“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)

Executive Summery Before 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.

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 become the 3rd largest.

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

3. India has the youngest population amongst the major countries. There are lot of people in the different income categories nearly the two third population is below the age of 35 and nearly 50% is below 25.

4. There are 56 million people in middle class, who are earning us$4,400-US$21,800 a year. And there are 6 million rich household in India.

5. The upper-middle and high-income household in urban areas are expected to 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.

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

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.

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 & housing

industry, higher disposable income, emergence of the retail industry in a

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

the population.

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 the branded 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 has been rising with the increase in disposable income coupled with more and more consumers falling under the double income families. The growing Indian middle class is an attraction for companies who are out there to woo them. 

Availability of newer variants of a product: Consumers are spoilt for choice when it comes to choosing products. Newer variants of a product will help a company in getting the attention of consumers who 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 range consumers, it is the brand name, technology and product features that are important.

Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of the product. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme.

Rise in the share of organised retail: Rise in organised retail will set the growth pace of the Indian consumer durables industry. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER), organised retail which constituted a mere four percent of the retail sector in FY07 is likely to grow 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 promotion measures such as discounts, free gifts and exchange offers help a company in distinguishing itself from others.

Festive season sales: Demand for colour TVs usually pick up during the festive seasons. As a result most companies come out with offers during this period to cash in on the festive mood. This period will continue 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: The domestic consumer durables sector faces threat from newer companies, especially from global ones who have technologically advanced products to offer.

Rivalry and competition: Presence of a large number of players in the domestic consumer durables industry leads to competition and rivalry among companies. Threat from rivalry and competition poses a threat to domestic companies.

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

Threat from substitute products/services: The domestic consumer durables industry is plagued by threats from substitute products. Easy accessibility to theatres/multiplexes, especially in urban areas has turned off the viewership from TV to a large extent. With the advent of a horde of FM radio stations, radio sets have now substituted TVs.

Customer power with respect to availability of choice: The availability of a wide product line on account of most products being homogeneous, poses a threat for companies operating in the consumer durables sector. Customers have the choice of both domestically produced and imported goods, with similar features.

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 maximum

potential customer to purchase companies TV. Seller or

company would get an insight to consumer behavior

regarding purchases like what does consumer thinks while

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 GoodsBrown Goods / Kitchen appliances

Consumer Electronics  

  Refrigerators Mixers and grinders Mobile Phones  

 Washing Machines Microwave oven, cooking range Televisions  

  A/C Irons MP3 Players  

 Audio Equipments 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 country’s real GDP grew by 9% during FY08; a tad lower

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

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…

Consumer Durables Volume Share

Air Conditioners,

13%

Washing Machine , 5%

Others, 34%

Colour Television, 30%

Refrigerators, 18%

Colour Television Refrigerators Air Conditioners

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

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 TV’s 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.

TV company and relative market share table and pie chart…

MARKET SHARE SHARE

LG36%

SAMSUNG28%

ONIDA18%

VEDIOCON16%

OTHERS2%

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 in

consumer durable industry. For any company getting the chunk of this

market will always be delightful. But in today’s 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.

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.

DATA ANALYSIS

AND

INTERPRETATION

Q.1 What is your age group?

Age Group Option % of Respondent

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%

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 % RespondentMale 85

Female 15

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 country’s 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.

Q3. Monthly Income :

Monthly Income

Option % respondentRs 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%

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.

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

.

Brand of ElectronicsOption % 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 LGSon

y

Panas

onic

Vedeo

con

Samsu

ng

Whirlp

ool

Godre

j

Philips

Sharp

Onida

Other

s

Brand of Electronics % respondent

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

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 LGSon

y

Panas

onic

Vedeo

con

Samsu

ng

Sharp

Onida

Other

s

Brand Of Colour T.V. % Respondent

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

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.

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

Brand Of Colour T.V. Option % RespondentBPL 2%LG 16%

Sony 16%Panasonic 6%Vedeocon 12%Samsung 16%

Sharp 3%Onida 11%Philips 4%Sharp 3%Others 11%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

BPL LGSon

y

Panas

onic

Vedeo

con

Samsu

ng

Sharp

Onida

Philips

Sharp

Other

s

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.

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

Type of colour TVOption % 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%

ConventionalTV

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

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 % RespondentYES 12.82NO 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

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 yearsOption % Respondent

0 - 03 Yrs 29.2704 Yrs - 06 Yrs. 26.8307 Yrs - 09 Yrs 14.6310 Yrs - 12 Yrs 12.2013 Yrs - above 17.07

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0 - 0

3 Yrs

04 Y

rs -

06 Y

rs.

07 Y

rs -

09 Y

rs

10 Y

rs -

12 Y

rs

13 Y

rs -

abov

e

No of years % Respondent

Interpretation :

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 % RespondentYES 60NO 40

Time periodOption % Respondent

with in three months 5.00Next six months 2.50

Within a year 25.00with in next Three yrs 15.00

with in next Six yrs 52.50

0.00

10.00

20.00

30.00

40.00

50.00

60.00

with in threemonths

Next sixmonths

Within a year with in nextThree yrs

with in nextSix 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

Long term durability

Good Performance

Over all features

After sales service,

As a part of consumer behaviour, every Brand has some USP’s 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 24LG 20

Onida 20Vediocon 25

Sony 11

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 % RespondentSamsung 19

LG 27Onida 16

Vediocon 10Sony 28

0

5

10

15

20

25

30

Samsung LG Onida Vediocon Sony

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 QualityOption % Respondent

Samsung 22LG 28

Onida 10Vediocon 12

Sony 28

0

5

10

15

20

25

30

Samsung LG Onida Vediocon Sony

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 28LG 34

Vediocon 14Sony 24

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?

PerformanceOption % Respondent

Samsung 24LG 30

Vediocon 18Sony 28

0

5

10

15

20

25

30

Samsung LG Vediocon Sony

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?

PerformanceOption % Respondent

Samsung 22LG 29

Vediocon 16Sony 33

0

5

10

15

20

25

30

35

Samsung LG Vediocon Sony

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 % RespondentYES 42.5NO 57.5

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 ProcessingOption % Respondent

Friends 22.05%Showroom Survey 22.83%

News paper/ magazine 18.11%Internet 17.32%

T,V, Commercials 15.75%Others 3.96%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Friends

Showro

om S

urve

y

News pape

r/ m

agaz

ine

Inte

rnet

T,V, C

omm

ercia

ls

Other

s

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?

FactorsOptions % Response

Price 14.9Quality 18.27

Features Offered 15.87

Style 6.25Latest Technology 13.46Aftersale service 13.46

Gifts Offered 3.85Brand 13.94

0

2

4

6

8

10

12

14

16

18

20

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 OpinionOption Response

Yes 85No 15

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 , Consumer’s 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 ?

Opinion Option ResponseFriends 23.68Parents 25Spouse 25

Children 13.16Salesman 4

Others 9.16

0

5

10

15

20

25

Friends Parents Spouse Children Salesman Others

Opinion Response

Interpretation :

As discussed earlier, consumer’s 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 Response

Company Showroom 42.5Electrical mall 26.5Local Vendor 12.5Exhibitions 0

Multi Branded Showroom 18.5

0

5

10

15

20

25

30

35

40

45

CompanyShowroom

Electrical mall Local Vendor Exhibitions Multi BrandedShowroom

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

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.

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

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,

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

Colour TV

Picture clarity

Sound clarity

Features offered

No of channels

Video out put

Audio out put

Tube, screen type

Various brands

After sales service

Dealer reputation

Exchange offer

O % finance

Gift vouchers

GuaranteeWarranty

Free installment

Any time help Call centre

Customer relationship management

Great resolution

Big Screen

Big Screen

Inbuilt proxima

Screen at bothThe side

Surround sound

Natural soundReproduction

3 D view

Ergonomic view

Wireless connectivity

Ready set top box

Less power consumption

Inbuilt games

Artificial intelligence

Blue tooth connectivity

Touch screen menu and remotecontrol

WI FI User friendly interactions

CORE Product

Formal Product

Augmented Product

Future Product

Behavioris the buying Behaviorof final consumer–individuals 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 O’s 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 buyer’s

consciousness. The buyer’s characteristics and decision process lead to

certain purchase decisions. The Marketer’s task is to understand what

happens in the buyer’s consciousness between the arrival of outside stimuli

and the buyer’s purchase decisions. They must answer two questions:

How do the buyer’s characteristics-cultural, social, personal, and

psychological-influence buying behavior?

How does the buyer make purchasing decisions?

 

Marketing

stimuli

Other stimuli Buyer’s

characteristics

Buyer’s decision

process

Buyer’s

decision

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Cultural

Social

Personal

Psychological

Problem

Recognition

Information search

Evaluation

Decision

Post Purchase 

Behavior

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

The degree of involvement in purchase.

Complex Decision Making

(Autos, Electronics Appliances)Variety seeking

(Cereals)

Inertia(canned Vegetables,

Paper Towels)Brand Loyalty(Cigarettes, Perfumes)

High InvolvementPurchase Decision

Habit(Little or no InformationSearch, consideration ofonly one brand)

Low InvolvementPurchase Decision

Decision Making(Information Search,consideration ofbrand alternatives)

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 consumer’s 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 consumer’s attitude

toward the product than on the product’s 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

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 of involvement

ExtensiveInformationprocessing

Complex Decision Making

Little or noInformation processing

Brand Loyalty

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

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.

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 it’s 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

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

product and endorse the product in the market.

NeedArousal

PurchasePost

purchaseEvaluation

ConsumerInformationProcessing

BrandEvaluatio

n

Feedback

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 don’t 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 ,

1. Quality

2. Features offered,

3. Style

4. Latest technology,

5. After sales service,

6. Gifts offered,

7. 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

Consumer’s focus from being Brand Loyal.

MARKETING MIX

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.

(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 buyer’s 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 consumer’s behavior is influenced by social factors, such as the

consumer’s 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

A buyer decision also are influenced by personal characteristics

such as the buyer’s 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 person’s occupation also affect the

goods and services they bought

Life Style- A person’s pattern of living as expressed in

his/her activities, interest, and opinion.

Personality-A person’s distinguishing psychological

characterstics that lead to relatively consistent and lasting

responses to his or her own environment.

(d) PSYCHOLOGICAL FACTORS

A person’s 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 individual’s behavior arising from

experience.

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

about something.

Attitude is a person’s 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.

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

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.

1958-1969-GoldStar The Electronics Industry Dream

1970-79 GoldStar symbol of The Technolgoy

1980-88 :- INTERNATIONALIZATION

1989-94 INOVATION

1995-98 GLOBAL LEADERS LG ELECTRONICS

1999-2003-DIGITAL MANAGEMENT

2004-2006 GREAT PEOPLE GREAT DESIGN

2007-THE PEOPLE COMPANY

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

Star, from which the abbreviation of LG was derived. The current "Life's

good" slogan is a backronym. Before the corporate Name change to LG,

household products were sold under the Brand name of Lucky, while

electronic products were sold under the brand name of Gold Star. The Gold

Star brand is still perceived as a discount brand.

In 1995, Gold Star was renamed LG Electronics, and acquired Zenith

Electronics of the United States.

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

6. LG Dacom

Business areas and main products

Mobile communications

(a) CDMA Handsets,

(b)GSM Handsets,

(c) 3G Handsets,

(d) Cellular Phones

Digital appliance

a) Air Conditioners,

b) Refrigerators,

c) Microwave Ovens,

d) Washing Machines,

e) Vacuum Cleaners,

f) Home Net,

g) Compressors for Air Conditioners and Refrigerators

Digital display

a) Plasma TVs,

b) LCD TVs,

c) Micro Display Panel TVs,

d) Monitors,

e) PDP Modules,

f) OLED Panels,

g) USB Memory,

h) Flat Panel Computer Monitors

Digital media

a) Home Theater Systems,

b) DVD Recorders,

c) Super Multi DVD Rewriters,

d) CD±RW,

e) Notebook PCs,

f) Desktop PCs,

g) PDAs,

h) PDA Phones,

i) MP3 Players,

j) New Karaoke Systems,

k) Car Infotainment

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”

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.

THE SYMBOL

The symbol of LG is the face of future. The letter “L” and “G” in a circle symbolizes world, future, youth, humanity & technology. LG philosophy is based on humanity. It also represents LG’s efforts to keep close relationship with our customers around the world.

The symbol consists of two elements.

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

Red color represents friendliness and gives a strong impression of LG’s commitment to deliver the best.

The circle symbolizes The Globe. The stylized image of a smiling face in the symbol conveys “Friendliness and Approachability”.

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

The slogan of LG is “Life’s Good”. It expresses“ Brand’s Value , Promises, Benefits , Personality .

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 between

corporations," in which companies with different infrastructures cooperate in

the fast-developing 21st century business field, is of key significance in

terms of strengthening the existing industry and creating a new one.

LG Electronics will do its best to create new products and services with an

open mind, while developing new technologies and business fields through

various associations with some of the world's most successful companies.

1. 3M

2. SUN

3. YAHOO

4. PHILLIPS

5. TOYOTA

6. MICROSOFT

7. HP

8. GOOGLE

9. GE

10.INTEL

11.NORTEL

12.HITACHI

13.PRADA

14.RENESAS

15.TOSHIBA

16.BESTBUY

And the number follows many more…………………………..

In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance. Yahoo

mobile services will be available from LG mobile. This service is targeting

10 million LG mobile phones in over 70 countries.

In Mar. 2007 LG Electronics and Google formed a strategic alliance. Both

companies will work together to release, market, and offer LG mobile

phones with Google services (search engine, map, email, and blogs).

LG BRAND IDENTITY:-

The brand of LG is delightfully smart. LG strives to enhance the customer’s

life and lifestyle with intelligent features, institutive functionality and

exceptional performance.

The brand platform:-

The LG brand is composed of four basic elements –

1. Value

2. Promise

3. Benefits

4. Personality

The Brands core Value that never changes.

a. Trust,

b. Innovation,

c. People

d. Passion

The benefits that are consistently delivered to the customer includes

a) Reliable products

b) Simple design

c) Ease of use

d) Extraordinary Experience

Personality describes the human characteristic that are expressed to the

customer through

Trustworthy, Considerate

Practical, Friendly

The Internal Culture of LG:

LG practices four cultures

1. Learning Culture

2. Boundary less Environment

3. A Carrier

4. Growth

According to LG, the Learning Culture continuously helps the employee to

learn more and more to develop the habit of continuous learning.

Boundary less Environment means that there is no difference between the

levels of employees. There is transparency between the work and mutual

understanding between all the employees.

A carrier is highly growing in LG and one who is the employee can develop

their carrier largely. A new comer will feel fully comfortable in the company

and for a new comer the company is very helpful in the overall growth of

personality.

Growth in LG is very high for those who are in the company and for those

who want to join in LG. The company is growing with fast innovation and

the BLUE Ocean strategy is one of the examples of growth.

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

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 as “LG WAY”.

From top to bottom:

No.1 LG – is the VISION

“Jeong-DO” Management is LG’s unique application to ethics. LG will

succeed through fair management practices and constantly developing our

business skill.

A) Honest with our customer

b) Providing great values to customer through constant

innovation & and development.

c) Equal opportunities

d) Equal Treatment

Management Principle - Creating value for customer

Code of conduct of LG

1. Responsibility and obligations to customers :

• Respect for Customers

• Creating Value

• Providing Value

2. Fair competition

• Pursuit of Free Competition

• Compliance with Laws and Regulations

3. Fair Transaction :

• Equal Opportunity

• Fair Transaction Procedure

• Support and Aid for Business Partners

4. Basic Ethics for Employees

• Basic Ethics

• Completion of Duty

• Self Development

• Fairness in Performance

• Avoidance of conflict with company interest

5. Corporate Responsibilities to employees

• Respect for human dignity

• Fair Treatment

• Promoting Creativity

6. Responsibilities to society and country

• Rational Business Development

• Protection of stock holder interest

• Contribution to social development

• Environmental Conservation

LG INDIA

LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG

Electronics, South Korea was established in January 1997 after clearance

from the Foreign Investment Promotion Board (FIPB). LG set up a state-of-

the art manufacturing facility at Greater Noida, near Delhi, in 1998, with

an investment of Rs 500 Crores.

LG corporate office is located at Plot no.51, Udyog Vihar, Kasna Road,

Greater Noida, India. This facility manufactured Color Televisions, Washing

Machines, Air-Conditioners and Microwave Ovens.

''Company is setting up a chain of exclusive premium showrooms. LG plans

to launch 60 premium Brand Shoppes by the end of the first quarter of this

year. At present, LG has a total of 83 LG stores across the country, of which

45 are shops and 38 are exclusive stores. Brand shops will be placed in the

premium segment and the target audience will comprise buyers interested in

premium and high end products.

LG Brand Shoppe goes beyond the concept of a normal exclusive store by

having a more interactive environment and additional lifestyle orientation on

display so that the customer can actually experience the LG products in his

or her own home settings.

LG Electronics India Ltd (LGEIL), consumer durables leader with 27%

market share, is planning a brand new image. To attract inspirational and

young consumers across India, company will roll out a new marketing

strategy. The exercise will cost the company Rs 360 crore.

LG Electronics India is the fastest growing company in the consumer

electronics, home appliances, and computer peripherals industry today. LG

Electronics is continually providing, superior technology products & value

for money to more than 50 lakh households in India.

LG Soft India the innovation wing of LG Electronics in Bangalore is LG

Electronics' largest R&D centre outside Korea. We at LGSI focus on

niche technology areas such as mobile application development, digital

video broadcast and biometrics software and support LG Electronics with

our expertise. Motivated by a passion for technology, a strong work culture

and loyalty to the organization, we are determined to see LG become one of

the top three brands globally.

Prominent consumer electronic company, LG Electronics Inc. has said that it

expects the sale of its products in India to up by 15 per cent in 2008. Moon

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

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

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

LGEI over comes these challenges to emerge as

Innovative marketing strategy

1. Launch new technologies in consumer electronic and home

appliances.

2. LG was the first brand to enter in cricket in big way, a way

by sponsoring the 1999 world cup followed it up in 2003 as

well.

3. LG brought in four captains of the Indian cricket team to

endorse its products. LG invested more then US$ 8 million

on advertising and marketing in this sport.

4. LG has differentiated its product using technology and

health benefits. CTV has “Golden eye technology” Air

conditioner has “Health air system” and microwave ovens

have the “Health wave system”.

Local and efficient manufacturing to reduce the cost

To overcome high import duties LG manufactures TV refrigerator in India at

manufacturing facility at Noida and . LGEI had already commissioned

contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has

helped LGEI to reduce cost. LGEI implementing the “Digital manufacturing

system” (DMS) as the cost cutting innovation this system is follow-up to the

six sigma exercise LGEI had initiate earlier.

R&D potential

LG has the research and development facilities in Bangalore and 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.

Product localization:-1. Product localization is the key strategy used by the LG

2. LG came out with Hindi and regional language menus on its TVs.

3. Introduced the low-priced “Cineplus” and “Sampooma” for the rural

market.

4. LG was the first brand to introduce gaming in TVs in continuations of its

association with cricket LG introduce cricket game in CTVs

MAJOR KEY SUCCESS FACTORS:

1. Innovative marketing - LG was the first brand to enter cricket

in a big way, by sponsoring the 1999 World Cup and followed

it up in 2003 as well.

2. Local and efficient manufacturing to reduce cost - To overcome

high import duties, LG manufactures PC monitors and

refrigerators in India at its manufacturing facility at Noida,

Delhi.

3. Commissioned contract manufacturing at Mohali, Kolkata and

Bhopal for CTVs.

4. Product localization - Product localization is a key strategy

used by LG. It came out with Hindi and regional language

menus on its TV.

5. Regional distribution model - This has resulted in quicker

rotation of stocks and better penetration into the B, C and D

class markets.

6. Leveraging India’s IT advantage - LG Electronics has awarded

a contract to develop IT solutions to LG Soft India (LGSI). The

project involves development and support for ERP, SCM, CRM

and IT-enabled services for LG.

Strategies adopted by the organization:

LG follows 10 commandments which are as follows.

1. Foster working environment-5S Environment

2. Fast execution is key to success

3. Transparent and fast communication-open communication

4. Update market -knowledge –Demographics

5. Win –Win relationship with the trade partners

6. Customer is the king

7. Even Billing –Road to ach supplier A

8. Be in touch with the market (70% Market, 30% Office).

9. Plan and Execute annual marketing Calendar-Time to market

10.Display share of 50% -to get 50% consumer share.

LG market share of consumer appliances and consumer electronic:-

LG position of CTV in various states in INDIA

LG position of REF in various states in INDIA

LG position of washing machine in various states in INDIA

LG position of AC in various states in INDIA

LG position of Audio & Home Theatre in various states INDIA

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. We

selected different brand in different category as per the market share and the

demand of product in market. This analysis represents the LG market

position during the period of March 2008. It shows that LG has captured

maximum market share almost in every category. LG and Samsung have the

maximum market in consumer durable market but LG dominate the almost

all the category in consumer durable. Prominent consumer electronic

company, LG Electronics Inc. has said that it expects the sale of its products

in India to up by 15 per cent in 2008. Moon Bum Shin, managing director of

LG Electronics India has said that the company has earmarked 4.8 billion

rupees for investment purpose in India this year. The said money will be

used to market as well as manufacture new products. LG Electronics,

informed that its sales of GSM mobile phones, color televisions, air

conditioners and other household goods in the Indian market was to the tune

of 95 billion rupees ($2.4 billion) in 2007. As per Shin's estimate, the sales

in 2008 would be around 110 billion rupees. In order to achieve its target,

Shin said LG Electronics will concentrate on catering to the 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. Shin remarked that the company was

targeting an increase of exports to $300 million in 2008 from $230 million

in 2007.

LG PUNELG Pune is the branch office of LGEIL. It is located in J.M Road. In 2004

LGEIL opened second factory which is located in Ranjangaon. This plant

manufactures all product including DVD writers and GSM mobiles. Thus it

became first company to manufacture DVD writers in India. The ODP plant

aims to reach a manpower base of 1500 people and an investment of Rs 300

crore till 2010. LG India will become the export hub for LG Worldwide,

catering to the Middle East and African markets. The company aims to touch

an export turnover of $3 billion by 2010 from India, which will contribute to

30 per cent of the Indian arm's turnover. , India, October 6, 2004 -- LGE

announced 3 growth strategies aimed at the 1.1 billion people of India

making the Indian market the second largest global production base

following China. Under this strategy LGE has projected 2007 revenues in

India will exceed US$10 billion, 10 times that of 2004.

The three strategies for the Indian market that the global electronics giant

disclosed included: penetrate the south-western market of India through the

new plant near Mumbai, the second largest city in India, in addition to the

existing northern plant; installs a new GSM handset production line in the

new plant and use it as its second-largest global GSM handset production

line after the Qingdao plant in China; and expand the current 750 R&D staff

in India to 1,500 by 2007, striving to develop premium products and export

30% of India-manufactured products to Asia, Middle East and Africa

markets by 2007. LG Electronics’ second new plant in Pune, India covers a

total area of 211,200 square meters and is currently equipped with a

production line to manufacture 600,000 TVs and one million refrigerators a

year. The company is set to add production lines of air conditioners, washing

machines, monitors, and electronic ovens, by 2005. Also, LG Electronics is

poised to install a GSM handset production line in the new plant by early

next year. The GSM handset line envisages a capacity of manufacturing 2

million handsets annually, and the company expands it to become a global

GSM handset production base with a capacity of an annual 10 million units

by 2010. In connection with its three growth strategies for the Indian market,

LG Electronics will invest a total of US$150 million in establishing facilities

and boosting R&D efforts in India by 2007. Specifically, it will invest

US$53 million in the second plant, another US$43 million in establishing

the GSM line, and US$54 million in securing R&D manpower and boosting

other efforts. Through these strategies, LG Electronics aims to penetrate the

global market by using China and India as its core production bases, while

operating its plants in Changwon and Gumi, Korea, as its main production

bases. This way, the company is pushing to penetrate the global home

appliance market. The present capacity of the facility is of 1 lakh unit per

year and it shall cater to the need of the domestic markets. LG plans to

upscale its operations to a figure of 2.5 lakh units a year in the near future.

The plant in addition to its current manufacturing facility at Greater Noida

will enable the company to enhance its consumer reach and reiterate it’s

commitment towards providing superior technology products to the India

consumer.

Distribution and Marketing:

The company has number of dealers and warehouses. They have LG

exclusive shops. For the marketing of the products a number of activities are

followed:

1. Exhibitions are conducted from time to time.

2. Society and college activities are conducted.

3. Hoarding, Posters, banners are used so as to grab the attention of the

costumers.

4. Day to day advertisement in leading newspaper.

5. Discount at festival time.

6. For dealer relationship they arrange dealer meeting at several time in the

year

7. LG divide dealer in gold silver etc. category to know the performance of

the dealers.

8. They have their sales persons at various sub dealer store and at mordent

trade store for particularly for the promotion of the LG product.

9. LG also uses the radio FM for the promotion activities.

10.Also provide capon and scratch card for festive season.

The logistics (Supply Chain Management):-

Logistics is the art and science of managing and controlling the flow of

goods, energy, information, and other resources like products, services, and

people, from the source of production to the marketplace. It is difficult to

accomplish any marketing or manufacturing without logistical support. It

involves the integration of information, transportation, inventory,

warehousing, material handling, and packaging. The operating responsibility

of logistics is the geographical repositioning of raw materials, work in

process, and finished inventories where required at the lowest cost possible.

Logistics Management is that part of the supply chain, which plans,

implements and controls the efficient, effective forward and reverse flow

and storage of goods, services and related information between the point of

origin and the point of consumption in order to meet customers'

requirements.

5R’s of Logistic followed by LG:

1. Right Time

2. Right Place

3. Right Condition

4. Right Cost

5. Right Handling

CUSTOMER SERVICE:

The best and the biggest international brands are here in India –but the irony

if it all: where is the after-sales-service? So integral to a brand, so critical for

its success and so taken for granted in developed markets! In India, after

sales service is, for want of a better description, the pits. So what’s stopping

the best companies from pulling out all the stops when it comes to providing

the best service? Do customers expect for too much? Or is it that in India

they don’t really care. Brand Equity fanned out to MNC as well as Indian

consumer durable companies, stockiest and dealers, analysts and market

researchers to get feel of what’s really keeping after sales from being used

as a cutting edge marketing tool in pushing products across categories.

Customers support following the purchase of a product or service. In some

cases, after-sales service can be almost as important as the initial purchase.

The manufacturer, retailer, or service provider determines what is included

in any warranty (or guarantee) package. This will include the duration of the

warranty traditionally one year from the date of purchase, but increasingly

two or more year’s maintenance and/or replacement policy, items

included/excluded, labor costs, and speed of response. In the case of a

service provider, after-sales service might include additional training or

helpdesk availability. Of equal importance is the customer's perception of

the degree of willingness with which a supplier deals with a question or

complaint, speed of response, and action taken.

LG also had a big problem of after sale service in India. Customers as well

as dealer were facing the problem of after sales service. Because of this

problem many dealer in the region were not ready to sell LG product. So it

becomes the big issue. But LG has taken some solid steps towards

improving customer’s perception and experience of after sales service.

Because it very important in competitive market to provide the best service.

L G Electronics has signed a memorandum of understanding with 23

Industrial Training Institutes to strengthen its after sales service in India. The

company aims to recruit 10,000 people by the end of this year as a part of its

branding strategy to focus on service and move away from discounting. L G

Electronics has identified eight states with high after sales service call rates

to ink the deals with the ITI. Y V Verma, director HR and management

system, LG Electronics said, "The Company was trying to find a solution for

effective after sales service since last two years. There is a huge need of

trained manpower for the after sales service to align with the company's

expansion and focus on the GSM mobiles and the personal computer

segments."

1. In the initial phase the company has entered into agreements with ITIs in

the states like Maharashtra, Gujarat, Delhi, Punjab, Assam, and Karnataka

and is in the last leg of signing with Uttar Pradesh.

2. L G Electronics, with 1200 service centers, has already recruited 300

students and plans to beef up the number to 10,000 by the year-end.

3. "The company has offered a scholarship to the selected students for the

last six months of their training program,"

4. The company will invest Rs 8 crore (Rs 80 million) in employee

development program this year with an aim to attain a 8 per cent attrition

rate.

5. The company moved away from the discounting strategy since last year

and is putting thrust on the quality and service in its brand communication to

position LG as a premium consumer electronics brand.

6. At the top, the Service Division in Korea reports to the Global CMO. (as

mentioned in Dermot’s public interview in ET). This shows commitment

that Service must be made into a marketing differentiator, and leveraged

thus.

7. LG has the widest service network across the country; some estimates put

it at a significant multiple of service-infrastructure from our nearest

competitor. While the sale size may also be a nice multiple from nearest, it

shows the company is ready to put our money where our mouth is.

8. The company has introduced a 211 service - once you register your

complaint, we will call you back in 2 hours (hence 2), set up an appointment

for the next convenient day for you (hence the first 1), and show up in the

promised 1-hour slot (hence the second 1). If the next convenient day for

you is the next day, that’s great too. It’s a disruptive action in an industry

(including LG) having traditionally shied away from its service

responsibilities, and thus not leveraging any mileage from it.

9. The company is promoting 211 through ATL, probably the first time after

sales service is being communicated in this fashion by any product

company. You may have seen the TV commercial or heard the radio advert

or seen the newspaper ad or in-shop posters, both of which revolve around

prompt response.

10.The first LG-owned service centre opened in Gurgaon. (Service in India

generally works through authorized service centers, in LG’s case they work

exclusively for LG.) A company-owned service centre tries that much

harder, knows things better, and can even contribute as a revenue center.

RECOMMENDATIONS AND SUGGESTIONS

1. LG should improve it’s after sale service because its hits badly LGs

market share.

2. More detailed customaries service is to be provided.

3. The training to in shop demonstration should be given at frequent time

interval and feed back should be considered positively.

4. The company should look into the matter of person hiring for in shop

demonstration. A big LG showroom should have at least 2 such kind

of person.

5. LG should try new dealer who have the potential. So they can target

more market.

6. As there is a bottle neck competition between Samsung and LG, it is

necessary to take measure steps to overcome the area of downfall in

LG with respect to Samsung.

7. The marketing managers should make better relations with dealers

and reputation of the company.

8. Customer considers quality as their first preference, so the company

should give more stress on this.

9. The switching of customer from LG product to other brand is due to

the bed after sell service in shop.

10.The product is well aware and it is on top of mind of customer. So

company should always improve services and update their

technology.

LIMITATIONS

Every study has certain limitations. In my study, also there were certain

limitations, which I could not able to solve.

1. The research was conducted in a small area.

2. My research work period witness the ups and downs in product sale of

different brands, which affected the perception of the customer. This

was biggest drawback of my study.

3. The sample size is also very which represent my research on

consumer behavior.

4. Rural area coverage was limited due to the consumers passiveness

towards the survey.

5. Due to passiveness and Geographic limitations of showroom owners,

consumers buying Behavior could not be studied in great details while

actual buying.

Never the less whatever support I have got from consumers, survey

respondent, Showroom owners is highly appreciable.

BIBLIOGRAPHY

www.lgindia.com

www.google.com

www.wikipedia.com

Business world

Business today

Economics times News paper

Times of India

“ Consumer Behavior and Marketing Action” … by Henry Assael

Show Room Survey:

o Vijay Sales ( Karghar, Navi Mumbai),

o Kings Electronics ( Kharghar, Navi Mumbai)

o Shri Shakti Electronics ( Dhule),

o Madhu Electronics (Nasik).