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LG Electronics Discovering The 86% Solution.. The 86% Solution Prof Vijay Mahajan & Kamini Banga.

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Presentation on theme: "LG Electronics Discovering The 86% Solution.. The 86% Solution Prof Vijay Mahajan & Kamini Banga."— Presentation transcript:

1 LG Electronics Discovering The 86% Solution.

2 The 86% Solution Prof Vijay Mahajan & Kamini Banga

3 The Essence of The 86% Solution? (insert cover of the book The 86% Solution here) 86% of worlds population lives in the emerging and developing world – an invisible opportunity! MNCs have traditionally focused on developed markets like NA and Europe, ignoring 86% of the world populace. Branding and Marketing principles in emerging markets are quite different from developed markets. Innovation is the key to success in emerging markets

4 LG History A Quick Review

5 Early Beginnings as GoldStar: Korea focused – Some Export to developed world. 1958 GoldStar (today's LG Electronics) established 1959Korea's first radio produced 1962 Radio exported to the US and Hong Kong as Korea's first 1965Korea's first refrigerator produced 1966Korea's first black & white TV produced 1968Korea's first air conditioner produced 1969Korea's first washing machine produced 1974GoldStar Communications went public 1977Color TV produced 1978Exports surpassed US$100 million as Korea's first in the electronics industry THE 1950s THE 1970s THE 1960s

6 The 1980s: Global production centers Initially in the developed world.. 1980 First EU sales subsidiary in Germany (LGEWG) established 1982 Color TV plant in Huntsville in the US established 1984Sales surpassed one trillion won 1986European-standard VCR plant in Germany established 1989Sales subsidiary and a joint production subsidiary in Thailand established

7 The 1990s: Entry into China & India. Acquisitions & Joint Ventures 1990 Ireland-based design technology center established 1993 With the establishment of Huizhou subsidiary in China (LGEHZ), marketing in China took full swing 1995 Company name changed to LG Electronics and the US-based Zenith acquired 1997 40-inch PDP TV and the world's first IC set for DTVs developed; India production subsidiary (LGEIL) established 1998 World's first 60-inch PDP TV developed 1999 LG.Philips LCD, a joint venture with Philips, established

8 The New Millennium: technology & innovation 2000The world's first Internet-enabled refrigerator launched Global sales of refrigerators reached the number one position 2001 the world's first Internet- enabled washing machine, air conditioner, and microwave oven launched 2003World's first synchronous-asynchronous IMT-2000 mobile phone developed; the world's first 76-inch PDP TV developed; CDMA mobile handsets took the largest share in the US & world CDMA market 2004All-in-one LG 55" LCD TV, the worlds first and largest among LCD TVs, commercialized. The worlds largest and first LG 71" plasma TV commercialized. The worlds first terrestrial DMB phone developed 2005World's first DMB (Digital Multimedia Broadcasting) notebook PC unveiled. World's first DMB Phone with Time-shift function developed Network solution joint venture of LG-Nortel launched CDMA mobile phones ranked first in the world in the 3rd quarter

9 LG Today Global Revenue: US $ 35 billion (consolidated $ 45 billion) 72,000 employees working in 77 offices and marketing units worldwide. Worlds largest producer of CDMA handsets, DVD players, optical storage devices, air conditioners, canister vacuum cleaners and micro ovens. Growth driven by globalization

10 Driven by Globalization 80% of Revenue from outside South Korea

11 The Vision: Clear Global Aspirations

12 The LG India Story So Far..

13 The India Success Story LGEIL-Winning Spirit 7200

14 LG Leads on Market shares (March 2005) *Source: ORG-Marg Washing Machine Refrigerators Color TV Microwaves

15 Proportion of intending buyers Brand Most likely to buy (%) *Source: AC Neilsen-ORG-Marg Brand Track, Jun 04-Apr 05

16 Top of Mind Brand Awareness Figs in % *Source: AC Neilsen-ORG-Marg Brand Track, Feb-Apr 05

17 Has LG Applied The 86% Solutions In India?

18 1. Dont Build a Car, when you need a bullock-cart

19 LG India: Closely studied the local needs & Adapted international technology Watching TV causes eye strain Food in the fridge goes stale Expensive clothes should not be washed in Washing Machines ACs are for cooling so it is a luxury item Golden Eye Preserve Nutrition System Fabricare HealthAir System Discovering Key Category BarriersLGs Innovation



22 Discover Local Insights: Fear that TV Viewing will spoil childrens Eyes 2 X Golden Eye TVC

23 LG Invented products to meet Indian consumers needs TV Signals dont reach all over the country World-cup Football Craze in 2002 Frost free refrigerators are unaffordable by masses Agitators in washing machine can damage clothes DTH TV (Indias first) Football shaped TV Introduced Semi Frost Free Introduced Chaos Punch Local Market InsightsLGs Innovation

24 LG Innovated to meet Indian consumers needs Majority of Indian consumers dont read English Big audiences on TV sets + high ambient noise Cricket is the second religion for most Indians! Cricket is a second religion for most Indians! Indian-language On screen instructions Ballad TV 2000 Watt output Free Cricket game With TV in 1999 World-cup Sponsorships Indian Consumer NeedsLGs Innovation

25 2. Connect Brands to the Market

26 Grassroots Marketing – An LG India Invention Widest distribution network – covering India inch by inch!: 51 branches 72 regional offices 61 central area offices 112 district area offices to cater to rural markets 100 remote area offices SPEED to market: products reached 18 states within 3 months of launch. SERVICE at the doorstep: 1108 service centers 24 hour, hassle free service

27 Not just Bottom of the Pyramid – The WHOLE Pyramid! Covers the width of categories from Home Entertainment to Household Durables to IT services to Mobile Phones. Wide price range – cater the entire population of India. Latest technology inventions in top end – world class products in the show rooms. Keep refreshing the portfolio – 40 to 50 new models every year. Visibility at the retail outlets – the real on-ground battle field.

28 3. Think Young!

29 LG Indias Strategy: Associate with Youthful Symbols Capitalize the Youth Passions: Cricket and Bollywood. Early sponsorship and association with Cricket since 2000. Abhishek Bacchan: The latest craze amongst youth.

30 4. Discover the Lands of Opportunity

31 LG Indias Strategy: Make Impossible possible Have Faith in Indias Potential Business Challenge: MARKET CREATION New lifestyles = New Opportunities. Innovate to meet local market needs and aspirations. Greed for Speed! Target the multiple consumer segments: The super rich, the middle classes, the youth, the poor and the rural. Price right – not cheap.

32 LG Indias Strategy: Invest in communication to realize your dreams. Set stretched goals Disproportionately higher Share of Voice Continuous presence – to maintain salience and top of mind awareness. Invest in sponsorships: ICC sponsor for test and one days in 2001, 2002, 2005. Make presence felt at the street level.

33 LG Indias strategy: Empower for Speed Markets will not wait! Deep distribution structure for quick reach of products Empowerment at grassroots level to ensure speedy decisions At national level Product Group Heads on key categories – run their categories as effective CEOs

34 To Sum Up

35 LGs Global Success Key Success Factors Corporate ambition for Global Leadership – clearly enumerated for every stakeholder. Belief in The 86% Solution principles and markets as engines of growth. Focus on Growth and Innovation. Speed a vital winning ingredient Dream impossible dreams; fuel those with adequate investment to convert dreams to reality.

36 Have A Wall? A Global Ad from India LG X Canvas TVC

37 The World Can Be Yours!

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