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M.P.Birla Institute of Management Page-1 STRATEGIC BRAND MANAGEMENT OF LG AIR CONDITIONERS AT LG ELECTRONICS INDIA LTD., BANGALORE. A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF BANGALORE UNIVERSITY. BY NIRAJ S KAKKAD REG.NO-02XQCM6022 UNDER THE GUIDANCE OF DR.K.V.PRABHAKAR (ADJUNCT PROFESSOR) M.P.BIRLA INSTITUTE OF MANAGEMENT ASSOCIATE BHARATIYA VIDYA BHAVAN. BANGALORE-560001 SEPTEMBER-OCTOBER 2004

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Page 1: Niraj LG Electronics

M.P.Birla Institute of Management Page-1

STRATEGIC BRAND MANAGEMENT

OF LG AIR CONDITIONERS AT LG ELECTRONICS

INDIA LTD., BANGALORE.

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF

BANGALORE UNIVERSITY.

BY

NIRAJ S KAKKAD

REG.NO-02XQCM6022 UNDER THE GUIDANCE OF

DR.K.V.PRABHAKAR (ADJUNCT PROFESSOR)

M.P.BIRLA INSTITUTE OF MANAGEMENT

ASSOCIATE BHARATIYA VIDYA BHAVAN.

BANGALORE-560001

SEPTEMBER-OCTOBER 2004

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DDEECCLLAARRAATTIIOONN

I hereby declare that the research work embodied in the dissertation

entitled “Strategic Brand Management of LG Air conditioner undertaken at

LG Electronics India Ltd.”, Bangalore, has been carried out by me under

the guidance and supervision of Dr.K.V.Prabhakar, Adjunct Professor,

M.P.Birla Institute of Management, Bangalore.

I also declare that this dissertation has not been submitted to any

University/Institution for the award of any Degree/Diploma.

Place: Bangalore

Date: 7th September, 2004

(NIRAJ S KAKKAD)

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CCEERRTTIIFFIICCAATTEE

I hereby declare that the research work embodied in

the dissertation entitled “Strategic Brand Management of LG Air

conditioner undertaken at LG Electronics India Ltd.” Bangalore

has been undertaken and completed by Mr. Niraj S

Kakkad under my guidance and supervision.

I also certify that he has fulfilled all the requirements

under the covenant governing the submission of dissertation to the

Bangalore University for the award of MBA degree.

Place: Bangalore

Date: 7th September, 2004

(Dr.K.V.Prabhakar)

Adjunct Professor

MPBIM, Bangalore-1

Page 4: Niraj LG Electronics

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CCEERRTTIIFFIICCAATTEE

I hereby certify that the research work embodied in this dissertation

entitled “STRATEGIC BRAND MANAGEMENT OF LG AIR

CONDITIONERS AT LG ELECTRONICS INDIA Ltd., BANGALORE” under

the guidance of Dr. K.V. Prabhakar, Adjunct Professor, MPBIM, Bangalore

(Internal Guide) and Mr. Gaurav Chandra of LG Electronics Ltd., Bangalore

(External Guide).

Place: Bangalore

Date: 7th September, 2004

(Dr. N. S. Malavalli)

Principal

MPBIM

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AACCKKNNOWOWLELEDDGGEEMMENTENT

I take this opportunity to sincerely thank Dr. K.V.Prabhakar who introduced

me to the intriguing subject of Strategic Brand Management and sharing his

encyclopedic knowledge on the subject, which is going to be instrumental in

shaping my career in the area of Brand Management.

I sincerely thank Mr. Rajgopal (Marketing manager LGEIL.) Bangalore

office for giving me this opportunity to undertake marketing research for LG

Electronics. Further more I express my heartfelt reverence to Mr. Gaurav

Chandra who guided me right throughout this project with his

comprehensive industry knowledge.

I sincerely thank the other faculties (Prof. Santhanam and Mrs. Sumitra

Sreenath) who encouraged and motivated me to undertake this project by

sharing their experience and knowledge of research and marketing.

I also thank Dr N.S. Malavalli (Principal) for giving me the opportunity to

explore my areas of interest by consistently lending support in terms of his

expertise and also supplying valuable inputs in terms of resources every step

of the way.

Lastly, I would like to express my heart-felt gratitude to my friends and

family who stood by me right throughout this project and have been a

constant source for support and strength.

Mr. Niraj Suryakant Kakkad

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CONTENTS

Page. No.

Executive Summary 1

PART-A THEORETICAL SETTING

Chapter-1 Introduction. 4

Chapter-2 Review of literature. 38

Chapter-3 Research methodology. 47

PART-B RESEARCH FINDINGS

Chapter-4 Data analysis and Interpretation 52

PART-C CONCLUSION AND RECOMMENDATION.

Chapter-5 Major findings of the research. 71

Chapter-6 Recommendation. 73

Chapyer-7 Directions for the further research. 75

ANNEXURE

• Questionnaire

• Select Bibliography including web sites used.

• Explanations to the research instruments used.

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LIST OF TABLES AND CHARTS Sr.No Table/Chart Heading Pg.No. 1 Chart showing that a Brand is more than a product 6

2 Chart showing the six-sided prism model of Brand Identity 10

3 Chart showing the Pyramidal Model of Brand 12

4 Chart showing the Five Step Strategic Brand Management Model by Roland Berger

15

5 Chart showing the Process of Strategic Brand Management 16

6 Tables showing the performance LG over a period of past three years i. Net Sales

ii. Net Profits iii. Operating margins iv. Net profit margins

24

7 Tables showing the LG’s present business performance and expected performance for 2004

i. LG Today 2003 ii. LG Tomorrow 2004

27

8 Chart showing the success of LG Electronics in the AC market in the

year 2000

29

9 Table showing LG’s market share in various brands for 2004 44

10 Table showing some famous outlets in Bangalore and their preferred

Brand of AC.

52

11 Table showing above average outlets top brand preference 53

12 Table showing rank preference of Respondents for various brands of

AC.

57

13 Respondent’s Rank Preference 58

14 Table showing Weighted Rank analyses of respondents 59

15 Table showing the awareness of respondents with regards to

Awareness of Plasma Gold Technology

62

16 Table showing the Brand preference of LG in terms of purchase 64

17 Table showing the usage of media sources for the promotion of AC 68

18 Table showing respondent’s preferred point of purchase for AC. 69

EXECUTIVE SUMMARY

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LG Electronics is one of the most respected and highly reputed Chaebol of

Korea. With its strategy of Global Expansion and its keen interest in the

Indian market has made it set up first one and now another unit in India by

the name LG Electronics India Pvt ltd. (LGEIPL). Mr.K.R.Kim who is at the

helm of operations in India has been a great leader and visionary. LG is a

very strategy-centric company that has a well chalked-out plan of operations.

LG India has been successful in making a strong presence in the Indian

home appliance market by becoming a market leader in almost all the

segments i.e. TV, Refrigerator, AC etc.

However something that caught the eye of almost all marketing researchers

is the strategy with which they entered the Indian market. LG took the

market by storm and has become a strong force gaining market leadership in

a host of products. LG is not a concentrated company in fact they have a

wide gamut of products and they have followed the Umbrella Brand

strategy. All the products of LG are promoted under a single brand name and

the Brand Logo, which also is the company name, has been the focus of all

the marketing activities of LG.

In terms of their foray in the Air conditioner market when they entered India

there were companies that had been concentrated in this business such as

Carrier, National etc. However LG has been successful in gaining the market

leadership from these strong players in just a matter of 3 years.

Their strength apart from the good quality and excellent penetration strategy

of their products lay in their strong strategy of branding. Strategic Brand

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Management plays a very crucial role in any company’s success in achieving

their corporate objectives such as becoming the market leader, positioning a

product in the minds of the consumers such that product recall is high and

enhancing the goodwill of the company so that the intangible asset of the

company would grow which at present happens to be a crucial component of

the Balance Sheet of almost all the companies.

However an interesting observation with regards to brand management is

that while a substantial amount of research has gone into the brand

perception, brand logo, brand growth etc. input perspective of branding not

much research is in evidence on the concept of “brand manners.”

(Brand manners are the synthesis of all the behaviors, which enable the

management to align the internal values of the company with the external

values of the brand.). This is the prime motivator behind taking up Brand

manners as a part of research.

The problem statement identified for the purpose of this research is:

Problem Statement:

1. How is LG Air-conditioner Brand preferred amongst Dealers?

2. How is LG Air-conditioners Perceived amongst Customers?

3. How as a Brand is an LG Air conditioner differentiated from, or valued

in isolation from the Umbrella Brand LG?

4. How does the concept of brand manners offer an explanation to the above

questions?

Objectives:

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• To critically analyze the penetration strength of LG Air conditioners in

Bangalore.

• To understand the customer perception of LG Air conditioners.

• To draw the Brand Essence of LG air conditioners in terms of brand

manners.

• Understand LG’s Brand Management strategy.

Research has thrown some light on the intriguing aspect of a global branding

strategy and provided learning with regards to the successful marketing

strategy followed by LG. Some major learnings of the research can be stated

as

¾�Amongst dealers of AC across Bangalore a majority of the dealers

prefer to promote LG Air conditioners

¾�Research also states that a majority of consumers prefer to purchase AC

from a dealer and Dealer Customer Relationship plays a key role in the

purchase decision of the consumers especially with regards to the

purchase of AC.

A strong literature survey and field research has assisted in coming to the

above findings; however more comprehensive research information on the

subject and industry follows in the coming chapters. The focus has been to

unravel the intent behind various strategies, models and concepts in brand

management that have been incorporated by LG and to analyze the degree to

which the Brand managers and strategists at LG have been successful in

implementing these concepts. Based upon this research work an elaborate set

of recommendations has been listed in chapter 6. However some significant

recommendations are listed below.

Recommendations:

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¾�LG can profitably put the concept of “experiential marketing” in its

marketing strategy.

¾�LG’s inherent success in the market has been driven largely by the strength

of its brands. This success may not be guaranteed in future, because of the

aggressive strategies of its competitors. As a future safeguard, we

recommend the Brand Asset Management (BAM) to LG.

¾�Innovate the product such that it can be used on alternative source of energy.

This is important in India as half the country experiences frequent power

cuts or no power at all.

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BRAND A brand is a name, term, sign, symbol, or design, or a combination of them, intended to

identify the goods and services of one seller or group of sellers and to differentiate them

from those of competitors.

Revolution of the Concept of Brand: Incubation of the Concept of Brand Equity:

The 1980 marked a turning point in the conception of brands. Management came to

realize that the principal asset of a company was in fact its brand names.

A lot of writing followed this incubation of the idea of “Brand Equity”, or the financial

value of the brand. In fact, the emergence of brands in activities, which previously had

resisted or were foreign concepts e.g. in Industry, banking, the service sector etc vouched

for the new importance of brands. This is confirmed by the importance that so many

distributors place on the promotion of their own brand.

The best brands convey a warranty of quality and in complex symbol, which can convey

up to six levels of meaning.

a. Attributes

b. Benefits

c. Values

d. Culture

e. Personality

f. User

Brands vary in the amount of power and value they have in the market place. David

Aaker distinguished five levels of customer attitude towards their brand, from lowest to

highest namely:

i. Customers will change brands, especially for price reasons.

ii. Customer is satisfied. No reason to change the brand.

iii. Customer is satisfied and would incur costs by changing brand.

iv. Customer values the brand and sees it as a friend

v. Customer is devoted to the brand.

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Brand equity is highly related to how many of a brand’s customers are in classes 3, 4 and

5.Moreover it is also, related, according to Aaker, to the degree

• Brand name recognition

• Perceived quality of brand

• Strong mental and emotional association

• Other assets such as patents, Trademarks and emotional associations.

Brand Equity is therefore an intangible asset i.e. it cannot be seen, tasted, heard or

smelled before it is bought.

Example:

According to a study conducted in 1997, about 84 percent of the market value of ten of

the leading FORTUNE 500 companies was attributed to intangible assets. Similarly an

indicative analysis by the agency Price Waterhouse Coopers, of listed companies with a

1997-98 turnover of more than Rs. 100 crores, identified 25 companies which in today’s

market command a market value which is more than 4.5 times the book value of tangible

assets.

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A Brand is more than a Product Chart: 1 Chart showing that a Brand is more than a product

Emergence of Brand Management Concept:

Brand management is still in a nascent stage even though brands are a business asset. At

present, in many cases, the tendency is to manage products, which happen to have a

name. Yet brand management involves different and specific reasoning and approaches.

Till date the management books and marketing bibles have not yet assimilated the full

implication of the brand revolution. Marketing books focus on the process of launching

new products, when marketing the brand is considered merely as a tactical and final

decision, which is developed through communication such as advertising, packaging and

the logo. Yet the reality of the situation is very different. From now on companies will be

faced with the strategic issues of whether or not growth should come about through

existing brands by developing their sphere of activity or through new brands.

Classic strategy models talk about product portfolios, whereas in reality companies have

to manage their brand portfolios. Several companies have product managers but few have

brand managers. This may cause problems in so far as more and more brands are being

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extended to more and more differentiated products, resulting in the delegation of the

management of value to several decision centers. In the medium term this may diminish

brand equity because decisions are taken without any integration of the decision centers.

The brand is not the product but it gives the product meaning and defines its identity in

both time and space. Companies are discovering that this brand equity has to be managed,

nourished and controlled.

The Evolution of the Concept of Brand Identity Brand Identity “It is the common element sending a single message amid the wide variety of its

products, actions and slogans.”

Brand identity is a recent concept; however researchers have already delved into the

concept of corporate identity by the late 80’s so to simply put it

Corporate Identity

It is what helps organization, or a part of it; feel that it truly exists and that it is a

coherent and unique being, with a history and a place of its own, different from others.

Thus we can infer that an identity means being true to yourself, driven by a personal goal

that is both different from others and resistant to change. Thus a brand identity will be

clearly defined once the following questions are answered:

1. What is the brand’s particular vision and aim?

2. What makes it different?

3. What need is the brand fulfilling?

4. What is its permanent nature?

5. What are its values?

6. What are the signs, which make it recognizable?

This type of official document would help better brand management in the medium term,

both in terms of form and content, and so better address future communication and

extension issues.

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Why speak of identity rather than image? Brand image is on the receiver’s side. Image research focuses on the way in which certain

groups perceive a product, a brand etc. The image refers to the way in which these

groups decode all of the signals emanating from the product, services and communication

covered by the brand.

Identity is on the sender’s side. The purpose in this case is to specify the brand’s

meaning, aim and self-image. Image is both the result and interpretation thereof. In terms

of brand management identity precedes image. Before projecting an image to the public,

we must know exactly what we want to project.

Branding is raising new questions for managers:

i. How many brands do we need?

ii. How do we manage our brand portfolio?

iii. What extensions can we give the brand and which products and services could and

should these encompass?

iv. Into what areas should we not extend the brand even if you expect it to sell?

v. Going too far may weaken brand equity. How do we manage brands over time and

keep them up to date, as technology, products and customers change?

vi. How do we change while still staying the same?

vii. How do we manage coherently and benefit from the synergy of a range of products

sold under a single brand?

viii. How do we optimize image in the relationship between products and their brand?

ix. How far can a brand be extended geographically?

x. Does it have the potential to become a homogeneous global brand in all countries?

xi. Several companies have the same name as their brand (e.g. Renault, LG, Nestle etc)

so what is the difference between managing a brand image, a corporate image and

an institutional image?

xii. Given that brands have a value, how can this be measured so as to survey and

control it?

xiii. Should it be included on the balance sheet to indicate its true economic value to

shareholders, investors and financial partners?

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These are some very crucial questions that requires significant amount of attention from

the brand management perspective, for a long time the answers to these questions were

found intuitively and the decisions made on a trial and error basis. However, now these

questions are addressed based upon some latest strategic models that have evolved based

upon continuous and persistent research that continues to be undertaken in this field.

Another impediment to brand management is that too often brands are examined through

their component parts: the brand name, its logo, design or packaging, advertising or

sponsorship, the level of image and brand awareness and a more recently evolved concept

of financial valuation. Real brand management, however, begins much earlier, with a

strategy and a consistent, integrated vision. Based on this information we can define

brand management as

Brand Management:

“The process of defining a brand identity and managing it.”

There are three models of brand management:

i. Prism Model for single brands

ii. The Pyramid Model for multi product brands

iii. Platform for rejuvenating brands

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1. Brand identity is best represented by six-sided prism.

Chart 2: Chart showing the six-sided prism model of Brand Identity

Source: “Strategic Brand Management” Kapherer Pg 100

• Physique:

A brand first has a physique: a combination of independent characteristics, which

may be either prominent or dormant.

• Personality:

A brand has personality: It acquires a character. If we identify the brand with a

person, we form a picture of that person by the way in which he speaks of

products or services.

• Culture:

The brand has its own culture. The culture implies a system of values, a source of

inspiration and energy.

• Relationship:

A brand is a relationship: It often provides the opportunity for an intangible

exchange between persons. This is particularly true for brands in the services

sector and retail brands.

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• Reflection:

A brand reflects a customer’s image. There is often confusion between reflection

and a brand’s target. The target describes brand’s potential purchasers or users. It

is type of identification.

• Self Image:

The sixth face of brand identity is the customer’s self image. Through our attitude

towards certain brands, we develop a certain type of inner relationship with

ourselves.

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2. The Pyramidal Model of Brand

To manage a brand through time, it is essential to analyze it as a 3-tier pyramid

incorporating time dimension.

Chart 3: Chart showing the Pyramidal Model of Brand

Source: “Strategic Brand Management” Kapferer Pg 173

At the top of pyramid is the brand focal point or the source point must be known,

but must remain unspoken of and invisible it is the brand’s deep identity, its core

value. As such it is permanent over the long run. �

In the middle of the pyramid, we have style and codes of the brand. It is the

stylus- a brand’s specific means of con veying a message – is a reflection of the

brand’s core identity. �

The lower stage of the pyramid relates to the communicate themes, the brand’s

current advertising positioning. The customers look at the brand bottom-up. They

discover it by its products, its themes, and the style of its communication.

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Steps involved in brand management

i. Brands age because of mismanagement

The brand has to be managed as per ever-changing environment. A lax or

reluctance in changing with the environment made by a company would easily

open the gates for new entrants to scavenge on the market share.

ii. The brand may have a built in element of mortality:

Brand extensions are must. People buy brands, but behind this lie number of

motives, and if you do not create a new brands that match evolving consumer

wants, you will have problem.

iii. The Brand Growth:

The brand growth is associated with changes in needs, wants, tastes and

preferences. As the customer needs change, even a company with one brand

targeted at a homogeneous market may feel the need to change.

As a brand is extended to cater to the need of a heterogeneous market, the life of

the brand increases.

iv. Brand identity is not something you shop for or borrow from someone:

The brand always starts with as a name of a new product. LG Health Zone Air

conditioner was the name coined by the company. Whisen is the brand name used

by LG for its new higher end range of Air conditioner. But to build this name into

a brand takes some time. So the identity prism is filled step by step over the life of

the brand.

v. There is an order in which the faces of the prism are filled:

Brands start with product. So the physical face is the concrete part of the brand.

When you start communicating, you always show, in your ads, picture of the

typical customer. Generally you also draw, internally, for your own purpose,

pictures of expected customers. These fill in the faces of customer reflection and

target audience. Later, your other marketing actions will fill the other faces. The

first face to be filled in is always product.

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vi. Branding can never become a substitute for Marketing:

The strength of LG is not just the brand; it is its distribution system. Wherever

you go, you will find a dealer of LG Air conditioners. And that is important. What

is the use if you can never find brands that you like?

Another Roland Berger proposes more comprehensive and effective model of Strategic

Brand Management, which will be highly effective in the case of a global brand like LG

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Chart 4: Chart showing the Five Step Strategic Brand Management Model by Roland

Berger

Source: Strategic Brand Management by Roland Berger PDF file

PVP: Projected Value Propositions: The past and current value projections of a brand

PVP: Projected Value Propositions: The past and current value projections of a brand

through the entire marketing mix including all communication

AVP: Actual Value Perception: The actual value perception of a brand as seen by the

consumers – as sum of all factors influencing a brand account

TVP: Target Value Proposition: "Ideal" brand position in the future as result of the

strategic process – “directions” for adjustment of entire marketing mix

FX: Future Execution/ Projection: Future value projections to be executed in the future

marketing mix of the brand including communication

Moment-of-truth: The consumer "tests" the projections/ promises of a brand and

creates/ adjusts the brand‘s perception in his or her mind

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Chart 5: Chart showing the Process of Strategic Brand Management

Source: Roland Berger - Strategic Brand Development Group

This model has been widely used by large corporations and hence has its own strong

standing in the field of Strategic Brand Management.

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COMPANY PROFILE:

HISTORY OF LG Founder and chairman In-hwoi Koo, with the pen name of Yonam established the Lucky

Chemical Industrial Co (Pusan Trading Company). Present LG Chemical in 1947,

heralding the LG history.

LG, which started its corporate activities with the production of “Lucky Cream”,

advanced into plastic industry for the first time in Korea in order to develop a cap of

cosmetics, which is not breakable.

LG elevated the standard of living of the Korean people by producing plastic goods

including combs, soap cases, toothbrushes and tablewares. With the development of

toothpaste for the first time in Korea with its own technology, LG dominated the

domestic toothpaste market.

In the mean time, LG established Goldstar Co. (Present LG Electronics) in 1958 in the

process of expanding its plastic industry area. It has inaugurated a new epoch of the

electronics industry by manufacturing a radio in 1959 for the first time in Korea.

At present LG Electronics is a major player in electronics and telecommunications,

operating 72 subsidiaries around the world with around 51000 employees worldwide.

CORPORATE INFORMATION

Corporate Name: LG Electronics Inc.

Established: October 1, 1958 (As a private company)

Corporate Office: LG Twin Towers 20, Yoido–dong,

Young1dungpo-gu Seoul, Korea 150-721

Number of Employees: 51300 (25700 in Korea/25600 Overseas)

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Key People 1. Chairman, LG Group: Koo Bon Moo

2. Chairman and CEO: Kim Ssang-Su

3. President and CTO: Paik Woo-Hyun

Core Values: LG Electronics believes in “The changing way of thinking can change the world”. We of

LG Electronics change our ways constantly. Hatching new ideas is how we give the

customers a greater value. A corporation’s core values are mirrored in its business

performance innovation, openness, and partnership. Cultivating a challenging spirit, it

musters every bit of creativity it can. With minds wide open, it treasures the wisdom of

customer’s suggestions. On the basis of win -win reciprocity, we are enhancing

partnership with customers, outsourcing contractors, and joint companies.

Innovation: Creating new and unique values.

Openness: Responding to the changing environment with an open mind and a flexible behaviour.

Partnership:

Establishing cooperative relationships to ensure the best performance through our full

entry.

Core Competencies: LG’s digitalists are building up marketing experience and technical expertise for greater

competence, Intriguing designing for an intricate network. The core competences they

have built up are indispensable for their growth into a global digital leader. LG hatches

products from many bright ideas.

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Marketing: The ability to clearly understand and analyze customer needs and then, link them to

business, continuously controlling the brand image.

Technology: The ability to develop unique product concepts with new proprietary technology, ahead

of others and then, commercializes them.

Design: The ability to plan projects and business effectively to maximize results.

Corporate Identity

The significance of Logo

The symbol-mark, the visual representation of LG, is the most significant element of LG

CIP (Corporate Identification Program). The Letters “L” and “G” in a circle symbolize

the World, Future, Youth, Humanity and Technology. Their philosophy is based on

Humanity. Also, it represents LG’s efforts to keep close relationship with their customers

in the world. Red, the main color, represents their friendliness, and also gives a strong

impression of LG’s commitment to the best. The elements of the international corporate

signature – the most effective visual representation - include the LG’s symbol -mark and

the logotype. Different versions of the international signature have been developed to

accommodate the variety of situations requiring its use. However, in order to present a

single image, the exact ratio and size must never be altered, and must be reproduced by

typography or computer graphics, based upon the manual. It is not necessary to print

“LG” in Korea unless you are forced to do so.

Top Competitors

• Daewoo Electronics Corporation

• Matsushita Electric Industrial Co., Ltd. (MC)

• Samsung Electronics Co., Ltd.

LG has a strong international positioning, with domestic sales accounting for only 36.6%

of sales in 2001. The company has lessened its dependence on the South Korean market

over the review period, with domestic sales accounting for a slightly larger 37.9% of

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sales in 1997. Sales in South Korea showed notable growth in 2001, although this slowed

in the second half of the year as the economy showed signs of weakening.

LG VISION FOR 21ST CENTURY

In the 21st Century, the world economy will be defined by the diversification of business

locations to various corners of the world and by the rapid proliferation of the information

revolution.

In line with these fast changes, LG wants to focus its efforts on differentiating its

competitive strength by creating higher values with its own unique core competencies

and healthy financial structure. This will equip LG with the corporate strength to generate

profits in different business environments.

As a global business operator, LG wants to remain committed to doing business from a

global perspective. Thus, the company wants to strive and procure and leverage human,

financial and technological resources at the global level for the global optimization of its

business system.

LG VISION The vision of LG is to Secure world class competitiveness in core businesses and

keeping up with rapidly changing business environment, LG has set the management

strategies for the 21st Century as to aim at a leading company in the core business

fields such as ‘Information & Telecommunications’, ‘Bio-technology’ and ‘Internet’

and to create a new century’s organizational culture that cultivates human resources

equipped with creativity and challenging spirit.

Since world is rapidly shifting into the information society, thus the development of

information technology represented by Internet has enabled people to jump over the limit

of time and space and create countless ‘El-Dorado’s’. Just a click brings forward the

whole world and barriers between regions and countries no longer exist. Besides,

cooperation between companies is everyday occurrences under the circumstances of

fierce competition.

Second, LG is introducing more top tier products and services than ever in the global

marketplace. Its R&D experts are developing distinctive technologies ahead of

Page 29: Niraj LG Electronics

M.P.Birla Institute of Management Page-29

competitors. Marketing, manufacturing and procurement experts are increasing product

value.

While lowering cost price, Sales and service experts are working to create more

customer satisfaction in order to win an maintain consumer trust.

Thirdly, the company is changing its way of thinking and attitude and wish to set up more

challenging targets than the competition and taking pole positions in core industries by

rapid adaptation of new and innovative best practices.

Lastly, the company would like to emphasize its preparedness for the future, while the

utmost goal has been to deliver growth and profit. From now, LG is trying to draw on

LG’s new strategic vision, together wi th the hopes and expectations for the future

believes to continue and adhere to the new focus, driven by a challenging and winning

spirit based on the ‘management of substance’ philosophy. The potential and tremendous

opportunity ahead of LG is unlimited for 2002 and beyond.

Page 30: Niraj LG Electronics

M.P.Birla Institute of Management Page-30

Page 31: Niraj LG Electronics

M.P.Birla Institute of Management Page-31

GLOBAL TOP 3 by 2010 LG Electronics pursues 21st century vision of becoming a true global digital leader who

can make its customer worldwide happy through its innovative digital products and

services.

LG Electronics set it’s mid and long term vision anew to rank among the top 3

electronics, information and telecommunication firms in the world by 2010.

As such, we embrace the philosophy of “Great Company, Great People”, whereby only

great people can create a great company, and pursue two growth strategies involving

“Fast innovation” and “Fast Growth”. Like wise, we seek to secure three core

capabilities: Product leadership, market leadership and people-centered leadership.

GROWTH STRATEGY

Fast Growth:

Fast growth is the result of strategies designed to expand the market size and earnings

quickly, in the process improving growth rate in terms of monetary value rather than

quantity.

Fast Innovation:

Fast innovation involves setting extremely high innovation goals and securing a

competitive edge, aiming for a target of 30% more than what competitors can do. Fast

innovation also means 30% more sales and improvement in market share, new product

development and unveiling that are faster by 30% and technology development and

establishment of corporate value three years ahead of competitors.

Page 32: Niraj LG Electronics

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CORPORATE CAPABILITIES:

Product leadership:

Refers to the ability to develop creative, premium products through new technologies.

Market Leadership:

Refers to the ability to achieve the “LG brand is No.1”

People Leadership:

Refers to talented people who perform excellent by internalizing and practicing

innovations.

CORPORATE CULTURE

Though a company implements perfect management strategies and boasts of outstanding

and talented people, it should have an appropriate corporate culture to unleash the power

of these capabilities

No ‘NO’ Challenge:

We foster a corporate culture whereby we suggest an alternative before saying “No” and

aggressively work towards fulfilling our goal.

Fun to Work:

We create a workplace where individual’s creativity and freedom are respected and

working is made fun.

Page 33: Niraj LG Electronics

M.P.Birla Institute of Management Page-33

BUSINESS AREA MAIN PRODUCTS:

1. Digital Display & Media Company

• Digital TV

• PDP

• Monitor

• CD-ROM Drives

• CD Re-writable Recorder

• VCR

• DVD Player

• Audio

• Security System

• Recording Media

• Video Phone

• PC Camera

• Banking Automatic System

• PCB

2. Digital Appliance Company

• Air Conditioner

• Refrigerator

• Microwave Oven

• Washing Machine

• Vacuum Cleaner

• Compressor for Air Conditioner

• Compressor for Refrigerator

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3. Telecommunication Equipment and Handset Company

• TDX

• STAREX

• Optical Switching Systems

• Implementation of Advanced IBS (Information Building System)

• System Integration (SI) Service

• Handsets for Satellite

• Mobile Multimedia and IMT 2000 Services

LG IN INDIA “LG Electronics India is the fastest growing company in the consumer electronics, home

appliances and computer peripherals industry today and continually providing superior

technology products and value for money to its customer in India.”

- K.R.Kim, MD, LG Electronics India

The data used in the following section has been called from company reports

The efficiency of LG can be gauged from the below given figures of LG which clearly

states how stable and strong LGEIPL is currently in India.

Page 35: Niraj LG Electronics

M.P.Birla Institute of Management Page-35

Table 1: Tables showing the performance LG over a period of past three years.

i. Net Sales

Sr.No. Year Net Sales

1 2000 1585.72

2 2001 1813.1

3 2003 3815.28

1585

.72

1813

.1 3815

.28

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2001 2003

Ye a r

Ne t S a le s

Net S ales

ii. Net Profits

Sr.No Years Profit

1 2000 46.89

2 2001 54.83

3 2003 116.2

46.8

9

54.8

3

116.

2

0

20

40

60

80

100

120

200 0 200 1 200 3

Year

Profit

Pro fit

Page 36: Niraj LG Electronics

M.P.Birla Institute of Management Page-36

iii. Operating Margins

Sr.No Year

Operating

margin %

1 2000 6.66

2 2001 7.65

3 2003 8.03

6.66 7.

65

8.03

0123456789

2000 2001 2003

Year

Operating margin %

Operating margin %

iv. Net profit margins

Sr.No Year

Net profit

margin %

1 2000 2.95

2 2001 3

3 2003 3.02

2.95

3 3.02

2.9

2.92

2.94

2.96

2.98

3

3.02

2000 2001 2003

Ye a r

Ne t P rofit Ma rgin %

N et P rofit M arg in %

Source: CRISIL 15 months

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M.P.Birla Institute of Management Page-37

However these are figures just give us an insight into the financial and operational

soundness of the company. However apart from being sound managerially its strategic

focus is also very lucid and precise LG’s projection comparison of their stand at present

and where they would be 1 year hence, reflects the keen awareness of it top management

and their focus in India.

LG Today and Tomorrow Table 2: Tables showing the LG’s present business performance and expected

performance for 2004

i. Today 2003

Sr.No Business

% of total

Business

1 Home appliances 44

2 Consumer electronics 46

3 IT division 10

LG Today 2003

44%

46%

10%

Hom e applianc es

cons um er elec tronics

IT divis ion

Page 38: Niraj LG Electronics

M.P.Birla Institute of Management Page-38

ii. Tomorrow

Sr. No Business

% of total

Business

1 Home appliances 48

2 Consumer electronics 37

3 IT division 11

4 GSM 4

LG Tomorrow 2004 (Target)

48%

37%

11% 4%Hom e applianc es

c ons um er e lec t ronic s

IT d ivis ion

G S M

Source: GSM (Global systems for mobile communications)

Page 39: Niraj LG Electronics

M.P.Birla Institute of Management Page-39

A Brief History of LG Air Conditioner in India

LG launched its window AC s in India in April 1998. By April 2001, it had displaced

Carrier as India’s No 1 seller. Its sale in calendar year 2000 stood at 88,000 units in an

organized sector market placed at 3,50,000 units.

Chart 6: Chart showing the success of LG Electronics in the AC market in the year 2000.

Page 40: Niraj LG Electronics

M.P.Birla Institute of Management Page-40

Strategy of LG: It is interesting to know how in such a short period of time it became the top AC marketer

in India some reflections with regards to their extremely successful strategy are

mentioned below:

• LG’s strategists focused on and were interested in expanding the Indian AC market

than wresting share away from other players.

• LG shouldered the strong responsibility of expanding the Indian market, which is small

and very much susceptible to downturns.

• It very cleverly targeted the home installation segment, which boomed while the

corporate segment went into a gloom. (In March 2000)

• It reflects the high degree of wisdom of the MD of LGEIL Mr.K.R.Kim of very

accurately analyzing the opportunity of a new player is better off things differently in a

competitive market that is split between price-fighters and technology-boasters.

• LG decided to be a value-driver, selling novel product benefits.

• LG’s then GM Sales Mr. Pradeep Tognatta zeroed in on a very crucial change in the

consumer expectation from an AC, which I quote here, is “At one time an AC was just

a cooling machine. But now people want it to improve the aesthetics of the room, give

them status, be easy to operate and improve health” Based upon this insight into

consumer insight LG Air conditioner captured the ‘health’ position in the consumer

mind space, LG has been able to alter the perception of what purpose an AC must

serve. In fact, it has taken the satisfaction parameter to a new plane altogether.

• Another thing that LG did differently and rather boldly was to go retail in a big way

putting its AC s right up in front, in easy access of the consumer. Before LG entered the

market, ACs were not considered show room display items. They had to be ordered and

were not very visible. After the initial outburst of distribution expansion, LG is

proceeding cautiously into new zones.

• Mr. Pradeep Tognatta strongly believed in Philip Kotler’s AD IACS Theory of selling –

Attraction, Desire, Interest, Attention, Conviction and Selling.

• Mr. Tognatta stated that the target audiences for AC s are those who wish to upgrade

from room coolers to ACs. Right now, the penetration is less than 2 percent. Half the

country doesn’t have electricity, and the other half experiences power shortage.

Page 41: Niraj LG Electronics

M.P.Birla Institute of Management Page-41

• The company precisely understands that AC satisfaction depends on service, to some

extent. So it’s no point selling a product where the service back up is inadequate. If an

AC breaks down in the middle of the night, the consumer wants it fixed immediately.

This is why LG has the ‘Happy Call’ system. As soon as the dealer concludes a sale, he

calls control cell, which pages the field staff. After three days the control cell calls back

the customer to see if he/she is satisfied.

• For 15 days, at the peak of the season, all dealers provide service till 2.30 at night. All

the SSDs are trained intensively by LG, and every technician is given world-class

instructions on how to handle complaints. Some are even sent to Korea for a stint at the

global headquarters, hence involving them closely with a corporation they can proud of.

• LG’s credo is clear: if the company is professional, everyone associated with the brand

must project the same image.

All those measures add up to create customer satisfaction. And this spells consumer pull.

This gives LG enormous clout with the trade. With ACs, as with other products, LG has

stuck to its rule of no credit to dealers.

LG’s back up plan to ensure targets are achieved: An ingenious idea that LG has set up in a case where targets look undoable! In such a

case LG has other ideas up its sleeve. It would use “Target Marketing” i.e. sniff out

segments with a need for specific features, and tap it. Plasma ACs are aimed at clinic and

software companies where germs and dust are fatal. On the whole LG runs tight

operations, with strict sales forecasts expected of all parts of the chain. Inventory levels

are kept low this way. If demand picks up, systems will become more efficient.

Page 42: Niraj LG Electronics

M.P.Birla Institute of Management Page-42

Current Date Scenario of Air Conditioner market in India:

Over the last decade the decrease in duties, combined with an increase in household

incomes, has put the room air conditioners well within the reach of urban households.

The excise reductions announced in the last budget from 32 to 24 per cent resulted in

price cuts. This saw the prices of branded ACs dropping to sub Rs. 20,000 levels. The

cost benefit has actually opened the economy segment and the array of finance facilities

on offer has in effect improved the market scenario. These benefits have prompted

Samsung, Whirlpool, Daikin and Fujitsu to enter the domestic market and roll out a slew

of models with cheaper prices to cheer the consumer.

Infact the AC market has witnessed growing trends over the last couple of years, between

20 and 25 percent. In the retail segment, the middle-income group has suddenly become

the target for a lot of companies. According to an industry player, the retail segment is

estimated to grow at a compounded annual growth rate of 25 percent in the next three

years. “To take on the retail and home segment, LG is expanding its portfolio of AC

products and we have in the pipeline a range of over 30 new launches this year, the

largest number of new products that will be put in the market by any air-conditioning

company”, says room AC product group head Salil Kapoor.

The air conditioner division notched up 50 % higher sales of 3, 00,000 units (Worth

Rs.50 Crores) for the first year 2003 as compared to 2,00,000 units during the previous

year. This translates into a 30 per cent market share. The company plans to sell 4, 00,000

units in 2004 which will account for a turnover of Rs. 850 Crores

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PRODUCT PROFILE

Price (INR) Model No Description

MRP List

LM-2461C2I Multi Split

AC 48,000.00 48,000.00

LM-3661C2I Multi Split

AC 52,200.00 52,200.00

LM-4865C2I Multi Split

AC 62,000.00 62,000.00

Multi-Split

Page 44: Niraj LG Electronics

M.P.Birla Institute of Management Page-44

Split

Price (INR) Model No Description

MRP List

LS-

L1262QC

Air

Conditioner

Split

22,990.00 21,990.00

LS-

K1862QC Split AC 32,490.00 29,103.00

LS-

T1862QC Split AC 36,990.00 31,358.00

LS-

T1862PC Split AC 39,490.00 32,500.00

LS-

K2461QCC Split AC 44,990.00 36,995.00

LP-

K3685QC Split AC 59,000.00 59,000.00

Page 45: Niraj LG Electronics

M.P.Birla Institute of Management Page-45

WHISEN

Price (INR) Model No Description

MRP List

LW-Q1262PC Whisen AC 25,490.00 21,033.00

LP-K2465QC Whisen AC 52,000.00 52,000.00

LP-K3065QC Whisen AC 55,000.00 55,000.00

LS-P1260HD Whisen AC 59,990.00 59,990.00

LS-P1260HM Whisen AC 59,990.00 59,990.00

LP-P2461PH Whisen AC 66,000.00 66,000.00

Page 46: Niraj LG Electronics

M.P.Birla Institute of Management Page-46

Windows AC

Price (INR) Model No Description

MRP List

LW-C1263BC Window

AC 19,990.00 16,420.00

LW-C1263QC Window

AC 21,990.00 17,445.00

LW-C1263QCP Window

AC 23,990.00 18,983.00

LW-M1863QC Window

AC 22,990.00 18,990.00

LW-N1860HI Window

AC 25,990.00 19,803.00

LW-M1863BC

Window

AC, Get

Free 20 ltrs

Solo

Microwave

MS 192W

21,490.00 21,000.00

Model No Description Price (INR)

Page 47: Niraj LG Electronics

M.P.Birla Institute of Management Page-47

MRP List

LW-M1863PC Window

AC 26,490.00 21,500.00

LW-M1863QCP Window

AC 24,990.00 21,545.00

LW-N2466BC Window

AC 28,490.00 22,673.00

LW-N2466PC

2 Ton

Window

Plasma AC

30,990.00 24,280.00

LW-N2466QCP Window

AC 31,490.00 25,645.00

LW-N2466QC Window

AC 29,490.00 23,698.00

Page 48: Niraj LG Electronics

M.P.Birla Institute of Management Page-48

As already mentioned in the first chapter Strategic Brand Management is a very virgin

topic making it extremely essential to accumulate comprehensive literature for getting

in-depth insight into the concept of Brand identity, brand equity, brand extension, brand

rejuvenation, brand growth, brand valuation and various other related concepts.

Apart from this theoretical literature survey, in-depth literature survey on LG Electronics

Company, LG’s operations in India with special emphasis on LG Air conditioners has

been undertaken to further facilitate in correlating and observing how well LG

Electronics Inc. has been successful in maintaining a strong brand identity.

Significant excerpts from the Literature Survey: �

“Strategic Brand Management – Creating and sustaining Brand Equity Long

Term” second edition Jean –Noel Kapferer

Preview

This book happens to be one of the very few books available on the subject of strategic

brand management. There is comprehensive literature available on the various facts of

brand management and some of the very recent concepts that have evolved in the field of

Brand management. There are different chapters given in this book that deal with

important concepts like � Brand Equity – Chapter 1

The brand is a focal point for all the positive and negative impressions created by the

buyer over time as he comes into contract with the brand’s products, distribution channel,

personnel and communication. On top of this, b y concentrating on a single name, the

latter acquires an aura of exclusivity. The brand continues to be, at least in the short term,

a by word for quality even after the patent has expired. The brand performs an economic

function in the mind of the consumer and thus has a lasting and memorable effect on the

companies’ activities , be it as distributor or owner of the brand. The value of a brand

comes from its ability to gain an exclusive, positive and prominent meaning in the minds

of a large number consumer.

Page 49: Niraj LG Electronics

M.P.Birla Institute of Management Page-49

� Brand Identity – Chapter 2

Brand identity is a recent concept, however researchers have already delved into the

concept of corporate identity by the late 80’s so to simply put it

It is the common element sending a single message amid the wide variety of its products,

actions and slogans.

Corporate Identity - It is what helps organization, or a part of it; feel that it truly exists

and that it is a coherent and unique being, with a history and a place of its own, different

from others.

� Identity Vs Change – Chapter 6

Brand image is on the receiver’s side. Image research fo cuses on the way in which certain

groups perceive a product, a brand etc. The image refers to the way in which these

groups decode all of the signals emanating from the product, services and communication

covered by the brand.

Identity is on the sender’s side. The purpose in this case is to specify the brand’s

meaning, aim and self-image. Image is both the result and interpretation thereof. In terms

of brand management identity precedes image. Before projecting an image to the public,

we must know exactly what we want to project.

� Brand Architecture - Chapter 7

It addresses the crucial issue of brand product relationship. LG follows the strategy of

umbrella brand. This strategy suggests that all the operations of the company across the

globe use a single brand name. It does have various product lines but all of them use a

single brand name.

The main advantage of umbrella strategy is the capitalization of one single name and

economies of scale on an international level. LG follows this strategy and has been quite

successful in its venture across the globe. It also permits considerable savings when they

enter new strategic markets.

An umbrella brand strategy allows the core brand to be nurtured by association with

products with which it was not previously associated. Also umbrella brands impose very

few constraints. Each division has its own communications to increase its market share

Page 50: Niraj LG Electronics

M.P.Birla Institute of Management Page-50

and to emphasize the specific qualities of its own brand. A note of caution here is that

only companies that are able to launch superior new products can use the umbrella

strategy. In each new market, the product will have to succeed on its own merits, despite

its brand name. LG has been extremely successful in not only launching new product

categories in new markets but also in a very short time span become leaders in the

markets it ventures into.

� Brand Extension – Chapter 8

Brand extension involves entering into new product markets using a single brand name.

LG as a strategic intent announced itself as a company that follows umbrella brand

strategy hence it opts for brand extension. The only note of caution in Brand extension is

that the communication of the product must be integrated across the various product

lines, failing to do so would almost definitely result in the dilution of the brand. LG has

stated its focus across products has a health focus. This ensures that the brand does not

get diluted and infact assists in creating a strong brand awareness and goodwill. This

ensures that the brand image across products and various segments of products and

consumers remains positive. � Multi Brand Portfolio – Chapter 9

This chapter focuses on the companies that would like to focus on developing multiple

brands. The chapter provides insights on the company and strategies that address the core

issues of developing and sustaining multiple brands.

� Decline, ageing and revitalization - Chapter 11

Brand entropy and degeneracy occur all so frequently in the current marketing scenario

where and competition is intense and companies in order to grow follow high growth and

expansion strategy. The brand value gets diluted and this leads to decrease in sales in the

long run. In the present business environment a lot of focus is given to the intangible

assets of the company in deciding the sale value of the company. In such times if the

brand is declining or aging which happens in its normal course of life will lead to

significant financial loss to the company. To ensure that the brand does not degenerate

strategies are chalked out in this chapter. It also states tips as to how to identify whether a

given brand is degenerating or not.

� Making brands go global – Chapter 12

Page 51: Niraj LG Electronics

M.P.Birla Institute of Management Page-51

World is turning into a global village. Given this latest evolution in the business scenario

where the massive revolution in the telecom and transportation sector has left the

companies coming in close proximity of each other a lot of companies are contemplating

opportunities to go global. LG already is a strong global brand. This chapter gives insight

into the various aspects and resources that are essential for a company to contemplate

building a global brand.

� Brand Valuation – Chapter 13

This chapter provides processes in valuing a brand. Brand is considered to be an

intangible asset of the company however in recent times the companies have become

sensitive to the fact that this asset actually happens to be a strong force in the balance

sheet and hence various methods of valuing a brand are being evolved to derive the fair

value of the company. This chapter states some of the methods that are currently in use

and also the problems that the company could encounter while valuing its brand.

“Advertising Management” by M.V.Kulkarni 4th Edition 2003 published by Everest

Publishing

The advertising management book has Chapter 12 totally dedicated to the concept of

brand management. It has given the steps of brand management, which have been

included in the introduction.

“Strategic Brand Management Process” by Roland Berger - Strategic Brand

Development Group

Roland Berger has published an article that provides a 5-step model for Strategic Brand

Management. Berger has stated the five main steps to be considered while stating the

model for Brand management the points are:

“LG Air conditioners Redefining Satisfaction” Strategy by Sridatri Banerjee

A&M 15 June, 2001 Pg 36

Page 52: Niraj LG Electronics

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Preview

This article was published at a time when LG had just about found a firm foothold in this

lucrative market of India and was at a juncture of making extremely quick inroads into

this market. The author very appropriately in a concise form states the core of LG Air

conditioner’s strategic focus. The article starts of with this powerful statement by the

author

“Health focus and power of reach. The story of LG Electronics won the Indian market

for room air conditioners”

These two lines are sufficient to aptly express the strategic intent of the company to �

Position the product on the health platform by claiming that the company is very

health conscious and the product is for those consumers who want the air blowing

into their living space to be germ and bacteria free air. �

LG’s focus on the aggressive penetration strategy to ensure that the product reach

is extensive. �

The focus on the home segment.

The article highlights how the LG’s strategists focused on expanding the AC market

than wresting share away from the other players.

The company’s insight into the fact that being a multi products company has turned out

to be an advantage. Aware of the fact that an ACs only company would be seen as the

‘expert’, LG laid greate r emphasis on the product differentiation

It lucidly takes us through the incubation of the company into this market to the

leadership position that it has gained within a short span of 3 years.

It further highlights the core competitive advantage that LG had over Carrier that

leveraged the company to the helm of the industry, i.e. its extremely strong distribution

network. LG started the retailing of AC in the Indian market.

LG has a strong retailer network of more than 2500 retailers. Intensive training is

imparted to the sales personnel of these dealer outlets on the product knowledge and the

appropriate way of delivering a convincing sales pitch.

Page 53: Niraj LG Electronics

M.P.Birla Institute of Management Page-53

After the initial burst of distribution expansion the company is now proceeding

cautiously into the new zones. The channels are more tightly controlled for ACs.

This article also highlights the fact that LG is quite aware of the needs of the consumer

by understanding the fact that AC satisfaction depends on service, to some extent. So

its no point selling a product where the service back-up is inadequate. For this LG has

set up the “Happy Call” system that is a 24 -hour call line for service and maintenance

related complaint handling system. This facility also ensures that the customers have

been getting proper service delivery in case of any fault immediately the service staff is

asked to pay a visit to the customer.

For 15 days at the peak of the season, all dealers provide service till 2.30 am.

To motivate the technicians few are even sent to Korea for a stint at the global

headquarters, thus involving them closely with a corporation they can be proud of

“LG NO 1” Cover Feature, Business India July 5 -18, 2004, Pg 48.

Preview

This article that recently appeared in Business India provides a birds eye view of the

functioning of LG Electronics India operations in the reign of Mr. Kwang-ro Kim, MD of

LG Electronics India Ltd. Over the 7 years of it s operations in India LG has scaled many

a mile. Its been consistently becoming a market leader in all its various product lines. It

touched the astronomical sales figure of 4500 Crores in 2003.

LG has the biggest share of the pie in quite a few products that have been launched under

its single brand name. To further elaborate

Table 3: Table showing LG’s market sha re in various brands for 2004

Sr.No Brand and product Market share %

1 Color Television 22.6

2 Refrigerator 23.6

3 Microwave 40.7

Page 54: Niraj LG Electronics

M.P.Birla Institute of Management Page-54

4 Air conditioner 30

Source: ORG-GFK report

Other significant excerpts of this article are:

1. LG’s achievement in the first quarter of this year i.e. (January-April 2004) Vis a

Vis the same quarter last year has amplified the Indian management’s positive attitude.

During this quarter, LG logged � 38% growth in consumer electronics � 51% growth in home appliances � 69% growth in its IT business.

Overall sales grew 53% to cross Rs 1000 Crores.

2. The article gave a brief insight into the principal values that drive Kim MD LG

Electronics India. He follows to fundamental principals they are self control and rational

thinking. “A ll wars, even the recent Iraq one, are not won after the air strikes are over but

when the army takes on the enemy on the ground”, he says. This is what Kim believed

even before he waged war for the Korean company in the Indian market. He calls his

aggressive market play “feet marketing”, which he feels is the key factor that made LG a

formidable force in the consumer durables.

3. Kim has also taken a clue from Jim Clemmer, the Canadian management expert

who has described passion as “a burning commitment to a cause”. The article did shed

some light on LG’s expectation and vision in India making its intentions about getting the

latest technology innovations to India clear.

4. LG’s rural focus:

Innovation in product offerings and building strong brand equity are one part of the

success story. But the real one that has driven LG’s numbers to heights is the rural

mantra. For LG, rural markets include all other cities excluding metros and the A+ -

class cities. In its marketing framework LG caters to both urban and rural populations. “

The Indian rural market with its large size and demand base, offers great opportunities to

marketers. The semi-urban and rural contribution to turnover is 65%. To address this

Page 55: Niraj LG Electronics

M.P.Birla Institute of Management Page-55

market we have not only launched economy-range products but also invested heavily in

building infrastructure.” Says head Girish Rao.

5. In addition, its association with the health platform and cricket helped it in wrest a

strong position in the mind space of consumers in rural India.

6. LG’s Marketing Force LG has appointed 4 marketing managers (north, south, east and west) 40 marketing managers in the branches. LG covers India with 72 regional offices, 61 central area offices, and 43 branches.

Additionally it has over 1123 regional area offices at the district level. Below these

area offices there are 80 remote area offices currently.

AdEx India Analysis May 21, 04

The article states numbers based upon their independent research with regards to the

print advertisement spends by the major companies in and the general trends of

advertisement spends in this country. Some important excerpts that are worth a mention

are: Companies have reduced their spend in Air conditioner advertising as compared

to the year 2000. A drop of 12% has been observed as compared to the year 2000. Advertisements spend on AC show a seasonal characteristic with reference to

print advertising. The research as done over the past three years i.e. (2000-2003)

indicates that the spend peaks in the 2nd quarter of the year which is when the summer

is at its peak and the build up for the same starts from the 1st quarter. The least spend

is observed in the 3rd quarter. An interesting pattern can be observed with regards to retail advertising

(advertisements released directly by dealers and not by the manufacturer). The

research indicates the following

o The share of retail advertising of the Air-conditioners category has always

been higher compared to all retail advertising over the past few years.

o The share of spend in retail advertising is consistently rising. In the year

2003 it stands at 7%. This trend is observed when the share of all retail

advertising has been more or less stagnant, with a share hovering around the 2 %

mark.

Page 56: Niraj LG Electronics

M.P.Birla Institute of Management Page-56

� Average Ad size in the Air-conditioners category shows a decline since 2000,

falling by 30% � Top 10 advertisers in this category contribute 90% of the advertising expenditure.

LG electronics has been the Top advertiser in this category in 2000 and 2003.

TITLE OF THE STUDY

“Strategic Brand Management – of LG Air-conditioners” at LG Electronics

India Pvt. Ltd., Bangalore.

PROBLEM STATEMENT:

1) How is LG Air-conditioner Brand preferred amongst Dealers?

2) How is LG Air-conditioners Perceived amongst Customers?

3) How as a Brand is an LG Air conditioner differentiated from or valued in

isolation from the Umbrella Brand LG?

4) How does the concept of brand manners offer an explanation to the above

questions?

The above problem statement has been crystallized into the following specific objectives:

OBJECTIVE OF THE STUDY:

• To critically analyze the penetration strength of LG Air conditioners in Bangalore.

• To understand the customer perception of LG Air conditioners.

• To draw the Brand Essence of LG air conditioners in terms of brand manners.

• Understand LG’s Brand Management strategy.

HYPOTHESES:

H1 Brand Preference of LG Air conditioners amongst dealers is substantial vis a vis

other air conditioners

H2 Customer Perception of LG brand is positive.

Page 57: Niraj LG Electronics

M.P.Birla Institute of Management Page-57

H3 LG Air conditioners have created a unique brand image for itself, which is

independent from the umbrella brand.

SCOPE OF THE STUDY The study is limited to all the dealers and consumers residing in Bangalore city.

TYPE OF RESEARCH The research investigation is explorative and analytical in nature, as it seeks to attract the

brand essence of LG air conditioners.

COLLECTION OF DATA Data is collected from Primary and Secondary sources.

Sources of primary data Primary data has been collected by using the following tools

• Interview Schedule

• Structured Questionnaire

• Personal observation of dealer outlets

• Social Network.

Sources of secondary data

Secondary Data has been collected from

• Websites,

• Research papers

• Newspapers

• Magazines

• Company brochure.

SAMPLING TECHNIQUE The sample is based on convenient sampling method.

Page 58: Niraj LG Electronics

M.P.Birla Institute of Management Page-58

SAMPLE SIZE: A sample of 50 customers and 24 dealers has been considered for the study.

SAMPLE AREA: The main focus in selecting area for the dealer survey is to cover the whole of Bangalore

region; all the 24 dealers included in the survey are spread across the city.

The customer sample is of people across Bangalore city.

SAMPLE DESCRIPTION

1) Dealer Sample:

The sample consists of the renowned outlets across Bangalore. Wholesale dealers of

Home appliances e.g. Viveks, Girias are the main focus of the survey as was required by

LG.

i. There are 8 outlets of Viveks spread across the whole of

Bangalore.

ii. The other major outlet chain is that of Girias with 5 outlets.

(Both these Dealers are considered to be a formidable strength in terms of their brand

recognition and a quality outlet for purchase of Home Appliance products)

iii. The other outlets are Uday Home world chain of outlets that

command a strong loyalty of locale.

2) Customer Sample

• The sample is taken from various parts of the city.

• The annual income of these respondents has varied from 100000-500000 in

majority. 40 respondents range in this region. The focus on them is because these are

the evolving customers. LG Air conditioners new target segment happens to be

customers in this region and above.

• In total from the sample taken 17 respondents have a club membership of which

13 are businessmen

Page 59: Niraj LG Electronics

M.P.Birla Institute of Management Page-59

• Of all the respondents 20 are businessmen, 8 are in government service, 13 are

professionals i.e. employees and academicians, and the remaining 9 are retired

personnel.

TOOLS USED Dealer Survey: Through Interview Schedule, Observational Study.

o Sample (Based on database available)

Consumer Survey: Questionnaire, In depth Interview

o Sample 50 (to be increased in case needed)

o Random Sampling

Tools used:

o Statistical Test

Normal Z Test two sample independent parametric test

Test of Proportions Parametric Test

o Qualitative observation

INSTRUMENTATION TECHNIQUES • In Dealer survey the method used is “Mystery Shopping”

• In customer survey “personal interview” based upon a structured questionnaire

has been administered over the sample.

• Observational study has been a significant part of this research work.

ACTUAL COLLECTION OF DATA

• Dealer specific data have been collected by interacting with the dealers by

personal visits to the outlets under the guise of consumers.

• Users and Non users alike have been personally interviewed and their verbatim

responses have been recorded and used for analysis.

Page 60: Niraj LG Electronics

M.P.Birla Institute of Management Page-60

LIMITATIONS OF THE STUDY

• There is a strong geographical constraint of being restricted only to Bangalore

city.

• Since the research is partly qualitative, bias or prejudice, which is deadly to

research, cannot be totally eliminated.

H1 Brand Preference of LG Air conditioners amongst dealers is

substantial vis a vis other Air conditioners.

Analysis:

The tool used to generate this data is a questionnaire that has been administered on the

dealer outlets by using the mystery shopping method. The following is the analysis of the

collected responses.

Based upon the criteria for analyzing the responses it has been quite evident that the

Hypothesis is positive

Total score of outlets over 4 parameters is 160.

Therefore overall average points = 160/24 = 6.67

The number of outlets figuring above average is 14.

Table 4: Table showing famous outlets in Bangalore and their preferred Brand of AC.

Sr. No. Outlet Code Brand Preference Points

1 Vivek’s R.T.Nagar Voltas 11

2 Vivek’s B’lore Central LG 12

3 Vivek’s Jayanagar LG 11

4 Vivek’s Rajajinagar LG 10

5 Vivek’s J.P.Nagar LG 10

Page 61: Niraj LG Electronics

M.P.Birla Institute of Management Page-61

6 Vivek’s K.H.Road Carrier 06

7 Girias Sadashivnagar LG 10

8 Girias Jayanagar LG 11

9 Devi International LG 10

10 Sri Balaji Electronics LG 08

11 Uniq R.T.Nagar LG 08

12 Griha Vaibhav (VV Puram) LG 02

13 Uday Enterprises Jayanagar Onida 09

14 India Home World Golf Course. Samsung 11

Source: field investigation.

Table 5: Table showing above average outlets top brand preference

Dealers Outlet Top Brand preference

Voltas 1

LG 10

Carrier 1

Onida 1

Samsung 1

Total 14

Source: Field investigation

Interpretation:

Dealer preference of LG air conditioners amongst the above average Outlets

1

10

11 1 Voltas

LGCarrierOnidaSamsung

Page 62: Niraj LG Electronics

M.P.Birla Institute of Management Page-62

�Of the 14 dealers who feature in the above average category of dealers 10

promote LG Air conditioners. �

Of the 10 who promote LG 7 have given LG a grade point of at least 10. �

The maximum of 13 points a brand can get. Hence to get a 10 would imply

getting 75 % score which LG Air conditioners has been successful in 7 times amongst

the above average dealers. �

However amongst all 24 dealers 16 dealers promote and prefer LG. �

On an overall brand rating LG scored a massive 181 points with the second most

preferred brand i.e. Carrier scoring only 55 points.

Testing of Hypothesis H0: LG and Onida are equally preferred amongst dealers

Ha: LG is preferred more by dealers.

Test administered is Normal Parametric Test for two independent samples Z test.

Level of Significance: 95%

Hence Ztab = 1.96

Hence Reject H0, when Zcal > Ztab

The above given hypothesis can be conclusively proved by comparison of mean scores

between LG and Onida from the data of dealer survey findings.

Formulae:

Zcal = ΧΧ1-X2 σσ√√1 1 n1 n2 σ = √n1*s12 + n2*s22 n1 + n2 Χ1= Σxi

n1 X2 = Σyi n2

+

Page 63: Niraj LG Electronics

M.P.Birla Institute of Management Page-63

Calculation table:

Sr No. LG

xi

Onida

yi

(x-x ) (y-y) (x-x )2 (y-y)2

1 3 - (4.542) 20.63

2 12 - 4.458 19.87

3 11 - 3.458 11.96

4 10 - 2.458 06.49

5 10 - 2.458 06.04

6 8 - 0.458 0.21

7 9 - 1.458 2.13

8 5 - (2.542) 6.46

9 10 2 2.458 (3) 6.04 9

10 11 6 3.458 (1) 11.96 1

11 3 - (4.542) 20.63

12 5 11 (2.542) 6 6.46 36

13 10 5 2.458 6.04

14 13 - 5.458 29.79

15 8 5 0.458 0.21

16 11 3 3.458 (2) 11.96 4

17 8 1 0.458 (4) 0.21 16

18 8 - 0.458 0.21

19 3 7 (4.542) 2 20.63 4

Page 64: Niraj LG Electronics

M.P.Birla Institute of Management Page-64

20 2 1 (5.542) (4) 30.71 16

21 8 - 0.458 0.21

22 4 9 (3.542) 4 12.54 16

23 6 - (1.542) 2.38

24 3 5 (4.542) 0 20.63

Σxi =

181

Σyi = 55 Σ = 0 Σ = 0 Σ(x-x)2 =

254.4

Σ(y-y)2 =

102

Here n1 = 24

n2 = 11

Therefore,

ΣX = 181 = 7.542 24 ΣY = 55 = 5 11 s12 = Σ(x-x) 2 = 254.4 = 11.061 n-1 24-1 s22 = Σ(y-y)2 = 102 = 10.2 n-1 10-1 σ = √24*11.061 + 11*10.2 = 3.285 24+11 Normal Test Zcal = 7.542 – 5 3.285√1 + 1 24 11

= 2.125

Page 65: Niraj LG Electronics

M.P.Birla Institute of Management Page-65

For 95 % level of significance Ztab = 1.96

Hence 2.125>1.96

Therefore, Zcal> Ztab

Hence Reject H0

Conclusion:

LG is preferred more by dealers.

H2 Customer Perception of LG brand is positive

Data Analysis of the responses collected from the sample has been set up in the form of

their rank preference of the product and the conclusion can be very easily be drawn that

Customer Perception of LG Brand is positive to further substantiate this statement a brief

analysis is given below:

Table 6: Table showing rank preference of Respondents for various brands of AC.

Count of Sr.No. Rank 1 NR Blue Star Carrier LG Onida Samsung Voltas Grand Total

Total 1 4 11 20 1 9 4 50

Count of Sr.No. Rank 2

NR Blue Star Carrier LG Onida Samsung Voltas Grand Total Total 1 13 11 11 0 8 6 50

Count of Sr.No. Rank 3 NR Blue Star Carrier LG Onida Samsung Voltas Grand Total

Total 1 10 2 13 3 10 11 50

Count of Sr.No. Rank 4 NR Blue Star Carrier LG Onida Samsung Voltas Grand Total

Total 1 8 8 3 7 11 12 50

Count of Sr.No. Rank 5 NR Blue Star Carrier LG Onida Samsung Voltas Grand Total

Total 1 6 8 1 12 10 12 50

Page 66: Niraj LG Electronics

M.P.Birla Institute of Management Page-66

Count of Sr.No. Rank 6

NR Blue Star Carrier LG Onida Samsung Voltas Grand Total Total 1 8 10 1 26 1 3 50

Source: Field Investigation

* NR = No Response

Table 7: Respondent’s Rank Preference

Rank Respondents rank preference

LG Samsung Voltas Carrier Blue Star Onida

1 20 9 4 11 4 1

2 11 8 6 11 13 0

3 13 10 11 2 10 3

4 3 11 12 8 8 7

5 1 10 12 7 6 12

6 1 1 4 10 8 26

Sum 49 49 49 49 49 49

Rank preference of Respondents

0

5

10

15

20

25

30

1 2 3 4 5 6Ranks

No.

of r

espo

nden

ts LG

Samsung

Voltas

Carrier

Blue Star

Onida

Source: Field Investigation

Page 67: Niraj LG Electronics

M.P.Birla Institute of Management Page-67

Table 8: Table showing Weighted Rank analyses of respondents

Weighted rank analysis

Brand Weighted rank

LG 11.38

Samsung 8.95

Voltas 7.71

Carrier 8.43

Blue Star 8.24

Onida 4.24

Source: field investigation.

Weighted rank

8.9511

.38

7.71

8.43

8.24

4.24

0

2

4

6

8

10

12

LG

Sam

sung

Vol

tas

Car

rier

Blu

e S

tar

Oni

da

Weighted rank

Interpretations:

Page 68: Niraj LG Electronics

M.P.Birla Institute of Management Page-68

�Of the 50 respondents there are 20 respondents that ranked LG as the most

preferred brand. �

LG also ranks top on grounds of weighted ranks second to Samsung.

Testing of Hypothesis:

H0: LG and Carrier are perceived to be equally good by consumers.

Ha: LG is perceived to be better than Carrier by customers.

Test administered is Normal Parametric Test for two independent samples Z test.

Level of Significance: 95%

Hence Ztab = 1.96

Hence Reject H0, when Zcal > Ztab

The above given hypothesis can be conclusively proved by comparison of total of 1st

three ranks scores between LG and Carrier from the data of consumer survey findings.

Formulae:

Z cal = P1−− P2 √√PQ ( 1 + 1 )

n1 n2 Where P1 = r n1 P2 = s

Page 69: Niraj LG Electronics

M.P.Birla Institute of Management Page-69

n2 P = Σ(r1+r2+r3+s1+s2+s3) n1 + n2

Q = 1-P

Where:

P1 = Proportion of LG

P2 = Proportion of Carrier

r = Summation of 1st three ranks preference of LG brand as stated by consumers.

s = Summation of 1st three rank preference of Carrier brand as stated by consumers.

n1 = total number of respondents for LG

n2 = total number of respondents for Carrier

Calculations:

P1 = 44 = 0.898 49 P2 = 24 = 0.490 49 P = 68 = 0 .694 98 Q = 1 – 0.694 = 0.306 Zcal = 0.898 − 0.490 √(0.694)(0.306)( 1 + 1) 49 49 = 4.56 For 95 % level of significance Ztab = 1.96

Hence 4.56 >1.96

Therefore, Zcal> Ztab

Page 70: Niraj LG Electronics

M.P.Birla Institute of Management Page-70

Hence Reject H0

Conclusion:

LG brand is perceived to be better than Carrier by consumers.

As Carrier is the second most positively perceived brand once a proportion test is

administered between LG and Carrier it can be safely implied that the LG brand’s

perception is more positive then any of the other brands.

H3 LG Air conditioners have created a unique Brand image for itself,

which is independent from the Umbrella Brand.

Analysis: �

A response on awareness of the core technology of LG Air conditioners i.e.

Plasma Gold Technology has been collected from a sample of 50 respondents

which included LG users as well.

A surprising observation is that of the 50 respondents

Table 9: Table showing the awareness of respondents with regards to Awareness of

Plasma Gold Technology

Awareness of Plasma Gold Technology Total

Yes No

No of Respondents 12 38 50

Source: Field Investigation

Page 71: Niraj LG Electronics

M.P.Birla Institute of Management Page-71

Awareness of Plasma Gold Technology

24%

76%

Yes

No

Rating based on Perception of Respondent of Promotional Campaign and over all

perceived performance of quality of product.

o The respondents when asked as to how would they rate the advertising and

promotional campaign of LG Air conditioners on a scale of 1 to 7, the overall points

tally based upon their collective response is 197. The maximum point that could be

awarded is 50*7 = 350; hence the scoring of LG’s promotional campaign is 56.2857

o When asked on overall performance (how do they perceive an LG air

conditioner would rate) The answer is pretty close at 195 points. The maximum points

that could be awarded is 50 *7 = 350, hence scoring of LG air conditioner on overall

performance stands at 55.7142%

o Overall points on perceived effectiveness of Advertising and promotional

Campaign is 197. The maximum points that could be awarded were 50*7= 350; hence

the scoring of LG’s promotional campaign was 56.2857%.

A clear interpretation of it is that the company has followed a strategy of promoting all its

products under the roof of one umbrella brand i.e. LG but however at the same time they

Page 72: Niraj LG Electronics

M.P.Birla Institute of Management Page-72

have ensured that individual brands also have their own distinct identity, which is what

justifies its efforts of promoting LG Air conditioners under the caption of HEALTH

ZONE air conditioners. A strategy, which has ensured that the product is strongly

positioned in the minds of the consumers as one, that provides healthy and clean air.

Table 10: Table showing the Brand preference of LG in terms of purchase

Brand preference in terms of Purchase

Brands No of respondents preference of Product

LG 21

Samsung 8

Hitachi 5

Blue Star 3

Voltas 5

Carrier 6

Daikin 1

O General 1

Total 50

Source: Field Investigation

Page 73: Niraj LG Electronics

M.P.Birla Institute of Management Page-73

Product purchase preference of the respondents

42%

16%10%

6%

10%

12% 2%2%

LGSamsungHitachiBlue StarVoltasCarrierDaikinO General

When asked about whether or not the respondent would opt for the Air

conditioner

It is evident that the popularity and enthusiasm amongst the consumers to purchase an LG

Air conditioner is quite high but when asked the reason thereof the most popular response

is Good Brand Recognition. However when asked about the TV advertisements that LG

has aired to create awareness of the LG Health Zone Air conditioners, there seems to be

a clear confusion observed and a partial lack of being able to recall the advertisement

indicating that though LG has been making conscious efforts at promoting the air

conditioner brand, its promotional strategies with regards to the umbrella brand have

been more effective in creating awareness and a brand identity for all its products.

Testing of Hypothesis:

H0: LG Air conditioner has created a brand image independent from the umbrella

brand

Ha: LG Air conditioner has not created a brand image independent from the

umbrella brand

Test administered is Normal Parametric Test for two independent samples Z test.

Level of Significance: 95%

Hence Ztab = 1.96

Hence Reject H0, when Zcal > Ztab

Page 74: Niraj LG Electronics

M.P.Birla Institute of Management Page-74

Data taken into account to prove this hypothesis is

⇒ Awareness of Plasma Gold Technology in isolation from the LG brand

⇒ Consumer’s perceptions of how on over all performance will an LG product rate

on a scale of 1 to 7. and taking only the respondents who rate LG greater that 4.

Formulae:

Z cal = P1−− P2 √√PQ ( 1 + 1 )

n1 n2 Where P1 = r n1 P2 = s n2 P = Σ(r+s) n1 + n2 Q = 1-P

Page 75: Niraj LG Electronics

M.P.Birla Institute of Management Page-75

Where

P1 = Proportion of awareness of Plasma Gold Technology

P2 = Proportion of consumers giving a score of greater than 4 to LG on overall

performance.

r = Summation of respondents aware of plasma gold technology

s = Summation of respondents giving a score of greater than 4 to LG on overall

performance

n1 = total number of respondents aware of plasma gold technology

n2 = total number of respondents giving LG a score of more than 4 on overall

performance

Calculations:

P1 = 12 = 0.24 50 P2 = 29 = 0.591 49 P = 41 = 0.414 99 Q = 1- 0.414 = 0.586 Z cal = 0.24 – 0.591 √(0.414)(0.586)( 1 + 1 ) 49 50 = 3.567

For 95 % level of significance Ztab = 1.96

Hence 3.567 >1.96

Therefore, Zcal> Ztab

Hence Reject H0

Conclusion:

LG Air conditioner has not created a brand image independent from the umbrella

Page 76: Niraj LG Electronics

M.P.Birla Institute of Management Page-76

brand.

DATA INCIDENTAL TO RESEARCH

I. MEDIA AWARENESS

Table 11: Table showing the usage of media sources for the promotion of AC.

Sr.No. Media Source Exposure (No. Of Respondents)

1 TV 43

2 Radio Jingle 04

3 Newspaper 35

4 Friend 22

5 Relative 19

6 Hoarding 11

7 Showroom Display 22

8 Other 06

9 Internet 01

Total 163

Source: Field Investigation

Respondent's Media exposure and awareness

43

4

35

22 1911

22

61

05

101520253035404550

TV Ad

Radio

jingle

Press a

ds

Friend

Relativ

e

Hoard

ing

Shrm.D

isp.

Others

Intern

et

Media source

No.

of R

espo

nden

ts

respondents

Interpretation: � Maximum Air conditioner product exposure happens through the TV media � Print Media happens to be the next most widely known source for promotion of

Air conditioners.

Page 77: Niraj LG Electronics

M.P.Birla Institute of Management Page-77

� Internet though being called very popular and growing medium of gaining brand

awareness happens to have the least exposure in real sense, so Promotion of AC

through Internet is not a feasible channel of gaining product exposure. � Showroom display in the case of AC does not have much prominence however is

preferred as much as word of mouth which implies that there is a growing awareness

for display in the Indian AC market.

II. PREFERRED POINT OF PURCHASE

Table 12: Table showing respondent’s preferred point of pu rchase for AC.

Source: field investigation.

Responent's preferred point of purchase

36

11

3

Dealer ManufacturerMalls

Interpretation: LG’s strategy to go retail with AC is a strategically very sound because majority of the

consumers now prefer to purchase from the dealers. Only AC producing companies like

Carrier never promoted the products through via the dealer channel. Thus taking dealer

assistance right from their initial venture into the Indian market has provided LG with the

first mover advantage of strengthening its penetration

Preferred point of purchase No of respondents

Dealer 36

Manufacturer 11

Malls 3

Total 50

Page 78: Niraj LG Electronics

M.P.Birla Institute of Management Page-78

III. BRAND RECALL 1st on Brand recall is Samsung

2nd on Brand recall is Voltas

The brand recall was tested on a question on which other brand of AC is the customer

aware of? The above two brands had the highest recall amongst the sample respectively.

IV. ADVERTISING SPENDING PATTERNS IN THE AIR

CONDITIONER INDUSTRY While browsing through secondary data on Advertisement expenditure some interesting

facts have come to light: � Air conditioner advertising expenditure has fallen as compared to year 2000. IT has

shown a drop of 12% � AC also shows seasonal characteristic on print advertising. As can be clearly seen in

the graph below.

Chart7: Print Advertising Spends

20

03

20

02

20

01

20

00 q1 q2 q3 q4

Airconditioner Adv ertis ing Spends on Print

Source: Press Adex (2000-2003)

� The graph states that in the second quarter each year the print advertising expenditure

in the AC industry peaks and the build up for this is initiated right from the end of 1st

quarter. � This research also states that retail advertising (advertisements released directly by

dealer and not by the manufacturer) is on the rise.

Page 79: Niraj LG Electronics

M.P.Birla Institute of Management Page-79

V. AWARENESS OF POWER CONSUMPTION

The majority of AC users are unaware of the power consumption of their AC units

implying that the customers are not too sensitive to power consumption while

contemplating a purchase decision with regards to an AC.

Page 80: Niraj LG Electronics

M.P.Birla Institute of Management Page-80

Major findings of this research have been listed below:

(Some of these findings have emerged from our personal enquiry notes.) 1. LG has focused at market expansion rather than trying to snatch customers from

competitors, this has been their prime advantage because a very fundamental strategy

with regards to entry into new markets is “Never get into a head on collision with the

existing strong brands of the market while entering a new market.”

2. LG has identified two major areas to focus in their marketing strategy i.e. �

Health focus �

Power of reach

3. Of the 14 dealers who feature in the above average category of dealers, 10

promote LG Air conditioners. However amongst all 24 dealers, 16 dealers promote

and prefer LG.

4. Dealers play a key role in a customer’s choice making of the product the fact that

the dealers are promoting LG product so strongly even though LG follows stringent

policies with regards to credit to dealers, implies the present scenario of the Indian

AC market. It is indicative that LG does provide a large amount of incentives to its

dealers and also that LG AC has a strong pull in the market.

5. The maximum of 13 points a brand can get from a dealer. Hence to get a 10

would imply getting 75 % score which LG Air conditioner has been successful in

getting 7 times amongst the above average dealers.

6. Of the 50 respondents, there are 20 respondents that ranked LG as the most

preferred brand.

7. When the respondents are required to state their choice of AC given a chance to

purchase one right away, 21 respondents picked up LG.

8. LG has been very focused in terms of their promotional and brand building

exercise. They have generated considerable amount of awareness for Air conditioners

in terms of their brand extension but at the same time consolidated their Umbrella

brand strategy, which has been justified and proved in Hypothesis.3. LG has followed

the single brand name strategy and it has been highly successful.

Page 81: Niraj LG Electronics

M.P.Birla Institute of Management Page-81

9. LG’s brand building exercise has been very focused and follows a very clearly cut

out strategy i.e. �

They identified the power of their Umbrella brand strategy and converted their

being “a company dealing in diversified products” scenario into their strong

competitive advantage. �

Their positioning strategy of using the Health focus concept has successfully

made a strong impact in the minds of customer, which gives them a strong platform

for differentiation and creating their unique brand identity.

10. LG has incorporated the fact that products and brands have a natural life and that

they degenerate in their Vision statement. This is indicative of the awareness that LG

has with regards to brand management. Their brand extension and growth strategy is

very well planned and will ensure that even though the brand would degenerate, the

company would be prepared and will have just the right strategy to revive the brand

as and when the need arises.

11. Majority of customers prefer to purchase an AC from the dealers. LG has been the

pioneering company in Indian market to use the dealer channel in promoting AC and

it seems to be a very appropriate strategy that the company has incorporated.

12. LG has a very strong Penetration strategy planned for Rural India. The brand

managers for the company have kept this objective in their mind and appropriately

promoted the product from the cricket platform which will make it easy for the rural

consumers to identify with the product and has kept LG at a position where it is

prepared to aggressively penetrate this lucrative Indian Rural Market when the time is

right with their most popular aggressive marketing strategy which the MD LG

Electronics has named as “Feet Marketing”

13. LG is strongly investing in India and are coming up with a new unit near Pune,

which is going to benefit India in multiple ways. It also makes the company’s

intentions of strongly associating with our country clear.

Page 82: Niraj LG Electronics

M.P.Birla Institute of Management Page-82

Following are a set of recommendations that would presumably keep LG Air

conditioner’s brand management team on track to achieve their ultimate objectives;

o Strong positioning of the product on its quite successful HEALTH PLATFORM.

o Ensure strong penetration of the Indian Market

1. The print advertising trends shows a clear increased prominence of retail

advertising. LG has a very strong dealer network which is widely spread across the

country. It will be essential for LG to consider having a central unit for screening the

print advertisements that these dealers propose to send to the popular newspapers in

their region to ensure that the brand communication across all these regions is

homogenous. It is extremely important for the strengthening of the brand identity.

2. Indian market is very erratic, at the same time half of the country suffers from

lack of power or frequent power cuts. It would provide the company a strong

competitive advantage if it can come up with an innovative technology of using

alternative source of energy. Energy, which is environmental-friendly e.g. Solar.

3. LG has employed 4 main Marketing Managers for the 4 main different zones. All

these managers report to the top management directly. It would be extremely

effective to have a National Brand Manager whose main profile would be to integrate

the ideas and strategies of all the zonal managers and generate a branding strategy

that is homogeneous across the nation and takes into consideration the vast cultural

diversity that is the hallmark of our country.

4. Being an Umbrella brand operating in 4 different businesses with a wide variety

of sub brands in each business makes it impossible for the company to take services

from one advertising agency. Employing services of more than 1 advertising agency

has an in-built threat of miss- communication as all agencies have their own unique

style of generating a media strategy. To ensure that there is homogeneity in

communication across the various business promotions so that the Umbrella brand

does not get diluted the company should have a system of screening all the promotion

material under some set standardized parameters and requirements. This would

ensure strengthening of the umbrella brand.

5. “LG’s Air conditioner’s” TV advertisements, (it has been observed over the

interview with respondents) do not have an effective recall amongst customers. The

new theme on which these advertisements have been constructed is family centric

Page 83: Niraj LG Electronics

M.P.Birla Institute of Management Page-83

advertisement theme that happens to be quite identical to the Samsung

advertisements. To overcome this brand diffusion effect, the company should focus

on creating something unique in their TV advertisement theme, which would help

customers to identify with the brand at the same time, ensure sound advertisement

recall.

6. The ‘value equation’ is very significant for LG. After all, the difference between

the leader in each market and also runs can be summed up this way. We take the

leader’s name and we get a sharp image of a particular value proposition it is offering

the customers. We take the name of any of the followers and all we get is a diffused

picture. Companies generally choose the “Constellation of values” they want to

deliver and then organize their operations accordingly. It is better to be outstanding in

one or two chosen values than be marginally better in half a dozen. Thus all

products/brands need to be positioned in the market; the value equation focuses on

the need to position ‘the company’ as well. The value equation shoueld be based on

the “Strategic drivers” of brand value. These drivers are shown in the following chart:

Chart 8: Chart showing “St rategic Drivers” of Brand Value

Strategic Drivers of Brand Value

Page 84: Niraj LG Electronics

M.P.Birla Institute of Management Page-84

7. Brand portfolio economics is also quite significant for LG. Managing a brand

portfolio poses many challenges. Any laxity in managing them will not only have its

effect on marketing and create confusion for customers but will also affect corporate

profitability. To effectively manage the portfolio of brands, LG can follow the

following ground rules:

⇒ Aligning the brand portfolio with business design.

⇒ Considering brand pyramid building. LG can benefit by building a

pyramid of brands, creating brands at different price points or catering brands

tailored to different segments.

⇒ Growing winners and harvest-losers. New brands to the portfolio can

spruce up market penetration but companies can benefit from focusing on a few

powerful brands that usually enjoy benefits like premium price, efficient

distribution, economies of scale etc.,

⇒ Play the cards: Companies having strong brands usually try to stretch their

brands to unrelated areas. This results in erosion of the existing brand equity.

Instead, a company can be “more” effective when building a new brand.

A company’s understanding of the brand equity and its economic contribution to the

profitability will help in developing a winning brand portfolio.

8. LG can profitably put the concept of “experiential marketing” in its marketing

strategy. This concept is based on the premise that the extent to which brands can be

expanded and leveraged into new categories determines the brand value. In this

brand-led world, products like air-conditioners are no longer bundles representing

functional characteristics but means to provide and enhance customer experiences.

The brand experience map (BEM) is quite helpful in this regard. The key components

of BEM are: customer actions, contact employee actions and the support process. The

brand steps involved in plotting a brand experience are:

⇒ Identify the process to be mapped

⇒ Map the process with the customer’s point of view.

⇒ Identify the lines of interaction

⇒ Identify the lines of visibility

⇒ Identify the lines of internal interaction.

⇒ Map internal support activities.

Page 85: Niraj LG Electronics

M.P.Birla Institute of Management Page-85

⇒ Link the customers and employees activities to the support activity

system.

⇒ Add evidence of product service at each customer action step.

⇒ Add information wherever necessary to increase clarity of these evidences.

In brief, the BEM projects brand manners in terms of four dimensions of customer

experience:

⇒ The rational experience – What goes on?

⇒ The emotional experience - How they feel?

⇒ The political experience – Why it is right for them?

⇒ The spiritual experience - Where it leads them to or ‘wither’?

Experiential marketing is eclectic, it focuses on the customer experiences, treating use of

a product as a holistic experience and recognizing both the rational and emotional

drivers of use of the product. LG can develop “Strategic Experiential modules” and track

the customer’s experiences in terms of sense, feel, think, act and relate. This will boost

the brand value of LG.

9. LG can also enhance the “power” of i ts power brands through an appropriate

dealer decision support structure which is highlighted below: Chart 9: Chart showing Dealer Decision Support Structure

Dealer Decision Support Structure

Page 86: Niraj LG Electronics

M.P.Birla Institute of Management Page-86

Integration of dealer initiatives is worth considering in this context. The road map to

integration is given below.

Chart 10: Chart showing Road map to Integration of Dealer initiative

Road map to Integration of Dealer initiative

10. LG’s inherent success in the market has been driven largely by the strength of its

brands. This success may not be guaranteed in future, because of the aggressive

strategies of its competitors. As a future safeguard, we recommend the Brand Asset

Management (BAM) to LG. The BAM manages the key touch points of customers in

terms of emotional and self-expressive benefits. BAM orientation may create

profound shift in the company as highlighted in the following Table:

Table 13: Table showing the difference between Traditional Brand Management & BAM

No. Traditional Brand

Management

Brand Asset Management

1 Brand managers Brand Champions

2 Customer satisfaction Customer commitment

3 Product-driven revenues Brand-driven revenues

4 Market share gains Stock price gains

5 Marketing manages the

brand

All functional areas

manage the brand

6 Brand is driven internally Brand is driven externally

Page 87: Niraj LG Electronics

M.P.Birla Institute of Management Page-87

The whole idea of BAM is to prevent the following common mistakes, which sound the

death knell for brands:

⇒ Brand Amnesia

⇒ Brand Ego

⇒ Brand Megalomania

⇒ Brand Deception

⇒ Brand Fatigue

⇒ Brand Paranoia

⇒ Brand irrelevance

11. We also recommend that LG should focus on designing/re-designing its brands

for psychological/Social instrumentality. There are three types of psychological/social

instrumentality:

⇒ Psychological/social instrumentality as the intrinsic, core benefit of the

product/service

⇒ Psychological/social instrumentality as a benefit resulting from the major

tangible benefit (For e.g. feeling satisfaction following the conclusion that we acted

sensibly taking advantage of an attractive deal)

⇒ Psychological or social instrumentality as a value added feature which is,

nonetheless, the major benefit.

12. Managing brand relationships is indispensable to LG. The emergence of hyper-

competition has transferred power to customers and dealers. One way to retain

customers is to develop a holistic relationship with them through Brand Relationship

Management (BRM).

⇒ Identifying the key value drivers that contribute to brand preference

⇒ Measuring the utility that customers attach to the brand

⇒ Analyzing the way the actual choices reflect customer preferences and

situational constraints.

⇒ Developing for each customer a market response profile, measuring

his/her propensity to respond to various marketing stimuli.

⇒ Grouping target customers into actionable segments based on profitability,

usage characteristics and/or common needs.

Page 88: Niraj LG Electronics

M.P.Birla Institute of Management Page-88

⇒ Defining offers and corresponding value propositions that meet the

identified needs.

⇒ Reconciling the value of the customer to the value of the brand and

understand the trade-offs in revenue management and customer relationship

management

⇒ Creating mechanisms that can generate positive interactions between the

customer and the firm.

⇒ Measuring the returns on the implementation of a BRM strategy.

13. LG can use profitably the “360 0 Brand engagement” – a sophisticated and

powerful brand management tool. A typical 3600-brand engagement can be distilled

into a clear four-step journey:

⇒ Ensure that the top team knows why they are embanking on the journey in

the first place.

⇒ Communicate a compelling story to employees, which explains the brand

significance and its delivery.

⇒ Help people to experience the story and understand the role they can play

in making it happen

⇒ And finally, re-enforce it through the processes the company uses to

manage the business.

The above steps are highlighted in the following chart:

Chart 11: Chart showing The Brand to Life Journey

Page 89: Niraj LG Electronics

M.P.Birla Institute of Management Page-89

14. The brand extension strategy of LG is currently comfortable. LG is reaping such

benefits of brand extensions as leveraging brand equity, distribution and promotion

synergies, parent brand re-enforcement, expanding to a wider market. However

considering the future risks to the LG’s flagship brand, we recommend that it should

focus on the following critical issues of brand extensions:

• Identifying brand personality

• Category size

• Promotion strategy

• Brand portfolio comfort level

• Tianing of the stretch

• Compatibility of brand associations.

We give below the Mega Brand Pulley Strategy, which is quite helpful in managing

brand extensions:

Chart 12: Chart showing Mega Brand Pulley Strategy

Page 90: Niraj LG Electronics

M.P.Birla Institute of Management Page-90

15. LG can profitably adopt the concept of “Brand Assimilation” (BA), which

involves aligning employees around its brand. Employees can make or break a

customer’s experience with the brand. Taking a strategic approach to brand assimilation

will ensure the company’s brand building efforts create deep relationship with the

customers. BA is a set of programs designed to ensure that all employees understand and

embrace the company’s brand and are able to bring it to life inside and outside the

company. The phases of structural brand assimilation are portrayed in the following

chart:

Chart 13: Chart Showing Phases of Structural Brand Assimilation

The reasons for BA are straightforward and difficult to dispute:

• BA provides a tangible reason for employees to believe in the company, which

keeps them energized.

• BA allows each employee to see how he/she fits into the scheme of delivering the

brand promise

• BA develops a level of pride to fulfilling the brand’s promise.

• BA confirms that the customer and the brand are the things to focus on.

Page 91: Niraj LG Electronics

M.P.Birla Institute of Management Page-91

16. LG may be called upon to do “Brand Surgery” in future in view of the turbulence

in the market for air-conditioners. We are, therefore, prompted to give below some

benchmarks for the brand surgery (avoiding tragic mistakes):

• The companies should under-promise and over-deliver the brand cult.

• If the company says that it is going to do something, it must do it. No excuses,

even if it is something small, customers will base the company’s trustworthiness on

the smallest of factors.

• The company should spell out what it ‘can do’ and ‘cannot do’ in its branding

materials. The company should make it clear if something is outside its area of

expertise.

• The company should be bold about its personality with the prospects. Its quirks

will drive away some but attract others.

• The company should not believe that lower price would do the miracle. A quality

customer will pay what the brand is worth instead of trying to get the company to

discount by holding out the carrot.

To sum-up, it is re-iterated that the current brand health of LG is comfortable but after a

healthy period in its maturity phase, the brand may show a sluggish fall. Rather than

incorrectly assuring that the brand is in terminal decline, analysis should be undertaken to

evaluate whether it is viable to inject new life.

New brands are expensive to launch and their future is very uncertain. By contrast,

revitalizing brands may well be less expensive route to follow, with a greater likelihood

of success.

Legendary racer Ayrton Senna, was once asked about the dangers of racing, he replied,

“there is minimum danger to me because I know all my risks”. This holds so very true for

a brand in today’s competitive environment. The key step in sustaining brand equity is to

identify the risks to a brand in the present context as well as in the future. We modestly

venture to claim that our recommendations are quite helpful in maintaining the robust

brand power of LG and in continuing the “Aggressive Strategist” status of LG for year s

to come.

Page 92: Niraj LG Electronics

M.P.Birla Institute of Management Page-92

DIRECTIONS FOR FURTHER RESEARCH In our view, Strategic Brand Management is a fertile and growing field

particularly in the FMCG sector. The scope for further research is abundant. Perhaps the

line of thinking on which our research investigation is based may propel research

investigation in the following ‘green pastures’ of Strategic Brand Management:

• Brand core values vis-a–vis Brand Manners.

• Brand Audit and new brands launched in the past five years

• Brand Image variations in the life cycle stages of the product/brand.

• Brand Surgery practices in leading companies in FMCG sector.

• Brand Entropy and Brand Revitalization – Case studies.

• Brand Valuation Models.

• Strategically building and sustaining brands.

• Brand leadership

• Managing product/brand platforms.

• Brand Amnesia

• Brand Megalomania

• Brand Deception

• Brand Fatigue

• Brand Paranoia

• Brand Catalyst and Customer Relationship Management

• The cognitive Neuroscience way of branding.

Page 93: Niraj LG Electronics

M.P.Birla Institute of Management Page-93

ANNEXURE

I. Questionnaire

⇒ Dealer Survey Questionnaire

1. What products do you stock?

2. My requirement is 1.5 tonne A/c. suggest a Suitable Model.

Do you take into account Customer requirement?

3. Please comment on your price structure.

4. What is your discount Policy?

5. What are the various payment schemes available?

6. What schemes or other facility shall be available apart from the product?

7. What is the most distinct feature of the Product?

8. What are the various pre sale, post sale and in sale services status?

9. Guarantee and warranty available. If any?

10. Suggest the distinct feature of the product?

11. Which other places across Bangalore is the product available?

12. What is the complaint management policy on various products?

13. Component rates on need of replacement?

14. Any latest technology if introduced by the company?

15. Re-sale value of the A/C.

16. Power consumption rate of the A/C.

17. Degree of accuracy on Temperature control possible.

18. What is the noise level?

19. What types of dealer contests take place?

20. What are the types of incentives made available by the dealer?

⇒ Consumer Survey Questionnaire

Please Note:

For the ease of interviewing a common questionnaire has been developed for AC users

and non-users. Some of the more product specific responses, which have been invited,

are not applicable to the non-users; hence their response is not sought for the same.

QUESTIONNAIRE

Page 94: Niraj LG Electronics

M.P.Birla Institute of Management Page-94

Dear Sir/Madam,

I Niraj S Kakkad a student of MPBIM am conducting a research on customer’s

perceptions with regards to Air conditioners. The information provided for the below

given questionnaire is of prime importance to my research, I request you to kindly spare

some time with regards to the same. I assure you that the information provided by you is

to be used strictly for Academic purpose and shall be kept confidential.

Respondent’s Profile

1. Name: ____________________________________________________________

2. Address:

__________________________________________________________________

__________________________________________________________________

� Your Occupation: ___________________________________________________ � Your Spouse’s Occupa tion: ___________________________________________ � Educational Qualification:

Yourself: _________________________________________________________

Your Spouse’s: _____________________________________________________ � Are you a member of any club in India: _________________________________

_________________________________________________________________

3. Contact No: ______________________________________________________

E-mail id: _________________________________________________________

4. Annual Income: (Please tick ( � ) whichever is Applicable)

a) < 1,00,000

Page 95: Niraj LG Electronics

M.P.Birla Institute of Management Page-95

b) 1,00,001<3,00,000

c) 3,00,001<5,00,000

d) 5,00,001<10,00,000

e) 10,00,001>

Product specific Responses 5. You have an LG Air conditioner which is

� Model No. ________________

Purchased on ______________

From ____________________

At Rs. ____________________

� You also have Model No. ___________________

Purchased on _____________________________

From ___________________________________

At Rs. ___________________________________

(a) If you have to purchase an air conditioner, where would you buy? � From the manufacturer directly. � From the dealer � From the super market/

Departmental store/malls.

6. Did you receive any gifts or discounts at the time of Purchase?

� Yes � No.

Page 96: Niraj LG Electronics

M.P.Birla Institute of Management Page-96

If yes, what?

________________________________________________________________

7. What made you aware of this product: (Please tick ( � ) whichever is Applicable)

a. Television advertisement

b. Radio Jingle

c. Newspaper Advertisement

d. Friend

e. Relative

f. Hoarding

g. Showroom Display

h. Others: (Specify___________

________________________

⇒ On a scale of 1 to 7. How do you rate the advertising media impact

of LG’s promotional campaign?

Poor Excellent

1_________2__________3__________4_________5_________6_________7

8. Which other Air conditioners are you aware of?

________________________________________________________________

________________________________________________________________

9. How long did it take for you to decide on the product and place an order?

_________________

10. How would you rate the performance of LG Air conditioners?

(Please tick ( � ) whichever is Applicable)

Very Poor ------ Poor--------Good--------Very Good-------Excellent

Page 97: Niraj LG Electronics

M.P.Birla Institute of Management Page-97

(a) Do you get pre sale, during sale and after sale service Yes No.

If YES how would you rate the pre sale, during sale and after sale service of

LG Air conditioners?

Pre Sale

Very poor------Poor---- Good------Very good-------- Excellent During Sale

Very poor------Poor---- Good------Very good-------- Excellent After Sale

Very poor------Poor---- Good------Very good-------- Excellent

11. From whom do you get Product Service? ! Manufacturer ! Dealer

12. From whom would you prefer to get Product service? ! Manufacturer ! Dealer

13. How much did you pay for the service? Actual Cost of Service Nominal Price Subsidized price.

14. Are you aware of how many units of Power does you’re a/c. consume?

____________________________

15. Are you aware of Plasma Gold Technology?

Yes

No

Page 98: Niraj LG Electronics

M.P.Birla Institute of Management Page-98

16. Do you have a Complaint against LG Air Conditioners?

Yes �

No �

If Yes! Please elaborate ____________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

17. How was the response to your complaint?

a. Instantly

b. Reasonable delay

c. Unreasonable Delay

19. Given a second opportunity to purchase an Air conditioner, which Brand would

you prefer to purchase?

(Please tick ( " ) whichever is Applicable)

a) LG �

b) Onida �

c) Voltas �

d) Carrier �

e) Samsung �

f) Others �

Specify

______________

Why?

_________________________________________________________

Page 99: Niraj LG Electronics

M.P.Birla Institute of Management Page-99

_________________________________________________________

_________________________________________________________

20. Do you feel the Prices of different models of LG Affordable/Reasonable? # Yes # No

21. How would you rate the dealer support to LG air conditioners? # Quite Good # Very Poor # Requires acceleration.

Brand Specific questions

22. Rank on your preference amongst the given brands of Air conditioners?

LG

Voltas

Carrier

S7amsung

Blue Star

Onida

23.. How do you feel on overall performance LG Air conditioners rate?

(Rank on a rating of 1 to 7)

(Please tick whichever rank is applicable)

Poor Excellent

1_______2_________3__________4___________5___________6_______7

Page 100: Niraj LG Electronics

M.P.Birla Institute of Management Page-100

II. SELECT BIBLIOGRAPHY:

• LG Air conditioner Brochure

• Books:

o “Marketing Management” by Philip Kotler millennium edition

o “Strategic Brand Management” by Jean Noel Kapferer 2nd Edition 2002

published by Kogan page India Pvt ltd.

o “Advertising Management” by M.V.Kulkarni 4 th Edition 2003 published

by Everest Publishing

o “Brand Warriors” edited by Fiona Gilmore, Profile books publication, UK

1999.

o “Building, measuring an d managing Brand Equity” by Kevin Lane Keller,

Prentice Hall of India ltd, New Delhi 2003.

o “Branding” by Geoffrey Randall, Cross publishing house, New Delhi

2003.

o “Brand Manners” by Hamish Pringle and William Gordon, John Wiley &

Sons publication, 2003”.

o “ Brand Mindset” by Duane.E.Knapp Tata McGraw Hill publication, New

Delhi 2003.

o “Branding” by James.R.Gregory Tata McGraw Hill publishing company

publication, New Delhi 2004.

Page 101: Niraj LG Electronics

M.P.Birla Institute of Management Page-101

o “Brand Marketing” by Joe Marconi, NTC books publications,Delhi 2002

o “Managing Brand Equity” by David Aaker Free Press publications Delhi

2002.

o “Branding in Action” by haninson.G and Cowking.P. McGraw Hill

publication, 1993.

o “Brand Marketing” by W.Weilbactier NTC publications, Chicago, 1993.

o “From Brand Vision to Brand Evaluation – Strategically builiding and

sustaining brands” by Leslie de Chernatony, Butterworth – Heinermann

publications, UK 2001.

o “Brand Leadership” by David.A.Aaker and Erich Joachimsthaler, Free

Press publications, New York 2000.

o “Creating Powerful Brands” by Leslie de Chernatony and Malcom

McDonald, Butterworth and Heinermann publication, UK 1999.

o “Brand Management – Perspectives and Practices” edited by Naveen Das,

ICFAI publication, Hyderabad 2002.

• Articles:

o “LG NO 1” Cover Feature, Business India July 5 -18, 2004, Pg 48.

o “LG Air conditioners Redefining Satisfaction” Strategy by Sridatri

Banerjee A&M 15 June, 2001 Pg 36

o AdEx India Analysis May 21,04

o “Strategic Brand management” by Roland Berger - Strategic Brand

Development Group file from Internet.

o “LG: The Aggre ssive Strategist” by Shishir Kumar in ‘Marketing

Mastermind’ June 2004.

o “Managing Brand Relationships for Success” by Subrat Sahu and Bharat

Dalal in ‘Indian Management’ September 2002.

o “Brand Experience Mapping for Brand Alignment” Global Executive

summaries in ‘Marketing Mastermind’ February 2003.

o “The making and faking of Emotionally Significant Brands” by Dan

Herman in “Advertising Express” November 2003.

Page 102: Niraj LG Electronics

M.P.Birla Institute of Management Page-102

o LG Management Perceptions of the importance of Brand Awareness”

research paper by Emmu McDonald quoted in “Marketing Mastermind”

February 2002.

o “ ‘Brand Sense’ building brands with sensory connections” White paper

sourced from harvest Consulting Group LLC quoted in ‘Marketing

Mastermind’ February 2002.

o “Maintaining Brand Health” by Martin Payne in “Mark eting Mastermind”

February 2002.

o “Brand Failures” by Morth Halg Book summary by Anshul Kaushesh in

‘Marketing Mastermind’ September 2003.

o “Brand Asset Management” by Scott Davis in “Marketing Mastermind”

April 2003.

o “Experiential Marketing” by Bernol.H.Sch mitt Book Review by Roli

Sehgal in “ICFAI Journal of Marketing Management”, May 2004.

o “Living the Brand” by Nicholas Ind Book Review by Mr. Y.Chandra

Shekhar in “ICFAI Journal of Marketing Management”, May 2004.

o “Brand Portfolio Economies” Global Executive Summary in “Marketing

Mastermind”, May 2002.

o “Brand Review” Covert Report in A&M Batch number 29 -02-2000.

o “ ‘Top Brands’ An A&M – ORG-MARG Survey” in A&M 31 -10-1998.

o “4 -D Branding” A survey in “Advertising Express” October 2003.

o “ 360 0 Branding” by Phil Askham and Susannoh Feckbey in “Strategic

Marketing” March -April 2004.

o “Brand Positioning: Issues and Analysis” A Survey in “Advertisement

Express” March 2003.

o “Branding – The cognitive Neuro-Science Way” by Noel Coburn in

“Advertising Express” February 2 004.

o “Brand Due Intelligence” by David Haigh in “Marketing Mastermind”

December 2002.

o “Creating Brand Personality for Generation X” by Sullaja Motwani in

“Strategic Marketing” Nov -Dec 2003.

o “Feeling Growth through Ingredient Branding” by Roy George in

“Adv ertising Express” April 2003.

Page 103: Niraj LG Electronics

M.P.Birla Institute of Management Page-103

o “Brand Assimilation” by Scott.M.Davis and Michael Dunn in

“Advertising Express” December 2003

o “Managing Brand Extensions” by K.Suresh in “Marketing Mastermind”

October 2003.

o “Brand Mascots” by Jagdeep Kapoor in “Strategic Mar keting” March –

April 2004.

• Websites surfed

o www.marketingprofs.com

o www.brandchannels.com

o www.google.com

o www.lge.com

o www.lgeil.com

o www.lgezbuy.com

o www.retailyatra.com

o www.expresscomputeronine.com

o www.rediff.com

o www.hinduonnet.com

o www.thehindubusinessline.com

Page 104: Niraj LG Electronics

M.P.Birla Institute of Management Page-104

III. Explanation to the research instruments used:

⇒ Dealer Survey Analysis

Dealer Survey Data Tabulation and Table stating the point scoring system

Sr.No. Parameter

Outlet Brand Specific information

1 Product Stocked - 1 All the brands stocked by the

dealer get 1 point.

2 Preferred by Dealer -

-

3

2

Points awarded to 1st preference

Points awarded to 2nd preference

3 Aesthetics 4

3

2

1

-

-

-

-

Points for Excellent

Points for Good

Points for OK

Points for Poor

4 Salesperson’s product

knowledge

4

3

2

1

-

-

-

-

Points for Excellent

Points for Good

Points for OK

Points for Poor

5 Salesperson’s preferred

brand

-

3

Points awarded

6 Display - 3

2

1

Points awarded to 1st preference

Points awarded to 2nd preference

Points awarded to 3rd preference

7 Promotion Material 1 1 Point awarded for making

available the promotion material.

Page 105: Niraj LG Electronics

M.P.Birla Institute of Management Page-105

8 Finance Scheme and

product price

1 Point awarded to the brand that

provides the maximum discount.

9 Awareness of the power

consumption

1 Point is awarded

10. Warranties and

Guarantee

1 Point awarded to the Brand

providing the maximum warranty.

Note:

1. Maximum points an Outlet can get is:

Parameter Point

Aesthetics 4

Salesman’s product knowledge 4

Promotion material made available 1

Awareness with regards to power

consumption

1

Total 10

2. Maximum points a Brand can score is:

Parameter Point

Product stocked 1

Dealers preferred brand 3

Display 3

Salesman’s preferred brand 3

Promotion material 1

Finance scheme and discount 1

Warranty and Guarantee 1

Total 13

Page 106: Niraj LG Electronics

M.P.Birla Institute of Management Page-106

Data Analysis and Tabulation

Brands

Sr.No. Name of the

Dealer

Total

Points

For

Outlet LG Voltas Carrier Samsung Ondia Videocon Others

1. Viveks

R.T.Nagar

8 3 11

2. Viveks

Central

Bangalore

9 12 3 3

3. Viveks

Jayanagar

7 11 4 3 2

4. Viveks

Rajajinagar

7 10 4 3

5. Viveks

J.P.Nagar

10 10 4 1

6. Viveks

Indiranagar

4 8 2 1 1

7. Viveks

Koramangla

4 9 4 1

8. Viveks

K.H.Road

7 5 4 6

9. Girias

Sadashivnagar

8 10 1 2

10. Girias

Jayanagar

8 11 6 1

11. Girias

Gandhinagar

3 3

Page 107: Niraj LG Electronics

M.P.Birla Institute of Management Page-107

Gandhinagar

12. Girias

Brigade Road

6 5 11

Sr.No. Name of the

Dealer

Total

Points

For

Outlet

Brands

LG Voltas Carrier Samsung Ondia Videocon Others

13. Devi

International

8 10 5 1

14. Yesbee

Electronics

6 13 1 1

15. Sri Balaji

Electronics

Rajajinagar

8 8 5 4

16. Jyothi’s

R.T.Nagar

4 11 3

17. Pai

International

4 8 2 1 1 1

18. Uniq

R.T.Nagar

9 8 6 1

19. VGP Limited 5

3 7

20. Griha

Vaibhav

V.V.Puram

7 2 1 1 2

21. Sonovision

Jayanagar

6 8

22. Uday

Enterprises

Jaynagar

9 4 9

Page 108: Niraj LG Electronics

M.P.Birla Institute of Management Page-108

23. Uday home

world Golf

Course

8 6 11

24. Coolwell

Electix

5 3 1 5

Total 160 181 44 15 18 55 3 12

Table showing the above average ranked outlets for AC purchasing in Bangalore

Sr.No. Outlet Brand Preference Points

1 Viveks R.T. Nagar Voltas 11

2 Viveks B’lore Central LG 12

3 Viveks Jayanagar LG 11

4 Viveks Rajajinagar LG 10

5 Viveks J.P.Nagar LG 10

6 Viveks K.H.Road Carrier 6

7 Girias Sadashivnagar LG 10

8 Girias Jayanagar LG 11

9 Devi International LG 10

10 Sri Balaji Electronics LG 8

11 Uniq R.T.Nagar LG 8

12

Griha Vaibhav (VV Puram)

LG and Videocon 2

13 Uday Enterprise Jayanagar Onida 9

14 India Home World Samsung 11

Overall Points Tally

Rank Brand Score

1 LG 181

2 Onida 55

Page 109: Niraj LG Electronics

M.P.Birla Institute of Management Page-109

3 Voltas 44

4 Samsung 18

5 Carrier 15

6 Others (Godrej, Hitachi,

Electrolux, Kenstar)

12

7 Videocon 3

• The maximum score that a brand can get across all the dealers is (13*24) = 312

Based on this maximum points $ LG scores a 58% across dealers $ Onida the next most promoted and preferred product however stand at a

weak 17.62%