LG

LG in India: Reinventing
Section Break
the Brand
Sec 4 - Group 8
 LG History – A Quick Review

Gold Star (today's LG Electronics)

1958 established
LGEIL’s Beginnings :
1959 Korea's first radio produced
LG Electronics India Pvt Ltd (LGEIL) opened on 1 April
1962 Radio exported to the US and Hong Kong as Korea's first 1997 in NOIDA near New Delhi

Challenges of Perception :
Became Korea's first company to be publicly listed as Lucky
1969 Goldstar Group • Proving to customers it was more than just another
Korean brand
• Convincing distributors they were worthy of a second
Mid – late Set up branch offices all over North America, West Germany,
chance after a failed entry with Goldstar in the early
1970’s Britain and the Middle-East
1990’s

1977 Recorded exports of more than US$100 million The Fifth P :

• Other than the conventional four P’s ( product, place,
promotion, price) , LG strategy included a 5th P- Pace
Group name changed to LG Electronics and launched the LG • On 12th May 1997, LGEIL set up 5 branch offices in the
1995 Brand
country and five months later 18 branch offices were in
operation
• By 2001, LGEIL’s presence was strong throughout the
Global sales reached US$38.5 billion, making it the world’s country and growing with each passing year
leading producer of CDMA/GSM handsets, air-
2006 conditioners, front-loading washing machines, optical
storage products
 The Indian Consumer
Demographic Segments

Psychographic Segments
Global Household disposable income > USD 22000 ; 2015F Total Households
= 3 million
Premium Seeking
17 Upgraders
Strivers Household disposable income > USD 11000 and < USD 22000 ; 2015F 10
Basic Brand-
Total Households = 6 million Trusting Followers
12 27
Savvy Package-
Seekers Household disposable income > USD 4000 and < USD 11000; 2015F Shopper
Total Households = 55 million
Home Enhancing
Basic Buyer
34
Aspirers Household disposable income > USD 2000 and < USD 4000 ; 2015F Personal Budget
Total Households = 106 million Buyer

Deprived Household disposable income < USD 2000 ; 2015F Total Households
= 74 million

Age Structure
• Just the Strivers and Globals will exceed the total 0-09 years: 23%
Household population of Australia (7.5m) and 75 % of 10-19 years: 22%
the Household population of Korea (12m)
20-29 years: 17%
• The top 3 segments will exceed the size of Brazil (51m), 30-49 years: 24%
Russia (50m), Japan (45m), Germany (40m) and UK 50+ years +: 15%
(25m) Pop. Growth Rate: 1.6%
Source: Census 2001, Government of India
 Product Strategy
Indian Consumer Needs LG’s Innovation Discovering Key Category Barriers LG’s Innovation

Indian-language
Majority of Indian consumers don’t read English On screen instructions “Watching TV causes eye strain” “Golden Eye”

Ballad TV “Preserve Nutrition

Big audiences on TV sets + high ambient noise “Food in the fridge goes stale”
2000 Watt output System”

Free Cricket game “Expensive clothes should not be

Cricket is the second religion for most Indians! “Fabricare”
With TV in 1999 washed in Washing Machines”

World-cup
Cricket is a second religion for most Indians! “ACs are for cooling so it is a luxury item” “HealthAir System”
Sponsorships

New Categories
The Mobile Phone Market :
• Entered the market in 2003 for CDMA handsets with Reliance
India Mobile as service provider
• Reviewed their product mix to bring down prices as per the
requirements of the Indian customer ( From INR 7000 to INR
3000 )
• By 2006, they had 15% market share in India and were the
third largest player in the segment
The PC Market :
• Research revealed that consumers mentioned LG PCs although it was
not a part of their global portfolio
• Due to its ubiquity LG was seen as a “domestic” brand compared to HP
and IBM
• Launched a integrated PC in 2004. Launched a notebook in 2006
• In 2006 its IT distribution system covered 25,000 of the 45,000 IT
outlets in India
 LGEIL : Shift in Brand Equity
Focus
• LGEIL decided to pursue leadership in each and every
category
• This resulted in greater allocation of budgets to price To stop price erosion and bolster its desired premium brand
image, LGEIL came up with a simple way to think about brand
discounts to drive sales whereas previously it was for
equity. The objective of the brand equity initiative was to ensure
print advertisements aimed at brand-building
• Due to geographic expansion, an ever-increasing part of that revenue objectives were not met at the expense of brand
equity by either selling more low-end items or by offering price
the marketing budget was allocated for promotions at a
discounts. LGEIL conceptualised brand equity as follows:
local level
• LGEIL moved from a single ad agency (LOWE) to three ad BE = Relative Market Share * Price Position * High End Contribution
agencies(LOWE, Capital and Rediffusion) with product
Where, Relative Market Share – Market share in the Category
based allocation of responsibilities which led to “product-
Relative to the Market Leader
based silos”
• Instead of being a strength, LGEIL’s focus on each category Price Position – Average of the ratio of the price of LG
models compared to equivalent models of the market
it operated in became the root cause of a lack of coherent
leader
direction and brand-level synergy
• LGEIL was no longer seen as aspirational but as a low-end High End Contribution - % of sales revenue contributed by
designated high-end products
brand that provided value for money
 LG

THANK YOU
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