Thursday, October 25, 2012

The third time in india

LG finally had it right the third time in india. now it is decisively upping the stakes 

But what came to the company’s rescue was their will to learn from their own mistakes and set out new rules of their own. For instance, in the late 1990s, when the competitors lured the dealers by giving them credit periods of 45 to 90 days, LG in fact asked dealers to pay in advance for its products. This helped them pick the right kind of partners from the crowd. Among the few initial strategies, which the company adopted, was a change in the management structure to suit the local requirements and backed by an understanding of Indian work culture. They vested the power in the hands of Indian employees in a big way with their own Foreign Service Employees (FSE’s) confined to just being facilitators. Interestingly, LG did not initially get into price wars, which was the vogue at that time in the segment. Their slogan was ‘No scheme, no gimmick, great products and honest prices’. But LG had to also deal with the image of ‘inferior products’ in some categories.

So, as the company realised it had greater potential in the lower segments, it went on the rampage with fierce price wars and sorted out penetration issues. Moon B. Shin, in an exclusive interaction with B&E, elucidated, “To increase brand awareness, LG sent vans across India, covering a distance of 5000 km every month and focused on building a strong dealer network.” These strategies gave it market leadership in many categories. As per 2008 figures (ORG-gfk), LG was commanding a share of 24% in ACs, 24% in microwaves, 27% in DVD players, and 23.1% in LCD TVs. Interestingly, LG later saw that the low end was becoming increasingly crowded and therefore launched its Blue Ocean Strategy. Now LG is consciously trying to play on the ‘best-in-quality’ positioning and deliberately commanding premium on price; knowing well that the ‘inferior’ perception is not a problem any more. The only problem is that key categories have seen decline in market share in India for 2008 (see B&E Corporation on LG in the issue dated February 6, 2009). Could LG’s second repositioning lead to confusion in Indian customers and decline in its fortunes? Indeed, it’s a sword that could cut both ways. They must use it very, very carefully.


Source : IIPM Editorial, 2012.

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