Lg Project2(Original)

8/11/2019 Lg Project2(Original)

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Acknowledgement

Notin$ concrete c!n be !cie%ed &itout !n optim!"

combin!tion o# in'pir!tion !nd per'pir!tion. No &or( c!n be

!ccomp"i'ed &itout t!(in$ te $uid!nce o# te e)pert'. It i'

on"* te criti+ue' #rom in$eniou' inte""ectu!"' t!t e"ped

tr!n'#orm ! product into ! +u!"it* product.

) would like to grate7ully acknowledge and e


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DECLARATION

This 4roject titled A!A@S)S *0 S(2)(S A!1

/ST*M(SC 0((1BA> T* STA!1A1 ?AT((1 BA!>D

being submitted by me in the 4artial 7ul7illment o7 reEuirements 7or the

awards o7 B.B.A degree 7rom Tecnia )nstitute *7 Ad5anced Studies6

A77iliated to GGS )P /ni5ersity6 1elhi.

) 7urther certi7y that ) ha5e not submitted this 4roject re4ort 7or

any other degree or di4loma certi7icate.

All sources o7 in7ormation and hel4 are authentic and ha5e been

acknowledged in the re4ort.

A!>)T WA?)

B.B.A,'T?S(M

"#$$%"$%"&

E,EC-TIE S-MMAR/

iii


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This report is an analysis of the Marketing Strategies of LG.

LG is a Multinational Company having its presence all over the

world. A thorough study of LG Electronics how it came into

e!istence " operations of LG Electronics #ndia has $een

presented along with an #ndian industry analysis.

Analy%ing the company in the $ackdrop of the #ndian &ome

Electronics was considered to $e important $ecause it is a highly

competitive market and it is very important to know where a

company stands in this industry.

There after an intense study has $een done into LG's corporatehistory its origin developments e!pansions strategies etc. Adiscussion a$out LG's operations in #ndia follows and there$y thetwo chosen areas i.e. marketing is discussed in the su$se(uentsections.

The four )'s of marketing have $een discussed in detail

individually along with the product's $rand awareness under the

marketing section.

Product0 &ighlights the addition and change in the product range

of the company and the significance of each of its product lines.

i5


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Pricin$0The $asis used for pricing and how the products have

$een priced.

P"!ce0 The kind of distri$ution network used to market its products.

Promotion* All the promotion activities to promote the company's

$rand and its products in order its increase its market share.

+indings and recommendations have $een drawn keeping the

industry and company analysis in mind. Graphs " Ta$les have

$een included in the data analysis chapter.

5


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LG ELECTRONICS 1 COMPAN/ PROFILE

LG Electronics; goal is to ena$le the intelligent networking of digital products that will

make consumers; lives $etter than ever.

Corporate ame LG Electronics #nc.

Esta$lished -cto$er / /958 oido?dong >oungdungpo?guSeoul @orea /5:?70/Tel* 80?0?2777?///43L* http*BBwww.LGE.com

Chairman " CE- Mr.>ong am

,usiness AreaandMain )roduct

Di$it!" Di'p"!* 2 Medi! Comp!n*igital TD )) Monitor C?3-M rives D?3-M rives C 3ewrita$le 3ecorder DC3 D)layer Audio Security System 3ecording MediaDideo )hone )C Camera ,anking AutomaticSystem )C,

Di$it!" App"i!nce Comp!n*Air Conditioner 3efrigerator Microwave -venashing Machine Dacuum Cleaner Compressor for

Air Conditioner Compressor for 3efrigerator

Te"ecommunic!tion E+uipment 2 3!nd'etComp!n*

TF STA3EF optical switching systems#mplementation of advanced #,S


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The S 72 $illion LG group is one of the world's top

conglomerates today having esta$lished its supremacy in diverse

fields ranging from electronics chemicals etc. to trade and

services.

The LG group was $orn as HLucky Chemicals' in /947 a pioneer in

the fledgling chemical industry. ith a pioneering spirit founder

chairman #n &wi?koo planted the seed of industry in a $aren land.

The seed grew into a dream factory for hope. uring the /95:'s

amidst the ruins of the +rancen war the HLucky' $rand emerged as

the representative $rand of +rance offering dreams and 1oy to the

impoverished +rancen economy. LG was the first +rancen

Company to make cosmetics and to enter the synthetic resins

industry.

LG esta$lished HGold star' in /958 opening the door to the home

Electronicsin +rance. Since developing +rance's first radio in /959

LG Electronics has pioneered and led the +rancen &ome

Electronics for over four decades .LGE was also the first company

to produce the first electronic fan ,B television. #n /96:'s with the

launch of a national economic development plan LG emerged as

the leader of +rancen industrial growth.

LG's success is ensuing the genial alliance $etween the +rancen

government and the organi%ation. The South +rancen Government

guided the five chae$ols into different industries and product lines.

#n the the $eginning of /97:'s after passing of the founder B

chairman #n?&iwi @oo Cha?@yung @oo took over as the chairman.

nder his a$le leadership in a decade LG esta$lished more than


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0: sister companies and schools increased its sales $y 26 times

its e!ports $y 9: times and confirmed its place as +rance's leading

$usiness group. #n particular it opened a central 3 " centre the

first +rancen company to do so which served as a $ack $one for

strengthening international competitiveness.

,y mid 8:'s LG grew into a leading comprehensive chemical

company. #t e!panded its electric and electronic $usiness

advanced into the information and communication sector

e!panded its resources and materials $usiness promoted the

growth of the industrial electronics and component electronics

industry strengthened its finance construction distri$ution and

service $usiness and e!panded its none profit $usiness and sports

sponsorshipI all of which contri$uted to enhancing the image of LG

group.

LG's period of first change came in the late /98:'s. #nnovation$ecame the key word in every aspect of management and LG

$egan to change to a (uality oriented management and adopted a

new management philosophy of HCreating value for customers' and

HManagement respecting human dignity'.

#n /995 to prepare for the coming 0/ stcentury chairman ,on?Moo

@oo took the helm of the LG group. At te '!me time LG

"!unced ! $"ob!" m!n!$ement 'tr!te$* #or te 45 't centur*6

!nd c!n$ed it' corpor!te identit* #rom Luc(* $o"d't!r to

7LG8.Even though this occurred in a very short period the LG

$rand was successfully transformed. LGE now meets the world's

customer with LG $rand. LG is known as a premium (uality $rand

with more useful functions and products popular for their superior

design.


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LG8' %i'ion i' to brin$ te 7'mi"in$ #!ce8 to e%er* ome cro''

te $"obe

The JsmilingK face logo sym$oli%es five key concepts world future

youth &uman and Technology. LG $elieves that an effective

com$ination of these elements for the organi%ation. LGE has $een

e!ploring ways to develop com$ine apply technologies that would

customi%e products and services to meet customer needs and

e!ceed their e!pectations LGE is performing this task $y

identifying its focus on 3 " centers.

-utside +rance LGE has seven 3 " centres in apan nited

States #reland and 3ussia among other countries and two 3 "

centres in +rance. LGE's long term strategy is to e!pand its 3 "

center $ase worldwide ad to invest 8 of the total revenue into 3

" .

LG's $usiness strategy for the 0/st century is very aggressive.

#nformation and communication electric and electronics chemical

and energy multimedia $ioengineering and semi?conductors

industries will $e promoted.

LG i' !n inte$r!ted e"ectronic $ood' m!nu#!cturer t!t

oper!te' tree bu'ine'' di%i'ion'0

Mu"timedi! Di%i'ion0

The multimedia division handles a range of multimedia products

such as computers C?3-MS -BA e(uipment information and

communications e(uipment optical data devices audio

e(uipment DC3's cam?corders printed circuit $oards


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$usiness which included igital Dideo isk


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leading products in Europe and orth America. Air?conditioner

sales have increased tremendously within the last 2?4 years and

have received accolades from customers in Africa Latin America

and Eastern Europe.

Di'p"!* Di%i'ion

The isplay division produces TD sets


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Communication evices isplay products Magnetic recording

Media Electric B Electronic components.

Te comp!n*8' ne& product 'tr!te$* i' centered !round it'

di$it!" tecno"o$* !nd #e!ture' ne)t9$ener!tion di'p"!*

de%ice' !' it' core product $roup. LGE is already recogni%ed

for its technology superiority in digital television and is channeling

appropriate resources into this category to achieve growth and

leadership position.

Going forward LGE i' m!(in$ $re!t 'tride' to&!rd' re!"i:in$

it' %i'ion of $ecoming the 7;e't G"ob!" Comp!n*8 in te 45't

centur*. As LGE pursues this vision it remains committed to

delivering outstanding products and services to customers around

the world.

LG8' i'ion

LG ELECT3-#CS envisions a future where life is convenient and

pleasant where living spaces are full of happiness. And where the

promise of the future we all dream of comes true.

LG Objecti%e'

Achieve gross sales of S78 $illion.

Secure ordinary income of 6 percent of gross sales.

Attain a return on investment of /5 percent.

,uild a $rand reputation for total satisfaction.

Create more comforta$le convenient homes electronics

companies .in every corner of our glo$al village the company is


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dedicated to creating a $etter future for all consumers wherever

they may live.


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LGE p"!n' to bui"d


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get to the glo$al digital market with smart products that can

simplify life. More t!n >? o# te tot!" re%enue' !re 'pent on R

2 D e%er* *e!r. ;* te *e!r 4@@@ !t "e!'t ? te tot!" re%enue

&i"" be put b!c( into re'e!rc !nd de%e"opment.

LG nurtures its employees o$tains patents for revolutionary

products and encourage 3 " achievement with diverse

incentive. #t's /2 domestic la$s including the LG production

Engineering research centre and our /: overseas la$oratories are

doing their at most in $asic technology manufacturing skills

(uality performance standardi%ation and design. ith the

company internal campaign for (uality innovation LGE is gunning

for glo$al leadership in digital technology. LGE's customer?oriented

performance is $acked $y energetic 3 " activities. 3 " $ased

TL 0::5 looks ahead at yet to $e invented technologies and

sensational products that with deliver outstanding performance to

$etter your life

LG9R2D i'ion0

/. +ocus on performance ma!imi%ation $ased on market leading 3

"


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LG M!n!$ement Pi"o'op* Cre!tin$ !"ue #or te Cu'tomer0

The whole purpose is to create value for the products and to serve

the customers in every thing we do. ith satisfied customers LG

will naturally continuously and consistently innovate and develop to

achieve our goal of providing the almost value per customers.

Management ,ased Esteem for &uman ignity* )eople are the

origin of all values in all management activities. Management

$ased on human dignity helps us achieve all goals. )eople should

practice company's vision sense of value and goal in view of

ownership to the company.

LG L-G- C-CE)T

Identi#ic!tion o# te '*mbo" M!r(

Sym$ol mark is the most important element of corporate

identification system. #t is the representative sym$ol of LGE

throughout the world. Sym$ol mark creates a unified mental image

of LGE necessary in international communication.


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The sym$ol mark which represents the J+ace of +utureK

incorporates five concepts and sentiments of world future youth

human and technology.

The circle with the letters JLK and JGK sym$oli%es that human $eing

are the most important aspect of our $usiness and e!presses the

resolution to do our $est to maintain close ties with our customers

and to ensure their satisfaction.

The red color reinforces an image of warmth and familiarity with

our glo$al customers and highlights LG's challenge to $ecome a

world class company.

;r!nd M!r(

,rand mark is the most important element of $rand identification

system. #t is the representative sym$ol of LGE throughout the

world. ,rand mark creates a unified mental image of LGEnecessary in international communication.

LG in Indi!

LG Electronics #ndia Limited


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,irla group. That move too failed in the negotiation stage itself. ,y

then the Goldstar had ac(uired a poor reputation with dealers and

consumers alike.

ith the change in its corporate identity in /995 worldwide from

HGoldstarK to JLGK it proved to $e lucky in #ndia only the third time

around despite $eing one of the first multinationals to hit the

#ndian market after li$erali%ation.

The company launched in elhi in May 0::: with ten model of

color television ranging from /4 inches to 09 inchesI eight models

of large capacity Mi!er Grinder ranging from 20: lt to 65: lt and

three models of Citrus uicer from 5.5 kgs to 0: kg and

su$se(uently launched the same in Chandigarh Lucknow aipur

,om$ay )une Calcutta Anmeda$ad #ndore ,angalore Chennai

and &ydera$ad.

These entire products $ear the LG $rand name which the

company has decided to change from its previous $rand JGoldstarK

around the world starting from 0:::.

Today in a short span of 04 months LG has twenty si! models of

colour television ranging from /4 inches to 6: inchesI /4 models of

large capacity Mi!er Grinder ranging from /75 lt to 89: ltI sevenmodels of Citrus uicer ranging from 5.5 kgs to 0: kgsI nine

models air conditionersI three models of micro wave ovensI two

DC's and have su$se(uently launched the same all?#ndia.

The company is envisioning a total investment of S 089 million


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Along the way the company plans to e!port products worth. /::

million in a ten?year period is starting from the commencement of

mass production in #ndia. #t also has a plan to invest 05 of its

e(uity to the #ndian pu$lic or to an #ndian investor after 5 years of

operation.

#n the #ir't p!'e of investment from 0::: to 0::/ the company

has decided to invest S /:: million


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#n the past five years #ndia has attracted a num$er of multinational

companies to invest in the country offering a plethora of choices to

the #ndian consumers. Thus the consumers seek international

$rands that offer value for money as well as a high standard of

service. LGE#L ceasely strives to $e responsive to consumer

needs desires and ha$its.

Today LGE#L is regarded as one of the top home Electronics

companies in #ndia


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LG Group' pre'ence in Indi!

LG Electronics #ndia Limited

LG Software

LG Chemicals

LG Construction

Production F!ci"it*

LGE#L set up its 47 acres manufacturing facilities at Greater oida

in April 0::/. Today the factory chuns out washing machines

colour televisions Toasters and micro wave ovens.

Mi!er Grinder is e!ternally sourced from Allwyn's manufacturing

facility at &ydera$ad. Currently LGE#L has tied up with Doltas Ltd.

to source a$out 6::::: Mi!er Grinder over 2 years from an 0::2

to ec. 0::5.

Doltas will product Mi!er Grinder according to the specified

standards of design and (uality given $y LG electronics. Doltas

would increase its capacity of /8:::: units to 05:::: units per

year of which LGE will $e sourcing a$out 8:.

At present the average #ndigeni%ation level in LG products is

a$out 45 percent and it plans to increase it to 85 per cent in the

ne!t couple of years. hen it had started the production of air

conditioners the level of indigeni%ation was a mere 0: per cent

that shot up to 9: per cent almost instantly. &ome Electronics

would also $e reaching such levels $y the end of the year.


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LG8' Production C!p!cit*

Color TD's 5::::: units

Semi Automatic Citrus uicer 0::::: units

Air Conditioners /::::: units

Micro waves 5:::: units

Mi!er Grinder E!ternally sourced

M!nu#!cturin$

At its state of the art manufacturing plant acute cost control has

$een on the agenda from day one. Some of the ways used to

control costs at the plant are*

a. +ull?optimi%ation of resources

$. Smoothening the clock work

c. 3aising the efficiently of employees

d. Minimal inventory levels.

At the plant it is made sure that there is no wastage of material

and every thing must keep moving all the time. Since money has

time value nothing that has hogged money should lie idle for too

long.


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#nventory is kept minimal for which strict guidelines are followed

religiously all through the chain. The plant keeps no more than

seven days stock of material from vendors and /5?0: days of

imported parts. ,ranch offices must have at the end of every

month 1ust 4: percent of the re(uirement for the ne!t month with

the rest $eing replenished $y the /5th.

Cost cutting has always $een a high priority for LG operations

around the world. #n keeping with this aim the company has $een

trying to achieve much locali%ation as possi$le as fast as possi$le.

At pre'ent te !%er!$e "e%e" o# indi$eni:!tion in LG product'

i' !bout per cent. The company hopes to increase that to

85 within the ne!t couple of years or so thus insulating itself

from e!change rate volatility and crushing costs in general. The

challenge is to cultivate high (uality local vendors (uickly. hen

LG first started making ACs in #ndia the indigenous componentaccounted for a mere 0: percent of the value of the final product

$ut within a few months the figure shot up to 9: per cent level.

&ome Electronics will hit a compara$le position $y the end of

0::5.

Since the S) of LG has $een high technology it cannot let any

defective product pass through the gates. Even ensuring that the

machines can handle #ndian conditions has $een top priority for

LG. Every product is put to an Early Life Test


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Inno%!tion !t LG

At LG innovation is a policy. The management's pet phrases are

HT)# 5:' and T3. The former total productivity innovation of 5: per

cent urges employees at all levels to increase productivity $y 5:

per cent. And the latter is the tool that helps to do thatNTear own

3e?engineering $y which employees especially at the assem$ly

line are directed to tear down all processes to the ground and start

afresh $y using less tine more innovative techni(ue and so on. #n

this manner it is $elieved the company is $ringing down costs for

the future and through T3 and T)# 5: e!pects to create

significant profits this year.

Engineers at LG don't say Hno' to any idea. #f the company has to

compete in the long run it cannot do so $y merely cutting costs. #t

is innovation that wins the race even in a market as $udget

constrained as #ndia.

A;O-T LG8S COMPETITORS

Pi"ip' Indi!

)hilips is one of the oldest multinationals to enter #ndia nearly 6:

years ago. )hilips has had a fairly successful run as a ma1or player

in the television market. The company has identified domestic

Electronics personal computers and monitors software as its

target $usiness. #n the year ending ec'98 )hilips #ndia has

notched up sales of 3s. /482 crore.


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S!m'un$ E"ectronic'

Samsung electronics another +rance company launched a$out

five years $ack entered #ndia with a stake of 5 million in the #ndiasu$sidiary Samsung #ndia electronics Ltd. in which it holds a 5/

per cent controlling share. The product portfolio of Samsung

Electrons ranges from Multimedia products home Electronics and

telecommunication product systems.

#n #ndia the company has esta$lished a leadership position in the

product categories in &ome Electronics's 44: watts Mi!er Grinder

C $ased systems washing machines microwave over and

DC's. #n 0::: it had a market share of 8. The company plans to

set up a manufacturing facility for home appliance at the oida

comple!. This facility for which the investment is estimated at

around S /5?0: million will have a production capacity of

5:::: units each for refrigerator and washing machines.

The company plans to set up four factories at the oida comple!

$y the year 0::: for &ome Electronics's refrigerators washing

machine microwave over and room AC's with a total investment of

3s. 06: crore.

;PL

Crompton Ltd. the market leader in consumer electronics the

flagship company of the 3s. 2::: crore Crompton group has

turned in an improved performance in 0:::?98 over the previous

year. The company's sales have risen 25.7 per cent to 3s. /746

crore over the previous years.


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The company is involved in the manufacturing of , " &ome

Electronics and colour picture tu$esI washing machineI microwave

ovensI vacuum cleaners etc. in order to fight the onslaught of the

multinationals in the consumer electronic industry Crompton which

is in technical colla$oration with Sanyo is all set to unleash a host

of new products for the domestic consumer. #n 0::2 the company

had market shares of 0/ in &ome ElectronicsI 6.0 in

refrigerator /9.0 in washing machinesI 44.6 in microwave

Crompton is the only company is trying to face competition on the

technical front with the various MCs that are %ooming into the

country with their JdigitalK range of products.

ir"poo"

This company invested in #ndia in /987 $eginning with the venture

with TDS private limited. #n /994 TDS hirlpool Ltd. changed its

name to hirlpool Citrus uicer Ltd. #ts dominance is mainly in the

white goods industry. #t /995 hirlpool re(uired controlling interest

in @elvinators of #ndia one of country's largest manufacturing and

marketer of refrigerators. #n /999 the company is in the process of

manufacturing Glo$al o. frost Mi!er Grinder in the forthcoming

pro1ect.

#ts market shares in 0::4 wereI Mi!er Grinder /9.2I Citrus uicer

/4.6.

IF;

#+, stands for #ndian fine $ank. #t started its operations in /989

when it launched its first washing machine. #t has a significant

presence in the high end Citrus uicer market with its fully

automatic washing machine. #+, has plans to increase its


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customer $ase $y increasing its product range. Currently the

company is into the manufacture of microwave ovens

dishwashers and clothes dryers. #ts market shares in 0::4 wereI

Citrus uicer 6.5I microwave 00.4.

Amtre) 3it!ci

#t has strategic alliance with &itachi Ltd. of apan. #t entered white

and $rown goods market in #ndia a$out seven to eight years $ack

and is aiming at a market share growth $y /6. #t is ma1ority into

the marketing of high end AC's each in split and windows segment.

#ts market shares in 0::4 were* air conditioner 0/.0.

Godrej GE E"ectronic'

The company has posted a loss of 3s. 6: crore in /999. #t posted

a 2: per cent growth in sales volume in the refrigerator $usiness

during the si! N month period ended ec'97 higher than the

industry average. Godre1 is the market leader in the refrigerator

segment. #n 0::/ it recorded a market share of 2/./. #n the

Citrus uicer segment it recorded a market share of 5.5. #t is the

only national player in the cooking range market in #ndia. #t is a

also planning to venture into $usiness like water purifier systems in

the near future a strategy which has ena$led it to $ecome a multi

appliance company.

E"ectro"u)

A, Electrolu! the world's largest manufacture of household

Electronics reached an agreement to o$tain ma1ority ownership in

an #ndian Citrus uicer manufacturerI #ntron Ltd. Electrolu!

invested S 0.4 million in the step to o$tain 5/ ownership in


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+ocus on niche segments

ominance of +rancen work culture

Little presence in A", class towns

Opportunit*

Convert image into market share

ide product portfolio

)ositive ru$?off due to high (uality

&ealthy resource generation

Tre!t'

ay $ehind market leader

Stagnant ur$an demand

othing uni(ue a$out strategy

&ighly competitive market


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M!r(etin$ Str!te$*

#n a short span of 1ust 06 months since its inception in May 0::6

te br!nd !' !tt!ined ! br!nd !&!rene'' "e%e" o# !bout @?

in te con'umer dur!b"e Indi!n m!r(et.

Considering the fact that LG electronics is a +rancen multinational

entering the #ndian market meant esta$lishing itself in a different

market altogether with varied culture and consumer tastes and

preferences. Also that so many multinationals are sweeping into

the country it is evident that each and every company has a

cutting edge over another. Te'e $"ob!" corpor!tion' !re

de%i!tin$ #rom teir intern!tion!" metodo"o$ie' !nd

impro%i'in$ teir 'tr!te$ie' #or "oc!" m!r(et'.

LG's locali%ation of strategy covers the following areas*

Entr* Str!te$*0 #t is always $etter to esta$lish as fully owned

su$sidiaries. #t is considered $etter if the company has a local

partner $ut since LG's earlier two attempts had already failed it

decided to do it all alone this time. Te 'tr!te$* t!t LG !'

!dopted i' pre'entin$ !n Indi!ni'ed #!ce to it' product' but

(eepin$ te tecno"o$* !t $"ob!" "e%e"'.

Oper!tion'0 LG opted for starting its own manufacturing facility at

Greater oida. The 0: month schedule to commission its

manufacturing plant was compressed to /: months. The company

decided to go in for a green field pro1ect rather than ac(uisitions or

mergers.


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Product'0LG decided to go in for Product Ad!pt!tion Str!te$*.

Glo$ally LG does not operate in the direct cool refrigerator semi

automatic Citrus uicer and 0/ inch &ome Electronics;. ,ut the

company had to develop these products for the #ndian market

$ecause these areas constitute a ma1or $ulk of $uys for the #ndian

consumer. Also LG launched sampoorna #ndia;s first TD with a

devangiri script on screen display on the 5: thanniversary of #ndian

independence. LG's strategy of locali%ing its products to suit #ndian

tastes added to its strength.

Se$ment!tion0 The Company decided to enter the high end

middle?class onward segment in the initial stages since most of

the #ndian $rands were targeting the low and middle end

customers. #n the past 2 years due to LG's distinct strategy it has

carved a niche for itself in a crowded segment of 0:

manufacturers.

;r!nd0 The Company launched its products in country with JLG

the glo$al leaderK. #t did not opt for any esta$lished $rands in the

country to $e associated with it.

Le!der'ip0At LG electronics keeping the locali%ed strategy in

mind an #ndian heads the strategic areas such as sales and

marketing. Generally it happens that the senior management is

deprived of #ndians in a transnational $ut LG did to want to follow

this path it wanted that the marketing division $e headed $y an

#ndian $ecause he would $e versed of the #ndian market and

cultures. ltimately it is this which determined whether the

company wants to make profits or o$tain a market share. LG

definitely wants to $e the leader in the home Electronics industry.

Seeing the progress that the company has made in the past 2


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years it has revised its plans for $ecoming the num$er one home

Electronics Company to the year 0::4 from 0::6. The company

even plans to $reak even this year. ;* te *e!r 4@@> it' turno%er

in Indi! &i"" compri'e ne!r"* 4 per cent o# it' $"ob!" turno%er.

This is significant for a multinational that has $een in the market for

1ust two years.

,efore launching itself in the market in 0::2 it carried out an

e!tensive research study to understand consumer motivations to

create magnetic products price them strategically position them

sharply and keep making the magnetism more potent. &aving

understood the finer differences in consumer motivations it opted

for sharp arrow Hreason to $uy' differentiation over the $lanket all?

approach


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ithin the first 4.5 months the company went all?#ndia. As the

company $usiness $egan to rise LG introduced the following

products to e!pand its product portfolio*

Air conditioners

55: watts refrigerator

Semi automatic Citrus uicer

Microwave ovens.

#n a $road perspective LG's sales and marketing success can $e

attri$uted to its7 )'s of marketing. #n addition to the products

price place and promotion the key factors that have

contri$uted to LG's success are the following 2 additional )'s*

P!ce6 Peop"e !nd P!''ion

The most important winning factor of the sales and marketing has

$een its H)assion'. #t is this attri$ute within all the workers that

drives the other 6 )'s.

&owever LG's Marketing Strategy is $ased on 2 )'s apart from theconventional 4 )'s of marketing*

Premiumpricing to maintain margins

,reathtaking P!ce to create riches

eep Penetr!tionto increase volumes.


36/91

Premium Pricin$0 LG electronics was one of the late entrants the

/8thplayer. hile other companies were 1ostling to play the low

price high volumes game LG decided to concentrate on the high

end of all the product segments.

The ma!imum price of a &ome Electronics was 3s. 0/::: for a

0/inch model was /: per cent higher than Sony's prices. Since

most of the competitors were catering to the lower and middle

segments LG decided to concentrate on the premium segments.

To cultivate the image that LG was a leader is $oth technology and

(uality innovative products ware launched* Golden Eye &ome

Electronics whose picture ad1usts automatically according to

e!ternal light conditions and Mi!er Grinder with preserve utrition

system that keep perisha$le foods nutritious.

Also a premium image precluded the company from offering

discounts or resorting to e!change offers. The strategy to offer

value propositions to the customer through honest pricing is that of

a long term player.

Any ways LG's (uality products and competitive prices have $een

accepted in the market place considering its 9: $rand

awareness.

P!ce0 The Company did not want to waste anytime $eing among

the last to enter the market. The 0:?month schedule to commission

its manufacturing plant was compressed to /: months. #t also

decided to go in for a nation wide launch and appointed /:::

dealers in 1ust 5 months in 0::2. +inally the company entered 2

product categories simultaneously ensuring ade(uate retail?space.

The company was a$le to $uild up the market for its products


37/91

faster than it would have $een a$le to do so if its had launched one

product at a time and marketed them region wise.

&owever to keep pace with the competitive market place it will

have to launch models with innovative features at regular intervals.

+or e.g. the proposed launch of a digital TD $y 0::2 and many

other digital products is a step towards this direction.

Penetr!tion0 )ace was followed $y aggressive penetration having

esta$lished /8 $rand offices and C"+ agents in Goa and

)ondicherry to take advantage of the sales ta! $enefits in these

areas and towns like 3anchi 3aipur and agpur the company has

e!panded its dealer network to 05::. ,y the end of this year this

will rise to 05:: dealers. To cater to the rural rich the company's 8

mo$ile vans cover nearly 45:: km of the hinterland around the 4

metros every month. All this $acked $y an estimated annual ad

spend and market support e!penses of 3s. 08 crore in 0::2.

LG8' m!r(etin$ 'tr!te$* re%o"%e' !round !$$re''ion &it

di##erenti!tion. LG8' product' !re di##erenti!ted !' 'uperior

tecno"o$* product'.

LG $elieves in JDalue MarketingK. #t is e!actly opposite of what

Akai Stands for. Akai is pushing volumes $y sacrificing value. -nthe other hand LG is sacrificing volume for value. The refusal to

interpret #ndian price sensitivity as value?insensitivity seems to

have pushed LG in to delving deep into consumer $ehavior for

insights missed $y e!cessively self?centric companies. The $ig

gain of doing it this way of course is pricing power and maintaining

this will remain crucial.


38/91

LG announces new market strategy

LG;s new strategy aims to focus on the premium segment of themarket that fetches greater margins as opposed to volumes. Thecompany claims this will $enefit its consumers channel partnersand stakeholders as it focuses on products that drive rapid growthand lead in their $rand category to create value for customers.Market studies indicate the demand for lu!ury consumer goods in

the Middle East is $urgeoning as a result of the high per capitaincome and (uality savvy consumers with increased purchasingpower. LG en1oys high $rand recognition in the region it is thesecond most recognised electronics $rand with 55.7 per centunaided $rand awareness according to the 0::4 Gallup $rande(uity inde! survey which represents high purchasing pro$a$ilityfor its premium products.

;Even though LG has strong $rand awareness in the region thesales of our premium products in the Middle East need a $oost. LGis already the world;s top selling $rand in terms of air conditionersmicrowave ovens and canister vacuum cleaners. The goal of LG;sigital Appliance Company is to $ecome the num$er one $randworldwide in the home appliance sector $y 0::7 and increaseglo$al sales to S /4 $illion. e are focusing our production andmarketing efforts on high end products in the appliances market.To keep pace with our growth we now need to fine tune ourmarketing strategy and focus on premium products; said avid)ark vice president and head of overseas sales and marketing

LG igital Appliance Company.

To succeed in its premium marketing efforts )ark said LG wouldconcentrate on staying ahead of the technology curve and developproducts that deliver high value to consumers. )ark alsoannounced a new channel marketing strategy to reward itsdistri$utors and $uild on its channel successes in the region. LGhas developed a C3M program called the ;iamond Clu$; to drivethe sales of premium products. Sustaining one market price in all

stores maintaining a price gap with main competitors to retain apremium image uni(ue promotions for target customers and well?trained customer care e!ecutives are features of this channel


39/91

initiative.

;e are committed to investing marketing and training resources toeducate the channel on the $enefits of delivering cutting?edge

mo$ility digital convergence and appliances to customers in thesemarkets; said )ark.

+ocusing on the premium segment in the appliances market willhelp LG overtake competitors such as hirlpool of the SA andSweden?$ased Electrolu!. #n the Middle East LG is aiming foroverall regional sales of S r0.8 $illion this year a 24 per centgrowth over 0::4. Since /999 LG;s igital Appliance Companyhas $een posting over 0: per cent growth in sales every year

compared to the four to five per cent average growth rate in theglo$al home appliances industry.

;To date our ma1or revenue earners have $een commercial andresidential air conditioners microwave ovens refrigeratorswashing machines and vacuum cleaners. e intend to continue to$uild on these core product categories as well as to focus on futuresources of growth in areas such as central air conditionersemen @SA #ran andTurkey participated in the forum.

Product O##erin$' 2 Re"!ted Str!te$ie'

LG has right from its inception launched a series of state?of?the?art

technology $acked products. The sales and the marketing

department keeps altering " refining the product portfolio

according to the re(uirements of the consumers.


40/91

LG Electronics has the following product lines

i. Colour televisions

ii. 3efrigerators

iii. ashing machines

iv. Air conditioners

v. Microwave ovens

vi. DC players


41/91


42/91

Terms used*

++.? +rost free

C N irect cool

SA N Semi Automatic

+A?+ully Automatic

)roduct features of any company product are the competitive tool

for differentiating the company products from other products. The

features of LG's products are discussed in detail in the following

su$sections.

i. Co"our Te"e%i'ion

hen LG launched its range of &ome Electronics in 0::2 it was

caught amidst at least /8 competitors all over #ndia in the industry.

hat it needed was a S) to its range of &ome Electronics apart

from competition.

#t launched its TD with the JGolden EyeK range


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+ollowing are the range of TDs offered*

LG golden Eye.

LG 3oving Eye TD

&ome Cinema

LG Super +lat wide vision

LG +latron

LG Go"den E*e* #t is considered to $e the world's first television

that provides wrinkle free viewing. #t consists of a light sensitive

natural an LGorithms HE>E' and an advanced circuit developed $y

LG. The HE>E' automatically ad1usts colour $rightness contrast

sharpness tint and white $alance in response to any change in

am$ient light conditions. This ensures that one en1oys unmatched

picture (uality without straining the eyes.

-ni+ue #e!ture' o# ! LG T..0

Super #"!t T0 The features of the completely flat screen picture

tu$e designed $y LG's own technologies are* reduced outer

light refection $etter focus from screen centre to corners and

(uick start electron gun.

Mu"ti &indo&' PIP0 This function displays 9 or 4 su$ screens

on the TD screen with 2?second updates. Any of these can $e

selected for main screen viewing at the touch of a $utton.


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Co"our 't!tu' memor*0 This feature allows users to en1oy

picture with their preferred colours.

C!nne" 'c!n0 This is very useful when users want to seewhich program is showing on each channel. ust $y touching a

$utton one can see every channel for a while.

G!me mode0 This is an e!isting in $uilt 2 level electronic game

H)ower ,all' which one can play when ever one does not feel

like watching a TD program.

Auto o"ume "e%e"er0 The sudden changes in volume


45/91

ringer at the door the TD indicates through a $eep and a live visual

of the caller appears on the screen.

LG has launched its JF"!tron Te"e%i'ionK $y the year 0:::. #t has

already starting pu$lici%ing for this TD and has made advance

$ookings open.

The uni(ue features that this TD would offer vis?Q?vis competitors

are*

5@@? #"!t picture tube0 il light refraction for clearer and most

realistic screens images.

Di$it!" 5@@ 3:0 +or flicker free viewing $ecause of dou$le

scanning speed than ordinary TDs

Di$it!" E*e0 To create wrinkle free viewing

Picture9in9picture0isplays su$ screens on the TD.

Picture9out9picture0 Compress the main picture of the screen

while sowing )#) pictures too.

LG has models ranging from /4 inches to 42 inches wide screen.

+ollowing is the range*

/4K inches 2 models

0/K inches 9 models

09K inches 4 models

20K inches / model

42K inches / model


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The company has more variety in the 0/K inch segment $ecause

the &ome Electronics market is dominated $y regular 0/inch sets.

ii. Re#ri$er!tor'

#n the domestic Grinding segment there are two types*

a. 55: watts* This Mi!er Grinder cool through the direct contact of

air with the cooling coils $ound around the free%er. This system

has several draw$acks* #ce forms fre(uently around the coil?

reducing cooling efficiency and creating the need for manual

defrosting. Additionally also the temperature distri$ution is

uneven with the various compartments.

$. 44: watts refrigerator* is designed to overcome the draw$ack of

conventional refrigerators. &ence the cooling coils are located

outside the stroke area. o frost even forms inside these thus

giving high cooling efficiency and ma!imum storage space allthe time.

LG entered the refrigerator market with 2::lt. 44: watts models. #t

introduced 8 models initially and now it has a 9 models in the 44:

watts type and 2 in the 55: watts type. After esta$lishing itself as

the market leader in the 2::lt. plus 44: watts Mi!er Grinder with a

share close to 27 percent in 0::5 LG is now targeting the 55:

watts segment which is the fastest g rowing category among

refrigerator in #ndia


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LG has the following models of refrigerator availa$le*

i. 2 models in 55: watts* /75 litres 0/: litres and 05: litres.

ii. 8 models in 44: watts* 22: litres 26: litres 28: litres 4:: litres

4/: litres 46: litres 57: litres 64: litres.

iii. #-S 72: litre model* elu!e #ntelligent -ptimum Silence.

+rom the a$ove three categories category


48/91

system detects the item and chills it instantly $y concentrating

cool air on it. #t is the $est and the most efficient cooling system

for refrigerators.

Neuro Fu::* contro" '*'tem* ith the help of various sensors

and a micro computer this system provides $ehavioral control

functions. #t calculates the least used moments for defrosting

automatically ad1usts the refrigerator temperature when there is

a change in the room temperature.

En%ironment #riend"** LG has converted its entire 2:: ++

range to C+C free compressors. The C+C


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Te t!r$et !udiences are the top end customers who are seeking

the trendy and rich lifestyle of the west in #ndia. +oreign diplomats

3#s and top e!ecutives constitute this segment.

LG is confident that with 44: watts Mi!er Grinder doing well in the

#ndian market the future for such super premium category Mi!er

Grinder is $right.

This product would $e displayed at select counters within the

targeted 7?/: towns.

The company feels that the successful campaign of its ) system

Mi!er Grinder in the ++ segment is $ound to have a spillover effect

on this new segment.

This refrigerator is directly imported from +rance and a team from

+rance e!tensively trains the service engineers for this product.

Te uni+ue #e!ture' o# ti' product !re0

orlds lowest noise level

orld lowest power consumption

C+C free

niform #ce making dispenser with one touch system

,uilt in home $ar.

Tempered glass shelves

ni(ue electronics temperature control system.


50/91

LG Fre' M!'ter

55: watts Mi!er Grinder come under this category. They give more

space along with $etter value for money. The interiors are

e!tremely fle!i$le to comforta$ly ad1ust shelves and accommodate

all the food.

#t is targeted at the mass market keeping the #ndian industry trends

in mind.

-ni+ue #e!ture'0

Dersatile and convenient

nerring efficiency

Great looks

Strong compressor for cooling

iii. Citru' uicer

#n the Citrus uicer category there are two types of machines*

a. Semi Automatic* ser has to transfer clothes $etween the

washing and drying compartments manually.

$. +ully automatic* washing and drying is done in the same unit.

LG has a$out 6 models of Citrus uicer availa$le in the market out

of which three are fully automatic and three?semi automatic.

The company introduced Citrus uicer in the market in 0::/. The

company has entered the semi automatic segment $ecause $ulk


51/91

of Citrus uicer $ought is semi automatic. orld over the company

does not cater to this category.

LG has a 27 percent share in the market in the fully automatic

Citrus uicer market. #n the semi automatic category it has a /0

per cent share.

Product po'itionin$0 LG8' Citru' uicer !re po'itioned !'

m!cine t!t c!re' #or te #!bric= %i! it' #!bric!re '*'tem.

The technology used in its products in the Chaos punch O2.

C!o' Punc &!'* a water punch that detangles clothes

$efore washing them


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The fa$ricare system has a washing action that creates powerful

water currents and water )unch to give clothes a cleaner more

effective and tangle free wash.

7Punc &!'8 'emi !utom!tic0

This is the orld only Citrus uicer with twin tu$ along with

)unch technology.

ust within a 2 months of its launch in May'98 the LG )unch

wash $ecame the largest selling semi automatic Citrus uicer in

the 6 kg and a$ove category in towns and cities across the

country. Since then it has sold a$out 9484: machines.

The single most important factor that contri$uted to the success

of )unch wash is the fact that it is designed on the $asis of a

deep understanding of consumer needs. The uni(ue features of

this product are*

Punc tecno"o$** The gushing upward movement of water

removes directs effectively. Creates water whirls to wash

clothes much $etter than other types of conventional washers.

)revents damage to the clothes $y using water rather than

friction to clean.

> ($9t&in tub* This is the first twin?tu$ Citrus uicer to $oast of

a 6kg capacity.

Tou$ &!' tub* made of a high impact resistant material

called polypropylene that makes it longer lasting. ni(ue water

dynamic pulsates that's designed to give the cleanest wash.


53/91

Spin tub* The capacity of spin tu$ matches with the wash tu$

such that all the clothes that have $een washed can $e dried in

one go.

7C"e!n M!'ter8 'emi !utom!tic

This is the #ndia's $iggest front load tum$le wash machine with

greater load capacity.

#ts washing action involves an e!tra rinse option and a suds free

system ensures that every $it of detergent is washed away from

your clothes.

The uni(ue feature s of this product is*

um$o drum


54/91

Triple water punch

Triple water fall system

Low power consumption

4 wash programs.

i%. Air Conditioner'

LG's Toasters were launched in phase ## in an'98. #t launched its

Toasters as J&ealth Air ACsK

There are two types of AC sold $y the company*

a. Split type

$. indow type

-n the whole there are a$out 9 models of ACs availa$le in themarket.

3e!"t Air S*'tem0 This system guards against heat dust and

pollution with its uni(ue anti?$acteria filter it drives air $orne germs

out of the $oundary. #ts de?odori%ing filter does away with

unpleasant odors. And the anti?fungus electrostatic air purification

unit traps dust particles as little as :.:/ microns and even smoke.

#t's HChaos' Logic airflow system creates natural air currents and

cools in gentle puffs rather than with $lasts of wold air. Thus it

prevents any unhealthy a$rupt drops in the $ody temperature.

Te uni+ue #e!ture' o# LG To!'ter' !re0

-ni+ue !ir puri#*in$ #i"ter'* The filtering system utili%es twofilters. The electrostatic filter removes the finest dust particles


55/91

as small as :.:/ mm and even to$acco smoke and pollen. The

de?odori%ing filter removes unpleasant odors especially those

caused $y air$orne fungi.

or"d8' #ir't 7C!o'8 "o$ic AC8'0 The most pleasant airflow for

the human $ody can $e found within nature. Countless data and

verification have resulted in the application of the new HChaos'

theory to LG AC's. This is a technology that reviews more

natural air $y controlling the angle and speed of the movement

of the vane.

or"d' +uiete't AC8'* To provide a comforta$le pleasant and

well $alanced environment LG AC's utili%ed a streamlined air

fan and a uni(ue design which create smooth air flow from the

air conditioner so that it operates under the lowest noise level

with the $est structure for the air path. The amount of friction

has $een decreased providing the (uietest Acs in the world.

Fo""o&in$ i' te r!n$e o# mode"'0

i. Split AC's N /.:T /.5T 0.:T 0.5T

ii. indow AC's N:.75T /.:T /.5T 0.:T

LG is launching the Di$it!" P"!'m! AC for the new millennium.

This AC has a igital Laser Sensor that detects hot areas in the

room $eing cooled and focuses air on those areas there$y

providing uniform and efficient cooling.


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Di$it!" p"!'m! AC0 Air C"e!n De9odori:!tion A""er$*

Pre%ention

The uni(ue features of this AC are*

Anti9;!cteri! #i"ter* #t removes dust in the air as well as inhi$its

$acteria proliferation making the indoor atmosphere healthy.

LG AC would $e 98.5 $acteria free.

Neuro Fu::* Contro"* According to the temperature air volume

and air velocity the sensor will automatically operate creating a

more pleasant atmosphere.

93our onBo## Timer* this function allows setting the timer from

one hour to a ma!imum of 7 hours.

Ci"d Loc( Function* This function presents children or others

from tampering with the control $uttons on the unit. All the

$uttons on the indoor display panel can $e locked. The unit can

then only $e controlled $y remote.

%. Micro&!%e o%en

LG launched microwave ovens in the second phase in 0::/. The

company initially introduced two models of microwaves and now it

has launched some models in different colors.


57/91

)roduct positioning* LG8' o%en' !%e been po'itioned !'


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F!mi"* 'i:e o%en* 08lt cavity si%e of oven gives more space for

#ndian utensils and suits #ndian family si%es.

3e!"t &!%e tecno"o$** ni(ue twin source technology emitswaves from top and $ottom resulting in faster and even cooking

without destroying nutrients.

LG has plans to introduce a microwave oven with pre?set #ndian

menus.

#t also plans to launch #ndia's first igital infrared microwave. The

igital infrared sensor in the microwave oven detects the

temperature of food and then automatically regulates the flow of

microwaves for faster and uniform cooking.

Pricing and elated Strategies

LG $elieves in JEthical )ricingK. The company has made various

players in the industry no compromise on the price front despite

the cutthroat price war e!isting amongst various players in the

industry.

#n electronics it was one of the late entrants to enter the market in

0:::. hile other companies that time were playing the low price

high volumes game the company decided to concentrate on thehigh end of all the product segments.

hen the company entered the market ,aron international


59/91

LG be"ie%e' in %!"ue m!r(etin$. #t is e!actly opposite of what

Akai stands for. Akai is pushing volume $y sacrificing value. LG is

sacrificing volume for value. The refusal to interpret #ndian price?

sensitivity as value insensitivity seems to have pushed LG into

delving deep into consumer $ehavior for insights missed $y other

companies. The $ig gain of doing it this way is pricing power and

maintaining this will remain critical. The company when it entered

the market in 0::: was targeting the premium end consumer. +or

e!ample*

a. #n the refrigerator category it entered the 44: watts 2::lt. O

Segment which forms a very little portion of the entire

refrigerator market. #ts 22:lt. refrigerator was priced at 3s.

06:::. -n the other hand Godre1 and Crompton were offering

++ Mi!er Grinder any thing $etween 3s. /6::: to 3s 0::::.

$. LG's $asic 0/ inch model of &ome Electronics is priced at 3s./55::. This price is higher than Sony's compara$le model


60/91

LG is currently selling its products in /8:: towns and cities with

population of one lakh and a$ove. #t has /86 $ranch offices 4:

distri$utors and 0::: dealers all over the country.

,y the end of 0::0 the company plans to reach another 7:::

towns with a population of 5:::: or more. #n this process it will

add on to 6: distri$utors and /::: dealers.

To achieve this sends eight vans to crisscross the country covering

5::: km every month to familiari%e the trade and the customers

with LG products.

#n every city LG approached the $est dealers $ut in a scheme?

ridden market it refused to offer any schemes. #t positioned itself

as an ethical company. #nstead of discounts LG wanted dealers to

pay an advance for LG products. This ensured that the dealer

would push the $rand in the marketplace even if it were 1ust to

keep his oven cash from staying $locked. #n the long run this

created a pent?up demand for the $rand.


61/91

LG since its inception laid stress on Proper C!nne"

Merc!ndi'in$ !nd M!n!$ement. ue to a very calculated

network e!pansion plan LG has the fastest dealer network

e!pansion in the industry and the highest dealer productivity.

ealer loyalty and retention has $een high right from the

$eginning due to proper inventory management higher dealer

profita$ility and incentives proper )-) and other promotional

material to the dealers and a $asket full of products for the

dealers to choose from.

Supp"* C!in !t LG

LG factory E!clusive -utlets

C " + agents

istri$utor

ealer

Promotion !nd Re"!ted Str!te$ie'

+ollowing are the promotion tools used $y LG electronics to

promote the company as well as its products*

Advertising


62/91


63/91

$een taken on $oard for cooking demonstration with the help of LG

Microwave oven. The demos will $e held at kitty parties arranged

$y SL mem$ers at dealer counters


64/91

minute programme on REE TD $y name of JLG &ero'sK where a

personality or any$ody who has e!celled in hisBher field speaks for

a$out two minutes. The clipping showing people who are

successful has got significance with relation to LG's success in the

country.

Cu'tomer S!ti'#!ction !t L$ E"ectronic'

#n today's world of $usiness the market place is a fierce

$attleground with national and multinational companies striving to

outsmart each other. LG $elieves that to emerge as the most

outstanding company $y 0::5 it needs to leave competition

$ehind and this is possi$le only through customer satisfaction.

Cu'tomer '!ti'#!ction in%o"%e' t&o !'pect'0

Intern!" Cu'tomer0 To try to anticipate and satisfy the needs of

the internal customers $y $eing sensitive to them.

E)tern!" Cu'tomer'0 To provide the e!ternal customers the $est

value for money i.e. the highest (uality at the lowest price and

then reinforce the commitment through good service thereafter.

+or e.g. the company has a different service policy. #t goes $y the

name of Jhappy callsK.

#mmediately after purchase the customer service team calls on

customers to find out if they are satisfied with the product and they

are given a call 1ust $efore the guarantee of the product e!pires.

;r!nd Stren$t

A p!t#inder8' 'tud* done last year to see where LG stands inthe consumer's mind has thrown up interesting findings. #t


65/91

comp!red LG8' CT8' Mi)er Grinder !nd Citru' uicer &it

"e!din$ br!nd' in te '!me c!te$orie' on #our p!r!meter'0

rec!"" "e%e"6 recommend!tion inc"in!tion6 !nd 't!tu'

connot!tion !nd product di##erenti!tion. The survey was

conducted in the five metros and four other cities


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#n Mi!er Grinder


67/91

Or$!ni:!tion Structure

Traditionally LG was primarily a marketing driven company and &3

department which was earlier dominant has gained importance

over the last 0 years. A num$er of interventions have $een

coordinated $y the marketing department. The &3 department has

helped in maintaining them and is more responsi$le at corporate

level than at plant level $ut this is undergoing a change. The &3

dept. has a conveyor chain setup.

D.).


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Criteri! mo't common"* con'idered b* re'pondent' to bu* !

LG product.

Attribute R!n(in$ H5 to J

,rand #mage /

+oreign Colla$oration 0After Sales Services 2ealer 4Technology 5

5@

54

5

5>

5

4@

/e' No


69/91

Sceme' pre#erred b* con'umer'

Cash iscount 40#nstallment Scheme 00E!change offer 00+ree Gift /4

Free Gi#t

5?

E)c!n$e o##er

44?

C!' Di'count

4?

In't!""ment

Sceme

44?


70/91

Mo't pre#erred LG product

Product R!n(in$

3efrigerator /

Microwave 0

AC 2

Television 4

ashing Machine 5

@

5@

5

4@

4

CT. AC Re #ri$e r!tor M icro&!%e !' in$

M!cine


71/91

Re"!ti%e br!nd !&!rene'' o# LG product' %i'99%i'

competitor' #or %!riou' product'

Top o# Mind rec!"" #or Re#ri$er!tor'

@

4

C

>

A

5@

54

5C

5>

;PL Onid! S!m'un$ Son*

@

4

C

>

A

5@

54

5C

5>

5A

;PL Eir"poo" LG D!e&oo


72/91

Top o# Mind rec!"" #or Air9conditioner'

Top o# te mind rec!"" #or co"our T.

@

4

>

5@

54

5

5>

C!rr ie r N!tion!" Amtr e) .o"t!' LG .ideocon


73/91

@

4

C

>

A

5@

54

5C

5>

LG Onid! Pi"ip' Son*


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Top o# te mind rec!"" #or !'in$ M!cine

Top o# te mind rec!"" #or Citru' uicer

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ir"poo" S!m'un$ LG .ideocon ;PL

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ir"poo" S!m'un$ .ideocon ;PL LG


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Top o# te mind rec!"" #or Sp"it Air Conditioner'

Top o# te mind rec!"" #or Micro&!%e O%en

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C!rrier N!tion!" Godrej LG Amtre)

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;PL Ken't!r IF; S!m'un$ LG


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O;ECTIES

To identify and analyses the position in the consumer dura$le

industry of LG Electronics #ndia.

Analy%ing the Marketing Strategies of the a$ove company.

To analy%e its performance since to inception.

RESEARC3 MET3ODOLOG/

#nformation regarding the Consumer &ome Electronics

organi%ation Marketing Strategies &uman 3esource Management

has $een o$tained through*


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Second!r* Source'


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HIIJ Gener!" Findin$'0 Ever since li$erali%ation in /99/ many

MCs have thronged the #ndian consumer dura$le market.

Companies such as )hilips Sony ational Samsung etc.

have entered the market over the past years. LG was one of

the late entrants into the market and it has $roken all records.

These multinationals that are coming into the market have the

latest technology aggressive marketing and fat

ADE3T#S#G $udgets. &owever in terms of sale and market

shares #ndian companies still occupy the top slots $ut MCs

are slowly gaining ground. LG is one company that plans to

$ecome o./ in this industry $y the year 0::6. hen MC

$rands come in they have the advantage of owning their

technology. #ndian $rands face pro$lems when it comes to

additional features $ecause they have to $uy from other

sources and this makes their products move e!pensive vis?Q?

vis the MC $rand.

#n the past too the #ndian market has seen MC $rands like Sony

-ptonica Sharp Thomson etc. $ut none of these companies have

performed well. 3eason $eing that these $rands could not

esta$lish themselves hence there was no lasting impression. ow

the trend is slowly catching up in favour of MCs who are offering

technologically superior products. The reason for this $eing that

these MCs has managed to convince the #ndian consumer that

there is more to them. Most of these companies have or are in the

process of setting up manufacturing facilities. This gives the

consumer a feeling of security that they are here to stay. Another

reason for their success could $e that MCs entered the market

when many #ndian $rands were on a decline and they have moved

into those empty slots.


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it te comin$ in o# te #orei$n br!nd' te indu'tr* !nd te

m!r(et !re "i(e"* to $ro& but ti' mi$t be !t te e)pen'e o#

our o&n Indi!n comp!nie'.

The attractiveness of LG Electronics #ndia in the consumer dura$le

industry can $e 1udged from the following FIE9FACTOR

IND-STR/ ANAL/SIS MODEL

E)i'tin$ Competition0 At least 0: manufacturers or even more

than those today flanks the consumer dura$le market. hen

LG entered the market it had competition from /8 companies.

The company at present faces competition from several MC

$rands as well as local #ndian companies. Crompton and ,a1a1

are the market leaders in this industry followed $y companies

like -nida )hilips etc. giving competition to the company.

Also every now and then companies keep on coming with

e!change offers


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Li(e"* Ne& Competition0 The only new competition that the

industry is going to face in the coming years is from foreign

$rands. Since in this industry there are tremendous entry

$arriers


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;!r$!inin$ po&er o# bu*er'0 The $uyers in this $usiness can $e

divided into two i.e. the dealers and the consumer. The

dealers in case of LG electronics don't have much of

$argaining power to e!ercise sinceI the dealers are supplied

products on a credit $asis so that they can push the product.

Such a strategy was never heard of earlier in the market. Also

transactions $etween the company and the dealer are carried

out on the $asis of targets achieved $y the dealers. The

companies also provide the dealers with various )-)

materials to increase the via$ility at the outlets and as a

relationship $uilding e!ercise. The consumer however en1oys

negligi$le $uying power. Although the consumer is the most

important entity for the organi%ation the $argaining power $y

them is looked down upon since prices etc are fi!ed the

company which are not negotia$le.

;!r$!inin$ po&er o# 'upp"ier'0 The supplies in the case of LG

electronics can $e divided into vi% local vendors and imported

supplier from +rance. The company has greater control over

the supplies from +rance. &owever in case of local vendors

company lays down the terms and conditions in advance so

that no negotiations are carried out in later stages. The level

of indigeni%ation in LG products in a$out 45 percent. The

company hopes to increase that to 85 within the ne!t couple

of years and for that the company would have to develop high

(uality local vendors.

LG Electronics #ndia $eing a su$sidiary of +rance multinational has

its own e!port division in the country. This was only set up after the


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company had esta$lished itself well in the local market. #ts e!port

operations were started in an 0::0.

The company plans to e!port in 0::2 S 2.8 million worth of

goods to the e!porting countries. ,y the year 0::7 it plans to

e!port S 7.6 million worth of goods and $y 0::9 S /::

million worth of goods. The company follows a rigorous procedure

in order to comply with the rules and regulations of the country.

&owever in order to meet its a$ove target of S /:: million

e!ports the company would have to consider e!ploiting more

countries in the neigh$oring areas and e!ploit the potential

markets to the fullest. The e!porting country's image and success

in its own market also effects the position of e!ports. Considering

the success LGE#L is making in the local market if it continues

with the same pace the e!port potential could also $e improved.

&owever currently the company is into e!ports presently to fulfill

the e!port o$ligation against the licenses that have $een taken for

the duty e!emption of the import of raw materials from +rance. #n

the coming years it is planning to e!plore more international

potential markets for its products.

Re'u"t' 2 Conc"u'ion'

Thus in my opinion this was the $est method that could have

$een used which included the use of $oth the primary and

secondary sources since only the secondary or the primary

sources could not have provided such an in?depth and detailed

information.


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RECOMMENDATIONS

Though LG electronic has done fairly well in the #ndian market $ut

in order to gain a market share in the long run certainrecommendation are highlighted $elow $ased on the analysis

conducted earlier and the conclusions.

LG 'ou"d cre!te ! m!'' m!r(et im!$e #or it'e"# i# it &!nt'

to !cie%e it' objecti%e to become te m!r(et "e!der b* te

*e!r 4@@>0 Even to day after three years of its e!istence in the

market the company has a premier image in the consumers

mind. #f it wants to achieve the a$ove stated o$1ective the

company should go in for mass marketing. The company has

started moving on this path $ut despite that its premium image

still e!ists.

To achieve this company should create such campaigns which

highlight the middle and the lower end consumer also. +or

products such as the #-S refrigerator +latron T.D. etc it

should highlight them as premium products for the elite class.

-ther products such as /4K &ome Electronics or /75lt. Mi!er

Grinder should target the lower end of the customer.

LG 'ou"d concentr!te more on te rur!" m!r(et'0 Currently

sales of the company form a very insignificant portion from the

rural market. #t only accounts for a$out 2: per cent of the total

sales. This is very little considering the vast potential that lies in

our country. The company should consider e!ploiting the

untouched areas of population even less than 5::::.


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#t could pro$a$ly form groups of /: to /0 such towns in a state

and appoint a single distri$utor for each group. The entire

responsi$ility of selling the products should $e given to the

distri$utor and his per performance should $e evaluated after

every /5 days. The company could offer him attractive schemes

and incentives to do this. This could $e test marketed in a

couple of states initially to find its success rate.

In order to re!p "on$ term bene#it'6 te comp!n* 'ou"d $o

in #or cert!in one't 'ceme'* Ma1ority of companies in this

industry today are selling their products via schemes offers

etc. in order to survive in this competitive market. #t is (uite

dou$t full that LG with its policy of Jno schemes no schemingK

would $e a$le to do much. The company definitely does not

have to go the Akai way $ut certain schemes and offers would

help the company in the long run. Since LG $elieves in Jvalue

marketingK it does not have to go in for e!change offers where

$y you get a new Citrus uicer or TD if return the old one. &ere

the company has to sacrifice on value to get volumes whatever

said and done. Some of the schemes that the company could

opt for is J,uy a refrigerator


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;I;LIOGRAP3/

;OOKS

Marketing Management ? J)hilip @otlerK

&uman 3esource Management ? JAshwathapaK

&uman 3esource Management ? JT.. Chha$raK

INTERNET

www.lgeil.com

www.google.com

NES PAPERS

Economic Times

+inancial E!press

Times of #ndia

#ndian E!press

MAGAINES

,usiness Today

A " M

,usiness #ndia

,usiness orld

,usiness Standard

IND-STR/ REPORTS

#nvestors Guide to #ndian #ndustry 0::6


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ANNE,-RES

LG8' Turno%er Hin R'. CroreJ

0::5 /05: cr 0::6 477:cr 0::7 805: cr

LG posts turnover of 3s 805: Crore in 0::7

Targets 19% growth in exports and 15% growth in the

domestic market

LG Electronics India, the countrys leading consumerdurable company today announced their annual results forcalendar year 2006 at Rs 820 crore! "he company ise#pecting an o$erall gro%th rate of &' this year and hasdeclared that their focus product categories %ill be (lat

panel )isplays and G*+ phones!LG India has also forecast a gro%th of &' in e#ports,

%hich is e#pected to contribute Rs! 0 crore to the totalturno$er in 200-!

.a$ing achie$ed leadership position in /lasma )isplay/anels and (lat "s, the company is e#pecting to become

the mar1et leader in L) "s as %ell! "he other focus

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category %ill be G*+, in %hich the company is aiming to

be amongst the top 3 players! "he company is alsotargeting to achie$e sales of &0 million handsets by year

200!

ommenting on the strategies %hich LG India %ill adopt toachie$e gro%th, Mr. Moon B Shin, MD, LGEILsaid, 4"hesuccessful implementation of 5lue cean strategy across

systems and products %ill be critical to our success thisyear! 7e ha$e already rolled out products li1e "ime+achine " and hocolate phone as part of this strategyand year 200- %ill see us launching many more uniue

technologies and products! 7e %ill also strengthen ourbase as an e#port hub!9

LG India achie$ed a turno$er of Rs! 8,20 crores in 2006,posting an o$erall gro%th of &0' ! "he o$erall

contribution %as :3' from .ome ;ppliances, 3' fromonsumer Electronics, &3' from I" products and 'from G*+!

S!"e' Fi$ure' H4@@9@J

/e!r CT Re#ri$er!tor !'in$M!cine

AC8' Micro&!%e

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DC SA FA

0::5 A A A A 25:: A A0::6 /95:::

545:: 267:: 290::

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LG9M!r(et S!re 4@@>

Product N!me Percent!$e

Television 9

3efrigerators55: watts 244: watts 26

Citrus uicer+ully Automatic 27Semi Automatic /0

Air Conditioners /7


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-ESTIONNAIRE

&ow is LG positioned versus other players in the market

&ow is each of its product line differentiated from others*

&ome Electronics AC's

3efrigerators Microwaves

ashing Machines

&ow has the product mi! changed since 0::2

ho are the target audiences for each of its product lines -n

what $asis has segmentation $een done

&ow does the LG supply chain operate

hat is the current market share of LG

hat does the logo Higitali%e' stand for

hat are the most commonly used media to advertise for LG

products

&ow has the ad $udget changed since 0::2

hat all promotional activities does the company undertake

for*

, Consumers

, ealers


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#n #ndia what is LG's marketing program like N is it a

standardi%ed marketing mi! or is it an adapted marketing mi!

Lg Project2(Original)

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