Market review of television sets in Ukraine

Kiev 2009

MARKET REVIEW OF TELEVISION SETS
Research plan 1. General Market Description....3 1.1. Description of the Ukrainian Market....3 1.2. Classification of Home Television Sets (share in the market, %)..3 Source: Contracts.....3 - CRT.....3 - Plasma.....4 - LCD.....5 - LED/OLED.....6 1.3. Basic Parameters of the Market of Home Television Sets, Calculation of the Market Capacity.6 2. Production and Sale.....7 2.1. Production and Sales of Home Television Sets (All Types), in numbers..7 2.2. Production and Sales of Home Television Sets (All Types), in money terms..9 3. Foreign Trade.....10 3.1. Export (Structure, Geography)....10 3.2. Import (Structure, Geography)....11 4. Basic Market Operators (TOP 15)....17 4.1. List and Description of the Basic Market Operators...17 4.2. Structuring of the main operators....19 4.3. Market shares of the main operators....20 5. Price and pricing on the market....21 5.1. Price situation on the TV market (analysis of the price structure)..21 5.2. Comparative analysis of prices....21 5.3. Dynamics of average prices of TVs for the period 2005-2009...23 6. Range of products on the market (brands, volumes)..24 7. Consumption of goods....26 8. Distribution channels....28 9. Summary. Forecast for the market capacity until 2011...30
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1. General Market Description 1.1. Description of the Ukrainian Market Popularity of HD television sets (HDTV) is a result of powerful promotional campaign organized by manufacturers of household appliances. Literally for several years, vendors have made consumers believe that a modern TV set and a HDTV are inseparable notions. Practically all recent models of flat panel displays can receive HD signal (HDTV-ready). They cost 25 percent more than TV sets with PAL/SECAM or NTSC only. Current tendencies of the market have had an impact on the post Soviet countries, and on Ukraine in particular. For instance, 320,000 LCD TV sets at the cost of 256 million USD were sold in Ukraine in 2007, and in 2006 the segment capacity had hardly reached 100 million USD. About 75 percent of LCDs that are sold in Ukraine support HD technology. First HD-compatible receivers received signal with a definition that is larger than the standard one (broadcast), but the image was no better. Consumers could use HD video players or HD video receivers, but they still failed to have the promised high definition picture. HDTVs-ready have followed them. Nevertheless, they also do not ensure full value HD picture. Number of pixels in the HD-ready picture with the definition pixels reaches one million. It is about half as large as Full HD full value television with high definition with a picture pixels. Models available in the market support HDTV and are equipped with Automatic Picture Control system that is a small sensor equipped with camera which can register illumination (lighting) parameters in the room and automatically regulate screen brightness (saturation). The major part of the market of modern TV sets is occupied by LCD models (without taking into consideration CRTs which are gradually pushed to the sidelines). It is conditioned by several reasons: LCDs are more power saving; picture is better from the point of view of quality than in CRTs; production technologies are simpler and cheaper than those for plasma and OLED prototypes. 1.2. Classification of Home Television Sets (share in the market, %) Depending on the technology applied, current TV sets may be divided into four types: ordinary with cathode-ray tube (CRT), projection (CRT, LCD or projector may be used as a source of picture), plasma and LCD. Diagram 1.2.1 Shares of TV Sets in the Ukrainian Market, % Type of a television set Plazma LCD CRT Projection and portable 2006 1,5 5,0,2,7 15,1 82,1 0,3,8 28,9 67,1 0,4,4 39,2 56,1 0,3

Source: Contracts

- CRT The history of CRT TV sets numbers over one hundred years. Kinescope (picture tube) is the basic part of a CRT TV set. Kinescope screen is covered with phosphorous containing content. Flow of electrons (electron beam) makes phosphorous pixels light red, green or blue light. Electron beam moves making a color line consisting of active pixels. Then, it moves down and creates the next one, etc. Speed of beam movement is high, and eye perceives the integral picture. Technology retains rather large potential. Leaders of TV industry continue producing CRT TV sets to every fancy. Although displays are not so large as projection systems, a wide scope of technical solutions makes CRT an attractive option for clients with different demands. Currently, models with convex, flat and super flat kinescopes are available. Price of a TV set with a convex kinescope varies within the limits of several hundreds USD. That is why anyone can afford it. Most buyers are entirely satisfied with the features of such a kinescope. Flat kinescopes are deemed a modern tendency in CRT development. LG (Super Flat), Sony (Super Trinitron) are the few brands which offer TV sets with super flat display. Quality of picture on such a screen is comparable to the quality of a picture behind the window glass. Such displays have wide angle and stylish modern design. Currently, four basic types of large CRT TV sets depending on their size are available 28, 29, 32 and 34 inches. The second group is the most popular and numerous: number of

picture is displayed when matrix physical definition is equal to the definition of the input signal. Due to this, to watch DVD (it is hard to find better quality signal) pixel definition is ideal but TV sets with such a matrix are yet not available in the market. To watch TV with 4:3 format and small size (up to 26), pixel definition is quite enough. Larger displays (over 32") have options for HDTV which is soon going to become the standard of video picture in the whole world. pixel definition is a definition that is good for such a signal, although such TV sets cost a lot. Lamp life is one more important peculiar feature of alike TV sets. In most modern LCDs it is equal to 60,000 hours subject to maximum brightness (it is enough for about 16 years subject to 10 hour run every day). However, TV sets with less lamp life are available in the market. For comparison: in plasma TV sets brightness reduces quicker for the same time, and for kinescope TV sets (in this case, phosphor burns out) the threshold is 15,000 20,000 hours, after that quality becomes much poorer. - LED/OLED Organic LightEmitting Diode (OLED) is an organic light emitting diode device manufactured from organic compounds which effectively emit light by passing electrical current through them. OLED technology is basically applied for manufacture of displays. It is expected that production of such displays will be less cost-consuming than LCD production. Thinfilm multilayer structures (several layers of polymers) are used for OLED production. Brightness. OLED displays ensure brightness from several candelas per quarter meter (night time) to very high brightness levels over candelas per quarter meter, and brightness may be regulated in a very wide dynamic range. Since display lifetime is inversely proportional to its brightness, it is suggested to use moderate brightness levels up to 1000 candelas per quarter meter. When lighting LCD display with bright light beam, glares appear, and picture on OLED display become bright and saturate with any level of lighting (illumination) (even in case of direct contact of sun rays with a display). Contrast. OLED is a leader here as well. OLED displays have contrast 1000000:1 (LCD 1300:1, CRT 2000:1) Angles. OLED technology allows watching display from any place and under any angle without any impact on picture quality. Power consumption. OLEDs consume half as much power as LCDs. Need for advantages demonstrated by organic displays is growing every year. This fact allows making a conclusion that boom of such a technology is going to take place soon. LED TV (Light Emitting Diode TeleVision). The term (or concept) was introduced by Samsung for promotion of own line of LCDs with EdgeLED. Usual LCDs use fluorescent lamps (CCFL Cold Cathode Fluorescent Lamp). It is worth noticing that Samsung is not the sole and not the first manufacturer of such TV sets. Sony, Philips and Sharp also manufacture LCDs with LED lighting. As a concept, LED TV evokes many disputes with regard to the issue of lawful use thereof, since technically such TV sets are not 100% LED type TV sets. Modern LEDs are larger than pixels of a modern TV set. Therefore, real use of full value LED matrix is possible in very large displays only, on stadiums for example. From the consumer point of view, LCDs with LED lighting have three enhancements when compared to LCDs with CCFM lighting: 1. Enhanced contrast (unavailable for EdgeLED); 2. Extremely thin (only for Edge-LED); 3. Improved color display (especially RGBLED).

1.3. Basic Parameters of the Market of Home Television Sets, Calculation of the Market Capacity Within the recent years, Ukrainian TV set market has experienced explosion in development and growth. The largest market capacity was reached in 2008 (2,821,300 TV sets sold). However, since crisis has become to be felt, growth rates have slowed down significantly. Several reasons are available - the main ones are the following: Unstable situation in the currency market (since the Ukrainian TV set market basically develops and depends on import of products by major world manufacturers, it may be confidently stated that it also depends on currency fluctuations. In other words, when the foreign currency exchange rate becomes higher with respect to national currency, consumers have less opportunity to buy such goods);
Loss of buying capacity (it is explained by the fact that when crisis has become to be felt, many Ukrainians either have lost constant source of income or it has been reduced significantly. Based upon this, consumers are now attracted by essential goods, and purchases of appliances (for example, TV sets) are postponed to more stable financial situation); Reduction of consumer credits (consumer credits are considered to be one of the powerful activators of market growth and development); governmental 13 percent markup for goods of non-critical import (the duty was introduced in March 6, 2009 effective for a half a year with the purpose of stabilization of state trade balance. However, this law has had a negative impact on suppliers of TV sets to Ukraine they are also forced to raise prices and reduce import) Difficult financial situation for Ukrainian manufacturers (difficult financial situation of Ukrainian manufacturers has resulted in decrease in production of goods); Reduced financing of new projects (market development directly depends on updating and enhancement of product lines, for the last two quarters, the tendency towards reduction is observed). Diagram 1.3.1 Calculation of the Capacity of TV Set Market in Ukraine. 2008 through the first and the second quarters 2009 (thousands TV sets) 2008 558,8 1847,5 6,2399,7 I half 2008 302,8 903,75 3,5 49,8 1252,6 I half 2009 158,9 128,4 3,1 259,9 544,1

* -estimation

2. Production and Sale 2.1. Production and Sales of Home Television Sets (All Types), in numbers Production of TV sets in Ukraine in January through July 2009 reduced by 54.2% or by 187,900 TV sets when compared to the same period in 2008 (to 158.900 TV sets). In July, production of TV sets in Ukraine reduced by 75.5%, or by 33,200 TV sets when compared to the same period in 2008 (to 10,800 TV sets). Diagram 2.1.1 Production of Home Television Sets (All Types) in Ukraine in 2008, in thousands TV sets Month January February March April May June July August September October Noveber December Amount 61,4 57,5 62,6 32,4 42,1 46,30,57,26,3

Source: Goskomstat

Production Import Export Carry-over stocks Volume
Monthly dynamics of TV set production in 2008 demonstrates relative stability, seasonal declines in production are observed. However, in December 2008, when crisis phenomena have just started having negative impact, more than twofold decline in production is observed (from 54,000 to 26,300 TV sets). Decline in production was about 52 percent in relation to the proceeding month. Diagram 2.1.2 Production of Home Television Sets (All Types) in Ukraine in the first and the second quarters 2009, in thousands TV sets Month January February March April May Amount 17,1 24,2 29,6 30,1 28,3
According to the data provided by the State Committee of Statistics, export decrease in the first and the second quarters 2009 was about 11.4% when compared to the same period proceeding year. It is conditioned by 47.4% decrease in products manufacture (when comparing figures for the first and the second quarters for 2008 and 2009). On the whole, it may be stated that market capacity has become more than twice as little when compared to proceeding figures.

June July 18,8 10,8

When comparing production volumes in the first and the second quarters in 2009 with the same period proceeding year, it is worth stating that production became two and a half or even three times as little. The period from March to May is an exception when increase in

TAJIKISTAN TURKMENISTAN UZBEKISTAN II. OTHER COUNTRIES EUROPE AUSTRIA BELGIUM GREECE DENMARK SPAIN ITALY LATVIA LITHUANIA LUXEMBURG HOLLAND GERMANY NORWAY POLAND PORTUGAL RUMANIA SLOVAKIA SLOVENIA UNITED KINGDOM HUNGARY kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) 100,0 2,0 20,0 1,0 653,0 22,0 14584353,9 1842274,0 4255100,9 263392,0 29,0 1,0 30740,1 941,0 21,0 3,0 1593,0 30,0 160325,2 6579,0 6119,2 161,0 57,3 3,0 1472,0 811,0 20,0 1,0 8856,0 692,0 624227,9 41474,0 47,0 3,0 528600,6 77858,0 154,0 9,0 1229,3 171,0 1369129,4 57210,0 350,5 17,0 73577,3 2194,0 1148234,0 65178,0 0,1 0,1 1,2 161160,7 81773,3 0,1 552,5 0,1 23,9 3554,7 105,9 0,6 27,5 0,1 235,1 9409,2 0,3 4783,7 1,2 56,5 28330,6 8,4 1893,1 27015,3
FINLAND FRANCE CZECH REPUBLIC ASIA HONG KONG ISRAEL INDONESIA CHINA KOREA, REPUBLIC MALAYSIA MONGOLIA UNITED ARAB EMIRATES TAIWAN THAILAND TURKEY JAPAN AMERICA MEXICO USA kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) 543,8 171,0 2272,6 188,0 295873,9 9135,0 1627,7 562,0 10326868,9 1578436,0 19714,5 3495,0 35,0 7,0 164825,9 20295,0 6944640,7 1062673,0 1091852,4 312707,0 1351744,4 63849,0 85,0 3,0 100,0 3,0 127788,8 51267,0 262374,8 13840,0 127822,5 41242,0 235885,1 9055,0 2384,2 446,0 550,6 14,0 1833,6 432,0 11,2 82,4 5175,3 505,7 79120,6 121,1 10,4 865,3 47258,7 15092,8 5894,5 0,1 0,3 2301,9 1118,4 1867,1 4590,1 266,8 47,8 219,0
Diagram 3.2.2 Structure of Import of Home Television Sets in Ukraine in the first and second quarters 2009, by countries Unit of measurement Amount Cost, thousand
USD TOTAL I. CIS countries AZERBAIJAN BYELORUSSIA KAZAKHSTAN RUSSIAN FEDERATION UZBEKISTAN II. OTHER COUNTRIES EUROPE AUSTRIA BELGIUM DENMARK SPAIN ITALY HOLLAND GERMANY NORWAY POLAND PORTUGAL SLOVAKIA UNITED KINGDOM HUNGARY FINLAND kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. 441920,9 128426,0 13181,7 1658,0 15,0 1,0 7991,0 405,0 66,0 3,0 4887,7 1239,0 222,0 10,0 428739,2 126768,0 34637,1 1641,0 163,0 5,0 32,0 5,0 2114,2 38,0 2524,2 90,0 743,7 15,0 83,0 4,0 11766,6 494,0 44,0 4,0 2311,9 239,0 231,0 17,0 4979,2 234,0 79,5 16,0 6603,9 282,0 1202,0 5534,5 53,0 0,2 34,5 0,2 17,7 0,5 5481,6 1121,8 1,7 2,1 42,1 44,6 10,9 0,5 63,8 12,3 82,3 20,5 119,0 5,9 139,2 26,1

(quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) kg. (quantity) 162,0 532,0 2,0 1102,0 33,0 125,0 1,0 393499,0 125091,0 9,0 6,0 216792,1 70803,0 90374,1 47874,0 3473,6 213,0 49,0 3,0 3976,8 711,0 65272,4 4644,0 3900,6 266,0 9651,5 571,0 603,1 36,0 72,8 28,0 530,3 8,0
FRANCE CZECH REPUBLIC SWITZERLAND ASIA INDONESIA CHINA KOREA, REPUBLIC MALAYSIA MONGOLIA TAIWAN THAILAND TURKEY JAPAN AMERICA MEXICO USA
381,8 20,5 148,6 4260,2 2,1 1554,2 1999,0 72,5 1,0 71,3 255,5 121,1 183,4 99,6 14,0 85,6
Diagram 3.2.3 Structure of Import of Home Television Sets in Ukraine 2006 through the first and the second quarters 2009, thousands TV sets

2000000

1847919

1600000

1200000

1080587 793712,0

800000
Import of home TV sets for the period 2006 through 2008 was at a high level. For instance, in 2008 import became more than twice as much as the figures for the proceeding year. The Ukrainian TV set market experienced a real boom supported by consumer credits (loans). Therefore, it may be concluded that the market of imported TV sets in 2008 was at the height of its development (models from medium and high price segments were mostly preferable). As the crisis has become to be felt, market situation has changed significantly. It became almost unprofitable to import new products to Ukraine. It was conditioned by several reasons. - governmental 13% duty for the goods of non-critical import; - reduction of consumer credits and raise of credit interest rates; - decrease in salaries and reduction of buying capacity as a result of this.
4. Basic Market Operators (TOP 15) 4.1. List and Description of the Basic Market Operators Seven basic operators are available in the Ukrainian TV set market. They occupy the largest market share. For instance, aggregate share of these operators was equal to 89 percent in the first and the second quarters 2008, but it has somewhat decreased in the first and the second quarters 2009 (to 81 percent) due to crisis phenomena and appearance of minor operators that started aggressive pricing policy with the purpose of occupation of own niche. Nevertheless, leading operators continue retaining their leading positions in the market due to quality of the goods offered and numerous options and opportunities provided by service centers located almost in every point in Ukraine. Such market operators include without limitation Samsung, LG, Philips, Sony, Sharp, Toshiba and Panasonic. Minor manufacturers that occupy small market share include without limitation Daewoo, Hitachi, JVC, HANNspree, Pioneer, NEC, Orion, Electron. As a rule, these manufacturers are introduced in one of market segments, i.e. CRT, LCD or plasma. When a manufacturer is available in several segments, the choice provided by such a manufacturer is not large, and it does not exceed 20 to 30 names as a rule. As a rule, such companies benefit due to reasonable prices, though exceptions are still available. Samsung Samsung was founded in 1969. A year of cooperation with Sanyo Electric has led to merger and appearance of Samsung Electronics Corporation. Company consolidated sales were equal to 103.4 million USD in 2007. Samsung Electronics employs about 150,000 employees working in 134 offices in 62 markets. The Company has five main units: Digital Appliance Business, Digital Media Business, LCD Business, Semiconductor Business and Telecommunication Network Business. rd Address: 3 level, 3 Spaska St., Kyiv 04070; phone: (044) 490-64-53, 490-64-24, phone/fax: (044) 490-64-94, hot line 8(800)502-00-00. www.samsung.com.ua LG LG Electronics Inc. (headquarters located in Seoul, South Korea) was founded in 1958 and is now a recognized world leader in the sphere of electronics, information and telecommunication technologies. 1996 LG Electronics has established its representation office in Ukraine with the purpose to inform potential buyers about LG products. In the worldwide scale, sales were equal to 11.3 billion USD in 2008 that is 1.2% higher than proceeding year. Address: LG Electronics Representation Office, 1 Dniprovsky Spusk, Kyiv. phone: 8(044)201-43-504 fax: 8(044)201-43-73; hot line: 8(800)303-00-00 www.ua.lge.com Philips The Company was founded in 1891. Nowadays, Philips is one of the major transnational world companies with sales equal to 26.7 billion Euros in 2007. Manufacturing facilities are located in 28 counties, and the products are sold in 150 markets. Costs for research and development were equal to 1.6 billion Euros in 2007, i.e. 6.1 % of total turnover. th Address: 7 level, 4/6 Grinchenko St., Kyiv 01042. phone :( 044)490-98-48, fax 490-98-56. www.philips.com; http://www.lighting.philips.com/ua_uk; Sony Company was founded in 1946. Sony manufactures audio and video players, mp3players, DVD-players, projecting and LCD-TVs, monitors and electronic components. Among the company's products such brands as VAIO, Bravia and Walkman. Sales for the 2008-09 - $ 80 billion, net loss - $ 1 billion. Representative Office in Ukraine Spasskaya Str, 30, Kiev, 04070 Phone: (044)490-63-11, (044)490-63-29 http://www.sony.ua Contact of the information center for consumers JSC Sony CIS Karamyshevsky passage, 6, Moscow, 123154, Russia, Phone: 8-( 800) 307-66-90, +7 (495) 25876-50 Sharp History of Sharp Corporation began in 1912. Currently, SHARP is a broad network of subsidiaries engaged in manufacturing and

was founded in 1938 in Tokyo. Turnover of the company in 2008-09 - $ 5.76 billion, losses - $ 1.34 billion. Company has branches in 12 countries in Europe. Company does not have a representative office in Ukraine. However, in Ukraine there is an Internet office of Pioneer hifi, which is an official dealer of the company. Tel: 8 (057) 771-47-27 www.pioneer-hifi.com.ua e-mail: info@pioneer-hifi.com.ua NEC NEC (Nippon Electric Corporation) is a Japanese company which is a manufacturer of electronic, computer and telecommunications equipment. This company is a one of the world's largest telecommunications companies. Head office is located in Tokyo. Company started its activities in 1899. Staff of the company consists of 150 thousand people. Company has 18 offices in 18 countries, 23 plants in 12 countries and 4 research centers in 4 countries, 61 company for marketing in 26 countries. Company's turnover in 2008 was about $ 41.9 billion, profit was $ 2.9 billion Media-Trade Ukraine is the official dealer of NEC in Ukraine. Address: Degtyarevskaya Str, 43; Kiev, 03113 Phone: +38 (044) 227-15-82 www.mediatrade.com.ua e-mail: info@media-trade.com.ua Orion A factory for production of radios and other electronic devices was founded in 1913 in Hungary. The company's goal was to create a whole range of electronic devices people use in everyday life. Company can be contacted through the site, by sending a message. Also through the site a person can get a different kind of advice and can contact partners of the company. www.orion.ua Concern was founded in 1989. At the moment this is a concern, which includes 14 scientific - industrial, industrial, and service companies. This is practically the only enterprise in Ukraine, which produces TVs in the country. Television Works "Elektron" is a subsidiary of JSC Concern-Electron. Address: Storozhenko Str., 32, Lvov, 79000 Tel: 8 (032) 239-52-65, 239-53-76 www.electron.lviv.ua
4.2. Structuring of the main operators Operators of the market can be structured according to the segments where they operate. Segments of the television market are: CRT, LCD, plasma and OLED - Displays. Diagram 4.2.1 Structuring of operators according to the TVs Segments Name of operator Samsung LG Philips Sony Sharp Toshiba Panasonic Daewoo Hitachi JVC HANNspree Pioneer NEC Orion CRT + + + + + + + LCD + + + + + + + + + + + + + Plazma + + + + + + + + OLED + + * - estimation

Only 2 companies (Sony and Samsung) have been represented in the segment of the most progressive and expensive products. These companies produce TVs OLED. However, Sony has in the Ukraine market only one model (11 inch TV), while Samsung represented by 11 widescreen TVs with 32 and more inches. Thus, only Samsung has been represented in all market segments. Other companies focus their production only in certain segments.
4.3. Market shares of the main operators In the TV market of Ukraine there are seven basic operators, which occupy more than 80% of the market. Shares of the main TV manufacturers for 1 Q 2008 and 2009 are provided on diagrams 4.3.1-4.3.2. It is worth noting while comparing figures that Samsung (market leader) significantly lost their positions this year. This can be explained by the fact that the company's competitors began to promote their products actively. A variety of advertising campaigns and presentations for customers attraction also contributed to the increase in market share for such manufacturers as Panasonic and Sharp. Thus, by reducing the share of Samsung in the market, there has been growth in the market shares of other companies. Diagram 4.3.1 Market shares of main producers in IQ 2008 according to the sales of TVs

Philips 12%

LG 15%
Sony 9% Sharp 4% Toshiba 4% Panasoni c 3% 19%

Samsung 34%

* - estimation
Comparing figures 1Q 2008 and 1Q 2009, there has been substantial growth in market share of other operators at 8%. Thus, their combined market share grew in 1Q 2009 from 11% to 19%.

LG 14%

Philips 15% Sony 8% Sharp 2%

Samsung 46% 11%

Toshiba 2% Panasoni c 2%
The largest share of the market in 1 Q 2009 has Samsung - 34%. Significantly far behind the leader are companies LG and Philips. They occupy 15% and 12% of the market respectively. Diagram 4.3.2 Market shares of main producers in IQ 2009 according to the sales of TVs
5. Price and pricing on the market 5.1. Price situation on the TV market (analysis of the price structure) Domestic prices of TV sets in the national currency remained at its pre-crisis level, so demand has shifted in favor of cheaper models. For example, the average cost of LCD-TV up to the sales of IQ 2009 was $ 670, which is 20.7% below the same period of 2008. If in the IQ of last year, the price of the most popular TV was $ 750-1000, then up to the same period of 2009 the price is $ 500-750. Budget models has the largest share of sales in Ukraine, the middle price segment has about 15%, while premium segment has about 6%. Price preference of Ukrainians coincide with global trends: the consumer wants to buy a functional and reliable apparatus for a reasonable price. Diagram 5.1.1 Price Segmentation in the TV market of Ukraine

In the range of 26-29 inches, the first 3 positions on the price took such producers as HANNspree, Sharp and Sony. In the range of 30-32 inches the leaders are HANNspree, Pioneer Philips. In the segment of large-format televisions (34-42 inches) the price leaders are HANNspree, Pioneer, Sony. As for TVs over 43 inches the price leader is Pioneer, then follow Sony and Philips. The most budget models presented in the market are produced by JVC. Thus, HANNspree, Sony and Sharp provide the most expensive products in every form factors of LCD TVs for the TV market of Ukraine. Samsung offers the most average prices in the market. Toshiba and LG offer the lowest prices for its products. Diagram 5.2.3
Average prices of plasma televisions produced by the leading manufacturers ($) Model name Samsung LG Philips Sony Sharp Toshiba 21 22-25 Length of diagonal 26-29 30-32 34-42 954,2 581,5 984,3 1059,2168,1404 -
Panasonic Daewoo Hitachi JVC HANNspree Pioneer NEC Orion Electron 1336,1847,2 1646,4259,5 * - estimation
Analysis of prices of plasma display panels was conducted on a similar structure with the analysis of LCD TVs. It should be mentioned that in the segment of plasma TVs manufacturers Sony, Sharp and Toshiba are not represented in the Ukrainian market. Another feature is that a lot of plasma TVs available on the market is concentrated in the segment with 34-42 inches and more than 43 inches. The most expensive models of plasma TVs are TVs with 34-42 inches produced by Pioneer, then TVs produced by NEC and Panasonic. TVs produced by Daewoo in this segment is the cheapest. In a segment of more than 43 inches price leaders is NEC, however, in second place is company Pioneer, then Panasonic. The most budget models in this segment are TVs produced by Philips.
Diagram 5.3.1 Dynamics of TVs average prices in ($)

2008 I half. 909 2012

Plazma
5.3. Dynamics of average prices of TVs for the period 2005-2009 It is worth noting that on the TV market there is a tendency to reduce the prices of all types of TVs. However, the amount of decrease in average price, depending on the type of TV (CRT, LCD or plasma) and it is different. The most expensive are plasma TVs, but they are not as common as LCD, the price of which is acceptable to most consumers. The most common are CRT TVs, however, the price for them is much lower than on LCD TVs or on plasma TVs. This is because CRT technology has long been on the market and is technically old, it is not able to fully meet consumer preferences for quality of the image.
The smallest price decrease from 2005 was for CRT TVs (from $ 187 to $ 156). The decline in this segment estimated as only 16,5%. Regarding LCD TVs, the situation is different. In the market there was more dynamic decrease in the average prices of similar models. The price in 2005 was $ 928, and in 1 half of 2009 already estimated as $ 670. The estimated decrease during this time period was 27,8%. However, the greatest decrease in average price was estimated in the segment of plasma TVs (from $ 2080 in 2005 to $ 950 in 1 half of 2009). The reduction amounted to 54,3%. The reasons for reducing the average price for different types of TVs are different.

CRT TVs. Not represented in Ukraine. LCD TVs. Sony as well as Samsung has a very broad model line of TV. At the moment it includes 133 models. Diagonal size varies from 19 to 70 inches. Range of prices - $ 385 - $ 5185 (average price of a model 70 inch Sony KDL-70X3500 is $ 45,610). Plasma TVs. Not represented in Ukraine. Sharp CRT TVs. Ukrainian market at the moment consists of 6 models of CRT TVs. Price range is $ 95 - $ 350. LCD TVs. Product Range consists of 59 TVs. Price range: $ 303 - $ 8055 (depending on the size of the diagonal - from 19 to 65 inches). Average price of a model with diagonal 65 inch is $ 12105. Plasma TVs. Not represented in Ukraine. Toshiba CRT TVs. Not represented in Ukraine LCD TVs. Range of products represented in Ukraine includes 42 TVs with diagonals from 15 to 52 inches. These models are in price range $ 250 - $ 2605. Plasma TVs. Not represented in Ukraine. Panasonic CRT TVs. Not represented in Ukraine. LCD TVs. Represented by a small number of models. Only 10 models of TVs with diagonal size from 20 to 32 inches are represented in Ukraine. Price range of these products varies from $ 405 to $ 1270. Plasma TVs. Unlike LCD TVs, plasma analogues are represented in Ukraine market by a wide range of TVs - 37 units. Diagonal size is up to 103 inches (average price of TV with 103 inches - Panasonic TH-103PF10RK is $ 38260). Price range varies from $ 770 to $ 38260. Daewoo CRT TVs. This producer has the widest range of products in this segment. It includes 6 models. LCD TVs. Not represented in Ukraine. Plasma TVs. Represented by one model, which costs $ 575.
6. Range of products on the market (brands, volumes) The range of TVs, which are presented on the Ukrainian market is very diverse because on the market there is a serious competition. Generational change for TVs is very fast because the market needs new and better models. Samsung CRT TVs. The range of CRT TVs is represented by 22 various models. The price range is between $ 130 and $ 350. LCD TVs In Ukraine there are 132 models of this type of TVs. They range in price range from $ 290 to $ 3780 (average price of a TV with a diagonal 70 inches Samsung LE70F96BD is $ 20200). Price depends on the size of the screen (from 19 to 70 inches), novelty of a model and technology. Plasma TVs. Models are represented on the market in number of 34 copies. These TVs are in the price range from $ 740 to $ 6150. The size of diagonals represented on the market is from 42 to 63 inches. LG CRT TVs. Unlike Samsung LG in the segment of CRT TV is focusing on production of models with a flat screen. Range consists of 25 models in the price range $ 100 - $ 420. LCD TVs. The range presented by 84 models of TVs. The cost of TV sets in this range from $ 280 to $ 2500. Plasma TVs. Model range of LG's plasma TVs on the territory of Ukraine includes 31 units. Price range is $ 540 - $ 5320. Length of diagonals in the presented models is 32 - 60 inches. Philips CRT TVs. Not represented in the territory of Ukraine. LCD TVs. In Ukraine Philips sells 86 models of LCD TVs. Price varies from $ 275 to $ 4590. Plasma TVs. Range includes 3 models with a diagonal length from 42 to 50 inches. Price range is from $ 980 to $ 1440. Sony

I Q 2009

Source: Contracty
Accordingly, these TVs (TVs which is in requisition now) can be divided into 3 price categories: low (below $ 750), medium (from 751 $ to 1500 $) and high (more than 1501 $). The most popular category at the moment is the low price category. Diagram 7.2 Distribution of consumer preferences according to the screen resolution
11% 19201080 5% 640480 11% 1024768 3%

1366768 70%

The most popular resolution for consumers is 1366x768. The percentage of consumers who choose this screen resolution is 70% (this is the best for watching DVD movies and TV broadcasts). Resolution with the size 1920x1080 gives to a user the most comfortable view for watching programs or movies, but it takes only 5% in consumer preferences. A reason for this distinction is the high price of devices that support such screen resolution. It should be mentioned that in case of price reduction for TVs with resolution 1920x1080 pixels, as well as elimination of
defects, the number of consumers who may choose TVs with this screen resolution will grow. Below there is a rating of the most popular TVs produced by the main producers in stores as well as their price range: Samsung CRT TVs. Samsung CS-29A730 ($234450); Samsung CS-29Z58HY ($238455); Samsung CS-29Z57 ($245394). LCD TVs. Samsung LE19A650A1 ($306500); Samsung LE32B350 ($422588); Samsung LE32B450 ($475670); Samsung LE32B551A6W ($595829); Samsung LE40B530 ($8091096); Samsung LE40B550 ($8551106). Plasma TVs. Samsung PS-42B450 ($740960); Samsung PS-42A451P1 ($7251110); Samsung PS-50A450P2 ($990 1670). LG CRT TVs. LG 15FJ4RB ($99123); LG 29FS7RLX ($208292); LG 29FS6RNX ($228390); LG 29FS4RNX ($234385). LCD TVs. LG 22LU4000 ($350453); LG 32LG2000 ($455685); LG 32LG4000 ($531839); LG 37LH7000 ($9101053). Plasma TVs. LG 42PG2000 ($6651108); LG 42PG6000 ($7861495); LG 60PS7000 ($3119 3468). Philips LCD TVs. Philips 22PFL3404 ($337467); Philips 32PFL5404H ($527711); Philips 32PFL5604H ($648879); Philips 37PFL9604H ($13011542); Philips 42PFL9703D ($16682525). Plasma TVs. Philips 42PFP5332 ($7691163). Sony LCD TVs. Sony KDL-19L4000 ($348436); Sony KDL-32V5500 ($725990); Sony KDL-32W5500 ($8301202); Sony KDL-40W5500 ($1125 1676); Sony KDL-52W4000 ($15752055); Sony KDL-46Z4500 ($16252403). Sharp CRT TVs. Sharp 21QF2U ($129145); Sharp 21SFX10U ($154174). LCD TVs. Sharp LC-20S5E ($295540); Sharp LC32DH77E ($785968); Sharp LC-46X8E ($11501541); Sharp LC-52HD1E ($2440 3156). Toshiba LCD TVs. Toshiba 19AV605PR ($287375); Toshiba 37AV500PR ($615860); Toshiba 42AV500PR ($7501222); Toshiba 40XF350PR ($10741899). Panasonic LCD TVs. Panasonic TX-R32LX80 ($508720); Panasonic TX-R32LX85 ($7401125); Panasonic TX-R37LX85 ($8251470). Plasma TVs. Panasonic TH-R42PV80 ($7561380); Panasonic TH-R42PV8 ($7151141); Panasonic TH-R46PY80 ($12402500). Daewoo CRT TVs. Daewoo KR-2930N ($241283); Daewoo KR-2930MT ($242283). Plasma TVs. Daewoo DPP-42H9 ($575925). Hitachi LCD TVs. Hitachi L42X01A ($13001450). Plasma TVs. Hitachi P50X01A ($25503671). JVC CRT TVs. JVC AV-1401UB ($90119); JVC AV2131QB ($166202). LCD TVs. JVC LT-32BX38 ($535630); JVC LT32FX38 ($489965). HANNspree LCD TVs. HANNspree HANNSa.red ($378870); HANNspree HANNSlounge 26 ($16201800). Pioneer LCD TVs.

Pioneer KRL-32V ($11601695). Plasma TVs. Pioneer PDP-5080XD ($18502199); Pioneer PDP-508XD ($1934 2369). NEC Plasma TVs. NEC PlasmaSync 50XP10 ($19703500). Orion CRT TVs. Orion STP1525FL ($95117); SPP2920FL ($194224). LCD TVs. Orion LCD2028 ($229357). Plasma TVs. Electron CRT TVs. ELECTRON 54-703 slim ($123145). LCD TVs. ELECTRON 81-980 ($453560). Orion 8. Distribution channels Sales channel (or sales) is a way which goods use during the sales process from supplier to consumer. For distribution management the most important strategic decisions are to choose a distribution channel structure. Making this decision the manufacturer actually predetermines the success or failure of promotion of a trademark on the market. But also there are some reasons for the slow growth of goods sales. They include these reasons: delays because of production facilities expansion; some technical problems (improve of technology); delays in bringing the goods to consumers through retail outlets; reluctance of consumers to change familiar patterns of behavior. In case selling of costly novelty such as TV with a high resolution the growth in sales is constrained by several other factors. One of them is that there is few consumers who can afford to buy a new product. When a company introduces new products, it usually bears losses or receives small profit due to low sales and high costs of distribution management and advertising. Work with sales representatives also costs dearly. During this period the size of ratio between promotion costs and sales is the biggest because it is necessary to: inform potential customers about a new product, which is unknown yet; persuade them to test products and provide sales through retailers. Main efforts on selling goods a company directs to attract consumers who are most prepared to make a purchase. Usually these consumers are members of a group with high income. In addition, prices at this stage are high because of: high costs caused by the relatively slow growth of production; technological problems arising at the stage of development of production; high trade margins necessary to cover the high costs of promotion activities, which are essential to increase growth in sales. Many manufacturers are working with the assistance of other companies who bring goods to the market and manage a distribution channel.
There are 3 main sales channels for TVs. These include the following: retail sales through online retailers, large supermarket chains of electronics, as well as the signing of contracts at the major exhibitions of household appliances. Diagram 8.1 Structure of TVs sales through the main distribution channels, % Internet shops attract consumers with the help of lower prices than in electronics stores. Price is reduced due to fewer staff than in large supermarkets and less deductions for employees' wages. Weaknesses include relatively small volumes of sales, logistical difficulties and delays with goods delivery.

Diagram 9.1 Forecast for the domestic TV market in 20092011, thousand units
1052 1324,7 0,1 1755,8 0,2 25,92% 32,54% 0,3 0,4
Resumption of the foreign manufacturers expansion on the Ukrainian market is expected in 2010. Growth of the market could reach 26%. Resumption of model lines of the main producers on the market and increase of competition among operators is also expected. These factors will positively affect the volume growth of the market. These major trends will also be relevant in 2011. It is expected to increase the market capacity to 32,5% (comparing to 2010) during this period. The increase will be occurred because of lower impact of crisis on the Ukrainian economy; the public confidence to the banking system will also increase and as a result of this increase of lending to the population (consumer loans). However, it is not expected to reach market capacity of pre-crisis level.
"- "" www.pro-consulting.com.ua , 02160,. , , 7-./: +38(044) 501-43-40; +38(044) 503- 63- 60 Financial and analytical group Pro-Consulting www.pro-consulting.com.ua 7-A Vozzyednannya Avenue Kyiv - 02160, Ukraine Tel: +38(044) 501-43-40; +38(044) 503- 63- 60
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