23319735 consumer buying behaviour brand loyality in consumer durables seg colour t v

8/7/2019 23319735 Consumer Buying Behaviour BRand Loyality in Consumer Durables Seg Colour T V

1/103

Consumer Buying Behavior & Brand Loyalty

In consumer Durable products

(Segment Colour T.V. )

Submitted by

Thakur Mandar Dnyaneshwar

MMM SEM V Roll No. 96

Under the Guidance of

Prof. Shri. Shailesh Kale

In Partial Fulfillment of

MMM course

University Of Mumbai

(2007-2010)


2/103

Executive SummeryBefore the liberalization of the Indian economy, only a few

companies like Kelvinator, Godrej, Allwyn, 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 appeared. Today, few of

these players control the major share of the consumer durables market.

Consumer durables market 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 and increasing floating population. 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.


3/103

Strengths:

1. In term of purchasing power parity (ppp), India is the 4th largest

economy in the world and overtake Japan in the near future becomethe 3rd largest.

2. Indian consumer durable market is expected to reach $400 billion byon 2010

3. India has the youngest population amongst the major countries. Thereare lot of people in the different income categories nearly the twothird 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 inIndia.

5. The upper-middle and high-income household in urban areas areexpected to growing

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.


4/103

SCOPE OF THE PROJECT:

Taking in to consideration over all view of the situation, project

scoped down to understand the role of Consumer Buying Behaviorin

this transformation in Consumer Durable Products.

Factors affecting consumer decision making.

Understand the role of the Brand loyalty in Consumer Durables.

Study the position of leader in the segment.

Path Forward:

Study Secondary data for industry overview,

Collect primary data for more insight,

Derive conclusions based on the Primary and Secondary,

Address research findings based on theory of Consumer Buying

Behaviorand Brand loyalty.

Study the various marketing moves of the market leader for better

understanding of the


5/103

Research Method

Data type : Primary Data

Research Tool : Questionnaire,

Literature Survey,

Internet.

Business Magazines,

Peoples Interactions

Sample Units : Individual Consumers, Family members,

Sampling Method: Random Sampling,

Assumptions :

Samples collected are representative of the entire

population.

Modern consumer is conscious and awareness is high.

He/ She is more curious about the product, quality, price

and features offered.

Try to obtain maximum information before actual

decision making.

Being in the Indian context family plays a important role.

Research Objective:

In this study more focus was to understand the Consumer

Buying Behaviorwhile purchasing Colour Television.


6/103

In the changing market scenario, and post globalization

do Brand Loyalty really exist?

India has an increasingly affluent middle class population that, on the back of rapid economic growth, has made the countries consumer

electronics industry highly dynamic. The industry had been witnessing

significant growth in recent year due to several factors such as retails

boom, growing disposable income and availability of easy finance

scheme. But still the consumers electronics goods such as Colour T.V.

refrigerator, microwave, and washing machine have low penetration in

the country., representing vast room for growth . This is attracting many

foreign players in country.

Since the penetration of several products T.V. refrigerators are reaching

saturation in the urban areas the markets for this products are shifting to

the semi urban and rural area.

The Indian consumer durables industry has witnessed a considerable

change in the past couple of years. Changing lifestyle, coupled with

greater affordability and a surge in advertising has been instrumental in

bringing about a sea change in the consumer behavior pattern.

This industry consists of durable goods used for domestic purposes such

as televisions, washing machines, refrigerators, microwave ovens, mobile

phones etc. The growth in the consumer durables sector has been driven

primarily by factors such as the boom in the real estate & housingindustry, higher disposable income, emergence of the retail industry in a

big way coupled with rising affluence levels of a considerable section of

the population.


7/103

As per the survey conducted by the FICCI on Indian consumer durables

industry, a shift in the consumer preferences towards higher end,

technologically advance branded products has been quite discernable.

This shift can be explained by narrowing differentials between the prices

of branded and unbranded products added with the high quality of after

sales service provided by thebranded players. . The shift has also been

triggered by the availability of foreign branded products in India owing

to lower import duties coupled with other liberal measures as introduced

by the government.

The key growth drivers for Indian consumer durables industry are :

Rise in disposable income: The demand for consumer electronics hasbeen rising with the increase in disposable income coupled with moreand more consumers falling under the double income families. Thegrowing Indian middle class is an attraction for companies who areout there to woo them.

Availability of newer variants of a product: Consumers are spoiltfor choice when it comes to choosing products. Newer variants of a

product will help a company in getting the attention of consumerswho look for innovation in products.

Product pricing: The consumer durables industry is highly price

sensitive, making price the determining factor in increasing volumes,at least for lower range consumers. For middle and upper rangeconsumers, it is the brand name, technology and product features thatare important.


8/103

Availability of financing schemes: Availability of credit and thestructure of the loan determine the affordability of the product. Sale ofa particular product is determined by the cost of credit as much as theflexibility of the scheme.

Rise in the share of organised retail: Rise in organised retail will setthe growth pace of the Indian consumer durables industry. Accordingto a working paper released by the Indian Council for Research onInternational Economic Relations (ICRIER), organised retail whichconstituted a mere four percent of the retail sector in FY07 is likely togrow at 45-50% per annum and quadruple its share in the total retail

pie 16% by 2011-2012. The share will grow with bigger players

entering the market.

Innovative advertising and brand promotion: Sales promotionmeasures such as discounts, free gifts and exchange offers help acompany in distinguishing itself from others.

Festive season sales: Demand for colour TVs usually pick up duringthe festive seasons. As a result most companies come out with offersduring this period to cash in on the festive mood. This period willcontinue to be the growth driver for consumer durable companies.

Major hurdles and challenges plaguing the Indian consumer durables

sector:

Threat from new entrants, especially global companies: Thedomestic consumer durables sector faces threat from newercompanies, especially from global ones who have technologicallyadvanced products to offer.


9/103

Rivalry and competition: Presence of a large number of players inthe domestic consumer durables industry leads to competition andrivalry among companies. Threat from rivalry and competition poses athreat to domestic companies.

Potential markets remaining yet untapped: A large segment of thedomestic market, mostly the rural market is yet to be tapped. Tappingthis yet untapped and unorganised market is a major challenge for theIndian consumer durables sector.

Threat from substitute products/services: The domestic consumer

durables industry is plagued by threats from substitute products. Easyaccessibility to theatres/multiplexes, especially in urban areas hasturned off the viewership from TV to a large extent. With the adventof a horde of FM radio stations, radio sets have now substituted TVs.

Customer power with respect to availability of choice: Theavailability of a wide product line on account of most products beinghomogeneous, poses a threat for companies operating in the consumer

durables sector. Customers have the choice of both domesticallyproduced and imported goods, with similar features.


10/103

Importance of studying this topic :

This study will give an important insight of customer who

goes to buy consumer durables mainly Colour TV in

showrooms. What does he thinks while purchasing a Colour

TV. What factors influence his decisions of purchasing TV?

A seller in showroom does not know what all goes in mind of

consumer when he enters his shop to purchase TV. They

have to rely on trial and error basis this research will tell

what factor consumer wants so that he comes to your shop.

Thus he can convert maximum of potential customer into

buyers if he knows what exactly triggers the customer

decision.

A company gets to know from this research what factors

influence the purchase decision of customer. Accordingly

directs its marketing effort so that it can get maximumpotential customer to purchase companies TV. Seller or

company would get an insight to consumer behavior

regarding purchases like what does consumer thinks while


11/103

purchasing a Colour TV?, What factors influence his decisions

of purchasing TV?

Industry Classification

The consumer durable industry can be broadly classified as consumer

electronics and consumer appliance. The consumer appliances category

can be further segmented as white goods and brown goods.

Classification of Consumer goods under following three category

White Goods

Brown Goods / Kitchen

appliances

Consumer

Electronics

Refrigerators Mixers and grinders Mobile Phones

WashingMachines Microwave oven, cooking range Televisions

A/C Irons MP3 Players

AudioEquipments Electric fans DVD players

Etc Etc Etc

Industrial Growth

The industrial sector grew in moderation during FY08 at 8.5% on the

back of a comparatively higher growth of 11.5% during the previous

fiscal. The countrys real GDP grew by 9% during FY08; a tad lower

than 9.6% in the previous fiscal. The consumer durables segment


12/103

witnessed a fall in production particularly for items where consumer

preferences have shifted towards newer products. Shifting in the

consumption pattern coupled with rising input costs of steel, iron ore etc,

may further affect the production levels of these goods. On the supply

side newer variants of consumer durables on the back of technological

advancements have flooded the market, whereas on the demand side it is

the prospering middle class and consumerism which have led to changing

demand patterns.

Consumer durables: Industry size, growth and trends:During FY 07, volume share of consumer durables was as follows

Consu mer Durables Volume S

Air

Conditioner

13%

Washing

Machine , 5

Others, 34

Colour

Television, 30

Refrigerator

18%

Colour Televis ion Refrige ra tors Air Cond itioners

Washing Machine Others

The consumer durable market in India was estimated to be around US $

4.5 billion in 2006 07. More than 700 million units have been sold in

the year 06-07. Colour T.V. forming the bulk of the sales with 30% share


13/103

of volume. CTV, refrigerator and Air conditioner together constitute

more than 60 % of the sales in terms of the number of units sold.

The CTV production was 15.10 million units in 06-07 and is expected to

grow by at least 25 % . At the disaggregated level conventional CTV

volumes have been falling while flat TVs have grown strongly. The flat

segment of the CTV now accounts for more than 60% of the total

domestic TV production.

High end products such as Liquid crystal display ( LCD), and plasma

display TV grew by 400 % and 150 % respectively in 06-07 with sharp

decline in the price of these products.

Now lets see who all are the market players in this colour T.V. segment.


14/103

TV company and relative market share table and pie chart


15/103

MARKET SHARE SHARE

LG

36%

SAMSUNG

28%

ONIDA

18%

VEDIOCON

16%

OTHERS

2%

From the market share analysis it is clear that LG India is market leader

in the Colour TV segment.

Indian Colour T.V. industry comprises of 30 % of total market share inconsumer durable industry. For any company getting the chunk of this

market will always be delightful. But in todays competitive market

which is dominated by consumers, understanding the consumer buying

Behaviorwill always be important. To get the insight of the consumer

buying Behaviorin a better way, it was decided to conduct market survey

and interpret the results. Based on the findings the various consumer

behavioral aspects will be explained and studied.

To interact with the consumer on-line survey as well as interviews were

conducted.


16/103

Questioner was prepared and mailed across various recipients.

Various consumers from different strata were selected.

Live interviews were taken for better understanding of the consumer

psychic.


17/103

DATA ANALYSIS

AND

INTERPRETATION

Q.1 What is your age group?

Age Group

Option % of Respondent


18/103

20 yrs - 25 yrs 27.50%

25 yrs - 30 yrs 47.50%

30 yrs - 35 yrs 12.50%

40 yrs - 45 yrs 8%

45 yrs and above 4.50%

0.00%

5.00%

10.00%

15.00%20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

20yrs

-25

y

25yrs

-30

y

30yrs

-35

y

40yrs

-45

y

45yrs

and

abo

Age Group

Age Group V/S % of Respondent

Interpretation :

From the above findings it is clear that maximum no of respondent

(47.5%) who responds to the survey are between age group 25 30 yrs. We

can interpret based on this that maximum consumer for this category is

young in age. So, product should be attractive towards young generation.

Targeting and positioning should be done by keeping in mind this age group.

Q2. Gender

GenderOption % Respondent

Male 85

Female 15


19/103

0

10

20

30

40

50

60

70

80

90

Male Female

Gender

Gender V/S % Respondent

Interpretation :

During survey and interviews it was observed that most of the respondent

(85%) are male. Even after globalization and many changes which had

occurred in the countrys social structure, male dominance can not be

ignored. Or other way it can be interpreted that male counter parts are given

liberty to take such high involvement decision.

So, Electronic industry is male dominated decision making industry.


20/103

Q3. Monthly Income :

Monthly Income

Option % respondent

Rs 10K - Rs. 20K 15.00%

Rs 20K - Rs. 30K 27.50%

Rs 30K - Rs. 40K 22.50%

Rs 40K - Rs. 50K 20.00%

Rs. 50K and above 15.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Rs10K

-Rs.

20

Rs20K

-Rs.

30

Rs30K

-Rs.

40

Rs40K

-Rs.

50

Rs.50K

and

abov

Monthly Income V/S % respondent

Interpretation :

From the collected data, monthly income of almost 50% respondent lies

between Rs. 20K Rs.40 K. Companies should take this in to account while

fixing price for the Colour T.V.


21/103

Q 4. Which brand of electronics are you currently using?

.

Brand of Electronics

Option % respondent

BPL 3.61%

LG 15.66%

Sony 18.07%

Panasonic 1.81%

Vedeocon 8.43%

Samsung 12.05%

Whirlpool 6.63%Godrej 9.64%

Philips 10.24%

Sharp 1.81%

Onida 4.82%

Others 7.23%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

BPL LG

Sony

Panasonic

Vedeocon

Samsung

Whirlp

ool

Godrej

Philip

sSharp

Onida

Othe

rs

Brand of Electronics % respondent


22/103


Brand Of Colour T.V.

Option % Respondent

BPL 8%

LG 28%

Sony 23%

Panasonic 4%

Vedeocon 16%

Samsung 10%Sharp 2%

Onida 4%

Others 5%

0%

5%

10%

15%

20%

25%

30%

BPL LG

Sony

Panasonic

Vedeocon

Samsung

Sharp

Onida

Othe

rs

Brand Of Colour T.V. % Respondent


23/103


This question was used to check the various brands which have entered in

the consumers home through various appliances. Also, this gives the fair

idea about which brand of colour T.V. consumer is currently using

Interpretation :

As the data suggest, electronic brands which have strong foot hold in the

consumers house hold are LG, SONY, SAMSUNG, PHILIPS, Which are

comprising of 56.02% . Indian consumer market is dominated by these

International players. Where as Domestic big shot players like GODREJ,

VEDEOCON, ONIDA, BPL, hardly comprises of 26.5%

But , when we see colour T.V. industry, LG is dominating market by 28%

followed by SONY 23%. Vedeocon is on IIIrd position with 16% market

share.

This clearly indicate that Indian consumers, post globalization are more

attracted toward the International Brands, instead of Domestic Brands.

They are ready to experiment by leaving age old Brands if proper quality

and value for money is offered.


24/103

Q5. When you think of colour T.V. which brand name strikes to your

mind ?

Brand Of Colour T.V.

Option % Respondent

BPL 2%

LG 16%

Sony 16%

Panasonic 6%

Vedeocon 12%

Samsung 16%

Sharp 3%

Onida 11%Philips 4%

Sharp 3%

Others 11%


25/103

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

BPL LG

Sony

Panasonic

Vedeocon

Samsung

Sharp

Onida

Philip

sSharp

Othe

rs

Brand Of Colour T.V. recall

Interpretation:

Recall value in the consumers mind plays a very important role in purchase

decision. Various factors such as brand image, Advertising impact, plays a

major role in creating a recall.

More the recall, more are the chances that the prospective customer will get

converted in to a active buyer. Data interpretation shows that international

brands like LG, Sony, Samsung are having more recall value. Where as in

domestic segment Vedeocan is followed by Onida.

LG should think of this, as even though being a market leader in the industry

the recall value for the SONY is high compare to LG. Samsung is almost on

the same ground as that of LG. LG. is having a immediate threat from

SONY and SAMSUNG in near future.


26/103

Q 6. Which type of colour TV are you having?

Type of colour TV

Option % Respondent

Conventional TV 35%

Flat TV 48%

LCD TV 10%

Plasma TV 8%

Ultra slim TV 0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Conventional

TV

Flat TV LCD TV Plasma TV Ultra slim TV

Type of colour TV

Interpretation:

Even though the companies are more concentrating on flat screen TV, LCD

TV, there are still considerable consumers (35%) who are still using


27/103

conventional TV. This means, these consumers can be aspiring consumers

for the Flat screen or LCD TV. But market is not that much responding to

the Plasma or Ultra slim TV. Reason could be high price line or target

consumers (Top of the pyramid).

Q7. Do you own multiple TV units? (for bedroom, living room etc)

No of T.V. Sets

Option % Respondent

YES 12.82

NO 87.18

0

10

20

30

40

50

60

70

80

90

YES NO

No of T.V. Sets % Respondent

Interpretation :

Only 12.82 % respondent says that they are having multiple TV units in the

house hold. This means still Indian consumer perceive the Colour TV to be a


28/103

family using item and not for individual usage. So, while customizing the

product company should keep in mind this family factor value in mind,

There is still scope for improvement for companies to introduce some

variant which will fulfill the room specific requirement at affordable price.

Q8. How old is your current TV set?

No of years

Option % Respondent

0 - 03 Yrs 29.27

04 Yrs - 06 Yrs. 26.8307 Yrs - 09 Yrs 14.63

10 Yrs - 12 Yrs 12.20

13 Yrs - above 17.07

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0-03

Yrs

Yrs-

06Yrs.

7Yrs

-09Y

rs

0Yrs

-12Y

rs

13Yrs-

above

No of years % Respondent

Interpretation :


29/103

Purchasing cycle of the product is very important. Respondent where

subjected to this question to know the purchase cycle of the Colour TV. If

we see the data, almost 56.10 % consumers had changed there colour TV in

last 6 years. Hence, 5 years purchase cycle can be considered by companies

for future strategies.

Q9. Do you intent to buy colour TV in near future? And within how

much time frame?

Intent to buyOption % Respondent

YES 60

NO 40

Time period

Option % Respondent

with in three months 5.00

Next six months 2.50

Within a year 25.00

with in next Three yrs 15.00

with in next Six yrs 52.50


30/103

0.00

10.00

20.00

30.00

40.00

50.00

60.00

with in three

months

Next six

months

Within a year with in next

Three yrs

with in next

Six yrs

Time period %Respondent

Interpretation:

This findings also support to the earlier suggestion. Almost 52.5%

consumers intent to buy CTV in next 6 years.

Q10. What features would you like to have in your TV?

This was a descriptive question asked to respondent. Idea behind this

question was to know about the consumers perception about the GOOD

FEATURES in the colour TV.

All the expectations of the consumers were jotted down and to bring the

uniformality among the suggestions, they were grouped based on the

characteristics. Following are the expectations of the consumer from a good

colour TV.

Affordable price

Good clarity

Good sound quality


31/103

Long term durability

Good Performance

Over all features

After sales service,

As a part of consumer behaviour, every Brand has some USPs to which the

consumers always associate the brand with. Respondent were asked to name

brand against the feature mentioned. The results for the same are as follows.

Q10 A) Which Brand of colour TV is best in terms of PRICE?

PriceOption % Respondent

Samsung 24

LG 20

Onida 20

Vediocon 25

Sony 11


32/103

0

5

10

15

20

25

Samsung LG Onida Vediocon Sony

Price % Respondent

Interpretation:

Consumers are having a perception of Vediocon and SAmsung among the

top brand based on the pricing.

Q 10 B) Which brand of colour TV is best in terms of clarity?

Clarity

Option % Respondent

Samsung 19

LG 27Onida 16

Vediocon 10

Sony 28


33/103

0

5

10

15

20

25

30


Clarity % Respondent

Interpritation

As per the consumer perception Clarity of Sony Colour TV is good,

followed by LG and Samsung

Q 10 C) Which Brand of colour TV is good in terms of sound quality?

Sound Quality

Option % RespondentSamsung 22

LG 28

Onida 10

Vediocon 12

Sony 28


34/103

0

5

10

15

20

25

30


Sound Quality % Respondent

Interpretation:

Again the survey findings are in favor of the LG and Sony for sound clarity.

Q 10 D ) Which brand is best in terms of Durability?

Durability

Option % Respondent

Samsung 28

LG 34

Vediocon 14

Sony 24


35/103

0

5

10

15

20

25

30

35

Samsung LG Vediocon Sony

Durability % Respondent

Interpretation :

Taking in to consideration the consumer perception, LG again lead the

competition.

Consumers perceive LG products more durable compare to competition.

Q10 E) Which brand of colour TV is best in terms of performance?

Performance

Option % Respondent

Samsung 24

LG 30

Vediocon 18


36/103

Sony 28

0

5

10

15

20

25

30


Performance % Respondent

Interpretation:

Consumers rate LG ahead of all the brands in case of performance.

Q 10 F) Which brand of the colour TV is best in terms of the after sales

service?

Performance

Option % Respondent

Samsung 22

LG 29

Vediocon 16


37/103

Sony 33

0

5

10

15

20

25

30

35


After Sales Service % Respondent

Interpretation:

Sony provides best after sales service through the CRM of the company.

Q 11. Will you buy the same company which you are currently owning?

Same company

Option % Respondent

YES 42.5

NO 57.5


38/103

0

10

20

30

40

50

60

YES NO

Same company % Respondent

Interpretation:

There is not much difference in the consumers response. Reason for this

could be consumers are unsatisfied with current brand, or they are eager to

try out some new product from different brand.

Q12. From where would you collect data / information about new colour

TV set?Information Processing

Option % Respondent

Friends 22.05%

Showroom Survey 22.83%

News paper/ magazine 18.11%


39/103

Internet 17.32%

T,V, Commercials 15.75%

Others 3.96%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Friends

Showroo

mSurve

y

News

paper/m

agazine

Intern

et

T,V,Com

mercials

Othe

rs

Information Processing % Respondent

Interpretation:

Consumers like to acquire required information from traditional methods of

information processing and that is friends, magazines. Due to retail growth

in India the showroom survey is more comfortable for consumers. Internet

information gathering is also on the raising side.

Q 13)What would you take in to consideration while making buying

decision?

Factors

Options % ResponsePrice 14.9

Quality 18.27

Features Offered 15.87

Style 6.25

Latest Technology 13.46

Aftersale service 13.46

Gifts Offered 3.85


40/103

Brand 13.94

0

2

4

6

8

10

12

14

16

18

20

Price

Qua

lity

Featur

esOffe

re

Style

Latest

Techn

olog

Aftersaleservic

GiftsOffere

Brand

Factors % Response

In previous few questions we have seen that how consumer perceive various

Brands with various features. Now to understand the consumer decision

making process in a better way, it is important to know what are the factors

which consumer take in to account while making decision making. As listed

above various factors are taken in to account by the consumers. Quality,features and price are on the top of the mind while making buying decision.

Q14. Would you take in to consideration your family members opinion?

Family members Opinion

Option ResponseYes 85

No 15


41/103

0

10

20

30

40

50

60

70

80

90

Yes No

Family members Opinion Response

Interpretation:

Consumer electronics market is considered to be a complex decision making

market. In such a complex market consumer do lot of information

processing . Various external factors influences consumers decision making

process. One of the influencing factor in this process is FAMILY

MEMBERS. In Indian context , Consumers family plays a very important

role. To check the influence of the family members above question was

asked to respondent. As expected 85% of the respondent replied that they

will take in to consideration the family members opinion.

Q15. Whose opinion will matter you most ?

OpinionOption Response

Friends 23.68

Parents 25

Spouse 25

Children 13.16

Salesman 4


42/103

Others 9.16

0

5

10

15

20

25

Friends Parents Spouse Children Salesman Others

Opinion Response

Interpretation :

As discussed earlier, consumers family plays a very important role in

decision making. But apart from family members what all are the factors

which influence the consumers in buying decision? Friends, parent,

spouse , children, salesman, others (office colleague , word of mouth,

brand ambassadors) are influencers. There opinion is count by the

purchaser before making buying decision.

Q16. From where would you prefer to buy your colour TV set. ?

Purchase PointOption ResponseCompany Showroom 42.5

Electrical mall 26.5

Local Vendor 12.5

Exhibitions 0

Multi Branded Showroom 18.5


43/103

0

5

10

15

20

25

30

35

40

45

Company

Showroom

Electrical mall Local Vendor Exhibitions Multi Branded

Showroom

Purchase Point Response

Interpretation:

Point of purchase is another important factor which always come to

buyers mind. Being a high involvement product, consumers want to buy

the product from the reputed and trustworthy purchase point. When

response from the respondent was analyzed it can be seen that almost

42.5% respondent want to buy product from the companies showroom.

Electronic mall, and multi branded showroom comprise of 44.5% share.

Various exhibitions which company get in to do not form part of the

favorite consumer purchase ponit.

Q17. As a future product what features would you like to add in to colour

T.V.?

Interpretation:

Understanding the consumers need, adding a desire in that need,

converting the same in to want and providing the product to fulfill the


44/103

want is the main key for any marketer. For this purpose , by this survey I

tried get insight of what consumer is expecting form the product in near

future? What are the needs of the consumers? What future development

do the consumer want in the product?

If we study and try to understand what need the colour TV basically

address then the question would be need for entertainment, need for

pleasure, need to experience the LIFE by visual and hearing senses.

But is this all that a consumer want from the colour TV?

Survey findings gave a total new insights about the consumers changing

lifestyle patterns, new expectation, creative demands and lot more

possibility to bring the totally innovative products.

Following are the few key expectations of the consumers from the

product :

1. Quality Picture,

Good Resolution,

3D Picture,

Big Screen,

Can be converted in to proxima when needed for theatre

like experience (actual Home Theatre).

Screen at both the side !!!

2. Quality Sound,

Surround Sound

No of speakers, for better sound quality,

Natural sound reproduction.

3. Additional features:

Ergonomic view.


45/103

Ready Set Top Box inside the TV,

Wire less connectivity,

Less power consumption when in use,

Additional features like inbuilt games, music system.

Artificial intelligence.

4. Techno savvy features:

Blue tooth connectivity with other devices such as

mobile, computer, camera, camcorder, music system.

Touch screen menu and remote control,

USB connect,

Wireless communication,

WI FI enabled device,

User friendly interaction,

Artificial intelligence (to change the program as per the

mood of user).

In a glance at the features expected by the consumers, we will come to know

that the preferences of the consumer had changed. Now days consumers not

only want entertainment but far more than that. During interaction with

consumers it was observed that Quality Picture, Quality Sound are

considered as the in built features in the product. Those are no more product

differentiation factors. Today consumer had become more demanding in

terms of creative factors. Techno savvy had become need for time.

Expectations from future product are more on this features. Connectivity,

compatible inter phase between various instrument. If we study the features

required by the consumers then it is very much clear that they are more of


46/103

technology oriented. Connectivity, USB connection, blue tooth, wire less

connectivity are all in more hype.

So, while developing the future products any organization should keep this

thing in mind.

TOTAL PRODUCT CONCEPT

Following is the diagram of total product concept. Total product

concept talks about the basic, core product. Followed by formal

product, in this, concept talks about what primary need those are

fulfilled by the core product. Then comes the augmented product,


47/103

which tells what all are the other benefits the product is offering

which will attract consumer to buy the product. Then followed by

the future product, consumers idea or the expectations from the

future product.

CONSUMER BEHAVIOR

The aim of marketing is to meet and satisfy target customers needs and

wants. The field of consumer Behaviorstudies how individuals, groups, and

organizations select, buy, use, and dispose of goods, services, ideas, or

experiences to satisfy their needs and desires. The consumer buyer

ColourTV

Picture clarity

Sound clarity

Features offered

No of channels

Videoout put

Audio out put

Tube, screentype

Variousbrands

After sales service

Dealer reputation

Exchange offer

O % finance

Gift vouchers

Guarantee

Warranty

Free installment

Any time helpCall centre

Customer relationshipmanagement

Great resolution

Big Screen

Big Screen

Inbuilt proxima

Screen at bothThe side

Surroundsound

Natural soundReproduction

3 D view

Ergonomic view

Wirelessconnectivity

Ready set topbox

Less powerconsumption

Inbuilt games

Artificial intelligence

Blue toothconnectivity

Touch screen menuand remotecontrol

WI FI User friendlyinteractions

COREProduct

FormalProduct

AugmentedProduct

FutureProduct


48/103

Behavioris the buying Behaviorof final consumerindividuals and

households who buys goods and services for personal consumption.

Understanding consumer Behaviorand knowing customers are

never simple. Customers may state their needs and wants but act otherwise.

They may not be in touch with their deeper motivations. They may respond

to influences that change their mind at the last minute. Nevertheless,

marketers must study their target customers wants, perceptions, preferences,

and shopping and buying behavior:

Studying consumers provides clues for developing new products, product

features, prices, channels, messages, and other marketing-mix elements.

A Model of Consumer Behavior

At one time, marketers could understand consumers through the daily

experience of selling to them. But the growth of companies and markets has

removed many marketing managers from direct contact with customers.

Increasingly, managers have had to rely on the 7 Os framework for

consumer research to answer the following key questions about any market:

Who constitutes the market? Occupants

What does the market buy? Objects

Why does the market buy? Objectives

Who participates in the buying? Organizations

How does the market buy? Operations

When does the market buy? Occasions

Where does the market buy? Outlets

The starting point for understanding buyer behavior is stimulus-response

model shown below. Marketing and environmental stimuli enter the buyers

consciousness. The buyers characteristics and decision process lead to


49/103

certain purchase decisions. The Marketers task is to understand what

happens in the buyers consciousness between the arrival of outside stimuli

and the buyers purchase decisions. They must answer two questions:

How do the buyers characteristics-cultural, social, personal, and

psychological-influence buying behavior?

How does the buyer make purchasing decisions?

Marketingstimuli

Other stimuli Buyerscharacteristics

Buyers decisionprocess

Buyersdecision

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Cultural

Social

Personal

Psychological

Problem

Recognition

Information search

Evaluation

Decision

Post PurchaseBehavior

Product choice

Brand choice

Dealer choice

Purchase Timing

Purchase amount

TYPES OF CONSUMER PURCHASING DECISION :

The process by which the consumers make purchasing decision must be

understood in order to develop a strategic application. Consumer decision

making is not a simple process. Deciding to buy a car is different than the

deciding to buy a tooth paste. Following figure presents a typology of

consumer purchasing decisions based on two dimensions:

Extent of decision making


50/103

The degree of involvement in purchase.

Complex DecisionMaking

(Autos, Electronics Appliances)

Variety seeking(Cereals)

Inertia(canned Vegetables,

Paper Towels)

Brand Loyalty(Cigarettes, Perfumes)

High InvolvementPurchase Decision

Habit(Little or no InformationSearch, consideration of

only one brand)

Low InvolvementPurchase Decision

Decision Making(Information Search,

consideration ofbrand alternatives)


51/103

The first dimension represent a continuum from decision making to habit.

Consumers can base their decision on a cognitive process of information

search and evaluation of brand alternatives. On the other hand, little or

no decision making may take place when consumer is satisfied with a

particular brand and purchase it consistently.

The second dimension depicts a continuum from high to low

involvement product. High involvement purchase are those that are

important to the consumers. Such a purchases are closely tied to the

consumers ego and self image and involve some financial, social,

personal risk. In such cases it worth consumers time and energy for

information search. Low involvement purchase are not important to

consumer and risk involve is less.

Decision making versus habit and low versus high involvement produces

four types of consumer purchase processes. The first process is called as

Complex decision making, it takes place when involvement is high and

decision making occurs. In such a types of cases consumers have the time

for active information search and process it in more details. They use this

information to evaluate and consider the alternate brand by applying specific

criteria such as economy, durability, and service.

Complex decision making will not occur every time the consumer purchase

a brand. When choice is repetitive the consumers learns from the past

experience and with little or no decision making buys the brand that is most

satisfactory. Such a Brand loyalty is the result of repeated satisfaction and

strong commitment to a particular brand. In such cases purchase is important

for the consumers. Also it should be noted that decision process are

consumer specific rather than product specific. That is the degree of

involvement and decision making depend more on the consumers attitude


52/103

toward the product than on the products characteristics. One consumer

might be involved with the product because of some specific characteristics.

Another might not give importance to these characteristics and switch brand

in search of variety.

CONSUMER INVOLVEMENT AND COMPLEX DECISION

MAKING:

As seen earlier two conditions for complex decision making are

Decision process require extensive information

processing,

High degree of consumer involvement with the product.Therefore to understand the complex decision making, we will first consider

the nature of the consumer involvement and then describe the nature of the

consumer decision process.

INVOLVEMENT AND INFORMATION PROCESSING :

The reason that involvement is link to complex decision making is,

generally, higher level of involvement the greater the search for the

information (refer fig ). Such a information processing defines complex

decision making.

Also, a high level of involvement does not always lead to complex decision

making. In some cases consumer may be involved with product and consider

only one brand (refer fig). Such a brand loyal consumers are satisfied with a

brand based on repeat purchase and do not feel the need to engage in

extensive information processing.

Even when decision making does take place, involve consumers are likely to

vary greatly in the extent of information processing. And consider


53/103

alternative brand in the next purchase. The only choice may be model and

option. Even when decision making takes place, involve consumers are

likely to vary greatly in the extent of information processing. Some may

evaluate just few brands on one or more attribute. Others may evaluate a

larger no of brands on many attributes. This means that extent of information

processing should be regarded as continuum from high to low and the degree

of decision making should be regarded on a continuum from low to

complex.

There are two types of involvement with the products, namely Situational

involvement occurs only in specific situation and is temporary. Where as

enduring involvement is continues and is more permanent. Both these are

likely to result in the complex decision making.

High level ofinvolvement

ExtensiveInformationprocessing

ComplexDecisionMaking

Little or noInformationprocessing

BrandLoyalty


54/103

A different approach is needed in targeting those with enduring versus

situational involvement. The deep seated nature of enduring involvement

means that symbol and images are likely to used to connect the consumer

with the product. In targeting the situational involvement more specific

appeals to particular context of purchase will be made.

COMPLEX DECISION MAKING :

In complex decision making consumers evaluate brands in details and

comprehensive manner. More information is sought and more brands are

evaluated than in the other types of decision making situations.

Conditions for complex decision making are as follows,

High priced product,

Products associated with the performance risk,

(medical products, automobiles)

Complex products ( Electronic gadgets, personal

computers)

Products associated with ones ego.

The nature of the product is not the only conditions for complex decision

making. Certain facilitating conditions need to exist. The most important is

adequate time for extensive information search and processing.

Complex decision making will not occur if a decision must be made quickly.

Also consumers may not have time to devote to extensive information

processing because of business and social obligations may have higher

priority.

Second condition for complex decision making is the availability of

adequate information to evaluate alternative brands. Consumers some times


55/103

delay in decision making because of insufficient and inaccurate information.

Decision making is delayed when there are too many products

characteristics and features to consider.

THE BUYER DECISION PROCESS

The buyer decision process consist of Five Stages-:

Need recognition,

Information search,

Evaluation of alternatives,

Purchase decision, and

Post purchase behaviour.

Clearly the buying process starts long before actual purchase and continues

long after. Marketer need to focus on the entire buying process rather than

on just the purchase decision.

1. NEED RECOGNITION- The first stage of the buyer decision

process in which the consumer recognizes a problem or need.

2. INFORMATION SEARCH- The stage of the buyer decision

process in which the consumer is aroused to search for more

information; the consumer may simply have heightened attention or

may go into active information search.

3. EVALUATION OF ALTERNATIVES - The stage of the buyer

decision process in which the consumer uses information to evaluate

alternative brands in the choice set.


56/103

4. PURCHASE DECISION- The stage of the buyer decision process in

which the consumer actually buys the product.

5. POST PURCHASE BEHAVIOUR-The stage of the buyer decision

process in which the consumer take further action after purchase

based their satisfaction or dissatisfaction.

As seen in the above figure and as explained in the above points consumer

buying Behavior is a five step process. This process starts with need

recognition and completes its loop with post purchase evaluation feedback

to the consumer. It is an on going process. It never stops even after the

purchase is happened. Consumers feedback may initiate the purchase

decision of the other buyer. Hence it becomes very important for the

company to make the entire experience of the buying a memorable one for

Need

Arousal

PurchasePost

purchase

Evaluation

ConsumerInformation

Processing

BrandEvaluation

Feedback


57/103

the consumer. So, that he/she become self impose Brand ambassador for the

product and endorse the product in the market.

But is it so easy for any consumer to buy the product? How does the

decision making happens in various products? Is it same complexities in all

products?

For colour TV as a product, it is a COMPLEX DECISION MAKING

process. Because in the buying process of the color TV purchasing,

consumers involvement is very high. In Indian context still the buying of

colour T.V. is considered as the high risk and high emotional and

economical involvement procedure. Still for majority of the house hold

buying a colour TV is a buying luxuries thing. Consumer him self , family

members all get involved in the entire process. As the survey finding

suggest, many consumers would like to do lot of information processing

from various information sources. Consumers dont mind doing a show

room surveys, going through various news papers, magazines, active search

for information is also involved from Internet.

Survey findings also suggest that 86.05% consumers will take in to

consideration the family members opinion. This clearly indicates that the

there is high involvement of the family members. Now, about the

information processing, if we see the survey findings then it can be seen that

consumer take in to account various factors such as ,


58/103

Quality

Features offered,

Style

Latest technology,

After sales service,

Gifts offered,

Brand

8. PriceConsumer takes in to account so many factors while evaluating the

Product !!!

It clearly shows how complex the decision making process is.

If we see the survey findings for buying the same product or from same

company to that matter. Consumers are not very much sure about the

decision. Only 44.19 % consumers responded positively where as

remaining things otherwise. Now what does this means? Consumers are

not very sure about their association with a particular Brand. Probably

Consumers want to try different Brand next time. So, slowly, slowly

Brand loyalty is getting diluted from this segment of the market. Which

was not the case earlier. Consumers used to be very much Brand loyal

with the particular brand for years. But changing globalization and

market environment is shifting the Consumers focus from being Brand

Loyal.

MARKETING MIX


59/103

Marketing mix can be defined as the set of controllable tactical marketing

tools product, price, place, promotion-that the firm may blend to produce

the response it wants in the target market.

PRODUCT-Product means the goods and services combination the

company offers to the target market. In case of color television it includes

variety, quality, design feature, brand name, packaging, services that are

offered along with the television.

PRICE- It is the amount of money the customer have to pay to obtain the

product (CTV). It includes list price, discount, allowances, payment period,

credit terms.

PLACE- It includes company activities that make the product available to

target consumers. Channels, coverage, assortments, locations, inventory,

transportation, logistics becomes the part of place

PROMOTION- Promotion means activities that communicate the merits of

the product and persuade target consumer to buy it. various promotional

activities are advertising, personal selling, sales promotion, public relations.

FACTORS AFFECTING CONSUMER BEHAVIOR

Consumer purchases are influenced strongly by cultural, social, personal, and

psychological characteristics. For most marketer cannot control such factors, but

they must take them into account.


60/103

(a) CULTURAL FACTORS

Cultural factors exert the broadest and deepest influence on the

consumer behavior the marketer needs to understand the role played by

the buyers culture, subculture, and social class.

Culture- the set of basic values, perception, wants and behavior learned by

the member of the society from family and other important institutions.

Subculture- a group of people with shared values system based on common

life experiences and situations.

Social class- relatively permanent and division in a society house members

share a similar values, interests, and behavior.

(b) SOCIAL FACTORS

A consumers behavior is influenced by social factors, such as the

consumers small group, family and social roles and status

o Group- Two or more people who interact to accomplish individual

or mutual goals.

o Family- The family members (husband, wife, children) can

strongly influence buyer behavior

o Role and Status- Role consist of the activities people are expected

to perform according to the persons around them.

Status reflect the general esteem given to it by the society.

people often choose the products that show their status in the

society.

(c) PERSONAL FACTOR


61/103

A buyer decision also are influenced by personal characteristics

such as the buyers age life style, and life cycle stage, occupation ,economic

situation , lifestyle , and personality and self concept.

o Age and Life cycle stage- People change the goods and

services they buy over their lifetime. Tastes of the people

undergo change with their age.

o Family life cycle- the stages through which families might pass

as they mature over time.

Occupation A persons occupation also affect the

goods and services they bought Life Style- A persons pattern of living as expressed in

his/her activities, interest, and opinion.

Personality-A persons distinguishing psychological

characterstics that lead to relatively consistent and lasting

responses to his or her own environment.

(d) PSYCHOLOGICAL FACTORS

A persons buying choices are influenced by four major

psychological factors: motivation, perception, learning, and beliefs and

attitudes.

(i) Motivation- A need that is sufficiently pressing to direct the person to

seek satisfaction of the need.(ii) Perception- The process by which people select, organize, and

interpret information to form a meaningful picture of the world.

(iii) Learning- Changes in the individuals behavior arising from

experience.


62/103

(iv) Beliefs and Attitude- Belief is a descriptive thought a person hold

about something.

Attitude is a persons consistently favorable or unfavorable

evaluation, feelings, and tendencies towards an object or idea.

FOLLOWING THE MARKET LEADER

During the entire Survey and study one thing was observed that even after

being the late entry in the market and being a MNC, LG India had out

performed in all segment of consumer durable and consumer electronic market.

For most of the consumers LG is having maximum recall value. Hence in the

ending up sessions of the project, L India was studied for the understanding of

the success of the leader.


63/103

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

consumers. LG, SAMSUNG the two Korean companies has been


64/103

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, have

divided the introduction part into three main sub parts.

1. LG Global2. LG India3. LG

History of company:

The company was originally established in 1958 as Gold Star, producing

radios, TVs, refrigerators, washing machines, and air conditioners.


65/103

1958-1969-GoldStar The Electronics Industry Dream


66/103

1970-79 GoldStar symbol of The Technolgoy

1980-88 :- INTERNATIONALIZATION

1989-94 INOVATION


67/103

1995-98 GLOBAL LEADERS LG ELECTRONICS

1999-2003-DIGITAL MANAGEMENT


68/103

2004-2006 GREAT PEOPLE GREAT DESIGN

2007-THE PEOPLE COMPANY


69/103

The LG Group was a merger of two Korean companies, Lucky and Gold

Star, from which the abbreviation ofLG 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 ofLucky, while

electronic products were sold under the brand name ofGold 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.

Global Operation:

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


70/103

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,


71/103

c) Super Multi DVD Rewriters,

d) CDRW,

e) Notebook PCs,

f) Desktop PCs,

g) PDAs,

h) PDA Phones,

i) MP3 Players,

j) New Karaoke Systems,

k) Car Infotainment

VISION

Global Top 3 by 2010

Global Top 3 Electronic/Telecommunication company

GROWTH STRATEGY

Fast innovation, Fast growth

CORE COMPETENCY

Product leadership, Market leadership, People leadership


72/103

CORPORATE CULTURE

No excuse, we not I, Fun workplace

SLOGAN

"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.


73/103

THE SYMBOL

The symbol of LG is the face of future. The letter L and G in acircle symbolizes world, future, youth, humanity & technology.LG philosophy is based on humanity. It also represents LGsefforts to keep close relationship with our customers around theworld.

The symbol consists of two elements.

1. The logo in LG gray2. The stylized image of human face in the unique LG red color.

Red color represents friendliness and gives a strong impression ofLGs commitment to deliver the best.

The circle symbolizes The Globe. The stylized image of a smilingface in the symbol conveys Friendliness and Approachability.

The one eye on the symbol represents Goal-oriented, Focused &Confident.

The slogan of LG is Lifes Good. It expresses Brands Value ,Promises, Benefits , Personality .


74/103

THE PARTNERSHIP

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.

STRATEGIC ALLIANCE

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 betweencorporations," 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.


75/103

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


76/103

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 customers

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


77/103

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 thecustomer through

Trustworthy, Considerate

Practical, Friendly


78/103

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


79/103

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.

Mission

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.

Product LeadershipWe 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


80/103

Quality Innovation

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 asLG WAY.

From top to bottom:

No.1 LG is the VISION

Jeong-DO Management is LGs unique application to ethics. LG will

succeed through fair management practices and constantly developing our

business skill.


81/103

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


82/103

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


83/103

6. Responsibilities to society and country

Rational Business Development

Protection of stock holder interest

Contribution to social development

Environmental Conservation

LG INDIALG 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


84/103

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.

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 ofthe top threebrands 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


85/103

Bum Shin, managing director of LG Electronics India has said that the

company has earmarked 4.8 billion rupees for investment purpose in India.

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.

India challenges

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


86/103

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 airsystem and microwave ovens

have the Health wave system.


87/103

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 Pune. 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.


88/103

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 andrefrigerators 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 languagemenus 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.


89/103

6. Leveraging Indias 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.


90/103

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 washing machine in various states in INDIA


91/103

LG position of AC in various states in INDIA

LG position of Audio & Home Theatre in various states INDIA


92/103

LG position of DVD 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. Weselected 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 i

23319735 consumer buying behaviour brand loyality in consumer durables seg colour t v

Documents