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Summer Internship Project
By – Vikas Rana Roll No. - 09DM134 Course – PGDM (2009-2011)
It is indeed a great pleasure to express my senses of profound gratitude & indebtedness to all the people who have been instrumental in making my internship a rich experience. I got the opportunity to do a challenging project in LG ELECTRONICS INDIA LTD. The project is the important part of our study and gives us a real practical exposure to the corporate world and it is almost impossible to do the same without the guidance of mentors .While doing the topic “Market Survey on LG consumer and comparative study of various A/C brands”I received immense guidance and help from several mentors It gives me immense pleasure to acknowledge LG ELECTRONICS INDIA Ltd., which has been kind enough to give me a chance to do my summer training and provided me wonderful support throughout my training period.. I am thankful to MR. Nitin Beri (Product Marketing Manager) for allowing me to do my research in his office on LG consumer durables and dealer development issues. I am grateful for his exceptional support for my study throughout these eight weeks. I have learned the meaning of marketing and professionalism from this great personality. I wish to thank my project guide Prof. R.J. Masilamani for his guidance during my project. I am grateful to my college director Dr. H Chaturvedi.for his support.
Summer Project Certificate
This is to certify that Mr. Vikas Rana Roll No. 09DM134 a student of PGDM has worked on a summer project titled Market Survey on LG consumer and comparative study of various A/C brands at LG Electronics India Limited after Trimester-III in partial fulfillment of the requirement for the Post Graduate Diploma in Management
programme. This is his/her original work to the best of my knowledge.
(Prof. R.J Masilamani) BIMTECH SEAL
7.3. RESEARCH METHODOLOGY 6. Data Collection Methods: 6. Research Instruments 6.9.TYPES OF LG AIR-CONDITIONER 4. Air Conditioner Ownership 7. ACKNOWLEDGEMENT 2. OBJECTIVES 6.1.INTRODUCTION: (About Air-conditioners) 4. LG INDIA (Greater Noida) 4.BRIEF ABOUT COMPETITORS PROFILE 5.SWOT Analysis 4.Contents 1. ANALYSIS AND RESULTS 7. Findings from Dealers Survey 7.1.1. Dealer Satisfaction with LG Scheme 3 0 5 6 7 7 7 7 8 9 11 13 14 15 21 22 23 23 24 24 24 26 29 30 30 31 31 32 33 34 34 38 50 59 .3.’S: 4.8.THE INDUSTRY:4.C.9. INTRODUCTION 4. BUSINESS DIVISIONS: 4. CORPORATE IDENTITY: 184.108.40.206.1. Demographics 7. STATEMENT OF THE PROBLEM 5. Organizational Chart (Worldwide): 4.3.5. REVIEW OF LITERATURE 4.9.IMPORTANT FACTORS: 220.127.116.11. POLICY REGARDING A.18.104.22.168.22.214.171.124. LG Electronics 4. MISSION: 4.3. EXECUTIVE SUMMARY 3.2. Summary: 4.9.DEMAND:4.9.2.THE GOVT.4. Limitations of the Study 7. VISION: 4.9.PROFITABILITY:4.2. COMPANY HISTORY: 4.
BIBLIOGRAPHY 62 63 65 65 66 67 69 4 .7. Observations from Sales and Service Dealers (SSD) 8. For Dealers 9. Observations from Dealers 7.2. SUGGESTIONS 10.1.6. CONCLUSION 8. From Customers 8.5.
I have taken a Sample size of 175 consumers and 80 dealers. This tells the success story of LG. 99 which they considered an unnecessary inconvenience. In the case of LG Schemes. For over a decade now. Towards these objectives. The main objective of the research is to find out that what the condition of LG’s service in the market and know whether consumers and dealers are satisfied with the services which are provided to them. and crafting it to improve the quality of life – as millions of satisfied customers will agree. Dealers were also surveyed to check on the new scheme offered by LG on the purchase of every A/C. LG has been bringing the latest and very best in Consumer Electronics and Home Appliances to the Indian consumer. Specifically we had to determine the current position of LG Air Conditioners in the market. Successfully adapting the best of international technology to suit Indian needs. Sustainability is at the center of LG’s strategy. 5 . And assess the main competitors of LG. It was found that LG had maximum ownership (38%) among the respondents and performance and customer satisfaction wise LG was considered best. Even dealers consider LG as the best brand. Other objectives were to analyze the current scenario of the market in the consumer durable sector. I have conducted a survey of consumers and dealers in the NCR region. technology and innovation. It is a company which is focused on maintaining the highest international standards of excellence through quality. Being a great company LG always tried to improve people lives through its products but some times due to changing environment or customer’s mind the product doesn’t do as well as expected. But with regards to promotion Samsung was considered the best. dealers were mostly unhappy with them as it required filling up of online forms and sending Demand Drafts of a value of Rs.EXECUTIVE SUMMARY LG is a well-known company.
2. friends. This project helps me to know the market practically. Asked various questions to dealers regarding sales.INTRODUCTION LG is the market leader in Air-Conditioner segment in India. Calculate the ownership of LG A/Cs in comparison to its competitors. For that I surveyed 180 consumers and 80 dealers. This project gives me great exposure to the consumer durable market because it includes product knowledge and the filed job in which I have visited the stores comes under the region of NCR and interviewed the consumer. 6 . Checking the customer satisfaction. 3. 10. promotion. 8. 7. Radio etc. thus the most appropriate place to conduct my project. Writing of the complaints from dealers and their suggestion.) for the customers. Exclusive Shops (LG Shopee) and Sales and Service Department. Finding out the customer response for the LG product by asking the owner of the shop and the customer itself. 5. Check the catalogue and POP availability (Promotion). I also visited three different types of dealership such as Multiple Brand Outlets (MBO).C. Haryana and got to know about the working of a LG’s customer care for which I have made another report. Check the response of the LG A/C scheme (Reebok). 6.E. Find out the problems that the dealer are facing while selling the LG product. margins etc. My job included 1. 4. During this project I also reviewed LG call center in Gurgaon. 9. Check the response of LG SSD service known as A. My job was during this project to see the marketing and ownership of LG and also the schemes/offers provided by the LG to the customers. Finding out the most influencing mediums (TV Advertisements.
com.REVIEW OF LITERATURE LG Electronics LG. and telecommunications devices. LSE: LGLD) is the world's second largest manufacturer of televisions and third-largest producer of mobile phones. The LG Group was a merger of two Korean companies. The current "Life's Good" slogan is a backronym. the company was picked as "The Design Team of the Year" by the red dot design award in 2006~2007 and is often called the "New Apple" in the industry and online communities. producing radios. It now focuses on the design and marketing of phones such as the LG Shine. South Korea. the LG Glimmer and LG Prada (KE850). the company's mobile phone division. washing machines. Seoul. With its headquarters in the LG Twin Towers in Yeouido. its affiliate. LG Electronics owns Zenith Electronics and controls 37. Summary: By 2005. LG recorded a brand growth of 14%. Also in 2006. In January 2009 LG was able to buy the domain name. one of the world's largest electronic conglomerates. Lucky (from the Korean "Lakhui") and GoldStar. while electronic products were sold under the brand name of GoldStar (Hangul:). GoldStar was renamed LG Electronics. COMPANY HISTORY: The company was originally established in 1958 as GoldStar. TVs. LG. placing it among the companies who own their two letter brand's domain name. a premium brand positioning in the Indian market and is today the most preferred brand in the segment. and air conditioners. marketed the LG Chocolate phone. home appliances. The company has 75 subsidiaries worldwide that design and manufacture televisions. In 1995.Now the world's largest plasma panel manufacturer. changing the company's image of the maker of thick 3G phones. LG was a Top 100 global brand. LG Mobile. and 7 .9 percent of LG Display. LG Display. household products were sold under the brand name of Lucky. In 1994 GoldStar gained sponsorship from The 3DO Company to make the first 3DO Interactive Multiplayer. (Korean: KRX: 066570. refrigerators. LG has been able to craft out in ten years. Before the corporate name change to LG. is one of the largest manufacturers of liquid crystal displays. As a result. and in 2006. LG Electronics is the flagship company of LG Group. from which the abbreviation of LG was derived.
LG took its first dive into the solar-panel manufacturing pool. Refrigerators. Covering over 50 acres. we have embraced the idea of “Great Company. Air Conditioners. Microwave Ovens Color Monitors.acquired Zenith Electronics of the United States. The company’s goal is to rank among the top 3 consumer electronics and telecommunications companies in the world by 2010.” recognizing that only great people can create a great company. LGEIL also up its second Greenfield manufacturing unit in Pune. Under the deal. LG would acquire a 75 percent stake in Conergy's Frankfurt solar-panel plant. LG has produced camcorders called ARTCAM and DSLRs. Color Televisions. LG Solar Energy is a subsidiary formed in 2007 to allow LG Chem to supply polysilicon to LG Electronics for production of solar cells. In 2004. Maharashtra that commences operations in October 2004. GSM Phones. In 2008. 8 . the facility manufactures LCD TV. VISION: LG Electronics is pursuing the vision of becoming a true global digital leader. Great People. attracting customers worldwide through its innovative products and design. set to be completed by year's end. as it announced a preliminary deal to form a joint venture with Conergy. To achieve this.
9 . The essence of the LG WAY is found in LG's management principles of creating value for customers and respecting human dignity. Conventional Installation 4. LG is able to accomplish its vision and reach our final goal of becoming No. and to earn their confidence. Reliability 3. 1. LG proceeds in a hierarchal manner. PRODUCT LEADERSHIP LG focuses on six development areas to become the product leader. Environment Friendly Product 5. Energy Saving QUALITY INNOVATION The policy of quality assurance is to provide customers with utmost satisfaction by supplying zero defects.1 LG. The fundamental policy of development is to secure product leadership that the Customers may have the utmost satisfaction. Low Noise & Vibration 6. New Machine 2. Management by Principle not only includes open and fair competition but also highlights building the competence necessary for LG people to create substantial value for customers. It is named as “LG WAY”. As they are put into action through "Jeong-Do" management.MISSION: The mission of LG is to provide the customers with utmost satisfaction through leadership.
Equal opportunities Equal Treatment Management Principle . Honest with our customer Providing great values to customer through constant innovation & and development. LG will succeed through fair management practices and constantly developing our business skill.Creating value for customer 10 .“Jeong-DO” Management is LG’s unique application to ethics.
These companies all adopted the “Life is Good” tagline you often see alongside its logo. and passion. such as LG Chemicals. innovation. LG is a chaebol (a South Korean conglomerate). They’re just “LG. Actually.” 11 . LG denies that their name now sta nds for Lucky Goldstar. Though. 1958). Lucky Goldstar was renamed to LG Electronics. these were different companies they were essentially owned by one person. so there’s a whole range of LG companies that also changed their names. LT Telecom.CORPORATE IDENTITY: BRAND IDENTITY SLOGAN SYMBOL BRAND IDENTITY: The LG brand comprises four basic elements: values. people. EVOLUTION OF SYMBOL: LG was formed from two different companies named Lucky (chemical cosmetic company. In 1995. and even a baseball team called the LG Twins. 1947) and Goldstar (radio manufacturing plant.
and also gives a strong impression of LG's commitment to deliver the best. and the slogan. The LG Electronics Life's Good signature consists of the LG logo. It is an ultimate expression for what our brand stands for and what we strive to deliver continuously. Therefore.SLOGAN: "LIFE'S GOOD" REPRESENTS LG'S DETERMINATION TO PROVIDE DELIGHTFULLY SMART PRODUCTS THAT WILL MAKE YOUR LIFE GOOD. "Life's Good" set in Charlotte Sans typeface curved around the LG symbol. LG's delightfully smart products will make your life good. youth. The curving of the slogan reinforces LG's personality and uniqueness. promises. the shape or the color of this symbol must never be changed. Also. The consistent usage of this signature clearly establishes the unique identity of the company and unifies every division and product from LG Electronics across the globe. LG’s philosophy is based on Humanity. seal. SYMBOL: The letters "L" and "G" in a circle symbolize the world. 12 . benefits and personality. it represents LG's efforts to keep close relationships with customers around the world. 'Life's Good' best expresses our brand's values. represents our friendliness. the main color. Red. future. and technology. The symbol consists of two elements: the LG logo in LG Grey and the stylized image of a human face in the unique LG Red color. humanity.
accounting for 29% of the company's total revenue. CD±RW. Desktop PCs. USB Memory. PDA Phones. multimedia processing. Notebook PCs. The LG Institute of Technology was founded to nurture ongoing innovation like improving energy devices.8 trillion. Digital display: Plasma TVs. Digital media: Home Theater Systems. Car Infotainment LG mobile devices are made for GSM networks as well as for CDMA networks worldwide. Blu-ray Disc players. About 35% of the company's home appliance revenue comes from the North American market. Micro`Display`Panel` TVs.BUSINESS DIVISIONS: Mobile communications: LG Electronics is the world's third largest handset maker. LG phones are available also in unlocked versions that can be used on any GSM network worldwide and not just for a specific carrier's network R&D: From mobile innovations to digital media technology. Digital appliance: The home appliance division makes products like refrigerators. Monitors. PDAs. LG is leading the electronics industry and bringing technology into your home. Super Multi DVD Rewriters. PDP Modules. 13 . The division's profit was KRW 717. MP3 Players. LCD TVs. Its 2007 sales totaled KRW 11. OLED Panels. DVD Recorders. and wireless networks around the world. Flat Panel Computer Monitors. New Karaoke Systems.1 billion. air conditioners and washing machines.
Organizational Chart (Worldwide): 14 .
digital video broadcast and biometrics software and support LG Electronics with our expertise. company will roll out a new marketing strategy.LG INDIA (Greater Noida) LG Electronics India Pvt. This facility manufactured Color Televisions. LG corporate office is located at Plot no. we are determined to see LG become one of the top three brands globally. LG set up a state-of-the art manufacturing facility at Greater Noida. and computer peripherals industry today. Kasna Road. with an investment of Rs 500 Crores. consumer durables leader with 27% market share. LG Soft India the innovation wing of LG Electronics in Bangalore is LG Electronics' largest R&D centre outside Korea. Udyog Vihar. 15 . LGEIL is celebrating the 11th anniversary this year. LG Electronics India Ltd (LGEIL). To attract inspirational and young consumers across India. is planning a brand new image. a wholly owned subsidiary of LG Electronics. Air-Conditioners and Microwave Ovens.51. LG Electronics Inc.8 billion rupees for investment purpose in India this year. near Delhi. Moon Bum Shin. LG Electronics is continually providing. managing director of LG Electronics India has said that the company has earmarked 4. LG Electronics India is the fastest growing company in the consumer electronics. India. Prominent consumer electronic company. superior technology products & value for money to more than 50 lakh households in India. a strong work culture and loyalty to the organization. Greater Noida.. home appliances. The said money will be used to market as well as manufacture new products. Ltd. South Korea was established in January 1997 after clearance from the Foreign Investment Promotion Board (FIPB). in 1998. has said that it expects the sale of its products in India to up by 15 per cent in 2008. The exercise will cost the company Rs 360 crore. We at LGSI focus on niche technology areas such as mobile application development. Washing Machines. Motivated by a passion for technology.
informed that its sales of GSM mobile phones. Washing Machines. Commercial AC’s Business Solutions LCD monitors. Moon B. the sales in 2008 would be around 110 billion rupees. Vacuum Cleaners AC Split AC.LG Electronics. Home Theatre System. Shin said LG Electronics will concentrate on catering to the high-end consumer market which will help boost sales this year.4 billion) in 2007. Colour TVs. Greater Noida (UP) Corporate Website : http://www. Microwaves.lgindia. FACTS AND FIGURES: Established In : Jan 1997 Managing Director : Mr. Audios. Network Monitors. Windows AC. air conditioners and other household goods in the Indian market was to the tune of 95 billion rupees ($2. India churns out six (6) per cent of LG Electronics global revenues of $42 billion. which is originally a South Korean Company with branch in India. 3G Phones 16 . LCD TV.com Number of Employees: 3000+ Business Areas & Main Products Home Entertainment Plasma Display Panels. LED Projectors. Camera Phones. CRT monitors. Graphic Monitor. As per Shin's estimate. Surajpur Kasna Road. Optical Storage Devices. In order to achieve its target. DVD Recorder/Player Home Appliances Refrigerators. Udyog Vihar. Touch Screen Phones. Shin Corporate Office :Plot No51. The Indian branch of LG exports to 40 countries. color televisions. NAS( Network attached Storage) and Digital signage GSM Colour Screen GSM Handsets.
The challenges faced by LG when entered in Indian market
1. One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in India). 2. High import duty 3. Competition from local market players and other MNCs in consumer durable segment. 4. Price sensitiveness of the Indian consumer
LGEI over comes these challenges to emerge as
1) Innovative marketing strategy a) Launch new technologies in consumer electronic and home appliances. b) LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world cup followed it up in 2003 as well. c) LG brought in four captains of the Indian cricket team to endorse its products. LG invested more than US$ 8 million on advertising and marketing in this sport. d) LG has differentiated its product using technology and health benefits. CTV has “Golden eye technology” Air conditioner has “Health air system” and microwave ovens have the “Health wave system”.
2) Local and efficient manufacturing to reduce the cost To overcome high import duties LG manufactures TV refrigerator in India at manufacturing facility at Noida and Pune. LGEI had already commissioned contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has helped LGEI to reduce cost. LGEI implementing the “Digital manufacturing system” (DMS) as the cost cutting innovation this system is follow-up to the six sigma exercise LGEI had initiate earlier. 3) R&D potential LG has the research and development facilities in Bangalore and Pune. Both the unit carry out R&D department for the domestic as well as the parent company it also dose customize R&D for the specific countries to which it export product. 4) Regional channel and wide distribution network 1. LG has adopted the regional distribution channel in India. All the distributers work directly with the company. This has resulted in quicker rotation of the stock and better penetration into B, C, D, class market. 2. LG also follows the stock rotation policy rather then dumping stock on channel partners.
Major Key Success Factors
1. Innovative marketing - LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World Cup and followed it up in 2003 as well. 2. Local and efficient manufacturing to reduce cost - To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi. 3. Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. 4. Product localization - Product localization is a key strategy used by LG. It came out with Hindi and regional language menus on its TV. 5. Regional distribution model - This has resulted in quicker rotation of stocks and better penetration into the B, C and D class markets. 6. Leveraging India’s IT advantage - LG Electronics has awarded a contract to develop IT solutions to LG Soft India (LGSI). The project involves development and support for ERP, SCM, CRM and IT-enabled services for LG.
Strategies adopted by the organization
LG follows 10 commandments which are as follows. 1. Foster working environment-5S Environment 2. Fast execution is key to success 3. Transparent and fast communication-open communication 4. Update market -knowledge –Demographics 5. Win –Win relationship with the trade partners 6. Customer is the king 7. Even Billing –Road to ach supplier A 8. Be in touch with the market (70% Market, 30% Office). 9. Plan and Execute annual marketing Calendar-Time to market 10. Display share of 50% -to get 50% consumer share.
LG Pune is the branch office of LGEIL. It is located in J.M Road. In 2004 LGEIL opened second factory which is located in Ranjangaon. This plant manufactures all product including DVD writers and GSM mobiles. Thus it became first company to manufacture DVD writer in India. The ODP plant aims to reach a manpower base of 1500 people and an investment of Rs 300 crore till 2010. LG India will become the export hub for LG Worldwide, catering to the Middle East and African markets. The company aims to touch an export turnover of $3 billion by 2010 from India, which will contribute to 30 per cent of the Indian arm's turnover. Pune, India, October 6, 2004 -- LGE announced 3 growth strategies aimed at the 1.1 billion people of India making the Indian market the second largest global production base following China. Under this strategy LGE has projected 2007 revenues in India will exceed US$10 billion, 10 times that of 2004.
LGEIL PRODUCT MIX 20 .
Samsung Competitors from Indian brands and from new entrants 21 . Opportunity Shifting to rural market Control over the white goods market.SWOT Analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths.175 area offices and over 10. Manufacturing unit in tax incentives areas. as we know the highest market share in home appliance market. Shifting to the rural market. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that. LG having the widest distribution network in the industry (47 branches.Samsung is also from South Korea and consumers confuse LG product with Samsung products Price war with its closest competitors. upper middle class and high class. Opportunities. Wide range of product categories to tap the consumer of middle class. Strength Market leader in home appliances segment. Threat The closest competitor of LG . Weaknesses.000 trade partners). LG customer service is one of the best in India. and Threats involved in a project or in a business venture. Weakness Product rang is very big in case of LG thus it gets difficult to provide good quality and constant innovation.
Only two years ago. accounts for the largest chunk of domestic appliances market in value terms. motion. system was back in 1902. and it has been filtered and clean. it has been placed in motion by means of fans or other apparatus..’s have been around for 40 years. Air conditioning may be defined as the simultaneous control of all those factors affecting both the physical and chemical conditions of the atmosphere within any structure. which includes washing machines. human health and comfort. odors and toxic gases. These factors include temperature. Increasing income levels and changes in life styles have led to heavy demand for consumer durable. dust. it has been heated or cooled.C. it has had moisture removed from it (dehumidified). 22 . Since then. or Split A. vacuum cleaners. upper and high accounting for a sixth of the population. humidity. Between 1986 and 1995. refrigerators. air conditioners. high rise buildings and apartment complexes. Estimated.C. these were regarded as luxuries. Air that has been properly conditioned has one or a combination of the foregoing processes performed on it e. the Window A. while the proportion of the low-income group has fallen by eight percent. there was an almost equal rise in the top three groups. The air conditioner industry can be broadly divided into room air conditioners and central air conditioners-while the latter is suitable for controlling and maintaining ambient temperature and humidity in large establishments. distribution. they have penetrated most urban households. The Indian white goods category. washing machines and air conditioners. usually single rooms. most of which affect in greater or lesser degree. televisions et al. the former is applicable for smaller areas.C. especially refrigerators. bacteria. The room air-conditioner is either Window A. whereas the split version originated in late 80s.g. the existing market for the consumer durable in India is over 30-35 million households with the top three-income groups-middle. marked the genesis of a new industry without which summer’s scorching heat and intolerable humidity would not have been surmounted.INTRODUCTION: (About Air-conditioners) The invention of Willis Haviland Carrier’s A.C.
3. Till 2006.g. This segment is plagued the most by the unorganized sector. 13.8 ton to RS. A. including chilling plant.5 ton to 2. 2400 crore and the central air conditioners. the government gives considerable relief to air conditioning sector. In the split air conditioner.000 crore. The excise duty was reduced from 80% to 60% in 1994-95 and from 60% to 18% in the following years.for 1. RS. 15.000/.500/. which means they cannot be imported without license or a baggage.0 ton models. This proportion used to be 30:70 during 1991-92. the split segment is divided into ducted and non-ducted. Only after 1993 did the government liberalizes its attitude towards white goods.in 1991-92 now costs only RS. In the year 1994-95 to 2005-2006 budgets. Therefore.000/. the evaporator/cooling unit is separated from the condenser unit (having compressor). It can be classified into window. cassette Tower.in the unorganized sector.C.’S: The attitude of the government to the industry in general has been influenced by the perception of white goods as luxury items. 23 . This considerably reduced the off-take of these items though huge demand was building up. In the Exim Policy. Then lowering of excise duties from 11016% favored the organized sector by narrowing the price gap e. POLICY REGARDING A.5 ton air conditioner which cost RS. The market for air conditioner was earlier dominated by the unorganised sector as a result of high excise duties.for 0. command a market of RS. packaged and chilling plant.THE INDUSTRY:The Air Conditioners has a total market size of approx.’s continue to be in the negative list.. the levies on these goods were jacked up. The window & split have a current market of RS.C. The sector accounted for around 55-60% of the market share only twelve years ago.000/. split. excise duty on air-conditioners varied from RS.800/. making these unaffordable for the better off. Further. with every new central budget. 1600 crore. as it requires the low level of investment on technology. 4. 45. This unorganized sector looms large over profits.in the organized sector against about RS. 1. THE GOVT. a 1.
between a broad range of 5-10 percent.’s and higher in case of Cassette & Tower A. Hitachi. In the central and chiller segment. The reason . after sales service and aesthetics. new capacities being added are by Carrier. is no longer a luxury but a necessity due to increase in Ambient Temperature & Humidity. Voltas. Carrier Aircon. which contributes about 40% of the total cost. But the wear and tear is quite high if not properly used & voltage fluctuations are high necessitating frequent repairs. Most critical in the product technology is the compressor. Even then. Some of the major players are L. Hitachi & L. 24 . IMPORTANT FACTORS: The important factors that govern profitability in the air conditioning industry are product technology. Daikin. Of Course. Amtrex.’s to setup in India. According to industry sources earlier 70-80 percent of the A.N. etc. The boom is luring many players including M.C. distribution network.DEMAND:Demand for A.C. PROFITABILITY:Margins in the industry vary depending upon the segment.g. Videocon Samsung. But these are reasonable in case of Split A.’s sold are used for essential industrial applications. This is well suited for the Indian conditions where the Humidity Ratio and ambient temperature are relatively high up to 52%. hospitals and pharmaceuticals and not merely for comfort.G. for players who have packed and chilly plant manufacturing facilities e. However. margins are higher.C.G. The most common type is the rotary compressor. Voltas and Blue Star. volumes.C.C. Blue Star. model and sizes. A large part of the demand comes from the commercial and industrial sector. fall in prices coupled with the increased purchasing power of the middle-class and the perception that an A. These MNC’s & Indians expected to be added this year are to the extent of one-lakh units in the windows & split segment. margins in the window segment are the least.C.’s has never been better.. as it widely believed. even the government is the major customer but now it proportionately covered by domestic sector also. Margins are the highest in the central and packaged air conditioning segments ranging between 15-20 percent.
The reciprocating compressor is suitable for conditions where temperature does not exceed 45 degree Celsius. above 2 Ton.C. consuming less power with negligible wear and tear problems. 25 . i. Also it can withstand voltage fluctuations which are common in India up to the limit. Now scroll compressors are also used for higher Tonnage A. it is suitable for dusty areas. it’s cooling efficiency decreases. The advantage of Rotary Compressor is that it is much more efficient than the reciprocating one at moderate temperatures. Hence.e. Beyond this.
5 & 2.TYPES OF LG AIR-CONDITIONER Split AC: It is the most versatile and little bit costlier than Window AC.0. 1. Gold Fin Condenser. 4 way swing. Jet Cool.3 & 5 stars Features Jet Cool. Auto Clean.0 Ton Star Ratings 2.0 Ton 1.0.5 & 2. one is evaporator/cooling unit and other is condensing unit.5 & 2. 4 Way selectable swing. 3 Eva. 4 Way Swing. Jet Heat.0.0 Ton 1.5 Ton 1. Dreamz Mode. Intelloeye. 1. Dual display.5 Ton 3 Star 2. Sleep Mode. Auto Clean 3G Cyclotron Plasma. It has Neo Plasma Filter. Jet Cool. These two units are connected with copper tubes and the gas charging process is also done at site where is installed. Dual Display (Hidden Type) Anti-Bacteria Filter.5 Ton N/A 26 . Sleep Mode.0 & 1. Jet Cool. which cools the room and condensing unit at outside wherever suitable for easily delivering of hot air. Allergy Care System.0. MultiFlow Condenser. Dual Display (Hidden Type) Big 88 display. On-Off Timer Jet Cool. 1.5 & 2. It is assembled in two separate parts. Auto Clean Anti Bacteria Filter. Jet Cool. It is known as split AC because it is spitted in two parts.3 & 5 stars 2.ENERGIA 5 Star L-IMPERIA 1. 3G Cyclone Plasma.0 Ton 1. Dreamz mode .3 & 5 stars L-GLORY L-CRESCENT L.3 & 5 stars 2. 1.5 & 2. Hot and Cold Function L-ARCTIC L-VOGUE L-DESIRE 3 & 5 stars L-GLITZ 1. OnOff Timer Jet Cool. Series Name A/C Tonnage 1. 1.75. Cooling unit is installed at any part of room/basement.0 Ton 0. 4 Way Swing.
Window AC: It is a most compact. outside for easy delivery of hot air. Its front part (cooling coil side) is Series Name A/C Tonnage Star Ratings Features L.0 Ton 1 &2 Stars Gold Fin Condenser.3 Stars Gold Fin Condenser. 2 & 3 Stars Aero Comfort System. It is machinery assembled in one piece due to which installation at any site is very easy and maintenance is also easier. Auto Clean. Anti Bacteria Filter. 4 Way Swing. Dreamz Mode. VFO Deodrizer. L-CRESCENT 0.0 Ton 1. It has the advantage of using single motor for both condenser and cooling coil side. Big Display. Gold Fin Condenser L. always kept in the room part and back part (condenser coil side) is in fresh environment i. 27 .2.5 & 2. Jet Cool. Anti Bacteria Filter.75 & 1 Ton 1. Sleep Mode.3 & 4 stars It has Energy Saver..5 & 2. Jet Cool. 1. versatile and cheapest air-conditioning system. VFO Deodriser L-MAGNA 1. Energy Saver. Sleep Mode. VFO Deodrizer.5 Ton 1.EUPHORIA 1. VFO Deodorizer.5 Ton 1.GRATIS 1. Energy Saver Mode L-VOGUE 1.e.2 & 3 Stars Gold Fin Condenser. Anti Bacteria Filter. cheaper and faster.
It is economical inspite of Window/Split AC it is useful where the whole area is to be chilled simultaneously. Thought the capital cost is higher but the running cost is very economical.. 28 . the indoor unit of cassette AC is installed in ceiling rather than on the wall.Cassette AC Cassette AC is a type of split AC but the difference is in the indoor unit. a final air-conditioning is done through cold water running through tubes. Tower AC Tower or Floor Standing ACs is another type of Split AC in which the indoor unit stands on the floor rather hanging to a wall or a ceiling. The main advantage of floor standing AC is that it has long air throw range due to its powerful fan. LG is the only AC manufacturer who is making floor standing ACs in India. Packaged AC It is used the area where the tonnage is high (approx. In Central Airconditioning. Central AC: It is used for the area where the tonnage required is more than 30 tons. This type of installation helps in more wide spread air throw thus cooling the room equally. above 3.0 ton to 30 ton).
29 . Samsung Electronics. brings out refrigerators. indoor air quality and chemicals. It offers engineering solutions for a wide spectrum of industries in areas such as heating. digital media and digital convergence technologies with 2004 parent company sales of US$ 55. India. setting the base for an increased robust international presence. Onida had a market capitalization of Rs. building management systems. Voltas is a part of the Tata Group.3 billion. microwave ovens. Investment of Rs 20 crore will be made to make it a success. Godrej: Godrej Appliances Ltd. Co Ltd. established as "MIRC Electronics" in 1981. Samsung: Samsung India is the Regional Headquarters for Samsung’s operations in Southwest Asia. Onida: Onida is one of India's leading electronics brands. 208 Customer Relation Centers and 41 depots spread across India. telecom. Recently it has announced to increase the number of retail stores from 49 to 100 by 2010.BRIEF ABOUT COMPETITORS PROFILE: Voltas: Voltas Limited is an engineering. telecommunication. Onida with its Sales & Marketing office in Dubai reported a 215 per cent export growth in two years. water management. Sanjay Johri.46 crore.301. As on 31 March 2005. materials handling. Onida has a network of 33 branch offices. The managing director is Mr. air conditioning and refrigeration company based in Mumbai.2 billion and net income of US$ 10. refrigeration. and a leading provider of high tech information technology. consumer electronics and home appliance products in the country. washing machines. Every consumer good comes with price range and variety to serve absolutely all the strata of the society. . and DVD players in India with the latest technology. is a global leader in semi-conductor. Its shares are traded on the Bombay Stock Exchange under symbol 500575 with a turnover of 4300 Crore in 2008-09. ventilation and air conditioning. airconditioners. construction equipment.
6) To assess effectiveness of existing brands for the products category i. (Air-conditioners). Sub-objectives: 1) To compare LG’s existing market vis-a-vis competition. 5) To ascertain weak and strong areas for LG and its competition. (Air-conditioners) 2) To identify the LG’s Customer Satisfaction Level regarding various aspects visa-vis competition. 3) To assess the demographics of the consumers.) market of NCR region and to analyze Customer’s satisfaction regarding various aspects.STATEMENT OF THE PROBLEM OBJECTIVES Major Objective: To study the Air Conditioners (A.e. 4) To check dealers response regarding the new scheme(Reebok) provided by LG. Advertisement Inputs Availability of brochures and POP Availability Of Product Influencing mediums Schemes And Margins Service Backup Product Range Ownership 30 .C.
its growth rates and the share of different companies in the market were found out. having been collected for another purpose. The project research type is DESCRIPTIVE RESEARCH TYPE in which I know what I have to measure & also the adequate method for measuring it along clear-cut definition of “population” I wanted to study. Without a proper well-organized research plan. which work as a base for drawing conclusion and getting result. Industries Trade Association and Computer. 31 . Survey or Experimental Method. Following are the steps to be followed while carrying out diagnostic research studies 1) Formulating the objective of the study (what the study is about & why is it being made) 2) Designing the methods of data collection 3) Selecting the sample 4) Collection the sample 5) Processing & analyzing the data 6) Reporting the finding Data Collection Methods: Data was gathered through Primary and Secondary Data: 1) Primary Data It consists of original information gathered for the specific purpose. 2) Secondary Method It consists of information that already exists somewhere. newspapers. the procedure to be used was also planned. The actual sales of the industries. it is impossible to complete the project and reach to any conclusion. With the help of Secondary Data collected from various magazines. The main objective of survey was to collect appropriate data. Since the aim was to obtain complete & accurate information in the said studies. This data is generally collected by Observation.Research Methodology Research methodology is considered as the nerve of the project. The project was based on the survey plan. They offer the advantage of low cost and already availability.
) Questionnaires are enclosed in Appendices. the following people were considered : Exporters Banking Sector Hotel Industries Doctors Computer Centers Industrial Sector High Income Class 2) Sample Size: (How many are to be surveyed?) Due to the limitations in the budget. Distributors. Dealers. Sampling Plan This call for three decisions:1) Sample Units: (Who is to be surveyed ?) As the Air conditioner is still a luxury product so far the survey purpose. researcher uses judgment to select population member who are good prospects for accurate information. 32 . the most common research instrument used was: Questionnaire A questionnaire consists of a set of questions presented to respondents for their answers.e. In this method. etc. a small sample size was taken and surveyed by adopting Judgment Sampling Procedure..Research Instruments To collect the primary data. For the experts (i. For that two types of questionnaires were developed: For the present/prospective customers.
policies and sales figure were not disclosed by the competitors. capable. of just 8 weeks. 6) Secondly. Personal Interview Method was chosen as it was the most versatile of the three methods. due to which we were not able to reach those destinations which we wish we would. Some of the confidential information viz. Each and every region is not easily accessible. of sample size may give inadequate results Non-cooperation shown by certain retailers and their ignoring attitude. Here the interviewer can ask more question and can record additional observations about Limitations of the Study In spite of working under the banner of such a magnificent company and also under the guidance of highly matured. 5) A limited time frame i. schemes. 33 .e.3) Sample Procedure: (How they are to be surveyed?) Three types of contact method are used: The Mail Questionnaire Telephone Interview Personal Interview For the present study. we cannot say that the data taken for our study is fully adequate to get the desired or accurate result. I would definitely like to share those aspects too 1) 2) 3) 4) Small no. margins. and understanding people certain constraints do played the role of hindrance in the way of accomplishing the assigned task.
of A/Cs owned in a household etc. Gender of the buyer Inference: As it can be seen 71% of the buyers (decision makers) are male. Household income. Age. consumers were asked questions regarding Gender.ANALYSIS AND RESULTS Demographics In order to determine the demographics. This will help LG in taking decisions regarding Promotion. 34 . Advertisements and Schemes etc. LG can take advantage of this by advertisements targeted towards the male audience to attract them more. to be offered to consumer. no. for buying an A/C.
Age of the buyer Inference: It was observed that 53% of the consumers were below the age of 30 years thus it is required that advertisements and schemes should target this segment as most of buyers will be first time buyers hence it can help LG in making a long term customer relationship. 35 .
Inference: 1) 64% of the surveyed consumers were living in Nuclear family (4 or less than 4 family members). 36 . 3) Offers such as family holidays can be provided with every purchase of the A/C to lure the customer. 2) 70% of the families had 1 or 2 members with earning power.
Inference: 1) 58% of the consumers were having income between Rs. 3) Hence they have Low Disposable Income and are more price sensitive. 3 to 6 Lakhs per annum 2) And 55% of above mentioned consumer below the age of 30 years. 4) By providing an A/C at right price point this segment can be tapped again to buy LG. 37 .
2) 15% were potential A/C customers.Air Conditioner Ownership Ownership of A/C Q. 38 . 4) Their choice was more affected by the performance of the current A/C they had. 3) Most of the owners were there to buy their second A/C and they had clear idea about which A/C to buy. Do you own an Air Conditioner? 1) Yes 2) No Inference: 1) 85% of the respondents surveyed already had A/C in their house.
39 . How many AC(s) do you have at your home? (select only one option) i) 1 ii) 2 iii) 3 iv) 4 v) 5 vi) Above 5 Inference: 1) 41% of the household had only one A/C installed. 2) 24% had two A/Cs installed.No. of A/Cs in a Household Q.
What are the types of AC(s) you have at you home? (Multiple options can be selected depending upon the number of AC(s)) i) ii) iii) iv) Window Split Cassette Tower Inference: 1) Window A/C is still the popular choice among the consumers with 61% of ownership.A/C Types Q. 40 .
A/C Tonnage Q.75 Ton 1 Ton 1.75 Ton A/C.5 Ton A/C installed. What is the tonnage of AC? (How much ton AC(s) you have at your place? Multiple options can be marked) i) ii) iii) iv) v) 0.75 tone was least preferred by consumers with only 3% of ownership 3) Most of consumers prefer 1 Ton A/C over 0.5 Ton 2 Ton 3 Ton and Above Inference: 1) 65% of the consumers surveyed had 1. 41 . 2) Whereas 0.
42 . Do the AC(s) have star rating? i) Yes ii) No Inference: 1) 80% of respondents already had star rated A/C installed in their home 2) It can be said that people are getting conscious regarding power consumption and environment.Star Rating Q.
Which Brand of AC(s) are you using? i) ii) iii) iv) v) vi) Samsung LG Onida Godrej Voltas Other (Please specify)- Inference: 1) LG had the maximum ownership.Ownership of A/C Brands Q. 43 . 3) This was due to their aggressive promotion. 2) Second most owned A/C brand was Samsung. 37% of the total respondents.
Which AC Brand are you planning to buy next? Voltas LG Onida Godrej Hitachi OGeneral Daiken Sanyo Samsung Whirlpool Panasonic Carrier Other (Please specify) Future A/C purchases by current A/C owners LG Voltas Samsung Others 30% 38% 22% 10% Out of 85% of current A/C owners mentioned above 38% want to buy LG again. 3) And 30% consumers selected other brands which consist of OGen. Daiken etc. Inference: 1) This pie-chart depicts the A/C brands that the current A/C users would like to buy. 30% of owners are shifting to other brands. 2) 38% of the current consumers selected to buy LG again.Future A/C Purchases by current LG users Q. Hitachi. 44 .
Inference: 1) This pie-chart depicts the A/C brands which potential customer is thinking seriously considering to buy. 45 . 3) This was due to its good service and performance. 2) Maximum (67%) of them selected LG.
Inference: 1) 45% of the current LG users wanted to buy LG again. 2) This is a bad news because more than half of the users do not want to buy LG again. 46 .
Inference: 1) Consumers who wanted to buy LG again chose this brand because of its impeccable service and good performance. 2) Brand name came after these two. 47 .
Inference: When asked for the reasons to not buy LG again mainly were 1) Other brands have better performance than LG. 2) Or the brand name is good than the LG. 48 .
relatives or the dealer himself. 49 . 2) TV was select as the second most influencing medium.Inference: 1) 48% of the consumers selected word of mouth as their most influencing mediums in form of friends.
Findings from Dealers Survey 50 .
59 . 99/. And the gift will be delivered to the customer.Dealer Satisfaction with LG Scheme LG Scheme.Demand Draft to LG.This scheme was given with LG A/Cs in which when a customer buys a LG A/C he/she gets a Reebok Gift. Inference: Mostly dealers were not satisfied with scheme as it involved filling up of online form and sending of Rs. 99 demand draft which is more of a hassle to customer than a pleasant experience. In order to obtain these gift customers has to register him/her through internet and then send a Rs.
Inference: Besides the DD problem many dealers never had the scheme in their shop. 61 .
whereas as Samsung is very aggressive in its promotions. 62 . Most of the models shown in Brochure are not available in the shop hence they are reluctant to show brochures to the customers. There were many dealers who were not even aware of the ongoing Reebok scheme. Dealers also complained that some of registered LG dealers are de-selling LG A/Cs but those who are actually selling LG are not getting its dealer’s membership.Observations from Dealers The supplies of LG A/Cs are very LOW. Some dealers also complained about the POP being not updated regularly. Dealers were provided with LG reebok scheme posters but there was no actual scheme present in that shop. And they end up buying other brands. Whereas some dealers even praised the coupon scheme given with Whirlpool A/C Quality of the gift is sub-standard. Customers are asking for discount rather than the Reebok gift. customers are ready to buy LG but due to low SKU’s we are unable to fulfill their demand.
These members are taken care properly by sending free gifts on regular basis.E Club A.C. The Club members are given special reward system in which these dealers are rewarded on a point system for selling a specific no. The following were the observations Almost all the SSD’s that were surveyed had LG A.E (Air-Conditioning Experts) is a club started by LG which SSD’s and A/C solution plazas were involved. of A/Cs. 2.C. Those who knew about the point system said they never knew how much points they have as the Website never worked. 63 . 3. all the SSD’s which have the membership had following problems: 1.Observations from Sales and Service Dealers (SSD) Club A. some of the SSD’s never received Membership cards only the Gifts were received. One of the shop keeper even tried calling the club but nobody picked up the phone. 4.E club membership but there was a huge problem.C. They had no clue about the reward system and the point system. Nobody contacted them after they received their membership cards and gifts. 5. Many of the SSD’s never checked back again.
Other SSD observation apart from Club A. 64 .C. Videocon . compared to Hitachi.E Most of the SSD’s complaint about unresponsive LG executives and said that LG is not taking proper care of these SSD’s They also complained about the distributors. that they are selling A/Cs for the less price and these SSD’s can’t compete with that price. They get very less margins from LG A/Cs. Some of the SSD dealers suggested that LG should capture corporate market by taking Architects and constructors into confidence because these people can influence decision on Air – Conditioning. Daiken etc.
customers get a lot of choice in terms of design and features. ‘Word of Mouth’ was rated most the most influential medium followed by TV. Onida & Panasonic. 43% of the respondents opted for LG A/C again followed by 21% for Samsung. Repeat buyers do not opt for LG since most of them are moving to the higher segment like Hitachi.S. Customers are preferring star rated A/Cs as they concerned about power consumption. Onida. 65 . The Product Range of LG is very good . OGeneral. Daiken. There is an acceptable level of advertisements being aired in the NCR region. Samsung.Conclusion From Customers LG has a 37%market share in the organized A/C market which includes major players such as Voltas.S is done within 24 hour of complaint registration. The LG Reebok scheme is not attracting customers as it requires the customer to fill an online form and send a Demand Draft to LG in order to receive the gift. Bluestar etc. LG’s After Sales Service is considered the best among the competitors. A. LG advertisements are not easily understood by an average consumer. Samsung has emerged as the second largest market player . Quality of LG’s product was appreciated on the average. Pricing of LG A/Cs (Split and window) are not competitive in comparision with Godrej. Godrej . and Panasonic.
. LG also provides training program for dealers. Most of the dealers provide installation through their own resources. Sometimes LG takes a long time to deliver A/Cs to direct buyers (i.e. Dealers are getting low margins from LG A/Cs in comparison to Voltas. It is not necessary for the dealer to have a service department as the after sales service of LG is more than adequate to meet ASS requirements.For Dealers Many of the dealers are not satisfied with the Reebok gift schemes provided by LG.. Most of the delivery to the regular distributor is done within 36 hours of request. banners and Brochures put up by LG found favour with the dealers. Customers is prefer discounts to the free gift. SSD etc.E reward systems. Sales and service dealers are not happy with the Club A.). Sales and service dealers are getting A/Cs at a higher price from LG as compare to the A/C sold through the distributor channel hence they are having lower margins when compared to a normal dealer.C. and Onida 66 . Availability of the product is inadequate to the demand at the height of the buying season Promotional material including POPs. Samsung. LG had the maximum sales followed by Samsung.
camera. was purchase of every A. thus paving way for other LG products in that house. audio’s or refrigerators along with an A. The unit wise incentives can be given. It will help the company to make the customer totally LG products oriented. membership of executive clubs. LG must have very effective and attractive T. like if any existing customer helps in bringing a demand of A. Promotion Schemes : Incentives to the customers should be given to attract them. Print Media has a widespread reach to the customers and it makes a good impact on them when they read advertisements in newspapers and magazines. mobile phones.C.C.Suggestions Price: LG should reduce the price of the A/Cs in order to compete with brands like Onida. Thus their involvement in buying a brand and the product is very high. For examples.. The existing actual loyal customers are motivated through promotion schemes.V.C.C. executive watches. a music system can be given. Handsome Discount or free gift on a joint purchase of television. etc. and Godrej.C.. but LG is not using this media effectively. Samsung. This is necessary because the decision of purchasing any high involvement product has the pre purchase consent of all the family members. he/she can be awarded by a gift. for purchase of two air-conditioners a pair of Ray Ban Sun Glasses can be given. Advertisements: Electronic Media has a very effective reach in each and every potential household. inter cards. like worth of gifts should be increased depending upon the increase in the number of units purchased. can be given to the customers. 67 . This gift will be like fixed discount in % for buying any LG Product once in a year.’s. users before buying.C. people generally discuss with other A. like a free gift in the way of credit cards. so there must be frequent advertisements in magazines and local newspapers on corporate level. and radio advertisements. for three or more units. so that all the family members can be acquainted with the special features of LG A. being a luxury service based and costly product. A.
Leaflets : Leaflets for A. it is very essential that the product must be available all the time.’s for their offices.C. Display Model : Dummy A. Product availability : Since LG has a very good brand equity in the market. to bui ld good relations with the customers and to retain customer loyalty. in terms of strong brand image. This will create more interest in customer’s mind which will lead into more acquaintance and more information about that particular A. benefit goes to competitor’s.C. product quality and after sales service. For thus. etc.`s which are being supplied to dealers have information for all type of A. to create good brand image of LG A. In addition to this leaflet.C. free gifts with every unit sold. separate single sheet leaflet must be designed for separate A. wider brand awareness.C.`s but it appears that this leaflet falls to create interests about a particular A. This leaflet supplies all the information concisely for all type of A. LG must provide a sound facility and faculty for technical training for the dealers to train their service personnel.’s must be arranged for the display at the dealer’s showroom with stand.C. so there is a rising trend in the demand of LG A.’s in the market. 68 .C. customer will spend more time in seeing and understanding about the particular A.C.`s By this way. Builders and Interior Decorators such as subsidized A. The advertisements should be of bigger size and more attractive with some unique features. There should be schemes for Architects..C.`s being shown together. the product is poorly available to the customers sometimes at that time.C.C. according to the requirement of the customer. These training centers must be setup at branch levels to facilitate easiness in providing training. After Sales Service : A Very good and quick sales service not only satisfies the customer having high expectations but also provides him a feeling of satisfaction and thus ensures his loyalty towards the brand. So. which will help in developing and strengthening their brand loyalty towards LG.’s but due to the demand exceeding the supply. according to his requirement. so that good contacts can be maintained with them. And at least one colorful advertisement must be given in the newspaper in a month at the time of season. Contact Building : LG must arrange timely get-together for building contacts with higher officials of the corporate and government.C.
google. “Marketing Management” 69 .com 4) C.wikipedia. Kothari.BIBLIOGRAPHY 1) www.R. Research Methodology 5) Philip Kotler.com 2) www.in 3) www.co.lge.
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