Learnings From Other Nations by Pranesh Misra (1)

7/30/2019 Learnings From Other Nations by Pranesh Misra (1)

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LG Electronics

Discovering The 86% Solution.


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The 86% Solution

Prof Vijay Mahajan & Kamini Banga


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The Essence of The 86% Solution?

(insert cover of the book The 86%Solution here)

86% of worlds population

lives in the emerging anddeveloping world aninvisible opportunity!

MNCs have traditionally

focused on developedmarkets like NA and Europe,ignoring 86% of the worldpopulace.

Branding and Marketing

principles in emergingmarkets are quite differentfrom developed markets.

Innovation is the key to

success in emerging markets


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LG History

A Quick Review


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Early Beginnings as GoldStar:

Korea focused Some Export to developed world.

1958GoldStar (today's LG Electronics)

established

1959 Korea's first radio produced

1962 Radio exported to the US and Hong Kongas Korea's first

1965 Korea's first refrigerator produced

1966 Korea's first black & white TV produced

1968 Korea's first air conditioner produced

1969 Korea's first washing machine produced

1974 GoldStar Communications went public

1977 Color TV produced

1978 Exports surpassed US$100 million as

Korea's first in the electronics industry

THE 1950s

THE 1970s

THE 1960s


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The 1980s: Global production centers

Initially in the developed world..

1980First EU sales subsidiary in Germany(LGEWG) established

1982 Color TV plant in Huntsville in the USestablished

1984 Sales surpassed one trillion won

1986 European-standard VCR plant in Germanyestablished

1989 Sales subsidiary and a joint production

subsidiary in Thailand established


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The 1990s: Entry into China & India.

Acquisitions & Joint Ventures

1990Ireland-based design technology centerestablished

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

swing1995 Company name changed to LG Electronics and

the US-based Zenith acquired

1997 40-inch PDP TV and the world's first IC set forDTVs developed; India production subsidiary(LGEIL) established

1998 World's first 60-inch PDP TV developed

1999 LG.Philips LCD, a joint venture with Philips,established


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The New Millennium:

technology & innovation

2000 The world's first Internet-enabled refrigerator launchedGlobal sales of refrigerators reached the number one position

2001 the world's first Internet- enabled washing machine, air conditioner, andmicrowave oven launched

2003 World's first synchronous-asynchronous IMT-2000 mobile phonedeveloped; the world's first 76-inch PDP TV developed;CDMA mobile handsets took the largest share in the US & world CDMAmarket

2004 All-in-one LG 55" LCD TV, the worlds first and largest among LCDTVs, commercialized. The worlds largest and first LG 71" plasma TVcommercialized. The worlds first terrestrial DMB phone developed

2005 World's first DMB (Digital Multimedia Broadcasting) notebook PCunveiled. World's first DMB Phone with Time-shift function developedNetwork solution joint venture of LG-Nortel launchedCDMA mobile phones ranked first in the world in the 3rd quarter


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LG Today

Global Revenue: US $ 35 billion (consolidated $ 45 billion)

72,000 employees working in 77 offices and marketing unitsworldwide.

Worlds largestproducerof CDMA handsets, DVDplayers, optical storage devices, air conditioners, canistervacuum cleaners and micro ovens.

Growth driven by globalization


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Driven by Globalization

80% of Revenue from outside South Korea

0

5

10

15

20

25

2000 2001 2002 2003 2004 2005

Domestic International


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The Vision: Clear Global Aspirations


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The LG India

Story

So Far..


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125

485

1056

1930

2216

3315

4500

6500

0

1000

2000

3000

4000

5000

6000

7000

1997 1998 1999 2000 2001 2002 2003 2004 2005

T

urnoverin

Rs(C

r)

LGEIL-Winning Spirit 7200


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12.7

35.6

0

10

20

30

40

Samsung LG

LG Leads on Market shares (March 2005)

*Source: ORG-Marg

22.9

29.3

20

22

24

26

28

30

Whirlpool LG

18.1

39.4

15

20

25

30

35

40

45

Samsung LG

14.3

27.4

12

14

16

18

20

22

24

26

28

Samsung LG

Washing Machine Refrigerators

Color TVMicrowaves


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Proportion of intending buyers

Brand Most likely to buy (%)

*Source: AC Neilsen-ORG-Marg Brand Track, Jun 04-Apr 05

3 2

1 1

67

1 0

0

5

1 0

1 5

2 0

2 5

3 0

3 5

LG

Samsung

Whir

lpool

Godrej

Vid

eocon


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Top of Mind Brand Awareness

Figs in %

*Source: AC Neilsen-ORG-Marg Brand Track, Feb-Apr 05

2 9

1 21 1 1 1

8

0

5

1 0

1 5

2 0

2 5

3 0

LG

Godrej

Samsung

BPL

Vid

eocon


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Has LG Applied

The 86% Solutions

In India?


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1. Dont Build a Car, when you need a

bullock-cart


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LG India: Closely studied the local needs &

Adapted international technology

Watching TV causes eye strain

Food in the fridge goes stale

Expensive clothes should not bewashed in Washing Machines

ACs are for cooling so it is a luxury item

Golden Eye

Preserve Nutrition

System

Fabricare

HealthAir System

Discovering Key Category Barriers LGs Innovation


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Discover Local Insights:

Fear that TV Viewing will spoil childrens Eyes

2 X Golden Eye TVC


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LG Invented products to meet Indian consumers needs

TV Signals dont reach all over the country

World-cup Football Craze in 2002

Frost free refrigerators are unaffordable by masses

Agitators in washing machine can damage clothes

DTH TV

(Indias first)

Football shaped TV

IntroducedSemi Frost Free

Introduced

Chaos Punch

Local Market Insights LGs Innovation


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LG Innovated to meet

Indian consumers needs

Majority of Indian consumers dont read English

Big audiences on TV sets + high ambient noise

Cricket is the second religion for most Indians!

Cricket is a second religion for most Indians!

Indian-language

On screen instructions

Ballad TV

2000 Watt output

Free Cricket gameWith TV in 1999

World-cup

Sponsorships

Indian Consumer Needs LGs Innovation


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2. Connect Brands to the Market


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Grassroots Marketing An LG India Invention

Widest distribution networkcovering India inch by inch!:

51 branches

72 regional offices

61 central area offices

112 district area offices to cater to rural markets 100 remote area offices

SPEED to market: products reached 18 states within 3months of launch.

SERVICE at the doorstep: 1108 service centers

24 hour, hassle free service


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Not just Bottom of the Pyramid

The WHOLE Pyramid!

Covers the width of categories from Home Entertainment toHousehold Durables to IT services to Mobile Phones.

Wide price range cater the entire population of India.

Latest technology inventions in top end world class productsin the show rooms.

Keep refreshing the portfolio 40 to 50 new models every

year.

Visibility at the retail outlets the real on-ground battle field.


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3. Think Young!


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LG Indias Strategy: Associate with Youthful Symbols

Capitalize the Youth Passions: Cricket and Bollywood.

Early sponsorship and association with Cricket since 2000.

Abhishek Bacchan: The latest craze amongst youth.


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4. Discover the Lands of Opportunity


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LG Indias Strategy: Make Impossible possible

Have Faith in Indias Potential

Business Challenge: MARKET CREATION

New lifestyles = New Opportunities.

Innovate to meet local market needs and aspirations.

Greed for Speed!

Target the multiple consumer segments: The super rich, themiddle classes, the youth, the poor and the rural.

Price right not cheap.


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LG Indias Strategy:

Invest in communication to realize your dreams.

Set stretched goals

Disproportionately higher Share of Voice

Continuous presence to maintain salience and top of mindawareness.

Invest in sponsorships: ICC sponsor for test and one days in2001, 2002, 2005.

Make presence felt at the street level.


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LG Indias strategy: Empower for Speed

Markets will not wait!

Deep distribution structure for quick reach of products

Empowerment at grassroots level to ensure speedy decisions

At national level Product Group Heads on key categoriesrun their categories as effective CEOs


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To

Sum Up


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LGs Global Success

Key Success Factors

Corporate ambition for Global Leadership clearlyenumerated for every stakeholder.

Belief in The 86% Solution principles and markets as

engines of growth.

Focus on Growth and Innovation.

Speed a vital winning ingredient

Dream impossible dreams; fuel those with adequateinvestment to convert dreams to reality.


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Have A Wall?

A Global Ad from India

LG X Canvas TVC


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The World Can

Be Yours!

Documents

Learnings From Other Nations by Pranesh Misra (1)