Download - LG Electronics Discovering The 86% Solution.. The 86% Solution Prof Vijay Mahajan & Kamini Banga
LG Electronics
Discovering “The 86% Solution.”
“The 86% Solution”
Prof Vijay Mahajan & Kamini Banga
The Essence of “The 86% Solution?”
(insert cover of the book The 86% Solution here)
86% of worlds population lives in the emerging and developing world – an invisible opportunity!
MNCs have traditionally focused on developed markets like NA and Europe, ignoring 86% of the world populace.
Branding and Marketing principles in emerging markets are quite different from developed markets.
Innovation is the key to success in emerging markets
LG History
A Quick Review
Early Beginnings as “GoldStar”:
Korea focused – Some Export to developed world.
1958GoldStar (today's LG Electronics)
established
1959 Korea's first radio produced
1962Radio exported to the US and Hong Kong
as Korea's first
1965 Korea's first refrigerator produced
1966 Korea's first black & white TV produced
1968 Korea's first air conditioner produced
1969 Korea's first washing machine produced
1974 GoldStar Communications went public
1977 Color TV produced
1978 Exports surpassed US$100 million as Korea's first in the electronics industry
THE 1950s
THE 1970s
THE 1960s
The 1980s: Global production centers
Initially in the developed world..
1980First EU sales subsidiary in Germany (LGEWG) established
1982Color TV plant in Huntsville in the US established
1984 Sales surpassed one trillion won
1986 European-standard VCR plant in Germany established
1989 Sales subsidiary and a joint production subsidiary in Thailand established
The 1990s: Entry into China & India.
Acquisitions & Joint Ventures
1990Ireland-based design technology center established
1993 With the establishment of Huizhou subsidiary in China (LGEHZ), marketing in China took full swing
1995 Company name changed to LG Electronics and the US-based Zenith acquired
1997 40-inch PDP TV and the world's first IC set for DTVs developed; India production subsidiary (LGEIL) established
1998 World's first 60-inch PDP TV developed
1999 LG.Philips LCD, a joint venture with Philips, established
The New Millennium:
technology & innovation
2000 The world's first Internet-enabled refrigerator launchedGlobal sales of refrigerators reached the number one position
2001 the world's first Internet- enabled washing machine, air conditioner, and microwave oven launched
2003 World's first synchronous-asynchronous IMT-2000 mobile phone developed; the world's first 76-inch PDP TV developed; CDMA mobile handsets took the largest share in the US & world CDMA market
2004 All-in-one LG 55" LCD TV, the world’s first and largest among LCD TVs, commercialized. The world’s largest and first LG 71" plasma TV commercialized. The world’s first terrestrial DMB phone developed
2005 World's first DMB (Digital Multimedia Broadcasting) notebook PC unveiled. World's first DMB Phone with Time-shift function developedNetwork solution joint venture of LG-Nortel launched CDMA mobile phones ranked first in the world in the 3rd quarter
LG Today
Global Revenue: US $ 35 billion (consolidated $ 45 billion)
72,000 employees working in 77 offices and marketing units worldwide.
World’s largest producer of CDMA handsets, DVD players, optical storage devices, air conditioners, canister vacuum cleaners and micro ovens.
Growth driven by globalization
Driven by Globalization
80% of Revenue from outside South Korea
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005
Domestic International
The Vision: Clear Global Aspirations
The LG India
Story
So Far..
The India Succe
ss Story
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1056
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3315
4500
6500
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1000
2000
3000
4000
5000
6000
7000
1997 1998 1999 2000 2001 2002 2003 2004 2005
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LGEIL-Winning Spirit7200
12.7
35.6
0
10
20
30
40
Samsung LG
LG Leads on Market shares (March 2005)
*Source: ORG-Marg
22.9
29.3
20
22
24
26
28
30
Whirlpool LG
18.1
39.4
15
20
25
30
35
40
45
Samsung LG
14.3
27.4
12
14
16
18
20
22
24
26
28
Samsung LG
Washing Machine Refrigerators
Color TVMicrowaves
Proportion of intending buyers
Brand Most likely to buy (%)
*Source: AC Neilsen-ORG-Marg Brand Track, Jun 04-Apr 05
3 2
1 1
6 71 0
0
5
1 0
1 5
2 0
2 5
3 0
3 5
LG
Sam
sung
Whir
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Godrej
Vid
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Top of Mind Brand Awareness
Figs in %
*Source: AC Neilsen-ORG-Marg Brand Track, Feb-Apr 05
2 9
1 2 1 1 1 18
0
5
1 0
1 5
2 0
2 5
3 0
LG Godr ej
Sam
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Video
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Has LG Applied
The 86% Solutions
In India?
1. “Don’t Build a Car, when you
need a bullock-cart”
LG India: Closely studied the local needs &
Adapted international technology
“Watching TV causes eye strain”
“Food in the fridge goes stale”
“Expensive clothes should not be washed in Washing Machines”
“ACs are for cooling so it is a luxury item”
“Golden Eye”
“Preserve Nutrition System”
“Fabricare”
“HealthAir System”
Discovering Key Category Barriers LG’s Innovation
Discover Local Insights:
“Fear that TV Viewing will spoil children’s Eyes”
2 X Golden Eye TVC
LG Invented products to meet Indian consumer’s needs
TV Signals don’t reach all over the country
World-cup Football Craze in 2002
Frost free refrigerators are unaffordable by masses
Agitators in washing machine can damage clothes
DTH TV(India’s first)
Football shaped TV
IntroducedSemi Frost Free
Introduced“Chaos Punch”
Local Market Insights LG’s Innovation
LG Innovated to meet
Indian consumer’s needs
Majority of Indian consumers don’t read English
Big audiences on TV sets + high ambient noise
Cricket is the second religion for most Indians!
Cricket is a second religion for most Indians!
Indian-languageOn screen instructions
Ballad TV2000 Watt output
Free Cricket gameWith TV in 1999
World-cupSponsorships
Indian Consumer Needs LG’s Innovation
2. “Connect Brands to the Market”
“Grassroots Marketing” – An LG India Invention
Widest distribution network – “covering India inch by inch!”:
51 branches72 regional offices61 central area offices112 district area offices to cater to rural markets100 remote area offices
SPEED to market: products reached 18 states within 3 months of launch.
SERVICE at the doorstep:1108 service centers24 hour, hassle free service
Not just Bottom of the Pyramid –
The WHOLE Pyramid!
Covers the width of categories from Home Entertainment to Household Durables to IT services to Mobile Phones.
Wide price range – cater the entire population of India.
Latest technology inventions in top end – world class products in the show rooms.
Keep refreshing the portfolio – 40 to 50 new models every year.
Visibility at the retail outlets – the real on-ground battle field.
3. “Think Young!”
LG India’s Strategy: Associate with Youthful Symbols
Capitalize the Youth Passions: Cricket and Bollywood.
Early sponsorship and association with Cricket since 2000.
Abhishek Bacchan: The latest craze amongst youth.
4. “Discover the Lands of
Opportunity”
LG India’s Strategy: Make “Impossible” possible
Have Faith in India’s Potential
Business Challenge: MARKET CREATION
New lifestyles = New Opportunities.
Innovate to meet local market needs and aspirations.
Greed for Speed!
Target the multiple consumer segments: The super rich, the middle classes, the youth, the poor and the rural.
Price right – not cheap.
LG India’s Strategy:
Invest in communication to realize your dreams.
Set “stretched” goals
Disproportionately higher Share of Voice
Continuous presence – to maintain salience and top of mind awareness.
Invest in sponsorships: ICC sponsor for test and one day’s in 2001, 2002, 2005.
Make presence felt at the street level.
LG India’s strategy: Empower for Speed
Markets will not wait!
Deep distribution structure for quick reach of products
Empowerment at grassroots level to ensure speedy decisions
At national level Product Group Heads on key categories – run their categories as effective CEOs
To
Sum Up
LG’s Global Success
Key Success Factors
Corporate ambition for Global Leadership – clearly enumerated for every stakeholder.
Belief in “The 86% Solution” principles and markets as engines of growth.
Focus on Growth and Innovation.
Speed a vital winning ingredient
Dream ‘impossible’ dreams; fuel those with adequate investment to convert dreams to reality.
“Have A Wall?”
A Global Ad from India
LG X Canvas TVC
The World Can
Be Yours!