LG ELECTRONICS INC: NORTH AMERICAN WASHING MACHINE MARKET

GROUP D7AISHWARYA USGAONKAR

ALANKRITA MISHRAANKIT SEN

JOSHUA DESOUZASHUBHAM GHOSH

SHOBHINI RAI

• Goldstar

entered North

American

Market in

1982, setup US

headquarters

by 1989.

•Huge existin

g

competitor

base with

Sears’ Kenmore

at 34.4%,

Maytag at

26.5%,

Whirlpool

17.6%, Others

at 20.2%

• Entered the North American market with a front-load model TROMM (carried ENERGY STAR label) (2002)

•LGE launched a

European style,

front-loading

washing machine with

three different

models. (2004)

•By 2005, LGE’s

volume market

share increased

to 10.8%

• Launched LG Brand (renamed in 1995 from Goldstar) in North America in 2002

• Business Strategy as described by LGE:“fast innovation, fast growth”

• Four values underlying LG brand identity: Trust, Innovation, People & Passion

• Annual demand for washing

machine was

gradually increasing at

an annual rate

of 4.9%, for front loading it

was growing at

21.3%

• Immediate challenges faced:• American

consumer perception of foreign brands

• Meeting expectations of American consumers of fit, feel and finish

• Building a brand

STRE

NGTH

S• Innovati

on and Design

• Forward Invention

• Product Adaptation

• Consistently successful in introducing new and innovative products

WEA

KNES

SES

• Lack of trained salesmen

• Inability to tap into Sears’ customer base OP

PORT

UNIT

IES

• Targeting high growth segment

• Patented Steam technology TH

REAT

S

• High level of competition in the front loading machine category

• Acceptance of Steam Technology

MAJOR ISSUES • Finalizing Washing Machine’s Design (Front load/Top load,

Transparent door/Opaque Door, Front/Top/Rear Control Panel etc.)• Introducing a single model (catering to single segment) or more

than one model (catering to different segments)• Introducing one of the two new technological concepts: Washer-

Dryer Combination or Steam Technology• Pricing and Marketing of the new model• Budget allocation to marketing communication

Based on the product, we aim to Segment, Target and Position the product,

• Environment Conscious (22%)• Fashion Conscious (29%)• Homemakers (20%)• Convenience & Budget Conscious (24%)

SEGMENTATION

• Environment Conscious – ensured increased energy and water efficiency

• Fashion Conscious – premium, front-loading, transparent door design, stainless steel body providing high aesthetic value.

• Homemaker- preferred cleanliness, large capacity & ease of loading and unloading

TARGETING

• Highly efficient product from a premium brand incorporating a patented and sophisticated steam technology.

• High aesthetic value along with high performance

POSITIONING

MARKETING MIXPRODUCT PRICE

PLACEPROMOTION

Product Design (One Model):

• Capacity: 3.8 cu ft.• Speed: 1200 rpm• Stainless Steel• Top Control Panel (LED)• Noise: Around 60 dB• Technology: Steam &

Washer Dryer Combination

Retail Channels:

• Best Buy• Home Depot• Sears• Regional retailers like

P.C. Richards, hhgregg etc.

Pricing of the Model:

• Willingness to Pay ~$1421. With the patented steam technology price would be around $1400.

• Added advantages for consumers (due to ENERGY STAR label)

• Rebate of around $100 would add to the margins of the manufacturer

• Training sales force (to change consumer perception & build brand value)

• In retail outlets with no salesmen, display the product where it is clearly visible.

• Providing discounts and specific advertising, especially, in festive seasons.

• Sponsorships and promotional events.

BEST PRACTICES

• Understanding Consumer behaviour by conducting Market Research• Aligning with the goals of the company (Strategic Fit)• Consistent and continuous developments in R&D and launching new

products every two years keeping in line with the company’s business strategy, “Fast Innovation, Fast Growth.”• Through market research, LG could effectively segment the consumers

and position their brand as a ‘premium’ category thereby gaining a 10.8% market share within 3 years.• Product adaptation suiting the needs of the American consumers

(especially with TROMM in 2002).• Forward Invention through the launch of innovative products with new

technology.

REFERENCES

• LG Electronics Inc.: Making waves in the North American washing machine market; INSEAD Case Study, Lajos J., Chattopadhyay A., 2007.• http://www.lg.com/ae/images/washing-machines/f1252rd7/gallery/medium01.jpg• http://

www.lg.com/nz/images/washing-machines/wd14070sd6/gallery/copy-medium01.jpg• http://

www.clipartkid.com/images/613/how-to-ensure-your-washing-machine-smells-as-fresh-as-the-day-it-was-XQ1LNv-clipart.jpg• http://

www.conversationalmarketinglabs.com/wp-content/uploads/2012/09/cartoon-lifting.jpg• http://

www.daniellopezdo.com/wp-content/uploads/2013/12/Cartoon-Man-Trying-To-Lift-Weights.jpg• https://

upload.wikimedia.org/wikipedia/commons/2/29/North_America_satellite_orthographic.jpg• http://www.ptclworkers.com/wp-content/uploads/2012/12/LG-life-good.jpg

Thank You

ANNEXURE -1Projected Market Share Growth in Washing Machine (in 000’s)

Machine 2002 2005 2006 2007 2008 2009 2010 Market Share in 2010

Front Loading

Machines

1379 2438 2948 3565 4310 5212 6302

49%CAGR 21%

Top Loading

Machines

6386 6494 6530 6567 6604 6641 6678

51%CAGR 1%

Total 7765 8932 9478 10132 10914 11853 12980