TABLE OF CONTENTS

PAGE NO.

1) EXECUTIVE SUMMARY

2) INTRODUCTION

NEED OF THE PROJECT

3) LITERATURE REVIEW

4) COMPANY PROFILE

LG GROUP LOOKING ABOVE AND BEYOND

HOW LG GREW

LEAP 2007- A VISION FOR THE FUTURE

LOGO CONCEPT

LG IN INDIA

5) RESEARCH

OBJECTIVE

METHODOLOGY

LIMITATIONS

6) LG GROUP’S PRESENCE IN INDIA

PRODUCTION FACILITY

PRODUCTION CAPACITY

MANUFACTURING

INNOVATION

PERFORMANCE REVIEW

1

7) MARKETING STRATEGY

8) BUSINESS MODEL

9) PRODUCT OFFERINGS AND RELATED STRATEGIES

10) PRICING OFFERINGS AND RELATED STRATEGIES

11) DISTRIBUTION OFFERINGS

SUPPLY CHAIN AT LG

12) PROMOTION OFFERINGS AND RELATED STRATEGIES

13) CUSTOMER SATISFACTION AT LG ELECTRONICS

14) BRAND AWARENESS

15) ORGANISATIONAL STRUCTURE

16) ANALYSIS AND FINDINGS

17) FINDINGS OF CONSUMER’S PERCEPTION

18) FINDINGS OF DEALER’S PERCEPTION

19) SWOT ANALYSIS

20) CONCLUSION

21) BIBLIOGRAPHY

22) APPENDICES

QUESTIONNAIRE FOR CONSUMER’S

QUESTIONNAIRE FOR DEALER’S

LIST OF TABLES

2

TABLE 1: LG’S PRODUCTION CAPACITY.

TABLE 2: LG’S TURNOVER IN RS.

TABLE 3: LG’S PRODUCT RANGE

TABLE 4: LG’S PRODUCT MODELS

TABLE 5: LG’S PRODUCT PRICES

TABLE 6: LG’S ADVERTISING BUDGET

TABLE 7: LG’S MARKETING OBJECTIVES AND STRATEGIES

TABLE 8: PARADIGM SHIFT

TABLE 9: COMPARISON ON THE BASIS OF THEMES OF

ADVERTISEMENT AND SCHEMES PROVIDED BY COMPANY

LIST OF GRAPHS

GRAPH 1: COMPARISON OF VARIOUS ADVERTISEMENTS

GRAPH 2: COMPARISON OF TOTAL NUMBER OF

ADVERTISEMENTS

GRAPH 3: COMPARISON OF NEWSPAPER

ADVERTISEMENTS

3

GRAPH 4: COMPARISON OF ADVERTISEMENTS ON THE

BASIS OF

DAYS

GRAPH 5: COMPARISON ON THE BASIS OF SIZE OF

ADVERTISEMENTS

GRAPH 6: COMPARISON OF TEXT/ ILLUSTRATION

GRAPH 7: COMPARISON ON THE BASIS OF PRESENCE OF

HUMAN MODEL

GRAPH 8: CONSUMER’S PERCEPTION OF FACTORS

AFFECTING BUYING BEHAVIOUR IN DELHI

GRAPH 9: CONSUMER’S PERCEPTION ON THE BASIS OF

RECALL OF ADVERTISEMENT FOR ELECTRONIC ITEMS IN

DELHI

GRAPH 10: CONSUMER’S PERCEPTION ON THE BASIS OF

RECALL OF ADVERTISEMENTS FOR HOME APPLIANCES IN

DELHI

GRAPH 11: CONSUMER’S PERCEPTION TOWARDS

PRODUCTS OF LG IN DELHI

4

GRAPH 12: CONSUMER’S PERCEPTION OF FACTORS

AFFECTING BUYING BEHAVIOUR ACCORDING TO AGE

GRAPH 13: CONSUMER’S PERCEPTION ON BASIS OF

ADVERTISEMENT AGE-WISE

GRAPH 14: CONSUMER’S PERCEPTION ON THE BASIS OF

BUYING BEHAVIOUR ACCORDING TO SEX

GRAPH 15: CONSUMER’S PERCEPTION ON THE BASIS OF

RECALL OF ADVERTISEMENT ACCORDING TO THEIR SEX

GRAPH 16: CONSUMER’S PERCEPTION OF FACTORS

AFFECTING BUYING BEHAVIOUR ACCORDING TO THEIR

USAGE

GRAPH 17: CONSUMER’S PERCEPTION OF RECALL OF

ADVERTISEMENT ON THE BASIS OF THEIR

USAGE

GRAPH 18: COMPARISION OF VARIOUS BRANDS ON THE

BASIS OF DEALER’S PERCEPTION

5

EXECUTIVE SUMMARY

“AN EMPIRICAL STUDY OF THE MARKETING

STRATEGIES OF LG VIS A VIS COMPETITION”

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

6

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.

7

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.

8

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

9

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

10

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.

11

NEED OF THE PROJECT

LG entered in Indian consumer electronic and home

appliances industry when the price war was bitter and

exchange offers were ruling the Indian market. In such

scenario, high quality premium product was seen as a

foolish step. But over a time span of 2 yrs LG has proved

to be a great gun.

But as we know that consumer taste and preference is fast

changing and don’t follow any rules and regulations if any

company wants to be a leader it should be well informed

about the changes taking place in market consumer’s

mind and taste and formulate strategies to counter these

changes.

A successful company is that which changes itself with

preferences and needs of consumers as well as create

12

need for their product not letting others to take the initial

step.

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.

13

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

14

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.

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.

15

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.

16

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.

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

17

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.

18

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.

19

The PULL STRATEGY

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

20

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.

21

Conclusion

After defining the strategy one must use the information

one has gathered to determine whether this strategy will

achieve the objective of making the enterprise

competitive in the marketplace. It is essential to know

who the competitors are and to understand their strengths

and weaknesses. Factors to consider include:

Each of the competitor's experience, staying power,

market position, strength, predictability and freedom

to abandon the market must be evaluated.

22

COMPANY PROFILE

LG Group- The best global company

U.S. $44 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

23

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.

24

The management philosophy- “We create value for

customers through management based on esteem for

human dignity”

The product manufactured internationally cover mobile

phones, Air conditioning, TV, 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.

25

LG GROUP LOOKING ABOVE AND

BEYOND

The LG Group is today ranging from chemicals, energy,

electronics, semi conductors, machinery and metals to

trade, services and finance. Each of the 77 LG member

companies is now working to rise to the highest level of

global competition in their respective industries. LG is now

ready to make next quantum leap forward.

By the end of the year 2006, the group lands to achieve

annual sales of U.S. $ 385 billion, quantitative and

qualitative managerial excellence with industry a leading

profitability in each business field, a corporate image

synonymous with customer satisfaction and recognition as

one of the rewarding place to work.

26

HOW LG GREW

1958: GoldStar (today’s LG Electronics) established

1959: Korea’s first radio produced

1965: Korea’s first refrigerator produced

1966: Korea’s first black & white TV produced

1968: Korea’s first air conditioner produced

1969: Korea’s first washing machine produced

1974: GoldStar Communications went public

1977: Color TV produced

1978: Exports surpassed US$100 million, a first for Korea’s electronics industry

1980: First EU sales subsidiary in Germany (LGEWG) established

1982: Color TV plant established in the US in Huntsville, Alabama

1984: Sales surpassed 1 trillion Won

1986: European-standard VCR plant established in Germany

1989: Sales subsidiary and a joint production subsidiary established in Thailand

1990: Ireland-based design technology center established

1993: With the establishment of Huizhou subsidiary in Hina(LGEHZ), marketing in China took full swing

27

1995: Company name changed to LG Electronics and US- based Zenith acquired

1997: 40-inch Plasma TV and the world’s first IC set for DTVs developed India production subsidiary (LGEIL) established

1998: World’s first 60-inch Plasma TV developed

1999: LG.Philips LCD established

2000: LG Information & Communications merged The world’s first Internet-enabled refrigerator launched Global sales of refrigerators reached the number one position2001: Asynchronous IMT-2000 equipment commercialized The world’s first Internetenabled washing machine, air conditioner, and microwave oven launched LG.Philips Displays, a joint venture with Philips established

2002: Under the LG Holding Company system, the Company spun off to LG Electronics (LGE)& LG Electronics Investment (LGEI) The first home network system commercialized in the global market

2003: World’s first synchronous-asynchronous IMT-2000 mobile phone developed The world’s first 76-inch Plasma TV developed CDMA mobile handsets took the largest share in the US and world CDMA market Launched the world’s first Super Multi DVD Rewriter

2004: EVSB, the next-generation DTV transmission technology, chosen to be the US/Canada DTV transmission standard by the US ATSC All-in-one LG

28

55-inch LCD TV, the world’s first and largest among LCD TVs, commercialized The world’s largest and first 71-inch Plasma TV commercialized The world’s first terrestrial DMB phone developed Developed Wireless Speaker Home Cinema System

2005: The world’s first DMB notebook commercialized The world’s slimmest TV commercialized The world’s largest 102-inch Plasma TV developed LG and Nortel Networks agreed to establish a joint venture for telecommunication network equipment Satellite-based DMB phone commercialized The largest share seized in the global CDMA market

2006: Launched the LG Shine, the second handset in the Black Label Series Globally launched the steam washing machine and interactive TV refrigerator Developed the world's first 100-inch LCD TV Launched the world's largest Full HD 102-inch Plasma TV (1080p) Developed the world's first dual- format high-definition Disc Player& Drive

2007: Launches the industry's first dual-format, high- definition disc player and drive Launches 120Hz Full HD LCD TV Demonstrated the world-first MIMO 4G- Enabled technologies with 3G LTE Won contract for GSMA's 3G campaign

2008: Introduces new global brand identity: "Stylish design and smart technology, in products that fit our consumer's lives."

29

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.

30

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.

INITIATIVES:

Redesigning business portfolio

Develop new strategic business

Globalization

Acquiring promising differential technology

Cultivate high performing leader

31

CORPORATE CULTURE:

Empowerment and boundary less.

QUANTITATIVE:

Achieve gross sales of US $ 78 billion.

Secure ordinary income of 6% of gross sales.

Attain a return on investment of 15%.

QUALITATIVE:

Build a brand reputation, total satisfaction to

consumers, creates more comfortable convenient homes.

President KOO said that LG’s goals are to achieve sales

of US $ 74 billion and a profit rate of 6%, the year when

the leap 2006 vision is finally realized. He also stated that

LG’s need to promote its image as a brand renowned for

maximum customer’s satisfaction by providing the most

32

courteous service, the quickest response to customer

needs and products and services of highest quality.

LOGO CONCEPT

The symbol mark, which represents the “Face Of The

Future”, incorporates full concepts and sentiments of the

World, Future, Youth, People and Technology.

The Circle with the letter “L” and “G” symbolizes that

human beings are the most important aspects of business

and express the resolution to do the best to maintain close

ties with customer and to ensure their satisfaction. The

Red Color reinforces an image of worth and familiarity

highlights LG’s challenge to become world class company.

33

LG’s symbol marks the most important element of the

corporate identification system, it is a representative

system of LG throughout the world. The symbol creates a

unified mental image of LG necessary in international

communication. It is the “Face Of The Future”. It

incorporates five concepts and sentiments:-

The World

The Future

Youth

Humanity

Technology

LG IN INDIA

LG Electronics India Limited (LGEIL) is a wholly owned

subsidiary of LG electronics, South Korea. The company

was established in January 1997 after clearance from the

Foreign Investment Promotion Board (FIPB).

34

Its earlier two attempts one in 1992 and one in 1995 had

failed. It first entered the country in 1992 with the

GoldStar brand name selling CTV’s in partnership with

Delhi-based consumer electronics company Bestavision,

the marriage failed to click right from the start. Two years

and a host of problems later, it snapped ties with

Bestaviscon and tried to form a joint venture with the C.K.

Birla group. That move, too, failed in the negotiation stage

itself. By then, the GoldStar brand had acquired a poor

reputation with dealers and consumers alike.

With the change in its corporate identity in 1995

worldwide from ‘GoldStar” to “LG” it proved to be lucky in

India only the third time around, despite being one of the

first multinationals to hit the Indian market after

liberalization.

35

The company launched in Delhi in May 1997, with, ten

model of colour television, ranging from 14 inches to 29

inches; eight models of large capacity refrigerators

ranging from 320 lt to 650 lt and three models of washing

machines from 5.5 kgs to 20 kg and subsequently

launched the same in Chandigarh, Lucknow, Jaipur,

Bombay, Pune, Calcutta, Ahmedabad, Indore, Bangalore,

Chennai and Hyderabad.

These entire products bear the LG brand name, which the

company has decided to change from its previous brand

“GoldStar” around the world starting from 1997.

Today in a short span of 24 months, LG has twenty six

models of colour television ranging from 14 inches to 60

inches; 14 models of large capacity refrigerators ranging

from 175 lt to 890 lt; seven models of washing machines

ranging from 5.5 kgs to 20 kgs; nine models air

conditioners; three models of micro wave ovens; two

36

VCD’s and have subsequently launched the same all over

India.

The company is envisioning a total investment of US $ 289

million (Rs. 1040 crore) over the next of 9 years which will

give it a major manufacturing presence in India and range

of white and brown goods as well as range of electronic

components by end of 2006.

The company plans to export products worth. $ 100

million in a ten-year period. It also has a plan to invest

25% of its equity to the Indian public or to an Indian

investor after 5 years of operation.

In the first phase of investment from 1998 to 2001, the

company decided to invest US$ 100 million (Rs. 500 crore)

to establish manufacturing facilities in Greater Noida. This

facility is capable of churning out 7,00,000 CTV’s,

4,00,000 Refrigerators, 2,00,000 washing machines,

1,00,000 Air conditioners and 5,00,000 Microwave ovens

37

per annum. The facility has started production since April

1998.

In the second phase from 2001 to 2005, LG electronics

has invested $ 200 million (Rs. 1000 cr) to increase its

existing capacities in finished products and add capacities

to manufacture compressors, play back transformers,

motors and deflection yokes.

After setting up of LG software Center in Bangalore in

1996, LGE has already set up an “in house R & D and HRD

center” in India not only to train the Indian employees, but

also to serve foreign employees of LGE in South East Asia

and Northern Africa.

In five years from now, LGEIL will become one of the

colossal industrial houses in India LGEIL has already

achieved a turnover of Rs. 1500 crores in the period Jan-

July 2006. LGEIL by introducing a wide range of products

38

to the Indian consumers has successfully carved a niche

for itself. Its success story is a result of its investment in

cutting edge technology and its relentless efforts to bring

home the smiling face.

In the past five years, India has attracted a number of

multinational companies to invest in the country, offering

a plethora of choices to the Indian consumers. Thus the

consumers seek international brands that offer value for

money as well as a high standard of service. LGEIL

increasely strives to be responsive to consumer needs,

desires and habits.

Today LGEIL is regarded as one of the top consumer

electronics companies in India (ORG-MARG Survey). LGEIL

has 18 company owned and 40 authorized service centres

across the country where the service engineers are

available twenty four hrs throughout the week.

39

The consumer durable industry will continue to witness

the growth in demand. The company will also have to take

a leap forward by increasing the volume of sales. It is

expected that in the coming years there will be stiffer

competition.

The company is taking measures to reduce costs and

improve productivity. With emphasis on quality and

improved service to the customers at an affordable price,

the company will endeavor to gain additional market

share. Also in view of the liberalization of the Indian

economy, company’s technical know how, superiority,

service competence and the goodwill is what the company

commands in the market. The company is optimistic of

consistent and sustained growth in its business.

40

RESEARCH OBJECTIVE

Globalization has affected today’s market towards the

competitiveness. There are so many domestic and

multinational companies growing up rapidly. Survival is

being the core concept of the companies.

A company must know the strategy of the competitors

because it directly affects it. So there is a need for a

company to know its rivals market potential, market share

and selling strategies.

Today the choice and preferences of consumer is also

changing. Customer is now aware about the products.

41

Customer is better educated more sophisticated. He is

aggressive and critical who demands his money’s worth

and pays only for what he wants.

Dealers are the customers of the company and consumers

are the main source of the information. This project has

certain objectives for which I covered both dealers and

consumers all over Delhi region.

The main objectives of the project are the following:

To study the LG’s advertising strategy vis-vis 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.

42

To find out the market share of products of LG in

Delhi.

To find out the most preferred brand in the market.

To know the awareness level of consumers about the

products of LG.

43

RESEARCH 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.

44

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:

45

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.

46

LIMITATIONS IN RESEARCH

Every study has its own limitations in terms of

methodology and the resources available for its conduct.

This study has no expectation to it and has been carried

under following limitation:

1. Some of the dealers as well as the customers were not

forthcoming with information as they thought it to be a

waste of time. Some customers were not able to respond

due to lack of awareness.

2. A number of dealers were biased towards a particular

brand which was giving them better returns.

3. Some of the shop owners were not available so,

contacted person was not able to present a fair view.

4. Respondent’s lack of time to give information and their

casual attitude was a big hindrance in the study.

5. The dealers were biased by some recent experiences

which they had with a particular distributor regarding the

service or distribution.

47

6. Respondent’s lack of time to give information and their

casual attitude

was a big hindrance in the study.

48

LG GROUPS PRESENCE IN INDIA

LG electronics India Limited

LG Software

LG Chemicals

LG Construction

Production Facility

LGEIL set up its 47 acres manufacturing facilities at

Greater Noida in April 1998. Today the factory chuns out

washing machines, colour televisions, air conditioners and

micro wave ovens.

Refrigerators are externally sourced from Allwyn’s

manufacturing facility at Hyderabad. Currently LGEIL has

tied up with Voltas Ltd., to source about 8,00,000

refrigerators over 3 years from Jan 2003 to Dec. 2006.

49

Voltas will produce refrigerators according to the specified

standards of design and quality given by LG electronics.

Voltas would increase its capacity of 1,80,000 units to

2,50,000 units per year of which LGE will be sourcing

about 80%.

At present, the average Indigenisation level in LG products

is about 45 percent and it plans to increase it to 85

percent in the next couple of years. CTV’s would also be

reaching such levels by the end of the year.

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

50

Refrigerators Externally sourced

Manufacturing

At its state of the art manufacturing plant, acute cost

control has been on the agenda from day one. 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.

51

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.

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,

52

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.

53

Innovation at LG

At LG innovation is a policy. The management’s pet

phrases are ‘TPI 50’ and TDR. The former total productivity

innovation of 50 percent, urges employees at all levels to

increase productivity by 50 percent. And the latter is the

tool that helps to do that–Tear Down Re-engineering, by

which employees, especially at the assembly line, are

directed to tear down all processes to the ground and start

afresh by using less time, more innovative technique and

so on. In this manner, it is believed the company is

bringing down costs for the future and through TDR and

TPI 50 expects to create significant profits this year.

Engineers at LG don’t say ‘no’ to any idea. If the company

has to compete in the long run, it cannot do so by merely

cutting costs.

It is innovation that wins the race even in a market as

budget constrained as India.

54

Performance Review

LG Electronics was established on October 1, 1958 (As a

private Company) and in 959, LGE started manufacturing

radios, operating 77 subsidiaries around the world with

over 72,000 employees worldwide it is one of the major

giants in the consumer durable domain worldwide. The

company has as many as 27 R& D centers. It’s global

leading products include residential air conditioners, DVD

players, CDMA handsets, home theatre systems and

optical storage systems. LG globally believes in the

philosophy of “Great Company, Great People,” whereby

only great people can create a great company.

The company’s growth strategy is based on “fast

innovation” and fast growth”, through three core

capabilities: product leadership, market leadership and

people-centered leadership.

55

The company has a strong corporate culture fostering

innovation, pioneering spirit and transparent management

across subsidiary and believes in empowering employees

to achieve leadership.

LG was voted as one of the Asia’s Top Performing Brands

by consumers. These awards are considered the ultimate

seal of consumer approval, and are highly significant as

they are a direct reflection of the Consumers’ Choice. The

company was conferred the Platinum Trusted Brand Award

for Air Conditioners and the Gold Trusted Brand Award for

LCD/Plasma TV, Washing Machines, Refrigerators and

Computers. About LG PDPs & LCDs LG Electronics has

established itself as the undisputed leader in PDPs and has

achieved new dimensions of technological excellence. The

company has the largest range of models in the PDP

category ever, with LG offering PDPs in sizes of 42, 50, 60

and 71 inch internationally. Further, LG has world's

slimmest plasma panel at 78 mm to the world's biggest

panel at 71 inches. Cutting Edge Technology such as Claro

filter, 10000:1 Contrast Ratio, 1500 cd/m2 brightness

56

levels, X studio, Digital Video recording ability, Flexi PIP,

Double Window Screen are some of the features which

makes LG's PDPs, the best made Plasma Panels ever. LG's

range of LCD TVs comes in sizes of 20", 26" and 32" and

are equipped with Super In plane switching technology

that ensures Wide Viewing Angle, 8 ms response time &

ripple proof reliable LCD panel structure. 26” & 32”

models are HDTV ready & come with host of AV ports.

All models have a high resolution of upto 1280 x 768,

equipped with progressive scan functions and have 3D

Digital Comb Filter.

About LG Air-conditioners LG has constantly been the

most preferred brand in ACs and has the lion's share with

36% market share in 2005. With a quantity turnover of 5

lakhs units and value turnover of Rs.1050 Crores in 2005,

LG now aims to achieve a quantity and value turnover of

6.5 lakhs plus units & Rs. 1350 Crores in 2006

respectively. LG developed the AeroDNA System which

manages vital constituents that define the indoor air

quality such as Temperature, Humidity, Odour, Purity and

57

Air Circulation to give perfectly conditioned indoor air at

the most economical costs to the consumer. The company

also launched the NeoPlasma technology, which uses a

12-stage filtration that effectively kills viruses and bacteria

to give pure and odorless fresh air for the consumer to

breathe.

About LG Washing Machines LG has been a market leader

in the washing machine segment also with a market share

of 34% as per ORG data. The company leads in both the

fully automatic and semi-automatic washing machines

categories.

LG recently added another first to its credit through the

launch of their new range of washing machines equipped

with “Direct Drive” technology.

The company has launched a total of six models in the

market, two in washers and four in washer & drier

combination. This technology is sure to revolutionize the

washing machine industry and further consolidate LG’s

leadership position. About LG Refrigerators The trend of

58

offering new and exciting products by LG has always been

followed by adding to its existing product portfolio. In

order to further consolidate its leading status in the

industry, LG recently showcased an exhaustive range of

33 progressive models in the refrigerator segment. The

company also launched the stylish 'Diamond Cut' range

for it’s consumers.

LG will now offer feature rich diamond cut frost-free

refrigerators ranging from a capacity of 230L to 816L. This

exhaustive range includes 6 variants in 230 liters capacity,

four variants in 250 liters and five variants each in 280

liters and 310 liters capacity respectively. The company

also launched two variants each in 350 liter & 380 liter

capacity and 6 variants in 400+ range. Seven additional

models in their high end DIOS range, to be introduced by

the company soon.

According to company sources, at LG it can be said

with pride that in 26 months of existence, LG

stands at a level that many companies in this

59

industry have attained in 26 years of their

existence.

LG’s Turnover (in Rs. Crore)

TABLE 2:

2003 1450 cr

2004 1865 cr

2005 2540 cr

Sales figures

Year CTV Refrigerator Washing

Machine

AC’s Microwa

ve

2003 2004 20050

500

1000

1500

2000

2500

3000

60

2004 2,95,00

0

105,500 108,7

00

87200 95000 25,00

0

17000

2005 280,00

0

26250 62000 71200 16600 4420

0

17000

MARKETING STRATEGY

In a short span of just 26 months, since its inception in

May 1997, the brand has attained a brand awareness

level of about 90% in the consumer durable Indian

market.

Considering the fact that LG electronics is a Korean

multinational, entering the Indian market meant

establishing itself in a different market altogether with

varied culture and consumer tastes and preferences. Also

that so many multinationals are sweeping into the

country, it is evident that each and every company has a

cutting edge over another. These global corporations

61

are deviating from their international

methodologies and improvising their strategies for

local markets.

LG’s localization of strategy covers the following areas:

Entry Strategy: It is always better to establish as

fully owned subsidiaries. It is considered better if the

company has a local partner but, since LG’s earlier two

attempts had already failed, it decided to do it all alone

this time. The strategy that LG has adopted is

presenting an Indianised face to its products but

keeping the technology at global levels.

Operations: LG opted for starting its own

manufacturing facility at Greater Noida. The 20 month

schedule to commission its manufacturing plant was

compressed to 10 months. The company decided to go in

for a Green Field Project rather than acquisitions or

mergers. (For all products except refrigerators).

62

Products: LG decided to go in for Product

Adaptation Strategy. Globally LG does not operate in

the direct cool refrigerator, semi automatic washing

machine and 21 inch CTV’s. But the company had to

develop these products for the Indian market because

these areas constitute a major bulk of buys for the Indian

consumer. Also LG launched, Sampoorna, India’s first TV

with a devangiri script on screen display on the 50th

anniversary of Indian Independence. LG’s strategy of

localizing its products to suit Indian tastes added to its

strength.

Segmentation: The Company decided to enter the

high - end middle-class onward segment in the initial

stages, since most of the Indian brands were targeting the

low and middle end customers. In the past 3 years due to

LG’s distinct strategy it has carved a niche for itself in a

crowded segment of 20 manufacturers.

63

Brand: The company launched its products in country

with “LG, the global leader ”. It did not opt for any

established brands in the country to be associated with it.

Leadership: At LG electronics, keeping the localized

strategy in mind, the strategic areas such as sales and

marketing are headed by an Indian. Generally it happens

that the senior management is deprived of Indians in a

transnational but LG wanted to follow this path. It wanted

that the marketing division be headed by an Indian

because he would be well-versed of the Indian market and

cultures. Ultimately it is this step, determined whether the

company wants to make profits or obtain a market share.

LG definitely wants to be the leader in the consumer

electronics industry. Seeing the progress that the

company has made in the past 3 years., it has revised its

plans for becoming the number one consumer electronics

64

company to the year 2004 from 2006. The company even

plans to break - even this year. This is significant for a

multinational that has been in the market for just two

years.

65

THE BUSINESS MODEL

THE

SEGMENT

THE PRODUCT THE BRAND

Niche/ Mass Top-of-line / Mass

Market

Global

Premium/ mid-

range?

Grown

THE PRICE

Premium /

economy

MAR

K

E

T

I

NG

66

ALLIANCE ENTRY

STRATEGY

LEADERSHIP

Fully-owned Greenfield Indian

INVESTMENT

Incremental

BOTTOMLINE

OBJECTIVE

Market share

Before launching itself in the market in 1997, it carried out

an extensive research study to understand consumer

O

P

E

R

A

T

I

O

N

S

67

motivations to create magnetic products, price them

strategically, position them sharply and keep making the

magnetism more potent. Having understood the finer

differences in consumer motivations, it opted for sharp

arrow ‘reason to buy’ differentiation over the blanket all-

approach (category wise) taken by most of the other

players.

After the initial preliminary market studies the sales &

marketing department decided to start off with 3 product

categories:

Color televisions

Washing machines (Automatic)

Refrigerators (300 lt + FF)

Within the first 4.5 months the company went all-India. As

the company’s business began to rise, LG introduced the

following products to expand its product portfolio:

Air conditioners

Direct cool refrigerator

68

Semi automatic washing machine

Microwave ovens.

In a broad perspective, LG’s sales and marketing success

can be attributed to its 7P’s of marketing. In addition to

the products, price, place and promotion, the key factors

that have contributed to LG’s success are the following 3

additional P’s:

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.

69

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 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

70

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.

71

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.

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

72

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

73

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

74

vi. VCD players (not all that popular).

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

Refrigera

tors

Washing

Machine

AC’s Micr

o

VCD

75

FF DC FA SA Ove

n

2003

2004

2005

Terms used: FF.- Frost free, DC – Direct cool, SA – Semi

Automatic

FA-Fully Automatic

Number of models

TABLE 4:

76

Ye

ar

CT

V’

s

Refrig

erator

Was

hing

Mach

ine

AC’

s

Micr

owa

ve

oven

VC

D

FF DC F

A

S

A

S

pl

it

20

03

16 8 3 7 4 2 3

20

04

22 9 3 10 6 3 7

20

05

33 13 4 5 3 15 8 5 10

77

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

78

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.

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

79

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

80

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.

Active Carbon Filter: Effectively absorbs unpleasant odors

from onions, stale milk etc.

81

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.

82

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.

Tempered glass shelves

83

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:

84

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.

85

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).

86

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.

87

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.

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.

88

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

89

‘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

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:

90

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

91

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

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:

92

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.

93

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.

94

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.

95

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.

96

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.

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.

97

PRICES FOR EACH OF ITS PRODUCT

CATEGORY

TABLE 5:

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

98

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

99

Air

Conditioners

Health air System

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

100

Upper middle &

Upper class,

working women

with trendy

lifestyle

Rs. 12,900 to Rs.

13,900

101

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

102

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.

Supply Chain at LG

LG factory Exclusive

Outlets

103

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

104

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

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.

105

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

106

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:

TABLE 6:

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

107

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.

108

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”.

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

109

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.

110

TABLE 7:

Introduction Growth

Marketin

g

objective

s

To offer technological

superior products in the

market

Preparing for

“Digitally yours”

image for the now

millenium

Strategie

s

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 Catering to the

111

the premium end mass market via

its diverse priced.

Distributi

on

Selective Intensive

Promotio

n

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

112

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

113

product and they are given a call just before the

guarantee of the product expires.

114

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)

115

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

Pre World Cup Post World Cup

116

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%

117

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)

118

Pre World Cup Post World Cup

Attractive Looks 24% 32%

World Class

Products

22% 32%

Attractive

Advertisements

19% 30%

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%.

119

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,

120

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.

121

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.

122

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.

123

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.

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

124

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

Managerial Clerical

Officer I Officer IIM1 M2

Executive Manager

ExecutiveDeputy

Manager

125

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

126

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

127

subsystem. The quality of HR determines in turn the

success of an organization.

Finance subsystem

HRM Subsystem

Technical subsystem

Material subsystem

Marketing subsystem

128

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

129

130

ANALYSIS & FINDINGS

To 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.)

131

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.

132

GRAPH 1:

Comparison on the basis of total

number of advertisement:

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

0

2

4

6

8

10

12

14

16

2 2

4

15

10

34

7

Different type of advertisements of various brands

Electrolux

Godrej

Hitachi

LG

Samsung

Videocon

Voltas

Whirpool

Brands

Ty

pe o

f a

dv

ertis

em

en

ts

133

in number. After LG other brands are left far behind with

Samsung and Whirlpool having 19 and 18 advertisements

respectively.

GRAPH 2:

0

5

10

15

20

25

30

35

5 47

32

19

86

18

Brand-wise classification of advertisement

Electrolux

Godrej

Hitachi

LG

Samsung

Videocon

Voltas

Whirpool

Brands

To

ta

l a

dv

ertis

em

en

ts

134

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.

TOI is preferred by Hitachi and Whirlpool, which gives 55%

and 45% of its total advertisement in TOI respectively.

GRAPH 3:

135

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

0%

20%

40%

60%

80%

100%

1 2 9

12

1 18

1 24

2

4 3 12 1

1

12

2 2

1

1 14

7 33 8

Brand-wise Classification on basis of News-papers

TOI

RP

HT

DB

Brands

Per

cent

age

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)

136

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.

GRAPH 4:

LG SAMSUNG WHIRPOOL

137

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

01234567

Brands - wise Classification of adver-tisement on basis of days

Sunday

Monday

Tuesday

Wednesday

Thursday

Friday

SaturdayBrands

Number of adver-

tisements

138

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.

139

GRAPH 5:

1 2 3 4 5 6 7 80%

20%

40%

60%

80%

100%

1

4

4 19 6

29

4

4

37 5 1 2

6 48

37

Brand -wise Classification on basis of size (sq.cm)

>600

300-600

150-300

0-150

Brands

Per

cent

age

1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7),

4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),

7 = Voltas(6), 8 = Whirpool(18)

140

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.

1 2 3 4 5 6 7 80%

20%40%60%80%

100%

5 4 7 28 174

16

4 2

8

22

Brand - wise classification of adver-tisements on basis of mostly Text/ Illus-

tration

Text

Illustrations

Brands

Per

cent

age

141

GRAPH 6:

Comparison on the basis of presence of

human model

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:

1 = Electrolux (5), 2 = Godrej (4), 3 = Hitachi (7),

4 = LG (32), 5 = Samsung (19), 6 = Videocon (8),

142

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

1 2 3 4 5 6 7 80%

20%40%60%80%

100%

5 4

3

143

187 29

5

8

3

Brand - wise classification of adver-tisements on basis of presence of hu-

man model

Yes

No

Brands

Per

cent

age

143

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.

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

144

TABLE 9:

BrandProduc

t Theme Scheme

Electrol

ux

FFR Life nourishing system0% Finance/ Exchange

offer/Meet cricketers   

FFRWater dispenser

technology0% Finance/ Exchange

offer/ Meet cricketers   

       

Videoc

on

AC Value for money 0% Finance

AC

Quadra heat exchange

technology0% Finance/ 6 year

warranty/ Free ionizer   

       

Voltas

AC Intelligent Qooling 5 yr. Warranty on

compressorAC A Tata product

       

145

Samsun

g

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 bashDouble scratch offer/

Free Gift Rs 1000/-   

ALL shaadi ka avsar Free gift Rs 1000 & Rs

2195

146

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 Day Free mobile worth Rs

4490/-WAC Free mobile

M/W Garma garam khana Free gift Rs 1000

       

Whirlpo

ol

FF Fast forward ice exchange offer

AC Quick cool experience

0% Finance/ Scratch

card

       

Godrej Ref Pentacool, 5 side funda  

147

       

Hitachi

AC

Keep track of Electricity

Bill 0% Finance

 

Programmed for 100

cities  

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:

148

Perception on the basis of recall of

advertisement for Consumer electronic

items:

Consumer electronic items include Television, Refrigerator

and Air Conditioners.

350360370380390400410

397406

398

371

393 393386

372

395

Factors affecting buying behaviour of products

Price Brand

Durability Capacity

Convinience Services Provided by the Co.

Adv. & Pub. Discount Offers

Family & FriendsFactors

Po

ints

149

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:

0

10

20

30

40

50

60

70

32

11 8

59

40

2318

115

Brand recall for consumer electronic items

Samsung

Whirlpool

Panasonic

LG

Sony

BPL

Videocon

Philips

Others

Brand

Po

ints

150

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.

GRAPH 10:

151

Perception towards products of LG:

0

10

20

30

40

50

60

Brand recall for Home Appliances

Samsung

Whirlpool

Bajaj

Godrej

LG

BPL

Kenstar

Videocon

Philips

IFB

OthersBrand

Po

ints

152

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:

0

10

20

30

40

50

60

70

80 EFFECTIVE ADVERTISEMENT

BETTER VARIETY

TAKE CARE OF HEALTH

BETTER QUALITY

GOOD BRAND EQUITY

BETTER AFTER SALES SERVICES

EASY TO USE

DURABLE

MORE FUCTIONS

BETTER APPEARANCE

HIGH COSTFactors

Points

153

AGE-WISE CLASSIFICATION OF

CONSUMER’S PERCEPTION:

Consumers Perception was analyzed on basis of various

Age groups.

Perception of factors affecting buying

behavior:

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:

154

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:

Be

twe

en

20

to

3..

.

Be

twe

en

35

to

5..

.

Ab

ov

e 5

0 y

rs

0%

50%

100%

Age wise classification of factors affecting the buying behaviour of LG products

Discount Offers Adv. & Pub.

Services Provided by the Co.

Convinience

Capacity Durability

Brand Price

155

SEX-WISE CLASSIFICATION OF

CONSUMER’S PERCEPTION:

Consumers Perception was analyzed on basis of

Sex.

CTV Ref. AC W/M M/W

0%

20%

40%

60%

80%

100%

Age wise classification of recall of adv. for various products of LG

> 50 yrs

35 - 50

18 - 35

156

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:

Pri

ce

Bra

nd

Du

rab

ility

Ca

pa

city

Co

nv

inie

nc

e

Se

rvic

es

Pro

vid

ed

by

...

Ad

v.

& P

ub

.

Dis

co

un

t O

ffe

rs

0%

50%

100%

Sex wise classification of factors affecting the buying behaviour of products

Male Female

157

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 .

GRAPH 15:

CTV Ref. AC W/M M/W

0%10%20%30%40%50%60%70%80%90%

100%

Sex wise classification of recall of adv. of various products of LG

Male Female

158

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

159

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

Pri

ce

Bra

nd

Du

rab

ility

Ca

pa

city

Co

nv

inie

nc

e

Se

rvic

es

Pro

vid

ed

by

...

Ad

v.

& P

ub

.

Dis

co

un

t O

ffe

rs0%

50%

100%

Usage wise classification of factors affecting the buy-ing behaviour of products

Users Non Users

160

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:

CTV Ref. AC W/M M/W0%

20%

40%

60%

80%

100%

Usage wise classification of recall of adv. of various products of LG

Non Users

Users

Products

Per

cen

tag

e

161

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%

162

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.

GRAPH 18:

Comparison of various brands on the basis of dealer’s perception

163

0

2

4

6

8

10

12

Incentive

POP

Supply

Employee behaviour

Credit period

After sales services

Warranty period

Brands

Points

1 = Sansui, 2 = Samsung, 3 = Crown, 4 = LG,

5 = Electrolux, 6 = Whirpool, 7 = Akai, 8 = Godrej,

1 2 3 4 5 6 7 8 9 1 1

164

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

Opportunity

Convert image into

market share

165

demand

Nothing unique about

strategy

Highly competitive

market

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

166

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, 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.

167

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

168

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:

169

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.

Distribution channel- Every company

concentrates on its strong distribution.

Check on unorganized market thriving-

inputs that are imported ones in at excise paid cost has no

Modified Value Added Tax paid.

Customers now a days are very much aware about the

products, so companies work hard on providing

information, offers, speciality of their products to

customers.

170

Every company stress on promotional based marketing.

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

171

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.

172

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.

173

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

174

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?

175

NO (CONTINUE) YES (TERMINATE)

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 _______

176

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 ___

177

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

11. What is your impression about the following on

LG products?

Fully Partially Unsatisfied

178

Satisfied Satisfied

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

179

______________________________________________

__

(THANK YOU FOR PARTICIPATING IN OUR SURVEY)

180

CONSUMER ELECTRONICS MARKET

STUDY

(Questionnaire for Dealers)

181

1. What all items of consumer electronics are sold

in this shop?

(READ LIST & RECORD BELOW IN TABLE)

None ( TERMINATE)

(Refrigerator / Air Conditioner / Colour Television /

Washing Machine / Microwave)

2. For how long you have been selling consumer

electronics items in this shop?

Less than 1 year (TERMINATE) 1 year or more

(CONTIUE)

3. What all brands of consumer electronics are sold

in this shop?

(DON’T READ LIST & RECORD BELOW; WRITE

OTHERS ALSO,IF ANY)

182

___________________________________________________________

_

4. What are your annual sales of following products

of various brands during past year? (Annual sales

in units)

(Record answers of questions 1 & 3 in table below,

ask sales of ticked items only)

Ans 1(Below)

Ans 3(Below) Ref AC CTV W/M M/W

LG

Samsung

Whirlpool

Voltas

Videocon

Electrolux

183

Godrej

i)

ii)

iii)

5. What is your opinion about Warranty Period

offered by company in its products? (ASK ABOUT

TICKED BRANDS ONLY)

Totall

y

Unsat

isfied

Very

much

Unsat

isfied

Some

what

Unsat

isfied

Neutr

al

Som

ewh

at

Sati

sfie

d

Very

muc

h

Sati

sfie

d

Tota

lly

Sati

sfie

d

LG

184

Sams

ung

Whirl

pool

Volta

s

Video

con

Electr

olux

185

Godr

ej

i)

ii)

iii)

6. What is your opinion about Credit Period offered

by company?

(ASK ABOUT TICKED BRANDS ONLY)

Totall

y

Unsat

isfied

Very

much

Unsat

isfied

Some

what

Unsat

isfied

Neutr

al

Som

ewh

at

Sati

sfie

d

Very

muc

h

Sati

sfie

d

Tota

lly

Sati

sfie

d

186

LG

Sams

ung

Whirl

pool

Volta

s

Video

con

Electr

olux

187

Godr

ej

i)

ii)

iii)

7. What is your opinion about Supply offered by

company?

(ASK ABOUT TICKED BRANDS ONLY)

Totall

y

Unsat

isfied

Very

much

Unsat

isfied

Some

what

Unsat

isfied

Neutr

al

Som

ewh

at

Sati

Very

muc

h

Sati

Tota

lly

Sati

188

sfie

d

sfie

d

sfie

d

LG

Sams

ung

Whirl

pool

Volta

s

Video

con

189

Electr

olux

Godr

ej

i)

ii)

iii)

8. Do you think that Catalogues and POPs (Point of

Purchase) provided by company are effective?

(ASK ABOUT TICKED BRANDS ONLY)

Com

pletel

y

Very

muc

h

Som

ewh

at

Neut

ral

Some

what

Disag

Very

much

Disag

Compl

etely

Disagr

190

Agre

e

Agre

e

Agre

e

ree ree ee

LG

Sams

ung

Whirl

pool

Volta

s

Video

con

191

Electr

olux

Godr

ej

i)

ii)

iii)

9. What is your opinion about After Sales Service

offered by company to its customers?

(ASK ABOUT TICKED BRANDS ONLY)

Totall Very Some Neutr Som Very

192

y

Unsat

isfied

much

Unsat

isfied

what

Unsat

isfied

al ewh

at

Sati

sfie

d

muc

h

Sati

sfie

d

Tota

lly

Sati

sfie

d

LG

Sams

ung

Whirl

pool

Volta

s

193

Video

con

Electr

olux

Godr

ej

i)

ii)

iii)

194

10. What is your opinion about Sales Incentives

offered by company to you?

(ASK ABOUT TICKED BRANDS ONLY)

Totall

y

Unsat

isfied

Very

much

Unsat

isfied

Some

what

Unsat

isfied

Ne

utr

al

Some

what

Satis

fied

Very

much

Satis

fied

Totall

y

Satis

fied

LG

Sams

ung

Whirl

pool

Volta

195

s

Video

con

Electr

olux

Godr

ej

i)

ii)

iii)

11. What is your opinion about Employee Behavior

of following companies?

196

(ASK ABOUT TICKED BRANDS ONLY)

Totall

y

Unsat

isfied

Very

much

Unsat

isfied

Some

what

Unsat

isfied

Ne

utr

al

Some

what

Satis

fied

Very

much

Satisfi

ed

Tota

lly

Sati

sfie

d

LG

Sams

ung

Whirl

pool

Volta

197

s

Video

con

Electr

olux

Godr

ej

i)

ii)

iii)

Name of Dealer: ______________________________

198

Name of Owner: ______________________________

(THANK YOU FOR PARTICIPATING IN OUR

SURVEY)

199