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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
M.P.Birla Institute of Management Page-2
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)
M.P.Birla Institute of Management Page-3
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
M.P.Birla Institute of Management Page-4
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
M.P.Birla Institute of Management Page-5
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
M.P.Birla Institute of Management Page-6
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.
M.P.Birla Institute of Management Page-7
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
M.P.Birla Institute of Management Page-8
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
M.P.Birla Institute of Management Page-9
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:
M.P.Birla Institute of Management Page-10
• 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:
M.P.Birla Institute of Management Page-11
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.
M.P.Birla Institute of Management Page-12
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.
M.P.Birla Institute of Management Page-13
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.
M.P.Birla Institute of Management Page-14
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
M.P.Birla Institute of Management Page-15
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.
M.P.Birla Institute of Management Page-16
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?
M.P.Birla Institute of Management Page-17
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
M.P.Birla Institute of Management Page-18
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.
M.P.Birla Institute of Management Page-19
• 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.
M.P.Birla Institute of Management Page-20
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.
M.P.Birla Institute of Management Page-21
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.
M.P.Birla Institute of Management Page-22
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
M.P.Birla Institute of Management Page-23
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
M.P.Birla Institute of Management Page-24
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.
M.P.Birla Institute of Management Page-25
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)
M.P.Birla Institute of Management Page-26
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.
M.P.Birla Institute of Management Page-27
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
M.P.Birla Institute of Management Page-28
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
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.
M.P.Birla Institute of Management Page-30
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.
M.P.Birla Institute of Management Page-32
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.
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
M.P.Birla Institute of Management Page-34
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.
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
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
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
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)
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.
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.
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.
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
M.P.Birla Institute of Management Page-43
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
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
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
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)
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
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.
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
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
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
M.P.Birla Institute of Management Page-52
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.
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
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
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.
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.
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.
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
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.
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
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
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
+
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
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
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
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
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:
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
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
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
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
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
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
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
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
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.
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
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.
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.
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.
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.
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
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
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.
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
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
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.
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
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
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.
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.
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.
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
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
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.
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
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
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?
_________________________________________________________
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
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.
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.
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.
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
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.
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
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
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
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
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%