STRATEGIC CORPORATE FINANCE:

SUBMITTED TO

DR. P JANAKI RAMUDU

SUBMITTED BY

SAGAR NIDAVANI

09PG479

Marketing “A”

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LG believes that technological innovation is the key to success in the
marketplace. Founded in 1958, they have led the way in bringing advanced
digital products and applied technologies to our customers. With their
commitment to innovation and assertive global business policies they aim to
become a worldwide leader in advanced digital technology. Now in India LG is
planning to enter into rural market and is focussing on value for money
products. Its main focus is in electronics segment where there is valuable
untapped potential. The rural consumer durable market is growing at a rate of
7% to 10% every year and LG is trying to focus its resources towards rural sales.

1. Is LG over ambitious in its targets?

If LG was not ambitious then never would it double the turnover from
1000cr to 2000cr in just a year. The recent news of the basic pay hike
ranging from a whopping 200% to 700% is the proof justifying their
seemingly over ambitious target. They are having an unique advantage
of being innovative technology leaders as well as they are able to get
that human connect with the customers as well as the prospects which
has helped them the get an upper railing in the slot of the consumer.

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2. Is there market for LG products for in rural areas?
 It is high time to even ask this question at this stage. With a recent
survey showing that 10% of total rural mobile buyers prefer touch
screen, the products of LG like:
Television
Air conditioners
Refrigerators
Washing machines,
Are ought to be sought in the rural areas.
On the other hand, some of the important reasons for entering the rural
market are:
 Rural is growing at an rate of 25%
 Largely untapped rural market (72%)
 Rural population is three times that of urban
 Urban market is facing intense competition, so the viable choice is rural
market
Just that the products have to be customized according to the rural
needs just like the low priced sampoorna TV re-launched as Cine-Plus at
Rs 5000-7000 as they are mostly daily earners and because of which the
requirements change as well as the tastes.

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 3. Develop a clear-cut strategy for rural penetration?
Let us first try to understand the current position and nature of the
company:

LG Market Share in India:

 Refrigerators – 29.4%
 TV – 26.5%
 Washing Machine – 35.4%

Based on survey by Business India in 2006, we have

This just shows that LG scores high on Innovativeness, quality of the products
& services, most importantly Global Competitiveness.

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LG’S Rural Marketing strategy:

BLUE Ocean strategy – rural population accounting for nearly 72% of Indian
population as viable targets.

4A’s

Availability – Place:

 65 remote area offices and 60 central area offices

 Distribution through FMCG distributors
 Dealers have risen from 3000 to 3500

Affordability – price:

 Reducing price by innovation (replacing 4 speakers by two speakers and

woofer
 Frost free refrigerator without twister tray to reduce cost

Awareness – promotion: There are different types.

Mouth publicity:

 Most affective medium of promotion

 Everyday people gather at panchayat and discuss about it.
 Mobile vans.

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 Road show van

 Exhibition for TV sampoorna

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  Cookery as part of promotion

Acceptability – Product:

 Product localization as key part of product strategy

 LG came out with Hindi, Telugu, Tamil and Bengali language TV menu’s
 Introduced low priced sampoorna and cineplus for rural market

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Conclusion:

The potential present at the rural market is no more negligible. LG as this

ability to have an emotional connect with its prospects and this aspect is very
important in rural context. It believes in latest technology at reasonable price
which goes hand in hand with the current need of the rural market.