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Marketing management

Pricing Strategy
Of
Onida washing machines

Submitted to Miss. Gurdeep Kaur.


Submitted by Avtar Singh.
Section

318

Roll no.

R318B59

Introduction
History
Onida was started by G.L.Mirchandani and Vijay Mansukhani in 1981 in
Mumbai. In 1982, Onida started assembling television sets at their factory in
Andheri, Mumbai. Since then, Onida has evolved into a multi-product
company in the consumer durables and appliances sector. Onida achieved a
100% growth in ACs and microwave ovens and a 40% growth in washing
machines last year.
Onida Today
Today Onida is one of the popular electronics brands in India. Onida has a
network of 33 branch offices, 208 Customer Relation Centers and 41 depots
spread across India. As on 31st March 2005, Onida enjoyed a market
capitalization of Rs.301.46 crore. As the Chairman and Managing Director of
Mirc Electronics, Mr Gulu Mirchandani is responsible for formulating,
incubating and delivering emerging technologies and services in the area of
consumer electronics. Under his leadership and guidance, Mirc Electronics
won an Award for Excellence in Electronics in 1999, from the Ministry of
Information Technology, Government of India. Mr Gulu takes personal
interest in conceptualizing and delivering various designs which appeal to
Indian consumers. He also takes great pride in people management practices
at Mirc Electronics and personally interacts with personnel at all levels,

regularly guiding and motivating them to achieve greater goals. He is


alumnus of BITS, Pilani, and holds a degree in B.E. (Mechanical)

Vision and Mission


Onidas Vision
To build a brand around substance. To communicate simple truths that
customers understand. To become a leader in our chosen field and become a
globally recognized, prestigious company through synergistic business
investment, differentiation through innovation, passion through
empowerment, cost through economies of scale and world class systems and
procedures that bring in delight of stakeholders.
Onidas Mission
To benefit society at large through Innovation, Quality, Productivity, Human
Development and Growth, and to generate sustained surpluses, always
striving for excellence, within the framework of law, and in nothing but the
truth in which we base every action.
Washing Machines
Prior to the advent of washing machines and high-tech detergents, which
promised to rid clothes of every imaginable stain, there was water. It was the
only resource available and it did a great job with dirty laundry. It loosened
dirt with its inherent liquid form. The sheer force of water would scare away
even the toughest of stains. Water was the scrubbing, washing and rinsing
agent. all rolled into one.
It is this enormous power and potential of water that Onida exploits with its
washing machines. All seven of its ultra models harness the power of water
to give you the perfect wash. These machines have extremely powerful
motors that increase water turbulance. This forces out all the dirt while
washing and all the soap while rinsing. In fact, the turbulence makes for a
very thorough wash and reduces the amount of harmful detergents that have

to be used normally. So what you`re left with are impeccably clean clothes
and the secrets of how to keep them that way.

Question: 1
For the assigned product and brand, delineate the pricing strategies adopted
by the company. Also highlight the impressions as viewed by the competitors
and customers, according to you?
Answer:
Price is the only element in the marketing mix of a firm that generates
revenue. It is the only P out of 4 Ps which generates revenue. Price is cost at
which company sell their products. Price is all around us. Price includes
rents, fees, rates, wages, salaries, commission etc.
In the given case study my product is washing machine and brand is Onida.
Now I will explain the price strategies adopted by Onida for washing
machines as below. But before answering the question there are few things to
get familiar with like:
Objective of Onida washing machine
Because of the recession going on the main objective of Onida washing
machine is survival like any other company. But this survival is their short
term objective. But their main objective is to maximize their market share.
They are doing this because due to increase in sales their overall cost of
production will decrease. This leads to proper utilization of resources.
Demand for Onida washing machine:
The demands for washing machines are more elastic. (Elastic means
percentage change in price is less as compare to percentage change in
demand.) Because if there is less change in price the demand for washing
machines is largely affected. For example the prices of washing machines are
less in festival session then there will be more demand for these products

Price elasticity of demand:


Price elasticity of washing machines is more elastic because consumers are
not purchasing it for short period usage these are kind of our fixed assets.
While purchasing it consumer will check the prices of different brands of
same quality then consumer will purchase only that product which is of least
price.
Cost:
Cost which was incurred in production of washing machines also plays
important role in setting the prices of washing machines. Cost includes cost
of production and selling and distribution expense etc. Every firm wants to
decrease their overall cost so that they increase their profit. They are doing
this by demanding high price than the cost of their product
PRICING STRATEGIES OF ONIDA WASHING MACHINES:
Target Pricing Strategy:
It means targeting a particular segment.Under this strategy Onida introduced
Washing machines with prices costing from 3,490 rupees for people
with low income,
For middle class people with washing machines costing price of 6000
rupees and
Washing machines with costing price of 18500 rupees for people of
higher segments which are having good incomes.
Discount Pricing Strategy:
Trade discount:
Onida provides trade discount to those customers if they do purchasing
on cash basis.
Festival discount:
Onida like other companies also provide festival discount to their
customer which increases their sale.
Promotion Pricing Strategy:
Onida promote their sales by adding a free or low cost warranty or

service contract. Onida provide warranty card along with their washing
machines and also provide after sales services for a stipulated time
period for free.

IMPRESSION OF ONIDA PRICING STRATEGIES ON THEIR


COMPETITORS AND CUSTOMERS:
From Competitors point of view:
For Onida Samsung, LG, Whirlpool, Videocon etc are their
competitors. According to me in todays business world every
organization is aware of their competitors strategies if they are not
than they should in order to compete with them and survive in the
market. Than naturally Samsung, LG and other competitors also plan
for some attracting price strategies which attract customers towards
them like promoting their products through intense promotions, by
reducing cost, by giving some attracting gifts with the sale of every
washing machines like give them some coupons or scratch cards etc.
From customers point of view:
Consumers often question the motivation behind price changes. Due to
the strategies like target pricing strategy Onida people are covering
almost all people who can afford washing machine right from people
of lower class with low income to higher class with high income.
Onida also provide festival discount to their customers because
generally consumer buy those product which they can get at low price
with high quality or with which they get something extra or more at
same price.
Question:2
For the assigned product and brand , identify and choose two
Product or brand, one which is above in price and the second which is below
in price w.r.t assigned product and brand. Explain why there are different
prices (pricing strategies) adopted by the company/ companies? Substantiate
it w.r.t 3Cs (Customer, Cost & Competitor).

Answer:
In this I am comparing Onida washing machine with washing machines of
Samsung whose price is more than Onida and LG washing machine whose
price is less than that of Onida. The prices and features of these companys
washing machines are given in the table given below. These washing
machines are of same capacity and almost have same features.

Price (Rs)*
Main Features
Type
Loading Type
Loading Capacity
Program Options
Auto Restart
Automatic Drainage
Child Lock
Prewash Soak
Heavy Wash
Normal Wash
Light Wash
Number of wash baskets
Other Features
Spin Shower Facility
Detergent Dispenser
Auto Power Off
End-of-Cycle Buzzer

Onida 6.0 Hydrosoak

LG WP-9031

Samsung WT 7600

8,690

7,690

8,490

Semi Automatic
Top
6 kg

Semi Automatic
Top
6 kg

Semi Automatic
Top
6 kg

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From the above table we see that Samsung provide high price washing
machine than Onida and LG where as LG provide less price or below price
washing machine than Onida and Samsung. The main reason for price
differentiation is as below:
From customer point of view:
SAMSUNG:
The reason for the high prices of Samsung washing machines is
that they have high brand image in the market and they are cashing their
customers loyalty.
Their customers are because the washing machines of Samsung are of higher
quality that is why they are charging higher prices and offers product of
premium value.
Their product fall in high price quality. So people are willing to pay higher
price.
ONIDA:
Onida provide their product at medium price, although there washing

machines are of medium qualities in comparison to Samsung but still people


prefer to buy these machine because of the additional features and offerings
provided by Onida people like warranty for more period of time in
comparison to other companies.
Free service for longer period of time.
Onida provide discount and after sale services for longer duration.
So customers prefer to purchase this product.
LG:
They provide low price product because they face tough competition from
Samsung and Onida etc. So LG reduces their prices because they want to
increase the demand of their product and maximize their sales. And people
who cant afford Samsung and Onida because of their prices are going for
washing machines from the companies like LG.
From cost point of view:
SAMSUNG:
Out of these three companies Samsung charging high price because of their
brand name and existence in the market from long period of time. Samsung is
an foreign company, some of the parts of machines are imported so they have
to pay import duties etc by this there cost of production increases so they
charge high prices to earn high revenues.
ONIDA:
Onida sell their products at lesser cost than Samsung because it is an Indian
company. Their technology is not as innovative as Samsung i.e. quality is
medium in comparison to Samsung. They provide medium quality at medium
prices.
LG:
LG provides their product at good stage as they provide their product at low
price with medium quality. They are keeping their prices low in order to
capture the maximum market. As they know in the Indian market middle
class people are maximum in number so they are keeping their prices low to
do maximum sales.

From competitors point of view:


SAMSUNG:
Samsung set their prices after considering the prices of the products of their
competitors to prevail in the market. They also provide seasonal discount or
some attractive gifts.
ONIDA:
Onida provide wide range of products to their customers. They provide
washing machines from minimum prices to maximum prices. Onida target
the customers from all sectors.
LG:
LG have to face a tough competition from the other companies which are
engaged in production of same products. LG reduces the prices of their
washing machines due to spending less on the operating cost to increase the
demand.

BIBLOGRAPHY

www.mouthshut.com
www.truthatonida.com
www.rediffprices.com
www.wikkipedia.com
www.google.com