PROJECT REPORT

ON

MARKET ANALYSIS OF LG CONSUMER DURABLES

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ACKNOWLEDGEMENT

We wish to express our sincere thanks to Prof. Mr. SANJAY MANOCHA, FACULTY- BHARATI VIDYAPEETH UNIVERSITY’S INSTITUTE OF MANAGEMENT AND RESEARCH for giving us the opportunity to work on the marketing plan of a company. This has given us the insight of how the various theoretical concepts are applied in an organization. I got the opportunity to do a challenging project in LG ELECTRONIC (INDIA) The project is the important part of our study and gives us a real practical exposure to the corporate world.

I also thank to Dr. Sachin S. Vernekar, Director, BHARATI VIDYAPEETH UNIVERSITY INSTITUTE O MANAGEMENT & RESEARCH for giving me chance to get such an experience and giving me chance to get an industrial experience.

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INDEX

1) Executive Summary

2) Preface

3) Introduction

4) Classification of Consumer Durables

5) Scope

6) Opportunity & Threats

7) History of Company

8) Global Operations

9) Business Areas & Main Products

10) Slogan & Symbol

11) Partnership

12) Strategic Alliance

13) Internal Culture of L.G.

14) Mission

15) Product Leadership

16) Code of Conduct

17) L.G. India

18) R&D Potential

19) Major Key Success Factors

20) Marketing and Distribution

21) Customer Service

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22) Objective of the Project

23) Research Methodology

24) Analysis

25) Recommendations & Suggestions

26) Customer Survey Findings

27) Limitations

28) Sources of Data Collected

29) Questionnaire

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Executive Summary

Indian Consumer durables market used to be dominated by few domestic players

like godrej Voltas allwyn and kalvinater. But post liberalization much foreign

company have entered into Indian market dethroning the Indian player and

dominating Indian market the major categories in the market CTV,

REFRIGRATOR, AIR CONDTIONERS AND WASHING MACHINE

India being the second largest growing economy with huge consumer class has

resulted in consumer durables as the fastest growing industries in India LG,

SAMSUNG the two Korean companies has been maintaining the lead in the

industries with LG being leader in almost all the categories.

The rural market is growing faster than the urban market, although the penetration

level is much lower .The CTV segment is expected to the largest contributing

segment to the overall growth the industry. The rising income levels double-

income families and consumer awareness are the main growth drivers of the

industries.

Consumer durables major LG Electronics India Pvt Ltd (LGEIL) will invest

nearly Rs 500 crore in India this year in research and development, brand-

building and other marketing initiatives.

The company, having a turnover of Rs 9,500 crore and market share of 26 per

cent, is investing Rs 360 crore on brand-building and other marketing initiatives

and around Rs 140 crore on research and development, besides launching new

platforms in information technology and related areas,

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LG’s innovative ‘211 campaign’ to provide quality after-sales service, will also

be expanded from the existing 22 to 40 cities.

The campaign, for which IT infrastructure has been set up, includes the

company’s response to customer complaint within two hours. The fixing time for

complaints varies from one hour to a maximum of 24 hours.

PREFACE

This project gives me great exposure to the consumer durable market because it

includes product knowledge and the filed job in which I have visited the stores of

Delhi. This project helps me to know the market practically. My job was during

this project to see the market share and also the display share of the LG product in

the store. LG always insist the 50% display share of LG product because LG

believes that “JO DIKHTA HAI WO BIKTA HAI”.

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INTRODUCTION

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

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

durables market, accounting for no less than 90% of the market. Then, after the

liberalization, foreign players like LG, Sony, Samsung, Whirlpool, Daewoo, and

Aiwa came into the picture. Today, these players control the major share of the

consumer durables market.

Consumer durables market is expected to grow at 10-15% in 2009-2010. It is

growing very fast because of rise in living standards, easy access to consumer

finance, and wide range of choice, as many foreign players are entering in the

market

With the increase in income levels, easy availability of finance, increase in

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

durables has increased significantly. Products like washing machines, air

conditioners, microwave ovens, color televisions (CTVs) are no longer

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

like vacuum cleaners, and dishwashers

Consumer durables sector is characterized by the emergence of MNCs, exchange

offers, discounts, and intense competition. The market share of MNCs in

consumer durables sector is 65%. MNC's major target is the growing middle class

of India. MNCs offer superior technology to the Consumers whereas the Indian

companies compete on the basis of firm grasp of the local market, their well-

acknowledged brands, and hold over wide distribution network. However, the

penetration level of the consumer durables is still low in India

.

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Classification of consumer durables sector

1. Consumer electronic include vcd/dvd, home theatre, music player, color

television (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc

2. White goods include dishwashers, air conditioners, heaters, washing machines,

refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances,

microwaves, built-in appliances, Tumble dryer, personal care product etc.

3. Moulded luggage include plastics

4. Clocks and watches

5. Mobile phones

Scope

1. In term of purchasing power parity (ppp), India is the 4th largest economy in the world and overtake Japan in the near future become the 3rd largest.

2. Indian consumer durable market is expected to reach $400 billion by on 2010

3. India has the youngest population amongst the major countries. There are lot of people in the different income categories nearly the two third population is below the age of 35 and nearly 50% is below 25.

4. There are 56 million people in middle class, who are earning us$4,400-US$21,800 a year. And there are 6 million rich household in India.

5. The upper-middle and high-income household in urban areas grew to 38.2

million in 2007 as against 14.6 million in 2000.

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Opportunity

1. In India the penetration level of white goods is lower as compared to other

developing countries.

2. Unexploited rural market.

3. Rapid urbanization.

4. Increase in income level, i.e.increase in purchasing power of consumers.

5. Easy availability of finance.

Threats

Higher import duties on row materials.

Cheap imports from Singapore, China and from other Asian countries.

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Brands in consumer electronic sector

MNCs NATIONAL REGIONALLG )SAMSUNG ) KOREA ONIDA BUSHHYUNDAI ) VIDEOCON CROWN

BPL SALORATCL ) CHINA GODREJ T-SERIESHAIER ) VOLTAS WESTON

IFB BELTAKPHILIPS ) HOLLAND OSKAR

PANASONIC )SHARP )HITACHI ) JAPANSANSUI )AKAI )AIWA

WHIRLPOOL )ELECTROLUX )

TODAY Consumer durables sector is characterized by the emergence of MNCs,

exchange offers, discounts, and intense competition. The market share of MNCs

in consumer durables sector is 65%. MNC's major target is the growing middle

class of India. MNCs offer superior technology to the

LG, SAMSUNG the two Korean companies has been maintaining the lead in the

industries with LG being leader in almost all the categories.

The company, having a turnover of Rs 9,500 crore and market share of 26 per

cent, is investing Rs 360 crore on brand-building and other marketing initiatives

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and around Rs 140 crore on research and development, besides launching new

platforms in information technology and related areas,

LG Electronics is one of the leading companies in the field of electronics with a

global presence in many countries. Before briefing, I have divided the

introduction part into three main sub parts.

1. LG Global

2. LG India

3. LG Pune

History of company

The company was originally established in 1958 as Gold Star, producing radios,

TVs, refrigerators, washing machines, and air conditioners.

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

from which the abbreviation of LG was derived. The current "Life's good" slogan

is a backronym. Before the corporate Name change to LG, household products

were sold under the Brand name of Lucky, while electronic products were sold

under the brand name of Gold Star. The Gold Star brand is still perceived as a

discount brand.

In 1995, Gold Star was renamed LG Electronics, and acquired Zenith Electronics

of the United States.

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Global Operation

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

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

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

LG Group

1. LG Philips LCD

2. LG Chemical

3. LG Telecom

4. LG Powercom

5. LG Twins

6. LG Dacom

Business areas and main products

Mobile communications

(a)CDMA Handsets,

(b)GSM Handsets,

(c) 3G Handsets,

(d)Cellular Phones

Digital appliance

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a)

Microwave Ovens,

b) Washing Machines,

c) Vacuum Cleaners,

d) Home Net,

e) Compressors for Air Conditioners and Refrigerators

Digital display

a) Plasma TVs,

b) LCD TVs,

c) Micro Display Panel TVs,

d) Monitors,

e) PDP Modules,

f) OLED Panels,

g) USB Memory,

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h) Flat Panel Computer Monitors

Digital media

a) Home Theater Systems,

b) DVD Recorders,

c) Super Multi DVD Rewriters,

d) CD±RW,

e) Notebook PCs,

f) DesktopPCs

g) PDAs,

h) PDA Phones,

i) MP3 Players,

j) New Karaoke Systems,

k) Car Infotainment

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SLOGAN

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

products that will make your life good.

The LG Electronics Life's Good signature consists of the LG logo, seal,

and the slogan, "Life's Good" set in Charlotte sans typeface curved

around the LG symbol. The curving of the slogan reinforces LG's

personality and uniqueness. The consistent usage of this signature

clearly establishes the unique identity of the company and unifies every

division and product from LG Electronics across the globe.

THE SYMBOL

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The symbol of LG is the face of future. The letter “L” and “G” in a circle

symbolizes world, future, youth, humanity & technology. LG philosophy is based

on humanity. It also represents LG’s efforts to keep close relationship with our

customers around the world.

The symbol consists of two elements.

1. The logo in LG gray

2. The stylized image of human face in the unique LG red color.

Red color represents our friendliness and gives a strong impression of LG’s

commitment to deliver the best.

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

symbol conveys “Friendliness and Approachability”. The one eye on the

symbol represents “Goal-oriented, Focused & Confident”.

The slogan of LG is “Life’s Good”. It expresses “ Brand’s Value, Promises,

Benefits , Personality.

THE PARTNERSHIP

LG Electronics chooses to promote harmony and build constructively on a labor-

management relationship rather than an employee-employer relationship. This

illustrates that management and workers are not in a vertical relationship, but in a

horizontal one.

This culture is necessary for LG Electronics as it strives to become one of the

world's top companies. Such a relationship is transformed into a value-creation

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relationship whereby both parties endeavor to address mutual problems and create

new values together.

STRATEGIC ALLIANCE

LG Electronics is making technical advances and identifying business

opportunities through various associative relationships with some of the

world's leading companies.

LG Electronics is striving to become number one in the world by mingling in

various business and technological fields and making strategic alliances with

world famous companies. "Strategic association between corporations," in which

companies with different infrastructures cooperate in the fast-developing 21st

century business field, is of key significance in terms of strengthening the existing

industry and creating a new one.

LG Electronics will do its best to create new products and services with an open

mind, while developing new technologies and business fields through various

associations with some of the world's most successful companies.

1. 3M

2. SUN

3. YAHOO

4. PHILLIPS

5. TOYOTA

6. MICROSOFT

7. HP

8. GOOGLE

9. GE

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10.INTEL

11.NORTEL

12.HITACHI

13.PRADA

14.RENESAS

15.TOSHIBA

16.BESTBUY

And the number follows many more…………………………..

In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance. Yahoo

mobile services will be available from LG mobile. This service is targeting 10

million LG mobile phones in over 70 countries.

In Mar. 2007 LG Electronics and Google formed a strategic alliance.

Both companies will work together to release, market, and offer LG mobile

phones with Google services (search engine, map, email, and blogs.)

LG BRAND IDENTITY:-

The brand of LG is delightfully smart. LG strives to enhance the customer’s life

and lifestyle with intelligent features, institutive functionality and exceptional

performance.

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The brand platform:-

The LG brand is composed of four basic elements –

1. Value

2. Promise

3. Benefits

4. Personality

The Brands core Value that never changes.

a. Trust,

b. Innovation,

c. People

d. Passion

The benefits that are consistently delivered to the customer includes

Reliable products

Simple design

Ease of use

Extraordinary Experience

Personality describes the human characteristic that are expressed to the customer

through

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Trustworthy, Considerate

Practical, Friendly

The Internal Culture of LG:

LG practices four cultures

1. Learning Culture

2. Boundary less Environment

3. A Carrier

4. Growth

According to LG, the Learning Culture continuously helps the employee to

learn more and more to develop the habit of continuous learning.

Boundary less Environment means that there is no difference between the levels

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

between all the employees.

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

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

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

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

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

Ocean strategy is one of the examples of growth.

Mission

The mission of LG is to provide the customers with utmost satisfaction through

leadership. The fundamental policy of development is to secure product

leadership that the Customers may have the utmost satisfaction.

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Product Leadership

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

1. New Machine

2. Reliability

3. Conventional Installation

4. Environment Friendly Product

5. Low Noise & Vibration

6. Energy Saving

Code of conduct of LG:

1. Responsibility and obligations to customers :• Respect for Customers• Creating Value • Providing Value

2 Fair competition• Pursuit of Free Competition• Compliance with Laws and Regulations

3 Fair Transaction :• Equal Opportunity • Fair Transaction Procedure• Support and Aid for Business Partners

4 Basic Ethics for Employees• Basic Ethics• Completion of Duty • Self Development• Fairness in Performance• Avoidance of conflict with company interest

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5 Corporate Responsibilities to employees• Respect for human dignity• Fair Treatment• Promoting Creativity

6 Responsibilities to society and country

• Rational Business Development• Protection of stock holder interest• Contribution to social development• Environmental Conservation

LG INDIA:

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

South Korea was established in January 1997 after clearance from the Foreign

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

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

investment of Rs 500 Crores.

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

Noida, India.

This facility manufactured Color Televisions, Washing Machines, Air-

Conditioners and Microwave Ovens.

Company is setting up a chain of exclusive premium showrooms. LG plans to

launch 60 premium Brand Shoppes by the end of the first quarter of this year. At

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

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

segment and the target audience will comprise buyers interested in premium and

high end products.

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LG Brand Shoppe goes beyond the concept of a normal exclusive store by having

a more interactive environment and additional lifestyle orientation on display so

that the customer can actually experience the LG products in his or her own home

settings.

LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market

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

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

exercise will cost the company Rs 360 crore.

LG Electronics India is the fastest growing company in the consumer electronics,

home appliances, and computer peripherals industry today.

LG Electronics is continually providing, superior technology products & value for

money to more than 50 lakh households in India. LGEIL is celebrating the 11th

anniversary this year.

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

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

Technology areas such as mobile application development, digital video

broadcast and biometrics software and support LG Electronics with our expertise.

Motivated by a passion for technology, a strong work culture and loyalty to the

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

globally.

Prominent consumer electronic company, LG Electronics Inc. has said that it

expects the sale of its products in India to up by 15 per cent in 2010. Moon Bum

Shin, managing director of LG Electronics India has said that the company has

earmarked 4.8 billion rupees for investment purpose in India this year. The said

money will be used to market as well as manufacture new products.

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In order to achieve its target, Shin said LG Electronics will concentrate on

catering to the high-end consumer market which will help boost sales this year.

India churns out six (6) per cent of LG Electronics global revenues of $42 billion.

The Indian branch of LG exports to 40 countries.

India challengesThe challenges faced by LG when entered in Indian market

1. Low brand awareness about LG in India.

2. One of the last MNCs entered in India (Samsung, Panasonic entered in

1995 in India).

3. High import duty

4. Competition from local market players and other MNCs in consumer

durable segment.

5. Price sensitiveness of the Indian consumer

LGEI over comes these challenges to emerge as

Innovative marketing strategy

1. Launch new technologies in consumer electronic and home appliances.

2. LG was the first brand to enter in cricket in big way a way, by sponsoring

the 1999 world cup followed it up in 2003 as well.

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3. LG brought in four captains of the Indian cricket team to endorse its

products. LG invested more then US$ 8 million on advertising and

marketing in this sport.

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

CTV has “Golden eye technology” Air conditioner has “Health air

system” and microwave ovens have the “Health wave system”.

Local and efficient manufacturing to reduce the cost

To overcome high import duties LG manufactures TV refrigerator in India at

manufacturing facility at Noida and Pune. LGEI had already commissioned

contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has helped

LGEI to reduce cost.

LGEI implementing the “Digital manufacturing system” (DMS) as the cost

cutting innovation this system is follow-up to the six sigma exercise LGEI had

initiate earlier.

R&D potential

LG has the research and development facilities in Bangalore and Pune. Both the

unit carry out R&D department for the domestic as well as the parent company it

also dose customize R&D for the specific countries to which it export product.

Regional channel and wide distribution network

1. LG has adopted the regional distribution channel in India. All the

distributers work directly with the company. This has resulted in quicker

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

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

channel partners.

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Product localization:-

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

2. LG came out with Hindi and regional language menus on its TVs.

3. Introduced the low-priced “Cineplus” and “sampooma” for the rural

market.

4. LG was the first brand to introduce gaming in TVs in continuations of its

association with cricket LG introduce cricket game in CTVs

MAJOR KEY SUCCESS FACTORS

1. Innovative marketing - LG was the first brand to enter cricket in a big way,

by sponsoring the 1999 World Cup and followed it up in 2003 as well.

2. Local and efficient manufacturing to reduce cost - To overcome high

import duties, LG manufactures PC monitors and refrigerators in India at

its manufacturing facility at Noida, Delhi.

3. Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for

CTVs.

4. Product localization - Product localization is a key strategy used by LG. It

came out with Hindi and regional language menus on its TV.

5. Regional distribution model - This has resulted in quicker rotation of stocks

and better penetration into the B, C and D class markets.

6. Leveraging India’s IT advantage - LG Electronics has awarded a contract

to develop IT solutions to LG Soft India (LGSI). The project involves

development and support for ERP, SCM, CRM and IT-enabled services for

LG.

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Strategies adopted by the organizationLG follows 10 commandments which are as follows.

1. Foster working environment-5S Environment

2. Fast execution is key to success

3. Transparent and fast communication-open communication

4. Update market -knowledge –Demographics

5. Win –Win relationship with the trade partners

6. Customer is the king

7. Even Billing –Road to ach supplier A

8. Be in touch with the market (70% Market, 30% Office).

9. Plan and Execute annual marketing Calendar-Time to market

10.Display share of 50% -to get 50% consumer share.

LG PUNE

LG Pune is the branch office of LGEIL. It is located in J.M Road.

In 2004 LGEIL opened second factory which is located in Ranjangaon. This plant

manufactures all product including DVD writers and GSM mobiles. Thus it

became first company to manufacture DVD writer in India. The ODP plant aims

to reach a manpower base of 1500 people and an investment of Rs 300 crore till

2010.

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LG India will become the export hub for LG Worldwide, catering to the Middle

East and African markets. The company aims to touch an export turnover of $3

billion by 2010 from India, which will contribute to 30 per cent of the Indian

arm's turnover.

Pune, India, October 6, 2004 -- LG announced 3 growth strategies aimed at the

1.1 billion people of India making the Indian market the second largest global

Production base following China. Under this strategy LGE has projected 2007

revenues in India will exceed US$10 billion, 10 times that of 2004.

The three strategies for the Indian market that the global electronics giant

disclosed. included: penetrates the south-western market of India through the

new Pune plant near Mumbai, the second largest city in India, in addition to the

existing northern plant; installs a new GSM handset production line in the new

Pune plant and uses it as its second-largest global GSM handset production line

after the Qingdao plant in China; and expands the current 750 R&D staff in India

to 1,500 by 20010, striving to develop premium products and export 30% of

India-manufactured products to Asia, Middle East and Africa markets by 2010.

LG Electronics’ second new plant in Pune, India covers a total area of 211,200

square meters and is currently equipped with a production line to manufacture

600,000 TVs and one million refrigerators a year. The company is set to add

production lines of air conditioners, washing machines, monitors, and electronic

ovens, by 2010.

Also, LG Electronics is poised to install a GSM handset production line in the

new Pune plant by early next year. The Pune GSM handset line envisages a

capacity of manufacturing 2 million handsets annually, and the company expands

it to become a global GSM handset production base with a capacity of an annual

10 million units by 2010.

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In connection with its three growth strategies for the Indian market, LG

Electronics will invest a total of US$150 million in establishing facilities and

boosting R&D efforts in India by 2010. Specifically, it will invest US$53 million

in the Pune second plant, another US$43 million in establishing the GSM line,

and US$54 million in securing R&D manpower and boosting other efforts.

Through these strategies, LG Electronics aims to penetrate the global market by

using China and India as its core production bases, while operating its plants in

Changwon and Gumi, Korea, as its main production bases. This way, the

company is pushing to penetrate the global home appliance market.

The present capacity of the facility is of 1 lakh unit per year and it shall cater to

the need of the domestic markets. LG plans to upscale its operations to a figure of

2.5 lakh units a year in the near future. The Pune plant in addition to its current

manufacturing facility at Greater Noida will enable the company to enhance its

consumer reach and reiterate it’s commitment towards providing superior

technology products to the India consumer.

The key strategies being implemented include increasing the number of its

regional offices from six to eight. LG has split its southern regional office into

two, one comprising the states of Tamil Nadu and Kerala and the other consisting

of Andhra Pradesh and Karnataka. In addition, it has split one of its northern

regional offices by making Uttar Pradesh a separate region after spinning it out

from Delhi NCR. The other four regional offices take care of East, Gujarat and

Madhya Pradesh, Maharashtra & Goa and Punjab, Haryana & Rajasthan

respectively.

In the coming year, LG is also repositioning its marketing spends, resulting in a

significant increase in its mass media expenditure for better brand visibility. LG

had a marketing budget of Rs 320 crore in 2007 with a 60:40 split in favor of

below-the-line activities. Next year, the company plans to increase the share of

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mass media even as overall marketing spends would be raised by just about 10-

15%.

Distribution and Marketing

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

shopee. For the marketing of the products a number of activities are followed

1. Exhibitions are conducted from time to time.

2. Society and college activities are conducted.

3. Hoarding, Posters, banners are used so as to grab the attention of the

costumers.

4. Day to day advertisement in leading newspaper.

5. Discount at festival time.

6. For dealer relationship they arrange dealer meeting at several time in the

year

7. LG divide dealer in gold silver bronze etc. category to know the

performance of the dealers.

8. They have their sales persons at various sub dealer store and at mordent

trade store for particularly for the promotion of the LG product.

9. LG also uses the radio FM for the promotion activities.

10.Also provide capon and scratch card for festive season.

5R’s of Logistic

Followed by LG:

1. Right Time

2. Right Place

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3. Right Condition

4. Right Cost

5. Right Handling

LG Distribution

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

Warehouse-

1. Mother Warehouse

2. Branch Warehouse

3. Spare part warehouse

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

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

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

by manufacturers, importers, exporters, wholesalers, transport businesses,

customs, etc. They are usually large plain buildings in industrial areas of cities

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

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

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

standard pallets loaded into pallet racks.

5 S of Warehouse, which the LG strictly follow.

1. Sweeping

2. Sorting

3. Systematic Arrangement

4. Simplification

5. Self- discipline

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

about the delivery.

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

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

3. Yellow Card – After the product labeled with green, allow this to move in

market

Distribution Time:-

• Local delivery – 4 hrs.

• Upcountry delivery - 12 hrs.

• Within 200 km. – 24 hrs.

• Beyond 200 km. – 48 hrs.

The above distribution time is the time of delivery of products from warehouse to

the market place, which the logistic department follows to fulfill the demand in

the market at right time. In LG, we have the following process, which is followed

in logistic through ERP.

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Order Processing

Invoicing

Indenting

Report

Order Processing booking for dealers /distributors

Invoicing after billing process/bill generation

Indenting requirement (Pdt Unit to branch unit)

Report distributed to all

In warehouse, there are two mode of dispersion of product from one place to

another within. a) Hydraulic b) Manual

In addition, there are 35 fire extinguishers to prevent the accidental hazard within

the warehouse due to fire. These fire extinguishers are valid up to year 2011. One

has to follow the rule of “NO Smoking” within the warehouse

WAREHOUSE WITH THE EQUIPMENT.

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WAREHOUSE: REFRIGERATOR AND CTV SECTION

CUSTOMER SERVICE

The best and the biggest international brands are here in India –but the irony if it

all: where is the after-sales-service? So integral to a brand, so critical for its

success and so taken for granted in developed markets! In India, after sales

service is, for want of a better description, the pits. So what’s stopping the best

companies from pulling out all the stops when it comes to providing the best

service? Do customers expect for too much? Or is it that in India they don’t really

care. Brand Equity fanned out to MNC as well as Indian consumer durable

companies, stockiest and dealers, analysts and market researchers to get a feel of

what’s really keeping after sales from being used as a cutting edge marketing tool

in pushing products across categories.

Customers support following the purchase of a product or service. In some cases,

after-sales service can be almost as important as the initial purchase. The

manufacturer, retailer, or service provider determines what is included in any

warranty (or guarantee) package. This will include the duration of the warranty

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traditionally one year from the date of purchase, but increasingly two or more

year’s maintenance and/or replacement policy, items included/excluded, labor

costs, and speed of response. In the case of a service provider, after-sales service

might include additional training or helpdesk availability. Of equal importance is

the customer's perception of the degree of willingness with which a supplier deals

with a question or complaint, speed of response, and action taken.

LG also had a big problem of after sale service in India. During my project I

also came to know that after sale service becomes the big issue in Pune region.

Customers as well as dealer were facing the problem of after sale service.

Because of this problem many dealer in Pune region were not ready to sale LG

product. So it becomes the big issue.

But LG has taken some solid steps towards improving customer’s perception

and experience of after sales service. Because it very important in competitive

market to provide the best service.

LG Electronics has signed a memorandum of understanding with 23 Industrial

Training Institutes to strengthen its after sales service in India.

The company aims to recruit 10,000 people by the end of this year as a part of its

branding strategy to focus on service and move away from discounting.

LG Electronics has identified eight states with high after sales service call rates to

ink the deals with the ITI. Y V Verma, director HR and management system,

LG Electronics said, "The Company was trying to find a solution for effective

after sales service since last two years. There is a huge need of trained manpower

for the after sales service to align with the company's expansion and focus on the

GSM mobiles and the personal computer segments."

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In the initial phase the company has entered into agreements with ITIs in the

states like Maharashtra, Gujarat, Delhi, Punjab, Assam, and Karnataka and

is in the last leg of signing with Uttar Pradesh.

1. LG Electronics, with 1200 service centers, has already recruited 300 students

and plans to beef up the number to 10,000 by the year-end.

2. "The company has offered a scholarship to the selected students for the last

six months of their training programme,"

3. The company will invest Rs 8 crore (Rs 80 million) in employee

development programme this year with an aim to attain a 8 per cent attrition

rate.

4. The company moved away from the discounting strategy since last year and

is putting thrust on the quality and service in its brand communication to

position LG as a premium consumer electronics brand.

5. At the top, the Service Division in Korea reports to the Global CMO. (As

mentioned in Dermot’s public interview in ET on Wednesday). This shows

commitment that Service must be made into a marketing differentiator, and

leveraged thus.

6. LG has the widest service network across the country; some estimates put it

at a significant multiple of service-infrastructure from our nearest

7. Competitor. While the sale size may also be a nice multiple from nearest, it

shows the company is ready to put our money where our mouth is.

8. The company has introduced a 211 service - once you register your

complaint, we will call you back in 2 hours (hence 2), set up an appointment

for the next convenient day for you (hence the first 1), and show up in the

promised 1-hour slot (hence the second 1). If the next convenient day for

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you is the next day, that’s great too. It’s a disruptive action in an industry

(including LG) having traditionally shied away from its service

responsibilities, and thus not leveraging any mileage from it.

9. The company is promoting 211 through ATL, probably the first time after-

sales service is being communicated in this fashion by any product company.

You may have seen the TV commercial or heard the radio advert or seen the

newspaper ad or in-shop posters, both of which revolve around prompt

response.

10.The first LG-owned service centre opened in Gurgaon. (Service in India

generally works through authorized service centers, in LG’s case they work

exclusively for LG.) A company-owned service centre tries that much

harder, knows things better, and can even contribute as a revenue center.

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Objective of the project

Primary objective

The main objective of filed survey during the project was to find out the

market share of the LG and also calculate the display share.

Find out the positional dealer who can sale the LG product in large volume.

The main objective of research was to identify potential dealer and

development these dealer. So LG can make them their direct dealer.

Find out the problem faced by the dealer in sales and the distribution.

Secondary objective

While purchasing the consumer durables which parameter is most

important for the consumer?

Do the consumers prefer the financial facility for buying consumer

durable?

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How frequently consumers change the consumer durable?

To enhances the knowledge of consumer durable market.

To increases the knowledge consumer durable product of LG.

To enhances the knowledge about the marketing and branding activity.

Research Methodology:

Research methodology is considered as the nerve of the project. Without a proper

well-organized research plan, it is impossible to complete the project and reach to

any conclusion. The project was based on the survey plan. The main objective of

survey was to collect appropriate data, which work as a base for drawing

conclusion and getting result.

Therefore, research methodology is the way to systematically solve the research

problem. Research methodology not only talks of the methods but also logic

behind the methods used in the context of a research study and it explains why a

particular method has been used in the preference of the other methods

Research design:

Research design is important primarily because of the increased complexity in the

market as well as marketing approaches available to the researchers. In fact, it is

the key to the evolution of successful marketing strategies and programmers. It is

an important tool to study buyer’s behavior, consumption pattern, brand loyalty,

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and focus market changes. A research design specifies the methods and

procedures for conducting a particular study. According to Kerlinger, “Research

Design is a plan, conceptual structure, and strategy of investigation conceived as

to obtain answers to research questions and to control variance.

Types of research is:

Descriptive Research

The type of research adopted for study is descriptive. Descriptive studies are

undertaken in many circumstances when the researches is interested to know the

characteristic of certain group such as age, sex, education level, occupation or

income. A descriptive study may be necessary in cases when a researcher is

interested in knowing the proportion of people in a given population who have in

particular manner, making projections of a certain thing, or determining the

relationship between two or more variables. The objective of such study is to

answer the “who, what, when, where and how” of the subject under investigation.

There is a general feeling that descriptive studies are factual and very simple. This

is not necessarily true. Descriptive study can be complex, demanding a high

degree of scientific skill on part of the researcher.

Descriptive studies are well structured. An exploratory study needs to be flexible

in its approach, but a descriptive study in contrast tends to be rigid and its

approach cannot be changed every now and then. It is therefore necessary, the

researcher give sufficient thought to framing research.

Questions and deciding the types of data to be collected and the procedure to be

used in this purpose. Descriptive studies can be divided into two broad categories:

Cross Sectional and Longitudinal Sectional. A cross sectional study is concerned

with a sample of elements from a given population. Thus, it may deal with

household, dealers, retail stores, or other entities. Data on a number of

characteristics from sample elements are collected and analyzed. Cross sectional

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studies are of two types: Field study and Survey. Although the distinction

between them is not clear- cut, there are some practical differences, which need

different techniques and skills. Field studies are ex-post-factor scientific inquiries

that aim at finding the relations and interrelations among variables in a real

setting. Such studies are done in live situations like communities, schools,

factories, and organizations.

Another type of cross sectional study is survey result, which has been taken by

me. A major strength of survey research is its wide scope. Detail information can

be obtained from a sample of large population .Besides; it is economical as more

information can be collected per unit of cost. In addition, it is obvious that a

sample survey needs less time than a census inquiry. Descriptive research

includes survey and fact finding enquiries of different kinds of the major purpose.

Descriptive research is description of the state of affairs, as it exists at present.

The main characteristic of this method is that the researcher has no control over

the variables; he can only report what has happened or what is happening. The

methods of research utilized in descriptive research are survey methods of all

kinds including comparative and co relational methods. The reason for using such

needs to be flexile in its approach, but a descriptive study in contrast tends to be

rigid and its approach cannot be changed ever now and then.

OBJECTIVE OF THE STUDY

The objective was to find out the market share of LG products, advantages, and

disadvantages of LG products from dealers and to find out what problems they

are facing with the LG products so that problems can be resolved to increase the

sale.

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PICTURE SHOWING THE PRODUCT OF LG IN ONE OF THE SHOP

Data collection methods:

After the research problem, we have to identify and select which type of data is to

research. At this stage; we have to organize a field survey to collect the data. One

of the important tools for conducting market research is the availability of

necessary and useful data.

Primary data: For primary data collection, we have to plan the following four

important aspects.

Sampling

Research Instrument

Secondary Data - The Company’s profile, journals and various literature

studies are important sources of secondary data.

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Data analysis and interpretation

1. Questionnaires

2. Pie chart and Bar chart

Questionnaires:

This is the most popular tool for the data collection. A questionnaire contains

question that the researcher wishes to ask his respondents which is always guided

by the objective of the survey.

Pie chart:

This is very useful diagram to represent data, which are divided into a number of

categories. This diagram consists of a circle of divided into a number of sectors,

which are proportional to the values they represent. The total value is represented

by the full create. The diagram bar chart can make comparison among the various

components or between a part and a whole of data.

Bar chart:

This is another way of representing data graphically. As the name implies, it

consist of a number of whispered bar, which originate from a common base line

and are equal widths. The lengths of the bards are proportional to the value they

represent.

Preparation of report:

The report was based on the analysis and presented with the findings and

suggestions. The sample of the questionnaires is attached with the report itself.

Sampling Methodology:

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Details of the sampling methodology, I have made questionnaire. The one is made

for the Customer.

No. of questions in questionnaires for customer: 07

No. of question related to LG product: 03

No. of people met during the research: 50

No. of respondents during the research: 20

Sample unit

Professionals, Business man,

Employees, House wife,

Working women, Students

Analysis

Q1. Have you ever purchased any consumer durable of L.G.?

Yes

No

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85%

15%

Yes

No

55%

10%

5%

30% Attractive Price

Service

Demonstration

Offers

Q.2While purchasing consumer durable which parameter influences you?

Price

Product feature

Brand

Service

Durability

Q3. From where you prefer buying consumer durables

Exhibitions

Co. Stores

Showroom

Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of

following reasons

Attractive Price

Service

Demonstrations

Offers

Q.5.Which consumer durable of L.G. you have?

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60%25%

15%

Showroom

Co. Stores

Exhibition

25%

20%30%

10%15% Price

Product Feature

Brand

Service

Durability

15%

35%45%

5%

1-3 years

3-5 years

5-10 years

More than 10years

CTV

LCD

REFRIDGERATOR

WASHING MACHINE

MICROWAVE

A/C

Q.6. How frequently you change your consumer durables?

1-3 years

3-5 years

5-10 years

More than 10 years

Q.7.Do you prefer any financing scheme to purchase consumer durables?

Yes

No

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10%10%

45%

20%

10% 5%

CTV

LCD

Refridgerators

WashingMachines

MicroWaves

A/C

90%

0%

10%

Yes

No

Can't Say

RECOMMENDATIONS AND SUGGESTIONS

1. LG should improve it’s after sale service because its hits badly LGs market

share.

2. More detailed customaries service is to be provided.

3. The training to in shop demonstration should be given at frequent time

interval and feed back should be considered positively.

4. The company should look into the matter of person hiring for in shop

demonstration. A big LG showroom should have at least 2 such kind of

person.

5. LG should try new dealer who have the potential. So they can target more

market.

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6. As there is a bottle neck competition between Samsung and LG, it is

necessary to take measure steps to overcome the area of downfall in LG

with respect to Samsung.

7. The marketing managers should make better relations with dealers and

reputation of the company.

8. Customer considers quality as their first preference, so the company should

give more stress on this.

9. The switching of customer from LG product to other brand is due to the

bed after sell service in shop.

10.The product is well aware and it is on top of mind of customer. So

company should always improve services and update their technology.

CUSTOMER SURVEY FINDINGS

1. Secondary supports play an important role in the customers mind and

create awareness among the customers. The secondary support includes

Demonstration, Exhibition & Even Sponsors.

2. From the survey it was found out that the majority of customers don’t buy

consumer durables from exhibitions. They just visit the exhibitions to see

the co. latest model.

3. They want to buy from the showrooms or from co. showrooms. For them

service is important .Beside convenience and other factors service is key

factor.

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4. Also majority of customers do not want any financing scheme for

purchasing the durables.

5. Customers are also now very choosy in buying the product and it is

important for the company to make loyal customer of their brand.

6. In survey we found that LG has captured maximum market share in every

category. LG dominates CTV, LCD, and Refrigerator, and Washing

machine, category.

7. LG and Samsung have bottle neck competition in TV and REF. category.

8. The product is well aware and it is on top of mind of customer.

9. Customers are also now very choosy in buying the product and it is

important for the company to make loyal customer of their brand.

RECOMMENDATIONS AND SUGGESTIONS

1. Display share should be increased where there is less than 50% as LG also

believes that “JO DIKHTA HAI WO BIKTA HAI”.

2. Company should try to improve service. No doubt the company products

have technically edge over competitors but in long run it may hamper the

company’s profit.

3. Company should concentrate more on its major drivers LCD, IT, and GSM.

Branding and promotions should be done effectively as it creates a long

lasting image in the mind of customers.

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4. Company should also cater to the needs of sub dealers as some of the sub

dealers have potential of high sales.

LIMITATIONS

Every study has certain limitations. In my study, also there were certain

limitations, which I could not able to solve.

1. The research was conducted in a very small area.

2. My research work period witness the biggest ups and downs in product sale

of different brands, which affected the perception of the customer. This was

biggest drawback of my study.

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3. Time factor was also important for me.

4. I had only found the upper-middle class family to fill up the questionnaire,

but generally, an average middle class family was required for the study.

5. The sample size is also very small which represent my research on

consumer behavior

SOURCES OF DATA COLLECTED

www.lgindia.com

www.google.com

www.wikipedia.com

Business world

Business today

LG magazine

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Economics times News paper

Times of India

Consumer survey Questionnaire

Q1. Have you ever purchased any LG consumer durable?

a) Yes

b) No

Q.2While purchasing consumer durable which parameter influences you?

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a) Price

b) Product feature

c) Brand

d) Service

e) Durability

Q3. From where you prefer buying consumer durables

a) Exhibitions

b) Co. Stores

c) Showroom

Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of

following reasons

a) Attractive Price

b) Service

c) Demonstrations

d) Offers

e) Convenience

Q.5.Which consumer durable of L.G. you have?

A. CTV -------------------

B. LCD -------------------

C. REFRIDGERATORS -------------------

D. WASHING MACHINE -------------------

E. MICROWAVES -------------------

F. A/C -------------------

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Q.6. How frequently you change your consumer durables?

a) 1-3 years

b) 3-5 years

c) 5-10 years

d) More than 10 years

Q.7.Do you prefer any financing scheme to purchase consumer durables?

a) Yes

b) No

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