Topic

Group No.3Group Members

Prathamesh Desai PG0832 Pankaj Patil PG0829

Reshma Jadhav PG0838 Deblina Banerjee PG0808

Faheem Shaikh PG0810 Maithili Shetty PG0816 Shishir Dwivedi PG0847

What exactly is a ‘BRAND’Brand is a powerful differentiator in a highly

competitive market place.A strong brand brings trust, confidence,

comfort and reliability in customer’s mind.To the company, strong brand provides

credibility and respect among its peers.A brand is also a defense against competitive

inroads.

The concept of Branding When the images about the features,

characteristics, benefits etc., of a product are very strong in mind of the consumer, a brand is created. The brand

• is associated with recognizable symbols like name, logos, designs, colours, jingles,

• creates awareness, familiarity, recognitions,• influence favourable action,• give confidence of quality, value and

satisfaction,• leads to customer loyalty and repeat buying.

LG ElectronicsThe company was originally established in 1958 as

GOLDSTAR, producing radios, TVs, refrigerators, washing machines, and air conditioners.

LG Electronics is the world's second-largest manufacturer of televisions and third-largest producer of mobile phones.

The LG Group was a merger of two Korean companies, Lucky and GoldStar, from which the abbreviation of LG was derived.

With its headquarters in the LG Twin Towers in Seoul, South Korea, LG Electronics is the flagship company of LG GROUP, one of the world's largest electronic conglomerates.

The company has 75 subsidiaries worldwide that design and manufacture televisions, home appliances, and telecommunications devices

LG IndiaEstablished in 1997, LG Electronics India (LGEI) is a

wholly-owned subsidiary of LG Electronics, South Korea.

It is one of the leading companies in consumer electronics, home appliances and computer peripherals in India.

It has a turnover of almost US$ 1000 million in India. LGEI’s sales are increasing with a CAGR of 40 per cent over the past five years.

LG is the market leader in various segments like colour TVs, microwave ovens, frost-free refrigerators, air-conditioners, DVD Players and washing machines.

India challengesThe challenges faced by LG when it entered themarket in 1997 were:• Low brand awareness about LG in India.• One of the last MNCs to enter India. (Samsung, Sony & Panasonic entered in 1995 & LG in

1997.)• High import duty.• Competition from local players and other

multinational companies in the consumer electronics segment

• Price sensitiveness of Indian consumers.

Factors for successInnovative marketing strategiesLaunch of new technologies in consumer electronics and

home appliances.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.

LG brought in four captains of the Indian cricket team to endorse its products. LG invested more than US$ 8 million on advertising and marketing in this sport.

LG has differentiated its products using technology and health benefits. The CTV range has ‘Golden Eye’ technology, air-conditioners have the ‘Health Air System’ and microwave ovens have the ‘Health Wave System’.

Local and efficient manufacturing to reduce costTo overcome high import duties, LG manufactures PC

monitors and refrigerators in India at its manufacturing facility at Noida, Delhi.

LGEIL had already commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. This has helped LGEIL to reduce costs.

LGEIL is implementing a “digital manufacturing system”

(DMS) as a cost-cutting innovation. This system is a follow-up to the Six Sigma exercise LGEIL had

initiated earlier.

Product localisationProduct localisation is a key strategy used by LG. LG came out with Hindi and regional language menus on its TV. Introduced the low-priced “Cineplus” and “Sampoorna” range for the rural markets. LG was the first brand to introduce gaming in CTVs. In continuation of its association with

cricket, LG introduced the cricket game in CTVs.

Regional channel strategyand wide distribution networkLG has adopted the regional distribution model

in India. All the distributors work directly with the company. This has resulted in quicker rotation of stocks, and better penetration into the B, C, and D class markets.

LG also follows the strategy of stock rotation, rather than dumping stocks on channel partners.

LG has over 46 branch offices across the country. LG had set a target of developing 2,000 dealers in 2004, in addition to the existing 3,000 dealers all over India.offices and another 110 area

Rural MarketA penetrative distribution strategy ensured that

products were available even in smaller towns and cities, breaking the chain of urban dependency that plagues most white goods manufacturers.

More than 65 per cent revenues come from non-urban sources; whereas the industry average is Twenty-five to 30 per cent.

Branch offices in larger cities set up central area offices in smaller towns; these in turn reach out to even smaller towns and villages through remote area offices  -- at last count, the company had 51 branch offices, 87 CAOs and 78 RAOs.

Product offeringIndian Customers are very price sensitive.

They want the best quality at reasonable prices.

LG introduced its economy range in the country.

The company was ready to battle on two flanks: it offered modern, features-packed products, at the same time keeping its margins wafer-thin.

LG has been a price warrior while retaining its brand equity

Customization to Indian MarketConsumers in southwest India prefer big sounds and big

bass outputs. Accordingly, LG India created Ballad, a flat screen television model that sells only in the subcontinent and comes equipped with 2,000-watt speakers.

Similarly, refrigerators in India have smaller freezers and big vegetable compartments -- Indians prefer fresh food and a significant proportion are vegetarian.

Colours, too, are chosen keeping market preferences in mind. White refrigerators, for instance, don't sell well in Kolkata and Punjab -- while the sea air in Bengal corrodes the paint, the masala’s used in Punjabi cooking discolour the fridge.

Large capacity semi-automatic washing machines that would suit Indian families.

Leveraging the India Advantage

India’s IT advantageLG 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 Electronics’ 60 overseas subsidiaries and manufacturing facilities worldwide.

LGSI has offices in San Jose, London and Seoul with over 300 professionals in the development facility at Bangalore. All its offices are networked for swifter communication and decision making.

R&D potentialLG has set up research and development facilities in

India at Bangalore and Pune. Both the units carry out R&D work for the domestic market as well as for the parent company.

It also does customised R&D for specific countries to which it exports products.

In refrigerators, 95 per cent of the components are localised. All of which also help keep prices down.

LG set up a second manufacturing facility at Ranjangaon, near Pune, which makes white goods as well as cellular phones -- the first GSM handset manufacturing facility in India.

Future plansLG has a positive perception of India and the Indian

consumer. LG is making a foray into the e-commerce market in

India and has partnered with various local websites like fabmall.com, rediff.com, indiatimes.com, and indiaplaza.com.

LG is also planning to invest over US$ 208 million in India over the next three years to expand the

business.Mobile software development is also on LG’s agenda.