Marketing Strategy LG Electronics

Project Report

OnI NTERNATIONAL

MARKETING STRATEGIES OF

BACHELOR OF BUSINESS ADMINISTRATION BACHELOR OF BUSINESS ADMINISTRATION ofof

GURU GOBIND SINGH UNIVERSITYGURU GOBIND SINGH UNIVERSITY,,

NEW DELHI INSTITUTE OF MA

PREFACE

I, student of RAI UNIVERSITY am pursuing a MBA course and towards the

partial fulfillment of it have undergone a project. I have put my sincere efforts

to accomplish my objectives within the stipulated time.

Despite all the limitations, obstacles, hurdles and hindrances, I have toiled

and worked to my optimum potential to achieve the desire goal. Being

neophytes in the highly competitive world of business, I came across some

difficulties to make my objectives a reality. Anyhow, with the kind help and

genuine interest of one and all and formally supported by the guidance of my

guide, I am presenting this hand carved effort in colored. I tried my level best

to conduct a research to gain a thorough knowledge about the project in my

topic “ International Marketing strategies of LG Electronics” I have put the best

of my efforts and have also tried to do justice with the available. If anywhere

something is found unacceptable or unnecessary to the theme, you are

welcome with your valuable suggestions.

CONTENTS

Abstract

Preface

Industry Prospects

Vision

Industry Overview

History

Future Prospects

Product Profile

HR System

Social Commitments

Strategic Alliances

Objective

Methodology

Findings and Analysis

Limitations

Conclusion and Recommendations

Bibliography

CHAPTER-1

ABSTRACT

This study is divided into several parts. This project highlights the objective

and aims of L.G Electronics sales promotion strategies and how successful

these promotions have been.

By “Questionnaire- Survey”, the preferences and purchase pattern of the

consumers have been highlighted. This has helped significantly in determining

what kind of promotional campaigns will be successful, what is lacking in

current campaign and things to consider in future before making a

promotional campaign.

In the end, conclusion has been made regarding the whole analysis and

several recommendations have been suggested, which could help in boosting

the success rate of sales promotion by L.G Electronics.

CHAPTER-2

INDUSTRY OVERVIEW

The consumer durable goods industry is a highly growth oriented Industry,

which is seeing high net growth inspite of the recession which has gripped the

major industries worldwide. In 2003, despite the various global difficulties, the

industry achieved higher yearly Sales growth over the previous year. But 2004

will bring great challenges for the industry as uncertainty in global business

and continued weakness in the world markets carries over from the previous

year. But the Indian market has been able to post robust growth in this

industry inspite of the recession in the world markets. The reason, which has

helped this industry, is the desire of the Indian people to acquire the latest that

the technology and the companies have to offer in the product portfolio

ranging from CTV’s & their higher end versions of plasma & projection Tv’s,

Airconditioners, Refrigerators, Washing machines, Cellphones, Microwave

Ovens etc.

This desire stems from the fact that people have money at their disposal and

want to spend it only on the Products, which give them, value for money. This

is because after a hard days work people want to relax for which they

purchase products that help them to do so. For example: washing machines

that require only the clothes be put into it, air conditioners which provide relief

from extreme hot and cold weather, Cellphones that help in connectivity and

other similar products with their associated features that help in making life

smooth for the people. Companies are cashing on this aspect to fuel their

growth and are even succeeding in their efforts if they provide good quality

products. This industry is also witnessing growth because the companies are

concentrating on strengthening the R&D and expanding investments in home

& overseas market and by also developing core technologies. They are

working hard to expand their market position by producing innovative products

as well as improving product quality and cost competitiveness.

CHAPTER-3

COMPANY PROFILE

Global Top 3 By 2010

LG Electronics pursues its 21 st century vision of becoming a true

global digital leader who can make its customers worldwide happy

through its innovative digital products and services.

LG Electronics sets its mid-term and long-term vision anew to rank

among the top 3 electronics, information, and telecommunication

firms in the world by 2010.

As such, we embrace the philosophy of "Great Company, Great

People," whereby only great people can create a great company,

and pursue two growth strategies involving "fast innovation" and

"fast growth." Likewise, we seek to secure three core capabilities:

product leadership, market leadership, and people-centered

leadership.

Growth Strategy

Fast Growth:

Fast growth is the result of strategies designed to expand the market

size and earnings quickly, in the process improving the growth rate

in terms of monetary value rather than quantity.

Fast Innovation:

Fast innovation involves setting extremely high innovation goals and

securing a competitive edge, aiming for a target of 30% more than

what our competitors can do. Fast innovation also means 30% more

sales and improvement in our market share, new product

development and unveiling these 30% faster, technology

development and establishment of corporate value three years

ahead of competitors.

Core Capabilities

Product Leadership:

Refers to the ability to develop creative, premium products through

specialized new technologies.

Market Leadership:

Refers to the ability to achieve the "LG brand is No. 1" goal backed

by its formidable market presence worldwide.

People Leadership:

Refers to talented people who perform excellently by internalizing

and practicing innovations.

Corporate Culture

Though a company implements perfect management strategies and

boasts of outstanding and talented people, it should have an

appropriate corporate culture to unleash the power of these

capabilities.

No 'No'- Challenge: We foster a corporate culture whereby we

suggest an alternative before saying "no" and aggressively work

towards fulfilling our goal.

'We' not ‘I’: We pursue a corporate culture whereby we embrace a

strong teamwork.

Fun to work: We create a workplace where individuals' creativity and

freedom are respected and working is made fun.

MISSION

LG Digital Design makes Customer's Dream True

INDUSTRY OVERVIEW

Overview

LG Electronics, Inc. (Korea Stock Exchange: 6657.KS) was

established in 1958 as the pioneer in the Korean consumer

electronics market. The company is a major global force in

electronics and information and communications products with more

than 64,000 employees working in 76 overseas subsidiaries and

marketing units around the world. With annual total revenues of

more than US $16.9 billion (non-consolidated), LG Electronics

comprises three main business companies : Digital Display & Media,

Digital Appliance, Telecommunication Equipment & Handset.

LG Electronics' goal is to enable the intelligent networking of digital

products that will make consumers' lives better than ever.

Corporate Name LG Electronics Inc.

Established October 1, 1958 (As a private Company)

Corporate Office LG Twin Towers 20,Yoido-dong, Youngdungpo-gu

Seoul, Korea 150-721

Tel: 82-2-3777-1114

URL: http://www.LGE.com

Chairman & CEO Mr. S.S.Kim

Business Area

and

Main Product

Digital Display & Media Company

Digital TV, PDP, Monitor, CD-ROM Drives, DVD-ROM

Drives, CD Rewritable Recorder, VCR, DVD Player,

Audio, Security System, Recording Media, Video

Phone, PC Camera, Banking Automatic System, PCB

Digital Appliance Company

Air Conditioner, Refrigerator, Microwave Oven,

Washing Machine, Vacuum Cleaner, Compressor for

Air Conditioner, Compressor for Refrigerator

Telecommunication Equipment & Handset Company

TDX, STAREX, optical switching systems,

Implementation of advanced IBS (Information Building

System), System Integration (SI) service, etc.

Implementation of advanced IBS (Information Building

System), System Integration (SI) service, Handsets for

satellite, mobile multimedia and IMT-2000 services,

etc.

Number of

Employees

64,082(27,814 in Korea/ 36,268 overseas)

Financial Highlights (in Millions )

  1999 2000 2001 2002 2003 2004

SALES 9,852.8 10,546.1 14,835.7 16,601.0 18,602.9 20,176.9

(Domestic) 2,569.8 2,704.0 4,881.2 6,084.1 6,654.9 4,793.7

(Export) 7,283.0 7,842.1 9,954.5 10,516.9 11,948.0 15,383.2

Ordinary

Profit

167.1 2,587.9 728.5 573.7 675.2 836.8

HISTORY

The 1950's

1958 Gold Star (today's LG Electronics) established

1959 Korea's first radio produced

The 1960's

1962 Radio exported to the US and Hong Kong as Korea's first

1965 Korea's first refrigerator produced

1966 Korea's first black & white TV produced

1968 Korea's first air conditioner produced

1969 Korea's first washing machine produced

The 1970's

1974 Gold Star Communication went public

1977 Color TV produced

1978Exports surpassed US$100 million as Korea's first in the

electronics industry

The 1980's

1980 First EU sales subsidiary in Germany (LGEWG) established

1982 Color TV plant in Huntsville in the US established

1984 Sales surpassed 1 trillion Won

1986 European-standard VCR plant in Germany established

1989Sales subsidiary and a joint production subsidiary in Thailand

established

The 1990's

1990 Ireland-based design technology center established

1993With the establishment of Huizhou subsidiary, China,

marketing in China begun full swing

1995Company name changed to LG Electronics and the US-based

Zenith acquired

199740-inch PDP TV and the world's first IC set for DTVs

developed; India production subsidiary (LGEIL) established

1998 World's first 60-inch PDP TV developed

1999 LG-Philips LCD, a joint venture with Philips, established

The 2000's

2000

LG Information & Communications merged, the word's first

Internet-enabled refrigerator launched; global sales of

refrigerators reached the number one position

2001

Asynchronous IMT-2000 equipment commercialized; the

world's first Internet-enabled washing machine, air

conditioner, and microwave oven launched; LG-Philips CRT, a

joint venture with Philips established

2002

Under the LG Holding Company system, the Company spun

off to LG Electronics (LGE) and LG Electronics Investment

(LGEI); the first home networking system commercialized in

the global market

2003

World's first synchronous-asynchronous IMT-2000 mobile

phone developed; the world's largest 76-inch PDP TV

developed; CDMA mobile handsets took the largest share in

the US CDMA market

MANAGEMENT STRUCTURE

BOARD OF DIRECTORS

STANDING

Name

BOD Title

Current Position

S. S. Kim

Representative Director

Chief Executive Officer

Young Soo Kwon

Director

Chief Financial Officer

NON - STANDING

Name

BOD Title

Current Position

Yu Sig Kang

BOD Chairman

Vice Chairman, LG Corp.

Suk Jean Kang

Outside Director

President, CEO Consulting Group

Il Sup Kim*

Outside Director

Professor, Ewha Women’s University

Nyum Jin*

Outside Director

Professor, Sogang University

Sung Won Hong*

Outside Director

Chairman, G-Mobile

AUDIT COMMITTEE

Name

Title

Current Position

Note

Suk Jean Kang*

Outside Director

Chairman, CEO Consulting Group

Advisor

Il Sup Kim*

Outside Director

Professor, Ewha Women’s University

Advisor

Nyum Jin*

Outside Director

Professor, Sogang University

Advisor

SENIOR CORPORATE OFFICERS

Name

Title

Current Position

S. S. Kim

Vice Chairman

Chief Executive Officer

Woo Hyun Paik

President

Chief Technology Officer

Jong Eun Kim

President

Head of European Headquarters

Nam Kyun Woo

President

Head of Digital Display & Media Company

Hee Gook Lee

President

Chief of LG Electronics Institute of Technology

Mun Hwa Park

President

Head of Telecommunication Equipment & Handset Company

Jin Bang Son

President

Head of LGE China Holding Company

Ju Ik Song

Executive Vice President

Chief of Korea Marketing Operation

Myeong Kyu Ahn

Executive Vice President

Head of North American Headquarters

Young Ki Kim

Executive Vice President

Chief of Human Resources

FUTURE PROSPECTS

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.

Financial Performance:

Turnover for 1997 : Rs. 125 Crores

Turnover for 1998 : Rs. 485 Crores

Turnover for 1999 : Rs. 1056 Crores

Turnover for 2000 : Rs. 1903 Crores

Turnover for 2001 : Rs. 2216 Crores

Turnover for 2002 : Crossed Rs. 3000 Crores

Turnover for 2003 : Clocking a turnover of Rs. 4,500 Crores

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.

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.

PRODUCT PORTFOLIO

TELEVISIONS

PROJECTORS

LCD Projector

PLASMA TV’S

AUDIO PLAYERS

DVD MOVIE STATION

VCD MOVIE STATION

REFERIGERATORS

WASHING MACHINES (FULLY AUTOMATIC)

AIR CONDITIONERS

MULTI SPLIT AC’S

MICROWAVE

CONVECTION RANGE