A PROJECT REPORT ON “SALES STRUCTURE OF TWO CONSUMER DURABLE COMPANIES: LG & SAMSUNG” SUBMITTED IN THE FINAL FULFILLMENT OF POST GRADUATION DIPLOMA IN MANAGEMENT 2008-10 UNDER THE GUIDANCE OF: PROF. ______________ SUBMITTED BY: ______________ ____________ Page 1
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Compare Sales Structure of Two Organization in Two Consumer Durables Company Lg & Samsung
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APROJECT REPORT
ON“SALES STRUCTURE OF TWO CONSUMER DURABLE
COMPANIES: LG & SAMSUNG”
SUBMITTED IN THE FINAL FULFILLMENT OFPOST GRADUATION DIPLOMA IN MANAGEMENT
2008-10
UNDER THE GUIDANCE OF:PROF. ______________
SUBMITTED BY:__________________________
______________ INSTITUTE OF MANAGEMENT____________________________________________
NEW DELHI
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Certificate
This is to certify that Mr. ________________, student of Post Graduation Diploma In Management (PGDM), batch 2008-10 has completed the project
“SALES STRUCTURE OF TWO CONSUMER DURABLE COMPANIES: LG & SAMSUNG”
With authenticity and accuracy, under my guidance and supervision
PROJECT GUIDE: Prof. ______________
FACULTY _________ NEW DELHI
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DECLARATION
I hereby declare that this project report prepared in lieu of a compulsory paper for the partial fulfillment of Master of Business Administration (Marketing and Finance) is my original work which I have submitted in __________ Institute of Management to my guide ______________. No part of it has been submitted to any other university or organization.
All the information and data in my project are authentic to the best of my knowledge and taken from reliable sources.
___________________
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Acknowledgement
Project work is never the work of an individual. It is more a combination of views, ideas, suggestions, contribution and work involving many individuals.
I wish to express my deepest gratitude to ______________ Institute of management for giving me an opportunity to be a part of their esteem organization and enhance my knowledge by granting permission to do my final project under their guidance.
I am grateful to __________________, my guide, for her invaluable guidance and cooperation during the course of the project. He provided me with her assistance and support whenever needed that has been instrumental in completion of this project.
Last but not the least my project work is a result of guidance and cooperation of many respectable persons and many of my friends to whom I cannot express their help in words.
________________
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Table of content
Contents Page No.
Certificate 2
Declaration 3
Acknowledgement 4
Ch-1 Executive Summary 6
Ch-2 Introduction 7
Ch-3 Industry Profile 8
Market Analysis 10
Some Facts 10
Market Value 11
Sector Outlook 12
Scope 12
Ch-4 Objective 14
Research Methodology 15
Hypothesis 15
Ch-5 Introduction to the topic 16
Ch-6 Company Profile 18
Sales Promotion 30
Benefits 30
Types 31
Advantages and Disadvantages 31-32
Ch-7 Key Findings 42
Ch-8 Conclusion 43
Ch-9 Recommendations 44
Ch-10 Bibliography 49
Curriculum vitae 50
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Chapter 1: EXECUTIVE SUMMARY
Indian Consumer durables market used to be dominated by few domestic players like Godrej, Voltas,
Allwyn and Kalvinator. But post liberalization much foreign company have entered into Indian market
dethroning the Indian player and dominating Indian market the major categories in the market CTV,
REFRIGRATOR, AIR CONDTIONERS AND WASHING MACHINE
India being the second largest growing economy with huge consumer class has resulted in
consumer durables as the fastest growing industries in India LG, SAMSUNG the two Korean companies
has been maintaining the lead in the industries with LG being leader in almost all the categories.
The rural market is growing faster than the urban market, although the penetration level is much lower .The
CTV segment is expected to the largest contributing segment to the overall growth the industry. The rising
income levels double-income families and consumer awareness are the main growth drivers of the
industries.
Consumer durables major LG Electronics India Pvt Ltd (LGEIL) will invest nearly Rs 500 crore in India
this year in research and development, brand-building and other marketing initiatives.
The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, is investing Rs 360
crore on brand-building and other marketing initiatives and around Rs 140 crore on research and
development, besides launching new platforms in information technology and related areas,
LG’s innovative ‘211 campaign’ to provide quality after-sales service, will also be expanded from the
existing 22 to 40 cities by next month, The campaign, for which IT infrastructure has been set up, includes
the company’s response to customer complaint within two hours. The fixing time for complaints varies
from one hour to a maximum of 24 hours.
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Ch-2 INTRODUCTION
Every company has some product to sell because sales is a basic requirement to run any business as it is the only component which provides revenue. It is the prime concern of every business to design a perfect sales structure for sales on which they are dependent. In this tough market scenario of today’s global competitive world it is most important to capture the market share along with fulfilling the customer needs and wants.
I have chosen consumer durable industry because there are only a few companies in the competition in Indian market and they are not only facing and fighting to competition by just fulfilling the needs and wants of their customer but also there are trying to generate new needs and wants to increase the demand of their product. Ten years back who thought there could be any LCD screens, mobile phones with GPS (Global Positioning System), plasmas etc. but it was possible only because of the advanced technological support through their continuous research and development. These companies have in some way revolutionized the world.
The main focus of these companies is in the research and development where innovation is worshiped. They are in some way responsible for the look of the world that we see today.
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Ch-3 INDUSTRY PROFILE
The Consumer Durables industry consists of durable goods and appliances for domestic use such as
televisions, refrigerators, air conditioners and washing machines. Instruments such as cell phones and
kitchen appliances like microwave ovens were also included in this category. The sector has been
witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom,
real estate and housing demand, greater disposable income and an overall increase in the level of affluence
of a significant section of the population. The industry is represented by major international and local
players such as BPL, Videocon, Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc.
The consumer durables industry can be broadly classified into two segments: Consumer Electronics and
Consumer Appliances. Consumer Appliances can be further categorized into Brown Goods and White
Goods. The key product lines under each segment were as follows.
Industry Size, Growth, Trends
The consumer durables market in India was estimated to be around US$ 5 billion in 2007-08. More than 7
million units of consumer durable appliances have been sold in the year 2006-07 with colour televisions
(CTV) forming the bulk of the sales with 30 per cent share of volumes. CTV, refrigerators and Air-
conditioners together constitute more than 60 per cent of the sales in terms of the number of units sold.
In the refrigerators market, the frost-free category has grown by 8.3 per cent while direct cool segment has
grown by 9 per cent. Companies like LG, Whirlpool and Samsung have registered double-digit growth in
the direct cool refrigerator market.
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In the case of washing machines, the semi-automatic category with a higher base and fully-automatic
categories have grown by 4 per cent to 526,000 units and by 8 per cent to 229,000 units, respectively. In the
air-conditioners segment, the sales of window ACs have grown by 32 per cent and that of split ACs by 97
per cent.
Since the penetration in the urban areas for these products is already quite high, the markets for both C-TV
and refrigerators were shifting to the semi-urban and rural areas. The growth across product categories in
different segments is assessed in the following sections.
Consumer Electronics
The CTV production was 15.10 million units in 2007-08 and is expected to grow by at least 25 per cent. At
the disaggregated level, conventional CTV volumes have been falling while flat TVs have grown strongly.
Market sources indicate that most CTV majors have phased out conventional TVs and have been instead
focusing more on flat TVs. The flat segment of CTVs now account for over60 per cent of the total domestic
TV production and is likely to be around 65 per cent in 2007-08.High-end products such as liquid crystal
display (LCD)and plasma display CTV grew by 400 per cent and 150 per
Cent respectively in 2009–10 following a sharp decline in prices of these products and this trend is expected
to continue. The audio/video player market has seen significant growth rates in the domestic market as
prices have dropped. This trend is expected to continue through 2009- 2010, as competition is likely to
intensify to scale and capture the mass market.
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MARKET ANALYSIS
The Indian Consumer Electronics market generated total revenues of $3.8 billion in 2006, this representing
a compound annual growth rate (CAGR) of 11.1% for the period spanning 2002-2006. In comparison, the
Chinese and Japanese markets grew with CAGRs of 11.8% and 15.7% over the same period, to reach
respective values of $17.6 billion and $20.5 billion in 2006.
Video equipment sales proved the most lucrative for the Indian Consumer Electronics market in 2006,
generating total revenues of $3 billion, equivalent to 80.8% of the market's overall value. In comparison,
sales of audio equipment generated revenues of $0.6 billion in 2006, equating to 14.9% of the market's
aggregate revenues. The performance of the market is forecast to accelerate, with an anticipated CAGR of
5.4% for the 2006-2011 period expected to drive the market to a value of $4.9 billion by the end of 2011.
Comparatively, the Chinese and Japanese markets will grow with CAGRs of 9.2% and 7% respectively
over the same period, to reach respective values of $27.4 billion and $28.6 billion in 2011.
With the increase in income levels, easy availability of finance, increase in consumer awareness, and
introduction of new models, the demand for consumer durables has increased significantly. Products like
washing machines, air conditioners, microwave ovens, color televisions (CTVs) are no longer considered
luxury items. However, there are still very few players in categories like vacuum cleaners, and dishwashers.
Consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and
intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is
the growing middle class of India. MNC’s offer superior technology to the consumers, whereas the Indian
companies compete on the basis of firm grasp of the local market, their well-acknowledged brands, and
hold over wide distribution network. However, the penetration level of the consumer durables is still low in
India. An important factor behind low penetration is poor government spending on infrastructure. For
example, the government spending is very less on electrification programs in rural areas. This factor
discourages the consumer durables companies to market their products in rural areas.
Some Facts
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1. Bargaining power of suppliers in consumer durables sector is
limited due to threat of imports and intense competition.
2. Some of the entry barriers in consumer durables sector are
distribution network, capital, and ability to hire purchases.
3. Demand is seasonal and cyclical.
4. Competition among players is on the basis of difference in prices
and well-acknowledged brands.
MARKET VALUE
The Indian consumer electronics market grew by 7.6% in 2006 to reach a value of$3.8 billion. The
compound annual growth rate of the market in the period 2002-2006 was 11.1%.
Table 1: India Consumer Electronics Market Value: $ billion, 2004-2008
Year $ billion INR billion % Growth
2002 2.5 109.2
2003 2.9 126.8 16.10%
2004 3.2 141.7 11.80%
2005 3.5 154.7 9.20%
2006 3.8 166.5 7.60%
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CAGR, 2002-2006: 11.1%
Sector Outlook
There has been strong competition between the major MNCs like Samsung, LG, and Sony.
According to Isuppli Corporation (Applied Market Intelligence), country's fiscal policy has encouraged
Indian consumer electronic industry. The reduction on import duty in the year 2005-06 has benefited many
companies, such as Samsung, LG, and Sony. These companies import their premium end products from
manufacturing facilities that are located outside India.
Indian consumers are now replacing their existing appliances with frost-free refrigerators, split air
conditioners, fully automatic washing machines, and color televisions (CTVs), which are boosting the sales
in these categories.
Some companies like. LG Electronics India Ltd. & Samsung Electronics Co. Ltd is now focusing on rural
areas also. These companies are introducing gift schemes and providing easy finance to capture the
consumer base in rural areas.
Scope
In terms of Purchasing Power Parity (PPP), India is the 4th largest economy in the world and is expected to
overtake Japan in the near future to become the 3rd largest. Indian consumer goods market is expected to
reach $400 billion by 2010. India has the youngest population amongst the major countries. There are a lot
of young people in India in different income categories. Nearly two- thirds of its population is below the age
of 35, and nearly 50 % is below 25. There are 56 million people in middle class, who are earning US$
4,400- US$ 21,800 a year. And there are 6 million rich households in India. The upper-middle and high-
income households in urban areas are expected to grow to 38.2 million in 2007 as against 14.6 million in
LG Electronics India Pvt. Ltd. A wholly owned subsidiary of LG Electronics, South Korea was
established in January, 1997 after clearance from the Foreign Investment Promotion Board (FIPB). The
trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 years
with the commencement of operations in May 1997. LG set up a state-of-the art manufacturing facility at
Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Color
Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also
commenced the home production for its eco-friendly Refrigerators and established its assembly line for its
PC Monitors at its Greater Noida manufacturing unit. The beginning of 2003 saw the rolling out of the first
locally manufactured Direct Cool Refrigerator from the plant at Greater Noida.
The Greater Noida manufacturing unit line has been designed with the latest technologies at par with
international standards at Korea and is one of the most Eco-friendly units amongst all LG manufacturing
plants in the world. LG has been able to craft out in five years, a premium brand positioning in the Indian
market and is today the most preferred brand in the segment
Various studies have shown that the consumer is well informed on the health awareness front. LG was one
of the first companies who recognized the emerging change in consumer needs and decided to differentiate
their products on the basis of technology, which appealed to the consumer on the basis of health benefits. Its
vision was to become a 'Health Partner' for its consumers worldwide and therefore formulated its corporate
philosophy to make peoples' lives better, convenient and healthier.
For example: The CTV range offered by LG has 'Golden Eye' technology, which senses the light levels in
the room and adjusts the picture to make it more comfortable for the eyes. The entire range of LG air-
conditioners have 'Health Air System', which not just cools, but keeps pollution out. Similarly, microwave
ovens have the 'Health Wave System', refrigerators have the 'PN System', which preserve the nutrition in
food and washing machines have 'Fabricare System', which takes the health factor down to ones clothes. All
the products offered by the company have unique technologies, developed by its R&D departments that
give customers a healthier environment to live-in.
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The year 2001 witnessed LG becoming the fastest growing company in the consumer electronics, home
appliances and computer peripherals industry. The company had till the month of October 2001 achieved a
cumulative turnover of Rs 5000 Crores in India since its inception in 1997, making it the fastest ever Rs
5000 Crores clocked by any company in the Indian consumer electronics and home appliances industry.
Having achieved this milestone, LG achieved another benchmark with the first ever sales of One Lakh ACs
(Windows and Splits) in a calendar year. LG is poised to surpass its turnover target of Rs. 2700 Crores this
year and clock a turnover of Rs. 3000 Crores.
This year, LG has emerged as the leader in Color Televisions, Semi Automatic Washing Machines, Air
Conditioners, Frost-Free Refrigerators and Microwaves Ovens. In Color Televisions having set the sales
target of one million units of Color Televisions for 2002, LG has already achieved the one million mark in
the month ahead of its target.
LG Electronics India is the fastest growing company in the consumer electronics, home appliances and
computer peripherals industry today.
LG Electronics is continually providing superior technology products & value for money to over 50 Lakh
households in India. LG Electronics already have various ranges of products & Planning to more with all
their variants and deviants.
LG’s Marketing Network is also big as enough, company is planning to increase it more. LG Electronics
currently has 65 Regional Area Offices, 60 Central Area Offices with 40 branches all over India.
So, the future prospect of LG Electronics in India seems to be very bright. As mentioned earlier, Samsung
has positioned themselves as wide variety products, good quality-affordable priced company. There are
many companies competing in the same industry like Apple with its mp3 and computer products, Canon
with its camera systems and Sony with music entertainment and HD TV. Samsung is one of the largest
electronics and IT companies. According to Fortune, they have made themselves noticeable by being
ranked second company in their industry (Electronics, electrical equipment) with a fortune 500 rank of 46
(Fortune, 2007). We have chosen to position Samsung's products in 5 different categories, because they
have different position in each category.
Products & Market Positioning Diagram
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High Prices Mobile
LCD HD
TV/DVD
LG Electronics (Business Divisions)
About Samsung
Samsung’s VisionSamsung is guided by a singular vision: to lead the digital convergence movement. We believe that through technology innovation today, we will find the solutions we need to address the challenges of tomorrow. From technology comes opportunity for businesses to grow, for citizens in emerging markets to prosper by tapping into the digital economy, and for people to invent new possibilities.
It’s our aim to develop innovative technologies and efficient processes that create new markets, enrich people’s lives and continue to make Samsung a trusted market leader
Samsung’s MissionEverything we do at Samsung is guided by our mission: to be the best “digital-Company”.
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Low Perceive Value
High Perceive Value
Low Prices
Digital Appliance
Semi Conductor
DISPLAY DIVISION TV Digital TV Monitor CPT CDT PDP Components (DY,
FBT, MGT)
MULTIMEDIA DIVISION
CD-ROM Drive DVD-ROM Drive CD-RW Drive VCR DVD Player Notebook PC PC camera Audio Security system Banking automatic
Samsung India aims to be the ‘Best Company’ in India by the Year 2012. ‘Best Company’ in terms of both the internal workplace environment as well as the external context in which the Company operates. Samsung aims to grow in India by contributing to the Indian economy and making the lives of its consumers simpler, easier and richer through its superior quality products.
“Our aim is to gain technological leadership in the Indian marketplace even as our goal is to earn the love and respect of more and more of our Indian consumers.” Mr. S.H. Oh, President & CEO Samsung South-West Asia Regional Headquarters.
Samsung in IndiaSamsung India is the hub for Samsung’s South West Asia Regional operations. The South West Asia Regional Headquarters looks after the Samsung business in Nepal, Sri Lanka, Bangladesh, Maldives and Bhutan besides India. Samsung India, which commenced its operations in India in December 1995, today enjoys a sales turnover of over US$ 1Bn in just a decade of operations in the country.
Headquartered in New Delhi, Samsung India has a network of 19 Branch Offices located all over the country. The Samsung manufacturing complex housing manufacturing facilities for Color Televisions, Color Monitors, Refrigerators and Washing Machines is located at Noida, near Delhi. Samsung ‘Made in India’ products like Color Televisions, Color Monitors and Refrigerators were beingexported to Middle East, CIS and SAARC countries from its Noida manufacturingcomplex. Samsung India currently employs over 1600 employees, with around 18% of its employees working in Research & Development.
SAMSUNG’S V.R.I.O FRAMEWORK
Resources Valuable Rare
Costly
to
Imitate
Exploited by
Organization
Competitive
Implication
Economic
Implication
Strength
or
Weakne
ss
Technology Yes No Yes NoCompetitive
ParityNormal Strength
Human
ResourceYes No No Yes
Competitive
ParityNormal Strength
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Corporate
StrategyYes No No Yes
Competitive
ParityNormal Strength
Value
Since 1969 through 2005, Samsung has become a large consumer electronic company that produces
semiconductors, digital media, telecom, LCD and digital appliance products. Samsung achieved success
from five different categories from their resources which it can divide into three parts; technology, human
resource and corporate strategy.
First, Samsung has innovative technology in R&D market. Samsung did not have technology to produce
DRAM in 1980s; they bought technology from another company to manufacture DRAM. However,
Samsung can produce DRAM based on that technology and established two teams for design DRAM
(Barney, 2008:PC2-8).
Second, Samsung has great human resource and policies. Samsung does not care about employees’
background; they only hire employees who have abilities. Therefore, Samsung can have employees from
many other countries and talents people. Also, they tried to develop employees’ skills through place
program. Samsung tried to hire and develop quality employees and rewarded those employees.
Third, Samsung’s corporate strategies bring success in their business. In 1980s, Samsung had to make
important decision of DRAM style. There were two different DRAM styles and Samsung’s Chairman
decided to produce DRAM with stacking style which brings success to Samsung (Barney, 2008: PC2-8).
Samsung could lose DRAM market depending on that decision, because both DRAM style were popular
and it is hard to choose which style is better than the other. Another strategic challenge for Samsung was
having partnership with Chinese DRAM Company in 2005. This Chinese company followed what
Samsung did in 1980s, they expend their market and this was threat for Samsung. Became partner with
Chinese company, Samsung would have access to China DRAM market in the future (Barney, 2008:PC2-
20).
Rarity
Each company has their own resources, it can be something that other companies already have or are
unique. Samsung’s resources are valuable but many other companies have technology, human resource and
corporate strategy. A company can acquire technology if they have enough investment, also a company can
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have good employees depend on their flexibility. Once a company have quality employees, those people
will lead the company to success way and provide strategic decisions.
Imitability
Except technology, human resource and strategy does not costly to imitate; also, Samsung bought the
technology from other company at the beginning. Therefore, all of resources are imitable for competitors.
Currently, Samsung is facing Chinese DRAM Company because of imitability of their resource.
Organization
Samsung has developed DRAM technology in better ways but they brought technology from another
company, but Samsung has built own human resources and polices that supports corporate strategy.
Competitive and Economic Implication
From Table 1-1, two valuable resources that were exploited by the organization represent that Samsung is a
strong company. Overall, Samsung has a competitive parity and normal economic scale; all of resources
work as competitive advantage for Samsung.
Cost leadership
Since Samsung bought DRAM technology from other company, they has develop and come up with better
technology. Samsung has introduced many products with low price and high technology products. High
technology requires high cost; Samsung tried to reduce cost by having main R&D facility and fab line in
South Korean instead of having many branches in other countries (Barney, 2008:PC2-17). These cost
leadership came from Samsung policy, which is “We will devote out human resources and technologies to
create superior products and services thereby contributing to a better global society” (Samsung, N/A).
Products differentiation
Samsung has tried to differentiate their products from other companies based on three categories, which are
product attributes, firm-customer relationships and firm linkages. There are many competitors that produce
similar products as Samsung; Samsung has to deal with competitors in five different industries.
Samsung add different features into their products to differentiate from others. For example, adding pod cast
feature into headset in order to provide more function fro customers (Samsung to put podcast feature on
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handsets, 2007). Feature difference attracts more customers and Samsung trying to differentiate their
products by present new features.
Samsung was not popular brand, but they became No.1 TV market in 2007 (Moon, 2008). Currently,
Samsung is a well known brand, they have reputation from customers and provide quality products to
customers. Also, Samsung opened showroom in the New York City to create loyalty with customers.
Samsung differentiate their products by acquiring other companies. Samsung Electronics has acquired
Phoenix SecureCore in 2007, in order to produce firmware for their electronic devices (SAMSUNG
LICENSES PHOENIX SECURECORE, 2007). Also, use their supply chain management system to
forecast trends and sales, therefore, Samsung can prepare for next strategies (Moon, 2008).
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Samsung Electronics Company was established in Taegu, Korea in 1969 by Byung-Chull Lee. During that
time the company only manufactured black-and-white TV sets. Since 1969, the company has enjoyed
steady growth. At the end of 2004, Samsung had around $80 billion in net sales, $60 billion in assets and
had 113 thousand employees worldwide. Also, in 2004 Samsung stood up ahead of many their competitors
such as Phillips, Kodak, and Panasonic (Barney & Hesterly, 2008, PC 2-1). By that time the company
produced TVs, AV equipment, and computers; the Telecommunication Business, which manufactured
mobile phones and networking equipment; the LCD Business, which made LCD panels for notebook
computers, desktop monitors, and HDTV; and the Digital Appliances Business, which produced and sold
refrigerators, air conditioners, and washing machines (Barney & Hesterly, 2008, PC 2-6).
Samsung believes that the success of their contributions to society and to the mutual prosperity of people
across national boundaries truly depends on how they manage their company. (Samsung, 2008) Kun Hee
Lee, current chairman of the Samsung Group always teaches his employees: always demand superiority in
product design and process efficiency. Under Lee’s leadership, Samsung Corporation has become one of
the world’s leading memory producers in all types of PCs, digital cameras, game players, and other
electronics products (Barney & Hesterly, 2008, PC 2-1).
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SALES PROMOTION
Sales promotion is a variety of short-term incentives to encourage trial or purchase of a product or service
by the consumers or the trade (retailers).
There has been increase in the sales promotion budgets of all organizations. Even smaller firms and retail
outlets like Shopper’s Stops have had sales promotion campaigns. This growing significance can be
attributed to the following:
a) Growing consumerism in India and an upwardly Denim Indian market.
b) Heightened inter-firm rivalry within the industry and in fact, in all sectors of the
economy.
c) Trade’s resistance to invest additional resources in the product mix of different
companies. This resistance is mainly because of most consumer companies enlarging
their product mix to pre-empt competition and also to satisfy different consumer
needs. Since the trade has limited sources they find it difficult to invest in all
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companies’ products. Hence, the trade also demands more incentives for any
additional investment.
d) Fragmentation of viewers and readers arising out of multiple television channels,
newspaper and magazines.
e) The mass media cost has been on the rise and most companies find sales promotion a
more cost effective alternative.
f) With technologies and products getting standardized, differentiation between firms
has got blunted and price wars have now become a reality in most consumer goods.
Benefits offered by sales promotions
It helps in securing trial and defending shelf space against competition.
Smoothens out the manufacturing capacities of firms in such a way that the peaks and the valleys are
minimized.
Provides opportunities to manufacturers to reach out market segments with differing price sensitivity
Adds excitement to the in-store merchandizing of consumer goods
Motivates the trade to keep more and push more of those brands that are on promotion
Types of sales promotion
Sales promotion can be grouped into the following:
A.A. Consumer sales promotions (Pull Strategy)
B.B. Trade sales promotions (Push strategy)
Consumer sales promotion methods encourage or stimulate consumers to patronize specific retail stores
or try particular products.
Trade sales promotion methods stimulate wholesalers and retailers to carry a producer’s products and to
market these products more aggressively.
Consumer Sales Promotion Methods
Consumer sales promotion methods used by retailers are often aimed at attracting customers to specific
locations, whereas those used by manufacturers are generally directed at introducing new products or
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promoting established brands. Various sales promotion like coupons, demonstration, frequent-user