LGs marketing strategies in India

Prepared by class 1 group 4: 1. 2. 3. 4. 5. Muhammad Sharif Aditya Inamdar Sahib Aliyev Artur Tkhya Assel Zhaxybayeva

Introduction
A company which is being driven by its sales targets rather than its market share

Introduction
We have seen many Japanese and Chinese companies in India, but like other foreign owned businesses they typically put one foot in the water to see if it is warm or cold. They have doubts. They lack determination. Whats been different about us is that we made a full commitment a very big investment from the start, including setting up tow full scale manufacturing facilities Managing Director, LG Electronics India

Introduction

Differentiation Strategy, Customization, Superior Technology The Rapid Growth

Introduction
Overview of Expansion
1997
1998 2001 2004 2005 2010 2010

Entry in India
First Plant in Uttar Pradesh Became fastest growing electronics, home appliances and computer peripherals 50m customers and more than Rs 60 b turn over GSM Mobile phone plant in Pune Planned to invest Rs 1.3 Bn I R&D Major export to European countries

Introduction
LG products
Golden Eye TV
Health Air AC Sampoorna TV

1997
1998 1998

Chaoc Punch Washing Machine DIOS Refrigerators

Linux Based PC

late 1990 feb 2002

sep 2002

LG Mobile Phones
Ballad Flat TV

late 2002
mid 2004

Introduction
Distribution - Network
Geographical layout of India

Distribution plans for each region

Remote Area Offices Regional Sales Offices Warehouses all over India Quick move of goods Non traditional distribution network Website for the dealers Connection with head office

Introduction
Study parameters
A critical evaluation of the performance from marketing

perspective
Identification of the marketing challenges facing the firm Identification and evaluation of possible solutions

The Selection of the best solution

An out line of the way in which you would implement the

solution

Introduction
Agenda
Introduction

Market assessment and PESTEL analysis

Competitor analysis Pricing and promotion strategies analysis SWOT and TOWS analysis Recommendations

Market assessment

Market assessment
Initially imported products from S.E. Asia

DVD writers : expected growth 33 mil units (2008)

To be made major export hub for European market Mobile phones : planned investment of Rs. 1.3 billion into R&D by 2010 to meet growing demand Refrigerators , Televisions & Air-conditioners: positioning as health concerned brand (1997)

Market assessment
Launched 45 new products (2001) 60 new products launched (2002) Launched Ballad-Flat TV for southwest India (2004)

My-PC Linux based PC (2002)

Launch of CDMA phones (2002)

Market assessment
Placed importance on good distribution network No credit period given to dealers ( market trend was 45-90 days ) LG dealers focused on volumes rather than margins Aggressive promotional techniques Higher profitability Loyalty Faster inventory rotation Online platform to order products Reduced inventory & procurement cycles Exclusive PC outlets (2003)

Market assessment
Developed regional strategies CAOs, RAOs, RSOs Helped and nurtured newly opened outlets Rural penetration increased market share

Market assessment
Honest Pricing Policy

Later adopted to aggressive pricing

Promotion was all year round

Repositioning as family brand

Cricket campaigns

PESTEL analysis
Political Taxation system, trade policies, regulatory
processes

Economic

economic growth, market employment, per capita income, inflation

cycles,

Social lifestyles and customer attitudes, demographic Technological innovative products and alternatives,
maturity of technology

Environmental recycled material usage in end

products, green technology used in manufacturing plants

Legal patents, licenses, copyrights

Competitor analysis

Competitor analysis
Samsung India
LGs key competitor in India is Samsung Electronics.

Samsung outperforms LG globally and in South Korea.

Head quarter of Samsung India located in New Delhi.

The companys sales turnover exceeded US 1 billion by the

end of March 2005. Samsung posed the potential threat for LG India being fast emerging as the leading technology

company in Asia.

Competitor analysis
Videocon International
Videocon International produced refrigerators, coolers,

glass, shells, kitchen appliances, and compressors.

In June 2005, Videocon acquired Electrolux and colour picture tube manufacturing business of Thomson.

Competitor analysis
SONY India
The company was set up by Sony Corporation Japan

Sony India competes with wide range of products: color

televisions, walkmans, music systems, DVD players, digital cameras, video recorders and mobile phone. The company sales turnover for the 2004-05 amounted to Rs. 8 billion

Competitor analysis
MIRC Electronics
The local company produced quality color televisions

with capacity of 1,2 million color televisions per annum.

MIRC Electronics also produced washing machines, airconditioners, DVDs, plasma televisions and home theatre sets.

Competitor analysis
NOKIA
The company competed with LG India in GSM segment.

Nokia dominated in the market with its 65 % in 2004.

HCL Infosystems
The company seized the 14,17 % of the PC market share.

Competitor analysis
Market share (2004)
60 50

40

LG Samsung
Whirpool

30

20

Others

10

0
Rifregerators Color TVs Microwave Ovens Washing machines

Promotion strategy

Promotion strategy
When the company entered India in 1997, LG as a brand was unknown in India. By 1997 the Indian market had all the global consumer electronics companies such as Sony, Panasonic, Samsung, Philips as well as local brands such as Videocon, BPL and Onida.

Promotion strategy
One of the key factors of promotion LG as a brand was a partnership with advertising agencies that knew the market well This partnership ultimately led to the building of Indias top consumer durable brand, with a estimated turnover of US$1.43bn. in 2004, whereas in 1997 was only US$27.5m. Lowe was lead agency which was responsible overall corporate branding and premium products

Promotion strategy
Focused to reach every consumer in India

Project LG as a true MNC and not as a Korean brand

Health positioning Build the brand by associating with sporting event such as cricket and golf

Pricing strategy

Pricing strategy
In 1997- entering into India market.

Selling imported products at high prices.

To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida The first manufacturing plant was established in 1998 in Noida

In 1998- launching first low priced TV for rural consumers.

Pricing strategy
In 2000- adopting new low price strategy. LG decreased prices by 5-15% relative to competitors.
2004 2003 45.00 33.15 22.16 19.03 10.56 4.85 1.25 65.00

2002
2001 2000 1999 1998 1997

SWOT and TOWS analysis

SWOT analysis
STRENGTHS
1. Huge manufacturing capacities 2. Market leader thanks to innovative and customer friendly products at competitive pricing and vast non-traditional distribution network 3. Focus on health of customers as USP 4. Differentiation strategy combined with customization (e.g. Sampoorna TV for rural customers with menu in Hindi) 5. Consistent updating of the product lines (e.g. 105 new models launched in 2001-2010) 6. High dealers loyalty and retention 7. More for less pricing strategy 8. High brand recall as a result of huge promotion and advertising spending

SWOT analysis
WEAKNESSES

1. Image of manufacturer of home appliances and consumer electronics and not IT products or mobile phones
2. Not very good image on the PCs market associated with failure of launch of PCs based on Linux operating system 3. Late entrance on the market of GSM mobile phones 4. Huge capex and current expenses (to support distribution and promotion) while low margins

SWOT analysis
OPPORTUNITIES
1. 2. 3. 4. Growing demand as a result of increase of disposable income and growth of population Further penetration the home appliances market to gain and sustain position of a dominant player Entering high premium segment which will grow in line with Indian economy growth Increase market share on the PCs and mobile phones markets

THREATS
1. Fierce competition 2. Threat from Samsung especially on the TVs, PCs and mobile phone markets 3. Decrease of profitability

C on ve ni en t ly av ai la b le

Marketing mix: 4C Vs 4P

co ns Fu an um ll r d er an h o h ge me ealt of ap h t h M pli frie e in ob an nd no ile ce ly va PC ph s pr elec tive s one odu tro an s ct nic d s ia ed m t in pr d an c p ni hi ro rs tc ct so s e le on on ,e g sp oti TV sin ket om i rt ic pr dve Cr OS a P

Customer solution for electronics and home appliances products only Costs Convenience
gy te ra st g ) in rs ic le pr dea ss or le (f or ins e f rg o r ma M ow L wn St s, or In dia Pr sem es n es i- an O arm enc urb d o n- y e an u lin a in a tle e s n d th n d ts to na e ru in re v ca r f s y nt al ar ee ar -fl ns ea un of s g th e to
Consumers Dealers

Areas for improvement: communication and customer solutions for mobiles and PCs

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TOWS analysis
SO: Maxi-Maxi Strategy
To increase production volume to satisfy growing demand (S1, O1)

To penetrate further the home appliances market consistently offering consumers new innovative products through vast distribution channels and high loyalty of dealers (S2, S5, S6, S7, S8: O2) Penetration the high premium segment (Upper Middle, Upper-Upper
Middle, and Rich) by offering consumers highly innovative, differentiated and customized products at higher prices (comparatively to LG products for mass market) (S4, S5: O3)

Increase market share on the mobile phones and PCs market applying shop in shop concept throughout vast dealers network, especially in rural areas where competitors have poor presence and using more for less pricing strategy (S6, S8: O4)

TOWS analysis
ST: Maxi-Mini Strategy
To expand geographical coverage to the areas where competitors are not well presented using the vast nontraditional system of distribution while offering the products with more features at lower pricing (more for less) (S6, S7, S8: T1, T2) To increase sales using all strengths to enjoy economy of scale (S1-S9: T3)

TOWS analysis
WO: Mini-Maxi Strategy To launch the new products on IT and mobile phone markets with UCP under new brand name or with repositioning (W1, W2: O4) Increase sales catching the growing demand opportunities to enjoy economy of sale (W4: O1, O2) WO: Maxi-Mini Strategy To expand geographical coverage to the areas where competitors are not well presented using the vast nontraditional system of distribution while offering the products with more features at lower pricing (more for less) (S6, S7, S8: T1, T2) To increase sales using all strengths to enjoy economy of scale (S1-S9: T3)

Recommendations

Recommendations
Strategic Directions Targeting and Segmentation Implementation through marketing mix

Recommendations
Targeting segment
Mass market: Low income, Lower Middle, Middle Middle
Disposable income: up to Rhs 1 000 000 a year

Premium segment: Upper Middle, Upper-Upper Middle, and Rich Disposable income: above Rhs 1 000 000 a year Area: large cities
Trends: This segment will not grow sharply as mass market segment, however its portion in national consumption will increase from 7% to 20 % by 2025

Area: rural and semi-urban areas, cities

Trends: Within this segment the size of middle class will increase to 41% of population by 2025, while the size of low income sub-segment will decrease to 26% of population

Recommendations
Marketing mix for new strategy
Product Mass market Electronics: Consistently updating product line to provide consumers with best solutions Mobile phones: Affordable, reliable and relatively simple models PCs: Basic and affordable models of tablets, and netbooks Sales and after sales services Electronics: Highly innovative, differentiated and customized products Mobile phones: Launch new products featuring more intellectual and innovative nature and based on newest technologies (android or analogous systems). PCs: Launch the new comprehensive and innovative models incl. notebooks and tablets Sales and after sales services

Premium segment

Recommendations
Marketing mix for new strategy
Price Mass market Keep more for less strategy. Promotional pricing during the new products launch period to create buyers excitement, then more for less strategy more for more (in comparison with mass market) Increase number of outlets to expand geographical coverage to the areas where competitors are not well presented Opening of exclusive LG concept stores (similar to Apple stores) and LG corners in big city stores (shop in shop concept) TV, radio, cricket sponsorship Newspaper and Life style journals in English, Advertisement in cinema Sponsorship of charity events Internet advertisement and social networks (Facebook)

Premium Place Mass market

Premium

Promotio n

Mass market Premium

Thank you!