Description
This is presentation which gives idea of marketing plan of Scarlet LCD TV by LG.It also inludes the below parameters Brand Cannibalization, Premium Positioning, Sales and Market Share Growth
Marketing Plan of LG–SCARLET: LCD TV
Abstract
LG is a South Korean chaebol that entered the Indian market in 1997 and achieved immediate success, something that its direct competitors such as Sony and Samsung took a long time to achieve. A major reason for this has been its focus on the massmarket segment. For this, it acquired the required knowledge about the functioning of the Indian social and cultural systems. Its market share in the consumer durable industry currently stands at more than 27%. However, this strategy also has some drawbacks. LG as a brand lags behind competitors such as Samsung and Sony. Therefore, LG embarked on a brand building exercise with the aim of positioning itself as a lifestyle brand. One of the products introduced to implement this strategy was an LCD TV range by the name Scarlet.
PRODUCT: LG Scarlet is a premium range of LCD flat-screen TV’s introduced by the company in May 2008. The initial hype led to rising sales, but the company and the product were unable to sustain this trend. A major reason for this was the low-level of differentiation offered by the product in comparison to both LG products and competitive products. The company responded by launching an improved version of the series, Scarlet 2.0 in May 2009. PROBLEM ANALYSIS: This marketing plan aims to provide a solution to the following problems surrounding the Scarlet range and the LCD market for LG: 1. Brand Cannibalization: Recently, LG launched Jazz, another LCD flat-screen TV that is very similar to Scarlet. This has resulted in brand cannibalization due to unclear positioning statements for the two products, especially with respect to each other. 2. Premium Positioning: Scarlet is LG’s flagship offering in the LCD flat-screen segment. However, this isn’t clear from its current positioning statement. 3. Sales and Market Share Growth: LG wishes to grow its market share of the LCD flatscreen segment from 23% to 33%. Scarlet is an important peg if they are to achieve this ambitious target and provide a significant sales boost
MARKETING STRATEGY: POSITIONING AND RATIONALE A good brand positioning helps guide marketing strategy by clarifying the brands essence, what goals it helps consumer achieve, and how it does so in unique way. POSITIONING STATEMENT OF THE BRAND LG: ?LG strives to enhance the customer’s life (and lifestyle) with intelligent features, intuitive functionality, and exceptional performance. Choosing LG is a form of selfexpression and self-satisfaction. Our 24 customer will take pride in owning the amazing and take comfort in knowing he/she made a smart, informed decision.? RATIONALE: Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the brand in the minds of the target audience. With the advent of Jazz on the scene, Scarlet is in a tight position in its life cycle. Its facing stiff competition from within the stable. There would be cannibalization between the two brands from LG beyond which they would face the competition. We intend to position Scarlet as a value based aspirational product, which people would want to buy – it would reflect the youthfulness, the technology, the imagination of life. The main target audience is those customers who have got high disposable incomes and aspire for lifestyle products. The USP of Scarlet is the technological innovations imbibed into it. They are : Technological Innovations: ? ? ? ? ? ? Flattest LCD TV in the world. High refresh rate shows clearest picture One of the fastest response times (2.4 ms in case of Scarlet 2.0) Bluetooth compatible Very high contrast ratio 100000:1 Invisible Speakers
Table of Contents
Abstract ........................................................................................................................................................ 2 a. b. c. Analysis of the competitive market environment ........................................................................... 5 Research and analysis of key marketing information on customer and competitive behavior 7 Segmentation and Target customer group ..................................................................................... 9
References: ............................................................................................................................................... 11
a. Analysis of the competitive market environment
Michael Porter’s Five Forces Model provides a framework for analyzing competitive market environment. 1. DEGREE OF RIVALRY LG, Samsung, Videocon, Sony and Onida are some of the big players in the industry. Although LG is the market leader, its average realisation is lower than the industry average due to competitive pricing. On the other hand, Samsung is far stronger than LG globally, and while India is a key market, there is no crushing need to ensure immediate big growth numbers. LG expects the Indian arm to contribute 10% of its total worldwide turnover by 2010. According to Crisil, the company has been growing at CAGR of 24% between 2001 and 2004. Videocon, another major player has managed to hold its own in the midst of the onslaught from the Korean majors, though profits have suffered. It has managed to hold on to its share by adopting a value for money strategy. Although the top players have drastically reduced prices, they have gained more volume due to increasing market size and higher penetration levels, coupled with conscious shift towards flat colour televisions. 2. THREAT OF ENTRY Threat of entry is determined by the entry barriers, which act to prevent new firms from entering the industry. 2.1. ACCESS TO DISTRIBUTION CHANNELS As market leaders LG and Samsung have highest sales per dealer and hence gain crucial competitive advantage over their rivals. 2.2. BRAND SALIENCE Domestic players are constrained in their brand building due to not being global in their operations. 2.3. CAPITAL INVESTMENT AND ECONOMIES OF SCALE Television industry is capital intensive and players have made huge investments in putting up state of the art manufacturing facilities. Huge capital requirement thus can act as barrier to entry.
3. THREAT OF SUBSTITUTES In this model, substitute products refer to products in other industries. Internet though emerging as an infotainment medium is very low in penetration. Moreover the industry has responded to the future threat by introducing a TV that can provide functions of the Internet along with regular features. 4. BUYER POWER The television market can be broadly segmented into following categories: 1. THE UPGRADERS This segment of buyers has upgraded from Black and White TV to Colour television. This segment is by far the largest in the Indian TV market and constitutes approximately 48% of the market. 2. FIRST TIME BUYERS This constitutes people who are purchasing a colour television for the first time. They comprise 18% of the market. 3. MULTIPLE SET PURCHASERS They comprise the lowest share of the market in terms of volume with just 8% being commanded. The family demographics of this segment are mostly joint families and full nests. 4. REPLACEMENT PURCHASERS Over the years this market has surged and is being looked upon as a potential high margin market by the companies. Replacement demand is expected to account for 55-57 per cent of total CTV sales in 2010-11.
5. SUPPLIER POWER Incase of LCD TV, LCD panels constitute more than 50% of the cost of television. A sharp reduction in import duty from 85% to 40% between 1994-96 and further down to 20% by 2004 was announced to gear the manufacturers of picture tubes to face competition from foreign players. The picture tube industry is both technology and capital-intensive industry. Hence manufacturers are dependent on suppliers for important components and hence suppliers enjoy high bargaining power.
b. Research and analysis of key marketing information on customer and competitive behavior
The TV industry recorded sales of ~15.9 MM units in 2007. The LCD market accounted for sales of ~0.4 MM TV and was projected to grow at 124% in 2008. The leading brands in the LCD segment were Samsung (37%), followed by Sony (17 per cent), and LG (16 per cent). DRIVERS FOR GROWTH 1. Enhanced purchasing power 2. Launch of digital broadcast networks (DTH, IPTV, STB cable) 3. A growing upper middle class
The CTV industry was valued at around Rs 110 billion in 2008-09. Its share in the total value of the household appliances industry is 48 per cent. TV sales saw a growth of 17% during 2008-09. Volumes grew by 54 per cent y-o-y in the first half of 2008-09; they declined by 5 per cent in the second half. The third quarter (being festive season) sales for CTV industry — accounted for 30-35 per cent of total sales. Since then, demand has picked up during the fourth quarter partly aided by the excise duty cuts of 4 per cent and 2 per cent announced in the fiscal stimulus packages in December 2008 and February 2009, respectively.
CTV Volume Growth Value Growth *Projected
2007-08 1 0
2008-09 17 15
2009-10* 5 3
2010-11* 11 10
Source: CRISIL Research
High-end TVs are expected to contribute around 32 per cent of total CTV sales in 200910. Over the past few years, a shifting of preferences towards liquid crystal display (LCD) has been observed, which is expected to become more pronounced going forward as buyers are increasingly opt for high-end TVs.
Reduced focus on the conventional colour TV (CCTV) segment, price reductions in LCDs and declining price difference between flat colour televisions (FCTV) and highend TV segments are propelling this shift. In 2005-06, LCDs were, on an average, priced eight times higher than FCTVs, which has now come down to a mere four times. In 2009-10, FCTV growth is expected to moderate to around 3 per cent, whereas CCTV volumes are expected to decline owing to the overall economic slowdown. We expect a shift in consumer preferences from CCTV to FCTV on account of a narrowing price differential between them. Thus, FCTV is expected to constitute around 54 per cent of the total CTV market in 2009-10. Highend television, fuelled primarily by LCD TV sales, is expected to constitute around 39 per cent of total CTV sales by 2010-11.
SEGMENTAL SHIFTS (GRADUAL SHIFT FROM FCTV TO LCD TVS) %Growth Y-o-Y Apr-Jun09 Conventional FLAT LCD Plasma 0.7 0.4 74.7 3.6 % Share Apr-Jun09 27.8 64.7 7.1 0.3
Share of the LCD segment in the total CTV market grew by 74.7 per cent (y-o-y). LCDs contributed 7.1 per cent of total CTV volumes in April-jun 2008-09 vis-à-vis 3.0 percent in April-February 2007-08.
c. Segmentation and Target customer group
SEGMENTATION SCHEMES AND PROFILES
1. SOCIOECONOMIC CLASSIFICATION (SEC) This so called as Socio-Economic Classification (SEC) is mainly used by market planners to target market before launching their new products. SEC is made to understand the purchase behaviour and the consumption pattern of the households. The urban area is segregated into: A1, A2, B1, B2, C, D, E1and E2.
Source: Indian Readership Survey Sections A & B refer to High-class- constitutes over a quarter of urban population Sec C refers to Middle-class-- constitutes 21% of the urban population Sections D & E refer to Low-class-- constitutes over half the urban population
2. INCOME The large Indian middle class comprising dual-income families is a very lucrative consumer base. With rising aspirations and incomes, sales of consumer durables in rural and semi-urban areas are already beginning to show robust growth. Indian consumer markets are predicted to experience a dramatic expansion of domestic consumption with spending patterns changing from necessary to discretionary. Middle-
income families are spending more on mobile phones, television and private schooling for children. High-income families are spending more on high-end consumer electronics, alcoholic beverages and designer clothing. Increases in the average age of getting married and age of having the first child are also contributing to the decrease in the proportion of couples with children.
3. GEOGRAPHIC a. Tier II cities: Nearly 26 Indian cities have a population exceeding 1.0 million and a rapidly growing consumer market with rising incomes. They are referred to as secondtier cities b. Rural and urban areas : By 2030, 40.8% of India's population will be living in urban areas compared to about 28.4% now. As urban areas become increasingly competitive, rural areas will represent the next frontier
TARGET MARKET
The target consumer has been identified as 1. Young working Indian 2. High-income families 3. Growing middle class families
The above category of consumers normally 1. Belong to A1, A2, B1, B2 SEC group 2. Are highly technology savvy 3. Love to spend money on high-end consumer electronic 4. Are value and family oriented. 5. Are looking for premium things that enrich their experience and help them 6. Own or intend to purchase such items to beautify their surroundings which 7. Have more concern for safety and health issues 8. Have more concern for life style product 9. Are highly quality oriented
References:
Kotler, Keller, Koshy, Jha – Marketing Management-South Asian Perspective , 13th Edition WEBSITES 1. LG Electronics India (http://www.in.lge.com/) 2. Sony India (http://www.sony.co.in/section/home) 3. Samsung Electronics India (http://www.samsung.com/in/) 4. https://www.crisilresearch.com
doc_734789520.docx
This is presentation which gives idea of marketing plan of Scarlet LCD TV by LG.It also inludes the below parameters Brand Cannibalization, Premium Positioning, Sales and Market Share Growth
Marketing Plan of LG–SCARLET: LCD TV
Abstract
LG is a South Korean chaebol that entered the Indian market in 1997 and achieved immediate success, something that its direct competitors such as Sony and Samsung took a long time to achieve. A major reason for this has been its focus on the massmarket segment. For this, it acquired the required knowledge about the functioning of the Indian social and cultural systems. Its market share in the consumer durable industry currently stands at more than 27%. However, this strategy also has some drawbacks. LG as a brand lags behind competitors such as Samsung and Sony. Therefore, LG embarked on a brand building exercise with the aim of positioning itself as a lifestyle brand. One of the products introduced to implement this strategy was an LCD TV range by the name Scarlet.
PRODUCT: LG Scarlet is a premium range of LCD flat-screen TV’s introduced by the company in May 2008. The initial hype led to rising sales, but the company and the product were unable to sustain this trend. A major reason for this was the low-level of differentiation offered by the product in comparison to both LG products and competitive products. The company responded by launching an improved version of the series, Scarlet 2.0 in May 2009. PROBLEM ANALYSIS: This marketing plan aims to provide a solution to the following problems surrounding the Scarlet range and the LCD market for LG: 1. Brand Cannibalization: Recently, LG launched Jazz, another LCD flat-screen TV that is very similar to Scarlet. This has resulted in brand cannibalization due to unclear positioning statements for the two products, especially with respect to each other. 2. Premium Positioning: Scarlet is LG’s flagship offering in the LCD flat-screen segment. However, this isn’t clear from its current positioning statement. 3. Sales and Market Share Growth: LG wishes to grow its market share of the LCD flatscreen segment from 23% to 33%. Scarlet is an important peg if they are to achieve this ambitious target and provide a significant sales boost
MARKETING STRATEGY: POSITIONING AND RATIONALE A good brand positioning helps guide marketing strategy by clarifying the brands essence, what goals it helps consumer achieve, and how it does so in unique way. POSITIONING STATEMENT OF THE BRAND LG: ?LG strives to enhance the customer’s life (and lifestyle) with intelligent features, intuitive functionality, and exceptional performance. Choosing LG is a form of selfexpression and self-satisfaction. Our 24 customer will take pride in owning the amazing and take comfort in knowing he/she made a smart, informed decision.? RATIONALE: Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the brand in the minds of the target audience. With the advent of Jazz on the scene, Scarlet is in a tight position in its life cycle. Its facing stiff competition from within the stable. There would be cannibalization between the two brands from LG beyond which they would face the competition. We intend to position Scarlet as a value based aspirational product, which people would want to buy – it would reflect the youthfulness, the technology, the imagination of life. The main target audience is those customers who have got high disposable incomes and aspire for lifestyle products. The USP of Scarlet is the technological innovations imbibed into it. They are : Technological Innovations: ? ? ? ? ? ? Flattest LCD TV in the world. High refresh rate shows clearest picture One of the fastest response times (2.4 ms in case of Scarlet 2.0) Bluetooth compatible Very high contrast ratio 100000:1 Invisible Speakers
Table of Contents
Abstract ........................................................................................................................................................ 2 a. b. c. Analysis of the competitive market environment ........................................................................... 5 Research and analysis of key marketing information on customer and competitive behavior 7 Segmentation and Target customer group ..................................................................................... 9
References: ............................................................................................................................................... 11
a. Analysis of the competitive market environment
Michael Porter’s Five Forces Model provides a framework for analyzing competitive market environment. 1. DEGREE OF RIVALRY LG, Samsung, Videocon, Sony and Onida are some of the big players in the industry. Although LG is the market leader, its average realisation is lower than the industry average due to competitive pricing. On the other hand, Samsung is far stronger than LG globally, and while India is a key market, there is no crushing need to ensure immediate big growth numbers. LG expects the Indian arm to contribute 10% of its total worldwide turnover by 2010. According to Crisil, the company has been growing at CAGR of 24% between 2001 and 2004. Videocon, another major player has managed to hold its own in the midst of the onslaught from the Korean majors, though profits have suffered. It has managed to hold on to its share by adopting a value for money strategy. Although the top players have drastically reduced prices, they have gained more volume due to increasing market size and higher penetration levels, coupled with conscious shift towards flat colour televisions. 2. THREAT OF ENTRY Threat of entry is determined by the entry barriers, which act to prevent new firms from entering the industry. 2.1. ACCESS TO DISTRIBUTION CHANNELS As market leaders LG and Samsung have highest sales per dealer and hence gain crucial competitive advantage over their rivals. 2.2. BRAND SALIENCE Domestic players are constrained in their brand building due to not being global in their operations. 2.3. CAPITAL INVESTMENT AND ECONOMIES OF SCALE Television industry is capital intensive and players have made huge investments in putting up state of the art manufacturing facilities. Huge capital requirement thus can act as barrier to entry.
3. THREAT OF SUBSTITUTES In this model, substitute products refer to products in other industries. Internet though emerging as an infotainment medium is very low in penetration. Moreover the industry has responded to the future threat by introducing a TV that can provide functions of the Internet along with regular features. 4. BUYER POWER The television market can be broadly segmented into following categories: 1. THE UPGRADERS This segment of buyers has upgraded from Black and White TV to Colour television. This segment is by far the largest in the Indian TV market and constitutes approximately 48% of the market. 2. FIRST TIME BUYERS This constitutes people who are purchasing a colour television for the first time. They comprise 18% of the market. 3. MULTIPLE SET PURCHASERS They comprise the lowest share of the market in terms of volume with just 8% being commanded. The family demographics of this segment are mostly joint families and full nests. 4. REPLACEMENT PURCHASERS Over the years this market has surged and is being looked upon as a potential high margin market by the companies. Replacement demand is expected to account for 55-57 per cent of total CTV sales in 2010-11.
5. SUPPLIER POWER Incase of LCD TV, LCD panels constitute more than 50% of the cost of television. A sharp reduction in import duty from 85% to 40% between 1994-96 and further down to 20% by 2004 was announced to gear the manufacturers of picture tubes to face competition from foreign players. The picture tube industry is both technology and capital-intensive industry. Hence manufacturers are dependent on suppliers for important components and hence suppliers enjoy high bargaining power.
b. Research and analysis of key marketing information on customer and competitive behavior
The TV industry recorded sales of ~15.9 MM units in 2007. The LCD market accounted for sales of ~0.4 MM TV and was projected to grow at 124% in 2008. The leading brands in the LCD segment were Samsung (37%), followed by Sony (17 per cent), and LG (16 per cent). DRIVERS FOR GROWTH 1. Enhanced purchasing power 2. Launch of digital broadcast networks (DTH, IPTV, STB cable) 3. A growing upper middle class
The CTV industry was valued at around Rs 110 billion in 2008-09. Its share in the total value of the household appliances industry is 48 per cent. TV sales saw a growth of 17% during 2008-09. Volumes grew by 54 per cent y-o-y in the first half of 2008-09; they declined by 5 per cent in the second half. The third quarter (being festive season) sales for CTV industry — accounted for 30-35 per cent of total sales. Since then, demand has picked up during the fourth quarter partly aided by the excise duty cuts of 4 per cent and 2 per cent announced in the fiscal stimulus packages in December 2008 and February 2009, respectively.
CTV Volume Growth Value Growth *Projected
2007-08 1 0
2008-09 17 15
2009-10* 5 3
2010-11* 11 10
Source: CRISIL Research
High-end TVs are expected to contribute around 32 per cent of total CTV sales in 200910. Over the past few years, a shifting of preferences towards liquid crystal display (LCD) has been observed, which is expected to become more pronounced going forward as buyers are increasingly opt for high-end TVs.
Reduced focus on the conventional colour TV (CCTV) segment, price reductions in LCDs and declining price difference between flat colour televisions (FCTV) and highend TV segments are propelling this shift. In 2005-06, LCDs were, on an average, priced eight times higher than FCTVs, which has now come down to a mere four times. In 2009-10, FCTV growth is expected to moderate to around 3 per cent, whereas CCTV volumes are expected to decline owing to the overall economic slowdown. We expect a shift in consumer preferences from CCTV to FCTV on account of a narrowing price differential between them. Thus, FCTV is expected to constitute around 54 per cent of the total CTV market in 2009-10. Highend television, fuelled primarily by LCD TV sales, is expected to constitute around 39 per cent of total CTV sales by 2010-11.
SEGMENTAL SHIFTS (GRADUAL SHIFT FROM FCTV TO LCD TVS) %Growth Y-o-Y Apr-Jun09 Conventional FLAT LCD Plasma 0.7 0.4 74.7 3.6 % Share Apr-Jun09 27.8 64.7 7.1 0.3
Share of the LCD segment in the total CTV market grew by 74.7 per cent (y-o-y). LCDs contributed 7.1 per cent of total CTV volumes in April-jun 2008-09 vis-à-vis 3.0 percent in April-February 2007-08.
c. Segmentation and Target customer group
SEGMENTATION SCHEMES AND PROFILES
1. SOCIOECONOMIC CLASSIFICATION (SEC) This so called as Socio-Economic Classification (SEC) is mainly used by market planners to target market before launching their new products. SEC is made to understand the purchase behaviour and the consumption pattern of the households. The urban area is segregated into: A1, A2, B1, B2, C, D, E1and E2.
Source: Indian Readership Survey Sections A & B refer to High-class- constitutes over a quarter of urban population Sec C refers to Middle-class-- constitutes 21% of the urban population Sections D & E refer to Low-class-- constitutes over half the urban population
2. INCOME The large Indian middle class comprising dual-income families is a very lucrative consumer base. With rising aspirations and incomes, sales of consumer durables in rural and semi-urban areas are already beginning to show robust growth. Indian consumer markets are predicted to experience a dramatic expansion of domestic consumption with spending patterns changing from necessary to discretionary. Middle-
income families are spending more on mobile phones, television and private schooling for children. High-income families are spending more on high-end consumer electronics, alcoholic beverages and designer clothing. Increases in the average age of getting married and age of having the first child are also contributing to the decrease in the proportion of couples with children.
3. GEOGRAPHIC a. Tier II cities: Nearly 26 Indian cities have a population exceeding 1.0 million and a rapidly growing consumer market with rising incomes. They are referred to as secondtier cities b. Rural and urban areas : By 2030, 40.8% of India's population will be living in urban areas compared to about 28.4% now. As urban areas become increasingly competitive, rural areas will represent the next frontier
TARGET MARKET
The target consumer has been identified as 1. Young working Indian 2. High-income families 3. Growing middle class families
The above category of consumers normally 1. Belong to A1, A2, B1, B2 SEC group 2. Are highly technology savvy 3. Love to spend money on high-end consumer electronic 4. Are value and family oriented. 5. Are looking for premium things that enrich their experience and help them 6. Own or intend to purchase such items to beautify their surroundings which 7. Have more concern for safety and health issues 8. Have more concern for life style product 9. Are highly quality oriented
References:
Kotler, Keller, Koshy, Jha – Marketing Management-South Asian Perspective , 13th Edition WEBSITES 1. LG Electronics India (http://www.in.lge.com/) 2. Sony India (http://www.sony.co.in/section/home) 3. Samsung Electronics India (http://www.samsung.com/in/) 4. https://www.crisilresearch.com
doc_734789520.docx