charles R. Grohe, chair of Friedrich Grohe's advisory board and majority shareholder, announced that he and the Rost family were selling their stakes in the company. A few weeks later, the European investment firm BC Partners won out in the auction organized by Credit Suisse First Boston, over counter bidders including American equity house Kohlberg Kravis Roberts and U.S. plumbing supplier Kohler. BC Partners acquired all common shares from the two families, representing a 51 percent stake in Friedrich Grohe, and these shares were transferred to Grohe Holding GmbH. BC Partners went on to buy back all but 0.4 percent of the preferred stock that was publicly traded. On March 29, 2000, the public trading of Friedrich Grohe shares ceased. Ultimately, the company was transformed into a private entity--Friedrich Grohe AG & Co. KG.

During the next two years, measures were taken to strengthen Friedrich Grohe's position in the world market. The United States had become the company's most important market outside of Germany, generating DM 200 million--or about $160 million--in sales in 2000. The company also invested in new subsidiaries in Eastern Europe, specifically Poland and Russia, as well as in Asia, where Friedrich Grohe was planning to open a new production plant in Shanghai and to cooperate with a Chinese tile manufacturer. On the internal front the company reorganized its sales divisions and pushed its designer line of fixtures with higher profit margins. With a world market share of roughly 10 percent in 2001, Institute for Technology & Management, Kharghar, Navi Mumbai

Friedrich Grohe aimed at becoming the global leader in bathroom fixtures and sanitary installations.

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3. 4-P’s of Grohe India

G

ROHE India Pvt. Ltd. is a fully subsidiary of Friedrich Grohe AG of Germany. Grohe has entered into the Indian market in year 2005. It has mulled a Joint venture with Indian sanitary giant Hindustan Sanitaryware India Ltd. (HSIL). HSIL better known as Hindware has helped German incumbent to use its experience. Grohe in India is targeting niche market of luxury highly sophisticated and technologically advanced sanitary ware market which if experts are believed, is increasing at a faster pace. Marketing mix of Grohe was interesting to study because it

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has product ranging from 2,000 to 20,000 INR. Also its distribution channel is very effective and considered best in industry. Product Mix Grohe claims to have Products of International standards. Its product mix length dwells among faucets, showers, cisterns, thermostats, and unique customized solutions. They have broadly classified their appliances into Bathroom & Kitchen products. Although some of products are cross functional and included both in verticals. Products are having high depth. Company is trying to convert these durable items in India into specialty goods for which consumers will be ready to go an extra mile in spending, since their target group is higher income group. They have differentiated their products by providing special features attached to it. Like one its Product Grohtherm came with special features of temperature control. One important differentiation is their customized solutions for bathrooms. These bathroom solutions are customized for an individual. Another aspect that creates Grohe Effect as they say among sanitary ware products is their look & feel. Aesthetic is an important attribute as I have found out in my survey study. With that German technology is also known for its cutting edge features, so is Grohe. Grohe product offerings are generally divided into three main categories Cosmopolitans: Minimalism, with its reduction of the unnecessary and defined iconic geometry. These are targeting those consumers which need minimum furnishings with product. Contemporary: These look for more garish equipments, Harmonious soft flowing lines and conventional aesthetics, radiating longevity and comfort. Authentic: This ranges products having elegance of past combined with today’s technology. It shows how company is aware of different needs of consumer and providing them what they need through their innovative range.

Product mix of Grohe India pvt. Ltd. is as follows

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Product-Mix width Faucets Accessories Bathroom: Allure Skate Aria Surf Atrio Essence Arabesk Sinofina Tenso Concetto Lineare

Showers

Thermostats

Rainshower Relexa Tempesta

Grohtherm 2000 Grohtherm 3000

Free hander

Sena Aquatower Classic Movario

Kitchen: Atrio Essence Minta K4 Zedra Aria Alira Europlus Eurodisc Eurostyle Eurosmart Classic line Costa Arabesk

Grohe India faucets range is a good example of Line stretching with the advent of new faucets coming in the market targeting lower income Institute for Technology & Management, Kharghar, Navi Mumbai

segments. Grohe is following Product line pricing by providing their products at three different levels of cosmopolitan, contemporary and Authentic. Authentic are priced higher than other Contemporary which again is more pricy then Cosmopolitan. Warranties are another major feature that is attached to a Grohe product. Now every Grohe India product comes with 10 years repairable warranty. Pricing Customer today is very diligent. When he goes out to buy something first they take a full comparison of product on internet. If a product is quoting price more than its perceived value, it is out of customers’ consideration set at the same moment. Although high prices in Indian market is synonymous to high quality. Grohe products are priced high as compared to competitor product in the same category. Grohe is a company having high technology products as compared to its competitors, so citing a slightly higher price for its products can impact consumer when they take inference form product quality and its price. Pricing objective for the Grohe product is supposed to be product quality leadership. Since its products are though priced higher than other company’s product in the market but their affordable luxury is also attached to them. Although their products need to be very much differentiated on the basis of technology. Grohe is supposed to be using Perceived value pricing method in India. German technology is recognized as one of the best in terms of performance and complexity. So perceived value is definitely higher. Since their products are attached with 10 years warranty, their distributor channel is also very reputed, trustworthy. The main pick out about their high perceived value is their high customer contacts and feedback even after the many years of sales. Other important factors affecting its price are the company pricing policy. Grohe has lowered their price for its Indian customers for the same products. They have products ranging from 2,000 to 25,000 for a single faucet .But these might be just for introductory phase of the company. Once company will establish its name in the country it will be having Slightly higher prices what they have today.

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Promotion Market dynamics and the changing perceptions of the customer, have nudged Grohe.HSIL at revamping and strengthening the image of its flagship brand, Hindware. This is expected to provide HSIL with the muscle to maintain its competitive edge and support future line extensions. The new communications, ‘Impressions and Expressions’, aims to project hindware as an expression of art and a brand that enhances lifestyle.The company has also launched Hindware Helpline, which offers after sales service, with a capability to attend to any complaint within 24 hours. Sustained trade promotion activities aimed at multi-brand retail outlets have given Hindware products the necessary fillip. Referral business has been strengthened by the initiation of special programmes such as architect meets and seminars. The up gradation of dealer showrooms and the setting up of Hindware Arcades have furthered the market hold of HSIL. A Grohe campaign Called the GROHE "Enjoyment Guarantee," the promotion offers a 30-day money-back promise on all GROHE Rainshower mounted and hand-held showerheads. Until November 30, if customers are not completely satisfied with their GROHE Rainshower designs, they can return them within 30 days of purchase for a full refund. Place Grohe believes in long term partnerships with its distributors, as well as it selects the distributors looking at their eagerness to grow, their reputation, past experience etc. Long Association can thrive on mutual trust. These Distribution points are located mostly in the growing city. Grohe has targeted major growing cities of India like Pune, Ahmedabad, Goa, Indore, Mumbai etc. Their policy is to capture new market not existing market. So existing in growing city only. Grohe has a model of State Distribution System (CDS) for distribution. The main Distribution center for a state or a region is hold responsible for logistics and distribution and replenishment of orders at the faster pace. Assortment creation for the efficient utilization of space in store and logistics transportations is done at the SDS only. The logistics software of the company is maintained by IBM software solutions.

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4.Internship Objectives

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The Objective of my summer internship are as follows

1. To understand the consumer’s buying behavior of luxury sanitary products. Luxury Sanitary equipments are altogether a niche market of sanitary products and it is raising with 12% per annum in Asian countries. Our objective is to study the typical buying behavior of the prospective consumers and trace out those peculiar attributes which gives a cue to a consumer to finally decide to buy a bathroom appliance. 2. To prepare a database of future customers of Grohe products. Pune is a region which is 4th fastest growing city in the country. Currently there are more than 500 big projects of townships & villa, row houses, & five star hotels are running. Preparing a database of big builders and architects was one of the important task assigned to me during internship. The area assigned to me is Pune municipal corporation region only. 3. To do a competitor analysis of Grohe India. Knowing your Competitors inside out is as important as knowing your consumers. Grohe is facing stiff competition from many big as well as local brands in the market. A comprehensive analysis of competitors will tell us about their big strength as well as their weakness, & last but not the least weakness in their strength on which Grohe can capitalize upon when making its marketing strategy. 4. To study supply chain of Grohe India. Grohe is a new entrant into the Indian market, still a big brand in Europe and other parts of World. Grohe has taken help from IBM to implement logistics networking planning tool to build a case of reducing the number of its Regional Distribution centre (RDC) in European network. But in India it is still a distant dream. Although in year 2008 Grohe has around 70 distributors across India & is going up to 100 by Dec. 2009. 5. To develop an advertisement for Grohe India. Institute for Technology & Management, Kharghar, Navi Mumbai

Although this task is not in original list, I appended it later as I start generating the feel of what generally the luxury bathroom fittings generally mean for its customer. It’s sheer pleasure, status, & lavishness attached to it.

Defining Management Problem Any research process helps decision maker to make a decision with high probability. Even degree of uncertainty decides what kind of research to be undertaken. To identify all the dimensions of a business problem is next to impossible for any researcher or objective rest alone management student. The formal quantitative research will not begin if the management problem is not apparent. So it is important to define a problem first in a comprehensive manner.But here the Iceberg principle is worth mentioning, which states that dangerous part of the business problem is neither visible to nor easy to understand by managers. The management problem can be avowed as “Since Pune is a big break for Grohe India to establish its Brand, the major apprehension of the company is ‘to understand buying behavior of consumer’ & ‘to communicate the message in most effective manner’”. For this reason it is necessary to comprehend the atypical behavior of end user. Obj.1 will assist us to figure out what today’s consumer think of when they buy bathroom equipments. This will help us to create a stimulus among them by giving them faithful cues. These cues can impel them to purchase a Grohe. In the intervening time a database will be prepared while getting in touch with and collecting data from various builders and high-flying customers. We have to design certain Hypotheses on a range of research objectives. These research objectives will put in the picture of purchasing deeds of customer in lucid way. A questionnaire need to be prepared consist of questions marking those hypothesis and objectives. Again it is important to lay bare the symptoms and identify the core problem of the business. So it is needed to gather lots of background information from primary or secondary sources. I talked with my company guide about the industry and product position in the market and search internet exhaustively to accumulate information about whereabouts of the industry. Institute for Technology & Management, Kharghar, Navi Mumbai

In Pune Jaquar & some other brands came out as clear leader for C.P. fittings. Obj.3 is to do a competitor analysis of Grohe. Studying the weakness of Jaquar and targeting them will become possible. I’ll try to find out any lacunae in their service channel or product portfolio to which Grohe can target.

Unit of Analysis For defining the management problem we will require the unit of analysis for study. Here we will see what is to be considered an individual, or organization as a whole for the purpose of collection of data. Since we are collecting data from big construction firms from Pune region as well as from individual prominent customers, it is better to deem the unit of analysis for data collected from builders as organization and for highflying consumer as individual. Determining relevant variables It is inevitable to determine the key variables, in order to define a management problem. Variables for this research mostly related to the buying behavior of the consumers. The variables affecting the customer choice for a particular product, their affinity towards a brand after long use are to be considered. The variables will help in deriving certain research questions. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Brand image Ease of use Aesthetic value Functional value Affordability Advertisements Renovation Sources of advertisements Income group Willingness to spend.

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5. Research Proposal

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T

he general purpose of this study is to determine the buying behavior of the consumer of luxury sanitary items. In defining the limit of the study, as a summer intern I have identified some study areas to be addressed as elucidated. A careful review of those question areas led to the development of the following specific research objectives. Research Objectives 1. Choice of Appliances is independent of Brand image of product. 2. Aesthetics of product is given priority over other attributes of kitchen & bathroom appliances. 3. Bathrooms are considered important portion of house by the population. 4. People are ready to pay more than 150,000/- INR for new bathroom / kitchen appliances. 5. People always consider new brands for renovation. 6. Brand image of appliance advertisements effectiveness.

is

closely

Research Design Institute for Technology & Management, Kharghar, Navi Mumbai

co-related

with

The survey research method was the basic research design. Each respondent (here as builders, architects and end consumers) were interviewed in their respective locations. The personal interviews are generally expected to last between 40-45 minutes, although the length of interviews depending on previous product related experience of research units. For example if a respondent has never been asked related question, they might not be ready to divulge their experience about bathroom appliances. Sometimes respondent looked wary of responding to certain question certain question must be skipped.

Some of the questions asked are 1. Does product brand of appliances affect your / end consumer’s choice? a. Yes b. May be c. Not at all 2. What importance does bathroom have in your/ end consumers’ home? a. Very important b. Important c. Not much importance d. No importance e. doesn’t matter 3. What are you/ end consumers willing to pay for a bathroom/ kitchen of your/ end consumers’ dream? a. 50,000 -1 lakh b. 1lakh to 1.5 lakh c. 1.50 lakh to 2.0 lakh d. 2.0 lakh to 2.50 lakh Sample Design A survey of approximately 100 unit located in around 45 locations throughout the Pune region is provided as database for this study. The sample is selected on a convenient sampling from all construction sites. Eligible respondents were holding responsible positions at various builders’, architects’ organizations. Within each household an effort will be made to interview the individual who is the most familiar with completing the survey forms. When there is more than Institute for Technology & Management, Kharghar, Navi Mumbai

one respondent a random process is used to select the respondent to be interviewed. Data Gathering The field work was done and a non random sampling survey was conducted. The survey was based on convenience. Questionnaire was utilized to collect the data on face to face, through e-mail using internet. Google documents were used to develop an online questionnaire and link was mailed to the various respondents. The survey was conducted to quantify certain factual information, certain aspects of information are also qualitative. Although I tried to conduct the survey free of any sampling error but there are certain errors which are inevitable. Response bias occurs when respondent tends to answer in a certain direction that is when they consciously or unconsciously misrepresent the truth. Auspices bias occurs when respondent bias in the responses of subjects caused by their being influenced by the organization conducting the study.

I deliberately didn’t tell the respondents that I represent any company. Sometimes it is not possible to eradicate the social desirability bias which can create a bias in the responses of subjects caused by their desire either conscious or unconscious, to gain prestige or to appear in a different social role. We tried to put brands which are virtually well known among the respondents. Data processing & Analysis Standard editing & coding procedure will be utilized. Simple tabulation & cross tabulation will be utilized to analyze the data.Various hypothesis testing tools were utilized.

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6. Observations

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Sample size For any kind of business research it is necessary to estimate the size of sample necessary to accomplish the purpose of study. In the following research conducted the sample size was calculated (see appendix A). This leads us conduct a survey and collect the sample of at least 90 samples. No of samples collected = 131 Builders/ Architects/Plumbing Contractors N1 = 96 End Consumers N2 = 35 Frame of questionnaire Questionnaire consists of only close ended questions. Size of questionnaire is kept up to 11 questions .Asking about various parameters related to their buying nature and their inclination towards one product. The Questionnaire follows tunnel technique with general questions to more specific questions in order to obtain unbiased response. It also helped in understanding and knowing about responders’ frame of reference by asking more specific questions about the respondent’s information. No filter questions and pivot questions were asked in the questionnaire (see Appendix - 1). Questions were set on various scales namely nominal, rational and ordinal. We tried to keep the questionnaire as succinct and resourceful as possible .Nominal scale is used to know the average thinking of the consumers and decision makers .Every variable was tried to include in the questionnaire. Institute for Technology & Management, Kharghar, Navi Mumbai

Brand awareness was an important purpose that I tried to solve through this survey. Grohe might be a big brand in European co. and people who have made any foreign trips are able to recall brand Grohe. Any Brand identify the source or maker of a product and allow consumer to assign responsibility for its performance to a particular manufacturer or distributor. So I asked End consumer’s only that can they give a brand recall and asked to identify as many brands as possible from a range of 13 brands.

Graph -1 Long bars shows high brand awareness, and it is clear Jaquar is leading and it has even left behind Industry leaders Parryware, Hindware. Grohe has low brand awareness with only 4% of respondents are nodding to know about brand Grohe. Management must give a deep thought to make themselves a known brand in the country. We also tested total Brand awareness of the end consumers by looking at no. of reactions given by each respondents to us . Looking at this we can say that how conscious todays’ consumer is, about their sanitary brands. We have plotted the no. of respondents against the no. of brand recalls. The Graph on the next page evidently depicts the awareness of the respondents. Around 50 % of the respondents were able to identify between 6 t0 8 brands name. More than 59% of people were known to 6 or more brands shows the end consumers’ apprehension for the brands for their bathroom fittings

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Graph Knowing their Brand awareness we come to know how a branded product is the requisite in today’s consumers’ bathroom. We were skeptic about brand awareness results so now when it is clear that Consumers are well aware of the various companies existing in the market, we asked them directly from where they heard about these companies and offerings, we wanted to know the source of information.

Graph -

After filling general information in the questionnaire, we asked them about appliance respondents prefer to fit in consumers’ bathroom. I got following response Graph 1 graph shows Does product brand of appliances affect This your / end consumer’s choice? clearly that Jaqaur is in leading position with Graph 2 Cera-parryware coming at second place. Interesting to know that local guerillas Now putting above data in cross tabulation every combine different brand Brandi.e.isfor clearly considered eating about one- fourth what people think about brand image we will get following table when choosing a bathroom or of the market. kitchen appliance. Around 77 % 0f respondents somehow consciously or unconsciously Table: take brand image of an 1 appliance under cons Parrywa Brands ideration Effect

Yes Maybe Not at all Total

Jaguar 32 8 6 46

re 8 4 4 16

Kohler 3 2 1 6

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Other 11 6 11 28

Total 54 20 22 96

Majority of respondents who consider brand image has an effect on their choice. The following graph shows how the preference for branded product changes among the user of various brands. The respondents who are using or prefer to use category “Other” product are undecided about their choice of appliance is based on brand.

Graph 3 The above Graph 3 clearly represents that Consumers using Jaquar are more brand conscious than any other brand. These people are companies target market.We tried to find out does Indian consumer give importance to their bathroom and are they willing to spend a large sum of money to get a bathroom of their dream. Initially bathrooms were considered an adjunct to home.

So is there anychange in the belief of Indian consumer. Because initially we have presumed that there is a change in Indian consumer thinking and our whole study is based on this assumption. So we asked them what importance does the bathroom has in their home and we find out. Graph 4 More than 79% of respondents told that bathroom is important portion of their home. To my expectance not a single respondent has said bathroom is having no importance in their home. This supports our initial assumption that bathroom is having certainly importance. Looking at another question in which we asked how much a consumer is keen to spend and tried to gauge their willingness to get a dream bathroom.This clearly indicates that the consumers will be getting more & more interested in their bathrooms which was once thought to be a detached part of the home Visiting at about 130 construction sites with varying price range I found that there are some things common in all of them. The size of bathrooms is between 4” X 7” to 6” X 8”. There are other appliances commonly put Institute for Technology & Management, Kharghar, Navi Mumbai

into a bathroom and one more thing, They are placing floor cisterns in the toilet, a wash basin, a geyser , faucet with mixer systems. Every house has at least one master bathroom. This master bathroom is bigger one and special worry of builders and architect. These master bathroom can be a special target area for Grohe. They can give customize solution to these bathrooms

Graph – 5 This Graph clearly shows people who are willing to pay more than 150,000 are less than 20% of all the respondents. This clears the picture of the population with more people willing to pay less than 100,000. Next we want to know the best possible way to reach the target audience, i.e. the best medium to advertise the Grohe Product. We asked them to rate following sources of advertising and the result shows how the end Consumer & Builders and other stake holders prefer different medium.

Graph- 5

It can be concluded from the above graph that Builders have given higher ratings to Print media and Billboards, but amazingly lower ratings for the radio/ fm advertisements. Now this is interesting because it is generally thought that TV advertisements are bigger persuaders than any other source. It can be clearly observed from above Graph- 5 that print media (News, Magazines etc.) is having major chunk in 4 as well as 5 ratingbars. It clearly shows Builders are more influenced by Print media similarly with billboards. Mall media and Radio advertisements are neglected as shown by decreasing weightage in bars. Graph – 7

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This graph shows how end consumer has rated for different sources of advertisements and it is quite evident that TV advertisements came out as winner then come print media. Interestingly both Builders data and End consumer data show apathy towards radio ads. Mall media being a new advertisement media is also left and not persuaded by both End consumer as well as Builders. Graph- 7 clearly shows 52 % of respondents have given rating 5 to TV advertisements.This finding can be an important info in advertising budget planning.

Hypothesis testing Another major portion of the Data analysis is the testing of various hypotheses we set at the beginning of the whole study. We tried to prove the above 5 hypothesis and found only acceptable. Hypothesis : 1 Choice of Appliances is independent of brands available in the market

different

Hypothesize: Since it is well acknowledged that brand name plays important criteria to select any home appliance we tried to prove the same in the sanitary ware industry also. So null & alternate hypotheses are H0 : Choice of Bathroom appliance is dependent on the brand image H1 : Choice of Bathroom appliance is independent of the brand image Test: Since we are testing the behavior of consumer on two variable i.e. the brands they use & effect of brand name on their selection for a particular type of appliance, it is quite evident we will require a chi-square bi-variate test. Χ2 = Σ(o –e)2/ e α: type 1 error rate α is taken as 0.10. Since the test is two tailed and α = 0.10, there is α/2 = 0.05 area in each of tail of distribution. Thus rejection Institute for Technology & Management, Kharghar, Navi Mumbai

region lies at two ends of distribution curve and acceptable region is 90% of total area which is lying symmetrically on both sides of the mean mean value. The degree of freedom for the hypothesis testing is 11. χ2α/2 = 9.8376

df = 11

Gathering data and keeping in cross tabulation format we can calculate the expected values. Calculating the value for the χ2 we found out it comes under the acceptance region defined.

χ2 calculated = 4.07018 *

for calculation see appendix

Action: Because this test static, we found that calculated value is coming very much inside the limits of acceptance region so null hypothesis is not rejected. That is the brand image is affecting a consumer’s choice and an important step in product selection.

Hypothesis2. Aesthetics of product is given priority over other attributes of kitchen & Bathroom appliances. Hypothesize: Any products have some aesthetic attributes which act as cue for consumer to buy the product. Generally aesthetics or in better terms looks plays an significant job to select a particular appliance. In case of bathroom appliance we are considering four major attributes like Aesthetics, affordability, functions, & ease of use. We will be trying to prove that Aesthetics are given priority over other feature H0: Aesthetic is given preference over other features H1: Aesthetic is not given preference over other features Alternatively can be stated as H0: µa > µe , µa > µf , µa > µd H1 : µa ≤ µ e , µa ≤ µf , µa ≤ µd Institute for Technology & Management, Kharghar, Navi Mumbai

Where µa = Population mean for aesthetic µe = Population mean for ease of use µf =Population mean for functionality µd = Population mean for affordability Test: This is a simple hypothesis test with two variables taking at a time. We will apply Z-test for the difference between two populations. This is a two tail test for testing variations about a central value i.e.

Z = ( x - µ )/(σ/√n) Level of significance α is 0.1. Since it is two tailed test i.e. α/2 =0.05 and being normal distribution the rejection region is 0.05 on each sides of acceptance region

From standard Z tabulated values for α/2 = .05 we get Ztab = 1.645

Z

α/2

= 0.823

Calculating Sample means and Population means we will obtain following values, Table: Sample Attributes Ease of Use Aesthetic Functions Affordabilit y Attributes Ease of Use Aesthetic Functions Affordability

means X

Table: Population means

4.13 4.08 4.14 4.17 µ 4.04 4.24 4.16 4.32

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Table: Standard deviation ‘σ’ Ease of use

Aesthetic

Functions

Affordabil ity

0.8614 55

0.763188 142

0.815892 04

0.816496 58

S. No.

*

Relation testing µa > µe

ZCal

Ztab

-1.798

-0.823

µa > µf

-0.745

-0.823

µa > µd

0.618

0.823

Hypothe sis Rejecte d Accepte d Accepte d

For calculation see Appendix

Action : We can conclude that since Zcal value for Ease of use & Aesthetic taking as two variables is deep into rejection region, we have enough evidence to reject the null hypothesis that aesthetic is always given priority over other features of the bathroom appliances. We can also conclude that we have not adequate data to give exact priority of attributes.

Hypothesis 3: Bathrooms are considered important portion of house by the population. Hypothesize: Bathrooms initially are considered just as a portion of home but now they are deemed as very important section of house. We are hypothesizing on this change in attitude of the Indian consumer H0 : Bathrooms are just a portion of house H1 : Bathrooms are important part of house Test: We are applying Z test for testing population mean. Calculating population mean and estimating its validity. This is a single tale test. Z = ( x - µ )/(σ/√n) Institute for Technology & Management, Kharghar, Navi Mumbai

α is set at 0.1, which means the level of significance for the hypothesis is 90%.Calculating value for Z form the table we will get Ztab = 1.645 Calculating Sample mean x = 4.146 Sample standard Deviations σ = 0.889 Taking random samples for calculating population mean No. of samples taken = 25 Population mean µ = 3.80 Zcal = 0.078 Action: Since the Ztab< Zca, We can clearly predict that null hypothesis is rejected that bathrooms are just a portion of a house.

Hypothesis 4: People are ready to pay more than 150,000/- INR for new bathroom / kitchen appliances. Hypothesize: We are trying to estimate whether the consumers are ready to pay a large sum in order to get a bathroom of their dream and ready to embellish the clandestine part of their house. H 0 : Consumers are not willing to pay a large sum for bathrooms

H1: Consumers are willing to pay a large sum for

bathrooms

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Test: Applying Z test for testing population mean checking its validity. It is one tail test. Z = ( x - µ )/(σ/√n) taking α = 0.05 We have tabulated value of Z Ztab = 1.96 Calculating Sample mean x = 109375 Sample standard Deviations σ = 43448.56 Taking random samples for calculating population mean No. of samples taken = 25 Population mean µ = 107000 Zcal = 0.535 Hypothesis 5: Brand image of appliance is closely co-related with advertisements effectiveness

Hypothesize:

Generally it is believed that Brand image is related with effectiveness of advertisements, here also we are assuming the same and try to predict the population’s attitude towards advertisements and brand image. correlation

H0 : Brand image and Advertisements are having high H1: Brand image & advertisements are not co-related

We find out that Brand perception is highly co-related to the cosumers’ interaction with different media of advertising Institute for Technology & Management, Kharghar, Navi Mumbai

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7. Analysis of Indian Sanitaryware industry

I

n the next decade, India is expected to be one of the world's fastest growing countries for sanitaryware consumption. The sanitation penetration has more than trebled from 8% in 1982 to 18% in 1994 and to 29% in 1999. The comparative penetration levels in neighboring countries are as follows: Pakistan: 50%, Sri Lanka: 65%, Malaysia: 94% and Thailand: 96%. The government impetus to improve hygiene and sanitation is likely to increase the demand for sanitaryware in India. Moreover the increasing urbanization of India and the consequent requirement for residential and commercial buildings will be a major driver for growth of sanitaryware. Along with this the focus of the central and state governments to provide housing facilities to the poor, is also expected to generate demand. Institute for Technology & Management, Kharghar, Navi Mumbai

The National Housing Policy formulation that envisages "Housing for all" by the end of Ninth Plan period is a big step towards this. Indira Awaas Yojana, Samgra Awaas Yojana are programs for providing housing to the rural poor is a key step taken by the government in this area. The housing development organizations like HUDCO, State Housing Development Boards and Rajiv Gandhi Rural Housing Corporation Ltd. are also playing a large role in this initiative. It is estimated that there is currently a demand for 20 million housing units in India. Further, a significant number of the 115 million housing units across the country will need reconstruction for improvement. Therefore a replacement market will emerge, though currently original equipment sanitaryware market accounts for nearly 90% of the market. Sanitaryware demand Sanitaryware Industries in India for the last 6-7 years have shown very dramatic growth with major players doubling their production capacity. The Companies have also upgraded their manufacturing system by introducing Battery Casting, Beam Casting and have gone in for latest imported Fast Firing Cycle Kiln Technology. These Companies have also upgraded their quality and have introduced high value range in the market, which has been accepted and appreciated. The demand for high value Sanitaryware in India is growing very fast. The Companies are trying to meet the demand as the realization per Metric Ton for high value product is very good which ultimately results in good profitability. In order to educate the customers in India to go for quality products and also for higher value sanitarywares, companies have adopted a very aggressive advertisement campaign. Companies have also strengthened their dealer network by offering showroom incentives and some of the companies have also gone for their own retail outlets in major towns. The demand for Sanitarywares in India is growing @ 15% -17% every year.

The sanitaryware industry in India is divided in two sectors. The organized sector consisting of 5 companies (M/s. Hindustan Sanitary Industries Limited, M/s. E.I.D. Parry, M/s. Swastik Sanitarywares Limited, M/s. Madhusudan Ceramics, M/s. Neycer India Limited), manufacturing sanitaryware for the last 15-20 years and have established their Brand image. The organized sectors produce fully vitrified sanitarywares, using latest technology and best of Ceramic Raw Materials available in India. The unorganized sectors have adopted local Indian technology to manufacture the basic sanitaryware products. Since the availability of raw material is in abundance and also very cheap in the state of Gujarat & Rajasthan, various companies have established their factory in these areas. They are producing the basic sanitaryware in various brands. Unorganized sector's percentage of production capacity and also their Institute for Technology & Management, Kharghar, Navi Mumbai

sales in the local domestic market are higher than that of the organized sectors' sales. Unorganized sanitaryware manufacturer comes under small sectors and hence enjoy the benefit of Nil Excise Duty and Sales Tax and hence they sell their products in the domestic market approximately 70% cheaper than the organized sector products. Government of India Policy on Housing Sector is very encouraging. The Government has announced Income Tax rebate on housing loan to boost the housing sector. All financial institutions are lending money for construction of house at a very low rate of interest. Government figure shows that Housing Sector is growing by approximately 25% every year. The need of Housing in India with 100 crores population looks to be very potential. As per DGTD Survey Report there is a shortage of about 20 million houses in the country by the end of 8th Five Year Plan. The housing has become a basic necessity, as people in India are looking forward for improved sanitary condition. The concept of making toilet is fast growing even in village areas, where toilet till last two years did not exist. The cost of producing sanitaryware in India is substantially low as compared to the advance countries, because the labour cost and the basic raw materials for manufacturing quality sanitarywares is available at very cheap rate and in abundance. Because of our low cost of production, Indian sanitarywares are very competitive in the neighboring countries and hence export from India is also growing every day.

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Fig.: Showing the presence of various sanitaryware industry in India

Source: Indian

Council for ceramic tiles & sanitaruware

Table below shows the statistics data related to the sanitaryware industry. It can be noted that not a single company is ranked in top 10 in terms of productions while market is growing consistently at the rate of SANIT ARYW ARE INDUSTRY

ST ATISTI CS :

World production:

187 Million pieces

India's Share:

6.7 Million pieces. not in the Top 10 (India A/c for 3.30%)

World ranking (in production): Global Industry Growth Rate:

5-7%

Growth Rate (India Domestic Market):

10%

Organized sector: % Share of Production: No. of units: Production Capacity: Actual Production:

43% 6 103300 M.T. per annum 95000 M.T. per annum

% Share of Production: Production Capacity: Actual Production:

57% 136700 M.T. per annum 120000 M.T. per annum

Unorganized sector:

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8. Suggestions & Limitations

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Suggestions Ggohe is a global leader with a turnover of over € 1 billion and holding it’s core competency of delivering value products to its customer from the very beginning of this century. But Indian market which is growing at rate of more than 9% annually is still hard nut to crack for it. Grohe has entered India way back 2 years but still only 4% of the surveyed consumer knows about it. Indian consumers are always a hard fish to catch for any local or global company. While Grohe has an exemplary supply chain management in German and European countries, it is still to be implemented in India. These SCM are maintained by IBM there. With more than 80 distributers in 7 cities in India and raised to 100 by this year end a diligent logistics software is the need of hours. Company is the winner of for three consecutive years for the better quality and competitive products offered to the consumers. Although Grohe is targeting high end consumers in the country but a brand become big once people begin cherishing it. Grohe has even loosen up its Brand value, because of low awareness of the brand among the population. We have come up with certain suggestions looking at the study results that are generated through the analysis of data

1. Brand Awareness is desired to be improved among the consumers “Seeing is believing” is what they say when it comes to recognition of Brand in this industry. Today consumer is brand conscious, we are amazed to know that many of the respondents are aware of more than 8 brand names when asked to respond. Today with the advent of internet and gradually escalating flow of excessive information end consumers are giving more emphasis on known names of brands. Indian consumers have a typical tendency to get a word of mouth publicity of any product. The viral marketing and intensive advertising plan is required for the development of market share. In order to plan the advertising campaign this study can be immense help, because it states how to reach target customers. TV advertisements are the best medium to get in touch and communicate to the end consumers while news paper, magazines are better sources to be in touch Institute for Technology & Management, Kharghar, Navi Mumbai

with the other major stake holders of industry like builders, architects, etc.

2. A installment scheme for the Grohe customers is to be introduced We can evidently say through this study that large base consumer of the country is not ready to invest more than 100,000 in the bathroom appliance. This is the total money which they can invest over a single bathroom which include tiles for walls and floor, fresher fans, and other garnishes with faucets and sanitary fittings. So it’s better to give options of more than one installments payments to the consumers 3. The delivery of high technology quality product with lesser glitches is to be assured. Grohe’s biggest competitors in Indian faucet market is Jaquar and the reason that I come to know about, why the builders, plumbing contractors and individual household like to trust Jaquar is it’s after sales service. I am being told that if there is any technical glitch in the product then Jaquar engineers personally come to attend it , and replaces the faulty piece without any trouble. This after sales service is a competitive advantage of Jaquar over its competitors. Grohe, a German company should place itself as company with high technology products into the minds of the consumers with greater emphasis on high quality product delivery. 4. An after sales service force is considered necessary to be developed. Amid they can also start training Plumbing contractors and give them authorized service dealership for specific Grohe products. Since Grohe involve German technology in their products which is reliable as well as complex to understand, a continuous training program for these dealers is to be made. An all India toll free service no. is to be provided to the consumers for service or maintenance of any Grohe Product. This force need to be as competent as to be fore front of the service. 5. Search engine marketing of Grohe website is rudimentary.

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Internet today is a strong and cost effective medium to reach a concentrated audience. When asked about whether the responders’ have mail id and uses internet about 87% of the respondents speak affirmative and more than 70% of them uses internet twice a week. We are assuming that any average web surfer use search engines 12 times a week one or other search engines. According to An interesting statistics which came out soon after the release of ET report which stated that there are 81 million Internet users in India.

Infact, India has been ranked fourth among the top ten nations in the world with 81 million internet users even as the world aggregate touched 1.35 billion by the end of 2007, according to figures released by Internet Governance Forum. This time LiveMint along with Mumbai based digital advertising & technology company Komli Pvt. Ltd. did some qualitative and quantitative research on online consumer trends in 2008. Now when we search for key words like Luxury bathroom products or bathroom fittings, it is hard to say that Grohe does not feature even on the third page of organic search. This shows poor rate of hits on website. Even by generating tag clouds wefound out that people are not looking for what Grohe.co.in has to offer. ‘Grohe cube’ is not even featured.

Source: www.tagcrowd.com

Fig. – Tag cloud developed for www.grohe.co.in Google adwords, adsenses and other search optimization tools are available to the marketers to optimize the search of web users and increase website traffic.Grohe website is the best when compared to its competitors but not utilized to its best of potential.

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7. Grohe cube virtual bathroom web tool need to be improvised. Today when it comes to buy a new appliance, buyer is so educated that he browses internet & tries to compare all the products. Various portals even help them to buy one. Grohe –cube is tool where you can design your own bathroom and can visualize how will a certain product look in his bathroom. In the process we are generating interest after getting attention of the consumers.

We are now considering those consumer who are really interested to buy a grohe product. But to bring them to this level we have to generate their attention acc. to AIDA model. So to seek attention I have designed an adword using Google adwords. These adwords will appear in sponsored links on Google search engine as well as google search network. I tried to make a google sponsored link and get success to some extent Google rated me 7/10 in keyword relevance. Figure below shows the snapshot of Google adwords account.

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Sou rce : www.adwords.google.com

Fig. showing the snapshot of google adwords account

The encircled sectionis the sponsored link I created although it does not feature on the Google network. This link can help in creating a stimulus and attention of the web users Grohe cube is a unique feature in Grohe portal and must be used as competitive advantage

8. Implementation of major SCM software. Already implemented across many countries in Europe, Supply chain management is prerequisite for a company to flourish. Distributors need to be informed about the consumer demands & accordingly replenished. Today no distributor want a product with low mobility, So keep low volume with them and rest to be stored at Central state distribution system. But it’ll be beneficial to store material near to places where demand is high i.e. near to the customer. Institute for Technology & Management, Kharghar, Navi Mumbai

Limitations 1.The analysis of potential products is limited to 6 digit H.S. code level, due to the unavailability of getting details of products imports to Australia in 8 digit H.S. code level. 2.During my study, I have identified that there are considerable differences and inherited feature in consumer tastes, fashions and preferences of separate states within Australia. Therefore it is very hard to identify common features of customers when analyzing products. Also it is very important to study deeply about different states separately. 3.One of the main barrier was communication, it was very difficult to contact builder representatives as they sometimes denied to provide with information. 4. Many times their views seemed biased and it was hard to desolate these views. So it might affect our results 5.Pune was a new city for the surveyor so lot of precious time was wasted in wandering from one site to other. 6.Study contains views of a small section of Pune, which might not be a true representation of the whole sanitary industry of the country. This study is strictly conducted in Pune municipal corporation region –Pune.

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9. Appendices

Appendix – 10.1 Questionnaire ITM Business School Plot #25/26, Sector 4, Kharghar, Navi Mumbai - 410210 Phone No +91 22 5616 5001 / 32985592, Fax No +91 22 27580950, Website: www.itm.edu Institute for Technology & Management, Kharghar, Navi Mumbai

Name: …………………………………………….. Mail id: ……………………………… …. Classification: ……… (A for Architect/ designer, B for builder/ contractor, E for End Consumer, P for Plumbing Contractor ) 1.Your income group (per annum) for end consumers’ only. a. 5-10Lakh b. 10-15 lakh c. 15-20 lakh d. above 20 lakh 2.What Appliances do you use/ prefer to fit in your/ consumers’ bathroom /kitchen? a.Jaguar b. Parryware c. Kohler d. Others. 3. How do you rate following for the appliances? (1 for low 5 for high) S. No. Attributes Ease of use Aesthetic Functions Affordability

4. Does product brand of appliances affect your / end consumer’s choice? a. Yes b. May be c. Not at all 5. What importance does bathroom have in your/ end consumers’ home? a. Very important b. Important c. Not much importance d. No importance e. Doesn’t matter 6. What are you/ end consumers willing to pay for a bathroom/ kitchen of your/ end consumers’ dream? a. 50,000 -1 lakh b. 1lakh to 1.5 lakh c. 1.50 lakh to 2.0 lakh d. 2.0 lakh to 2.50 lakh

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7. Are you/ end consumers satisfied with your/ their bathroom/ kitchen appliances? a. Yes b. May be c. Not at all 8. Do you/ does end consumer think about changing your/ their appliances on renovation? a. Yes b. May be c. Not at all 9. How do you rate advertisements from following sources? (1 for low 5 for high) S. No. Sources 1. Print Media (News Papers, Magazines etc.) 2. TV Advertisements 3. Mall media 4. FM/ Radio Advertisements 5. Billboards

10. How much are you affected by the advertisements for your choice? a. Very much b. Often c. Sometimes d. Not much Not at all 11. How often do you use internet? a. Daily b. Twice a week c. Weekly

d. Fortnightly.

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e.

Appendix- 10.2. Research Calculations Hypotheses Calculations Hypothesis-1 Responses to appliances builders prefer to fit in bathrooms Table:1 Jaguar Parryware Kohler Other

46 16 6 28

Total

96

Responses to effectiveness of Product brand of appliances over builders’ choice Table:2 Yes 54 May be 20 No Total

22 96

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Calculating expected value

Calculation of χ2

Applying Chi square goodness of fit test Let α = 0.10 or α/2 = 0.05 Degree of freedom = 11 Ef fe ct

Bran ds

Yes Maybe Not at all

Jagu ar 25.8 8

Parryw are 9.00

3.38

Othe r 15.7 5

9.58 10.5 4 46.0 0

3.33

1.25

5.83

3.67

1.38

6.42

Kohler

16.00

5 4 2 0 2 2

6.0 28

Hypothesis- 2

Lebel Very important Important Somewhat important Less Importance No importance

weig ht 5 4

Actual weight

40 36

200 144

14

42

6

12

0 96

0 398 4.1458333 33

3

2 1 Total

Hypothesis 3:

frequen cy

Avg. =

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(0 (0 - e)2 e)2 / e 37.52 1.45 2.51 0.26 20.63 1.96 1.00 0.11 0.44 0.13 0.11 0.03 0.14 0.01 0.56 0.10 0.14 0.02 Σ (0 - e)2 / 4.070 e 18

Calculation of Sample mean Frequency table of samples collected Actual weight

We are taking 25 randomly selected samples to calculate population mean.

Lebel Very important Important Somewhat important Less Importance No importance

weight 5 4

frequen cy 40 36

3

14 6 0 96

2 1 Total

Avg. =

200 144 42 12 0 398 4.14583333 3

Calculation of Population mean Very important Important Somewhat Important Less Importance Doesn't metter

5 4 3 2 1 Total

8 8

40 32

5 4 0 25

15 8 0 3.8

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Hypothesis 4: Calculation of sample mean i.e. average value a group of people can spend to have a bathroom of their dream.

Table:1 Range 50,0001,00,000 1,00,0001,50,000 1,50,0002,00,000 2,00,0002,50,000

Frequen cy 52 26 14 4 96

f*r 390000 0 325000 0 245000 0

No of Observations :

Note: r = mean of Class range f = sample frequency

900000 105000 00

sample average =

96

109375

Calculation of Population mean

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Table:2 Range 50,0001,00,000 1,00,0001,50,000 1,50,0002,00,000 2,00,0002,50,000

Population Avg. =

Frequen cy

f*r 97500 13 0 11250 9 00 35000 2 0 22500 1 0 26750 25 00

We are selecting randomly 25 samples out of total population of samples in order to calculate population mean Standard deviation σ = 43,488.80 . α = 0.05

107000

Hypothesis:5 Responses to the folowing questions are tabulated Does product brand image is affecting your choice? Table:1 Yes 54 May be 20 Not at all 22 Total 96 Institute for Technology & Management, Kharghar, Navi Mumbai

How much are you affected by the advertisements for you choice Table:2 Very much 34 Often 27 Sometimes 15 Not much 12 Not at all 8 Total 96

Cross Tabulation: Table: 3

Yes May be Not at all

Very much 22

Often 12

Someti mes 4

Not much 9

Not at all 7

54

6

9

5

0

0

20

6

6

6

3

1

22 96

34

27

15

12

8

Calculating expected value for the above observations

Table: 4

Very much Yes May be Not at all

19.125 7.0833 333 7.7916 667 34

Expected values Someti Often mes 15.18 75 8.4375 5.625 6.187 5 27

Not much

Not at all

6.75

4.5 1.6666 67 1.8333 33 8

3.125

2.5

3.4375 15

2.75 12

Glossary Institute for Technology & Management, Kharghar, Navi Mumbai

54 20 22 96

Advertising Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsir Brand A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or servicesof one seller or group of sellers and to differntiate them from those of competitors, Brand awareness all the thoughts, feelings, images, experience, beliefs, and so on that become associated with the brand. Brand image The perceptions and belief held by consemers, as reflected in the association held in consumer memory. Branding Endowing the products and services with the power of brand. Competitive adventage A company’s ability to perform in one or more ways that competitors can not match. Core Values the belief systems that underlie consumer attitudes and behavior, and that determine peoples’ choice and desire over a long term. Core competency attribute that is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits, has applications in a wide variety of markets, is difficult for competitors to imitate. Cues stimuli that determine when, where, and how a person responds. Customer perceived value The difference between the prospective customers’ evaluation of all benefits and all the cost of an offering and perceived alternatives.

Delivery how well the products or services are deliverd to customer Institute for Technology & Management, Kharghar, Navi Mumbai

Drive a strong internal stimulus e-marketing company efforts to inform buyers, communicate, promote, and sell its products and services over the internet Image the set of beliefs, ideas, and impressions a person holds regarding an object. Loyalty a commitment to rebuy or re-patronise a preferred product or service. Marketing communication mix advertising, sales promotion, events & experience, public relation & publicity, direct marketing, and personal selling Marketing research the systematic design, collection, analysis, reporting of data & findings relevant to a specific markeitng situation facing to the company. Media Selection finding the most collective media to deliver the desired no. and type of exposure to the target audience. Perceived value the value promisecby the company’s value proposition and perceived by customer Perception the process by which an individual selects, organizes, and intercepts information inputs to create a meaningful picture of the world Performance quality the level at which products’ primary characterstics operate Product assortment the set of all products and items, a seller offers for sell. Product mix same as product assortment

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Satisfaction a persons’ feeling of pleasure or disappointment resulting from comparing a products’ percieved performance or outcome in relation to his or her expectations. SCM procuring the right inputs and converting them into finished products; and despatching them to the final destinations. Target market the part of qualified available market the company decides to pursue. Value delivery network a company’s supply chain and how it partners with specific suppliers and distributors to make products and bring them to market. Value pricing winnig loyal customer by charging an offordable price for a high quality product. Viral marketing using the internet to create word of mouth effects to support marketing efforts and goal.

Institute for Technology & Management, Kharghar, Navi Mumbai

Institute for Technology & Management, Kharghar, Navi Mumbai