STRUCTURE OF STUDY

Introduction
Meaning of consumer durables
Ratio of various products in consumer durables
Various companies of consumer durables with brief details.
LG and Samsung in Indian Markets.
Products offered by them.
Ratio of LG and Samsung in the various segments of consumer durables products in India.
Meaning of marketing strategy.
Marketing Mix.

Marketing strategies of LG and Samsung in India.

Other reasons for their success.
Conclusion.

1
CHARTER 2

The level of success LG and Samsung have achieved in India in incredible. In just over 10
years, the Korean duo has established dominance over the Indian white goods market, edging
out traditional multinational companies and Indian competitors. Between them, they account
for the largest share of the $6 billion consumer durables, electronics and appliances market,
with LG claiming the preferred brand position for virtually everything from televisions to
microwave ovens and washing machines, while Samsung is a steady number-two or number-
three player. Over the past decade, both have consistently seen double-digit growth rates and
are convinced they will maintain, if not surpass, those levels in coming years as well -- an
optimism that is shared by industry watchers.
So how this Korean duo was able to achieve this level of success?

2
WHAT ARE CONSUMER DURABLES..?

Consumer durables involve any type of products purchased by consumers that are

manufactured for long-term use. As opposed to many goods that are intended for
consumption in the short term, consumer durables are intended to endure regular usage for
several years or longer before replacement of the consumer product is required. Just about
every household will contain at least a few items that may be properly considered to be of
a consumer durable nature.

One of the most common of all consumer durables would be the furniture found in the home.
This would include items such as sofas, chairs, tables, bed frames, and storage pieces such as
chests of drawers and bookshelf units. While once thought to be limited to only items made
of sturdy metal or wood, any type of furniture today that is intended for use over the period of
at least a few years can rightly be classified asconsumer durables.

Another common example of customer durables in the possession of most households is

appliances. These items may include ovens, refrigerators, toasters, and gas or electric water
heaters. Consumer durables of this type are intended for use on a continuing basis, and often
are sold with some type of warranty or service contract that helps to ensure the appliance will
continue working for an appreciable period of time.

Manufacturers of consumer durables do tend to sell their consumer products with an eye

toward long term use by the buyer. At the same time, many of these manufacturers normally
provide documentation that defines what is considered reasonable use of the goods. This
serves to set the standard for how long a consumer can reasonable expect any form
of consumer durables to function, provided that the durables are not abused or utilized in an

inappropriate manner.

3
PERFORMANCE OF CONSUMER DURABLES

In the past 10 years, the global market has witnessed a surge in demand as economies such as
Brazil, Mexico, India and China have opened up and begun rapid development, welcoming
globalization with élan. The consumer durables industry has always exhibited impressive
growth despite strong competition and constant price cutting, and the first contraction since
the 2001 dot-com bust has been due to the global recession. Given the strong correlation
between demand for durables (both new and replacements) and income, the industry naturally
suffered during the 2008-2009 period. However, projections for current year going forward
are very optimistic, as consumers resume spending, and producers launch new enticing
variants to grab new customers. Leading players include Sony Corporation, Toshiba
Corporation, Whirlpool Corporation and Panasonic Corporation.

Developing countries such as India and China have largely been shielded from the backlash
of the recession, as consumers continued to buy basic appliances. In fact, China has been
ranked the second-biggest market in the world for consumer electronics. Despite the
recession, their strong domestic economy and growing high-income population have buoyed
demand leading to aggressive market growth.

( YEAR 2008-09)

4
There is growing interest for new age products such as LCD-TVs and DVD players.
Meanwhile, the penetration of the basic, largest dollar items such as ovens, washing machines
and refrigerators is also increasing. India too, has witnessed a similar phenomenon, with the
urban consumer durables market growing at almost 10 %p.a., and the rural durables market
growing at 25% p.a. Some high-growth categories within this segment include mobile
phones, TVs and music systems.

The Indian consumer durables industry has witnessed a considerable change in the past
couple of years. Changing lifestyle, higher disposable income coupled with greater
affordability and a surge in advertising has been instrumental in bringing about a sea change
in the consumer behavior pattern. Apart from steady income gains, consumer financing and
hire-purchase schemes have become a major driver in the consumer durables industry.

In the case of more expensive consumer goods, such as refrigerators, washing machines,
color televisions and personal computers, retailers are joining forces with banks and finance
companies to market their goods more aggressively. In addition, change in policy, such as the
WTO FTA in 2005 resulted in zero customs duty on imports of all telecom equipment,
thereby improving the pricing and affordability of imported goods.

MNCs hold an edge over their Indian counterparts in terms of superior technology combined
with a steady flow of capital, while domestic companies compete on the basis of their well-
acknowledged brands, an extensive distribution network and an insight in local market
conditions. The largest MNCs incorporated in India are Whirlpool India, LG India, Samsung
India and Sony India and homegrown brands are Videocon, Godrej Industries and IFB.

However, the level of success LG and Samsung have achieved in India is phenomenal.
In just over 10 years, the Korean duo has established dominance over the Indian white goods
market, edging out traditional multinational companies and Indian competitors. Between
them, they account for the largest share of the $6 billion consumer durables, electronics and
appliances market, with LG claiming the preferred brand position for virtually everything
from televisions to microwave ovens and washing machines, while Samsung is a steady
number-two or number-three player. Over the past decade, both have consistently seen
double-digit growth rates and are convinced they will maintain, if not surpass, those levels in
coming years as well -- an optimism that is shared by industry watchers.

5
CHAPTER 3

Whether it is refrigerators, air conditioners, washing machines or colour televisions -- LG's

dominance over the white goods market is complete.

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 never took off from 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.

Rechristened 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 with an investment of Rs. 5 billion.

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 Rs 150 crore (Rs 1.5 billion) in 1997,
LG registered a turnover of Rs 6,500 crore (Rs 65 billion) last year and is targeting Rs 9,000
crore (Rs 90 billion) in 2005.

Samsung India has maintained a steady growth since it launched in India in 1995-96

Off with the old

Perhaps the most important step was to leave behind the baggage of the past.

As Lucky Goldstar, the company's biggest fault was that it did precisely what other white
goods brands of the 1990s were doing: some half-hearted advertising and pushing the
products only when the consumer entered the store.

Activities that "pulled" potential buyers into showrooms were conspicuous by their absence.
Once it got the permission to operate as a wholly-owned subsidiary, though, all that changed.
Within just five months, LG products were available across the country, compared to the
average two years competitors took for a nationwide launch.

6
 CHANGE IN STRATEGY

LG's entry strategy was to establish its presence across the country, offering a range of
affordable but feature-rich products. Margins in the consumer electronics industry are
traditionally very low, and the company didn't try to push them up. Instead, it clung to the
"value-plus" platform, counting on volume to bring in revenues.

Samsung, on the other hand, focused on creating a premium brand image by emphasizing the
design and technology aspects of its higher-priced products and building a more affluent
customer base. "Customers would buy an LG [product] for their bedrooms but pick a Sony or
Samsung for their living rooms

Over the years, there was a reversal..

Over the past couple of years, though, there has been a reversal of roles. Now, Samsung is
reaching out to the price-sensitive masses, offering affordable, customized products.
Samsung India deputy managing director Ravinder Zutshi explains the new strategy: "We
want market leadership not only in the premium end, but also in the large-volume
categories." LG, meanwhile, is seeking to upgrade its image and product portfolio, thus
moving from being a functional to an aspirational brand. "All our efforts are directed towards
offering aspirational products that new-age customers can be proud of," says Moon B. Shin,
managing director, LG Electronics India Ltd..

The existing approaches to the market were obviously successful, but why the change then?

The initial route is based on the company's heritage. But whether you choose a product-led or
brand-led strategy, you have to complete the circle. When you want to expand the market, it
is easier to reach out to a segment where you don't have a presence than to take out more
value from an existing category is what they believe in.

SUMMARY
 Established In : Jan 1997
 Managing Director : Mr. Moon B. Shin
 Corporate Office : Plot no51, Udyog Vihar, Surajpur Kasna Road, Greater Noida
(UP)
 Corporate Website : http://www.lg.com
 Number of Employees: 3000+

7
PRODUCTS OF LG AND SAMSUNG

Business Areas & Main Products

Home Entertainment

Plasma Display Panels, LCD TVs, LED LCD TVs, Colour TVs, Audios, Home Theatre
System, DVD Recorder/Player, BluRay Players

Home Appliances

Refrigerators, Washing Machines, Microwave Ovens, Vacuum Cleaners, Air Purifiers

AC

Split AC, Window AC, Commercial AC’s

Business Solutions

LCD monitors, CRT monitors, Network Monitors, Graphic Monitor, Optical Storage
Devices, LED Projectors, NAS (Network attached Storage) and Digital signage

GSM

Smart Phones, Color Screen GSM Handsets, Camera Phones, Touch Screen Phones, 3G
Phones, Multimedia Phones, Dual SIM Phones, CDMA Phones

CHAPTER 4
ANALYSIS AND INFEERENCES.

CTV
INDIAN COLOR TELEVISION MARKET TOTAL 1,71,99,000 UNITS

8
 Percentage 2009
Others
12%
Videocon
21%
ELCOT
Sony 23%
0% LG
TCL 20%
2%
Panasonic
2%
Onida
8% Samsung
13%

INDIAN LCD TELEVISION MARKET

The Indian CTV market is estimated at 17.19 million sets in 2009 with 5 per cent marginal
growth oer last year. This is inclusive of the 5 million sets supplied to Electronics Corporation
of Tamil Nadu(ELCOT) for free distribution by the Tamil Nadu Government.
The market is dominated by Videocon, LG and Samsung. Size-wise sales indicate that market
was dominated by 14-inch TVs due to the ELCOT order, and 21-inch Flat TVs.

Videocon Group held the leader position in the industry, with sales of 3.6 million sets in 2009,
which included 1 million sets to ELCOT.The group holds 20.93 percent share of the total
market. Videocon
has launched a new logo for their brand. They have also introduced the retail chain
Digiworld and Digihome. In the Flat TV category, the group has launched televisions
With EcoVision Technology along with a range of 5- star rated TVs.

LG registered sales of 3.48 million sets, contributing a share of 20.29 percent towards the
total market. The company plans to launch many new products with innovative features like
Internet TV, wire-less solutions and full LEDs in 2010.

9
 SALES
SAMSUNG SONY LG OTHERS

19%
32%

23%

25%

Samsung registered sales of 2.16 million sets in 2009. The company i s celebrating the sale
of one million Flat Panel TVs by launching a Thanks a Million offer campaign in its
Flat Panel TVs, digital still camera and c amcorder category. The company is looking to
growing CTV sales, based on new product/technology introduction; strengthening product
display at multi-brand counters and enhancing penetration in the semi-urban markets.

10
DVD PLAYERS MARKET – 5 MILLION UNITS
ORGANISED (80%)

SALES
LG PHILIPS VIDEOCON
ONIDA OTHERS

22%

42%

17%

9% 10%

The DVD players market is in a transition phase. The increasing popularity of DTH is
posing stiff competition to the DVD players market. With the availability of more than 100
entertainment and news c hannels and movies on demand, DTH services are gradually
eating out from the DVD player s market share pie and experts feel that this trend shall
continue in the times to come. The market balance is shifting from the larger brands to the
smaller regional brands for this extremely price competetive product. Constantly declining
margins have forced larger players to have the DVD players market and move toward more
profitable categories, thus benefiting the smaller or regional players.

The Indian DVD players total mar ket size is estimated at 6.2 million units in 2009. The
market has dec reased by 11.5 percent from 7 million units in 2008. The organized segment
comprises 80 percent of the market. The unorganized segment, including the gray market
continues to contribute
almost 20 percent.
-
LG remains the leader with a sale of 1.1 million units, capturing a market share of 22
percent. LG is currently emphasizing on focused marketing of Blu-ray DVD players. Its
Blu-ray disc player, BD 370, offers features like last scene memory, DTS-HD—advanc
ed di gital out, 2 sof t scan, 100 high speed smooth scan, Dolby Digital Plus, 1080p up-
conversion, and Dolby TrueHD.

Samsung achieved sales of 300,000 units in 2008-09. I t off ers exc ellenc e in HD DVD
players with boasting features like HDMI, 1080p up-conversion, Touch of Color design
and USB for easy connection and CD-r ipping. Samsung standard DVD players can play any
DVD, regardless of its condition. Its rolling actuator technology automatically adjusts the
lens angle so that it can r ead the information stored in the disc with 100 percent accuracy.

11
INDIAN REFRIGERATORS MARKET

TOTAL 59,00,000 UNITS

SALES
LG SAMSUNG IFB
ONIDA VIDEOCON OTHERS

20%
32%

10%

10%
16%
12%

The Indian refrigerator market is estimated at 5.9 mil lion units in 2008–09. Rural and
semi-urban markets emerged as significant contributors to industry growth. With these
markets being less impacted by the slowdown, players are sprucing up their presence in
the rural areas, and tier 2, 3, and 4 towns to garner a share of this pie and increase
bottomline. Another growth avenue is the replacement market.
Exchange and promotional schemes are being introduced to facilitate replacement. The fast-
catching concept of second and third refrigerators in the Indian market is throwing up
opportunities for smaller capacity refrigerators.

The market was dominated by top five brands, accounting for more than 95 per-cent
share. LG led the pack with 23 percent share. Samsung and Whirlpool shared the second spot
with 19.49 percent shares each. Godrej and Videocon Group were not far behind, with 17.8
and 16.27 percent market shares respectively.

12
DIRECT COOLING ( 68%)

SALES
GODREJ VIDEOCON SAMSUNG
WHIRLPOOL LG OTHERS

7%
20%
17%

20%
18%

18%

FROST FREE (32%)

SALES
LG SAMSUNG IFB
ONIDA VIDEOCON OTHERS

20%
32%

10%

10%
16%
12%

13
WASHING MACHINE MARKET 27,55,135 UNITS

SALES
LG SAMSUNG IFB
ONIDA VIDEOCON OTHERS

20%
32%

10%

10%
16%
12%

The ongoing economic buoyancy in India despite global economic meltdown has offered
opportunities for rapid growth of home appliances industry. The Indian washing machine
market seems to be on a high growth trajectory with an overall growth of 25 per cent in
2008–09. This compares well with a 17 percent growth last year.

The total washing market is estimated at 2.75 million units for 2008-09, with four
brands together dominating 78 percent of the market. LG was the leader with 23.6 percent
share. Samsung and Videocon Group had shares of 20.8 and 18.9 percent respectively.
Whirlpool also had double digit share, at 14.5 percent.

WASHING MACHINE MARKET CATEGORIES

SEMI AUTOMATIC- LG IS SECOND TO VIDEOCON (25%) WITH 23%.
FULLY AUTOMATIC – LG IS SECOND TO SAMSUNG (30%) WITH 25%.

14
MICROWAVE OVEN MARKET

TOTAL 9,85,000 UNITS.

SALES
LG SAMSUNG IFB
ONIDA VIDEOCON OTHERS

20%
32%

10%

10%
16%
12%

The Indian microwave oven market remained stagnant in 2008–09, with estimated sales at
985,000 units. With low stakes, the category did not witness significant expansion efforts by
manufacturers during the economic slowdown and also remained subdued on shopping
priority of housewives. Demand primarily percent, and Videocon Group 10 percent came
from upcountry markets.

LG was the clear market leader with 32 percent market share. Samsung’s market share
stood at 16 percent. IFB, Videocon Gr oup, and Onida were neck-to-neck, and hovered
around 10–11 percent shares each. Godrej, Whirlpool, and Koryo (private label for
Home Solutions Retail) had growth given the emphasis being placed on shares between 4 and
6 percent. Panasonic also has a presenc e in the market.

15
AIRCONDITIONERS MARKET

28,00,000 UNITS.

MARKET SHARE
LG SAMSUNG
VOLTAS OTHERS

25%

44%

17%

14%

The Indian air conditioner market is estimated at 2.8 million units in 2009. The top
three brands, LG, Samsung and Voltas commanded 56 perc ent of the market. The top eight
br ands, LG, Samsung, Voltas, Videocon, Onida, Godrej, Blue Star and Hitachi
accounted f or 87 per cent of the total market, with the split air conditioners accounting
for 68 percent of their sales.

LG sales stood at 700,000 units, with sales of 455,000 units in the split AC segment
and 245,000 units in the Window AC segment. In developing the 2010 range, the compament.
In the AC segment, the company offers various customized services and models keeping in
mind the individual needs of the customer. The models on display at the stores include high-
end models, Twin Power Systems, 3-way surround cool Window Air Conditioner, Art
Cool, Floor standing and Mirror Splits.

Samsung registered sales of 291,400 units in the split AC market and 178,600 in the window
AC segment, with a total sales of 470,000 units in 2009. The company started manufacturing
ACs in India with the launch of two lines – one each at Chennai and Noida. There is an
increased focus on performance, design, color and India customization at Samsung. In order to
generate awareness in the semi-urban markets, the company has started initiatives like
Dream Home Road Shows, mobile vans,etc.

16
DIGITAL CAMERA MARKET

10,25,000 UNITS.

MARKET SHARE
SONY CANON KODAK
NIKON OLYMPUS OTHERS

8%
6%
7% 35%

20%

24%

The Indian digital camera market is estimated at one million compact range of cameras
and 25,000 DSLR cameras, in 2008–09. Sony, Canon, and be equipped with the latest
calibration Kodak command 79 perc ent of the market. Slated to grow at 20 percent per
annum, the market is heading towards 1.23 million cameras next fiscal.

Sony India leads the pack with the launch of 11 models of Cyber -shot range including the
world’s slimmest digital still c amera. The brand is retailed primarily from Sony exclusive
stores.

17
COMPARISON OF THE MARKET AND LG SCENARIO.

CTV MARKET SCENARIO

Chart Title

200
164

93 85
70
39 50
1998 2000 2002 2004 2006 2008 2010

1 2 3 4 5 6 7

LG SCENARIO

Chart Title

38
35
30
24

10 2010
6 2006 2008
2002 2004
2000

1 2 3 4 5 6

18
TOTAL MARKET WASHING MACHINES

Chart Title
Year Total market

50

21
18
15
13
10 2008 2010
2004 2006
2000 2002

1 2 3 4 5 6

LG GROWTH RATE

Chart Title
Year LG

1550

630
375 440
180 221
2000 2002 2004 2006 2008 2010

1 2 3 4 5 6

SO HOW LG AND SAMSUNG WERE ABLE TO ACHIEVE SUCH HIGH GROWTH

RATES?

BECAUSE OF THE FACT THAT THEY WERE ABLE TO PLAN AND FOLLOW
PROPER MARKETING STRATEGIES.

19
MARKETING STRATEGY
Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable competitive
advantage. A marketing strategy should be centered around the key concept that customer
satisfaction is the main goal.
Marketing strategy is a method of focusing an organization's energies and resources on a
course of action which can lead to increased sales and dominance of a targeted market niche.
A marketing strategy combines product development, promotion, distribution, pricing,
relationship management and other elements; identifies the firm's marketing goals, and
explains how they will be achieved, ideally within a stated timeframe. Marketing strategy
determines the choice of target market segments, positioning, marketing mix, and allocation of
resources. It is most effective when it is an integral component of overall firm strategy,
defining how the organization will successfully engage customers, prospects, and competitors
in the market arena. Corporate strategies, corporate missions, and corporate goals. As the
customer constitutes the source of a company's revenue, marketing strategy is closely linked
with sales. A key component of marketing strategy is often to keep marketing in line with a
company's overarching mission statement.

MARKETING MIX
The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing
Association presidential address. However, this was actually a reformulation of an earlier idea
by his associate, James Culliton, who in 1948 described the role of the marketing manager as a
"mixer of ingredients", who sometimes follows recipes prepared by others, sometimes
prepares his own recipe as he goes along, sometimes adapts a recipe from immediately
available ingredients, and at other times invents new ingredients no one else has tried.[1] A
prominent marketer, E. Jerome McCarthy, proposed a Four P classification in 1960, which has
seen wide use.

20
Four P's
Elements of the marketing mix are often referred to as the Four P's-
 Product - It is a tangible object or an intangible service that is mass produced or
manufactured on a large scale with a specific volume of units. Intangible products are
service based like the tourism industry & the hotel industry or codes-based products like
cellphone load and credits. Typical examples of a mass produced tangible object are
the motor car and the disposable razor. A less obvious but ubiquitous mass produced
service is a computer operating system. Packaging also needs to be taken into
consideration. Every product is subject to a life-cycle including a growth phase followed
by an eventual period of decline as the product approaches market saturation. To retain its
competitiveness in the market, product differentiation is required and is one of the
strategies to differentiate a product from its competitors.
 Price – The price is the amount a customer pays for the product. The business may
increase or decrease the price of product if other stores have the same product.
 Place – Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It can include any physical store as well as virtual
stores on the Internet.
 Promotion represents all of the communications that a marketer may use in the
marketplace. Promotion has four distinct elements: advertising, public relations, personal
selling and sales promotion. A certain amount of crossover occurs when promotion uses
the four principal elements together, which is common in film promotion. Advertising
covers any communication that is paid for, from cinema commercials, radio and Internet
adverts through print media and billboards. Public relations are where the communication
is not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any apparently informal
communication about the product by ordinary individuals, satisfied customers or people
specifically engaged to create word of mouth momentum. Sales staff often plays an
important role in word of mouth and Public Relations.
Any organization, before introducing its products or services into the market; conducts a
market survey. The sequence of all 'P's as above is very much important in every stage of
product life cycle Introduction, Growth, Maturity and Decline.

21
Product

Product Innovation Is Key

The key to LG’s success lies in their product innovation. While the basic design of the
products originates in South Korea, the company has invested heavily in local R&D to tweak
product design to suit local tastes. In 2008, LG has budgeted US$50 million for R&D and
manpower in the coming 12 months. When LG entered the Indian market, domestic
companies were investing in advertising and marketing, rather than product development. The
Koreans' promise of cutting-edge technology and their hunger for R&D worked to their
advantage.

According to LG, one reason it is successful in India is that it listens carefully to our
customers. It has realized that not just localization, but micro-localization, is required.
Recently, LG conducted a nationwide lifestyle study to know more about our consumers and
their preferences. Products are designed based on those findings.

For example, In many Indian households, the washing machine is operated by domestic
helpers who can't read instructions in English. LG's solution was to add speech technology that
gives instructions in local languages. Innovations like this help them connect with their
customers and offer products that fit into their lifestyles.
Customization of this kind has been part of LG's India Strategy for some time now.

It developed Ballad, a flat-screen television with 2,000-watt speakers sold only in the
subcontinent, following research that said Indians in the southwestern part of the country
preferred loud, bass sounds.

The company's refrigerators have smaller freezers and large vegetable compartments than
models sold in other countries, based on the fact that many Indians are vegetarians and use the
freezer mainly for making ice.

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. Regional channel strategy and wide
distribution network.

22
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.

LG also follows the strategy of stock rotation, rather than dumping stocks on channel partners.
LG has over 46 branch offices and another 110 area offices across the country.

LG had set a target of developing 2,000 dealers in 2004, in addition to the existing 3,000
dealers all over India
.
While the pace may only just be picking up at Samsung, product localization is nothing new
for that company, either:
In 2002, the company introduced a "sari" cycle in its washing machines, designed to prevent
the traditional six-yard garment from getting tangled with other clothes.

The focus of the current round of innovation, though, is on making mass, volume-driven
products more appealing. That means including voltage stabilizers in direct-cool refrigerators
(a feature otherwise found only in frost-free refrigerators) and launching semi-automatic
washing machines with Samsung's proprietary anti-bacterial wash technology (earlier
restricted to fully-automatic machines).

Not surprisingly, the bulk of the improvements are in televisions, the mother category in the
consumer electronics market. Accordingly, Samsung has developed customer insight-based
features such as channel grouping and lowering volume with a single touch. "[Our] product
innovations cater to the needs of diverse consumers. We will move towards customizing even
mass and volume-driven products," says Samsung's Zutshi.

central to Samsung's strategy in India, much like globally, is to weave in consumer-relevant

technology as an overarching attribute to its products and brand. So you have refrigerators, air-
conditioners and washing machines with bacteria- and virus-fighting technology in the 'Silver
Nano' series, flat televisions that come with DNIe technology for sharper picture and contrast,
and mobile phones with interface in eight Indian language. The overarching idea: Build "a
multi-product, intra-product co-opted brand" that is at once able to take on rivals as varied as
Nokia, Electrolux, Sony, LG, Philips, Hewlett-Packard and Canon.

23
PRODUCT DIFFERENCIATION
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’.

LG's Product Line

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
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 lighting in the room, accordingly and adjusted color
sharpness, brightness, contrast, tint and balanced them automatically.

Thus, LG showed that it cared for customers' health through its products. LG's concern for
health of customers was its unique selling proposition (USP) in the Indian consumer durables
market.

Similarly, LG positioned its refrigerators as the 'preserve nutrition system' refrigerators. In

1998, the company launched air conditioners as Health Air ACs.

LG: Looking great

Category Marketshare in volume terms YEAR 2008-09.
  LG No 2 player
Refrigerators 27.2 21.2 (Whirlpool
Colour TVs 25.5 15.1 (Samsung)
Microwave ovens 41.4 19.7 (Samsung)
Washing machines 34 13.8 (Whirlpool)

PLACE
In its initial years in India, LG realized that it was important to have a good distribution
24
network to reach far-flung towns and the semi-urban markets.

To increase brand awareness among consumers, LG sent vans across India covering a distance
of 5000 km every month. The company focused on building a strong dealer network.

In the late 1990s, when the trend was to give a credit period of 45 to 90 days to dealers, LG
did not offer any such schemes to attract dealers.

It instead asked them to pay in advance for its products. This ensured that the dealers pushed
the brand in the market to keep their own cash from being blocked. At the retail and trade
level, as the volumes grew faster, LG pushed its dealers towards selling products at lower
margins and focusing on quick rotation of stocks.

Local and efficient manufacturing to reduce cost

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.

Now, Samsung is aiming to similarly broaden its presence across non-metro and semi-urban
towns. Apart from increasing the number of branch sales offices and expanding its retail
presence, the company is also reaching out to its customers directly. It regularly conducts
road shows and live demos of its products and has begun distributing pamphlets and
promotional literature in regional languages.

PRICE

While the Japanese brands had outpriced themselves all these years – trying to ride the
market on the strength of their strong brand image – the likes of Korea’s Samsung and LG
systematically established themselves as the prima donnas of the consumer electronics
market through the 90s.

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.

25
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,' its first low priced TV for rural consumers, and followed it with 'Cineplus.'
According to Kim, as the Indian customers wanted the best products at reasonable prices, LG
started introducing quality products in the economy range.

In the first few years after its entry, LG did not get into price wars. Unlike other players, it
did not offer any exchange schemes or discounts.

LG officials said that they believed in an 'honest pricing policy' and its message to customers
read 'No scheme, no gimmick, great products and honest prices.

Samsung  is going to the market with an ‘aggressive' Pricing Strategy that gives consumers
its latest ML 1666 laser printer, which the company claims to be the ‘world's smallest' laser
printer, at an MRP of Rs 5,499.

Promotion

Of all the elements of marketing mix, LG seemed to have put more emphasis on promotion
and advertising. LG gave immense importance to its promotion and advertising activities.

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 (5% OF ITS REVENUES) on advertising. An ad agency
which handled the account of one of the LG's rivals, commented: "Communication creates a
mindspace among the consumers and LG has occupied that fairly well."

26
 1. ALL THE YEAR ROUND ADVERTISING.

Unlike many Indian brands which advertised seasonally i.e., (two-three months of the festival
season-September, October and November), LG advertised all round the year. According to
analysts, this resulted in high brand recall and successful positioning.

In all the communications of LG, the USP remained the same for individual products. For
refrigerators, it was "preserve nutrition;" for CTVs, it was "less strain on eyes;" for air
conditioners, it was "healthy ambience and air quality;" for washing machines it was "fabric
care;" and for microwave ovens it was "healthy cooking.

2. Penetrative Distribution.

Importantly, for LG, a nationwide launch meant just that. A penetrative distribution strategy
ensured that products were available even in smaller towns and cities, breaking the chain of
urban dependency that plagues most white goods manufacturers.

More than 65 per cent of 2004 revenue of Rs 6,500 crore (Rs 65 billion) revenue came from
non-urban sources; up from under 60 per cent of 2003. The industry average- 25 to 30 per
cent. Add the fact that the rural markets accounted for a remarkable 30 per cent of total sales
and it's clear that LG's strategy "We push rural marketing," is working.

How does it do that? LG reaches into the hinterland through a pyramidal sales structure.
Branch offices in larger cities set up central area offices in smaller towns; these in turn reach
out to even smaller towns and villages through remote area offices  -- at last count, the
company had 51 branch offices, 87 CAOs and 78 RAOs.

Each RAO has servicing, marketing and sales teams at its disposal and an individual budget
for marketing activities in its territory. The executive in charge has independent decision-
making powers -- he can decide the tenor and scale of brand promotions in his area, without
having to cross check every little detail from the head office.

Technology, too, is being used to the hilt to ease their jobs. The RAOs and CAOs are all
electronically connected through a V-SAT and Intranet network.

And where earlier decisions about putting up large hoardings could be approved only after a
visit from the head office, LG has provided all its branch managers digital cameras -- now
they just click images of suitable locations and get them approved electronically.

27
 3. HEAVY ADVERTISING.

An advertising blitzkreig followed. And the momentum hasn't let up since. LG is one of the
most aggressive advertisers in the white goods industry, spending close to 5 per cent of its
revenue on marketing activities -- that's Rs 130 crore (Rs 1.3 billion) 2002.

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 spend to sales ratio at 5-6% of sales was very close to that of FMCG giant
HLL.

4. CRICKET

A close tie up with cricket ensured the brand building exercise would score well on consumer
recall -- apart from signing on leading Indian cricketers, LG also launched a cricket game on
one of its television models. Point of sales promotions were also extensively advertised to
ensure customers were tempted to visit the stores.

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.'1

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.

From 1997 till 1999 LG did not have any television commercials. They were not represented
among the masses in a true sense. They were just represented in towns through hoardings,
newspapers. The 1999 World Cup in England was their first mass awareness programme
right from carton boxes to communication. It became known to everyone. Subsequently the
two Champions Trophies and the 2003 World Cup became a mainstay in their efforts to build
the brand.

28
Samsung has sponsored the Indian cricket team as well as individual players.

Samsung, in order to create its brand awareness, signed seven cricket celebrities and in doing
this it aimed to cash in on the popularity of cricket in India which is considered a religion in
India. Instead of just ads featuring cricketers, Samsung launched its “Team Samsung India”
campaign all over India. The focus of this concept was to create patriotism through cricketers,
but under the Samsung brand name the banner reads “With Team Samsung”. The campaign
was a huge success and it enabled Samsung to increase awareness of its brand. As a result, it
began to make impressive growth in India.

5. OTHER THAN CRICKET..

LG realised that two growth engines as far as the advertising fraternity is concerned will
work. One is all around cricket and the stars. The other will revolve around entertainment.

LG went with a double engine effect .They believed that Cricket delivers numbers and
reaches masses. It however alienates women. It does not address that gender with the same
amount of passion. Cricket is better for a consumer electronics television oriented effort for
the male audience. It also partially delivers in the air conditioner category as men to some
extent make decisions for this product. But when it comes to pushing mobile phones, washing
machines, microwave ovens, refrigerators it does not deliver the full impact.

Samsung signed on popular actor Aamir Khan as its brand ambassador.

“In India, Samsung’s investment on branding has spanned our brand building and
corporate initiatives, product investments and investments in the channel,” says Mr. Yadav.
“In the year 2008, Samsung supported the Olympics cause in India by way of sponsorship of
the Indian team, the support for select members of the Indian team. The company also
organized the biggest-ever national level school quiz on Olympics for school children.
Consequently, its Olympic-related advertising campaign brought the company’s brand
closer to customers. 

“We supported the Indian team to the Beijing Olympic Games as well as provided
scholarship support to six Indian athletes for their training expenses, including Abhinav
Bindra whom we subsequently signed on as our Brand Ambassador for Consumer Electronics
products, following his return from the Olympics,” adds Mr. Yadav. Samsung hugely
invested in sports, as it knew that sports attract crowds. In the Athens 2004 Olympic games, it

29
was named as Worldwide Wireless Communications Partner of the Olympic games, but not
without a cost.

Samsung provided 14,000 mobile phones and also supported equipment during the games.
They also presented themselves in the Olympic Torch Relay, which took place in 27
countries. They also showcased their products for 17 days to the visitors at the Olympic event
and also allowed 30,000 minutes of free calling grabbing the audience to its brand. 

6. Mobile phone campaign launch

LG realized that their target is very young from the late teens and thus their brand had to
become younger, their generation brand. They did not want to become a brand that is for an
older generation just because they had been around for several years. They learnt from what
Coke, Pepsi have done over the years to remain young. This helped them to address all
sections of consumers. LG wanted to become a consolidated consumer driven brand that also
encompasses mobile and IT.

Mobile handsets contributed 35% of Samsung India's turnover of over Rs 9,000 crore (Rs.90
billion) in 2009, vs.26% of a turnover of Rs 7,600 crores in 2008 

Lots of reasons can be attributed to Samsung's rise. One reason is the heavy competition in
India, which hit rivals like Motorola, but which Samsung was able to cope with because of its
huge funding and scale economies. All high-volume Samsung models of up to Rs 15,000 are
made in the company's facility at Noida, which can produce up to a million phones a month.
The rest are all imported from South Korea (not China). 

Samsung's handling of distribution has been another key factor. "The margins we offer to
retailers are the best in the industry. We guarantee 30 per cent return of investment on
Samsung merchandise to retailers" says Samsung India Director (mobile and information
technology) Ranjit Yadav. 

India has some 120,000 mobile handset dealers. Samsung reaches about half of them. Since
the trade has a long tail, Yadav thinks this covers over 80 per cent handset sales in the
country. Most large retail shops have Samsung agents to sell its handsets. Yadav has a team
of 30 which looks at channel development, and another team of 30 to work with retailers to

30
make their business viable. 

As for product strategy Samsung's is no different from Nokia's: bundle "more than the
competition" at various price points. Thus in the below-Rs 3000 segment the Samsung Guru
comes with the Hindu calendar, tracker for misplaced handsets, Bluetooth (in some models),
clamshell design and solar recharge facility (Solar Guru). 

In the multimedia segment (Rs 3,500 and Rs 8,000) Samsung offers in the Metro features like
camera, pre-loaded social networking sites (not all models) and a card for data storage. For
small businessmen who travel to remote parts and rural consumers who are straddled with
low connectivity, there is the dual-SIM handset. For young adventure-seekers, there is the
"planet-proof" Marine which they can drop in water or put under a motorcycle and still hope
to use it. 

Samsung's forte is its touchscreen phones, which start at Rs 7,600 and go up to Rs 33,900.
There are the Star and Corby at the entry level. Corby is targeted at youth and comes loaded
with social networking sites. Then there's Pixon which has a powerful camera, Jet with high
processor speed of 800 MHz, Omnia business phones and the Galaxy on the Android
platform. A third of all launches in 2009 were in the touch-screen category. The company
claims it has 31 per cent share of the touch-screen market. 

Samsung came out with 44 new models in 2009 (42 in 2008; the plan for 2010 is no less
ambitious). It has about 50 handsets in the market at present, which means almost the entire
line is less than a year old. Samsung in March 2008 launched a mass-media campaign with
Amir Khan and the tagline, "Next is what?" 

CDMA is a smaller market, but the entry of new players like Virgin and MTS has revived it.
Even as CDMA players began to build a GSM business also, the CDMA handset market has
grown, and is expected to grow 10-15 per cent in 2010. 

Till recently CDMA handset sales were tied to the operator. However, Qualcomm sponsored
the Open Handset movement, after which retail sales are expected to grow. Samsung was first
to bring OMH handsets to market. In 2008 it came out with the Mpower series of handsets
which could be used for all CDMA services ? Reliance Mobile, Tata Indicom and Virgin

31
Mobile. This opened retail possibilities in CDMA. In September 2009, it used the OMH chip
developed by CDMA technology provider Qualcomm for the Mpower 699 which offers full
flexibility between service operators. 

With this technological breakthrough, Samsung has for the last two years begun to focus on
the retail segment of the CDMA handset market. It has close to 10,000 dealers now, up from
3,000 a year ago. The company gets almost 35 per cent of its volumes from retail. It has 15
models in its line, priced between Rs 3,200 and Rs 12,500, including a CDMA Corby and a
dual-SIM handset for CDMA as well as GSM services. As a result, its share in CDMA
handsets has improved from 16 per cent at the end of 2008 to 25.4 per cent a year later. 

7.LG does not show any foreign ads.

LGs communication language is not that of a foreigner. They agree that Emotions work a lot
in India. The warmth and affection that a brand showers upon its target audience will be
reciprocated. A brand may be ranked higher but if it is not relatable then it will not do well.

In 1997 LG were represented in high end markets. It was niche. Today they sell different TV
sets, refrigerators. They don’t just have SEC A+ 35+. Their target is total. So their
communication must address everybody. They cannot have one for the higher end and
another for the lower end.

8. Role of a celebrity.

The sheer rub off of that celebrity draws in masses for a high end product. It connects mind to
mind. This is where a Saurav Ganguly worked.

This is also what Abhishek Bachchan did. Even in Allahabad, Benares it worked. At the same
time LG did not use a celebrity for everything. For television sets their positioning had been
around the eyes. It used an average child.

9. PRODUCT DIFFERENCIATION

Conventional wisdom says that television watching is bad as it causes strain. LGs
communication showed that with LG’s eye technology it is not harmful. The position was
very different in that it showed that it would give the child a world of knowledge. The child
plays a crucial role in terms of buying a TV set. It looked at the TV as being an infotainment
medium and not entertainment.

32
10. DIRECT MARKETING.

The pre purchase and post purchase experience are important towards enhancing brand value.
In the long term word of mouth publicity is key. We have around 1,150 in shop
demonstrators and 1,000 counters across the country. This is a force and manpower that no
other competing brand has. Exhibitions play a significant role across the country. The
portfolio that we have cannot be addressed with just one showroom.

One showroom can only accommodate 30 per cent of our product line. Exhibitions give us
the opportunity to display more products and do something meaningful. We concentrate on
training our sales people and upgrading their sales skills.

Direct Marketing- The route of direct marketing adopted and health campaigns by LG proved

to be very successful by taking it to the number one position with the highest market share.
The objective of direct marketing was to serve the customers in a better way after the
purchase by teaching them the various uses of microwave.. Also, LG was able to identify
customer buying behavior in different zones and could customize its products accordingly.
Direct marketing also helped the company communicate the product improvisations and
customizations directly to the customers. It was quick to respond as per the customer
requirements.

Though direct marketing is expensive as compared to other methods of promotion, but the
strategy seems to pay off as the September 2004 ORG Marg Retail survey declared LG as the
leader in microwave market with 43.6 per cent market share followed by Samsung with 20
per cent and IFB with 12.5 per cent.

The route of direct marketing adopted and health campaigns by LG proved to be very

successful by taking it to the number one position with the highest market share. The objective
of direct marketing was to serve the customers in a better way after the purchase by teaching
them the various uses of microwave.. Also, LG was able to identify customer buying behavior
in different zones and could customize its products accordingly

Though direct marketing is expensive as compared to other methods of promotion, but

the strategy seems to pay off as the September 2004 ORG Marg Retail survey declared LG as
the leader in microwave market with 43.6 per cent market share followed by Samsungwith 20
per cent and IFB with 12.5 per cent.

11. OTHER SALES MEANS..

33
Mobile vans and road shows will play a crucial role going forward. LG used malls as a place
for display as a lot of people visit them. In-house demonstrations of products after purchase
are another area of focus. Cookery classes for their microwave ovens tell the customer that
LG does not just sell microwaves. It is also teaching him how to cook.

Ladies come to learn cooking and they also learn about the other products available from the
range. This activity will be strengthened over the years as India cannot be addressed by only
going to 10 or 20 towns. The major growth will have in those middle markets.

All LGs portfolio except for laptops and mobiles are in house. You can only see someone
else’s Airconditioner by going to their living room. They remain inside. A mobile phone is
flashed around as a personality trait. They believe that if you sell a LG phone to a school or
college student you are preparing him/her to be a future LG television, washing machine,
refrigerator customer.

So they are catching them young. The mobile phone in the future will be the first entry
product into the customers home. After that will come television sets and washing machines.

It becomes a brand that a person is proud of. However LG is staying away from SMS and
MMS communication activities on ethical grounds.

12. LG’s Rural Foray

•LG tripled the number of its retail & distributor outlets in rural areas from 2004 to 2008.
The avg. price of its Sampoorna range of CTVs came down to about the price so competitive
that, thereby bridging the gap between CTVs and other local B/W TVs.
It also tapped local forms of entertainment like annual haats and fairs and made huge
investments in infrastructure for distribution and marketing.
In 2009, LG spent Rs80 crore for promotion of its products and include other products under
this initiative. 

34
 LG TURNOVER Y-0-Y year turnover

16000

13090

10730
9500
8250
7500
6500

4500
3315
1997 1998 1999 2000 2216 2002 2003 2004 2005 2006 2007 2008 2009 2010
1903 2001
1056
125 485
1 2 3 4 5 6 7 8 9 10 11 12 13 14

OTHER REASONS FOR LGs SUCCESS..

LGs success is a function not just of what the company did, but also of what its competitors
didn't do. The super-premium price and positioning of technologically superior Japanese
brands like Sony and Panasonic made them inaccessible to most of the Indian market. On the
other hand, lower-priced Indian brands offered old-generation products; they did not invest
sufficiently in R&D because they were not able to launch new products quickly enough to
amortize those costs.

The other players in the consumer electronics space consider India a market for transactions,
which is a short-term, unsustainable strategy. On the other hand, LG believe this is a market
in which to do [long-term] business. It has made a full commitment to India.

In any customer-facing business, product, brand and distribution decide success. Moreover,
in the durables industry, after-sales service and product innovation are also key factors. LG
leveraged its global R&D facilities to speedily bring in new products and offered more
variety at attractive prices.LG followed this approach better than Samsung, which is why it is
bigger than Samsung in India.

India’s IT advantage

35
LG Electronics has awarded a contract to develop IT solutions to LG Soft India (LGSI). The
project involves development and support for ERP, SCM, CRM and IT-enabled services for
LG Electronics’ 60 overseas subsidiaries and manufacturing facilities worldwide.

LGSI has offices in San Jose, London and Seoul with over 300 professionals in the
development facility at Bangalore. All its offices are networked for swifter communication
and decision making.

R&D potential
LG has set up research and development facilities in India at Bangalore and is in the process
of setting up another at Pune. Both the units carry out R&D work for the domestic market as
well as for the parent company. It also does customised R&D for specific countries to which
it exports products. LG invested  nearly Rs 500 crore in India in 2010 in research and
development, brandbuilding and other marketing initiatives. The company, having a turnover
of Rs 9,500 crore and market share of 26 per cent, invested Rs 360 crore on brand-building
and other marketing

initiatives and around Rs 140 crore on research and development, besides launching new
platforms in information technology and related areas.

Samsung spent US$13 million to set up a 75-member hardware R&D center at Noida (Uttar
Pradesh) in 2009.

Future plans

LG has a positive perception of India and the Indian consumer. LG is making a foray into the
e-commerce market in India and has partnered with various local websites like fabmall.com,
rediff.com, indiatimes.com, and indiaplaza.com.

LG is also planning to invest over US$ 208 million in India over the next three years to
expand the business. Mobile software development is also on LG’s agenda.

LG has investments of over `1,300 crore, which entail setting up a new plant, most probably
in Chennai.

36
Samsung  has recently doubled the capacity of its refrigerator factory and is looking at a 50
per cent increase in its 10 million per annum mobile phone unit.  

Interestingly, both the Korean cheabols are also looking at India as a manufacturing base for
other markets. Samsung, for instance, currently has very limited exports from India. But that
is going to change; Jung says India will serve the West Asia, Africa and north Asian markets.
At present, these markets are served by Malaysia, Thailand and China.

LG is a bit ahead, but the strategic aim is the same: to transform India into a manufacturing
hub. "Currently, 12 per cent of our turnover comes from exports. This will go up to 30 per
cent by 2015," says Moon. But even Moon, like his counterpart, points out that the markets
that India will cater to include South Africa and West Asia, maybe even South Korea.

The two cheabols have also increasingly realised the need to shift a larger part of their
research and development work to India.

So, increasingly, these centres will play a key role in cutting-edge development of new
products, not only for India, but for the global markets.

Samsung, for instance, has just set up a performance innovation centre in India - the fourth
worldwide (after the US, China and UK), which will design and develop innovative new
products. To begin with, mobile phones have been selected, which could be followed by
televisions Samsung, which already has over 4,300 engineers, is planning to add in another
700 this year

Rival LG is also upgrading its Indian R&D centre so that it can design and develop
televisions, refrigerators, washing machines and microwaves for the world market.

To achieve these objectives, it will be hiring 2,000 more engineers. Currently, the 3,000-
strong R&D centre mostly undertakes localisation of products from Korea.

CUSTOMER RETENTION

Having gained a foothold in the Indian electronics market, LG and Samsung are now working
on firmly securing their positions through customer retention. That requires a two-pronged
approach -- promoting replacements for electronics and appliances and focusing on customer
satisfaction and after-sales service. Industry observers point out that the product lifecycle in
consumer electronics has already plunged from two years to under one year, on average,
which creates huge potential for replacement purchases. Suresh Khanna, secretary general of
the Consumer Electronics and Appliances Manufacturers Association of India (CEAMA),
agrees. "Earlier, all purchases were for a lifetime. Now, the lifecycle is getting shorter and
companies are seizing this opportunity."

37
Customer service is another way of keeping existing customers engaged with the brand.
"Across the industry, customer service has improved, from installation to follow-up. Of
course, technology has also improved, so breakdowns are fewer. But the accent on customer
satisfaction builds brand loyalty and contributes to word-of-mouth publicity for the brand,"
Khanna says. Both LG and Samsung have focused on providing reliable and quick customer
service right from the start. Even in the mid-1990s, when Samsung had just begun its India
operations, vans painted in the company's colors toured the major cities with engineers on
call for service visits.

Now, apart from a website, Samsung has two captive call centers where operators field calls
in six languages and route calls to any one of 900 service centers and 7,000 engineers across
the country. The emphasis is on quality and speed of service, so turnaround time is under 24
hours in most cases.

LG, too, has increased its attention to customer service. Earlier this year, the company
launched its "211" initiative, where it promises to call back the consumer within two hours,
fix an appointment within one day of registering the call, and allocate a one-hour slot to fix
the problem. The idea is to provide service at the customer's convenience, says a company
spokesman. Like Samsung, LG has a call center, 8,000 engineers and 1,200 service centers
across India. "After-sales service is critical in the durables industry," says Shin.

IIMA's Koshy believes customer service is vital, even if product quality is impeccable. "It is a
way of establishing confidence in the brand. With customer service, you can connect with the
customer not at the functional level, but at a higher, emotional level."

SMA is an attempt to create a product- and brand-conscious consumer-facing corporate

culture that permeates right down to dealer's sales personnel. It has a budget of more than $1
million (Rs 4.40 crore), and growing. "Once SMA came into my fold, I started reporting
directly to the CEO- something I wasn't doing even as head of management innovation in
implementing six sigma," adds Rai, pointing to the importance and focus the company
accords SMA in its brand plans. Another first for Samsung and a far cry from the industry
practice of treating after-sales service as a revenue centre, is Samsung Service Plazas. "For
us, service is a cost centre, part of managing the customer-relationship-management chain.
We earn through selling the product; why rip off the customer for choosing your brand?" says
R. Srikanth, Vice President (Service).

The company has set up seven sprawling (over 2,500-sq. ft. each) service plazas in downtown
locations in as many cities. Here a consumer can walk in with the product-mobile phones,
cameras, printers and laptops-and get on-the-spot service, and often at prices lower than
published rates. Samsung's pouring big money here, considering that it costs in excess of Rs
2-crore to set up a single service plaza, and that a dozen more are planned for 2005. "Many
customers who walk in chat with our executives on new technologies, new products or even
query about functionalities of products they may already own," says Srikanth. The unstated
hope: That customers will keep coming back for more products.

38