LG Electronics

SALES MANAGEMENT
(1) formulation of sales strategy through d evelopment
of account management policies sales
force compensation policies, sales revenue forecasts,
and sales plan,
(2) implementation of sales strategy through
selecting, training, motivating, and supporting the
sales force, setting sales revenue targets.
(3) sales force management through development and
implementation of sales performance, monitoring,
and evaluation methods and analysis of associated
behavioral patterns and costs.
 SALES

• A sale is the act of selling of products or

services in return for money or other
compensation. It is an act of completion of a
commercial activity
Type of sales
1. Public Auctions 4. Internet Sales
2. Annual maintenance Contract 5. Fixed-Price
Sales
3. Silent Auction Sales
 LG Electronics India Pvt. Ltd.
• A wholly owned subsidiary of LG Electronics,
South Korea

• Established in January, 1997

• State-of-the art manufacturing facility at

Greater Noida, near Delhi, in 1998
 LG Electronics India Pvt. Ltd.
• Vision was to become a 'Health Partner' for its
consumers
• The CTV range offered by LG has 'Golden Eye'
technology
• Entire range of LG air-conditioners have 'Health Air
System'
• Microwave ovens have the 'Health Wave System'
• Refrigerators have the 'PN System’
• Washing machines have 'Fabricare System'
 LG -Background

• Gold star co.1958

• LG India,official sponsor of CTV kits for
1982 Asian Games
• 1995- technical collaboration with
Bestavision group
• 1995- CK Birla group
• 1997-LG Electronics Ltd
 Vision- “Global Top 3 by 2012”
"Life's Good“
Represents LG's determination to provide delightfully smart
products that will make your life good

Mission
• To be the best company in its product
range
• To bring a smiling face to every home
across the world
• Corporate logo incorporate
-world ,future,youth,humanity ,technology
 Slogan
"Life's Good"
Represents LG's determination to provide delightfully smart products
that will make your life good

Symbol
LG Symbolizes
• Future
• Humanity
• Technology
 India challenges

The challenges faced by LG when entered in Indian

market
• 1. Low brand awareness about LG in India.
• 2. One of the last MNCs entered in India (Samsung,
Panasonic entered in 1995 in India).
• 3. High import duty
• 4. Competition from local market players and other
MNCs in consumer durable segment.
• 5. Price sensitiveness of the Indian consumer
LGEI over comes these challenges to emerge as
Innovative marketing strategy

• Launch new technologies in consumer electronic and home

appliances.
• LG was the first brand to enter in cricket in big way a way,
by sponsoring the 1999 world cup followed it up in 2003 as
well.
• LG brought in four captains of the Indian cricket team to
endorse its products. LG invested more then US$ 8 million
on advertising and marketing in this sport.
• LG has differentiated its product using technology and
health benefits. CTV has “Golden eye technology” Air
conditioner has “Health air system” and microwave ovens
have the “Health wave system”.
 Regional channel and wide distribution
network

1. LG has adopted the regional distribution

channel in India. All the distributers work
directly with the company. This has resulted
in quicker rotation of the stock and better
penetration into B, C, D, class market.
2. LG also follows the stock rotation policy
rather then dumping stock on channel
partners.
 Product localization:-
1. Product localization is the key strategy used
by the LG
2. LG came out with Hindi and regional
language menus on its TVs.
3. Introduced the low-priced “Cineplus” and
“Sampooma” for the rural market.
4. LG was the first brand to introduce gaming in
TVs in continuations of its association with
cricket LG introduce cricket game in CTVs
 MAJOR KEY SUCCESS FACTORS:

1. Innovative marketing - LG was the first brand

to enter cricket in a big way, by sponsoring
the 1999 World Cup and followed it up in
2003 as well.
2. 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.
 MAJOR KEY SUCCESS FACTORS:
3.Commissioned contract manufacturing at Mohali,
Kolkata and Bhopal for CTVs.

4. Product localization - Product localization is a key

strategy used by LG. It came out with Hindi and
regional language menus on its TV.

5. Regional distribution model - This has resulted in

quicker rotation of stocks and better penetration
into the B, C and D class markets.
 MAJOR KEY SUCCESS FACTORS:

• 6. Leveraging India’s IT advantage - 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.
 Strategies adopted by the organization:
• LG follows 10 commandments which are as follows.
• 1. Foster working environment-5S Environment
• 2. Fast execution is key to success
• 3. Transparent and fast communication-open
communication
• 4. Update market -knowledge –Demographics
• 5. Win –Win relationship with the trade partners
• 6. Customer is the king
• 7. Even Billing –Road to ach supplier A
• 8. Be in touch with the market (70% Market, 30% Office).
• 9. Plan and Execute annual marketing Calendar-Time to
market
• 10.Display share of 50% -to get 50% consumer share.
 Consumer Electronics
• Production in the consumer electronics industry is US$ 6.7 billion in
2009–2010.
• The segment registered a growth of 18 per cent in 2009–2010 from
US$ 5.5 billion in the previous year.
• The consumer electronics segment contributes about 27 per cent to
the total hardware production in the country.
Consumer Electronics
 Consumer Appliances
• The consumer appliances market is estimated at US$4.34 billion, with
imports valued at US$ 1.22 billion in 2009–2010.
• Most imports are in the finished goods categories such as watches, electric
coffee makers, food grinders, electric heaters, etc.
Key Players
Key Players
Product Mix Of Key Players By volume
 Electronic Goods EX-IM
• Every year India imports electronics and appliances in huge quantity.

• More that 70 per cent of Indian electronics market depends on import of both finished

goods and components.

• India imported worth US$ 18.5 billion and exported worth US$ 3.69 billion of electronics

goods between April 2008 and February 2009

USD (mn) 2006-07 2007-08 2008-09 % Growth 2007-08 % Growth 2008-09

Exports 2690.5 2809.3 3697.1 4.4% 31.6%

Imports 15057.3 17320.4 18505.8 15.0% 6.8%
*excluding computer in physical form
Sales Trend- Consumer Electronics
 Market Players( Organized Sector)

1. LG
2. Samsung
3. Amtrex Hitachi
4. Carrier
5. National
6. Voltas
7. Videocon
8. Blue star
9. Godrej
10. Others
Market Share( Organized Sector)
Geographical Distribution Of ACs
LG market share of consumer appliances and consumer electronic:-
LG POSITION OF CTV IN VARIOUS STATES IN INDIA
LG position of REF in various states in India
LG position of AC in various States in India
Consumer Durable- Growth Drivers
LG- Product Portfolio
 LG- Product Portfolio
Mobile communications Digital appliance
• CDMA Handsets • Air Conditioners
• GSM Handsets • Refrigerators
• 3G Handsets • Microwave Ovens
• Cellular Phones • Washing Machines

Digital display Digital media

• Plasma TVs • Home Theater Systems
• LCD TVs • DVD Recorder
• Micro Display Panel TVs • Notebook PCs
• Monitors • Desktop PCs
• Car Infotainment
LG Technology Collaboration
 LG CHANNEL STRUCTURE
• Multi-tier structure
• Have LG Shoppes, cyber shoppes, SSDs, X-Canvas
Studios, direct dealers
• Also have a network of distributors and sub dealers
• About 10,000 stock and selling points spread across the
country
• Different distribution strategies for its different
product groups
• GSM mobile phones do not make use of CFA’s
• CTV’s, microwaves and other like items require a CFA
 LG CHANNEL STRUCTURE

• Primary manufacturing facility at Greater NOIDA

• Two other manufacturing facilities have come up in the

region of Pune and Dehradun, keeping in mind the
benefits of Excise free zones (EFZ’s)

• Procurement of supplies and materials for production

is done by the purchase department
 LG CHANNEL STRUCTURE

• The annual forecasts are further disaggregated into

forecasts that are carried out twice a month(15 days
basis), on the basis of which inventories are
maintained and further production levels are
maintained

• Most raw materials are bought from suppliers within

India

• At the retail level, LG uses a combination of exclusive

LG showrooms as well as Multi-brand outlets (MBO’s)
 LG CHANNEL STRUCTURE

• Consumers for LG include individual consumers as well

as institutional clients

• LG also indulges in e-retailing as an alternative channel

through its website www.lgezbuy.com

• LG also has a separate channel for services and spares

 Consumer Durables
SCM

IMPORTANCE: OBJECTIVES:
• Product Proliferation • Efficient Sourcing
• Multiple players • Demand Planning
• High competition • Inventory Optimization
• Benchmarking and TQM • Order Management
• Production Demand mismatch • Tracking
• Ever Increasing Targets • High Inventory for High Demand
• Bargaining power of Retailers Periods
• Reverse Logistics
 Benefits of Efficient SCM
•Reduced vendor payments due to better on-time delivery and
improved availability
•Increased revenues from improved availability of high fast moving
inventory
•Working capital reduction due to improved inventory management and
reduced order cycle times
• Fixed capital reduction due to effective asset utilization
Consumer Durables Channel

Company Franchisee
Managed Stores Traditional Retailing Showrooms

Reverse Logistics E-Retailing

Individual Consumers Institutional Consumers

LG DISTRIBUTION NETWORK
 ALTERNATE CHANELS:
E RETAILING VENTURE

LGEZBUY.COM
LG Logistic Organization Structure
 The Situations of
Supply Chain

• LGE Transportation with its annual expense exceeding $40 million, was
recognized as one of the critical areas within the companies operations
that would deliver significant value to both the top and bottom line.

• Transportation Cost account for approximately 51% of total logistic cost

and was recognized as a primary target for reduction.

• In order to extend the value of Oracle ERP and EXEWMS systems deeper
into the distribution network ,LGE needed to integrate a best of breed
transportation management into its existing enterprise management
systems.
 The Challenge In Supply
Chain
 The challenge for LGE was to achieve transparency between market demand
variability and distribution planning and execution.

 To effectively manage this, LGE set out to establish integrated best practice
workflows across the entire transportation and distribution organization.

 The selection criterion was focused on partnering with the best in class
transportation management solution provider, followed by the lowest overall total
cost of ownership the least rest and a rapid time to value.
 CHANNEL CONFLICTS AND COOPERATION

• The first type of channel conflict may arise because of the co-existence of
the following:
• LG owned exclusive outlets
• MBOs (multi brand outlets)

• Another type of conflict could be a result of institutional sales being

sourced by both:
• The company itself
• The dealers who want to meet targets

• Internal conflicts:
• The branch managers, who look after all products in a particular
region, and product group managers, who look after particular
products, often monitor the same dealers in a region, thereby
leading to conflicts.
• DISTRIBUTORS

• The company appoints distributor for selective cities where the

markets are small but require more focus and attention.
Distributors are required to conduct sales and marketing on behalf
of the company in these markets serving to all the required
company stores.
• The company sends goods to the distributor on out right sale
basis.
• It is the duty of the distributor to send his people into the field to
book the orders and also execute them through their own delivery
vehicles.
• The distributor has to maintain his own sales, delivery and
accounts people for smooth working of his unit and is served by
the nearest C/F for all his requirements.
• The distributor is given a margin of 10-20%
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Delivery Schedule

• takes 1 day for CFA’s to service reorder within their zones

• distributor too caters to the demand in his area within 48
hours from the time of receiving the order
• If goods have to be procured from the warehouse then it
takes 8 days (avg) for the goods to arrive at the C/F or
distributor and delivered to the stores.
• no inventory management system in place with the MBO’s
• ‘LG Shoppe’ and franchisee showrooms do have a system
in place to consolidate their inventory and sales with the
company main office
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Ordering

• The retailers order their requirements directly to the

concerned distributors.
• The distributors source the orders from the company
warehouses, which are connected directly with each of
the 43 branches.
• The mother warehouse in Greater Noida caters to the
needs of all the regional warehouses.
• It is the responsibility of the C/F agents to supply to the
distributors as per their requirements.
• If any reorder do come in during the month then the
regional warehouse that entertains them properly
services them.
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Planning & Forecasting

• The company goes for annual forecasts on the basis of the

previous year’s sales and also current trends.
• These sales forecasts are then disaggregated into monthly
sales plans.
• The logistics and the production people meet every 15
days, and on the basis of sales as well as past inventory,
they freeze production for the next 15 days.
• In case the sales in the previous period have not been up
to the mark, and the inventory levels are high, the
production is halted and stock of the situation is taken.
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Manufacturing

• The company purchases nearly all its material

requirements exclusively
• separate import departments that look after the imports
• Around 80% of all the models across the product line are
manufactured at the manufacturing facility at Greater
Noida
• compressor plant in Noida
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Reverse Logistics

• The company accepts returns from their retailers as well

as company owned stores
• The job of bringing back the defects again rests with local
distributor and C/F that collects them from the shop
• They are entered and kept separately at the warehouse
and proper stock is maintained and sent to warehouse
• The damaged goods are dispatched to the warehouse
periodically. The damaged goods received from the
distributor are credited to his account and as such are
only accepted after thorough examination by the local
sale executive
 LG SUPPLY CHAIN MANAGEMENT ISSUES

• Direct marketing

• LG uses direct marketing strategies in the microwave oven

product category, as the category hasn’t picked up in
volumes in India as of yet. These are carried out through
road shows, exhibitions etc.
Consumer Durable Value Chain
 Durable- Top 10 Players (Indian) by sales FY
2009-10
1. Nokia India • India being the second largest growing
2. LG Electronics India Ltd economy with huge consumer class has
3. Samsung India Electronics resulted in consumer durables as the fastest
4. Sony India growing industries in India
5. Philips India
6. Whirlpool Appliances • LG, SAMSUNG the two Korean companies
7. Titan Industries has been maintaining the lead in the
8. Siemens industries with LG being leader in almost all
9. Videocon Industries the categories. 
10. Blue star

Source: http://www.naukrihub.com/india/consumer-durables/companies-list/top-players
 BE Factors…
• Economic
-Rise in disposable income
-Changes in custom duties and exchange rates
Socio-cultural
-life style improvement
-high value products at reasonable price
-multiple ownership
 BE Factors….
• Technological
-advancements
-responsiveness to deal with competition
-technology import route
 BE Factors…
• Global
-dumping and competition
Demographics
-largest middle class in the world
-quality and health consiousness
 Industrial competition analysis
• Bargaining power of buyers
• Bargaining power of suppliers
• Threat from substitutes
• Threat of new entrants
• Rivalry among existing players
 SWOT Analysis
• Strengths
-differentiation and adaptation –Golden Eye,
14’’ CTV
-innovation -Sampoorna CTV ,multilingual
screen displays
-promotion plan -mobile showrooms
-distribution
-brand image
 SWOT
• Weaknesses
-dealer margins, schemes
-high promotion costs
Opportunities
-industry growth
-anti dumping duty on Chinese TVs by U.S
 McKINSEY 7S FRAMEWORK
• Strategy
• Structure
• Style
• Shared values
• Skills
• Staff
• system
 Strategies adopted by LG
• Entry –Indianised face with global technology
• Operations- own plant ahead of schedule
• Products-product adaptation strategy
• Segmentation-high middle class and carved a
niche in a crowded segment
• Brand-LG , the global leader
 strategies
• Leadership-localisation Indians at top slots
unlike other MNCs
 LG’s marketing success
• Extensive consumer research
• Strategic pricing
• Sharp positioning
• 3 more Ps
-pace,people,passion
 Positioning
• Golden Eye TV-Wrinkle free viewing
• Refrigerators-PN system
• ACs- Health air system
• Washing machines-Fabricare system
• Microwave oven –Healthwave cooking
 RECOMMENDATIONS

• LG has a reasonable Distributions network in rural India,

however since it has plans to expand in that segment, it must
back it up with an even wider and more accessible network.
Also, the human resources devoted in those regions need to
be strategically chosen, keeping in mind the different mind
set of not only the consumers but also the channel partners.

• Before going on an expansion spree in rural India, LG must

feel the pulse of that market and understand exactly how the
consumers in that segment think and behave.
 …RECOMMENDATIONS
CONTD…
• Likewise, it must also have lots of incentives for its dealers
and distributors in the rural markets since trade schemes
tend to be highly effective in these regions.

• LG could also look at providing easy credit schemes for its

rural customers.

• As of now, all after sales services of LG products are looked

after by franchisees. The company tends to spend a lot of
money on setting up a servicing infrastructure, training the
staff, maintaining company representatives at the servicing
premise etc. Therefore, LG could look at setting up company
owned service centers. This would instill confidence in the
customers and also create an after-market for LG products.
 ..RECOMMENDATIONS
CONTD
• LG should also try and shift its sourcing of materials and
components from Indian suppliers, to cut costs. Only the high
quality components should be imported from South Korea.

• The number of company owned exclusive LG outlets should

be increased so as to provide greater flexibility, keeping an
eye on the cons of this as well, such as channel conflicts,
under-cutting by dealers, costs etc.

• To avoid unionization and cartel forming among transporters,

LG must not give the contracts to a single transporter, but a
number of them.