A
PROJECT ON
“BRAND LG”

[pic] Presented By:
Gurjit Singh – 3022
Heman Makwana – 3023
G. Kalaiarasan – 3025
Kalpana Patel – 3026
Acknowledgement

We would like to thank Prof Sohan Mahanty for providing us with such an important and challenging opportunity of preparing a project report on Branding which has enabled us to learn a lot about the Branding strategies, LG’s product innovations and marketing tactics for the Indian market.

It is a matter of great pleasure to express our sincere gratitude and thanksgiving to our Director – Dr. Bigyan Prakash Verma.

Last but not the least, we extend our sincere thanks to all the people who helped us directly or indirectly in way of ideas and valuable thoughts for making this project, a grand reality.

History of LG Brand:
| LG's history dates back to 1947 when Lucky Chemical Industrial Company (LCIC), the first chemical company in South Korea, was |
|established. In 1958, LCIC started Goldstar Company to manufacture consumer durables. Within a year of its inception, Goldstar manufactured|
|South Koreas first radio, A 501. |
|In the 1960s, it started exporting radios to the US and Hong Kong and manufactured Korea's first telephone, refrigerator and black & white |
|television. With the consumer durables business picking-up, LCIC changed its name to Lucky Goldstar. |

Since South Korea was a small market, Lucky Goldstar expanded its operations to foreign countries and established its first overseas branch in New York in 1968. In the same year, it manufactured Korea's first air conditioner. By the 1970s, Lucky Goldstar became the first Korean consumer electronics company to get listed on the Korean stock exchange and in 1977 its sales reached 100 billion. In 1995, Lucky Goldstar changed its name to LG Electronics, during its corporate restructuring .Presently, LG Electronics, Inc. (LG) is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people working in 114 operations including 82 subsidiaries around the world. With 2007 global sales of USD 44 billion*, LG is comprised of four business units - Mobile Communications, Digital Appliance, Digital Display and Digital Media. LG is the world's leading producer of CDMA/GSM handsets, air conditioners, front-loading washing machines, optical storage products, DVD players, flat panel TVs and home Theater systems. LG's efforts continue to enhance the global presence of the LG brand and to maximize profitable growth. In particular, LG Electronics will focus on achieving profitable and sustainable growth in the mobile communications and digital display sectors to strengthen its leadership in the IT industry, while at the same time increasing its market share in the home appliance and digital media sectors.

Evolution of Logo:

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LG began its life as two companies: Lucky (or Lak Hui) Chemical Industrial (est. 1947), which made cosmetics and GoldStar (est. 1958), a radio manufacturing plant. Lucky Chemical became famous in Korea for creating the Lucky Cream, with a container bearing the image of the Hollywood starlet Deanna Durbin. GoldStar evolved from manufacturing only radios to making all sorts of electronics and household appliances. In 1995, Lucky Goldstar changed its name to LG Electronics. Actually, LG is a chaebol (a South Korean conglomerate), so there’s a whole range of LG companies that also changed their names, such as LG Chemicals, LT Telecom, and even a baseball team called the LG Twins. These companies all adopted the "Life is Good" tagline you often see alongside its logo. Interestingly, LG denies that their name now stands for Lucky Goldstar… or any other words. They’re just "LG."

LG logo:

| The LG logo shown alongside is a fairly interesting logo. As you can see the logo has the alphabets, L & G in the form of a |
|face. The symbol consists of two elements: the LG logo in LG Grey and the stylized image of a human face in the unique LG Red color. |
| |

• The letters "L" and "G" in a circle symbolize the world, future, youth, humanity and technology. The symbol also represents LG's efforts to maintain close relationships with our customers worldwide. • Red, the main color, represents friendliness, and also gives a strong impression of LG's commitment to the best.

Design The circle symbolizes the globe. The stylized image of a smiling face in the symbol conveys friendliness and approachability. Overall, LG’s symbol represents the world, future, youth, humanity, and technology.

One eye Goal-oriented, focused, confident.
Upper- right hand space Intentionally left blank and asymmetric, which represents LG's creativity and adaptability to changes.
Colors
LG Red, the main color, symbolizes friendliness, and also gives a strong impression of LG's commitment to be the best. LG Grey represents technology and reliability.

LG In India: Established in 1997, LG Electronics India (LGEI) is a wholly-owned subsidiary of LG Electronics, South Korea. It is one of the leading companies in consumer electronics, home appliances and computer peripherals in India. It has a turnover of almost US$ 1000 million in India. LGEI’s sales are increasing with a CAGR of 40 per cent over the past five years.

In less than 2 years of entering the Indian Market LG notched up substantial market share 6.5% of the 4500 crore CTV 8% of Washing Mashines 9% of Microwave Ovens 37% of Refrigerators

LG is now the market leader in various segments like Color TVs, microwave ovens, frost-free refrigerators, washing machines and air-conditioners, with market shares of 26.2 % in CTV 41.2% in Microwave Ovens 37.9% in Refrigerators 34.1% in Washing Machines and 34% in Air Conditioners.

LG Electronics India received the Occupational Health & Safety Management System OHSAS 18001:1999 certification from the British Standards Institution (BSI), India, for a systematic approach towards Occupational Health and Safety Management System. LGEI exported goods and services worth US$ 40 million in 2003. The major export markets for LGEI are the Middle East, West Africa and Central Asia.

Initial Challenges In India:
The challenges faced by LG when it entered the market in 1995 were

• Low brand awareness about LG in India. • One of the last MNCs to enter India. (Samsung, Sony & Panasonic entered in 1995 & LG in 1997.) • High import duty. • Competition from local players and other multinational companies in the consumer electronics segment. • Price sensitiveness of Indian consumers. One criticism of the South Koreans is that they are extremely difficult to work with, and one keeps hearing about how Indian managers don't last long while working with South Korean companies. But ask the Indian consumers. They love their products. According to ORG consumer research figures, the combined share of South Korean consumer electronics giants Samsung and LG in almost all the categories is over 50 per cent. It is also a fact that the consumer electronics industry in India defies every marketing norm. Early starters have an advantage but late entrants are not necessarily poorly placed either. This is a story about South Korean giant LG Electronics which rose from nowhere to become a market leader in consumer electronics in India within a decade of its existence — but today finds itself in the unenviable situation of having to fight harder to retain its position. "LGEIL (LG Electronics India Ltd) did face obstacles initially, but from the very start we were determined to succeed," says the company's Vice-President for Sales and Marketing, Girish Rao. There were various bottlenecks. Before 1994, the perception of Korean companies was the biggest challenge. LG’s first task, therefore, was to bring about a 360-degree change in perception and instill faith and respect among Indians for Korean products. Says D. K. Sabharwal of Abacus, a consultancy firm whose clients include Whirlpool, Airtel, and Pepsi: "LG had a very good entry strategy. Its trading model was sound and was backed up by a very innovative product line." While some of the other companies gave credit to win over the trade, LG did the opposite. It asked the trade to pay up first, which forced the dealers to push LG products rather than those of others. To back up such a strategy, LG came up with innovative products, packaged them well and created an aura around them. LG had to work hard to gain respect for South Korean brands and one of the companies which benefited from it was a compatriot, Samsung.

Competition from Home: When Samsung entered India, according to an industry source, it got its focus wrong as it targeted a few products which included printers but later spread itself too thin. Perhaps LG's efforts to prepare the foundation for the success of South Korean brands also helped Samsung when it got its focus right. And now the battle to win the race is entering a crucial stage. Having to compete with another brand from the same country isn't helping matters either. Even if LG does not like it, customers always compare LG and Samsung products and not another foreign brand. But ORG figures indicate that in most categories, LG still leads by a good margin. The groundwork for this was laid with some carefully thought out plans. When LG started its foray, it realized that India was not just one market. It was an agglomeration of numerous sub-markets, defined by the various regions of India. "So there was a great need for demographic customization, which fortunately, we learned and put into action at the initial stages itself," says Girish Rao.

Strategies adopted to tackle Competition The super-premium price and positioning of technologically superior Japanese brands like Sony and Panasonic made them inaccessible to most of the Indian market. On the other hand, lower-priced Indian brands offered old-generation products; they did not invest sufficiently in R&D because they were not able to launch new products quickly enough to amortize those costs. LG understood these drawbacks and hence planned a strategy of branding their products as "value-plus" counting on volume to bring in revenues. LG, too, has increased its attention to customer service. Earlier in the year 2008, the company launched its "211" initiative, where it promises to call back the consumer within two hours, fix an appointment within one day of registering the call, and allocate a one-hour slot to fix the problem. The idea is to provide service at the customer's convenience, says a company spokesman. Like Samsung, LG has a call center, 8,000 engineers and 1,200 service centers across India. LG has always laid stress on product innovation. LG has budgeted US$50 million for R&D and manpower in the coming 12 months. LG initiated the health platform and communicated the Health Benefits of its products thereby taking an emotional route to differentiate its products and get closer to the consumers.

Repositioning Brand : South Korea-based LG Electronics is globally repositioning the LG brand identity and so is its local unit, LG Electronics India, with the theme of `Harmony of smart technology in stylish design to fit into’ in India. In order to adopt the global brand repositioning strategy, LG Electronics India is charting out three major corporate and marketing initiatives for the Indian market. 1. Plan to upgrade 100 brand shops with new retail brand identities of LG in India by mid-next year in order to reflect new identities to give a premium shopping experience to its customers. 2. There will be communication reflecting brand identity and flagship products at brand shops, which is consistent to LG’s new brand identity. 3. A consistent product roadmap in delivering the new brand identity, to make sure that execution translates into communication.
Promotional Strategies: Of all the elements of marketing mix, LG seemed to have put more emphasis on promotion and advertising. Some analysts are of the opinion that the cornerstone of LG's strategy was its heavy advertising. In 2002, it spent around 1.3 billion on advertising. An ad agency which handled the account of one of the LG's rivals, commented: "Communication creates a mind space among the consumers and LG has occupied that fairly well." Unlike many Indian brands which advertised seasonally i.e., (two-three months of the festival season-September, October and November), LG advertised all round the year, this resulted in high brand recall and successful positioning. In all the communications of LG, the USP remained the same for individual products. For refrigerators, it was "preserve nutrition"; for CTVs, it was "less strain on eyes"; for air conditioners, it was "healthy ambience and air quality"; for washing machines it was "fabric care" and for microwave ovens it was "healthy cooking".
Some promotional steps taken by LG is given below by year wise
2003:
• World Cup: LG has reportedly paid about $25 million to the ICC for becoming the official sponsor of the tournament. It aired 22 ad films (featuring the captains of the various cricket teams). And It achieved a sales turnover of Rs 920 crore in the period (January to March 2003) which will amount to a 60 per cent growth over the same period last year. • Patakha Ghumao Inam Pao: LG has launched its mega consumer offer for Diwali, 'Patakha Ghumao Inam Pao' - from 25 September to 31 October 2003. Its objective to encouraging customers to switch to new generation LG products. This unique promotion entails assured gifts on every purchase of an LG colour television, direct cool refrigerator, frost-free refrigerator, air-conditioner, semi-automatic washing machine, fully-automatic washing machine and MY PC. [pic] [pic]
2005:
• Bank of India loan scheme for LG products: BOI and LG Electronics India have signed a memorandum of understanding to finance consumer durables manufactured or marketed by LG, under the formers Star Personal Loan Scheme. BOI provided loan to eligible customers at concessional rates of interest to buy LG products.
2006:
• LG Toon Dhoom: LG promises customers to win exciting gifts on purchase of any LG product. During this offer, the customer would get an LG device - a "popper" on buying an LG product. The customers will press the popper and a chit mentioning the assured gift will be revealed. The offer promises customers a combination of LG products and other branded gifts.
2007:
• LG Indian Amateur Golf Tour: LG takes on the mantle of sponsorship for the Indian Golf Union’s National Amateur Tour for the next three years starting from 2007. The LG Indian Amateur Golf Tour will touch 11 cities incorporating 13 events, making it a nation-wide tour. By sponsoring game golf, it tries to portrait itself as technologically superior products which blends perfectly with the game.

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2008: • 5 year warranty Program: LG is offering 5 year warranty on 19″ and 22″ LCD monitors (up from the regular 3 years) for a limited time only. This offer is valid for purchases made between 16th Aug 2008 and 30th Sept 2008. • Global Home Chef Award 2008: LG organized a cookery contest at Le Meridian in December 2008. The winner of the contest was Ms. Reena Mathews from Kochi who prepared Passion Prawns and Chocolate truffle cake.[pic]
Advertising Strategies: In first year of operations (97-98), the communication was focused on imagery advertising and leveraged its association with World Cup Cricket to get closer to the end consumers. During 99-00, the marketing communication was focused on creating a superior image in technology, thereby talking about "Digital LG" and "Cyber LG" with the advent of Internet enables products.

LG is taking the brand closer to the consumer by taking an emotional route in its advertising and marketing communications. It took the health platform and communicated the "Health Benefits" In the earlier stages of establishing itself in the market, LG followed the strategy of imagery advertising, but after creating a strong foothold in the consumer’s households, LG changed its strategy for its marketing communication to product centric communication and more interactive communication on the ground level.

For example, LG Microwave ovens always initially spoken about Health wave and the initiatives taken by us for the cookery classes. But in today’s changed environment, since the price points gives an opportunity to reach out to a greater audience, it has changed the communication to “Garam Garam Khaana”, thereby addressing the mass media.

Advertising Media: LG’s media strategy revolves around using different media vehicles depending on the product category and the target segment for that particular product. For instance, in case of CTVs, it realized that this product category must target all segments. It therefore, took LG’s association with cricket and soccer to further strengthen the communication of LG CTVs. It focused on the channels providing high reach opportunities.

Similarly for Air Conditioners, It focused on movie channels and niche magazines for its media vehicles. The objective was to retain the premium image of this product category. For Refrigerators, we focussed on the family oriented channels as a strategic move to target the right segment

On the whole, LG tried to spread its investments across all channels.

Distribution Strategies: In its initial years in India, LG realized that it was important to have a good distribution network to reach far-flung towns and the semi-urban markets. To increase brand awareness among consumers, LG sent vans across India covering a distance of 5000 km every month. The company focused on building a strong dealer network. In the late 1990s, when the trend was to give a credit period of 45 to 90 days to dealers, LG did not offer any such schemes to attract dealers. It instead asked them to pay in advance for its products. This ensured that the dealers pushed the brand in the market to keep their own cash from being blocked. At the retail and trade level, as the volumes grew faster, LG pushed its dealers towards selling products at lower margins and focusing on quick rotation of stocks (Regional Distribution Model). Channel partners will certainly play a crucial role. Players like LG who realize that partners are today looking at vendors who can enhance their profitability, will succeed by taking the lead in quicker settlement of channel schemes. LG by November 2007 has a large presence in the country with 40 Branch offices, 146 total Area Offices and 481 service centers and 669 service centers for mobiles. LG also has a huge network of 4500 direct dealers, 12000 service dealers and more than 550 sales and service dealers. Channel schemes will continue to thrive, considering they strengthen relationships and enhance channel profitability. Since the ultimate goal of any scheme is to enhance profitability for the partners, besides faster sellout of stocks, and better channel relationships, LG will continue to maintain a strong position in this sphere. Incentive schemes will get preference as they are means to motivate the channel partners to push the products better but at the same time do not need the products to be discounted. The main thing to be remembered by the entire channel fraternity is to ensure incentives do not end up as disincentives by discounting and LG shall endeavor that all schemes are transparent and redemption is faster.

Future Opportunities for LG India:

LG India would be focusing mostly on the Mobile Handset, Personal Computers and Flat Panel Displays markets as the population in India is becoming younger every year, their interests and incomes are going up every year and the interest is shifting to these products. According to www.Pluggd.in the mobile handset market share is as follows: • Nokia: 59.5% • Sony: 8.1% • Samsung: 7% • Motorola: 5.9% LG Electronics, the world's fifth-largest handset maker, had a 6 per cent share of the world market as of September 2008. LG Electronics Inc. aims to raise its share of the global mobile phone market to the 10 per cent range in 2009. Stating that the ‘Blue Ocean Strategy’ adopted by the company in the form of product innovations has paid well, Yashi V Verma, director, (HR & MS) said, LG wants to be a company with a premium image. Strong focus on the execution of product plans, localised research and development (R&D) and maximum care of the employee has differentiated the company from its competitors. http://www.financialexpress.com/news/lg-electronics-repositioning-brand-in-india/300368/ http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4338