LG's Growth Strategies in India
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : MKTG115
Case Length : 19 Pages
Period : 1998 - 2005
Pub Date : 2006
Teaching Note :Not Available
Organization : LG
Industry : Consumer Electronics
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
Pricing Strategies
When LG started its operations in 1997, it sold products that were imported. Hence, its products were priced high and were equivalent to other foreign (Japanese) products. Industry analysts felt that this strategy was adopted to make local consumers feel that LG products were by no means inferior to Japanese products in performance or in quality.
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However, in 1998, LG launched 'Sampoorna,' its first low priced TV for rural consumers, and followed it with 'Cineplus.' According to Kim, as the Indian customers wanted the best products at reasonable prices, LG started introducing quality products in the economy range.
In the first few years after its entry, LG did not get into price wars. Unlike other players, it did not offer any exchange schemes or discounts.
LG officials said that they believed in an 'honest pricing policy' and its message to customers read 'No scheme, no gimmick, great products and honest prices.'...
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Promotion
LG gave immense importance to its promotion and advertising activities. In 2004, the company spent nearly Rs. 1.3 billion (5% of its revenues) towards advertising. Analysts commented that LG's promotion and advertising of its durables segment were similar to that of an FMCG company. Unlike many Indian brands which advertised seasonally (2-3 months during the festival season i.e. September, October and November), LG advertised all round the year...
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The Future
Analysts felt that there were other factors that had contributed to LG's success in India. The company imports only the basic technology from South Korea, while its own R&D facility in India, where LG has been investing Rs. 2 billion per annum, accounts for 90% of the innovations.
The parent company gave its Indian subsidiary full independence of decision making. LG India had to consult its parent company only on major decisions like where to establish manufacturing plant. However, decisions regarding equipment required for the plant were taken by the Indian subsidiary itself... |
Exhibits
Exhibit I: LG's Product Range*
Exhibit II: Profile of LG's Competitors in India
Exhibit III: LG Captain of India
Exhibit IV: LG's 'Dhoom Machade'Offer
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