LG

LG in India: Reinventing the Brand

Section Break
Sec 4 - Group 8
 LG History – A Quick Review
1958
GoldStar (today's LG Electronics) LGEIL’s Beginnings :
established
1959 Korea's first radio produced LG Electronics India Pvt Ltd (LGEIL) opened on 1
April 1997 in NOIDA near New Delhi
Facts
Case Facts
Radio exported to the US and Hong Kong as
1962
Korea's first
Challenges of Perception :
Became Korea's first company to be publicly • Proving to customers it was more than just
1969
listed as Lucky Goldstar Group another Korean brand
• Convincing distributors they were worthy of a
Set up branch offices all over North
Mid – late second chance after a failed entry with Goldstar
America, West Germany, Britain and
1970’s in the early 1990’s
the Middle-East
Case

Recorded exports of more than US$100 The Fifth P :

1977
million
1995
Group name changed to LG Electronics
and launched the LG Brand
Global sales reached US$38.5 billion,
making it the world’s leading producer
2006 of CDMA/GSM handsets, air-
conditioners, front-loading washing
machines, optical storage products
• Other than the conventional four P’s ( product,
place, promotion, price) , LG strategy included a
5thth P- Pace
• On 12thth May 1997, LGEIL set up 5 branch offices
in the country and five months later 18 branch
offices were in operation
• By 2001, LGEIL’s presence was strong
throughout the country and growing with each
passing year
 The Indian Consumer
Demographic Segments

Globals Household disposable income > USD 22000 ; 2015F

Total Households = 3 million
Household disposable income > USD 11000 and <
Strivers
Case Facts
USD 22000 ; 2015F Total Households = 6 million
Seekers Household disposable income > USD 4000 and < USD
11000; 2015F Total Households = 55 million
Aspirers Household disposable income > USD 2000 and < USD
4000 ; 2015F Total Households = 106 million
• Just the Strivers and Globals will exceed
the total Household population of
Australia (7.5m) and 75 % of the
Household population of Korea (12m)
• The top 3 segments will exceed the size
of Brazil (51m), Russia (50m), Japan
(45m), Germany (40m) and UK (25m)

Deprived Household disposable income < USD 2000 ; 2015F

Total Households = 74 million

Age Structure
Psychographic Segments 0-09 years: 23%
Premium 10-19 years: 22%
17 10 Seeking 20-29 years: 17%
Upgraders
12 27 Basic Brand- 30-49 years: 24%
Trusting 50+ years +: 15%
Followers Pop. Growth Rate: 1.6%
34 Savvy Package-
Source: Census 2001, Government of
Shopper
India
 Product Strategy
Indian Consumer Needs LG’s Innovation Discovering Key Category Barriers LG’s Innovation

Indian-language
Majority of Indian consumers don’t read English On screen instructions “Watching TV causes eye strain” “Golden Eye”
Case Facts
Ballad TV “Preserve Nutrition
Big audiences on TV sets + high ambient noise “Food in the fridge goes stale”
2000 Watt output System”

Free Cricket game “Expensive clothes should not be

Cricket is the second religion for most Indians! “Fabricare”
With TV in 1999 washed in Washing Machines”

World-cup
Cricket is a second religion for most Indians! “ACs are for cooling so it is a luxury item” “HealthAir System”
Sponsorships

New Categories
The Mobile Phone Market :
• Entered the market in 2003 for CDMA handsets
with Reliance India Mobile as service provider
• Reviewed their product mix to bring down prices
as per the requirements of the Indian customer
( From INR 7000 to INR 3000 )
• By 2006, they had 15% market share in India
and were the third largest player in the segment
The PC Market :
• Research revealed that consumers mentioned LG PCs
although it was not a part of their global portfolio
• Due to its ubiquity LG was seen as a “domestic” brand
compared to HP and IBM
• Launched a integrated PC in 2004. Launched a
notebook in 2006
• In 2006 its IT distribution system covered 25,000 of the
45,000 IT outlets in India
 LGEIL : Shift in Focus
• LGEIL decided to pursue leadership in each and every category
• This resulted in greater allocation of budgets to price discounts to drive sales whereas previously it was for print
advertisements aimed at brand-building
• Due to geographic expansion, an ever-increasing part of the marketing budget was allocated for promotions at a local
level
Case Facts
• LGEIL moved from a single ad agency (LOWE) to three ad agencies(LOWE, Capital and Rediffusion) with product
based allocation of responsibilities which led to “product-based silos”
• Instead of being a strength, LGEIL’s focus on each category it operated in became the root cause of a lack of coherent
direction and brand-level synergy
• LGEIL was no longer seen as aspirational but as a low-end brand that provided value for money

Brand Equity
To stop price erosion and bolster its desired premium brand image, LGEIL came up with a simple way to
think about brand equity. The objective of the brand equity initiative was to ensure that revenue objectives
were not met at the expense of brand equity by either selling more low-end items or by offering price
discounts. LGEIL conceptualised brand equity as follows:
BE = Relative Market Share * Price Position * High End Contribution

Where, Relative Market Share – Market share in the Category Relative to the Market Leader
Price Position – Average of the ratio of the price of LG models compared to equivalent models of the
market leader
High End Contribution - % of sales revenue contributed by designated high-end products
Thank You!