Lg Brown Goods

Project on LG Contents burster3 Mission Statement3 Vision3 Core Values3 How the present strategies are within the mission, wad and core note values3 Present Strategy3 Market compend3 Segmentation3 Targeting4 Positioning4 Needs4 PESTLE Analysis4 Political factor4 Economical factor4 Socio-cultural factors5 Technological factors5 healthy factors5 Environmental factors5 diligence/ emulous Analysis6 Industry in which LG Competes6 Industry performance for last 5 yrs and projections for beside 3 eld6Market piece of ground of Top 5 players by portions7 Market share of organized and unorganized for last class and projection for near tether years8 Industrys 5 competitive forces9 Indirect Competitors of LG Electronics (Brown goods) 9 Top Direct Competitors of LG Electronics in INDIA 9 Competitive advantages of Samsung Electronics 10 Competitive Advantages of Sony Electronics 10 Competitive Advantage of Videocon 10 cram Analysis of LG Electronics 10 Performance Review11Past pe rformance of the harvest-time and elements of the marketing mix11 Objective of the caller-out13 Mission Mission Statement To become a top advanced electronics confederacy in the orbit. It takes pride in its company and employees and believes that this is what exit make it into one of the most innovative companies of the 21st century. Vision LGs vision is to deliver innovative digital products and services that make our customers lives go, easier and happier through increased functionality and fun. Core ValuesGlobal, Tomorrow, Energy, Humanity and Technology are the pillars that this corporation is founded on with the capital letters L and G positioned inside a circle to centre our ideals above all else, humanity. The symbol mark stands for our fragmentize to establish a lasting relationship with, and to achieve the highest satisfaction for our customers. How the present strategies are within the mission, vision and core values By tackleing the Blue marine Strategy LG will be able to sustain its leadership position.BOS fork ups a systematic way of identifying and creating high growth opportunities. LG is looking not just to control its leadership position in India, but to continue to grow, and to transition from a mass stigmatize to a premium one. Through the adoption of this policy, LG plans to launch products or services which create or significantly increase its market shares and profit by offe frame differentiated values in view of customers. The move to adopt Blue Ocean Strategy is seen as an ambitious drive to resurrect LG globally.The strategy aims at designing in order to exploit opportunities, so uttermost untapped either within the present sections of LG or outside, where there is zero or negligible contestation. Present Strategy * Local and efficient manufacturing to reduce damage * Product localisation LG came out with regional language menus on its TV * Introduction of low priced products for the rural market especially in the TV segment * LG has adopted the regional distribution model in India * Offering affordable products at a lower margin cutting on multitude to ring in revenues * LG is adopting the Blue Ocean Strategy (BOS) in India as part of its global strategy * BOS gives a frame work for breaking forth from the competition to achieve high customer value and profitability simultaneously * Blue Ocean Products are products and services which create a differential value for the customer, thus opening up vast, new markets to drastically improve profitability and market share * Blue Ocean Business Model is one that focuses the efforts of the company on providing differentiated value to customers. Market AnalysisSegmentation Demographic Higher income group Occupation Geographic Tier 1 and Tier 2 cities Psychographic Loyalty precondition switcher loyal because product of different need are taken from different brand considering superiority Usage rate high in cost of usage user life stage marriage s and other life stage are when brown good and eletronics are bought benefts for consumer who seek well-beings derived with tech occassion bought mostly on festive season so provided with various schemes. Behavioural LG look for Value and lifestyle which people believe they correspond to. TargetingLG has targeted its market on the basis of the product that they are saying to the consumer. upper-lower and higher segments people more concern to health benefits, life style and fibre products LCD and Plasma TV for premium segment trying to shift to mid class and mass market of product selective specialization Positioning Differentiate product on technology which invoke to consumer on basis of health benefits worry health wave system for oven, golden eye for TV its tagline describes to make people life better satisfied and healthier they try to position as young vibrant and premium brand NeedsNeeds met by the LG brown n electronics product ease of use, higher readiness PESTLE Analysis Political factor Taxation policies, foreign mete out regulations, trade policies are the important political factors. LG must follow the compliances given by the political relation like the Environmental Protection Agency. Sales volume gets negatively affected due to any change in the policies or foreign trade regulations. It will cause consumer to pay more for products. There is a possibility that the change in government can confirm an effect from the support of LGs Research and Development. These political factors areHigh import duty Export promotion scheme of Indian government like EPCG(Export Promotion Capital Good Scheme), EOU(Export Oriented Units) status Plants in Tax incentive nations like Pune, Greater Noida. Economical factor Price wars is the biggest economic factor for LG. LG has used competitive strategies like localization and adapting it to different markets. Making it easier to grab consumers attention with products that are easier for their e veryday l iving. In India, LG unfastened manufacturing facilities that begun with the R&D looking at what competitors have already brought to the arket and made their product unique and geared towards the consumers needs. Things that may affect sales volume from a economic stand point is a jerky change in consumers income. So LG would have to look in to how they can make products more affordable for consumers in recession. In India GDP is rising. Per Capita Income is increasing, so sp end uping power of consumer is increasing. Socio-cultural factors LG went into the market in India with all the right tools. They adapted to the market and immediately began to be the innovators of that market.They have given back to the society by providing them with employment opportunities by building manufacturing plants. They are manufacturing eco-friendly products and increasing the life style of the people. Within the social factor, LG has been able to achieve a higher sales volume in India. Technologic al factors LG has always been a leader in innovation from the 1980s so technology is the important factor for them. LG is expanding in 3G Network technology. In India, Reliance incorporation with LG has 3G plans made for smart phones. LG cleard its LG Optimus 3D to the market in India.Improvement in technology made the product cheaper and quality of product has been increased. Legal factors Legal factors like employment law and consumer protection law can also affect the start-up of a company. Employment laws, like how many people a commercial enterprise employs the number of employees in each location, the minimum number of employees specified in the employment law etc. Consumer protection law protects consumers from fraudulent or unethical business practices, misleading advertisements, and defective products. So, these are some of the laws that businesses must abide before starting a venture.Environmental factors LG must follow the compliances given by the government bodies like the Environmental Protection Agency which also monitors the implementation. The company was penalised for failing to meet its commitment to make products free of polyvinyl chloride (PVC) plastic and brominated flame retardants (BFRs) by the end of 2010. All of LGs mobile phones are now free from PVC and BFRs while other products such as TVs and notebooks contain PVC/BFR free parts LG aims to manikin these substances out from TVs monitors and PCs by 2012 and household appliances by 2014.In the Guide the company scored badly on the Energy criteria, being criticized for setting a weak target for the decline of commonhouse gas emissions and not making renewable energy part of its low carbon strategy. LG scored most points in the Sustainable Operations category with the company providing take-back for obsolete phones in 52 countries and being in the process of addressing the issue of conflict minerals. LG is now following a green product strategy. The objective of LG Electronics gre en product strategy is to minimize the environmental impact on the whole value chain while enriching lives.The strategy consists of three components energy, human and resources. The strategy is ground on a model that takes into consideration high energy efficiency, a reduction in raw material usage, and human welfare. Industry/ Competitive Analysis Industry in which LG Competes LG Competes in Consumer Durables industry. Theconsumer durables industryemerged in the twentieth century and has now become a global industry expense billions of dollars. * LG specializes in the manufacturing of consumer durables The scope of our report covers LGs brown Goods which include * Television * Audio-Video dodgings Computers * Electronic Accessories Industry performance for last 5 years and projections for next 3 years * We believe that the Indian consumer durables industry will post sloshed double digit growth of 15% over the next 3 years. * We believe that the industry will continue to grow l ed by lower penetration, increasing disposable income, easy credit availability match with declining prices. Increasing rural demand would be the key feature of the industry growth going ahead. * However, increase in raw material prices and intense competition among players, are key challenges for the industry. In a scenario of shorter product life cycles and increasing competition, we believe that the companies with strong RD, wide distribution network, strong brand would benefit most from the strong industry growth. * We believe that the consumer durables industrys growth has been two pronged (a) driven by lower penetration in rural markets and (b) new innovations and replacement demand in urban markets. Source Display search ,CEAMA, GEPL, Capital Research Market share of Top 5 players by segments Source Display search ,CEAMA, GEPL, Capital Research Source Display search ,CEAMA, GEPL, Capital ResearchMarket share of organized and unorganized for last year and projection for next three years Present Scenario At present around 97 per cent of the more than 5 billion retail set forth of all types in India are smaller than 50 sq mtrs. So organized retail forms only 3% of the total retail sector in consumer durables industry. Prediction for the future The urban and rural markets in India are growing at an annual rate of 7 to 10 per cent and 25 per cent respectively. One of the key enablers of this growth has been the increasing penetration of organised retail.While there are established distribution networks in both rural and urban India, the forepart of well-known brands and organised sector is increasing. This situation is, however, transforming. Shopping malls are becoming increasingly common in Indian cities, and based on plans announced by key developers, a proliferation of new malls is expected over the next three years. Although many of the new malls would be much smaller than their western counterparts , Indian consumers will have a far larger number of attractive, comfortable, brand-conscious outlets in which to shop.As a result, the organized retail industry is expected to cover a market share of 15 to 18 per cent by the end of 2010, from just 3 per cent at present. This will have a positive impact on the consumer durables industry, as organized retailing would not only streamline the supply chain, but also facilitate increased demand, especially for high-end and branded products Industrys 5 competitive forces Indirect Competitors of LG Electronics (Brown Goods) The collateral competitors of LG electronics brown goods such as television, audio systems and cameras are the manufacturers of modern computers and laptops such as Lenovo, H.P and Dell. Modern laptops offer a variety of multidimensional features to the consumers who use them. For instance they can be used as a television, as a video and audio harmony player or even as a camera as it hosts all these capabilities in itself. thusly it provides indirect competition to firms which produce the exclusive gadgets religious offering these services on a single unit basis. Another form of indirect competition is fixd by the major mobile phone manufacturers of the world such as Apple, Nokia, Samsung and H. T. C.Modern mobile phones have become very sophisticated and encompass a variety of multimedia features such as gaming, videos, music, camera and the internet. Thus it is acting as a one for all device today and thereby poses indirect little terror to dedicated players offering singular service gadgets such as T. V, Music systems or D. V. D players. Also LG faces indirect competition from cheap imitations and imports especially from China and Singapore. These products though poor in terms of quality are very economical and hence cater to a wide range of rural consumers who are extremely price conscious.They can easily grease ones palms these cheap electronic goods at low prices. Thus, they are eating away a possible market share of LG electronics and thereby acting as an indirect competitor to it. Top Direct Competitors of LG Electronics in INDIA 1. Samsung Electronics 2. Sony Electronics 3. Videocon Competitive advantages of Samsung Electronics Samsung electronics gains competitive advantage by innovations in the process of product manufacturing, design and development. It has a very strong research and development unit that is working continuously to offer new and innovative product designs.Its speed of execution is perhaps its biggest strength. The time gap amongst product visualization and its actual delivery is very short which helps it offer the latest in technology trends to its customers in a short span of time. It maintains a very talented pool of creative people who help in driving its technological innovations. It has also been able to feel the pulse of the customers over the years and has been successful in offering product features which were highly desired by the customers at acceptable prices.Competitive Ad vantages of Sony Electronics The biggest advantage possessed by Sony Electronics is its strong brand paradigm which it has been able to build over a period of time. Its core competence includes the miniaturization of products which involves making products and its components of very small sizes without compromising on its quality. It has a not bad(p) research and development wing that helps it come out with cutting edge breakthroughs in technology and innovation. Thus, it has been able to offer products with high quality.It has been successful in creating a pool of loyal customers from urban and semi urban areas who seek advanced high quality products without being too concerned about the price factor. Competitive Advantage of Videocon Videocon has gained competitive advantage in the electronics industry by offering technologically advanced good quality products at relatively low prices. It strives to provide the best possible service at the lowest possible prices. This has enabl ed them to become a hot favourite among the price sensitive Indian consumers especially those belong to rural areas having low purchasing power.It uses strategic planning and vendor management to achieve operational efficiency. It has been able to penetrate a wide market area due to its efficient distribution systems. It has the largest distributed manufacturing base in India having twelve facilities across the country. Thus it has been able to manage a complex supply chain effectively. SWOT Analysis of LG Electronics Strengths 1. LG electronics is one of the market leaders in home appliances segment in India and so enjoys a position of strength in the electronics industry. 2.Most of the LG products are of naive design and very ease to use which helps it in satisfying its customers and building trust. 3. It has alliances and partnerships with major technology companies of the world such as G. E, Siemens and Microsoft etc. 4. It has a very wide range of product categories to tap c onsumers of various segments. 5. It has one of the widest distribution networks in the industry with more than 47 branches and 175 area offices. 6. It has a strong RD division which helps it to come out with technologically advanced products. Weaknesses 1.The after sales service of LG is not perceived to be up to the mark as customers are not highly satisfied with it. 2. It has similar product categories and features as compared to its nigh(a) competitors. 3. It has not been able to create a stringy brand image for itself in the market. 4. It is often directly compared to its biggest competitor Samsung and its supremacy over other brands is overlooked. 5. It has not been able to attract the top talent in the form of highly skilled employees to its fold. Opportunities 1. The rural market in India is growing as the economic condition of the areas is improving at a fast rate.This has opened a huge potential for sales in these areas for LG. 2. The consumer electronics industry in In dia is also poised for further growth thereby giving ample luck to LG to expand its scope. 3. There will be great opportunities to launch new products in the future as technology is advancing and consumers are always on the lookout for something new. 4. LG has the opportunity to become the leader in white goods market as well by leveraging its supremacy in the other electronics fields. Threats 1. The biggest threat to LG electronics is from its biggest competitorSamsung which is also from South Korea and is a dominant force in the Indian Electronics market. 2. There is a threat of entering into a price competition with its close competitors that could lower its profit margins. 3. The short product life cycle of electronic products is also a threat to the company as they become obsolete very quickly. 4. The changing government regulations on health, safety and environment issues may also pose a threat to the operations of LG. 5. Cheap imitations and imports from China also pose a sm all degree of threat to its sales. Performance ReviewPast performance of the product and elements of the marketing mix LG Electronics is doing everything it can to retain its number one position in the Indian brown goods consumer durables market, estimated at Rs 35,000 crore. With more than 30 per cent share of this market, it now expects its India operations to overtake its Korea sales in the next three to four years. LG Electronics India is targeting revenue of Rs 20,000 crore (the figure currently is Rs 16,000 crore) through rapid expansion and new product launches. It is investing Rs 800 crore to expand production capacity, and the advertising budget is Rs 700 crore for this year.LG is direction on key innovations including 3D TV, mobile digital television, and new solar cell business. The performance highlights Sales have been shown according to product and place. The following map shows the percentage contribution made by different product categories in total sales of LG Com pany. The chart shows that major part of LG revenue comes from brown goods (Home delight and Mobiles). The chart below shows the breakup of sales region wise Source 1. Business Standard article June, 2012. 2. Annual Report-LG, 2011 Product Product localisation is a key strategy used by LG. LG came out with Hindi and regional language menus on its TV. Introduced the low-priced Cineplus and Sampoorna range for the rural markets. LG was the first brand to introduce gaming in CTVs. In continuation of its association with cricket, LG introduced the cricket game in CTVs. Price To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi. LGEIL had already commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. This has helped LGEI to reduce costs.LGEIL is implementing a digital manufacturing system (DMS) as a cost-cutting innovation. This system is a devour to the Six Sigma exercise LGEIL had i nitiated earlier. Place (Distribution) LG has adopted the regional distribution model in India. All the distributors work directly with the company. This has resulted in quicker rotation of stocks, and better penetration into the B, C, and D class markets. LG also follows the strategy of stock rotation, rather than dumping stocks on channel partners. LG has over 46 branch offices and another one hundred ten areaoffices across the country.LG had set a target of developing 2,000 dealers, in addition to the existing 3,000 dealers all over India Promotion To make itself a known brand in the consumer electronics sector, LG has taken innovative marketing and promotional initiatives Launch of new technologies in consumer electronics and home appliances. 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. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more than USS 8 milli on on advertising and marketing in this sport. LG has differentiated its products using technology and health benefits. The CTV range has Golden Eye technology, air-conditioners have the Health Air System and microwave ovens have the Health Wave System. Objective of the company LG Electronics India aims Rs 16,000 crore sales turnover in 2012. The Indian unit of South Koreas LG Electronics expects to double its revenue to $9 billion by 2015, a top executive said, as rising incomes and growing urban households expand the consumer durables market in Asias leash largest economy. LG Electronics Inc, the worlds No. TV brand, said on Sunday it aimed to increase its global market share in LCD TVs to 15 percent this year from 11 percent last year by boosting unit sales by 54 percent. LG Electronics is aiming at a 50% market share in the 3D TV market this year, as against 40% last year with the launch of its latest series of film 3D Smart TVs priced in the range of Rs 55,000 to Rs 7,00,000, self-praise of worlds slimmest bezel TVs. Soon Kwon, MD, LGEIL says, We are targeting business worth Rs 1000 crore from 3D TVs and aim to consolidate our position in the Flat Panel TV segment with 30% market share.We have an aggressive marketing strategy with target investment of Rs 100 crore. The new range is also accompanied by new Cinema 3D glasses for 2012. Adds Kwon, 3D entertainment is set to explode in India at a steady growth of 500%. We are anticipating the size to go up to 5 lakh units this year, as against 1 lakh units last year. LGs aim is to increase export from India to about 40%. LGs estimated sales(in million) of year ending dec12 is 47 and dec13 is also 47.