A PROJECT REPORT ON MARKET ANALYSIS OF LG CONSUMER DURABLES & DEALER DEVELOPMENT
„MARKETED‟ BY: POOJA SHARMA (27) RAJESH RANJAN (30) ROHIT SONKAR (32) SANJAY VERMA (36) SONI (40) MASTERS OF INTERNATIONAL BUSINESS 1st SEMESTER
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.
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 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.
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”.
While visiting the shops we
1. Calculated the display share of the LG product in every shop. 2. Collected the data of actual monthly sale of the LG products in few shops. 3. Checked the availability of LG catalogue and the POPs in the store. 4. Found out the problems that the dealer are facing while selling the LG products. 5. Found out the customer response for LG products by asking the owner of the shop. 6. Found out the distributor name from who they were purchasing their products and also whether they have direct dealership and which brand. 7. Checked whether demo calls are attended or not
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.
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 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.
Classification of consumer durables sector 1. Consumer electronic include vcd/dvd, home theatre, music player, color television (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc 2. White goods include dishwashers, air conditioners, heaters, washing machines, refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances, microwaves, built-in appliances, Tumble dryer, personal care product etc. 3. Moulded luggage include plastics 4. Clocks and watches 5. Mobile phones
Scope 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 $400 billion by on 2010 3. India has the youngest population amongst the major countries. There are lot 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.
Opportunity 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.
Threats 1. Higher import duties on row materials. 2. Cheap imports from Singapore, China and from other Asian countries.
Brands in consumer electronics sector
MNCs LG SAMSUNG HYUNDAI TCL HAIER ) ) KOREA ) ) CHINA ) NATIONAL ONIDA VIDEOCON BPL GODREJ VOLTAS IFB REGIONAL BUSH CROWN SALORA T-SERIES WESTON BELTAK OSKAR
PHILIPS PANASONIC SHARP HITACHI SANSUI AKAI ) AIWA WHIRLPOOL ELECTROLUX
) HOLLAND ) ) ) ) JAPAN
TODAY 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 LG, SAMSUNG the
two Korean companies has been maintaining the lead in the industries with LG being leader in almost all the categories. The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, 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 Electronics is one of the leading companies in the field of electronics with a global presence in many countries.Before briefing, we have divided the introduction part into three main sub parts. 1. LG Global 2. LG India 3. LG
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 GoldStar symbol of The Technolgoy
1980-88 :- INTERNATIONALIZATION
1995-98 GLOBAL LEADERS LG ELECTRONICS
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 a backronym. 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.
LG Electronics is playing an active role in the world market with its assertive global business policy. As a result, LG Electronics controls 110 local subsidiaries in the world with around 82,000 executive and employees. LG Group 1. LG.Philips LCD 2. LG Chemical 3. LG Telecom 4. LG Powercom 5. LG Twins
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
Global Top 3 by 2010 Global Top 3 Electronic/Telecommunication company
“Fast innovation, Fast growth”
“Product leadership, Market leadership, People leadership”
No excuse, “we” not “I”, Fun workplace
"Life's Good" represents LG's determination to provide delightfully smart products that will make your life good.
The LG Electronics Life's Good signature consists of the LG logo, seal, and the slogan, "Life's Good" set in Charlotte sans typeface curved around the LG symbol. The curving of the slogan reinforces LG's personality and uniqueness. The consistent usage of this signature clearly establishes the unique identity of the company and unifies every division and product from LG Electronics across the globe.
The symbol of LG is the face of future. The letter “L” and “G” 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. The symbol consists of two elements. 1. The logo in LG gray 2. The stylized image of human face in the unique LG red color.
Red color represents our friendliness and gives a strong impression of LG‟s commitment to deliver the best. The circle symbolizes The Globe. The stylized image of a smiling face in the symbol conveys “Friendliness and Approachability”. The one eye on the symbol represents “Goal-oriented, Focused & Confident”. The slogan of LG is “Life’s Good”. It expresses“ Brand’s Value , Promises, Benefits , Personality .
LG Electronics chooses to promote harmony and build constructively on a labor-management relationship rather than an employee-employer relationship. This illustrates that management and workers are not in a vertical relationship, but in a horizontal one. This culture is necessary for LG Electronics as it strives to become one of the world's top companies. Such a relationship is transformed into a value-creation relationship whereby both parties endeavor to address mutual problems and create new values together.
LG Electronics is making technical advances and identifying business opportunities through various associative relationships with some of the world's leading companies. LG Electronics is striving to become number one in the world by mingling in various business and technological fields and making strategic alliances with world famous companies. "Strategic association between corporations," in which companies with different infrastructures cooperate in the fast-developing 21st
century business field, is of key significance in terms of strengthening the existing industry and creating a new one.
LG Electronics will do its best to create new products and services with an open mind, while developing new technologies and business fields through various associations with some of the world's most successful companies. 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 16.BESTBUY
And the number follows many more…………………………..
In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance. Yahoo mobile services will be available from LG mobile. This service is targeting 10 million LG mobile phones in over 70 countries. In Mar. 2007 LG Electronics and Google formed a strategic alliance. Both companies will work together to release, market, and offer LG mobile phones with Google services (search engine, map, email, and blogs).
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.
The brand platform:The LG brand is composed of four basic elements – 1. Value 2. Promise 3. Benefits 4. Personality
The Brands core Value that never changes.
a. Trust, b. Innovation, c. People d. Passion
The benefits that are consistently delivered to the customer includes a) Reliable products b) Simple design c) Ease of use d) Extraordinary Experience
Personality describes the human characteristic that are expressed to the customer through Trustworthy, Considerate Practical, Friendly
The Internal Culture of LG:
LG practices four cultures 1. Learning Culture 2. Boundary less Environment 3. A Carrier 4. Growth
According to LG, the Learning Culture continuously helps the employee to learn more and more to develop the habit of continuous learning.
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. A carrier is highly growing in LG and one who is the employee can develop their carrier largely. A new comer will feel fully comfortable in the company and for a new comer the company is very helpful in the overall growth of personality. 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.
The mission of LG is to provide the customers with utmost satisfaction through leadership. The fundamental policy of development is to secure product leadership that the Customers may have the utmost satisfaction.
We are focusing on six development areas to become the product leader. 1. New Machine 2. Reliability 3. Conventional Installation 4. Environment Friendly Product 5. Low Noise & Vibration 6. Energy Saving
The policy of quality assurance is to provide customers with utmost satisfaction by supplying zero defects.
LG proceeds in a hierarchal manner. It is named as “LG WAY”. From top to bottom: No.1 LG – is the VISION “Jeong-DO” Management is LG‟s unique application to ethics. LG will succeed through fair management practices and constantly developing our business skill.
A) Honest with our customer b) Providing great values to customer through constant innovation & and development. c) Equal opportunities d) Equal Treatment Management Principle - Creating value for customer
Code of conduct of LG
1. Responsibility and obligations to customers : • • • Respect for Customers Creating Value Providing Value
2. Fair competition • Pursuit of Free Competition • Compliance with Laws and Regulations
3. Fair Transaction : • Equal Opportunity • Fair Transaction Procedure • Support and Aid for Business Partners
4. Basic Ethics for Employees • Basic Ethics • Completion of Duty • Self Development • Fairness in Performance • Avoidance of conflict with company interest
5. Corporate Responsibilities to employees • Respect for human dignity • Fair Treatment • Promoting Creativity
6. Responsibilities to society and country • Rational Business Development • Protection of stock holder interest • Contribution to social development • Environmental Conservation
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. 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. ''Company is setting up a chain of exclusive premium showrooms. LG plans to launch 60 premium Brand Shoppes by the end of the first quarter of this year. At present, LG has a total of 83 LG stores across the country, of which 45 are shops and 38 are exclusive stores. Brand shops will be placed in the premium segment and the target audience will comprise buyers interested in premium and high end products. LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a more interactive environment and additional lifestyle orientation on display so that the customer can actually experience the LG products in his or her own home settings. LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract inspirational and young consumers across India, company will roll out a new marketing strategy. The exercise will cost the company Rs 360 crore.
LG Electronics India is the fastest growing company in the consumer electronics, home appliances, and computer peripherals industry today. LG Electronics is continually providing, superior technology products & value for money to more than 50 lakh households in India. LGEIL is celebrating the 11th anniversary this year. LG Soft India the innovation wing of LG Electronics in Bangalore is LG Electronics' largest R&D centre outside Korea. We at LGSI focus on niche technology areas such as mobile application development, digital video broadcast and biometrics software and support LG Electronics with our expertise. Motivated by a passion for technology, a strong work culture and loyalty to the organization, we are determined to see LG become one of the top three brands globally. Prominent consumer electronic company, LG Electronics Inc. has said that it expects the sale of its products in India to up by 15 per cent in 2008. Moon Bum Shin, managing director of LG Electronics India has said that the company has earmarked 4.8 billion rupees for investment purpose in India this year. The said money will be used to market as well as manufacture new products. LG Electronics, which is originally a South Korean Company with branch in India, informed that its sales of GSM mobile phones, color televisions, air conditioners and other household goods in the Indian market was to the 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 $42 billion. The Indian branch of LG exports to 40 countries.
The challenges faced by LG when entered in Indian market 1. Low brand awareness about LG in India. 2. One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in India). 3. High import duty 4. Compitition from local market players and other MNCs in consumer durable segment. 5. Price sensitiveness of the Indian consumer LGEI over comes these challenges to emerge as Innovative marketing strategy 1. Launch new technologies in consumer electronic and home appliances. 2. LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world cup followed it up in 2003 as well.
3. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more then US$ 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”.
Local and efficient manufacturing to reduce the cost To overcome high import duties LG manufactures TV refrigerator in India at manufacturing facility at Noida and . LGEI had already commissioned contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has helped LGEI to reduce cost. LGEI implementing the “Digital manufacturing system” (DMS) as the cost cutting innovation this system is follow-up to the six sigma exercise LGEI had initiate earlier.
R&D potential LG has the research and development facilities in Bangalore and . Both the unit carry out R&D department for the domestic as well as the parent company it also dose customize R&D for the specific countries to which it export product.
Regional channel and wide distribution network 1. LG has adopted the regional distribution channel in India. All the distributers work directly with the company. This has resulted in quicker rotation of the stock and better penetration into B, C, D, class market. 2. LG also follows the stock rotation policy rather then dumping stock on channel partners. 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 “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
MAJOR KEY SUCCESS FACTORS:
1. Innovative marketing - LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World Cup and followed it up in 2003 as well. 2. Local and efficient manufacturing to reduce cost - To overcome
high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi. 3. Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. 4. Product localization - Product localization is a key strategy used by LG. It came out with Hindi and regional language menus on its TV. 5. Regional distribution model - This has resulted in quicker rotation of stocks and better penetration into the B, C and D class markets. 6. Leveraging India‟s IT advantage - LG Electronics has awarded a contract to develop IT solutions to LG Soft India (LGSI). The project involves development and support for ERP, SCM, CRM and IT-enabled services for LG.
Strategies adopted by the organization:
LG follows 10 commandments which are as follows. 1. Foster working environment-5S Environment 2. Fast execution is key to success 3. Transparent and fast communication-open communication 4. Update market -knowledge –Demographics 5. Win –Win relationship with the trade partners 6. Customer is the king 7. Even Billing –Road to ach supplier A 8. Be in touch with the market (70% Market, 30% Office). 9. Plan and Execute annual marketing Calendar-Time to market 10.Display share of 50% -to get 50% consumer share.
LG market share of consumer appliances and consumer electronic:LG position of CTV in various states in India LG position of REF in various states in India LG position of WM in various states in India LG position of AC in various States in India LG position of Audio & Home Theater in various in India LG position of DVD in various in India LG position of MWO in various states in India This analysis is based on the ORG survey conducted by LG which represent the LG position of different consumer durables in various states in India. We selected different brand in different category as per the market share and the demand of product in market. This analysis represents the LG market position during the period of March 2008. It shows that LG has captured maximum market share almost in every category. LG and Samsung have the maximum market in consumer durable market but LG dominate the almost all the category in consumer durable. Prominent consumer electronic company, LG Electronics Inc. has said that it expects the sale of its products in India to up by 15 per cent in 2008. Moon Bum Shin, managing director of LG Electronics India has said that the company has earmarked 4.8 billion rupees for investment purpose in India this year. The said money will be used to market as well as manufacture new products. LG Electronics, informed that its sales of GSM mobile phones, color televisions, air conditioners and other household
goods in the Indian market was to the 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 highend 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 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, 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 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%.
Distribution and Marketing:
The company has number of dealers and warehouses. They have LG exclusive shops. For the marketing of the products a number of activities are followed: 1. Exhibitions are conducted from time to time. 2. Society and college activities are conducted. 3. Hoarding, Posters, banners are used so as to grab the attention of the costumers. 4. Day to day advertisement in leading newspaper. 5. Discount at festival time. 6. For dealer relationship they arrange dealer meeting at several time in the year 7. LG divide dealer in gold silver etc. category to know the performance of the dealers. 8. They have their sales persons at various sub dealer store and at mordent trade store for particularly for the promotion of the LG product. 9. LG also uses the radio FM for the promotion activities. 10.Also provide capon and scratch card for festive season.
The logistics (Supply Chain Management):Logistics is the art and science of managing and controlling the flow of goods, energy, information, and other resources like products, services, and people, from the source of production to the marketplace. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible. Logistics Management is that part of the supply chain, which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. 5R‟s of Logistic followed by LG: 1. Right Time 2. Right Place 3. Right Condition 4. Right Cost 5. Right Handling The LG Factory is located at NOIDA & . There are three types of Warehouse1. Mother Warehouse 2. Branch Warehouse 3. Spare part warehouse The mother warehouse is that where the products from the factory are kept and from that warehouse, the products are sent
to the branch warehouse. A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks. In warehouse 7 locations is set up for the products. Loc 1, Loc 2, Loc 3, Loc 4 , Loc 5 ,Loc6, Loc 7 Loc 1 – selling Loc 2 - second sale Loc 3 - insurance claim Loc 4 - write off material Loc 5 – destroy the item Loc 6 - court case material Loc 7 - for repair
5‟s of warehouse, which the LG strictly follow. 1. Sweeping 2. Sorting 3. Systematic Arrangement 4. Simplification 5. Self- discipline In warehouse, the products are pinup with 3-color paper to get the knowledge about the delivery.
1. Red Card – To stop the product going into market, 2. Green card – To allow the product for delivery in market, 3. Yellow Card – After the product labeled with green, allow this to move in market 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 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 In warehouse, there are two mode of dispersion of product from one place to another within. a) Hydraulic b) Manual In addition, there are 35 fire extinguishers to prevent the accidental hazard within the warehouse due to fire. These fire extinguishers are valid up to year 2011. One has to follow the rule of “NO Smoking” within the warehouse
Logistics Ten Commandments – Golden Rules 1 - Warehouse 5S – to be strictly followed – FG – 2, 5 & 7 to be properly maintained. 2 - 100% Bar-coding for all inward & outward transaction. 3 - Follow standard pick – ship process religiously. 4 – No inventory mismatch, shortage or excess – monthly 100% physical stocktaking. 5 – Nil 30+ for FG – 2, 3 & 5. 6 – Nil transit damage. 7 – File insurance claim within 2 days. Settle all claim all within 30 days. 8 – No inter – branch transfer without HO clearance. 9 – PSI feeding into system by 25th of every month. Ensure 90% accuracy. 10 – Apply physical FMFO. Problem 1- In transit material damage checking. 2- Cost target achievement. 3- Natural events tracking. 4- Fluctuation in demand-supply Equipments 1- 100% Bar code scanner. 2- ERP – Invoice Generation Process. 3- Hydraulic Trolleys for material movement. 4- Pallets for safety of material.
The best and the biggest international brands are here in India – 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.
LG also had a big problem of after sale service in India. During the project we also came to know that after sale service becomes the big issue in the region. Customers as well as dealer were
facing the problem of after sales service. Because of this problem many dealer in the region were not ready to sell LG product. So it becomes the big issue. But LG has taken some solid steps towards improving customer‟s perception and experience of after sales service. Because it very important in competitive market to provide the best service. L G Electronics has signed a memorandum of understanding with 23 Industrial Training Institutes to strengthen its after sales service in India. The company aims to recruit 10,000 people by the end of this year as a part of its branding strategy to focus on service and move away from discounting. L G Electronics has identified eight states with high after sales service call rates to ink the deals with the ITI. Y V Verma, director HR and management system, LG Electronics said, "The Company was trying to find a solution for effective after sales service since last two years. There is a huge need of trained manpower for the after sales service to align with the company's expansion and focus on the GSM mobiles and the personal computer segments." 1. In the initial phase the company has entered into agreements with ITIs in the states like Maharashtra, Gujarat, Delhi, Punjab, Assam, and Karnataka and is in the last leg of signing with Uttar Pradesh. 2. L G Electronics, with 1200 service centers, has already recruited 300 students and plans to beef up the number to 10,000 by the year-end. 3. "The company has offered a scholarship to the selected students for the last six months of their training program," 4. The company will invest Rs 8 crore (Rs 80 million) in employee development program this year with an aim to attain a 8 per cent attrition rate.
5. The company moved away from the discounting strategy since last year and is putting thrust on the quality and service in its brand communication to position LG as a premium consumer electronics brand. 6. At the top, the Service Division in Korea reports to the Global CMO. (as mentioned in Dermot‟s public interview in ET on Wednesday). This shows commitment that Service must be made into a marketing differentiator, and leveraged thus. 7. LG has the widest service network across the country; some estimates put it at a significant multiple of service-infrastructure from our nearest competitor. While the sale size may also be a nice multiple from nearest, it shows the company is ready to put our money where our mouth is. 8. The company has introduced a 211 service - once you register your complaint, we will call you back in 2 hours (hence 2), set up an appointment for the next convenient day for you (hence the first 1), and show up in the promised 1-hour slot (hence the second 1). If the next convenient day for you is the next day, that‟s great too. It‟s a disruptive action in an industry (including LG) having traditionally shied away from its service responsibilities, and thus not leveraging any mileage from it. 9. The company is promoting 211 through ATL, probably the first time after sales service is being communicated in this fashion by any product company. You may have seen the TV commercial or heard the radio advert or seen the newspaper ad or in-shop posters, both of which revolve around prompt response. 10.The first LG-owned service centre opened in Gurgaon. (Service in India generally works through authorized service centers, in LG‟s case they work exclusively for LG.) A company-owned service centre tries that much harder, knows things better, and can even contribute as a revenue center.
Objective of the project Primary objective 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. To enhances the knowledge about the marketing and branding activity.
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 Research design is important primarily because of the increased complexity in the market as well as marketing approaches available to the researchers. In fact, it is the key to the evolution of successful marketing strategies and programmers. It is an important tool to study buyer‟s behavior, consumption pattern, brand loyalty, and focus market changes. A research design specifies the methods and procedures for conducting a particular study. According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of investigation conceived as to obtain answers to research questions and to control variance. Type of research is Descriptive Research The type of research adopted for study is descriptive. Descriptive studies are undertaken in many circumstances when the researches is interested to know the characteristic of certain group such as age, sex, education level, occupation or income. A descriptive study may be necessary in cases when a researcher is
interested in knowing the proportion of people in a given population who have in particular manner, making projections of a certain thing, or determining the relationship between two or more variables. The objective of such study is to answer the “who, what, when, where and how” of the subject under investigation. There is a general feeling that descriptive studies are factual and very simple. This is not necessarily true. Descriptive study can be complex, demanding a high degree of scientific skill on part of the researcher. Descriptive studies are well structured. An exploratory study needs to be flexible in its approach, but a descriptive study in contrast tends to be rigid and its approach cannot be changed every now and then. It is therefore necessary, the researcher give sufficient thought to framing research. Questions and deciding the types of data to be collected and the procedure to be used in this purpose. Descriptive studies can be divided into two broad categories: Cross Sectional and Longitudinal Sectional. A cross sectional study is concerned with a sample of elements from a given population. Thus, it may deal with household, dealers, retail stores, or other entities. Data on a number of characteristics from sample elements are collected and analyzed. Cross sectional studies are of two types: Field study and Survey. Although the distinction between them is not clearcut , there are some practical differences, which need different techniques and skills. Field studies are ex-post-factor scientific inquiries that aim at finding the relations and interrelations among variables in a real setting. Such studies are done in live situations like communities, schools, factories, and organizations. Another type of cross sectional study is survey result, which has been taken by me. A major strength of survey research is its wide scope. Detail information can be obtained from a sample of large population .Besides; it is economical as more information can be
collected per unit of cost. In addition, it is obvious that a sample survey needs less time than a census inquiry. Descriptive research includes survey and fact finding enquiries of different kinds of the major purpose. Descriptive research is description of the state of affairs, as it exists at present. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. The methods of research utilized in descriptive research are survey methods of all kinds including comparative and co relational methods. The reason for using such needs to be flexile in its approach, but a descriptive study
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 -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. OBJECTIVE OF THE STUDY The objective was to find out the market share of LG products, advantages and disadvantages of LG products from dealers and to find out what problems they are facing with the LG products so that problems can be resolved to increase the sale. Data collection methods: After the research problem, we have to identify and select which type of data is to research. At this stage; we have to organize a field survey to collect the data. One of the important tools for conducting market research is the availability of necessary and useful data. Primary data: For primary data collection, we have to plan the following four important aspects. Sampling Research Instrument 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: 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. Q.2While purchasing consumer durable which parameter influences you? Price Product feature Brand Service Durability Inference 1. 30% of customer gives importance to price. So it shows that Indian consumers are very price sensitive. They give more importance to price over the brand. 2. 26% give importance to brand. So price and Brand matter a lots for the costumers. And they are also want best brand in best price. 3. 19% to product feature Service 16% and durability 9% Service is also a big factor for the customer they are less interested in the durability.
Q3. From where you prefer buying consumer durables Exhibitions Co.shoppee Showroom Inference: 1. A majority of customers prefer to buy from showrooms. Very less proposition of customers buys from Exhibitions. 2. 47% customers are prefer to by from the showrooms because the showrooms are more convenient to customers they also think that these shops give more discounts. 3. People are less interested to buy from the exhibition they only visit the exhibition for price quotation of the product and the comparison of the product. Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of following reasons Attractive Price Service Demonstrations Offers 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.
Q.5.Which consumer durable you have and of which brand? CTV LCD PLASMA REF WM MW AC Inference In CTV section maximum customers have Onida, in LCD Sony is the leader, In plasma BPL is the leader, In Ref LG is the leader, MW LG is the leader. In WM there are companies and in AC also. Q.6. How frequently you change your consumer durables? 1-3 years 3-5 years 5-10 years More than 10 years 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. Q.7.Do you prefer any financing scheme to purchase consumer durables? Yes No
Inference Majority of customers do not prefer any financial scheme.
Dealer survey 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 sale. 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 dealer who are capable of being the dealer of LG. 4. We also came to know while visiting the shops that there was big problem of after sale 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. 7. The top competitor of LG product in is SAMSUNG. 8. In area the performance of LG is in better position but the competitor also hold closer margin. 9. There is high growth of sale in market due to booming in new technology and better service. 10.Word of mouth plays a vital role in awareness among customer. This is one factor, which can play a good role in promotion of products as well as demonstration given by the shopkeeper also plays a vital role for customer.
RECOMMENDATIONS AND SUGGESTIONS: 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. 7. The marketing managers should make better relations with dealers and reputation of the company. 8. Customer considers quality as their first preference, so the company should give more stress on this. 9. The switching of customer from LG product to other brand is due to the bed after sell service in shop. 10.The product is well aware and it is on top of mind of customer. So company should always improve services and update their technology.
CUSTOMER SURVEY FINDINGS 1. Secondary supports play an important role in the customers mind and create awareness among the customers. The secondary support includes Demonstration, Exhibition & Even Sponsors. 2. From the survey it was found out that the majority of customers don‟t buy consumer durables from exhibitions. They just visit the exhibitions to see the co. latest model. 3. They want to buy from the showrooms or from co. showrooms. For them service is important .Beside convenience and other factors service is key factor. 4. Also majority of customers do not want any financing scheme for purchasing the durables. 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.
RECOMMENDATIONS AND SUGGESTIONS 1. Exhibitions do not help to generate so much sells but they should be conducted regularly. This helps in generating awareness regarding the product in customers which ultimately helps in sales. 2. Also it is helps in advertising for the new products. Like in this exhibition new LCD SCARLET was advertised. Company should always focus on service. 3. Display share should be increased where there is less than 50% as LG also believes that “JO DIKHTA HAI WO BIKTA HAI”. 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
BIBLIOGRAPHY www.lgindia.com www.google.com www.wikipedia.com Business world Business today LG magazine Economics times News paper Times of India
Consumer survey Questionnaire
Q1. Have you purchased any consumer durable during Exhibitions? a) Yes b) No Q.2While purchasing consumer durable which parameter influences you? a) Price b) Product feature c) Brand d) Service e) Durability Q3. From where you prefer buying consumer durables a) Exhibitions b) Co.shoppee c) Showroom 76 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 77 Q.7.Do you prefer any financing scheme to purchase consumer durables? a) Yes b) No
A.S.I A.S.M B.S.I CAC C.S D.S.C. L.H.D R.E.F Area Service In charge Area sales manager Branch Service In charge Commercial Air Conditioning System NET Customer Service Net Direct service centre. Logistics Head of department Refrigerator