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Project Report Project Report

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MARKETING STRATEGIES OF
MARKETING STRATEGIES OF
LG ELECTRONICS INDIA LTD.
LG ELECTRONICS INDIA LTD.
Submitted In te p!rti!" #u"#i""ment in te de$ree o#
BACHELOR OF BUSINESS ADMINISTRATION
Submitted To: Submitted By:
Ms.Anu Aggarwal Ankit Wahi
Project Guide oll !o."#$$%"$%"&
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:. PSP )nstitutional Area6 Madhuban .howk6 ohini6 1elhi,$$""#'6
Ph.!o: "$$,+%'''$+$6 $++6$+:6$+; 0a<: , "$$,+%'''$+"6
(mail: in7o=tiasindia.org Website: www.tiasindia.org

Acknowledgement
Notin$ concrete c!n be !cie%ed &itout !n optim!"
combin!tion o# in'pir!tion !nd per'pir!tion. No &or( c!n be
!ccomp"i'ed &itout t!(in$ te $uid!nce o# te e)pert'. It i'
on"* te criti+ue' #rom in$eniou' inte""ectu!"' t!t e"ped
tr!n'#orm ! product into ! +u!"it* product.
) would like to grate7ully acknowledge and e<4ress and e<4ress
my dee4 gratitude to Ms. Anu Aggarwal6 my teacher guide who always
hel4ed and 4ro5ided guidance during the course o7 my 4roject. ) would
like to e<tend my earnest thanks 7or her assistance in the course o7 my
4roject.
A!>)T WA?)
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BBA '
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DECLARATION
This 4roject titled AA!A@BS)S *0 S(2).(S A!1
./ST*M(SC 0((1BA.> T* STA!1A1 .?AT((1 BA!>D
being submitted by me in the 4artial 7ul7illment o7 reEuirements 7or the
awards o7 B.B.A degree 7rom Tecnia )nstitute *7 Ad5anced Studies6
A77iliated to GGS )P /ni5ersity6 1elhi.
) 7urther certi7y that ) ha5e not submitted this 4roject re4ort 7or
any other degree or di4loma certi7icate.
All sources o7 in7ormation and hel4 are authentic and ha5e been
acknowledged in the re4ort.

A!>)T WA?)
B.B.A,'
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E,EC-TI.E S-MMAR/
iii

This report is an analysis of the Marketing Strategies of LG.
LG is a Multinational Company having its presence all over the
world. A thorough study of LG Electronics how it came into
e!istence " operations of LG Electronics #ndia has $een
presented along with an #ndian industry analysis.
Analy%ing the company in the $ackdrop of the #ndian &ome
Electronics was considered to $e important $ecause it is a highly
competitive market and it is very important to know where a
company stands in this industry.
There after an intense study has $een done into LG's corporate
history its origin developments e!pansions strategies etc. A
discussion a$out LG's operations in #ndia follows and there$y the
two chosen areas i.e. marketing is discussed in the su$se(uent
sections.
The four )'s of marketing have $een discussed in detail
individually along with the product's $rand awareness under the
marketing section.
Product0 &ighlights the addition and change in the product range
of the company and the significance of each of its product lines.
i5

Pricin$0 The $asis used for pricing and how the products have
$een priced.
P"!ce0 The kind of distri$ution network used to market its products.
Promotion* All the promotion activities to promote the company's
$rand and its products in order its increase its market share.
+indings and recommendations have $een drawn keeping the
industry and company analysis in mind. Graphs " Ta$les have
$een included in the data analysis chapter.
5
TA,LE -+ C-.TE.TS
/. Company profile
0. -$1ectives of the study
2. 3esearch Methodology
4. Marketing Strategy
5. )ricing " 3elated Strategies
6. +indings " Analysis
7. 3esults " conclusions
8. 3ecommendations
9. ,i$liography
/:. Anne!ures

LG ELECTRONICS 1 COMPAN/ PROFILE
LG Electronics; goal is to ena$le the intelligent networking of digital products that will
make consumers; lives $etter than ever.
Corporate .ame LG Electronics #nc.
Esta$lished -cto$er / /958 <As a private Company=
Corporate -ffice LG Twin Towers 0:>oido?dong >oungdungpo?gu
Seoul @orea /5:?70/
Tel* 80?0?2777?///4
A3L* http*BBwww.LGE.com
Chairman " CE- Mr.>ong .am
,usiness Area
and
Main )roduct
Di$it!" Di'p"!* 2 Medi! Comp!n*
Cigital TD )C) Monitor CC?3-M Crives CDC?
3-M Crives CC 3ewrita$le 3ecorder DC3 CDC
)layer Audio Security System 3ecording Media
Dideo )hone )C Camera ,anking Automatic
System )C,
Di$it!" App"i!nce Comp!n*
Air Conditioner 3efrigerator Microwave -ven
Eashing Machine Dacuum Cleaner Compressor for
Air Conditioner Compressor for 3efrigerator
Te"ecommunic!tion E+uipment 2 3!nd'et
Comp!n*
TCF STA3EF optical switching systems
#mplementation of advanced #,S <#nformation
,uilding System= System #ntegration <S#= service
etc.
#mplementation of advanced #,S <#nformation
,uilding System= System #ntegration <S#= service
&andsets for satellite mo$ile multimedia and #MT?
0::: services etc.
.um$er of
Employees
64:80<078/4 in @oreaB 26068 overseas=

The AS G72 $illion LG group is one of the world's top
conglomerates today having esta$lished its supremacy in diverse
fields ranging from electronics chemicals etc. to trade and
services.
The LG group was $orn as HLucky Chemicals' in /947 a pioneer in
the fledgling chemical industry. Eith a pioneering spirit founder
chairman #n &wi?koo planted the seed of industry in a $aren land.
The seed grew into a dream factory for hope. Curing the /95:'s
amidst the ruins of the +rancen war the HLucky' $rand emerged as
the representative $rand of +rance offering dreams and 1oy to the
impoverished +rancen economy. LG was the first +rancen
Company to make cosmetics and to enter the synthetic resins
industry.
LG esta$lished HGold star' in /958 opening the door to the home
Electronicsin +rance. Since developing +rance's first radio in /959
LG Electronics has pioneered and led the +rancen &ome
Electronics for over four decades .LGE was also the first company
to produce the first electronic fan ,BE television. #n /96:'s with the
launch of a national economic development plan LG emerged as
the leader of +rancen industrial growth.
LG's success is ensuing the genial alliance $etween the +rancen
government and the organi%ation. The South +rancen Government
guided the five chae$ols into different industries and product lines.
#n the the $eginning of /97:'s after passing of the founder B
chairman #n?&iwi @oo Cha?@yung @oo took over as the chairman.
Ander his a$le leadership in a decade LG esta$lished more than
0: sister companies and schools increased its sales $y 26 times
its e!ports $y 9: times and confirmed its place as +rance's leading
$usiness group. #n particular it opened a central 3 " C centre the
first +rancen company to do so which served as a $ack $one for
strengthening international competitiveness.
,y mid 8:'s LG grew into a leading comprehensive chemical
company. #t e!panded its electric and electronic $usiness
advanced into the information and communication sector
e!panded its resources and materials $usiness promoted the
growth of the industrial electronics and component electronics
industry strengthened its finance construction distri$ution and
service $usiness and e!panded its none profit $usiness and sports
sponsorshipI all of which contri$uted to enhancing the image of LG
group.
LG's period of first change came in the late /98:'s. #nnovation
$ecame the key word in every aspect of management and LG
$egan to change to a (uality oriented management and adopted a
new management philosophy of HCreating value for customers' and
HManagement respecting human dignity'.
#n /995 to prepare for the coming 0/
st
century chairman ,on?Moo
@oo took the helm of the LG group. At te '!me time LG
"!unced ! $"ob!" m!n!$ement 'tr!te$* #or te 45
't
centur*6
!nd c!n$ed it' corpor!te identit* #rom Luc(* $o"d't!r to
7LG8. Even though this occurred in a very short period the LG
$rand was successfully transformed. LGE now meets the world's
customer with LG $rand. LG is known as a premium (uality $rand
with more useful functions and products popular for their superior
design.
LG8' %i'ion i' to brin$ te 7'mi"in$ #!ce8 to e%er* ome cro''
te $"obe
The JsmilingK face logo sym$oli%es five key concepts world future
youth &uman and Technology. LG $elieves that an effective
com$ination of these elements for the organi%ation. LGE has $een
e!ploring ways to develop com$ine apply technologies that would
customi%e products and services to meet customer needs and
e!ceed their e!pectations LGE is performing this task $y
identifying its focus on 3 " C centers.
-utside +rance LGE has seven 3 " C centres in Lapan Anited
States #reland and 3ussia among other countries and two 3 " C
centres in +rance. LGE's long term strategy is to e!pand its 3 " C
center $ase worldwide ad to invest 8M of the total revenue into 3
" C.
LG's $usiness strategy for the 0/
st
century is very aggressive.
#nformation and communication electric and electronics chemical
and energy multimedia $ioengineering and semi?conductors
industries will $e promoted.
LG i' !n inte$r!ted e"ectronic $ood' m!nu#!cturer t!t
oper!te' tree bu'ine'' di%i'ion'0
Mu"timedi! Di%i'ion0
The multimedia division handles a range of multimedia products
such as computers CC?3-MS -BA e(uipment information and
communications e(uipment optical data devices audio
e(uipment DC3's cam?corders printed circuit $oards <)C,= and
magnetic tapes <MT=. At present LG is placing high priority to new
$usiness which included Cigital Dideo Cisk <CDC= personal circuit
,oards <)CA= hand help )C's <&)C= .etwork computers <.C=
and other related products and hopes to capture the market at full?
thrust as these products $ecome more common in $usiness
operations. The division posted AS G 0.5 $illion sales in 0::2.
3ome E"ectronic' Di%i'ion0
This division is divided into two main product categories with Air
Conditioners washing machines refrigerators microwave ovens
vacuum cleaners etc. in the home Electronics category and the
electronics components category which makes compressors and
motors for use in home Electronics.
#n 0::2 this division posted AS G 2 $n in sales. The divisions'
products have played a significant historical role at LGE and
em$race a solid share of markets throughout the world. The
division has accelerated its glo$ali%ation strategy and has
manufacturing plants in seven countries which has greatly
enhanced overseas production and sales efforts.
LGE's home Electronics products are admired in various countries.
LGE Citrus Luicer holds the top position in Li$ya Lordan Tunisia
South Africa and in most regions of Asia. The division also leads
market share figures for Citrus Luicer in Singapore )anama
Chile ,olivia and over /: countries throughout Asia and Latin
America.
3efrigerator e!ports have increased tremendously occupying top
positions in // countries spanning every region of the world.
Dacuum cleaner e!ports are also rising rapidly as C#S market is
$eing concentrated. The division's Microwave ovens are the
leading products in Europe and .orth America. Air?conditioner
sales have increased tremendously within the last 2?4 years and
have received accolades from customers in Africa Latin America
and Eastern Europe.
Di'p"!* Di%i'ion
The Cisplay division produces TD sets <&ome Electronics= Colour
)icture Tu$es <C)T= Colour display Tu$es <CCT= Monitors <M.T=
Ceflection >okes <C+= and other display related products and has
grown rapidly amidst large scale market e!pansion. The Cisplay
Civision is fighting valiantly as the competition intensifies with price
depreciation due to competitors dumping products. &owever the
division is standing firm in the market and is recogni%ed as high
(uality $rand all across the glo$e. Eith the Chinese and #ndonesia
comple!es running full scale since'96 a vast glo$al production
network has $een created. #n the turmoil of constantly rising ta!es
the division still managed to $oost sales in 0::: $y ASG 2.6 $illion
a 07M increase over the previous year.
The company registered as the market share leader in over 0:
countries throughout Europe Africa and Latin America.
LGE has esta$lished facilities in 07 countries with a glo$al network
of 54 su$sidiaries and offices with 5:::: dedicated employees.
LG is an esta$lished $rand in more than /7/ countries offering
futuristic technology and customi%ed products that deliver ultimate
satisfaction to the consumers. LGE is now in the process of forging
its image as a leading glo$al enterprise. The products that are
manufactured glo$ally include multimedia players Dideo " Audio
products &ome Electronics #nformation systems products
Communication Cevices Cisplay products Magnetic recording
Media Electric B Electronic components.
Te comp!n*8' ne& product 'tr!te$* i' centered !round it'
di$it!" tecno"o$* !nd #e!ture' ne)t9$ener!tion di'p"!*
de%ice' !' it' core product $roup. LGE is already recogni%ed
for its technology superiority in digital television and is channeling
appropriate resources into this category to achieve growth and
leadership position.
Going forward LGE i' m!(in$ $re!t 'tride' to&!rd' re!"i:in$
it' %i'ion of $ecoming the 7;e't G"ob!" Comp!n*8 in te 45
't
centur*. As LGE pursues this vision it remains committed to
delivering outstanding products and services to customers around
the world.
LG8' .i'ion
LG ELECT3-.#CS envisions a future where life is convenient and
pleasant where living spaces are full of happiness. And where the
promise of the future we all dream of comes true.
LG Objecti%e'
Achieve gross sales of ASG78 $illion.
Secure ordinary income of 6 percent of gross sales.
Attain a return on investment of /5 percent.
,uild a $rand reputation for total satisfaction.
Create more comforta$le convenient homes electronics
companies .in every corner of our glo$al village the company is
dedicated to creating a $etter future for all consumers wherever
they may live.
LGE p"!n' to bui"d <Di$it!"
i:e
LG= !' it' premier br!nd im!$e
!nd i' m!(in$ c!re#u" prep!r!tion' to t!(e te center 't!$e in
repre'entin$ te cuttin$9ed$e e"ectronic' indu'tr* in te ne&
mi""ennium.
LG Corpor!te Identit*
LG's sym$ol mark is the most important element of the corporate
identification system. #t is the representative sym$ol of LG
throughout the world. The sym$ol mark creates a unified mental
image of LG necessary in international communication. Ee call
this mark the Jface of the future.K #t incorporates five concepts and
sentiments*
LG8' 9R 2 D
LGE has esta$lished facilities in 07 countries with a glo$al network
of 54 su$sidiaries and offices with 5:::: dedicated employees
LGE has reinforced 3 " C activities in higher digital technology to
The face made from the
Land Gsymbolizes
that hman bein!s are
the central as"ect of
or bsiness and
e#"resses the
resoltion to do or
cstomers and ensre
Red Color: reinforces an image
of warmth and familiarity with
our global customers.
get to the glo$al digital market with smart products that can
simplify life. More t!n >? o# te tot!" re%enue' !re 'pent on R
2 D e%er* *e!r. ;* te *e!r 4@@@ !t "e!'t A? te tot!" re%enue
&i"" be put b!c( into re'e!rc !nd de%e"opment.
LG nurtures its employees o$tains patents for revolutionary
products and encourage 3 " C achievement with diverse
incentive. #t's /2 domestic la$s including the LG production
Engineering research centre and our /: overseas la$oratories are
doing their at most in $asic technology manufacturing skills
(uality performance standardi%ation and design. Eith the
company internal campaign for (uality innovation LGE is gunning
for glo$al leadership in digital technology. LGE's customer?oriented
performance is $acked $y energetic 3 " C activities. 3 " C $ased
TL 0::5 looks ahead at yet to $e invented technologies and
sensational products that with deliver outstanding performance to
$etter your life
LG9R2D .i'ion0
/. +ocus on performance ma!imi%ation $ased on market leading 3
" C <0:::=
0. Create glo$al leading products <0:::?0::0=
2. Secure technological identity to lead the growth of LGE <0::0?
0::5=
R2D Appro!c !nd direction
/. Secure profita$ility $ased team work where $usiness and
technology $ecome one
0. Enhance 3 " C performance to promote production of market
driven products.
2. Encourage $usiness mindset of 3 " C teams.
LG9Str!te$ic Initi!ti%e'
Rede'i$n ;u'ine'' port#o"ioBde%e"op ne& 'tr!te$ic
bu'ine''
#t is important to revamp the company's e!isting product structure
to strategically foster our image as the $est glo$al company. Ee
need to redesign our $usiness portfolio to facilitate the $ranching
out into the new sectorsI active efforts would $e made to advance
into*
/. The software and the service sectors
0. The information and communication sector
2. The health and environmental e(uipment
4. Ma1or parts and component sector
And others $y pursuing friendly M " A's and strategic alliances with
other companies.
LG b!'ic pi"o'op*
Compete in the international market with a glo$al mindset
Ma!imi%e value for customers employees and shareholders
)ursue the $est in the class through Hmanagement $y principle'
Contri$ute to society through good Jcorporate citi%enship.K
LG M!n!$ement Pi"o'op* Cre!tin$ .!"ue #or te Cu'tomer0
The whole purpose is to create value for the products and to serve
the customers in every thing we do. Eith satisfied customers LG
will naturally continuously and consistently innovate and develop to
achieve our goal of providing the almost value per customers.
Management ,ased Esteem for &uman Cignity* )eople are the
origin of all values in all management activities. Management
$ased on human dignity helps us achieve all goals. )eople should
practice company's vision sense of value and goal in view of
ownership to the company.

LG L-G- C-.CE)T
Identi#ic!tion o# te '*mbo" M!r(
Sym$ol mark is the most important element of corporate
identification system. #t is the representative sym$ol of LGE
throughout the world. Sym$ol mark creates a unified mental image
of LGE necessary in international communication.
The sym$ol mark which represents the J+ace of +utureK
incorporates five concepts and sentiments of world future youth
human and technology.
The circle with the letters JLK and JGK sym$oli%es that human $eing
are the most important aspect of our $usiness and e!presses the
resolution to do our $est to maintain close ties with our customers
and to ensure their satisfaction.
The red color reinforces an image of warmth and familiarity with
our glo$al customers and highlights LG's challenge to $ecome a
world class company.
;r!nd M!r(
,rand mark is the most important element of $rand identification
system. #t is the representative sym$ol of LGE throughout the
world. ,rand mark creates a unified mental image of LGE
necessary in international communication.
LG in Indi!
LG Electronics #ndia Limited <LGE#L= is a wholly owned su$sidiary
of LG electronics South +rance. The company was esta$lished in
Lanuary 0::: after clearance from the +oreign #nvestment
)romotion ,oard <+#),=.
#ts earlier two attempts one in /990 and one in /995 had failed. #t
first entered the country in /990 with the Goldstar $rand name
selling &ome Electronics' in partnership with Celhi?$ased home
Electronics Company ,estavision the marriage failed to click right
from the start. Two years and a host of pro$lems later it snapped
ties with ,estaviscon and tried to form a 1oint venture with the C.@.
,irla group. That move too failed in the negotiation stage itself. ,y
then the Goldstar had ac(uired a poor reputation with dealers and
consumers alike.
Eith the change in its corporate identity in /995 worldwide from
HGoldstarK to JLGK it proved to $e lucky in #ndia only the third time
around despite $eing one of the first multinationals to hit the
#ndian market after li$erali%ation.
The company launched in Celhi in May 0::: with ten model of
color television ranging from /4 inches to 09 inchesI eight models
of large capacity Mi!er Grinder ranging from 20: lt to 65: lt and
three models of Citrus Luicer from 5.5 kgs to 0: kg and
su$se(uently launched the same in Chandigarh Lucknow Laipur
,om$ay )une Calcutta Anmeda$ad #ndore ,angalore Chennai
and &ydera$ad.
These entire products $ear the LG $rand name which the
company has decided to change from its previous $rand JGoldstarK
around the world starting from 0:::.
Today in a short span of 04 months LG has twenty si! models of
colour television ranging from /4 inches to 6: inchesI /4 models of
large capacity Mi!er Grinder ranging from /75 lt to 89: ltI seven
models of Citrus Luicer ranging from 5.5 kgs to 0: kgsI nine
models air conditionersI three models of micro wave ovensI two
DCC's and have su$se(uently launched the same all?#ndia.
The company is envisioning a total investment of AS G 089 million
<3s. /:4: crore= over the ne!t of 9 years which will give it a ma1or
manufacturing presence in #ndia in and range of white a $rown
goods as well as in a range of electronic components $y 0:/:.
Along the way the company plans to e!port products worth. G /::
million in a ten?year period is starting from the commencement of
mass production in #ndia. #t also has a plan to invest 05M of its
e(uity to the #ndian pu$lic or to an #ndian investor after 5 years of
operation.
#n the #ir't p!'e of investment from 0::: to 0::/ the company
has decided to invest ASG /:: million <3s. 5:: crore= to esta$lish
manufacturing facilities in Greater .oida. This facility will $e
capa$le of churning out 7::::: &ome Electronics 4:::::
3efrigerators 0::::: washing machines /::::: Air
conditioners and 5::::: Microwave ovens per annum. The
facility has started production since April 0::/.
#n the 'econd p!'e from 0::/ to 0::5 LG electronics will invest
G 0:: million <3s. 5:: cr= to increase its e!isting capa$ilities in
finished products and add capa$ilities to manufacture
compressors ply $ack transformers motors and deflection yokes.
After setting up of LG software Center in ,angalore in /999 LGE
also will set up an Jin house 3 " C and ACDE3T#S#.G centerK in
#ndia not only to train the #ndian employees $ut also to serve
foreign employees of LGE in South East Asia and .orthern Africa.
In #i%e *e!r' #rom no&6 LGEIL &i"" become one o# te co"o''!"
indu'tri!" ou'e' in Indi! LGE#L has already achieved a turnover
of 3s. 5:: crores in the period Lan?Luly'0::0. LGE#L $y
introducing a wide range of products to the #ndian consumers has
successfully carved a niche for itself. #ts success story is a result of
its investment in cutting edge technology and its relentless efforts
to $ring home the smiling face.
#n the past five years #ndia has attracted a num$er of multinational
companies to invest in the country offering a plethora of choices to
the #ndian consumers. Thus the consumers seek international
$rands that offer value for money as well as a high standard of
service. LGE#L ceasely strives to $e responsive to consumer
needs desires and ha$its.
Today LGE#L is regarded as one of the top home Electronics
companies in #ndia <-3G?MA3G Survey=. LGE#L has /8 company
owned and 4: authori%ed service centres across the country
where the service engineers are availa$le twenty?four hrs
throughout the week.
The consumer dura$le industry will continue to witness the growth
in demand. The company will also have to take a leap forward $y
increasing the volume of sales. #t is e!pected that in the coming
years there will $e stiffer competition. The company is taking
measures to reduce costs and improve productivity. Eith emphasis
on (uality and improved service to the customers at an afforda$le
price the company will endeavor to gain additional market share.
Also in view of the li$erali%ation of the #ndian economy company's
technical know how superiority service competence and the good
will is what the company commands in the market. The company is
optimistic of consistent and sustained growth in its $usiness.
LG Group' pre'ence in Indi!
LG Electronics #ndia Limited
LG Software
LG Chemicals
LG Construction
Production F!ci"it*
LGE#L set up its 47 acres manufacturing facilities at Greater .oida
in April 0::/. Today the factory chuns out washing machines
colour televisions Toasters and micro wave ovens.
Mi!er Grinder is e!ternally sourced from Allwyn's manufacturing
facility at &ydera$ad. Currently LGE#L has tied up with Doltas Ltd.
to source a$out 6::::: Mi!er Grinder over 2 years from Lan 0::2
to Cec. 0::5.
Doltas will product Mi!er Grinder according to the specified
standards of design and (uality given $y LG electronics. Doltas
would increase its capacity of /8:::: units to 05:::: units per
year of which LGE will $e sourcing a$out 8:M.
At present the average #ndigeni%ation level in LG products is
a$out 45 percent and it plans to increase it to 85 per cent in the
ne!t couple of years. Ehen it had started the production of air
conditioners the level of indigeni%ation was a mere 0: per cent
that shot up to 9: per cent almost instantly. &ome Electronics
would also $e reaching such levels $y the end of the year.
LG8' Production C!p!cit*
Color TD's 5::::: units
Semi Automatic Citrus Luicer 0::::: units
Air Conditioners /::::: units
Micro waves 5:::: units
Mi!er Grinder E!ternally sourced
M!nu#!cturin$
At its state of the art manufacturing plant acute cost control has
$een on the agenda from day one. Some of the ways used to
control costs at the plant are*
a. +ull?optimi%ation of resources
$. Smoothening the clock work
c. 3aising the efficiently of employees
d. Minimal inventory levels.
At the plant it is made sure that there is no wastage of material
and every thing must keep moving all the time. Since money has
time value nothing that has hogged money should lie idle for too
long.
#nventory is kept minimal for which strict guidelines are followed
religiously all through the chain. The plant keeps no more than
seven days stock of material from vendors and /5?0: days of
imported parts. ,ranch offices must have at the end of every
month 1ust 4: percent of the re(uirement for the ne!t month with
the rest $eing replenished $y the /5
th
.
Cost cutting has always $een a high priority for LG operations
around the world. #n keeping with this aim the company has $een
trying to achieve much locali%ation as possi$le as fast as possi$le.
At pre'ent te !%er!$e "e%e" o# indi$eni:!tion in LG product'
i' !bout CD per cent. The company hopes to increase that to
85M within the ne!t couple of years or so thus insulating itself
from e!change rate volatility and crushing costs in general. The
challenge is to cultivate high (uality local vendors (uickly. Ehen
LG first started making ACs in #ndia the indigenous component
accounted for a mere 0: percent of the value of the final product
$ut within a few months the figure shot up to 9: per cent level.
&ome Electronics will hit a compara$le position $y the end of
0::5.
Since the AS) of LG has $een high technology it cannot let any
defective product pass through the gates. Even ensuring that the
machines can handle #ndian conditions has $een top priority for
LG. Every product is put to an Early Life Test <ELT= which su$1ects
of to the misery of 4: degrees centigrade heat for a prolonged
period. The defect elimination programme follows a statistically
optimi%ed process of random sample checks.
Inno%!tion !t LG
At LG innovation is a policy. The management's pet phrases are
HT)# 5:' and TC3. The former total productivity innovation of 5: per
cent urges employees at all levels to increase productivity $y 5:
per cent. And the latter is the tool that helps to do thatNTear Cown
3e?engineering $y which employees especially at the assem$ly
line are directed to tear down all processes to the ground and start
afresh $y using less tine more innovative techni(ue and so on. #n
this manner it is $elieved the company is $ringing down costs for
the future and through TC3 and T)# 5: e!pects to create
significant profits this year.
Engineers at LG don't say Hno' to any idea. #f the company has to
compete in the long run it cannot do so $y merely cutting costs. #t
is innovation that wins the race even in a market as $udget
constrained as #ndia.
A;O-T LG8S COMPETITORS
Pi"ip' Indi!
)hilips is one of the oldest multinationals to enter #ndia nearly 6:
years ago. )hilips has had a fairly successful run as a ma1or player
in the television market. The company has identified domestic
Electronics personal computers and monitors software as its
target $usiness. #n the year ending Cec'98 )hilips #ndia has
notched up sales of 3s. /482 crore.
S!m'un$ E"ectronic'
Samsung electronics another +rance company launched a$out
five years $ack entered #ndia with a stake of G 5 million in the #ndia
su$sidiary Samsung #ndia electronics Ltd. in which it holds a 5/
per cent controlling share. The product portfolio of Samsung
Electrons ranges from Multimedia products home Electronics and
telecommunication product systems.
#n #ndia the company has esta$lished a leadership position in the
product categories in &ome Electronics's 44: watts Mi!er Grinder
CC $ased systems washing machines microwave over and
DCC's. #n 0::: it had a market share of 8M. The company plans to
set up a manufacturing facility for home appliance at the .oida
comple!. This facility for which the investment is estimated at
around AS G /5?0: million will have a production capacity of
5:::: units each for refrigerator and washing machines.
The company plans to set up four factories at the .oida comple!
$y the year 0::: for &ome Electronics's refrigerators washing
machine microwave over and room AC's with a total investment of
3s. 06: crore.
;PL
Crompton Ltd. the market leader in consumer electronics the
flagship company of the 3s. 2::: crore Crompton group has
turned in an improved performance in 0:::?98 over the previous
year. The company's sales have risen 25.7 per cent to 3s. /746
crore over the previous years.
The company is involved in the manufacturing of , " E &ome
Electronics and colour picture tu$esI washing machineI microwave
ovensI vacuum cleaners etc. in order to fight the onslaught of the
multinationals in the consumer electronic industry Crompton which
is in technical colla$oration with Sanyo is all set to unleash a host
of new products for the domestic consumer. #n 0::2 the company
had market shares of 0/M in &ome ElectronicsI 6.0M in
refrigerator /9.0M in washing machinesI 44.6M in microwave
Crompton is the only company is trying to face competition on the
technical front with the various M.Cs that are %ooming into the
country with their JdigitalK range of products.
Eir"poo"
This company invested in #ndia in /987 $eginning with the venture
with TDS private limited. #n /994 TDS Ehirlpool Ltd. changed its
name to Ehirlpool Citrus Luicer Ltd. #ts dominance is mainly in the
white goods industry. #t /995 Ehirlpool re(uired controlling interest
in @elvinators of #ndia one of country's largest manufacturing and
marketer of refrigerators. #n /999 the company is in the process of
manufacturing Glo$al .o. frost Mi!er Grinder in the forthcoming
pro1ect.
#ts market shares in 0::4 wereI Mi!er Grinder /9.2MI Citrus Luicer
/4.6M.
IF;
#+, stands for #ndian fine $ank. #t started its operations in /989
when it launched its first washing machine. #t has a significant
presence in the high end Citrus Luicer market with its fully
automatic washing machine. #+, has plans to increase its
customer $ase $y increasing its product range. Currently the
company is into the manufacture of microwave ovens
dishwashers and clothes dryers. #ts market shares in 0::4 wereI
Citrus Luicer 6.5I microwave 00.4M.
Amtre) 3it!ci
#t has strategic alliance with &itachi Ltd. of Lapan. #t entered white
and $rown goods market in #ndia a$out seven to eight years $ack
and is aiming at a market share growth $y /6M. #t is ma1ority into
the marketing of high end AC's each in split and windows segment.
#ts market shares in 0::4 were* air conditioner 0/.0M.
Godrej GE E"ectronic'
The company has posted a loss of 3s. 6: crore in /999. #t posted
a 2: per cent growth in sales volume in the refrigerator $usiness
during the si! N month period ended Cec'97 higher than the
industry average. Godre1 is the market leader in the refrigerator
segment. #n 0::/ it recorded a market share of 2/./M. #n the
Citrus Luicer segment it recorded a market share of 5.5M. #t is the
only national player in the cooking range market in #ndia. #t is a
also planning to venture into $usiness like water purifier systems in
the near future a strategy which has ena$led it to $ecome a multi
appliance company.
E"ectro"u)
A, Electrolu! the world's largest manufacture of household
Electronics reached an agreement to o$tain ma1ority ownership in
an #ndian Citrus Luicer manufacturerI #ntron Ltd. Electrolu!
invested AS G 0.4 million in the step to o$tain 5/M ownership in
#ntron Ltd. #n /995 it took ma1ority control of Mahara1a #nt'l Ltd. an
#ndian refrigerator manufacturer. Eith these two manufacturing
$ases it even has 4:M stake in Eureka +or$es Electrolu! plans to
launch a wide range of environment friendly household Electronics
in #ndia. The company has presence mainly in the refrigerator and
Citrus Luicer segment. #t has $een launching world class products
in #ndia at regular intervals. 0::2 witnessed the launch of seven
upgraded world class models of @elvinator refrigerator. #n 0::/ it
launched premium Gold collection from @elvinator. Market shares
in 0::4 were* refrigerator 9.7M.
S.E.O.T. ANAL/SIS OF T3E ORGANIFATION
Stren$t'
)remium pricing no discounts
+ocus on technology and (uality
Strong commitment from parent
#n N house manufacturing capa$ility
)roducts locali%ed to suite #ndian tastes
Ee!(ne''e'
Lack of transparency with dealers
+ocus on niche segments
Cominance of +rancen work culture
Little presence in A", class towns
Opportunit*
Convert image into market share
Eide product portfolio
)ositive ru$?off due to high (uality
&ealthy resource generation
Tre!t'
Eay $ehind market leader
Stagnant ur$an demand
.othing uni(ue a$out strategy
&ighly competitive market
M!r(etin$ Str!te$*
#n a short span of 1ust 06 months since its inception in May 0::6
te br!nd !' !tt!ined ! br!nd !&!rene'' "e%e" o# !bout G@?
in te con'umer dur!b"e Indi!n m!r(et.
Considering the fact that LG electronics is a +rancen multinational
entering the #ndian market meant esta$lishing itself in a different
market altogether with varied culture and consumer tastes and
preferences. Also that so many multinationals are sweeping into
the country it is evident that each and every company has a
cutting edge over another. Te'e $"ob!" corpor!tion' !re
de%i!tin$ #rom teir intern!tion!" metodo"o$ie' !nd
impro%i'in$ teir 'tr!te$ie' #or "oc!" m!r(et'.
LG's locali%ation of strategy covers the following areas*
Entr* Str!te$*0 #t is always $etter to esta$lish as fully owned
su$sidiaries. #t is considered $etter if the company has a local
partner $ut since LG's earlier two attempts had already failed it
decided to do it all alone this time. Te 'tr!te$* t!t LG !'
!dopted i' pre'entin$ !n Indi!ni'ed #!ce to it' product' but
(eepin$ te tecno"o$* !t $"ob!" "e%e"'.
Oper!tion'0 LG opted for starting its own manufacturing facility at
Greater .oida. The 0: month schedule to commission its
manufacturing plant was compressed to /: months. The company
decided to go in for a green field pro1ect rather than ac(uisitions or
mergers. <+or all products e!cept refrigerators=.
Product'0 LG decided to go in for Product Ad!pt!tion Str!te$*.
Glo$ally LG does not operate in the direct cool refrigerator semi
automatic Citrus Luicer and 0/ inch &ome Electronics;. ,ut the
company had to develop these products for the #ndian market
$ecause these areas constitute a ma1or $ulk of $uys for the #ndian
consumer. Also LG launched sampoorna #ndia;s first TD with a
devangiri script on screen display on the 5:
th
anniversary of #ndian
independence. LG's strategy of locali%ing its products to suit #ndian
tastes added to its strength.
Se$ment!tion0 The Company decided to enter the high end
middle?class onward segment in the initial stages since most of
the #ndian $rands were targeting the low and middle end
customers. #n the past 2 years due to LG's distinct strategy it has
carved a niche for itself in a crowded segment of 0:
manufacturers.
;r!nd0 The Company launched its products in country with JLG
the glo$al leaderK. #t did not opt for any esta$lished $rands in the
country to $e associated with it.
Le!der'ip0 At LG electronics keeping the locali%ed strategy in
mind an #ndian heads the strategic areas such as sales and
marketing. Generally it happens that the senior management is
deprived of #ndians in a transnational $ut LG did to want to follow
this path it wanted that the marketing division $e headed $y an
#ndian $ecause he would $e versed of the #ndian market and
cultures. Altimately it is this which determined whether the
company wants to make profits or o$tain a market share. LG
definitely wants to $e the leader in the home Electronics industry.
Seeing the progress that the company has made in the past 2
years it has revised its plans for $ecoming the num$er one home
Electronics Company to the year 0::4 from 0::6. The company
even plans to $reak even this year. ;* te *e!r 4@@> it' turno%er
in Indi! &i"" compri'e ne!r"* 4 per cent o# it' $"ob!" turno%er.
This is significant for a multinational that has $een in the market for
1ust two years.
,efore launching itself in the market in 0::2 it carried out an
e!tensive research study to understand consumer motivations to
create magnetic products price them strategically position them
sharply and keep making the magnetism more potent. &aving
understood the finer differences in consumer motivations it opted
for sharp arrow Hreason to $uy' differentiation over the $lanket all?
approach <category wise= taken $y most of the other players.
After the initial preliminary market studies the sales" marketing
department decided to start off with 2 product categories*
Color televisions
Citrus Luicer <Automatic=
Mi!er Grinder <2:: lt O ++=
Eithin the first 4.5 months the company went all?#ndia. As the
company $usiness $egan to rise LG introduced the following
products to e!pand its product portfolio*
Air conditioners
55: watts refrigerator
Semi automatic Citrus Luicer
Microwave ovens.
#n a $road perspective LG's sales and marketing success can $e
attri$uted to its7 )'s of marketing. #n addition to the products
price place and promotion the key factors that have
contri$uted to LG's success are the following 2 additional )'s*
P!ce6 Peop"e !nd P!''ion
The most important winning factor of the sales and marketing has
$een its H)assion'. #t is this attri$ute within all the workers that
drives the other 6 )'s.
&owever LG's Marketing Strategy is $ased on 2 )'s apart from the
conventional 4 )'s of marketing*
Premium pricing to maintain margins
,reathtaking P!ce to create riches
Ceep Penetr!tion to increase volumes.
Premium Pricin$0 LG electronics was one of the late entrants the
/8
th
player. Ehile other companies were 1ostling to play the low
price high volumes game LG decided to concentrate on the high
end of all the product segments.
The ma!imum price of a &ome Electronics was 3s. 0/::: for a
0/inch model was /: per cent higher than Sony's prices. Since
most of the competitors were catering to the lower and middle
segments LG decided to concentrate on the premium segments.
To cultivate the image that LG was a leader is $oth technology and
(uality innovative products ware launched* Golden Eye &ome
Electronics whose picture ad1usts automatically according to
e!ternal light conditions and Mi!er Grinder with preserve .utrition
system that keep perisha$le foods nutritious.
Also a premium image precluded the company from offering
discounts or resorting to e!change offers. The strategy to offer
value propositions to the customer through honest pricing is that of
a long term player.
Any ways LG's (uality products and competitive prices have $een
accepted in the market place considering its 9:M $rand
awareness.
P!ce0 The Company did not want to waste anytime $eing among
the last to enter the market. The 0:?month schedule to commission
its manufacturing plant was compressed to /: months. #t also
decided to go in for a nation wide launch and appointed /:::
dealers in 1ust 5 months in 0::2. +inally the company entered 2
product categories simultaneously ensuring ade(uate retail?space.
The company was a$le to $uild up the market for its products
faster than it would have $een a$le to do so if its had launched one
product at a time and marketed them region wise.
&owever to keep pace with the competitive market place it will
have to launch models with innovative features at regular intervals.
+or e.g. the proposed launch of a digital TD $y 0::2 and many
other digital products is a step towards this direction.
Penetr!tion0 )ace was followed $y aggressive penetration having
esta$lished /8 $rand offices and C"+ agents in Goa and
)ondicherry to take advantage of the sales ta! $enefits in these
areas and towns like 3anchi 3aipur and .agpur the company has
e!panded its dealer network to 05::. ,y the end of this year this
will rise to 05:: dealers. To cater to the rural rich the company's 8
mo$ile vans cover nearly 45:: km of the hinterland around the 4
metros every month. All this $acked $y an estimated annual ad
spend and market support e!penses of 3s. 08 crore in 0::2.
LG8' m!r(etin$ 'tr!te$* re%o"%e' !round !$$re''ion &it
di##erenti!tion. LG8' product' !re di##erenti!ted !' 'uperior
tecno"o$* product'.
LG $elieves in JDalue MarketingK. #t is e!actly opposite of what
Akai Stands for. Akai is pushing volumes $y sacrificing value. -n
the other hand LG is sacrificing volume for value. The refusal to
interpret #ndian price sensitivity as value?insensitivity seems to
have pushed LG in to delving deep into consumer $ehavior for
insights missed $y e!cessively self?centric companies. The $ig
gain of doing it this way of course is pricing power and maintaining
this will remain crucial.
LG announces new market strategy
LG;s new strategy aims to focus on the premium segment of the
market that fetches greater margins as opposed to volumes. The
company claims this will $enefit its consumers channel partners
and stakeholders as it focuses on products that drive rapid growth
and lead in their $rand category to create value for customers.
Market studies indicate the demand for lu!ury consumer goods in
the Middle East is $urgeoning as a result of the high per capita
income and (uality savvy consumers with increased purchasing
power. LG en1oys high $rand recognition in the region it is the
second most recognised electronics $rand with 55.7 per cent
unaided $rand awareness according to the 0::4 Gallup $rand
e(uity inde! survey which represents high purchasing pro$a$ility
for its premium products.
;Even though LG has strong $rand awareness in the region the
sales of our premium products in the Middle East need a $oost. LG
is already the world;s top selling $rand in terms of air conditioners
microwave ovens and canister vacuum cleaners. The goal of LG;s
Cigital Appliance Company is to $ecome the num$er one $rand
worldwide in the home appliance sector $y 0::7 and increase
glo$al sales to ASG /4 $illion. Ee are focusing our production and
marketing efforts on high end products in the appliances market.
To keep pace with our growth we now need to fine tune our
marketing strategy and focus on premium products; said Cavid
)ark vice president and head of overseas sales and marketing
LG Cigital Appliance Company.
To succeed in its premium marketing efforts )ark said LG would
concentrate on staying ahead of the technology curve and develop
products that deliver high value to consumers. )ark also
announced a new channel marketing strategy to reward its
distri$utors and $uild on its channel successes in the region. LG
has developed a C3M program called the ;Ciamond Clu$; to drive
the sales of premium products. Sustaining one market price in all
stores maintaining a price gap with main competitors to retain a
premium image uni(ue promotions for target customers and well?
trained customer care e!ecutives are features of this channel
initiative.
;Ee are committed to investing marketing and training resources to
educate the channel on the $enefits of delivering cutting?edge
mo$ility digital convergence and appliances to customers in these
markets; said )ark.
+ocusing on the premium segment in the appliances market will
help LG overtake competitors such as Ehirlpool of the ASA and
Sweden?$ased Electrolu!. #n the Middle East LG is aiming for
overall regional sales of ASG r0.8 $illion this year a 24 per cent
growth over 0::4. Since /999 LG;s Cigital Appliance Company
has $een posting over 0: per cent growth in sales every year
compared to the four to five per cent average growth rate in the
glo$al home appliances industry.
;To date our ma1or revenue earners have $een commercial and
residential air conditioners microwave ovens refrigerators
washing machines and vacuum cleaners. Ee intend to continue to
$uild on these core product categories as well as to focus on future
sources of growth in areas such as central air conditioners
<CAC;s= $uilt?in appliances ovens dishwashers and plasma
lighting systems; )ark added.
Around 48 representatives from LG;s regional distri$ution network
in the AAE Patar ,ahrain -man @uwait >emen @SA #ran and
Turkey participated in the forum.
Product O##erin$' 2 Re"!ted Str!te$ie'
LG has right from its inception launched a series of state?of?the?art
technology $acked products. The sales and the marketing
department keeps altering " refining the product portfolio
according to the re(uirements of the consumers.
LG Electronics has the following product lines
i. Colour televisions
ii. 3efrigerators
iii. Eashing machines
iv. Air conditioners
v. Microwave ovens
vi. DCC players <not all that popular=.
#nitially in 0::6 the company had launched only /0 models of
&ome Electronics 8 models of Mi!er Grinder <2:: lt O frost?free=
and 2 models of fully automatic washing machines. Gradually as
the company showed signs of profita$ility it e!panded its range of
products in its portfolio.
The increase in the product range can $e 1udged from the following
ta$les.)roduct range <0::5?:7=
/e!r CT.8' Re#ri$er!tor' E!'in$
M!cine
AC8' Micro .CD
FF DC FA SA O%en
0::5

0::6

0::7

Number o# mode"' H4@@D9@IJ
/e!r CT.8' Re#ri$er
!tor
Citru'
Kuicer
AC8' Micro&
!%e
o%en
.CD
FF DC FA SA Sp"it
0::5 /0 8 2
0::6 /4 8 2 7 4 0 0
0::7 /6 9 2 2 2 7 4 2 0
Terms used*
++.? +rost free
CC N Cirect cool
SA N Semi Automatic
+A?+ully Automatic
)roduct features of any company product are the competitive tool
for differentiating the company products from other products. The
features of LG's products are discussed in detail in the following
su$sections.
i. Co"our Te"e%i'ion
Ehen LG launched its range of &ome Electronics in 0::2 it was
caught amidst at least /8 competitors all over #ndia in the industry.
Ehat it needed was a AS) to its range of &ome Electronics apart
from competition.
#t launched its TD with the JGolden EyeK range <this was a
simultaneous glo$al launch= which it positioned as the right set for
wrinkle free viewing.
Eit ti' di##erenti!tin$ 'tr!te$*6 tod!* LG9i' !t number #i%e
po'ition' in te CT. m!r(et &it ! m!r(et 'i:e o# G.4L
percent.
#n order to meet the needs of the #ndian rural market LG launched
on /5
th
August 0::/K sampoarnaK television #ndia's first TD with a
devanagri script on Nscreen display. This TD was afforda$le
consumer friendly and designed for the rural market.
+ollowing are the range of TDs offered*
LG golden Eye.
LG 3oving Eye TD
&ome Cinema
LG Super +lat wide vision
LG +latron
LG Go"den E*e* #t is considered to $e the world's first television
that provides wrinkle free viewing. #t consists of a light sensitive
natural an LGorithms HE>E' and an advanced circuit developed $y
LG. The HE>E' automatically ad1usts colour $rightness contrast
sharpness tint and white $alance in response to any change in
am$ient light conditions. This ensures that one en1oys unmatched
picture (uality without straining the eyes.
-ni+ue #e!ture' o# ! LG T...0
Super #"!t T.0 The features of the completely flat screen picture
tu$e designed $y LG's own technologies are* reduced outer
light refection $etter focus from screen centre to corners and
(uick start electron gun.
Mu"ti &indo&' PIP0 This function displays 9 or 4 su$ screens
on the TD screen with 2?second updates. Any of these can $e
selected for main screen viewing at the touch of a $utton.
Co"our 't!tu' memor*0 This feature allows users to en1oy
picture with their preferred colours.
C!nne" 'c!n0 This is very useful when users want to see
which program is showing on each channel. Lust $y touching a
$utton one can see every channel for a while.
G!me mode0 This is an e!isting in $uilt 2 level electronic game
H)ower ,all' which one can play when ever one does not feel
like watching a TD program.
Auto .o"ume "e%e"er0 The sudden changes in volume <different
sound levels of each $roadcasting centre= which is e!perienced
when you switch channels are automatically eliminated with the
help of a smart circuit to ensure a comforta$le uniform sound
level across all the channels.
Mu"ti L!n$u!$e OSD Menu0 Gives users an option to have the
entire on screen display of the menu in English &indi Marathi
Tamil and ,engali.
L ;!nd Gr!pic E+u!"i:er0 Allows to tailor the sound (uality
according to personal choice.
Turbo Se!rc0 Searches and memori%es channels /0 times
faster than other ordinary TDs.
LG claims that none of the features cited a$ove are availa$le in
the competitor products.
LG Ro%in$ E*e0 TD with a $uilt in security system. #t has a door
ringer with an in $uilt security camera. -nce put on the door the
camera can $e connected to the TD any time a caller presses a
ringer at the door the TD indicates through a $eep and a live visual
of the caller appears on the screen.
LG has launched its JF"!tron Te"e%i'ionK $y the year 0:::. #t has
already starting pu$lici%ing for this TD and has made advance
$ookings open.
The uni(ue features that this TD would offer vis?Q?vis competitors
are*
5@@? #"!t picture tube0 .il light refraction for clearer and most
realistic screens images.
Di$it!" 5@@ 3
:
0 +or flicker free viewing $ecause of dou$le
scanning speed than ordinary TDs
Di$it!" E*e0 To create wrinkle free viewing
Picture9in9picture0 Cisplays su$ screens on the TD.
Picture9out9picture0 Compress the main picture of the screen
while sowing )#) pictures too.
LG has models ranging from /4 inches to 42 inches wide screen.
+ollowing is the range*
/4K inches 2 models
0/K inches 9 models
09K inches 4 models
20K inches / model
42K inches / model
The company has more variety in the 0/K inch segment $ecause
the &ome Electronics market is dominated $y regular 0/inch sets.
ii. Re#ri$er!tor'
#n the domestic Grinding segment there are two types*
a. 55: watts* This Mi!er Grinder cool through the direct contact of
air with the cooling coils $ound around the free%er. This system
has several draw$acks* #ce forms fre(uently around the coil?
reducing cooling efficiency and creating the need for manual
defrosting. Additionally also the temperature distri$ution is
uneven with the various compartments.
$. 44: watts refrigerator* is designed to overcome the draw$ack of
conventional refrigerators. &ence the cooling coils are located
outside the stroke area. .o frost even forms inside these thus
giving high cooling efficiency and ma!imum storage space all
the time.
LG entered the refrigerator market with 2::lt. 44: watts models. #t
introduced 8 models initially and now it has a 9 models in the 44:
watts type and 2 in the 55: watts type. After esta$lishing itself as
the market leader in the 2::lt. plus 44: watts Mi!er Grinder with a
share close to 27 percent in 0::5 LG is now targeting the 55:
watts segment which is the fastest g rowing category among
refrigerator in #ndia <nine out of every /: models of fridges sold in
#ndia are 55: watts inside=. At present its market share in this
category is one 2 percent.
#n 0::0 it launched three new models of CC Mi!er Grinder in /75
litre 0/: litre and 05: litre.
LG has the following models of refrigerator availa$le*
i. 2 models in 55: watts* /75 litres 0/: litres and 05: litres.
ii. 8 models in 44: watts* 22: litres 26: litres 28: litres 4:: litres
4/: litres 46: litres 57: litres 64: litres.
iii. C#-S 72: litre model* Celu!e #ntelligent -ptimum Silence.
+rom the a$ove three categories category <i= is catering to the
middle class segment category <ii= is catering to the middle upper
and upper class whereas category <iii= is catering e!clusively to
upper elite class who are seeking the trendy and rich lifestyles of
the west in #ndia.
LG8' Mi)er Grinder !' been po'itioned !' ! nutrition
pre'er%er %i! it' PN '*'tem.
PN '*'tem HPre'er%e Nutrition '*'temJ0 The ). system
comprises the +.#.3. Lamp the moisture controller and the
Ceodori%er. The three works together to counter factor that cause
unpleasant odors degeneration and staleness of food. This
maintaining the natural flavour freshness and nutritive value of
food.
The uni(ue features of a LG refrigerator are*
Super coo"in$ '*'tem0 if one wants to cool lots of food in a
short time for a party for instance= the super cooling systems
&#?speed fan will let out cool air much faster and more
powerfully.
Focu'ed coo"in$ '*'tem* Ehen a new item is placed
anywhere in the refrigerator a $uilt in neuro fu%%y control
system detects the item and chills it instantly $y concentrating
cool air on it. #t is the $est and the most efficient cooling system
for refrigerators.
Neuro Fu::* contro" '*'tem* Eith the help of various sensors
and a micro computer this system provides $ehavioral control
functions. #t calculates the least used moments for defrosting
automatically ad1usts the refrigerator temperature when there is
a change in the room temperature.
En%ironment #riend"** LG has converted its entire 2:: ++
range to C+C free compressors. The C+C <Chloro flouro
car$ons= free gas does not deplete the o%one layer and does
not add to glo$al warming.
Acti%e c!rbon #i"ter* Effectively a$sor$s unpleasant odors from
onions stale milk etc.
Moi'ture Contro""er* Maintains the humidity at an ideal level
keeping fruits and vegeta$les nutrition last longer.
Dio' Re#ri$er!tor HDe"u)e Inte""i$ent Optimum Si"enceJ0 This
72: lt. refrigerator was launched in August 0::0. It i' con'idered
to be te #ir't refrigerator of its kind in the countryI C#-S has the
world lowest noise level and lowest power consumption.
#t is a super premium product launched in the top four metros. The
company has taken a focused approach towards this product
$ecause these are the markets which will prove instrumental in
the success of such state of the art technologies.
Te t!r$et !udiences are the top end customers who are seeking
the trendy and rich lifestyle of the west in #ndia. +oreign diplomats
.3#s and top e!ecutives constitute this segment.
LG is confident that with 44: watts Mi!er Grinder doing well in the
#ndian market the future for such super premium category Mi!er
Grinder is $right.
This product would $e displayed at select counters within the
targeted 7?/: towns.
The company feels that the successful campaign of its ). system
Mi!er Grinder in the ++ segment is $ound to have a spillover effect
on this new segment.
This refrigerator is directly imported from +rance and a team from
+rance e!tensively trains the service engineers for this product.
Te uni+ue #e!ture' o# ti' product !re0
Eorlds lowest noise level
Eorld lowest power consumption
C+C free
Aniform #ce making dispenser with one touch system
,uilt in home $ar.
Tempered glass shelves
Ani(ue electronics temperature control system.
LG Fre' M!'ter
55: watts Mi!er Grinder come under this category. They give more
space along with $etter value for money. The interiors are
e!tremely fle!i$le to comforta$ly ad1ust shelves and accommodate
all the food.
#t is targeted at the mass market keeping the #ndian industry trends
in mind.
-ni+ue #e!ture'0
Dersatile and convenient
Anerring efficiency
Great looks
Strong compressor for cooling
iii. Citru' Kuicer
#n the Citrus Luicer category there are two types of machines*
a. Semi Automatic* Aser has to transfer clothes $etween the
washing and drying compartments manually.
$. +ully automatic* washing and drying is done in the same unit.
LG has a$out 6 models of Citrus Luicer availa$le in the market out
of which three are fully automatic and three?semi automatic.
The company introduced Citrus Luicer in the market in 0::/. The
company has entered the semi automatic segment $ecause $ulk
of Citrus Luicer $ought is semi automatic. Eorld over the company
does not cater to this category.
LG has a 27 percent share in the market in the fully automatic
Citrus Luicer market. #n the semi automatic category it has a /0
per cent share.
Product po'itionin$0 LG8' Citru' Kuicer !re po'itioned !'
m!cine t!t c!re' #or te #!bric= %i! it' #!bric!re '*'tem.
The technology used in its products in the Chaos punch O2.
C!o' Punc ML &!'* a water punch that detangles clothes
$efore washing them <efficiently=. The punch propels water through
every pore of the fa$ric and HO2' are 2 additional pulsates
<technology used $y LG=.
LG's Citrus Luicers are availa$le in the following models*
i. H)unch wash' semi automatic * 0 models of 6 kg capacity
ii. HClean master' semi automatic* 7kg capacity.
iii. HTur$o Crum' fully automatic* 2 models in 5.5kg 6 kg and
/: kg.
F!bric!re '*'tem
LG has introduced this system to its range of washing
machines. #t is a distinct principle that helps preserves life of the
fa$ric. Ehenever clothes are ru$$ed against hard surfaces like
agitators to remove dirt the fa$ric wears out. Clothes get
tangled and are stretched out of shape. E!cess detergent and
improper rinsing makes fa$ric loose its original feel and colour.
The fa$ricare system has a washing action that creates powerful
water currents and water )unch to give clothes a cleaner more
effective and tangle free wash.
7Punc &!'8 'emi !utom!tic0
This is the Eorld only Citrus Luicer with twin tu$ along with
)unch technology.
Lust within a 2 months of its launch in May'98 the LG )unch
wash $ecame the largest selling semi automatic Citrus Luicer in
the 6 kg and a$ove category in towns and cities across the
country. Since then it has sold a$out 9484: machines.
The single most important factor that contri$uted to the success
of )unch wash is the fact that it is designed on the $asis of a
deep understanding of consumer needs. The uni(ue features of
this product are*
Punc tecno"o$** The gushing upward movement of water
removes directs effectively. Creates water whirls to wash
clothes much $etter than other types of conventional washers.
)revents damage to the clothes $y using water rather than
friction to clean.
> ($9t&in tub* This is the first twin?tu$ Citrus Luicer to $oast of
a 6kg capacity.
Tou$ &!' tub* made of a high impact resistant material
called polypropylene that makes it longer lasting. Ani(ue water
dynamic pulsates that's designed to give the cleanest wash.
Spin tub* The capacity of spin tu$ matches with the wash tu$
such that all the clothes that have $een washed can $e dried in
one go.
7C"e!n M!'ter8 'emi !utom!tic
This is the #ndia's $iggest front load tum$le wash machine with
greater load capacity.
#ts washing action involves an e!tra rinse option and a suds free
system ensures that every $it of detergent is washed away from
your clothes.
The uni(ue feature s of this product is*
Lum$o drum <7 kgs=
)owerful dual filter
Economical water consumption
Low noise level
Suds free system
7Te Turbo drum8 #u""* !utom!tic
This Citrus Luicer provides with features that are uni(ue to LG. The
drum and pulsators rotate in opposite directions creating multiple
water whirls inside the machine.
The uni(ue features of this product are*
The tur$o drum
)ulsators
Triple water punch
Triple water fall system
Low power consumption
4 wash programs.
i%. Air Conditioner'
LG's Toasters were launched in phase ## in Lan'98. #t launched its
Toasters as J&ealth Air ACsK
There are two types of AC sold $y the company*
a. Split type
$. Eindow type
-n the whole there are a$out 9 models of ACs availa$le in the
market.
3e!"t Air S*'tem0 This system guards against heat dust and
pollution with its uni(ue anti?$acteria filter it drives air $orne germs
out of the $oundary. #ts de?odori%ing filter does away with
unpleasant odors. And the anti?fungus electrostatic air purification
unit traps dust particles as little as :.:/ microns and even smoke.
#t's HChaos' Logic airflow system creates natural air currents and
cools in gentle puffs rather than with $lasts of wold air. Thus it
prevents any unhealthy a$rupt drops in the $ody temperature.
Te uni+ue #e!ture' o# LG To!'ter' !re0
-ni+ue !ir puri#*in$ #i"ter'* The filtering system utili%es two
filters. The electrostatic filter removes the finest dust particles
as small as :.:/ mm and even to$acco smoke and pollen. The
de?odori%ing filter removes unpleasant odors especially those
caused $y air$orne fungi.
Eor"d8' #ir't 7C!o'8 "o$ic AC8'0 The most pleasant airflow for
the human $ody can $e found within nature. Countless data and
verification have resulted in the application of the new HChaos'
theory to LG AC's. This is a technology that reviews more
natural air $y controlling the angle and speed of the movement
of the vane.
Eor"d' +uiete't AC8'* To provide a comforta$le pleasant and
well $alanced environment LG AC's utili%ed a streamlined air
fan and a uni(ue design which create smooth air flow from the
air conditioner so that it operates under the lowest noise level
with the $est structure for the air path. The amount of friction
has $een decreased providing the (uietest Acs in the world.
Fo""o&in$ i' te r!n$e o# mode"'0
i. Split AC's N /.:T /.5T 0.:T 0.5T
ii. Eindow AC's N:.75T /.:T /.5T 0.:T
LG is launching the Di$it!" P"!'m! AC for the new millennium.
This AC has a Cigital Laser Sensor that detects hot areas in the
room $eing cooled and focuses air on those areas there$y
providing uniform and efficient cooling.
Di$it!" p"!'m! AC0 Air C"e!n M De9odori:!tion M A""er$*
Pre%ention
The uni(ue features of this AC are*
Anti9;!cteri! #i"ter* #t removes dust in the air as well as inhi$its
$acteria proliferation making the indoor atmosphere healthy.
LG AC would $e 98.5M $acteria free.
Neuro Fu::* Contro"* According to the temperature air volume
and air velocity the sensor will automatically operate creating a
more pleasant atmosphere.
I93our onBo## Timer* this function allows setting the timer from
one hour to a ma!imum of 7 hours.
Ci"d Loc( Function* This function presents children or others
from tampering with the control $uttons on the unit. All the
$uttons on the indoor display panel can $e locked. The unit can
then only $e controlled $y remote.
%. Micro&!%e o%en
LG launched microwave ovens in the second phase in 0::/. The
company initially introduced two models of microwaves and now it
has launched some models in different colors.
)roduct positioning* LG8' o%en' !%e been po'itioned !'
<3e!"t &!%e coo(in$ '*'tem=
LG's microwave ovens have gone $eyond the status sym$olism
and practical versatility that other $rands have tried to use. The
market for microwaves was at 65::: units in 0::/ and this is one
area that the company wants to e!plore.
#n 0::5 it plans to sell a$out 7:::: units which is almost e(ual to
the entire market in 0::6.
3e!"t &!%e coo(in$ '*'tem0 LG's health wave system has
JMultiwave technologyK which other microwaves don't have. This
feature creates multiple emissions that help to ensure that the
entire dish is cooked ama%ingly evenly and fast. #t has a twin
source of emission from the top and the $ottom making it far more
efficient than any other microwave.
Cue to dou$le emission technology there is a higher microwave
interaction with the food which results in faster and even cooking
right to the core of the food with no cold spots.
There are two types of models availa$le*
a. Microwave N for general working <.on?grilling=
$. Microwave O Grill O Com$ination
-ni+ue #e!ture' o# ! LG micro&!%e0
Eor"d8' on"* one9touc Indi!n coo(in$ '*'tem0 The LG
health wave has the world's only one touch #ndian cooking
system. All vegeta$les and dishes can $e cooked at the touch
of a single $utton.
F!mi"* 'i:e o%en* 08lt cavity si%e of oven gives more space for
#ndian utensils and suits #ndian family si%es.
3e!"t &!%e tecno"o$** Ani(ue twin source technology emits
waves from top and $ottom resulting in faster and even cooking
without destroying nutrients.
LG has plans to introduce a microwave oven with pre?set #ndian
menus.
#t also plans to launch #ndia's first Cigital infrared microwave. The
Cigital infrared sensor in the microwave oven detects the
temperature of food and then automatically regulates the flow of
microwaves for faster and uniform cooking.
Pricing and elated Strategies
LG $elieves in JEthical )ricingK. The company has made various
players in the industry no compromise on the price front despite
the cutthroat price war e!isting amongst various players in the
industry.
#n electronics it was one of the late entrants to enter the market in
0:::. Ehile other companies that time were playing the low price
high volumes game the company decided to concentrate on the
high end of all the product segments.
Ehen the company entered the market ,aron international <Akai=
was on a rampage then with the Akai television e!change
scheme. )rice offs were in and the trade was en1oying credit
periods of any thing $etween 45 and 9: days.
LG be"ie%e' in %!"ue m!r(etin$. #t is e!actly opposite of what
Akai stands for. Akai is pushing volume $y sacrificing value. LG is
sacrificing volume for value. The refusal to interpret #ndian price?
sensitivity as value insensitivity seems to have pushed LG into
delving deep into consumer $ehavior for insights missed $y other
companies. The $ig gain of doing it this way is pricing power and
maintaining this will remain critical. The company when it entered
the market in 0::: was targeting the premium end consumer. +or
e!ample*
a. #n the refrigerator category it entered the 44: watts 2::lt. O
Segment which forms a very little portion of the entire
refrigerator market. #ts 22:lt. refrigerator was priced at 3s.
06:::. -n the other hand Godre1 and Crompton were offering
++ Mi!er Grinder any thing $etween 3s. /6::: to 3s 0::::.
$. LG's $asic 0/ inch model of &ome Electronics is priced at 3s.
/55::. This price is higher than Sony's compara$le model <3s.
/45::=. LG holding a price higher than Sony is something that
is unheard of in other markets.
c. LG's microwave ovens are nothing less than 3s. /05::I #+, "
Crompton <Market leaders for microwaves= are selling them for
less than 3s. /:::: also.
&owever the company after three years in the market has come
down to mass marketing. .ow it is targeting all the segments in the
market. #t is even concentrating on the rural areas now. #t has a
refrigerator for as low as 3s. 92:: and a T D for as low as 3s.
9:::.
Di'tribution !nd Re"!ted Str!te$ie'
LG is currently selling its products in /8:: towns and cities with
population of one lakh and a$ove. #t has /86 $ranch offices 4:
distri$utors and 0::: dealers all over the country.
,y the end of 0::0 the company plans to reach another 7:::
towns with a population of 5:::: or more. #n this process it will
add on to 6: distri$utors and /::: dealers.
To achieve this sends eight vans to crisscross the country covering
5::: km every month to familiari%e the trade and the customers
with LG products.
#n every city LG approached the $est dealers $ut in a scheme?
ridden market it refused to offer any schemes. #t positioned itself
as an ethical company. #nstead of discounts LG wanted dealers to
pay an advance for LG products. This ensured that the dealer
would push the $rand in the marketplace even if it were 1ust to
keep his oven cash from staying $locked. #n the long run this
created a pent?up demand for the $rand.
LG since its inception laid stress on Proper C!nne"
Merc!ndi'in$ !nd M!n!$ement. Cue to a very calculated
network e!pansion plan LG has the fastest dealer network
e!pansion in the industry and the highest dealer productivity.
Cealer loyalty and retention has $een high right from the
$eginning due to proper inventory management higher dealer
profita$ility and incentives proper )-) and other promotional
material to the dealers and a $asket full of products for the
dealers to choose from.
Supp"* C!in !t LG
LG factory E!clusive -utlets
C " + agents
Cistri$utor
Cealer
Promotion !nd Re"!ted Str!te$ie'
+ollowing are the promotion tools used $y LG electronics to
promote the company as well as its products*
Advertising
)u$lic 3elations
Sales )romotion
LG has devised an effective ACDE3T#S#.G and promotional
strategy. ,y using appropriate positioning stance and appropriate
media vehicles strong concepts and AS)s were developed.
Also various aspects a$out the $rand performance the products
and strategies to the media have $een communicated very well to
the media with its e!cellent pu$lic relations.
Tod!*6 LG 't!nd' !' te No. 5 PR Comp!n* in te indu'tr*.
i. Ad%erti'in$
The company started with ACDE3T#S#.G on print and outdoor
media in 0:::.
The ACDE3T#S#.G had to $e straight and simple aimed at $oth
the head and heart.
+or e.g. to advertise for Mi!er Grinder the ad line went J+rom today
all other Mi!er Grinder well $ecome historyK. This was something
that pushed the end $enefit further toward the consumer.
-ver time the media used e!tensively to advertise are electronic
print and outdoor. #t is 6:M TD 2:M print and /:M outdoor. Also
the company has also started with we$ ACDE3T#S#.G over the
site.
R!tio #or it' product' i' te '!me #or promotion
#n order to $oost secondary sales the sales and marketing
department has launched a new activity. Two LG lady chefs have
$een taken on $oard for cooking demonstration with the help of LG
Microwave oven. The demos will $e held at kitty parties arranged
$y CSL mem$ers at dealer counters <to attract walk in customers=
to new LG microwave customers <they would $e re(uested to
invite at least 6?7 people to their house at the time of demo=.
Currently this activity has started only in Celhi and Mum$ai and will
$e gradually e!tended to other $ranches.
.ow that LG is coming up with its digital range of products the
vehicle that the company plans to adopt would $e direct selling
ma1ority in order to demonstrate the products wherever possi$le.
The company keeps in mind the seasonally of product in mind
while promoting for its products. #t advertises heavily during festive
season and also during summers when the demand for ACs
Citrus Luicer is on the rise.
Lintas is the ad agency handling the account.
#ts ACDE3T#S#.G $udget since 0::6 is as follows*
/e!r ;ud$et Objecti%e
0::5 /5 crore To inform a$out LG's products
0::6 2: crore To promote additional product launches
0::7 2: crore To promote the $rand
The company considers the ACDE3T#S#.G* Sales ratio if sales
are increasing the company tries to reduce the ad N $udget.
-f late LG has got more into corporate ACDE3T#S#.G i.e.
promoting the $rand and its achievements rather than promoting
the product. Even the ads seen on TD these days LG is trying to
promote the $rand and not the product. +or e.g. it sponsors a 0?
minute programme on REE TD $y name of JLG &ero'sK where a
personality or any$ody who has e!celled in hisBher field speaks for
a$out two minutes. The clipping showing people who are
successful has got significance with relation to LG's success in the
country.
Cu'tomer S!ti'#!ction !t L$ E"ectronic'
#n today's world of $usiness the market place is a fierce
$attleground with national and multinational companies striving to
outsmart each other. LG $elieves that to emerge as the most
outstanding company $y 0::5 it needs to leave competition
$ehind and this is possi$le only through customer satisfaction.
Cu'tomer '!ti'#!ction in%o"%e' t&o !'pect'0
Intern!" Cu'tomer0 To try to anticipate and satisfy the needs of
the internal customers $y $eing sensitive to them.
E)tern!" Cu'tomer'0 To provide the e!ternal customers the $est
value for money i.e. the highest (uality at the lowest price and
then reinforce the commitment through good service thereafter.
+or e.g. the company has a different service policy. #t goes $y the
name of Jhappy callsK.
#mmediately after purchase the customer service team calls on
customers to find out if they are satisfied with the product and they
are given a call 1ust $efore the guarantee of the product e!pires.
;r!nd Stren$t
A p!t#inder8' 'tud* done last year to see where LG stands in
the consumer's mind has thrown up interesting findings. #t
comp!red LG8' CT.8' Mi)er Grinder !nd Citru' Kuicer &it
"e!din$ br!nd' in te '!me c!te$orie' on #our p!r!meter'0
rec!"" "e%e"6 recommend!tion inc"in!tion6 !nd 't!tu'
connot!tion !nd product di##erenti!tion. The survey was
conducted in the five metros and four other cities <Lucknow
Ludhiana Ahmeda$ad and Laipur= amongst 05?4: year old men
owning a car or motor$ike <for &ome Electronics=I 05?4: years old
men and women in carBmotor$ike owning house holds <for
fridge's=I and women in car N owning households <for washing
machines=.
3ere !re 'ome o# te #indin$'0
#n &ome Electronics <Celhi= LG ranks alongside Sony as a status
sym$ol. #t also leads on willingness to recommend <along with
Sony and ,)L= and product differentiation. -n spontaneous recall
Crompton and ,a1a1 lead and LG are at the ne!t level along with
Sony -nida and Samsung.
#n Mi!er Grinder <Celhi= Godre1 leads $y far on spontaneous
recall. ,ut on willingness to recommend LG is the leader and so
top on status and product differentiation.
#n Citrus Luicer <Celhi= LG doesn't lead on any parameter. -n
spontaneous recall willingness to recommend and status
connotation the leader is ,)L while Ehirlpool leads on product
differentiation.
#n Mum$ai LG &ome Electronics have the poorest recall of all the
$rands. Sony leads on recall and willingness to recommend. -n
status and differentiation Crompton leads.
#n Mi!er Grinder <Mum$ai= Godre1 leads the pack on three
parameters. LG is the leader only on status connotations.
#n Citrus Luicer <Mum$ai= ,a1a1 has the highest recall while LG
figures in the last few. Ehirlpool leads on all the other parameters.
#n relia$ility <recommendation inclination= we are (uite high
despite the higher prices which means that the consumer thinks
very highly of us Jsays @arwalK. -n knowledge <awareness= we
are slightly low. After all in 0::0 our turnover of 3s. /05 crore
were less than the ACDE3T#S#.G spend of ,a1a1 and ,)L. ,ut
across the $oard on esteem and differentiation LG has scored
much higher than the othersK says he. A fact corro$orated $y A"M
-3G?Marg's Most Admired Marketing Companies Survey <A"M
2: Septem$er 0::2= which ranks LG as second in the industry
<after ,)L= on product differentiation. #n fact on the parameter
)roducts are designed to meet consumer needs LG gets its
highest score of 6.66. The same survey also ranks LG pretty low
on distri$ution <.o.2/= $ut even so it is higher than Samsung and
.ational )anasonic. -n overall ranking LG made a rather high
de$ut of the year was Akai which came in straight at .o. 8 on the
list of admired dura$les companies.
Clearly LG's $rand N $uilding efforts have had e!emplary success.
Ehat the company needs to do is capitali%e on it.
Or$!ni:!tion Structure
Traditionally LG was primarily a marketing driven company and &3
department which was earlier dominant has gained importance
over the last 0 years. A num$er of interventions have $een
coordinated $y the marketing department. The &3 department has
helped in maintaining them and is more responsi$le at corporate
level than at plant level $ut this is undergoing a change. The &3
dept. has a conveyor chain setup.
D.). <&3=
C.G.M. <&3M=
<Senior )ersonnel Manager )lants=
Senior )ersonnel Manager <Sales " Marketing=
Criteri! mo't common"* con'idered b* re'pondent' to bu* !
LG product.
Attribute R!n(in$ H5 to DJ
,rand #mage /
+oreign Colla$oration 0
After Sales Services 2
Cealer 4
Technology 5

<Computation in Appendi! #=
,rand Awareness of LG
5G
5
@
4
C
>
A
5@
54
5C
5>
5A
4@
/e' No
Sceme' pre#erred b* con'umer'
Cash Ciscount 40
#nstallment Scheme 00
E!change offer 00
+ree Gift /4
Free Gi#t
5C?
E)c!n$e o##er
44?
C!' Di'count
C4?
In't!""ment
Sceme
44?
Mo't pre#erred LG product
Product R!n(in$
3efrigerator /
Microwave 0
AC 2
Television 4
Eashing Machine 5
@
D
5@
5D
4@
4D
CT. AC Re#ri$er!tor Micro&!%e E!'in$
M!cine
Re"!ti%e br!nd !&!rene'' o# LG product' %i'9N9%i'
competitor' #or %!riou' product'
Top o# Mind rec!"" #or Re#ri$er!tor'
@
4
C
>
A
5@
54
5C
5>
;PL Onid! S!m'un$ Son*
@
4
C
>
A
5@
54
5C
5>
5A
;PL Eir"poo" LG D!e&oo
Top o# Mind rec!"" #or Air9conditioner'
Top o# te mind rec!"" #or co"our T..
@
4
C
>
A
5@
54
5C
5>
C!rrier N!tion!" Amtre) .o"t!' LG .ideocon
@
4
C
>
A
5@
54
5C
5>
LG Onid! Pi"ip' Son*
Top o# te mind rec!"" #or E!'in$ M!cine
Top o# te mind rec!"" #or Citru' Kuicer
@
4
C
>
A
5@
54
5C
5>
5A
Eir"poo" S!m'un$ LG .ideocon ;PL
@
4
C
>
A
5@
54
5C
5>
5A
4@
Eir"poo" S!m'un$ .ideocon ;PL LG
Top o# te mind rec!"" #or Sp"it Air Conditioner'
Top o# te mind rec!"" #or Micro&!%e O%en
@
4
C
>
A
5@
54
5C
5>
C!rrier N!tion!" Godrej LG Amtre)
@
4
C
>
A
5@
54
5C
5>
;PL Ken't!r IF; S!m'un$ LG
O;KECTI.ES
To identify and analyses the position in the consumer dura$le
industry of LG Electronics #ndia.
Analy%ing the Marketing Strategies of the a$ove company.
To analy%e its performance since to inception.
RESEARC3 MET3ODOLOG/
#nformation regarding the Consumer &ome Electronics
organi%ation Marketing Strategies &uman 3esource Management
has $een o$tained through*
<a=)rimary Sources
<$=Secondary Sources
-fficers of the following departments were approached to o$tain
information a$out the concerned su$1ect.
Marketing
&uman 3esource Management
Prim!r* Source'0
Puestionnaire #nterview and Ciscussions with the Senior
Marketing E!ecutives of the Companies to get relevant
information.
Second!r* Source'
<i= #nternet
<ii= Li$raries
<iii= Articles
<iv= Company $rochures literature and pamphlets.
FINDINGS 2 ANAL/SIS
HIJ Findin$' ;!'ed on M!r(etin$0 #t is no dou$t a$out the fact
that LG is considered to $e JA u$e m!r(etin$ 'ucce''=. -ne
look at LG's achievements ever the past three years and it is clear
that indeed LG's success lies in its marketing strategy. &owever
the company is still a long way to go $efore it $ecomes a market
leader to $eat Crompton and ,a1a1 who are the current market
leaders in the industry.
HIIJ Gener!" Findin$'0 Ever since li$erali%ation in /99/ many
M.Cs have thronged the #ndian consumer dura$le market.
Companies such as )hilips Sony .ational Samsung etc.
have entered the market over the past years. LG was one of
the late entrants into the market and it has $roken all records.
These multinationals that are coming into the market have the
latest technology aggressive marketing and fat
ACDE3T#S#.G $udgets. &owever in terms of sale and market
shares #ndian companies still occupy the top slots $ut M.Cs
are slowly gaining ground. LG is one company that plans to
$ecome .o./ in this industry $y the year 0::6. Ehen M.C
$rands come in they have the advantage of owning their
technology. #ndian $rands face pro$lems when it comes to
additional features $ecause they have to $uy from other
sources and this makes their products move e!pensive vis?Q?
vis the M.C $rand.
#n the past too the #ndian market has seen M.C $rands like Sony
-ptonica Sharp Thomson etc. $ut none of these companies have
performed well. 3eason $eing that these $rands could not
esta$lish themselves hence there was no lasting impression. .ow
the trend is slowly catching up in favour of M.Cs who are offering
technologically superior products. The reason for this $eing that
these M.Cs has managed to convince the #ndian consumer that
there is more to them. Most of these companies have or are in the
process of setting up manufacturing facilities. This gives the
consumer a feeling of security that they are here to stay. Another
reason for their success could $e that M.Cs entered the market
when many #ndian $rands were on a decline and they have moved
into those empty slots.
Eit te comin$ in o# te #orei$n br!nd' te indu'tr* !nd te
m!r(et !re "i(e"* to $ro& but ti' mi$t be !t te e)pen'e o#
our o&n Indi!n comp!nie'.
The attractiveness of LG Electronics #ndia in the consumer dura$le
industry can $e 1udged from the following FI.E9FACTOR
IND-STR/ ANAL/SIS MODEL
E)i'tin$ Competition0 At least 0: manufacturers or even more
than those today flanks the consumer dura$le market. Ehen
LG entered the market it had competition from /8 companies.
The company at present faces competition from several M.C
$rands as well as local #ndian companies. Crompton and ,a1a1
are the market leaders in this industry followed $y companies
like -nida )hilips etc. giving competition to the company.
Also every now and then companies keep on coming with
e!change offers <Akai= consumer schemes price offer etc. LG
is one company which $elieves in J.o scheme no schemingK.
Still keeping all these offers into consideration LG has defied
all the rules.
In m!n* &!*'6 LG !' pro%ed to be te Pep'i o# te &ite
$ood' indu'tr* 1 bri$t6 !$i"e !nd d!'in$. #t always has its
ears glued to the ground to know what the competition is doing.
+or e.g. in the last week of May when Sony was a$out to launch
its 72cm Dega flat monitors at 3s. 5695: directly taking on LG's
+latron monitor priced at 3s. 5795: the company released LG
ads in the same pu$lication where the Sony ad was $eing
released on the same dates and on pages preceding the Sony
adI LG's copy read. J.othing will get flatter than this ever
<whatever the competition may try to tell you=. This ad took the
e!citement out of the Sony launch
LG e"ectronic' tod!* !' more t!n 'ur%i%ed in te m!r(et
&itin te'e tree *e!r' &it it' m!r(etin$ 'tr!te$* !nd
tecno"o$ic!""* 'uperior r!n$e o# product'.
&owever the company does look to have a $right future and its
plans to $e the .o. / home Electronics Company might 1ust come
true considering the new digital range that the company has lined
up for the new millennium.
Li(e"* Ne& Competition0 The only new competition that the
industry is going to face in the coming years is from foreign
$rands. Since in this industry there are tremendous entry
$arriers <technology manufacturing etc.= only a foreign $rand
can pose threat to the company. Also if market leaders such
as Crompton and ,a1a1 go in for some technology tie?ups with
foreign $rand to have access to technology it could $e a
threat to the company in the long run. These companies are
considered to $e the market leaders and if they start coming
up with products similar to what LG are offering it could pose a
serious threat to the company. This would however re(uire
huge investments tie?up with a glo$al leader etc. to $eat the
M.Cs which is not likely to $e possi$le in the near future.
&owever any other glo$al company that comes into the
market with its uni(ue marketing strategy would definitely $e a
serious threat to LG.
Sub'titute' A%!i"!b"e0 Colour TD's Citrus Luicer and Mi!er
Grinder don't have a su$stitute to them. ,ut however a cooler
could $e a su$stitute to an AC or an oven could $e a
su$stitute to a microwave Anyway these two su$stitutes are
not very significant hence the industry is attractive to stay in.
;!r$!inin$ po&er o# bu*er'0 The $uyers in this $usiness can $e
divided into two i.e. the dealers and the consumer. The
dealers in case of LG electronics don't have much of
$argaining power to e!ercise sinceI the dealers are supplied
products on a credit $asis so that they can push the product.
Such a strategy was never heard of earlier in the market. Also
transactions $etween the company and the dealer are carried
out on the $asis of targets achieved $y the dealers. The
companies also provide the dealers with various )-)
materials to increase the via$ility at the outlets and as a
relationship $uilding e!ercise. The consumer however en1oys
negligi$le $uying power. Although the consumer is the most
important entity for the organi%ation the $argaining power $y
them is looked down upon since prices etc are fi!ed the
company which are not negotia$le.
;!r$!inin$ po&er o# 'upp"ier'0 The supplies in the case of LG
electronics can $e divided into vi% local vendors and imported
supplier from +rance. The company has greater control over
the supplies from +rance. &owever in case of local vendors
company lays down the terms and conditions in advance so
that no negotiations are carried out in later stages. The level
of indigeni%ation in LG products in a$out 45 percent. The
company hopes to increase that to 85M within the ne!t couple
of years and for that the company would have to develop high
(uality local vendors.
LG Electronics #ndia $eing a su$sidiary of +rance multinational has
its own e!port division in the country. This was only set up after the
company had esta$lished itself well in the local market. #ts e!port
operations were started in Lan 0::0.
The company plans to e!port in 0::2 AS G 2.8 million worth of
goods to the e!porting countries. ,y the year 0::7 it plans to
e!port AS G 7.6 million worth of goods and $y 0::9 AS G /::
million worth of goods. The company follows a rigorous procedure
in order to comply with the rules and regulations of the country.
&owever in order to meet its a$ove target of ASG /:: million
e!ports the company would have to consider e!ploiting more
countries in the neigh$oring areas and e!ploit the potential
markets to the fullest. The e!porting country's image and success
in its own market also effects the position of e!ports. Considering
the success LGE#L is making in the local market if it continues
with the same pace the e!port potential could also $e improved.
&owever currently the company is into e!ports presently to fulfill
the e!port o$ligation against the licenses that have $een taken for
the duty e!emption of the import of raw materials from +rance. #n
the coming years it is planning to e!plore more international
potential markets for its products.
Re'u"t' 2 Conc"u'ion'
Thus in my opinion this was the $est method that could have
$een used which included the use of $oth the primary and
secondary sources since only the secondary or the primary
sources could not have provided such an in?depth and detailed
information.
RECOMMENDATIONS
Though LG electronic has done fairly well in the #ndian market $ut
in order to gain a market share in the long run certain
recommendation are highlighted $elow $ased on the analysis
conducted earlier and the conclusions.
LG 'ou"d cre!te ! m!'' m!r(et im!$e #or it'e"# i# it &!nt'
to !cie%e it' objecti%e to become te m!r(et "e!der b* te
*e!r 4@@>0 Even to day after three years of its e!istence in the
market the company has a premier image in the consumers
mind. #f it wants to achieve the a$ove stated o$1ective the
company should go in for mass marketing. The company has
started moving on this path $ut despite that its premium image
still e!ists.
To achieve this company should create such campaigns which
highlight the middle and the lower end consumer also. +or
products such as the C#-S refrigerator +latron T.D. etc it
should highlight them as premium products for the elite class.
-ther products such as /4K &ome Electronics or /75lt. Mi!er
Grinder should target the lower end of the customer.
LG 'ou"d concentr!te more on te rur!" m!r(et'0 Currently
sales of the company form a very insignificant portion from the
rural market. #t only accounts for a$out 2: per cent of the total
sales. This is very little considering the vast potential that lies in
our country. The company should consider e!ploiting the
untouched areas of population even less than 5::::.
#t could pro$a$ly form groups of /: to /0 such towns in a state
and appoint a single distri$utor for each group. The entire
responsi$ility of selling the products should $e given to the
distri$utor and his per performance should $e evaluated after
every /5 days. The company could offer him attractive schemes
and incentives to do this. This could $e test marketed in a
couple of states initially to find its success rate.
In order to re!p "on$ term bene#it'6 te comp!n* 'ou"d $o
in #or cert!in one't 'ceme'* Ma1ority of companies in this
industry today are selling their products via schemes offers
etc. in order to survive in this competitive market. #t is (uite
dou$t full that LG with its policy of Jno schemes no schemingK
would $e a$le to do much. The company definitely does not
have to go the Akai way $ut certain schemes and offers would
help the company in the long run. Since LG $elieves in Jvalue
marketingK it does not have to go in for e!change offers where
$y you get a new Citrus Luicer or TD if return the old one. &ere
the company has to sacrifice on value to get volumes whatever
said and done. Some of the schemes that the company could
opt for is J,uy a refrigerator <2::ltO.= And a microwave and get
some rupees offK or J$uy refrigerator O Citrus Luicer and get the
Citrus Luicer at half the priceK.
;I;LIOGRAP3/
;OOKS
Marketing Management ? J)hilip @otlerK
&uman 3esource Management ? JAshwathapaK
&uman 3esource Management ? JT... Chha$raK
INTERNET
www.lgeil.com
www.google.com
NEES PAPERS
Economic Times
+inancial E!press
Times of #ndia
#ndian E!press
MAGAFINES
,usiness Today
A " M
,usiness #ndia
,usiness Eorld
,usiness Standard
IND-STR/ REPORTS
#nvestors Guide to #ndian #ndustry 0::6
ANNE,-RES
LG8' Turno%er Hin R'. CroreJ
0::5 /05: cr
0::6 477:cr
0::7 805: cr
LG posts turnover of 3s 805: Crore in 0::7
Targets 19% growth in exports and 15% growth in the
domestic market
LG Electronics India, the countrys leading consumer
durable company today announced their annual results for
calendar year 2006 at Rs 820 crore! "he company is
e#pecting an o$erall gro%th rate of &' this year and has
declared that their focus product categories %ill be (lat
panel )isplays and G*+ phones!
LG India has also forecast a gro%th of &,' in e#ports,
%hich is e#pected to contribute Rs! ,0 crore to the total
turno$er in 200-!
.a$ing achie$ed leadership position in /lasma )isplay
/anels and (lat "0s, the company is e#pecting to become
the mar1et leader in L2) "0s as %ell! "he other focus
@
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D@@@
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category %ill be G*+, in %hich the company is aiming to
be amongst the top 3 players! "he company is also
targeting to achie$e sales of &0 million handsets by year
200,!
2ommenting on the strategies %hich LG India %ill adopt to
achie$e gro%th, Mr. Moon B Shin, MD, LGEIL said, 4"he
successful implementation of 5lue 6cean strategy across
systems and products %ill be critical to our success this
year! 7e ha$e already rolled out products li1e "ime
+achine "0 and 2hocolate phone as part of this strategy
and year 200- %ill see us launching many more uni8ue
technologies and products! 7e %ill also strengthen our
base as an e#port hub!9
LG India achie$ed a turno$er of Rs! 8,20 crores in 2006,
posting an o$erall gro%th of &0' ! "he o$erall
contribution %as :3' from .ome ;ppliances, 3,' from
2onsumer Electronics, &3' from I" products and '
from G*+!
S!"e' Fi$ure' H4@@D9@IJ
/e!r CT. Re#ri$er!tor E!'in$
M!cine
AC8' Micro&!
%e
L@@ "t
HFFJ
DC SA FA
0::5 .A .A .A .A 25:: .A .A
0::6 /95::
:
545:: 267:: 290:
:
49::
:
/:::: 5:::
0::7 /8:::: /605: 40::: 4/0:
:
66:: 040:: 7:::
LG9M!r(et S!re 4@@>
Product N!me Percent!$e
Television 9
3efrigerators
55: watts 2
44: watts 26
Citrus Luicer
+ully Automatic 27
Semi Automatic /0
Air Conditioners /7
O-ESTIONNAIRE
&ow is LG positioned versus other players in the marketS
&ow is each of its product line differentiated from others*
&ome Electronics AC's
3efrigerators Microwaves
Eashing Machines
&ow has the product mi! changed since 0::2S
Eho are the target audiences for each of its product linesS -n
what $asis has segmentation $een doneS
&ow does the LG supply chain operateS
Ehat is the current market share of LGS
Ehat does the logo HCigitali%e' stand forS
Ehat are the most commonly used media to advertise for LG
productsS
&ow has the ad $udget changed since 0::2S
Ehat all promotional activities does the company undertake
for*
, Consumers
, Cealers
#n #ndia what is LG's marketing program like N is it a
standardi%ed marketing mi! or is it an adapted marketing mi!S