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In the partial fulfillment of requirement for the award of degree of
MASTER OF BUSINESS ADMINISTRATION (MBA) From Dr. Babasaheb Ambedkar Marathwada University, Aurangabad
Pratap P. Ingle
Roll No. 0815023
Under The Guidance of
Ms. Pradnyashailee Sawai
MGM’s Institute of Management (IOM), N-6, CIDCO, Aurangabad.
I, the undersigned, hereby declare that the project report on The Market Analysis of LG Consumer Durables & Dealer Devlopment is submitted to the ‘MGM’s Institute of Management, CIDCO, Aurangabad’. It is my original work and the conclusions drawn there in are based on the data & material collected by myself.
Date: Place: - Aurangabad
Pratap P. Ingle
The successful completion of this project report could not have been possible without the help and guidance of many people. I would like to express my sincere and deepest sense of gratitude to all of them. I am deeply indebted to my project guide Ms. Pradnyashailee Sawai for her valuable guidance for my project. It gives me immense pleasure to acknowledge LG Electronics India Ltd. dealers, who have been nice enough to give me a chance to do my project and providing me wonderful support throughout my project. I sincerely thank Dr. S.A.Somwanshi (Director, MGM IOM) whose direction and encouragement motivated me to steer the project work confidently and successfully.
This is to certify that the project report on The Market Analysis of LG Consumer Durables & Dealer Devlopment submitted by Pratap Ingle is the result of his original research work completed under our supervision. To the best of our knowledge & belief the work embodied in this project report has not formed earlier the basis for the award of any degree or similar title of this for any other examining body.
Ms. Pradnyashailee Sawai Project Guide
Mr.Goutam Saha Dean
Dr. G.A. Nikam Director
SR. NO. 1. INTRODUCTION
PAGE NO. 6
OBJECTIVES SCOPE REASERCH METHODOLOGY LIMITATIONS REVIEW OF LITARATURE PROFILE OF THE COMPANY CRITICAL ANALYSIS SUMMARY FINDINGS SUGGESTIONS BIBLIOGRAPHY QUESTIONNAIRE
10 11 12 13 14 16 26 31 32 33 36 37
2. 3. 4. 5.
Before the liberalization of the Indian economy, only a few companies like Kelvinator, Godrej, Allwyn, and Voltas were the major players in the consumer durables market, accounting for no less than 90% of the market.
Then, after the liberalization, foreign players like LG, Sony, Samsung, Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players control the major share of the consumer durables market. Consumer durables market is expected to grow at 10-15% in 2009-2010. It is growing very fast because of rise in living standards, easy access to consumer finance, and wide range of choice, as many foreign players are entering in the market With the increase in income levels, easy availability of finance, increase in consumer awareness, and introduction of new models, the demand for consumer durables has increased significantly. Products like washing machines, air conditioners, microwave ovens, color televisions (CTVs) are no longer considered luxury items. However, there are still very few players in categories like vacuum cleaners, and dishwashers Consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the Consumers whereas the Indian companies compete on the basis of firm grasp of the local market, their well-acknowledged brands, and hold over wide distribution network. However, the penetration level of the consumer durables is still low in India.
LG Electronics is playing an active role in the world market with its assertive global business policy. As a result, LG Electronics controls 110 local subsidiaries in the world with around 82,000 executive and employees. LG Group 1. LG.Philips LCD 2. LG Chemical 3. LG Telecom 4. LG Powercom 5. LG Twins 6. LG Dac
Business areas and main products
Mobile communications (a) CDMA Handsets, (b)GSM Handsets, (c) 3G Handsets,
(d) Cellular Phones Digital appliance a) Air Conditioners, b) Refrigerators, c) Microwave Ovens, d) Washing Machines, e) Vacuum Cleaners, f) Home Net, g) Compressors for Air Conditioners and Refrigerators Digital display a) Plasma TVs, b) LCD TVs, c) Micro Display Panel TVs, d) Monitors, e) PDP Modules, f) OLED Panels, g) USB Memory, h) Flat Panel Computer Monitors Digital media a) Home Theater Systems, b) DVD Recorders, c) Super Multi DVD Rewriters, d) CD±RW, e) Notebook PCs, f) Desktop PCs, g) PDAs, h) PDA Phones, i) MP3 Players, j) New Karaoke Systems, k) Car Infotainment
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). LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores.
LG corporate office is located at Plot no.51, Udyog Vihar, Kasna Road, Greater Noida, India. This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. ''Company is setting up a chain of exclusive premium showrooms. LG plans to launch 60 premium Brand Shoppes by the end of the first quarter of this year. At present, LG has a total of 83 LG stores across the country, of which 45 are shops and 38 are exclusive stores. Brand shops will be placed in the premium segment and the target audience will comprise buyers interested in premium and high end products. LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a more interactive environment and additional lifestyle orientation on display so that the customer can actually experience the LG products in his or her own home settings. LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract inspirational and young consumers across India, company will roll out a new marketing strategy. The exercise will cost the company Rs 360 crore. 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 more than 50 lakh households in India. LGEIL is celebrating the 11th anniversary this year. LG Soft India the innovation wing of LG Electronics in Bangalore is LG Electronics' largest R&D centre outside Korea. We at LGSI focus on niche technology areas such as mobile application development, digital video broadcast and biometrics software and support LG Electronics with our expertise. Motivated by a passion for technology, a strong work culture and loyalty to the organization, we are determined to see LG become one of the top three brands globally. Prominent consumer electronic company, LG Electronics Inc. has said that it expects the sale of its products in India to up by 15 per cent in 2008. Moon Bum Shin, managing director of LG Electronics India has said that the company has earmarked 4.8 billion rupees for investment purpose in India this year. The said money will be used to market as well as manufacture new products. LG Electronics, which is originally a South Korean Company with branch in India, informed that its sales of GSM mobile phones, color televisions, air conditioners and other household goods in the Indian market was to the tune of 95 billion rupees ($2.4 billion) in 2007. As per Shin's estimate, the sales in 2008 would be around 110 billion rupees. In order to achieve its target, Shin said LG Electronics will concentrate on catering to the high-end consumer
market which will help boost sales this year. India churns out six (6) per cent of LG Electronics global revenues of $42 billion. The Indian branch of LG exports to 40 countries.
Classification of consumer durables sector
• Consumer electronic include vcd/dvd, home theatre, music player, color television (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc White goods include dishwashers, air conditioners, heaters,washing machines, refrigerators, vacuum cleaners, kitchen appliances, nonkitchen appliances, microwaves, built-in appliances, Tumble dryer, personal care product etc. Moulded luggage include plastics Clocks and watches Mobile phones
• • •
OBJECTIVES OF THE PROJECT
Primary objective • The main objective of filed survey during the project was to find out the market share of the LG and also calculate the display share.
• • • •
Find out the positional dealer who can sale the LG product in large volume. The main objective of research was to identify potential dealer and development these dealer. So LG can make them their direct dealer. This will ease the dependence on the some big dealer like Maharashtra and Mahaveer electronics. Find out the problem faced by the dealer in sales and the distribution.
Secondary objective • The Objective was to find out that how far the exhibitions are helpful in branding, • While purchasing the consumer durables which parameter is most important for the consumer? • Do the consumers prefer the financial facility for buying consumer durable? • How frequently consumers change the consumer durable? • To enhances the knowledge of consumer durable market. • To increases the knowledge consumer durable product of LG. • To enhances the knowledge about the marketing and branding N activity.
SCOPE OF THE PROJECT
This project gives us great exposure to the consumer durable market because it includes product knowledge and field survey job in which we visited the LG stores in Pune. Incidentally Gudipadava time was nearing during our survey period which exposed us to another aspect of product promotion. LG always insist the 50% display share of LG product because LG believes that “JO DIKHTA HAI WO BIKTA HAI”.
In term of purchasing power parity (PPP), India is the 4th largest economy in the world and overtake Japan in the near future become the 3rd largest. Indian consumer durable market is expected to reach $400 billion by on 2010 India has the youngest population amongst the major countries. There are lot of people in the different income categories nearly the two third population is below the age of 35 and nearly 50% is below 25. There are 56 million people in middle class, who are earning us$4,400-US$21,800 a year. And there are 6 million rich household in India. The upper-middle and high-income household in urban areas are expected to grew to 38.2 million in 2007 as against 14.6 million in 2000.
Research methodology is considered as the nerve of the project. Without a proper well-organized research plan, it is impossible to complete the project and reach to any conclusion. The project was based on the survey plan. The main objective of survey was to collect appropriate data, which work as a base for drawing conclusion and getting result. Therefore, research methodology is the way to systematically solve the research problem. Research methodology not only talks of the methods but also logic behind the methods used in the context of a research study and it explains why a particular method has been used in the preference of the other methods
Research design Research design is important primarily because of the increased complexity in the market as well as marketing approaches available to the researchers. In fact, it is the key to the evolution of successful marketing strategies and programmers. It is an important tool to study buyer’s behavior, consumption pattern, brand loyalty, and focus market changes. A research design specifies the methods and procedures for conducting a particular study. According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of investigation conceived as to obtain answers to research questions and to control variance.
Data collection methods
After the research problem, we have to identify and select which type of data is to research. At this stage; we have to organize a field survey to collect the data. One of the important tools for conducting market research is the availability of necessary and useful data. Primary data: For primary data collection, we have to plan the following four important aspects. • Sampling • Research Instrument • Secondary Data - The Company’s profile, journals and various literature studies are important sources of secondary data. • Data analysis and interpretation
Every study has certain limitations. In our study, also there were certain limitations, which I could not able to solve. • The research was conducted in a very small area.
Our research work period witness the biggest ups and downs in product sale of different brands, which affected the perception of the customer. This was biggest drawback of my study. Time factor was also important for us. We had limited time for the research, for which a full-fledged report was insufficient for me. The customer filled the questionnaire mostly in careless manner, so it was difficult to make them hold for time. We had only found the upper-middle class family to fill up the questionnaire, but generally, an average middle class family was required for the study. The sample size is also very small which represent my research on consumer behavior
The increasing spread and domination of international brands has seemed inevitable for at least the last 30 years. Investors have historically been extremely confident about the prospects for branded goods businesses, particularly those owning international brands like LG . And the multinational branded goods owners themselves have shared that confidence. With their economies of scale, massive spending power and highly developed management structures, these behemoths have seemed invincible. Multinationals, in pursuit of the global brand, have rationalized irrational name variants –In the last few months, LG has changed the name of its
leading cleaning brand in the Korea but local and regional brands still remain strong. The multi-layered multinationals simply don’t have the agility and speed to respond to local needs in every country of the world in the way that locally grounded brands do. Nimbler, smaller competitors, who are solely focused on their home markets, can adapt more quickly. None of this has gone unnoticed by global brand owners. It could be argued that the downfall of all local brands is that they have ambitions to be global brands. It is clear that the fortunes of both global and local brands will wax and wane with new fashions, new governments and new technology esp. in the case of multinationals like . Perhaps, though, the question we really should be asking is what global and local mean in the new economy. Most virtual Internet brands are effectively transnational. The word ‘global’ in our marketing vocabularies for some time now and that very coining seems to recognize that global and local brands need each other. In the end people want both global and local brands – brands that make them feel part of wider international community and brands that root them in their home culture as done by LG worldwide. TERMS AND CONCEPTS USED: • Global Marketing Strategy: How companies position themselves in different companies and how customers perceive the value and authenticity of their brand name and products is majorly what a marketing strategy focuses on Global Marketing strategies become increasingly important within a modern global company. No firm competing regionally, or world-wide, can afford to pursue marketing strategies that are based solely on national characteristics or potentials. To succeed in these situations, the marketing effort must consider all global aspects of the company’s marketing effort and its competitors. Companies must develop characteristics that, compared with national, regional and global competitors, generate advantages in the market place. Marketing resources must also be effectively allocated in line with strategic objectives. • Global Success Factors: A company’s many attributes form to make the company a major success. These major strategies and core competencies of companies make up its global success factors. • Global Advertising:
Global advertising depends on the culture, value and beliefs of the coutry where the company wants to place itself. For example in Pakistan the advertisements are way different than they would be in china or in Australia or in any other country for that matter. • Mediums for Advertising Another major part of global branding is mediums for advertising. It depends a lot on technological potential of countries where the company is doing its operations. Electronic-media, bill boards, print media and many more mediums are used for this purpose. • Brand awareness Brand awareness is a proof of company’s success. It relates to how customers know about the brand and respond to it. Later in this report a brand awareness survey has been carried out to make the concept clearer. • Competitors analysis Its is very important for companies to carry out this analysis to know their position in the market and to analyze how they can make it better for themselves to improve on their product and mange to have a competitive edge over their competitors
PROFILE OF THE COMPANY
The mission of LG is to provide the customers with utmost satisfaction through leadership. The fundamental policy of development is to secure product leadership that the Customers may have the utmost satisfaction. VISION Global Top 3 by 2010 Global Top 3 Electronic/Telecommunication company
GROWTH STRATEGY “Fast innovation, Fast growth”
CORE COMPETENCY “Product leadership, Market leadership, People leadership”
CORPORATE CULTURE No excuse, “we” not “I”, Fun workplace SLOGAN "Life's Good" represents LG's determination to provide delightfully smart products that will make your life good.
The symbol of LG is the face of future. The letter “L” and “G” in a circle symbolizes world, future, youth, humanity & technology. LG philosophy is based on humanity. It also represents LG’s efforts to keep close relationship with our customers around the world. The symbol consists of two elements. 1. The logo in LG gray 2. The stylized image of human face in the unique LG red color. Red color represents our friendliness and gives a strong impression of LG’s commitment to deliver the best. The circle symbolizes The Globe. The stylized image of a smiling face in the symbol conveys “Friendliness and Approachability”. The one eye on the symbol represents “Goal-oriented, Focused & Confident”. The slogan of LG is “Life’s Good”. It expresses“ Brand’s Value , Promises, Benefits , Personality .
History of the company
The company was originally established in 1958 as Gold Star, producing radios, TVs, refrigerators, washing machines, and air conditioners.
1958-69 1970-79 1980-88 1989-94 1995-98 1999-03 2004-06 2007
- GoldStar The Electronics Industry Dream GoldStar symbol of The Technolgoy
- INTERNATIONALIZATION - INOVATION - GLOBAL LEADERS LG ELECTRONICS - DIGITAL MANAGEMENT - GREAT PEOPLE GREAT DESIGN - THE PEOPLE COMPANY
The LG Group was a merger of two Korean companies, Lucky and Gold Star, from which the abbreviation of LG was derived. The current "Life's good" slogan is a backronym. Before the corporate Name change to LG, household products were sold under the Brand name of Lucky, while electronic products were sold under the brand name of Gold Star. The Gold Star brand is still perceived as a discount brand. In 1995, Gold Star was renamed LG Electronics, and acquired Zenith Electronics of the United States.
LG BRAND IDENTITY The brand of LG is delightfully smart. LG strives to enhance the customer’s life and lifestyle with intelligent features, institutive functionality and exceptional performance. The brand platform The LG brand is composed of four basic elements – 1. Value 2. Promise 3. Benefits 4. Personality The Brands core Value that never changes. a. Trust, b. Innovation, c. People d. Passion The benefits that are consistently delivered to the customer includes a) Reliable products b) Simple design c) Ease of use d) Extraordinary Experience Personality describes the human characteristic that are expressed to the customer throughTrustworthy, ConsideratePractical, Friendly
The Internal Culture of LG
LG practices four cultures 1. Learning Culture 2. Boundary less Environment 3. A Carrier 4. Growth
According to LG, the Learning Culture continuously helps the employee to learn more and more to develop the habit of continuous learning. Boundary less Environment means that there is no difference between the levels of employees. There is transparency between the work and mutual understanding between all the employees. A carrier is highly growing in LG and one who is the employee can develop their carrier largely. A new comer will feel fully comfortable in the company and for a new comer the company is very helpful in the overall growth of personality. Growth in LG is very high for those who are in the company and for those who want to join in LG. The company is growing with fast innovation and the BLUE Ocean strategy is one of the examples of growth.
We are focusing on six development areas to become the product leader. 1. New Machine 2. Reliability 3. Conventional Installation 4. Environment Friendly Product 5. Low Noise & Vibration 6. Energy Savin
The policy of quality assurance is to provide customers with utmost satisfaction by supplying zero defects.
LG proceeds in a hierarchal manner. It is named as “LG WAY”. From top to bottom: No.1 LG – is the VISION
“Jeong-DO” Management is LG’s unique application to ethics. LG will
succeed through fair management practices and constantly developing our business skill. A) Honest with our customer b) Providing great values to customer through constant innovation & and development. c) Equal opportunities d) Equal Treatment Management Principle - Creating value for customer
Code of conduct of LG
1. Responsibility and obligations to customers : • Respect for Customers • Creating Value • Providing Value
2. Fair competition • Pursuit of Free Competition • Compliance with Laws and Regulations 3. Fair Transaction : Equal Opportunity Fair Transaction Procedure Support and Aid for Business Partners 4. Basic • • • • • Ethics for Employees Basic Ethics Completion of Duty Self Development Fairness in Performance Avoidance of conflict with company interest
5. Corporate Responsibilities to employees • Respect for human dignity • Fair Treatment • Promoting Creativity 6. Responsibilities to society and country • Rational Business Development • Protection of stock holder interest • Contribution to social development • Environmental Conservation
DISTRIBUTION AND MARKETING
The company has number of dealers and warehouses. They have LG exclusive shops. For the marketing of the products a number of activities are followed 1. Exhibitions are conducted from time to time. 2. Society and college activities are conducted.
3. Hoarding, Posters, banners are used so as to grab the attention of the costumers. 4. Day to day advertisement in leading newspaper. 5. Discount at festival time. 6. For dealer relationship they arrange dealer meeting at several time in the year 7. LG divide dealer in gold silver etc. category to know the performance of the dealers. 8. They have their sales persons at various sub dealer store and at mordent trade store for particularly for the promotion of the LG product. 9. LG also uses the radio FM for the promotion activities. 10. Provide capon and scratch card for festive season.
Innovative marketing strategy
Launch new technologies in consumer electronic and home appliances. 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. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more then US$ 8 million on advertising and marketing in this sport. 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”. 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 . 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. 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.
Product localization 1. Product localization is the key strategy used by the LG 2. LG came out with Hindi and regional language menus on its TVs. 3. Introduced the low-priced “Cineplus” and “Sampooma” for the rural market. 4. LG was the first brand to introduce gaming in TVs in continuations of its association with cricket LG introduce cricket game in CTVs
Logistics is the art and science of managing and controlling the flow of goods, energy, information, and other resources like products, services, and people, from the source of production to the marketplace. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible. Logistics Management is that part of the supply chain, which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. 5R’s of Logistic followed by LG: • Right Time • Right Place • Right Condition • Right Cost • Right Handling The LG Factory is located at NOIDA & . There are three types of Warehouse• Mother Warehouse • Branch Warehouse • Spare part warehouse The mother warehouse is that where the products from the factory are kept and from that warehouse, the products are sent to the branch warehouse. A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load
and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.
In warehouse, the products are pinup with 3-color paper to get the knowledge about the delivery. 1. Red Card – To stop the product going into market, 2. Green card – To allow the product for delivery in market, 3. Yellow Card – After the product labeled with green, allow this to move in market
Mapping of regional dealers. They have been divided into three categories on the basis of their turnover and the selling capacity. 1 2 3 1- Includes the modern trade and they have direct billing from the branch office. They have high turnover and the company depends heavily on them 2- Includes the distributors. They have direct billing from the branch office. Their turnover is also high. 3- Includes the sub dealers. They have direct billing from distributors or from the branch office. Their turnover is not so high, but there are few sub dealers whose potential is quite high. According to sales the branch has designated as gold and silver sub dealers.
I have made questionnaire No. of questions in questionnaires for customer: 07 No. of question related to LG product: 03 No. of people met during the research: 200
No. of respondents during the research: 50 Sample unit Professionals, Business man, Employees, House wife, Working women, Students
Q1. Have you purchased any consumer durable during Exhibitions? • Yes • No
Inferences 1. 65 % of Customers have not purchased any consumer durable from exhibitions. 2. Only 35 % people have purchased. 3. It shows that consumers are coming in the exhibition for knowledge of product and also they want to know that weather there is actual price difference in exhibition and shop or not. 4. Consumers also want to compare to the different brand which are available in the exhibition. 5. So exhibitions are more useful to increases brand awareness. 6. People are less interested to purchase product from the exhibition. Q.2 While purchasing consumer durable which parameter influences you? • Price • Product feature • Brand • Service • Durability
Inference 1. 30% of customer gives importance to price. So it shows that Indian consumers are very price sensitive. They give more importance to price over the brand. 2. 26% give importance to brand. So price and Brand matter a lots for the costumers. And they are also want best brand in best price. 3. 19% to product feature Service 16% and durability 9% Service is also a big factor for the customer they are less interested in the durability.
Q3. From where you prefer buying consumer durables ? • Exhibitions • Co.shoppee • Showroom
Inference: 1. A majority of customers prefer to buy from showrooms. Very less proposition of customers buys from Exhibitions. 2. 47% customers are prefer to by from the showrooms because the showrooms are more convenient to customers they also think that these shops give more discounts.
3. People are less interested to buy from the exhibition they only visit the exhibition for price quotation of the product and the comparison of the product.
Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of following reasons • Attractive Price • Service • Demonstrations • Offers
Inference 1. Customers buy from showrooms because of the service and convenience. These are two main factors. 2. Customers are preferred to buy from the showroom because of they think that these convenient store may provide good after sell service. 3. Customer also thinks that there is more chance to bargain and they can get more discounts in these showrooms. 4. Price also a factor that attract the customer in these showrooms.
Q.5.Which consumer durable you have and of which brand? • CTV • LCD • PLASMA • REF • WM • MW
Inference In CTV section maximum customers have Onida, in LCD Sony is the leader, In plasma BPL is the leader, In Ref LG is the leader, MW LG is the leader. In WM there are companies and in AC also. Q.6. • • • • How frequently you change your consumer durables? 1-3 years 3-5 years 5-10 years More than 10 years
Inference 1. Customers prefer to change consumer durables within 5-10 years. In India people do not change consumer durable frequently. 2. 23% customers do not change their consumer durable within 10 year. 3. It represent that Indian consumer do not prefer to change their consumer durable frequently.
Q.7.Do you prefer any financing scheme to purchase consumer durables? • Yes • No
Inference Majority of customers do not prefer any financial scheme
Indian Consumer durables market used to be dominated by few domestic players like Godrej Voltas Allwyn and Kelvinator. But post liberalization many foreign companies have entered into Indian market dethroning the Indian players and dominating Indian market the major categories being CTV, Refrigerators, Air Conditioners and Washing Machines. India being the second largest growing economy with huge consumer class has resulted in consumer durables as the fastest growing industries in India. LG, SAMSUNG
the two Korean companies have been maintaining the lead in the market with LG being leader in almost all the categories. The rural market is growing faster than the urban market, although the penetration level is much lower .The CTV segment is expected to the largest contributing segment to the overall growth of the industry. The rising income levels double-income families and consumer awareness are the main growth drivers of the industries. Consumer durables major LG Electronics India Pvt Ltd will invest nearly Rs 500 crore in India this year in research and development, brandbuilding and other marketing initiatives. The company, having a turnover of Rs 9,500 crore and market share of 26 percent, is investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140 crore on research and development, besides launching new platforms in information technology and related areas, LG’s innovative ‘211 campaign’ to provide quality after-sales service, will also be expanded from the existing 22 to 40 cities by next month, the campaign, for which IT infrastructure has been set up, includes the company’s response to customer complaint within two hours. The fixing time for complaints varies from one hour to a maximum of 24 hours. TODAY Consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the LG, SAMSUNG the two Korean companies has been maintaining the lead in the industries with LG being leader in almost all the categories. The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, is investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140 crore on research and development, besides launching new platforms in information technology and related areas.
DEALER SURVEY FINDINGS
By calculating the display share we found that in most of store LG has 50% display share almost all categories.
• • •
By the actual monthly sale of particular store we came to know the capacity of the store and how much product can they sale. It helps us to know that weather dealer is capable of being a direct dealerof LG or not and it also helps to find out the new dealer who are capableof being the dealer of LG. We also came to know while visiting the shops that there was big problem of after sale service. Many dealers were facing the problem of after sale service because there is no follow up calls from LG. Demo calls also not done properly. The top competitor of LG product in is SAMSUNG. In area the performance of LG is in better position but the competitor also hold closer margin. There is high growth of sale in market due to booming in new technology and better service. Word of mouth plays a vital role in awareness among customer. This is one factor, which can play a good role in promotion of products as well as demonstration given by the shopkeeper also plays a vital role for customer.
RECOMMENDATIONS AND SUGGESTIONS
LG should improve it’s after sale service because its hits badly LGs market share in region.
More detailed customaries service is to be provided. The training to in shop demonstration should be given at frequent time interval and feed back should be considered positively. The company should look into the matter of person hiring for in shop demonstration. A big LG showroom should have at least 2 such kind of person. LG should try new dealer who have the potential. So they can target more market. As there is a bottle neck competition between Samsung and LG, it is necessary to take measure steps to overcome the area of downfall in LG with respect to Samsung. The marketing managers should make better relations with dealers and reputation of the company. Customer considers quality as their first preference, so the company should give more stress on this. The switching of customer from LG product to other brand is due to the bed after sell service in shop. The product is well aware and it is on top of mind of customer. So company should always improve services and update their technology.
• • • •
CUSTOMER SURVEY FINDINGS
Secondary supports play an important role in the customers mind and create awareness among the customers. The secondary support includes Demonstration, Exhibition & Even Sponsors.
From the survey it was found out that the majority of customers don’t buy consumer durables from exhibitions. They just visit the exhibitions to see the co. latest model. • They want to buy from the showrooms or from co. showrooms. For them service is important .Beside convenience and other factors service is key factor. • Also majority of customers do not want any financing scheme for purchasing the durables. • There was heavy rush on weekends so large numbers of ISD’s were appointed that day. Also the live demo calls helps in selling. Exchange offers also generate sale. • Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand. • In survey we found that LG has captured maximum market share in every category. LG dominates CTV, LCD, and Refrigerator, and Washing machine, category. • LG and Samsung have bottle neck competition in TV and REF. category. • The product is well aware and it is on top of mind of customer. • Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand.
RECOMMENDATIONS AND SUGGESTIONS
Exhibitions do not help to generate so much sells but they should be conducted regularly. This helps in generating awareness regarding the product in customers which ultimately helps in sales.
Also it is helps in advertising for the new products. Like in this exhibition new LCD SCARLET was advertised. Company should always focus on service. Display share should be increased where there is less than 50% as LG also believes that “JO DIKHTA HAI WO BIKTA HAI”. Company should try to improve service. No doubt the company products have technically edge over competitors but in long run it may hamper the company’s profit. Company should concentrate more on its major drivers LCD, IT, and GSM. Branding and promotions should be done effectively as it creates a long lasting image in the mind of customers. Company should also cater to the needs of sub dealers as some of the sub dealers have potential of high sales.
• • • • • Business world Business today LG magazine Economics times News paper Times of India
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www.lgindia.com www.google.com www.wikipedia.com
CONSUMER SURVEY QUESTIONNAIRE
Q1. Have you purchased any consumer durable during Exhibitions? • Yes • No Q.2While purchasing consumer durable which parameter influences you? • Price • Product feature • Brand • Service • Durability Q3. From where you prefer buying consumer durables • Exhibitions • Co.shoppee
• Showroom Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of following reasons • Attractive Price • Service • Demonstrations • Offers • Convenience Q.5.Which consumer durable you have and of which brand? • CTV ------------------• LCD ------------------• PLASMA ------------------• REF ------------------• WM ------------------• MW ------------------• AC ------------------Q.6. How frequently you change your consumer durables? • 1-3 years • 3-5 years • 5-10 years • More than 10 years Q.7.Do you prefer any financing scheme to purchase consumer durables? • Yes • No