Reference no: EM132713623

C.G. Electronics Ltd. was a company incorporated in 1983 by Mr. Atul Seth and over the years had emerged as one of the forerunners in the growing segment of the electronics and home appliances market in India. Presently it has a market share of 30 percent of the home appliances market. The company's product strategy has been to offer a wide product range right from mono stereo, two-in-ones, sophisticated music system, televisions, refrigerators, washing machines, and microwave ovens. C.G. Electronics marketing strategy also included offering the above products so as to match the needs and budget of the middle class and upper strata of the society.

In 1991 Rahul, son of Mr. Atul Seth took over as the Managing Director of the company. Seeing the intense competition in the market in the post liberalization scenario, Rahul was keen to go by the principle that once you have targeted your customer, you follow him/her relentlessly with attractive offerings .In 1994 he started with a well focused promotion and distribution strategies. The promotion included spending Rs 10 crores in advertising through holding exhibitions, organizing special training programmes for their sales force, using mass media appeal, offering freebies and various other sales promotion techniques. For distribution, Rahul went about the task of selecting exclusive showrooms and franchisees to display their wide range of products. The location for the exclusive retail outlets was also selected so as to match the perception of the consumers as an "exclusive showroom" for them.

Even after two years of the operating the new promotion and distribution strategy, the sales of C.G. Electronics, was not picking up to the extent the company had thought it would. Rahul directed the marketing manager to do a study of the other retail outlets to know the trend. The results indicated that there was a change in the consumers' perception about purchasing consumer durables. There was seen a preference for purchasing goods from retail outlets having more than one brand.

Questions:

(a) Where do you think Rahul went wrong in his analysis of consumer behaviour?

(b) Discuss the change in the role of consumers today as compared to the consumers five years ago.