Export Marketing Strategy Term Paper

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Marketing (Water Fans, India)

Industry outlook

The market in India for water fans or misting fans as they are also called is problematical at best. Without doubt, the climate (except in the northern mountains) is hot; the problem is, it is also quite humid. Still, the Indian people have been looking for ways to stay cool for centuries. It was India that gave the world the slatted shutter; when air comes in through small spaces (as in shutters, adopted in the American South before air conditioning, or in lattice-work walls as in parts of India), it is cooled. Still, they did not develop a cooling system like that of that ancient Romans, which did use water running through channels to create condensation. The reason, of course, is the problem of water quality. While industrial pollution has now added immeasurably to the water quality problems in India, the sluggish flow of its rivers had always rendered free-flowing water murky, at best.

These are historical impediments to using water or misting fans in India. But there is also the problem of intermittent electrical outages common to virtually all LCDs (less developed countries). There is also the price factor; in a nation just beginning to attract good-paying jobs from overseas firms, there could be a reluctance to spend on cooling for the home, both to conserve cash flow and because those newly employed professionals who could afford it might conclude that air conditioning at work is sufficient.

Still, there is an air-conditioning "war" going on in India at the moment, with giant electrical appliance company Voltas in the thick of it.

In six weeks in May and April, 2004, Voltas sold 7,000 of its "supercheap 0.8 tonne and 0.6 tonne air-conditioners. The price for the 0.6 tonne: an eye-catching and easy-on-the-wallet Rs 9,999."

In 2003, the summer was unaccountably cool and Voltas had only weak growth. In 2004, however, the company expected growth of 25%, pushing sales up from 800,000 in 2003-04 to around the 1 million mark"

for 2004-2005. However, it was beating by Korean giant LG; LG took the top spot with 29% of the market.

While Volta is working to hold its prices below the 'magic' Rs10,000 mark, some companies are offering convenience. In a price sensitive market, where no one wants to spend an extra rupee on electricity, LG allows homeowners who have bought its Whisen top-of-line model to phone a number that will automatically and remotely switch on their unit so that they can have a cool house to return to, but not have to run the units while they are away at work or elsewhere.

Voltas also knows that "electricity consumption is more important than any other feature in the customer's mind."

That, in fact, is the main opening for truly inexpensive units such as the TPI Corporation 18" self-contained power mister. They are banking on a market study by Rama Bijapurkar; concluded that "if monthly bills for air-conditioners could be brought to less than Rs 1,000, the overall market would triple to 3 million annually."

While she was speaking of air conditioners per se and not portable water fans, because these units are specifically for 'on demand' usage, they should have a robust market share, as well. In addition, those who choose air-conditioning often want to bridge seasons and have minimal cooling for parts of the year when it is wasteful to run a whole-house air-conditioner. There is also likely to be a burgeoning market for water fans for apartment dwellers and renters, particularly as the Indian economy attracts more industry employing more young people living on their own. In fact, water fans could likely grab a share of the room air-conditioner market, currently accounting for about 20% of the market with the cheapest of those from LG selling for almost twice the cost of whole-house units from Voltas, Rs 17,500.

Product Information and description

While TPI Corporation produces a number of models, the one it is planning to introduce in India is its 18" Self-Contained Power Mister. This uses a 1-speed, 1-phase, 120 volt motor. It has a simple toggle switch for fan only or fan and mist, and a 130 psi diaphragm pump. It can be mounted in various ways to obtain a water supply, with one of the most popular being on top of a 10 gallon Igloo-type cooler. It can also be mounted on plastic drums.

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While this is not the most elegant looking unit, it is possibly the most versatile and can be used in the home or at picnics or other events to provide an oasis of cooling.

The U.S. price is $139 (INR6,081.25); however, TPI is expecting to be able to drop the price to about INR5,500, making it an attractive alternative especially to budget conscious apartment dwellers.

Company analysis

TPI is a privately held company and is not traded on any major exchange. Therefore, public information about it is difficult to obtain. However, it has an excellent history of merger and acquisition success. The company was founded in 1949 by Robert E. Henry, Sr. And his brother, Ed Henry, to produce extruded plastic cable for ceiling heat applications, an alternative heating form found only in mild climates such as that of East Tennessee, where winter heating needs are relatively minimal.

Following is a list of its successful acquisitions:

1972-- Sunwarm, a company producing heating products located in nearby Kingsport, Tennessee. "This acquisition expanded TPI into the retail and hardware markets."

1982 -- "The Markel Electric Company of Buffalo, New York, producers of highly engineered space heating equipment for residential, commercial and industrial applications. This acquisition was relocated to Johnson City, Tennessee, bringing 250 jobs to the area, and doubling the company's sales volume."

1982 -- "A Controls Division of the Singer Company of New York, which manufactured safety devices for space heating equipment. Electing to relocate this acquisition to the Johnson City area, 45 additional local jobs were created."

1982 -- "Transcon of Hialeah, Florida, was the third successful acquisition of 1982. This company manufactured high velocity processing equipment, capable of processing materials up to a rate of 1,000 feet per minute, required for the pulp and textile industries. This company was subsequently relocated to the Fostoria, Ohio, division expanding its product offerings."

1983 -- "TPI entered the residential ventilation market by acquiring the Delta Fan Company located in Sardis, Mississippi. This company manufactured ventilation products including 'wholehouse' fans, and attic ventilation, roof mounted domes and gable mounted exhaust fans. This acquisition successfully moved the company into the growing home cooling market, and was focused mainly to offset the seasonal trends experienced in the heating business cycle, thus balancing TPI's manufacturing capacity.

1986 -- "TPI acquired Columbus Electric Manufacturing Company located in nearby Piney Flats, Tennessee and later relocates it to the Gray, Tennessee facility. This company produces sophisticated switches and controls used in a broad variety of products and industries sold worldwide. Columbus Electric Manufacturing sells to markets, such as high tech and aeronautical industries, and is known for its dependability and high quality standards."

1988 -- "TPI further strengthened its position as the leading electric space heating manufacturer by acquiring the Carolina Products Equipment Company (CPE) and integrating selected products into the company's product offering."

1990 -- "TPI purchased Riteway Products Company located in Atlanta, Georgia. This company manufactured both ventilation products, skylights and roof windows, which further strengthened TPI's ventilation program. Relocated to Gray, Tennessee, these products are now included in the local manufacturing operations."

1992 -- "TPI purchased the Frigid Fan product line from the Robeson Company located in New Jersey. This product line consists of portable room fans, window fans, and pedestal fans used in the residential, commercial and industrial markets adding a broader product base to TPI's air ventilation program."

1993, -- "TPI purchased the Redd-i Company located in Chattanooga, Tennessee, manufacturers of specialized heating products ranging from insert type duct heaters to highly specialized VAV type heat and air moving devices. This acquisition further broadened the electric space heating products offered in the commercial and industrial markets. These products are now included in the local manufacturing operations in Gray, Tennessee."

1993 -- "TPI completed the acquisition of American Stabilis Inc., (ASI) manufacturer of Sill Line heaters, and the Digistat line of Electrosil and programmable thermostats."

1993 -- "TPI acquired Sensors & Switches Manufacturer in Lexington, Ohio. They market thermal limit switches, and snap limit switches for highly specified OEM applications. Now being part of the Columbus Electric division, they provide TPI with thermal cutouts for all baseboard heating units."

1995 -- "TPI's newest division is created and called TPI Industrial. This new division would be responsible for TPI Corporation strong surge into the industrial and commercial markets."

The company is located in Johnson City, Tennessee.

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