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Case Study - LG
Case Study - LG
LG Electronics India Pvt. Ltd. (LGEIL) manufactures and markets consumer electronics
and home appliances. The company’s products include color televisions, LCD projectors,
DVD players, washing machines, air-conditioners, microwave ovens, direct cool and
frost-free refrigerators, personal computers, monitors, vacuum cleaners, optical storage
devices, and GSM mobile phones. LGEIL was established in 1997 and is based in
Greater Noida, India with additional offices in Bangalore, Mumbai, Pune and New Delhi.
It operates as a subsidiary of LG Electronics Inc. The day LG Electronics India Pvt. Ltd.
entered India it was faced with some major challenges like low brand awareness of LG in
India, one of the last MNC to enter India after SAMSUNG, SONY, PANASONIC which
entered in the year 1995, competition from local players as well as with other MNC’s and
last but not the least price sensitivity of the Indian customer. Facing these challenges
boldly LG Electronics India Ltd. is a leader today with a market share of 27% in
consumer durables in India. This case discusses the success story of LGEIL i.e. how it
was able to cope up with all these challenges in ever changing and demanding
environment. How branding has played an important role in its success in India?
Since there are many products which this company manufactures, but in this particular
case study we will be concentrating on the color, plasma, LCD televisions. How they
tried to gain the market share in India?
BACKGROUND
LG group is a large South Korean conglomerate, which produces electronics, mobile
phones and petrochemical products and operates subsidiaries like LG Electronics, LG
Telecom, Zenith Electronics and LG Chemicals in over 80 countries.
CEO of LG group is Koo-Bon-Moo and it was headquartered at Seoul, South Korea. It
was created as an appliance company in 1947 named GoldStar it later merged with the
chemical company Lucky. Many consumer electronics were sold under the brand name
GoldStar, while some other household products were sold under the brand name of
Lucky. The Lucky brand was famous for household cleaning products and laundry
detergents, but most associated with its toothpaste.
In 1995 it was renamed as “LG”, the abbreviation of ‘Lucky GoldStar’. More recently the
company associates its tagline “Life’s Good”, with the letter LG.
LG Electronics is a South Korean multinational corporation. It is South Korea’s second
largest electronics maker and the world’s third largest appliance maker.
It was founded in the year 1958 having its headquartered in the LG Twin Towers on
Yeouido, Seoul, LG electronics is the flagship company of LG group, having its
chairman and CEO as Yong Nam.
The company has 75 subsidiaries worldwide that designs and manufacture televisions,
home appliances and telecommunication devices.
LG Electronics own Zenith Electronics and controls LG displays , a joint venture with
Philips Electronics.
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South
Korea was established in January 1997 in India. One of the most formidable brands in the
consumer durable and home appliances segment, LGEIL has an impressive portfolio of
Colour Televisions, Washing Machines, Air-Conditioners, Microwave Ovens,
Refrigerators (Direct Cool and Frost Free), PCs, Vacuum Cleaners, Audio Systems,
DVDs, PDPs, optical storage devices, Laptops and GSM mobile phones. In India for over
nine years, LG has earned a premium brand positioning due to its superior quality, high
product performance, revolutionary technological delivery and warm service. LG is the
acknowledged trendsetter for the consumer durable industry in India with the fastest ever
nationwide reach, latest global technology and product innovation.
LGEIL's first manufacturing unit at Greater Noida is one of the most eco-friendly units
among all LG manufacturing plants in the world. The new and second Greenfield facility
of LG Electronics India located at Ranjangaon, Pune has the capacity to manufacture
GSM Mobile Phones. Colour Televisions, Air Conditioners, Refrigerators, Washing
Machines, Microwave Ovens and Color Monitors .This is India’s first mobile phone
manufacturing unit.
The rural Indian market, which accounts for nearly 70 percent of the total number of
households, witnessed a 25 percent annual growth while the urban consumer durables
market reflected an annual rate of 7 to 10 percent.
FICCI president Habil Khorakiwala aligns this growth to the changing dynamics of
consumer behaviour – luxury goods are now being perceived as necessities in households
and higher disposable incomes at hand are being spent on lifestyle products.”
Anjan Roy, economic advisor for FICCI says, the consumer durables market picked up in
January 2008 reflecting increased sales by major consumer durable companies and this
tempo is poised to continue. CE companies are re-working their strategies for the ensuing
summer season, considered to be a good period for the industry. A cut in customs duty on
inputs will enhance the manufacturing competitiveness of the industry by reducing cost
and boosting demand and sales.
2006-2008:
LG Electronics has announced the launch of the Time Machine TV in the country, which
aims at making TV viewing much more intelligent than before. This new product of the
manufacturer is targeted at tech-savvy individuals.
According to LG, Time Machine TVs are the world s first television-sets to be equipped
with a built-in digital video recorder, which enables the user to pause, rewind and replay
live TV programs as per convenience after the original broadcast. With the inclusion of
the playability feature, the Time Machine TV offers consumers the ability to have
absolute control over the ways to view television. Using the built in HDD recorder
technology, the viewer can go back in time to view their favorite programs all over again.
Time Machine is available in both LCD and plasma display panels. The plasma TV
comes equipped with clarofilter technology, which enhances picture quality through a
special optical film. Thus, removing double image and distracting effects of reflected
light while watching television.
The LG Time Machine LCD TVs are available in 37-inch and 42-inch models, while the
Plasma versions are available in 42-inch and 50-inch. All the Time Machine models are
already available in the Indian market and are priced between Rs 100,000 to Rs 250,000.
LG Electronics has introduced the Ultra Slim Television which is a combination of style,
and practicality, targeted towards discerning consumers who demand a tangible solution
for limited living space along with aesthetic appeal for modern homes.
The LG Ultra Slim TV is the World’s Slimmest CRT Television. Breaking the stereotype
of Slim Televisions, this revolutionary product is 7cm slimmer than LG’s own Super
Slim range and a whopping 14 cm slimmer compared to the Conventional Flat TVs
available in India.
It has a deflection angle of 120 degrees. This is 30 degrees wider than a normal CRT TV.
As the deflection angle has a strong influence on the depth of TV set, LG has applied the
shortest ‘Slim Gun’ which enabled it make the TV slimmer than ever before. The product
is priced at Rs 12990/-.
LG Plasma Display Panel: LG Electronics has achieved new dimensions of technological
excellence among the Plasma Display Panel manufacturers. The PDP is available in sizes
of 40, 42, 50, 60 and 71 inch internationally.
LG has world’s slimmest panel at 78 mm to the world’s biggest panel at 71”. The
company is the only brand in India which offers “The largest range of models in the PDP
category. Cutting Edge Technology such as Image Stick minimization, Orbiter,
Whitewash, Flexi PIP, Double Window Screen are some of the features which makes
LG’s PDPs, the best made Plasma Panels ever.
LG Televisions:
Slimagic
In the Indian household scenario where space is a major constraint, LG has come up with
an innovative solution by way of World’s slimmest Flat CRT TV, Slimagic. In India,
especially in the metros, there is a major concern of smaller living space, and LG’s latest
innovation provides a solution to utilize the limited living area / space in the most useful
manner. The technology used for Slimagic is highly advanced with a new picture tube
which makes the TV super slim and occupies 30% less space. The unique features of the
Slimagic TV is that it a sleek TV, which occupies less space without compromising on
picture quality and looks attractive with double tone colors. Slimagic is available in 21”
and 29”
The LG X-WAVE TV:
X Wave is India’s first TV with wireless Audio Transmitter. This new technology will
enable consumers to listen TV sound through any audio system with FM receiver. Thus
resulting in Home Theatre experience. The X Wave Wireless Sound Television comes
with unique chip which transmits the TV sound on FM frequency. The TV sound output
can be received by any audio set with FM receivers. This will enable consumer to
experience home theatre sound output. The current model is available in 21” category and
LG plans to launch 29” Flat X wave shortly.
LG Electronics India (LGEIL) will invest over Rs 1,100 crore in the next three years
starting 2007 and is eyeing revenue of Rs 16,000 crore by 2010. Of the planned
investment, Rs 1,000 crore would be used to fund marketing initiatives with a focus on
plasma TV, IT products, split AC and GSM handset while Rs 120 crore would go into
production capacity expansion.
LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is
planning a brand new image. To attract aspirational and young consumers across India,
company will roll out a new marketing strategy. LG Electronics India Pvt. Ltd. (LGEIL)
is going to invest Rs 360 crores in brand building and other marketing initiatives this
year. LG, this year, will focus on the IT, GSM and flat panel displays segment. The
company will also venture into the air purifiers and wine sellers segment. Moreover, LG
is looking at launching India-specific products.
Commenting on the occasion, Moon B Shin, managing director, LGEIL, said, “LG is
committed towards introducing innovative, trendy and technology products. The focus of
the company, this year, will be on combining its expertise in design and technology to
give a fresh premium appeal to the brand, adding an aspirational value for the Indian
consumer. The differentiating factor for the brand will be with its focus on customer
service.”
LG has started a '211 campaign' to provide its customers with quality after-sales service.
The campaign includes company response to customer complaint within 2 hours. The
fixing time for complaints would vary from 1 hour to a maximum of 24 hours. The IT
infrastructure for 211 campaigns has been currently set up in 22 cities and would be
extended to 40 cities by next month.
Shin added, “We have an aggressive line-up of products this year, and our focus will be
on the IT, GSM and flat panel displays segment. We have recently launched the 32”
Plasma TV and 22” LCD TV. We will also be entering the air purifiers and wine sellers
segment. We will be investing Rs 360 crores this year for our brand-related exercises.”
“LG wants to enhance the consumer durable shopping experience for the consumers. We
are planning to launch 60 premium brand shops by the end of first quarter,” added Shin.
Brand shops cater to the audience interested in buying high-end products.