A MINOR PROJECT REPORT
ON
AN EMPIRICAL STUDY OF THE MARKETING STRATEGIES OF LG
Submitted in the partial fulfilment of degree of Bachelor of Business Administration (General)
(2012-2015)
Under the Guidance of:
Ms. VANIKA Asst. Professor, FIMT
Submitted By:
HEMANT YADAV Enrollment No. 04790101712
BBA (GENERAL) 3rd Semester
FAIRFIELD INSTITUTE OF MANAGEMENT AND TECHNOLOGY
Affiliated to Guru Gobind Singh Indraprastha University,
Kapashera, New Delhi-110037
2
Student Declaration
I hereby declare that the project entitled “An Empirical Study of
the Marketing Strategies of LG” under the Guidance of Ms.
Vanika submitted in the partial fulfilment of the degree of
Bachelor of Business Administration BBA (GENERAL) FROM
“Fairfield Institute of Management and Technology”, affiliated
from GGSIPU New Delhi. This is my original work and this
project work has not formed the basis for the award of any Degree
to the best of my knowledge.
Name:HEMANT YADAV
Enrolment No.: 04790101712
Place: New Delhi
Date:
3
Certificate by the Guide
This is to certify that project title “An Empirical Study of the
Marketing Strategies of LG” is original work of Mr. Rakesh
Joshi student of BBA (GEN) 3rd Semester and has been duly
completed his project under my guidance and supervision up to my
satisfactory level.
This work has been done in partial fulfilment of the requirement
for the award of the degree of Bachelor of Business Administration
from “Fairfield Institute of Management and Technology”,
GGSIPU and has not been submitted anywhere in any other
university for the award of any degree.
Ms. Vanika
Asst. Professor, FIMT
4
ACKNOWLEDGMENT
It is pleasure to acknowledge many people who knowingly and
unwittingly helped me, to complete my project. First of all let me
praise god for all the blessings, which carried me through all those
years.
I am particularly indebted to the Director Dr. R.K. Garg, Director
(Admn.) Dr. Manju Singh and HOD, Management Dr. S.P. Singh
of the Fairfield Institute of Management and Technology which
inculcated in me utmost respect for human values and groomed me
up in the field of software technology take on the challenges of the
competitive world.
I pay my sincere and heartiest gratitude to my faculty guide
Ms. Vanika for her continuous motivation and support she gave to
me, during the period of project.
My Special thanks to all those Respondents, whom I have
interviewed for the purpose of my Primary Data Collection.
RAKESH JOSHI
5
TABLE OF CONTENTS
1) PREFACE
2) INTRODUCTION
3) LITERATURE REVIEW
4) COMPANY PROFILE
5) RESEARCH
OBJECTIVE
METHODOLOGY
LIMITATIONS
6) PRODUCT OFFERINGS AND RELATED STRATEGIES
7) PRICING OFFERINGS AND RELATED STRATEGIES
8) DISTRIBUTION OFFERINGS
SUPPLY CHAIN AT LG
9) PROMOTION OFFERINGS AND RELATED STRATEGIES
10) CUSTOMER SATISFACTION AT LG ELECTRONICS
11) BRAND AWARENESS
12) ORGANISATIONAL STRUCTURE
13) ANALYSIS AND FINDINGS
14) FINDINGS OF CONSUMER’S PERCEPTION
15) FINDINGS OF DEALER’S PERCEPTION
16) SWOT ANALYSIS
17) CONCLUSION
18) BIBLIOGRAPHY
19) APPENDICES
QUESTIONNAIRE FOR CONSUMER’S
6
PREFACE
LG is one such company which has brought technologically advanced products for its
customers keeping in mind that today’s 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 company’s
services the company cannot achieve “Total Consumer Satisfaction”. They should
constantly try to find whether dealer’s 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
company’s 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
customer’s 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.
7
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.
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 it’s 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 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 it’s sales volume and profit by 2010 with 30% of it’s 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.
8
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.
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 market is very attractive and the enterprise is strong, one will invest the
best resources in support of the offering.
Where the market is very attractive but the enterprise is weak, one must concentrate
on strengthening the enterprise, using the offering as a stepping stone toward this
objective.
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.
9
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 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
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.
10
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 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.
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.
The PULL STRATEGY
11
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 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.
12
COMPANY PROFILE
LG Group- The best global company
U.S. $73 billion LG Group is one of the world’s 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 1970’s after Founder/Chairman passed away, Mr. Chakyung took
over as a chairman. Under his leadership, in a decade more than 20 sister companies and
schools, increased its sales by 36 times and exports by 90 times and was regarded as
Korea’s 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 ultimate satisfaction.
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 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 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.
13
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:
To be the best global company.
PHILOSOPHY:
To compete in international market with a global mindset.
Maximize value for customers, employees and shareholders.
Pursue the best in the class through management by principle.
Contribute to society through good corporate citizenship.
14
RESEARCH
OBJECTIVES
The main objectives of the project are following:
To study the LG’s advertising strategy viz-viz 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.
To find out the market share of products of LG.
To find out the most preferred brand in the market.
To know the awareness level of consumers about the products of LG.
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.
For Dealer’s survey “Systematic and Random Sampling” technique was used.
15
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.
Collected relevant information from the newspaper.
2. 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:
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.
16
LG’s Production Capacity
TABLE1:
Colur TV’s 800,000 units
Semi Automatic washing machines 400,000 units
Air Conditioners 180,000 units
Micro waves 80,000 units
Refrigerators Externally sourced
Manufacturing
At its state of the art manufacturing plant, acute cost control has been on the agenda from
dayone. 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
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.
17
Cost cutting has always been a high priority for LG operations around the world. In
keeping with this aim, 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. CTV’s 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 defect elimination
programme follows a statistically optimized process of random sample checks.
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 P’s.
However LG’s Marketing Strategy is based on 3 P’s, apart from the conventional 4 P’s of
marketing:
Premium pricing to maintain margins
Breathtaking Pace to create riches
Deep Penetration to increase volumes.
Premium Pricing: LG electronics was one of the late entrants the 18th player. While
other companies were jostling to 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 Sony’s prices. Since most of the competitors were catering to the lower and middle
segments, LG decided to concentrate on the premium segments.To cultivate the image
18
that LG was a leader is both technology and quality, innovative products were launched:
Golden Eye CTV’s 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, LG’s quality products and competitive
prices have 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 ensuring adequate retail-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 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 company’s 8 mobile vans cover nearly 4,500 km
of the hinterland around the 4 metros every month. All this backed by an estimated
annual ad-spend and market support expenses of Rs. 28 crore.
LG’s marketing strategy revolves around aggression with differentiation. LG’s
products are differentiated as superior technology products.
19
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 remain crucial.
Product positioning
The Unique Selling Proposition (USP) is based on health.
The company wanted a USP for its products which no other company in the industry had.
Hence it piggybacked on health. This is a niche which none of the other company’s had
thought of. Each of its product lines were positioned based on health:
Golden Eye television- Ensuring wrinkle free viewing
Refrigerators – PN System (preserve nutrition system)
Air conditioners – Health Air AC’s
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 state-of-the-art technology backed
products. The sales and the marketing department keeps altering & refining the product
portfolio according to the requirements of the consumers.
LG electronics has the following product lines
i. Colour televisions
ii. Refrigerators
iii. Washing machines
iv. Air conditioners
v. Microwave ovens
vi. VCD players (not all that popular).
20
Initially in 1997, the company had launched only 12 models of CTV’s, 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.
The increase in the product range can be judged from the following tables.
Product Range
TABLE 3:
Year CTV’s Refrigerators Washing
Machine
AC’s Micro VCD
FF DC FA SA Oven
2003 ( ( (
2004 ( ( ( ( ( (
2005 ( ( ( ( ( ( ( (
Terms used: FF.- Frost free, DC – Direct cool, SA – Semi Automatic
FA-Fully Automatic
Number of models
TABLE 4:
Year CTV’s
Refrigerator Washing Machine
AC’s Microwave oven
VCD
21
FF DC FA SA Split
2003 16 8 3 7 4 2 3
2004 22 9 3 10 6 3 7
2005 33 13 4 5 3 15 8 5 10
The features of LG’s 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.
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
fridge’s 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:
i. 3 models in direct cool: 175 litres, 210 litres and 250 litres.
22
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.
LG’s refrigerators have been positioned as a 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 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.
Neuro Fuzzy Control System: With the help of various sensors and a
microcomputer this system provides 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.
23
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 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.
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.
24
Tempered glass shelves
Unique electronics temperature control system.
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 b. Unerring efficiency
c. Great looks d. Strong compressor for cooling
ii. WASHING MACHINES
In the washing machine category there are two types of machines:
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.
Product positioning: LG’s washing machine are positioned as “machine that cares
for the fabric” via its Fabricare system.
25
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.
Chaos Punch +3 wash: The punch propels water through every pore of the fabric and
‘+3’ are 3 additional pulsators (technology used by LG).
LG’s washing machines are available in the following models:
i. ‘Punch wash’ semi automatic: 2 models of 6 kg capacity
ii. ‘Clean master’ semi automatic: 7 kg capacity.
iii. ‘Turbo Drum’ fully automatic: 3 models in 5.5kg, 6 kg and 10kg.
‘Punch wash’ semi automatic:
This is the world’s only washing machine with twin tub along with Punch technology.
Within 3 months of its launch in May’98, 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.
26
6 kg-Twin Tub: This is the first twin-tub washing machine to boast of a 6 kg
capacity.
Tough Wash Tub: Made of a high impact resistant material called polypropylene
that makes it long lasting. Unique water dynamic pulsator that’s designed to give the
cleanest wash.
Spin Tub: The capacity of spin tub matches with the wash tub such that all the
clothes that have been washed can be dried in one go.
‘Clean Master’ Semi Automatic
This is the India’s 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)
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, creating multiple water whirls inside the machine.
The unique features of this product are:
The turbo drum
Pulsators
Triple water punch
Triple water fall system
27
Low power consumption
4 wash programs.
iii. AIR CONDITIONERS
LG’s air conditioners were launched in phase II of Jan’98. 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 de-odorizing 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 ‘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 AC’s: 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 AC’s. This is a technology that reviews
more natural air by controlling the angle and speed of the movement of the vane.
Worlds Quietest AC’s: To provide a comfortable pleasant and well balanced
environment, LG AC’s utilized a streamlined air fan and a unique design which create
28
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 Ac’s in the world.
Following is the range of models:
i. Split AC’s – 1.0 T, 1.5 T, 2.0 T, 2.5 T
ii. Window AC’s – 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.
Digital Plasma AC: Air Clean + De-odorization + Allergy Prevention
The unique features of this AC are:
Anti-Bacteria Filter: It removes dust in the air as well as inhibits bacteria
proliferation, making the indoor 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 unit. All the buttons on the indoor display panel can be
locked. The unit can then, only be controlled by remote.
29
PRICING AND RELATED STRATEGIES
LG believes in “Ethical Pricing”. No compromise has been made by the company on the
price front despite the cut-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 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 refrigerators any thing
between Rs. 16,000 to Rs, 20,000.
b. LG’s basic 21 inch model of CTV is priced at Rs. 15,500. This price is higher
than Sony’s comparable model (Rs. 14,500). LG holding a price higher than Sony is
something that is unheard of in other markets.
c. LG’s microwave ovens are nothing less than Rs. 12,500, IFB & BPL (Market
leaders for microwaves) are selling them for less than Rs. 10,000 also.
30
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 company’s 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.
31
PRICES FOR EACH OF ITS PRODUCT CATEGORY
Target / Segment /
Positioning
Price
Colour Television Golden Eye wrinkle free
viewing
Lower &middle income
group; youth segment &the
rural markets
Rs9000-Rs11000
Middle &upper-middle
income groups.
Rs. 14000 to Rs 19000
Upper class &upper middle
class; people leading a
trendy lifestyle.
Rs 22000 to Rs59000
Refrigerator PN. System
Direct Cool Lower and middle class; Rs. 9000to Rs11000
Frost free (up to 640 lt) Upper and upper middle
class; working women
Rs. 26,000 to Rs. 64,000
DIOS Upper-upper class; people
leading trendy lifestyles of
the west.
Rs. 1. 3 lakhs
Air Conditioners Health air System
32
Split type Upper and upper middle
class
Rs. 42,000 to Rs. 67,000
Window type Upper middle and middle
class
Rs. 23000 to Rs. 33,000
Washing Machine Fabricare System
Semi Automatic Middle class and mass
market;
Rs. 75,00 to Rs. 8,000
Fully Automatic Upper middle and upper-
class working women
Rs. 18,000 to Rs. 21,000
Micro wave oven Health wave cooking
system
Upper middle & Upper
class, working women with
trendy lifestyle
Rs. 12,900 to Rs. 13,900
33
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 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.
34
Supply Chain at LG
LG factory Exclusive Outlets
C & F agents
Distributor
Dealer
PROMOTION AND RELATED STRATEGIES
Following are the promotion tools used by LG electronics to promote the company as
well as its products:
Advertising
Public Relations
Sales Promotion
LG has devised an effective advertising and promotional strategy. 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.
i. Advertising
35
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.
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 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:
36
TABLE :
Year Budget Objective
1999-
2001
20 crore To inform about LG’s products
2002-
2004
45 crore To promote additional product launches
2005-
2008
60 crore To promote the brand
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 field speaks for about two minutes.
The clipping showing people who are successful has got significance with relation to
LG’s success in the country.
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”.
37
It is only once in a while that the company comes up with promotional schemes. Recently
about 200 people were 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, he’ll 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 company’s success over the past 3 years. Marketing objectives and strategies for the
introductory and the growth stage are summarized.
TABLE :
Introduction Growth
Marketing
objectives
To offer technological superior
products in the market
Preparing for “Digitally
yours” image for the now
millennium
Strategies
Product Offering about in total 23 products to
the premium end of the market
Launching digitally
superior products for all
its product ranges
Price Initially prices high to cater the
premium end
Catering to the mass
market via its diverse
priced.
38
Distribution Selective Intensive
Promotion Heavy advertising to create
awareness about its products
More into corporate
advertising i.e. promotion
the brand
CUSTOMER SATISFACTION AT LG ELECTRONICS
In today’s 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 satisfaction involves two aspects :
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 company has a different service policy’s. 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.
39
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
Top of Mind Brand Awareness (Consumer durables)
Pre –World Cup Post World Cup
D C B All All D M C B
20% 18% 14% 18% LG 31% 30% 36% 34% 22%
Brand Associations with Cricket
Pre World Cup Post World Cup
D M C B All All D M C B
13% 15% 8% 10% 12% LG 17% 22% 21% 15% 8%
Brand Associations with Commercials
40
Pre World Cup Post World Cup
D M C B All
0 1% 0% 1% 0
0 1% 0 0 0
LG
(Ad Recall)
(Brand –ad association)
B D M C All
0 0 1% 0 0
0 0 0 0 0
Brand Association With Products
Pre World Cup LG Post World Cup ‘99
84% CTV’s 87%
40%` Refrigerators 61%
38% Washing Machines 56%
27% Music Systems 36%
11% Microwave Overs 22%
15% Air – conditioners 37%
Promotion Awareness
Recall
Pre World Cup Post World Cup
33% LG 35%
Intention of availing
17% LG 3%
POSITIONING ASSOCIATIONS (LG)
Pre World Cup Post World Cup
Attractive Looks 24% 32%
World Class Products 22% 32%
41
Attractive Advertisements 19% 30%
42
Analysis
LG spent about Rs. 40 crore as its expenditure for the world cup. Huge players like BPL
did not succeed much in the market. Every unit of mindspace that LG gained was BPL’s
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% and for LG it rose from 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.
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
AC’s . This is quite an achievement.
Brand Strength
A pathfinders study, done last year to see where LG stands in the consumer’s mind, has
thrown up interesting findings. It compared LG’s CTV’s, 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).
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.
43
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 (Delhi), LG doesn’t lead on any parameter. On spontaneous recall,
willingness to recommend and status connotation, the leader is BPL, while Whirlpool
leads on product differentiation.
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-Marg’s 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 on distribution, but even so, it is higher than Samsung and National Panasonic. On
overall ranking LG made a rather high debut of the year.
Clearly, LG’s brand – building efforts have had exemplary success. What the company
needs to do is to capitalize on it.
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.
44
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
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
45
Managerial Clerical
Officer I Officer IIM1 M2
Executive Manager
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
(c) Junior Level Management
: Executives
: Management trainees
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 and assisting management in the formulation of policies on personnel
administration including employee’s training and manpower planning.
Employee’s 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.
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.
46
PARADIGM SHIFT
TABLE 8:
Till Now From Now onwards
Way of thinking Analog way Digital way
Management style Sense management (self
experience)
Knowledgement
(Information)
Information acquisition Paper, Media, Education I.T.
Work Style Paper Based Work Paperless work
Behavior Dealer Push,
Empower-less
Responsibility
Less Ownership
Consumer Pull More
Empower-equal
Responsibility
Strengthen Ownership
47
Finance subsyste
m
HRM Subsyst
em
Technical subsystemMaterial
subsystem
Marketing subsystem
ANALYSIS & FINDINGSTo 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: Advertisement published by individual dealers was not taken into
consideration, only the advertisements given by the branch offices or Head office were
studied.)
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.
GRAPH 1:
Comparison on the basis of total number of advertisement:
48
Different type of advertisements of various brands
2 2
4
15
10
34
7
0
2
4
6
8
10
12
14
16
Brands
Typ
e of
adv
erti
sem
ents
Electrolux
Godrej
Hitachi
LG
Samsung
Videocon
Voltas
Whirpool
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.
49
GRAPH 2:
Comparision of advertisement on the basis of Newspapers:
Total no. of advertisements of individual brands in different Newspapers is notted
percentage-wise. DB publishes total 34 advertisements of the total 99 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.
50
Brand-wise classification of advertisement
5 47
32
19
86
18
0
5
10
15
20
25
30
35
Brands
Tot
al a
dver
tise
men
ts Electrolux
Godrej
Hitachi
LG
Samsung
Videocon
Voltas
Whirpool
TOI is preferred by Hitachi and Whirlpool, which gives 55% and 45% of its total
advertisement in TOI respectively.
GRAPH 3:
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 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.
51
Brand-wise Classification on basis of Newspapers
1 2 9
12
1 18
1 24
2
4 3 12 1
1
12
2 2
1
1 14
7 33 8
0%
20%
40%
60%
80%
100%
Brands
Per
cent
age TOI
RP
HT
DB
1 2 3 4 5 6 7 8
1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8), 7 = Voltas(6), 8 = Whirpool(18)
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.
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.
52
01234567
Number of advertisem
ents
Brands
Brands - wise Classification of advertisement on basis of days
SundayMondayTuesdayWednesdayThursdayFridaySaturdayLG SAMSUNG WHIRPOOL
GRAPH 5:
53
Brand -wise Classification on basis of size (sq.cm)
37 5 1 2
6 48
37
1
4
4 19 6
29
4
4
0%
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8
Brands
Per
cen
tage >600
300-600
150-300
0-150
1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),
7 = Voltas(6), 8 = Whirpool(18)
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.
GRAPH 6:
Comparison on the basis of presence of human model
54
Brand - wise classification of advertisements on basis of mostly Text/
Illustration
5 4 7 28 174
16
4 2
8
22
0%20%40%60%80%
100%
1 2 3 4 5 6 7 8
Brands
Per
cent
age
TextIllustrations
1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),
7 = Voltas(6), 8 = Whirpool(18)
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 none
of the advertisement of Hitachi and Videocon had human model.
GRAPH 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.
55
Brand - wise classification of advertisements on basis of presence of
human model
7 29
5
8
3
5 4
3
143
18
0%20%40%60%80%
100%
1 2 3 4 5 6 7 8
Brands
Per
cent
age
YesNo
1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7), 4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),
7 = Voltas(6), 8 = Whirpool(18)
Comparison on the basis of Theme of advertisement and Schemes provided by the
company:
Brand-wise listing of products according to themes and schemes are listed in the
chart
TABLE :
Brand Product Theme Scheme
Electrolux
FFR Life nourishing system 0% Finance/ Exchange
offer/Meet cricketers
FFR Water dispenser technology 0% Finance/ Exchange offer/
Meet cricketers
Videocon
AC Value for money 0% Finance
AC Quadra heat exchange technology 0% Finance/ 6 year warranty/
Free ionizer
VoltasAC Intelligent Qooling
5 yr. Warranty on compressorAC A Tata product
Samsung
FFR Rang de kismat offer Free gift 1200 to 30000/ 0%
Finance/ exchange offer
DCR Freshetarian with Bio Ref. 0% Finance
AC Instachill AC 5 yr warranty on compressor
CTV We are no.1
CTV Q series CTV
CTV BioTV
M/W Uphaar jo ban jaye yaadgar 0% Finance
LG ALL LG Birthday bash Double scratch offer/ Free Gift
Rs 1000/-
56
ALL shaadi ka avsar Free gift Rs 1000 & Rs 2195
FFR Ice beam technology 0% Finance/ Exchange offer
FFR Now or Never offer Exchange offer, save Rs 9000/-
FFR Door cooling
DCR A-One DCR
AC India no. 1 LG
AC Mukabala rajasthan ki garmi se Free gift Rs 1000
WAC Mother's DayFree mobile worth Rs 4490/-
WAC Free mobile
M/W Garma garam khana Free gift Rs 1000
WhirlpoolFF Fast forward ice exchange offer
AC Quick cool experience 0% Finance/ Scratch card
Godrej Ref Pentacool, 5 side funda
HitachiAC Keep track of Electricity Bill 0% Finance
Programmed for 100 cities
57
FINDINGS OF CONSUMER’S PERCEPTION
A total of 100 consumers were taken into consideration for the analysis. The survey
covered different houses and markets in Delhi.
Consumer’s Perception in Delhi:
Consumer’s Perception was analyzed on basis of various variables. They are discussed
below.
GRAPH 8:
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:
58
Factors affecting buying behaviour of products
397406
398
371
393 393 386372
395
340
360
380
400
420
Factors
Po
ints
Price BrandDurability CapacityConvinience Services Provided by the Co.Adv. & Pub. Discount OffersFamily & Friends
Perception on the basis of recall of advertisement for Home electronic 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.
59
Brand recall for consumer electronic items
32
11 8
59
40
2318
115
0
10
20
30
40
50
60
70
Brand
Po
ints
Samsung
Whirlpool
Panasonic
LG
Sony
BPL
Videocon
Philips
Others
GRAPH 10:
60
Brand recall for Home Appliances
0
10
20
30
40
50
60
Brand
Po
ints
Samsung
Whirlpool
Bajaj
Godrej
LG
BPL
Kenstar
Videocon
Philips
IFB
Others
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:
AGE-WISE CLASSIFICATION OF CONSUMER’S PERCEPTION:
Consumers Perception was analyzed on basis of various Age groups.
Perception of factors affecting buying behavior:
61
0
10
20
30
40
50
60
70
80
Factors
Points
EFFECTIVE ADVERTISEMENT
BETTER VARIETY
TAKE CARE OF HEALTH
BETTER QUALITY
GOOD BRAND EQUITY
BETTER AFTER SALESSERVICES
EASY TO USE
DURABLE
MORE FUCTIONS
BETTER APPEARANCE
HIGH COST
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:
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:
62
Age wise classification of factors affecting the buying behaviour of LG
products
0%20%40%60%80%
100%
Bet
wee
n20
to
34yr
s
Abo
ve50
yrs
Discount Offers
Adv. & Pub.
Services Providedby the Co.Convinience
Capacity
Durability
Brand
Price
SEX-WISE CLASSIFICATION OF CONSUMER’S 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:
63
Age wise classification of recall of adv. for various products of LG
0%
20%
40%
60%
80%
100%
CTV Ref. AC W/M M/W
> 50 yrs
35 - 50
18 - 35
Sex wise classification of factors affecting the buying behaviour of products
0%20%40%60%80%
100%
Pric
e
Dur
abili
ty
Con
vini
ence Adv
. &P
ub.
Male Female
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 .
64
GRAPH 15:
USAGE -WISE CLASSIFICATION OF CONSUMER’S 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:
Perception on basis of recall of advertisement
65
Usage wise classification of factors affecting the buying behaviour of products
0%20%40%60%80%
100%
Pric
e
Dur
abili
ty
Con
vini
ence
Adv
. & P
ub.
Users Non Users
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:
66
Usage wise classification of recall of adv. of various products of LG
0%
20%
40%
60%
80%
100%
CTV Ref. AC W/M M/W
Products
Perc
en
tag
e
Non Users
Users
FINDINGS OF DEALER’S PERCEPTION
Dealer’s 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%
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.
67
GRAPH 18:
68
0
2
4
6
8
10
12
Points
Brands
Incentive
POP
Supply
Employee behaviour
Credit period
After sales services
Warranty period
Comparison of various brands on the basis of dealer’s perception
1 = Sansui, 2 = Samsung, 3 = Crown, 4 = LG, 5 = Electrolux, 6 = Whirpool, 7 = Akai, 8 = Godrej, 9 = BPL, 10 = Videocon, 11 = Onida
1 2 3 4 5 6 7 8 9 10
SWOT ANALYSIS
Strengths
Premium pricing, no discounts
Focus on technology and quality
Strong commitment from parent
In – house manufacturing
capability
Products localized to suite
Indian tastes
Weaknesses
Lack of transparency with
dealers
Focus on niche segments
Dominance of Korean work
culture
Little presence in A&B class
towns
Threats
Way behind market leader
Stagnant urban demand
Nothing unique about strategy
Highly competitive market
Opportunity
Convert image into market share
Wide product portfolio
Positive rub-off due to high
quality
Healthy resource generation
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 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 India’s top consumer electronics company, it means surging past BPL,
69
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 LG’s 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 company’s growth
is assured.
70
CONCLUSION
The result of success in today’s highly charged competitive market depends not only in
product 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 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 company’s 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:
Environmental Threats:
Competition- Indian market is becoming highly competitive after the
globalization, MNC’s are giving very high competition to the Indian domestic brands.
Value for money- Indian market is very price sensitive, customer’s value for
their money.
71
Distribution channel- Every company concentrates on its strong distribution.
Environmental Opportunities:
Building Brand- Company’s image and brand name plays a great role in the
purchasing behavior of 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 company’s like BPL, LG, Samsung are ahead in this category
and are trying to tap this big market.
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.
72
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.
73
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 ( 35yrs to 50 yrs ( >50yrs
3. Sex: ( Male ( Female
4. Monthly Income:
( Less than Rs 3000 ( Rs 3000 to 9000 ( Rs 9000 to 15000
( >Rs15000
5. Are you planning to buy any consumer electronics item within a year?
( YES (CONTINUE) ( NO (TERMINATE)
6. Are you or someone else in your family working for a consumer electronics
company?
(NO (CONTINUE) (YES (TERMINATE)
74
7. What is your total monthly household income?
( Less than Rs 3000 ( Rs 3000 to 9000 ( Rs 9000 to 15000 ( >Rs15000
8. What all products of consumer electronics are there in your house?
CTV: ( LG ( Samsung ( Sansui ( BPL ( Videocon ( Onida
( Other ______
REFRIGERATOR: ( LG ( Whirlpool ( Electrolux ( Godrej
( Other _______
AIR CONDITIONER: ( LG ( Carrier ( Hitachi ( Voltas
( Samsung ( Other ______
WASHING MACHINE: ( LG ( Samsung ( Whirlpool
( Videocon ( Other ______
MICROWAVE: ( LG ( Samsung ( Kenstar ( IFB
( Whirlpool ( Other _______
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
most important )
Price ___ Appearance ___ Durability ___ Functions __ 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 Home Appliances
75
11. What is your impression about the following on LG products?
Fully Satisfied Partially Satisfied
Unsatisfied
Quality of goods
Price
After Sales Service
Function of the component
12. What additional features you require to become a prospective customer of LG?
13. Any Recommendations and Suggestions
________________________________________________
(THANK YOU FOR PARTICIPATING IN OUR SURVEY)
76
