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A Project Report ON Market Analysis of LG Consumer Durables & Dealer Development
A Project Report ON Market Analysis of LG Consumer Durables & Dealer Development
A
PROJECT REPORT
ON
MARKET ANALYSIS OF LG CONSUMER DURABLES &
DEALER DEVELOPMENT
¶MARKETED· BY:
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Acknowledgement
It is indeed of great moment to pleasure to express our
senses of profound gratitude & indebtedness to all the
people who have been instrumental in making it a rich
experience. We found it to be a challenging project that
gave us a real practical exposure to the corporate world
and it is almost impossible to do the same without the
guidance of peoples around us. It gives us immense
pleasure to acknowledge LG ELECTRONICS INDIA Ltd.
dealers, who have been nice enough to give us a chance to
do our project and providing us wonderful support
throughout our project.
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Executive summary
Indian Consumer durables market used to be dominated by few
domestic players like Godrej Voltas Allwyn and Kelvinator. But
post liberalization many foreign companies have entered into
Indian market dethroning the Indian players and dominating
Indian market the major categories being CTV, REFRIGRATOR,
AIR CONDTIONERS and WASHING MACHINES. India being
the second largest growing economy with huge consumer class
has resulted in consumer durables as the fastest growing
industries in India. LG, SAMSUNG the two Korean companies
have been maintaining the lead in the market with LG being
leader in almost all the categories. The rural market is growing
faster than the urban market, although the penetration level is
much lower .The CTV segment is expected to the largest
contributing segment to the overall growth of the industry. The
rising income levels double-income families and consumer
awareness are the main growth drivers of the industries.
Consumer durables major LG Electronics India Pvt Ltd (LGEIL)
will invest nearly Rs 500 crore in India this year in research and
development, brand-building and other marketing initiatives. The
company, having a turnover of Rs 9,500 crore and market share of
26 percent, is investing Rs 360 crore on brand-building and other
marketing initiatives and around Rs 140 crore on research and
development, besides launching new platforms in information
technology and related areas, LG·s innovative ¶211 campaign· to
provide quality after-sales service, will also be expanded from the
existing 22 to 40 cities by next month, the campaign, for which IT
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Scope of project
This project gives us great exposure to the consumer durable
market because it includes product knowledge and field survey
job in which we visited the LG stores in Delhi. Incidentally Diwali
time was nearing during our survey period which exposed us to
another aspect of product promotion. LG always insist the 50%
display share of LG product because LG believes that ´JO
DIKHTA HAI WO BIKTA HAIµ.
Key findings:-
1. By calculating the display share we found that in most of store
LG has 50% display share almost all categories.
2. By the actual monthly sale of particular store we came to know
the capacity of the store and how much product can they sell.
3. It helps us to know that weather dealer is capable of being a
direct dealer of LG or not and it also helps to find out the new
dealers who are capable of being an LG dealer.
4. We also came to know while visiting the shops that there was
big problem of after sales service.
5. Many dealers were facing the problem of after sale service
because there is no follow up calls from LG.
6. Demo calls also not done properly.
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INTRODUCTION
Before the liberalization of the Indian economy, only a few
companies like Kelvinator, Godrej, Alwyn, and Voltas were the
major players in the consumer durables market, accounting for no
less than 90% of the market. Then, after the liberalization, foreign
players like LG, Sony, Samsung, Whirlpool, Daewoo, and Aiwa
came into the picture. Today, these players control the major
share of the consumer durables market. Consumer durables
market is expected to grow at 10-15% in 2007-2008. It is growing
very fast because of rise in living standards, easy access to
consumer finance, and wide range of choice, as many foreign
players are entering in the market With the increase in income
levels, easy availability of finance, increase in consumer
awareness, and introduction of new models, the demand for
consumer durables has increased significantly. Products like
washing machines, air conditioners, microwave ovens, color
televisions (CTVs) are no longer considered luxury items.
However, there are still very few players in categories like
vacuum cleaners, and dishwashers Consumer durables sector is
characterized by the emergence of MNCs, exchange offers,
discounts, and intense competition. The market share of MNCs in
consumer durables sector is 65%. MNC's major target is the
growing middle class of India. MNCs offer superior technology to
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Scope
Opportunity
Threats
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PANASONIC )
SHARP )
HITACHI )
SANSUI ) JAPAN
AKAI )
AIWA
WHIRLPOOL )
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ELECTROLUX
1. LG Global
2. LG India
3. LG
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History of company:
The company was originally established in 1958 as Gold Star,
producing radios, TVs, refrigerators, washing machines, and air
conditioners.
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1980-88 :- INTERNATIONALIZATION
1989-94 INOVATION
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1999-2003-DIGITAL MANAGEMENT
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Global Operation:
LG Group
1. LG.Philips LCD
2. LG Chemical
3. LG Telecom
4. LG Powercom
5. LG Twins
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6. LG Dacom
Business areas and main products
Mobile communications
(a) CDMA Handsets,
(b)GSM Handsets,
(c) 3G Handsets,
(d) Cellular Phones
Digital appliance
a) Air Conditioners,
b) Refrigerators,
c) Microwave Ovens,
d) Washing Machines,
e) Vacuum Cleaners,
f) Home Net,
g) Compressors for Air Conditioners and Refrigerators
Digital display
a) Plasma TVs,
b) LCD TVs,
c) Micro Display Panel TVs,
d) Monitors,
e) PDP Modules,
f) OLED Panels,
g) USB Memory,
h) Flat Panel Computer Monitors
Digital media
a) Home Theater Systems,
b) DVD Recorders,
c) Super Multi DVD Rewriters,
d) CD±RW,
e) Notebook PCs,
f) Desktop PCs,
g) PDAs,
h) PDA Phones,
i) MP3 Players,
j) New Karaoke Systems,
k) Car Infotainment
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ISION
Global Top 3 by 2010
GROWTH STRATEGY
CORE COMPETENCY
CORPORATE CULTURE
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SLOGAN
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THE SYMBOL
The symbol of LG is the face of future. The letter ´Lµ and ´Gµ in a
circle symbolizes world, future, youth, humanity & technology.
LG philosophy is based on humanity. It also represents LG·s
efforts to keep close relationship with our customers around the
world.
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THE PARTNERSHIP
STRATEGIC ALLIANCE
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1. 3M
2. SUN
3. YAHOO
4. PHILLIPS
5. TOYOTA
6. MICROSOFT
7. HP
8. GOOGLE
9. GE
10.INTEL
11.NORTEL
12.HITACHI
13.PRADA
14.RENESAS
15.TOSHIBA
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16.BESTBUY
LG BRAND IDENTITY:-
The brand of LG is delightfully smart. LG strives to enhance the
customer·s life and lifestyle with intelligent features, institutive
functionality and exceptional performance.
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1. Value
2. Promise
3. Benefits
4. Personality
a. Trust,
b. Innovation,
c. People
d. Passion
a)cReliable products
b)cSimple design
c)cEase of use
d)cExtraordinary Experience
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Trustworthy, Considerate
Practical, Friendly
1.cLearning Culture
3.cA Carrier
4.cGrowth
Growth in LG is very high for those who are in the company and
for those who want to join in LG. The company is growing with
fast innovation and the BLUE Ocean strategy is one of the
examples of growth.
Mission
Product Leadership
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Quality Innovation
´
is LG·s unique application to ethics. LG
will succeed through fair management practices and constantly
developing our business skill.
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Code of conduct of LG
2.cFair competition
3.cFair Transaction :
Equal Opportunity
Fair Transaction Procedure
Support and Aid for Business Partners
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Basic Ethics
Completion of Duty
Self Development
Fairness in Performance
Avoidance of conflict with company interest
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LG INDIA
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG
Electronics, South Korea was established in January 1997 after
clearance from the Foreign Investment Promotion Board (FIPB).
LG set up a state-of-the art manufacturing facility at Greater
Noida, near Delhi, in 1998, with an investment of Rs 500 Crores.
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R&D potential
Product localization:-
1. Product localization is the key strategy used by the LG
2. LG came out with Hindi and regional language menus on its
TVs.
3. Introduced the low-priced ´Cineplusµ and ´Sampoomaµ for the
rural market.
4. LG was the first brand to introduce gaming in TVs in
continuations of its association with cricket LG introduce cricket
game in CTVs
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LG PUNE
LG Pune is the branch office of LGEIL. It is located in J.M Road.
In 2004 LGEIL opened second factory which is located in
Ranjangaon. This plant manufactures all product including DVD
writers and GSM mobiles. Thus it became first company to
manufacture DVD writers in India. The ODP plant aims to reach
a manpower base of 1500 people and an investment of Rs 300
crore till 2010. LG India will become the export hub for LG
Worldwide, catering to the Middle East and African markets. The
company aims to touch an export turnover of $3 billion by 2010
from India, which will contribute to 30 per cent of the Indian
arm's turnover. , India, October 6, 2004 -- LGE announced 3
growth strategies aimed at the 1.1 billion people of India making
the Indian market the second largest global production base
following China. Under this strategy LGE has projected 2007
revenues in India will exceed US$10 billion, 10 times that of 2004.
The three strategies for the Indian market that the global
electronics giant disclosed included: penetrate the south-western
market of India through the new plant near Mumbai, the second
largest city in India, in addition to the existing northern plant;
installs a new GSM handset production line in the new plant and
use it as its second-largest global GSM handset production line
after the Qingdao plant in China; and expand the current 750
R&D staff in India to 1,500 by 2007, striving to develop premium
products and export 30% of India-manufactured products to Asia,
Middle East and Africa markets by 2007. LG Electronics· second
new plant in Pune, India covers a total area of 211,200 square
meters and is currently equipped with a production line to
manufacture 600,000 TVs and one million refrigerators a year. The
company is set to add production lines of air conditioners,
washing machines, monitors, and electronic ovens, by 2005. Also,
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Distribution Time:-
Local delivery ² 4 hrs.
Upcountry delivery - 12 hrs.
Within 200 km. ² 24 hrs.
Beyond 200 km. ² 48 hrs.
The above distribution time is the time of delivery of products
from warehouse to the market place, which the logistic
department follows to fulfill the demand in the market at right
time. In LG, we have the following process, which is followed in
logistic through ERP.
Order Processing
Invoicing
Indenting
Report
Order Processing booking for dealers /distributors
Invoicing after billing process/bill generation
Indenting requirement (Production Unit to branch unit)
Report distributed to all
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Problem
CUSTOMER SERICE:
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The best and the biggest international brands are here in India ²
but the irony if it all: where is the after-sales-service? So integral
to a brand, so critical for its success and so taken for granted in
developed markets! In India, after sales service is, for want of a
better description, the pits. So what·s stopping the best companies
from pulling out all the stops when it comes to providing the best
service? Do customers expect for too much? Or is it that in India
they don·t really care. Brand Equity fanned out to MNC as well as
Indian consumer durable companies, stockiest and dealers,
analysts and market researchers to get feel of what·s really
keeping after sales from being used as a cutting edge marketing
tool in pushing products across categories. Customers support
following the purchase of a product or service. In some cases,
after-sales service can be almost as important as the initial
purchase. The manufacturer, retailer, or service provider
determines what is included in any warranty (or guarantee)
package. This will include the duration of the warranty
traditionally one year from the date of purchase, but increasingly
two or more year·s maintenance and/or replacement policy,
items included/excluded, labor costs, and speed of response. In
the case of a service provider, after-sales service might include
additional training or helpdesk availability. Of equal importance
is the customer's perception of the degree of willingness with
which a supplier deals with a question or complaint, speed of
response, and action taken.
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service centre tries that much harder, knows things better, and
can even contribute as a revenue center.
Objective of the project
S
> The main objective of filed survey during the project was to
find out the market share of the LG and also calculate the display
share.
> Find out the positional dealer who can sale the LG product in
large volume.
> The main objective of research was to identify potential dealer
and development these dealer. So LG can make them their direct
dealer.
> This will ease the dependence on the some big dealer like
Maharashtra and Mahaveer electronics.
> Find out the problem faced by the dealer in sales and the
distribution.
> The Objective was to find out that how far the exhibitions are
helpful in branding,
> While purchasing the consumer durables which parameter is
most important for the consumer?
> Do the consumers prefer the financial facility for buying
consumer durable?
> How frequently consumers change the consumer durable?
> To enhances the knowledge of consumer durable market.
> To increases the knowledge consumer durable product of LG.
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Research Methodology:
Research methodology is considered as the nerve of the project.
Without a proper well-organized research plan, it is impossible to
complete the project and reach to any conclusion. The project was
based on the survey plan. The main objective of survey was to
collect appropriate data, which work as a base for drawing
conclusion and getting result.
Therefore, research methodology is the way to systematically
solve the research problem. Research methodology not only talks
of the methods but also logic behind the methods used in the
context of a research study and it explains why a particular
method has been used in the preference of the other methods
Research design
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BRANCH
1 2 3 in contrast tends to be rigid and its approach cannot be
changed ever now and then.
DEALER MANAGEMENT
Mapping of regional dealers.
They have been divided into three categories on the basis of their
turnover and the selling capacity.
> -1
> -2
> -3
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-1 Includes the modern trade and they have direct billing from
the branch office. They have high turnover and the company
depends heavily on them-2 includes the distributors. They have
direct billing from the branch office. Their turnover is also high.
-3 Includes the sub dealers .They have direct billing from
distributors or from the branch office. Their turnover is not so
high, but there are few sub dealers whose potential is quite high.
According to sales the branch has designated as gold and silver
sub dealers.
Bar chart:
This is another way of representing data graphically. As the name
implies, it consist of a number of whispered bar, which originate
from a common base line and are equal widths. The lengths of the
bards are proportional to the value they represent.
Preparation of report:
The report was based on the analysis and presented with the
findings and suggestions. The sample of the questionnaires is
attached with the report itself.
Sampling Methodology:
Details of the sampling methodology, I have made questionnaire.
The one is made for the Customer.
No. of questions in questionnaires for customer: 07
No. of question related to LG product: 03
No. of people met during the research: 200
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Inference
1. Customers buy from showrooms because of the service and
convenience.
These are two main factors.
2. Customers are preferred to buy from the showroom because of
they think that these convenient store may provide good after sell
service.
3. Customer also thinks that there is more chance to bargain and
they can get more discounts in these showrooms.
4. Price also a factor that attract the customer in these showrooms.
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Inference
1. Customers prefer to change consumer durables within 5-10
years. In India people do not change consumer durable
frequently.
2. 23% customers do not change their consumer durable within 10
year.
3. It represent that Indian consumer do not prefer to change their
consumer durable frequently.
1. LG should improve it·s after sale service because its hits badly
LGs market share in region.
2. More detailed customaries service is to be provided.
3. The training to in shop demonstration should be given at
frequent time interval and feed back should be considered
positively.
4. The company should look into the matter of person hiring for
in shop demonstration. A big LG showroom should have at least
2 such kind of person.
5. LG should try new dealer who have the potential. So they can
target more market.
6. As there is a bottle neck competition between Samsung and LG,
it is necessary to take measure steps to overcome the area of
downfall in LG with respect to Samsung.
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6. Customers are also now very choosy in buying the product and
it is important for the company to make loyal customer of their
brand.
7. In survey we found that LG has captured maximum market
share in every category. LG dominates CTV, LCD, and
Refrigerator, and Washing machine, category.
8. LG and Samsung have bottle neck competition in TV and REF.
category.
9. The product is well aware and it is on top of mind of customer.
10.Customers are also now very choosy in buying the product
and it is important for the company to make loyal customer of
their brand.
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LIMITATIONS
Every study has certain limitations. In our study, also there were
certain limitations, which I could not able to solve.
1. The research was conducted in a very small area.
2. Our research work period witness the biggest ups and downs
in product sale of different brands, which affected the perception
of the customer.
This was biggest drawback of my study.
3. Time factor was also important for us. We had limited time for
the research, for which a full-fledged report was insufficient for
me.
4. The customer filled the questionnaire mostly in careless
manner, so it was difficult to make them hold for time.
5. We had only found the upper-middle class family to fill up the
questionnaire, but generally, an average middle class family was
required for the study.
6. The sample size is also very small which represent my research
on consumer behavior
BIBLIOGRAPHY
> www.lgindia.com
> www.google.com
> www.wikipedia.com
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e) Durability
Q3. From where you prefer buying consumer durables
a) Exhibitions
b) Co.shoppee
c) Showroom
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Q.4.You prefer to buy from the same as you have mentioned in
Q.3
because of following reasons
a) Attractive Price
b) Service
c) Demonstrations
d) Offers
e) Convenience
Q.5.Which consumer durable you have and of which brand?
a) CTV -------------------
b) LCD -------------------
c) PLASMA -------------------
D) REF -------------------
E) WM -------------------
F) MW -------------------
G) AC -------------------
Q.6. How frequently you change your consumer durables?
a) 1-3 years
b) 3-5 years
c) 5-10 years
d) More than 10 years
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Q.7.Do you prefer any financing scheme to purchase consumer
durables?
a) Yes
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b) No
APPENDIX
A.S.I Area Service In charge
A.S.M Area sales manager
B.S.I Branch Service In charge
CAC Commercial Air Conditioning System
C.S NET Customer Service Net
D.S.C. Direct service centre.
L.H.D Logistics Head of department
R.E.F Refrigerator
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