Posted: June 9th, 2022

Marketing Strategies Of Lg Marketing Essay

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To make itself a known brand in the consumer electronics sector, LG has taken innovative marketing and promotional initiatives:

CRICKET FIRST!!!!!

In November 2002, LG Electronics India (LG), one of the leading consumer durables companies in India, launched advertising campaigns featuring cricketers. LG announced that it would release 22 ad films featuring world-class cricketers to strengthen its association with cricket.

The campaign, ‘Cricket First,’ which featured captains of the 14 teams participating in World Cup 2003, highlighted the spirit of cricket with a tagline, ‘Captains of Cricket World, for the Captain of Consumer Electronics and Home Appliances.’

The company announced that it would spend around Rs 400-500 million on advertising during the World Cup. Analysts felt that LG might reap rich benefits by associating itself with cricket in a cricket crazy country like India.

Since 1997, when LG entered India, it has emphasized on marketing. Analysts felt that LG was trying to sell a brand of consumer durables using an FMCG marketing model, and was trying to create a mass market for a brand, which had a premium image.

Like the marketing of FMCG products, LG’s marketing was heavily dependent on advertising. Its ad spends to sales ratio at 5-6% of sales was very close to that of FMCG giant HLL.

PRODUCT INNOVATION

LG believed in holding the interest of its customers by bringing out new products regularly. In its first year of operations, it launched 70 models across a range of products.

In 2001, it launched 45 new models across its entire product range and in 2002 it launched 60 new models. Before developing products, LG conducted market research to ensure that its products met local requirements. LG customized product for Indian markets.

LG has differentiated its products using technology and health benefits. The CTV range has ‘Golden Eye’ technology, air-conditioners have the ‘Health Air System’ and microwave ovens have the ‘Health Wave System’.

DISTRIBUTION

Soon after its entry into India, LG realized that it needed to be innovative to capture the market. LG expanded throughout the country to far-flung towns and semi-urban markets. It sent vans across the country, covering a distance of 5000 km every month, to increase brand awareness among the trade and the customers.

PRICE

Initially, when LG entered the Indian market, its products were priced high. This was because LG had to import products in the absence of a manufacturing facility in India.

Thus, its products were priced as high as Japanese products. According to some analysts, 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. However, in 1998, LG launched ‘Sampoorna,’ a low priced TV aimed at rural consumers.

PROMOTION

Of all the elements of marketing mix, LG seemed to have put more emphasis on promotion and advertising. Some analysts are of the opinion that the cornerstone of LG’s strategy was its heavy advertising. In 2002, it spent around 1.3 billion on advertising. An ad agency which handled the account of one of the LG’s rivals, commented: “Communication creates a mind space among the consumers and LG has occupied that fairly well.”

PRODUCT LOCALISATION

Product localisation is a key strategy used by LG.

• LG came out with Hindi and regional language menus on its TV.

• Introduced the low-priced “Cineplus” and “Sampoorna” range for the rural markets.

• LG was the first brand to introduce gaming in CTVs. In continuation of its association with cricket, LG introduced the cricket game in CTVs.

LOCAL AND EFFICIENT MANUFACTURING

To overcome high import duties, LG manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida, Delhi. LGEIL had already commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. This has helped LGEI to reduce costs. LGEIL is implementing a “digital manufacturing system” (DMS) as a cost-cutting innovation. This system is a follow-up to the Six Sigma exercise LGEIL had initiated earlier.

REGIONAL CHANNEL STRATEGY AND WIDE DISTRIBUTION NETWORK

LG has adopted the regional distribution model in India. All the distributors work directly with the company. This has resulted in quicker rotation of stocks, and better penetration into the B, C, and D class markets.

RURAL MARKETING

Rural Marketing is defined as any marketing activity in which one dominant participant is from a rural area. This implies that rural marketing consists of marketing of inputs (products or services) to the rural as well as marketing of outputs from the rural markets to other geographical areas.

Reasons for Entry into Rural market:

The urban market is a replacement and up gradation market today and facing Intense competition from local and global players

The Rural population is nearly three times of the urban large untapped rural market (72%) Saturation in Urban market.

The urban consumer durable market for products like CTVs, AC’s, & refrigerators is growing annually at between 7% and 10%. Whereas Rural market is growing at rate 25%

LG’S RURAL MARKETING STRATEGIES

Advertising and promotion trough 4 A’s ( 4A’S APPROACH):

Advertising and promotion trough 4 A’s: Availability, Acceptability, Affordability, and Awareness

Availability:

LG had 65 Remote Area Offices (RAO) and 60 central area offices (CAO) under the branch offices that are empowered with decision making authority, billing and collection. Distribution of products were through FMCG distributers. Dealers had risen from 1000 to 15000 2003- presence in 3,823 cities.

Affordability:

Affordability reduces cost by replacing 4 speakers by 2, back woofer and Frost free refrigerator without twister tray. Prices of sampoorna were too less to afford by anyone.

Awareness:

Awareness in rural area were created by

Mobile Vans (Garam Garam Khana)

Road show van

Exhibition for TV sampoorna : LG launch color TV with Hindi, Tamil, Marathi etc. on screen Display.

Cookery classes as part of promotion

Acceptability:

Acceptability Product localization is the key strategy used by the LG LG came out with Hindi, Marathi, Tamil, Bengali and regional language menus on its TVs. Introduced the low-priced “Cineplus” and “sampoorna” for the rural market.

Mouth publicity

Big advertisement was chosen as medium in rural market. Every day people gather at panchayat. If one consumer is not happy, entire village will know and company can kiss the market good bye.

Wide distribution

Company has distributed the product through local FMCG distributors instead of Company-dealer-customer distribution chain. Company has increased its direct dealers and sub-dealers in rural market: Company has increased presence in towns from 1496 to 3823

Blue Ocean Strategy