Bharat Christie Anthony

8/12/2019 Bharat Christie Anthony

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Project Title : Formulation of MarketingStrategies to Improve Market Share ofLG Refrigerator

Submitted by

Bharat hristie !nthon"Roll #o $ %&&&'()*+

In partial fulfillment of the requirement

for the award of the degree

of MBA in Marketing

Fe,ruar" *-&'.

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Table of contentsChapter No

1 Literature Review Page No

1.1 What Is Strategy 3

1.2 Marketing Strategy 9

1.3 Segmentation, Targeting, Positioning 14

1.4 Porters i!e or"es Mo#e$ 2%

1.& S'staina($e Competiti!e )#!antage, Porters *eneri"Strategy

3+

1. Port-o$io )na$ysis 3%

1.% Ne Pro#'"t Strategy /Inno!ation, Market 0ntry, Pro#'"tine 0tension

4+

1. ran# Strategy 4&

1.9 Pri"ing Strategy 4

2Study And Inference - Formulation Of Marketing Strategieso Im!rove Market S"are Of L# Refrigerators

2.1 Company Pro-i$e &+

2.2 Competitors &3

2.3 Porters )na$ysis &

2.4 SW5T )na$ysis %1

2.& Marketing P$an 3

2. Promotion Strategy

2.% 6istri('tion Strategy 9+

2. Con"$'sion 91

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CHAPTER -1

Literature review

1.1 What is Strateg!

/Strateg" is the direction an0 scope of an organi1ation over the long-term: 2hich

achieves advantage for the organi1ation through its configuration of resources

within a challenging environment3 to meet the nee0s of markets an0 to fulfill

Stakeholder e4pectations/.

Strateg is about"

5 6here is the ,usiness tr"ing to get to in the long7term8

5 6hich markets shoul0 a ,usiness compete in an0 2hat kin0s of activities are

involve0 in such markets8

5 9o2 can the ,usiness perform ,etter than the competition in those markets8

5 6hat resources skills3 assets3 finance3 relationships3 technical competence3 an0

facilities; are re


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Operational Strategy7 is concerne0 2ith ho2 each part of the ,usiness

0isorgani1e0 to 0eliver the corporate an0 ,usiness7unit level strategic 0irection.

>perational strateg" therefore focuses on issues of resources3 processes3 people etc.

Strateg" is the process of planning ? e4ecuting various maneuvers or actions inane

attempt to reach a goal. Strateg" is often associate0 2ith ,usiness3 politics3 ?

militar" planning3 ,ut in0ivi0uals can also strategi1e to2ar0s achieving their

career3 health. Strateg" is essentiall" akin to planning ,ut Implies a ma4imi1ation

of resources 2ith logical thinking3 intelligence ac


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Pro0uct ustomer value

Promotion ommunication

Price ost

Place onvenience

People apa,le

Process onvergent

Ph"sical @vi0ence on0uctive

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'ssues for (ar)eting strateg

5 Pro*uct

6hat pro0uct 0o customers use no28

6hat ,enefits 0oes consumer 2ant from the pro0uct8

5 Pro(otions

6hat promotions appeals 2oul0 influence consumer to purchase ? use of our

pro0uct8

6hat a0vertising claims 2oul0 ,e effective for our pro0uct8

5 Pricing

9o2 important is price to the consumer in various target markets8

6hat effect 2ill a price change have on purchase ,ehavior8

5 Place

6here 0o consumers ,u" this pro0uct8

6oul0 a 0ifferent 0istri,ution s"stem change consumer purchasing ,ehavior8

5 Peo+le

6hat t"pe of people is 0esire0 ," the consumer to 0eliver the service8 6oul0

0ifferentiation ," people help in gaining competitive a0vantage8

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5 Process

6oul0 0ifferent proce0ure3 mechanism3 routine3 an0 helps in satisf"ing the

customer nee0s8

5 Phsical Evi*ence

an 2e have 0ifferent ph"sical evi0ence8

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1., ar)eting Strateg

!chieving o,jectives re


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T+es of ar)eting Strateg"

>ne of the most important concepts of the marketing planning process is the nee0

to 0evelop a cohesive marketing strateg" that gui0es tactical programs for the

marketing 0ecision areas.

In marketing there are t2o levels to strateg" formulation:

&. General Marketing Strategies

*. ecision !rea Strategies.

eneral ar)eting Strategies"

These set the 0irection for all marketing efforts ," 0escri,ing3 in general terms3

ho2 marketing 2ill achieve its o,jectives. There are man" 0ifferent General

Marketing Strategies3 though most can ,e vie2e0 as falling into one of the

follo2ing categories:

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ar)et E/+ansion"

This strateg" looks to gro2 overall sales in one of t2o 2a"s:

Gro2 Sales 2ith @4isting Pro0ucts $ 6ith this approach the marketer seeks to

activel" increase the overall sales of pro0ucts the compan" currentl" markets. This

can ,e accomplishe0 ,":

&; Getting e4isting customers to ,u" moreC

*; Getting potential customers to ,u" i.e.3 those 2ho have "et to ,u";

'; Selling current pro0ucts in ne2 markets.

Gro2 Sales 2ith #e2 Pro0ucts $ 6ith this approach the marketer seeks to achieve

o,jectives through the intro0uction of ne2 pro0ucts. This can ,e accomplishe0 ,":

&; Intro0ucing up0ate0 versions or refinements to e4isting pro0ucts.

*; Intro0ucing pro0ucts that are e4tensions of current pro0ucts.

'; Intro0ucing ne2 pro0ucts not previousl" markete0.

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5 ar)et Share rowth$ This strateg" looks to increase the marketerAs overall

percentage or share of market. In man" cases this can onl" ,e accomplishe0 ,"

taking sales a2a" from competitors. onse


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5 These are use0 to achieve the General Marketing Strategies ," gui0ing the

0ecisions 2ithin important marketing areas pro0uct3 pricing3 0istri,ution3

promotion3 target marketing;.For e4ample3 a General Marketing Strateg" that

centers on entering a ne2 market 2ith ne2 pro0ucts ma" ,e supporte0 ," ecision

!rea Strategies that inclu0e:

5 Target Market Strateg" $ emplo" segmenting techni


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#ifferentiation

Seg(entation" grouping consumers ," some criteria.

Targeting" choosing 2hich groups; to sell to.

Positioning" select the marketing mi4 most appropriate for the target segments;.

Seg(entation"

5 Grouping consumers ," some criteria3 such that those 2ithin a group 2ill respon0

similarl" to a marketing action an0 those in a 0ifferent group 2ill respon0

0ifferentl".

Potential seg(entation variables"

5 Se4

5 !ge5 Race

5 Income

5 @0ucational level

5 Marital status

5 #um,er of chil0ren

5 Introvert E e4trovert 1

5 Dsage histor"

Which seg(ent 4

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5 Mass market3

5 Multiple segments3

5 Single segment

Mass market $ high volumes lo2 margins goo0s. @4ample $confectioner"3

clothing.

Multiple segment7 appealing to 2i0er range of groupAs e4ample $ )4)vehicles3

to2ns3 countr"3 gen0er3 lifest"le3 social class.

Single segment $ often a speciali1e0 pro0uct3 e4ample $ machiner"3 e4clusive

goo0s.

AR5ET SEE0TAT'60 STRATE7"

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5 The nee0 for market segmentation

5 Marketers un0erstan0 the" cannot 0o all things to all peopleC all the time .Bu"ers

? markets are too comple4 ? 0iverse for one simple marketing formula to

a0e


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5 I0entif" for segmenting the market

5 evelop profiles of resulting segment

5 evelop measure of segment attractiveness

5 Select the target segment

5 evelop position for each target segment

5 evelop marketing mi4 for each target segment

ar)et Seg(entation"

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5 6ith a large countr"

5 Man" 0ifferent t"pes of people it is too 0ifficult to create a pro0uct that 2ill

satisf" ever",o0"3 that is 2h" 2e focus on a segment of the total market

5 Market Segmentation 7Grouping people accor0ing to their similarit" relate0 to a

particular pro0uct categor"

8 co((onl use* bases for Seg(entation

5 Geographic location 7 ,ase0 upon 2here people live historicall" a popular 2a"

of 0ivi0ing markets;

5 emographic 7 ,ase0 upon age3 gen0er an0 income level ver" often use0;

5 Ps"chographic E lifest"les 7 ,ase0 on peopleAs opinions3 interests3 life st"les. @g3

people 2ho like har0 rock music pro,a,l" prefer ,eer to 2ine

5 Benefits 7 ,ase0 on the 0ifferent e4pectation that customers have a,out 2hat a

pro0uctEservice can 0o for them

@g. People 2ho 2ant to ,ut lite foo0 cause it 2ill help them lose 2eight.

Positioning Strateg"

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5 ! Positioning Strateg" results in the image "ou 2ant to 0ra2 in the min0 of "our

customers3 the picture "ou 2ant himEher to visuali1e of "ou 2hat "ou offer3 in

relation to the market situation3 an0 an" competition "ou ma" have/.

5 6hile 0esigning "our positioning strateg" "ou 2ill ,e face0 2ith three main

options:

5 Positioning "our pro0uct against "our competitors3 / >ur prices are half of that

"ou ma" fin0 else2here for similar pro0ucts/

5 @mphasi1ing a 0istinctive uni


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7ou will nee* to write *own the following

5 >ur pro0uct offers the follo2ing ,enefits: 777777777777777

5 To the follo2ing customers "our target market: 7777777777

5 >ur pro0uct is ,etter than the competitors in the follo2ing manner: 7777777777777777

5 6e can prove our pro0uct is the ,est ,ecause evi0ence3 0ifferences3

testimonials..@tc; 77777777777777777777

5 Hour positioning statement reflects 2hat "ou nee0 to communicate a,out a

specific pro0uct3 an0 to 2hom3 so "ou 2ill al2a"s hit the right ,utton3

communicating the right message to the right customer at the right time.

5 @ver" marketing program shoul0 cover onl" one pro0uct hence must not reflect

more than one clearl" state0 positioning strateg"3 so:

5 1 +ro*uct 9 1 (ar)eting +rogra( 9 1 +ositioning state(ent.

enerall3 there are si/ basic strategies for +ro*uct +ositioning"

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5 B" attri,ute or ,enefit7 This is the most frenl" college stu0ents ma" participate 2ith their campus e7

mail Is.

5 B" pro0uct or service class7 Margarine competes as an alternative to ,utter.

Margarine is positione0 as a lo2er cost an0 healthier alternative to ,utter3 2hile

,utter provi0es ,etter taste an0 2holesome ingre0ients.

5 B" competitor7 BM6 an0 Merce0es often compare themselves to each other

segmenting the market to just the crKme 0e la crKme of the automo,ile market.

For0 an0 hev" nee0 not appl".

5 B" price or


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5 Positioning is 2hat the customer ,elieves an0 not 2hat the provi0er 2ants them

to ,elieve. Positioning can change 0ue to the counter measures taken at the

competition.

5 Managing "our pro0uct positioning re


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5 Market 0ominance is a measure of the strength of a ,ran03 pro0uct3 service or

firm3 relative to competitive offerings.

5 There is often a geographic element to the competitive lan0scape. In 0efining

market 0ominance3 "ou must see to 2hat e4tent a pro0uct3 ,ran03 or firm controls a

pro0uct categor" in a given geographic area.

ar)et #o(inance Strategies"

5 These calculations of market 0ominance "iel0


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5 Market hallenger

5 Market Follo2er

5 Market #icher

#efense Strateg"

5 ! market lea0er shoul0 generall" a0opt a 0efense strateg"

5 Si4 commonl" use0 0efense strategies

$ Position efense$ Mo,ile efense

$ Flanking efense

$ ontraction efense

$ Pre7emptive efense

$ ounter7>ffensive

$ efense

So(e of the o+tions o+en to a (ar)et challenger are"

5 Price 0iscounts or price cutting

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5 Line e4tensions

5 Intro0uce ne2 pro0ucts

5 Re0uce pro0uct


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The market challengersA strategic o,jective is to gain market share an0 to ,ecome

the lea0er eventuall" ho28

5 B" attacking the market lea0er

5 B" attacking other firms of the same si1e

5 B" attacking smaller firms

T+es of Attac) Strategies:

5 Frontal attack

5 Flank attack

5 @ncirclement attack

5 B"pass attack

5 Guerrilla attack

1.8 P6RTER&S ;'


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5 ! frame2ork for the in0ustr" anal"sis an0 ,usiness strateg"

5 The Porter=s % Forces tool is a simple ,ut po2erful tool for un0erstan0ing 2here

po2er lies in a ,usiness situation. This is useful3 ,ecause it helps "ou un0erstan0

,oth the strength of "our current competitive position3 an0 the strength of a

position "ou=re looking to move into.

The five forces co(e fro( Porter=s fa(ous fra(ewor) an* are"

5 Po2er of Bu"ers

5 Po2er of Suppliers

5 Threat of su,stitutes

5 Barriers to entr"

5 ompetitors

It uses concepts 0evelope0 in In0ustrial >rgani1ation @conomics to 0erive five

forces 2hich 0etermine the competitive intensit" an0 therefore attractiveness of a

market. !ttractiveness in this conte4t refers to the overall in0ustr" profita,ilit".

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5 !n /unattractive/ in0ustr" is one 2here the com,ination of forces acts to 0rive

0o2n overall profita,ilit". ! ver" unattractive in0ustr" 2oul0 ,e one approaching

/pure competition/.

5 Porter referre0 to these forces as the micro environment3 to contrast it 2ith the

more general term macro environment. The" consist of those forces close to a

compan" that affect its a,ilit" to serve its customers an0 make a profit. ! change

in an" of the forces normall" re


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5 Porter makes clear that for 0iversifie0 companiesC the first fun0amental issue in

corporate strateg" is the selection of in0ustries lines of ,usiness; in 2hich the

compan" shoul0 competeC an0 each line of ,usiness shoul0 0evelop its o2n3

in0ustr"7specific3 five forces anal"sis.

5 The i0ea is that change in "our market is likel" to come as the ,asis of one of

these five areas. For instance3 ,u"ers ma" 0istort the market ," forcing prices

0o2n3 or ," 0eci0ing to take ,uil0 pro0ucts in7house.

5 In consi0ering ho2 these /forces/ act on "our markets3 "ou get a picture of issues

such as channel conflict3 threats from vertical integration3 an0 the impact of

regulator" change or the a0vent of ne2 technolog". Hou can also take a vie2 as to

ho2 "ou are or can affect the competitive situation for "our o2n ,enefit3 rather

than staticall" accepting the status Sustainable Co(+etitive A*vantage3 Porter&s

eneric Strateg

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What is Co(+etitive a*vantage!

6hen t2o or more firms compete 2ithin the same market3 one firms possesses a

competitive a0vantage over its rivals 2hen it earns a persistentl" higher rate of

profit or has the potential to earn a persistentl" higher rate of profit;

Co(+etitive A*vantage 4 #efinition

5 ! competitive a0vantage is an a0vantage over competitors gaine0 ," offering

consumers greater value3 either ," means of lo2er prices or ," provi0ing greater

,enefits an0 service that justifies higher prices.

5 !n a0vantage that a firm has over its competitors3 allo2ing it to generate greater

sales or margins an0Eor retains more customers than its competition.5 There can ,e man" t"pes of competitive a0vantages inclu0ing the firm=s cost

structure3 pro0uct offerings3 0istri,ution net2ork an0 customer support.

5 ompetitive a0vantage comes from performing ,etter than competitors

5 Sustaina,le competitive a0vantage comes from performing ,etter than

competitors for a long time

Co(+etitive A*vantage E/a(+les

5 Focus on a narro2 market niche

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$ eBay$ >nline auctions

$McAfee$ irus protection auctions

5 evelop e4pertise3 resource strengths3 an0 capa,ilities not easil" imitate0 ,"

rivals

$FedEx$ #e4t70a" 0eliver" of small packages

$ Walt i!ney$ Theme park management an0 famil" entertainment

$ "oyota$ Sophisticate0 pro0uction s"stem

5 Strive to ,e the in0ustr"As lo27cost provi0er

$ Wal#Mart

5 >ut compete rivals on a ke" 0ifferentiating feature

$$ohn!on % $ohn!on$ Relia,ilit" in ,a," pro0ucts

$&arley#a'id!on$ Ning7of7the7roa0 st"ling

$(olex$ Top7of7the7line prestige$Mercede!#Ben)$ @ngineering 0esign an0 performance

$Ama)on*com$ 6i0e selection an0 convenience

There are t2o main t"pes of competitive a0vantages:

5 omparative a0vantage an0

5 ifferential a0vantage.

Sustainable Co(+etitive A*vantage"

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5 9o2ever3 2e sai0 the primar" o,jective of ,usiness7level strateg" 2as to create

sources of!u!tainable competitive a0vantage S!;.

5 9o2 0o 2e kno2 S! 2hen 2e see it8 6hat is it8 6hen is it consi0ere0

sustaina,le8

5 To pro0uce S!3 the capa,ilit" must:

&. Pro0uce value

*. Be rare

'. Imperfectl" imita,le3 i.e. not ,e easil" imitate0 or su,stitute0

). Be e4ploita,le ," the organi1ation

Co(+etencies vs. Core Co(+etencies vs. #istinctive Co(+etencies

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5 ! co(+etenc is an internal ca+abilit that a compan" performs better than

other internal capa,ilities.

5 ! core co(+etenc is a 2ell7performe0 internal capa,ilit" that is central3 not

peripheral3 to a compan"As strateg3 co(+etitiveness3 an* +rofitabilit.

5 ! *istinctive co(+etence is a co(+etitivel valuable ca+abilit that a

compan" +erfor(s better than its rivals.

E/a(+les" #istinctive Co(+etencies

5 To"ota3 9on0a3 #issan

$ Lo27cost3 high7


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S! is an element or com,ination of elements; of the ,usiness strateg" that

provi0es a meaningful a0vantage over ,oth e4isting an0 future competitors.

!n S! nee0s to ,e meaningful3 sustaina,le an0 su,stantial.

!n S! nee0s to ,e supporte0 an0 enhance0 over time.

The assets an0 competencies of an organi1ation represent the most sustaina,le

element of a ,usiness strateg"3 ,ecause these are usuall" 0ifficult to cop" or

counter.

!n S! shoul0 ,e visi,le to customers an0 provi0e or enhance a value

proposition.

The ke" is to link an S! 2ith the positioning of a ,usiness.

! soli0 value proposition can fail if a ke" ingre0ient is missing e.g.3Pringles;.

Sustainable Co(+etitive A*vantages vs. 5e Success ;actors

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5 ! NSF is an asset or competence nee0e0 to compete3 2hereas3 an S! is an asset

or competence that is the ,asis for a continuing a0vantage.

5 !n S! is analogous to a Point of ifferentiation P>;3 2hereas a NSF can ,e

analogous to either a Point of Parit" P>P; or a P>.

;ra(ewor)s for Sustainable Co(+etitive A*vantage

5 Nno2le0ge7,ase0 strateg"

5 Generic strateg"

5 9",ri0 strateg"

5 ore competenceE0istinctive capa,ilit"Eresource ,ase0 strateg"

5nowle*ge-base* Strateg

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Porter&s eneric Strateg ;ra(ewor)"

5 PorterAs generic strateg" is ,ase0 on ans2ering * R

5 Pro0ucing pro0ucts at a lo2er price than competitors

5 In association 2ith choosing *ifferentiation or cost lea*ershi+3 the organi1ation

must 0eci0e ,et2een:

5 Targeting the whole (ar)et 2ith the chosen strateg"3 >R

5 Targeting a specific seg(ent of the market

1.? P6RT;6L'6 A0AL7S'S

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What is a +ortfolio!

5 ! ,usiness portfolio is the collection of Strategic Business Dnits that together

form a corporation.

5 The optimal ,usiness portfolio is one that fits perfectl" to the compan"=s strengths

an0 helps to e4ploit the most attractive in0ustries or markets.

What is $usiness Portfolio Analsis!

Business portfolio anal"sis is an enterprise strateg" 0evelopment tool ,ase0

primaril" on the market share of "our ,usiness an0 the gro2th of market in 2hich

"our ,usiness e4ists

ost Po+ular $usiness Portfolio Tools

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Three most popular ,usiness portfolio tools are 7

5 The BG Gro2th 7Share Matri4

5 The G@ Multifactor Portfolio Matri4

5 The G@ Multifactor Portfolio Matri4 2as 0eli,eratel" 0esigne0 ," General

@lectric ompan" G@; an0 McNinse" an0 ompan" to ,e more complete that the

BG Gro2th7Share Matri4.

Portfolio Analsis

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#efinition

!nal"1ing elements of a firmAs pro0uct mi4 to 0etermine the optimum allocation

of its resources.

T2o most common measures use0 in a portfolio anal"sis are market gro2th rate

an0 relative market share.

The $C (atri/

It is a chart that ha0 ,een create0 ," Bruce 9en0erson for the Boston onsulting

Group in &+O- to help corporations 2ith anal"1ing their ,usiness units or pro0uct

lines.

This helps the compan" allocate resources an0 is use0 as an anal"tical tool in

5 Bran0 marketing3

5 Pro0uct management

5 Strategic management an0

5 Portfolio anal"sis

1.% 0ew Pro*uct Strateg 4'nnovation3 ar)et Entr3

Pro*uct Line E/tension

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'ntro*uction

5 Pro0uct or service; is the main element of the marketing mi4

5 Therefore3 nee0 to 0etermine the Pro0uct Strategies ,efore 0eci0ing on the

remaining marketing mi4

Pro*uct Hierarch

5 #ee0

5 Pro0uct famil"

5 Pro0uct class

5 Pro0uct Line

5 Pro0uct t"pe

5 Bran0

5 Item

%-Levels of Pro*uct Hierarch

5 Pro0uct nee0to satisf" a nee0 e.g. feet protection

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5 Pro0uct classa famil" of pro0ucts having similar function e.g. all shoes

5 Pro0uct linea group of pro0ucts 2ith closel" relate0 functions e.g. sports shoes

5 Pro0uct t"pepro0ucts 2ithin a line having similar form e.g. foot ,all shoes

5 Bran0a name representing a pro0uct or line e.g. #ike

5 Item Stock Neeping Dnit;a unit item e.g. one pair of #ike foot,all shoe

What is +ro*uct!

5 ! pro0uct can ,e 0efine0 as a collection of ph"sical3 service an0 s"m,olic

attri,utes 2hich "iel0 satisfaction or ,enefits to a user or ,u"er.

5 ! pro0uct is a com,ination of ph"sical attri,utes sa"3 si1e an0 shapeC an0

su,jective attri,utes sa" image or /


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5 Pro0uct innovation means 0ifferent things to 0ifferent people.

5 ! mo0ifie0 version of an e4isting pro0uct range

5 ! ne2 mo0el in the e4isting pro0uct range

5 ! ne2 pro0uct outsi0e the e4isting range ,ut in a similar fiel0 of technolog"

5 ! totall" ne2 pro0uct in a ne2 fiel0 of technolog"

Pro(otional Strateg

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5e ;actors to Consi*er

5 Promotion strateg" shoul0 ,e 0evelope0 to

5 Reach "our target market

5 Meet "our goals an0 o,jectives

Tailor Pro(otion Strateg to"

Specific >,jective:

5 To provi0e information a,out the pro0uctEservice

5 To stimulate 0eman0

5 To 0ifferentiate pro0uctE service or ,uil0 ,ran0 image

5 To counter competitors

5 To respon0 to ne2s

1.@ $RA0# STRATE7

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#efinitions of $ran* Strateg"

5 ! plan for the s"stematic 0evelopment of a ,ran0 to ena,le it to meet its agree0

o,jectives.

5 The strateg" shoul0 ,e roote0 in the ,ran0=s vision an0 0riven ," the principles of

0ifferentiation an0 sustaine0 consumer appeal.

5 The true ,ran0 is the sum total of the perceptions of all the constituencies 2hich

contri,ute to revenues an0 profits.

$RA0#


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5 ! clean articulation of strategic3 financial ? ,ran0 goals that management has

create0 for the ,ran0.

5 ! first step to strategic success as to 2here the ,ran0 can ? cannot go.

5 Provi0es a vision that forces management to articulate 2hat the" 2ant the ,ran0

to 0o for the organi1ation over the ne4t five "ears3 relative to ,ran0 value3 revenue

? profit contri,utions.

$RA0#&S P6S'T'60'0

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5 The place in the consumerAs min0 that "ou 2ant "our ,ran0 to o2n $the ,enefit

"ou 2ant them to think of 2hen the" think of "our ,ran0.

5 ! strong position means the ,ran0 has a uni


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Pricing is one of the ) Ps of the marketing mi4. The other three aspects are

pro0uct3 promotion3 an0 place. It is also a ke" varia,le in microeconomic price

allocation theor". Price is the onl" revenue generating element amongst the )ps3

the rest ,eing cost centers.

#efinitions"

5 Pricing is the process of 0etermining 2hat a compan" 2ill receive in e4change

for its pro0ucts. Pricing factors are manufacturing cost3 marketplace3 competition3

market con0ition3 Qualit" of pro0uct.

5 The effective +rice is the price the compan" receives after accounting for

0iscounts3 promotions3 an0 other incentives.

5 Pro(otional +ricing refers to an instance 2here pricing is the ke" element of the

marketing mi4.

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Stu* an* 'nference - ;or(ulation of ar)eting Strategies to '(+rove

ar)et Share of L Refrigerators

Pricing Process"

&. Set Pricing >,jectives

*. !nal"1e 0eman0

'. ra2 conclusions from competitive intelligence

). Select pricing strateg" appropriate to the political3 social3 legal an0 economical

environment

%. etermine specific prices.

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CHAPTER -,Stu* an* 'nference - ;or(ulation of

ar)eting Strategies to '(+rove ar)et

Share of L Refrigerators

,.1 Co(+an Profile

LG @lectronics:

LG is enhancing users= 0ail" lives 2ith innovative home appliances com,ining

st"le an0 technological e4cellence3 2hile lea0ing the in0ustr" in green technolog".

LG @lectronics is also using the most a0vance0 technolog" an0 the most insightful

0esigns. LG is committe0 to preserving the natural environment an0 creating

consumer7optimi1e0 pro0ucts its core principle is to help our planet. LG is taking a

proactive approach to energ".

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ooking !ppliances

LG=s Solar DB@ light 2ave oven3 the secon0 generation of Solar >M3 com,ines

all the functions of a convection oven3 grill3 an0 micro2ave3 allo2ing chefs to

cook a variet" of foo0s much faster than 2ith conventional ovens. The Solar

DB@ also helps to retain nutrients an0 flavor an0 makes healthier meals through

the Steam hef function. espite its unconventional features an0 convenient touch

control panel3 the Solar DB@ is 0esigne0 to fit 2ell into the kitchen 2ith the look

of a tra0itional oven.

>ven3 2ith an e7ook,ook on the L panel3 helps cooks ,ecome 2orl07class

chefs 2hile saving time an0 energ".

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$uilt-in refrigerators

These price" mo0els are 0esigne0 to fit almost flush 2ith ca,inets an0 counters.

Built7ins t"picall" come in ,ottom7free1er an0 si0e7,"7si0e st"les. Hou can even

,u" a separate refrigerator an0 free1er an0 ,uil0 them into a O*7inch72i0e opening.

laime0 capacities go up to * cu,ic feet3 ,ut onl" a,out O- percent of that is

usa,le. These offer the sleekest look. !n0 most can accept optional front panels

that match other elements of "our kitchen. Built7in refrigerators are the least space

efficient overall. The"=re 2i0e ' inches or more; ,ut relativel" shallo27*% or *

inches front to ,ack. The"=ve also ,een repair7prone as a group

,., Co(+etitors

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The free1ing unit in0ustr" has t2o t"pes of competitors local an0 importe0. The

local competitors are a2lance3 6aves3 P@L3 Singer an0 the" cater the +- of the

refrigerator market of Pakistan. The importe0 competitors are LG3 Samsung3

Siemens an0 General. The" cater the % market re


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urrentl" there are t2o 0irect competitors in the local market for the si0e ," si0e

refrigerators an0 these are Samsung an0 9aier.

S!MSD#G:

Current an* future obBectives"

ision of S!MSD#G @lectronics is /Lea0ing the igital onvergence

Revolution/ an0 our mission to carr" out this vision is /igital7e ompan".

For this goal3 S!MSD#G @lectronics restructure0 into ) strategic ,usiness areas 7

9ome #et2ork3 Mo,ile #et2ork3 >ffice #et2ork an0 ore components 7 that

support net2ork pro0ucts. !lso pioneering pro0ucts an0 technolog" in

semicon0uctors3 telecommunication 0evices an0 home appliances fiel0 2hich 2ill

make S!MSD#G @lectronics a most competitive total solution provi0er in 0igital

convergence era.

Bran0 9istor":

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Samsung is market oriente0 enterprise having hea0


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>rient 2as esta,lishe0 in Pakistan in &+%O. The ,usiness 2as starte0 as orient color

la,s an0 no2 %- "ears later compan" has 0evelope0 to a multi ,usiness

corporation. In @lectronics ,usiness orient starte0 as a 0istri,utor of Mitsu,ishi.

But no2 orient group of companies are assem,ling several home appliance

pro0ucts at their facilities an0 selling them to customer. >rient ,rings to its

customers top pro0ucts at ver" affor0a,le prices. >rient provi0es in house

mo0ifications to meet customer specifications an0 for that purpose their staff is

passes through regular trainings on the latest in electronics technolog".

oncentration In0e4:

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,.2 Porter&s Analsis

Rivals po2er:

57

ompan" Refrigerator; Share ; Ranks

LG '- &

P@L '- *

9aier O '

a2lance '& )

>thers Samsung3 Super3 General3 etc; * %


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The free1ing unit in0ustr" has t2o t"pes of competitors local an0 importe0. The

local competitors are a2lance3 6aves3 P@L3 Singer an0 the" cater the +- of the

refrigerator market of Pakistan. The importe0 competitors are LG3 Sam Sung3

Siemens an0 General. The" cater the % market re


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oncentration an0 Balance: There are man" firms making the free1ing unit

in0ustr". But ver" fe2 firms have capture0 the ma4imum market share in the

market nominate0 ," !6L!#@ an0 P@LC the" have the & an0 *( market

shares respectivel" in refrigerators.

Bran0 I0entit": Bran0ing in this in0ustr" is ver" crucial an0 ,u"ers are more

conscious a,out choosing ,ran0s3 so Bran0s 2ho have ,uil0 strong ,ran0 e


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9igh cost of pro0uction: It is one of the main ,arriers of entering the free1ing unit

in0ustr". 9igh costs of ra2 materials an0 other inputs like cost of electricit" an0

custom 0uties on imports ma0e it highl" capital intensive in0ustr".

9igh a0vertisement cost: To compete in the free1ing unit in0ustr" huge

a0vertisement cost is re


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Pakistan3 most of the parts like ,o0" of the pro0uct3 their pipes lines an0 their

circuits are manufacturing a,roa03 some are even importing the circuits too. The

9aier electronics3 the 2aveAs refrigerator are making man" of their parts locall"

an0 getting the lo2 cost ,enefits.

!t consumerE ultimate customer level the ,argaining po2er is ver" lo2 as the

,u"ers are fragmente0. The prices are fi4e0 in most of the cases an0 no 0iscount is

offere0. The ,u"ers are usuall" a2are of the prices an0 the" 0onAt tr" to ,argain

2hich makes the ,argaining po2er of the ,u"ers lo2

oncentration: In Pakistan there are onl" ,ran0e0 companies 2hich have the share

in the market.P@L3 9aier3 2aves3 a2lance these are the local companies 2hich

purchases the ra2 material from international market3 LG assem,ling the fri0ge in

Pakistan. There are man" suppliers in international market. So at manufacturer

level the ,u"er ,argaining po2er is t"picall" higher for some parts 0ue to their


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!s there are man" suppliers so the ,u"er s2itch if he is not satisf" ," the supplier

pro0uct. The supplier pro0uct


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free1ers. !s ,oth pro0ucts have 0ifferent a0vantages an0 attri,utes so there are

some com,o pro0ucts availa,le.

High Switching Cost"

There is high s2itching cost associate0 2ith these pro0ucts as these are e4pensive

long use pro0ucts so it is not eas" to s2itch pro0uct or ,ran0s

Price3 Perfor(ance"

The close su,stitute can ,e com,ine0 free1er7refrigerator3 as there are some such

pro0ucts availa,le so those pro0ucts offer ,etter performance in or0er that the"

occup" less space an0 are availa,le at one place in place of t2o 0ifferent pro0ucts.

$ARA'0'0 P6WER 6; S:PPL'ERS"

Supplier in0ustr" 0ominance

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9ere the supplier in this in0ustr" are not 0ominant as there are lot of suppliers from

0ifferent countries an0 suppl"ing 0ifferent parts of multiple


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urrent in0ustr" structure an0 ho2 is it changing. In Pakistan refrigerator in0ustr"

is facing monopolistic competition as it has appro4imatel" &- competitors.

9o2ever most of ,ig glo,al pla"ers are also e4ist in the market making it ver"

competitive. It has also increase0 importe0 ra2 materials an0 refrigerators. !n0

0ue to changing securit" environments man" in0ustries are shifting their

pro0uction facilities from Pakistan. Therefore it ma" also have a0verse effect on

refrigerator in0ustr". 9o2ever man" ne2 companies are e4pecte0 to launch their

pro0uct in Pakistan 0ue to attractiveness of the in0ustr".

0u(ber of co(+anies in five ears

ue to attractiveness in home appliance in0ustr" 0ue to rising population of

countr" 2e can e4pect at7least &7* more companies in the in0ustr" making

competition in in0ustr" more an0 stronger.

$asis of Co(+etition

ue to ever increasing competition in the in0ustr" competition 2ill ,e on

follo2ing ,asis.

Innovation an0 ifferentiation

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@nerg" @fficient

Less @4pensive

Qualit" of the pro0uct

!fter sales services

Goo0 ,ran0 reputation

Quick an0 on7time an0 safer 0eliver" of the pro0ucts

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E(ergence of new t+e of co(+etition

6ith the emergence of ne2 companies in Pakistan3 it 2ill ,e necessar" for thelocal manufacturing companies to increase their


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'(+ortant ;orces

Social factors are ,ringing ver" major changes in the 0eman0 structure of thein0ustr".

Increase0 ,argaining po2er of ,u"er ma0e him a,le to e4perience multiple pro0uct

an0 select a ,est fit among his re


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LG @lectronics LG@; is a manufacturer of electronic appliances3 home

entertainment pro0ucts3 communication 0evices an0 electronic components. The

compan" manufactures a 2i0e range of pro0ucts ranging from color monitors to

L pro0ucts to home appliances. The compan" also manufactures 2ireless

han0sets an0 telecommunication infrastructure s"stems. ! 0iversifie0 operation

ena,les the compan" to take a0vantage of opportunities 2ithin specific markets

an0 geographies3 an0 at the same time protects it from segment specific set,acks.

9o2ever3 counterfeit pro0uct affects the revenue of the compan" in the long run.

Strengths"

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iversifie0 operations: LG@ has 0iversifie0 operations. The compan"

manufactures a 2i0e range of pro0ucts ranging from color monitors to L

pro0ucts to home appliances. It also manufactures 2ireless han0sets an0

telecommunication infrastructure s"stems. LG@ generates revenues through si4

,usiness 0ivisions: L *).*;3 0igital 0ispla" *&.';3 0igital appliance

&+.+;3 mo,ile communication &(.O;3 0igital me0ia +.&;3 an0 other

,usiness .O;. The compan"=s ,usiness is also geographicall" 0iversifie03

2ith the largest geographic segment3 @urope3 accounting for ** of the total

revenues in FH*--O. >ther geographic 0ivisions inclu0es #orth !merica3

omestic Norea;3 hina3 !sia3 entral an0 South !merica3 an0 others

accounte0 for *&.(3 &+.)3 &(.%3 &&.3 . an0 -.& of total revenues3

respectivel".

! 0iverse revenue ,ase ena,les the compan" to take a0vantage of opportunities

2ithin specific markets an0 geographies3 an0 at the same time cushions it from

segment specific set,acks.

Strong research an* *evelo+(ent ca+abilities"

LG@ has strong research an0 0evelopment R?; capa,ilities. LG@ is

committe0 to invest in R? to create pro0ucts 2ith the latest technolog" an0

st"le. LG@ operates '( research la,s throughout the 2orl0. The compan"=s

strong focus on R? has ena,le0 it to come out 2ith innovative pro0ucts.

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Strong ;inancial +osition"

LG is a repute0 international firm has a 0iversifie0 Pro0uct lines in electronics3So LG has a strong financial position that is a ,ig strength for the firm.

Strong bran* na(e 'nnovative"

LG is using efficientl" its R? resource ,ase an0 continuousl" in0ulge0 in

innovative pro0ucts 0evelopment.

A*vance technolog

LG is provi0ing a0vance0 technological e


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Marketing epartment is a core competenc" of LG electronics in Pakistan an0

Marketing 0epartment is pla"ing a vital role for the reputation of compan"

across the compan" an0 this is prove0 to ,e a strong point for LG@ in Pakistan.

Marketing epartment ma0e availa,le LG Pro0ucts across the countr" an0

thatAs 2h" LG has a strong ,ran0 name 0ue to its core competencies an0 its

strengths in the areas like marketing an0 R?.

Pro*uct Lea*ershi+"

Refers to the a,ilit" to 0evelop creative3 premium pro0ucts through speciali1e0

ne2 technologies

Cor+orate Culture"

Though a compan" implements perfect management strategies an0 ,oasts of

outstan0ing an0 talente0 people3 it shoul0 have an appropriate corporate culture

to unleash the po2er of these capa,ilities.

Wea)ness"

urrentl" there are no ,ig 2eaknesses of LG in the Local Market an0 LG is 0oing

at its ,est in the market in or0er to sustain in the local market an0 proving to ,e a

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revolutionar" lea0ership capa,ilit" through continuous 0evelopment in its pro0uct

lines.

#e+en*ant #istribution 0etwor)"

LG has not its o2n in0epen0ent istri,ution net2ork an0 have strategic

alliance 2ith P@L an0 using the 0istri,ution channel of Pak @lectron to market

its electrical appliances pro0ucts.

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76

T6WS

ATR'CS

Strength 'nternalD

0iversifie0 operations

Research an0 evelopment

financial position

,ran0 name

innovative

a0vance technolog"

0istri,ution channel

marketing 0epartment

pro0uct lea0ership

corporate culture

Wea)ness 'nternalD

0epen0ent 0istri,ution

channel

target market

6++ortunit E/ternalD

Gro2th in population

availa,ilit" of consumer

financing

customer nee0s

ne2 technolog"

potential for a00itionalmarket share

S6 Strategies

!s the Population is Gro2ing so

using compan"As financial ,ase

gro2th in the market can ,e pursue.

!vailing the consumer financing

option an0 R? ,ase ne2 pro0ucts

0esigns an0 more 0iversifie0

pro0uct lines can ,e generate0

Dsing strong ,ran0 name3

istri,ution net2ork an0

innovative pro0uct resource ,ase3

potential for market share can ,e

avail easil"

W6 Strategies

In or0er to capture a00itional

market share LG shoul0 0evelop

o2n 0istri,ution channel rather

than using Strategic alliance

,ase.

!s the Population is gro2ing so

the" shoul0 also capture the

mi00le income level market in

or0er to gro2 their market share.

Threats E/ternalD

securit" issue importe0 ,ran0s

higher 0istri,ution

margins

9igh competition

e4it ,arrier is high

ST Strategies

Dsing our strengths like pro0uctlea0ership3 strong financial position

an0 ,ran0 name 2e can keep

customers a2a" from s2itching to

other local an0 foreign ,ran0s

WT Strategies

!s importe0 ,ran0s alsocapturing the mi00le class so in

or0er to get more market share

focusing on mi00le class segment

can increase market share.


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E;E ';E atrices"

EFTER0AL ;ACT6R EPPDRTD#ITI@S

Gro2th in population -.& ) -.)

availa,ilit" of consumer financing -.& ) -.)

customer nee0s -.-% ) -.*

ne2 technolog" -.* ) -.(

potential for a00itional market share -.-% * -.&

T9R@!TS

securit" issue -.-% & -.-%

importe0 ,ran0s -.&% ' -.)%higher 0istri,ution margins -.& * -.*

9igh competition -.& ) -.)

e4it ,arrier is high -.& & -.&

Total" 1 , 2.1

'0TER0AL ;ACT6R E


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Arthur #e Little A#LD atri/"

Through our previous anal"sis 2e have evaluate0 that LG prove0 to ,e a market

lea0er in this in0ustr" 2ith its innovative pro0uct intro0uction in refrigerator

in0ustr". So3 it takes the position of ominant in the market an0 the in0ustr" is in

gro2th stage.

The Suggeste0 strategies for the given position are:

7 Maintain in0ustr" position an0 market share

7 Invest to sustain gro2th

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;our cooling Sections

+uadoorrefrigerator is a refrigerator 2hich has four 0ifferent cooling temperature

cooling compartments. @ach compartment has its o2n fan an0 evaporator

2hich ena,le it to maintain separate temperature in each compartment as per

re


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;le/ible Ca+acit

If "ou nee0 more space of free1er "ou can use free1er as 2ell as t2o ,ottom

compartments as free1er. Similarl" if "ou nee0 more space as refrigerator "ou can

use one refrigerator compartment an0 t2o ,ottom compartment as refrigerator. So

it is ver" convenient to change capacit" accor0ing to nee0.

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;ree fro( i/ing of 6*or

!s 2e kno2 that pro0uct is 0ivi0e0 into multiple compartments so 2e can store

items in 0ifferent locations to avoi0 mi4ing of o0orsA of 0ifferent foo0 pro0ucts.

This feature keeps the original taste an0 fragrance of foo0 alive.

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aintains ;reshness

9igh humi0it" level is critical for keeping vegeta,les

an0 fruits at their freshest. 6hile conventional refrigerators maintain humi0it"

level of onl" &O3 often 0r"ing out foo0


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,.> ar)eting Plan

!n i0ea is nothing unless e4ecute0 properl". ! marketing plan inclu0es list of

actions an0 proce0ures to ,e use0 in the e4ecution of pro0uct plan. So 2e 2ill

0evelop a marketing plan to e4ecute our pro0uct plan.

Reasons for (ar)eting +lan"

The reason for the formation of this marketing plan is that 2e are launching a ne2

an0 speciali1e0 pro0uct in the market. !s the pro0uct is ne2 so 2e have to change

consumer ,ehavior as 2ell as position our pro0uct as premium pro0uct in the min0

of consumers 2ho are health conscious. Moreover that 2e nee0 to make marketing

strategies to successfull" launch our ne2 pro0uct in the market. This report

provi0es a 0etaile0 anal"sis of refrigerator in0ustr"3 targeting3 positioning3

competitors3 price an0 pro0uct strategies.

Target ar)ets"

Before 2e select a target market 2e nee0 to i0entif" potential segments that are

availa,le to launch our pro0uct.

I0entif"ing the Segment:

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There are several ,ases to i0entif" the segments for a pro0uct ,ut 2e 2ill select our

segment on the ,asis of

Geographic

emographics

Behaviouralistic

Strategic rou+"

6e can 0evelop strategic groups as follo2s on the ,asis of prices the"

charge an0 innovation the" ,rought to the market.

Positioning

LG is a ,ran0 2ith the image of most innovative manufacturer of electronics in the

2orl0. The pro0ucts are positione0 in the min0s of its customers as premium

pro0ucts.

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LG has a positioning statement of LifeAs Goo0 2hich represents LG=s

0etermination to provi0e 0elightfull" smart pro0ucts that 2ill make their

consumerAs life goo0.

Their slogan3 =Life=s Goo0= ,est e4presses their ,ran0=s values3 promises3 ,enefits

an0 personalit". It is an ultimate e4pression for 2hat their ,ran0 stan0s for an0

2hat the" strive to 0eliver continuousl".

Pro*uct Strateg

LG is striving to gain market lea0ership position so the" 2ill ,ring ne2 an0

innovative pro0ucts in the market. To gain market lea0ership the" are intro0ucing

0ifferent ranges of refrigerators to cater the 0eman0 of major classes of the market.

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LG has pro0uct 0ifferentiation strateg" in the market. 9ence the" are ,ringing

0ifferent pro0ucts to the market. This +uadoorrefrigerator is also the part of LGAs

competitive strateg". The pro0uct has four 0ifferent temperature controlla,le

compartments. The pro0uct is mo0ern si0e ," si0e t"pe refrigerator 2ith 2ater

0ispenser.

Pricing Strateg

To launch a ne2 pro0uct the most suita,le pricing strateg" is skimming pricing

polic". So 2e 2ill earn mone" from earl" a0opters at initial stage. The pro0uct 2ill

,e availa,le in the market at a price ranging from Rs. *%-3--- to Rs. '--3---. The

pro0uct 2ill ,e availa,le at outlets at same or uniform price level. The pro0uct has

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,rought ,enefit to customers through innovation so it 2ill ,e charge0 at premium

price. The refrigerator 2ill fall in categories like Prestige goo0s an0 pro0uct

innovation. So the value proposition of the refrigerator is high. The pro0uct 2ill ,e

availa,le in the 2hole countr" at the same price 2hereas out,oun0 cost of the

refrigerator from LG to 0istri,utor or retail outlet 2ill ,e ,ear0 ," LG making LG

ena,le to implement a uniform pricing polic" for all the 0ealers irrespective of

2hether the" are ,ig or small throughout the countr".

,.? Pro(otion Strateg

LG 2ill enter ne2 pro0uct market 2ith ver" attractive strateg". The" are alrea0"

investing ver" high amount in promotion i.e. appro4imatel" 7O of their revenue.

Total ,u0get of LG for promotional activities is appro4imatel" Rs. '--3---3---.

Dsuall" the sales promotion ,u0get an0 their allocation are 0escri,e0 ," LG

Norea. To launch this pro0uct 2e nee0 a ver" heav" ,u0get for its a0vertisement.

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A*vertising

!ppro4imatel" (- of the promotion ,u0get 2ill ,e use0 for the a0vertisement of

the pro0uct.

@lectronic Me0ia:

>ut of total a0vertisement ,u0get appro4imatel" *% of the ,u0get 2ill ,e

allocate0 to the electronic me0ia like G@> ne2s an0 local ca,le net2ork of

specific areas.

>ut0oor Me0ia:

>ut of a0vertisement ,u0get appro4imatel" )- 2ill ,e allocate0 for the out0oor

a0vertisement. Bill ,oar0s shoul0 ,e installe0 at major roun0 a,out areas. Like in

Lahore it shoul0 ,e installe0 near li,ert" choke3 cavalr" groun0 etc.

Print Me0ia:

'% of the a0vertisement ,u0get shoul0 ,e allocate0 to the print me0ia. These 2ill

inclu0e a0vertisement on top line ne2spapers like a2n an0 high en0 maga1ines.

Moreover3 pamphlets 2ill ,e pu,lishe0 2ith the material containing ,enefits an0

usage of the pro0uct.

#irect ar)eting"

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There are appro4imatel" *%-- 0istri,utors availa,le to LG countr"2i0e. 9ence LG

has great opportunit" to efficientl" an0 effectivel" utili1e this huge net2ork. !s the

pro0uct is targeting the 0eman0 of niche therefore not all ,ut some of them 2ill ,e

use0 for the 0istri,ution of the pro0ucts. istri,utors in those markets 2here elite

class usuall" 0o their shopping 2ill ,e locations of our pro0uct.

,.@ Conclusion

Refrigerator is 0eveloping as a necessit" pro0uct. The market of refrigerator

in0ustr" has ,een continuousl" for the last man" "ears. There are several pro0ucts

availa,le in the market 2ith a lot of 0ifferentiation ,ut there is a gap of a pro0uct

2ith most of the features availa,le an0 integrate0 in one unit. If the pro0uct is

launche0 2ith the right marketing strategies it 2ill 0efinitel" cover the niche

market an0 2ill generate han0some amount of revenue for the compan" that 2ill

take the initiative. @g.. +uadoor refrigerator 2ith four 0ifferent temperature

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controlle0 compartments having fle4i,le capacit" for ,oth free1er an0 refrigerator

units.

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