This document provides a summary of LG Electronics India Ltd's marketing strategies. It discusses LG's corporate history and operations in India. It analyzes the Indian home electronics industry as the context for LG's business. The summary then examines LG's 4P's of marketing - Product, Price, Place and Promotion in India. Key findings and recommendations are provided based on the industry and company analysis. Tables and graphs are included to aid the data analysis. The summary is presented in 3 sentences or less as requested.
This document provides a summary of LG Electronics India Ltd's marketing strategies. It discusses LG's corporate history and operations in India. It analyzes the Indian home electronics industry as the context for LG's business. The summary then examines LG's 4P's of marketing - Product, Price, Place and Promotion in India. Key findings and recommendations are provided based on the industry and company analysis. Tables and graphs are included to aid the data analysis. The summary is presented in 3 sentences or less as requested.
This document provides a summary of LG Electronics India Ltd's marketing strategies. It discusses LG's corporate history and operations in India. It analyzes the Indian home electronics industry as the context for LG's business. The summary then examines LG's 4P's of marketing - Product, Price, Place and Promotion in India. Key findings and recommendations are provided based on the industry and company analysis. Tables and graphs are included to aid the data analysis. The summary is presented in 3 sentences or less as requested.
On On MARKETING STRATEGIES OF MARKETING STRATEGIES OF LG ELECTRONICS INDIA LTD. LG ELECTRONICS INDIA LTD. Submitted In te p!rti!" #u"#i""ment in te de$ree o# BACHELOR OF BUSINESS ADMINISTRATION Submitted To: Submitted By: Ms.Anu Aggarwal Ankit Wahi Project Guide oll !o."#$$%"$%"& BBA ' th S(M S(SS)*! +""&,+""- T(.!)A )!ST)T/T( *0 A12A!.(1 ST/1)(S 3A44ro5ed by A).T(6 Go5t. o7 )ndia 8 A77iliated to GGS )ndra4rastha /ni5ersity9 :. PSP )nstitutional Area6 Madhuban .howk6 ohini6 1elhi,$$""#'6 Ph.!o: "$$,+%'''$+$6 $++6$+:6$+; 0a<: , "$$,+%'''$+"6 (mail: in7o=tiasindia.org Website: www.tiasindia.org
Acknowledgement Notin$ concrete c!n be !cie%ed &itout !n optim!" combin!tion o# in'pir!tion !nd per'pir!tion. No &or( c!n be !ccomp"i'ed &itout t!(in$ te $uid!nce o# te e)pert'. It i' on"* te criti+ue' #rom in$eniou' inte""ectu!"' t!t e"ped tr!n'#orm ! product into ! +u!"it* product. ) would like to grate7ully acknowledge and e<4ress and e<4ress my dee4 gratitude to Ms. Anu Aggarwal6 my teacher guide who always hel4ed and 4ro5ided guidance during the course o7 my 4roject. ) would like to e<tend my earnest thanks 7or her assistance in the course o7 my 4roject. A!>)T WA?) *@@ !*: "#$$%"$"%& BBA ' T? S(M ii
DECLARATION This 4roject titled AA!A@BS)S *0 S(2).(S A!1 ./ST*M(SC 0((1BA.> T* STA!1A1 .?AT((1 BA!>D being submitted by me in the 4artial 7ul7illment o7 reEuirements 7or the awards o7 B.B.A degree 7rom Tecnia )nstitute *7 Ad5anced Studies6 A77iliated to GGS )P /ni5ersity6 1elhi. ) 7urther certi7y that ) ha5e not submitted this 4roject re4ort 7or any other degree or di4loma certi7icate. All sources o7 in7ormation and hel4 are authentic and ha5e been acknowledged in the re4ort.
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This report is an analysis of the Marketing Strategies of LG. LG is a Multinational Company having its presence all over the world. A thorough study of LG Electronics how it came into e!istence " operations of LG Electronics #ndia has $een presented along with an #ndian industry analysis. Analy%ing the company in the $ackdrop of the #ndian &ome Electronics was considered to $e important $ecause it is a highly competitive market and it is very important to know where a company stands in this industry. There after an intense study has $een done into LG's corporate history its origin developments e!pansions strategies etc. A discussion a$out LG's operations in #ndia follows and there$y the two chosen areas i.e. marketing is discussed in the su$se(uent sections. The four )'s of marketing have $een discussed in detail individually along with the product's $rand awareness under the marketing section. Product0 &ighlights the addition and change in the product range of the company and the significance of each of its product lines. i5
Pricin$0 The $asis used for pricing and how the products have $een priced. P"!ce0 The kind of distri$ution network used to market its products. Promotion* All the promotion activities to promote the company's $rand and its products in order its increase its market share. +indings and recommendations have $een drawn keeping the industry and company analysis in mind. Graphs " Ta$les have $een included in the data analysis chapter. 5 TA,LE -+ C-.TE.TS /. Company profile 0. -$1ectives of the study 2. 3esearch Methodology 4. Marketing Strategy 5. )ricing " 3elated Strategies 6. +indings " Analysis 7. 3esults " conclusions 8. 3ecommendations 9. ,i$liography /:. Anne!ures
LG ELECTRONICS 1 COMPAN/ PROFILE LG Electronics; goal is to ena$le the intelligent networking of digital products that will make consumers; lives $etter than ever. Corporate .ame LG Electronics #nc. Esta$lished -cto$er / /958 <As a private Company= Corporate -ffice LG Twin Towers 0:>oido?dong >oungdungpo?gu Seoul @orea /5:?70/ Tel* 80?0?2777?///4 A3L* http*BBwww.LGE.com Chairman " CE- Mr.>ong .am ,usiness Area and Main )roduct Di$it!" Di'p"!* 2 Medi! Comp!n* Cigital TD )C) Monitor CC?3-M Crives CDC? 3-M Crives CC 3ewrita$le 3ecorder DC3 CDC )layer Audio Security System 3ecording Media Dideo )hone )C Camera ,anking Automatic System )C, Di$it!" App"i!nce Comp!n* Air Conditioner 3efrigerator Microwave -ven Eashing Machine Dacuum Cleaner Compressor for Air Conditioner Compressor for 3efrigerator Te"ecommunic!tion E+uipment 2 3!nd'et Comp!n* TCF STA3EF optical switching systems #mplementation of advanced #,S <#nformation ,uilding System= System #ntegration <S#= service etc. #mplementation of advanced #,S <#nformation ,uilding System= System #ntegration <S#= service &andsets for satellite mo$ile multimedia and #MT? 0::: services etc. .um$er of Employees 64:80<078/4 in @oreaB 26068 overseas=
The AS G72 $illion LG group is one of the world's top conglomerates today having esta$lished its supremacy in diverse fields ranging from electronics chemicals etc. to trade and services. The LG group was $orn as HLucky Chemicals' in /947 a pioneer in the fledgling chemical industry. Eith a pioneering spirit founder chairman #n &wi?koo planted the seed of industry in a $aren land. The seed grew into a dream factory for hope. Curing the /95:'s amidst the ruins of the +rancen war the HLucky' $rand emerged as the representative $rand of +rance offering dreams and 1oy to the impoverished +rancen economy. LG was the first +rancen Company to make cosmetics and to enter the synthetic resins industry. LG esta$lished HGold star' in /958 opening the door to the home Electronicsin +rance. Since developing +rance's first radio in /959 LG Electronics has pioneered and led the +rancen &ome Electronics for over four decades .LGE was also the first company to produce the first electronic fan ,BE television. #n /96:'s with the launch of a national economic development plan LG emerged as the leader of +rancen industrial growth. LG's success is ensuing the genial alliance $etween the +rancen government and the organi%ation. The South +rancen Government guided the five chae$ols into different industries and product lines. #n the the $eginning of /97:'s after passing of the founder B chairman #n?&iwi @oo Cha?@yung @oo took over as the chairman. Ander his a$le leadership in a decade LG esta$lished more than 0: sister companies and schools increased its sales $y 26 times its e!ports $y 9: times and confirmed its place as +rance's leading $usiness group. #n particular it opened a central 3 " C centre the first +rancen company to do so which served as a $ack $one for strengthening international competitiveness. ,y mid 8:'s LG grew into a leading comprehensive chemical company. #t e!panded its electric and electronic $usiness advanced into the information and communication sector e!panded its resources and materials $usiness promoted the growth of the industrial electronics and component electronics industry strengthened its finance construction distri$ution and service $usiness and e!panded its none profit $usiness and sports sponsorshipI all of which contri$uted to enhancing the image of LG group. LG's period of first change came in the late /98:'s. #nnovation $ecame the key word in every aspect of management and LG $egan to change to a (uality oriented management and adopted a new management philosophy of HCreating value for customers' and HManagement respecting human dignity'. #n /995 to prepare for the coming 0/ st century chairman ,on?Moo @oo took the helm of the LG group. At te '!me time LG "!unced ! $"ob!" m!n!$ement 'tr!te$* #or te 45 't centur*6 !nd c!n$ed it' corpor!te identit* #rom Luc(* $o"d't!r to 7LG8. Even though this occurred in a very short period the LG $rand was successfully transformed. LGE now meets the world's customer with LG $rand. LG is known as a premium (uality $rand with more useful functions and products popular for their superior design. LG8' %i'ion i' to brin$ te 7'mi"in$ #!ce8 to e%er* ome cro'' te $"obe The JsmilingK face logo sym$oli%es five key concepts world future youth &uman and Technology. LG $elieves that an effective com$ination of these elements for the organi%ation. LGE has $een e!ploring ways to develop com$ine apply technologies that would customi%e products and services to meet customer needs and e!ceed their e!pectations LGE is performing this task $y identifying its focus on 3 " C centers. -utside +rance LGE has seven 3 " C centres in Lapan Anited States #reland and 3ussia among other countries and two 3 " C centres in +rance. LGE's long term strategy is to e!pand its 3 " C center $ase worldwide ad to invest 8M of the total revenue into 3 " C. LG's $usiness strategy for the 0/ st century is very aggressive. #nformation and communication electric and electronics chemical and energy multimedia $ioengineering and semi?conductors industries will $e promoted. LG i' !n inte$r!ted e"ectronic $ood' m!nu#!cturer t!t oper!te' tree bu'ine'' di%i'ion'0 Mu"timedi! Di%i'ion0 The multimedia division handles a range of multimedia products such as computers CC?3-MS -BA e(uipment information and communications e(uipment optical data devices audio e(uipment DC3's cam?corders printed circuit $oards <)C,= and magnetic tapes <MT=. At present LG is placing high priority to new $usiness which included Cigital Dideo Cisk <CDC= personal circuit ,oards <)CA= hand help )C's <&)C= .etwork computers <.C= and other related products and hopes to capture the market at full? thrust as these products $ecome more common in $usiness operations. The division posted AS G 0.5 $illion sales in 0::2. 3ome E"ectronic' Di%i'ion0 This division is divided into two main product categories with Air Conditioners washing machines refrigerators microwave ovens vacuum cleaners etc. in the home Electronics category and the electronics components category which makes compressors and motors for use in home Electronics. #n 0::2 this division posted AS G 2 $n in sales. The divisions' products have played a significant historical role at LGE and em$race a solid share of markets throughout the world. The division has accelerated its glo$ali%ation strategy and has manufacturing plants in seven countries which has greatly enhanced overseas production and sales efforts. LGE's home Electronics products are admired in various countries. LGE Citrus Luicer holds the top position in Li$ya Lordan Tunisia South Africa and in most regions of Asia. The division also leads market share figures for Citrus Luicer in Singapore )anama Chile ,olivia and over /: countries throughout Asia and Latin America. 3efrigerator e!ports have increased tremendously occupying top positions in // countries spanning every region of the world. Dacuum cleaner e!ports are also rising rapidly as C#S market is $eing concentrated. The division's Microwave ovens are the leading products in Europe and .orth America. Air?conditioner sales have increased tremendously within the last 2?4 years and have received accolades from customers in Africa Latin America and Eastern Europe. Di'p"!* Di%i'ion The Cisplay division produces TD sets <&ome Electronics= Colour )icture Tu$es <C)T= Colour display Tu$es <CCT= Monitors <M.T= Ceflection >okes <C+= and other display related products and has grown rapidly amidst large scale market e!pansion. The Cisplay Civision is fighting valiantly as the competition intensifies with price depreciation due to competitors dumping products. &owever the division is standing firm in the market and is recogni%ed as high (uality $rand all across the glo$e. Eith the Chinese and #ndonesia comple!es running full scale since'96 a vast glo$al production network has $een created. #n the turmoil of constantly rising ta!es the division still managed to $oost sales in 0::: $y ASG 2.6 $illion a 07M increase over the previous year. The company registered as the market share leader in over 0: countries throughout Europe Africa and Latin America. LGE has esta$lished facilities in 07 countries with a glo$al network of 54 su$sidiaries and offices with 5:::: dedicated employees. LG is an esta$lished $rand in more than /7/ countries offering futuristic technology and customi%ed products that deliver ultimate satisfaction to the consumers. LGE is now in the process of forging its image as a leading glo$al enterprise. The products that are manufactured glo$ally include multimedia players Dideo " Audio products &ome Electronics #nformation systems products Communication Cevices Cisplay products Magnetic recording Media Electric B Electronic components. Te comp!n*8' ne& product 'tr!te$* i' centered !round it' di$it!" tecno"o$* !nd #e!ture' ne)t9$ener!tion di'p"!* de%ice' !' it' core product $roup. LGE is already recogni%ed for its technology superiority in digital television and is channeling appropriate resources into this category to achieve growth and leadership position. Going forward LGE i' m!(in$ $re!t 'tride' to&!rd' re!"i:in$ it' %i'ion of $ecoming the 7;e't G"ob!" Comp!n*8 in te 45 't centur*. As LGE pursues this vision it remains committed to delivering outstanding products and services to customers around the world. LG8' .i'ion LG ELECT3-.#CS envisions a future where life is convenient and pleasant where living spaces are full of happiness. And where the promise of the future we all dream of comes true. LG Objecti%e' Achieve gross sales of ASG78 $illion. Secure ordinary income of 6 percent of gross sales. Attain a return on investment of /5 percent. ,uild a $rand reputation for total satisfaction. Create more comforta$le convenient homes electronics companies .in every corner of our glo$al village the company is dedicated to creating a $etter future for all consumers wherever they may live. LGE p"!n' to bui"d <Di$it!" i:e LG= !' it' premier br!nd im!$e !nd i' m!(in$ c!re#u" prep!r!tion' to t!(e te center 't!$e in repre'entin$ te cuttin$9ed$e e"ectronic' indu'tr* in te ne& mi""ennium. LG Corpor!te Identit* LG's sym$ol mark is the most important element of the corporate identification system. #t is the representative sym$ol of LG throughout the world. The sym$ol mark creates a unified mental image of LG necessary in international communication. Ee call this mark the Jface of the future.K #t incorporates five concepts and sentiments* LG8' 9R 2 D LGE has esta$lished facilities in 07 countries with a glo$al network of 54 su$sidiaries and offices with 5:::: dedicated employees LGE has reinforced 3 " C activities in higher digital technology to The face made from the Land Gsymbolizes that hman bein!s are the central as"ect of or bsiness and e#"resses the resoltion to do or cstomers and ensre Red Color: reinforces an image of warmth and familiarity with our global customers. get to the glo$al digital market with smart products that can simplify life. More t!n >? o# te tot!" re%enue' !re 'pent on R 2 D e%er* *e!r. ;* te *e!r 4@@@ !t "e!'t A? te tot!" re%enue &i"" be put b!c( into re'e!rc !nd de%e"opment. LG nurtures its employees o$tains patents for revolutionary products and encourage 3 " C achievement with diverse incentive. #t's /2 domestic la$s including the LG production Engineering research centre and our /: overseas la$oratories are doing their at most in $asic technology manufacturing skills (uality performance standardi%ation and design. Eith the company internal campaign for (uality innovation LGE is gunning for glo$al leadership in digital technology. LGE's customer?oriented performance is $acked $y energetic 3 " C activities. 3 " C $ased TL 0::5 looks ahead at yet to $e invented technologies and sensational products that with deliver outstanding performance to $etter your life LG9R2D .i'ion0 /. +ocus on performance ma!imi%ation $ased on market leading 3 " C <0:::= 0. Create glo$al leading products <0:::?0::0= 2. Secure technological identity to lead the growth of LGE <0::0? 0::5= R2D Appro!c !nd direction /. Secure profita$ility $ased team work where $usiness and technology $ecome one 0. Enhance 3 " C performance to promote production of market driven products. 2. Encourage $usiness mindset of 3 " C teams. LG9Str!te$ic Initi!ti%e' Rede'i$n ;u'ine'' port#o"ioBde%e"op ne& 'tr!te$ic bu'ine'' #t is important to revamp the company's e!isting product structure to strategically foster our image as the $est glo$al company. Ee need to redesign our $usiness portfolio to facilitate the $ranching out into the new sectorsI active efforts would $e made to advance into* /. The software and the service sectors 0. The information and communication sector 2. The health and environmental e(uipment 4. Ma1or parts and component sector And others $y pursuing friendly M " A's and strategic alliances with other companies. LG b!'ic pi"o'op* Compete in the international market with a glo$al mindset Ma!imi%e value for customers employees and shareholders )ursue the $est in the class through Hmanagement $y principle' Contri$ute to society through good Jcorporate citi%enship.K LG M!n!$ement Pi"o'op* Cre!tin$ .!"ue #or te Cu'tomer0 The whole purpose is to create value for the products and to serve the customers in every thing we do. Eith satisfied customers LG will naturally continuously and consistently innovate and develop to achieve our goal of providing the almost value per customers. Management ,ased Esteem for &uman Cignity* )eople are the origin of all values in all management activities. Management $ased on human dignity helps us achieve all goals. )eople should practice company's vision sense of value and goal in view of ownership to the company.
LG L-G- C-.CE)T Identi#ic!tion o# te '*mbo" M!r( Sym$ol mark is the most important element of corporate identification system. #t is the representative sym$ol of LGE throughout the world. Sym$ol mark creates a unified mental image of LGE necessary in international communication. The sym$ol mark which represents the J+ace of +utureK incorporates five concepts and sentiments of world future youth human and technology. The circle with the letters JLK and JGK sym$oli%es that human $eing are the most important aspect of our $usiness and e!presses the resolution to do our $est to maintain close ties with our customers and to ensure their satisfaction. The red color reinforces an image of warmth and familiarity with our glo$al customers and highlights LG's challenge to $ecome a world class company. ;r!nd M!r( ,rand mark is the most important element of $rand identification system. #t is the representative sym$ol of LGE throughout the world. ,rand mark creates a unified mental image of LGE necessary in international communication. LG in Indi! LG Electronics #ndia Limited <LGE#L= is a wholly owned su$sidiary of LG electronics South +rance. The company was esta$lished in Lanuary 0::: after clearance from the +oreign #nvestment )romotion ,oard <+#),=. #ts earlier two attempts one in /990 and one in /995 had failed. #t first entered the country in /990 with the Goldstar $rand name selling &ome Electronics' in partnership with Celhi?$ased home Electronics Company ,estavision the marriage failed to click right from the start. Two years and a host of pro$lems later it snapped ties with ,estaviscon and tried to form a 1oint venture with the C.@. ,irla group. That move too failed in the negotiation stage itself. ,y then the Goldstar had ac(uired a poor reputation with dealers and consumers alike. Eith the change in its corporate identity in /995 worldwide from HGoldstarK to JLGK it proved to $e lucky in #ndia only the third time around despite $eing one of the first multinationals to hit the #ndian market after li$erali%ation. The company launched in Celhi in May 0::: with ten model of color television ranging from /4 inches to 09 inchesI eight models of large capacity Mi!er Grinder ranging from 20: lt to 65: lt and three models of Citrus Luicer from 5.5 kgs to 0: kg and su$se(uently launched the same in Chandigarh Lucknow Laipur ,om$ay )une Calcutta Anmeda$ad #ndore ,angalore Chennai and &ydera$ad. These entire products $ear the LG $rand name which the company has decided to change from its previous $rand JGoldstarK around the world starting from 0:::. Today in a short span of 04 months LG has twenty si! models of colour television ranging from /4 inches to 6: inchesI /4 models of large capacity Mi!er Grinder ranging from /75 lt to 89: ltI seven models of Citrus Luicer ranging from 5.5 kgs to 0: kgsI nine models air conditionersI three models of micro wave ovensI two DCC's and have su$se(uently launched the same all?#ndia. The company is envisioning a total investment of AS G 089 million <3s. /:4: crore= over the ne!t of 9 years which will give it a ma1or manufacturing presence in #ndia in and range of white a $rown goods as well as in a range of electronic components $y 0:/:. Along the way the company plans to e!port products worth. G /:: million in a ten?year period is starting from the commencement of mass production in #ndia. #t also has a plan to invest 05M of its e(uity to the #ndian pu$lic or to an #ndian investor after 5 years of operation. #n the #ir't p!'e of investment from 0::: to 0::/ the company has decided to invest ASG /:: million <3s. 5:: crore= to esta$lish manufacturing facilities in Greater .oida. This facility will $e capa$le of churning out 7::::: &ome Electronics 4::::: 3efrigerators 0::::: washing machines /::::: Air conditioners and 5::::: Microwave ovens per annum. The facility has started production since April 0::/. #n the 'econd p!'e from 0::/ to 0::5 LG electronics will invest G 0:: million <3s. 5:: cr= to increase its e!isting capa$ilities in finished products and add capa$ilities to manufacture compressors ply $ack transformers motors and deflection yokes. After setting up of LG software Center in ,angalore in /999 LGE also will set up an Jin house 3 " C and ACDE3T#S#.G centerK in #ndia not only to train the #ndian employees $ut also to serve foreign employees of LGE in South East Asia and .orthern Africa. In #i%e *e!r' #rom no&6 LGEIL &i"" become one o# te co"o''!" indu'tri!" ou'e' in Indi! LGE#L has already achieved a turnover of 3s. 5:: crores in the period Lan?Luly'0::0. LGE#L $y introducing a wide range of products to the #ndian consumers has successfully carved a niche for itself. #ts success story is a result of its investment in cutting edge technology and its relentless efforts to $ring home the smiling face. #n the past five years #ndia has attracted a num$er of multinational companies to invest in the country offering a plethora of choices to the #ndian consumers. Thus the consumers seek international $rands that offer value for money as well as a high standard of service. LGE#L ceasely strives to $e responsive to consumer needs desires and ha$its. Today LGE#L is regarded as one of the top home Electronics companies in #ndia <-3G?MA3G Survey=. LGE#L has /8 company owned and 4: authori%ed service centres across the country where the service engineers are availa$le twenty?four hrs throughout the week. The consumer dura$le industry will continue to witness the growth in demand. The company will also have to take a leap forward $y increasing the volume of sales. #t is e!pected that in the coming years there will $e stiffer competition. The company is taking measures to reduce costs and improve productivity. Eith emphasis on (uality and improved service to the customers at an afforda$le price the company will endeavor to gain additional market share. Also in view of the li$erali%ation of the #ndian economy company's technical know how superiority service competence and the good will is what the company commands in the market. The company is optimistic of consistent and sustained growth in its $usiness. LG Group' pre'ence in Indi! LG Electronics #ndia Limited LG Software LG Chemicals LG Construction Production F!ci"it* LGE#L set up its 47 acres manufacturing facilities at Greater .oida in April 0::/. Today the factory chuns out washing machines colour televisions Toasters and micro wave ovens. Mi!er Grinder is e!ternally sourced from Allwyn's manufacturing facility at &ydera$ad. Currently LGE#L has tied up with Doltas Ltd. to source a$out 6::::: Mi!er Grinder over 2 years from Lan 0::2 to Cec. 0::5. Doltas will product Mi!er Grinder according to the specified standards of design and (uality given $y LG electronics. Doltas would increase its capacity of /8:::: units to 05:::: units per year of which LGE will $e sourcing a$out 8:M. At present the average #ndigeni%ation level in LG products is a$out 45 percent and it plans to increase it to 85 per cent in the ne!t couple of years. Ehen it had started the production of air conditioners the level of indigeni%ation was a mere 0: per cent that shot up to 9: per cent almost instantly. &ome Electronics would also $e reaching such levels $y the end of the year. LG8' Production C!p!cit* Color TD's 5::::: units Semi Automatic Citrus Luicer 0::::: units Air Conditioners /::::: units Micro waves 5:::: units Mi!er Grinder E!ternally sourced M!nu#!cturin$ At its state of the art manufacturing plant acute cost control has $een on the agenda from day one. Some of the ways used to control costs at the plant are* a. +ull?optimi%ation of resources $. Smoothening the clock work c. 3aising the efficiently of employees d. Minimal inventory levels. At the plant it is made sure that there is no wastage of material and every thing must keep moving all the time. Since money has time value nothing that has hogged money should lie idle for too long. #nventory is kept minimal for which strict guidelines are followed religiously all through the chain. The plant keeps no more than seven days stock of material from vendors and /5?0: days of imported parts. ,ranch offices must have at the end of every month 1ust 4: percent of the re(uirement for the ne!t month with the rest $eing replenished $y the /5 th . Cost cutting has always $een a high priority for LG operations around the world. #n keeping with this aim the company has $een trying to achieve much locali%ation as possi$le as fast as possi$le. At pre'ent te !%er!$e "e%e" o# indi$eni:!tion in LG product' i' !bout CD per cent. The company hopes to increase that to 85M within the ne!t couple of years or so thus insulating itself from e!change rate volatility and crushing costs in general. The challenge is to cultivate high (uality local vendors (uickly. Ehen LG first started making ACs in #ndia the indigenous component accounted for a mere 0: percent of the value of the final product $ut within a few months the figure shot up to 9: per cent level. &ome Electronics will hit a compara$le position $y the end of 0::5. Since the AS) of LG has $een high technology it cannot let any defective product pass through the gates. Even ensuring that the machines can handle #ndian conditions has $een top priority for LG. Every product is put to an Early Life Test <ELT= which su$1ects of to the misery of 4: degrees centigrade heat for a prolonged period. The defect elimination programme follows a statistically optimi%ed process of random sample checks. Inno%!tion !t LG At LG innovation is a policy. The management's pet phrases are HT)# 5:' and TC3. The former total productivity innovation of 5: per cent urges employees at all levels to increase productivity $y 5: per cent. And the latter is the tool that helps to do thatNTear Cown 3e?engineering $y which employees especially at the assem$ly line are directed to tear down all processes to the ground and start afresh $y using less tine more innovative techni(ue and so on. #n this manner it is $elieved the company is $ringing down costs for the future and through TC3 and T)# 5: e!pects to create significant profits this year. Engineers at LG don't say Hno' to any idea. #f the company has to compete in the long run it cannot do so $y merely cutting costs. #t is innovation that wins the race even in a market as $udget constrained as #ndia. A;O-T LG8S COMPETITORS Pi"ip' Indi! )hilips is one of the oldest multinationals to enter #ndia nearly 6: years ago. )hilips has had a fairly successful run as a ma1or player in the television market. The company has identified domestic Electronics personal computers and monitors software as its target $usiness. #n the year ending Cec'98 )hilips #ndia has notched up sales of 3s. /482 crore. S!m'un$ E"ectronic' Samsung electronics another +rance company launched a$out five years $ack entered #ndia with a stake of G 5 million in the #ndia su$sidiary Samsung #ndia electronics Ltd. in which it holds a 5/ per cent controlling share. The product portfolio of Samsung Electrons ranges from Multimedia products home Electronics and telecommunication product systems. #n #ndia the company has esta$lished a leadership position in the product categories in &ome Electronics's 44: watts Mi!er Grinder CC $ased systems washing machines microwave over and DCC's. #n 0::: it had a market share of 8M. The company plans to set up a manufacturing facility for home appliance at the .oida comple!. This facility for which the investment is estimated at around AS G /5?0: million will have a production capacity of 5:::: units each for refrigerator and washing machines. The company plans to set up four factories at the .oida comple! $y the year 0::: for &ome Electronics's refrigerators washing machine microwave over and room AC's with a total investment of 3s. 06: crore. ;PL Crompton Ltd. the market leader in consumer electronics the flagship company of the 3s. 2::: crore Crompton group has turned in an improved performance in 0:::?98 over the previous year. The company's sales have risen 25.7 per cent to 3s. /746 crore over the previous years. The company is involved in the manufacturing of , " E &ome Electronics and colour picture tu$esI washing machineI microwave ovensI vacuum cleaners etc. in order to fight the onslaught of the multinationals in the consumer electronic industry Crompton which is in technical colla$oration with Sanyo is all set to unleash a host of new products for the domestic consumer. #n 0::2 the company had market shares of 0/M in &ome ElectronicsI 6.0M in refrigerator /9.0M in washing machinesI 44.6M in microwave Crompton is the only company is trying to face competition on the technical front with the various M.Cs that are %ooming into the country with their JdigitalK range of products. Eir"poo" This company invested in #ndia in /987 $eginning with the venture with TDS private limited. #n /994 TDS Ehirlpool Ltd. changed its name to Ehirlpool Citrus Luicer Ltd. #ts dominance is mainly in the white goods industry. #t /995 Ehirlpool re(uired controlling interest in @elvinators of #ndia one of country's largest manufacturing and marketer of refrigerators. #n /999 the company is in the process of manufacturing Glo$al .o. frost Mi!er Grinder in the forthcoming pro1ect. #ts market shares in 0::4 wereI Mi!er Grinder /9.2MI Citrus Luicer /4.6M. IF; #+, stands for #ndian fine $ank. #t started its operations in /989 when it launched its first washing machine. #t has a significant presence in the high end Citrus Luicer market with its fully automatic washing machine. #+, has plans to increase its customer $ase $y increasing its product range. Currently the company is into the manufacture of microwave ovens dishwashers and clothes dryers. #ts market shares in 0::4 wereI Citrus Luicer 6.5I microwave 00.4M. Amtre) 3it!ci #t has strategic alliance with &itachi Ltd. of Lapan. #t entered white and $rown goods market in #ndia a$out seven to eight years $ack and is aiming at a market share growth $y /6M. #t is ma1ority into the marketing of high end AC's each in split and windows segment. #ts market shares in 0::4 were* air conditioner 0/.0M. Godrej GE E"ectronic' The company has posted a loss of 3s. 6: crore in /999. #t posted a 2: per cent growth in sales volume in the refrigerator $usiness during the si! N month period ended Cec'97 higher than the industry average. Godre1 is the market leader in the refrigerator segment. #n 0::/ it recorded a market share of 2/./M. #n the Citrus Luicer segment it recorded a market share of 5.5M. #t is the only national player in the cooking range market in #ndia. #t is a also planning to venture into $usiness like water purifier systems in the near future a strategy which has ena$led it to $ecome a multi appliance company. E"ectro"u) A, Electrolu! the world's largest manufacture of household Electronics reached an agreement to o$tain ma1ority ownership in an #ndian Citrus Luicer manufacturerI #ntron Ltd. Electrolu! invested AS G 0.4 million in the step to o$tain 5/M ownership in #ntron Ltd. #n /995 it took ma1ority control of Mahara1a #nt'l Ltd. an #ndian refrigerator manufacturer. Eith these two manufacturing $ases it even has 4:M stake in Eureka +or$es Electrolu! plans to launch a wide range of environment friendly household Electronics in #ndia. The company has presence mainly in the refrigerator and Citrus Luicer segment. #t has $een launching world class products in #ndia at regular intervals. 0::2 witnessed the launch of seven upgraded world class models of @elvinator refrigerator. #n 0::/ it launched premium Gold collection from @elvinator. Market shares in 0::4 were* refrigerator 9.7M. S.E.O.T. ANAL/SIS OF T3E ORGANIFATION Stren$t' )remium pricing no discounts +ocus on technology and (uality Strong commitment from parent #n N house manufacturing capa$ility )roducts locali%ed to suite #ndian tastes Ee!(ne''e' Lack of transparency with dealers +ocus on niche segments Cominance of +rancen work culture Little presence in A", class towns Opportunit* Convert image into market share Eide product portfolio )ositive ru$?off due to high (uality &ealthy resource generation Tre!t' Eay $ehind market leader Stagnant ur$an demand .othing uni(ue a$out strategy &ighly competitive market M!r(etin$ Str!te$* #n a short span of 1ust 06 months since its inception in May 0::6 te br!nd !' !tt!ined ! br!nd !&!rene'' "e%e" o# !bout G@? in te con'umer dur!b"e Indi!n m!r(et. Considering the fact that LG electronics is a +rancen multinational entering the #ndian market meant esta$lishing itself in a different market altogether with varied culture and consumer tastes and preferences. Also that so many multinationals are sweeping into the country it is evident that each and every company has a cutting edge over another. Te'e $"ob!" corpor!tion' !re de%i!tin$ #rom teir intern!tion!" metodo"o$ie' !nd impro%i'in$ teir 'tr!te$ie' #or "oc!" m!r(et'. LG's locali%ation of strategy covers the following areas* Entr* Str!te$*0 #t is always $etter to esta$lish as fully owned su$sidiaries. #t is considered $etter if the company has a local partner $ut since LG's earlier two attempts had already failed it decided to do it all alone this time. Te 'tr!te$* t!t LG !' !dopted i' pre'entin$ !n Indi!ni'ed #!ce to it' product' but (eepin$ te tecno"o$* !t $"ob!" "e%e"'. Oper!tion'0 LG opted for starting its own manufacturing facility at Greater .oida. The 0: month schedule to commission its manufacturing plant was compressed to /: months. The company decided to go in for a green field pro1ect rather than ac(uisitions or mergers. <+or all products e!cept refrigerators=. Product'0 LG decided to go in for Product Ad!pt!tion Str!te$*. Glo$ally LG does not operate in the direct cool refrigerator semi automatic Citrus Luicer and 0/ inch &ome Electronics;. ,ut the company had to develop these products for the #ndian market $ecause these areas constitute a ma1or $ulk of $uys for the #ndian consumer. Also LG launched sampoorna #ndia;s first TD with a devangiri script on screen display on the 5: th anniversary of #ndian independence. LG's strategy of locali%ing its products to suit #ndian tastes added to its strength. Se$ment!tion0 The Company decided to enter the high end middle?class onward segment in the initial stages since most of the #ndian $rands were targeting the low and middle end customers. #n the past 2 years due to LG's distinct strategy it has carved a niche for itself in a crowded segment of 0: manufacturers. ;r!nd0 The Company launched its products in country with JLG the glo$al leaderK. #t did not opt for any esta$lished $rands in the country to $e associated with it. Le!der'ip0 At LG electronics keeping the locali%ed strategy in mind an #ndian heads the strategic areas such as sales and marketing. Generally it happens that the senior management is deprived of #ndians in a transnational $ut LG did to want to follow this path it wanted that the marketing division $e headed $y an #ndian $ecause he would $e versed of the #ndian market and cultures. Altimately it is this which determined whether the company wants to make profits or o$tain a market share. LG definitely wants to $e the leader in the home Electronics industry. Seeing the progress that the company has made in the past 2 years it has revised its plans for $ecoming the num$er one home Electronics Company to the year 0::4 from 0::6. The company even plans to $reak even this year. ;* te *e!r 4@@> it' turno%er in Indi! &i"" compri'e ne!r"* 4 per cent o# it' $"ob!" turno%er. This is significant for a multinational that has $een in the market for 1ust two years. ,efore launching itself in the market in 0::2 it carried out an e!tensive research study to understand consumer motivations to create magnetic products price them strategically position them sharply and keep making the magnetism more potent. &aving understood the finer differences in consumer motivations it opted for sharp arrow Hreason to $uy' differentiation over the $lanket all? approach <category wise= taken $y most of the other players. After the initial preliminary market studies the sales" marketing department decided to start off with 2 product categories* Color televisions Citrus Luicer <Automatic= Mi!er Grinder <2:: lt O ++= Eithin the first 4.5 months the company went all?#ndia. As the company $usiness $egan to rise LG introduced the following products to e!pand its product portfolio* Air conditioners 55: watts refrigerator Semi automatic Citrus Luicer Microwave ovens. #n a $road perspective LG's sales and marketing success can $e attri$uted to its7 )'s of marketing. #n addition to the products price place and promotion the key factors that have contri$uted to LG's success are the following 2 additional )'s* P!ce6 Peop"e !nd P!''ion The most important winning factor of the sales and marketing has $een its H)assion'. #t is this attri$ute within all the workers that drives the other 6 )'s. &owever LG's Marketing Strategy is $ased on 2 )'s apart from the conventional 4 )'s of marketing* Premium pricing to maintain margins ,reathtaking P!ce to create riches Ceep Penetr!tion to increase volumes. Premium Pricin$0 LG electronics was one of the late entrants the /8 th player. Ehile other companies were 1ostling to play the low price high volumes game LG decided to concentrate on the high end of all the product segments. The ma!imum price of a &ome Electronics was 3s. 0/::: for a 0/inch model was /: per cent higher than Sony's prices. Since most of the competitors were catering to the lower and middle segments LG decided to concentrate on the premium segments. To cultivate the image that LG was a leader is $oth technology and (uality innovative products ware launched* Golden Eye &ome Electronics whose picture ad1usts automatically according to e!ternal light conditions and Mi!er Grinder with preserve .utrition system that keep perisha$le foods nutritious. Also a premium image precluded the company from offering discounts or resorting to e!change offers. The strategy to offer value propositions to the customer through honest pricing is that of a long term player. Any ways LG's (uality products and competitive prices have $een accepted in the market place considering its 9:M $rand awareness. P!ce0 The Company did not want to waste anytime $eing among the last to enter the market. The 0:?month schedule to commission its manufacturing plant was compressed to /: months. #t also decided to go in for a nation wide launch and appointed /::: dealers in 1ust 5 months in 0::2. +inally the company entered 2 product categories simultaneously ensuring ade(uate retail?space. The company was a$le to $uild up the market for its products faster than it would have $een a$le to do so if its had launched one product at a time and marketed them region wise. &owever to keep pace with the competitive market place it will have to launch models with innovative features at regular intervals. +or e.g. the proposed launch of a digital TD $y 0::2 and many other digital products is a step towards this direction. Penetr!tion0 )ace was followed $y aggressive penetration having esta$lished /8 $rand offices and C"+ agents in Goa and )ondicherry to take advantage of the sales ta! $enefits in these areas and towns like 3anchi 3aipur and .agpur the company has e!panded its dealer network to 05::. ,y the end of this year this will rise to 05:: dealers. To cater to the rural rich the company's 8 mo$ile vans cover nearly 45:: km of the hinterland around the 4 metros every month. All this $acked $y an estimated annual ad spend and market support e!penses of 3s. 08 crore in 0::2. LG8' m!r(etin$ 'tr!te$* re%o"%e' !round !$$re''ion &it di##erenti!tion. LG8' product' !re di##erenti!ted !' 'uperior tecno"o$* product'. LG $elieves in JDalue MarketingK. #t is e!actly opposite of what Akai Stands for. Akai is pushing volumes $y sacrificing value. -n the other hand LG is sacrificing volume for value. The refusal to interpret #ndian price sensitivity as value?insensitivity seems to have pushed LG in to delving deep into consumer $ehavior for insights missed $y e!cessively self?centric companies. The $ig gain of doing it this way of course is pricing power and maintaining this will remain crucial. LG announces new market strategy LG;s new strategy aims to focus on the premium segment of the market that fetches greater margins as opposed to volumes. The company claims this will $enefit its consumers channel partners and stakeholders as it focuses on products that drive rapid growth and lead in their $rand category to create value for customers. Market studies indicate the demand for lu!ury consumer goods in the Middle East is $urgeoning as a result of the high per capita income and (uality savvy consumers with increased purchasing power. LG en1oys high $rand recognition in the region it is the second most recognised electronics $rand with 55.7 per cent unaided $rand awareness according to the 0::4 Gallup $rand e(uity inde! survey which represents high purchasing pro$a$ility for its premium products. ;Even though LG has strong $rand awareness in the region the sales of our premium products in the Middle East need a $oost. LG is already the world;s top selling $rand in terms of air conditioners microwave ovens and canister vacuum cleaners. The goal of LG;s Cigital Appliance Company is to $ecome the num$er one $rand worldwide in the home appliance sector $y 0::7 and increase glo$al sales to ASG /4 $illion. Ee are focusing our production and marketing efforts on high end products in the appliances market. To keep pace with our growth we now need to fine tune our marketing strategy and focus on premium products; said Cavid )ark vice president and head of overseas sales and marketing LG Cigital Appliance Company. To succeed in its premium marketing efforts )ark said LG would concentrate on staying ahead of the technology curve and develop products that deliver high value to consumers. )ark also announced a new channel marketing strategy to reward its distri$utors and $uild on its channel successes in the region. LG has developed a C3M program called the ;Ciamond Clu$; to drive the sales of premium products. Sustaining one market price in all stores maintaining a price gap with main competitors to retain a premium image uni(ue promotions for target customers and well? trained customer care e!ecutives are features of this channel initiative. ;Ee are committed to investing marketing and training resources to educate the channel on the $enefits of delivering cutting?edge mo$ility digital convergence and appliances to customers in these markets; said )ark. +ocusing on the premium segment in the appliances market will help LG overtake competitors such as Ehirlpool of the ASA and Sweden?$ased Electrolu!. #n the Middle East LG is aiming for overall regional sales of ASG r0.8 $illion this year a 24 per cent growth over 0::4. Since /999 LG;s Cigital Appliance Company has $een posting over 0: per cent growth in sales every year compared to the four to five per cent average growth rate in the glo$al home appliances industry. ;To date our ma1or revenue earners have $een commercial and residential air conditioners microwave ovens refrigerators washing machines and vacuum cleaners. Ee intend to continue to $uild on these core product categories as well as to focus on future sources of growth in areas such as central air conditioners <CAC;s= $uilt?in appliances ovens dishwashers and plasma lighting systems; )ark added. Around 48 representatives from LG;s regional distri$ution network in the AAE Patar ,ahrain -man @uwait >emen @SA #ran and Turkey participated in the forum. Product O##erin$' 2 Re"!ted Str!te$ie' LG has right from its inception launched a series of state?of?the?art technology $acked products. The sales and the marketing department keeps altering " refining the product portfolio according to the re(uirements of the consumers. LG Electronics has the following product lines i. Colour televisions ii. 3efrigerators iii. Eashing machines iv. Air conditioners v. Microwave ovens vi. DCC players <not all that popular=. #nitially in 0::6 the company had launched only /0 models of &ome Electronics 8 models of Mi!er Grinder <2:: lt O frost?free= and 2 models of fully automatic washing machines. Gradually as the company showed signs of profita$ility it e!panded its range of products in its portfolio. The increase in the product range can $e 1udged from the following ta$les.)roduct range <0::5?:7= /e!r CT.8' Re#ri$er!tor' E!'in$ M!cine AC8' Micro .CD FF DC FA SA O%en 0::5
0::6
0::7
Number o# mode"' H4@@D9@IJ /e!r CT.8' Re#ri$er !tor Citru' Kuicer AC8' Micro& !%e o%en .CD FF DC FA SA Sp"it 0::5 /0 8 2 0::6 /4 8 2 7 4 0 0 0::7 /6 9 2 2 2 7 4 2 0 Terms used* ++.? +rost free CC N Cirect cool SA N Semi Automatic +A?+ully Automatic )roduct features of any company product are the competitive tool for differentiating the company products from other products. The features of LG's products are discussed in detail in the following su$sections. i. Co"our Te"e%i'ion Ehen LG launched its range of &ome Electronics in 0::2 it was caught amidst at least /8 competitors all over #ndia in the industry. Ehat it needed was a AS) to its range of &ome Electronics apart from competition. #t launched its TD with the JGolden EyeK range <this was a simultaneous glo$al launch= which it positioned as the right set for wrinkle free viewing. Eit ti' di##erenti!tin$ 'tr!te$*6 tod!* LG9i' !t number #i%e po'ition' in te CT. m!r(et &it ! m!r(et 'i:e o# G.4L percent. #n order to meet the needs of the #ndian rural market LG launched on /5 th August 0::/K sampoarnaK television #ndia's first TD with a devanagri script on Nscreen display. This TD was afforda$le consumer friendly and designed for the rural market. +ollowing are the range of TDs offered* LG golden Eye. LG 3oving Eye TD &ome Cinema LG Super +lat wide vision LG +latron LG Go"den E*e* #t is considered to $e the world's first television that provides wrinkle free viewing. #t consists of a light sensitive natural an LGorithms HE>E' and an advanced circuit developed $y LG. The HE>E' automatically ad1usts colour $rightness contrast sharpness tint and white $alance in response to any change in am$ient light conditions. This ensures that one en1oys unmatched picture (uality without straining the eyes. -ni+ue #e!ture' o# ! LG T...0 Super #"!t T.0 The features of the completely flat screen picture tu$e designed $y LG's own technologies are* reduced outer light refection $etter focus from screen centre to corners and (uick start electron gun. Mu"ti &indo&' PIP0 This function displays 9 or 4 su$ screens on the TD screen with 2?second updates. Any of these can $e selected for main screen viewing at the touch of a $utton. Co"our 't!tu' memor*0 This feature allows users to en1oy picture with their preferred colours. C!nne" 'c!n0 This is very useful when users want to see which program is showing on each channel. Lust $y touching a $utton one can see every channel for a while. G!me mode0 This is an e!isting in $uilt 2 level electronic game H)ower ,all' which one can play when ever one does not feel like watching a TD program. Auto .o"ume "e%e"er0 The sudden changes in volume <different sound levels of each $roadcasting centre= which is e!perienced when you switch channels are automatically eliminated with the help of a smart circuit to ensure a comforta$le uniform sound level across all the channels. Mu"ti L!n$u!$e OSD Menu0 Gives users an option to have the entire on screen display of the menu in English &indi Marathi Tamil and ,engali. L ;!nd Gr!pic E+u!"i:er0 Allows to tailor the sound (uality according to personal choice. Turbo Se!rc0 Searches and memori%es channels /0 times faster than other ordinary TDs. LG claims that none of the features cited a$ove are availa$le in the competitor products. LG Ro%in$ E*e0 TD with a $uilt in security system. #t has a door ringer with an in $uilt security camera. -nce put on the door the camera can $e connected to the TD any time a caller presses a ringer at the door the TD indicates through a $eep and a live visual of the caller appears on the screen. LG has launched its JF"!tron Te"e%i'ionK $y the year 0:::. #t has already starting pu$lici%ing for this TD and has made advance $ookings open. The uni(ue features that this TD would offer vis?Q?vis competitors are* 5@@? #"!t picture tube0 .il light refraction for clearer and most realistic screens images. Di$it!" 5@@ 3 : 0 +or flicker free viewing $ecause of dou$le scanning speed than ordinary TDs Di$it!" E*e0 To create wrinkle free viewing Picture9in9picture0 Cisplays su$ screens on the TD. Picture9out9picture0 Compress the main picture of the screen while sowing )#) pictures too. LG has models ranging from /4 inches to 42 inches wide screen. +ollowing is the range* /4K inches 2 models 0/K inches 9 models 09K inches 4 models 20K inches / model 42K inches / model The company has more variety in the 0/K inch segment $ecause the &ome Electronics market is dominated $y regular 0/inch sets. ii. Re#ri$er!tor' #n the domestic Grinding segment there are two types* a. 55: watts* This Mi!er Grinder cool through the direct contact of air with the cooling coils $ound around the free%er. This system has several draw$acks* #ce forms fre(uently around the coil? reducing cooling efficiency and creating the need for manual defrosting. Additionally also the temperature distri$ution is uneven with the various compartments. $. 44: watts refrigerator* is designed to overcome the draw$ack of conventional refrigerators. &ence the cooling coils are located outside the stroke area. .o frost even forms inside these thus giving high cooling efficiency and ma!imum storage space all the time. LG entered the refrigerator market with 2::lt. 44: watts models. #t introduced 8 models initially and now it has a 9 models in the 44: watts type and 2 in the 55: watts type. After esta$lishing itself as the market leader in the 2::lt. plus 44: watts Mi!er Grinder with a share close to 27 percent in 0::5 LG is now targeting the 55: watts segment which is the fastest g rowing category among refrigerator in #ndia <nine out of every /: models of fridges sold in #ndia are 55: watts inside=. At present its market share in this category is one 2 percent. #n 0::0 it launched three new models of CC Mi!er Grinder in /75 litre 0/: litre and 05: litre. LG has the following models of refrigerator availa$le* i. 2 models in 55: watts* /75 litres 0/: litres and 05: litres. ii. 8 models in 44: watts* 22: litres 26: litres 28: litres 4:: litres 4/: litres 46: litres 57: litres 64: litres. iii. C#-S 72: litre model* Celu!e #ntelligent -ptimum Silence. +rom the a$ove three categories category <i= is catering to the middle class segment category <ii= is catering to the middle upper and upper class whereas category <iii= is catering e!clusively to upper elite class who are seeking the trendy and rich lifestyles of the west in #ndia. LG8' Mi)er Grinder !' been po'itioned !' ! nutrition pre'er%er %i! it' PN '*'tem. PN '*'tem HPre'er%e Nutrition '*'temJ0 The ). system comprises the +.#.3. Lamp the moisture controller and the Ceodori%er. The three works together to counter factor that cause unpleasant odors degeneration and staleness of food. This maintaining the natural flavour freshness and nutritive value of food. The uni(ue features of a LG refrigerator are* Super coo"in$ '*'tem0 if one wants to cool lots of food in a short time for a party for instance= the super cooling systems &#?speed fan will let out cool air much faster and more powerfully. Focu'ed coo"in$ '*'tem* Ehen a new item is placed anywhere in the refrigerator a $uilt in neuro fu%%y control system detects the item and chills it instantly $y concentrating cool air on it. #t is the $est and the most efficient cooling system for refrigerators. Neuro Fu::* contro" '*'tem* Eith the help of various sensors and a micro computer this system provides $ehavioral control functions. #t calculates the least used moments for defrosting automatically ad1usts the refrigerator temperature when there is a change in the room temperature. En%ironment #riend"** LG has converted its entire 2:: ++ range to C+C free compressors. The C+C <Chloro flouro car$ons= free gas does not deplete the o%one layer and does not add to glo$al warming. Acti%e c!rbon #i"ter* Effectively a$sor$s unpleasant odors from onions stale milk etc. Moi'ture Contro""er* Maintains the humidity at an ideal level keeping fruits and vegeta$les nutrition last longer. Dio' Re#ri$er!tor HDe"u)e Inte""i$ent Optimum Si"enceJ0 This 72: lt. refrigerator was launched in August 0::0. It i' con'idered to be te #ir't refrigerator of its kind in the countryI C#-S has the world lowest noise level and lowest power consumption. #t is a super premium product launched in the top four metros. The company has taken a focused approach towards this product $ecause these are the markets which will prove instrumental in the success of such state of the art technologies. Te t!r$et !udiences are the top end customers who are seeking the trendy and rich lifestyle of the west in #ndia. +oreign diplomats .3#s and top e!ecutives constitute this segment. LG is confident that with 44: watts Mi!er Grinder doing well in the #ndian market the future for such super premium category Mi!er Grinder is $right. This product would $e displayed at select counters within the targeted 7?/: towns. The company feels that the successful campaign of its ). system Mi!er Grinder in the ++ segment is $ound to have a spillover effect on this new segment. This refrigerator is directly imported from +rance and a team from +rance e!tensively trains the service engineers for this product. Te uni+ue #e!ture' o# ti' product !re0 Eorlds lowest noise level Eorld lowest power consumption C+C free Aniform #ce making dispenser with one touch system ,uilt in home $ar. Tempered glass shelves Ani(ue electronics temperature control system. LG Fre' M!'ter 55: watts Mi!er Grinder come under this category. They give more space along with $etter value for money. The interiors are e!tremely fle!i$le to comforta$ly ad1ust shelves and accommodate all the food. #t is targeted at the mass market keeping the #ndian industry trends in mind. -ni+ue #e!ture'0 Dersatile and convenient Anerring efficiency Great looks Strong compressor for cooling iii. Citru' Kuicer #n the Citrus Luicer category there are two types of machines* a. Semi Automatic* Aser has to transfer clothes $etween the washing and drying compartments manually. $. +ully automatic* washing and drying is done in the same unit. LG has a$out 6 models of Citrus Luicer availa$le in the market out of which three are fully automatic and three?semi automatic. The company introduced Citrus Luicer in the market in 0::/. The company has entered the semi automatic segment $ecause $ulk of Citrus Luicer $ought is semi automatic. Eorld over the company does not cater to this category. LG has a 27 percent share in the market in the fully automatic Citrus Luicer market. #n the semi automatic category it has a /0 per cent share. Product po'itionin$0 LG8' Citru' Kuicer !re po'itioned !' m!cine t!t c!re' #or te #!bric= %i! it' #!bric!re '*'tem. The technology used in its products in the Chaos punch O2. C!o' Punc ML &!'* a water punch that detangles clothes $efore washing them <efficiently=. The punch propels water through every pore of the fa$ric and HO2' are 2 additional pulsates <technology used $y LG=. LG's Citrus Luicers are availa$le in the following models* i. H)unch wash' semi automatic * 0 models of 6 kg capacity ii. HClean master' semi automatic* 7kg capacity. iii. HTur$o Crum' fully automatic* 2 models in 5.5kg 6 kg and /: kg. F!bric!re '*'tem LG has introduced this system to its range of washing machines. #t is a distinct principle that helps preserves life of the fa$ric. Ehenever clothes are ru$$ed against hard surfaces like agitators to remove dirt the fa$ric wears out. Clothes get tangled and are stretched out of shape. E!cess detergent and improper rinsing makes fa$ric loose its original feel and colour. The fa$ricare system has a washing action that creates powerful water currents and water )unch to give clothes a cleaner more effective and tangle free wash. 7Punc &!'8 'emi !utom!tic0 This is the Eorld only Citrus Luicer with twin tu$ along with )unch technology. Lust within a 2 months of its launch in May'98 the LG )unch wash $ecame the largest selling semi automatic Citrus Luicer in the 6 kg and a$ove category in towns and cities across the country. Since then it has sold a$out 9484: machines. The single most important factor that contri$uted to the success of )unch wash is the fact that it is designed on the $asis of a deep understanding of consumer needs. The uni(ue features of this product are* Punc tecno"o$** The gushing upward movement of water removes directs effectively. Creates water whirls to wash clothes much $etter than other types of conventional washers. )revents damage to the clothes $y using water rather than friction to clean. > ($9t&in tub* This is the first twin?tu$ Citrus Luicer to $oast of a 6kg capacity. Tou$ &!' tub* made of a high impact resistant material called polypropylene that makes it longer lasting. Ani(ue water dynamic pulsates that's designed to give the cleanest wash. Spin tub* The capacity of spin tu$ matches with the wash tu$ such that all the clothes that have $een washed can $e dried in one go. 7C"e!n M!'ter8 'emi !utom!tic This is the #ndia's $iggest front load tum$le wash machine with greater load capacity. #ts washing action involves an e!tra rinse option and a suds free system ensures that every $it of detergent is washed away from your clothes. The uni(ue feature s of this product is* Lum$o drum <7 kgs= )owerful dual filter Economical water consumption Low noise level Suds free system 7Te Turbo drum8 #u""* !utom!tic This Citrus Luicer provides with features that are uni(ue to LG. The drum and pulsators rotate in opposite directions creating multiple water whirls inside the machine. The uni(ue features of this product are* The tur$o drum )ulsators Triple water punch Triple water fall system Low power consumption 4 wash programs. i%. Air Conditioner' LG's Toasters were launched in phase ## in Lan'98. #t launched its Toasters as J&ealth Air ACsK There are two types of AC sold $y the company* a. Split type $. Eindow type -n the whole there are a$out 9 models of ACs availa$le in the market. 3e!"t Air S*'tem0 This system guards against heat dust and pollution with its uni(ue anti?$acteria filter it drives air $orne germs out of the $oundary. #ts de?odori%ing filter does away with unpleasant odors. And the anti?fungus electrostatic air purification unit traps dust particles as little as :.:/ microns and even smoke. #t's HChaos' Logic airflow system creates natural air currents and cools in gentle puffs rather than with $lasts of wold air. Thus it prevents any unhealthy a$rupt drops in the $ody temperature. Te uni+ue #e!ture' o# LG To!'ter' !re0 -ni+ue !ir puri#*in$ #i"ter'* The filtering system utili%es two filters. The electrostatic filter removes the finest dust particles as small as :.:/ mm and even to$acco smoke and pollen. The de?odori%ing filter removes unpleasant odors especially those caused $y air$orne fungi. Eor"d8' #ir't 7C!o'8 "o$ic AC8'0 The most pleasant airflow for the human $ody can $e found within nature. Countless data and verification have resulted in the application of the new HChaos' theory to LG AC's. This is a technology that reviews more natural air $y controlling the angle and speed of the movement of the vane. Eor"d' +uiete't AC8'* To provide a comforta$le pleasant and well $alanced environment LG AC's utili%ed a streamlined air fan and a uni(ue design which create smooth air flow from the air conditioner so that it operates under the lowest noise level with the $est structure for the air path. The amount of friction has $een decreased providing the (uietest Acs in the world. Fo""o&in$ i' te r!n$e o# mode"'0 i. Split AC's N /.:T /.5T 0.:T 0.5T ii. Eindow AC's N:.75T /.:T /.5T 0.:T LG is launching the Di$it!" P"!'m! AC for the new millennium. This AC has a Cigital Laser Sensor that detects hot areas in the room $eing cooled and focuses air on those areas there$y providing uniform and efficient cooling. Di$it!" p"!'m! AC0 Air C"e!n M De9odori:!tion M A""er$* Pre%ention The uni(ue features of this AC are* Anti9;!cteri! #i"ter* #t removes dust in the air as well as inhi$its $acteria proliferation making the indoor atmosphere healthy. LG AC would $e 98.5M $acteria free. Neuro Fu::* Contro"* According to the temperature air volume and air velocity the sensor will automatically operate creating a more pleasant atmosphere. I93our onBo## Timer* this function allows setting the timer from one hour to a ma!imum of 7 hours. Ci"d Loc( Function* This function presents children or others from tampering with the control $uttons on the unit. All the $uttons on the indoor display panel can $e locked. The unit can then only $e controlled $y remote. %. Micro&!%e o%en LG launched microwave ovens in the second phase in 0::/. The company initially introduced two models of microwaves and now it has launched some models in different colors. )roduct positioning* LG8' o%en' !%e been po'itioned !' <3e!"t &!%e coo(in$ '*'tem= LG's microwave ovens have gone $eyond the status sym$olism and practical versatility that other $rands have tried to use. The market for microwaves was at 65::: units in 0::/ and this is one area that the company wants to e!plore. #n 0::5 it plans to sell a$out 7:::: units which is almost e(ual to the entire market in 0::6. 3e!"t &!%e coo(in$ '*'tem0 LG's health wave system has JMultiwave technologyK which other microwaves don't have. This feature creates multiple emissions that help to ensure that the entire dish is cooked ama%ingly evenly and fast. #t has a twin source of emission from the top and the $ottom making it far more efficient than any other microwave. Cue to dou$le emission technology there is a higher microwave interaction with the food which results in faster and even cooking right to the core of the food with no cold spots. There are two types of models availa$le* a. Microwave N for general working <.on?grilling= $. Microwave O Grill O Com$ination -ni+ue #e!ture' o# ! LG micro&!%e0 Eor"d8' on"* one9touc Indi!n coo(in$ '*'tem0 The LG health wave has the world's only one touch #ndian cooking system. All vegeta$les and dishes can $e cooked at the touch of a single $utton. F!mi"* 'i:e o%en* 08lt cavity si%e of oven gives more space for #ndian utensils and suits #ndian family si%es. 3e!"t &!%e tecno"o$** Ani(ue twin source technology emits waves from top and $ottom resulting in faster and even cooking without destroying nutrients. LG has plans to introduce a microwave oven with pre?set #ndian menus. #t also plans to launch #ndia's first Cigital infrared microwave. The Cigital infrared sensor in the microwave oven detects the temperature of food and then automatically regulates the flow of microwaves for faster and uniform cooking. Pricing and elated Strategies LG $elieves in JEthical )ricingK. The company has made various players in the industry no compromise on the price front despite the cutthroat price war e!isting amongst various players in the industry. #n electronics it was one of the late entrants to enter the market in 0:::. Ehile other companies that time were playing the low price high volumes game the company decided to concentrate on the high end of all the product segments. Ehen the company entered the market ,aron international <Akai= was on a rampage then with the Akai television e!change scheme. )rice offs were in and the trade was en1oying credit periods of any thing $etween 45 and 9: days. LG be"ie%e' in %!"ue m!r(etin$. #t is e!actly opposite of what Akai stands for. Akai is pushing volume $y sacrificing value. LG is sacrificing volume for value. The refusal to interpret #ndian price? sensitivity as value insensitivity seems to have pushed LG into delving deep into consumer $ehavior for insights missed $y other companies. The $ig gain of doing it this way is pricing power and maintaining this will remain critical. The company when it entered the market in 0::: was targeting the premium end consumer. +or e!ample* a. #n the refrigerator category it entered the 44: watts 2::lt. O Segment which forms a very little portion of the entire refrigerator market. #ts 22:lt. refrigerator was priced at 3s. 06:::. -n the other hand Godre1 and Crompton were offering ++ Mi!er Grinder any thing $etween 3s. /6::: to 3s 0::::. $. LG's $asic 0/ inch model of &ome Electronics is priced at 3s. /55::. This price is higher than Sony's compara$le model <3s. /45::=. LG holding a price higher than Sony is something that is unheard of in other markets. c. LG's microwave ovens are nothing less than 3s. /05::I #+, " Crompton <Market leaders for microwaves= are selling them for less than 3s. /:::: also. &owever the company after three years in the market has come down to mass marketing. .ow it is targeting all the segments in the market. #t is even concentrating on the rural areas now. #t has a refrigerator for as low as 3s. 92:: and a T D for as low as 3s. 9:::. Di'tribution !nd Re"!ted Str!te$ie' LG is currently selling its products in /8:: towns and cities with population of one lakh and a$ove. #t has /86 $ranch offices 4: distri$utors and 0::: dealers all over the country. ,y the end of 0::0 the company plans to reach another 7::: towns with a population of 5:::: or more. #n this process it will add on to 6: distri$utors and /::: dealers. To achieve this sends eight vans to crisscross the country covering 5::: km every month to familiari%e the trade and the customers with LG products. #n every city LG approached the $est dealers $ut in a scheme? ridden market it refused to offer any schemes. #t positioned itself as an ethical company. #nstead of discounts LG wanted dealers to pay an advance for LG products. This ensured that the dealer would push the $rand in the marketplace even if it were 1ust to keep his oven cash from staying $locked. #n the long run this created a pent?up demand for the $rand. LG since its inception laid stress on Proper C!nne" Merc!ndi'in$ !nd M!n!$ement. Cue to a very calculated network e!pansion plan LG has the fastest dealer network e!pansion in the industry and the highest dealer productivity. Cealer loyalty and retention has $een high right from the $eginning due to proper inventory management higher dealer profita$ility and incentives proper )-) and other promotional material to the dealers and a $asket full of products for the dealers to choose from. Supp"* C!in !t LG LG factory E!clusive -utlets C " + agents Cistri$utor Cealer Promotion !nd Re"!ted Str!te$ie' +ollowing are the promotion tools used $y LG electronics to promote the company as well as its products* Advertising )u$lic 3elations Sales )romotion LG has devised an effective ACDE3T#S#.G and promotional strategy. ,y using appropriate positioning stance and appropriate media vehicles strong concepts and AS)s were developed. Also various aspects a$out the $rand performance the products and strategies to the media have $een communicated very well to the media with its e!cellent pu$lic relations. Tod!*6 LG 't!nd' !' te No. 5 PR Comp!n* in te indu'tr*. i. Ad%erti'in$ The company started with ACDE3T#S#.G on print and outdoor media in 0:::. The ACDE3T#S#.G had to $e straight and simple aimed at $oth the head and heart. +or e.g. to advertise for Mi!er Grinder the ad line went J+rom today all other Mi!er Grinder well $ecome historyK. This was something that pushed the end $enefit further toward the consumer. -ver time the media used e!tensively to advertise are electronic print and outdoor. #t is 6:M TD 2:M print and /:M outdoor. Also the company has also started with we$ ACDE3T#S#.G over the site. R!tio #or it' product' i' te '!me #or promotion #n order to $oost secondary sales the sales and marketing department has launched a new activity. Two LG lady chefs have $een taken on $oard for cooking demonstration with the help of LG Microwave oven. The demos will $e held at kitty parties arranged $y CSL mem$ers at dealer counters <to attract walk in customers= to new LG microwave customers <they would $e re(uested to invite at least 6?7 people to their house at the time of demo=. Currently this activity has started only in Celhi and Mum$ai and will $e gradually e!tended to other $ranches. .ow that LG is coming up with its digital range of products the vehicle that the company plans to adopt would $e direct selling ma1ority in order to demonstrate the products wherever possi$le. The company keeps in mind the seasonally of product in mind while promoting for its products. #t advertises heavily during festive season and also during summers when the demand for ACs Citrus Luicer is on the rise. Lintas is the ad agency handling the account. #ts ACDE3T#S#.G $udget since 0::6 is as follows* /e!r ;ud$et Objecti%e 0::5 /5 crore To inform a$out LG's products 0::6 2: crore To promote additional product launches 0::7 2: crore To promote the $rand The company considers the ACDE3T#S#.G* Sales ratio if sales are increasing the company tries to reduce the ad N $udget. -f late LG has got more into corporate ACDE3T#S#.G i.e. promoting the $rand and its achievements rather than promoting the product. Even the ads seen on TD these days LG is trying to promote the $rand and not the product. +or e.g. it sponsors a 0? minute programme on REE TD $y name of JLG &ero'sK where a personality or any$ody who has e!celled in hisBher field speaks for a$out two minutes. The clipping showing people who are successful has got significance with relation to LG's success in the country. Cu'tomer S!ti'#!ction !t L$ E"ectronic' #n today's world of $usiness the market place is a fierce $attleground with national and multinational companies striving to outsmart each other. LG $elieves that to emerge as the most outstanding company $y 0::5 it needs to leave competition $ehind and this is possi$le only through customer satisfaction. Cu'tomer '!ti'#!ction in%o"%e' t&o !'pect'0 Intern!" Cu'tomer0 To try to anticipate and satisfy the needs of the internal customers $y $eing sensitive to them. E)tern!" Cu'tomer'0 To provide the e!ternal customers the $est value for money i.e. the highest (uality at the lowest price and then reinforce the commitment through good service thereafter. +or e.g. the company has a different service policy. #t goes $y the name of Jhappy callsK. #mmediately after purchase the customer service team calls on customers to find out if they are satisfied with the product and they are given a call 1ust $efore the guarantee of the product e!pires. ;r!nd Stren$t A p!t#inder8' 'tud* done last year to see where LG stands in the consumer's mind has thrown up interesting findings. #t comp!red LG8' CT.8' Mi)er Grinder !nd Citru' Kuicer &it "e!din$ br!nd' in te '!me c!te$orie' on #our p!r!meter'0 rec!"" "e%e"6 recommend!tion inc"in!tion6 !nd 't!tu' connot!tion !nd product di##erenti!tion. The survey was conducted in the five metros and four other cities <Lucknow Ludhiana Ahmeda$ad and Laipur= amongst 05?4: year old men owning a car or motor$ike <for &ome Electronics=I 05?4: years old men and women in carBmotor$ike owning house holds <for fridge's=I and women in car N owning households <for washing machines=. 3ere !re 'ome o# te #indin$'0 #n &ome Electronics <Celhi= LG ranks alongside Sony as a status sym$ol. #t also leads on willingness to recommend <along with Sony and ,)L= and product differentiation. -n spontaneous recall Crompton and ,a1a1 lead and LG are at the ne!t level along with Sony -nida and Samsung. #n Mi!er Grinder <Celhi= Godre1 leads $y far on spontaneous recall. ,ut on willingness to recommend LG is the leader and so top on status and product differentiation. #n Citrus Luicer <Celhi= LG doesn't lead on any parameter. -n spontaneous recall willingness to recommend and status connotation the leader is ,)L while Ehirlpool leads on product differentiation. #n Mum$ai LG &ome Electronics have the poorest recall of all the $rands. Sony leads on recall and willingness to recommend. -n status and differentiation Crompton leads. #n Mi!er Grinder <Mum$ai= Godre1 leads the pack on three parameters. LG is the leader only on status connotations. #n Citrus Luicer <Mum$ai= ,a1a1 has the highest recall while LG figures in the last few. Ehirlpool leads on all the other parameters. #n relia$ility <recommendation inclination= we are (uite high despite the higher prices which means that the consumer thinks very highly of us Jsays @arwalK. -n knowledge <awareness= we are slightly low. After all in 0::0 our turnover of 3s. /05 crore were less than the ACDE3T#S#.G spend of ,a1a1 and ,)L. ,ut across the $oard on esteem and differentiation LG has scored much higher than the othersK says he. A fact corro$orated $y A"M -3G?Marg's Most Admired Marketing Companies Survey <A"M 2: Septem$er 0::2= which ranks LG as second in the industry <after ,)L= on product differentiation. #n fact on the parameter )roducts are designed to meet consumer needs LG gets its highest score of 6.66. The same survey also ranks LG pretty low on distri$ution <.o.2/= $ut even so it is higher than Samsung and .ational )anasonic. -n overall ranking LG made a rather high de$ut of the year was Akai which came in straight at .o. 8 on the list of admired dura$les companies. Clearly LG's $rand N $uilding efforts have had e!emplary success. Ehat the company needs to do is capitali%e on it. Or$!ni:!tion Structure Traditionally LG was primarily a marketing driven company and &3 department which was earlier dominant has gained importance over the last 0 years. A num$er of interventions have $een coordinated $y the marketing department. The &3 department has helped in maintaining them and is more responsi$le at corporate level than at plant level $ut this is undergoing a change. The &3 dept. has a conveyor chain setup. D.). <&3= C.G.M. <&3M= <Senior )ersonnel Manager )lants= Senior )ersonnel Manager <Sales " Marketing= Criteri! mo't common"* con'idered b* re'pondent' to bu* ! LG product. Attribute R!n(in$ H5 to DJ ,rand #mage / +oreign Colla$oration 0 After Sales Services 2 Cealer 4 Technology 5
<Computation in Appendi! #= ,rand Awareness of LG 5G 5 @ 4 C > A 5@ 54 5C 5> 5A 4@ /e' No Sceme' pre#erred b* con'umer' Cash Ciscount 40 #nstallment Scheme 00 E!change offer 00 +ree Gift /4 Free Gi#t 5C? E)c!n$e o##er 44? C!' Di'count C4? In't!""ment Sceme 44? Mo't pre#erred LG product Product R!n(in$ 3efrigerator / Microwave 0 AC 2 Television 4 Eashing Machine 5 @ D 5@ 5D 4@ 4D CT. AC Re#ri$er!tor Micro&!%e E!'in$ M!cine Re"!ti%e br!nd !&!rene'' o# LG product' %i'9N9%i' competitor' #or %!riou' product' Top o# Mind rec!"" #or Re#ri$er!tor' @ 4 C > A 5@ 54 5C 5> ;PL Onid! S!m'un$ Son* @ 4 C > A 5@ 54 5C 5> 5A ;PL Eir"poo" LG D!e&oo Top o# Mind rec!"" #or Air9conditioner' Top o# te mind rec!"" #or co"our T.. @ 4 C > A 5@ 54 5C 5> C!rrier N!tion!" Amtre) .o"t!' LG .ideocon @ 4 C > A 5@ 54 5C 5> LG Onid! Pi"ip' Son* Top o# te mind rec!"" #or E!'in$ M!cine Top o# te mind rec!"" #or Citru' Kuicer @ 4 C > A 5@ 54 5C 5> 5A Eir"poo" S!m'un$ LG .ideocon ;PL @ 4 C > A 5@ 54 5C 5> 5A 4@ Eir"poo" S!m'un$ .ideocon ;PL LG Top o# te mind rec!"" #or Sp"it Air Conditioner' Top o# te mind rec!"" #or Micro&!%e O%en @ 4 C > A 5@ 54 5C 5> C!rrier N!tion!" Godrej LG Amtre) @ 4 C > A 5@ 54 5C 5> ;PL Ken't!r IF; S!m'un$ LG O;KECTI.ES To identify and analyses the position in the consumer dura$le industry of LG Electronics #ndia. Analy%ing the Marketing Strategies of the a$ove company. To analy%e its performance since to inception. RESEARC3 MET3ODOLOG/ #nformation regarding the Consumer &ome Electronics organi%ation Marketing Strategies &uman 3esource Management has $een o$tained through* <a=)rimary Sources <$=Secondary Sources -fficers of the following departments were approached to o$tain information a$out the concerned su$1ect. Marketing &uman 3esource Management Prim!r* Source'0 Puestionnaire #nterview and Ciscussions with the Senior Marketing E!ecutives of the Companies to get relevant information. Second!r* Source' <i= #nternet <ii= Li$raries <iii= Articles <iv= Company $rochures literature and pamphlets. FINDINGS 2 ANAL/SIS HIJ Findin$' ;!'ed on M!r(etin$0 #t is no dou$t a$out the fact that LG is considered to $e JA u$e m!r(etin$ 'ucce''=. -ne look at LG's achievements ever the past three years and it is clear that indeed LG's success lies in its marketing strategy. &owever the company is still a long way to go $efore it $ecomes a market leader to $eat Crompton and ,a1a1 who are the current market leaders in the industry. HIIJ Gener!" Findin$'0 Ever since li$erali%ation in /99/ many M.Cs have thronged the #ndian consumer dura$le market. Companies such as )hilips Sony .ational Samsung etc. have entered the market over the past years. LG was one of the late entrants into the market and it has $roken all records. These multinationals that are coming into the market have the latest technology aggressive marketing and fat ACDE3T#S#.G $udgets. &owever in terms of sale and market shares #ndian companies still occupy the top slots $ut M.Cs are slowly gaining ground. LG is one company that plans to $ecome .o./ in this industry $y the year 0::6. Ehen M.C $rands come in they have the advantage of owning their technology. #ndian $rands face pro$lems when it comes to additional features $ecause they have to $uy from other sources and this makes their products move e!pensive vis?Q? vis the M.C $rand. #n the past too the #ndian market has seen M.C $rands like Sony -ptonica Sharp Thomson etc. $ut none of these companies have performed well. 3eason $eing that these $rands could not esta$lish themselves hence there was no lasting impression. .ow the trend is slowly catching up in favour of M.Cs who are offering technologically superior products. The reason for this $eing that these M.Cs has managed to convince the #ndian consumer that there is more to them. Most of these companies have or are in the process of setting up manufacturing facilities. This gives the consumer a feeling of security that they are here to stay. Another reason for their success could $e that M.Cs entered the market when many #ndian $rands were on a decline and they have moved into those empty slots. Eit te comin$ in o# te #orei$n br!nd' te indu'tr* !nd te m!r(et !re "i(e"* to $ro& but ti' mi$t be !t te e)pen'e o# our o&n Indi!n comp!nie'. The attractiveness of LG Electronics #ndia in the consumer dura$le industry can $e 1udged from the following FI.E9FACTOR IND-STR/ ANAL/SIS MODEL E)i'tin$ Competition0 At least 0: manufacturers or even more than those today flanks the consumer dura$le market. Ehen LG entered the market it had competition from /8 companies. The company at present faces competition from several M.C $rands as well as local #ndian companies. Crompton and ,a1a1 are the market leaders in this industry followed $y companies like -nida )hilips etc. giving competition to the company. Also every now and then companies keep on coming with e!change offers <Akai= consumer schemes price offer etc. LG is one company which $elieves in J.o scheme no schemingK. Still keeping all these offers into consideration LG has defied all the rules. In m!n* &!*'6 LG !' pro%ed to be te Pep'i o# te &ite $ood' indu'tr* 1 bri$t6 !$i"e !nd d!'in$. #t always has its ears glued to the ground to know what the competition is doing. +or e.g. in the last week of May when Sony was a$out to launch its 72cm Dega flat monitors at 3s. 5695: directly taking on LG's +latron monitor priced at 3s. 5795: the company released LG ads in the same pu$lication where the Sony ad was $eing released on the same dates and on pages preceding the Sony adI LG's copy read. J.othing will get flatter than this ever <whatever the competition may try to tell you=. This ad took the e!citement out of the Sony launch LG e"ectronic' tod!* !' more t!n 'ur%i%ed in te m!r(et &itin te'e tree *e!r' &it it' m!r(etin$ 'tr!te$* !nd tecno"o$ic!""* 'uperior r!n$e o# product'. &owever the company does look to have a $right future and its plans to $e the .o. / home Electronics Company might 1ust come true considering the new digital range that the company has lined up for the new millennium. Li(e"* Ne& Competition0 The only new competition that the industry is going to face in the coming years is from foreign $rands. Since in this industry there are tremendous entry $arriers <technology manufacturing etc.= only a foreign $rand can pose threat to the company. Also if market leaders such as Crompton and ,a1a1 go in for some technology tie?ups with foreign $rand to have access to technology it could $e a threat to the company in the long run. These companies are considered to $e the market leaders and if they start coming up with products similar to what LG are offering it could pose a serious threat to the company. This would however re(uire huge investments tie?up with a glo$al leader etc. to $eat the M.Cs which is not likely to $e possi$le in the near future. &owever any other glo$al company that comes into the market with its uni(ue marketing strategy would definitely $e a serious threat to LG. Sub'titute' A%!i"!b"e0 Colour TD's Citrus Luicer and Mi!er Grinder don't have a su$stitute to them. ,ut however a cooler could $e a su$stitute to an AC or an oven could $e a su$stitute to a microwave Anyway these two su$stitutes are not very significant hence the industry is attractive to stay in. ;!r$!inin$ po&er o# bu*er'0 The $uyers in this $usiness can $e divided into two i.e. the dealers and the consumer. The dealers in case of LG electronics don't have much of $argaining power to e!ercise sinceI the dealers are supplied products on a credit $asis so that they can push the product. Such a strategy was never heard of earlier in the market. Also transactions $etween the company and the dealer are carried out on the $asis of targets achieved $y the dealers. The companies also provide the dealers with various )-) materials to increase the via$ility at the outlets and as a relationship $uilding e!ercise. The consumer however en1oys negligi$le $uying power. Although the consumer is the most important entity for the organi%ation the $argaining power $y them is looked down upon since prices etc are fi!ed the company which are not negotia$le. ;!r$!inin$ po&er o# 'upp"ier'0 The supplies in the case of LG electronics can $e divided into vi% local vendors and imported supplier from +rance. The company has greater control over the supplies from +rance. &owever in case of local vendors company lays down the terms and conditions in advance so that no negotiations are carried out in later stages. The level of indigeni%ation in LG products in a$out 45 percent. The company hopes to increase that to 85M within the ne!t couple of years and for that the company would have to develop high (uality local vendors. LG Electronics #ndia $eing a su$sidiary of +rance multinational has its own e!port division in the country. This was only set up after the company had esta$lished itself well in the local market. #ts e!port operations were started in Lan 0::0. The company plans to e!port in 0::2 AS G 2.8 million worth of goods to the e!porting countries. ,y the year 0::7 it plans to e!port AS G 7.6 million worth of goods and $y 0::9 AS G /:: million worth of goods. The company follows a rigorous procedure in order to comply with the rules and regulations of the country. &owever in order to meet its a$ove target of ASG /:: million e!ports the company would have to consider e!ploiting more countries in the neigh$oring areas and e!ploit the potential markets to the fullest. The e!porting country's image and success in its own market also effects the position of e!ports. Considering the success LGE#L is making in the local market if it continues with the same pace the e!port potential could also $e improved. &owever currently the company is into e!ports presently to fulfill the e!port o$ligation against the licenses that have $een taken for the duty e!emption of the import of raw materials from +rance. #n the coming years it is planning to e!plore more international potential markets for its products. Re'u"t' 2 Conc"u'ion' Thus in my opinion this was the $est method that could have $een used which included the use of $oth the primary and secondary sources since only the secondary or the primary sources could not have provided such an in?depth and detailed information. RECOMMENDATIONS Though LG electronic has done fairly well in the #ndian market $ut in order to gain a market share in the long run certain recommendation are highlighted $elow $ased on the analysis conducted earlier and the conclusions. LG 'ou"d cre!te ! m!'' m!r(et im!$e #or it'e"# i# it &!nt' to !cie%e it' objecti%e to become te m!r(et "e!der b* te *e!r 4@@>0 Even to day after three years of its e!istence in the market the company has a premier image in the consumers mind. #f it wants to achieve the a$ove stated o$1ective the company should go in for mass marketing. The company has started moving on this path $ut despite that its premium image still e!ists. To achieve this company should create such campaigns which highlight the middle and the lower end consumer also. +or products such as the C#-S refrigerator +latron T.D. etc it should highlight them as premium products for the elite class. -ther products such as /4K &ome Electronics or /75lt. Mi!er Grinder should target the lower end of the customer. LG 'ou"d concentr!te more on te rur!" m!r(et'0 Currently sales of the company form a very insignificant portion from the rural market. #t only accounts for a$out 2: per cent of the total sales. This is very little considering the vast potential that lies in our country. The company should consider e!ploiting the untouched areas of population even less than 5::::. #t could pro$a$ly form groups of /: to /0 such towns in a state and appoint a single distri$utor for each group. The entire responsi$ility of selling the products should $e given to the distri$utor and his per performance should $e evaluated after every /5 days. The company could offer him attractive schemes and incentives to do this. This could $e test marketed in a couple of states initially to find its success rate. In order to re!p "on$ term bene#it'6 te comp!n* 'ou"d $o in #or cert!in one't 'ceme'* Ma1ority of companies in this industry today are selling their products via schemes offers etc. in order to survive in this competitive market. #t is (uite dou$t full that LG with its policy of Jno schemes no schemingK would $e a$le to do much. The company definitely does not have to go the Akai way $ut certain schemes and offers would help the company in the long run. Since LG $elieves in Jvalue marketingK it does not have to go in for e!change offers where $y you get a new Citrus Luicer or TD if return the old one. &ere the company has to sacrifice on value to get volumes whatever said and done. Some of the schemes that the company could opt for is J,uy a refrigerator <2::ltO.= And a microwave and get some rupees offK or J$uy refrigerator O Citrus Luicer and get the Citrus Luicer at half the priceK. ;I;LIOGRAP3/ ;OOKS Marketing Management ? J)hilip @otlerK &uman 3esource Management ? JAshwathapaK &uman 3esource Management ? JT... Chha$raK INTERNET www.lgeil.com www.google.com NEES PAPERS Economic Times +inancial E!press Times of #ndia #ndian E!press MAGAFINES ,usiness Today A " M ,usiness #ndia ,usiness Eorld ,usiness Standard IND-STR/ REPORTS #nvestors Guide to #ndian #ndustry 0::6 ANNE,-RES LG8' Turno%er Hin R'. CroreJ 0::5 /05: cr 0::6 477:cr 0::7 805: cr LG posts turnover of 3s 805: Crore in 0::7 Targets 19% growth in exports and 15% growth in the domestic market LG Electronics India, the countrys leading consumer durable company today announced their annual results for calendar year 2006 at Rs 820 crore! "he company is e#pecting an o$erall gro%th rate of &' this year and has declared that their focus product categories %ill be (lat panel )isplays and G*+ phones! LG India has also forecast a gro%th of &,' in e#ports, %hich is e#pected to contribute Rs! ,0 crore to the total turno$er in 200-! .a$ing achie$ed leadership position in /lasma )isplay /anels and (lat "0s, the company is e#pecting to become the mar1et leader in L2) "0s as %ell! "he other focus @ 5@@@ 4@@@ L@@@ C@@@ D@@@ >@@@ I@@@ A@@@ G@@@ 4@@D 4@@> 4@@I category %ill be G*+, in %hich the company is aiming to be amongst the top 3 players! "he company is also targeting to achie$e sales of &0 million handsets by year 200,! 2ommenting on the strategies %hich LG India %ill adopt to achie$e gro%th, Mr. Moon B Shin, MD, LGEIL said, 4"he successful implementation of 5lue 6cean strategy across systems and products %ill be critical to our success this year! 7e ha$e already rolled out products li1e "ime +achine "0 and 2hocolate phone as part of this strategy and year 200- %ill see us launching many more uni8ue technologies and products! 7e %ill also strengthen our base as an e#port hub!9 LG India achie$ed a turno$er of Rs! 8,20 crores in 2006, posting an o$erall gro%th of &0' ! "he o$erall contribution %as :3' from .ome ;ppliances, 3,' from 2onsumer Electronics, &3' from I" products and ' from G*+! S!"e' Fi$ure' H4@@D9@IJ /e!r CT. Re#ri$er!tor E!'in$ M!cine AC8' Micro&! %e L@@ "t HFFJ DC SA FA 0::5 .A .A .A .A 25:: .A .A 0::6 /95:: : 545:: 267:: 290: : 49:: : /:::: 5::: 0::7 /8:::: /605: 40::: 4/0: : 66:: 040:: 7::: LG9M!r(et S!re 4@@> Product N!me Percent!$e Television 9 3efrigerators 55: watts 2 44: watts 26 Citrus Luicer +ully Automatic 27 Semi Automatic /0 Air Conditioners /7 O-ESTIONNAIRE &ow is LG positioned versus other players in the marketS &ow is each of its product line differentiated from others* &ome Electronics AC's 3efrigerators Microwaves Eashing Machines &ow has the product mi! changed since 0::2S Eho are the target audiences for each of its product linesS -n what $asis has segmentation $een doneS &ow does the LG supply chain operateS Ehat is the current market share of LGS Ehat does the logo HCigitali%e' stand forS Ehat are the most commonly used media to advertise for LG productsS &ow has the ad $udget changed since 0::2S Ehat all promotional activities does the company undertake for* , Consumers , Cealers #n #ndia what is LG's marketing program like N is it a standardi%ed marketing mi! or is it an adapted marketing mi!S
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