LG Final Report

Acknowledgement I sincerely feel that the credit of this project work could not be narrowed to only one individual as the whole work is out come of inte integr grat ated ed effo effort rts s of all all thos those e conc concer erne ned d with with it thro throug ugh h whos whose e cooperation and effective guidance I could achieve its completion. I wish to place my profound indebtness and deep sense of obligation obligation to Mr.Yusuf Sheikh, Sheikh, Area Sales Manager LG Electronics Hubli for his kind permission for the study in his organization and for his supreme guidance through out the project. I express my sincere ness thanks to Mr. Shyam Regional al Shyam,, Region Sales Officer LG Electronics Hubli for extending his cooperation and guidance. I

wish to express my deep sense of gratitude to

Prof. Prof. P.B.Ro P.B.Rooda odagi gi,, Princ rinciipal pal and and Colle ollege ge gui guide for for valua aluabl ble e suggestions, guidance and constant encouragement in making this project a success. I am grateful to all dealers who have been helpful through my project work.

Deepak S Narayanan.

10TH JANUARY 06

KLE Society’s College of Business Administration- B BA Hubli

LG ELECTRONICS PVT LTD, HUBLI: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).

The trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997. LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida.

In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that commences operations in October this year. Covering over 50 acres, the facility manufactures Color Televisions, Air Conditioners, Refrigerators, Washing Machines Microwave Ovens Color Monitors and GSM


LG ELECTRONICS PVT LTD, HUBLI: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).

The trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997. LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida.

In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that commences operations in October this year. Covering over 50 acres, the facility manufactures Color Televisions, Air Conditioners, Refrigerators, Washing Machines Microwave Ovens Color Monitors and GSM


phones. The Greater Noida manufacturing unit line has been designed with the latest technologies at par with international standards at Korea and is one of the most Eco-friendly units amongst all LG manufacturing plants in the world LG has been able to craft out in eight years, a premium brand positioning in the Indian market and is today the most preferred brand in the segment.

Various studies have shown that the consumer is well informed on the health awareness front. LG was one of the first companies who recognized the emerging change in consumer needs and decided to differentiate their products on the basis of technology which appealed to the consumer on the basis of health benefits. Its vision was to become a 'Health Partner' for its consumers worldwide and therefore formulated its corporate philosophy to make peoples' lives better, convenient and healthier. The CTV range offered by LG has 'Golden Eye' technology, which senses the light levels in the room and adjusts the picture to make it more comfortable for the eyes. The entire range of LG air-conditioners have 'Health Air System', which not just cools, but keeps pollution out. Similarly, microwave ovens have the 'Health Wave System', refrigerators have the 'PN System', which preserve the nutrition in food and washing machines have 'Fabricare System', which takes the health factor down to ones clothes. All the products offered by the company have


unique technologies, developed by its R&D departments that give customers a healthier environment to live-in. The year 2001 witnessed LG becoming the fastest growing company in the consumer electronics, home appliances and computer peripherals industry. The company had till the month of October 2001 achieved a cumulative turnover of Rs 5000 Crores in India since its inception in 1997, making it the fastest ever Rs 5000 Crores clocked by any company in the Indian consumer electronics and home appliances industry. Having achieved this milestone, LG achieved another benchmark with the first ever sales of One Lakh ACs (Windows and Splits) in a calendar year.

In Color Televisions having set the sales target of one million units of Color Televisions for 2002, LG has already achieved the one million mark in the month ahead of its target. In 2003, LG has emerged as the leader in Color Televisions, Semi Automatic Washing Machines, Air Conditioners, Frost-Free Refrigerators and Microwaves Ovens. In the year 2004, LGEIL achieved unprecedented sales efficiency both in Direct Cool and Frost Free segment and sold more than 1 million units of refrigerators outperforming industry expectations.

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. The company has achieved a turnover of Rs 6500 crore in 2004 and aims to touch a turnover of 10 Billion US Dollars by 2010 and commands an enviable position in the GSM mobile phone market. It has already started manufacturing of GSM phones in its plant at Pune.

LG India has also been taking on a slew of initiatives as a part of Corporate Social Responsibility. LGEIL is proud to have adopted about 24 villages around our Greater Noida facility. LG extends Free Medical Care, which comprises of free check ups and a free distribution of medicines on a daily basis. LGEIL is also generating self-employment opportunities for the people in the form of tailoring, knitting etc. in addition to all this, LG also sends veterinary doctors regularly to these villages. Besides all this, LG India is one of the very few companies in the country that has an internal Energy, Environment, Safety and Health Department. This function caters to activities like Energy Conservation, Environmental Issues, Work Place Fire and Safety as well as Occupational Health for the benefit of the employees.


LG ELECTRONICS IN INDIA It started operations in two phases in the first phase unit of .25 million capacity was set up. In the second stage LG started planning for expansion of this capacity. At present LG has 5 million capacity which plans to be increased to seven million by year 2006.

LG is already the second largest consumer electronic brand in Indian after BPL

1) INFRASTRUCTURE AND NETWORK: LG has already established an impressive sales and service network in India. It has 18 branch offices and 3000 dealers. LG has a national presence in the truest sense of the term. Touching the lives of people in both urban and rural areas across India.

2) COMMITMENT: As a testimony to its commitment in India LG has set up state-of-art manufacturing plant in Noida with an investment of U.S Dollar 3000 million as in year 2002.


3) SERVICE BACK UP: LG has 500 service engineers located in 54 centers across India. In addition LG customer offices and personalized staff constantly endeavoring to provide better service to the Indian customer.

4) GROWTH: LG was able to move at a very fast pace initially and was able to complete it s nation wide launch in a period of 5 month where as its competitors took nearly 2 years to complete the launch. Apart from Sony, LG is the only foreign company which has successfully own subsidiary in country. This way it has never been constrained for funds

5) MARKETING: LG strategy of differentiating itself from other brands in market to has paid off. When LG entered the market in1997, there was a price war going on in consumer electronic market. After grabbing the urban market, now LG has decided to place their bets on rural markets. They are also launching new products especially design for this areas and prices which will be very affordable


LG electronics product range:Each LG products features world class technology that is innovative and unique to LG. this is a reflection of LG’s commitment to its customers. LG is well known for its products fairness. It is continuously updating its technological features in its products.

•

Color television -

World’s only Golden Eye.

•

Refrigerators

-

World’s only PN system.

•

Microwave Oven -

World’s only multi wave.

•

Washing Machines-

World’s only Chaos Punch +3.

Air conditioner

World’s only health air system.

•

•

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LG Refrigerators:

LG electronics India Pvt Ltd has introduced a wide rang of innovative Preserve Nutrition (PN) system refrigerators to the Indian market. The world’s only PN system available in 14 models. The futuristic model, DIOS side by side refrigerator. It won’t just cool like other refrigerator but would also keep food fresh and nutritious.

PN system has ceramic coated FAR INFRA RED (FIR) lamp, the moisture controller and the deodorizer. The 3 components function together to counter factors that cause unpleasant odors,


degeneration and staleness of food. The natural flavor freshness and nutritive value of food are maintained.

Apart from the above characteristics, LG refrigerators are aesthetically designed. LG believes the refrigerator should be pieces of furniture not just appliances. The DIOS side by side refrigerator using the PN system technology is created on a product concept of deluxe and robust exterior design and maximized facilitated interiors design. It is among the top notch in the world in terms of energy consumption, noise level and cooling power and is termed “The King of Refrigerators”.

•

LG Microwave ovens:

Microwave ovens were never considered goods for the Indian cooking. Not any more. LG has launched the first in the micro wave oven that can be used for cooking anything.

•

LG Health air system and Air Conditioners

This technology is unique to LG Air conditioners are clean, pure and healthy. A Chaos Logic air flow system recreates natural air currents and conditions the air (as in ordinary air conditioner). It also has the unique filter system comprising of an Electronic Air Purification Unit that traps and gets rid of the minutest


dust particles and even smoke. An Anti bacteria Filter guards your home against air borne germs and diseases. While a Deodorizing Filter gets rid of unpleasant odors.

•

LG Televisions

LG Electronics has introduced The Golden Eye series television. The product is revolutionary as is does away with need to adjust picture quality in one’s TV, whatever the light conditions in the room.

Golden Eye also has a host of other features like scanning velocity modulation and picture quality improvement circuit that uses three electronic filters to provide crisp and distortion free images.


WHITE GOODS INDUSTRY INTRODUCTION: The consumer durable industry consist of a large number of household applications Refrigerator, washing machine and A.C’s are popularly known as white good industry. The term White Goods is generally referred to those class of household appliances that are coated with a coat of white enamel.

The white goods sector in India was traditionally the preserve of big players like Godrej, Kelvinator, Allwyn and Voltas. The four of them were controlled 90% of market until late 80’s.

Due to new economic reforms many Multi National Companies like Whirlpool, LG, Videocon, BPL, Samsung, Daewoo, and Electrolux get attracted towards Indian white good market potential. This entry of various new Multi national Companies to Indian market customers started to get the world class brand products.

After entering Indian markets Multi national companies started to adopt various marketing strategies. Whirlpool and Electrolux were first to enter. Whirlpool took over the Kelvinator and TVS appliances. During late 90’s Koreans started to enter white


goods industry. LG the Korean white goods leader operates in India through 100% subsidiary. It started to concentrate on latest technological developments in appliances of white goods industry. The Koreans have realized more on imports of completely built up units. This has ensured their presence in the Indian markets (which is getting crowded day by day) much before their manufacturing set up is ready.

Most of MNC’s come into country with mega investment plans hoping to capture the significant share of Indian markets, but initially markets have been proved wrong.

When the consumers durable industry was in recession (economic slowdown) Whirlpool, Godrej, and Electrolux have been sustaining loss, others (Koreans) do not expect to reach their break even points for next two years. Among Korean’s Samsung and LG electronics has done relatively well especially at the higher end market.


SOME COMPANY PROFILES AND THEIR MARKETING STRATEGIES:

After economic reforms, the market for consumer durable and white goods has become crowded in the past two years with launch of several Multi National Company’s brand. To service Indian companies such as BPL, Videocon and Onida, it will become essential to match their financial strengths and marketing strategies.

GODREJ: It’s a joint venture formed by spinning of the refrigerator business with G.E appliance (U.S.A) with stake Godrej 60% and G.E 40%. Both are leaders in refrigerator markets in respective countries. Godrej – G.E plans to consolidate its business and enter into white goods marketing currently.

Godrej – G.E has entered all the segments in the refrigerator market and has the widest market range of refrigerator. The word Godrej enjoys tremendous brand equity.

Godrej is focusing on the cost control as the key to success. In order to distinguish one’s offering from that of others firms are trying to add more value added services in their product portfolio.


VIDEOCON: Videocon International is holding company of Videocon group, which involves in manufacturing and marketing of consumer goods. Videocon was the first company to introduce frost-free refrigerator in the Indian market.

BPL: BPL refrigerator is a Rs 1295 million company started in the year 1982. It is a rapidly growing company with production facilities at Bangalore & technological tie ups with Sanyo Japan. These companies have decided to concentrate on the white and brown appliance goods. BPL was able to occupy a premium and rich positioning in the market. It has its products priced at a small premium as compared to other brands.


DATA COLLECTION METHODS:

Data collection is an elaborate process in which the researcher makes a planned search for all relevant data. Data is a foundation of all marketing research. It’s a raw material with which a researcher functions. For present research major data required was primary data. Major importance was given to collection of primary data from dealers.

SOURCES OF PRIMARY DATA:

To collect required data from primary source, survey method was used. It is the most common method of collecting primary data for marketing decisions surveys. Survey research is concerned with the administration of questionnaires and interview.

Interview: To collect primary information, I contacted dealers through personal interviews with structured questionnaires. Before collecting the required information, I had a personal interview with all major dealers in home appliances in the Hubli-Dharwad market. I selected personal interview method to collect primary data because of the following advantages:


1) Ability to handle questionnaires. 2) Need for accuracy 3) Easy to control sample 4) Time requirement. 5) Response rate.

QUESTIONNAIRE: The questionnaire was designed after considering all the major aspects of the survey, like the type of data to be collected, ability of the response rate.

QUESTIONNAIRE FORMAT AND LAYOUT. (Refer annexure) My questionnaire was mainly designed from a dealers view point as my study consisted interviewing the major dealers in Hubli Dharwad dealing in home appliances.

SAMPLING PROCESS In marketing research projects making census study of entire universe is impossible on account of limitation. Sampling is used to collect primary data when the sources of information are broad in nature sampling is integral part of the data collection process following sampling process was used for present study.


SWOT ANALYSIS BETWEEN DOMESTIC COMPANIES AND MNC’S

Domestic players Strengths

Multi national

Brand equity

Brand recall

Distribution network

Quality and technology

Product range

Financial strength

Production capacity

International experience

Weakness

Price range

Coverage

Quality and

Late comers

technology Financial strength

Presence in only premium segment

Lack of exposure

Distribution network No experience of Indian market

Opportunity

Huge market

Huge market

potential

potential

Rural and semi

Foreign brand pull

urban market Threats

Recession market

Well established local player

More and more

Retaliation

MNC’s coming in Domestic taxes and

Launching of quality

burdens

product by domestic


company

PROJECTS DETAILS AND METHODOLOGY:

The marketing process consist of of analyzing marketing opportunities, developing marketing strategies and planning and marketing process



ANALYSING MARKETING OPPORTUNITIES Every organization has to study market potential when it is going to target new market segment or want to improve product performance in the market.

Once organization analyzes its marketing opportunities then it can target market with strong competitive strategies. To know the opportunities market research is to be made to gather all the information about market environment, potential market, and competitors.




DEVELOPING MARKETING STRATEGIES After adopting various marketing strategies for differentiating and positioning, every organization has to look through its performance in comparison with market competitors.



PLANNING MARKETING PROGRAMMES To transfer marketing strategies into marketing programs, marketing expenditure, marketing mix and marketing allocation. The company has to decide how to divide the total marketing budget among various marketing tools.


TITLE OF THE PROJECT

“Market mapping study” OBJECTIVE

MARKET MAPPING STUDY of the Consumer Durable Industry in Hubli city, to study competitive structure, performance of LG in Hubli market

SUB OBJECTIVES: 1. To find out market share various companies in Hubli market.

2. To study consumer buying behavior special for consumer durables in Hubli.

3. To elicit dealers satisfaction levels in term of sales margin, credit facility, response and service given by the companies.


FINDINGS OF THE PROJECT: MARKET SHARE: Sales data of different companies in the consumer durable market for the refrigerator segment:

Company

Sales in units\

Videocon

month 198

Onida

219

Lg

189

BPL

136

Electrolux

12

Samsung

134

Godrej

221

Haier

90

Hyundai

121

Kelvinator

145


Sales data region wise for refrigerators (per month):

Company

Dharwad

Hubli

Videocon

72

60

Onida

97

90

Lg

80

87

BPL

75

56

Electrolux

3

6

Samsung

49

78

Godrej

131

122

Haier

36

10

Hyundai

10

31

Kelvinator

65

54


Sales data of different companies in the consumer durable market for the washing machine segment:

Company

Sales in units\

Videocon

month 154

Onida

223

Lg

187-189

BPL

150

Electrolux

50

Samsung

150-200

Godrej

100-150

Haier

10-12

Hyundai

15-20

Kelvinator

____

Sales data region wise for washing machines:


Company

Hubli

Dharwad

Videocon

100

93

Onida

150

100

Lg

125

45

BPL

50-60

10-12

Electrolux

5-8

5

Samsung

70-80

80

Godrej

10-15

25-30

Haier

10-12

18-20

Hyundai

8-10

20-25

Kelvinator

_____

_____


RECOMMENDATIONS and SUGGESSTIONS:

1) PROMOTIONAL ACTIVITIES:Only 10% in rural and 55% in urban customers are fully aware of LG brand name. But it is major requirement of market to increase awareness level. 

Company should involve itself in local melas through LG exhibition, social work by LG, wall painting wherever possible, hoarding display, maintain high frequency of television and newspaper advertisement.



Company should launch vans which could also be used for service purpose.



Company should advertise on different medias of advertisement like radio, and broadcasting in regional languages.

2) SALES AND SERVICE:It is necessary to develop after sale service facility further, although company is having good sale service but the dealers and the consumers are not satisfied as compared to the competitors


What company must do? 

Company should go for special carriage vans which would carry all the necessary spares and items which provide for better logistics



These vans are required in urban areas so has to increase brand awareness



Can be used for promotion by using various medias of advertising like promotion of LG logos, schemes and discounts

3) TECHNOLOGICAL DEVELOPMENT LG should keep continuous monitoring of technological developments happening in and around in the market scenario and keep in track the competitors’ strategy and make its product update.

4) TAPPING NEW DEALERS: Tapping new dealers refers to the dissatisfaction amongst the current dealers and in such a scenario attracting new dealers for dealership would be a challenge for the company. The charts clearly depict that LG dealers are not very satisfied with the company in different aspects. Therefore the company should contact such dealers in order to sort out their grievances. Further the company should look out for potential dealers who are willing to take up exclusive LG dealership. This would help the company


to set a foundation for a strong networking channel and effective logistics management.

5) ATTACK ON SPECIFIC SEGMENT: The company till now has not got its positioning right in the Hubli market. The number of working couples in the city is rising day by day and there is also steep increase in the number of independents residing in the city. Students from out states are getting attracted towards the city for study purposes and career options. So the company has a greater market population at its disposal to target its products to.

1) Satisfaction level of LG dealers in respect to sales margin:

dissatisfied 22%

satisfied 78%


2) Satisfaction level of LG dealers in respect to credit facility:

dissatisfied 28%

satisfied 72%

3) Satisfaction level of LG dealers in respect to response:

ssa s e 9%

satisfied 91%


4) Satisfaction level of LG dealers in respect to service: dissatisfied 6%

satisfied 94%

5) Dealers feeling about LG’s performance:-

very poor 20%

excellent 32%

poor 4%

fair 24%

good 20%


MARKET SHARE OF LG: LG has very good performance in urban area but negligible presence in rural markets. Its is because of its non availability and reach to the rural villages and sectors. AWARENESS: In the refrigerator segment Godrej has highest awareness and it tops the customers mind by gaining around 30%. Whereas LG covers just 16% of market share which is quite less as compared to its competitors. UTLITY OF THE PROJECT 1. This project highlights mainly on competitive scenario in this local market which is useful for company to develop new strategies and become more competitive. 2. The suggestions of this project are helpful to increase the operation with in the limited territory. 3. The analysis of the project shows which areas have to be concentrated more for better sales. 4. The project identifies new requirement of the market. 6. The project makes an attempt to identify any new value addition that dealers were expectin


ANNEXURE: DEALERS QUESTIONNAIRE : I Deepak S. Narayanan studying Bachelor of Business Administration (BBA) at KLES’s College of Business Administration. I am undergoing a project work as part of my academic course. The objective of my project work is Market Mapping Study of Consumer Durable Industry in Hubli. Therefore I request you to fill in the questionnaire given below: I assure you that the information given will be purely used for academic purpose. 1) 2) 3) 4)

Name of the proprietor: Name of the agency : Number of years in business: Major products and brands dealt with at your counter

Major products

Major brands


5) Please mention the various brands you sell and their average monthly sale at your counter: brands television refrigerator Washing Air microwave audio machine conditioner

6) Who is the brand leader in the below mentioned segments at your counter? segments

Rank1

Rank2

Color television Refrigerators Washing machines Air conditioner microwave Audio systems


Rank 3

LG Final Report

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