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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
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be expanded from the existing 22 to 40 cities by next
month, the campaign, for which IT infrastructure has
been set up, includes the company’s response to
customer complaint within two hours. The fixing time for
complaints varies from one hour to a maximum of 24
hours.
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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 HAI”.
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.
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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.
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
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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 the Consumers whereas the
Indian companies compete on the basis of firm grasp of
the local market, their well-acknowledged brands, and
hold over wide distribution network. However, the
penetration level of the consumer durables is still low in
India.
Scope
Opportunity
Threats
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PHILIPS ) HOLLAND
OSKAR
PANASONIC )
SHARP )
HITACHI )
SANSUI ) JAPAN
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AKAI )
AIWA
WHIRLPOOL )
ELECTROLUX
1. LG Global
2. LG India
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3. LG
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
6. LG Dacom
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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
VISION
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GROWTH STRATEGY
CORE COMPETENCY
CORPORATE CULTURE
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SLOGAN
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THE SYMBOL
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The one eye on the symbol represents “Goal-oriented,
Focused & Confident”.
THE PARTNERSHIP
STRATEGIC ALLIANCE
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LG Electronics is making technical advances and
identifying business opportunities through various
associative relationships with some of the world's
leading companies.
1. 3M
2. SUN
3. YAHOO
4. PHILLIPS
5. TOYOTA
6. MICROSOFT
7. HP
8. GOOGLE
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9. GE
10.INTEL
11.NORTEL
12.HITACHI
13.PRADA
14.RENESAS
15.TOSHIBA
16.BESTBUY
LG BRAND IDENTITY:-
The brand of LG is delightfully smart. LG strives to
enhance the customer’s life and lifestyle with intelligent
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features, institutive functionality and exceptional
performance.
1. Value
2. Promise
3. Benefits
4. Personality
a. Trust,
b. Innovation,
c. People
d. Passion
a) Reliable products
b)Simple design
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c) Ease of use
d)Extraordinary Experience
Trustworthy, Considerate
Practical, Friendly
1. Learning Culture
3. A Carrier
4. Growth
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Boundary less Environment means that there is no
difference between the levels of employees. There is
transparency between the work and mutual
understanding between all the employees.
Mission
Product Leadership
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3. Conventional Installation
4. Environment Friendly Product
5. Low Noise & Vibration
6. Energy Saving
Quality Innovation
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Code of conduct of LG
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2. Fair competition
3. Fair Transaction :
• Equal Opportunity
• Fair Transaction Procedure
• Support and Aid for Business Partners
• Basic Ethics
• Completion of Duty
• Self Development
• Fairness in Performance
• Avoidance of conflict with company interest
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• Rational Business Development
• Protection of stock holder interest
• Contribution to social development
• Environmental Conservation
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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LG corporate office is located at Plot no.51, Udyog Vihar,
Kasna Road, Greater Noida, India. This facility
manufactured Color Televisions, Washing Machines, Air-
Conditioners and Microwave Ovens.
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India. LGEIL is celebrating the 11th anniversary this
year.
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revenues of $42 billion. The Indian branch of LG exports
to 40 countries.
India challenges
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2. LG was the first brand to enter in cricket in big way a
way,
by sponsoring the 1999 world cup followed it up in
2003 as
well.
3. LG brought in four captains of the Indian cricket team
to
endorse its products. LG invested more then US$ 8
million
on advertising and marketing in this sport.
4. LG has differentiated its product using technology
and
health benefits. CTV has “Golden eye
technology” Air
conditioner has “Health air system” and
microwave ovens
have the “Health wave system”.
R&D potential
Product localization:-
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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 “Cineplus” and “Sampooma”
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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tune of 95 billion rupees ($2.4 billion) in 2007. As per
Shin's estimate, the sales in 2008 would be around 110
billion rupees. In order to achieve its target, Shin said LG
Electronics will concentrate on catering to the high-end
consumer market which will help boost sales this year.
India churns out six (6) per cent of LG Electronics global
revenues of $42 billion. The Indian branch of LG exports
to 40 countries. Shin remarked that the company was
targeting an increase of exports to $300 million in 2008
from $230 million in 2007.
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
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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,
LG Electronics is poised to install a GSM handset
production line in the new plant by early next year. The
GSM handset line envisages a capacity of manufacturing
2 million handsets annually, and the company expands it
to become a global GSM handset production base with a
capacity of an annual 10 million units by 2010. In
connection with its three growth strategies for the Indian
market, LG Electronics will invest a total of US$150
million in establishing facilities and boosting R&D efforts
in India by 2007. Specifically, it will invest US$53 million
in the second plant, another US$43 million in establishing
the GSM line, and US$54 million in securing R&D
manpower and boosting other efforts. Through these
strategies, LG Electronics aims to penetrate the global
market by using China and India as its core production
bases, while operating its plants in Changwon and Gumi,
Korea, as its main production bases. This way, the
company is pushing to penetrate the global home
appliance market. The present capacity of the facility is of
1 lakh unit per year and it shall cater to the need of the
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domestic markets. LG plans to upscale its operations to a
figure of 2.5 lakh units a year in the near future. The
plant in addition to its current manufacturing facility at
Greater Noida will enable the company to enhance its
consumer reach and reiterate it’s commitment towards
providing
superior technology products to the India consumer. The
key strategies being implemented include increasing the
number of its regional offices from six to eight. LG has
split its southern regional office into two, one comprising
the states of Tamil Nadu
and Kerala and the other consisting of Andhra Pradesh
and Karnataka. In addition, it has split one of its northern
regional offices by making Uttar Pradesh a separate
region after spinning it out from Delhi NCR. The other four
regional offices take care of East, Gujarat and Madhya
Pradesh, Maharashtra & Goa and Punjab, Haryana &
Rajasthan respectively. In the coming year, LG is also
repositioning its marketing spends, resulting in a
significant increase in its mass media expenditure for
better brand visibility. LG had a marketing budget of Rs
320 crore in 2007 with a 60:40 split in favor of below-the-
line activities. Next year, the company plans to increase
the share of mass media even as overall marketing
spends would be raised by just about 10-15%.
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2. Right Place
3. Right Condition
4. Right Cost
5. Right Handling
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Loc 4 - write off material
Loc 5 – destroy the item
Loc 6 - court case material
Loc 7 - for repair
Distribution Time:-
• Local delivery – 4 hrs.
• Upcountry delivery - 12 hrs.
• Within 200 km. – 24 hrs.
• Beyond 200 km. – 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
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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
Problem
CUSTOMER SERVICE:
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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.
Primary objective
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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.
Secondary objective
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
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.
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-1
-2
-3
-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.
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Secondary Data - The Company’s profile, journals and
various literature studies are important sources of
secondary data.
Data analysis and interpretation
1. Questionnaires
2. Pie chart and Bar chart
Questionnaires:
This is the most popular tool for the data collection. A
questionnaire contains question that the researcher
wishes to ask his respondents which is always guided by
the objective of the survey.
Pie chart:
This is very useful diagram to represent data , which are
divided into a number of categories. This diagram
consists of a circle of divided into a number of sectors,
which are proportional to the values they represent. The
total value is represented by the full create. The diagram
bar chart can make comparison among the various
components or between a part and a whole of data.
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:
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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
No. of respondents during the research: 50
Sample unit Professionals, Business man,
Employees, House wife, Working women, Students
Analysis:
Q1. Have you purchased any consumer durable during
Exhibitions?
Yes
No
Inferences
1. 65 % of Customers have not purchased any consumer
durable from exhibitions.
2. Only 35 % people have purchased.
3. It shows that consumers are coming in the exhibition
for knowledge of product and also they want to know that
weather there is actual price difference in exhibition and
shop or not.
4. Consumers also want to compare to the different brand
which are available in the exhibition.
5. So exhibitions are more useful to increases brand
awareness.
6. People are less interested to purchase product from
the exhibition.
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.
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.
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5. There was heavy rush on weekends so large numbers
of ISD’s were appointed that day. Also the live demo calls
helps in selling. Exchange offers also generate sale.
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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4. Company should try to improve service. No doubt the
company products have technically edge over
competitors but in long run it may hamper the company’s
profit.
5. Company should concentrate more on its major drivers
LCD, IT, and GSM. Branding and promotions should be
done effectively as it creates a long lasting image in the
mind of customers.
6. Company should also cater to the needs of sub dealers
as some of the sub dealers have potential of high sales.
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
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BIBLIOGRAPHY
www.lgindia.com
www.google.com
www.wikipedia.com
Business world
Business today
LG magazine
Economics times News paper
Times of India
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Q.7.Do you prefer any financing scheme to purchase
consumer durables?
a) Yes
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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