A PROJECT REPORT

ON

“BRAND PREFERENCE AND COMPETITIVE ANALYSIS

OF LG”

At

Submitted to:

In the partial fulfillment for the course of

“Post Graduate Diploma in Management”

Under the supervision of: Submitted BY:

External-Mr. Ashwani Amit kumar Pal

Internal-Mr. Gautam Srivastava Batch–PGDM 2009-2011

Roll No.-0911201003

Mangalmay Business Academy

Knowledge Park-II,Greater Noida (U.P)

1

2

CERTIFICATE

This is to certify that the Summer Training Project Report entitled “BRAND

PREFERENCE AND COMPETITIVE ANALYSIS OF LG” being submitted by Mr.

AMIT KUMAR PAL as partial fulfillment of the requirement of the two year PGDM

course is a bona fide work carried out by the student at our institute.

This summer project study in his original work and has not been submitted to any other

University Institute.

Project Mentor Dr. Anupam Narula

Director- Acadmics

Mr.Gautam Srivastava

Date:

3

DECLARATION

I, AMIT KUMAR PAL to declare that the summer training project report entitled

“BRAND PREFERENCE AND COMPETITIVE ANALYSIS OF LG” being

submitted to the Mangalmay Business Academy for the partial fulfillment of the

requirement for the Course of PGDM is my own endeavors and it has not been submitted

earlier to any institution/university for any degree.

Place:

( AMIT KUMAR PAL)

Date:

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ACKNOWLEDGMENT

It is with deep sense of gratitude that I express my indebtedness to everybody

who has been instrumental in helping me in completing the project. This project

has involved a lot of effort and research, which would not have been possible without the

help of many people.

I would also like to thank my faculty guide, Mr.Ashwani for being very supportive of this

research for giving me this opportunity to explore our potential and undertake this

internship. It really helped to put the theoretical knowledge to practical use and gave a

much deeper understanding of the actual operations of the industry.

(AMIT KUMAR PAL)

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PREFACE

As part of PGDM curriculum summer training was undertaken with E-DURABLE.

Which is a Unit of LG co. one of the biggest Electronics maker in the world?

The summer training was of 8 weeks and started with 1st of May and end with 30th of June

2010.

The purpose of this summer training was to take practical experience in marketing

organization to have exposure to various management practices in the field of marketing.

The report is an attempt to go through the detail of penetration of LG and study the

strategy of company to gain market Strategy.

.

No professional curriculum is completed without practical work experience. Every

individual who is doing management studies has to undergo this phase to practical study

before he/she can consider himself/herself full qualified as a potential manager.

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EXECUTIVE SUMMARY

“Brand preference and competitive analysis of LG”.

To know about your competitor’s position in the market is an important aspect of

marketing strategy. This type of survey effects other decision of marketing.

E-durable. Which is a unit of LG in Dehradun.I worked with it? I have allocated the area

of Dehradun.On 1st may I started my project under the guidance of Mr.

Ashwani(H.R)Dehradun.

LG is one such company which has brought technologically advanced products for its

customers keeping in mind that today’s customer are placing greater weight on quality

and value in making their purchase decision. Dealers are also the customers of the

company. They are the last chain in the distribution channel of the company. They are the

one who directly deal with the consumers. If they are not satisfied with the company’s

services the company cannot achieve “Total Consumer Satisfaction”. They should

constantly try to find whether dealer’s are satisfied with the company or not and if not

what are the reasons and try to remove such reasons.

Today the markets have been globalized, there is a cutthroat competition, and there are

many players in the market offering same type of products. The companies have to

convince the customers and so advertisements play an important role in promoting the

company’s products. As there are many players in the market offering same type of

product, dealers have to keep the products of various brands for their customers. How

they have positioned the stock in show room is of great importance.

Keeping this in mind, I have undertaken the project to find competitors potential and

customer’s preferences towards the products of LG. For this, I prepared questionnaire for

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both dealers and customers. In the current market scenario dealers play important role to

create the image of the company and the product.

This project may prove to be of immense use to the Marketing section as well as

Customer Care Department as it will help them to know the problems of customers,

reasons for their dissatisfaction and ways to eliminate these problems.

This will also help the company to know how far they have been successful in their brand

building process. During the whole experience of conducting the survey and completing

the project, I met with both success and failure. But then both kinds of experiences have

only equipped me better with practical knowledge, ability, attitudes and skills.

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TABLE OF CONTENTS

CHAPTER DETAILS PAGE

NO.

1. INTRODUCTION 11

2.COMPANY PROFILE

LG IN INDIA

2. HISTORY

3. ORGANISATIONAL STRUCTURE

MARKETING STRATEGY

BUSINSS MODEL

PRODUCT STRATEGY

FEATURE OF PRODUCT

PRICING STRATEGY

DITRIBUTION TRATEGY

SUPPLY CHAIN AT LG

12-33

3. COMPETITOR ANALYSIS 34-37

4.

RESEARCH

1. OBJECTIVES OF RESEARCH

2. LIMITATIONS OF RESEARCH

3. METHODLOGY

38-41

9

5.FINDINGS AND ANALYSIS

1. FINDINGS OF CONSUMERS PERCEPTION

2. FINDINGS OF DEALERS PERCEPTION

3. BRAND AWARENESS

42-55

6. SWOT ANALYSIS 56

7.CONCLUSION

1.RECOMMENDATION58-59

8.

BIBLIOGRAPHY60

9.APPENDICES

1. QUESTIONNAIRE FOR CONSUMERS

2. QUESTIONNAIRE FOR DEALERS

61-65

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INTRODUCTION

Consumer durable industry is one of the most lucrative industries and is rapidly growing.

The Indian economic industry witnessed proliferation of

Global companies in the national scene, liberalization of Indian economy coupled with

the media explosion ushered in a new era of consumerism, increased purchasing power

and leads to the creation of budding consumer durable market.

The version Indian market offered tremendous scope to the multinationals. The growth

rates were as high as 22% in the wide goods segment compared to the nearly 2-3%

growth in the European market. Thus, it will witness major takeovers strategic alliances,

technical collaboration and formation of fully owned subsidiaries.

Adding value to the customer's life as a motto was upheld when LG touched the Indian

shores way back in 1997. Today, when LG is entering a decade, it is very heartening to

see that the company has achieved its growth through sheer hard work and determination.

Company’s mission simply was to provide valued customers with the products which add

value to their life and to build an ever lasting relationship based on that foundation.

Today, this mission has emerged as leaders across categories in the Indian Consumer

Electronics.

LG has in a short span of nine years setup state-of-the art manufacturing facilities and

achieved an unprecedented turnover figure of Rs. 7500 Crores in 2007. It has laid out an

extensive network of 77 subsidiaries across the country employing a total of 72000

people,

LG aims to make India an export hub to consolidate its position not only in the domestic

but in the international markets.

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COMPANY PROFILE

LG Group- The best global company

U.S. $73 billion LG Group is one of the world’s top conglomerates today, having

established its supremacy in diversified fields ranging from electronics, chemicals, and

cosmetics to trade and services. The LG Group was born as “Lucky Chemicals” in 1947,

a pioneer in the fledging chemical industry with a pioneering spirit. Founder chairman

planted the seed of the industry in the barren land.

LG was the First Korean Company to make cosmetics and to enter the synthetic resins

industry. LG established “Gold Star” in 1958, opening the door to electronic industry in

Korea. In the early 1970’s after Founder Chairman passed away, Mr. Chakyung took over

as a chairman.

“Gold Star” brand product sales in 1996 came to U.S. $ 9 billion, which ranked one of the

top electronic industries in the world. LG is known by consumers in more than 171

countries for offering products that deliver ultimate satisfaction. Along with the new

corporate mission, LG electronics has been reborn. The organization remains fruitful and

vibrant.

Building a better future for customer is the top priority and the company is going top gear

to make the “Better Future” a reality. The new corporate name and identity will continue

to offer full satisfaction to customers around the world and will come to symbolize the

face of the future.

The management philosophy of LG is “We create value for customers through

management based on esteem for human dignity”

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LG IN INDIA

LG Electronics India Limited (LGEIL) is a wholly owned subsidiary of LG electronics,

South Korea. The company was established in January 1997 after clearance from the

Foreign Investment Promotion Board (FIPB).

Its earlier two attempts one in 1992 and one in 1995 had failed. It first entered the country

in 1992 with the Gold Star brand name selling Color Television’s in partnership with

Kolkata-based consumer electronics company Bestavision, the marriage failed to click

right from the start. Two years and a host of problems later, it snapped ties with

Bestavision and tried to form a joint venture with the C.K. Birla group. That move, too,

failed in the negotiation stage itself. By then, the Gold Star brand had acquired a poor

reputation with dealers and consumers alike.

With the change in its corporate identity in 1995 worldwide from ‘Gold Star” to “LG” it

proved to be lucky in India only the third time around, despite being one of the first

multinationals to hit the Indian market after liberalization.

The company launched in May 1997, with, ten model of color television, ranging from 14

inches to 29 inches; eight models of large capacity refrigerators ranging from 320 lt to

650 lt and three models of washing machines from 5.5 kg to 20 kg and subsequently

launched the same in Chandigarh, Lucknow, Jaipur, Bombay, Pune, Calcutta,

Ahmedabad, Indore, Bangalore, Chennai and Delhi. These entire products bear the LG

brand name, which the company has decided to change from its previous brand “Gold

Star” around the world starting from 1997.

The company plans to export products worth. $100 million in a ten-year period. It also

has a plan to invest 25% of its equity to the Indian public or to an Indian investor after 5

years of operation.The company is taking measures to reduce costs and improve

productivity. With emphasis on quality and improved service to the customers at an

affordable price, the company will endeavor to gain additional market share.

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HOW LG GREW

1958:

Gold Star was established, developed and produced Korea’s first radio.

1960:

First Korean company to manufacture an electric fan

Became Korean first exporter of consumer electronic (radio) to USA.

Developed and produced Korea’s first refrigerator and Korea’s first television

Developed and produced Korea’s first room AC and Korea’s first washing machine.

1970:

Developed Korea’s first multi-key phone system.

Developed Korea’s first color television and first overseas sales subsidiary in USA, Gold

Star Electronics International, was the first Korean company to record US $ 100 million

in exports.

1980:

Established Korea’s first production subsidiary Gold Star American in USA.

Established local sales and promotion subsidiary in Germany, Canada and Japan.

ORGANIZATIONAL STRUCTURE

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Organization structure defines and describes the authority and responsibility relationship

between various positions. The people working together for the accomplishment of some

common objectives require a defined structure through which they are related to each

other and through which their efforts can be coordinated into a team.

LG is a functional organization whereby all the activities in the company are grouped

according to certain function.

Sales and Marketing

Human Resource Department

Manufacturing

Finance and Accounts

In LG, each functional head performs a specialized function for the entire company.

Every functional head has functional authority over other departments and every

employee reports to several functional heads. Here each operating executive carefully

concentrates on his function and gets expert advice and assistants.

At LG management and staff are subdivided into two levels:

(a) Managerial Cadre

(a) Clerical Cadre

Depending on the above classification of the managerial cadre, management can be

divided into the following.

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Managerial Clerical

Officer I Officer IIM1 M2

Executive Manager

Executive Deputy Manager

Each employee in the above levels performs his or her task and responsibilities according

to the assigned function.

(a) Top Level Management

Managing Director

Vice President

(b)Middle Level Management

Managers

Senior Manager

Deputy Manager

(c) Junior Level Management

Executives

Management trainees

The responsibilities of the Vice President at LG electronics include:

Advising and assisting management in the formulation of policies on personnel

administration including employee’s training and manpower planning.

Employee’s welfare including community development and its implementation in

regard to all the divisions of the company.

Maintaining functional relationships with other divisional heads of the company.

Human Resource Department is a central sub-system and it interacts closely and

continuously with all other subsystems of an organization. The quality of people in all

subsystem depends largely upon the policies, programmes and practices of the Human

Resource Management subsystem. The quality of HR determines in turn the success of an

organization.

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Marketing strategy

In a short span of just 26 months, since its inception in May 1997, the brand has attained

a brand awareness level of about 90% in the consumer durable Indian market.

Considering the fact that LG electronics is a Korean multinational, entering the Indian

market meant establishing itself in a different market altogether with varied culture and

consumer tastes and preferences. Also that so many multinationals are sweeping into the

country, it is evident that each and every company has a cutting edge over another. These

global corporations are deviating from their international methodologies and improvising

their strategies for local markets.

LG’s localization of strategy covers the following areas:

Entry Strategy: It is always better to establish as fully owned subsidiaries. It is

considered better if the company has a local partner but, since LG’s earlier two attempts

had already failed, it decided to do it all alone this time. The strategy that LG has adopted

is presenting an Indianised face to its products but keeping the technology at global

levels.

Operations: LG opted for starting its own manufacturing facility at Greater Noida. The

20 month schedule to commission its manufacturing plant was compressed to 10 months.

The company decided to go in for a Green Field Project rather than acquisitions or

mergers. (For all products except refrigerators).

Products: LG decided to go in for Product Adaptation Strategy. Globally LG does not

operate in the direct cool refrigerator, semi automatic washing machine and 21 inch Color

Televisions. But the company had to develop these products for the Indian market

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because these areas constitute a major bulk of buys for the Indian consumer. Also LG

launched, Sampoorna, India’s first Television with a devnagiri script on screen display on

the 50th anniversary of Indian Independence. LG’s strategy of localizing its products to

suit Indian tastes added to its strength.

Segmentation: The Company decided to enter the high-end middle-class onward

segment in the initial stages, since most of the Indian brands were targeting the low and

middle end customers. In the past 3 years due to LG’s distinct strategy it has carved a

niche for itself in a crowded segment of 20 manufacturers.

Brand: The company launched its products in country with “LG, the global leader”. It

did not opt for any established brands in the country to be associated with it.

Leadership : At LG electronics, keeping the localized strategy in mind, the strategic areas

such as sales and marketing are headed by an Indian.

THE BUSINESS MODEL

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THE SEGMENT THE PRODUCT THE BRAND

Niche/ Mass Top-of-line / Mass

Market

Global

Premium/ mid-

range

Grown

THE PRICE

Premium economy

ALLIANCE ENTRY STRATEGY LEADERSHIP

Fully-owned Greenfield Indian

INVESTMENT

Incremental

BOTTOMLINE

OBJECTIVE

Market share

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M

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Before launching itself in the market in 1997, it carried out an extensive research study to

understand consumer motivations to create magnetic products, price them strategically,

position them sharply and keep making the magnetism more potent. Having understood

the finer differences in consumer motivations, it opted for sharp arrow ‘reason to buy’

differentiation over the all-approach (category wise) taken by most of the other players.

After the initial preliminary market studies the sales and marketing department decided to

start off with 3 product categories:

Color televisions

Washing machines (Automatic)

Refrigerators

Within the first 4.5 months the company went all-India. As the company’s business

began to rise, LG introduced the following products to expand its product portfolio:

Air conditioners

Direct cool refrigerator

Semi automatic washing machine

Microwave ovens.

20

In a broad perspective, LG’s sales and marketing success can be attributed to its 7P’s of

marketing. In addition to the products, price, place and promotion, the key factors that

have contributed to LG’s success are the following 3 additional P’s:

Place, People and Passion

The most important winning factor of the sales and marketing has been its ‘Passion’. It

is this attribute within all the workers that drives the other 6 P’s.

However LG’s Marketing Strategy is based on 3 P’s, apart from the conventional 4 P’s of

marketing:

Premium pricing to maintain margins

Breathtaking Pace to create riches

Deep Penetration to increase volumes

Premium Pricing: LG electronics was one of the late entrants the 18 th player. While other

companies were jostling to play the low price high volumes game, LG decided to

concentrate on the high end of all the product segments.

The maximum price of a CTV was Rs. 21,000 for a 21inch model, was 10 percent higher

than Sony’s prices. Since most of the competitors were catering to the lower and middle

segments, LG decided to concentrate on the premium segments. To cultivate the image

that LG was a leader is both technology and quality, innovative products were launched.

LG’s quality products and competitive prices have been accepted in the market place

considering its 90% brand awareness.

Place: The Company did not want to waste any time being among the last to enter the

market. The 20 month schedule to commission its manufacturing plant was compressed

to 10 months. It also decided to go in for a nation wide launch and appointed 1000

dealers in just 5 months in 1997. Finally, the company entered 3 product categories

simultaneously ensuring adequate retail-space. The company was able to build up the

market for its products faster because it had launched one product at a time and marketed

them region - wise.

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However, to keep pace with the competitive market place it will have to launch models

with innovative features at regular intervals. For e.g., the proposed launch of a digital

TV by 2000 and many other digital products is a step towards this direction.

Penetration: Pace was followed by aggressive penetration. Having established 18 brand

offices, and Clearing and Forwarding agents in Goa and Pondicherry to take advantage of

the sales tax benefits in these areas and towns like Ranchi, Raipur and Nagpur the

company has expanded its dealer network to 2,500. By the end of this year, this will rise

to 2500 dealers.

LG believes in “Value Marketing”. LG is sacrificing volume for value. The big gain of

doing it this way, of course is pricing power and maintaining this will remain crucial.

Product positioning

The Unique Selling Proposition (USP) is based on health.

The company wanted a USP for its products which no other company in the industry had.

Hence it piggybacked on health. This is a niche which none of the other company’s had

thought of. Each of its product lines were positioned based on health:

Golden Eye television- Ensuring wrinkle free viewing

Refrigerators – PN System (preserve nutrition system)

Air conditioners – Health Air AC’s

Washing Machines – Chaos Punch +3-Fabricare system

Microwave Oven –Health wave cooking system

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PRODUCT OFFERINGS & RELATED STRATEGIES

LG has right from its inception launched a series of state-of-the-art technology backed

products. The sales and the marketing department keeps altering & refining the product

portfolio according to the requirements of the consumers.

LG electronics has the following product lines

i. Color televisions

ii. Refrigerators

iii. Washing machines

iv. Air conditioners

v. Microwave ovens

vi. VCD players

Initially in 1997, the company had launched only 12 models of Color Televisions, 8

models of refrigerators (300 lt + frost free) and 3 models of fully automatic washing

machines. Gradually as the company showed signs of profitability it expanded its range

of products in its portfolio.

FEATURES OF PRODUCTS

I. REFRIGERATORS

In the domestic refrigeration segment there are two types:

a. Direct Cool: These refrigerators cool through the direct contact of air with the

cooling coils bound around the freezer. This system has several draw backs: Ice forms

frequently around the coil-reducing cooling efficiency and creating the need for manual

defrosting. Also the temperature distribution is uneven with the various compartments.

b. Frost-free refrigerator: It is designed to overcome the drawback of conventional

refrigerators. Hence the cooling coils are located outside the stroke area. No frost is

formed inside the freezer, thus giving high cooling efficiency and maximum storage

space all the time.

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LG entered the refrigerator market with 300 lt frost free models. It introduced 8 models

initially and now it has 9 models in the frost free type and 3 in the direct cool type.

ii. AIR CONDITIONERS

LG’s air conditioners were launched in phase II of Jan’98. It launched its air conditioners

as “Health Air Conditioner’s”

There are two types of AC sold by the company:

a. Split type

b. Window type

On the whole there are about 9 models of Air Conditioners available in the market.

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Health Air System: This system guards against heat, dust and pollution with its unique

anti-bacteria filter, it drives air borne germs out of the boundary. Its de-odorizing filter

does away with unpleasant odors, and the anti-fungus electrostatic air purification unit

traps dust particles as little as 0.01 microns and even smoke. It’s ‘Chaos’ Logic air flow

system creates natural air currents, and cools in gentle puffs rather than with blasts of

cold air. Thus it prevents any unhealthy, abrupt drops in the body temperature.

The unique features of LG air conditioners are:

Unique Air Purifying Filters: The filtering system utilizes two filters. The

electrostatic filter removes the finest dust particles as small as 0.01 mm and even tobacco,

smoke and pollen. The de-odorizing filter removes unpleasant odors, especially those

caused by airborne fungi.

Worlds First ‘Chaos’ Logic AC’s: The most pleasant airflow for the human body

can be found within nature. Countless data and verification have resulted in the

application of the new ‘Chaos’ theory to LG AC’s. This is a technology that reviews

more natural air by controlling the angle and speed of the movement of the vane.

Worlds Quietest AC’s: To provide a comfortable pleasant and well balanced

environment, LG AC’s utilized a streamlined air fan and a unique design which create

smooth airflow from the air conditioner so that it operates under the lowest noise level

with the best structure for the air path. The amount of friction has been decreased

providing the quietest Ac’s in the world.

Following is the range of models:

i. Split Air Conditioner’s – 1.0 T, 1.5 T, 2.0 T, 2.5 T

ii. Window Air Conditioner’s – 0.75 T, 1.0 T, 1.5 T, 2.0 T.

PRICES FOR EACH OF ITS PRODUCT CATEGORY

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Target / Segment /

Positioning

Price

Color Television Golden Eye wrinkle free

viewing

Lower &middle income

group; youth segment &the

rural markets

Rs9000-Rs11000

Middle &upper-middle

income groups.

Rs. 14000 to Rs 19000

Upper class &upper middle

class; people leading a

trendy lifestyle.

Rs 22000 to Rs59000

Refrigerator PN. System

Direct Cool Lower and middle class; Rs. 9000to Rs11000

Frost free (up to 640 lt) Upper and upper middle

class; working women

Rs. 26,000 to Rs. 64,000

DIOS Upper-upper class; people

leading trendy lifestyles of

the west.

Rs. 1. 3 lakhs

Air Conditioners Health air System

Split type Upper and upper middle

class

Rs. 42,000 to Rs. 67,000

Window type Upper middle and middle Rs. 23000 to Rs. 33,000

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class

Washing Machine Fabricare System

Semi Automatic Middle class and mass

market;

Rs. 75,00 to Rs. 8,000

Fully Automatic Upper middle and upper-

class working women

Rs. 18,000 to Rs. 21,000

Micro wave oven Health wave cooking

system

Upper middle & Upper

class, working women with

trendy lifestyle

Rs. 12,900 to Rs. 13,900

27

DISTRIBUTION AND RELATED STRATEGIES

LG is currently selling its products in 1800 towns and cities with population of one lakhs

and above. It has 186 branch offices, 40 distributors and 2,000 dealers all over the

country. By the end of 2008, the company plans to reach another 8000 towns with a

population of 50,000 or more. In this process it will add on to 100 distributors and 1500

dealers.

To achieve this, the company engages eight vans to feed the country covering 5000 km

every month, to familiarize the trade and the customers with LG products.

In every city, LG approached the best dealers but in a scheme ridden market, it refused to

offer any schemes. It positioned itself as an ethical company, instead of discounts. LG

wanted dealers to pay an advance for LG products. This ensured that the dealer would

push the brand in the market place, even if it was just to keep his oven cash from staying

blocked. In the long run this created demand for the brand.

Dealer loyalty and retention has been high, right from the beginning due to proper

inventory management, higher dealer profitability and incentives, proper POP and other

promotional material to the dealers and a basket full of products for the dealers to choose

from.

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Supply Chain at LG

LG factory Exclusive Outlets

C & F agents

Distributor

Dealer

PROMOTION AND RELATED STRATEGIES

Following are the promotion tools used by LG electronics :

Advertising

Public Relations

Sales Promotion

LG has devised an effective advertising and promotional strategy. By using appropriate

media vehicles, strong concepts and Unique Selling Product’s were developed. Also,

various aspects about the brand performance, the products and strategies to the media,

has been communicated very well with its excellent public relations.

i. Advertising

The company started with advertising on print and outdoor media in 1997.The

advertising had to be straight and simple aimed at both the head and heart.

29

For e.g. to advertise for refrigerators the ad - line went “From today all other refrigerators

will become history”. This was something that pushed the end benefit further toward the

consumer.

Over time, the media used extensively to advertise. Electronic, print and outdoor are

some of the types of advertisements. The media used to advertise for LG are 60% TV,

30% print and 10% outdoor.

Also the company has started with web advertising over the site.

In order to boost secondary sales the sales and marketing department has launched a new

activity. Two LG lady chef’s have been taken on board for cooking demonstration with

the help of LG Microwave Oven. The demos will be held at kitty parties arranged by

members, at dealer counters (to attract walk in customers), to new LG microwave

customers (they would be requested to invite at least 6-7 people to their house at the time

of demo). Currently this activity has started only in Kolkata and Mumbai and will be

gradually extended to other branches.

Now that LG is coming up with its digital range of products, the vehicle that the company

plans to adopt would be direct selling, in order to demonstrate the products wherever

possible. The company keeps in mind the seasonality of product while promoting for its

products. It advertises heavily during festive season and also during summers when the

demand for Air Conditioners, washing machines is on the rise.

Lintas is the ad agency handling the account.

Its advertising budget since 1999 is as follows:

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TABLE 6:

Year Budget Objective

1999-

2001

20 crore To inform about LG’s products

2002-

2004

45 crore To promote additional product launches

2005-

2008

60 crore To promote the brand

The company considers the Advertising: Sales ratio, if sales are increasing the company

tries to reduce the ad – budget.

Of late LG has got more into corporate advertising i.e. promoting the brand and its

achievements rather than promoting the product. Even the ads seen on TV these days, LG

is trying to promote the brand and not the product.

It sponsors a 2- minute programmes on Zee TV by name of “LG Heroes” where a

personality or anybody who has excelled in his/her field speaks for about two minutes.

The clipping showing people who are successful has got significance with relation to

LG’s success in the country.

ii. Public Relations

The company takes care of the PR activities on its own mostly for press releases etc. The

officials at LG are very media friendly hence 90% of the media comes to the company

itself.

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Today, LG stands as the Number 1 Public Relations Company in the industry... The

company organizes press conferences very often to keep the media updated on its

activities.

Iii.Sales Promotion

LG since its inception has believed in “No Schemes, no Scheming”.

It is only once in a while that the company comes up with promotional schemes. For

consumers, it has schemes like 10% off on pre- peak purchases and low finance schemes.

For dealers, the company gives them good margins based on sales, sending them to Korea

etc. Some of the recent schemes that LG has come up with:

(a) Lucky draws on purchase of every LG product, to a lucky customer, he’ll get a free

trip to Singapore for 4 days.

(b) “Save upto Rs. 1000 on LG Microwave” LG microwaves available at introductory

prices till 16th Aug 2006.

According to the stages of the product life cycle, LG is in the growth stage considering

the company’s success over the past 3 years. Marketing objectives and strategies for the

introductory and the growth stage are summarized.

Introduction Growth

Marketing

objectives

To offer technological superior

products in the market

Preparing for “Digitally

yours” image for the now

millennium

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Product Offering about in total 23 products to

the premium end of the market

Launching digitally superior

products for all its product

ranges

Price Initially prices high to cater the

premium end

Catering to the mass market

via its diverse priced.

Distribution Selective Intensive

Promotion Heavy advertising to create

awareness about its products

More into corporate

advertisingi.e. promotion the

brand

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COMPETITOR ANALYSIS

1) WHIRLPOOL

Whirlpool, right from its inception in 1911 as first commercial manufacturer of

motorized washers to the current market position of being world's number one

manufacturer and marketer of major home appliances, has always set industry milestones

and benchmarks. The parent company is headquartered at Benton Harbor, Michigan,

USA with a global presence in over 170 countries and manufacturing operation in 13

countries with 11 major brand names /

Soon Whirlpool acquired Kelvinator India Limited in 1995 and marked an entry into

Indian refrigerator market as well. This expanded the company's portfolio in the Indian

subcontinent to washing machines, refrigerator, microwave ovens and air conditioners.

Today, Whirlpool is the most recognized

brand in home appliances in India and holds a market share of over 25%. The company

owns three state-of-the-art manufacturing facilities at Faridabad, Pondicherry and Pune.

34

Each of these manufacturing set-ups features an infrastructure that is witness of

Whirlpool's commitment to consumer interests and advanced technology.

In the year ending in March '06, the annual turnover of the company for its Indian

enterprise was Rs.1,375 Crores. According to data, Whirlpool enjoys the status of the

single largest refrigerator and second largest washing machine brand in India.

A slogan of “You and whirlpool, the world's best homemaker” dots its promotional

campaigns. The products are engineered to suit the requirements of ‘smart, confident and

in-control' homemaker who knows what she wants. The product range is designed in a

way that it employs unique technology and offers consumer relevant solutions.

2) VIDEOCON

Videocon is an industrial conglomerate with interests all over the world and based in

India. The group has 17 manufacturing sites in India and plants in China, Poland, Italy

and Mexico. It is also the third largest picture tube manufacturer in the world. In India the

group sells consumer products like Color Televisions, Washing Machines, Air

Conditioners, Refrigerators, Microwave ovens and many other home appliances, selling

them through a Multi-Brand strategy with the largest sales and service network in

35

India.Videocon Group brands include Sansui, Toshiba, Electrolux, Kenstar, Next

The Videocon group has an annual turnover of US $ 4.1 billion, making it one of the

largest consumer electronic and home appliance companies in India...

3) SAMSUNG

Since its founding in 1938, SAMSUNG has maintained a mission statement that responds

both to its own change, and to new developments in the world.

The management philosophy represents the strong determination to contribute directly to

the prosperity of people all over the world. The talent, creativity and dedication of the

people are key factors to efforts, and the strides made in technology offer endless

possibilities to achieve higher standards of living everywhere.

36

SAMSUNG believes that the success of contributions to society and to the mutual

prosperity of people across national boundaries truly depends on how we manage our

company. The company’s goal is to create the future with our customers Samsung

provides products like dishwaher, washing machine, microwave, refrigerator and air

conditioners.

37

RESEARCH OBJECTIVE

Globalization has affected today’s market towards the competitiveness. There are so

many domestic and multinational companies growing up rapidly. Survival is being the

core concept of the companies.

A company must know the strategy of the competitors because it directly affects it. So

there is a need for a company to know its rivals market potential, market share and selling

strategies.

Today the choice and preferences of consumer is also changing. Customer is now aware

about the products. Customer is better educated more sophisticated. He is aggressive and

critical who demands his money’s worth and pays only for what he wants.

Dealers are the customers of the company and consumers are the main source of the

information. This project has certain objectives for which dealers and consumer’s

perception were covered all over Kolkata region.

The main objectives of the project are the following:

To study the LG’s advertising strategy vis-à-vis its competitors

To see how effective is the promotional and positioning strategy of LG.

To find out the problems faced by dealers in selling the LG products.

To find out the market share of products of LG in Kolkata.

To find out the most preferred brand in the market.

To know the awareness level of consumers about the products of LG.

38

Limitations in Research

Every study has its own limitations in terms of methodology and the resources available

for its conduct. This study has no expectation to it and has been carried under following

limitation:

1. Some of the dealers as well as the customers were not forthcoming with information as

they thought it to be a waste of time. Some customers were not able to respond due to

lack of awareness.

1. A number of dealers were biased towards a particular brand which was giving them better

returns.

1. Some of the shop owners were not available so, contacted person was not able to present

a fair view.

1. Respondent’s lack of time to give information and their casual attitude was a big

hindrance in the study.

1. The dealers were biased by some recent experiences which they had with a particular

distributor regarding the service or distribution.

1. Respondent’s lack of time to give information and their casual attitude

Was a big hindrance in the study?

Research Methodology

Methodology is the specification of the method for acquiring the information needed to

structure the study.

Universe

Universe for dealer survey was Dehradun.

Universe for consumer survey was Dehradun.

39

Sampling Size:

Sample size for consumer survey was 100 covering houses and markets from different

areas of Dehradun.

Company survey consisted of visiting 70 dealers of Dehradun.

Sampling Techniques:

1 For Consumers survey “Convenient Sampling” techniques was applied.

1 For Dealer’s survey “Systematic and Random Sampling” technique was used.

Collection of Data

1. Secondary data

Internal Data

Went through some previous market studies provided by the guide.

Previous summer training reports to grasp knowledge about white goods market.

Study of product manual and salesman training report to get product knowledge.

External Data

Scanning of various business magazines.

Collected relevant information from the newspaper.

2. Primary Data

Interview Method

40

Some of the employees of LG from Sales and marketing department and a few dealers of

LG were interviewed for the purpose of exploratory study. The response obtained from

them was very helpful in preparing the questionnaire for dealers and deciding upon

various classificatory and data variables.

Two questionnaires were designed one for the consumers and the other for the dealers. 70

dealers and sub dealers and 100 consumers were visited for the research work.

Observation Method

Observation about the consumer behavior at dealer counter gave us lots of knowledge

about the customer expectations regarding products, counter preferences for brand and

after sales service.

41

FINDING AND ANALYSIS

To study the promotional strategies of various brands only newspapers were studied due

to practical limitations. Four newspapers were studied for a period of two months from

02nd May to 30th June, 2010. 2 of them were English Newspapers i.e. Times of India and

Hindustan Times and 2 Hindi Newspapers i.e. Dainik jagran and Hindustan.

(Assumption: Advertisement published by individual dealers was not taken into

consideration, only the advertisements given by the branch offices or Head office were

studied.)

42

GRAPH 1:

Comparison on the basis of total number of advertisement:

Graph of total number of advertisement of various brands is plotted below. From the

graph it can be concluded LG published a total of 15 advertisements, which is maximum

in number. After LG other brands are left far behind with Samsung and Whirlpool having

10 and 7 advertisements respectively.

43

Different type of advertisements of various brands

2 2

4

15

10

34

7

0

2

4

6

8

10

12

14

16

Brands

Type

of a

dver

tisem

ents

Electrolux

Godrej

Hitachi

LG

Samsung

Videocon

Voltas

Whirpool

GRAPH 2:-

Comparison on the basis of total number of advertisement:

Graph of total number of advertisement of various brands is plotted above. From the

graph it can be concluded LG published a total of 32 advertisements, which is maximum

in number. After LG other brands are left far behind with Samsung and Whirlpool having

19 and 18 advertisements respectively.

GRAPH 3:-

44

Comparison of advertisements on the basis of products:

Graph of total number of advertisement of various brands published on different days is

plotted above. LG prefers giving its advertisement on Saturdays and Sundays.

Samsung prefers Friday for giving its advertisement.

Whirlpool prefers Wednesday for giving its advertisement.

45

LG SAMSUNG WHIRPOOL

FINDINGS OF CONSUMER’S PERCEPTION

A total of 100 consumers were taken into consideration for the analysis. The survey

covered different houses and markets in Dehradun.

Consumer’s Perception of LG in Dehradun: Consumer’s Perception was analyzed on

basis of various variables. From the graph below it can be studied that the brand name of

LG(406) is the maximum reason that affects the buying behavior of its products.

GRAPH 1:

GRAPH 2:

Perception on the basis of recall of advertisement for Consumer electronic items

46

Consumer electronic items include Television, Refrigerator and Air Conditioners.

Consumers were asked to recall the advertisement of any brand and their responses are

measured and plotted in the graph. From the graph it is observed that advertisements of

LG brand ie 59 were recalled mostly.

GRAPH 3:-

Perception on the basis of recall of advertisement for Home electronic items:

Home electronic items include Washing Machine and Micro Wave Ovens.

Consumers were asked to recall the advertisement of any home appliance brand and their

responses are measured and plotted in the above graph.

47

From the graph it is observed that advertisements of LG brand i.e., 48 were recalled

mostly.

Perception towards products of LG

GRAPH 1:-

Consumers were asked to rate various factors of LG products and their response was

measured and plotted. From the figure it is observed that LG products were perceived to

have effective advertisement, better quality and have high brand equity. (i.e. 71, 45 and

35 respectively)

48

AGE-WISE CLASSIFICATION OF CONSUMER’S

Perception

GRAPH 2:

Perception of factors affecting buying behavior

Various factors affecting buying behavior were asked to be ranked by

Consumers in the questionnaire. They are plotted in the above graph.

From the graph it can be observed that in the age group20-34, Price and Discount Offers

were found to be most important factor. In the age group 35-50, Price and Brand were

found to be most important factors. In the age group above 50 years, Convenience and

Advertisement and Publicity were found to be most important factors.

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GRAPH 3:-

Perception on the basis of recall of advertisement:

Consumers were asked to recall the advertisement of LG products and their response was

measured and plotted in the graph. From the graph it is observed that age group of 18-35

years recalled mostly advertisement of Refrigerator and Air Conditioner. While age

group of 35-50 years recalled mostly advertisement of Microwave and Color Television

while age group above 50 years recalled Refrigerator and Washing Machine.

FINDINGS OF DEALER’S PERCEPTION

50

Dealer’s Perception

Dealers were asked questions regarding various factors and were asked to rate them on a

5 point scale. Points scored by individual brands were added. Maximum points, which

could be scored by any brand, were 21. Their responses are plotted in the graph.

GRAPH 1:

From the figure it is concluded that Sansui and Samsung were perceived as the best

brands with 10 points.

Samsung and Crown have highest Warranty period.

Sansui and Crown were told to have best after sales service.

Crown and Electrolux offers highest credit period.

Akai has best Employee behavior.

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1 = Sansui, 2 = Samsung, 3 = Crown, 4 = LG, 5 = Electrolux, 6 = Whirpool, 7 = Akai, 8 = Godrej, 9 = BPL, 10 = Videocon, 11 = Onida

12 345 67 891011

Godrej offers best supply.

LG has best Point Of Purchase.

Sansui, Crown and Videocon offer best incentives to its dealers.

BRAND AWARENESS

LG electronics has established a strong brand name standing apart in the consumers

mind. In three years of its existence in the market it has attained a brand awareness level

of about 90% in the consumer durable market.

A survey conducted by Business Today, surveyed on the “Impact of mega – event

advertising” on the Brand awareness pre and post World Cup.

This survey was conducted covering 4000 households across 4 metros Delhi (B), Chennai

(C), Kolkata (D) and Mumbai (M) to quantify the gains and losses made by each of the

major advertisers on the awareness scales of viewers.

Findings for LG electronics are presented below

Top of Mind Brand Awareness (Consumer durables)

Pre –World Cup Post World Cup

D C B M All D C B M All

20% 18% 14% 20% 18% 30% 34% 22% 32% 31%

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Brand Association with Products

Pre World Cup LG Post World Cup ‘99

84% Color Televisions 87%

40%` Refrigerators 61%

38% Washing Machines 56%

27% Music Systems 36%

11% Microwave Ovens 22%

15% Air – conditioners 37%

POSITIONING ASSOCIATIONS (LG)

Pre World Cup Post World Cup

Attractive Looks 24% 32%

World Class Products 22% 32%

Attractive Advertisements 19% 30%

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Analysis

LG spent about Rs. 40 crore as its expenditure for the world cup. Huge players like BPL

did not succeed much in the market. Every unit of mind space that LG gained was BPL’s

loss. Both BPL and LG started out with the same brand awareness before the World Cup,

but BPL fell and LG rose because of different ad-spends. Brand awareness for BPL fell

from 35% to 27% and for LG it rose from 18% to 31%.

LG exploited the opportunity that its ad-spend offered by pushing through its mother –

brand image. It was a smart strategy and it worked.

This is the reason that customers perception of LG has widened dramatically from being

a Television company to being a full fledged consumer durable company. It has gained

on its association with every product category: 40 percent to 61 percent for fridges; 38 to

56 for washing machines; 27 to 36 for music systems; 11 to 22 for microwaves; 15 to 37

for AirConditioner’s. This is quite an achievement.

Brand Strength

According to the research we can analyze where LG stands in the consumer’s mind. It

compared LG’s Color Televisions, refrigerators and washing machines with leading

brands in the same categories on four parameters: recall level, recommendation

inclination, status connotation and product differentiation. The survey was conducted in

the five metros and four other cities (Lucknow, Ludhiana, Ahmedabad and Jaipur)

amongst 25-40 year old men owning a car or motorbike (for Color Televisions); 25-40

year old men and women in car/ motorbike owning house holds (for fridges); and women

in car – owning households (for washing machines).

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Some of the findings are:

In Color Television (Dehradun), LG ranks alongside Sony as a status symbol. It also

leads on willingness to recommend (along with Sony and BPL), and product

differentiation. On spontaneous recall, BPL and Videocon lead, and LG is at the next

level along with Sony, Onida and Samsung.

In refrigerators (Dehradun), Godrej leads by far on spontaneous recall. But on willingness

to recommend, LG is the leader, and so top on status and product differentiation.

In washing machines (Dehradun), LG doesn’t lead on any parameter. On spontaneous

recall, willingness to recommend and status connotation, the leader is BPL, while

Whirlpool leads on product differentiation.

Clearly, LG’s brand – building efforts have had exemplary success. What the company

needs to do is to capitalize on it.

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SWOT ANALYSIS

Strengths

Premium pricing, no discounts

Focus on technology and quality

Strong commitment from parent

In – house manufacturing capability

Products localized to suite Indian

tastes

Weaknesses

Lack of transparency with dealers

Focus on niche segments

Dominance of Korean work culture

Little presence in A&B class towns

Opportunity

Convert image into market share

Wide product portfolio

Positive rub-off due to high quality

Healthy resource generation

Threats

Way behind market leader

Stagnant urban demand

Nothing unique about strategy

Highly competitive market

The strategy adopted by the company of premium pricing could turn out to be its

weakness in the long run. It would enable it to remain a low volumes player only. Even a

company like Sony, which believes in selling premium products globally, has decided to

56

introduce cheaper washing machine models to increase its volumes in small towns. The

reason for doing this is because future demand will come from the small towns and the

rural areas where consumers are extremely price sensitive.

However, within the past three years the marketing efforts of LG has paid fruits but now

the company must move ahead with better proposals and ideas to survive in the

competitive market. The key to survive in a competitive market place is the ability to

launch models with innovative features at regular intervals. Currently LG has a wide

range of products but it needs to aggressively introduce more models.

LG electronics has to go a long way before it becomes a major in the consumer durables

market. Becoming India’s top consumer electronics company, it means surging past BPL,

Videocon and Philips. At the moment BPL is the largest player in consumer electronics

and home appliances. And these companies definitely have its eyes open to know what is

happening in the industry. However LG’s technological superiority will provide the

cutting edge to its marketing strategy. Also the support that the company is getting from

the parent company that is willing to invest in more money, the company’s growth is

assured.

57

CONCLUSION

The result of success in today’s highly charged competitive market depends not only in

product innovation and level of productivity but also in hands of efficient service network

with technological advancements and more adaptability towards information edge.

It has been seen that companies are trying to lower the cost of production and trying to

give more emphasis in creating value added customer base and customer service. It has

lead to extreme innovation and cost reduction to the marketer. It is also seen during last

few years that the companies, which have more, efficient, and meaningful service

network and also the companies who have controlled the cost of distribution have

eventually controlled the market.

In order to multiply sales volume, only an efficient dealer and retail network can widen

the geographical reach of a company’s products. There is substantial over capacity in the

industry. A shakeout is most likely and survival will depend upon technology, pricing

power, efficient after sales service and to a limited extend branding power.

One thing has become quite clear now, strategic marketing is critical for survival and

growth.

Assessment of environmental information and determining the relative significance of

threats and opportunities is an important aspect carried by all the major players. For this

preparation of a profile of threats and opportunities is done:

58

Recommendations

At this point of market evolution, various electronic and household producing companies

believe that their core competency is managing operations and brand. Competitors

believe that this is a time to invest in the business and not to save cost through

outsourcing. So LG should consider this viewpoint and think about the risk involved in

outsourcing its core competence.

LG should try to counter by providing lower rates to certain users or high end users i.e.

to follow discriminatory or product-mix pricing strategy.

LG must try to come out with some specific plans and offers so that people get

motivated and buy the product because of that specific offer.

More proportional schemes should be launched to incorporate the perfect blend of push

and pull. So LG should provide dealers and distributor more perks and incentives.

Emphasis on more effective Public Relation exercise should be given by sponsoring

various events to expand its reach.

In the interest of subscribers LG should take serious steps regarding the ‘Customer

satisfaction pre and post sale’ in consent with the regulatory bodies.

LG should incorporate further innovations to outsmart the most potential competitors

like Samsung, Whirlpool and Voltas.

59

BIBLIOGRAPHY

BOOKS

1) Johnson & Scholes, "Exploring Corporate Strategy", Text and Cases,

5th Edition, 2008 Prentice Hall of India.

2) Kotler Philip, "Marketing Management", Prentice Hall of India, 2006.

3) Wilson & Gilligan, "Strategic Marketing Management", Viva Books Private Limited.

WEBSITES

1) www.lgindia.com

2) www.electronicindustry.com

3) www.strategy-business.com

4) www.google.com

MAGAZINES ANS NEWSPAPER

1) Economic Times, May 2010, "LG Unplugged", Romi Mukherjee.

2) Business Today, June 2010, "Will LG be Lucky Enough to Strike Gold", George Skaria.

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APPENDICES

CONSUMER ELECTRONICS MARKET STUDY

(Questionnaire for Consumers)

1. Full Name:

2. Which of the following Age group do you belong ?

less than 20 yrs 20yrs to 35 yrs

35yrs to 50 yrs more than 50yrs

3. Sex: Male Female

4. Monthly Income:

Less than Rs 3000 Rs 3000 to 9000

Rs 9000 to 15000 more than Rs15000

5. Are you planning to buy any consumer electronics item within a year?

YES NO

6. What all products of consumer electronics are there in your house?

1 CTV:

LG Samsung Sansui

BPL Videocon Other ______

2 REFRIGERATOR:

LG Whirlpool Electrolux

Godrej Other _______

3 AIR CONDITIONER:

LG Carrier Hitachi

Voltas Samsung Other ______

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4 WASHING MACHINE:

LG Samsung Whirlpool

Videocon Other ______

5 MICROWAVE:

LG Samsung Kenstar

Whirlpool Other _______

7. Rank the following factors in the way they affect your buying decision of a consumer

electronics product? ( Rank 1 being least important and 5 being most important )

Price ___ Appearance ___ Durability ___ Functions __ Easy to use ___After

Sales Service ___ Brand Name ____ Pressure of friends, relatives____

8. Which two brands first come in your mind when you talk of consumer electronic items

and Home Appliances?

Consumer Electronic Item Home Appliances

_____________________ _____________________

9.What additional features you require to become a prospective customer of LG ?

________________________________________________________________________

10.What is your impression about the following on LG products?

Tick you answer.

Fully Satisfied Partially

Satisfied

Unsatisfied

62

Quality of goods

Price

After Sales Service

Function of the

component

11. Any Recommendations and Suggestions:

________________________________________________________________________

________________________________________________________________________

(THANK YOU FOR PARTICIPATING IN OUR SURVEY)

CONSUMER ELECTRONICS MARKET STUDY

(Questionnaire for Dealers)

1.Name of Dealer: ______________________________

2.What all items of consumer electronics do you sell?

Refrigerator Air Conditioner Color Television

Washing Machine Microwave

3. For how long you have been selling consumer electronic and household items?

Less than 1 year 1 year or more

4. What all brands of consumer electronics are sold the most in your shop? Please

specify.

____________________________________________________________

63

5. What is your opinion about Warranty Period offered by the above company in its

products?

Unsatisfied Neutral Satisfied

6. What are your annual sales of following products of various brands during past year?

(Annual sales in units)

Ref AC CTV W/M M/W

LG

Samsung

Whirlpool

Voltas

Videocon

Electrolux

Godrej

7. What is your opinion about After Sales Service offered by company to its customers?

Unsatisfied

Partially

Unsatisfied

Neutral Satisfied partially

Satisfied

LG

Samsung

Whirlpool

Voltas

Videocon

Electrolux

Godrej

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8. What is your opinion about Employee Behavior of following companies?

Unsatisfied

Partially

Unsatisfied

Neutral Satisfied partially

Satisfied

LG

Samsung

Whirlpool

Voltas

Videocon

Electrolux

Godrej

9. Any comments/suggestions

________________________________________________________________________

________________________________________________________________________

_______________________________________

(THANK YOU FOR PARTICIPATING IN OUR SURVEY)

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