Page 83 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 4: Forecasting and Premising

Notes
Meanwhile, hotels represent a price sensitive segment requiring specially customized
products.
Welfare: In this segment, LG is targeting a consumer base – the aspirational consumer,
mostly factory staff – that most companies ignore, but which has considerable clout in
terms of generating volumes. This segment is being targeted on the convenience and easy
finance platform. LG has just tied up with Birla Global Finance Ltd., part of the Aditya
Birla Group, for the purpose. Under the tie-up, LG will unit-wise cover all the Birla
companies. This amounts to over two lakh employees.

This is a lucrative segment, claims LG, because of the high hit-rate; out of a potential base
of 1,000 factory workers, there is an assured sale of at least 10 to 20 percent.
Hotel Segment: In this segment, LG is targeting the five-star and middle-level hotels (50–
110 rooms) by offering customized products. For example, LG offers a special 'hotel-mode
TV' model with an auto volume leveler, which ensures that other guests are not disturbed.
Another attraction for hotels is the cricket game TV model that would also prove to be
popular and an interactive option with Internet, video/audio or room service menu
facilities. LG claims to have sent out mailers to 1,200 hotels, and bagged at least 100 orders,
besides the 'Palace on Wheels' luxury train, for providing TV sets in its 52 cabins. Now, LG
is reading a range of interactive televisions for this segment, offering remote-controlled
features like: the hotel menu, local facilities, billing, room service, video on demand,
internet, multilingual options.
Canteens and the Government Sector: "We are perhaps the only company offering our
entire range of products in CSD canteens," feels the product manager, of LG. In the
government sector, which operates through tenders, significant orders so far included an
order for 200 TVs for Himachal Tourism bungalows in the State and over 2,000 TVs for
primary schools in rural areas in Maharashtra.
The company has a five-memeber Institutional Sales Division, with each devoted exclusively
to one segment. It has 50 institutional sales dealers and a ring of sales representatives
when interact with the dealers and conduct demonstrations when needed. Its infrastructure
consists of 20 mobile vans with glass windows to display the product range. These vans
cover at least 500 km every month in both rural and urban markets.

Questions
1. Do you think such a field sales force is adequate to harness the market potential in
the Institutional market?
2. Would you recommend focusing on one or two segments out of the given five?
Justify your answer.

Source: IGNOU, Management Programme, Term-End Examination, June 2008.

4.3 Summary

Developing a business forecast provides management with strategic and operational insight
leading to improved business performance.

It is the basis of budgeting and provides the information that allows managers to manage.
Without a business forecast a business is simply responding to the day to day operating
environment and has limited capacity to maximize future opportunities or minimize
potential risk.

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