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Case study MARKET POTENTIAL

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INTRODUCTION
LG Electronics India Pvt. Ltd. (LGEIL) manufactures and markets consumer electronics
and home appliances. The company’s products include color televisions, LCD projectors,
DVD players, washing machines, air-conditioners, microwave ovens, direct cool and
frost-free refrigerators, personal computers, monitors, vacuum cleaners, optical storage
devices, and GSM mobile phones. LGEIL was established in 1997 and is based in
Greater Noida, India with additional offices in Bangalore, Mumbai, Pune and New Delhi.
It operates as a subsidiary of LG Electronics Inc. The day LG Electronics India Pvt. Ltd.
entered India it was faced with some major challenges like low brand awareness of LG in
India, one of the last MNC to enter India after SAMSUNG, SONY, PANASONIC which
entered in the year 1995, competition from local players as well as with other MNC’s and
last but not the least price sensitivity of the Indian customer. Facing these challenges
boldly LG Electronics India Ltd. is a leader today with a market share of 27% in
consumer durables in India. This case discusses the success story of LGEIL i.e. how it
was able to cope up with all these challenges in ever changing and demanding
environment. How branding has played an important role in its success in India?
Since there are many products which this company manufactures, but in this particular
case study we will be concentrating on the color, plasma, LCD televisions. How they
tried to gain the market share in India?
BACKGROUND
LG group is a large South Korean conglomerate, which produces electronics, mobile
phones and petrochemical products and operates subsidiaries like LG Electronics, LG
Telecom, Zenith Electronics and LG Chemicals in over 80 countries.
CEO of LG group is Koo-Bon-Moo and it was headquartered at Seoul, South Korea. It
was created as an appliance company in 1947 named GoldStar it later merged with the
chemical company Lucky. Many consumer electronics were sold under the brand name
GoldStar, while some other household products were sold under the brand name of
Lucky. The Lucky brand was famous for household cleaning products and laundry
detergents, but most associated with its toothpaste.
In 1995 it was renamed as “LG”, the abbreviation of ‘Lucky GoldStar’. More recently the
company associates its tagline “Life’s Good”, with the letter LG.
LG Electronics is a South Korean multinational corporation. It is South Korea’s second
largest electronics maker and the world’s third largest appliance maker.
It was founded in the year 1958 having its headquartered in the LG Twin Towers on
Yeouido, Seoul, LG electronics is the flagship company of LG group, having its
chairman and CEO as Yong Nam.
The company has 75 subsidiaries worldwide that designs and manufacture televisions,
home appliances and telecommunication devices.
LG Electronics own Zenith Electronics and controls LG displays , a joint venture with
Philips Electronics.
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South
Korea was established in January 1997 in India. One of the most formidable brands in the
consumer durable and home appliances segment, LGEIL has an impressive portfolio of
Colour Televisions, Washing Machines, Air-Conditioners, Microwave Ovens,
Refrigerators (Direct Cool and Frost Free), PCs, Vacuum Cleaners, Audio Systems,

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DVDs, PDPs, optical storage devices, Laptops and GSM mobile phones. In India for over
nine years, LG has earned a premium brand positioning due to its superior quality, high
product performance, revolutionary technological delivery and warm service. LG is the
acknowledged trendsetter for the consumer durable industry in India with the fastest ever
nationwide reach, latest global technology and product innovation.
LGEIL's first manufacturing unit at Greater Noida is one of the most eco-friendly units
among all LG manufacturing plants in the world. The new and second Greenfield facility
of LG Electronics India located at Ranjangaon, Pune has the capacity to manufacture
GSM Mobile Phones. Colour Televisions, Air Conditioners, Refrigerators, Washing
Machines, Microwave Ovens and Color Monitors .This is India’s first mobile phone
manufacturing unit.
MARKET POTENTIAL OF CONSUMER DURABLES IN INDIA
A survey carried out by FICCI last year indicated that the consumer durable goods sector
is all set to witness 12 percent growth this year. Spurred by a marked shift in consumers’
preference for high-end products from premium brands floating superior technology, the
consumer durable goods sector recorded a growth of 11.5 percent in 2006-07 as against
8.5 in the previous year. Clearly, the aspiration to own premium lifestyle products among
consumers has gone up.
The rural Indian market, which accounts for nearly 70 percent of the total number of
households, witnessed a 25 percent annual growth while the urban consumer durables
market reflected an annual rate of 7 to 10 percent.
FICCI president Habil Khorakiwala aligns this growth to the changing dynamics of
consumer behaviour luxury goods are now being perceived as necessities in households
and higher disposable incomes at hand are being spent on lifestyle products.”
Anjan Roy, economic advisor for FICCI says, the consumer durables market picked up in
January 2008 reflecting increased sales by major consumer durable companies and this
tempo is poised to continue. CE companies are re-working their strategies for the ensuing
summer season, considered to be a good period for the industry. A cut in customs duty on
inputs will enhance the manufacturing competitiveness of the industry by reducing cost
and boosting demand and sales.
Rationalization of taxes, clearly, seems to be a universal demand across the CE sector.
This will ensure manufacturers in India have a level playing field as against their
counterparts in the import business. Fast growing product segments such as flat panel
TVs, LCD TVs, Plasma TVs, Slim CRT TVs, frost-free refrigerators, fully automatic
washing machines, split air-conditioners, DVD players, microwave ovens, and home
theatre systems products entailing high aspirational value are likely to see a growth in
consumption.
INDIA EMERGING AS A FORCE IN THE TELEVISION MARKET
In India, where 70 percent of citizens earn less than $5,000 a year, buying a television is

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INTRODUCTION LG Electronics India Pvt. Ltd. (LGEIL) manufactures and markets consumer electronics and home appliances. The company’s products include color televisions, LCD projectors, DVD players, washing machines, air-conditioners, microwave ovens, direct cool and frost-free refrigerators, personal computers, monitors, vacuum cleaners, optical storage devices, and GSM mobile phones. LGEIL was established in 1997 and is based in Greater Noida, India with additional offices in Bangalore, Mumbai, Pune and New Delhi. It operates as a subsidiary of LG Electronics Inc. The day LG Electronics India Pvt. Ltd. entered India it was faced with some major challenges like low brand awareness of LG in India, one of the last MNC to enter India after SAMSUNG, SONY, PANASONIC which entered in the year 1995, competition from local players as well as with other MNC’s and last but not the least price sensitivity of the Indian customer. Facing these challenges boldly LG Electronics India Ltd. is a leader today with a market share of 27% in consumer durables in India. This case discusses the success story of LGEIL i.e. how it was able to cope up with all these challenges in ever changing and demanding environment. How branding has played an important role in its success in India? Since there are many products which this company manufactures, but in this particular case study we will be concentrating on the color, plasma, LCD televisions. How they tried to gain the market share in India? ...
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