vishal khare
New member
CASE STUDY
ON
LG ELECTRONICS INDIA PVT.LTD.
SUBMITTED BY:
VISHAL KHARE
ENROLL. NO-07BS4908
ICFAI BUSINESS SCHOOL
PUNE
INTRODUCTION
LG Electronics India Pvt. Ltd. (LGEIL) manufactures and markets consumer electronics and home appliances. The company’s products include color televisions, LCD projectors, DVD players, washing machines, air-conditioners, microwave ovens, direct cool and frost-free refrigerators, personal computers, monitors, vacuum cleaners, optical storage devices, and GSM mobile phones. LGEIL was established in 1997 and is based in Greater Noida, India with additional offices in Bangalore, Mumbai, Pune and New Delhi. It operates as a subsidiary of LG Electronics Inc. The day LG Electronics India Pvt. Ltd. entered India it was faced with some major challenges like low brand awareness of LG in India, one of the last MNC to enter India after SAMSUNG, SONY, PANASONIC which entered in the year 1995, competition from local players as well as with other MNC’s and last but not the least price sensitivity of the Indian customer. Facing these challenges boldly LG Electronics India Ltd. is a leader today with a market share of 27% in consumer durables in India. This case discusses the success story of LGEIL i.e. how it was able to cope up with all these challenges in ever changing and demanding environment. How branding has played an important role in its success in India?
Since there are many products which this company manufactures, but in this particular case study we will be concentrating on the color, plasma, LCD televisions. How they tried to gain the market share in India?
BACKGROUND
LG group is a large South Korean conglomerate, which produces electronics, mobile phones and petrochemical products and operates subsidiaries like LG Electronics, LG Telecom, Zenith Electronics and LG Chemicals in over 80 countries.
CEO of LG group is Koo-Bon-Moo and it was headquartered at Seoul, South Korea. It was created as an appliance company in 1947 named GoldStar it later merged with the chemical company Lucky. Many consumer electronics were sold under the brand name GoldStar, while some other household products were sold under the brand name of Lucky. The Lucky brand was famous for household cleaning products and laundry detergents, but most associated with its toothpaste.
In 1995 it was renamed as “LG”, the abbreviation of ‘Lucky GoldStar’. More recently the company associates its tagline “Life’s Good”, with the letter LG.
LG Electronics is a South Korean multinational corporation. It is South Korea’s second largest electronics maker and the world’s third largest appliance maker.
It was founded in the year 1958 having its headquartered in the LG Twin Towers on Yeouido, Seoul, LG electronics is the flagship company of LG group, having its chairman and CEO as Yong Nam.
The company has 75 subsidiaries worldwide that designs and manufacture televisions, home appliances and telecommunication devices.
LG Electronics own Zenith Electronics and controls LG displays , a joint venture with Philips Electronics.
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January 1997 in India. One of the most formidable brands in the consumer durable and home appliances segment, LGEIL has an impressive portfolio of Colour Televisions, Washing Machines, Air-Conditioners, Microwave Ovens, Refrigerators (Direct Cool and Frost Free), PCs, Vacuum Cleaners, Audio Systems, DVDs, PDPs, optical storage devices, Laptops and GSM mobile phones. In India for over nine years, LG has earned a premium brand positioning due to its superior quality, high product performance, revolutionary technological delivery and warm service. LG is the acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation.
LGEIL's first manufacturing unit at Greater Noida is one of the most eco-friendly units among all LG manufacturing plants in the world. The new and second Greenfield facility of LG Electronics India located at Ranjangaon, Pune has the capacity to manufacture GSM Mobile Phones. Colour Televisions, Air Conditioners, Refrigerators, Washing Machines, Microwave Ovens and Color Monitors .This is India’s first mobile phone manufacturing unit.
MARKET POTENTIAL OF CONSUMER DURABLES IN INDIA
A survey carried out by FICCI last year indicated that the consumer durable goods sector is all set to witness 12 percent growth this year. Spurred by a marked shift in consumers’ preference for high-end products from premium brands floating superior technology, the consumer durable goods sector recorded a growth of 11.5 percent in 2006-07 as against 8.5 in the previous year. Clearly, the aspiration to own premium lifestyle products among consumers has gone up.
The rural Indian market, which accounts for nearly 70 percent of the total number of households, witnessed a 25 percent annual growth while the urban consumer durables market reflected an annual rate of 7 to 10 percent.
FICCI president Habil Khorakiwala aligns this growth to the changing dynamics of consumer behaviour – luxury goods are now being perceived as necessities in households and higher disposable incomes at hand are being spent on lifestyle products.”
Anjan Roy, economic advisor for FICCI says, the consumer durables market picked up in January 2008 reflecting increased sales by major consumer durable companies and this tempo is poised to continue. CE companies are re-working their strategies for the ensuing summer season, considered to be a good period for the industry. A cut in customs duty on inputs will enhance the manufacturing competitiveness of the industry by reducing cost and boosting demand and sales.
Rationalization of taxes, clearly, seems to be a universal demand across the CE sector. This will ensure manufacturers in India have a level playing field as against their counterparts in the import business. Fast growing product segments such as flat panel TVs, LCD TVs, Plasma TVs, Slim CRT TVs, frost-free refrigerators, fully automatic washing machines, split air-conditioners, DVD players, microwave ovens, and home theatre systems – products entailing high aspirational value are likely to see a growth in consumption.
INDIA EMERGING AS A FORCE IN THE TELEVISION MARKET
In India, where 70 percent of citizens earn less than $5,000 a year, buying a television is not an option for many consumers. Surprisingly, however, Indians have shown remarkable interest in buying televisions, even the more-expensive flat-panel sets, mostly because of increased awareness, rising availability and declining prices, according to iSuppli Corp.
“India is emerging as a major force in the global television market in terms of domestic consumption as well as in production of sets”, said Riddhi Patel, principal analyst for television systems at iSuppli. While there remain disparities in terms of the economic status of television buyers, set sales in India are experiencing strong growth.
India’s television market is set to grow to 18.7 million units by 2011, expanding at a Compound Annual Growth Rate (CAGR) of 9 percent from 12.1 million units in 2006. On the revenue side, overall television sales will reach $4 billion by 2011, rising at a CAGR of 9.6 percent, up from $2.5 billion in 2006, according to iSuppli.
The attached figure presents iSuppli’s forecast for the Indian television market for both units and revenue for the period of 2006 through 2011.
CRTs still dominate market
While Flat-Panel-Display (FPD) televisions are gaining sales momentum in India, CRT televisions still have a leading position in the nation because the higher prices of Liquid Crystal Display Televisions (LCD-TVs) and plasma sets have discouraged their adoption in most parts of the country, Patel added.
Many consumers in India buying their first television sets are looking at 21-inch and smaller CRTs as starter sets. However, this carries over to the replacement market as well, where consumers are attracted to 29-inch flat-face CRT TVs as alternatives to LCD-TVs because of their lower prices. It is the urban areas, where consumers are looking for replacement sets or buying second televisions, where there is a likelihood of flat panels gaining some market share.
Manufacturing on the rise
Television set manufacturing continues to rise in India, with both domestic and overseas firms increasing their production bases in the country. This is due to a number of reasons, including:
• Low-cost skilled labor
• Availability of a qualified workforce
• An untapped domestic market
• Special economic zones that provide tax-free environments
• Other tax and financial support breaks
Factories in India are cropping up in less-developed regions because of tax breaks given by the government in order to improve the living conditions of citizens as well as to promote investments in television production in the country. India has an excellent component supply base in terms of manufacturing facilities for glass and color picture tubes so it makes it a good fit for companies striving to take advantage of this emerging market.
LG ELECTRONICS INDIA PVT. LTD. (1997-2002)
1997: LG Electronics India Pvt. Ltd has entered into a strategic alliance with two consumer finance companies -- Countrywide Consumer Financial Services and Avco Financial Services Pvt. Ltd. Under the current scheme of things, the Mumbai-based Countrywide will provide finance facilities for LG products in 13 centres, while the New Delhi-based Avco Financial will handle two centres. After months of negotiations, LG finally entered into an alliance with the two in November, and the same has been operational since then.
Says LG Electronics India vice-president (marketing and sales) Rajeev Karwal: "The finance schemes will be available for one, two and three years." While the one-year scheme for Delhi will have a low flat interest rate of five per cent, in the other cities it will be 6.5 per cent. The rates for two and three-year schemes are uniform at 9.5 per cent and 10.5 per cent for all cities. LG will provide special "express" finance facility to credit card holders.
"The idea behind the alliance is to provide customers an opportunity to buy products of their choice. Moreover, it will help LG increase its market share since people who cannot afford cash down payment can buy in installments," added Karwal.
The scheme will only cover LG's colour television sets, refrigerators and washing machines. The company had recently added karaoke VCDs to its portfolio, but this will, currently, be out of the ambit of the finance scheme.
The company has in all launched 21 products in India, which include 10 colour TV sets, seven refrigerators and three washing machines. Countrywide will provide finance to consumers at Delhi, Mumbai, Pune, Ahmedabad, Baroda, Bangalore, Chennai, Hyderabad, Cochin, Coimbatore, Noida, Faridabad, and Gurgaon. From January 1998, the same will be extended to Chandigarh, Ludhiana, Indore, Lucknow, Trichi, Goa, Nashik and Jaipur. Avco Financial will only handle Delhi and Jaipur.
Karwal is confident that this alliance will help LG beat the recessionary trends prevailing in the consumer durables industry. "This alliance will definitely help, but the most important thing is product quality and after sales service," says Karwal.
1998: LG Electronics India Pvt. Ltd plans to set up deflection yok and extra high tension transformer manufacturing facilities at Greater Noida. The company's Noida facility at present houses colour televisions (CTVs), refrigerators, and air conditioners units.
"As part of our CTV indigenization programme we contemplate to put up such units in the country. It can either be wholly owned by the company or with a joint venture partner. We are also planning to export critical components to developed countries at a later stage," company vice-president (marketing & sales) Rajeev Karwal said.
LG aims to achieve 80 per cent indigenization level within the next two years, he said. At present, it stands at around 60 per cent. It sources key components like tuners from Onida.
In addition to the component facilities, the company has also decided to set up air conditioner and microwave oven units by next year. LG has set aside around $289 million for undertaking has set aside arouexpansion plans over a period of five years to seven years in the country. To part finance the project, the company is planning its maiden public issue by 2002.
"We will dilute 25 per cent in favour of the public. Rest of the funds will come from equity," Karwal said.
Next year the company will have exports, for which the internal target has been set at $100 million. The Korean electronics giant is eyeing the Saarc region for a substantial growth in the sector. The products exported will carry `LG Made in India' brand names, Karwal said.
The company also plans to start manufacture of computer monitors at its Noida facility. It has already earmarked funds for this facility and production is expected to start early next year.
Giving thrust to rural marketing, the company has conducted extensive rural market research and plans to unveil mobile vans in these areas. The mobile vans will help the customers to know about the company brands and the various service-oriented programmes. LG also plans to extend its existing air conditioner range this year.
Two new models of window ACs, one new model in split ACs and a package AC are on the anvil. The package AC will have features like plasma air purifying system, cooling and heating options, soft dry operation, wireless remote control, anti-bacteria filter and auto swing.
1999-2002: In an initiative aimed at enhancing the consumer involvement with the brand LG during World Cup '99, LG Electronics India Pvt. Ltd (LGEIL) is flagging off three high-blitz cricketing contests in April. Spearheaded by the heroes of World Cup '83-Mohinder Amarnath, Roger Binny and Madan Lal-LGEIL's Rs 8-crore promotion initiative will involve three contests, which will kick off in the first week of April. The winners of these contests will be flown to Lord's, England, in three groups, each of which will be led by the celebrity cricketers.
Through a heavily advertised print and electronic media campaign, the consumers would be invited to answer three basic questions like: which team did India meet in World Cup 1993? Participants would also have to write a slogan for LG. The winners will have the option to travel with the LG team of their choice and will stay in the UK for three days, where apart from watching cricket they would be taken for sightseeing with the cricket stars.
The campaign for the contests is a mix of one20-second and three 10-second ads, which will appear on DD, Star Plus, ESPN, and Star Sports. In the print media, the 240 cc ad will be followed by a 120 cc insert. Following a lucky draw, results will be announced in the first week of May in India Today
The newly defined mantra by Kwang-Ro Kim, the Managing Director of LG Electronics India Pvt. Ltd (LGEIL) is cost-innovation -- from implementing higher technology efficiencies, to reducing design-related frills, to purchasing cheaper components, to more effective HR policies. It requires a lot of skill to cut costs and he said that he is glad that without denting profits significantly, we have managed to cut consumer prices of air-conditioners by 20 percent, and of colour televisions (CTVs) by 15 per cent. We are preparing ourselves for another 7-8 per cent reduction in prices across all categories.
Their immediate agenda now is the commencement of its digital management system (DMS), a cost-cutting technique that would lead to shorter assembly lines, higher productivity, and reduced manufacturing costs by 30 per cent. The implementation of DMS is expected to result in an additional five per cent reduction in prices across CTVs, refrigerators and washing machines at the least. To be brought in at LG Electronics manufacturing base in Greater Noida for CTVs in the first half of 2002, DMS is to be subsequently extended to refrigerators and washing machines. The DMS exercise is a follow-up of the Six Sigma exercise LGEIL had initiated late last year, with the objective of cutting costs across processes other than manufacturing.
Apart from the technology edge, the Rs 1,795-crore LGEIL (turnover for the period between January and October 2001), is banking on its grassroots-level marketing to edge out competing heavyweights such as BPL, Samsung, Videocon and Whirlpool, which are all breathing down its neck. Meanwhile, industry dynamics have already claimed their first victim. The Chinese invasion that had threatened to turn the industry upside down with rock-bottom pricing has all but fizzled out.
LG has been the fastest growing CTV brand since 1999, its cracking the stronghold of the Bangalore-based BPL - the most preferred brand of CTVs among intending buyers, a title that LG is gunning for now. Southern region has been the Achilles heel in LGs scheme of things, so they need to catch up there. They are trying to improve the distribution network there and they are sure that once their Chennai unit becomes functional they will do well. While the contract-manufacturing base in Chennai will produce CTVs and air-conditioners, the Nasik factory will be involved in the manufacture of only CTVs.
Since the company is taking the contract-manufacturing route instead of setting up its own factories, the investments involved will not be too high. Similar contract manufacturing at Mohali, Kolkata and Bhopal for CTVs was commissioned earlier this year.
Apart from supplementing its capacity at Greater Noida (on the outskirts of Delhi), the expansion strategy is in line with LGs long-term plan of turning India into an export hub for several South Asian countries. Apart from existing exports markets in Sri Lanka, UAE, Bangladesh and Philippines, they are hopeful of tapping the markets of Hong Kong, New Zealand and South Africa next year for exports. The export target of $20 million the following year, against the current $10 million. Another recent move towards broad basing penetration has been setting up areas offices in 50-plus regions across 83 territories.
On the distribution front, LG is training its sights on the institutional and Government segment anew. The idea is to grow sales from the institutional segment from five per cent now to 10 per cent in the next one year. Also, the next one year will see another 15 LG Shoppes (exclusive outlets), up from the current 35.
Another strategic decision has been deferring its proposed IPO indefinitely till the market recovers. LGEIL was planning to raise $25 million from the IPO in the year 2001, by offloading 25 per cent equity stake in the company. Instead, it intends to raise funds through non-convertible debentures (NCD), the proceeds of which will part finance the expansion plans.
While the low-priced Sampoorna CTV brand has been relaunched as Cine Plus at a Rs 5,000-7,000 tag. A budget of Rs 10 crore has been allocated for rural marketing in the year 2002.
LG ELECTRONICS INDIA PVT. LTD. (2003-2008)
2003: LG CDMA launched their TV presence with the World Cup. They had spent 5.3 crores to get the spots for the ad- campaign; this had improved their brand awareness as well as their sales as they did in 1999.
LG colour TV sales scale a new peak The consumer electronics industry, starved of `bumper business' after World Cup cricket early this year, has cause to cheer. The festival of lights has brightened the year for the colour TV industry, which was desperately looking for growth triggers. LGEIL has reported sales of 327,000 units in October alone. This is a sales figure which nobody even in LG worldwide has achieved in a single month. During the two months September-October 2003, the company has sold more than five lakh units. The festive marketing strategy coupled with focus on the semi-urban market and a slew of product launches were the main growth drivers. Almost 70 per cent of our sales came from the semi-urban market. The company reported a turnover of Rs 2,286 crore in the period January to June 2003, registering a growth of 45 per cent compared to the same period last year. This year the sales figure touches 8.25 million units.
LG Electronics (LGE) has launched a new range of New Display Products (NDPs). Claiming to be a leader in the consumer electronics market, LG has strategically planned to create an exclusive category of hi-end consumer electronics products which include plasma display panels, projection televisions, LCD TVs, projectors, monitors and optical storage devices.
Targeting the fast-growing flat panel displays market; LGE's strategy will be on exploring the untapped potential for these products in India. The company is look at upgrading a consumer from being the owner of a conventional TV to a technologically superior electronic product.
NDP refers to TV products with new display technologies such as PDP, LCD TV, projection TV and projectors. They feature large sized or slimmer screens in comparison with the existing products.
LGE is introducing two patented technologies of MDP product line up and XDR (Pro) technology for picture enhancement through these products. The product market for NDPs is booming due to the changing broadcasting technology, consumer aspirations and product competitiveness.
A release says that LGE will strive to make these aspirational products available at the consumer's doorstep. Apart from the retail stores where these products will be available, the New Display Products will also be available in the X Canvas Studios, which are the exclusive outlets for LGE's high end products and on LGE's website, Lgezbuy.com which is India's largest CE and HA site.
LG Electronics India Pvt. Ltd (LGEIL), has posted a net profit of Rs 205 crore for the year ending December 31, 2003.
The company has registered a turnover of Rs 4,500 crore, a growth of 36 per cent vis-a-vis 2002, with individual contributions being 46 per cent from consumer electronics division, 44 per cent and 10 per cent from home appliances and IT divisions respectively.
2004: LG thinks local with pune plant. LG Electronics has re-strategized its plans for the colour television segment in India. Its upcoming Pune plant, which was to have served as an export hub for some markets in the Asia Pacific region, will now also manufacture CTVs for the southern and western markets of India. These two regions are likely to constitute 50% of LG’s total sales this year and are expected to clock sales of 1.2 million units. To start with, LG will manufacture 50,000-60,000 CTVs per month at its Pune plant, whose capacity will be ramped up later. This is expected to benefit the company’s margins from the southern and western markets as it will save on logistics costs to some extent. According to the blueprint for the Pune factory, the Korean company will put in Rs 100 crore each year for the next five years. The Pune plant was to manufacture top-end products for CTVs, including large screen products, apart from other appliances.
LG Electronics India (LGEIL) has launched the world's first TV Refrigerator called TV DIOS with a 13-inch hi-definition LCD TV. Not just that, TV DIOS also has built in FM radio set too. Altogether these 600 litre of Fridge-cum-TV costs Rs 2 lakh. TV DIOS is the seventh model in the DIOS range of refrigerators. As for advertising and marketing plans for TV DIOS, the company is putting aside Rs 3 crore to be spent on print and outdoor advertising.
The rural market is going to be the main focus of LG for 2004. Since we intend to be very active in the rural market, we have set a target of 70% value growth. So the target is Rs. 7,000 crores. We think the rural market contribution will be around 65% and the growth over this year on the rural market will be something around 40%.
The rural activities include marketing activities and other initiatives in the form of surveys and the like. So for that, we are opening many more branches across the country. In September ’02 we had only eighteen branches; now we have forty branches. Additionally, 112 area offices more , which were not there at all last year; these area offices have been opened in the district-level areas. Below these area offices, they have remote area offices, which are called as ‘RAOs.’ Currently they have eighty RAOs, which they are planning to expand to two hundred RAOs by next year so that they can reach out to the rural market in a better way and feel the pulse of all the consumers and the dealers there.
2005: LG Electronics India Pvt. Ltd., the leading consumer durable company in the country, has achieved a landmark turnover of Rs. 2100 crores during the festive season this year. The auspicious occasion of Diwali marked a boom in the sales of every LG product category especially in the colour television category. LG surpassed sales of 4.75 lakh colour televisions during the festive season thus recording the highest sales by LGEIL in this category. The Flat TVs have had an extraordinary impact on the overall sales of the colour television segment. LGEIL sold 2.73 lakh units of flat TVs and 2.02 units of Normal TV's during the month of October.
Mr. Amitabh Tiwari, National Head – CTV, LGEIL said, "Our team is well prepared to face competition within the industry. It is the strength of our team and our network that we have been able to achieve the landmark figure. We are way ahead in the Colour television category and have set a benchmark for the industry to follow. We are elated to have created history in the color television category by achieving a turnover of Rs. 392 crores in the month of October. "
LG and SBI Card launch India's first Consumer Appliances Co-Branded Card. The LG - SBI Card is India's first co-branded credit card for the consumer appliances industry and can be used at more than 2 lakh outlets in India and more than 30 million outlets around the world displaying the Visa logo. Bringing together two of India's power brands, the LG - SBI Card will leverage the extensive national distribution networks of both LG and SBI Card to drive penetration.
Designed as a customer loyalty and rewards program, the LG - SBI Card combines all the well-known features of SBI Card with a series of exclusive rewards, benefits and promotional offers from LGEIL for the co-branded cardholder.
Announcing the launch, Mr. K R Kim, President South West Asia, LGE and MD LGEIL said, "The LG - SBI Card brings together two leading companies in their industries, both with a reputation for quality products, experience in providing superior customer service, and innovation. LG's product leadership is driven by our cutting edge technology, design and functionality but our market leadership is the result of a relentless drive to make the experience of our customers an unrivalled one. Through the LG - SBI Card, we hope to get even closer to our customers and drive long-term relationships with them."
He added, "Our goal is to be the card of choice for today's frequent shopper. The LG - SBI Card will introduce the benefits of SBI Card to a new and wider group of smart consumers who are looking to consolidate their spending and earn multiple benefits in return. LG SBI cardholders will enjoy the convenience and financial flexibility of this new co-branded credit card, which not only allows them to buy now and pay later in parts, but also to aspire for higher-end products by taking advantage of the exclusive offers they will earn from LG."
LGEIL has achieved a turnover of Rs 7500 crore in 2005. LG Electronics India Pvt. Ltd. –had launched SUPER SLIM Television and PROJECTION television in Bangalore -2005.
2006-2008:
LG Electronics has announced the launch of the Time Machine TV in the country, which aims at making TV viewing much more intelligent than before. This new product of the manufacturer is targeted at tech-savvy individuals.
According to LG, Time Machine TVs are the world s first television-sets to be equipped with a built-in digital video recorder, which enables the user to pause, rewind and replay live TV programs as per convenience after the original broadcast. With the inclusion of the playability feature, the Time Machine TV offers consumers the ability to have absolute control over the ways to view television. Using the built in HDD recorder technology, the viewer can go back in time to view their favorite programs all over again.
Time Machine is available in both LCD and plasma display panels. The plasma TV comes equipped with clarofilter technology, which enhances picture quality through a special optical film. Thus, removing double image and distracting effects of reflected light while watching television.
The LG Time Machine LCD TVs are available in 37-inch and 42-inch models, while the Plasma versions are available in 42-inch and 50-inch. All the Time Machine models are already available in the Indian market and are priced between Rs 100,000 to Rs 250,000.
LG Electronics has introduced the Ultra Slim Television which is a combination of style, and practicality, targeted towards discerning consumers who demand a tangible solution for limited living space along with aesthetic appeal for modern homes.
The LG Ultra Slim TV is the World’s Slimmest CRT Television. Breaking the stereotype of Slim Televisions, this revolutionary product is 7cm slimmer than LG’s own Super Slim range and a whopping 14 cm slimmer compared to the Conventional Flat TVs available in India.
It has a deflection angle of 120 degrees. This is 30 degrees wider than a normal CRT TV. As the deflection angle has a strong influence on the depth of TV set, LG has applied the shortest ‘Slim Gun’ which enabled it make the TV slimmer than ever before. The product is priced at Rs 12990/-.
LG Plasma Display Panel: LG Electronics has achieved new dimensions of technological excellence among the Plasma Display Panel manufacturers. The PDP is available in sizes of 40, 42, 50, 60 and 71 inch internationally.
LG has world’s slimmest panel at 78 mm to the world’s biggest panel at 71”. The company is the only brand in India which offers “The largest range of models in the PDP category. Cutting Edge Technology such as Image Stick minimization, Orbiter, Whitewash, Flexi PIP, Double Window Screen are some of the features which makes LG’s PDPs, the best made Plasma Panels ever.
LG Televisions:
Slimagic
In the Indian household scenario where space is a major constraint, LG has come up with an innovative solution by way of World’s slimmest Flat CRT TV, Slimagic. In India, especially in the metros, there is a major concern of smaller living space, and LG’s latest innovation provides a solution to utilize the limited living area / space in the most useful manner. The technology used for Slimagic is highly advanced with a new picture tube which makes the TV super slim and occupies 30% less space. The unique features of the Slimagic TV is that it a sleek TV, which occupies less space without compromising on picture quality and looks attractive with double tone colors. Slimagic is available in 21” and 29”
The LG X-WAVE TV:
X Wave is India’s first TV with wireless Audio Transmitter. This new technology will enable consumers to listen TV sound through any audio system with FM receiver. Thus resulting in Home Theatre experience. The X Wave Wireless Sound Television comes with unique chip which transmits the TV sound on FM frequency. The TV sound output can be received by any audio set with FM receivers. This will enable consumer to experience home theatre sound output. The current model is available in 21” category and LG plans to launch 29” Flat X wave shortly.
LG Electronics India (LGEIL) will invest over Rs 1,100 crore in the next three years starting 2007 and is eyeing revenue of Rs 16,000 crore by 2010. Of the planned investment, Rs 1,000 crore would be used to fund marketing initiatives with a focus on plasma TV, IT products, split AC and GSM handset while Rs 120 crore would go into production capacity expansion.
LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract aspirational and young consumers across India, company will roll out a new marketing strategy. LG Electronics India Pvt. Ltd. (LGEIL) is going to invest Rs 360 crores in brand building and other marketing initiatives this year. LG, this year, will focus on the IT, GSM and flat panel displays segment. The company will also venture into the air purifiers and wine sellers segment. Moreover, LG is looking at launching India-specific products.
Commenting on the occasion, Moon B Shin, managing director, LGEIL, said, “LG is committed towards introducing innovative, trendy and technology products. The focus of the company, this year, will be on combining its expertise in design and technology to give a fresh premium appeal to the brand, adding an aspirational value for the Indian consumer. The differentiating factor for the brand will be with its focus on customer service.”
LG has started a '211 campaign' to provide its customers with quality after-sales service. The campaign includes company response to customer complaint within 2 hours. The fixing time for complaints would vary from 1 hour to a maximum of 24 hours. The IT infrastructure for 211 campaigns has been currently set up in 22 cities and would be extended to 40 cities by next month.
Shin added, “We have an aggressive line-up of products this year, and our focus will be on the IT, GSM and flat panel displays segment. We have recently launched the 32” Plasma TV and 22” LCD TV. We will also be entering the air purifiers and wine sellers segment. We will be investing Rs 360 crores this year for our brand-related exercises.”
“LG wants to enhance the consumer durable shopping experience for the consumers. We are planning to launch 60 premium brand shops by the end of first quarter,” added Shin. Brand shops cater to the audience interested in buying high-end products.
MAJOR KEY SUCCESS FACTORS
• Innovative marketing - LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World Cup and followed it up in 2003 as well.
• Local and efficient manufacturing to reduce cost - To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi.
• Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs.
• Product localization - Product localization is a key strategy used by LG. It came out with Hindi and regional language menus on its TV.
• Regional distribution model - This has resulted in quicker rotation of stocks and better penetration into the B, C and D class markets.
• Leveraging India’s IT advantage - LG Electronics has awarded a contract to develop IT solutions to LG Soft India (LGSI). The project involves development and support for ERP, SCM, CRM and IT-enabled services for LG.
ON
LG ELECTRONICS INDIA PVT.LTD.
SUBMITTED BY:
VISHAL KHARE
ENROLL. NO-07BS4908
ICFAI BUSINESS SCHOOL
PUNE
INTRODUCTION
LG Electronics India Pvt. Ltd. (LGEIL) manufactures and markets consumer electronics and home appliances. The company’s products include color televisions, LCD projectors, DVD players, washing machines, air-conditioners, microwave ovens, direct cool and frost-free refrigerators, personal computers, monitors, vacuum cleaners, optical storage devices, and GSM mobile phones. LGEIL was established in 1997 and is based in Greater Noida, India with additional offices in Bangalore, Mumbai, Pune and New Delhi. It operates as a subsidiary of LG Electronics Inc. The day LG Electronics India Pvt. Ltd. entered India it was faced with some major challenges like low brand awareness of LG in India, one of the last MNC to enter India after SAMSUNG, SONY, PANASONIC which entered in the year 1995, competition from local players as well as with other MNC’s and last but not the least price sensitivity of the Indian customer. Facing these challenges boldly LG Electronics India Ltd. is a leader today with a market share of 27% in consumer durables in India. This case discusses the success story of LGEIL i.e. how it was able to cope up with all these challenges in ever changing and demanding environment. How branding has played an important role in its success in India?
Since there are many products which this company manufactures, but in this particular case study we will be concentrating on the color, plasma, LCD televisions. How they tried to gain the market share in India?
BACKGROUND
LG group is a large South Korean conglomerate, which produces electronics, mobile phones and petrochemical products and operates subsidiaries like LG Electronics, LG Telecom, Zenith Electronics and LG Chemicals in over 80 countries.
CEO of LG group is Koo-Bon-Moo and it was headquartered at Seoul, South Korea. It was created as an appliance company in 1947 named GoldStar it later merged with the chemical company Lucky. Many consumer electronics were sold under the brand name GoldStar, while some other household products were sold under the brand name of Lucky. The Lucky brand was famous for household cleaning products and laundry detergents, but most associated with its toothpaste.
In 1995 it was renamed as “LG”, the abbreviation of ‘Lucky GoldStar’. More recently the company associates its tagline “Life’s Good”, with the letter LG.
LG Electronics is a South Korean multinational corporation. It is South Korea’s second largest electronics maker and the world’s third largest appliance maker.
It was founded in the year 1958 having its headquartered in the LG Twin Towers on Yeouido, Seoul, LG electronics is the flagship company of LG group, having its chairman and CEO as Yong Nam.
The company has 75 subsidiaries worldwide that designs and manufacture televisions, home appliances and telecommunication devices.
LG Electronics own Zenith Electronics and controls LG displays , a joint venture with Philips Electronics.
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January 1997 in India. One of the most formidable brands in the consumer durable and home appliances segment, LGEIL has an impressive portfolio of Colour Televisions, Washing Machines, Air-Conditioners, Microwave Ovens, Refrigerators (Direct Cool and Frost Free), PCs, Vacuum Cleaners, Audio Systems, DVDs, PDPs, optical storage devices, Laptops and GSM mobile phones. In India for over nine years, LG has earned a premium brand positioning due to its superior quality, high product performance, revolutionary technological delivery and warm service. LG is the acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation.
LGEIL's first manufacturing unit at Greater Noida is one of the most eco-friendly units among all LG manufacturing plants in the world. The new and second Greenfield facility of LG Electronics India located at Ranjangaon, Pune has the capacity to manufacture GSM Mobile Phones. Colour Televisions, Air Conditioners, Refrigerators, Washing Machines, Microwave Ovens and Color Monitors .This is India’s first mobile phone manufacturing unit.
MARKET POTENTIAL OF CONSUMER DURABLES IN INDIA
A survey carried out by FICCI last year indicated that the consumer durable goods sector is all set to witness 12 percent growth this year. Spurred by a marked shift in consumers’ preference for high-end products from premium brands floating superior technology, the consumer durable goods sector recorded a growth of 11.5 percent in 2006-07 as against 8.5 in the previous year. Clearly, the aspiration to own premium lifestyle products among consumers has gone up.
The rural Indian market, which accounts for nearly 70 percent of the total number of households, witnessed a 25 percent annual growth while the urban consumer durables market reflected an annual rate of 7 to 10 percent.
FICCI president Habil Khorakiwala aligns this growth to the changing dynamics of consumer behaviour – luxury goods are now being perceived as necessities in households and higher disposable incomes at hand are being spent on lifestyle products.”
Anjan Roy, economic advisor for FICCI says, the consumer durables market picked up in January 2008 reflecting increased sales by major consumer durable companies and this tempo is poised to continue. CE companies are re-working their strategies for the ensuing summer season, considered to be a good period for the industry. A cut in customs duty on inputs will enhance the manufacturing competitiveness of the industry by reducing cost and boosting demand and sales.
Rationalization of taxes, clearly, seems to be a universal demand across the CE sector. This will ensure manufacturers in India have a level playing field as against their counterparts in the import business. Fast growing product segments such as flat panel TVs, LCD TVs, Plasma TVs, Slim CRT TVs, frost-free refrigerators, fully automatic washing machines, split air-conditioners, DVD players, microwave ovens, and home theatre systems – products entailing high aspirational value are likely to see a growth in consumption.
INDIA EMERGING AS A FORCE IN THE TELEVISION MARKET
In India, where 70 percent of citizens earn less than $5,000 a year, buying a television is not an option for many consumers. Surprisingly, however, Indians have shown remarkable interest in buying televisions, even the more-expensive flat-panel sets, mostly because of increased awareness, rising availability and declining prices, according to iSuppli Corp.
“India is emerging as a major force in the global television market in terms of domestic consumption as well as in production of sets”, said Riddhi Patel, principal analyst for television systems at iSuppli. While there remain disparities in terms of the economic status of television buyers, set sales in India are experiencing strong growth.
India’s television market is set to grow to 18.7 million units by 2011, expanding at a Compound Annual Growth Rate (CAGR) of 9 percent from 12.1 million units in 2006. On the revenue side, overall television sales will reach $4 billion by 2011, rising at a CAGR of 9.6 percent, up from $2.5 billion in 2006, according to iSuppli.
The attached figure presents iSuppli’s forecast for the Indian television market for both units and revenue for the period of 2006 through 2011.
CRTs still dominate market
While Flat-Panel-Display (FPD) televisions are gaining sales momentum in India, CRT televisions still have a leading position in the nation because the higher prices of Liquid Crystal Display Televisions (LCD-TVs) and plasma sets have discouraged their adoption in most parts of the country, Patel added.
Many consumers in India buying their first television sets are looking at 21-inch and smaller CRTs as starter sets. However, this carries over to the replacement market as well, where consumers are attracted to 29-inch flat-face CRT TVs as alternatives to LCD-TVs because of their lower prices. It is the urban areas, where consumers are looking for replacement sets or buying second televisions, where there is a likelihood of flat panels gaining some market share.
Manufacturing on the rise
Television set manufacturing continues to rise in India, with both domestic and overseas firms increasing their production bases in the country. This is due to a number of reasons, including:
• Low-cost skilled labor
• Availability of a qualified workforce
• An untapped domestic market
• Special economic zones that provide tax-free environments
• Other tax and financial support breaks
Factories in India are cropping up in less-developed regions because of tax breaks given by the government in order to improve the living conditions of citizens as well as to promote investments in television production in the country. India has an excellent component supply base in terms of manufacturing facilities for glass and color picture tubes so it makes it a good fit for companies striving to take advantage of this emerging market.
LG ELECTRONICS INDIA PVT. LTD. (1997-2002)
1997: LG Electronics India Pvt. Ltd has entered into a strategic alliance with two consumer finance companies -- Countrywide Consumer Financial Services and Avco Financial Services Pvt. Ltd. Under the current scheme of things, the Mumbai-based Countrywide will provide finance facilities for LG products in 13 centres, while the New Delhi-based Avco Financial will handle two centres. After months of negotiations, LG finally entered into an alliance with the two in November, and the same has been operational since then.
Says LG Electronics India vice-president (marketing and sales) Rajeev Karwal: "The finance schemes will be available for one, two and three years." While the one-year scheme for Delhi will have a low flat interest rate of five per cent, in the other cities it will be 6.5 per cent. The rates for two and three-year schemes are uniform at 9.5 per cent and 10.5 per cent for all cities. LG will provide special "express" finance facility to credit card holders.
"The idea behind the alliance is to provide customers an opportunity to buy products of their choice. Moreover, it will help LG increase its market share since people who cannot afford cash down payment can buy in installments," added Karwal.
The scheme will only cover LG's colour television sets, refrigerators and washing machines. The company had recently added karaoke VCDs to its portfolio, but this will, currently, be out of the ambit of the finance scheme.
The company has in all launched 21 products in India, which include 10 colour TV sets, seven refrigerators and three washing machines. Countrywide will provide finance to consumers at Delhi, Mumbai, Pune, Ahmedabad, Baroda, Bangalore, Chennai, Hyderabad, Cochin, Coimbatore, Noida, Faridabad, and Gurgaon. From January 1998, the same will be extended to Chandigarh, Ludhiana, Indore, Lucknow, Trichi, Goa, Nashik and Jaipur. Avco Financial will only handle Delhi and Jaipur.
Karwal is confident that this alliance will help LG beat the recessionary trends prevailing in the consumer durables industry. "This alliance will definitely help, but the most important thing is product quality and after sales service," says Karwal.
1998: LG Electronics India Pvt. Ltd plans to set up deflection yok and extra high tension transformer manufacturing facilities at Greater Noida. The company's Noida facility at present houses colour televisions (CTVs), refrigerators, and air conditioners units.
"As part of our CTV indigenization programme we contemplate to put up such units in the country. It can either be wholly owned by the company or with a joint venture partner. We are also planning to export critical components to developed countries at a later stage," company vice-president (marketing & sales) Rajeev Karwal said.
LG aims to achieve 80 per cent indigenization level within the next two years, he said. At present, it stands at around 60 per cent. It sources key components like tuners from Onida.
In addition to the component facilities, the company has also decided to set up air conditioner and microwave oven units by next year. LG has set aside around $289 million for undertaking has set aside arouexpansion plans over a period of five years to seven years in the country. To part finance the project, the company is planning its maiden public issue by 2002.
"We will dilute 25 per cent in favour of the public. Rest of the funds will come from equity," Karwal said.
Next year the company will have exports, for which the internal target has been set at $100 million. The Korean electronics giant is eyeing the Saarc region for a substantial growth in the sector. The products exported will carry `LG Made in India' brand names, Karwal said.
The company also plans to start manufacture of computer monitors at its Noida facility. It has already earmarked funds for this facility and production is expected to start early next year.
Giving thrust to rural marketing, the company has conducted extensive rural market research and plans to unveil mobile vans in these areas. The mobile vans will help the customers to know about the company brands and the various service-oriented programmes. LG also plans to extend its existing air conditioner range this year.
Two new models of window ACs, one new model in split ACs and a package AC are on the anvil. The package AC will have features like plasma air purifying system, cooling and heating options, soft dry operation, wireless remote control, anti-bacteria filter and auto swing.
1999-2002: In an initiative aimed at enhancing the consumer involvement with the brand LG during World Cup '99, LG Electronics India Pvt. Ltd (LGEIL) is flagging off three high-blitz cricketing contests in April. Spearheaded by the heroes of World Cup '83-Mohinder Amarnath, Roger Binny and Madan Lal-LGEIL's Rs 8-crore promotion initiative will involve three contests, which will kick off in the first week of April. The winners of these contests will be flown to Lord's, England, in three groups, each of which will be led by the celebrity cricketers.
Through a heavily advertised print and electronic media campaign, the consumers would be invited to answer three basic questions like: which team did India meet in World Cup 1993? Participants would also have to write a slogan for LG. The winners will have the option to travel with the LG team of their choice and will stay in the UK for three days, where apart from watching cricket they would be taken for sightseeing with the cricket stars.
The campaign for the contests is a mix of one20-second and three 10-second ads, which will appear on DD, Star Plus, ESPN, and Star Sports. In the print media, the 240 cc ad will be followed by a 120 cc insert. Following a lucky draw, results will be announced in the first week of May in India Today
The newly defined mantra by Kwang-Ro Kim, the Managing Director of LG Electronics India Pvt. Ltd (LGEIL) is cost-innovation -- from implementing higher technology efficiencies, to reducing design-related frills, to purchasing cheaper components, to more effective HR policies. It requires a lot of skill to cut costs and he said that he is glad that without denting profits significantly, we have managed to cut consumer prices of air-conditioners by 20 percent, and of colour televisions (CTVs) by 15 per cent. We are preparing ourselves for another 7-8 per cent reduction in prices across all categories.
Their immediate agenda now is the commencement of its digital management system (DMS), a cost-cutting technique that would lead to shorter assembly lines, higher productivity, and reduced manufacturing costs by 30 per cent. The implementation of DMS is expected to result in an additional five per cent reduction in prices across CTVs, refrigerators and washing machines at the least. To be brought in at LG Electronics manufacturing base in Greater Noida for CTVs in the first half of 2002, DMS is to be subsequently extended to refrigerators and washing machines. The DMS exercise is a follow-up of the Six Sigma exercise LGEIL had initiated late last year, with the objective of cutting costs across processes other than manufacturing.
Apart from the technology edge, the Rs 1,795-crore LGEIL (turnover for the period between January and October 2001), is banking on its grassroots-level marketing to edge out competing heavyweights such as BPL, Samsung, Videocon and Whirlpool, which are all breathing down its neck. Meanwhile, industry dynamics have already claimed their first victim. The Chinese invasion that had threatened to turn the industry upside down with rock-bottom pricing has all but fizzled out.
LG has been the fastest growing CTV brand since 1999, its cracking the stronghold of the Bangalore-based BPL - the most preferred brand of CTVs among intending buyers, a title that LG is gunning for now. Southern region has been the Achilles heel in LGs scheme of things, so they need to catch up there. They are trying to improve the distribution network there and they are sure that once their Chennai unit becomes functional they will do well. While the contract-manufacturing base in Chennai will produce CTVs and air-conditioners, the Nasik factory will be involved in the manufacture of only CTVs.
Since the company is taking the contract-manufacturing route instead of setting up its own factories, the investments involved will not be too high. Similar contract manufacturing at Mohali, Kolkata and Bhopal for CTVs was commissioned earlier this year.
Apart from supplementing its capacity at Greater Noida (on the outskirts of Delhi), the expansion strategy is in line with LGs long-term plan of turning India into an export hub for several South Asian countries. Apart from existing exports markets in Sri Lanka, UAE, Bangladesh and Philippines, they are hopeful of tapping the markets of Hong Kong, New Zealand and South Africa next year for exports. The export target of $20 million the following year, against the current $10 million. Another recent move towards broad basing penetration has been setting up areas offices in 50-plus regions across 83 territories.
On the distribution front, LG is training its sights on the institutional and Government segment anew. The idea is to grow sales from the institutional segment from five per cent now to 10 per cent in the next one year. Also, the next one year will see another 15 LG Shoppes (exclusive outlets), up from the current 35.
Another strategic decision has been deferring its proposed IPO indefinitely till the market recovers. LGEIL was planning to raise $25 million from the IPO in the year 2001, by offloading 25 per cent equity stake in the company. Instead, it intends to raise funds through non-convertible debentures (NCD), the proceeds of which will part finance the expansion plans.
While the low-priced Sampoorna CTV brand has been relaunched as Cine Plus at a Rs 5,000-7,000 tag. A budget of Rs 10 crore has been allocated for rural marketing in the year 2002.
LG ELECTRONICS INDIA PVT. LTD. (2003-2008)
2003: LG CDMA launched their TV presence with the World Cup. They had spent 5.3 crores to get the spots for the ad- campaign; this had improved their brand awareness as well as their sales as they did in 1999.
LG colour TV sales scale a new peak The consumer electronics industry, starved of `bumper business' after World Cup cricket early this year, has cause to cheer. The festival of lights has brightened the year for the colour TV industry, which was desperately looking for growth triggers. LGEIL has reported sales of 327,000 units in October alone. This is a sales figure which nobody even in LG worldwide has achieved in a single month. During the two months September-October 2003, the company has sold more than five lakh units. The festive marketing strategy coupled with focus on the semi-urban market and a slew of product launches were the main growth drivers. Almost 70 per cent of our sales came from the semi-urban market. The company reported a turnover of Rs 2,286 crore in the period January to June 2003, registering a growth of 45 per cent compared to the same period last year. This year the sales figure touches 8.25 million units.
LG Electronics (LGE) has launched a new range of New Display Products (NDPs). Claiming to be a leader in the consumer electronics market, LG has strategically planned to create an exclusive category of hi-end consumer electronics products which include plasma display panels, projection televisions, LCD TVs, projectors, monitors and optical storage devices.
Targeting the fast-growing flat panel displays market; LGE's strategy will be on exploring the untapped potential for these products in India. The company is look at upgrading a consumer from being the owner of a conventional TV to a technologically superior electronic product.
NDP refers to TV products with new display technologies such as PDP, LCD TV, projection TV and projectors. They feature large sized or slimmer screens in comparison with the existing products.
LGE is introducing two patented technologies of MDP product line up and XDR (Pro) technology for picture enhancement through these products. The product market for NDPs is booming due to the changing broadcasting technology, consumer aspirations and product competitiveness.
A release says that LGE will strive to make these aspirational products available at the consumer's doorstep. Apart from the retail stores where these products will be available, the New Display Products will also be available in the X Canvas Studios, which are the exclusive outlets for LGE's high end products and on LGE's website, Lgezbuy.com which is India's largest CE and HA site.
LG Electronics India Pvt. Ltd (LGEIL), has posted a net profit of Rs 205 crore for the year ending December 31, 2003.
The company has registered a turnover of Rs 4,500 crore, a growth of 36 per cent vis-a-vis 2002, with individual contributions being 46 per cent from consumer electronics division, 44 per cent and 10 per cent from home appliances and IT divisions respectively.
2004: LG thinks local with pune plant. LG Electronics has re-strategized its plans for the colour television segment in India. Its upcoming Pune plant, which was to have served as an export hub for some markets in the Asia Pacific region, will now also manufacture CTVs for the southern and western markets of India. These two regions are likely to constitute 50% of LG’s total sales this year and are expected to clock sales of 1.2 million units. To start with, LG will manufacture 50,000-60,000 CTVs per month at its Pune plant, whose capacity will be ramped up later. This is expected to benefit the company’s margins from the southern and western markets as it will save on logistics costs to some extent. According to the blueprint for the Pune factory, the Korean company will put in Rs 100 crore each year for the next five years. The Pune plant was to manufacture top-end products for CTVs, including large screen products, apart from other appliances.
LG Electronics India (LGEIL) has launched the world's first TV Refrigerator called TV DIOS with a 13-inch hi-definition LCD TV. Not just that, TV DIOS also has built in FM radio set too. Altogether these 600 litre of Fridge-cum-TV costs Rs 2 lakh. TV DIOS is the seventh model in the DIOS range of refrigerators. As for advertising and marketing plans for TV DIOS, the company is putting aside Rs 3 crore to be spent on print and outdoor advertising.
The rural market is going to be the main focus of LG for 2004. Since we intend to be very active in the rural market, we have set a target of 70% value growth. So the target is Rs. 7,000 crores. We think the rural market contribution will be around 65% and the growth over this year on the rural market will be something around 40%.
The rural activities include marketing activities and other initiatives in the form of surveys and the like. So for that, we are opening many more branches across the country. In September ’02 we had only eighteen branches; now we have forty branches. Additionally, 112 area offices more , which were not there at all last year; these area offices have been opened in the district-level areas. Below these area offices, they have remote area offices, which are called as ‘RAOs.’ Currently they have eighty RAOs, which they are planning to expand to two hundred RAOs by next year so that they can reach out to the rural market in a better way and feel the pulse of all the consumers and the dealers there.
2005: LG Electronics India Pvt. Ltd., the leading consumer durable company in the country, has achieved a landmark turnover of Rs. 2100 crores during the festive season this year. The auspicious occasion of Diwali marked a boom in the sales of every LG product category especially in the colour television category. LG surpassed sales of 4.75 lakh colour televisions during the festive season thus recording the highest sales by LGEIL in this category. The Flat TVs have had an extraordinary impact on the overall sales of the colour television segment. LGEIL sold 2.73 lakh units of flat TVs and 2.02 units of Normal TV's during the month of October.
Mr. Amitabh Tiwari, National Head – CTV, LGEIL said, "Our team is well prepared to face competition within the industry. It is the strength of our team and our network that we have been able to achieve the landmark figure. We are way ahead in the Colour television category and have set a benchmark for the industry to follow. We are elated to have created history in the color television category by achieving a turnover of Rs. 392 crores in the month of October. "
LG and SBI Card launch India's first Consumer Appliances Co-Branded Card. The LG - SBI Card is India's first co-branded credit card for the consumer appliances industry and can be used at more than 2 lakh outlets in India and more than 30 million outlets around the world displaying the Visa logo. Bringing together two of India's power brands, the LG - SBI Card will leverage the extensive national distribution networks of both LG and SBI Card to drive penetration.
Designed as a customer loyalty and rewards program, the LG - SBI Card combines all the well-known features of SBI Card with a series of exclusive rewards, benefits and promotional offers from LGEIL for the co-branded cardholder.
Announcing the launch, Mr. K R Kim, President South West Asia, LGE and MD LGEIL said, "The LG - SBI Card brings together two leading companies in their industries, both with a reputation for quality products, experience in providing superior customer service, and innovation. LG's product leadership is driven by our cutting edge technology, design and functionality but our market leadership is the result of a relentless drive to make the experience of our customers an unrivalled one. Through the LG - SBI Card, we hope to get even closer to our customers and drive long-term relationships with them."
He added, "Our goal is to be the card of choice for today's frequent shopper. The LG - SBI Card will introduce the benefits of SBI Card to a new and wider group of smart consumers who are looking to consolidate their spending and earn multiple benefits in return. LG SBI cardholders will enjoy the convenience and financial flexibility of this new co-branded credit card, which not only allows them to buy now and pay later in parts, but also to aspire for higher-end products by taking advantage of the exclusive offers they will earn from LG."
LGEIL has achieved a turnover of Rs 7500 crore in 2005. LG Electronics India Pvt. Ltd. –had launched SUPER SLIM Television and PROJECTION television in Bangalore -2005.
2006-2008:
LG Electronics has announced the launch of the Time Machine TV in the country, which aims at making TV viewing much more intelligent than before. This new product of the manufacturer is targeted at tech-savvy individuals.
According to LG, Time Machine TVs are the world s first television-sets to be equipped with a built-in digital video recorder, which enables the user to pause, rewind and replay live TV programs as per convenience after the original broadcast. With the inclusion of the playability feature, the Time Machine TV offers consumers the ability to have absolute control over the ways to view television. Using the built in HDD recorder technology, the viewer can go back in time to view their favorite programs all over again.
Time Machine is available in both LCD and plasma display panels. The plasma TV comes equipped with clarofilter technology, which enhances picture quality through a special optical film. Thus, removing double image and distracting effects of reflected light while watching television.
The LG Time Machine LCD TVs are available in 37-inch and 42-inch models, while the Plasma versions are available in 42-inch and 50-inch. All the Time Machine models are already available in the Indian market and are priced between Rs 100,000 to Rs 250,000.
LG Electronics has introduced the Ultra Slim Television which is a combination of style, and practicality, targeted towards discerning consumers who demand a tangible solution for limited living space along with aesthetic appeal for modern homes.
The LG Ultra Slim TV is the World’s Slimmest CRT Television. Breaking the stereotype of Slim Televisions, this revolutionary product is 7cm slimmer than LG’s own Super Slim range and a whopping 14 cm slimmer compared to the Conventional Flat TVs available in India.
It has a deflection angle of 120 degrees. This is 30 degrees wider than a normal CRT TV. As the deflection angle has a strong influence on the depth of TV set, LG has applied the shortest ‘Slim Gun’ which enabled it make the TV slimmer than ever before. The product is priced at Rs 12990/-.
LG Plasma Display Panel: LG Electronics has achieved new dimensions of technological excellence among the Plasma Display Panel manufacturers. The PDP is available in sizes of 40, 42, 50, 60 and 71 inch internationally.
LG has world’s slimmest panel at 78 mm to the world’s biggest panel at 71”. The company is the only brand in India which offers “The largest range of models in the PDP category. Cutting Edge Technology such as Image Stick minimization, Orbiter, Whitewash, Flexi PIP, Double Window Screen are some of the features which makes LG’s PDPs, the best made Plasma Panels ever.
LG Televisions:
Slimagic
In the Indian household scenario where space is a major constraint, LG has come up with an innovative solution by way of World’s slimmest Flat CRT TV, Slimagic. In India, especially in the metros, there is a major concern of smaller living space, and LG’s latest innovation provides a solution to utilize the limited living area / space in the most useful manner. The technology used for Slimagic is highly advanced with a new picture tube which makes the TV super slim and occupies 30% less space. The unique features of the Slimagic TV is that it a sleek TV, which occupies less space without compromising on picture quality and looks attractive with double tone colors. Slimagic is available in 21” and 29”
The LG X-WAVE TV:
X Wave is India’s first TV with wireless Audio Transmitter. This new technology will enable consumers to listen TV sound through any audio system with FM receiver. Thus resulting in Home Theatre experience. The X Wave Wireless Sound Television comes with unique chip which transmits the TV sound on FM frequency. The TV sound output can be received by any audio set with FM receivers. This will enable consumer to experience home theatre sound output. The current model is available in 21” category and LG plans to launch 29” Flat X wave shortly.
LG Electronics India (LGEIL) will invest over Rs 1,100 crore in the next three years starting 2007 and is eyeing revenue of Rs 16,000 crore by 2010. Of the planned investment, Rs 1,000 crore would be used to fund marketing initiatives with a focus on plasma TV, IT products, split AC and GSM handset while Rs 120 crore would go into production capacity expansion.
LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract aspirational and young consumers across India, company will roll out a new marketing strategy. LG Electronics India Pvt. Ltd. (LGEIL) is going to invest Rs 360 crores in brand building and other marketing initiatives this year. LG, this year, will focus on the IT, GSM and flat panel displays segment. The company will also venture into the air purifiers and wine sellers segment. Moreover, LG is looking at launching India-specific products.
Commenting on the occasion, Moon B Shin, managing director, LGEIL, said, “LG is committed towards introducing innovative, trendy and technology products. The focus of the company, this year, will be on combining its expertise in design and technology to give a fresh premium appeal to the brand, adding an aspirational value for the Indian consumer. The differentiating factor for the brand will be with its focus on customer service.”
LG has started a '211 campaign' to provide its customers with quality after-sales service. The campaign includes company response to customer complaint within 2 hours. The fixing time for complaints would vary from 1 hour to a maximum of 24 hours. The IT infrastructure for 211 campaigns has been currently set up in 22 cities and would be extended to 40 cities by next month.
Shin added, “We have an aggressive line-up of products this year, and our focus will be on the IT, GSM and flat panel displays segment. We have recently launched the 32” Plasma TV and 22” LCD TV. We will also be entering the air purifiers and wine sellers segment. We will be investing Rs 360 crores this year for our brand-related exercises.”
“LG wants to enhance the consumer durable shopping experience for the consumers. We are planning to launch 60 premium brand shops by the end of first quarter,” added Shin. Brand shops cater to the audience interested in buying high-end products.
MAJOR KEY SUCCESS FACTORS
• Innovative marketing - LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World Cup and followed it up in 2003 as well.
• Local and efficient manufacturing to reduce cost - To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi.
• Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs.
• Product localization - Product localization is a key strategy used by LG. It came out with Hindi and regional language menus on its TV.
• Regional distribution model - This has resulted in quicker rotation of stocks and better penetration into the B, C and D class markets.
• Leveraging India’s IT advantage - LG Electronics has awarded a contract to develop IT solutions to LG Soft India (LGSI). The project involves development and support for ERP, SCM, CRM and IT-enabled services for LG.
