Lg Project

March 23, 2018 | Author: Rohit Soni | Category: Research And Development, Brand, Empowerment, Luxury Goods, Lg Corporation
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A Project Report On MARKETING STRATEGIES OF LG ELECTRONICS INDIA LTD.“PROJECT SUBMITTED FOR THE PARTIAL FULFILLMENT TOWARDS THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN APPLIED MANAGEMENT” Under Supervision of: Mr. Narendra Singh YADAV No.4740900063 Submitted by: LALIT KUMAR Enr. DIRECTORATE OF DISTANCE EDUCATION, ANNAMALAIUNIVERSITY, 2011 ii FORM OF SUBMISSION OF PROJECT Name of the student Enrolment number Program with subject management,Mercentile And Commercial Law, Project Management, Sales Management, Product And Brand Management, Marketing of Service ) MARKETING STRATAGY OF ‘LG ’ ELCTRONICS 2 Years LALIT KUMAR YADAV, S/O SHRI RAGHUVEER SINGH YADAV, MOH-: SHRI NAGAR, PIPAL CHOWK, MATHURA ROAD, HATHRAS, POST & DISTT- HATHRAS, HATHRAS-204101 (U.P.) Mb. +91 9259614295 Mr. NARENDRA SINGH TERRITORY SALES OFFICER MARKETING 5 YEARS SURABHI TRADING COMPANY 37/125, SARAN NAGAR, OPP. VITA BREAD FACTORY NEAR RAJDEEP APPARTMENT, NEW AGRA, DAYAL BAGH, AGRA-282005 0562-4051943 (RESIDENTIAL) 35/60-2A NEW LASHKERPUR MUGHAL ROAD, KAMLA NAGAR, AGRA-282005 09313017229 LALIT KUMAR YADAV 4740900063 MBA in Applied Management (Customer Relationship Title of the project Period of study Address of the candidate Name of the guide Designation with experience Address of the Guide (OFFICIAL) Date of submission of project iii ELECTRONICS” Submitted me as a part Of My M.B.Place: student…………… Date: Guide……………..A.Agra.G. Signature of the Signature of the DECLARATION I here by declare that the project report entitled “MARKETING STRATEGIES OF L. llnd year of master of Business Adminiatration (Applied Management) To The NIS Academy. ( Annamalai University Chennai ) iv . I would like to take this opportunity to exchange my heart full gratitude to all those who helped me in presenting this report. NARENDRA SINGH for providing the attention. It gives me great pleasure in presenting this report to the “The NIS Academy”. consistent.No.4740900063 BATCH:2009 – 2011 ACKNOWLEDGEMENT This report bears the imprint of many persons who have helped me in numerous ways in writing this report. I would like to take this opportunity to thanks Mr. v . I would also like to take this opportunity to thanks all teachers and faculty members specially for cooperating me a lot in this project and for providing advice to make my project more useful and impressive. It stipulated time with out his active guidance. encouragement and support I needed to complete this project.Lalit Kumar Yadav Enr. guidance. associate ship. vi .G. and that the project has not previously formed the basis for the award of any Degree. electronics” Is work done by Mr. LALIT KUMAR YADAV during the period of his/her study under my guidance./Ms.My overriding debt is to my parents who provided me moral support & inspiration needed to prepare this report. LALIT KUMAR YADAV MBA(AM) llnd Year CERTIFICATE Certified that the “marketing strategy of L. Diploma. fellowship or similar other titles and that it is an independent work done by his/her. To the best of my knowledge this is his original work for and has award not of been any submitted the degree/diploma any where he has been a vii .B.A.Lalit Kumar Yadad. Electronics”. a student of M.The title of project is “Marketing strategies of L. (AM) llnd year has done this project under my (Narendra Singh) supervision .G.Signature of the guide: Place: Date: address with seal: Name: Official CERTIFICATE This is certify that Mr. I wish him all success in life. DATE: PLACE: Singh Mr.Narendra viii .science student of this institute. EXEXUTIVE SUMMARY This report is an analysis of the Marketing Strategies of LG. its origin. Analyzing the company in the backdrop of the Indian Home Electronics was considered to be important because it is a highly competitive market and it is very important to know where a company stands in this industry. Product: Highlights the addition and change in the product range of the company and the significance of each of its product lines. expansions. and thereby the two chosen areas i. developments. Marketing is discussed in the subsequent sections. Pricing: The basis used for pricing and how the products have been priced. ix . A discussion about LG’s operations in India follows. Promotion: All the promotion activities to promote the company’s brand and its products in order its increase its market share.e. has been presented along with an Indian industry analysis. strategies etc. There after an intense study has been done into LG’s corporate history. how it came into existence & operations of LG Electronics India. The four P’s of marketing have been discussed in detail individually along with the product’s brand awareness under the marketing section. Place: The kind of distribution network used to market its products. LG is a Multinational Company having its presence all over the world. A thorough study of LG Electronics. Graphs & Tables have been included in the data analysis chapter. x .Findings and recommendations have been drawn keeping the industry and company analysis in mind. without which this project report would not have been completed. JIMS. First of all. Finally. Also I would also like to thank all those who have contributed in completing this project report. I gratefully acknowledge the continuous assistance and inspiration given to me by the Faculty of Rohini. I would like to thank my family for providing me monetary and non-monetary support. Special thanks to ______________________ for her invaluable support and guidance during my training period and supervising my work. xi .ACKNOWLEDGEMENT Getting a project report ready requires the hard work and effort of many people. as and when required. W.1 Significance of the study 2.3 Problems of the Organization 1.O.4 Scope of the study 2.3 Objectives of the study 2.TABLE OF CONTENTS Chapter 1: Introduction 1.5 S.4 Competition Information 1.T.1 Overview of the Industry 1. Analysis of the Organization Chapter 2: Objective & Methodology 2.5 Methodology Limitation Chapter 3: Conceptual Discussion Chapter 4: Data Analysis Chapter 5: Findings & Recommendations Annexure Bibliography Synopsis 01-49 01 21 42 44 48 50-53 50 50 50 51 51 53 54-82 83-88 89-94 95-99 100 xii .2 Managerial usefulness of the study 2.2 Profile of the Organization 1. one saw a lot of players in the Electronics market due to which increase in the Electronics that boosted the sale of home Electronics.Chapter – 1 INTRODUCTION 1.g. Some of them started with fully owned subsidiaries and some went in for a tie up with domestic players. Simultaneously they concentrated on increasing the visibility of their products in the shops of the dealers they 1 . After liberalization in 1991. Analyzing the market structure one finds that long-term dominance of Moulinex. they started to set up distribution and service networks. Crompton. LG. The entry of these multinationals changed the market. As a first step. Moulinex in 1992.1 A PREVIEW TO THE INDUSTRY TV perhaps is a most powerful media today in India. Kenwood. Inalsa.. following in 1999-97. Most of these MNCs started operations in 1992 and by 1993. After liberalization bought itself a dramatic change in the competitive structure of the market. had some infrastructure in place. Softel. The comings of the MNCs have resulted in a decline in profit margins for the domestic players. The extensive use of the media as a powerful tool for entertainment information and education by other channel owners added impetus to this growth. LG in 1992. Braun. The socio economic impact of this media in a country like India is tremendous. Bajaj etc. Philips. Braun established themselves in 1999-97. Philips in 1994-95. For e. Kenwood and LG. Samsung’s schemes.appointed. Indian companies that were complacent earlier. 2 . But all other domestic players have over–reacted and this has diluted the strategic issues of technological innovation through customer after sales service and ads. The entrenched position of the Indian market leaders in Electronics Bajaj. keeping the dealers margins intact to help push the products. They launched technologically advanced models with attractive price tags. LG. felt the heat. JVC. After some quick rethinking they launched new models at attractive prices. Despite all this the Indian companies have remained strong. The Electronics domestic player has not understood the importance of technological innovation. Braun. Soften price led wars. Moulinex price consideration. The coming in of the MNCs has created a new scenario with a new market profile. Domestic Electronics firms are guided by objective of maximizing short run profit rather than long term growth and the firms’ competitive strategy is guided by product differentiation and price manipulation-Inalsa’s money back offer. Crompton and Black and Decker has been challenged by the MNCs such as Moulinex.despite all this LG and JVC have opposed exchange offers and price led wars. The rate at which foreign brands are growing is only due to the fact of a dynamic business environment. Bajaj. Inalsa. Kenwood. LG. Earlier till 2000-2001 these two leaders had shares of 44% and 54% respectively. The market leaders currently in the Electronics industry are Bajaj and Crompton with 11% and 13% share respectively in 2008-2009. Major Players Domestic International : : Crompton. LG. Philips. 3 .The domestic players have a 24% market share. JVC Currently the four major players in the market are BAJAJ LG Philips Moulinex Kenwood 11% market share 8% market share 19% market share 12% market share 11% market share These Five players cover 61% of the market. Moulinex. Braun. Even today. Black and Decker. MNCs have managed to grab a 76% in a very short span. Earlier this was 19:6. Bajaj is considered to be the market leader. 000. underlying this boom is the story of marketing techniques by the MNCs. August 2009 also saw the highest sales during the one-year period April 2005 to August 2009. The segment grew by 44% in August 2009 over the same period last year. 4 . The world help age extempo have been a trigger but.Market shares in the 3.000 units market (2009) are: Current Scenario: The recent help age extempo has spurred a sudden growth Black and Decker 7% Crompton 9% Others 11% Sheffield 11% LG 8% Bajaj 11% Kenwood 11% Philips 19% electrolux 12% in the Juicer Mixer Grinder segment. 0% LG 5.The new MNC Home Electronics brands are on a roll armed with latest technology. May 2009 (Post extempo) Sheffield 10. In terms of sales and market share Indian companies still occupy the top slots but MNCs are slowly gaining ground.0% Crompton 5.0% Bajaj 3. These companies are capturing a significant share of the Indian Home Electronics market.0% Inalsa 12.0% 5 . aggressive marketing and advertising budgets.0% Kenwood 8. These MNCs have positioned themselves by offering superior technology and discounts.0% Philips 19.0% Braun 11.0% Others 13.0% Moulinex 14. rather than old technology that the Indian companies failed to do so. Home Electronics market shares. the help age extempo driven spurt in Home Electronics sales appears to have spilled over to July’09. Top 3 brands for July’09 were LG Philips Moulinex 27% 28% 17% Seeing the figures for May’2009 LG was number 2 with 27%. 6 .5% 9% 7% Kenwood Inalsa Crompton Others 7% 19% 4% 12% TOSTERS India has been one of the rapidly expanding markets for Toasters for the past couple of years.According the latest survey conducted by ORG-GEK for July 2005. TV market shares – July’09 Philips Moulinex LG Bajaj LG Braun 16% 8% 9% 6. The Indian market has considerable demand potential for this product. however the sale of pop-up-toasters accounts for a larger share. This segment has been the fastest growing amongst the lot. Bag body. Moulinex and Braun had the effect of galvanizing the industry.21 crores. Bag Body d. The world over. Sheet Metal are Sandwich toasters and pop-up-toasters are use for Crisping. accounting for an estimated Rs. with a growth rate of 18% or so in 2009-10. sale of Cool body dominates the total shipments. Pop-up-toasters Cool body. However this phenomenon has been changing in the past couple of years. In India. The demand for pop-up-toasters and Sandwich toasters mainly comes from house 7 . Sheet metal c. The industry players as a consequence are gearing up for both the customers and the competition. Cool body b. The Cool body and Pop-up-toasters segment is the largest in terms of value.This attracted most of the major multinational players. The Toasters industry can be broadly classified into 4 segments: a. The entry of players such as LG. Kenwood.holds.2% Philips 28. Usha etc.7% Sheffield 6. Others 13. The demand for Toaster is generally restricted to major cities and towns. Sujata. The demand from the hotel sector though it accounts for a smaller portion.4% Inalsa 12. Delhi and Mumbai alone is estimated to account for one-third of the total industry sale to households.5% . Braun. The Sandwich toasters segment is however dominated by Usha. Inalsa. There are also a host of other smaller players such as Black and Decker. Crompton. Moulinex. Philips. a large portion of the demand from this segment-around 16% relates to buyers of second units. The major players in the market for Sandwich Toasters are Bajaj. LG. Also. House holds are estimated to account for around 82% of the total demand.2% 8 Braun 21.1% Moulinex 18. Eight cities which include the four metros are estimated to account for 72% of the total household demand. The Pop-up-toaster market is dominated by Philips. Laxman Slyvania though LG is making a large headway into this segment too. is the fastest growing segment. This industry has benefited from the consumers buying preferCreated by MAHAJAN GRAPHICSences.000 units market (Retail) 2009 WHITE GOODS (Mixer Grinder & Citrus Juicer): A PREVIEW OF THE INDUSTRY The white goods industry is witnessing dynamic changes. exits by a few others. It can be classified into: a. Mixer Grinder: Mixer Grinder accounts for the largest segment in the white goods industry. After a TV and Toasters.5 mn units. Three attachment with 440 watts i. Industrial Grinder i. the most likely product on the buying list would be a Mixer Grinder. booming volume growth in the first six month of 2009-10 all these changes are the characteristics of the industry. The size of the industry is about 2. marketing tie-ups. Domestic Mixer Grinder b. capacity expansions. Acquisitions of units by some.Market shares in the 80. This has resulted in a higher penetration level for Mixer Grinder. 9 . Three attachment with 550 watts Domestic grinder industry with a turnover of 40 crores is dominated by the organized sector. Both Usha and Philips made significant inroads in 2007. The Grinding market consist of 440 watts and 550 watts models which has the following demand: 440 watts. the size of the Mixer Grinder segment contracted in 2001. This trend has reversed in 2008-09..15% of the demand for refrigerators. However the year 2009 saw the entry of many France and Korean companies. All these companies have entered in the 550 watts and above capacity niche 10 . the volume growth was in double digits i. In the 440 watts segment. Philips and Inalsa continue to be the market leader in the 550 watts segment although its market share has come down. The action is slowly moving towards 550 watts models of the grinding segment. The 550 watts Mixer Grinder segment has been growing faster than the 440 watts segment in recent past. Crompton continues to be the leader. Companies are steadily upgrading the economy models capacity from 440 watts to 550 watts.After a good year in 2008. 550 watts –85% of the demand for refrigerators. In the first six months of 2008-09.e. 25%. The slower rate of growth of 440 watts models forced Crompton to finally launch 550 watts models in Oct’96. Braun. plants at Haryana and Moulinex plants were commissioned recently with capacities of 30lacs & 15 lacs units respectively. Inalsa. Philips. in per cent 2009. Moulinex. Bajaj. Bajaj and LG from going ahead with their plans. The global giants like Inalsa. 11 . The excess capacity in the Mixer Grinder industry has deterred players such as Usha. Sujata and LG have taken advantage of. Both LG are outsourcing Mixer Grinder from Polar manufacturing facility. There has been significant expansion in capacity in this industry. LG have entered the Indian market with their international range of products. while Moulinex and Braun are sourcing Mixer Grinder and Citrus juicer from China respectively. Market shares in the 80. This has led to certain marketing tie-ups which Usha. The entry of these giants has opened up an entirely new and technically superior segment comprising 440 watts Grinding.segment that can be imported in fully assembled form and where margins are higher.000 units market (440 watts + 550 watts). Kenwood 11. There are two types of Citrus Juicer in this segment: a. growth of 26%. at around 44.8% Bajaj 1.8% Usha 5. One ltr 12 .4% crompton 8.4% Citrus Juicer : The size of the Citrus Juicer industry is small compared to the Mixer Grinder industry.8% Others 5.6% sumeet 28.. In the first six months of 2009-10.7% Braun 12.2% Sheffield 8. the volume growth was in double digits i.000 units. Half ltr b.e.3% Moulinex 17. The trend has reversed in 2009-10. the size the Citrus Juicer segment contracted in 2009. The psyche of the consumer who looks at Citrus Juicer as a luxury product and the infrastructural problems such as the non-availability of electricity has been the major hindrances for the growth of the industry. After a good year in 2008. low prices of domestic brands of Citrus Juicer will continue to dictate the purchasing decision of majority of buyers. 13 . Currently almost all-foreign companies are operating in large capacity one ltr segment. As long as companies can not justify the premium pries to customers. with the number of working women on the rise and the difficulty in availability of domestic help the market is expected to grow by over 30% in the next few years from the present growth rate of 6%. One ltr 22% 78% Philips is the leader in both half and one ltr. Currently since the level of indeginisation is very low for the foreign machines. The capacity utilization levels are still quite low in the industry. The demand for the above types in the market is: c. Braun. Kenwood. Major contenders-LG. dominating the market. Moulinex.Philips has market share of 55% in 2009. segment is under serious attack by a range of technically superior foreign models which are also available in large capacities. The situation is expected to improve significantly in the future. Half ltr d. Segments. The company’s position in the One ltr. the high price charged in a major stumbling block for the first time shoppers of Citrus Juicer. the size the Jug Kettel segment inflated in 2009. growth of 28%.3% Kenwood 3. at around 79.6% Others 6.6% 5. The psyche of the consumer who looks at Jug Kettel as a luxury product and the infrastructural merits such as the low consumption of electricity have been the major advantages for the growth of the industry.5% Sheffield 6.e. There are two types of Jug Kettel in this segment: 14 .5% Moulinex 14.000-unit market (half ltr + one ltr) in per cent (2009).2% Philips 40. Bajaj Braun 3..000 units.Market share in the 44. The trend has reversed in 2009-10.7% Jug Kettel: The size of the Jug Kettel is large compared to the Citrus Juicer industry. the volume growth was in double digits i. In the first six months of 2009-10. After a good year in 2005.6% Inalsa 19. Currently almost all-foreign companies are operating in large capacity cordless segment. low prices of domestic brands of Jug Kettel will continue to dictate the purchasing decision of majority of buyers. As long as companies can not justify the premium pries to customers. The capacity utilization levels are still quite low in the industry. With cord 12% d. Cordless Philips has market share of 47% in 2008. Moulinex. Kenwood. Currently since the level of indeginisation is very low for the foreign machines. the high price charged in a major stumbling block for the first time shoppers of jug Kettel.a. With cord b. The situation is expected to improve significantly in the future. The company’s position in cordless segment is under serious attack by a range of technically superior foreign models. Cordless 88% Philips is the leader in with cord and Cordless segments. Braun. The demand for the above types in the market is: c. which are also available in large capacities. Major contenders-LG. dominating the market. with the number of working men and women on the rise and the difficulty in availability of domestic help the 15 . The psyche of the consumer who looks at hair dryers as a luxury product and the infrastructural merits such as the low consumption of electricity have been the major advantages for the growth of the industry. 16 .market is expected to grow by over 34% in the next few years from the present growth rate of 8%.9% Hair Dryers: The size of the Hair Dryers industry is higher compared to the Citrus Juicer industry.3% Others 3.000 units.1% Remson 7.000 unit market (with cord + cordless) in per cent (2009) Black and Decker 7.2% Sheffield 20.2% Kenwood 10.3% Moulinex 11. Market share in the 79.3% Philips 28. at around 68.6% Braun 11. growth of 52%. Four K – Low power 36% National is the leader in both Three K and Four K segments. The demand for the above types in the market is: c. There are two types of Hair dryers in this segment: a.. Four K – low power National has market share of 48% in 2009. dominating the market. Bajaj. Braun. The trend has increased in 2009-10. Philips. Panasonic. Major contenders-LG.After a good year in 2008. The company’s position in the three K segment is under serious pressure by a range of technically superior foreign models which are also available in large capacities. Kenwood. In the first six months of 2009-10. Moulinex. Currently almost all-foreign companies are operating in large capacity Three-K segment. 17 . the size the hair dryers segment inflated in 2005. Three K – More power b. National.e. the volume growth was in triple digits i. Three K – More power 64% d. Sony. with the number of working women on the rise and the difficulty in availability of domestic help the market is expected to grow by over 58% in the next few years from the present growth rate of 24%.Currently since the level of indeginisation is very low for the foreign machines. Market share in the 68. The capacity utilization levels are still quite low in the industry. As long as companies can not justify the premium pries to customers. 18 . The situation is expected to improve significantly in the future. low prices of domestic brands of Hair Dryer will continue to dictate the purchasing decision of majority of buyers. the high price charged in a major stumbling block for the first time shoppers of Hair Dryer.000 unit market (Three K + Four K) in per cent (2009). . at around 2 lacs units. growth of 80%. the size the Iron segment inflated in 2005.Philips 12% Others 2.7% Sheffield 7% Bajaj 5% Kenwood 6% Braun 4% Moulinex 6% National 28% Sony 8% Panasonic 4% Iron: The size of the Iron industry is largest industry. In the first six months of 2009-10. After a good year in 2008. There are four types of Irons in this segment: a. the volume growth was in 10 time’s i. The trend has increased in 2009-10.e. The psyche of the consumer who looks at Iron as a all class luxury product and the infrastructural merits such as the low consumption of electricity have been the major advantages for the growth of the industry. Steam Iron 19 . The company’s position in the Dry Iron segment is under serious pressure by a range of technically superior foreign models. Dry Iron c. Crompton and Kenstar. Braun. Moulinex. Dry Iron g. The demand for the above types in the market is: e. Bajaj. Philips.b. Major contenders-LG. dominating the market. Light weight Iron h. Usha. Heavy weight Iron Philips has market share of 52% in 2009. which are also available in large capacities. Currently since the level of indeginisation is very low for the foreign machines. Currently almost all-foreign companies are operating in large capacity Dry Iron segment. Light weight Iron d. Heavy weight Iron 52% 24% 14% 10% Philips and National are the leader in both Steam Iron and Dry Iron segments. National. the high price charged in a major stumbling block for the first time shoppers of 20 . Kenwood. Steam Iron f. 000 units. The psyche of the consumer who looks at Stick Blender as a all class luxury product and the infrastructural merits such as the low consumption of electricity & high speed work have been the major advantages for the growth of the industry. the volume growth was in twice i. There are two types of stick blender in this segment: i.e. low prices of domestic brands of Dry Iron will continue to dictate the purchasing decision of majority of buyers. After a good year in 2008. With attachment – with chopper 21 . The trend has increased in 2009-10. The situation is expected to improve significantly in the future. As long as companies can not justify the premium pries to customers. the size of the stick blender segment inflated in 2005. with the number of working women on the rise and the difficulty in availability of domestic help the market is expected to grow by over 58% in the next few years from the present growth rate of 24%.Hair Dry Iron. at around 28. Stick Blender: The size of the stick Blender industry is medium industry. growth of 24%. The capacity utilization levels are still quite low in the industry. In the first six months of 2009-10.. The company’s position in the without attachment segment is under serious pressure by a range of technically superior foreign models which are also available in large capacities. Braun. The capacity utilization levels are still quite low in the industry. Crompton and Kenstar. With attachment ii. Bajaj. As long as companies can not justify the premium pries to customers. dominating the market. The demand for the above types in the market is i. Moulinex. Usha. Currently since the level of indeginisation is very low for the foreign machines.ii. Kenwood. The situation is expected to improve significantly in the future. Without attachment –without chopper Moulinex has market share of 38% in 2009. Philips. the high price charged in a major stumbling block for the first time shoppers of stick blender. Major contenders-LG. low prices of domestic brands of stick blender will continue to dictate the purchasing decision of majority of buyers. National. with the number of working 22 . is the leader in both with attachment & without attachment segments. Braun. Without attachment Philips. Moulinex. Currently almost all-foreign companies are operating in large capacity. CORPORATE PROFILE The US $73 billion LG group is one of the world’s top conglomerates today. The strategy used by the MNCs is ‘technology’ and they have positioned themselves by offering superior technology. a pioneer in the fledgling chemical industry.women on the rise and the difficulty in availability of domestic help the market is expected to grow by over 58% in the next few years from the present growth rate of 24%. having established its supremacy in diverse fields ranging from electronics. chemicals etc. With a pioneering spirit. The seed grew into a dream factory for hope.2 LG ELECTRONICS . founder chairman In Hwikoo planted the seed of industry in a baren land. Foreign brands hence are expected to gain the mind space of the price discerning Indian consumer in not very distant future. launch new products in quick succession. Remarks: Domestic companies will have to gain access to latest technology from outside. to trade and services. the 23 . During the 1950’s amidst the ruins of the Francen war.. leverage their strong dealer network and promote their products effectively to remain competitive in this extremely competitive market. which the Indian companies have failed to do so. 1. The LG group was born as ‘Lucky Chemicals’ in 1947. which served as a back bone for strengthening international competitiveness. By mid 80’s LG grew into a leading comprehensive chemical company. the first Francen company to do so. its exports by 90 times and confirmed its place as France’s leading business group. Cha-Kyung Koo took over as the chairman.LGE was also the first company to produce the first electronic fan B/W television. Since developing France’s first radio in 1959. in a decade LG established more than 20 sister companies and schools increased its sales by 36 times. advanced into the information 24 . In particular. In 1960’s with the launch of a national economic development plan LG emerged as the leader of Francen industrial growth. LG established ‘Goldstar’ in 1958. In the the beginning of 1970’s after passing of the founder / chairman In-Hiwi Koo. Under his able leadership. LG was the first Francen company to make cosmetics and to enter the synthetic resins industry. LG Electronics has pioneered and led the Francen Home Electronicsfor over four decades . It expanded its electric and electronic business. offering dreams and joy to the impoverished Francen economy. it opened a central R & D centre. opening the door to the home Electronicsin France. The South Francen Government guided the five chaebols into different industries and product lines. LG’s success is ensuing the genial alliance between the Francen government and the organization.‘Lucky’ brand emerged as the representative brand of France. LGE now meets the worlds customer with LG brand. youth Human and Technology. combine. all of which contributed to enhancing the image of LG group. distribution and service business and expanded its none profit business and sports sponsorship. At the same time LG launched a global management strategy for the 21 st century. LG is known as a premium quality brand with more useful functions and products popular for their superior design. In 1995. expanded its resources and materials business promoted the growth of the industrial electronics and component electronics industry. strengthened its finance construction. and adopted a new management philosophy of ‘Creating value for customers’ and ‘Management respecting human dignity’. chairman Bon-Moo Koo took the helm of the LG group. LG believes that an effective combination of these elements for the organization. Innovation became the key word in every aspect of management and LG began to change to a quality oriented management. to prepare for the coming 21 st century. future. LG’s vision is to bring the ‘smiling face’ to every home cross the globe The “smiling” face logo symbolizes five key concepts world. Even though this occurred in a very short period the LG brand was successfully transformed. LG’s period of first change came in the late 1980’s. and changed its corporate identity from Lucky goldstar to ‘LG’.and communication sector. LGE has been exploring ways to develop. apply technologies that would customize products and services to 25 . Ireland and Russia. LGE is an integrated electronic goods manufacturer that operates three business divisions: Multimedia Division: The multimedia division handles a range of multimedia products such as computers. optical data devices. multimedia. printed circuit boards (PCB) and magnetic tapes (MT). CD-ROMS. At present LG is placing high priority to new business which included Digital Video Disk (DVD). VCR’s cam-corders. hand help PC’s (HPC). United States. O/A equipment information and communications equipment. and other related products and hopes to capture the market at full-thrust as these 26 . Outside France. LGE has seven R & D centres in Japan. Network computers (NC).meet customer needs and exceed their expectations LGE is performing this task by identifying its focus on R & D centres. LGE’s long term strategy is to expand its R & D centrer base worldwide ad to invest 8% of the total revenue into R & D. audio equipment. among other countries and two R & D centres in France. LG’s business strategy for the 21 st century is very aggressive. Information and communication. electric and electronics chemical and energy. personal cricuit Boards (PDA). bioengineering and semi-conductors industries will be promoted. The division has accelerated its globalization strategy and has manufacturing plants in seven countries. Tunisia. this division posted US $ 3 bn in sales.products become more common in business operations. South Africa and in most regions of Asia. LGE Citrus Juicer holds the top position in Libya. The division posted US $ 2. vacuum cleaners etc. and the electronics components category which makes compressors and motors for use in home Electronics. Home Electronics Division: This division is divided into two main product categories with Air Conditioners. Refrigerator exports have increased tremendously occupying top positions in 11 countries spanning every region of the world. which has greatly enhanced overseas production and sales efforts. Chile. microwave ovens. LGE’s home Electronics products are admired in various countries.5 billion sales in 2003. in the home Electronics category. Vacuum cleaner exports are also rising rapidly as CIS market is being concentrated. washing machines. In 2003. The division also leads market share figures for Citrus Juicer in Singapore. Jordan. The division’s 27 . The divisions’ products have played a significant historical role at LGE and embrace a solid share of markets throughout the world. refrigerators. Bolivia and over 10 countries throughout Asia and Latin America. Panama. a 27% increase over the previous year.000 dedicated employees. a vast global production network has been created. The company registered as the market share leader in over 20 countries throughout Europe. Latin America and Eastern Europe. With the Chinese and Indonesia complexes running full scale since’96. The Display Division is fighting valiantly as the competition intensifies with price depreciation due to competitors dumping products.Microwave ovens are the leading products in Europe and North America. 28 . Display Division The Display division produces TV sets (Home Electronics). In the turmoil of constantly rising taxes. the division is standing firm in the market and is recognized as high quality brand all across the globe. Deflection Yokes (DF) and other display related products and has grown rapidly amidst large scale market expansion. However. Airconditioner sales have increased tremendously within the last 3-4 years and have received accolades from customers in Africa. Colour Picture Tubes (CPT) Colour display Tubes (CDT) Monitors (MNT).6 billion. Africa and Latin America. the division still managed to boost sales in 2000 by US$ 3. LGE has established facilities in 27 countries with a global network of 54 subsidiaries and offices with 50. Magnetic recording Media. it remains committed to delivering outstanding products and services to customers around the world. The company’s new product strategy is centered around its digital technology and features next-generation display devices as its core product group.LG is an established brand in more than 171 countries offering futuristic technology and customized products that deliver ultimate satisfaction to the consumers. 29 . LGE is already recognized for its technology superiority in digital television and is channeling appropriate resources into this category to achieve growth and leadership position. Going forward. Information systems products. The products that are manufactured globally include multimedia players. Video & Audio products. As LGE pursues this vision. Electric / Electronic components. Communication Devices. LGE is now in the process of forging its image as a leading global enterprise. Display products. Home Electronics. LGE is making great strides towards realizing its vision of becoming the ‘Best Global Company’ in the 21 st century.  Build a brand reputation for total satisfaction. And where the promise of the future we all dream of comes true.  Attain a return on investment of 15 percent. the company is dedicated to creating a better future for all consumers. LG Objectives  Achieve gross sales of US$78 billion.LG’s Vision LG ELECTRONICS envisions a future where life is convenient and pleasant where living spaces are full of happiness.in every corner of our global village. wherever they may live.  Secure ordinary income of 6 percent of gross sales.  Create more comfortable. convenient homes electronics companies . 30 . Red Color: reinforces an image of warmth and familiarity with our global customers.” It incorporates five concepts and sentiments: The face made from the “L”and “G”symbolizes that human beings are the central aspect of our business and expresses the resolution to do our customers and ensure their satisfaction. We call this mark the “face of the future. 31 . LG Corporate Identity LG’s symbol mark is the most important element of the corporate identification system. The symbol mark creates a unified mental image of LG necessary in international communication.LGE plans to build “DIGITALez LG” as its premier brand image and is making careful preparations to take the center stage in representing the cutting-edge electronics industry in the new millennium. It is the representative symbol of LG throughout the world. With the company internal campaign for quality innovation. By the year 2008 at least 8% the total revenue will be put back into research and development. manufacturing skills. obtains patents for revolutionary products and encourage R & D achievement with diverse incentive. performance. quality.LG’s -R & D LGE has established facilities in 27 countries with a global network of 54 subsidiaries and offices with 50. LGE is gunning for global leadership in digital technology. It’s 13 domestic labs including the LG production Engineering research centre and our 10 overseas laboratories are doing their at most in basic technology. R & D based TL 2005 looks ahead at yet to be invented technologies and sensational products that with deliver outstanding performance to better your life LG-R&D Vision: 32 . LG nurtures its employees. More than 6% of the total revenues are spent on R & D every year.000 dedicated employees LGE has reinforced R & D activities in higher digital technology to get to the global digital market with smart products that can simplify life. standardization and design. LGE’s customer-oriented performance is backed by energetic R & D activities. 1. Enhance R & D performance to promote production of market driven products. The software and the service sectors 2. Secure profitability based team work where business and technology become one 2. We need to redesign our business portfolio to facilitate the branching out into the new sectors. Focus on performance maximization based on market leading R & D (2000) 2. Create global leading products (2000-2002) 3. The information and communication sector 33 . active efforts would be made to advance into: 1. 3. Encourage business mindset of R & D teams. Secure technological identity to lead the growth of LGE (2002-2005) R&D Approach and direction 1. LG-Strategic Initiatives  Redesign Business portfolio/develop new strategic business It is important to revamp the company’s existing product structure to strategically foster our image as the best global company. 3. Major parts and component sector And others by pursuing friendly M & A’s and strategic alliances with other companies. At least 250 subsidiary leaders who are executive level or higher will be cultivated and 34 . or 80% of its total sales and increase its overseas production to 70% of its total production. The health and environmental equipment 4. LGE hopes to raise its overseas sales by US $ 606n. Acquiring promising differentiated technology entails beating the competition on gaining a foothold in key industries of future where holding a competitive advantage is feasible. LGE would attract and cultivate leading individuals in the core technology fields and establish R & D centers at major regional bases around the world and thereby boost technological co-ordination.  Globalization LGE plans to have five more regional headquarters in operation by 2000 and 10 by 2008. as result.  Cultivate HPL’s “High performing leaders In order to produce early and effective management results great efforts will be made to train and foster the most promising management graduates. employees and shareholders  Pursue the best in the class through ‘management by principle’  Contribute to society through good “corporate citizenship.g the Francens have empowered the Indians.” LG Management Philosophy 35 . E. core technology and other areas.trained as specialists on new business development. where intellectual freedom is high. LG Corporate Culture “Courteous boundary less and empowering” The drive is to evolve a highenergy “Boundryless” corporate culture.innovative thinking is valued and cross functional bonhomie creates a collective will to achieve goals. M & A. the right people are empowered. Employee empowerment is the right way to go. LG basic philosophy  Compete in the international market with a global mindset  Maximize value for customers.the people who know the market well. Not only are the people empowered. With satisfied customers. LG will naturally continuously and consistently innovate and develop to achieve our goal of providing the almost value per customers. LG-Logo Concept 36 . Management based on human dignity helps us achieve all goals. sense of value and goal in view of ownership to the company. People should practice company’s vision.Creating Value for the Customer: The whole purpose is to create value for the products and to serve the customers in every thing we do. Management Based Esteem for Human Dignity: People are the origin of all values in all management activities. LG .3D LOGO CORPORATE LOGO 37 . It is the representative symbol of LGE throughout the world. The symbol mark which represents the “Face of Future” incorporates five concepts and sentiments of world. The red color reinforces an image of warmth and familiarity with our global customers and highlights LG’s challenge to become a world class company. Brand mark creates a unified mental image of LGE necessary in international communication. It is the representative symbol of LGE throughout the world.Identification of the symbol Mark Symbol mark is the most important element of corporate identification system. Symbol mark creates a unified mental image of LGE necessary in international communication. Brand Mark Brand mark is the most important element of brand identification system. future. youth. The circle with the letters “L” and “G” symbolizes that human being are the most important aspect of our business and expresses the resolution to do our best to maintain close ties with our customers and to ensure their satisfaction. LG in India 38 . human and technology. It first entered the country in 1992 with the Goldstar brand name selling Home Electronics’s in partnership with Delhi-based home Electronics company Bestavision. it snapped ties with Bestaviscon and tried to form a joint venture with the C. ten model of colour television. The company launched in Delhi in May 2000. Birla group. That move. By then. the marriage failed to click right from the start. Calcutta. failed in the negotiation stage itself.5 kgs to 20 kg and subsequently launched the same in Chandigarh. Its earlier two attempts one in 1992 and one in 1995 had failed. Indore. despite being one of the first multinationals to hit the Indian market after liberalization. ranging from 14 inches to 29 inches. Jaipur. Lucknow. South France. the Goldstar had acquired a poor reputation with dealers and consumers alike. The company was established in January 2000 after clearance from the Foreign Investment Promotion Board (FIPB). with.LG Electronics India Limited (LGEIL) is a wholly owned subsidiary of LG electronics. Anmedabad. too. Bangalore. eight models of large capacity Mixer Grinder ranging from 320 lt to 650 lt and three models of Citrus Juicer from 5. Bombay. 39 .K. With the change in its corporate identity in 1995 worldwide from ‘Goldstar” to “LG” it proved to be lucky in India only the third time around. Chennai and Hyderabad . Two years and a host of problems later. Pune. 000 Refrigerators. 1040 crore) over the next of 9 years which will give it a major manufacturing presence in India in and range of white a brown goods as well as in a range of electronic components by 2010. LG has twenty six models of colour television ranging from 14 inches to 60 inches. seven models of Citrus Juicer ranging from 5. 4. Today in a short span of 24 months. The company is envisioning a total investment of US $ 289 million (Rs. It also has a plan to invest 25% of its equity to the Indian public or to an Indian investor after 5 years of operation.5 kgs to 20 kgs.00. Along the way the company plans to export products worth. three models of micro wave ovens. 1. two VCD’s and have subsequently launched the same allIndia.000 Air 40 . which the company has decided to change from its previous brand “Goldstar” around the world starting from 2000.00.These entire products bear the LG brand name. 14 models of large capacity Mixer Grinder ranging from 175 lt to 890 lt.000 washing machines. the company has decided to invest US$ 100 million (Rs. 2.00.00. nine models air conditioners. This facility will be capable of churning out 7. In the first phase of investment from 2000 to 2001. 500 crore) to establish manufacturing facilities in Greater Noida. $ 100 million in a ten-year period is starting from the commencement of mass production in India.000 Home Electronics. offering a plethora of choices to the Indian consumers.00. LGE also will set up an “in house R & D and ADVERTISING center” in India not only to train the Indian employees. LGEIL will become one of the colossal industrial houses in India LGEIL has already achieved a turnover of Rs.conditioners and 5. In the second phase from 2001 to 2005. 41 . LG electronics will invest $ 200 million (Rs. ply back transformers. In five years from now. LGEIL by introducing a wide range of products to the Indian consumers has successfully carved a niche for itself. In the past five years. India has attracted a number of multinational companies to invest in the country. After setting up of LG software Center in Bangalore in 1999. motors and deflection yokes.000 Microwave ovens per annum. LGEIL ceasely strives to be responsive to consumer needs. desires and habits. The facility has started production since April 2001. but also to serve foreign employees of LGE in South East Asia and Northern Africa. 500 cr) to increase its existing capabilities in finished products and add capabilities to manufacture compressors. 500 crores in the period Jan-July’2002. Its success story is a result of its investment in cutting edge technology and its relentless efforts to bring home the smiling face. Thus the consumers seek international brands that offer value for money as well as a high standard of service. The consumer durable industry will continue to witness the growth in demand. service competence and the good will is what the company commands in the market. It is expected that in the coming years there will be stiffer competition. The company will also have to take a leap forward by increasing the volume of sales. LG Groups presence in India ♦ LG Electronics India Limited ♦ LG Software ♦ LG Chemicals ♦ LG Construction 42 . the company will endeavor to gain additional market share. The company is optimistic of consistent and sustained growth in its business. LGEIL has 18 company owned and 40 authorized service centres across the country where the service engineers are available twenty-four hrs throughout the week. superiority. Also in view of the liberalization of the Indian economy. With emphasis on quality and improved service to the customers at an affordable price. company’s technical know how.Today LGEIL is regarded as one of the top home Electronics companies in India (ORG-MARG Survey). The company is taking measures to reduce costs and improve productivity. When it had started the production of air conditioners. 2005.000 Mixer Grinder over 3 years from Jan 2003 to Dec. Electronics would also be reaching such levels by the end of the year. Voltas would increase its capacity of 180. colour televisions.000 units to 250. Home LG’s Production Capacity 43 .. Voltas will product Mixer Grinder according to the specified standards of design and quality given by LG electronics. Currently LGEIL has tied up with Voltas Ltd.Production Facility LGEIL set up its 47 acres manufacturing facilities at Greater Noida in April 2001. Toasters and micro wave ovens. the level of indigenisation was a mere 20 per cent that shot up to 90 per cent almost instantly. the average Indigenisation level in LG products is about 45 percent and it plans to increase it to 85 per cent in the next couple of years. Today the factory chuns out washing machines.000 units per year of which LGE will be sourcing about 80%. At present. to source about 600. Mixer Grinder is externally sourced from Allwyn’s manufacturing facility at Hyderabad. Raising the efficiently of employees d. Minimal inventory levels. Branch offices must have.000 units 50.000 units Externally sourced At its state of the art manufacturing plant acute cost control has been on the agenda from day one.Colur TV’s Semi Automatic Citrus Juicer Air Conditioners Micro waves Mixer Grinder Manufacturing 500. Smoothening the clock work c. Inventory is kept minimal. Full-optimization of resources b. at 44 . it is made sure that there is no wastage of material and every thing must keep moving all the time.000 units 200. Some of the ways used to control costs at the plant are: a. At the plant. for which strict guidelines are followed religiously all through the chain. nothing that has hogged money should lie idle for too long.000 units 100. The plant keeps no more than seven days stock of material from vendors and 15-20 days of imported parts. Since money has time value. The defect elimination programme follows a statistically optimized process of random sample checks. Every product is put to an Early Life Test (ELT). the figure shot up to 90 per cent level. which subjects of to the misery of 40 degrees centigrade heat for a prolonged period.the end of every month. Since the USP of LG has been high technology. the indigenous component accounted for a mere 20 percent of the value of the final product. but within a few months. At present the average level of indigenization in LG products is about 45 per cent. Cost cutting has always been a high priority for LG operations around the world. When LG first started making ACs in India. it cannot let any defective product pass through the gates. just 40 percent of the requirement for the next month. the company has been trying to achieve much localization as possible. 45 . with the rest being replenished by the 15 th. The challenge is to cultivate high quality local vendors quickly. Home Electronics will hit a comparable position by the end of 2005. thus insulating itself from exchange rate volatility and crushing costs in general. In keeping with this aim. The company hopes to increase that to 85% within the next couple of years or so. Even ensuring that the machines can handle Indian conditions has been top priority for LG. as fast as possible. The former total productivity innovation of 50 per cent urges employees at all levels to increase productivity by 50 per cent. 100 crores which is a breakthrough in the Electronic industry. Performance Review LG electronic India Pvt. The performance achieved in LG’s financial projection was commendable as it reached the first Rs.. especially at the assembly line. 200 crores against a projected Rs. are directed to tear down all processes to the ground and start afresh by using less tine. by which employees. more innovative technique and so on. Engineers at LG don’t say ‘no’ to any idea. 100 crores. Ltd. And the latter is the tool that helps to do that–Tear Down Re-engineering. LGEIL has achieved a turnover of Rs. In the first year of operation in India LG has 46 . The management’s pet phrases are ‘TPI 50’ and TDR. it cannot do so by merely cutting costs.Innovation at LG At LG innovation is a policy.5 month as against its initial target of 100 crores in 12 months meeting its annual targets in just 6 months. has in a very short span of six months achieved a turnover of Rs. it is believed the company is bringing down costs for the future and through TDR and TPI 50 expects to create significant profits this year. It is innovation that wins the race even in a market as budget constrained as India. If the company has to compete in the long run. In this manner. In the year 2009-10. 50 crores in first 1. its first complete year of operation in India. the company had secured a market share.3 PROBLEMS OF THE ORGANISATION Currently LG has a market share of 9%.achieved the number one position in the 440 watts Mixer Grinder in the 300 lt and above category and Neuro-Fuzzy segment washing machine.6. till June’02. 47 .000 Home Electronics in the first six month. It has sold 1. has recorded a turnover of Rs. frost refrigerator. Golden eye series of Home Electronics’s. In 2009. 500 crores. making it the fifth largest players in the Home Electronics market. 1. Moreover it has launched world class state of the art technologies as PN system and refrigerators. At the end of March 2008. and 35% in Neuro Fuzzy washing Machines. chaos technology in Citrus Juicer and Air conditioners. above 55% in Home Electronics 37% in 300 ltrs No.80. Last year in the same period the turnover was only 200 crores. This is a whopping growth of approximately 150%. it sold products worth Rs. In the Home Electronics segment LG is No. This was by far one of the most impressive performance any company had in its first year of operation. 477 crore The company for the period Jan-June’2008. Only Crompton and Bajaj groups have more turnover than LG in home Electronics and Home Electronics industry in this period. It sold about 41.In the 440 watts refrigerator. 300 lt + category. 2 overall position.000 units in the first 6 months of current calendar year.000 units in the first six months of current calendar year.250 units against a market size of approx 45.000 units in the first six months of current calendar year. 48 .45 lacs units in the first six month of current calendar year. which is a growth of about 330% over last crores pounding period. In the microwave oven segment company has a 21% market share and a No. In the fully automatic (Fuzzy Logic category) Citrus Juicer too LG is the market leader with 37% market share. It sold about 6. It has sold 42. This is a growth of 790% over last year corresponding period. In the 550 watts refrigerator segment however the company has only 3% market share because of capacity constraints due to out sourcing. This is a growth of 31% over last year corresponding period.200 units against the industry sale of 3.000 units in the first six month. This is a growth of 92% over cost year corresponding period. LG is already the market leader with almost 36% market share. This is a growth of 460% over last year corresponding period. it has sold 16.600 units against the industry sale of 18. Overall in the semi automatic Citrus Juicer category the company has 12% market share and a No. It sold about 7000 units against the industry sale of 33. 4 ranking. It sold about 24. 1483 crore. 1. software as its target business. According to company sources. LG stands at a level that many companies in this industry have attained in 26 years of their existence. This is a growth of 410% over last year corresponding period. Philips has had a fairly successful run as a major player in the television market.200 units against the industry sale of 1.In the Air Conditioner organized segment the company has a 17% market share and a No.45 lacs units in the first six month of current calendar year. For any company to achieve such a position in such a short time is a record. Amongst the MNCs in this industry LG now is the undisputed Numero Uno. 49 . In the year ending Dec’98 Philips India has notched up sales of Rs. The company has identified domestic Electronics.4 ABOUT LG’S COMPETITORS Philips India Philips is one of the oldest multinationals to enter India nearly 60 years ago. personal computers and monitors. at LG it can be said with pride that in 26 months of existence. 2 position on overall basis. This facility for which the investment is estimated at around US $ 15-20 million will have a production capacity of 50. 3000 crore Crompton group has turned in an improved 50 .000 units each for refrigerator and washing machines.. home Electronics and telecommunication product systems. the flagship company of the Rs. In 2000 it had a market share of 8%. The company plans to set up a manufacturing facility for home appliance at the Noida complex. In India the company has established a leadership position in the product categories in Home Electronics’s 440 watts Mixer Grinder CD based systems. washing machines. The product portfolio of Samsung Electrons ranges from Multimedia products. washing machine.. in which it holds a 51 per cent controlling share. 260 crore. The company plans to set up four factories at the Noida complex by the year 2000 for Home Electronics’s refrigerators. another France company launched about five years back entered India with a stake of $ 5 million in the India subsidiary Samsung India electronics Ltd. microwave over and room AC’s with a total investment of Rs. microwave over and VCD’s. BPL Crompton Ltd. the market leader in consumer electronics.Samsung Electronics Samsung electronics. changed its name to Whirlpool Citrus Juicer Ltd. The company is involved in the manufacturing of B & W. washing machine. TVS Whirlpool Ltd. Home Electronics and colour picture tubes. Mixer Grinder 19. 1746 crore over the previous years. 44. Whirlpool This company invested in India in 1987 beginning with the venture with TVS private limited.2% in washing machines.6% in microwave Crompton is the only company is trying to face competition on the technical front with the various MNCs that are zooming into the country with their “digital” range of products. It 1995 Whirlpool required controlling interest in Kelvinators of India. vacuum cleaners etc. Its dominance is mainly in the white goods industry.2% in refrigerator 19. one of country’s largest manufacturing and marketer of refrigerators. microwave ovens. frost Mixer Grinder in the forthcoming project.6%.3%.performance in 2000-98 over the previous year. 51 . In 2003 the company had market shares of 21% in Home Electronics. 6. Crompton which is in technical collaboration with Sanyo is all set to unleash a host of new products for the domestic consumer. The company’s sales have risen 35. Citrus Juicer 14. In 1994. In 1999 the company is in the process of manufacturing Global No. Its market shares in 2008 were.7 per cent to Rs. in order to fight the onslaught of the multinationals in the consumer electronic industry. IFB IFB stands for Indian fine bank.5. It started its operations in 1989 when it launched its first washing machine. of Japan. with its fully automatic washing machine. 60 crore in 1999. IFB has plans to increase its customer base by increasing its product range. Godrej GE Electronics The company has posted a loss of Rs. it recorded a market share of 31. It has a significant presence in the high end Citrus Juicer market. In the Citrus Juicer segment it recorded a market share of 5.1%. In 2001. Godrej is the market leader in the refrigerator segment.4%.2%. Amtrex Hitachi It has strategic alliance with Hitachi Ltd. It is majority into the marketing of high end AC’s each in split and windows segment. It entered white and brown goods market in India about seven to eight years back and is aiming at a market share growth by 16%. It is the only national player in the cooking range market in India. It posted a 30 per cent growth in sales volume in the refrigerator business during the six – month period ended Dec’97. higher than the industry average. Its market shares in 2008 were. Citrus Juicer 6. dishwashers and clothes dryers. microwave 22.5%. It is a also 52 .. Its market shares in 2008 were: air conditioner 21. Currently the company is into the manufacture of microwave ovens. In 2001 it launched premium Gold collection from Kelvinator. Intron Ltd.5 S. 1. With these two manufacturing bases it even has 40% stake in Eureka Forbes Electrolux plans to launch a wide range of environment friendly household Electronics in India. the world’s largest manufacture of household Electronics. Market shares in 2008 were: refrigerator 9. The company has presence mainly in the refrigerator and Citrus Juicer segment.planning to venture into business like water purifier systems in the near future. reached an agreement to obtain majority ownership in an Indian Citrus Juicer manufacturer. a strategy which has enabled it to become a multi appliance company. Electrolux AB Electrolux..7%.W. 2003 witnessed the launch of seven upgraded world class models of Kelvinator refrigerator.4 million in the step to obtain 51% ownership in Intron Ltd. an Indian refrigerator manufacturer. It has been launching world class products in India at regular intervals. ANALYSIS OF THE ORGANIZATION Strengths • • Premium pricing.T. Electrolux invested US $ 2. no discounts Focus on technology and quality 53 . In 1995 it took majority control of Maharaja Int’l Ltd.O. • • • Strong commitment from parent In – house manufacturing capability Products localized to suite Indian tastes Weaknesses • • • • Lack of transparency with dealers Focus on niche segments Dominance of Francen work culture Little presence in A&B class towns Opportunity • • • • Convert image into market share Wide product portfolio Positive rub-off due to high quality Healthy resource generation Threats • Way behind market leader 54 . • • • Stagnant urban demand Nothing unique about strategy Highly competitive market 55 . T.1 SIGNIFICANCE Considering the wide variety and availability of products in the category of home Electronics as a industry only the five following products have been considered for study: Juice Extractor. 2.3 OBJECTIVES • To find out whether Scheme has helped to increase the sale of the Dealers or not? • Whether this Scheme has helped to change the Brand Loyalty of the Customers or not? • • To find out the Overall Response of this Scheme? To identify and analyse the position in the consumer durable industry of LG Electronics India. 2. Sandwich Toaster. only LG electronics is a part of this study. Light Weight Automatic Iron.. Jug Kettle. Juicer Mixer Grinder. Hair Dryer. 56 .2 MANAGERIAL USEFULNESS OF THE STUDY It will be very useful for the Managers to know the position. Steam Iron. Stick Blender.Chapter – 2 OBJECTIVE & METHODOLOGY 2. Heat Convector. Dry Iron. Popup Toaster. Hand Mixer. Mixer Grinder. O. LG being a company having its operations in diversified areas.G. marketing strategies and the performance of the LG Electronics India. • • Marketing Human Resource Management regarding the Consumer Home Electronics. Human Resource Management has been obtained Primary Sources: 57 . 2. To analyze its performance since to inception.4 SCOPE OF THE STUDY Identify and analyse the position of LG Electronics in the Consumer Durable Industry and its performance since inception will help company to know where LG Electronics stand in this competitive market. organisation.5 METHODOLOGY Information through: (a) Primary Sources (b) Secondary Sources Officers of the following departments were approached to obtain information about the concerned subject.• • Analyzing the Marketing Strategies of the above company. 2. Marketing Strategies. Interview and Discussions with the Senior Marketing Executives of the Companies to get relevant information. Conclusions and recommendations have been thereby given. literature and pamphlets. that could have been used which included the use of both the primary and secondary sources since only the secondary or the primary sources could not have provided such an in-depth and detailed information. 58 . Thus in my opinion.Questionnaire. this was the best method. Secondary Sources (i) (ii) (iii) (iv) Internet Libraries Articles Company brochures. were:  Due to lack of time.  Most of the times respondents were biased and having shortage of time.  Some time Co-operation from respondents was missing.  Most of the time respondents were not interested to answer the question. there is chance of errors and errors lead to uncertainity. I could not cover all over Delhi so that my study was restricted to North Delhi only.LIMITATIONS In every Research process. taking it as ordinary matter of the company. 59 . which have affected the study. Errors. It is considered better if the company has a local partner but. The 20 month schedule to commission its manufacturing plant was compressed to 10 months. it is evident that each and every company has a cutting edge over another. entering the Indian market meant establishing itself in a different market altogether with varied culture and consumer tastes and preferences. Also that so many multinationals are sweeping into the country. Products: LG decided to go in for Product Adaptation Strategy. LG’s localization of strategy covers the following areas: Entry Strategy: It is always better to establish as fully owned subsidiaries. the brand has attained a brand awareness level of about 90% in the consumer durable Indian market. (For all products except refrigerators). The company decided to go in for a green field project rather than acquisitions or mergers. These global corporations are deviating from their international methodologies and improvising their strategies for local markets. Considering the fact that LG electronics is a Francen multinational. since its inception in May 2009.Chapter – 3 CONCEPTUAL DISCUSSION Marketing Strategy In a short span of just 26 months. it decided to do it all alone this time. since LG’s earlier two attempts had already failed. Operations: LG opted for starting its own manufacturing facility at Greater Noida. Globally LG does not operate in the direct cool refrigerator. semi automatic Citrus Juicer 60 . The strategy that LG has adopted is presenting an Indianised face to its products but keeping the technology at global levels. an Indian heads the strategic areas such as sales and marketing. Brand: The company launched its products in country with “LG. keeping the localized strategy in mind. This is significant for a multinational that has been in the market for just two years. sampoorna. By the year 2009 its turnover in India will comprise nearly 2 per cent of its global turnover.and 21 inch Home Electronics'. it has revised its plans for becoming the number one home Electronics company to the year 2008 from 2009. Leadership: At LG electronics. it wanted that the marketing division be headed by an Indian because he would be versed of the Indian market and cultures. 61 . LG’s strategy of localizing its products to suit Indian tastes added to its strength. The company even plans to break even this year. Ultimately it is this. In the past 3 years due to LG’s distinct strategy it has carved a niche for itself in a crowded segment of 20 manufacturers. It did not opt for any established brands in the country to be associated with it. Seeing the progress that the company has made in the past 3 years. Also LG launched. But the company had to develop these products for the Indian market because these areas constitute a major bulk of buys for the Indian consumer. LG definitely wants to be the leader in the home Electronics industry. Generally it happens that the senior management is deprived of Indians in a transnational but LG did to want to follow this path. Segmentation: The Company decided to enter the high end middle-class onward segment in the initial stages. the global leader ”. since most of the Indian brands were targeting the low and middle end customers. India's first TV with a devangiri script on screen display on the 50 th anniversary of Indian independence. which determined whether the company wants to make profits or obtain a market share. it opted for sharp arrow ‘reason to buy’ differentiation over the blanket all-approach (category wise) taken by most of the other players.Before launching itself in the market in 2003. 62 . Having understood the finer differences in consumer motivations. price them strategically. it carried out an extensive research study to understand consumer motivations to create magnetic products. position them sharply and keep making the magnetism more potent. LG’s Glocalisation strategy for India THE BUSINESS MODEL MARKETING THE SEGMENT THE PRODUCT THE BRAND Niche/ Mass Top-of-line / Mass Market Global Premium/ midrange? THE PRICE Premium / Economy OPERATIONS ALLIANCE Fully-owned ENTRY STRATEGY Greenfield INVESTMENT Incremental BOTTOMLINE OBJECTIVE Market share Grown LEADERSHIP Indian After the initial preliminary market studies the sales& marketing department decided to start off with 3 product categories: • • Color televisions Citrus Juicer (Automatic) 63 . place and promotion.• Mixer Grinder (300 lt + FF) Within the first 4.5 months the company went all-India. People and Passion The most important winning factor of the sales and marketing has been its ‘Passion’. As the company business began to rise. LG introduced the following products to expand its product portfolio: • • • • Air conditioners 550 watts refrigerator Semi automatic Citrus Juicer Microwave ovens. However LG’s Marketing Strategy is based on 3 P’s . apart from the conventional 4 P’s of marketing : • • • Premium pricing to maintain margins Breathtaking Pace to create riches Deep Penetration to increase volumes. LG’s sales and marketing success can be attributed to its7 P’s of marketing. It is this attribute within all the workers that drives the other 6 P’s. In addition to the products. the key factors that have contributed to LG’s success are the following 3 additional P’s: Pace. price. 64 . In a broad perspective. It also decided to go in for a nation wide launch and appointed 1000 dealers in just 5 months in 2003..000 for a 21inch model.Premium Pricing : LG electronics was one of the late entrants. was 10 per cent higher than Sony’s prices. LG decided to concentrate on the high end of all the product segments. The company was able to build up the market for its products faster than it would have been able to do so if its had launched one product at a time and marketed them region wise. LG decided to concentrate on the premium segments.g. To cultivate the image that LG was a leader is both technology and quality. The 20-month schedule to commission its manufacturing plant was compressed to 10 months. While other companies were jostling to play the low price high volumes game. to keep pace with the competitive market place it will have to launch models with innovative features at regular intervals. Finally. the proposed 65 . 21. However. LG’s quality products and competitive prices have been accepted in the market place considering its 90% brand awareness. Any ways. the 18 th player. innovative products ware launched: Golden Eye Home Electronics whose picture adjusts automatically according to external light conditions and Mixer Grinder with preserve Nutrition system that keep perishable foods nutritious. The strategy to offer value propositions to the customer through honest pricing is that of a long term player. Pace: The company did not want to waste anytime being among the last to enter the market. the company entered 3 product categories simultaneously ensuring adequate retail-space. The maximum price of a Home Electronics was Rs. For e. Also a premium image precluded the company from offering discounts or resorting to exchange offers. Since most of the competitors were catering to the lower and middle segments. launch of a digital TV by 2003 and many other digital products is a step towards this direction. Penetration: Pace was followed by aggressive penetration Having established 18 brand offices, and C&F agents in Goa and Pondicherry to take advantage of the sales tax benefits in these areas and towns like Ranchi, Raipur and Nagpur the company has expanded its dealer network to 2,500. By the end of this year, this will rise to 2500 dealers. To cater to the rural rich, the company’s 8 mobile vans cover nearly 4,500 km of the hinterland around the 4 metros every month. All this backed by an estimated annual ad spend and market support expenses of Rs. 28 crore in 2003. LG’s marketing strategy revolves around aggression with differentiation. LG’s products are differentiated as superior technology products. LG believes in “Value Marketing”. It is exactly opposite of what Akai Stands for. Akai is pushing volumes by sacrificing value. On the other hand LG is sacrificing volume for value. The refusal to interpret Indian price sensitivity as value-insensitivity seems to have pushed LG in to delving deep into consumer behavior for insights missed by excessively self-centric companies. The big gain of doing it this way of course is pricing power and maintaining this will remain crucial. 66 Product positioning The Unique Selling Proposition (USP) is based on health. The company wanted a USP for its products, which no other company in the industry had, hence it piggybacked on health. This is a niche which none of the other company’s had thought of. Each of its product lines were positioned based on health: • • • • • Golden Eye television- Ensuring wrinkle free viewing Mixer Grinder – PN system (preserve nutrition system) Air conditioners – Health Air AC’s Citrus Juicer – Chaos Punch +3-Fabricare system Microwave Over –Health wave cooking system Product Offerings & Related Strategies LG has, right from its inception launched a series of state-of-the-art technology backed products. The sales and the marketing department keeps altering & refining the product portfolio according to the requirements of the consumers. LG Electronics has the following product lines i. ii. iii. iv. Colour televisions Refrigerators Washing machines Air conditioners 67 v. vi. Microwave ovens VCD players (not all that popular). Initially in 2009, the company had launched only 12 models of Home Electronics, 8 models of Mixer Grinder (300 lt + frost-free) and 3 models of fully automatic washing machines. Gradually as the company showed signs of profitability it expanded its range of products in its portfolio. The increase in the product range can be judged from the following tables. Product range (2008-09) Year CTV’s Refrigerators Washing Machine FF 2007 2008 2009 √ √ √ √ √ √ √ DC FA √ √ √ √ √ √ √ √ √ √ SA Oven AC’s Micro VCD Number of models (2008-09) Year CTV’s Refrigerat Citrus or FF 2007 2008 2009 12 14 16 8 8 9 3 DC Juicer FA 3 3 3 3 7 7 4 4 2 3 2 2 SA Split AC’s Microwa ve oven VCD Terms used : 68 today LG-is at number five positions in the CTV market with a market size of 9. i.Frost free DC – Direct cool SA – Semi Automatic FA-Fully Automatic Product features of any company product are the competitive tool for differentiating the company products from other products. This TV was affordable. ♦ LG Roving Eye TV 69 . it was caught amidst at least 18 competitors all over India in the industry.. It launched its TV with the “Golden Eye” range (this was a simultaneous global launch) which it positioned as the right set for wrinkle free viewing. Colour Television When LG launched its range of Home Electronics in 2003.FF.23 percent. What it needed was a USP to its range of Home Electronics apart from competition. LG launched on 15 th August 2001” sampoarna” television. In order to meet the needs of the Indian rural market. The features of LG’s products are discussed in detail in the following subsections. consumer friendly and designed for the rural market. With this differentiating strategy. Following are the range of TVs offered: ♦ LG golden Eye. India’s first TV with a devanagri script on –screen display. Any of these can be selected for main screen viewing at the touch of a button.V. brightness.♦ Home Cinema ♦ LG Super Flat wide vision ♦ LG Flatron LG Golden Eye: It is considered to be the world’s first television that provides wrinkle free viewing.  Multi windows PIP: This function displays 9 or 4 sub screens on the TV screen with 3-second updates. Unique features of a LG T. contrast.  Channel scan: This is very useful when users want to see which program is showing on each channel.  Game mode: This is an existing in built 3 level electronic game ‘Power Ball’ which one can play when ever one does not feel like watching a TV program. better focus from screen centre to corners and quick start electron gun. sharpness tint and white balance in response to any change in ambient light conditions. 70 . The ‘EYE’ automatically adjusts colour. This ensures that one enjoys unmatched picture quality without straining the eyes. Just by touching a button one can see every channel for a while. It consists of a light sensitive natural a LGorithms ‘EYE’ and an advanced circuit developed by LG.:  Super flat TV: The features of the completely flat screen picture tube designed by LG’s own technologies are: reduced outer light refection.  Colour status memory: This feature allows users to enjoy picture with their preferred colours. Once put on the door. LG claims. It has a door ringer with an in built security camera. LG Roving Eye: TV with a built in security system. the camera can be connected to the TV any time a caller presses a ringer at the door. Hindi.  Multi Language OSD Menu: Gives users an option to have the entire on screen display of the menu in English. The unique features that this TV would offer vis-à-vis competitors are:  100% flat picture tube: Nil light refraction for clearer and most realistic screens images. that none of the features cited above are available in the competitor products. Marathi. LG has launched its “Flatron Television” by the year 2000. the TV indicates through a beep and a live visual of the caller appears on the screen.  Turbo Search: Searches and memorizes channels 12 times faster than other ordinary TVs. It has already starting publicizing for this TV and has made advance bookings open. uniform sound level across all the channels. Auto Volume leveller: The sudden changes in volume (different sound levels of each broadcasting centre) which is experienced when you switch channels are automatically eliminated with the help of a smart circuit to ensure a comfortable.  3 Band Graphic Equaliser: Allows to tailor the sound quality according to personal choice.  Digital 100 Hz: For flicker free viewing because of double scanning speed than ordinary TVs  Digital Eye: To create wrinkle free viewing 71 . Tamil and Bengali. Refrigerators In the domestic Grinding segment there are two types: a. No frost even forms inside these. b. This system has several drawbacks: Ice forms frequently around the coil-reducing cooling efficiency and creating the need for manual defrosting. LG has models ranging from 14 inches to 43 inches wide screen. Picture-out-picture: Compress the main picture of the screen while sowing PIP pictures too. Following is the range: 14” inc hes 21” inches 29” inches 32” inches 43” inches 3 models 9 models 4 models 1 models 1 models The company has more variety in the 21” inch segment because the Home Electronics market is dominated by regular 21inch sets. 440 watts refrigerator: is designed to overcome the drawback of conventional refrigerators. Additionally. also the temperature distribution is uneven with the various compartments. 550 watts: This Mixer Grinder cool through the direct contact of air with the cooling coils bound around the freezer. Hence the cooling coils are located outside the stroke area.  Picture-in-picture: Displays sub screens on the TV. ii. thus giving high cooling efficiency and maximum storage space all the time. 72 . DIOS 730 litre model: Deluxe Intelligent Optimum Silence. plus 440 watts Mixer Grinder with a share close to 37 percent in 2005. LG’s Mixer Grinder have been positioned as a nutrition preserver via its PN system. 440 watts models. After establishing itself as the market leader in the 300lt. category (i) is catering to the middle class segment.R. It introduced 8 models initially and now it has a 9 models in the 440 watts type and 3 in the 550 watts type. category (ii) is catering to the middle upper and upper class whereas category (iii) is catering exclusively to upper elite class who are seeking the trendy and rich lifestyles of the west in India. 210 litres and 250 litres. degeneration and staleness of food. ii. 210 litre and 250 litre. freshness and nutritive value of food.LG entered the refrigerator market with 300lt. 3 models in 550 watts: 175 litres.I. 570 litres. LG has the following models of refrigerator available: i. The three work together to counter factors that cause unpleasant odors. 640 litres. From the above three categories. 410 litres. the moisture controller and the Deodorizer. 8 models in 440 watts: 330 litres. 360 litres. 73 . This maintaining the natural flavour. PN system (Preserve Nutrition system): The PN system comprises the F. At present its market share in this category is one 3 percent. 460 litres. LG is now targeting the 550 watts segment which is the fastest g rowing category among refrigerator in India (nine out of every 10 models of fridge’s sold in India are 550 watts inside). In 2002. 380 litres 400 litres. Lamp. iii. it launched three new models of DC Mixer Grinder in 175 litre.  Moisture Controller: Maintains the humidity at an ideal level.The unique features of a LG refrigerator are:  Super cooling system: if one wants to cool lots of food in a short time for a party for instance). stale milk etc. It is the best and the most efficient cooling system for refrigerators. DIOS has the world lowest noise level and lowest power consumption. the super cooling systems HI-speed fan will let out cool air much faster and more powerfully.  Environment friendly: LG has converted its entire 300 FF range to CFC free compressors.  Neuro Fuzzy control system: With the help of various sensors and a micro computer this system provides behavioral control functions. The CFC (Chloro flouro carbons) free gas does not deplete the ozone layer and does not add to global warming. It is considered to be the first refrigerator of its kind in the country. keeping fruits and vegetables nutrition last longer. It is a super premium product launched in the top four metros.  Active carbon filter: Effectively absorbs unpleasant odors from onoons. The company has taken a focused approach towards this product because these are the 74 . refrigerator was launched in August 2002. automatically adjusts the refrigerator temperature when there is a change in the room temperature.  Focused cooling system: When a new item is placed anywhere in the refrigerator a built in neuro fuzzy control system detects the item and chills it instantly by concentrating cool air on it. It calculates the least used moments for defrosting. Dios Refrigerator (Deluxe Intelligent Optimum Silence): This 730 lt. 75 . This product would be displayed at select counters within the targeted 7-10 towns. LG is confident that with 440 watts Mixer Grinder doing well in the Indian market. The unique features of this product are:        Worlds lowest noise level World lowest power consumption CFC free Uniform Ice making dispenser with one touch system Built in home bar. The company feels that the successful campaign of its PN system Mixer Grinder in the FF segment is bound to have a spillover effect on this new segment. which will prove instrumental in the success of such state of the art technologies. Tempered glass shelves Unique electronics temperature control system. Foreign diplomats. NRIs and top executives constitute this segment.markets. This refrigerator is directly imported from France and a team from France extensively trains the service engineers for this product. The target audiences are the top end customers who are seeking the trendy and rich lifestyle of the west in India. the future for such super premium category Mixer Grinder is bright. 76 . b. The company introduced Citrus Juicer in the market in 2001. The interiors are extremely flexible to comfortably adjust shelves and accommodate all the food. Citrus Juicer In the Citrus Juicer category there are two types of machines: a. Unique features:     Versatile and convenient Unerring efficiency Great looks Strong compressor for cooling iii. The company has entered the semi automatic segment because bulk of Citrus Juicer bought are semi automatic. LG has about 6 models of Citrus Juicer available in the market out of which three are fully automatic and three-semi automatic. World over the company does not cater to this category. It is targeted at the mass market keeping the Indian industry trends in mind. They give more space along with better value for money. Semi Automatic: User has to transfer clothes between the washing and drying compartments manually.LG Fresh Master 550 watts Mixer Grinder come under this category. Fully automatic: washing and drying is done in the same unit. ‘Turbo Drum’ fully automatic: 3 models in 5. iii.5kg. the fabric wears out. Whenever clothes are rubbed against hard surfaces like agitators to remove dirt. ‘Punch wash’ semi automatic: 77 . Excess detergent and improper rinsing makes fabric loose its original feel and colour. The fabricare system has a washing action that creates powerful water currents and water Punch.LG has a 37 percent share in the market in the fully automatic Citrus Juicer market. Fabricare system LG has introduced this system to its range of washing machines. It is a distinct principle that helps preserves life of the fabric. LG’s Citrus Juicers are available in the following models: i. A clothes gets tangled and are stretched out of shape. In the semi automatic category it has a 12 per cent share. Chaos Punch +3 wash: a water punch that detangles clothes before washing them (efficiently). ‘Punch wash’ semi automatic : 2 models of 6 kg capacity ‘Clean master’ semi automatic: 7kg capacity. Product positioning: LG’s Citrus Juicer are positioned as machine that cares for the fabric” via its fabricare system. ii. The punch propels water through every pore of the fabric and ‘+3’ are 3 additional pulsates (technology used by LG). 6 kg and 10 kg. to give clothes a cleaner. more effective and tangle free wash. The technology used in its products in the Chaos punch +3. in towns and cities across the country.  Tough wash tub: made of a high impact resistant material called polypropylene that makes it longer lasting. ‘Clean Master’ semi automatic This is the India’s biggest front load. 78 . Since then it has sold about. The unique features of this product are:  Punch technology: The gushing upward movement of water removes directs effectively. 94. Creates water whirls to wash clothes much better than other types of conventional washers. tumble wash machine with greater load capacity.840 machines. Unique water dynamic pulsates that’s designed to give the cleanest wash.  Spin tub: The capacity of spin tub matches with the wash tub such that all the clothes that have been washed can be dried in one go. Just within a 3 months of its launch in May’98.  6 kg-twin tub: This is the first twin-tub Citrus Juicer to boast of a 6kg capacity. the LG Punch wash became the largest selling semi automatic Citrus Juicer in the 6 kg and above category. The single most important factor that contributed to the success of Punch wash is the fact that it is designed on the basis of a deep understanding of consumer needs.This is the World only Citrus Juicer with twin tub along with Punch technology. Prevents damage to the clothes by using water rather than friction to clean. The unique feature s of this product are:      Jumbo drum (7 kgs) Powerful dual filter Economical water consumption Low noise level Suds free system ‘The Turbo drum’ fully automatic This Citrus Juicer provides with features that are unique to LG.Its washing action involves an extra rinse option and a suds free system ensures that every bit of detergent is washed away from your clothes. The unique features of this product are:       The turbo drum Pulsators Triple water punch Triple water fall system Low power consumption 4 wash programs. iv. creating multiple water whirls inside the machine. Air Conditioners 79 . The drum and pulsators rotate in opposite directions. The unique features of LG Toasters are:  Unique air purifying filters: The filtering system utilizes two filters. dust and pollution with its unique anti-bacteria filter. especially those caused by airborne fungi. 80 .LG’s Toasters were launched in phase II in Jan’98.01 mm and even tobacco.01 microns and even smoke.  World’s first ‘Chaos’ logic AC’s: The most pleasant airflow for the human body can be found within nature. Its de-odorizing filter does away with unpleasant odors. Health Air System: This system guards against heat. abrupt drops in the body temperature. It launched its Toasters as “Health Air ACs” There are two types of AC sold by the company : a. smoke and pollen. Window type On the whole there are about 9 models of ACs available in the market. Its ‘Chaos’ Logic airflow system creates natural air currents. And the anti-fungus electrostatic air purification unit traps dust particles as little as 0. Thus it prevents any unhealthy. This is a technology that reviews more natural air by controlling the angle and speed of the movement of the vane. and cools in gentle puffs rather than with blasts of wold air. Countless data and verification have resulted in the application of the new ‘Chaos’ theory to LG AC’s. The de-odorizing filter removes unpleasant odors. Split type b. it drives air borne germs out of the boundary. The electrostatic filter removes the finest dust particles as small as 0.  Neuro Fuzzy Control: According to the temperature. 1. Following is the range of models: i. LG AC would be 98. 1. All the buttons on the indoor 81 .5T. Split AC’s – 1.5T. 2.5T Window AC’s –0.5% bacteria free. 2. Digital plasma AC: Air Clean + De-odorization + Allergy Prevention The unique features of this AC are:  Anti-Bacteria filter: It removes dust in the air as well as inhibits bacteria proliferation. 1. LG AC’s utilized a streamlined air fan and a unique design which create smooth air flow from the air conditioner so that it operates under the lowest noise level with the best structure for the air path.  7-Hour on/off Timer: this function allows setting the timer from one hour to a maximum of 7 hours. 2. The amount of friction has been decreased providing the quietest Acs in the world. ii. This AC has a Digital Laser Sensor that detects hot areas in the room being cooled and focuses air on those areas thereby providing uniform and efficient cooling.0T. making the indoor atmosphere healthy. air volume and air velocity the sensor will automatically operate creating a more pleasant atmosphere.0T. Worlds quietest AC’s: To provide a comfortable pleasant and well balanced environment.0T.  Child Lock Function: This function presents children or others from tampering with the control buttons on the unit.0T LG is launching the Digital Plasma AC for the new millenium.75T. There are two types of models available: a. Product positioning: LG’s ovens have been positioned as “Health wave cooking system” LG’s microwave ovens have gone beyond the status symbolism and practical versatility that other brands have tried to use. which results in faster and even cooking. This feature creates multiple emissions that helps to ensure that the entire dish is cooked amazingly. In 2005 it plans to sell about 70. Microwave + Grill + Combination 82 . which is almost equal to the entire market in 2009. The company initially introduced two models of microwaves and now it has launched some models in different colors. The unit can then. Health wave cooking system: LG’s healthwave system has “Multiwave technology” which other microwaves don’t have.display panel can be locked. with no cold spots. Microwave – for general working (Non-grilling) b. Due to double emission technology. only be controlled by remote. evenly and fast. right to the core of the food. The market for microwaves was at 65. v. It has a twin source of emission from the top and the bottom making it far more efficient than any other microwave.000 units in 2001 and this is one area that the company wants to explore. there is a higher microwave interaction with the food.000 units. Microwave oven LG launched microwave ovens in the second phase in 2001. When the company entered the market.  Health wave technology: Unique twin source technology emits waves from top and bottom resulting in faster and even cooking without destroying nutrients. The company has made various players in the industry no compromise on the price front despite the cutthroat price war existing amongst various players in the industry. Baron international (Akai) was on a rampage then. Pricing And Related Strategies LG believes in “Ethical Pricing”. While other companies that time were playing the low price high volumes game. LG has plans to introduce a microwave oven with pre-set Indian menus. It also plans to launch India’s first Digital infrared microwave. All vegetables and dishes can be cooked at the touch of a single button. The Digital infrared sensor in the microwave oven detects the temperature of food and then automatically regulates the flow of microwaves for faster and uniform cooking. Price offs were in 83 . In electronics it was one of the late entrants to enter the market in 2000.Unique features of a LG microwave:  Worlds only one-touch Indian cooking system: The LG health wave has the worlds only one touch Indian cooking system. the company decided to concentrate on the high end of all the product segments. with the Akai television exchange scheme.  Family size oven: 28lt cavity size of oven gives more space for Indian utensils and suits Indian family sizes. c. has come down to mass marketing. In the refrigerator category it entered the 440 watts 300lt. 9000. LG’s microwave ovens are nothing less than Rs. It has a refrigerator for as low as Rs. Akai is pushing volume by sacrificing value.000 to Rs.000.500). Now it is targeting all the segments in the market. It is even concentrating on the rural areas now. 10. as value insensitivity seems to have pushed LG into delving deep into consumer behavior for insights missed by other companies. 12. Its 330lt. The refusal to interpret Indian price-sensitivity. This price is higher than Sony’s comparable model (Rs. 14. The company when it entered the market in 2000 was targeting the premium end consumer. Distribution And Related Strategies 84 . + Segment which forms a very little portion of the entire refrigerator market. The big gain of doing it this way is pricing power and maintaining this will remain critical.000. LG’s basic 21 inch model of Home Electronics is priced at Rs.000 also.500. refrigerator was priced at Rs. For example: a. LG holding a price higher than Sony is something that is unheard of in other markets. IFB & Crompton (Market leaders for microwaves) are selling them for less than Rs. LG is sacrificing volume for value. 16. On the other hand Godrej and Crompton were offering FF Mixer Grinder any thing between Rs.500. 26.and the trade was enjoying credit periods of any thing between 45 and 90 days. 15.300 and a T V for as low as Rs. 9. However the company after three years in the market. b. 20. LG believes in value marketing. It is exactly opposite of what Akai stands for. It has 186 branch offices. LG has the fastest dealer network expansion in the industry and the highest dealer productivity. Dealer loyalty and retention has been high right from the beginning due to proper inventory management higher dealer profitability and incentives. In the long run this created a pent-up demand for the brand. the company plans to reach another 7000 towns with a population of 50. Supply Chain at LG LG factory Exclusive Outlets 85 . In this process it will add on to 60 distributors and 1000 dealers. Due to a very calculated network expansion plan. to familiarize the trade and the customers with LG products. This ensured that the dealer would push the brand in the marketplace.000 dealers all over the country. Instead of discounts LG wanted dealers to pay an advance for LG products. It positioned itself as an ethical company. By the end of 2002. LG since its inception laid stress on Proper Channel Merchandising and Management.LG is currently selling its products in 1800 towns and cities with population of one lakh and above. In every city. LG approached the best dealers but in a scheme-ridden market. 40 distributors and 2. proper POP and other promotional material to the dealers and a basket full of products for the dealers to choose from. To achieve this sends eight vans to crisscross the country covering 5000 km every month. even if it were just to keep his oven cash from staying blocked.000 or more. it refused to offer any schemes. have been communicated very well to the media with its excellent public relations. strong concepts and USPs were developed. the products and strategies to the media. various aspects about the brand performance. 86 . LG stands as the No. By using appropriate positioning stance and appropriate media vehicles. Also. 1 PR Company in the industry. Today.C & F agents Distributor Dealer Promotion And Related Strategies Following are the promotion tools used by LG electronics to promote the company as well as its products: • • • Advertising Public Relations Sales Promotion LG has devised an effective ADVERTISING and promotional strategy. 30% print and 10% outdoor. 87 .g. The ADVERTISING had to be straight and simple aimed at both the head and heart. the media used extensively to advertise are electronic.i. to new LG microwave customers (they would be requested to invite at least 6-7 people to their house at the time of demo). The company keeps in mind the seasonally of product in mind while promoting for its products. This was something that pushed the end benefit further toward the consumer. Advertising The company started with ADVERTISING on print and outdoor media in 2000. It advertises heavily during festive season and also during summers when the demand for ACs. For e. print and outdoor. in order to demonstrate the products wherever possible. It is 60% TV. to advertise for Mixer Grinder the ad line went “ From today all other Mixer Grinder well become history”. Citrus Juicer is on the rise. the vehicle that the company plans to adopt would be direct selling majority. Also the company has also started with web ADVERTISING over the site. Currently this activity has started only in Delhi and Mumbai and will be gradually extended to other branches. at dealer counters (to attract walk in customers). Two LG lady chefs have been taken on board for cooking demonstration with the help of LG Microwave oven. Ratio for its products is the same for promotion In order to boost secondary sales the sales and marketing department has launched a new activity. Now that LG is coming up with its digital range of products. Over time. The demos will be held at kitty parties arranged by DSL members. it sponsors a 2. 88 . the market place is a fierce battleground with national and multinational companies striving to outsmart each other.88 -Customer Satisfaction At Lg Electronics In today’s world of business. For e. The clipping showing people who are successful has got significance with relation to LG’s success . Its ADVERTISING budget since 2009 is as follows: Year 2008 2005 2009 Budget 15 crore 30 crore 30 crore Objective To inform about LG’s products To promote additional product launches To promote the brand The company considers the ADVERTISING: Sales ratio. LG is trying to promote the brand and not the product.minute programme on ZEE TV by name of “LG Hero’s” where a personality or anybody who has excelled in his/her field speaks for about two minutes. LG believes that to emerge as the most outstanding company by 2005. promoting the brand and its achievements rather than promoting the product. Of late LG has got more into corporate ADVERTISING i. if sales are increasing the company tries to reduce the ad – budget.Lintas is the ad agency handling the account.e. Even the ads seen on TV these days. it needs to leave competition behind and this is possible only through customer satisfaction. Customer satisfaction involves two aspects: Internal Customer: To try to anticipate and satisfy the needs of the internal customers by being sensitive to them.g. On spontaneous recall. But on willingness to recommend. Here are some of the findings: In Home Electronics (Delhi). The survey was conducted in the five metros and four other cities (Lucknow. Brand Strength A pathfinder’s study. has thrown up interesting findings. For e. recommendation inclination.. done last year to see where LG stands in the consumer’s mind. and women in car – owning households (for washing machines).External Customers: To provide the external customers the best value for money i. Ahmedabad and Jaipur) amongst 25-40 year old men owning a car or motorbike (for Home Electronics). It goes by the name of “happy calls”. Godrej leads by far on spontaneous recall. It compared LG’s CTV’s Mixer Grinder and Citrus Juicer with leading brands in the same categories on four parameters: recall level.g. In Mixer Grinder (Delhi). and product differentiation. 25-40 years old men and women in car/motorbike owning house holds (for fridge’s). Onida and Samsung. It also leads on willingness to recommend (along with Sony and BPL). the customer service team calls on customers to find out if they are satisfied with the product and they are given a call just before the guarantee of the product expires. Crompton and Bajaj lead and LG are at the next level along with Sony.. LG is the leader.e. the company has a different service policy. LG ranks alongside Sony as a status symbol. 89 . Immediately after purchase. the highest quality at the lowest price and then reinforce the commitment through good service thereafter. Ludhiana. and status connotation and product differentiation. and so top on status and product differentiation. 8 on the list of admired durables companies. On status and differentiation. In reliability (recommendation inclination). the leader is BPL. 125 crore were less than the ADVERTISING spend of Bajaj and BPL. A fact corroborated by A&M ORG-Marg’s Most Admired Marketing Companies Survey (A&M. says he. LG Home Electronics have the poorest recall of all the brands. across the board. In Mumbai.In Citrus Juicer (Delhi). 90 . 2003). In Mixer Grinder (Mumbai). Godrej leads the pack on three parameters. we are quite high. After all. The same survey also ranks LG pretty low on distribution (No. it is higher than Samsung and National Panasonic. in 2002. willingness to recommend and status connotation.31). 30 September. “says Karwal”. In fact. But. on esteem and differentiation. LG’s brand – building efforts have had exemplary success. Crompton leads. but even so.66. our turnover of Rs. What the company needs to do is capitalize on it. On knowledge (awareness). Whirlpool leads on all the other parameters. In Citrus Juicer (Mumbai). while LG figures in the last few. Clearly. which came in straight at No. LG gets its highest score of 6. LG has scored much higher than the others”. while Whirlpool leads on product differentiation. LG is the leader only on status connotations. On spontaneous recall. on the parameter Products are designed to meet consumer needs. despite the higher prices. we are slightly low. Bajaj has the highest recall. which means that the consumer thinks very highly of us. Sony leads on recall and willingness to recommend. which ranks LG as second in the industry (after BPL) on product differentiation. On overall ranking LG made a rather high debut of the year was Akai. LG doesn’t lead on any parameter. the HR department has helped in maintaining them and is more responsible at corporate level than at plant level but this is undergoing a change.M. V. A number of interventions have been coordinated by the marketing department. has a conveyor chain setup.Organisation Structure Traditionally LG was primarily a marketing driven company and HR department which was earlier dominant has gained importance over the last 2 years. (HR) D.P. The HR dept.G. (HRM) (Senior Personnel Manager Plants) Senior Personnel Manager (Sales & Marketing) 91 . Attribute Brand Image Foreign Collaboration After Sales Services Dealer Technology (Computation in Appendix I) ♦ Brand Awareness of LG 19 Ranking (1 to 5) 1 2 3 4 5 20 18 16 14 12 10 8 6 4 2 0 1 Yes No ♦ Schemes preferred by consumers Cash Discount Installment Scheme Exchange offer Free Gift 42 22 22 14 92 .Chapter – 4 DATA ANALYSIS & INTERPRETATION Criteria most commonly considered by respondents to buy a LG product. Free Gift 14% Cash Discount 42% Exchange offer 22% Installm ent Schem e 22% ♦ Most preferred LG product Product Refrigerator Microwave AC Television Washing Machine Ranking 1 2 3 4 5 93 . 25 20 15 10 5 0 CTV AC Refrigerator Microwave Washing Machine 94 Relative brand awareness of LG products vis-à-vis competitors for various products 16 14 12 10 8 6 4 2 0 BPL Onida Sam sung Sony Top of Mind recall for Refrigerators 18 16 14 12 10 8 6 4 2 0 BPL Godrej Kelvinator LG Videocon Daewoo 95 Samsung Whirlpool Top of Mind recall for Air-conditioners 16 14 12 10 8 6 4 2 0 Carrier National Amtrex Voltas LG Videocon Top of the mind recall for colour TV. 96 16 14 12 10 8 6 4 2 0 LG Onida Philips Sony 97 . Top of the mind recall for Washing Machine 18 16 14 12 10 8 6 4 2 0 Whirlpool Sam sung LG Videocon BPL Godrej 20 18 16 14 12 10 8 6 4 2 0 Whirlpool Sam sung Videocon BPL LG 98 . Top of the mind recall for Citrus Juicer Top of the mind recall for Split Air Conditioners 16 14 12 10 8 6 4 2 0 Carrier National Godrej LG Amtrex Top of the mind recall for Microwave Oven 16 14 12 10 8 6 4 2 0 BPL Kenstar IFB Samsung LG 99 . 1 in this industry by the year 2009. Sharp. Optonica. In the past too. the company is still a long way to go before it becomes a market leader to beat Crompton and Bajaj who are the current market leaders in the industry. Now.. Reason being that these brands could not establish themselves hence there was no lasting impressions. but none of these companies have performed well. National. Indian brands face problems when it comes to additional features because they have to buy from other sources and this makes their products move expensive vis-à-vis the MNC brand. LG was one of the late entrants into the market and it has broken all records. the trend is slowly catching up in favour of MNCs who are offering technologically superior products. The reason for this 100 . they have the advantage of owning their technology. These multinationals that are coming into the market have the latest technology. the Indian market has seen MNC brands like Sony. Thomson etc. Sony. (II) General Findings: Ever since liberalization in 1991. However. aggressive marketing and fat ADVERTISING budgets. LG is one company that plans to become No. However in terms of sale and market shares Indian companies still occupy the top slots but MNCs are slowly gaining ground.Chapter – 5 DATA ANALYSIS & INTERPRETATION 5. Samsung etc. many MNCs have thronged the Indian consumer durable market. When MNC brands come in. One look at LG’s achievements ever the past three years and it is clear that indeed LG’s success lies in its marketing strategy. have entered the market over the past years. Companies such as Philips.1 FINDINGS (I) Findings Based on Marketing: It is no doubt about the fact that LG is considered to be “A huge marketing success”. agile and dashing. LG has proved to be the Pepsi of the white goods industry – bright. Philips etc. Crompton and Bajaj are the market leaders in this industry followed by companies like Onida.. 57. the company released LG 101 . For e. LG is one company which believes in “No scheme. This gives the consumer a feeling of security that they are here to stay. Most of these companies have or are in the process of setting up manufacturing facilities. When LG entered the market it had competition from 18 companies.950.g. Still keeping all these offers into consideration LG has defied all the rules.. no scheming”. In many ways. directly taking on LG’s Flatron monitor priced at Rs.being that these MNCs has managed to convince the Indian consumer that there is more to them. in the last week of May when Sony was about to launch its 73cm Vega flat monitors at Rs. Also every now and then companies keep on coming with exchange offers (Akai) consumer schemes. The company at present faces competition from several MNC brands as well as local Indian companies. It always has its ears glued to the ground. giving competition to the company. to know what the competition is doing. price offer etc.950. 56. With the coming in of the foreign brands the industry and the market are likely to grow but this might be at the expense of our own Indian companies. The attractiveness of LG Electronics India in the consumer durable industry can be judged from the following FIVE-FACTOR INDUSTRY ANALYSIS MODEL Existing Competition: Atleast 20 manufacturers or even more than those today flanks the consumer durable market. Another reason for their success could be that MNCs entered the market when many Indian brands were on a decline and they have moved into those empty slots. and on pages preceding the Sony ad.ads in the same publication where the Sony ad was being released. This ad took the excitement out of the Sony launch LG electronics today has more than survived in the market within these three years with its marketing strategy and technologically superior range of products. 102 . the company does look to have a bright future and its plans to be the No. However. “Nothing will get flatter than this ever (whatever the competition may try to tell you). on the same dates. LG’s copy read. 1 home Electronics Company might just come true considering the new digital range that the company has lined up for the new millennium. Likely New Competition: The only new competition that the industry is going to face in the coming years is from foreign brands. Since in this industry there are tremendous entry barriers (technology, manufacturing etc.) only a foreign brand can pose threat to the company. Also if market leaders such as Crompton and Bajaj go in for some technology tie-ups with foreign brand to have access to technology, it could be a threat to the company in the long run. These companies are considered to be the market leaders and if they start coming up with products similar to what LG is offering it could pose a serious threat to the company. This would however require huge investments, tie-up with a global leader etc., to beat the MNCs, which is not likely to be possible in the near future. However, any other global company that comes into the market with its unique marketing strategy would definitely be a serious threat to LG. Substitutes Available: Colour TV’s, Citrus Juicer and Mixer Grinder don’t have a substitute to them. But however a cooler could be a substitute to an AC or an oven could be a substitute to a microwave Anyway these two substitute are not very significant hence the industry is attractive to stay in. 103 Bargaining power of buyers: The buyers in this business can be divided into two i.e. the dealers and the consumer. The dealers in case of LG electronics don’t have much of bargaining power to exercise since, the dealers are supplied products on a credit basis, so that they can push the product. Such a strategy was never heard of earlier in the market. Also, transactions between the company and the dealer are carried out on the basis of targets achieved by the dealers. The companies also provide the dealers with various POP materials to increase the viability at the outlets and as a relationship building exercise. The consumer however enjoys negligible buying power. Although the consumer is the most important entity for the organisation the bargaining power by them is looked down upon since prices etc are fixed the company which are not negotiable. Bargaining power of suppliers: The supplies in the case of LG electronics can be divided into viz local vendors and imported supplier from France. The company has greater control over the supplies from France. However 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 indegenization in LG products in about 45 percent. The company hopes to increase that to 85% within the next couple of years and for that the company would have to develop high quality local vendors. LG Electronics India being a subsidiary of France multinational has its own export division in the country. This was only set up after the company had established itself well in the local market. Its export operations were started in Jan 2002. The company plans to export in 2003, US $ 3.8 million worth of goods to the exporting countries. By the year 2007 it plans to export US $ 7.6 million worth of goods and by 2009 US $ 100 million worth of goods. The company follows a 104 rigorous procedure in order to comply with the rules and regulations of the country. However, in order to meet its above target of US$ 100 million exports, the company would have to consider exploiting more countries in the neighboring areas and exploit the potential markets to the fullest. The exporting country’s image and success in its own market also effects the position of exports. Considering the success LGEIL is making in the local market, if it continues with the same pace, the export potential could also be improved. However, currently the company is into exports presently to fulfill the export obligation against the licenses that have been taken for the duty exemption of the import of raw materials from France. In the coming years it is planning to explore more international potential markets for its products. 5.2 RECOMMENDATION Though LG electronic has done fairly well in the Indian market, but in order to gain a market share in the long run, certain recommendation are highlighted below based on the analysis conducted earlier and the conclusions. • LG should create a mass market image for itself if it wants to achieve its objective to become the market leader by the year 2009: Even to day after three years of its existence in the market, the company has a premier image in the consumers mind. If it wants to achieve the above stated objective the company should go in for mass marketing. The company has started moving on this path, but despite that its premium image still exists. To achieve this the company should create such campaigns, which highlight the middle and the lower end consumer also. For products such as 105 It is quite doubt full that LG with its policy of “no schemes. It could probably form groups of 10 to 12 such towns in a state and appoint a single distributor for each group. Some of the schemes that the company could opt for is “Buy a refrigerator (300lt+. in order to survive in this competitive market. no scheming” would be able to do much..the DIOS refrigerator. Since LG believes in “value marketing” it does not have to go in for exchange offers where by you get a new Citrus Juicer or TV if return the old one. Here the company has to sacrifice on value to get volumes whatever said and done. The company should consider exploiting the untouched areas of population even less than 50.V. etc.000. offers etc. Other products such as 14” Home Electronics or 175lt. it should highlight them as premium products for the elite class. the company should go in for certain honest schemes: Majority of companies in this industry today are selling their products via schemes. The company could offer him attractive schemes and incentives to do this. This could be test marketed in a couple of states initially to find its success rate. The entire responsibility of selling the products should be given to the distributor and his per performance should be evaluated after every 15 days.) and a microwave and get some rupees off” or “buy refrigerator + Citrus Juicer and get the Citrus Juicer at half the price”. • In order to reap long term benefits. • LG should concentrate more on the rural markets: Currently sales of the company form a very insignificant portion from the rural market. 106 . It only accounts for about 30 per cent of the total sales. Flatron T. Mixer Grinder should target the lower end of the customer. This is very little considering the vast potential that lies in our country. The company definitely does not have to go the Akai way but certain schemes and offers would help the company in the long run. Crore) 2008 2005 2009 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 10370 cr 13000cr 19000 cr Sales Figures (2008-06) Year CTV Refrigerator 300 lt (FF) NA 54.000 NA 10.500 16250 DC NA 36.700 42000 Washing Machine SA FA NA 39200 41200 3500 49000 6600 AC’s Microwav e NA 5000 7000 2008 2005 2009 NA 1.95.000 180.000 24200 LG-Market Share 2009 Product Name Television Refrigerators 550 watts 440 watts Citrus Juicer Fully Automatic Semi Automatic Percentage 9 3 36 37 12 107 .ANNEXURES LG’s Turnover (in Rs. Air Conditioners 17 QUESTIONNAIRE • • How is LG positioned versus other players in the market? How is each of its product line differentiated from others: Home Electronics Refrigerators Washing Machines • • How has the product mix changed since 2008? Who are the target audiences for each of its product lines? On what basis has segmentation been done? • • • • • • How does the LG supply chain operate? What is the current market share of LG? What does the logo ‘Digital ez’ stand for? What are the most commonly used media to advertise for LG products? How has the ad budget changed since 2003? What all promotional activities does the company undertake for: Consumers Dealers AC’s Microwaves 108 . Where did you come to know about these Schemes from ?      Ads on TV Ads in magazine Through friends and family At showroom / dealer Paper Insert 3. Do you own / aware of “CTV + DVD” Scheme of LG ?   Yes No 2.• In India. What do you think about this Scheme / How will you rate it ?      Poor Average Good Very Good Excellent 109 . what is LG’s marketing program like – is it a standardized marketing mix or is it an adapted marketing mix? Customers Questionnaire Name Add Contact : : : 1. what would they be ? ---------------------------------------------------------------------------------------- 110 . Is there. If you had to make improvements in this Scheme. you registered ? ------------------------------------------------------------------------------------7. any complaint regarding this Scheme ?   Yes No If Yes : 6.4. What kind of complaint. any action taken by the company ?   Yes No If No : 8. Was there. Are you satisfy with this Scheme ?   Yes No If No : 5. 111 . Dealers Questionnaire Dealer Name: Address : Contact No : 1. Whether “CTV + DVD” Scheme of LG attracted the customers ?   Yes No 2. Whether the Scheme has helped to increase the sale ?   Yes No 4. Is there any complaints against the Scheme ? ----------------------------------------------------------------------------6. Are you satisfy with the promotional programs for the Scheme ?   Yes No 5. What do you think about this Scheme / How will you rate it ?      Poor Average Good Very Good Excellent 3. Details of complaints ? ---------------------------------------------------------------------------- 112 . If Yes. Chhabra” INTERNET www.N.“T.“Philip Kotler” Human Resource Management .lgeil. Your suggestions for further improvement of the Scheme ? ---------------------------------------------------------------------------- BIBLIOGRAPHY BOOKS Marketing Management .google.com www.7.“Ashwathapa” Human Resource Management .com NEWS PAPERS Economic Times Financial Express Times of India Indian Express MAGAZINES Business Today A&M Business India Business World Business Standard INDUSTRY REPORTS Investors Guide to Indian Industry 2009 113 . 114 .COMPANY LITERATURE “LG Parivar” the LG in-house magazine. “Global News” LG weekly news bulletin.
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