Professional Documents
Culture Documents
On
“MARKET ANALYSIS OF LG CONSUMER DURABLES &
DEALER DEVELOPMENT”
Submitted for the partial fulfillment of the requirement for the award
of Master of Business Administration (MBA) degree from Uttar Pradesh
Technical University (UPTU), Lucknow.
Submitted By:
0902970115
Year 2010-11
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13 KM Stone, Ghaziabad – Meerut Road, Ghaziabad-201206 (U.P.)
Date: HOD
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To whom it may concern
Date: - Guide
3
DECLARATION
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Acknowledgement
It is indeed of great moment to pleasure to express our
senses of profound gratitude & indebtedness to all the
people who have been instrumental in making it a rich
experience. We found it to be a challenging project that
gave us a real practical exposure to the corporate world
and it is almost impossible to do the same without the
guidance of peoples around us. It gives us immense
pleasure to acknowledge LG ELECTRONICS INDIA Ltd.
dealers, who have been nice enough to give us a chance to
do our project and providing us wonderful support
throughout our project.
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Executive summary
Indian Consumer durables market used to be dominated by few
domestic players like Godrej Voltas Allwyn and Kelvinator. But
post liberalization many foreign companies have entered into
Indian market dethroning the Indian players and dominating
Indian market the major categories being CTV, REFRIGRATOR,
AIR CONDTIONERS and WASHING MACHINES. India being
the second largest growing economy with huge consumer class
has resulted in consumer durables as the fastest growing
industries in India. LG, SAMSUNG the two Korean companies
have been maintaining the lead in the market with LG being
leader in almost all the categories. The rural market is growing
faster than the urban market, although the penetration level is
much lower .The CTV segment is expected to the largest
contributing segment to the overall growth of the industry. The
rising income levels double-income families and consumer
awareness are the main growth drivers of the industries.
Consumer durables major LG Electronics India Pvt Ltd (LGEIL)
will invest nearly Rs 500 crore in India this year in research and
development, brand-building and other marketing initiatives. The
company, having a turnover of Rs 9,500 crore and market share of
26 percent, is investing Rs 360 crore on brand-building and other
marketing initiatives and around Rs 140 crore on research and
development, besides launching new platforms in information
technology and related areas, LG’s innovative ‘211 campaign’ to
provide quality after-sales service, will also be expanded from the
existing 22 to 40 cities by next month, the campaign, for which IT
infrastructure has been set up, includes the company’s response
to customer complaint within two hours. The fixing time for
complaints varies from one hour to a maximum of 24 hours.
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Scope of project
This project gives us great exposure to the consumer durable
market because it includes product knowledge and field survey
job in which we visited the LG stores in Delhi. Incidentally Diwali
time was nearing during our survey period which exposed us to
another aspect of product promotion. LG always insist the 50%
display share of LG product because LG believes that “JO
DIKHTA HAI WO BIKTA HAI”.
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Key findings:-
1. By calculating the display share we found that in most of store
LG has 50% displays share almost all categories.
2. By the actual monthly sale of particular store we came to know
the capacity of the store and how much product can they sell.
3. It helps us to know that weather dealer is capable of being a
direct dealer of LG or not and it also helps to find out the new
dealers who are capable of being an LG dealer.
4. We also came to know while visiting the shops that there was
big problem of after sales service.
5. Many dealers were facing the problem of after sale service
because there is no follow up calls from LG.
6. Demo calls also not done properly.
INTRODUCTION
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Before the liberalization of the Indian economy, only a few
companies like Kelvinator, Godrej, Alwyn, and Voltas were the
major players in the consumer durables market, accounting for no
less than 90% of the market. Then, after the liberalization, foreign
players like LG, Sony, Samsung, Whirlpool, Daewoo, and Aiwa
came into the picture. Today, these players control the major
share of the consumer durables market. Consumer durables
market is expected to grow at 10-15% in 2007-2008. It is growing
very fast because of rise in living standards, easy access to
consumer finance, and wide range of choice, as many foreign
players are entering in the market with the increase in income
levels, easy availability of finance, increase in consumer
awareness, and introduction of new models, the demand for
consumer durables has increased significantly. Products like
washing machines, air conditioners, microwave ovens, color
televisions (CTVs) are no longer considered luxury items.
However, there are still very few players in categories like
vacuum cleaners, and dishwashers Consumer durables sector is
characterized by the emergence of MNCs, exchange offers,
discounts, and intense competition. The market share of MNCs in
consumer durables sector is 65%. MNC's major target is the
growing middle class of India. MNCs offer superior technology to
the Consumers whereas the Indian companies compete on the
basis of firm grasp of the local market, their well-acknowledged
brands, and hold over wide distribution network. However, the
penetration level of the consumer durables is still low in India.
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1. Consumer electronic include VCD/DVD, home theatre, music
player, color television (CTVs), cameras, camcorders, portable
audio, Wi-Fi, etc
2. White goods include dishwashers, air conditioners, heaters,
washing machines, refrigerators, vacuum cleaners, kitchen
appliances, non-kitchen appliances, microwaves, built-in
appliances, Tumble dryer, personal care product etc.
3. Mounded luggage include plastics
4. Clocks and watches
5. Mobile phones
Scope
Opportunity
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1. In India the penetration level of white goods is lower as
compared to other developing countries.
2. Unexploited rural market.
3. Rapid urbanization.
4. Increase in income level, i.e. increase in purchasing power of
consumers.
5. Easy availability of finance.
Threats
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MNCs NATIONAL REGIONAL
LG ) ONIDA BUSH
SAMSUNG ) KOREA VIDEOCON CROWN
HYUNDAI ) BPL SALORA
PANASONIC )
SHARP )
HITACHI )
SANSUI ) JAPAN
AKAI )
AIWA
WHIRLPOOL )
ELECTROLUX
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two Korean companies has been maintaining the lead in the
industries with LG being leader in almost all the categories.
The company, having a turnover of Rs 9,500 crore and market
share of 26 per cent, is investing Rs 360 crore on brand-building
and other marketing initiatives and around Rs 140 crore on
research and development, besides launching new platforms in
information technology and related areas.
1. LG Global
2. LG India
3. LG
History of company:
The company was originally established in 1958 as Gold Star,
producing radios, TVs, refrigerators, washing machines, and air
conditioners.
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1958-1969-GoldStar The Electronics Industry Dream
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1970-79 GoldStar symbol of The Technolgoy
1980-88 :- INTERNATIONALIZATION
1989-94 INOVATION
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1995-98 GLOBAL LEADERS LG ELECTRONICS
1999-2003-DIGITAL MANAGEMENT
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2004-2006 GREAT PEOPLE GREAT DESIGN
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The LG Group was a merger of two Korean companies, Lucky
and Gold Star, from which the abbreviation of LG was derived.
The current "Life's good" slogan is a acronym. Before the
corporate Name change to LG, household products were sold
under the Brand name of Lucky, while electronic products were
sold under the brand name of Gold Star. The Gold Star brand is
still perceived as a discount brand.
In 1995, Gold Star was renamed LG Electronics, and acquired
Zenith acronym chronics ,Name change ,Brand, Zenith
,Electronics of the United States.
Global Operation:
LG Electronics is playing an active role in the world market with
its assertive global business policy. As a result, LG Electronics
controls 110 local subsidiaries in the world with around 82,000
executive and employees.
LG Group
1. LG.Philips LCD
2. LG Chemical
3. LG Telecom
4. LG Powercom
5. LG Twins
6. LG Dacom
Business areas and main products
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Mobile communications
(a) CDMA Handsets,
(b)GSM Handsets,
(c) 3G Handsets,
(d) Cellular Phones
Digital appliance
a) Air Conditioners,
b) Refrigerators,
c) Microwave Ovens,
d) Washing Machines,
e) Vacuum Cleaners,
f) Home Net,
g) Compressors for Air Conditioners and Refrigerators
Digital display
a) Plasma TVs,
b) LCD TVs,
c) Micro Display Panel TVs,
d) Monitors,
e) PDP Modules,
f) OLED Panels,
g) USB Memory,
h) Flat Panel Computer Monitors
Digital media
a) Home Theater Systems,
b) DVD Recorders,
c) Super Multi DVD Rewriters,
d) CD±RW,
e) Notebook PCs,
f) Desktop PCs,
g) PDAs,
h) PDA Phones,
i) MP3 Players,
j) New Karaoke Systems,
k) Car Infotainment
VISION
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Global Top 3 by 2010
GROWTH STRATEGY
CORE COMPETENCY
CORPORATE CULTURE
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SLOGAN
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THE SYMBOL
The symbol of LG is the face of future. The letter “L” and “G” in a
circle symbolizes world, future, youth, humanity & technology.
LG philosophy is based on humanity. It also represents LG’s
efforts to keep close relationship with our customers around the
world.
INDUSTRY PROFILE
The Consumer Durables industry consists of durable goods
and appliances for domestic use such as televisions,
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refrigerators, air conditioners and washing machines.
Instruments such as cell phones and kitchen appliances like
microwave ovens were also included in this category. The sector
has been witnessing significant growth in recent years, helped by
several drivers such as the emerging retail boom, real estate and
housing demand, greater disposable income and an overall
increase in the level of affluence of a significant section of
the population. The industry is represented by major
international and local players such as BPL, Videocon, Voltas,
Blue Star, MIRC Electronics, Titan, Whirlpool, etc. The consumer
durables industry can be broadly classified into two
segments:
Consumer Appliances can be further categorized into Brown
Goods and White Goods. The key product lines under each
segment were as follows.
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per cent and that of split ACs by 97 per cent. Since the penetration
in the urban areas for these products is already quite high, the
markets for both C-TV and refrigerators were shifting to the
semi-urban and rural areas. The growth across product
categories in different segments is assessed in the following
sections.
Consumer Electronics
The CTV production was 15.10 million units in 2007-08 and is
expected to grow by at least 25 per cent. At the disaggregated
level, conventional CTV volumes have been falling while flat TVs
have grown strongly. Market sources indicate that most CTV
majors have phased out conventional TVs and have been instead
focusing more on flat TVs. The flat segment of CTVs now
account for over60 per cent of the total domestic TV
production and is likely to be around 65 per cent in 2007-
08.High-end products such as liquid crystal display (LCD)and
plasma display CTV grew by 400 per cent and 150 per Cent
respectively in 2009 –10 following a sharp decline in prices of
these products and this trend is expected to continue. The
audio/video player market has seen significant growth rates in
the domestic market as prices have dropped. This trend is
expected to continue through 2009- 2010, as competition is likely
to intensify to scale and capture the mass market.
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L G understands the local cultural sensibilities to customize its
products according to the Indian market. It has set up a usability
lab at the Indian Institute of Technology in New Delhi to
customize Samsung products to meet the specific needs of Indian
consumers. This industry-institute partnership is helping
Samsung to study and analyze consumer response in aspects of
product design, including aesthetics, ergonomics and interface.
Through its research done on consumer preferences in India,
Samsung has concluded that Indian consumers want more
sound oriented products. Thus, the Samsung televisions for
India have a higher sound capacity than their foreign
counterparts. For the semi-automatic segment of Samsung
washing machines, Samsung has introduced for the first time in
India a feature called Super Dry. It is present in three of
Samsung‘s semi
-automatic models and dries the clothes better than the rest.
Samsung washing machines have an additional menu that takes
care of the local best. They also have a =memory restart‘that takes
care of the frequent Indian warder -power failures in India.
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OBJECTIVES OF THE PROJECT
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Research Methodology
Research design
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Data Collection:
This report was prepared after collecting data from the retailers/
dealers and past data was arranged from the various studies
conducted in last few years and various other records of company.
Primary Data:
Secondary Data:
SAMPLING METHOD
Random Sampling method
SAMPLE SIZE
100 Dealers
Research tools:
Questionnaires
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M.G Road
A.B. Road
Vija1. Calculate the display share of the L G product in shop.
2. Collected the data of actual monthly sale of the L G product in few
shop.
3 Found out the problems that the dealer were facing while selling the L
G product.
4. Found out the customer response for L G products by asking the
owner of the shop.
5. Checked whether demo calls were attended or not
This project gives us great exposure to the consumer durable
market because it includes product knowledge and field survey job in
which we visited the consumer durable stores in Indore district.
Indore city
M.G Road
A.B. Road
Vijay Nagar
Scope of the study
This project gives us great exposure to the consumer durable
market because it includes product knowledge and field survey
job in which we visited the consumer durable stores in Indore
district.
While visiting the shops we
1. Calculated the display share of the L G product in shop.
2. Collected the data of actual monthly sale of the L G product in
few shop.
3 Found out the problems that the dealer were facing while selling
the L G product.
4. Found out the customer response for L G products by asking
the owner of the shop.
5. Checked whether demo calls were attended or not.
Scope
1. In term of purchasing power parity (PPP), India is the 4th
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largest economy in the world and overtake Japan in the near
future become the 3rd largest.
2. Indian consumer durable market is expected to reach $450
billion by on 2010
3. India has the youngest population amongst the major countries.
There were lot of people in the different income categories nearly
the two third population is below the age of 35 and nearly 50% is
below 25.
4. There were 56 million people in middle class, who were
earning us$4,400-US$21,800 a year. And there were 6 million rich
household in India.
OPPORTUNITY
1. In India the penetration level of white goods is lower as
compared to other developing countries.
2. Unexploited rural market.
3. Rapid urbanization.
4. Increase in income level, i.e. increase in purchasing power of
consumers.
THREATS
1. Higher import duties on row materials.
2. Cheap imports from Singapore, China and from other Asian
countries.
LIMITATION OF STUDY
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1. The period of the project was not sufficient to study all the
factors in deep.
2. Visiting various places for the study consumed a lot of time.
3. We cannot say that what the consumer have revealed will be
right for each and every situation because their perception is
influenced by many factors.
4. Many consumer and dealers/retailers showed less interest in
providing information and haven‘t cooperated.
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explosive technology growth, and continuing innovations in
global communications. These changes have created new
knowledge needs for the manager. Other knowledge demands
have arisen from problems with mergers, trade policies, protected
markets, technology transfers, and macroeconomic savings
investment issues.
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enhanced. These trends reinforce each other and are having a
massive impact on business management.
Internal Sources
Internal sources of organizational data are so varied that it is
difficult to provide generalizations about their use. Accounting
and management information systems create and store much
of the internal data. Research and development, planning and
marketing functions also contribute. Examples are departmental
reports, production summaries, financial and accounting reports,
and marketing and sales studies. The collection methods used
are unique to the specific situation, and collection success
depends on knowing just where and how to look. Sometimes the
information may exist in central files (i.e., at headquarters), in
computer database, or in departmental chronological files. In
other organizations, a central library keeps all relevant
information. Systematic searches should be made through
exploratory interviews with everyone who handles the
information. Often company librarians, IS, PR/communications,
or departmental secretaries can help in pinpointing critical data
sources. Internal data sources may be the only source of
information for many studies.
External Sources
External sources are created outside the organization and are more
varied than internal sources. There are also better defined methods for
finding them. This discussion is restricted to published sources, although
other sources of information may be useful.
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Published sources of data can be classified into five categories.
The newest and fastest growing one is computerized database.
They are composed of interrelated data files. The files are sets
of records grouped together for storage on some medium.
Access may be through online search or CD-ROM. Online
databases are often specialized and focus on information about a
particular field. Major source of published information consists
of diverse materials from special collections. Within this
category there are many reference books, each a compendium
of a range of information. A second group includes university
publications, of which there are master‘s theses, doctoral
dissertations, and research records. A third group includes
company publications such as financial reports, company policy
statements, and speeches by prominent executives, sales
literature, product specifications, and many others. There are
miscellaneous information sources consisting of the productions
of various trades, professional and other associations. These
organizations often publish statistical compilation, research
report, and proceeding of meeting.
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1 C-TV 86
2 C-TV & REFRIGERATOR 67
3 C-TV & REFRIGERATOR &
WASHING MACHINE 56
4 ABOVE ALL 92
TOTAL 301
Source: - Survey
Graph No. 1
INTERPRETATION:-
According to survey, 86 dealers were sold only C-TV, 67 dealers were
sold C-TV and REFRIGERATOR, 56 dealers were sold C-TV and
REFRIGERATOR,WASHING MACHINE and 92 dealers were sold all
product.
Table no. 2 shows no. of company‘s product sold from dealer‘s shop.
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3 THREE 9
4 TWO 34
TOTAL 100
Source:- Survey
Graph No. 2
INTERPRETATION-
According to survey, 33 dealers were sold 5 brands, 34 dealers were sold only
2 brands from their shops.
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3 SAMSUNG 18 18
4 SANSUI 11 11
5 ONIDA 9 9
TOTAL 100 100
Source:- Survey
Graph No.3
INTERPRETATION-
According to dealers, in Indore district LG is leading in
C-TV with 39%, after that VIDEOCON is 2 with 23% and then SAMSUNG
is on 3 with 18%.
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3 Service 17 17
4 Advertisement 15 15
5 Schemes 10 10
TOTAL 100 100
Source:- Survey
Graph No.4
INTERPRETATION-
According to dealers, Price is most important parameter for more sale of C-
TV and then Quality, Services, Advertisement and Schemes.
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3 SAMSUNG 9 9
4 GODREJ 12 12
5 WHIRLPOOL 19 19
6 KELVINATOR 16 16
7 KENSTAR 9 9
TOTAL 100 100
Source:- Survey
Graph No. 5
INTERPRETATION-
According to dealers, LG also leading in the REFRIGERATOR market in
Indore district with 22%,
After that Whirlpool and Kelvinator is following them.
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3 Service 19 19
4 Advertisement 13 13
5 Schemes 9 9
TOTAL 100 100
Source:-Survey
Graph No. :- 6
INTERPRETATION-
According to dealers, most important parameter for more sale of Refrigerator
is Quality and then Price, Services, Advertisement and Schemes.
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3 SAMSUNG 15 15
4 IFB 7 7
5 WHIRLPOOL 21 21
6 GODREJ 9 9
7 KELVINATOR 10 10
8 KENSTAR 9 9
TOTAL 100 100
Source:- Survey
INTERPRETATION-
According to dealers, LG is leading in Washing Machine market with
18%, after that VIDEOCON and SAMSUNG is leading in Indore
district.
Table No.8 shows most important parameter for more sale of Washing
Machine
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INTERPRETATION-
According to dealers, the most important factor which affects the sales of
washing machine is QUALITY, and then prices and services is
considered by the customers.
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INTERPRETATION-
According to dealers, PHILIPS is the most popular brand in DVD
market with 22%,after that ONIDA with 15% and VIDEOCON with
13% on 3 position.
Table No.10 shows most important parameter for more sales of DVD
INTERPRETATION-
According to dealers, Quality is major factor in respect of more sale of DVD,
and then Services and prices were to be considered.
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INTERPRETATION-
According to dealers, KENSTAR is very popular brand for
microwave oven KENSTAR is making a huge business as com pare to
other competitors after that LG and then SAMSUNG. According to
dealers, microwave oven does not have that much demand as compare to
other consumer durable product.
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INTERPRETATION-
The most important factor of m ore sales of microwave oven is
QUALITY of the product. Quality is mostly affected on sales of
microwave oven.
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Table No.14 shows Suggestion from dealers for SAMSUNG to increase
the business
INTERPRETATION-
46
FINDING
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8. While visiting the shop we know that LG is gives high profit
margin as compare to other competitors.
10. All the dealers were not satisfied with the profit margin.
THE PARTNERSHIP
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LG Electronics chooses to promote harmony and build
constructively on a labor-management relationship rather than an
employee-employer relationship. This illustrates that
management and workers are not in a vertical relationship, but in
a horizontal one.
STRATEGIC ALLIANCE
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LG Electronics will do its best to create new products and
services with an open mind, while developing new technologies
and business fields through various associations with some of the
world's most successful companies.
1. 3M
2. SUN
3. YAHOO
4. PHILLIPS
5. TOYOTA
6. MICROSOFT
7. HP
8. GOOGLE
9. GE
10. INTEL
11. NORTEL
12. HITACHI
13. PRADA
14. RENESAS
15. TOSHIBA
16. BESTBUY
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and offer LG mobile phones with Google services (search engine,
map, email, and blogs).
LG BRAND IDENTITY:-
The brand of LG is delightfully smart. LG strives to enhance the
customer’s life and lifestyle with intelligent features, institutive
functionality and exceptional performance.
1. Value
2. Promise
3. Benefits
4. Personality
a. Trust,
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b. Innovation,
c. People
d. Passion
a) Reliable products
b) Simple design
c) Ease of use
d) Extraordinary Experience
Trustworthy, Considerate
Practical, Friendly
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1. Learning Culture
3. A Carrier
4. Growth
Growth in LG is very high for those who are in the company and
for those who want to join in LG. The company is growing with
fast innovation and the BLUE Ocean strategy is one of the
examples of growth.
Mission
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development is to secure product leadership that the Customers
may have the utmost satisfaction.
Product Leadership
Quality Innovation
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LG proceeds in a hierarchal manner. It is named as “LG WAY”.
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c) Equal opportunities
d) Equal Treatment
Code of conduct of LG
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2. Fair competition
3. Fair Transaction :
• Equal Opportunity
• Fair Transaction Procedure
• Support and Aid for Business Partners
• Basic Ethics
• Completion of Duty
• Self Development
• Fairness in Performance
• Avoidance of conflict with company interest
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• Environmental Conservation
LG INDIA
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG
Electronics, South Korea was established in January 1997 after
clearance from the Foreign Investment Promotion Board (FIPB).
LG set up a state-of-the art manufacturing facility at Greater
Noida, near Delhi, in 1998, with an investment of Rs 500 Crores.
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''Company is setting up a chain of exclusive premium
showrooms. LG plans to launch 60 premium Brand Shoppes by
the end of the first quarter of this year. At present, LG has a total
of 83 LG stores across the country, of which 45 are shops and 38
are exclusive stores. Brand shops will be placed in the premium
segment and the target audience will comprise buyers interested
in premium and high end products.
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organization, we are determined to see LG become one of the top
three brands globally.
India challenges
60
3. High import duty
4. Compitition from local market players and other MNCs in
consumer durable segment.
5. Price sensitiveness of the Indian consumer
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conditioner has “Health air system” and microwave ovens
have the “Health wave system”.
R&D potential
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as the parent company it also dose customize R&D for the specific
countries to which it export product.
Product localization:-
63
2. Local and efficient manufacturing to reduce cost - To overcome
high import duties, LG manufactures PC monitors and
refrigerators in India at its manufacturing facility at Noida,
Delhi.
3. Commissioned contract manufacturing at Mohali, Kolkata and
Bhopal for CTVs.
4. Product localization - Product localization is a key strategy
used by LG. It came out with Hindi and regional language
menus on its TV.
5. Regional distribution model - This has resulted in quicker
rotation of stocks and better penetration into the B, C and D
class markets.
6. Leveraging India’s IT advantage - LG Electronics has awarded
a contract to develop IT solutions to LG Soft India (LGSI). The
project involves development and support for ERP, SCM, CRM
and IT-enabled services for LG.
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LG market share of consumer appliances and consumer
electronic:-
65
would be around 110 billion rupees. In order to achieve its target,
Shin said LG Electronics will concentrate on catering to the high-
end consumer market which will help boost sales this year. India
churns out six (6) per cent of LG Electronics global revenues of
$42 billion. The Indian branch of LG exports to 40 countries. Shin
remarked that the company was targeting an increase of exports
to $300 million in 2008 from $230 million in 2007.
LG PUNE
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following China. Under this strategy LGE has projected 2007
revenues in India will exceed US$10 billion, 10 times that of 2004.
The three strategies for the Indian market that the global
electronics giant disclosed included: penetrate the south-western
market of India through the new plant near Mumbai, the second
largest city in India, in addition to the existing northern plant;
installs a new GSM handset production line in the new plant and
use it as its second-largest global GSM handset production line
after the Qingdao plant in China; and expand the current 750
R&D staff in India to 1,500 by 2007, striving to develop premium
products and export 30% of India-manufactured products to Asia,
Middle East and Africa markets by 2007. LG Electronics’ second
new plant in Pune, India covers a total area of 211,200 square
meters and is currently equipped with a production line to
manufacture 600,000 TVs and one million refrigerators a year.
The company is set to add production lines of air conditioners,
washing machines, monitors, and electronic ovens, by 2005. Also,
LG Electronics is poised to install a GSM handset production line
in the new plant by early next year. The GSM handset line
envisages a capacity of manufacturing 2 million handsets
annually, and the company expands it to become a global GSM
handset production base with a capacity of an annual 10 million
units by 2010. In connection with its three growth strategies for
the Indian market, LG Electronics will invest a total of US$150
million in establishing facilities and boosting R&D efforts in India
by 2007. Specifically, it will invest US$53 million in the second
plant, another US$43 million in establishing the GSM line, and
US$54 million in securing R&D manpower and boosting other
efforts. Through these strategies, LG Electronics aims to penetrate
the global market by using China and India as its core production
bases, while operating its plants in Changwon and Gumi, Korea,
as its main production bases. This way, the company is pushing
to penetrate the global home appliance market. The present
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capacity of the facility is of 1 lakh unit per year and it shall cater
to the need of the domestic markets. LG plans to upscale its
operations to a figure of 2.5 lakh units a year in the near future.
The plant in addition to its current manufacturing facility at
Greater Noida will enable the company to enhance its consumer
reach and reiterate it’s commitment towards providing superior
technology products to the India consumer. The key strategies
being implemented include increasing the number of its regional
offices from six to eight. LG has split its southern regional office
into two, one comprising the states of Tamil Nadu and Kerala and
the other consisting of Andhra Pradesh and Karnataka. In
addition, it has split one of its northern regional offices by making
Uttar Pradesh a separate region after spinning it out from Delhi
NCR. The other four regional offices take care of East, Gujarat
and Madhya Pradesh, Maharashtra & Goa and Punjab, Haryana
& Rajasthan respectively. In the coming year, LG is also
repositioning its marketing spends, resulting in a significant
increase in its mass media expenditure for better brand visibility.
LG had a marketing budget of Rs 320 crore in 2007 with a 60:40
split in favor of below-the-line activities. Next year, the company
plans to increase the share of mass media even as overall
marketing spends would be raised by just about 10-15%.
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3. Hoarding, Posters, banners are used so as to grab the attention
of the costumers.
4. Day to day advertisement in leading newspaper.
5. Discount at festival time.
6. For dealer relationship they arrange dealer meeting at several
time in the year
7. LG divide dealer in gold silver etc. category to know the
performance of the dealers.
8. They have their sales persons at various sub dealer store and at
mordent trade store for particularly for the promotion of the LG
product.
9. LG also uses the radio FM for the promotion activities.
10.Also provide capon and scratch card for festive season.
The logistics (Supply Chain Management):-
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2. Right Place
3. Right Condition
4. Right Cost
5. Right Handling
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5’s of warehouse, which the LG strictly follow.
1. Sweeping
2. Sorting
3. Systematic Arrangement
4. Simplification
5. Self- discipline
Distribution Time:-
• Local delivery – 4 hrs.
• Upcountry delivery - 12 hrs.
• Within 200 km. – 24 hrs.
• Beyond 200 km. – 48 hrs.
The above distribution time is the time of delivery of products
from warehouse to the market place, which the logistic
department follows to fulfill the demand in the market at right
time. In LG, we have the following process, which is followed in
logistic through ERP.
· Order Processing
· Invoicing
· Indenting
· Report
Order Processing booking for dealers /distributors
Invoicing after billing process/bill generation
Indenting requirement (Production Unit to branch unit)
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Report distributed to all
Problem
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3- Natural events tracking.
4- Fluctuation in demand-supply Equipments
1- 100% bar code scanner.
2- ERP – Invoice Generation Process.
3- Hydraulic Trolleys for material movement.
4- Pallets for safety of material.
CUSTOMER SERVICE:
The best and the biggest international brands are here in India –
but the irony if it all: where is the after-sales-service? So integral
to a brand, so critical for its success and so taken for granted in
developed markets! In India, after sales service is, for want of a
better description, the pits. So what’s stopping the best companies
from pulling out all the stops when it comes to providing the best
service? Do customers expect for too much? Or is it that in India
they don’t really care. Brand Equity fanned out to MNC as well as
Indian consumer durable companies, stockiest and dealers,
analysts and market researchers to get feel of what’s really
keeping after sales from being used as a cutting edge marketing
tool in pushing products across categories. Customers support
following the purchase of a product or service. In some cases,
after-sales service can be almost as important as the initial
purchase. The manufacturer, retailer, or service provider
determines what is included in any warranty (or guarantee)
package. This will include the duration of the warranty
traditionally one year from the date of purchase, but increasingly
two or more year’s maintenance and/or replacement policy,
items included/excluded, labor costs, and speed of response. In
the case of a service provider, after-sales service might include
additional training or helpdesk availability. Of equal importance
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is the customer's perception of the degree of willingness with
which a supplier deals with a question or complaint, speed of
response, and action taken.
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2. L G Electronics, with 1200 service centers, has already recruited
300 students and plans to beef up the number to 10,000 by the
year-end.
3. "The company has offered a scholarship to the selected students
for the last six months of their training program,"
4. The company will invest Rs 8 crore (Rs 80 million) in employee
development program this year with an aim to attain a 8 per cent
attrition rate.
5. The company moved away from the discounting strategy since
last year and is putting thrust on the quality and service in its
brand communication to position LG as a premium consumer
electronics brand.
6. At the top, the Service Division in Korea reports to the Global
CMO. This shows commitment that Service must be made into a
marketing differentiator, and leveraged thus.
7. LG has the widest service network across the country; some
estimates put it at a significant multiple of service-infrastructure
from our nearest competitor. While the sale size may also be a
nice multiple from nearest, it shows the company is ready to put
our money where our mouth is.
8. The company has introduced a 211 service - once you register
your complaint, we will call you back in 2 hours (hence 2), set up
an appointment for the next convenient day for you (hence the
first 1), and show up in the promised 1-hour slot (hence the
second 1). It’s a disruptive action in an industry (including LG)
having traditionally shied away from its service responsibilities,
and thus not leveraging any mileage from it.
9. The company is promoting 211 through ATL, probably the first
time after sales service is being communicated in this fashion by
any product company. You may have seen the TV commercial or
heard the radio advert or seen the newspaper ad or in-shop
posters, both of which revolve around prompt response.
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10.The first LG-owned service centre opened in Gurgaon. (Service
in India generally works through authorized service centers, in
LG’s case they work exclusively for LG.) A company-owned
service centre tries that much harder, knows things better, and
can even contribute as a revenue center.
Primary objective
The main objective of filed survey during the project was to find
out the market share of the LG and also calculate the display
share.
Find out the positional dealer who can sale the LG product in
large volume.
The main objective of research was to identify potential dealer
and development these dealer. So LG can make them their direct
dealer.
This will ease the dependence on the some big dealer like
Maharashtra and Mahaveer electronics.
Find out the problem faced by the dealer in sales and the
distribution.
Secondary objective
The Objective was to find out that how far the exhibitions are
helpful in branding,
while purchasing the consumer durables which parameter is
most important for the consumer?
Do the consumers prefer the financial facility for buying
consumer durable?
How frequently consumers change the consumer durable?
To enhances the knowledge of consumer durable market.
To increases the knowledge consumer durable product of LG.
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To enhances the knowledge about the marketing and branding
activity.
Research Methodology:
Research methodology is considered as the nerve of the project.
Without a proper well-organized research plan, it is impossible to
complete the project and reach to any conclusion. The project was
based on the survey plan. The main objective of survey was to
collect appropriate data, which work as a base for drawing
conclusion and getting result.
Therefore, research methodology is the way to systematically
solve the research problem. Research methodology not only talks
of the methods but also logic behind the methods used in the
context of a research study and it explains why a particular
method has been used in the preference of the other methods
Research design
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Type of research is Descriptive Research
The type of research adopted for study is descriptive. Descriptive
studies are undertaken in many circumstances when the
researches is interested to know the characteristic of certain group
such as age, sex, education level, occupation or income. A
descriptive study may be necessary in cases when a researcher is
interested in knowing the proportion of people in a given
population who have in particular manner, making projections of
a certain thing, or determining the relationship between two or
more variables. The objective of such study is to answer the “who,
what, when, where and how” of the subject under investigation.
There is a general feeling that descriptive studies are factual and
very simple. This is not necessarily true. Descriptive study can be
complex, demanding a high degree of scientific skill on part of the
researcher.
Descriptive studies are well structured. An exploratory study
needs to be flexible in its approach, but a descriptive study in
contrast tends to be rigid and its approach cannot be changed
every now and then. It is therefore necessary, the researcher give
sufficient thought to framing research.
Decide the types of data to be collected and the procedure to be
used in this research. Descriptive studies can be divided into two
broad categories: Cross Sectional and Longitudinal Sectional. A
cross sectional study is concerned with a sample of elements from
a given population. Thus, it may deal with household, dealers,
retail stores, or other entities. Data on a number of characteristics
from sample elements are collected and analyzed. Cross sectional
studies are of two types: Field study and Survey. Although the
distinction between them is not clear- cut, there are some practical
differences, which need different techniques and skills. Field
studies are ex-post-factor scientific inquiries that aim at finding
the relations and interrelations among variables in a real setting.
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Such studies are done in live situations like communities, schools,
factories, and organizations.
Another type of cross sectional study is survey result, which has
been taken by me. A major strength of survey research is its wide
scope. Detail information can be obtained from a sample of large
population .Besides; it is economical as more information can be
collected per unit of cost. In addition, it is obvious that a sample
survey needs less time than a census inquiry. Descriptive research
includes survey and fact finding enquiries of different kinds of
the major purpose. Descriptive research is description of the state
of affairs, as it exists at present. The main characteristic of this
method is that the researcher has no control over the variables; he
can only report what has happened or what is happening. The
methods of research utilized in descriptive research are survey
methods of all kinds including comparative and co relational
methods. The reason for using such needs to be flexible in its
approach, but a descriptive study
BRANCH
1 2 3 in contrast tends to be rigid and its approach cannot be
changed every now and then.
-1
-2
-3
-1 Includes the modern trade and they have direct billing from
the branch office. They have high turnover and the company
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depends heavily on them-2 includes the distributors. They have
direct billing from the branch office. Their turnover is also high.
-3 Includes the sub dealers .They have direct billing from
distributors or from the branch office. Their turnover is not so
high, but there are few sub dealers whose potential is quite high.
According to sales the branch has designated as gold and silver
sub dealers.
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his respondents which is always guided by the objective of the
survey.
Pie chart:
This is very useful diagram to represent data, which are divided
into a number of categories. This diagram consists of a circle of
divided into a number of sectors, which are proportional to the
values they represent. The total value is represented by the full
create. The diagram bar chart can make comparison among the
various components or between a part of data and a whole of
data.
Bar chart:
This is another way of representing data graphically. As the name
implies, it consist of a number of whispered bar, which originate
from a common base line and are equal widths. The lengths of the
bards are proportional to the value they represent.
Preparation of report:
The report was based on the analysis and presented with the
findings and suggestions. The sample of the questionnaires is
attached with the report itself.
Sampling Methodology:
Details of the sampling methodology, I have made questionnaire.
The one is made for the Customer.
No. of questions in questionnaires for customer: 07
No. of question related to LG product: 03
No. of people met during the research: 200
No. of respondents during the research: 50
Sample unit Professionals, Business man,
Employees, House wife, Working women, Students
Analysis:
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Q1. Have you purchased any consumer durable during
Exhibitions?
Yes
No
Inferences
1. 65 % of Customers have not purchased any consumer durable
from exhibitions.
2. Only 35 % people have purchased.
3. It shows that consumers are coming in the exhibition for
knowledge of product and also they want to know that weather
there is actual price difference in exhibition and shop or not.
4. Consumers also want to compare to the different brand which
are available in the exhibition.
5. So exhibitions are more useful to increases brand awareness.
6. People are less interested to purchase product from the
exhibition.
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3. 19% to product feature Service 16% and durability 9% Service is
also a big factor for the customer they are less interested in the
durability.
Inference
1. Customers buy from showrooms because of the service and
convenience.
These are two main factors.
2. Customers are preferred to buy from the showroom because of
they think that these convenient store may provide good after sell
service.
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3. Customer also thinks that there is more chance to bargain and
they can get more discounts in these showrooms.
4. Price also a factor that attract the customer in these showrooms.
Inference
1. Customers prefer to change consumer durables within 5-10
years. In India people do not change consumer durable
frequently.
2. 23% customers do not change their consumer durable within 10
year.
3. It represent that Indian consumer do not prefer to change their
consumer durable frequently.
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Q.7.Do you prefer any financing scheme to purchase consumer
durables?
Yes
No
Inference
Majority of customers do not prefer any financial scheme.
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promotion of products as well as demonstration given by the
shopkeeper also plays a vital role for customer.
1. LG should improve it’s after sale service because its hits badly
LGs market share in region.
2. More detailed customaries service is to be provided.
3. The training to in shop demonstration should be given at
frequent time interval and feed back should be considered
positively.
4. The company should look into the matter of person hiring for
in shop demonstration. A big LG showroom should have at least
2 such kind of person.
5. LG should try new dealer who have the potential. So they can
target more market.
6. As there is a bottle neck competition between Samsung and LG,
it is necessary to take measure steps to overcome the area of
downfall in LG with respect to Samsung.
7. The marketing managers should make better relations with
dealers and reputation of the company.
8. Customer considers quality as their first preference, so the
company should give more stress on this.
9. The switching of customer from LG product to other brand is
due to the bed after sell service in shop.
10.The product is well aware and it is on top of mind of customer.
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CUSTOMER SURVEY FINDINGS
1. Secondary supports play an important role in the customers
mind and create awareness among the customers. The secondary
support includes Demonstration, Exhibition & Even Sponsors.
2. From the survey it was found out that the majority of
customers don’t buy consumer durables from exhibitions. They
just visit the exhibitions to see the co. latest model.
3. They want to buy from the showrooms or from co. showrooms.
For them service is important .Beside convenience and other
factors service is key factor.
4. Also majority of customers do not want any financing scheme
for purchasing the durables.
5. There was heavy rush on weekends so large numbers of ISD’s
were appointed that day. Also the live demo calls helps in selling.
Exchange offers also generate sale.
6. Customers are also now very choosy in buying the product and
it is important for the company to make loyal customer of their
brand.
7. In survey we found that LG has captured maximum market
share in every category. LG dominates CTV, LCD, and
Refrigerator, and Washing machine, category.
8. LG and Samsung have bottle neck competition in TV and REF.
category.
9. The product is well aware and it is on top of mind of customer.
10.Customers are also now very choosy in buying the product
and it is important for the company to make loyal customer of
their brand.
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RECOMMENDATIONS AND SUGGESTIONS
1. Exhibitions do not help to generate so much sells but they
should be conducted regularly. This helps in generating
awareness regarding the product in customers which ultimately
helps in sales.
2. Also it is helps in advertising for the new products. Like in this
exhibition new LCD SCARLET was advertised. Company should
always focus on service.
3. Display share should be increased where there is less than 50%
as LG also believes that “JO DIKHTA HAI WO BIKTA HAI”.
4. Company should try to improve service. No doubt the
company products have technically edge over competitors but in
long run it may hamper the company’s profit.
5. Company should concentrate more on its major drivers LCD,
IT, and GSM. Branding and promotions should be done
effectively as it creates a long lasting image in the mind of
customers.
6. Company should also cater to the needs of sub dealers as some
of the sub dealers have potential of high sales.
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LIMITATIONS
Every study has certain limitations. In our study, also there were
certain limitations, which I could not able to solve.
1. The research was conducted in a very small area.
2. Our research work period witness the biggest ups and downs
in product sale of different brands, which affected the perception
of the customer.
This was biggest drawback of my study.
3. Time factor was also important for us. We had limited time for
the research, for which a full-fledged report was insufficient for
me.
4. The customer filled the questionnaire mostly in careless
manner, so it was difficult to make them hold for time.
5. We had only found the upper-middle class family to fill up the
questionnaire, but generally, an average middle class family was
required for the study.
6. The sample size is also very small which represent my research
on consumer behavior
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BIBLIOGRAPHY
www.lgindia.com
www.google.com
www.wikipedia.com
Business world
Business today
LG magazine
Economics times News paper
Times of India
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Q1. Have you purchased any consumer durable during
Exhibitions?
a) Yes
b) No
a) Price
b) Product feature
c) Brand
d) Service
e) Durability
a) Exhibitions
b) Co.shoppee
c) Showroom
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a) Attractive Price
b) Service
c) Demonstrations
d) Offers
e) Convenience
a) CTV -------------------
b) LCD -------------------
c) PLASMA -------------------
D) REF -------------------
E) WM -------------------
F) MW -------------------
G) AC -------------------
a) 1-3 years
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b) 3-5 years
c) 5-10 years
a) Yes
b) No
APPENDIX
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A.S.I Area Service In charge
A.S.M Area sales manager
B.S.I Branch Service In charge
CAC Commercial Air Conditioning System
C.S NET Customer Service Net
D.S.C. Direct service centre.
L.H.D Logistics Head of department
R.E.F Refrigerator
94