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A

Project Study report

On

LG ELECTRONICS INDIA Ltd.

Titled

“Marketing Analysis on LG Consumer &

Dealer Development”

Submitted in partial fulfillment for the


Award of degree of

MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED BY:- SUBMITTED TO:-


Htesh Kumar Sain Mr.Anchalkumar

MBA Final Year

2010-2011
Sobhasaria Engineering College

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Executive summary

Indian Consumer durables market used to be dominated by few domestic players like
godrej, Voltas, allwyn and kelvinater. But post liberalization much foreign company have
entered into Indian market dethroning the Indian player and dominating Indian market the
major categories in the market CTV, REFRIGRATOR, AIR CONDTIONERS AND
WASHING MACHINE 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 has been maintaining the lead in the
industries 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 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 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.

LG’s innovative ‘211 campaign’ to provide quality after-sales service, will also be expanded
from the existing 45 to 56 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 (TAT).

Contents: -

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1. Introduction to the Industry
2. Introduction to the Organization
(a) History of the company
(b) Vision
(c) Mission
(d) LG India
(e) Major Key success factors
3. Research methodology
3.1 Title of the Study
3.2 Objective of the Study
3.3 Type of Research
3.4 Sample Size and method of selecting Sample
3.5 Scope of Study
3.6 Limitations of Study

4. Facts and Findings


4.1 Dealer survey findings
4.2 Customer survey findings

5. Analysis and Interpretation


5.1 Dealer Survey

3
5.2 Customer Survey

6. SWOT Analysis
7. Conclusion
8. Recommendation and Suggestions
9. Appendix
9.1 Questionnaire
9.2 Abbreviation
10. Bibliography

4
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INTRODUCTION

Before the liberalization of the Indian economy, only a few companies like
Kelvinator, Godrej, Allwyn, and Voltas were the major players in the consumer
durables market, accounting for no less than 90% of the market. Then, after the
liberalization, foreign players like LG, Sony, Samsung, Whirlpool, Daewoo,
and Aiwa came into the picture. Today, these players control the major share of the
consumer durables market.

Consumer durables market is expected to grow at 10-12% in 2009-2010. It is


growing very fast because of rise in living standards, easy access to consumer finance,
and wide range of choice, as many foreign players are entering in the market.

With the increase in income levels, easy availability of finance, increase in


consumer awareness, and introduction of new models, the demand for
consumer durables has increased significantly. Products like washing machines, air
conditioners, microwave ovens, color televisions (CTVs) are no longer
considered luxury items. However, there are still very few players in categories like
vacuum cleaners, and dishwashers.

Consumer durables sector is characterized by the emergence of MNCs, exchange


offers, discounts, and intense competition. The market share of MNCs in
consumer durables sector is 65%. MNC's major target is the growing middle class of
India. MNCs offer superior technology to the consumers whereas the Indian companies
compete on the basis of firm grasp of the local market, their well-acknowledged brands,
and hold over wide distribution network. However, the penetration level of the consumer
durables is still low in India.

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Classification of consumer durables sector

1. Consumer electronic includes vcd/dvd, home theatre, music player, color television
(CTVs), cameras, camcorders, portable audio, Hi-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. Moulded luggage includes plastics.

4. Clocks and watches.

5. Mobile phones.

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Strength

1. In term of purchasing power parity (ppp), India is the 4th largest economy in the
world and overtake Japan in the near future become the 3rd largest.

2. Indian consumer durable market is expected to reach $400 billion by on 2010.


3. India has the youngest population amongst the major countries. There are lot of
people in the different income categories nearly the two third population is below the
age of 35 and nearly 50% is below 25.

4. There are 56 million people in middle class, who are earning us$4,400-
US$21,800 a year and there are 6 million rich household in India.
5. The upper-middle and high-income household in urban areas are expected to grew
to 38.2 million in 2008 as against 14.6 million in 2000.

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.
5. Easy availability of finance.

Threats

➢ Higher import duties on raw materials.


➢ Cheap imports from Singapore, China and from other Asian
countries.

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Brands in consumer electronics sector

MNCs NATIONAL REGIONAL


LG )
SAMSUNG ) KOREA ONIDA BUSH
HYUNDAI ) VIDEOCON CROWN
BPL SALORA
TCL ) CHINA GODREJ T-SERIES
HAIER ) VOLTAS WESTON
IFB BELTAK
PHILIPS ) HOLLAND OSKAR

PANASONIC )
SHARP )
HITACHI )
SANSUI ) JAPAN
AKAI )
AIWA

WHIRLPOOL )
ELECTROLUX

TODAY Consumer durables sector is characterized by the emergence of MNCs,


exchange offers, discounts, and intense competition. The market share of MNCs in
consumer durables sector is 65%. MNC's major target is the growing middle class of India.
MNCs offer superior technology to the consumers.

LG, SAMSUNG the two Korean companies has been maintaining the lead in the
industries with LG being leader in almost all the categories.

The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, is
investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140
crore on research and development, besides launching new platforms in information
technology and related areas.

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What does LG stand for?
As LG is not an acronym, there is no full name for LG.
On renaming the Group, we considered 'LG' to be the most appropriate for a new Group
name that could integrate different images of two main streams of the Group's businesses,
the Chemicals led by 'Lucky' and the Electronics & Telecommunications led by 'Gold star,'
while including various brand images of other business fields.

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LG Electronics is one of the leading companies in the field of electronics
with a global presence in many countries. It is a Korean Company. Before briefing, I have
divided the introduction part into three main sub parts.

1. LG Global
2. LG India
3. LG Pune

 History of company
Year of Foundation: 1947

Total Sales: KRW 84 Trillion (as of 2006)

Business Fields: Electronics, Chemicals,


Telecommunication & Services
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Number of Companies: 30

Overseas Subsidiaries: around 130

Number of employees: around 120,000.

The company was originally established in 1958 as Gold Star, producing radios, TVs,
refrigerators, washing machines, and air conditioners.

The LG Group was a merger of two Korean companies Lucky and Gold Star from
which the abbreviation of LG was derived. The current "Life's good" slogan is a
backronym. Before the corporate Name change to LG, household products were sold under
the Brand name of Lucky, while electronic products were sold under the brand name of
Gold Star. The Gold Star brand is still perceived as a discount brand.

In 1995, Gold Star was renamed LG Electronics, and acquired Zenith Electronics of the
United States.

 Signature
The signature of LG being the most important element in communicating with LG's Brand
Image, any change or distortion of proportion, spacing or resizing at will is absolutely
prohibited. The signature shall be used with consistency and uniformity among all kinds of
media. Restrictions and rules of the corporate Identification Program shall always be
respected.

Horizontal Vertical
coordinatio coordina
n tion

 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

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1. LG Philips LCD
2. LG Chemical
3. LG Telecom
4. LG Powercom
5. LG Twins
6. LG Dacom

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LG LG Chem LG TeleCom
Electronics

- LG - CS Leader
- LG.Philips Petrochemical
LCD
- TeleDREAM
-LG DOW
- LG Innotek Polycarbonate
DACOM
- LG Micron - SEETEC
- LG Powercom
- Hiplaza LG Household
&
Health Care
-DACOM
Multimedia
LG Life Internet
- Hi Logistics Sciences

- DACOM
Crossing
Siltron LG MMA

LG CNS
Lusem

- V-ENS

LG N-Sys

SERVEONE

LG Management
Development
Institute(Economic
Research Institute)

○ Business areas and main products

✔ Mobile communications

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(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.
✔ Digital media
a) Home Theater Systems,

b) DVD Recorders,

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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
Global Top 3 by 2010

Global Top 3 Electronic/Telecommunication company

GROWTH STRATEGY
“Fast innovation, Fast growth”

CORE COMPETENCY
“Product leadership, Market leadership, People leadership”

CORPORATE CULTURE
No excuse, “we” not “I”, Fun workplace

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SLOGAN

“‘Life’s Good’ represents LG's determination to provide delightfully


smart products that will make your life good”.

The LG Electronics Life's Good signature consists of the LG logo, seal,


and the slogan, "Life's Good" set in Charlotte sans type face curved around
the LG symbol. The curving of the slogan reinforces LG's personality and
uniqueness. The consistent usage of this signature clearly establishes the
unique identity of the company and unifies every division and product from LG
Electronics across the globe.

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.

✔ The symbol consists of two elements.

1. The logo in LG gray


2. The stylized image of human face in the unique LG red color.

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Red color represents our friendliness and gives a strong impression of LG’s
commitment to deliver the best.

The circle symbolizes The Globe. The stylized image of a smiling face in the symbol
conveys “Friendliness and Approachability”. The one eye on the symbol
represents “Goal-oriented, focused & Confident”.

The slogan of LG is “Life’s Good”, expresses “Brand’s Value, Promises,


Benefits, Personality”.

THE PARTNERSHIP

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.

This culture is necessary for LG Electronics as it strives to become one of the world's top
companies. Such a relationship is transformed into a value-creation relationship whereby
both parties endeavor to address mutual problems and create new values together.

STRATEGIC ALLIANCE

“LG Electronics is making technical advances and identifying business opportunities


through various associative relationships with some of the world's leading
companies”.

LG Electronics is striving to become number one in the world by mingling in various


business and technological fields and making strategic alliances with world famous
companies. "Strategic association between corporations," in which companies with different
infrastructures cooperate in the fast-developing 21st century business field, is of key
significance in terms of strengthening the existing industry and creating a new one.

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.
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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

And the number follows many more…………………………..

In Feb. 2009 LG Electronics and Yahoo formed a strategic alliance. Yahoo mobile
services will be available from LG mobile. This service is targeting 10 million LG mobile
phones in over 70 countries.

In Mar. 2009 LG Electronics and Google formed a strategic alliance.

Both companies will work together to release, market, 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.

✔ The brand platform:-


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The LG brand is composed of four basic elements –

➢ Value
➢ Promise
➢ Benefits
➢ Personality

✔ The Brands core Value that never changes:-

➢ Trust

➢ Innovation

➢ People

➢ Passion

The benefits that are consistently delivered to the customer includes:

➢ Reliable products

➢ Simple design

➢ Ease of use

➢ Extraordinary Experience

Personality describes the human characteristics that are expressed to the


customer through:

➢ Trustworthy Considerate

➢ Practical Friendly

The Internal Culture of LG:

LG practices four cultures

➢ Learning Culture
➢ Boundary less Environment
➢ A Carrier

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➢ Growth

✔ According to LG, the Learning Culture continuously helps the employee to learn
more and more to develop the habit of continuous learning.

✔ Boundary less Environment means that there is no difference between the


levels of employees. There is transparency between the work and mutual
understanding between all the employees.

✔ A carrier is highly growing in LG and one who is the employee can develop their
carrier largely. A new comer will feel fully comfortable in the company and for a new
comer the company is very helpful in the overall growth of personality.

✔ Growth in LG is very high for those who are in the company and for those who
want to join in LG. The company is growing with fast innovation and the BLUE
Ocean strategy is one of the examples of growth.

Mission
The mission of LG is to provide the customers with utmost satisfaction through leadership.

The fundamental policy of development is to secure product leadership that the

Customers may have the utmost satisfaction.

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 OUR PRINCIPLES AND POLICIES

01. Creativity & Autonomy


An individual's creativity is the source of creating value. We respect diversity and autonomy
so that each can exercise his / her own creativity to the full extent.

02. Equal opportunity


Equal opportunity builds trust between people. We ensure everyone an equal opportunity
regardless of gender, race, age, religion or nationality.

03. Emphasis on competence


We have adopted competence as the most important criterion for making personnel
decisions.

04. Long-term perspective


Maintaining a long-term perspective is the foundation of our human resource policies.
Human resource programs should be designed with a long-term perspective and
implemented with dedication and persistence.

05. Performance based rewards


Rewards based on performance are essential for human motivation. Performance results
will be fairly evaluated and rewarded accordingly.

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✔ Performance-Based Principle

LG practices a performance-based salary system, which was initiated in 2000 to install a

performance-based culture across all subsidiaries.

The performance-based salary system evaluates employees' rank, title, salary, and other

values on the basis of job performance and role, which represents a shift away from the

previous seniority-based system. This new system inspires employees to exercise their

individual abilities to the greatest extent, which raises standards and promotes a

performance-based.

LG set the basic framework for this goal, and allowed each of its subsidiaries to formulate

their respective detailed action plans.

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○ Product Leadership

We are focusing on six development areas to become the product leader.

➢ New Machine
➢ Reliability
➢ Conventional Installation
➢ Environment Friendly Product
➢ Low Noise & Vibration
➢ Energy Saving

○ Quality Innovation
The policy of quality assurance is to provide customers with utmost satisfaction by
supplying zero defects.

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LG proceeds in a hierarchal manner. It is named as “LG WAY”.
From top to bottom:

➢ No.1 LG – is the VISION

“Jeong-DO” Management is LG’s unique application to ethics. LG will succeed through


fair management practices and constantly developing our business skill.

A) Honest with our customer

b) Providing great values to customer through constant innovation & and


development.

c) Equal opportunities.

d) Equal Treatment

e) Management Principle - Creating value for customer

LG's vision is to become the best in its class by winning customers' acclaim as a true leader
in the global market.

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LG’s VISION PICTURE

➢ No. 2 Code of conduct of LG:

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1. Responsibility and obligations to customers :
• Respect for Customers
• Creating Value
• Providing Value

2 Fair competition
• Pursuit of Free Competition
• Compliance with Laws and Regulations

3 Fair Transaction :
• Equal Opportunity
• Fair Transaction Procedure
• Support and Aid for Business Partners

4 Basic Ethics for Employees


• Basic Ethics
• Completion of Duty
• Self Development
• Fairness in Performance

• Avoidance of conflict with company interest

5 Corporate Responsibilities to employees


• Respect for human dignity
• Fair Treatment
• Promoting Creativity

6 Responsibilities to society and country


• Rational Business Development
• Protection of stock holder interest
• Contribution to social development
• Environmental Conservation

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➢ No.3 Management Principles
LG's management principles state the purpose of LG's business activities, and also provide
a basis for its operations. It embodies the key concepts of "Creating value for customers"
and "Respecting human dignity."

LG believes that
customers make up the
very foundation of our
business. That is why LG
places the highest priority
on serving customers,
and encourages its
people to create true
value for customers
through innovation. This
principle provides a
strong basis for LG's
operation that is targeted
at winning the hearts of
the customers by offering
them truly innovative
products.

LG believes that the


source of its innovation
lies in its people.
"Respecting human
dignity" implies that LG
values the ingenuity and
autonomy of its people. It
signifies that LG strives to
maximize capabilities of
its people, and helps
them realize their
potential on the job. This
principle is further
reinforced through LG's
everyday management
practice of rewarding its
people based on
capabilities and
performance.

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➢ FINANCIAL STATEMENT
Summarized Income Statement 04-05:-

Summarized Income Statement 07-08:-

(Unit : KRW 100 million) 2009 2008

Operating revenue 4,961 7,610

Operating expense 1,018 544

Operating income 3,943 7,066

Non-operating income 3,763 1,171

Non-operating expenses 320 1,769

Income before
7,386 6,468
income taxes

Income tax expense 1,354 712

Net income 6,032 5,755

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 GLOBAL REPORT

Opening
of
Mobile Children's
Spa Bath Hospital
Donation Long-
Term
Care Unit

On location at the WTCC -


Enjoying 'Four Giants'
Sponsoring the World's Top
World Cup with LGE
Racing Event

Twenty Elementary Schools LG's Amazing


Receive 'Our Garden' Performance

Significant Innovation Toward LG and Celebrity help


Increasing Customer Value Alienated Youth

LG increases Brand Awareness


Kazakhstan, a shining
with Africa Cup of Nations
star
Sponsorship

Official Sponsorship of PDP TV Free Medical Services


for ASEAN + 3 Summit Meeting in Africa

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Eco friendly activities of different LG Companies

LG Electronics

LG Electronics vows to observe the basic


philosophy and principles of environmental
management to ensure sustainable development
and improve quality of life for its customers.

LG Innotek

LG Innotek puts the environment and the people’s


welfare first in its efforts to develop technologies and
in doing business. Based on this environmentally
friendly mindset, we strive to step up our global
competitiveness.

LG Micron

LG Micron protects our environment and runs the


company in an environmentally friendly manner. All
the staff in LG Micron work on safety, health,
environmental protection and energy saving.

Siltron

Siltron is putting all its efforts to minimize the


environmental impact of its business activities and
to protect its employees and the residents near its
facilities from accidents.

LG Chem has been designating environmentally-


friendly organizations, certificating environmentally-
friendly managerial systems, conducting self-
analysis, and executing preventive environmental
managerial evaluation as it fortifies its
environmentally-friendly managerial systems.

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LG Petrochemical

LG Petrochemical promises to maximize customers’


satisfaction
and to contribute to society. LG Petrochemical will
provide continual
improvement in environment, safety and health as
well as efficient use of energy through RC activities.

LG MMA

LG MMA has implemented self-controlled


environmental management system based on the
core values of management for environment, safety
and health, in addition to the collaboration of labor
and management.

➢ PRESS RELEASES

Sep 06, 2006 LG Electronics Completes Construction of Russian Plant

- The plant completes production triangle connecting Wroclaw,


Mlawa and Ruza to target Europe, Russia and the ...

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Sep 06, 2006 LG.Philips LCD Receives BSC Hall of Fame Award

Seoul, Korea (September 6, 2006) - LG.Philips LCD (NYSE:


LPL, KRX: 034220), one of the world's leading i...

Aug 29, 2006 LG Electronics Gearing Up for Next-Generation DVD Market

LG Electronics (LG), a global leader and technology innovator


in consumer electronics and mobile communication...

Aug 29, 2006 LG Mobile And DMC Continue Dream Team Partnership

London, 29 August 2006 – LG Mobile (LG), a pioneer in


consumer electronics and mobile phones, today an...

Aug 16, 2006 LG Unveils The UK's First 5 Mega-Pixel Digital Camera Phone

London, 27th July 2006 – LG Mobile (LG) announces the first 5


Mega-Pixel digital camera phone to arrive ...

Aug 15, 2006 LG Wins Three EISA Awards

LG Electronics (LG), a global leader and technology innovator


in consumer electronics and mobile communication...

LG is widely into the public relations and fulfilling the social responsibility, which a business
should by opening children's hospital. Through wide donations, sponsoring different shows,
and participating in such events which increase consumer awareness all over the world.

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 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 New Delhi, in 1998, with an investment of Rs 500 Crores.

LG corporate office is located at Plot no.51, Udyog Vihar, Kasna Road, Greater Noida, U.P,
India.

This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and


Microwave Ovens.

''Company is setting up a chain of exclusive premium showrooms. LG plans to launch 60


premium Brand Shoppes by the end of the first quarter of this year. At present, LG has a
total of 83 LG stores across the country, of which 45 are shoppes and 38 are exclusive
stores. Brand shoppes will be placed in the premium segment and the target audience will
comprise buyers interested in premium and high end products.

LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a more
interactive environment and additional lifestyle orientation on display so that the customer
can actually experience the LG products in his or her own home settings.

LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is
planning a brand new image. To attract inspirational and young consumers across India,
company will roll out a new marketing strategy. The exercise will cost the company Rs 360
crore.

LG Electronics India is the fastest growing company in the consumer electronics,


home appliances, and computer peripherals industry today.

LG Electronics is continually providing, superior technology products & value for money to
more than 50 lakh households in India. LGEIL is celebrating the 13th anniversary this
year.

LG Soft India the innovation wing of LG Electronics in Bangalore is LG Electronics'


largest R&D centre outside Korea. We at LGSI focus on niche technology areas such as

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mobile application development, digital video broadcast and biometrics
software and support LG Electronics with our expertise. Motivated by a passion for
technology, a strong work culture and loyalty to the organization, we are determined to see
LG become one of the top three brands globally.

Prominent consumer electronic company, LG Electronics Inc. has said that it expects the
sale of its products in India to up by 21 per cent in 2009. Moon Bum Shin, managing
director of LG Electronics India has said that the company has earmarked 5.8 billion rupees
for investment purpose in India this year. The said money will be used to market as well as
manufacture new products.

LG Electronics, which is originally a South Korean Company with branch in India, informed
that its sales of GSM mobile phones, color televisions, air conditioners and other household
goods in the Indian market was to the tune of 95 billion rupees ($2.4 billion) in 2009. As per
Shin's estimate, the sales in 2009 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.

○ India challenges
The challenges faced by LG when entered in Indian market
✔ Low brand awareness about LG in India.
✔ One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in
India).
✔ High import duty
✔ Competition from local market players and other MNCs in consumer durable
segment.
✔ Price sensitiveness of the Indian consumer.

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➢ LGEI over comes these challenges to emerge as
Innovative marketing strategy:
1. Launch new technologies in consumer electronic and home appliances.
2. LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999
world cup followed it up in 2003 as well.
3. LG brought in four captains of the Indian cricket team to endorse its products. LG
invested more than US$ 8 million on advertising and marketing in this sport.
4. LG has differentiated its product using technology and health benefits. CTV has
“Golden eye technology” Air conditioner has “Health air system” and microwave
ovens have the “Health wave system”.

➢ Local and efficient manufacturing to reduce the cost:


To overcome high import duties LG manufactures TV refrigerator in India at manufacturing
facility at Noida and Pune. LGEI had already commissioned contract manufacturing at
Mohali Kolkata and Bhopal for CTVs. This has helped LGEI to reduce cost.
LGEI implementing the “Digital manufacturing system” (DMS) as the cost cutting innovation
this system is follow-up to the six sigma exercise LGEI had initiate earlier.

➢ R&D potential
LG has the research and development facilities in Bangalore and Pune. Both the unit carry
out R&D department for the domestic as well as the parent company it also dose customize
R&D for the specific countries to which it export product.

➢ Regional channel and wide distribution network


1. LG has adopted the regional distribution channel in India. All the distributers work
directly with the company. This has resulted in quicker rotation of the stock and
better penetration into B, C, D, class market.

2. LG also follows the stock rotation policy rather than dumping stock on channel
partners.

➢ Product localization:-
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1. Product localization is the key strategy used by the LG
2. LG came out with Hindi and regional language menus on its TVs.
3. Introduced the low-priced “Cineplus” and “sampooma” for the rural market.
4. LG was the first brand to introduce gaming in TVs in continuations of its
association with cricket LG introduces cricket game in CTVs.

➢ MAJOR KEY SUCCESS FACTORS


1. Innovative marketing - LG was the first brand to enter cricket in a big way, by
sponsoring the 1999 World Cup and followed it up in 2003 as well.

2. Local and efficient manufacturing to reduce cost - To overcome high import


duties, LG manufactures PC monitors and refrigerators in India at its
manufacturing facility at Noida, Delhi.

3. Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs.

4. Product localization - Product localization is a key strategy used by LG. It came


out with Hindi and regional language menus on its TV.

5. Regional distribution model - This has resulted in quicker rotation of stocks and
better penetration into the B, C and D class markets.

6. Leveraging India’s IT advantage - LG Electronics has awarded a contract to


develop IT solutions to LG Soft India (LGSI). The project involves development
and support for ERP, SCM, CRM and IT-enabled services for LG.

➢ Strategies adopted by the organization

LG follows 10 commandments which are as follows:-

1. Foster working environment-5S Environment

2. Fast execution is key to success

3. Transparent and fast communication-open communication

4. Update market -knowledge –Demographics


37
5. Win –Win relationship with the trade partners

6. Customer is the king

7. Even Billing –Road to ach supplier A

8. Be in touch with the market (70% Market, 30% Office).

9. Plan and Execute annual marketing Calendar-Time to market

10. Display share of 50% -to get 50% consumer share.

➢ LG market share of consumer appliances and consumer electronic:-

✔ LG position of CTV in various states in India

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✔ LG position of REF in various states in India

✔ LG position of WM in various states in India

39
✔ LG position of AC in various States in India

✔ LG position of Audio & Home Theater in various in India

✔ LG position of DVD in various in India

✔ LG position of MWO in various states in India

40
This analysis is based on the ORG survey conducted by LG which represent the LG
position of different consumer durables in various states in India. I select different brand in
different category as per the market share and the demand of product in market. This
analysis represents the LG market position during the period of March 2009. It shows that
LG has captured maximum market share almost in every category. LG and Samsung have
the maximum market in consumer durable market but LG dominate the almost all the
category in consumer durable.

Prominent consumer electronic company, LG Electronics Inc. has said that it expects the
sale of its products in India to up by 21 per cent in 2009. Moon Bum Shin, managing
director of LG Electronics India has said that the company has earmarked 5.8 billion rupees
for investment purpose in India this year. The said money will be used to market as well as
manufacture new products.

LG Electronics, informed that its sales of GSM mobile phones, color televisions, air
conditioners and other household goods in the Indian market was to the tune of 95
billion rupees ($2.4 billion) in 2009. As per Shin's estimate, the sales in 2009 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 2009 from $230 million in 2009.

✔ MANAGEMENT STRATEGY

LG is set to:
> Invest 3.2 trillion won in R&D, up by 20% from last year

> Invest 7.3 trillion won in facilities


> Attain sales of 92 trillion won, up by 10% from last year's 84 trillion won

41
Investing 10.5 trillion won, and achieving sales of 92 trillion won in 2009.

In 2009, LG is set to develop core technologies in electronics, chemicals and


other mainstream businesses, and intensively foster new growth engines.

2009 Sales and Investment Plan


2008
Change
2009 Plan Performance
(%)
(estimated)

Total KRW 10.5


KRW 10.4 trillion
investment trillion

- R&D KRW 3.2 trillion KRW 2.7 trillion +20%

- Facility KRW 7.3 trillion KRW 7.7 trillion

Sales KRW 92 trillion KRW 84 trillion +10%

USD 46.4
Export USD 40 billion +16%
billion

42
 LG PUNE

LG Pune is the branch office of LGEIL. It is located in J.M Road.

In 2004 LGEIL opened second factory which is located in Ranjangaon. This plant
manufactures all product including DVD writers and GSM mobiles. Thus it became first
company to manufacture DVD writer in India. The ODP plant aims to reach a manpower
base of 1500 people and an investment of Rs 300 crore till 2010.

LG India will become the export hub for LG Worldwide, catering to the Middle East and
African markets. The company aims to touch an export turnover of $3 billion by 2010 from
India, which will contribute to 30 per cent of the Indian arm's turnover.

Pune, India, October 6, 2004 -- LGE announced 3 growth strategies aimed at the 1.1 billion
people of India making the Indian market the second largest global production base
following China. Under this strategy LGE has projected 2008 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: penetrates the south-western market of India through the new Pune 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 Pune plant and uses it as its second-largest
global GSM handset production line after the Qingdao plant in China; and expands the
current 750 R&D staff in India to 1,500 by 2008, striving to develop premium products and
export 30% of India-manufactured products to Asia, Middle East and Africa markets by
2008.

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 Pune
plant by early next year. The Pune 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.
43
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 2008. Specifically, it will invest US$53 million in the Pune 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 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 Pune 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 2009 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%.

LG Pune is the branch office of LGEIL. It is located in J.M Road.

44
The organization structure is –one branch manager, one chief accountant, and
area sales manager of CE, HA separate for GSM, Marketing manager for CE, HA and
separate for GSM. The Pune branch has warehouse at wagoli.

B.M

A c c ou nt S R .B S I

ASI

M . G I. T.Z .ML .H .D A .M C A C A .M A CA M M .AT M G S MB S I G S M


BSI G SM

AM

D PT

45
➢ Distribution and Marketing

The company has number of dealers and warehouses. They have LG exclusive shopper.
For the marketing of the products a number of activities are followed:

1. Exhibitions are conducted from time to time.


2. Society and college activities are conducted.
3. Hoarding, Posters, banners are used so as to grab the attention of the costumers.
4. Day to day advertisement in leading newspaper.
5. Discount at festival time.
6. For dealer relationship they arrange dealer meting 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)

Visit to warehouse of LG Pune at Wagoli

✔ Logistics is the art and science of managing and controlling the flow of goods,
energy, information, and other resources like products, services, and people, from
the source of production to the marketplace. It is difficult to accomplish any
marketing or manufacturing without logistical support. It involves the integration of
information, transportation, inventory, warehousing, material handling, and
packaging. The operating responsibility of logistics is the geographical repositioning
of raw materials, work in process, and finished inventories where required at the
lowest cost possible.

✔ Logistics Management is that part of the supply chain, which plans,


implements and controls the efficient, effective forward and reverse flow and storage

46
of goods, services and related information between the point of origin
and the point of consumption in order to meet customers' requirements.

5R’s of Logistic followed by LG:

➢ Right Time
➢ Right Place
➢ Right Condition
➢ Right Cost
➢ Right Handling

 LG Pune Distribution

LG Pune comes under the western Distribution Region. This region has
following

➢ Pune

➢ Kolapur

➢ Sholapur

➢ Satara

➢ Sangli

The LG Factory is located at NOIDA & PUNE.

➢ There are three types of Warehouse-

1. Mother Warehouse

2. Branch Warehouse

3. Spare part warehouse

✔ The mother warehouse is that where the products from the factory are kept and
from that warehouse, the products are sent to the branch warehouse.
47
A warehouse is a commercial building for storage of goods. Warehouses
are used by manufacturers, importers, exporters, wholesalers, transport businesses,
customs, etc. They are usually large plain buildings in industrial areas of cities and towns.
They come equipped with loading docks to load and unload trucks; or sometimes are
loaded directly from railways, airports, or seaports. They also often have cranes and forklifts
for moving goods, which are usually placed on ISO standard pallets loaded into pallet
racks.

The Pune warehouse is located near Wagoli. It is 13670 sq. feet in area.

In warehouse 7 locations is set up for the products.

Loc 1, Loc 2, Loc 3, Loc 4, Loc 5, Loc6, Loc 7

Loc 1 – selling

Loc 2 - second sale

Loc 3 - insurance claim

Loc 4 - write off material

Loc 5 – destroy the item

Loc 6 - court case material

Loc 7 - for repair

5’s of warehouse, which the LG strictly follow:-

➢ Sweeping

➢ Sorting

➢ Systematic Arrangement

➢ Simplification

➢ Self- discipline

48
In warehouse, the products are pinup with 3-color paper to get the
knowledge about the delivery.

1. Red Card – To stop the product going into market,

2. Green card – To allow the product for delivery in market,


3. Yellow Card – After the product labeled with green, allow this to move in market.

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 (Pdt Unit to branch unit)

Report  distributed to all

In warehouse, there are two mode of dispersion of product from one place to another
within:-

49
(a) Hydraulic

(b) Manual

In addition, there are 35 fire extinguishers to prevent the accidental hazard within the
warehouse due to fire. These fire extinguishers are valid up to year 2011. One has to follow
the rule of “NO Smoking” within the warehouse.

Logistics Ten Commandments – Golden Rules

1 - Warehouse 5S – to be strictly followed – FG – 2, 5 & 7 to be properly maintained.

2 - 100% Bar-coding for all inward & outward transaction.

3 - Follow standard pick – ship process religiously.

4 – No inventory mismatch, shortage or excess – monthly 100% physical stocktaking.

5 – Nil 30+ for FG – 2, 3 & 5.

6 – Nil transit damage.

7 – File insurance claim within 2 days. Settle all claim all within 30 days.

8 – No inter – branch transfer without HO clearance.

9 – PSI feeding into system by 25th of every month. Ensure 90% accuracy.

10 – Apply physical FMFO.

Problem
1- In transit material damage checking.
2- Cost target achievement.
3- Natural events tracking.
4- Fluctuation in demand-supply

Equipments

50
1- 100% bar code scanner.
2- ERP – Invoice Generation Process.
3- Hydraulic Trolleys for material movement.
4- Pallets for safety of material.

WAREHOUSE WITH THE EQUIPMENT

WAREHOUSE: REFRIGERATOR AND CTV SECTION

➢ HUMAN RESOURCES

51
WHO WE LOOK FOR
1. Person who faithfully adheres to foundational knowledge
LG is pushing such intense hiring through its major subsidiaries, such as LG Electronics,
LG Chem, LG.Philips LCD, and LG CNS, in North America, Europe, Japan, China, India,
Russia, and other countries. LG will embark on a combined total of over 30 tours to hire
over 600 globally talented individuals with a master's degree or a doctoral degree in the
field of engineering, and science and technology.

2. Person who is highly creative


It is important to be widely knowledgeable. However, we still need young creative people
who are capable of using and applying their knowledge, to the creation of new values and
ideas. Talented individuals should tenaciously explore and seek out new things and
surpass existing methods, not at desk but on the frontline, not by knowledge but by action,
and not using abstract concepts but with practical innovative passion.

3. Person with solid opinions


We need people who have their own clear viewpoints and yet get along well with others.
We need people who possess the virtues of cooperation and accommodation. We need
those with sound thinking who will sacrifice even themselves, will participate in many
activities and thus contribute to the society. We also need people who are genuinely
honest, are equitable, and do their best to serve customers. A corporation that aims to be a
'people company' needs all these talented people.

✔ DEVELOPING TALENTED PEOPLE


Future competitiveness

Essential Education Programs by Rank


LG differentiates essential education programs by rank with a focus on five areas, the core
of which is pursuing LG management philosophy and corporate philosophy, and maximizing
educational outcomes.

LG differentiates essential education programs by rank with a focus on five areas, the core
of which is pursuing LG management philosophy and corporate philosophy, and maximizing
educational outcomes.

52
✔ ESSENTIAL EDUCATION SYSTEM BY RANK

LG executives and employees should complete essential educational courses by rank in


order to develop as core talented individuals with superior working abilities and base
knowledge.

53
 Salary System
The existing rank-based salary system has now been abolished. Salary is now categorized
as basic salary, performance-based salary, mandatory allowances, and special incentives.
Gradually the performance-based salary aspect will be expanded.

As such, existing salary items based on seniority have been incorporated into the basic
salary, while the performance-based salary share of teams and individuals will be amended
to increase gradually, motivating employees to exercise their abilities to the greatest extent.

54
55
➢ 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.

56
Therefore, research methodology is the way to systematically solve the
research problem. Research methodology not only talks of the methods but also logic
behind the methods used in the context of a research study and it explains why a particular
method has been used in the preference of the other methods.

Research design:

Research design is important primarily because of the increased complexity in the market
as well as marketing approaches available to the researchers. In fact, it is the key to the
evolution of successful marketing strategies and programmers. It is an important tool to
study buyer’s behavior, consumption pattern, brand loyalty, and focus market changes. A
research design specifies the methods and procedures for conducting a particular study.
According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of
investigation conceived as to obtain answers to research questions and to control variance.

57
✔ Title of the Study

“Marketing Analysis on LG Consumer & Dealer Development

✔ OBJECTIVES
Explained in detail next.

✔ Scope of project

My job include while visiting the shops

1. Calculate the display share of the LG product in every shop which comes under
Pune region.

2. Collect the data of actual monthly sale of the LG product in every shop.

3. Check the availability of LG catalogue and the POPs in the store.

4. Find out the problems that the dealer are facing while sailing the LG product.

5. Find out the customer response for the LG product by asking the owner of the shop.

6. Find out the distributer name from whom they purchasing their product and also
weather they have direct dealership and which brand.

7. Check that demo calls are attended or not.

58
✔ LIMITATIONS

The limits of study are itself limitations:

Firstly, hard to include all users n dealers.

Secondly, employee’s part not considered.

More explained in next pages.

59
60
✔ 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 a 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 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.

LG also had a big problem of after sale service in India. During my project I also came to
know that after sale service becomes the big issue in Pune region. Customers as well as
dealer were facing the problem of after sale service. Because of this problem many dealer
in Pune region were not ready to sale LG product. So it becomes the big issue.

But LG has taken some solid steps towards improving customer’s perception and
experience of after sales service. Because it very important in competitive market to provide
the best service.

L G Electronics has signed a memorandum of understanding with 23 Industrial Training


Institutes to strengthen its after sales service in India.

The company aims to recruit 10,000 people by the end of this year as a part of its branding
strategy to focus on service and move away from discounting.

61
L G Electronics has identified eight states with high after sales service call
rates to ink the deals with the ITI. Y V Verma, director HR and management system, LG
Electronics said, "The Company was trying to find a solution for effective after sales service
since last two years. There is a huge need of trained manpower for the after sales service
to align with the company's expansion and focus on the GSM mobiles and the personal
computer segments."

1. In the initial phase the company has entered into agreements with ITIs in the states
like Maharashtra, Gujarat, Delhi, Punjab, Assam, and Karnataka and is in the last
leg of signing with Uttar Pradesh.

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 programmes,"

4. The company will invest Rs 8 crore (Rs 80 million) in employee development


programme this year with an aim to attain an 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. (As mentioned
in Dermot’s public interview in ET on Wednesday). 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). If the next convenient day for you is the next day, that’s great too. 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.

62
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.

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.

 CONSUMER SURVEY DURING EXHIBITION

From 16th to 25th May, 2009 a consumer exhibition was organized at the college of
Engineering ground. The exhibition was sponsored by Sakal group in which number of
companies participated.

EXHIBITIONS PICTURES SHOWING THE PRODUCTS

➢ FINANCIAL REPORT

Financial Performance:

63
Turnover for 2002 Rs. 125 Crores

Turnover for 2003 Rs. 485 Crores

Turnover for 2003 Rs. 1056 Crores

Turnover for 2004 Rs. 1903 Crores

Turnover for 2005 Rs. 2216 Crores

Turnover for 2006 Crossed Rs.3315 Crores

Turnover for 2008 Crossed Rs.4500 Crores

Turnover for 2009 Crossed Rs.6500 Crores

64
✔ DEALER MANAGEMENT:-
Mapping of Pune region dealers.

In Pune region there were total 180 dealers including the up country side, they have been
divided into three categories on the basis of their turnover and the selling capacity.

➢ PUNE -1
➢ PUNE-2
➢ PUNE-3

PUNE-1 Includes the modern trade and they have direct billing from the branch office.
They have high turnover and the company depends heavily on them.

PUNE-2 includes the distributors. They have direct billing from the branch office.Their
turnover is also high.

PUNE-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.

65
 Objective of The Study:-

Primary objective:-

➢ The main objective of filed survey during the project was to find out the market share
of the LG and also calculate the display share.

➢ Find out the positional dealer who can sale the LG product in large volume.

➢ The main objective of research was to identify potential dealer and development
these dealer. So LG can make them their direct dealer.

➢ This will ease the dependence on the some big dealer like Maharashtra and
Mahaveer electronics.

➢ Find out the problem faced by the dealer in sales and the distribution.

Secondary objective:-

➢ The Objective was to find out that how far the exhibitions are helpful in branding,

➢ While purchasing the consumer durables which parameter is most important for the
consumer?

➢ Do the consumers prefer the financial facility for buying consumer durable?

➢ How frequently consumers change the consumer durable?

➢ To enhances the knowledge of consumer durable market.

➢ To increases the knowledge consumer durable product of LG.

➢ To enhances the knowledge about the marketing and branding activity.

The objective was to find out the market share of LG products, advantages, and
disadvantages of LG products from dealers and to find out what problems they are facing
with the LG products so that problems can be resolved to increase the sale.

66

➢➢

PICTURE SHOWING THE PRODUCT OF LG IN ONE OF THE SHOP

67
➢ Types of research are:-

• 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.

68
SAMPLE SIZE And METHOD OF SELECTION:

Questions and deciding the types of data to be collected and the procedure to be
used in this purpose. 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. 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 in contrast tends to be rigid and its approach
cannot be changed ever now and then.

Defining the population

The entire aggregation of items from which the samples are drawn is known as the
population. In simple words the population or universe is any complete group of People,
companies, hospitals, stores, colleges, students etc.

69
✔ Data collection methods:

Data collection is a very important step in any research. It’s the pivot along which the whole
research revolves. If the data collected is not appropriate then the whole research will be of
no use.

Data Collection basically involves collecting the relevant data from various sources may be
primary or secondary and then sorting the information so that meaningful information can
be gathered from the sorted data.

Data can be collected from two sources:

✔ Sources of Data Collection

Primary sources Secondary Sources

➢ Primary Sources:
Primary sources include the data, which are first handed. They are collected directly from
the respondents using the data collection methods like the questionnaires, survey
interviews, direct observation, or tabulation. For primary data collection, we have to plan the
following four important aspects.

○ Sampling

○ Research Instrument
➢ Secondary Sources:
Secondary sources are the sources in which data has already been collected by some
other person or organization for their use and is used by the researcher for his purpose.
These include websites, trade associations, journals, books etc.
The Company’s profile, journals and various literature studies are important sources of
secondary data.
My research is based on the mixture of both primary and secondary sources. I have
collected the information with the help of Questionnaire (primary data), journals and

70
websites (secondary data). Questionnaires have helped me to know about the
needs of the individual investors. Journals and websites have provided me the information
about the MF industry, its past and future performance. After the research problem, we
have to identify and select which type of data is to research. At this stage; we have to
organize a field survey to collect the data. One of the important tools for conducting market
research is the availability of necessary and useful data.

This survey conducted by the means of a Questionnaire. Both open and closed ended
question were put forward and a 3 point simple graphic rating scale was used at the end.
(Questionnaire attached in the annexure). The results were tabulated using simple
percentage methods.

➢ Observation Method

The observation method is the most commonly used method especially in studies relating
to behavior sciences. Observation becomes a scientific tool and the method of data
collection for the research when it serves a formulated research purpose, is systematically
planned and recorded and is subject to checks and controls on validity and reliability. Under
the observation method, the information sought by way of investigator’s own direct
observation without asking from the respondent. The main advantage of this method is that
subjective bias is eliminated and it relates to the current happenings and also the
respondent is independent to respond to a situation and can record the natural behaviour of
the group.

➢ Sampling Methodology

Sampling plays a very critical role in any research. A sample is the true indicator of
Any research methodology. The sampling can be done in the two ways:

1) Probability sampling
2) Non probability sampling

✔ 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

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No. of people met during the research: 200

No. of respondents during the research: 50

POPULATION (N): The Dealers working in LG & Customers of LG:

Existing & potential customer,

Authorized Dealers of LG,

& other brand Dealers.

= 800

SAMPLE SIZE (n): 85

✔ Sample unit

Professionals, Business man,

Employees, House wife,

Working women, Students

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✔ Scope of the study .

The scope of conducting this survey:

✔ To examine whether the Company is consulted while formulating their goals, duties,
responsibilities and standards of performance for the assessment period

✔ To find out the level of satisfaction of the customers concerning the mutual goal
setting process and to take their recommendations for the same.

✔ To examine the level of satisfaction of the dealers regarding the appraisal given to
them by their Suppliers.

✔ To find out the effectiveness of the feedback sessions provided to them on their
performance evaluation.

✔ To study whether the appraisal process has been able to provide them with a good
career path.

✔ To study the level of satisfaction with the succession planning process

✔ To find out the role of linking compensation and rewards with the appraisal process.

✔ To study the level of motivation among the employees subsequent to the


performance appraisal reviews.

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➢ LIMITATIONS

Every study has certain limitations. In my study, also there were certain
limitations, which I could not able to solve.

1. The research was conducted in a very small area.


2. My 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 me. I had only 60 days to complete my 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. I 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.

My study is not recognizable in whole INDIA as well as outside Ranchi due to


the above limitations and less area coverage.

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FACTS AND
FINDINGS

75
Dealer survey Facts & Findings

1. By calculating the display share we found that in most of store LG has 50% display
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 sale.

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 dealer who are capable of being the dealer
of LG.

4. We also came to know while visiting the shops that there was big problem of after
sale 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.

7. The top competitor of LG product in Pune is SAMSUNG.


8. In Pune area the performance of LG is in better position but the competitor also hold
closer margin.

9. There is high growth of sale in market due to booming in new technology and better
service.
Word of mouth plays a vital role in awareness among customer. This is one factor, which
can play a good role in promotion of products as well as demonstration given by the
shopkeeper also plays a vital role for customer.

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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.

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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KEY FINDINGS of Project Study:
The research findings of this survey speak of a robust and
effective policy and process of the customer n dealers system
being followed at LG India Ltd. Although there are a few short-
comings, yet, the whole process of Motivation and Satisfaction at LG
can deemed to term as Effective and Efficient.

Out of the given number of respondents:

1. 65 % of Customer has 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. Consumer also wants 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.

7. 30% of customer gives importance to price. So it shows that Indian consumers are
very price sensitive. They give more importance to price over the brand.

8. 26% give importance to brand. So price and Brand matter a lots for the costumers.
And they are also want best brand in best price.

9. 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.

10. Customers prefer to change consumer durables within 5-10 years. In India people do
not change consumer durable frequently.

11. 23% customers do not change their consumer durable within 10 year.

12. It represent that Indian consumer do not prefer to change their consumer durable
frequently.

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 Data analysis and interpretation

○ Questionnaires
○ Pie chart and Bar chart

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✔ Questionnaires:

This is the most popular tool for the data collection. A questionnaire contains question that
the researcher wishes to ask 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 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.

➢ Analysis:

Q1. Have you purchased any consumer durable during Exhibitions?

➢ Yes
➢ No

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➢ Inferences

✔ 65 % of Customer has not purchased any consumer durable from exhibitions.

✔ Only 35 % people have purchased.

✔ 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.

✔ Consumer also wants to compare to the different brand which are available in the
exhibition.

✔ So exhibitions are more useful to increases brand awareness.

✔ People are less interested to purchase product from the exhibition.

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Q.2 While purchasing consumer durable which parameter influences you?

➢ Price
➢ Product feature
➢ Brand
➢ Service
➢ Durability

➢ Inference

✔ 30% of customer gives importance to price. So it shows that Indian consumers are
very price sensitive. They give more importance to price over the brand.

✔ 26% give importance to brand. So price and Brand matter a lots for the costumers.
And they are also want best brand in best price.

✔ 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.

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Q3. From where you prefer buying consumer durables

➢ Exhibitions
➢ Co.shoppee
➢ Showroom

➢ Inference:

1. A majority of customers prefer to buy from showrooms. Very less proposition of


customers buys from Exhibitions.

2. 47% customers are prefer to by from the showrooms because the showrooms are
more convenient to customers they also think that these shops give more discounts.

3. People are less interested to buy from the exhibition they only visit the exhibition for
price quotation of the product and the comparison of the product.

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Q.4.You prefer to buy from the same as you have mentioned in Q.3
because of following reasons

➢ Attractive Price
➢ Service
➢ Demonstrations
➢ Offers

➢ Inference

✔ Customers buy from showrooms because of the service and convenience. These are
two main factors.

✔ Customers are preferred to buy from the showroom because of they think that these
convenient store may provide good after sell service.

✔ Customer also thinks that there is more chance to bargain and they can get more
discounts in these showrooms.

✔ Price also a factor that attract the customer in these showrooms.

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Q.5.Which consumer durable you have and of which brand?

➢ CTV
➢ LCD

➢ PLASMA
➢ REF

➢ WM
➢ MW

➢ AC

➢ Inference

In CTV section maximum customers have Onida, in LCD Sony is the leader, in
plasma BPL is the leader, In Ref LG is the leader, and MW LG is the leader. In
WM there are companies and in AC also.

Q.6. How frequently you change your consumer durables?


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➢ 1-3 years

➢ 3-5 years

➢ 5-10 years

➢ More than 10 years

➢ INFERENCE

1. Customers prefer to change consumer durables within 5-10 years. In India people do
not change consumer durable frequently.

2. 23% customers do not change their consumer durable within 10 year.

3. It represent that Indian consumer do not prefer to change their consumer durable
frequently.

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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.

87
SWOT
ANALYSIS

88
A SWOT analysis is an integral part of a marketing plan can- can also be part of a business
plan.

What is SWOT analysis?


A SWOT (strength, weakness, opportunity, Threats) is a tool used to provide a
general or detailed snapshot of a company health.

Why use a SWOT analysis?


In any business it is important that the business be its own worst critic A SWOT
analysis forces an objective an objective analysis of a company position vis a vis
its competitors and the market place. Simultaneously and effective SWOT
analysis will help determine in which areas a company is succeeding allowing it
to allocate resources in such a way as to maintain any dominant position. It may
have below are numerous ex. SWOT analysis for sale.

○ Strength

✔ In term of purchasing power parity (ppp), India is the 4th largest economy in the
world and overtake Japan in the near future become the 3rd largest.

✔ Indian consumer durable market is expected to reach $400 billion by on 2010.


✔ India has the youngest population amongst the major countries. There are lot of
people in the different income categories nearly the two third population is below the
age of 35 and nearly 50% is below 25.

✔ There are 56 million people in middle class, who are earning us$4,400-
US$21,800 a year and there are 6 million rich household in India.
✔ The upper-middle and high-income household in urban areas are expected to grew
to 38.2 million in 2008 as against 14.6 million in 2000.
✔ Knowledge reliance communication is ranked fastest growing company.
✔ It has loyalty of customers and vendors it is local.
✔ There are 56 million people in middle class, who are earning us$4,400-US$21,800 a
year and there are 6 million rich household in India.

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○ Weakness 
➢ Company has a large physical network so sometimes it is difficult to manage all this
in an idle manner.

➢ In comparison to strong competitors the visibility of LG Pune is not satisfactory.

➢ Customers are found only in cities.

➢ Lack of Service centre’s in village areas.

○ Opportunity 

✔ The financial strength of this group is backbone of Organization.

✔ The company provides in depth training to their employees and front line sales
Dealers.

✔ As LG target market needs more services the competitors are less likely than ever to
provide it their business model does not include service just selling.

✔ The good Brand image of organization can help and recommend organization to
proceed further with new electronic items.

✔ In India the penetration level of white goods is lower as compared to other


developing countries.

✔ Unexploited rural market.

✔ Increase in income level, i.e. increase in purchasing power of consumers.

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➢ Threats

✔ Higher import duties on raw materials.


✔ Cheap imports from Singapore, China and from other Asian countries.
✔ The strong competitors of LG. Samsung just signed an agreements with
whirlpool by which both will increase its network across country.
✔ time is going to be very tough.

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CONCLUSION

92
CONCLUSIONS OF THE STUDY UNDERTAKEN

As it is clearly analyzed from the above description LG is doing a great job in Market
Relationship. LG has done a great job in the field of public relations in the form of customer
satisfaction and providing a value to its customer base in the country. It has fulfilled its
social responsibility by organizing free health camps for its customers. LG is making efforts
to minimize environmental pollution and to prevent accidents which might occur during
business operations, to promote a policy to preserve the natural environment and contribute
to the overall health of our employees and communities where we conduct our business.
But it has a lot to do more create a good brand image for its customers so that it may
become a trusted brand for its customers.

✔ A great degree of empowerment has been viewed throughout the organization


leading to employee innovation and creativity.

✔ Delegation of authority has been done with much thought and precision making the
employees feel empowered.

✔ Mutual goal setting has proved to be very effective tools in making the employees
club their personal goals with the goals of the organization leading to the tendency of
the employees’ exhibit a feeling of “ownership” in the vision and mission of LG.

✔ Today, customer or user is very aware of its right and duties, profits and losses and
understand what is wrong or right. He takes decision after collecting information from
all sources and after analyzing them according to his requirement and benefits. LG
got this point very clear in its mind.

✔ In the past few years LG has touched the heights of success by introducing a wide
range of Gadgets and other medium of electronics which are extremely
advantageous at every step of our lives, whether it be home or office it is in our
service 24hours.

✔ The process of the system of Dealer handing was very well driven.
✔ Customers are very satisfied by Lg’s Service.

✔ The internal environment of the organization is playing much important role than the
external one.

✔ Customers buy from showrooms because of the service and convenience. These are
two main factors.

✔ 65 % of Customer has not purchased any consumer durable from exhibitions. Only
35 % people have purchased.

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✔ 30% of customer gives importance to price. So it shows that Indian consumers are
very price sensitive. They give more importance to price over the brand.

✔ Customer also thinks that there is more chance to bargain and they can get more
discounts in these showrooms.

94
RECOMMENDATION
AND
SUGGESTIONS

95
Reccomondations & Suggestions:-
1. LG should improve it’s after sale service because its hits badly LGs
market share in Pune 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 feedback 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. So
company should always improve services and update their technology.

11.Importance should be provided to every dealer equally.

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CONSUMERS 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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APPENDIX

98
QUESTINNAIRE

Consumer survey Questionnaire


Q1. Have you purchased any consumer durable during Exhibitions?

a) Yes
b) No

Q.2While purchasing consumer durable which parameter influences you?

a) Price
b) Product feature
c) Brand
d) Service
e) Durability

Q3. From where you prefer buying consumer durables

a) Exhibitions
b) Co.shoppee
c) Showroom

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Q.4.You prefer to buy from the same as you have mentioned in Q.3 because
of following reasons

a) Attractive Price
b) Service
c) Demonstrations
d) Offers
e) Convenience

Q.5.Which consumer durable you have and of which brand?

a) CTV -------------------

b) LCD -------------------
c) PLASMA -------------------

d) REF -------------------
e) WM -------------------

f) MW -------------------
g) AC -------------------

Q.6. How frequently you change your consumer durables?

a) 1-3 years

b) 3-5 years

c) 5-10 years

d) More than 10 years

100
Q.7.Do you prefer any financing scheme to purchase consumer durables?

a) Yes
b) No

101
ABBREVIATIONS

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

P.P.P Purchasing Power Parity

CTVS Color televisions

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MNCs Multinational companies

(LG) Lucky and Gold star

(LG) in current Life Good

(FIPB) Foreign investment promotion board

(LGEIL) LG Electronics India Ltd

DMS Digital manufacturing system

WM washing machine

AC air conditioners

FMFO first made first out

103
BIBLIOGRAPHY
Websites:-

➢ www.lgindia.com
➢ www.google.com
➢ www.wikipedia.com

Magazines:-
➢ Business world October 2009
➢ Business today December 2009
➢ LG magazine February 2010

BOOKS
Marketing Management (10th Edition), Marketing Management (3rd Edition), Research
Methodology (2nd Edition), Research Methodology (3rd Edition).

AUTHORS:
Philip Kotler, V.S. Ramaswamy, C.R.Kothary, S.P. Kasande

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