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LG in rural India

LG in rural India

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Published by: m_dattaias on Aug 05, 2010
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11/30/2013

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LG’s INITIATIVES IN RURAL INDIA
 
JISHNU MOHANFK-1823
 
SYSTEMS AND OPERATIONS
CORPORATE OVERVIEW
Established in 1997, LG Electronics India Pvt. Ltd is a wholly owned subsidiary of LGElectronics, South Korea. In India for a decade now, LG is the market leader in consumer durables and recognized as a leading technology innovator in the information technologyand mobile communications business. LG is the acknowledged trendsetter for theconsumer durable industry in India with the fastest ever nationwide reach, latest globaltechnology and product innovation.One of the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics, Home Appliances, GSM mobile phones and IT products. LG ElectronicsIndia Pvt. Ltd was established in January, 1997 after clearance from the ForeignInvestment Promotion Board (FIPB). LG set up a state-of-the art manufacturing facility atGreater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facilitymanufactured Color Televisions, Washing Machines, Air-Conditioners and MicrowaveOvens. In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune,Maharashtra that commences operations in October 2004. Covering over 50 acres, thefacility manufactures LCD TV, GSM Phones, Color Televisions, Air Conditioners,Refrigerators, Microwave Ovens Color Monitors.LG has been able to craft out in ten years, a premium brand positioning in the Indianmarket and is today the most preferred brand in the segment.
LG’s PUSH INTO RURAL MARKETS
LG has increased its branch numbers to 23 in the year 2002 from 18 in the previous year.To further penetrate the rural market, it has posted 93 area managers across the country.The spreading of the networks also helped in taking quick decisions. LG has improvedthe interaction with the dealers. In its bid to enter the rural market in a big way, LG
 
launched a massive campaign in rural areas. These included road shows, societydemonstrations, and localized shows in rural India. The countryside campaign wassupported by a huge advertisement and promotion budget. The multinational companyhad increased its annual advertisement and promotion budget for consumer electronics by60 per cent from Rs.25 crores in 2001 to Rs.40 crores in 2002.For the World Cup Football 2002, LG kicked off a media promotional campaign of Rs.15crores. Knowing that there is an opportunity to sell CTVs during the two months as theworld would be gripped by the World Cup Football fever, LG had launched a new CTVmodel, looking like a football, which according to it is the world’s first soccer TV inIndia.
RURAL MARKET PENETRATION
LG's twin-pronged strategy has worked out brilliantly. At one level, the company figuredit needed new cheaper products to lure the rural buyer. At another level, it figured thatmore offices in smaller towns and cities were the need of the hour. LG moved quickly on both fronts. At one level, it has introduced cheaper products like its Sampoorna televisionrange. At another it has gone on an office-opening spree in India's smaller towns.Currently, it has more than 150 branch offices.The urban consumer durable market for products like color TVs, washing machines,refrigerators and air-conditioners was growing annually at between 7 per cent and 10 per cent. The rural market was growing faster than urban India. The urban market became areplacement and up-gradation market. LG lead the way in this regard. In 2002, 60 per cent of its turnover came from the urban market. Today, that's down to 40 per cent. Themajority of LG's revenues are now coming from smaller towns like Hapur, Trichy, Jorhatand Asansol.The company has also taken other initiatives like 65 Remote Area Offices under the branch offices that are empowered to directly link to the central billing system for orders,

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