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  • 8/8/2019 MRKTG MGMT LG



    Before the liberalization of the Indian economy, only a few companies like

    Kelvinator, Godrej, Allwyn, and Voltas were the major players in the

    consumer durables market, accounting for no less than 90% of the market. Then, after the liberalization, foreign players like LG, Sony, Samsung,

    Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players

    control the major share of the consumer durables market. Consumer durables

    market is expected to grow at 10-15% in 2009-2010. It is growing very fast

    because of rise in living standards, easy access to consumer finance, and wide

    range of choice, as many foreign players are entering in the market With the

    increase in income levels, easy availability of finance, increase in consumer

    awareness, and introduction of new models, the demand for consumer

    durables has increased significantly. Products like washing machines, airconditioners, microwave ovens, color televisions (CTVs) are no longer

    considered luxury items. However, there are still very few players in categories

    like vacuum cleaners, and dishwashers Consumer durables sector is

    characterized by the emergence of MNCs, exchange offers, discounts, and

    intense competition. The market share of MNCs in consumer durables sector is

    65%. MNC's major target is the growing middle class of India. MNCs offer

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    superior technology to the Consumers whereas the Indian companies compete

    on the basis of firm grasp of the local market, their well-acknowledged brands,

    and hold over wide distribution network. However, the penetration level of the

    consumer durables is still low in India.

    Global Operation

    LG Electronics is playing an active role in the world market with its assertive

    global business policy. As a result, LG Electronics controls 110 local

    subsidiaries in the world with around 82,000 executive and employees.

    LG Group

    1. LG.Philips LCD

    2. LG Chemical

    3. LG Telecom4. LG Powercom

    5. LG Twins

    6. LG Dac

    Business areas and main products

    Mobile communications

    (a) CDMA Handsets,

    (b)GSM Handsets,

    (c) 3G Handsets,(d) Cellular Phones

    Digital appliance

    a) Air Conditioners,b) Refrigerators,

    c) Microwave Ovens,

    d) Washing Machines,

    e) Vacuum Cleaners,

    f) Home Net,

    g) Compressors for Air Conditioners and Refrigerators

    Digital displaya) Plasma TVs,

    b) LCD TVs,c) Micro Display Panel TVs,

    d) Monitors,

    e) PDP Modules,

    f) OLED Panels,

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    g) USB Memory,

    h) Flat Panel Computer MonitorsDigital media

    a) Home Theater Systems,

    b) DVD Recorders,c) Super Multi DVD Rewriters,

    d) CDRW,

    e) Notebook PCs,

    f) Desktop PCs,

    g) PDAs,

    h) PDA Phones,

    i) MP3 Players,

    j) New Karaoke Systems,

    k) Car Infotainment


    LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics,

    South Korea was established in January 1997 after clearance from the

    Foreign Investment Promotion Board (FIPB). LG set up a state-of-the art

    manufacturing facility at Greater Noida, near Delhi, in 1998, with an

    investment of Rs 500 Crores.

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

    Noida, India. This facility manufactured Color Televisions, Washing Machines,

    Air-Conditioners and Microwave Ovens.

    ''Company is setting up a chain of exclusive premium showrooms. LG plans tolaunch 60 premium Brand Shoppes by the end of the first quarter of this year.

    At present, LG has a total of 83 LG stores across the country, of which 45 are

    shops and 38 are exclusive stores. Brand shops will be placed in the premium

    segment and the target audience will comprise buyers interested in premium

    and high end products.LG Brand Shoppe goes beyond the concept of a normal exclusive store by

    having a more interactive environment and additional lifestyle orientation on

    display so that the customer can actually experience the LG products in his or

    her own home settings.LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market

    share, is planning a brand new image. To attract inspirational and young

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    consumers across India, company will roll out a new marketing strategy. The

    exercise will cost the company Rs 360 crore.LG Electronics India is the fastest growing company in the consumer

    electronics, home appliances, and computer peripherals industry today. LG

    Electronics is continually providing, superior technology products & value formoney to more than 50 lakh households in India. LGEIL is celebrating the

    11th anniversary this year.

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

    Electronics' largest R&D centre outside Korea. We at LGSI focus on niche

    technology areas such as mobile application development, digital video

    broadcast and biometrics software and support LG Electronics with our

    expertise. Motivated by a passion for technology, a strong work culture and

    loyalty to the organization, we are determined to see LG become one of the top

    three brands globally.

    Prominent consumer electronic company, LG Electronics Inc. has said that itexpects the sale of its products in India to up by 15 per cent in 2008. Moon

    Bum Shin, managing director of LG Electronics India has said that thecompany has earmarked 4.8 billion rupees for investment purpose in India this

    year. The said money will be used to market as well as manufacture new


    LG Electronics, which is originally a South Korean Company with branch in

    India, informed that its sales of GSM mobile phones, color televisions, air

    conditioners and other household goods in the Indian market was to the tune

    of 95 billion rupees ($2.4 billion) in 2007. As per Shin's estimate, the sales in

    2008 would be around 110 billion rupees. In order to achieve its target, Shin

    said LG Electronics will concentrate on catering to the high-end consumer

    market which will help boost sales this year. India churns out six (6) per cent

    of LG Electronics global revenues of $42 billion. The Indian branch of LG

    exports to 40 countries.

    Classification of consumer durables sector

    y Consumer electronic includevcd/dvd, home theatre, music player, color television (CTVs),

    cameras, camcorders, portable audio, Hi-Fi, etc

    y White goods include dishwashers, air conditioners, heaters,washingmachines, refrigerators, vacuum cleaners, kitchen appliances, non-

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    kitchen appliances, microwaves, built-in appliances, Tumble dryer,

    personal care product etc.y Moulded luggage include plasticsy Clocks and watchesy Mobile phones



    The mission of LG is to provide the customers with utmost satisfactionthrough leadership. The fundamental policy of development is to secure

    product leadership that the Customers may have the utmost satisfaction.


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    Global Top 3 by 2010

    Global Top 3 Electronic/Telecommunication company


    Fast innovation, Fast growth


    Product leadership, Market leadership, People leadership


    No excuse, we not I, Fun workplace


    "Life's Good" represents LG's determination to provide delightfully smart

    products that will make your life good.


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    The symbol of LG is the face of future. The letter L and G in a circlesymbolizes world, future, youth, humanity & technology. LG philosophy isbased on humanity. It also represents LGs efforts to keep close relationshipwith our customers around the world.

    The symbol consists of two elements.

    1. The logo in LG gray2. The stylized image of human face in the unique LG red color.

    Red color represents our friendliness and gives a strong impression of LGscommitment to deliver the best.

    The circle symbolizes The Globe. The stylized image of a smiling face in the

    symbol conveys Friendliness and Approachability.

    The one eye on the symbol represents Goal-oriented, Focused & Confident.

    The slogan of LG is Lifes Good. It expresses Brands Value , Promises,Benefits , Personality .

    History of the company

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

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    1958-69 - GoldStar The Electronics Industry Dream

    1970-79 - GoldStar symbol of The Technolgoy


    1989-94 - INOVATION





    The LG Group was a merger of two Korean companies, Lucky and Gold Star,

    from which the abbreviation of LG was derived. The current "Life's good"slogan is a backronym. Before the corporate Name change to LG, household

    products were sold under the Brand name of Lucky, while electronicproducts were sold under the brand name ofGold Star. The Gold Star brand

    is still perceived as a discount brand. In 1995, Gold Star was renamed LG

    Electronics, and acquired Zenith Electronics of the United States.


    The brand of LG is delightfully smart. LG strives to enhance the customers life

    and lifestyle with intelligent features, institutive functionality and exceptional


    The brand platform

    The LG brand is composed of four basic elements

    1. Value

    2. Promise

    3. Benefits

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    4. Personality

    The Brands core Value that never changes.

    a. Trust,

    b. Innovation,c. People

    d. Passion

    The benefits that are consistently delivered to the customer includes

    a) Reliable productsb) Simple designc) Ease of used) Extraordinary ExperiencePersonality describes the human characteristic that are expressed to thecustomer throughTrustworthy, ConsideratePractical, Friendly

    The Internal Culture of LG

    LG practices four cultures

    1. Learning Culture2. Boundary less Environment3. A Carrier4. Growth

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

    Boundary less Environment means that there is no difference between the

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

    understanding between all the employees.

    A carrier is highly growing in LG and one who is the employee can develop their

    carrier largely. A new comer will feel fully comfortable in the company and for a

    new comer the company is very helpful in the overall growth of personality.

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    Growth in LG is very high for those who are in the company and for those who

    want to join in LG. The company is growing with fast innovation and the BLUE

    Ocean strategy is one of the examples of growth.

    Product Leadership

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

    1. New Machine

    2. Reliability

    3. Conventional Installation

    4. Environment Friendly Product

    5. Low Noise & Vibration

    6. Energy Savin

    Quality Innovation

    The policy of quality assurance is to provide customers with utmost

    satisfaction by supplying zero defects.

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    LG proceeds in a hierarchal manner. It is named as LG WAY.

    From top to bottom:

    No.1 LG is the VISION

    Jeong-DO Management is LGs unique application to ethics. LG willsucceed through fair management practices and constantly developing our

    business skill.

    A) Honest with our customer

    b) Providing great values to customer through constant

    innovation & and development.

    c) Equal opportunities

    d) Equal Treatment Management Principle - Creating value for customer

    Code of conduct of LG

    1. Responsibility and obligations to customers :y Respect for Customersy Creating Valuey Providing Value

    2. Fair competitiony Pursuit of Free Competitiony Compliance with Laws and Regulations

    3. Fair Transaction :Equal Opportunity

    Fair Transaction Procedure

    Support and Aid for Business Partners

    4. Basic Ethics for Employees

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    y Basic Ethicsy Completion of Dutyy Self Developmenty Fairness in Performancey Avoidance of conflict with company interest

    5. Corporate Responsibilities to employees

    y Respect for human dignityy Fair Treatmenty Promoting Creativity

    6. Responsibilities to society and country

    y Rational Business Developmenty Protection of stock holder interesty Contribution to social developmenty Environmental Conservation


    The company has number of dealers and warehouses. They have LG exclusive

    shops. For the marketing of the products a number of activities are followed1. Exhibitions are conducted from time to time.2. Society and college activities are conducted.3. Hoarding, Posters, banners are used so as to grab the attention of the


    4. Day to day advertisement in leading newspaper.5. Discount at festival time.6. For dealer relationship they arrange dealer meeting at several time in the


    7. LG divide dealer in gold silver etc. category to know the performance ofthe dealers.

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    8.They have their sales persons at various sub dealer store and at mordenttrade store for particularly for the promotion of the LG product.

    9. LG also uses the radio FM for the promotion activities.10. Provide capon and scratch card for festive season.

    Innovative marketing strategy

    Launch new technologies in consumer electronic and home appliances.

    LG was the first brand to enter in cricket in big way a way, by sponsoringthe 1999 world cup followed it up in 2003 as well.

    LG brought in four captains of the Indian cricket team to endorse itsproducts. LG invested more then US$ 8 million on advertising andmarketing in this sport.

    LG has differentiated its product using technology and health benefits. CTV

    has Golden eye technology Air conditioner has Health airsystemand microwave ovens have the Health wave system.

    Local and efficient manufacturing to reduce the cost

    To overcome high import duties LG manufactures TV refrigerator in India

    at manufacturing facility at Noida and . LGEI had already commissioned

    contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This hashelped LGEI to reduce cost. LGEI implementing the Digital

    manufacturing system (DMS) as the cost cutting innovation this system

    is follow-up to the six sigma exercise LGEI had initiate earlier.

    Regional channel and wide distribution network

    1. LG has adopted the regional distribution channel in India. All thedistributers work directly with the company. This has resulted in quicker

    rotation of the stock and better penetration into B, C, D, class market.

    2. LG also follows the stock rotation policy rather then dumping stock onchannel partners.

    Product localization

    1. Product localization is the key strategy used by the LG2.

    LG came out with Hindi and regional language menus on its TVs.3. Introduced the low-priced Cineplus and Sampooma for the ruralmarket.

    4. LG was the first brand to introduce gaming in TVs in continuations of itsassociation with cricket LG introduce cricket game in CTVs


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    Logistics is the art and science of managing and controlling the flow of goods,

    energy, information, and other resources like products, services, and people,

    from the source of production to the marketplace. It is difficult to accomplish

    any marketing or manufacturing without logistical support. It involves theintegration of information, transportation, inventory, warehousing, material

    handling, and packaging. The operating responsibility of logistics is the

    geographical repositioning of raw materials, work in process, and finished

    inventories where required at the lowest cost possible.

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

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

    storage of goods, services and related information between the point of origin

    and the point of consumption in order to meet customers' requirements.

    5Rs of Logistic followed by LG:

    y Right Timey Right Placey Right Conditiony Right Costy Right Handling

    The LG Factory is located at NOIDA & . There are three types of


    y Mother Warehousey Branch Warehousey Spare part warehouse

    The mother warehouse is that where the products from the factory are kept

    and from that warehouse, the products are sent to the branch warehouse. A

    warehouse is a commercial building for storage of goods. Warehouses are used

    by manufacturers, importers, exporters, wholesalers, transport businesses,customs, etc. They are usually large plain buildings in industrial areas of cities

    and towns. They come equipped with loading docks to load and unload trucks;

    or sometimes are loaded directly from railways, airports, or seaports. They also

    often have cranes and forklifts for moving goods, which are usually placed on

    ISO standard pallets loaded into pallet racks.

    In warehouse, the products are pinup with 3-color paper to get the knowledge

    about the delivery.

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

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

    3. Yellow Card After the product labeled with green, allow this

    to move in market


    Mapping of regional dealers. They have been divided into three categories on

    the basis of their turnover and the selling capacity.




    1- Includes the modern trade and they have direct billing from the branch

    office. They have high turnover and the company depends heavily on them2- Includes the distributors. They have direct billing from the branch office.

    Their turnover is also high.3- Includes the sub dealers. They have direct billing from distributors or from

    the branch office. Their turnover is not so high, but there are few sub dealers

    whose potential is quite high. According to sales the branch has designated as

    gold and silver sub dealers.

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    LG has differentiated its products using technologyand health benefits. The CTV range has GoldenEye technology, air-conditioners have the HealthAir System and microwave ovens have the HealthWave System.

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    Segmentation from Geographic:

    From geographic segmentation we have selected region to select our segment. Initially we will

    take elite class of Lahore. The area that we will cater is Defence, Gulberg, Model Town, Behria

    Town, Johar Town etc . After successful launch of refrigerator in Lahore we will launch it in

    major cities of Lahore like Karachi, Islamabad, and Rawalpindi etc.

    Segmentation from Demographics (Income Level):

    Second base we have selected for our segmentation is Demographic Segmentation where we will

    create segment on the base of income level. As our target market is elite class of Lahore so our

    segment will be consumers with high income levels.

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    Segmentation from Behavioralistic approach:

    The third base that we have selected is Behavioralistic segmentation approach. And in this part

    we will select a segment on the behavior of buyer like benefit sought by the customer like quality

    of the product, look of the product etc.

    Calculation of Segment Potential:

    Total population of Lahore is estimated to be approximately 10,000,000. And out of that elite

    class is approximately 2.5 % of total population. So we can say that size of our potential target

    market is 10,000,000*2.5% = 250,000 customers from Lahore.

    Market Definition:


    e can define market on the basis of three aspects like area, income level and behavior ofpeople. Hence our market will be the people of Lahore from Defence and Gulberg with highest

    income level who wants a product with more and more benefits and look of the product.

    Segment for this Product (TargetMarket):

    As defined in the market definition we will select a segment of elite class people of the country

    from the posh areas and also with the high income level in all social classes.

    Size of the TargetMarket:

    As we have calculated potential customer in our segment so we can calculate the size of our

    target market as follow:

    Size of target market = N*P*Q

    Size of target market = 250,000 * 250,000 * 1

    Size of target market = 62,500,000,000

    So we can say that the size of target market is approximately Rs. 6.25*1010


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    Strategic Group:

    We can develop strategic groups as follows on the basis of prices they charge and innovation

    they brought to the market.

    LG & Samsung

    Dawlance & Pel Orient & Haier


    LG is a brand with the image of most innovative manufacturer of electronics in the world. The

    products are positioned in the minds of its customers as premium products.

    LG has a positioning statement of Lifes Good which represents LG's determination to

    provide delightfully smart products that will make their consumers life good.

    Their slogan, 'Life's Good' best expresses their brand's values, promises, benefits and personality.

    It is an ultimate expression for what their brand stands for and what they strive to deliver


    Side By Side Refrigerators:

    The most popular refrigerator style by far is the side-by-side, which has the refrigerator on the

    right side and the freezer in the left side. The fresh food compartment is generally about 50

    percent larger than the freezer compartment.With side-by-side refrigerators, the freezer and the

    fresh food compartment get equal real estate. They can come with in-door water and ice systems




    Less Innovative More

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    or other gadgets such as TV screens. The average dimensions for standalone refrigerator units

    are:Width: 35 inches; Depth: 30 inches; Depth with door open 90 degrees: 45 inches; Height: 71

    inches. Space efficient cooks who also want in-door extras will like side-by-sides best.

    LGs new side by side innovative product design allows for more space inside, without adding

    space outside. To cool or chill (a substance) and to preserve (food) by chilling their products inPakistan keeping abreast with the changing lifestyles, where consumers seek convenience

    bundled with style, LG has also added its usual touch of innovation, which is its hallmark. Being

    the pioneer in Twin cooling technology, now it has further enhanced the product by

    incorporating space-saving technology to increase storage capabilities without adding to the units

    outside dimensions. However, the formal designed bulky refrigerators failed to appeal to

    European tastes that care more about kitchen decor. LG research addressed this concern and

    since then, LG Electronics has been ranked first in the European side-by-side refrigerator market

    for several years. The changing preferences and lifestyle of the Pakistani consumers LG has

    introduced its sleek and stylish refrigerator in the Pakistani market as well, for those who have an

    eye for perfection and beauty. LG Electronics first took a leadership role in the side-by-side

    refrigerator market with the introduction of new product technology at a steady rate in the history

    of Pakistan. LG has brought revolutionary solutions in Pakistan, while maintaining the edge of

    unsurpassed external dimensions. LG Being number one in the Side-By-Side category worldwide

    understand its consumers and offers deeper and wider storage facility by expanding the capacity

    of a conventional-sized refrigerator by more than 100 liters that can accommodate larger items

    than traditional refrigerators. LG patented LCD display system on its new refrigerator series,

    which allows the ultimate user experience of its product.

    Types of Refrigerators:

    Top-freezer refrigerators:

    These are the traditional type, dating back to the earliest refrigerators.Widths

    typically run from about 30 to 33 inches. Manufacturers claim up to 22-cubic-

    foot capacities, but usable capacity is typically 20 percent lower by our

    measurements. They typically offer the most storage for their size. Fairly wide

    refrigerator shelves make it easy to reach the back. They also cost the least as a

    group, yet they offer stainless trim on more models for a more stylish look.

    Bottom-freezer refrigerators:

    Sales of bottom-freezers are growing fastest.Widths run from 30 to 36 inches.

    Claimed capacities go up to 26 cubic feet, though usable space doesn't quite

    match that of comparable top-freezers. Bottom-freezers offer the convenience of

    an eye-level refrigerator. French-door models offer the space-saving narrow door

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    swing of a side-by-side and the option of opening only half the refrigerator for smaller items.

    Side-by-side refrigerators:

    A vertical, full-length split places the freezer on one side and refrigerator on

    the other. Side-by-sides typically comes with through-the-door ice and waterdispensers, temperature-controlled bins, and rapid ice-making cycles.Width

    typically measures 32 to 36 inches. Claimed capacities are up to 30 cubic feet,

    but only about 65 to 70 percent is usable. The narrow doors are a plus in a

    tight kitchen.

    Built-in refrigerators

    These pricey models are designed to fit almost flush with

    cabinets and counters. Built-ins typically come in bottom-freezer

    and side-by-side styles. You can even buy a separate refrigerator

    and freezer and build them into a 72-inch-wide opening.

    Claimed capacities go up to 26 cubic feet, but only about 70

    percent of that is usable. These offer the sleekest look. And most

    can accept optional front panels that match other elements of

    your kitchen. Built-in refrigerators are the least space efficient

    overall. They're wide (36 inches or more) but relatively shallow-

    25 or 26 inches front to back. They've also been repair-prone as a group.


    LG is currently the bestselling and leading brand of front-loading washers

    in the United States, carried by major American distributors including BestBuy, Home Depot, and Sears, helping to expand this segment in the market.

    LG's innovative and stylish front-loading STEAM washer was votednumber one by several consumer magazines (Consumer Reports, JD Power

    Magazine) for three consecutive years (2006, 2007,2008) gaining thereputation as the best product on the market.


    LG creates products that reflect the specific needs and preferences of its customers. LG

    Electronics sells convenient, spacious, and stylish refrigerators adapted for different users. LGintroduced the door-mounted ice maker, a unique system that provides10 % more storage by placing the ice maker on the freezer door. LG

    refrigerators consume less energy and create less noise thanks to a linearcompressor, while keeping food fresher with innovative technologies

    such as vita-light, green ion door cooling and Vacuum Fresh crisper. TheLG multi door refrigerator has led the North American market since its

    launch in 2007.

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    Cooking Appliances

    LG's Solar CUBE light wave oven, the second generation of Solar DOM,

    combines all the functions of a convection oven, grill, and microwave,allowing chefs to cook a variety of foods much faster than with

    conventional ovens. The Solar CUBE also helps to retain nutrients andflavor and makes healthier meals through the Steam Chef function. Despite

    its unconventional features and convenient touch control panel, the SolarCUBE is designed to fit well into the kitchen with the look of a traditional oven.

    Built-in Appliances

    LG's Built-In Appliances create a convenient and efficient kitchen

    environment by combining individual home appliances into well-designedintegrated packages. LG's built-in appliances include hoods, hobs, built-in

    ovens, built-in microwaves, dishwashers, and refrigerators. LG's Built-in

    Oven, with an e-Cookbook on the LCD panel, helps cooks become world-class chefs whilesaving time and energy.


    y Business worldy Business todayy LG magaziney Economics times News paper

    Share (%)






    Samsung, Super, General, etc)

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    y Times of India


    y www.lgindia.comy