LG INTRODUCTION

1. STUDIES
ON
LG ELECTRONIC COMPANY
IN PARTIAL FULFILMENT OF FULL TIME, MBA PROGRAM
(2013-2015)
SUBMITTED TO:
RADHA
BK School of Business Management
Gujarat University, Navrangpura,
Ahmedabad-380009
Phone: +917926304811
info@bkschool.org.in
SUBMITTED BY ROLL NO.
 Abdul Mahboob Shujaeee 11301
 Najeebullah Hemat 11327
 Ahmad Farhad 11355
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Introduction to the LG
Being competitive and maintain a good position in the market is the most common goal of the
organization today however, household consumer goods are very essential to our daily lives.
Whether it is machine refrigerator or a TV; these produced is the primary need of the people in
the world. But since customer are looking for short delivery times. Long period warranties.
Innovation, diversification and customization of product with high quality and affordable prices
it is hard for companies to survive in such competitive market and keep their customer loyally
LG Electronics was established in 1958 as Gold Star, the company started producing radios,
TV, Refrigerator, air condition and washing machines, with its innovative and expertise it led the
way into creating advance.
In 2005 the company ranked top 100 global brand, in 2006 LG growth of 14% till now has
become the largest plasma panel manufacture
This study will investigate the different marketing strategies used by LG Electronics, its
performance in the market, market share, sales and profitability and will be focusing more on the
marketing of a washing machine using contemporary marketing tools and techniques.
Vision statement of the company
LG pursues its 21st century vision of becoming a true global digital leader who can make its
customers worldwide happy through its innovative digital products and services
SWOT Analysis
The SWOT analysis is a useful tool for companies to identify the internal and external factors
that are favorable or unfavorable to achieve the company’s objectives. We will analyze LGE’s
strengths, weakness, opportunities and threats in the market.

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Strengths
LG is multinational company and has created brand image around the world
It is established in developed countries but also in developing countries
It is the world’s largest plasma panel manufacturer
Have reliable products, easy to use and modern product design
Wide range of products to serve all categories
Invests a lot in Research and Development to create the right product for the consumers and
satisfy their needs
LG is growing quickly and gaining market share trough innovation and customer satisfaction to
retain its loyal customers
Diversifies manufacturing locations in the globe with manufacturing unit in tax incentive
Have the widest distribution channels in the industry, 47 branches with 10000 trade partners
LG was the first company to launch steam washing machines
Weaknesses
Samsung Company offers the same products and is a nation and international competitor
Difficulty in operating complex machines due to the lack of training in (Morocco)
Opportunities:
Fast growth of the home appliance market with the highest share
Focus on Research, Development and innovation to attract new potential buyers and retain
existing customers
LG received a patent for washing machine in Rep of Korea this might also be viewed as strength
and a stronger brand image

4. Competitors are continuously improving their products trough innovation and research; this
might make LG lose some of its customers
Financial crisis around the world affects consumer’s purchasing power.
LG is comparable with its close competitor Samsung in Korea and Worldwide
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Price War with competitors
Cheap Chinese Products that might be an alternative in some countries
Differential advantages
Fast innovation as a competitive advantage:
‘’LG wants to make people’s lives richer, easier and better. Our goal is to put a smile on all our
consumers’ faces. “Smart technology” enables consumers to do things more easily and
experience things more pleasurably. Consumers expect LG’s products to contain the world’s
most advanced technology, and that our hardware and software have been perfected. In addition,
they expect LG products to work in ways that are simple yet smart.’’ (LGE Annual Report,
2010)
LG has set extremely high innovation goal, the company is aiming for a target of 30% more than
what its competitors can do, this also means 30% more sales and increased market share. This
makes LG up to 3 years ahead of competitors in terms of technology.
Core Capabilities:
Here LG goal is to offer technologies that suits people’s needs, as it stated on its annual report ‘’
the core goal of our product development processes is to create technologies that enrich people’s
lives. It flows directly from LG’s guiding principle of “creating harmony among people.”
Innovation flourishes best when it anticipates or answers a need that enriches people’s lives. We
create products that help people get more out of life, have more leisure time, and experience
more pleasure. We do this by always understanding their needs and continually surpassing their
expectations.’’

5. LG retains its customers by providing them with long term warranties (10 years) covering the
core technologies such as its washing machines. Its innovative technology brings trust to its
consumers by bringing the world’s smartest largest capacity washing machines in the market. At
the end of 2010, it launched an 11kg washing with ‘’ a new and innovative damping system and
fixed outer tub.’’ Beside the innovative technology, LG washing machines and the other product
line of home appliances fits perfectly into consumer’s lives, the company combines both product
design and simplicity that appeal to the consumer’s sophisticated taste. They also have a special
series of washing machines with a line of photo-etched design with various colors that attract
most consumers and especially young housewives whom are attracted to this stylish design with
the pleasure of touching the products sharp technology and features that makes everything ideal
and easy to use.
LG Electronics has achieved a big market share for washing machines and has shipped 10
million Washing Machines in 2008, Said Mr. Young Ha Lee, President of LG Digital Appliance
Company and announced its business strategies for achieving the top positions globally in this
category with sales of 7 billion USD by 2012.
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Roots of competitive advantages
Technical Resources:
LG relies on its Research and Development capabilities and product innovation in collaboration
with worldwide engineers from companies like IBM. As it engaged the global business services
company IBM in Korea to design a new ‘’customer-driven-process’’ framework to outsource its
product developing effort. This will result in a higher rate of success for new product
development with reliable planning and monitoring and also a faster time to the market since the
LGE Company is beneficiating from IBM’s efficient product development process.
As LGE stated (LGE, 2011) ‘’our future growth will be built on the combined strength of our
product innovation and our understanding of the customer. With the help of IBM’s process
expertise, we are getting closer to realizing that vision’’ (S. Choi LGE, 2011)

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Marketing Resources:
LGE relies on the loyalty and trust of its customers and this trough efficient communication tools
with the cooperation of many famous companies worldwide like Best buy. The company was the
first brand to sponsor the 1999 World Cup of Cricket and also in 2003.
LGE Introduces its new products using contemporary communications tools like TV
commercials, Radio, Internet and billboards in order to create more brand awareness in many
countries. The company has 10000 traders worldwide and more than 47 branches, and this play
Human Resources:
LGE offers diverse educational programmers to its employee’s trough learning centers
worldwide, it focuses on favorable working environments that let its employees demonstrate
their capabilities at full. It also focuses on individual’s creativity to create value respecting
diversity of skills. It rewards its employees based on performance, create equal opportunities
built on trust among people without considering gender, race, age, religion or nationality, and
thus creates motivation and commitment.
Michael Porter's Five Forces Analysis
The Bargaining Power of Buyers
the bargaining power of buyers is moderate. There aren't many companies that offer the same
quality of products as those of LG Display or have advanced as much technologically. The
company’s televisions, monitors, notebook PCs and applications stand out among existing
competitors. LG Display reduces the buyer power by designing its products in ways that appeal
to and fit the needs of today's customers. Everything from the slim and sleek, wide view,
portable and compact designs and display technologies make the products superior to the
competing companies.
The Bargaining Power of Suppliers
As far as LG Display's bargaining power of suppliers, the power is on the lower end. The
company forms information partnership to create cooperation among supply chain partners for
mutual success. It enters into a cooperative relationship with its suppliers by becoming their
shareholders. This allows LG Display to promote strategic relationships with equipment and
parts suppliers, which enables a stable source of supply at competitive prices. The result is high-quality
parts at a lower cost which is done through sharing product concepts with suppliers early
in the product development cycle. This kind of cooperation with suppliers has lowered costs by

7. 10% compared to the fourth quarter of 2008. LG Display stands apart from its peers in terms of
market share, cost competitiveness and supply capacity.
Threat of Substitute Products or Services
the threat of substitute products is moderately low. Substitutes for LCD are LED (Light-Emitting
Diode) and OLED (Organic Light-Emitting Diode), both are newer technologies currently
developed by the company. As long as LG Display can maintain its current market share of a
quarter percent for the newer products, substitute products would not be considered as threats.
The company’s development of new products and technologies that can be differentiated from
those of its competitors increases switching cost as well as reduces buyers’ propensity to
substitute. In addition, its innovation technology is another switching cost for consumers.
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Threat of New Entrants
The threat of new entrants is low in the flat panel display industry (TFT-LCD technology) due to
its various entry barriers such as rapidly evolving technology, capital-intensive characteristics,
brand equity, expected retaliation among existing competitors and the significant investments
required by the economies of scale. In addition, the industry may not be as appealing to potential
competitors due to its highly competitive nature. Existing competitors have already experienced
pressure on their prices and margins due largely to additional industry capacity from other panel
makers in Korea, Taiwan, China and Japan. Other entry barriers also include LG Display’s
absolute cost advantage in its supply chain management and learning curve advantage with its
years of experience as a leading player in the industry
Rivalry among Existing Competitors
Rivalry among existing competitors is on the higher end. Although the company’s market share
increased to 26.4% in 2009 from 20.4% in 2007, there is still intense competition within the
industry. Competitions are likely to remain intense not only due to the expected large demand for
LCD panels in the market today but also due to additional industry capacity from other Asian
LCD panel makers such as Samsung, AU Optronics and Sharp. However, the average selling
prices may continue to decline as a result of technology advancements and cost reductions. In
order to stay competitive, LG Display strives to differentiate itself with not only cutting-edge
technology but also innovative designs. The BusinessWeek article "LG Bets Big on TV Design"
clearly demonstrates this business initiative.

8. Different marketing strategies used by LG electronics:
Business Strategy
LG Display Co Ltd uses differentiation as its main business strategy by producing goods and
services that are unique to the market. That is products that are used to experience new, rich life
of digital display through a variety of TFT-LCD LG Display provides, such as the production
and supply of thin-film transistor liquid crystal displays called TFT-LCD panels, principally used
for televisions to provide slim and sleek design. It also provides large, wide and high
performance screens for notebook computers and wider, brighter and crisper screens for desktop
monitors. In addition, it provides TFT-LCDs for handheld products such as mobile phones, and
lighter and slimmer products for industrial and other applications such as entertainment systems,
automobile navigation systems, portable DVD players, digital photo displays and medical
diagnostic equipment. The customers served by LG Display include manufacturers of notebook
computers, televisions and desktop monitors.
The customer service center provides product repair and warranty services to customers in the
Americas region, where the demand for LCD TVs is rapidly growing, especially in the United
States, Canada, Mexico and Brazil. The service center features optimized facilities and analysis
equipment to provide warranty services primarily for LCD panels that are 32 inches and larger.
In addition, the Company has one sales subsidiary and four representative offices in the U.S. As
part of their strategy to improve customer alignment; this enables them to better respond to the
needs of their customers in a timely and efficient manner.
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Level of Strategies of LG
Smart technology for customer
LG is increasing its focuses on “smart technology” that ads convince and joy to customer’s
lives.
Expansion- it is expanding itself worldwide for more profit and sales of the company by opening
different stores at different places.
IN ODER TO SUSTAIN LEADERSHIP among global electronics and information
technology companies LG R& D is driving the development of “great product” and strength a
process of “select and focus” in key area such as cell phones and digital TVs.

9. RETRENCHMENT: A strategy used by this company is, to reduce the diversity or the
overall size of the operations of the company. This strategy is used in order to cut expenses with
the goal of becoming a more financial stable business.
EXPANSION-LG believes in “Brands may be important, but good products are what the
market is looking for.” therefore, it is increasing its products variety and expanding the business
worldwide.
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Green product strategy
LG has set a strategy to develop products that reduce environmental impacts throughout the life
cycle of the products. It is classified into three categories human, energy, and resource.
Human
To reduce the environmental impact on human, LG has been working t improve home
environment for its consumers by replacing hazardous substance, reducing noises from home
appliances and adding anti allergy and anti-bacterial features.
Energy
LG energy strategy focuses on two key areas energy efficiency enhancement and reduce
greenhouse gas emissions during using and manufacturing.
LG has an internal process in place to manufacture products while talking environmental issues
such as product as product decomposing and recyclability into considerations from the product
development stages and uses evaluations and support tools such as recycling checklists
Resources
LG is trying to improve resource efficiency by reducing the use of resource and improving
recyclability of products. From the development phase, LG works to enhance material quality
and product structure, and strives to improve product performance while reducing the size and
weight based on collections with recyclers. To improve recyclability, LG has an internal process
in place to manufacture products.
LG has developed slim design products to reduce the use of resources as well as for ease of use.
LG manages energy and water usage in connections with waste eliminations activities to use
resource effectively during manufacture process.

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Product mix of LG
Product mix is a combination of products manufactured or traded by the same business house to
reinforce their presence in the market, increase market share and increase the turnover for more
profitability. Normally the product mix is within the synergy of other products for a medium size
organization. However large groups of Industries may have diversified products within core
competency. Videocon, L.G, are some examples.
Dimensions of product mix
 Number of products: The amount of products that is produced by a particular company.
 Range of product: A complete portfolio of products that a company manufactures and/or
markets.
 Type of product: A group of items within a product line that share one of several possible
 forms of the product.
 Product line: A group of products that are closely related because they function in a
similar manner, are sold to the same customer groups, are marketed through the same
types of outlets, or fall within given price ranges.
 Product length: It refers to the total number of items the company carries within its
product lines.
 Product width: It refers to the number of different product lines the company carries.
 Product depth: It refers to the how many variants are offered of each product in the line.
 Product consistency: It refers to how closely related the various product lines are in end
use , product requirements, distribution channels
LG’s product lines
Since its initial years in India, LG has focused on bringing out new models regularly in its
product range. In its first year of operation in India, LG launched 70 models across a range of

11. products. In 1997, it introduced its Golden Eye Technology TV, which had a light sensitive
natural algorithm ‘eye’.
The ‘eye’ responded to the changes in lightening in the room, accordingly and adjusted colour
sharpness, brightness, contrasting and balance them automatically.
Thus, LG showed that it cared for customer health through its products. LG’s concern for health
of customers was its unique selling proposition(USP) in the Indian consumer durable market.
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Dimension of product mix in LG
LG operates its business through 6 divisions. These are also the product width of LG Electronics.
These are:
1. Home appliances
2. Mobile communications
3. Home entertainment
4. Computer products
5. Air conditioning
6. Business solutions
The item that comes in the product width is the product line.
Home appliances:
The home appliances make products like refrigerators and washing machines. The various home
appliances are:-
1. Side by side refrigerator
2. Double door refrigerator
3. Single door refrigerator

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4. Washer dryer combos
5. Front load washing machine
6. Top load washing machine
7. Semi automatic washing machine
8. Dish washer
9. Microwave oven
10. Vacuum cleaner
11. Air purifier
12. Water purifier
Mobile communications
LG mobile devices are made for GSM as well as for CDMA networks worldwide. The various
mobiles are:-
1. Smart phones
2. Touch phones
3. Multimedia phones
4. Dual sim phones
5. Basic phones
6. All types of mobile phones

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Home entertainment
The home entertainment makes products like TV’s, DVD Players etc. For example:-
1. Plasma TV
2. Color TV
3. Music system
4. DVD Player
5. LED LCD TV
6. Blue Ray Players
7. Home Theater System
8. PDP Modules
9. OLED Panels
10. USB Memory
11. DVD Records
12. MP3 Players
13. LCD TV
Computer products:
LG provides following computer products:-
1. Desktop
2. Flat panel monitors
3. LCD monitors
4. Projector
5. Optical media
6. Notebook

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Air conditioning:
The various types of ACs are:-
1. Split AC
2. Window AC
3. Cassette AC
4. Ducted AC
Business solutions:
LG provides various products for business:-
1. Monitors
2. Car infotainment
3. Telemeters
4. Digital signage solutions
5. Security devices
6. Video conferencing

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Greener products of LG
In the latest, LG produced various Greener Products. They are:
1. Mobile Phone: LG has made mobile phones environment friendly by replacing harmful
materials with healthy substitutes, at the same time increasing energy efficiency and
recyclability.
2. Washing machines: LG electronics has adopted the Life Cycle Assessment (LCA) system
for its product development and carries out the development of its eco-products in stages.
3. TVs: The Company has also improved the TV’s light efficiency while enhancing the
circuit components and designs, and reducing energy consumption.
4. Eco-Design: LG’s eco-design strategies reduce the environmental impact of a product’s
development, production and circulation all while improving efficiency of resources and
recyclability and reducing use of hazardous materials.
5. Hazardous substances: Since 2005, LG’s products have ceased to contain any of the six
most hazardous substances specified by the EU. LG adheres to strict regulations
regarding the management of hazardous substances in its production processes.
The partnership
LG Electronics chooses to promote harmony and build constructively on a labor-management
relationship rather than an employee-employer relationship. This illustrates that management and
workers are not in a vertical relationship, but in a horizontal one.
This culture is necessary for LG Electronics as it strives to become one of the world's top
companies. Such a relationship is transformed into a value-creation relationship whereby both
parties endeavor to address mutual problems and create new values together.

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Strategic alliance of LG
LG Electronics is making technical advances and identifying business opportunities through
various associative relationships with some of the world's leading companies.LG Electronics is
striving to become number one in the world by mingling in various business and technological
fields and making strategic alliances with world famous companies. "Strategic association
between corporations," in which companies with different infrastructures cooperate in the fast-developing
21st century business field, is of key significance in terms of strengthening the
existing industry and creating a new one.