Debdatta Das Roll No:-521029844 Centre Code:-02783 Master of Business Administration - Semester III Project Report

Formulation of Marketing Strategies to Improve Market Share of LG Microwave Ovens

History of company
The company was originally established in 1958 as Gold Star, producing radios, TVs, refrigerators, washing machines, and air conditioners.

1958-1969-GoldStar The Electronics Industry Dream

1970-79 Gold Star symbol of The Technology

1980-88 :- INTERNATIONALIZATION

1989-94 INOVATION

1995-98 GLOBAL LEADERS LG ELECTRONICS

1999-2003-DIGITAL MANAGEMENT

2004-2006 GREAT PEOPLE GREAT DESIGN

2007-THE PEOPLE COMPANY

The LG Group was a merger of two Korean companies, Lucky and Gold Star, from which the abbreviation of LG was derived. The current "Life's good" slogan is an acronym. Before the corporate Name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of Gold Star. The Gold Star brand is still perceived as a discount brand. In 1995, Gold Star was renamed LG Electronics, and acquired Zenith Electronics of the United States.

BRIEF MARKET PROFILE

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, MICROWAVE OVENS 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. Consumer durables major LG Electronics India Pvt Ltd (LGEIL) invested 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, LGs 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 infrastructure has been set up, includes the companys response to customer complaint within two hours.

MARKET ENVIRONMENT

1. In term of purchasing power parity (PPP), India is the 4th largest economy in the world and overtake Japan in the near future become the 3rd largest.

2. Indian consumer durable market is expected to reach $450 billion by on 2012.

3. India has the youngest population amongst the major countries. There are lots of people in the different income categories nearly the two third population is below the age of 35 and nearly 50% is below 25.

4. There are 56 million people in middle class, who are earning us$4,400-US$21,800 a year. And there are 6 million rich household in India.

5. The upper-middle and high-income household in urban areas are expected to grew to 38.2 million in 2007 as against 14.6 million in 2000.

MARKET ATTRACTIVENESS

1. In India the penetration level of white goods is lower as compared to other developing countries.

2. Unexploited rural market.

3. Rapid urbanization.

4. Increase in income level, i.e. increase in purchasing power of consumers.

5. Easy availability of finance.

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MARKETING STRATEGIES
The marketing strategy of LG Electronics in the Indian market like any market driven organization tries to gain market share by approaching its product, pricing, distribution and promotion. The marketing strategy would be to focus on the increasing competition and the slowdown in the consumer home appliances segment. Market information indicates the demand for luxury consumer goods is burgeoning as a result of high per capita income and quality savvy consumers with increased purchasing power. LG enjoys high brand recognition in the region, it is the 2nd most recognized electronic brand with 55.7% unaided brand awareness according to the 2008 Gallup brand equity index survey, which represents high purchasing probability for its premium products.

CRICKET FIRST!
In November 2002, LG Electronics India one of the leading consumer durables company in India, launched advertising campaigns featuring cricketers. The campaign Cricket First, which featured captains of the14 teams participating in World Cup 2003, highlighted the spirit of cricket with a tagline, Captains of Cricket World, for the Captain of Consumer Electronics and Home appliances. LG emphasized on marketing. Analysts felt that LG was trying to sell a brand of consumer durables using an FMCG marketing model and was trying to create a market for a brand, which has a premium image.

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OVERALL MARKETING STRATEGY

LG concentrated on staying ahead of the technology curve and develop products that deliver high value to consumers. LG announced a new channel marketing strategy to reward its distributors and build on its channel successes in the region. LG developed a CRM program called the Diamond Club to drive the sales of premium products. Sustaining one market price in all stores, maintaining a price gap with main competitors to retain a premium image, unique promotions for target customers and well trained customer care executives are features of this channel initiative.

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PRODUCT INNOVATION
LG believes in holding the interest of its customers by bringing out new products regularly. In its first year of operations, it launched 70 models across a range of products. Some of the new microwave ovens models are:

Before developing products, LG conducts market research to ensure that its products met local requirements.

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PRODUCT
LG should focus on product line extension of microwave ovens. Introduction of simultaneous cooking at the same time with Microwave oven should be looked into.

Indian consumers are very price sensitive, energy saving Microwave oven should be thought of.

DISTRIBUTION
Microwave oven distribution should be extended to far-flung towns and semi-urban markets. Microwave ovens should be displayed properly in the dealers show room.

PRICE
Indian being a price-sensitive, market prices should be reasonable. Flexibility in choice within various Microwave ovens should be made available.

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 Hire purchase schemes should be made simpler with zero interest rates.

PROMOTION
Target audience for Microwave oven should be more focused. Usage/training classes for women in Microwave oven cooking should be organized in village melas/ haats etc. and other gatherings.

Easy-to-cook and time saving for other activities should be focused. In India most of the mothers teach their children, therefore focus on mothers for other alternative activities should be campaigned.

Cooking competitors should be organized in housing societies through Microwave oven. Awards and other form of recognition should be done accordingly.

LG should tag up with LPG suppliers viz., Indian Oil, HP, BP and others with gas ovens. Since, LPG subsidized cylinders would be

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limited in the near future alternative Electric Cooking i.e., Microwave oven cooking as an alternative should be campaigned.

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