Page 46 - DMGT408DMGT203_Marketing Management

Unit 2: Understanding the Marketplace and Consumers

Notes

Case Study Life’s Good for LG

G Electronics India’s market share dropped in January 2005—for the first time since
the company was set up in 1997. But Managing Director Kwang-Ro Kim isn’t worried.
L“The dealers must have met their targets in December itself, so they took it easy in
January,” he explains.

Were it any other company, the managing director’s insouciance would appear to border
on foolhardiness. But this is LG, a company that can afford to take it easy.
Even after the blip in sales in January—LG’s market share in refrigerators fell fractionally
from 28.6 per cent the previous month to 28.1 per cent—the Korean consumer electronics
brand is still the preferred white goods brand in India—across categories and sub-categories.

Whether it is refrigerators, air-conditioners, washing machines or colour televisions—
LG’s dominance over the white goods market is complete.
In volume terms, LG is No. 2 player.

Refrigerators 27.22 - 1.2 (Whirlpool)
Colour TVs 25.5 - 15.1 (Samsung)
Microwave ovens 41.4 - 19.7 (Samsung)
Washing machines 34.0 - 13.8 (Whirlpool)

That’s pretty decent going for a company whose first experience in the Indian market was
nothing short of disastrous. In its earlier avatar, the Korean company came to India as
Lucky Goldstar.
This was in the early 1990s, and the rules at the time didn’t permit foreign companies to
start independent ventures. So Lucky Goldstar took on not one, but two joint venture
partners. The first partnership ended acrimoniously while the second one never got off
the ground.

In 1997, the Foreign Investment Promotion Board finally gave the Korean company
permission to set up its own factory to make washing machines and refrigerators.
Re-christened LG Electronics, the new company—a 100 per cent subsidiary of the Korean
chaebol—swung into action and set up a state-of-the-art manufacturing facility at Greater
Noida, Uttar Pradesh.

There’s been no looking back since then. In October 2004, LG set up a second manufacturing
facility at Ranjangaon, near Pune, which makes white goods as well as cellular phones—
the first GSM handset manufacturing facility in India.
Another facility, exclusively for GSM handsets, is being set up and will start operations in
August. Turnover is also on the upswing: starting from ` 150 crore in 1997, LG registered
a turnover of ` 6,500 crore last year and is targeting ` 9,000 crore in 2005.
So, what went right?
Perhaps the most important step was to leave behind the baggage of the past.
Contd...

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