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A Project Study report On LG ELECTRONICS INDIA Ltd. Titled “Marketing Analysis on LG Consumer & Dealer Development” Submitted in partial fulfillment for the Award of degree of MASTERS OF BUSINESS ADMINISTRATION SUBMITTED BY:- SUBMITTED TO:- Htesh Kumar Sain Mr.Anchalkumar MBA Final Year 2010-2011 1

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Page 1: LG Electronic

A

Project Study report

On

LG ELECTRONICS INDIA Ltd.

Titled

“Marketing Analysis on LG Consumer &

Dealer Development”

Submitted in partial fulfillment for the Award of degree of

MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED BY:- SUBMITTED TO:-

Htesh Kumar Sain Mr.Anchalkumar

MBA Final Year

2010-2011

Sobhasaria Engineering College

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Executive summary

Indian Consumer durables market used to be dominated by few domestic players like

godrej, Voltas, allwyn and kelvinater. But post liberalization much foreign company have

entered into Indian market dethroning the Indian player and dominating Indian market the

major categories in the market CTV, REFRIGRATOR, AIR CONDTIONERS AND

WASHING MACHINE India being the second largest growing economy with huge

consumer class has resulted in consumer durables as the fastest growing industries in India

LG & SAMSUNG the two Korean companies has been maintaining the lead in the

industries with LG being leader in almost all the categories.

The rural market is growing faster than the urban market, although the penetration level is

much lower .The CTV segment is expected to the largest contributing segment to the

overall growth the industry. The rising income levels double-income families and consumer

awareness are the main growth drivers of the industries.

Consumer durables major LG Electronics India Pvt Ltd (LGEIL) will invest nearly Rs

500 crore in India this year in research and development, brand-building and other

marketing initiatives.

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’s innovative ‘211 campaign’ to provide quality after-sales service, will also be expanded

from the existing 45 to 56 cities by next month.

The campaign, for which IT infrastructure has been set up, includes the company’s

response to customer complaint within two hours. The fixing time for complaints varies from

one hour to a maximum of 24 hours (TAT).

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Contents: -

1. Introduction to the Industry

2. Introduction to the Organization

(a) History of the company

(b) Vision

(c) Mission

(d) LG India

(e) Major Key success factors

3. Research methodology

3.1 Title of the Study

3.2 Objective of the Study

3.3 Type of Research

3.4 Sample Size and method of selecting Sample

3.5 Scope of Study

3.6 Limitations of Study

4. Facts and Findings

4.1 Dealer survey findings

4.2 Customer survey findings

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5. Analysis and Interpretation

5.1 Dealer Survey

5.2 Customer Survey

6. SWOT Analysis

7. Conclusion

8. Recommendation and Suggestions

9. Appendix

9.1 Questionnaire

9.2 Abbreviation

10. Bibliography

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INTRODUCTION

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 came into the picture. Today, these players control the major share of the

consumer durables market.

Consumer durables market is expected to grow at 10-12% in 2009-2010. It 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. 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.

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Classification of consumer durables sector

1. Consumer electronic includes vcd/dvd, home theatre, music player, color television

(CTVs), cameras, camcorders, portable audio, Hi-Fi, etc.

2. White goods include dishwashers, air conditioners, heaters, washing machines,

refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances,

microwaves, built-in appliances, Tumble dryer, personal care product etc.

3. Moulded luggage includes plastics.

4. Clocks and watches.

5. Mobile phones.

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Strength

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 grew

to 38.2 million in 2008 as against 14.6 million in 2000.

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

Higher import duties on raw materials.

Cheap imports from Singapore, China and from other Asian

countries.

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Brands in consumer electronics sector

MNCs NATIONAL REGIONALLG )SAMSUNG ) KOREA ONIDA BUSHHYUNDAI ) VIDEOCON CROWN

BPL SALORATCL ) CHINA GODREJ T-SERIESHAIER ) VOLTAS WESTON

IFB BELTAKPHILIPS ) HOLLAND OSKAR

PANASONIC )SHARP )HITACHI )SANSUI ) JAPANAKAI )AIWA

WHIRLPOOL )ELECTROLUX

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.

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What does LG stand for?As LG is not an acronym, there is no full name for LG.

On renaming the Group, we considered 'LG' to be the most appropriate for a new Group

name that could integrate different images of two main streams of the Group's businesses,

the Chemicals led by 'Lucky' and the Electronics & Telecommunications led by 'Gold star,'

while including various brand images of other business fields.

LG Electronics is one of the leading companies in the field of electronics with a global

presence in many countries. It is a Korean Company. Before briefing, I have divided the

introduction part into three main sub parts.

1. LG Global

2. LG India

3. LG Pune

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History of company Year of Foundation: 1947

Total Sales: KRW 84 Trillion (as of 2006)

Business Fields: Electronics, Chemicals, Telecommunication & Services

Number of Companies: 30

Overseas Subsidiaries: around 130

Number of employees: around 120,000.

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

refrigerators, washing machines, and air conditioners.

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.

Signature The signature of LG being the most important element in communicating with LG's Brand Image, any change or distortion of proportion, spacing or resizing at will is absolutely prohibited. The signature shall be used with consistency and uniformity among all kinds of media. Restrictions and rules of the corporate Identification Program shall always be respected.

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Horizontalcoordination

Verticalcoordination

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

LG Electronics

- LG.Philips LCD

- LG Innotek

- LG Micron

  LG Chem

- LG Petrochemical

-LG DOW Polycarbonate

- SEETEC

  LG TeleCom

- CS Leader

- TeleDREAM

DACOM

- LG Powercom13

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- Hiplaza

- Hi Logistics

Siltron

Lusem

LG Household & Health Care

LG Life Sciences

LG MMA

-DACOM Multimedia Internet

- DACOM Crossing

LG CNS

- V-ENS

LG N-Sys

SERVEONE

LG Management Development Institute(Economic Research Institute)

o Business areas and main products

Mobile communications(a)CDMA Handsets,

(b)GSM Handsets,

(c)3G Handsets,

(d)Cellular Phones

Digital appliance14

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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.

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,

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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

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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 type face 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 gray

2. The stylized image of human face in the unique LG red color.

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Red color represents our 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”, 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.

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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. 2009 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. 2009 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.)

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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 –

Value

Promise

Benefits

Personality

The Brands core Value that never changes:-

Trust

Innovation

People

Passion

The benefits that are consistently delivered to the customer includes:

Reliable products

Simple design

Ease of use

Extraordinary Experience

Personality describes the human characteristics that are expressed to the

customer through:

Trustworthy Considerate

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Practical Friendly

The Internal Culture of LG:

LG practices four cultures

Learning Culture

Boundary less Environment

A Carrier

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.

MissionThe 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.

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OUR PRINCIPLES AND POLICIES

01. Creativity & Autonomy An individual's creativity is the source of creating value. We respect diversity and autonomy so that each can exercise his / her own creativity to the full extent.

02. Equal opportunity Equal opportunity builds trust between people. We ensure everyone an equal opportunity regardless of gender, race, age, religion or nationality.

03. Emphasis on competence We have adopted competence as the most important criterion for making personnel decisions.

04. Long-term perspective Maintaining a long-term perspective is the foundation of our human resource policies. Human resource programs should be designed with a long-term perspective and implemented with dedication and persistence.

05. Performance based rewards Rewards based on performance are essential for human motivation. Performance results will be fairly evaluated and rewarded accordingly.

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Performance-Based Principle

LG practices a performance-based salary system, which was initiated in 2000 to install a

performance-based culture across all subsidiaries.

The performance-based salary system evaluates employees' rank, title, salary, and other

values on the basis of job performance and role, which represents a shift away from the

previous seniority-based system. This new system inspires employees to exercise their

individual abilities to the greatest extent, which raises standards and promotes a

performance-based.

LG set the basic framework for this goal, and allowed each of its subsidiaries to formulate

their respective detailed action plans.

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o Product Leadership

We are focusing on six development areas to become the product leader.

New Machine

Reliability

Conventional Installation

Environment Friendly Product

Low Noise & Vibration

Energy Saving

o Quality Innovation

The policy of quality assurance is to provide customers with utmost satisfaction by

supplying zero defects.

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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

e) Management Principle - Creating value for customer

LG's vision is to become the best in its class by winning customers' acclaim as a true leader in the global market.

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LG’s VISION PICTURE

No. 2 Code of conduct of LG :

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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

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No.3 Management Principles LG's management principles state the purpose of LG's business activities, and also provide a basis for its operations. It embodies the key concepts of "Creating value for customers" and "Respecting human dignity."

LG believes that customers make up the very foundation of our business. That is why LG places the highest priority on serving customers, and encourages its people to create true value for customers through innovation. This principle provides a strong basis for LG's operation that is targeted at winning the hearts of the customers by offering them truly innovative products.

   

   

LG believes that the source of its innovation lies in its people. "Respecting human dignity" implies that LG values the ingenuity and autonomy of its people. It signifies that LG strives to maximize capabilities of its people, and helps them realize their potential on the job. This principle is further reinforced through LG's everyday management practice of rewarding its people based on capabilities and performance.

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FINANCIAL STATEMENT

Summarized Income Statement 04-05:-

Summarized Income Statement 07-08:-

(Unit : KRW 100 million) 2009 2008

Operating revenue 4,961 7,610

Operating expense 1,018 544

Operating income 3,943 7,066

Non-operating income 3,763 1,171

Non-operating expenses 320 1,769

Income before income taxes

7,386 6,468

Income tax expense 1,354 712

Net income 6,032 5,755

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GLOBAL REPORT

Mobile Spa Bath Donation

 

Opening of Children's Hospital Long-Term Care Unit

           

 On location at the WTCC - Sponsoring the World's Top Racing Event

 Enjoying 'Four Giants' World Cup with LGE

           

  Twenty Elementary Schools Receive 'Our Garden'  LG's Amazing

Performance

           

  Significant Innovation Toward Increasing Customer Value  LG and Celebrity help

Alienated Youth

           

 LG increases Brand Awareness with Africa Cup of Nations Sponsorship

 Kazakhstan, a shining star

           

  Official Sponsorship of PDP TV for ASEAN + 3 Summit Meeting  Free Medical Services

in Africa

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Eco friendly activities of different LG Companies

LG Electronics

LG Electronics vows to observe the basic philosophy and principles of environmental management to ensure sustainable development and improve quality of life for its customers.

LG Innotek

LG Innotek puts the environment and the people’s welfare first in its efforts to develop technologies and in doing business. Based on this environmentally friendly mindset, we strive to step up our global competitiveness.

LG Micron

LG Micron protects our environment and runs the company in an environmentally friendly manner. All the staff in LG Micron work on safety, health, environmental protection and energy saving.

Siltron

Siltron is putting all its efforts to minimize the environmental impact of its business activities and to protect its employees and the residents near its facilities from accidents.

LG Chem has been designating environmentally-friendly organizations, certificating environmentally-friendly managerial systems, conducting self-analysis, and executing preventive environmental managerial evaluation as it fortifies its

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environmentally-friendly managerial systems.

LG Petrochemical

LG Petrochemical promises to maximize customers’ satisfaction and to contribute to society. LG Petrochemical will provide continualimprovement in environment, safety and health as well as efficient use of energy through RC activities.

LG MMA

LG MMA has implemented self-controlled environmental management system based on the core values of management for environment, safety and health, in addition to the collaboration of labor and management.

PRESS RELEASES

Sep 06, 2006 LG Electronics Completes Construction of Russian Plant

- The plant completes production triangle connecting Wroclaw, Mlawa and Ruza to target Europe, Russia and the ...

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Sep 06, 2006 LG.Philips LCD Receives BSC Hall of Fame Award

Seoul, Korea (September 6, 2006) - LG.Philips LCD (NYSE: LPL, KRX: 034220), one of the world's leading i...

Aug 29, 2006 LG Electronics Gearing Up for Next-Generation DVD Market

LG Electronics (LG), a global leader and technology innovator in consumer electronics and mobile communication...

Aug 29, 2006 LG Mobile And DMC Continue Dream Team Partnership

London, 29 August 2006 – LG Mobile (LG), a pioneer in consumer electronics and mobile phones, today an...

Aug 16, 2006 LG Unveils The UK's First 5 Mega-Pixel Digital Camera Phone

London, 27th July 2006 – LG Mobile (LG) announces the first 5 Mega-Pixel digital camera phone to arrive ...

Aug 15, 2006 LG Wins Three EISA Awards

LG Electronics (LG), a global leader and technology innovator in consumer electronics and mobile communication...

LG is widely into the public relations and fulfilling the social responsibility, which a business should by opening children's hospital. Through wide donations, sponsoring different shows, and participating in such events which increase consumer awareness all over the world.

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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 New 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, U.P,

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 shoppes and 38 are exclusive

stores. Brand shoppes 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. LGEIL is celebrating the 13th anniversary this year.

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

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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 21 per cent in 2009. Moon Bum Shin, managing

director of LG Electronics India has said that the company has earmarked 5.8 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, 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 2009. As per

Shin's estimate, the sales in 2009 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.

o India challenges The challenges faced by LG when entered in Indian market

Low brand awareness about LG in India.

One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in

India).

High import duty

Competition from local market players and other MNCs in consumer durable

segment.

Price sensitiveness of the Indian consumer.

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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 than 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 Pune. 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 network1. 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 than dumping stock on channel

partners.

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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 introduces cricket game in CTVs.

MAJOR KEY SUCCESS FACTORS1. 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:-

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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

38

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

LGSAMSUNG

Page 39: LG Electronic

LG position of REF in various states in India

LG position of WM in various states in India

39

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

LGSAMSUNG

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST

)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

LGSAMSUNG

Page 40: LG Electronic

LG position of AC in various States in India

LG position of Audio & Home Theater in various in India

40

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST

)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

PHILIPSLGSAMSUNGVIDEOCON

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST

)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

LGSAMSUNGVOLTASGODREJ

Page 41: LG Electronic

LG position of DVD in various in India

LG

position of MWO in various states in India

41

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

LGSAMSUNGKENSTARGODREJ

ANDHRA PRADESH

ASSAM AND NORTH

EAST

BIHAR

CHHATTISG

ARHDELH

I

GUJARAT

HARYANA

JHARKHAND

KARNATAKA

KERALA

MADHYA PRADESH

MAHARASHTR

A

ORISSA

PUNJAB

RAJASTHAN

TAMIL N

ADU

UTTAR PRADESH

(EAST)

UTTAR PRADESH

(WEST

)

WEST BEN

GAL0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

LGPHILIPSSAMSUNGVIDEOCON

Page 42: LG Electronic

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. I select 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 2009. 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 21 per cent in 2009. Moon Bum Shin, managing

director of LG Electronics India has said that the company has earmarked 5.8 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 2009. As per Shin's estimate, the sales in 2009 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 2009 from $230 million in 2009.

MANAGEMENT STRATEGY

LG is set to:

> Invest 3.2 trillion won in R&D, up by 20% from last year

> Invest 7.3 trillion won in facilities

> Attain sales of 92 trillion won, up by 10% from last year's 84 trillion won

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Investing 10.5 trillion won, and achieving sales of 92 trillion won in 2009.

In 2009, LG is set to develop core technologies in electronics, chemicals and other mainstream businesses, and intensively foster new growth engines.

2009 Sales and Investment Plan

  2009 Plan2008 Performance(estimated)

Change (%)

Total investment

KRW 10.5 trillion KRW 10.4 trillion  

- R&D KRW 3.2 trillion KRW 2.7 trillion +20%

- Facility KRW 7.3 trillion KRW 7.7 trillion  

Sales KRW 92 trillion KRW 84 trillion +10%

Export USD 46.4 billion USD 40 billion +16%

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LG PUNE

LG 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 writer 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.

Pune, 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 2008 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: penetrates the south-western market of India through the new Pune 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 Pune plant and uses it as its second-largest

global GSM handset production line after the Qingdao plant in China; and expands the

current 750 R&D staff in India to 1,500 by 2008, striving to develop premium products and

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

2008.

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 Pune

plant by early next year. The Pune GSM handset line envisages a capacity of

manufacturing 2 million handsets annually, and the company expands it to become a global

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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

2008. Specifically, it will invest US$53 million in the Pune 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 Pune 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.

The key strategies being implemented include increasing the number of its

regional offices from six to eight. LG has split its southern regional office into two,

one comprising the states of Tamil Nadu and Kerala and the other consisting of

Andhra Pradesh and Karnataka. In addition, it has split one of its northern regional

offices by making Uttar Pradesh a separate region after spinning it out from Delhi

NCR. The other four regional offices take care of East, Gujarat and Madhya

Pradesh, Maharashtra & Goa and Punjab, Haryana & Rajasthan respectively.

In the coming year, LG is also repositioning its marketing spends, resulting in a significant

increase in its mass media expenditure for better brand visibility. LG had a marketing

budget of Rs 320 crore in 2009 with a 60:40 split in favor of below-the-line activities. Next

year, the company plans to increase the share of mass media even as overall marketing

spends would be raised by just about 10-15%.

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

The organization structure is –one branch manager, one chief accountant, and area sales

manager of CE, HA separate for GSM, Marketing manager for CE, HA and separate for

GSM. The Pune branch has warehouse at wagoli.

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Distribution and Marketing

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

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 meting 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)

Visit to warehouse of LG Pune at Wagoli

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.

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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:

Right Time

Right Place

Right Condition

Right Cost

Right Handling

LG Pune Distribution

LG Pune comes under the western Distribution Region. This region has

following

Pune

Kolapur

Sholapur

Satara

Sangli

The LG Factory is located at NOIDA & PUNE.

There are three types of Warehouse-

1. Mother Warehouse

2. Branch Warehouse

3. Spare part warehouse48

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The mother warehouse is that where the products from the factory

are kept and from that warehouse, the products are sent to the branch warehouse.

A warehouse is a commercial building for storage of goods. Warehouses are used by

manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They

are usually large plain buildings in industrial areas of cities and towns. They come equipped

with loading docks to load and unload trucks; or sometimes are loaded directly from

railways, airports, or seaports. They also often have cranes and forklifts for moving goods,

which are usually placed on ISO standard pallets loaded into pallet racks.

The Pune warehouse is located near Wagoli. It is 13670 sq. feet in area.

In warehouse 7 locations is set up for the products.

Loc 1, Loc 2, Loc 3, Loc 4, Loc 5, Loc6, Loc 7

Loc 1 – selling

Loc 2 - second sale

Loc 3 - insurance claim

Loc 4 - write off material

Loc 5 – destroy the item

Loc 6 - court case material

Loc 7 - for repair

5’s of warehouse, which the LG strictly follow:-

Sweeping

Sorting

Systematic Arrangement

Simplification

Self- discipline

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In warehouse, the products are pinup with 3-color paper to get the knowledge about the

delivery.

1. Red Card – To stop the product going into market,

2. Green card – To allow the product for delivery in market,

3. Yellow Card – After the product labeled with green, allow this to move in market.

Distribution Time:-

• Local delivery – 4 hrs.

• Upcountry delivery - 12 hrs.

• Within 200 km. – 24 hrs.

• Beyond 200 km. – 48 hrs.The above distribution time is the time of delivery of products from warehouse to the market

place, which the logistic department follows to fulfill the demand in the market at right time.

In LG, we have the following process, which is followed in logistic through ERP.

Order Processing

Invoicing

Indenting

Report

Order Processing booking for dealers /distributors

Invoicing after billing process/bill generation

Indenting requirement (Pdt Unit to branch unit)

Report distributed to all

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In warehouse, there are two mode of dispersion of product from one place

to another within:-

(a) Hydraulic

(b) Manual

In addition, there are 35 fire extinguishers to prevent the accidental hazard within the

warehouse due to fire. These fire extinguishers are valid up to year 2011. One has to follow

the rule of “NO Smoking” within the warehouse.

Logistics Ten Commandments – Golden Rules

1 - Warehouse 5S – to be strictly followed – FG – 2, 5 & 7 to be properly maintained.

2 - 100% Bar-coding for all inward & outward transaction.

3 - Follow standard pick – ship process religiously.

4 – No inventory mismatch, shortage or excess – monthly 100% physical stocktaking.

5 – Nil 30+ for FG – 2, 3 & 5.

6 – Nil transit damage.

7 – File insurance claim within 2 days. Settle all claim all within 30 days.

8 – No inter – branch transfer without HO clearance.

9 – PSI feeding into system by 25th of every month. Ensure 90% accuracy.

10 – Apply physical FMFO.

Problem

1- In transit material damage checking.

2- Cost target achievement.

3- Natural events tracking.

4- Fluctuation in demand-supply

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Equipments

1- 100% bar code scanner.

2- ERP – Invoice Generation Process.

3- Hydraulic Trolleys for material movement.

4- Pallets for safety of material.

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WAREHOUSE WITH THE EQUIPMENT

WAREHOUSE: REFRIGERATOR AND CTV SECTION

HUMAN RESOURCES

WHO WE LOOK FOR

1. Person who faithfully adheres to foundational knowledgeLG is pushing such intense hiring through its major subsidiaries, such as LG Electronics, LG Chem, LG.Philips LCD, and LG CNS, in North America, Europe, Japan, China, India, Russia, and other countries. LG will embark on a combined total of over 30 tours to hire over 600 globally talented individuals with a master's degree or a doctoral degree in the field of engineering, and science and technology.

2. Person who is highly creativeIt is important to be widely knowledgeable. However, we still need young creative people who are capable of using and applying their knowledge, to the creation of new values and ideas. Talented individuals should tenaciously explore and seek out new things and surpass existing methods, not at desk but on the frontline, not by knowledge but by action, and not using abstract concepts but with practical innovative passion.

3. Person with solid opinions We need people who have their own clear viewpoints and yet get along well with others. We need people who possess the virtues of cooperation and accommodation. We need those with sound thinking who will sacrifice even themselves, will participate in many

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activities and thus contribute to the society. We also need people who are genuinely honest, are equitable, and do their best to serve customers. A corporation that aims to be a 'people company' needs all these talented people.

DEVELOPING TALENTED PEOPLE Future competitiveness

Essential Education Programs by RankLG differentiates essential education programs by rank with a focus on five areas, the core of which is pursuing LG management philosophy and corporate philosophy, and maximizing educational outcomes.

LG differentiates essential education programs by rank with a focus on five areas, the core of which is pursuing LG management philosophy and corporate philosophy, and maximizing

educational outcomes.

ESSENTIAL EDUCATION SYSTEM BY RANK

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LG executives and employees should complete essential educational courses by rank in order to develop as core talented individuals with superior working abilities and base knowledge.

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Salary System The existing rank-based salary system has now been abolished. Salary is now categorized as basic salary, performance-based salary, mandatory allowances, and special incentives. Gradually the performance-based salary aspect will be expanded.

As such, existing salary items based on seniority have been incorporated into the basic salary, while the performance-based salary share of teams and individuals will be amended to increase gradually, motivating employees to exercise their abilities to the greatest extent.

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Research Methodology:

Research methodology is considered as the nerve of the project. Without a proper well-

organized research plan, it is impossible to complete the project and reach to any

conclusion. The project was based on the survey plan. The main objective of survey was to

collect appropriate data, which work as a base for drawing conclusion and getting result.

Therefore, research methodology is the way to systematically solve the research problem.

Research methodology not only talks of the methods but also logic behind the methods

used in the context of a research study and it explains why a particular method has been

used in the preference of the other methods.

Research design:

Research design is important primarily because of the increased complexity in the market

as well as marketing approaches available to the researchers. In fact, it is the key to the

evolution of successful marketing strategies and programmers. It is an important tool to

study buyer’s behavior, consumption pattern, brand loyalty, and focus market changes. A

research design specifies the methods and procedures for conducting a particular study.

According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of

investigation conceived as to obtain answers to research questions and to control variance.

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Title of the Study

“Marketing Analysis on LG Consumer & Dealer Development

OBJECTIVES

Explained in detail next.

Scope of project

My job include while visiting the shops

1. Calculate the display share of the LG product in every shop which comes under

Pune region.

2. Collect the data of actual monthly sale of the LG product in every shop.

3. Check the availability of LG catalogue and the POPs in the store.

4. Find out the problems that the dealer are facing while sailing the LG product.

5. Find out the customer response for the LG product by asking the owner of the shop.

6. Find out the distributer name from whom they purchasing their product and also

weather they have direct dealership and which brand.

7. Check that demo calls are attended or not.

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LIMITATIONS

The limits of study are itself limitations:

Firstly, hard to include all users n dealers.

Secondly, employee’s part not considered.

More explained in next pages.

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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 a 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. During my project I also came to

know that after sale service becomes the big issue in Pune region. Customers as well as

dealer were facing the problem of after sale service. Because of this problem many dealer

in Pune region were not ready to sale 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.

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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 programmes,"

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

programme this year with an aim to attain an 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 on Wednesday). 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

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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.

CONSUMER SURVEY DURING EXHIBITION

From 16th to 25th May, 2009 a consumer exhibition was organized at the college of

Engineering ground. The exhibition was sponsored by Sakal group in which number of

companies participated.

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EXHIBITIONS PICTURES SHOWING THE PRODUCTS

FINANCIAL REPORT

Financial Performance:

Turnover for 2002 Rs. 125 Crores

Turnover for 2003 Rs. 485 Crores

Turnover for 2003 Rs. 1056 Crores

Turnover for 2004 Rs. 1903 Crores

Turnover for 2005 Rs. 2216 Crores

Turnover for 2006 Crossed Rs.3315 Crores

Turnover for 2008 Crossed Rs.4500 Crores

Turnover for 2009 Crossed Rs.6500 Crores

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PUNEBRANCHPUNE 1PUNE 2PUNE 3 DEALER MANAGEMENT:-

Mapping of Pune region dealers.

In Pune region there were total 180 dealers including the up country side, they have been

divided into three categories on the basis of their turnover and the selling capacity.

PUNE -1

PUNE-2

PUNE-3

PUNE-1 Includes the modern trade and they have direct billing from the branch office.

They have high turnover and the company depends heavily on them.

PUNE-2 includes the distributors. They have direct billing from the branch office.Their

turnover is also high.

PUNE-3 Includes the sub dealers .They have direct billing from distributors or from the branch office. Their turnover is not so high, but there are few sub dealers whose potential is quite high. According to sales the branch has designated as gold and silver sub dealers.

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Objective of The Study:-

Primary objective:-

The main objective of filed survey during the project was to find out the market share

of the LG and also calculate the display share.

Find out the positional dealer who can sale the LG product in large volume.

The main objective of research was to identify potential dealer and development

these dealer. So LG can make them their direct dealer.

This will ease the dependence on the some big dealer like Maharashtra and

Mahaveer electronics.

Find out the problem faced by the dealer in sales and the distribution.

Secondary objective:-

The Objective was to find out that how far the exhibitions are helpful in branding,

While purchasing the consumer durables which parameter is most important for the

consumer?

Do the consumers prefer the financial facility for buying consumer durable?

How frequently consumers change the consumer durable?

To enhances the knowledge of consumer durable market.

To increases the knowledge consumer durable product of LG.

To enhances the knowledge about the marketing and branding activity.

The objective was to find out the market share of LG products, advantages, and

disadvantages of LG products from dealers and to find out what problems they are facing

with the LG products so that problems can be resolved to increase the sale.

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PICTURE SHOWING THE PRODUCT OF LG IN ONE OF THE SHOP

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Types of research are:-

Descriptive ResearchThe type of research adopted for study is descriptive. Descriptive studies are undertaken in

many circumstances when the researches is interested to know the characteristic of certain

group such as age, sex, education level, occupation or income. A descriptive study may be

necessary in cases when a researcher is interested in knowing the proportion of people in a

given population who have in particular manner, making projections of a certain thing, or

determining the relationship between two or more variables. The objective of such study is

to answer the “who, what, when, where and how” of the subject under investigation. There

is a general feeling that descriptive studies are factual and very simple. This is not

necessarily true. Descriptive study can be complex, demanding a high degree of scientific

skill on part of the researcher.

Descriptive studies are well structured. An exploratory study needs to be flexible in its

approach, but a descriptive study in contrast tends to be rigid and its approach cannot be

changed every now and then. It is therefore necessary, the researcher give sufficient

thought to framing research.

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SAMPLE SIZE And METHOD OF SELECTION:

Questions and deciding the types of data to be collected and the procedure to be

used in this purpose. Descriptive studies can be divided into two broad categories: Cross

Sectional and Longitudinal Sectional. A cross sectional study is concerned with a sample of

elements from a given population. Thus, it may deal with household, dealers, retail stores,

or other entities. Data on a number of characteristics from sample elements are collected

and analyzed. Cross sectional studies are of two types: Field study and Survey. Although

the distinction between them is not clear- cut, there are some practical differences, which

need different techniques and skills. Field studies are ex-post-factor scientific inquiries that

aim at finding the relations and interrelations among variables in a real setting. Such studies

are done in live situations like communities, schools, factories, and organizations.

Another type of cross sectional study is survey result, which has been taken by me. A major

strength of survey research is its wide scope. Detail information can be obtained from a

sample of large population .Besides; it is economical as more information can be collected

per unit of cost. In addition, it is obvious that a sample survey needs less time than a

census inquiry. Descriptive research includes survey and fact finding enquiries of different

kinds of the major purpose. Descriptive research is description of the state of affairs, as it

exists at present. The main characteristic of this method is that the researcher has no

control over the variables; he can only report what has happened or what is happening. The

methods of research utilized in descriptive research are survey methods of all kinds

including comparative and co relational methods. The reason for using such needs to be

flexible in its approach, but a descriptive study in contrast tends to be rigid and its approach

cannot be changed ever now and then.

Defining the population

The entire aggregation of items from which the samples are drawn is known as the

population. In simple words the population or universe is any complete group of People,

companies, hospitals, stores, colleges, students etc.

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Data collection methods:

Data collection is a very important step in any research. It’s the pivot along which the whole research revolves. If the data collected is not appropriate then the whole research will be of no use.

Data Collection basically involves collecting the relevant data from various sources may be primary or secondary and then sorting the information so that meaningful information can be gathered from the sorted data.

Data can be collected from two sources:

Sources of Data Collection

Primary sources Secondary Sources

Primary Sources:

Primary sources include the data, which are first handed. They are collected directly from

the respondents using the data collection methods like the questionnaires, survey

interviews, direct observation, or tabulation. For primary data collection, we have to plan the

following four important aspects.

o Sampling

o Research Instrument

Secondary Sources:

Secondary sources are the sources in which data has already been collected by some other person or organization for their use and is used by the researcher for his purpose. These include websites, trade associations, journals, books etc.

The Company’s profile, journals and various literature studies are important sources of secondary data.

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My research is based on the mixture of both primary and secondary sources. I

have collected the information with the help of Questionnaire (primary data), journals and

websites (secondary data). Questionnaires have helped me to know about the needs of

the individual investors. Journals and websites have provided me the information about the

MF industry, its past and future performance. After the research problem, we have to

identify and select which type of data is to research. At this stage; we have to organize a

field survey to collect the data. One of the important tools for conducting market research is

the availability of necessary and useful data.

This survey conducted by the means of a Questionnaire. Both open and closed ended

question were put forward and a 3 point simple graphic rating scale was used at the end.

(Questionnaire attached in the annexure). The results were tabulated using simple

percentage methods.

Observation Method

The observation method is the most commonly used method especially in studies relating to behavior sciences. Observation becomes a scientific tool and the method of data collection for the research when it serves a formulated research purpose, is systematically planned and recorded and is subject to checks and controls on validity and reliability. Under the observation method, the information sought by way of investigator’s own direct observation without asking from the respondent. The main advantage of this method is that subjective bias is eliminated and it relates to the current happenings and also the respondent is independent to respond to a situation and can record the natural behaviour of the group.

Sampling Methodology

Sampling plays a very critical role in any research. A sample is the true indicator ofAny research methodology. The sampling can be done in the two ways:

1) Probability sampling2) Non probability sampling

Sampling Methodology :

Details of the sampling methodology, I have made questionnaire. The one is made for the

Customer.

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No. of questions in questionnaires for customer: 07

No. of question related to LG product: 03

No. of people met during the research: 200

No. of respondents during the research: 50

POPULATION (N): The Dealers working in LG & Customers of LG:

Existing & potential customer,

Authorized Dealers of LG,

& other brand Dealers.

= 800

SAMPLE SIZE (n): 85

Sample unit

Professionals, Business man,

Employees, House wife,

Working women, Students

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Scope of the study.

The scope of conducting this survey:

To examine whether the Company is consulted while formulating their goals, duties, responsibilities and standards of performance for the assessment period

To find out the level of satisfaction of the customers concerning the mutual goal setting process and to take their recommendations for the same.

To examine the level of satisfaction of the dealers regarding the appraisal given to them by their Suppliers.

To find out the effectiveness of the feedback sessions provided to them on their performance evaluation.

To study whether the appraisal process has been able to provide them with a good career path.

To study the level of satisfaction with the succession planning process

To find out the role of linking compensation and rewards with the appraisal process.

To study the level of motivation among the employees subsequent to the performance appraisal reviews.

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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 very small area.

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

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

drawback of my study.

3. Time factor was also important for me. I had only 60 days to complete my research,

for which a full-fledged report was insufficient for me.

4. The customer filled the questionnaire mostly in careless manner, so it was difficult to

make them hold for time.

5. I had only found the upper-middle class family to fill up the questionnaire, but

generally, an average middle class family was required for the study.

6. The sample size is also very small which represent my research on consumer

behavior.

My study is not recognizable in whole INDIA as well as outside Ranchi due to the above limitations and less area coverage.

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FACTS AND FINDINGS

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Dealer survey Facts & Findings

1. By calculating the display share we found that in most of store LG has 50% display

share almost all categories.

2. By the actual monthly sale of particular store we came to know the capacity of the

store and how much product can they sale.

3. It helps us to know that weather dealer is capable of being a direct dealer of LG or

not and it also helps to find out the new dealer who are capable of being the dealer

of LG.

4. We also came to know while visiting the shops that there was big problem of after

sale service.

5. Many dealers were facing the problem of after sale service because there is no

follow up calls from LG.

6. Demo calls also not done properly.

7. The top competitor of LG product in Pune is SAMSUNG.

8. In Pune area the performance of LG is in better position but the competitor also hold

closer margin.

9. There is high growth of sale in market due to booming in new technology and better

service.

Word of mouth plays a vital role in awareness among customer. This is one factor, which can play a good role in promotion of products as well as demonstration given by the shopkeeper also plays a vital role for customer.

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CUSTOMER SURVEY FINDINGS

1. Secondary supports play an important role in the customers mind and create

awareness among the customers. The secondary support includes Demonstration, Exhibition & Even Sponsors.

2. From the survey it was found out that the majority of customers don’t buy consumer

durables from exhibitions. They just visit the exhibitions to see the co. latest model.

3. They want to buy from the showrooms or from co. showrooms. For them service is

important .Beside convenience and other factors service is key factor.

4. Also majority of customers do not want any financing scheme for purchasing the

durables.

5. There was heavy rush on weekends so large numbers of ISD’s were appointed that

day. Also the live demo calls helps in selling. Exchange offers also generate sale.

6. Customers are also now very choosy in buying the product and it is important for the

company to make loyal customer of their brand.

7. In survey we found that LG has captured maximum market share in every

category. LG dominates CTV, LCD, and Refrigerator, and Washing machine,

category.

8. LG and Samsung have bottle neck competition in TV and REF. category.

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

Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand.

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KEY FINDINGS of Project Study:

The research findings of this survey speak of a robust and effective policy and process of the customer n dealers system being followed at LG India Ltd. Although there are a few short-comings, yet, the whole process of Motivation and Satisfaction at LG can deemed to term as Effective and Efficient.

Out of the given number of respondents:

1. 65 % of Customer has not purchased any consumer durable from exhibitions.

2. Only 35 % people have purchased.

3. It shows that consumers are coming in the exhibition for knowledge of product and

also they want to know that weather there is actual price difference in exhibition and

shop or not.

4. Consumer also wants to compare to the different brand which are available in the

exhibition.

5. So exhibitions are more useful to increases brand awareness.

6. People are less interested to purchase product from the exhibition.

7. 30% of customer gives importance to price. So it shows that Indian consumers are

very price sensitive. They give more importance to price over the brand.

8. 26% give importance to brand. So price and Brand matter a lots for the costumers.

And they are also want best brand in best price.

9. 19% to product feature Service 16% and durability 9% Service is also a big factor for

the customer they are less interested in the durability.

10. Customers prefer to change consumer durables within 5-10 years. In India

people do not change consumer durable frequently.

11. 23% customers do not change their consumer durable within 10 year.

12. It represent that Indian consumer do not prefer to change their consumer

durable frequently.

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Data analysis and interpretation

o Questionnaires

o Pie chart and Bar chart

Questionnaires:

This is the most popular tool for the data collection. A questionnaire contains question that

the researcher wishes to ask his respondents which is always guided by the objective of the

survey.

Pie chart:

This is very useful diagram to represent data , which are divided into a number of

categories. This diagram consists of a circle of divided into a number of sectors, which are

proportional to the values they represent. The total value is represented by the full create.

The diagram bar chart can make comparison among the various components or between a

part and a whole of data.

Bar chart:

This is another way of representing data graphically. As the name implies, it consist of a

number of whispered bar, which originate from a common base line and are equal widths.

The lengths of the bards are proportional to the value they represent.

Preparation of report:

The report was based on the analysis and presented with the findings and suggestions. The

sample of the questionnaires is attached with the report itself.

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Analysis:

Q1. Have you purchased any consumer durable during Exhibitions?

Yes

No

Inferences

65 % of Customer has not purchased any consumer durable from exhibitions.

Only 35 % people have purchased.

It shows that consumers are coming in the exhibition for knowledge of product and also

they want to know that weather there is actual price difference in exhibition and shop or

not.

Consumer also wants to compare to the different brand which are available in the

exhibition.

So exhibitions are more useful to increases brand awareness.

People are less interested to purchase product from the exhibition.

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Q.2 While purchasing consumer durable which parameter influences you?

Price

Product feature

Brand

Service

Durability

Inference

30% of customer gives importance to price. So it shows that Indian consumers are

very price sensitive. They give more importance to price over the brand.

26% give importance to brand. So price and Brand matter a lots for the costumers.

And they are also want best brand in best price.

19% to product feature Service 16% and durability 9% Service is also a big factor for

the customer they are less interested in the durability.

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Q3. From where you prefer buying consumer durables

Exhibitions

Co.shoppee

Showroom

Inference:

1. A majority of customers prefer to buy from showrooms. Very less proposition of

customers buys from Exhibitions.

2. 47% customers are prefer to by from the showrooms because the showrooms are

more convenient to customers they also think that these shops give more discounts.

3. People are less interested to buy from the exhibition they only visit the exhibition for

price quotation of the product and the comparison of the product.

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Q.4.You prefer to buy from the same as you have mentioned in Q.3

because of following reasons

Attractive Price

Service

Demonstrations

Offers

Inference

Customers buy from showrooms because of the service and convenience. These are

two main factors.

Customers are preferred to buy from the showroom because of they think that these

convenient store may provide good after sell service.

Customer also thinks that there is more chance to bargain and they can get more

discounts in these showrooms.

Price also a factor that attract the customer in these showrooms.

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Q.5.Which consumer durable you have and of which brand?

CTV

LCD

PLASMA

REF

WM

MW

AC

Inference

In CTV section maximum customers have Onida, in LCD Sony is the leader, in plasma BPL is the leader, In Ref LG is the leader, and MW LG is the leader. In WM there are companies and in AC also.

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Q.6. How frequently you change your consumer durables?

1-3 years

3-5 years

5-10 years

More than 10 years

INFERENCE

1. Customers prefer to change consumer durables within 5-10 years. In India people do

not change consumer durable frequently.

2. 23% customers do not change their consumer durable within 10 year.

3. It represent that Indian consumer do not prefer to change their consumer durable frequently.

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Q.7.Do you prefer any financing scheme to purchase consumer

durables?

Yes

No

INFERENCE

Majority of customers do not prefer any financial scheme.

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SWOT ANALYSIS

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A SWOT analysis is an integral part of a marketing plan can- can also be part of a business plan.

What is SWOT analysis?

A SWOT (strength, weakness, opportunity, Threats) is a tool used to provide a general or detailed snapshot of a company health.

Why use a SWOT analysis?In any business it is important that the business be its own worst critic A SWOT analysis forces an objective an objective analysis of a company position vis a vis its competitors and the market place. Simultaneously and effective SWOT analysis will help determine in which areas a company is succeeding allowing it to allocate resources in such a way as to maintain any dominant position. It may have below are numerous ex. SWOT analysis for sale.

o Strength

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.

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

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.

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.

The upper-middle and high-income household in urban areas are expected to grew to 38.2 million in 2008 as against 14.6 million in 2000.

Knowledge reliance communication is ranked fastest growing company.

It has loyalty of customers and vendors it is local.

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.

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o Weakness

Company has a large physical network so sometimes it is difficult to manage all this in an idle manner.

In comparison to strong competitors the visibility of LG Pune is not satisfactory.

Customers are found only in cities.

Lack of Service centre’s in village areas.

o Opportunity

The financial strength of this group is backbone of Organization.

The company provides in depth training to their employees and front line sales Dealers.

As LG target market needs more services the competitors are less likely than ever to provide it their business model does not include service just selling.

The good Brand image of organization can help and recommend organization to proceed further with new electronic items.

In India the penetration level of white goods is lower as compared to other developing countries.

Unexploited rural market.

Increase in income level, i.e. increase in purchasing power of consumers.

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Threats

Higher import duties on raw materials.

Cheap imports from Singapore, China and from other Asian countries.

The strong competitors of LG. Samsung just signed an agreements with

whirlpool by which both will increase its network across country.

time is going to be very tough.

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CONCLUSION

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CONCLUSIONS OF THE STUDY UNDERTAKEN

As it is clearly analyzed from the above description LG is doing a great job in Market Relationship. LG has done a great job in the field of public relations in the form of customer satisfaction and providing a value to its customer base in the country. It has fulfilled its social responsibility by organizing free health camps for its customers. LG is making efforts to minimize environmental pollution and to prevent accidents which might occur during business operations, to promote a policy to preserve the natural environment and contribute to the overall health of our employees and communities where we conduct our business. But it has a lot to do more create a good brand image for its customers so that it may become a trusted brand for its customers.

A great degree of empowerment has been viewed throughout the organization leading to employee innovation and creativity.

Delegation of authority has been done with much thought and precision making the employees feel empowered.

Mutual goal setting has proved to be very effective tools in making the employees club their personal goals with the goals of the organization leading to the tendency of the employees’ exhibit a feeling of “ownership” in the vision and mission of LG.

Today, customer or user is very aware of its right and duties, profits and losses and understand what is wrong or right. He takes decision after collecting information from all sources and after analyzing them according to his requirement and benefits. LG got this point very clear in its mind.

In the past few years LG has touched the heights of success by introducing a wide range of Gadgets and other medium of electronics which are extremely advantageous at every step of our lives, whether it be home or office it is in our service 24hours.

The process of the system of Dealer handing was very well driven.

Customers are very satisfied by Lg’s Service.

The internal environment of the organization is playing much important role than the external one.

Customers buy from showrooms because of the service and convenience. These are two main factors.

65 % of Customer has not purchased any consumer durable from exhibitions. Only

35 % people have purchased.

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30% of customer gives importance to price. So it shows that Indian consumers are

very price sensitive. They give more importance to price over the brand.

Customer also thinks that there is more chance to bargain and they can get more discounts in these showrooms.

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RECOMMENDATIONAND

SUGGESTIONS

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Reccomondations & Suggestions:-

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

market share in Pune region.

2. More detailed customaries service is to be provided.

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

interval and feedback 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.

11. Importance should be provided to every dealer equally.

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CONSUMERS RECOMMENDATIONS AND SUGGESTIONS

1. Exhibitions do not help to generate so much sells but they should be

conducted regularly. This helps in generating awareness regarding the

product in customers which ultimately helps in sales.

2. Also it is helps in advertising for the new products. Like in this exhibition

new LCD SCARLET was advertised. Company should always focus on

service.

3. Display share should be increased where there is less than 50% as LG

also believes that “JO DIKHTA HAI WO BIKTA HAI”.

4. Company should try to improve service. No doubt the company products

have technically edge over competitors but in long run it may hamper the

company’s profit.

5. Company should concentrate more on its major drivers LCD, IT, and

GSM. Branding and promotions should be done effectively as it creates

a long lasting image in the mind of customers.

6. Company should also cater to the needs of sub dealers as some of the

sub dealers have potential of high sales.

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APPENDIX

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QUESTINNAIRE

Consumer survey Questionnaire

Q1. Have you purchased any consumer durable during Exhibitions?

a) Yes

b) No

Q.2While purchasing consumer durable which parameter influences you?

a) Price

b) Product feature

c) Brand

d) Service

e) Durability

Q3. From where you prefer buying consumer durables

a) Exhibitions

b) Co.shoppee

c) Showroom

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Q.4.You prefer to buy from the same as you have mentioned in Q.3

because of following reasons

a) Attractive Price

b) Service

c) Demonstrations

d) Offers

e) Convenience

Q.5.Which consumer durable you have and of which brand?

a) CTV -------------------

b) LCD -------------------

c) PLASMA -------------------

D) REF -------------------

E) WM -------------------

F) MW -------------------

G) AC -------------------

Q.6. How frequently you change your consumer durables?

a) 1-3 years

b) 3-5 years

c) 5-10 years

d) More than 10 years

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Q.7.Do you prefer any financing scheme to purchase consumer durables?

a) Yes

b) No

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ABBREVIATIONS

A.S.I Area Service In charge

A.S.M Area sales manager

B.S.I Branch Service In charge

CAC Commercial Air Conditioning System

C.S NET Customer Service Net

D.S.C. Direct service centre.

L.H.D Logistics Head of department

R.E.F Refrigerator

P.P.P Purchasing Power Parity

CTVS Color televisions

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MNCs Multinational companies

(LG) Lucky and Gold star

(LG) in current Life Good

(FIPB) Foreign investment promotion board

(LGEIL) LG Electronics India Ltd

DMS Digital manufacturing system

WM washing machine

AC air conditioners

FMFO first made first out

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BIBLIOGRAPHYWebsites:-

www.lgindia.com

www.google.com

www.wikipedia.com

Magazines:- Business world October 2009

Business today December 2009

LG magazine February 2010

BOOKS

Marketing Management (10th Edition), Marketing Management (3rd Edition), Research Methodology (2nd Edition), Research Methodology (3rd Edition).

AUTHORS:

Philip Kotler, V.S. Ramaswamy, C.R.Kothary, S.P. Kasande

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