TABLE OF CONTENTS

PAGE NO. 1) 2) EXECUTIVE SUMMARY INTRODUCTION 1) 2) NEED OF THE PROJECT

LITERATURE REVIEW COMPANY PROFILE LG GROUP LOOKING ABOVE AND BEYOND HOW LG GREW LEAP 2007- A VISION FOR THE FUTURE LOGO CONCEPT LG IN INDIA

1)

RESEARCH OBJECTIVE METHODOLOGY LIMITATIONS

1)

LG GROUPS PRESENCE IN INDIA PRODUCTION FACILITY PRODUCTION CAPACITY MANUFACTURING INNOVATION PERFORMANCE REVIEW

1) 2) 3) 4) 5)

MARKETING STRATEGY BUSINESS MODEL PRODUCT OFFERINGS AND RELATED STRATEGIES PRICING OFFERINGS AND RELATED STRATEGIES DISTRIBUTION OFFERINGS SUPPLY CHAIN AT LG

1) 2) 3) 4) 5) 6) 7) 8) 9)

PROMOTION OFFERINGS AND RELATED STRATEGIES CUSTOMER SATISFACTION AT LG ELECTRONICS BRAND AWARENESS ORGANISATIONAL STRUCTURE ANALYSIS AND FINDINGS FINDINGS OF CONSUMERS PERCEPTION FINDINGS OF DEALERS PERCEPTION SWOT ANALYSIS CONCLUSION

10) BIBLIOGRAPHY 11) APPENDICES QUESTIONNAIRE FOR CONSUMERS QUESTIONNAIRE FOR DEALERS

LIST OF TABLES
TABLE 1: LGS PRODUCTION CAPACITY. TABLE 2: LGS TURNOVER IN RS. TABLE 3: LGS PRODUCT RANGE TABLE 4: LGS PRODUCT MODELS TABLE 5: LGS PRODUCT PRICES TABLE 6: LGS ADVERTISING BUDGET TABLE 7: LGS MARKETING OBJECTIVES AND

STRATEGIES TABLE 8: PARADIGM SHIFT TABLE 9: COMPARISON ON THE BASIS OF THEMES OF ADVERTISEMENT AND SCHEMES PROVIDED BY COMPANY

LIST OF GRAPHS
GRAPH 1: COMPARISON OF VARIOUS ADVERTISEMENTS GRAPH 2: COMPARISON OF TOTAL NUMBER OF

ADVERTISEMENTS

GRAPH

3:

COMPARISON

OF

NEWSPAPER

ADVERTISEMENTS GRAPH 4: COMPARISON OF ADVERTISEMENTS ON THE BASIS OF DAYS GRAPH 5: COMPARISON ON THE BASIS OF SIZE OF ADVERTISEMENTS GRAPH 6: COMPARISON OF TEXT/ ILLUSTRATION GRAPH 7: COMPARISON ON THE BASIS OF PRESENCE OF HUMAN MODEL GRAPH 8: CONSUMERS PERCEPTION OF FACTORS

AFFECTING BUYING BEHAVIOUR IN DELHI GRAPH 9: CONSUMERS PERCEPTION ON THE BASIS OF RECALL OF ADVERTISEMENT FOR ELECTRONIC ITEMS IN DELHI

GRAPH 10: CONSUMERS PERCEPTION ON THE BASIS OF RECALL OF ADVERTISEMENTS FOR HOME APPLIANCES IN DELHI GRAPH 11: CONSUMERS PERCEPTION TOWARDS

PRODUCTS OF LG IN DELHI GRAPH 12: CONSUMERS PERCEPTION OF FACTORS AFFECTING BUYING BEHAVIOUR ACCORDING TO AGE GRAPH 13: CONSUMERS PERCEPTION ON BASIS OF ADVERTISEMENT AGE-WISE GRAPH 14: CONSUMERS PERCEPTION ON THE BASIS OF BUYING BEHAVIOUR ACCORDING TO SEX

GRAPH 15: CONSUMERS PERCEPTION ON THE BASIS OF RECALL OF ADVERTISEMENT ACCORDING TO THEIR SEX

GRAPH 16: CONSUMERS PERCEPTION OF FACTORS AFFECTING USAGE GRAPH 17: CONSUMERS PERCEPTION OF RECALL OF BUYING BEHAVIOUR ACCORDING TO THEIR

ADVERTISEMENT ON THE BASIS OF THEIR USAGE GRAPH 18: COMPARISION OF VARIOUS BRANDS ON THE BASIS OF DEALERS PERCEPTION

EXECUTIVE SUMMARY

AN

EMPIRICAL

STUDY

OF

THE

MARKETING

STRATEGIES OF LG VIS A VIS COMPETITION LG is one such company which has brought technologically advanced products for its customers keeping in mind that todays customer are placing greater weight on quality and value in making their purchase decision. Dealers are also the customers of the company. They are the last chain in the distribution channel of the company. They are the one who directly deals with the consumers. If they are not satisfied with the companys services the company cannot achieve Total Consumer Satisfaction. They

should constantly try to find whether dealers are satisfied with the company or not and if not what are the reasons and try to remove such reasons.

Today the markets have been globalized, there is a cutthroat competition, and there are many players in the market offering same type of product. The companies have to convince the customers and so advertisements play an important role in promoting the companys products. As there are many players in the market offering same type of product, dealers have to keep the products of various brands for their customers. How they have positioned the stock in show room is of great importance.

Keeping this in mind, I have undertaken the project to find competitors potential and customers preferences towards the products of LG. For this, I prepared

questionnaire for both dealers and customers. In the current market scenario dealers play important role to create the image of the company and the product.

This project may prove to be of immense use to the Marketing section as well as Customer Care Department as it will help them to know the problems of customers, reasons for their dissatisfaction and ways to eliminate these problems.

This will also help the company to know how far they have been successful in their brand building process. During the whole experience of conducting the survey and completing the project, I met with both success and failure. But then both kinds of experiences have only equipped me better with practical knowledge, ability, attitudes and skills.

INTRODUCTION

Consumer durable industry is one of the most lucrative industry and is rapidly growing. The Indian economic industry witnessed proliferation of global companies in the national scene, liberalization of Indian economy coupled with the media explosion ushered in a new era of consumerism, increased purchasing power and leads to the creation of budding consumer durable market. The version Indian market offered tremendous scope to the multinationals. The growth rates were as high as 22% in the wide goods segment compared to the nearly 2-3% growth in the European market. No wonder it will witness major takeovers strategic alliances, technical collaboration and formation of fully owned subsidiaries.

10

Adding value to the customer's life as a motto was upheld when LG touched the Indian shores way back in 1997. Today, when LG is entering a decade, it is very heartening so see that the company and all its employees have not only lived up to this motto, but taken it to tremendous heights through sheer hard work and determination. Companies mission simply was to provide valued

customers with the products which add value to their life, and to build an ever lasting relationship based on that foundation.

Today, this mission has emerged as leaders across categories in the Indian Consumer Electronics and Home Appliance segment.

LG has in a short span of nine years setup state-of-the art manufacturing facilities and achieved an un-precedented turnover figure of Rs. 7500 crores in 2005. It has laid out

11

an extensive network of 77 subsidiaries across the country employing a total of 72000 people, making LG one of the most respected and visible brands in India.

LG plans to double its sales volume and profit by 2010 with 30% of its sales volume and 50% of its profit being derived through Blue Ocean products.

LG aims to make India an export hub to consolidate its position not only in the domestic, but in the international markets.

12

NEED OF THE PROJECT

LG entered in Indian consumer electronic and home appliances industry when the price war was bitter and exchange offers were ruling the Indian market. In such scenario, high quality premium product was seen as a foolish step. But over a time span of 2 yrs LG has proved to be a great gun.

But as we know that consumer taste and preference is fast changing and dont follow any rules and regulations if any company wants to be a leader it should be well informed about the changes taking place in market consumers mind and taste and formulate strategies to counter these changes.

A successful company is that which changes itself with preferences and needs of consumers as well as create

13

need for their product not letting others to take the initial step.

LITERATURE REVIEW

In today's very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. However, in concert with defining the marketing strategy one must also have a well - defined methodology for the day-to-day process of implementing it. It is of little value to have a strategy if you lack either the resources or the expertise to implement it.

There are two major components of marketing strategy: How the enterprise will address the competitive marketplace How will it implement and support day-to-day operations.

14

In the process of creating a marketing strategy one must consider all the relevant factors. Each strategy must address some unique considerations, it is not reasonable to identify 'every' important factor at a generic level. However, many are common to all marketing strategies. Some of the more critical are described below. In general this falls into one of four categories: Where the is market strong, is very one attractive invest and the the best

enterprise

will

resources in support of the offering.

Where

the is

market weak,

is

very

attractive

but

the on

enterprise

one

must

concentrate

strengthening the enterprise, using the offering as a stepping stone toward this objective.

15

 Where the market is not especially attractive, but the enterprise is strong then an effective marketing and sales effort for the offering will be good for

generating near term profits. Where the market is not especially attractive and the enterprise is weak, one should promote this offering only if it supports a more profitable part of the business. Otherwise, one should determine the most cost effective way to divest the enterprise of this offering.

Now, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following 'generic' strategies -

A COST LEADERSHIP STRATEGY :

It is based on the concept that one can produce and market a good quality product or service at a lower cost

16

than its competitors. These low costs should translate to profit margins that are higher than the industry average.

Some conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, close management of labor, products designed for ease of manufacturing and low cost distribution.

A DIFFERENTIATION STRATEGY

It is the one, which creates a product or service that is perceived as being unique "throughout the industry". The emphasis can be on brand image, proprietary technology, special features, superior service, a strong distributor network or other aspects that might be specific to the industry. This uniqueness should also translate to profit margins that are higher than the industry average. Some of the conditions that should exist to support a

17

differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.

A FOCUS STRATEGY

It may be the most sophisticated of the generic strategies, in the sense that it is a more 'intense' form of either the cost leadership or differentiation strategy. It is based on the concept of serving a particular target in such an exceptional manner, that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.

Pricing
Having defined the overall offering objective and selecting the generic strategy one must decide on a variety of closely related operational strategies. One of these is how one will price the offering. A pricing strategy is mostly

18

influenced by the net income. There are three basic strategies one can consider. A SKIMMING STRATEGY Where the offering has enough differentiation to justify a high price and one desires quick cash and have minimal desires for significant market penetration and control, then one sets the prices very high. A MARKET PENETRATION STRATEGY Where near term income is not so critical and rapid market penetration for eventual market control is desired, then one must set the prices very low.

19

 A COMPARABLE PRICING STRATEGY Where one is not the market leader in the industry then the leaders will most likely have created a 'price

expectation' in the minds of the marketplace. In this case one can price the offering comparably to those of its competitors.

Promotion
To sell an offering one must effectively promote and advertise it. There are two basic promotional strategies, PUSH and PULL.

The PUSH STRATEGY It maximizes the use of all available channels of

distribution

to

"push"

the

offering

into

the

marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing the need for advertising.

20

The PULL STRATEGY

It requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required.

The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.

Distribution
One must also select the distribution strategy(s) which should get the offering into the hands of the customer.

These include: On-premise Sales involving the sale of the offering using a field sales organization that visits the prospect's facilities to make the sale. Direct Sales involves the sale of the offering using a direct, in-house sales organization that does all

21

selling through the Internet, telephone or mail order contacts. Wholesale Sales involves the sale of the offering using intermediaries or "middle-men" to distribute product or service to the retailers. Self-service Retail Sales involves the sale of the offering using self service retail methods of

distribution. Full-service Retail Sales involves the sale of the offering through a full service retail distribution channel.

22

Conclusion

After defining the strategy one must use the information one has gathered to determine whether this strategy will achieve the objective of making the enterprise competitive in the marketplace. It is essential to know who the

competitors are and to understand their strengths and weaknesses. Factors to consider include:

Each of the competitor's experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.

23

COMPANY PROFILE LG Group- The best global company

U.S. $44 billion LG Group is one of the worlds top conglomerates today, having established its supremacy in diversified fields ranging from electronics, chemicals, and cosmetics to trade and services. The LG Group was born as Lucky Chemicals in 1947, a pioneer in the fledging chemical industry with a pioneering spirit. Founder

chairman planted the seed of the industry in the barren land. LG was the First Korean Company to make cosmetics and to enter the synthetic resins industry. LG established Gold Star in 1958, opening the door to electronic industry in Korea. In the early 1970s after

Founder/Chairman passed away, Mr. Chakyung took over as a chairman. Under his leadership, in a decade more

24

than 20 sister companies and schools, increased its sales by 36 times and exports by 90 times and was regarded as Koreas best leading business school.

GoldStar brand product sales in 1996 came to U.S. $ 9 billion, which ranked one of the top electronic industries in the world. LG is known by consumers in more than 171 countries for offering products that deliver satisfaction. ultimate

Along with the new corporate mission, LG electronics has been reborn. The organization remains fruitful and

vibrant.

Building a better future for customer is the top priority and the company is going top gear to make the Better Future a reality. The new corporate name and identity will continue to offer full satisfaction to customers around

25

the world and will come to symbolize the face of the future.

The

management

philosophy-

We

create

value

for

customers through management based on esteem for human dignity

The product manufactured internationally cover mobile phones, Air conditioning, TV, multimedia players, video audio products, home appliances, Information system products, communication devices, display products,

magnetic recording media and electric/ electronic parts and components. Heavy investments are being made in the next generation and Environment Friendly Products.

26

27

LG GROUP LOOKING ABOVE AND BEYOND

The LG Group is today ranging from chemicals, energy, electronics, semi conductors, machinery and metals to trade, services and finance. Each of the 77 LG member companies is now working to rise to the highest level of global competition in their respective industries. LG is now ready to make next quantum leap forward.

By the end of the year 2006, the group lands to achieve annual sales of U.S. $ 385 billion, quantitative and qualitative managerial excellence with industry a leading profitability in each business field, a corporate image synonymous with customer satisfaction and recognition as one of the rewarding place to work.

28

HOW LG GREW
1958: GoldStar (todays LG Electronics) established 1959: Koreas first radio produced 1965: Koreas first refrigerator produced 1966: Koreas first black & white TV produced 1968: Koreas first air conditioner produced 1969: Koreas first washing machine produced 1974: GoldStar Communications went public 1977: Color TV produced 1978: Exports surpassed US$100 million, a first for Koreas electronics industry 1980: First EU sales subsidiary in Germany (LGEWG) established 1982: Color TV plant established in the US in Huntsville, Alabama 1984: Sales surpassed 1 trillion Won 1986: European-standard VCR plant established in Germany 1989: Sales subsidiary and a joint production subsidiary established in Thailand 1990: Ireland-based design technology center established

29

1993: With the establishment of Huizhou subsidiary in Hina(LGEHZ), marketing in China took full swing 1995: Company name changed to LG Electronics and USbased Zenith acquired 1997: 40-inch Plasma TV and the worlds first IC set for DTVs developed India production subsidiary (LGEIL) established 1998: Worlds first 60-inch Plasma TV developed 1999: LG.Philips LCD established 2000: LG Information & Communications merged The worlds first Internet-enabled refrigerator launched Global sales of refrigerators reached the number one position 2001: Asynchronous IMT-2000 equipment commercialized The worlds first Internetenabled washing machine, air conditioner, and microwave oven launched LG.Philips Displays, a joint venture with Philips established 2002: Under the LG Holding Company system, the Company spun off to LG Electronics (LGE)& LG Electronics Investment (LGEI) The first home network system commercialized in the global market 2003: Worlds first synchronous-asynchronous IMT-2000 mobile phone developed The worlds first 76-inch Plasma TV developed CDMA mobile handsets took the largest share in the US and world CDMA market Launched the worlds first Super Multi DVD Rewriter

30

2004: EVSB, the next-generation DTV transmission technology, chosen to be the US/Canada DTV transmission standard by the US ATSC All-in-one LG 55-inch LCD TV, the worlds first and largest among LCD TVs, commercialized The worlds largest and first 71-inch Plasma TV commercialized The worlds first terrestrial DMB phone developed Developed Wireless Speaker Home Cinema System 2005: The worlds first DMB notebook commercialized The worlds slimmest TV commercialized The worlds largest 102-inch Plasma TV developed LG and Nortel Networks agreed to establish a joint venture for telecommunication network equipment Satellite-based DMB phone commercialized The largest share seized in the global CDMA market 2006: Launched the LG Shine, the second handset in the Black Label Series Globally launched the steam washing machine and interactive TV refrigerator Developed the world's first 100-inch LCD TV Launched the world's largest Full HD 102-inch Plasma TV (1080p) Developed the world's first dualformat high-definition Disc Player& Drive 2007: Launches the industry's first dual-format, highdefinition disc player and drive Launches 120Hz Full HD LCD TV Demonstrated the world-first MIMO 4GEnabled technologies with 3G LTE Won contract for GSMA's 3G campaign

31

2008: Introduces new global brand identity: "Stylish design and smart technology, in products that fit our consumer's lives."

32

LEAP 2007 A VISION FOR THE FUTURE

LG Electronics vision for the 21st century is to become a true global digital leader through fast growth and fast innovation and to be known as a company who can make its worldwide customers happy through its innovative digital products and services. LG Electronics has set its mid-term and long-term goal to rank among the top 3 electronics, information, and telecommunication firms in the world by 2010. They aim to utilize core capabilities of product leadership, market leadership and people

leadership and enhance corporate culture of team work and fun workplace to achieve their mission of becoming "2 by 10", that is, double their sales volume and profit by year 2010.

VISION:
33

 To be the best global company.

PHILOSOPHY:
To compete in international market with a global mindset. Maximize shareholders. Pursue the best in the class through management by principle. Contribute citizenship. to society through good corporate value for customers, employees and

INITIATIVES:
Redesigning business portfolio Develop new strategic business Globalization Acquiring promising differential technology

34

 Cultivate high performing leader

CORPORATE CULTURE:
Empowerment and boundary less.

QUANTITATIVE:
Achieve gross sales of US $ 78 billion. Secure ordinary income of 6% of gross sales. Attain a return on investment of 15%.

QUALITATIVE:
Build a brand reputation, total satisfaction to

consumers, creates more comfortable convenient homes.

President KOO said that LGs goals are to achieve sales

of US $ 74 billion and a profit rate of 6%, the year when

35

the leap 2006 vision is finally realized. He also stated that LGs need to promote its image as a brand renowned for maximum customers satisfaction by providing the most courteous service, the quickest response to customer needs and products and services of highest quality.

LOGO CONCEPT

The symbol mark, which represents the Face Of The Future, incorporates full concepts and sentiments of the World, Future, Youth, People and Technology. The Circle with the letter L and G symbolizes that human beings are the most important aspects of business and express the resolution to do the best to maintain close ties with customer and to ensure their satisfaction.

36

The Red Color reinforces an image of worth and familiarity highlights LGs challenge to become world class company. LGs symbol marks the most important element of the corporate identification system, it is a representative system of LG throughout the world. The symbol creates a unified mental image of LG necessary in international communication. It is the Face Of The Future. It incorporates five concepts and sentiments: The World The Future Youth Humanity Technology

LG IN INDIA
LG Electronics India Limited (LGEIL) is a wholly owned subsidiary of LG electronics, South Korea. The company

37

was established in January 1997 after clearance from the Foreign Investment Promotion Board (FIPB).

Its earlier two attempts one in 1992 and one in 1995 had failed. It first entered the country in 1992 with the GoldStar brand name selling CTVs in partnership with Delhi-based consumer electronics company Bestavision, the marriage failed to click right from the start. Two years and a host of problems later, it snapped ties with Bestaviscon and tried to form a joint venture with the C.K. Birla group. That move, too, failed in the negotiation stage itself. By then, the GoldStar brand had acquired a poor reputation with dealers and consumers alike.

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, despite being one of the

38

first

multinationals

to

hit

the

Indian

market

after

liberalization.

The company launched in Delhi in May 1997, with, ten model of colour television, ranging from 14 inches to 29 inches; eight models of large capacity refrigerators

ranging from 320 lt to 650 lt and three models of washing machines from 5.5 kgs to 20 kg and subsequently launched the same in Chandigarh, Lucknow, Jaipur, Bombay, Pune, Calcutta, Ahmedabad, Indore, Bangalore, Chennai and Hyderabad.

These entire products bear the LG brand name, which the company has decided to change from its previous brand GoldStar around the world starting from 1997.

39

Today in a short span of 24 months, LG has twenty six models of colour television ranging from 14 inches to 60 inches; 14 models of large capacity refrigerators ranging from 175 lt to 890 lt; seven models of washing machines ranging from 5.5 kgs to 20 kgs; nine models air conditioners; three models of micro wave ovens; two VCDs and have subsequently launched the same all over India.

The company is envisioning a total investment of US $ 289 million (Rs. 1040 crore) over the next of 9 years which will give it a major manufacturing presence in India and range of white and brown goods as well as range of electronic components by end of 2006.

The company plans to export products worth. $ 100 million in a ten-year period. It also has a plan to invest

40

25% of its equity to the Indian public or to an Indian investor after 5 years of operation.

In the first phase of investment from 1998 to 2001, the company decided to invest US$ 100 million (Rs. 500 crore) to establish manufacturing facilities in Greater Noida. This facility is capable of churning out 7,00,000 CTVs, 4,00,000 1,00,000 Refrigerators, Air 2,00,000 and washing 5,00,000

machines,

conditioners

Microwave ovens per annum. The facility has started production since April 1998.

In the second phase from 2001 to 2005, LG electronics has invested $ 200 million (Rs. 1000 cr) to increase its existing capacities in finished products and add capacities to manufacture compressors, play back transformers, motors and deflection yokes.

41

After setting up of LG software Center in Bangalore in 1996, LGE has already set up an in house R & D and HRD center in India not only to train the Indian employees, but also to serve foreign employees of LGE in South East Asia and Northern Africa.

In five years from now, LGEIL will become one of the colossal industrial houses in India LGEIL has already achieved a turnover of Rs. 1500 crores in the period Jan-July 2006. LGEIL by introducing a wide range of products to the Indian consumers has successfully carved a niche for itself. Its success story is a result of its investment in cutting edge technology and its relentless efforts to bring home the smiling face.

In the past five years, India has attracted a number of multinational companies to invest in the country, offering

42

a plethora of choices to the Indian consumers. Thus the consumers seek international brands that offer value for money as well as a high standard of service. LGEIL increasely strives to be responsive to consumer needs, desires and habits.

Today LGEIL is regarded as one of the top consumer electronics companies in India (ORG-MARG Survey).

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.

The consumer durable industry will continue to witness the growth in demand. The company will also have to take a leap forward by increasing the volume of sales. It is expected that in the coming years there will be stiffer competition.

43

The company is taking measures to reduce costs and improve productivity. With emphasis on quality and improved service to the customers at an affordable price, the company will endeavor to gain additional market share. Also in view of the liberalization of the Indian economy, companys technical know how, superiority, service competence and the goodwill is what the company commands in the market. The company is optimistic of consistent and sustained growth in its business.

44

RESEARCH OBJECTIVE

Globalization has affected todays market towards the competitiveness. There are so many domestic and

multinational companies growing up rapidly. Survival is being the core concept of the companies.

A company must know the strategy of the competitors because it directly affects it. So there is a need for a company to know its rivals market potential, market share and selling strategies.

Today the choice and preferences of consumer is also changing. Customer is now aware about the products. Customer is better educated more sophisticated. He is aggressive and critical who demands his moneys worth and pays only for what he wants.

45

Dealers are the customers of the company and consumers are the main source of the information. This project has certain objectives for which I covered both dealers and consumers all over Delhi region.

The main objectives of the project are the following: To study the LGs advertising strategy vis-vis its

competitors To see how effective is the promotional and positioning strategy of LG. To find out the problems faced by dealers in selling the LG products.

46

To find out the market share of products of LG in

Delhi. To find out the most preferred brand in the market.

To know the awareness level of consumers about the products of LG.

47

RESEARCH METHODOLOGY

Methodology is the specification of the method for acquiring the information needed to structure the study.

Universe
Universe for dealer survey was Delhi. Universe for consumer survey was Delhi.

Sampling Size:
Sample size for consumer survey was 100 covering houses and markets from different areas of Delhi. Company survey consisted of visiting 70 dealers of Delhi.

Sampling Techniques:
For Consumers survey Convenient Sampling

techniques was applied.

48

 For

Dealers

survey

Systematic

and

Random

Sampling technique was used.

Collection of Data:
1.Secondary Collection Internal Data:
Went through some previous market studies provided by the guide. Previous summer training reports to grasp knowledge about white goods market. Study of product manual and salesman training report to get product knowledge.

External Data:
Scanning of various business magazines.

49

 Collected relevant information from the newspaper.

1.Primary Data:
Interview Method:

Some of the employees of LG from Sales & marketing department and a few dealers of LG were interviewed for the purpose of exploratory study. The response obtained from them was very helpful in preparing the questionnaire for dealers and deciding upon various classificatory and data variables.

Two questionnaire were designed one for the consumers and the other for the dealers. I visited 70 dealers and sub dealers and 100 consumers.

Observation Method:

50

Observation about the consumer behavior at dealer counter gave us lots of knowledge about the customer expectations regarding products, counter preferences for brand and after sales service.

LIMITATIONS IN RESEARCH

Every

study

has

its

own

limitations

in

terms

of

methodology and the resources available for its conduct. This study has no expectation to it and has been carried under following limitation: 1. Some of the dealers as well as the customers were not forthcoming with information as they thought it to be a waste of time. Some customers were not able to respond due to lack of awareness. 2. A number of dealers were biased towards a particular brand which was giving them better returns.

51

3. Some of the shop owners were not available so, contacted person was not able to present a fair view. 4. Respondents lack of time to give information and their casual attitude was a big hindrance in the study. 5. The dealers were biased by some recent experiences which they had with a particular distributor regarding the service or distribution. 6. Respondents lack of time to give information and their casual attitude was a big hindrance in the study.

52

LG GROUPS PRESENCE IN INDIA

LG electronics India Limited LG Software LG Chemicals LG Construction

Production Facility
LGEIL set up its 47 acres manufacturing facilities at Greater Noida in April 1998. Today the factory chuns out washing machines, colour televisions, air conditioners and micro wave ovens.

53

Refrigerators

are

externally

sourced

from

Allwyns

manufacturing facility at Hyderabad. Currently LGEIL has tied up with Voltas Ltd., to source about 8,00,000 refrigerators over 3 years from Jan 2003 to Dec. 2006. Voltas will produce refrigerators according to the specified standards of design and quality given by LG electronics. Voltas would increase its capacity of 1,80,000 units to 2,50,000 units per year of which LGE will be sourcing about 80%.

At

present,

the

average

Indigenisation

level

in

LG

products is about 45 percent and it plans to increase it to 85 percent in the next couple of years. CTVs would also be reaching such levels by the end of the year.

LGs Production Capacity

TABLE1:

54

Colur TVs Semi Automatic washing machines Air Conditioners Micro waves Refrigerators

800,000 units 400,000 units

180,000 units 80,000 units Externally sourced

Manufacturing
At its state of the art manufacturing plant, acute cost control has been on the agenda from day one. Some of the ways used to control costs at the plant are: a. Full-optimization of resources b. Smoothening the clock work c. Raising the efficiency of employees through time and motion study

55

d. Minimal inventory levels.

At the plant, it is made sure that there is no wastage of material and every thing must keep moving all the time. Since money has time value, nothing that has hogged money should lie idle for too long. Inventory is kept minimal, for which strict guidelines are followed religiously all through the chain. The plant keeps no more than seven days stock of material from vendors and 15-20 days of imported parts. Branch offices must have, at the end of every month, just 40 percent of the requirement for the next month, with the rest being replenished by the 15th.

Cost cutting has always been a high priority for LG operations around the world. In keeping with this aim,

56

the

company

has

been

trying

to

achieves

much

localization as fast as possible.

At present the average level of indigenisation in LG products is about 45 percent. The company hopes to increase it to 85% within the next couple of years or so, thus insulating itself from exchange rate volatility and crushing costs in general. The challenge is to cultivate high quality local vendors quickly. CTVs will hit a comparable position by the end of the year.

Since the USP of LG has been high technology, it cannot let any defective product pass through the gates. Even ensuring that the machines can handle Indian conditions has been top priority for LG. Every product is put to an Early Life Test (ELT), which subjects of to the misery of 40 degrees centigrade heat for a prolonged period. The

57

defect

elimination

programme

follows

statistically

optimized process of random sample checks.

Innovation at LG
At LG innovation is a policy. The managements pet phrases are TPI 50 and TDR. The former total

productivity innovation of 50 percent, urges employees at all levels to increase productivity by 50 percent. And the latter is the tool that helps to do thatTear Down Reengineering, by which employees, especially at the

assembly line, are directed to tear down all processes to the ground and start afresh by using less time, more innovative technique and so on. In this manner, it is believed the company is bringing down costs for the

58

future and through TDR and TPI 50 expects to create significant profits this year. Engineers at LG dont say no to any idea. If the

company has to compete in the long run, it cannot do so by merely cutting costs. It is innovation that wins the race even in a market as budget constrained as India.

Performance Review
LG Electronics was established on October 1, 1958 (As a private Company) and in 959, LGE started manufacturing radios, operating 77 subsidiaries around the world with over 72,000 employees worldwide it is one of the major giants in the consumer durable domain worldwide. The company has as many as 27 R& D centers. Its global leading products include residential air conditioners, DVD players, CDMA handsets, home theatre systems and

59

optical storage systems. LG globally believes in the philosophy of Great Company, Great People, whereby only great people can create a great company.

The

companys and

growth fast

strategy growth,

is

based

on

fast core

innovation

through

three

capabilities: product leadership, market leadership and people-centered leadership.

The company has a strong corporate culture fostering innovation, pioneering spirit and transparent management across subsidiary and believes in empowering employees to achieve leadership. LG was voted as one of the Asias Top Performing Brands by consumers. These awards are considered the ultimate seal of consumer approval, and are highly significant as they are a direct reflection of the Consumers Choice. The company was conferred the Platinum Trusted Brand

60

Award for Air Conditioners and the Gold Trusted Brand Award for LCD/Plasma TV, Washing Machines,

Refrigerators and Computers. About LG PDPs & LCDs LG Electronics has established itself as the undisputed leader in PDPs and has achieved new dimensions of technological excellence. The company has the largest range of models in the PDP category ever, with LG offering PDPs in sizes of 42, 50, 60 and 71 inch internationally. Further, LG has world's slimmest plasma panel at 78 mm to the world's biggest panel at 71 inches. Cutting Edge Technology such as Claro filter, 10000:1 Contrast Ratio, 1500 cd/m2 brightness levels, X studio, Digital Video recording ability, Flexi PIP, Double Window Screen are some of the features which makes LG's PDPs, the best made Plasma Panels ever. LG's range of LCD TVs comes in sizes of 20", 26" and 32" and are equipped with Super In plane switching technology that ensures Wide Viewing Angle, 8 ms response time & ripple proof reliable LCD panel structure.

61

26 & 32 models are HDTV ready & come with host of AV ports. All models have a high resolution of upto 1280 x 768, equipped with progressive scan functions and have 3D Digital Comb Filter. About LG Air-conditioners LG has constantly been the most preferred brand in ACs and has the lion's share with 36% market share in 2005. With a quantity turnover of 5 lakhs units and value turnover of Rs.1050 Crores in 2005, LG now aims to achieve a quantity and value turnover of 6.5 lakhs plus units & Rs. 1350 Crores in 2006

respectively. LG developed the AeroDNA System which manages vital constituents that define the indoor air quality such as Temperature, Humidity, Odour, Purity and Air Circulation to give perfectly conditioned indoor air at the most economical costs to the consumer. The company also launched the NeoPlasma technology, which uses a 12-stage filtration that effectively kills viruses and

62

bacteria to give pure and odorless fresh air for the consumer to breathe. About LG Washing Machines LG has been a market leader in the washing machine segment also with a market share of 34% as per ORG data. The company leads in both the fully automatic and semi-automatic washing machines categories. LG recently added another first to its credit through the launch of their new range of washing machines equipped with Direct Drive technology. The company has launched a total of six models in the market, two in washers and four in washer & drier combination. This technology is sure to revolutionize the washing machine industry and further consolidate LGs leadership position. About LG Refrigerators The trend of offering new and exciting products by LG has always been followed by adding to its existing product portfolio. In order to further consolidate its leading status in the

63

industry, LG recently showcased an exhaustive range of 33 progressive models in the refrigerator segment. The company also launched the stylish 'Diamond Cut' range for its consumers. LG will now offer feature rich diamond cut frost-free refrigerators ranging from a capacity of 230L to 816L. This exhaustive range includes 6 variants in 230 liters capacity, four variants in 250 liters and five variants each in 280 liters and 310 liters capacity respectively. The company also launched two variants each in 350 liter & 380 liter capacity and 6 variants in 400+ range. Seven additional models in their high end DIOS range, to be introduced by the company soon. According to company sources, at LG it can be said with pride that in 26 months of existence, LG stands at a level that many companies in this industry have attained in 26 years of their existence.

LGs Turnover (in Rs. Crore)

64

TABLE 2: 2003 2004 2005 1450 cr 1865 cr 2540 cr

Sales figures
Year CTV Refrigerator Washing Machine 300 lt (FF) 2003 2004 NA 2,95,00 0 2005 280,00 0 26250 NA 105,500 NA 108,7 00 62000 71200 16600 NA 87200 8500 95000 NA 25,00 0 4420 0 17000 NA 17000 DC SA FA ACs Microwa ve

MARKETING STRATEGY
In a short span of just 26 months, since its inception in May 1997, the brand has attained a brand awareness

65

level of about 90% in the consumer durable Indian market.

Considering the fact that LG electronics is a Korean multinational, 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, it is evident that each and every company has a cutting edge over another. These global corporations are deviating from their international methodologies and improvising their strategies for local markets.

LGs localization of strategy covers the following areas:

Entry Strategy:

It is always better to establish as

fully owned subsidiaries. It is considered better if the company has a local partner but, since LGs earlier two attempts had already failed, it decided to do it all alone

66

this time. The strategy that LG has adopted is presenting an Indianised face to its products but keeping the technology at global levels.

Operations:

LG

opted

for

starting

its

own

manufacturing facility at Greater Noida. The 20 month schedule to commission its manufacturing plant was compressed to 10 months. The company decided to go in for a Green Field Project rather than acquisitions or mergers. (For all products except refrigerators).

Products:

LG

decided

to

go

in

for

Product

Adaptation Strategy. Globally LG does not operate in the direct cool refrigerator, semi automatic washing machine and 21 inch CTVs. 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. Also LG launched, Sampoorna, Indias first TV

67

with a devangiri script on screen display on the 50th anniversary of Indian Independence. LGs strategy of localizing its products to suit Indian tastes added to its strength.

Segmentation:

The Company decided to enter the

high - end middle-class onward segment in the initial stages, since most of the Indian brands were targeting the low and middle end customers. In the past 3 years due to LGs distinct strategy it has carved a niche for itself in a crowded segment of 20 manufacturers.

Brand:

The company launched its products in country

with LG, the global leader . It did not opt for any established brands in the country to be associated with it.

68

Leadership:

At LG electronics, keeping the localized

strategy in mind, the strategic areas such as sales and marketing are headed by an Indian. Generally it happens that the senior management is deprived of Indians in a transnational but LG wanted to follow this path. It wanted that the marketing division be headed by an Indian because he would be well-versed of the Indian market and cultures. Ultimately it is this step, determined whether the company wants to make profits or obtain a market share. LG definitely wants to be the leader in the consumer electronics industry. Seeing the progress that the

company has made in the past 3 years., it has revised its plans for becoming the number one consumer electronics company to the year 2004 from 2006. The company even plans to break - even this year. This is significant for a multinational that has been in the market for just two years.

69

70

THE BUSINESS MODEL

THE SEGMENT THE PRODUCT THE BRAND

MA RK E T I NG

Niche/ Mass

Top-of-line / Mass Market

Global

Premium/ mid-range? THE PRICE

O P E R A T I O N S

Grown

Premium / economy ALLIANCE ENTRY STRATEGY LEADERSHI P

71

Fully-owned

Greenfield INVESTMENT

Indian

Incremental BOTTOMLINE OBJECTIVE

Market share

Before launching itself in the market in 1997, it carried out an extensive research study to understand consumer motivations to create magnetic products, price them strategically, position them sharply and keep making the magnetism more potent. Having understood the finer differences in consumer motivations, it opted for sharp arrow reason to buy differentiation over the blanket all-

72

approach (category wise) taken by most of the other players. After the initial preliminary market studies the sales & marketing department decided to start off with 3 product categories: Color televisions Washing machines (Automatic) Refrigerators (300 lt + FF)

Within the first 4.5 months the company went all-India. As the companys business began to rise, LG introduced the following products to expand its product portfolio: Air conditioners Direct cool refrigerator Semi automatic washing machine Microwave ovens.

73

In a broad perspective, LGs sales and marketing success can be attributed to its 7Ps of marketing. In addition to the products, price, place and promotion, the key factors that have contributed to LGs success are the following 3 additional Ps:

Pace, People and Passion

The most important winning factor of the sales and marketing has been its Passion. It is this attribute within all the workers that drives the other 6 Ps. However LGs Marketing Strategy is based on 3 Ps, apart from the conventional 4 Ps of marketing:

Premium pricing to maintain margins Breathtaking Pace to create riches Deep Penetration to increase volumes. LG electronics was one of the late entrants

Premium Pricing:

the 18th player. While other companies were jostling to

74

play the low price high volumes game, LG decided to concentrate on the high end of all the product segments. The maximum price of a CTV was Rs. 21,000 for a 21inch model, was 10 percent higher than Sonys prices. Since most of the competitors were catering to the lower and middle segments, LG decided to concentrate on the premium segments. To cultivate the image that LG was a leader is both technology and quality, innovative products were launched: Golden Eye CTVs whose picture adjusts automatically according to external light conditions and refrigerators with preserve Nutrition system that keep perishable foods nutritious. Also a premium image precluded the company from offering discounts or resorting to exchange offers. The

strategy to offer value propositions to the customer through honest pricing is that of a long-term player. Any ways, LGs quality products and competitive prices have

75

been accepted in the market place considering its 90% brand awareness.
Pace:

The company did not

want to waste any

time

being among the last to enter the market. The 20 month schedule to commission its manufacturing plant was compressed to 10 months. It also decided to go in for a nation wide launch and appointed 1000 dealers in just 5 months in 1997. Finally, the company entered 3 product categories simultaneously space. The company was able to build up the market for its products faster than it would have been able to do so if it had launched one product at a time and marketed them region - wise. However, to keep pace with the competitive market place it will have to launch models with innovative features at regular intervals. For e.g., the proposed launch of a ensuring adequate retail-

76

digital TV by 2000 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 companys 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. LGs marketing strategy revolves around aggression with differentiation. LGs products are differentiated as superior technology products.

77

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 big gain of doing it this way, of course is pricing power and maintaining this will crucial. remain

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 companys had thought of. Each of its product lines were positioned based on health: Golden Eye television- Ensuring wrinkle free viewing

78

Refrigerators

PN

System

(preserve

nutrition

system) Air conditioners Health Air ACs

Washing Machines Chaos Punch +3-Fabricare

system Microwave Oven Health wave cooking system

PRODUCT OFFERINGS & RELATED STRATEGIES

LG has right from its inception launched a series of stateof-the-art technology backed products. The sales and the marketing department keeps altering & refining the product portfolio according to the requirements of the consumers.

79

LG electronics has the following product lines i. ii. iii. iv. v. vi. Colour televisions Refrigerators Washing machines Air conditioners Microwave ovens VCD players (not all that popular).

Initially in 1997, the company had launched only 12 models of CTVs, 8 models of refrigerators (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.

80

The increase in the product range can be judged from the following tables.

Product Range
TABLE 3:
Year CTV Refrigerat s ors FF DC Washing Machine FA SA ACs Micr o Ove n 2003 2004 2005 VCD

Terms used: FF.- Frost free, DC Direct cool, SA Semi Automatic FA-Fully Automatic

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Number of models
TABLE 4:

Ye CT Refrig ar V s erator

Was hing Mach ine

AC s

Micr owa ve oven S pli t

VC D

FF DC F

A A

20 03

16

82

20 04 20 05

22

10

33

13

15

10

The features of LGs products are discussed in detail: -

i. REFRIGERATORS
In the domestic refrigeration segment there are two types:
a. Direct Cool:

These refrigerators cool through the direct

contact of air with the cooling coils bound around the freezer. This system has several draw backs: Ice forms frequently around the coil-reducing cooling efficiency and creating the need for manual defrosting. Also the

temperature distribution is uneven with the various compartments.

83

b. Frost-free refrigerator:

It is designed to overcome the

drawback of conventional refrigerators. Hence the cooling coils are located outside the stroke area. No frost is formed inside the freezer, thus giving high cooling efficiency and maximum storage space all the time. LG entered the refrigerator market with 300 lt frost free models. It introduced 8 models initially and now it has 9 models in the frost free type and 3 in the direct cool type. After establishing itself as the market leader in the 300 lt plus frost free refrigerators with a share close to 37 percent in 2005, LG is now targeting the direct cool segment which is the fastest growing category among refrigerator in India (nine out of every 10 models of fridges sold in India are direct cool inside).

In 2005, it launched three new models of DC refrigerators in 175 litre, 210 litre and 250 litre. LG has the following models of refrigerator available:

84

i.

3 models in direct cool: 175 litres, 210 litres and 250

litres. ii. 8 models in frost free: 330 litres, 360 litres, 380

litres 400 litres, 410 litres, 460 litres, 570 litres, 640 litres. iii. DIOS 730 litres model: Deluxe Intelligent Optimum Silence . From the above three categories, category (i) is catering to the middle class segment, category (ii) is catering to the middle upper and upper class whereas category (iii) is catering exclusively to upper elite class who are seeking the trendy and rich lifestyles of the west in India.

LGs

refrigerators

have

been

positioned

as

nutrition preserver via its PN System.

PN System (Preserve Nutrition System):

The PN system

comprises the F.I.R. Lamp, the moisture controller and the Deodorizer. The three work together to counter

85

factors that cause unpleasant odors, degeneration and staleness of food. Thus maintaining the natural flavor, freshness and nutritive value of food.

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, the super cooling systems HI-speed fan will let out cool air much faster and more powerfully.
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 is the best and the most efficient cooling system for refrigerators.

86

Neuro Fuzzy Control System:

With the help of various this system provides

sensors

and

microcomputer

behavioral control functions. It calculates the least used moments for defrosting, automatically adjusts the

refrigerator temperature when there is a change in the room temperature.

Environment Friendly:

LG has converted its entire 300 FF

range to CFC free compressors. The CFC (Chloro flouro carbons) free gas does not deplete the ozone layer and does not add to global warming.
Active Carbon Filter:

Effectively absorbs unpleasant odors

from onions, stale milk etc.

Moisture Controller:

Maintains the humidity at an ideal

level, keeping fruits and vegetables nutrious last longer.

Dios

Refrigerator

(Deluxe

Intelligent

Optimum Silence):

This 730 lt refrigerator was

launched in August 2005. It is considered to be the

87

first refrigerator of its kind in the country, DIOS claimed as the world lowest noise level and lowest power consumption fridge. It is a super premium product launched in the top four metros. The company has taken a focused approach towards this product because these are the models which will prove instrumental in the success of such state of the art technologies.

The target audiences are the top end customer who is seeking the trendy and rich lifestyle of the west in India. Foreign diplomats, NRIs and top executives constitute this segment. LG is confident that with frost free refrigerators doing well in the Indian market, the future for such super premium category refrigerators is bright. This product would be displayed at the selected counters within the targeted 7-10 towns.

88

The company feels that the successful campaign of its PN System refrigerators in the FF segment is bound to have a spillover effect on this new segment. This refrigerator is directly imported from Korea and the service engineers for this product are extensively trained by a team from Korea. 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. Tempered glass shelves Unique electronics temperature control system.

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LG Fresh Master
Direct Cool refrigerators come under this category. They give more space along with better value for money. The interiors are extremely flexible so to comfortably adjust

shelves and accommodate all the food. It targets the mass market keeping the Indian industry trends in mind. Unique features: a. Versatile and convenient c. Great looks cooling b. Unerring efficiency d. Strong compressor for

ii. WASHING MACHINES

In the washing machine category there are two types of machines:

90

a.

Semi Automatic:

User has to transfer clothes

between the washing and drying compartments manually.

b.

Fully Automatic:

Washing and drying is done in

the same unit. LG has about 6 models of washing machines available in the market out of which three are fully automatic and three semi automatic. The company introduced washing machines in the market in 1998. The company has entered the semi automatic segment because bulk of washing machines bought are semi automatic. World over the company does not cater to this category of semi automatic washing machine. LG has a 37 percent share in the market in the fully automatic washing machine market. In the semi

automatic category it has a 12 percent share.

91

Product positioning:

LGs washing machine

are positioned as machine that cares for the fabric via its Fabricare system.

Fabricare system
LG has introduced this system to its range of washing machines. It is a distinct principle that helps preserve life of the fabric. Whenever clothes are rubbed against hard surfaces like agitators to remove dirt, the fabric wears out. Clothes gets tangled and are stretched out of shape. 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 a water Punch, to give clothes a cleaner, more effective and tangle free wash. The technology used in its products is the Chaos punch +3.

92

Chaos Punch +3 wash:

The punch propels water

through every pore of the fabric and +3 are 3 additional pulsators (technology used by LG). LGs washing machines are available in the following models: i. Punch wash semi automatic: 2 models of 6 kg

capacity ii. iii. Clean master semi automatic: 7 kg capacity. Turbo Drum fully automatic: 3 models in 5.5kg, 6

kg and 10kg.

Punch wash semi automatic:

This is the worlds only washing machine with twin tub along with Punch technology.

93

Within 3 months of its launch in May98, the LG Punch wash became the largest selling semi automatic washing machine in the 6 kg and above category, in towns and cities across the country. Since then it has sold about 94,840 machines. 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. The unique features of this product are:

Punch Technology:

The gushing upward movement of

water removes dirt effectively. Creates water whirls to wash clothes much better than other types of

conventional washers. Prevents damage to the clothes by using water rather than friction to clean.

6 kg-Twin Tub:

This is the first twin-tub washing machine

to boast of a 6 kg capacity.

94

Tough

Wash

Tub:

Made of a high impact resistant

material called polypropylene that makes it long lasting. Unique water dynamic pulsator thats 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.

Clean Master Semi Automatic

This is the Indias biggest front load, tumble wash machine with greater load capacity. 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: Jumbo drum (7 kgs)

95

 Powerful dual filter Economical water consumption Low noise level Suds free system

The Turbo Drum fully automatic

This washing machine provides with features that are unique to LG. The drum and pulsators rotate in opposite directions, machine. The unique features of this product are: creating multiple water whirls inside the

The turbo drum Pulsators Triple water punch Triple water fall system Low power consumption 4 wash programs.

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iii. AIR CONDITIONERS

LGs air conditioners were launched in phase II of Jan98. It launched its air conditioners as Health Air ACs There are two types of AC sold by the company: a. Split type b. Window type

On the whole there are about 9 models of ACs available in the market.

Health Air System:

This system guards against

heat, dust and pollution with its unique anti-bacteria filter, it drives air borne germs out of the boundary. Its deodorizing filter does away with unpleasant odors, and the anti-fungus electrostatic air purification unit traps dust particles as little as 0.01 microns and even smoke. Its

97

Chaos Logic air flow system creates natural air currents, and cools in gentle puffs rather than with blasts of cold

air. Thus it prevents any unhealthy, abrupt drops in the body temperature.

The unique features of LG air conditioners are:

Unique Air Purifying Filters:

The filtering system utilizes

two filters. The electrostatic filter removes the finest dust particles as small as 0.01 mm and even tobacco, smoke and pollen. The de-odorizing filter removes unpleasant odors, especially those caused by airborne fungi.

Worlds First Chaos Logic ACs:

The most pleasant airflow

for the human body can be found within nature. Countless data and verification have resulted in the application of the new Chaos theory to LG ACs. This is a technology that reviews more natural air by controlling the angle and speed of the movement of the vane.

98

Worlds Quietest ACs: To provide a comfortable

pleasant and well balanced environment, LG ACs utilized a streamlined air fan and a unique design which create smooth airflow from the air conditioner so that it operates under the lowest noise level with the best structure for the air path. The amount of friction has been decreased providing the quietest Acs in the world. Following is the range of models: i. ii. Split ACs 1.0 T, 1.5 T, 2.0 T, 2.5 T Window ACs 0.75 T, 1.0 T, 1.5 T, 2.0 T.

LG is launching the Digital Plasma AC for the new millennium. 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.

99

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 proliferation, making the indoor

inhibits

bacteria

atmosphere healthy. LG AC would be 98.5% bacteria free.

Neuro Fuzzy Control:

According to the temperature, air

volume and air velocity the sensor will automatically operate creating a more pleasant atmosphere.

7-Hour On / Off Timer:

This function allows setting the

timer from one hour to a maximum of 7 hours.

Child Lock Function:

This function presents children or

others from tampering with the control buttons on the

10 0

unit. All the buttons on the indoor display panel can be locked. The unit can then, only be controlled by remote.

PRICING AND RELATED STRATEGIES

LG believes in Ethical Pricing. No compromise has been made by the company on the price front despite the cut-

10 1

throat price war existing amongst various players in the industry. In electronics it was one of the late entrants to enter the market in 1997. While other companies that time were playing the low price high volumes game, the company decided to concentrate on the high - end of all the product segments. When the company entered the market, Baron

International

(Akai) was on a rampage then, with the

Akai television exchange scheme. Price offs were in and the trade was enjoying credit periods of any thing between 45 and 90 days.

LG believes in value marketing. It is exactly opposite of what Akai stands for. Akai is pushing volume by sacrificing value. LG is sacrificing volume for value. The refusal to interpret Indian price-sensitivity as value insensitivity seems to have pushed LG into delving deep

10 2

into consumer behavior for insights missed by other companies. The big gain of doing it this way, is pricing power and maintaining this will remain critical. The company when it entered the market in 1997 was targeting the premium end consumer. For example:
a.

In the refrigerator category it entered the frost free 300

lt + segment which forms a very little portion of the entire refrigerator market. Its 330 lt refrigerator was priced at Rs. 26,000. On the other hand Godrej and BPL were offering FF Rs, 20,000. b. LGs basic 21 inch model of CTV is priced at Rs. 15,500. This price is higher than Sonys comparable model (Rs. 14,500). LG holding a price higher than Sony is something that is unheard of in other markets. refrigerators any thing between Rs. 16,000 to

10 3

c. LGs microwave ovens are nothing less than Rs. 12,500, IFB & BPL (Market leaders for microwaves) are selling

them for less than Rs. 10,000 also. However the company after three years in the market, has come down to mass marketing. Now it is targeting all the segments in the market. It is even concentrating on the rural areas now. It has a refrigerator for as low as Rs. 9,300 and a T V for as low as Rs. 9000. But the companys premium image in the market, could be effected in the short run but this would enable the company to gain market share in the long run.

10 4

PRICES FOR EACH OF ITS PRODUCT CATEGORY

TABLE 5: Target Segment Positioning Colour Television Golden wrinkle viewing Lower income youth &the markets Middle middle &upper- Rs. 14000 to Rs income 19000 &middle Rs9000-Rs11000 group; segment rural Eye free / Price /

10 5

groups. Upper &upper class; class Rs 22000 to

middle Rs59000 people

leading a trendy lifestyle. Refrigerator Direct Cool PN. System Lower and middle Rs. class; Rs11000 9000to

Frost free (up to Upper and upper Rs. 26,000 to Rs. 640 lt) middle class; 64,000

working women DIOS Upper-upper class; leading lifestyles west. Air Conditioners Health air System people trendy of the Rs. 1. 3 lakhs

10 6

Split type

Upper and upper Rs. 42,000 to Rs. middle class 67,000

Window type

Upper middle and Rs. 23000 to Rs. middle class 33,000

Washing Machine Semi Automatic

Fabricare System

Middle class mass market;

and Rs. 75,00 to Rs. 8,000

Fully Automatic

Upper middle and Rs. 18,000 to Rs. upper-class working women 21,000

Micro oven

wave Health

wave

cooking system Upper Upper working with lifestyle middle & Rs. 12,900 to Rs.

class, 13,900 women trendy

10 7

DISTRIBUTION AND RELATED STRATEGIES

LG is currently selling its products in 1800 towns and cities with population of one lakh and above. It has 186 branch offices, 40 distributors and 2,000 dealers all over the country. By the end of 2006, the company plans to reach another 8000 towns with a population of 50,000 or more. In this process it will add on to 100 distributors and 1500 dealers. To achieve this, the company engages eight vans to feed the country covering 5000 km every month, to familiarize the trade and the customers with LG products.

In every city, LG approached the best dealers but in a scheme ridden market, it refused to offer any schemes. It positioned itself as an ethical company, instead of discounts. LG wanted dealers to pay an advance for LG

10 8

products. This ensured that the dealer would push the brand in the market place, even if it was just to keep his oven cash from staying blocked. In the long run this created a pent-up demand for the brand. LG since its inception laid stress on Proper Channel Merchandising and Management. Due to a very calculated network expansion plan, 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, proper POP and other promotional material to the dealers and a basket full of products for the dealers to choose from.

10 9

Supply Chain at LG
LG factory Outlets Exclusive

C & F agents

Distributor

Dealer

11 0

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. By using appropriate media vehicles, strong concepts and USPs were developed.Also, various aspects about the brand performance, the products and strategies to the media, has been communicated very well with its excellent public relations. Today, LG stands as the No. 1 PR Company in the industry.

11 1

i. Advertising
The company started with advertising on print and outdoor media in 1997.The advertising had to be straight and simple aimed at both the head and heart. For e.g. To advertise for refrigerators the ad - line went From today all other refrigerators will become history. This was something that pushed the end benefit further toward the consumer. Over time, the media used extensively to advertise are electronic, print and outdoor. It is 60% TV, 30% print and 10% outdoor. Also the company has started with web advertising over the site.

11 2

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. Two LG lady chefs have been taken on board for cooking

demonstration with the help of LG Microwave Oven. The demos will be held at kitty parties arranged by DSL members, at dealer counters (to attract walk in

customers), to new LG microwave customers (they would be requested to invite at least 6-7 people to their house at the time of demo). Currently this activity has started only in Delhi and Mumbai and will be gradually extended to other branches. Now that LG is coming up with its digital range of products, the vehicle that the company plans to adopt

11 3

would be direct selling, in order to demonstrate the products wherever possible. The company keeps in mind the seasonality of product while promoting for its products. It advertises heavily during festive season and also during summers when the demand for ACs, washing machines is on the rise.

Lintas

is the ad agency handling the account.

Its advertising budget since 1999 is as follows: TABLE 6: Year Budget Objective To inform about LGs products

1999- 20 crore 2001 2002- 45 crore 2004 2005- 60 crore 2008

To

promote

additional

product

launches To promote the brand

11 4

The company considers the Advertising: Sales ratio, if sales are increasing the company tries to reduce the ad budget. Oflate LG has got more into corporate advertising i.e. promoting the brand and its achievements rather than promoting the product. Even the ads seen on TV these days, LG is trying to promote the brand and not the product. For e.g. It sponsors a 2- minute programme on Zee TV by name of LG Heros where a personality or anybody who has excelled in his/her about two minutes. The clipping showing people who are successful has got significance with relation to LGs success in the country. field speaks for

11 5

LG was one of the four sponsors of world cup

ii. Public Relations

The company takes care of the PR activities on its own mostly for press releases etc.The officials at LG are very media friendly hence 90% of the media comes to the company itself. LG stands as the no.1 PR company in the industry. The company organizes press conferences very often to keep the media updated on its activities.

iii.Sales Promotion
LG since its inception has believed in No Schemes, no Scheming. It is only once in a while that the company comes up with promotional schemes. Recently about 200 people were

11 6

sent to see the world cup, it is only once in a while that it comes up with such schemes. For consumers, it has schemes like 10% off on pre- peak purchases and low finance schemes.

For dealers, the company gives them good margins based on sales, sending them to Korea etc. Some of the recent schemes that LG has come up with: (a)Lucky draws on purchase of every LG product, to a lucky customer, hell get a free trip to Singapore for 4 days.

(b) Save

upto Rs. 1000 on LG Microwave LG microwaves

available at introductory prices till 16th Aug 2006.

According to the stages of the product life cycle, LG is in the growth stage considering the companys success over

11 7

the past 3 years. Marketing objectives and strategies for the introductory and the growth stage are summarized.

TABLE 7:
Introduction Marketin g objective s Strategie s Product Offering about in total 23 Launching digitally products to the premium superior end of the market products To offer Growth technological Preparing in the Digitally for yours

superior market

products

image for the now millenium

for all its product

11 8

ranges Price Initially prices high to cater Catering the premium end mass to the via

market

its diverse priced. Distributi on Promotio n Heavy advertising to create More awareness products about its corporate advertising promotion brand i.e. the into Selective Intensive

CUSTOMER ELECTRONICS

SATISFACTION

AT

LG

11 9

In todays world of business, the market place is a fierce battleground with national and multinational companies striving to outsmart each other. LG believes that to emerge as the most outstanding company by 2006 end, it needs to leave competition behind and this is possible only through customer satisfaction.

Customer aspects :

satisfaction

involves

two

Internal Customers:

Try to anticipate and satisfy

the needs of the internal customers by being sensitive to them.

External Customers:

To provide the external

customers the best value for money i.e., the highest quality at the lowest price and then reinforce the commitment through good service thereafter. For e.g., the

12 0

company has a different service policys. It goes by the name of happy calls. Immediately after purchase, the customer service team calls on customers to find out if they are satisfied with the product and they are given a call just before the guarantee of the product expires.

12 1

BRAND AWARENESS
LG electronics has established a strong brand name standing apart in the consumers mind. In three years of its existence in the market it has attained a brand awareness level of about 90% in the consumer durable market. A survey conducted by Business Today, surveyed on the Impact of mega event advertising on the Brand awareness pre and post World Cup. This survey was conducted covering 4000 households across 4 metros Bangalore (B), Chennai (C), Delhi (D) and Mumbai (M) to quantify the gains and losses made by each of the major advertisers on the awareness scales of viewers.

Findings

for

LG

electronics

are

presented below

12 2

Top

of

Mind

Brand

Awareness

(Consumer durables)

Pre World Cup

D 20 % C 18 % B 14 % All 18 % LG All 31 %

Post World Cup

D 30 % M 36 % C 34 % B 22 %

Brand Associations with Cricket

Pre World Cup D 13 % M 15 % C 8% B 10 % All 12 % LG Post World Cup All 17 % D 22 % M 21 % C 15 % B 8%

12 3

Brand Associations with Commercials

Pre World Cup D All 0 1% 0 0 1% 0 1% 0 0 0% M C B LG (Ad Recall) (Brand ad association) Post World Cup B C 0 1% 0 0 0 0 0 0 0 All 0 D M

12 4

Brand Association With Products

Pre World Cup LG Post World Cup 99 84% 40%` 38% CTVs Refrigerators Washing Machines 27% 11% 15% Music Systems Microwave Overs Air conditioners 36% 22% 37% 87% 61% 56%

Promotion Awareness
Recall
Pre World Cup 33% LG Post World Cup 35%

12 5

Intention of availing
17% LG 3%

Positioning Associations (LG)

Pre World Cup Attractive Looks World Products Attractive Advertisements 19% 30% Class 24% 22% Post World Cup 32% 32%

Analysis
LG spent about Rs. 40 crore as its expenditure for the world cup. Huge players like BPL did not succeed much in

12 6

the market. Every unit of mindspace that LG gained was BPLs loss. Both BPL and LG started out with the same brand awareness before the World Cup, but BPL fell and LG rose because of different ad-spends. Brand awareness for BPL fell from 35% to 27% 18% to 31%. LG exploited the opportunity that its ad-spend offered by pushing through its mother brand image. It was a smart strategy and it worked. and for LG it rose from

This is the reason that customers perception of LG has widened dramatically from being a TV company to being a full fledged consumer durable company. It has gained on its association with every product category: 40 percent to 61 percent for fridges; 38 to 56 for washing machines ; 27 to 36 from music systems; 11 to 22 for microwaves; 15 to 37 for ACs . This is quite an achievement.

12 7

Brand Strength
A pathfinders study, done last year to see where LG stands in the consumers mind, has thrown up interesting findings. It compared LGs CTVs, refrigerators and washing machines with leading brands in the same categories on four parameters: recall level,

recommendation inclination, status connotation and product differentiation. The survey was conducted in the five metros and four other cities (Lucknow, Ludhiana, Ahmedabad and Jaipur) amongst 25-40 year old men owning a car or motorbike (for CTVs); 25-40 year old

men and women in car/ motorbike owning house holds (for fridges); and women in car owning households (for washing machines).

12 8

Some of the findings are:

In CTVs (Delhi), LG ranks alongside Sony as a status symbol. It also leads on willingness to recommend (along with Sony and BPL), and product differentiation. On spontaneous recall, BPL and Videocon lead, and LG is at the next level along with Sony, Onida and Samsung. In refrigerators (Delhi), Godrej leads by far on

spontaneous recall. But on willingness to recommend, LG is the leader, and so top on status and product

differentiation. In washing machines parameter. On (Delhi), LG doesnt lead on any recall, willingness to

spontaneous

recommend and status connotation, the leader is BPL, while Whirlpool leads on product differentiation.

12 9

In Mumbai, LG CTVs have the poorest recall of all the brands. Sony leads on recall and willingness to

recommend. On status and differentiation, BPL leads. In refrigerators (Mumbai), Godrej leads the pack on three parameters. LG is the leader only on status connotations. In washing machines (Mumbai), Videocon has the highest recall, while LG figures in the last few. Whirlpool leads on all the other parameters.

Across the board, on esteem and differentiation, LG has scored much higher than the others. A fact corroborated by A&M ORG-Margs Most Admired Marketing Companies Survey (A&M, 30 September, 2005), which ranks LG as second in the industry (after BPL) on product

differentiation. In fact, on the parameter Products are designed to meet consumer needs, LG gets its highest

score of 6.66. The same survey also ranks LG pretty low

13 0

on distribution, but even so, it is higher than Samsung and National Panasonic. On rather high debut of the year. Clearly, LGs brand building efforts have had exemplary success. What the company needs to do is to capitalize on it. overall ranking LG made a

13 1

ORGANIZATIONAL STRUCTURE
Organization structure defines and describes the authority and responsibility relationship between various positions. The people working together for the accomplishment of some common objectives require a defined structure through which they are related to each other and through which their efforts can be co-ordinated into a team. The internal organization structure of the HRD department varies widely depending upon the nature and size of enterprise, its management philosophy and its external environment. LG is a functional organization whereby all the activities in the company are grouped according to certain function. Sales and marketing HRD Manufacturing Finance and Accounts

13 2

Each functional head performs a specialized function for the entire company. Every functional head has functional authority over other departments and every employee

reports to several functional heads. Here each operating executive carefully concentrates on his function and gets expert advice and assistants.

At LG management and staff are subdivided into two levels:

(a)Managerial Cadre (b)Clerical Cadre

Managerial

Clerical

M1

M2

Officer I

Officer II

Executive

Manager

13 3

Executive

Deputy Manager

Depending on the above classification of the managerial cadre, management can be divided into: (a)Top Level Management : Managing Director : Vice President

(b) Middle Level Management : Managers : Senior Manager : Deputy Manager (a)Junior Level Management : Executives : Management trainees

13 4

Each employee in the above levels performs his or her task and responsibilities according to the assigned

function. The responsibilities of the Vice President (HRD) at LG electronics include: Advising of and assisting on management personnel in the

formulation

policies

administration

including employees training and manpower planning. Employees welfare including community

development and its implementation in regard to all the divisions of the company. Maintaining functional relationships with other

divisional heads of the company.

13 5

HRD is a central sub-system and it interacts closely and continuously with all other subsystems of an organization. The quality of people in all subsystem depends largely upon the policies, programmes and practices of the HRM subsystem. The quality of HR determines in turn the success of an organization.
Finance subsystem

Technical subsystem Material subsystem

HRM Subsystem

Marketing subsystem

13 6

PARADIGM SHIFT
TABLE 8: Till Now From onwards Way of thinking Management style Analog way Sense Digital way Knowledgement Now

management (self (Information) experience)

Information acquisition Work Style

Paper, Education Paper Work

Media, I.T.

Based Paperless work

Behavior

Dealer Push, Empower-less Responsibility Less Ownership

Consumer More equal

Pull

Empower-

Responsibility Strengthen Ownership

13 7

13 8

ANALYSIS & FINDINGS

To study the promotional strategies of various brands only newspapers were studied due to practical limitations. Four newspapers were studied for a period of one month from 12th July to 12th Aug 2006. 2 of them were English Newspapers i.e. Times of India and Hindustan Times and 2 Hindi Newspapers i.e. Dainik Bhaskar and Rajasthan Patrika .

(Assumption: dealers

Advertisement

published

by

individual

was not taken into consideration, only the

advertisements given by the branch offices or Head office were studied.)

13 9

Comparison on the basis of type of advertisements:

Graph of different type of advertisement of various brands is plotted below. From the graph it can be concluded that LG has maximum variety in advertisement. Over a period of one month LG published 15 different types of

advertisement, followed by Samsung having 10 type of advertisement.

14 0

GRAPH 1:

Comparison on the basis of total number of advertisement:

Graph of total number of advertisement of various brands is plotted below. From the graph it can be concluded LG published a total of 32 advertisements, which is maximum in number. After LG other brands are left far behind with Samsung and Whirlpool having 19 and 18 advertisements respectively.

GRAPH 2:

14 1

Comparision of advertisement on the basis of Newspapers:

Total no. of advertisements of individual brands in different publishes Newspapers total 34 is notted percentage-wise. of the total DB 99

advertisements

advertisements published in all 4 newspapers, i.e. 34%. DB is preferred by Samsung and Whirlpool, which gives 60% and 45% of its total advertisement in DB

respectively. HT is preferred by Voltas, Videocon and Godrej as they all give 50% of their advertisement in HT. RP is preferred by Electrolux and LG as each of them gives 40% of their advertisement in RP.

14 2

TOI is preferred by Hitachi and Whirlpool, which gives 55% and 45% of its total advertisement in TOI

respectively.

GRAPH 3:

1 2 3 4 5 6 7 8
Comparison of advertisements on the basis of days:
Graph of total number of advertisement of various brands published on different days is plotted below. From the
1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8), 7 = Voltas(6), 8 = Whirpool(18)

14 3

graph it can be concluded that 13 advertisements are given on Fridays, which is maximum in number. LG prefers giving its advertisement on Saturdays and Sundays, it gives 21% of its advertisement on each of these days. Samsung prefers Friday for giving its advertisement as it gives 26% of its advertisement on Fridays. Whirlpool prefers Wednesday for giving its advertisement as it gives 22% of its advertisement on Wednesdays. GRAPH 4:

Comparison of advertisements on the basis of products:

Of all the advertisements, AC has maximum of 36 advertisement followed by Ref. having 32 advertisement.

LG

SAMSUNG WHIRPOOL

14 4

Hitachi, Voltas and Videocon gives advertisement of only AC. While Electrolux and Godrej gives advertisement of only Ref. Whirlpool gives 40% advertisement of both AC and Ref each. Samsung gives 55% advertisement of Ref. While LG gives maximum of 40% advertisement of All Product range.

Comparison on the basis of size of advertisement

Advertisement was categorized into 4 categories on basis of their size. Of all the advertisement 45% of advertisement are of 300-600 cm2 category. Advertisement of size >600cm2 were highest of Electrolux equal to 80%. All the advertisement of Godrej were of 300-600 cm2 size. All the advertisement of Videocon were of 150- 300 cm2 size.

14 5

GRAPH 5:

1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),

Comparison on the basis of mostly Text/ Illustration

Advertisement were categorized on basis of whether it contains mostly text or illustration. All the advertisement of Videocon had mostly text. In rest of the brands, advertisement had more of illustration. In Godrej,

Electrolux and Hitachi all the advertisement had mostly illustration.

14 6

GRAPH 6:

Comparison on the basis of presence of human model

Advertisement were categorised on basis of whether it contains a human model or not. All the advertisement of Electrolux, Godrej and Whirlpool had human model. While = advertisement of Hitachi and Videocon had none of1 theElectrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8), human model. GRAPH 7:

1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7),

14 7

Comparison on basis of frequency of advertisement

Advertisement were categorised on basis of their

frequency in newspaper. It can be concluded that 77% of the times LG gives its advertisement everyday in

newspaper. Highest Gap of 4 days was found in LG. 44% of the times Samsung gives its advertisement everyday in newspaper. Highest Gap of 4 days was found in Samsung. 54% of the times Whirlpool gives its advertisement everyday in newspaper. Highest Gap of 3 days was found in Whirlpool.

Comparison on the basis of Theme of advertisement and Schemes provided by the company:
14 8

Brand-wise listing of products according to themes and schemes are listed in the chart

TABLE 9:
Produc Brand t FFR Electrol Water dispenser ux FFR technology 0% Finance/ Exchange offer/ Meet cricketers Theme Life nourishing system Scheme 0% Finance/ Exchange offer/Meet cricketers

14 9

AC Videoco n AC

Value for money Quadra heat exchange technology

0% Finance

0% Finance/ 6 year warranty/ Free ionizer

AC Voltas AC

Intelligent Qooling A Tata product

5 yr. Warranty on compressor

FFR

Rang de kismat offer

Free gift 1200 to 30000/ 0% Finance/ exchange offer

Freshetarian with Bio DCR Samsun g AC CTV CTV CTV Instachill AC We are no.1 Q series CTV BioTV Uphaar jo ban jaye M/W yaadgar 0% Finance Ref. 0% Finance 5 yr warranty on compressor

LG

ALL

LG Birthday bash

15 0

Double scratch offer/ Free Gift Rs 1000/Free gift Rs 1000 & Rs ALL shaadi ka avsar 2195 0% Finance/ Exchange FFR Ice beam technology offer Exchange offer, save FFR FFR DCR AC Now or Never offer Door cooling A-One DCR India no. 1 LG Mukabala rajasthan ki AC WAC WAC M/W garmi se Mother's Day Free mobile Garma garam khana Free gift Rs 1000 Free mobile worth Rs 4490/Free gift Rs 1000 Rs 9000/-

Whirlpo ol

FF

Fast forward ice

exchange offer 0% Finance/ Scratch

AC

Quick cool experience

card

Godrej

Ref

Pentacool, 5 side funda

15 1

Keep track of Electricity Hitachi AC Bill Programmed for 100 cities 0% Finance

FINDINGS PERCEPTION

OF

CONSUMERS

A total of 100 consumers were taken into consideration for the analysis. The survey covered different houses and markets in Delhi.

Consumers Perception in Delhi:

Consumers Perception was analyzed on basis of various variables. They are discussed below. GRAPH 8:

15 2

Perception on the basis of recall of advertisement for Consumer electronic items:

Consumer electronic items include Television, Refrigerator and Air Conditioners. Consumers were asked to recall the advertisement of any brand and their responses are measured and plotted in the graph. From the graph it is observed that advertisement of LG brand were recalled mostly.

GRAPH 9:

15 3

Perception on the basis of recall of advertisement items:

Home electronic items include Washing Machine and Micro Wave Ovens. Consumers were asked to recall the advertisement of any home appliance brand and their responses are measured and plotted in the graph. From the graph it is observed that advertisement of LG brand were recalled mostly.

for

Home

electronic

GRAPH 10:

15 4

Perception towards products of LG:

Consumers were asked to rate various factors of LG products and their response was measured and plotted. From the figure it is observed that LG products were perceived to have high cost, better quality and have high brand equity. GRAPH 11:

15 5

AGE-WISE

CLASSIFICATION

OF

CONSUMERS PERCEPTION:
Consumers Perception was analyzed on basis of various Age groups.

Perception of factors affecting buying behavior:

Various factors affecting buying behavior were asked to be ranked by consumers in the questionnaire. They are plotted in a graph From the graph it can be observed that in the age group20-34, Price and Discount Offers were found to be most important factor. In the age group 35-50, Price and Brand were found to be most important factors. In the age group >50, Convenience and Adv. And Publicity were found to be most important factors. GRAPH 12:

15 6

Perception on the basis of recall of advertisement:

Consumers were asked to recall the advertisement of LG products and their response was measured and plotted in the graph. From the graph it is observed that age group of 20-34 recalled mostly advertisement of Ref. and AC. While age group of 35-50 recalled mostly advertisement of CTV and Washing Machines while age group > 50 recalled Adv. Of Ref.and W/M

GRAPH 13:

15 7

SEX-WISE

CLASSIFICATION

OF

CONSUMERS PERCEPTION:
Consumers Perception was analyzed on basis of Sex.

Perception of factors affecting buying behavior

Various factors affecting buying behavior were asked to be ranked by consumers in the questionnaire. From the graph it can be observed that in males, Adv. and Publicity were found to be most important factors. In females, Capacity and Convenience were found to be most important factors. GRAPH 14:

15 8

Perception

on

basis

of

recall

of

advertisement
Consumers were asked to recall the advertisement of LG products and their response was measured and plotted in the graph. From the figure it is observed that females recalled adv. of Micro Wave and Washing Machines. While males recalled mostly advertisement of CTV and Ref .

GRAPH 15:

15 9

USAGE

-WISE

CLASSIFICATION

OF

CONSUMERS PERCEPTION
Consumers Perception was analyzed on basis of whether they already possess LG product or not.

Perception of factors affecting buying behaviour

Various factors affecting buying behaviour were asked to be ranked by consumers in the questionnaire. From the graph it can be observed that in Non-users, Price and Brand equity were found to be most important factors. In Users, Services provided and Durability were found to be most important factors. GRAPH 16:

16 0

Perception

on

basis

of

recall

of

advertisement
Consumers were asked to recall the advertisement of LG products and their response was measured and plotted in the graph. From the figure it is observed that Non Users recalled Adv. of AC and W/M. While Users recalled mostly

advertisement of CTV, Ref. and M/W.

GRAPH 17:

16 1

FINDINGS OF DEALERS PERCEPTION

Dealers Perception
Dealers were asked questions regarding various factors and were asked to rate them on a 5 point scale. Points scored by individual brands were added. Maximum points, which could be scored by any brand, were 21. Their responses are plotted in the graph. From the figure it is concluded that Sansui and Samsung were perceived as the best brands with 10 points i.e. 47%

16 2

Samsung and Crown were told to have highest

Warranty period, a total of 66% points. Sansui and Crown were told to have best after sales

service, a total of 83% points. Crown and Electrolux offers highest credit period, a

total of 66% points. Akai has best Employee behavior, a total of 66%

points. Godrej offers best supply, a total of 66% points. LG has best POPs, a total of 66% points. Sansui, Crown and Videocon offers best incentives to

its dealers, a total of 50% points.

Comparison of various brands on the basis of dealers perception

GRAPH 18:

16 3

1 2 34 5 6 7 89 10 11
1 = Sansui, 2 = Samsung, 3 = Crown, 4 = LG, 5 = Electrolux, 6 = Whirpool, 7 = Akai, 8 = Godrej,

SWOT ANALYSIS
16 4

Strengths Premium no discounts Focus on pricing,

Weaknesses Lack transparency dealers Focus segments Dominance of on niche of with

technology and quality Strong commitment from parent In house

Korean work culture Little presence in

manufacturing capability

Products

localized

A&B class towns

to suite Indian tastes Threats Way behind market leader Stagnant demand Nothing about strategy unique urban Opportunity Convert image into market share Wide portfolio Positive rub-off due to high quality product

16 5

 Highly market

competitive

Healthy generation

resource

The strategy adopted by the company of premium pricing could turn out to be its weakness in the long run. It would enable it to remain a low volumes player only. Even a company like Sony, which believes in selling premium products globally, has decided to introduce cheaper washing machine models to increase its volumes in small towns. The reason for doing this is because future demand will come from the small towns and the rural areas where consumers are extremely price sensitive. However, within the past three years the marketing efforts of LG has paid fruits but now the company must move ahead with better proposals and ideas to survive in the competitive market. The key to survive in a

competitive market place is the ability to launch models with innovative features at regular intervals. Currently LG

16 6

has a wide range of products but it needs to aggressively introduce more models.. LG electronics has to go a long way before it becomes a major in the consumer durables market. Becoming Indias top consumer electronics company, it means surging past BPL, Videocon and Philips. At the moment BPL is the largest player in consumer electronics and home

appliances. And these companies definitely have its eyes open to know what is happening in the industry. However LGs technological superiority will provide the

cutting edge to its marketing strategy. Also the support that the company is getting from the parent company that is willing to invest in more money, the companys growth is assured.

16 7

CONCLUSION
The result of success in todays not highly only in charged product

competitive

market

depends

innovation and level of productivity but also in hands of efficient service network with technological advancements and more adaptability towards information edge. It has been seen that companies are trying to lower the cost of production and trying to give more emphasis in creating value added customer base and customer

service. It has lead to extreme innovation and cost reduction to the marketer. It is also seen during last few years that the companies, which have more, efficient, and meaningful service network and also the companies who have controlled the cost of distribution have eventually controlled the market. Companies are finding that they can attract more customers by giving better service or lower prices through better physical distribution. On the other hand, companies may lose customers when they fail

16 8

to provide service to its customers at the right time because a satisfied customer brings five new customers while a dissatisfied customer takes away fifty. In order to multiply sales volume, only an efficient dealer and retail network can widen the geographical reach of a companys products. There is substantial over capacity in the industry. A shakeout is most likely and survival will depend upon technology, pricing power, efficient after sales service and to a limited extend branding power.

One

thing

has

become

quite

clear

now,

strategic

marketing is critical for survival and growth. Assessment of environmental information and determining the relative significance of threats and opportunities is an important aspect carried by all the major players. For this preparation of a profile of threats and opportunities is done:

16 9

Environmental Threats:

Competition- Indian market is becoming highly

competitive after the globalization, MNCs are giving very high competition to the Indian domestic brands.

Value for money- Indian market is very price

sensitive, customers value for their money.

Distribution

channel-

Every

company

concentrates on its strong distribution.

Check

on

unorganized

market

thriving-

inputs that are imported ones in at excise paid cost has no Modified Value Added Tax paid.

17 0

Customers now a days are very much aware about the so companies offers, work of hard their on providing to

products,

information, customers.

speciality

products

Every company stress on promotional based marketing.

Environmental Opportunities:

Building Brand- Companys image and brand name

a great role in the purchasing behavior of

plays

consumers. Every company tries to increase their brand name.

Untapped rural market- Certain market surveys

show that market is growing at the rate of around 25%, so companys like BPL, LG, Samsung are ahead in this category and are trying to tap this big market.

17 1

Technology- These days the customer preference

are taking a shift to technological awareness, they do not any more rely on the technology heard, rather they have the potential to get aware, and analyze the same and adapt them. Socio Economic Condition is a major aspect which is giving a boom to the Consumer durable industry, the purchasing power and the expenditure in entertainment of the customer is increasing day by day.

CRM- Customer Relation Management is another area

where all companies are trying to make their imprint.

17 2

BIBLIOGRAPHY
1.

Johnson & Scholes, "Exploring Corporate Strategy",

Text and Cases. Prentice Hall of India, 5 th Edition, 2002 2. Kotler Philip, "Marketing Management", Prentice Hall of India, 2004. 3. Wilson & Gilligan, "Strategic Marketing

Management", Viva Books Private Limited. 4. Economic Times, July 2005, "LG Unplugged", Romi Mukherjee. 5. Business Today, April 2006, "Will LG be Lucky Enough to Strike Gold", George Skaria. 6. A&M 2006, February, "LG's Fine Push & Pull

Strategy".
7.

www.lgindia.com .

8. Strategic Marketing by Watson and Sons.

17 3

APPENDICES CONSUMER ELECTRONICS MARKET STUDY

(Questionnaire for Consumers)

1. Full Name:

2. Which of the following Age group do you belong ?

< 20 yrs (TERMINATE) 20yrs to 35 yrs to 50 yrs >50yrs

35yrs

17 4

3. Sex:

Male

Female

4. Monthly Income:

Less than Rs 3000 9000 to 15000 >Rs15000

Rs 3000 to 9000

Rs

5. Are you planning to buy any consumer electronics item within a year?

YES (CONTINUE)

NO (TERMINATE)

17 5

6. Are you or someone else in your family working for a consumer electronics company?

NO (CONTINUE)

YES (TERMINATE)

7. What is your total monthly household income?

Less than Rs 3000 9000 to 15000

Rs 3000 to 9000

Rs

>Rs15000

8. What all products of consumer electronics are there in your house?

CTV: BPL

LG Videocon

Samsung Onida

Sansui

17 6

Other ______ REFRIGERATOR: Electrolux LG Godrej Whirlpool

Other _______

AIR CONDITIONER: Hitachi Samsung Voltas

LG

Carrier

Other ______ LG

WASHING MACHINE: Samsung Videocon Whirlpool

Other ______ LG IFB Other _______ Samsung

MICROWAVE: Kenstar Whirlpool

9.

Rank the following factors in the way they affect

your buying decision of a consumer electronics product? ( Rank 1 being least important and 5 being

17 7

most important )

Price ___ Functions __

Appearance ___ Durability ___ Easy to use ___

After Sales Service ___ Brand Name ____ Pressure of friends, relatives____

10.Which two brands first come in your mind when you talk of consumer electronic items and Home Appliances?

Consumer Electronic Item Appliances

Home

17 8

11. What is your impression about the following on LG products?

Fully Satisfied Quality goods Price After Service Function of the component Sales of

Partially Satisfied

Unsatisfied

12.What additional features you require to become a prospective customer of LG?

17 9

13. Any Recommendations and Suggestions

______________________________ __________________

18 0

(THANK YOU FOR PARTICIPATING IN OUR SURVEY)

18 1

CONSUMER ELECTRONICS MARKET STUDY

(Questionnaire for Dealers)

1. What all items of consumer electronics are sold in this shop? (READ LIST & RECORD BELOW IN TABLE) None ( TERMINATE)

(Refrigerator / Air Conditioner / Colour Television / Washing Machine / Microwave)

2.

For how long you have been selling consumer

electronics items in this shop? Less than 1 year (TERMINATE) more (CONTIUE) 1 year or

18 2

3. What all brands of consumer electronics are sold in this shop? (DONT READ LIST & RECORD BELOW; WRITE OTHERS ALSO,IF ANY)

___________________________________________ _________________

4. What are your annual sales of following products of various brands during in units) past year? (Annual sales

(Record answers of questions 1 & 3 in table below, ask sales of ticked items only)

Ans 3(Below) LG Samsung

Ref

AC

Ans 1(Below) CTV W/M

M/W

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Whirlpool Voltas Videocon Electrolux Godrej i) ii) iii)

5. What is your opinion about Warranty Period offered by company in its products? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very y

Some

Neutr al

Som Very

Tot

much what

ewh muc ally at Sati h Sati Sati sfie

Unsat Unsat Unsat isfied isfied isfied LG

sfied sfied d

18 4

Sams ung Whirl pool Volta s Video con Electr olux Godr ej
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i) ii) iii)

6. What is your opinion about Credit Period offered by company? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very y

Some

Neutr al

Som Very

Tot

much what

ewh muc ally at Sati h Sati Sati sfie

Unsat Unsat Unsat isfied isfied isfied LG Sams ung

sfied sfied d

18 6

Whirl pool Volta s Video con Electr olux Godr ej i) ii) iii)

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7. What is your opinion about Supply offered by company? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very y

Some

Neutr al

Som Very

Tot

much what

ewh muc ally at Sati h Sati Sati sfie

Unsat Unsat Unsat isfied isfied isfied LG Sams ung Whirl pool

sfied sfied d

18 8

 Volta s Video con Electr olux Godr ej i) ii) iii)

8. Do you think that Catalogues and POPs (Point of Purchase) provided by company are effective? (ASK ABOUT TICKED BRANDS ONLY)

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Com Very Som Neut Some Very pletel muc ewh y h at ral what much

Compl etely

Disag Disag Disagr ree ree ee

Agre Agre Agre e LG Sams ung Whirl pool Volta s e e

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Video con Electr olux Godr ej i) ii) iii)

9. What is your opinion about After Sales Service offered by company to its customers? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very

Some

Neutr

Som Very

Tot
19 1

much what

al

ewh muc ally at Sati h Sati Sati sfie

Unsat Unsat Unsat isfied isfied isfied LG Sams ung Whirl pool Volta s Video con

sfied sfied d

19 2

Electr olux Godr ej i) ii) iii)

10. What is your opinion about Sales Incentives offered by company to you? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very y

Some Ne utr

Some Very what

Totall

much what

much y
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Unsat Unsat Unsat al isfied isfied isfied LG Sams ung Whirl pool Volta s Video con Electr

Satisf Satisf Satisf ied ied ied

19 4

olux Godr ej i) ii) iii)

11. What is your opinion about Employee Behavior of following companies? (ASK ABOUT TICKED BRANDS ONLY)

Totall Very y

Some Ne utr

Some Very what much

Tota lly

much what

Unsat Unsat Unsat al isfied isfied isfied LG

Satisf Satisfi Sati ied ed sfied

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Sams ung Whirl pool Volta s Video con Electr olux Godr ej
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i) ii) iii)

Name of Dealer: ______________________________

Name of Owner: ______________________________

(THANK YOU FOR PARTICIPATING IN OUR SURVEY)

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