Niraj LG Electronics

STRATEGIC BRAND MANAGEMENT OF LG AIR CONDITIONERS AT LG ELECTRONICS INDIA LTD., BANGALORE.
A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF BANGALORE UNIVERSITY.
BY NIRAJ S KAKKAD
REG.NO-02XQCM6022 (ADJUNCT PROFESSOR)

UNDER THE GUIDANCE OF DR.K.V.PRABHAKAR
M.P.BIRLA INSTITUTE OF MANAGEMENT

ASSOCIATE BHARATIYA VIDYA BHAVAN. BANGALORE-560001 SEPTEMBER-OCTOBER 2004
M.P.Birla Institute of Management
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DECLARATION
I hereby declare that the research work embodied in the dissertation entitled Strategic Brand Management of LG Air conditioner undertaken at LG Electronics India Ltd., Bangalore, has been carried out by me under the guidance and supervision of Dr.K.V.Prabhakar, Adjunct Professor, M.P.Birla Institute of Management, Bangalore. I also declare that this dissertation has not been submitted to any University/Institution for the award of any Degree/Diploma.
Place: Bangalore
Date: 7th September, 2004
(NIRAJ S KAKKAD)
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CERTIFICATE
I hereby declare that the research work embodied in the dissertation entitled Strategic Brand Management of LG Air conditioner undertaken at LG Electronics India Ltd. Bangalore has been undertaken and completed by Kakkad under my guidance and supervision. I also certify that he has fulfilled all the requirements under the covenant governing the submission of dissertation to the Bangalore University for the award of MBA degree. Mr. Niraj S
Place: Bangalore Date: 7th September, 2004 (Dr.K.V.Prabhakar) Adjunct Professor MPBIM, Bangalore-1
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CERTIFICATE
I hereby certify that the research work embodied in this dissertation entitled STRATEGIC BRAND MANAGEMENT OF LG AIR CONDITIONERS AT LG ELECTRONICS INDIA Ltd., BANGALORE under the guidance of Dr. K.V. Prabhakar, Adjunct Professor, MPBIM, Bangalore (Internal Guide) and Mr. Gaurav Chandra of LG Electronics Ltd., Bangalore (External Guide). Place: Bangalore Date: 7th September, 2004 (Dr. N. S. Malavalli) Principal MPBIM
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ACKNOWLEDGEMENT OWLED
I take this opportunity to sincerely thank Dr. K.V.Prabhakar who introduced me to the intriguing subject of Strategic Brand Management and sharing his encyclopedic knowledge on the subject, which is going to be instrumental in shaping my career in the area of Brand Management. I sincerely thank Mr. Rajgopal (Marketing manager LGEIL.) Bangalore office for giving me this opportunity to undertake marketing research for LG Electronics. Further more I express my heartfelt reverence to Mr. Gaurav Chandra who guided me right throughout this project with his comprehensive industry knowledge. I sincerely thank the other faculties (Prof. Santhanam and Mrs. Sumitra Sreenath) who encouraged and motivated me to undertake this project by sharing their experience and knowledge of research and marketing. I also thank Dr N.S. Malavalli (Principal) for giving me the opportunity to explore my areas of interest by consistently lending support in terms of his expertise and also supplying valuable inputs in terms of resources every step of the way. Lastly, I would like to express my heart-felt gratitude to my friends and family who stood by me right throughout this project and have been a constant source for support and strength.
Mr. Niraj Suryakant Kakkad
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CONTENTS
Page. No. Executive Summary PART-A THEORETICAL SETTING 1
Chapter-1 Introduction. Chapter-2 Review of literature. Chapter-3 Research methodology.
4 38 47
PART-B RESEARCH FINDINGS
Chapter-4
Data analysis and Interpretation
52
PART-C CONCLUSION AND RECOMMENDATION. Chapter-5 Major findings of the research.
71 73 75
Chapter-6 Recommendation. Chapyer-7 Directions for the further research.
ANNEXURE Questionnaire Select Bibliography including web sites used. Explanations to the research instruments used.
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LIST OF TABLES AND CHARTS

Sr.No Table/Chart Heading
1 2 3 4 5 6 Chart showing that a Brand is more than a product Chart showing the six-sided prism model of Brand Identity Chart showing the Pyramidal Model of Brand Chart showing the Five Step Strategic Brand Management Model by Roland Berger Chart showing the Process of Strategic Brand Management Tables showing the performance LG over a period of past three years i. Net Sales ii. Net Profits iii. Operating margins iv. Net profit margins Tables showing the LGs present business performance and expected performance for 2004 i. LG Today 2003 ii. LG Tomorrow 2004 Chart showing the success of LG Electronics in the AC market in the year 2000 9 10 11 12 13 14 15 16 17 18 Table showing LGs market share in various brands for 2004 Table showing some famous outlets in Bangalore and their preferred Brand of AC. Table showing above average outlets top brand preference Table showing rank preference of Respondents for various brands of AC. Respondents Rank Preference Table showing Weighted Rank analyses of respondents Table showing the awareness of respondents with regards to Awareness of Plasma Gold Technology Table showing the Brand preference of LG in terms of purchase Table showing the usage of media sources for the promotion of AC Table showing respondents preferred point of purchase for AC.
Pg.No.
6 10 12 15 16 24
27
29 44 52 53 57 58 59 62 64 68 69
EXECUTIVE SUMMARY
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LG Electronics is one of the most respected and highly reputed Chaebol of Korea. With its strategy of Global Expansion and its keen interest in the Indian market has made it set up first one and now another unit in India by the name LG Electronics India Pvt ltd. (LGEIPL). Mr.K.R.Kim who is at the helm of operations in India has been a great leader and visionary. LG is a very strategy-centric company that has a well chalked-out plan of operations. LG India has been successful in making a strong presence in the Indian home appliance market by becoming a market leader in almost all the segments i.e. TV, Refrigerator, AC etc. However something that caught the eye of almost all marketing researchers is the strategy with which they entered the Indian market. LG took the market by storm and has become a strong force gaining market leadership in a host of products. LG is not a concentrated company in fact they have a wide gamut of products and they have followed the Umbrella Brand strategy. All the products of LG are promoted under a single brand name and the Brand Logo, which also is the company name, has been the focus of all the marketing activities of LG. In terms of their foray in the Air conditioner market when they entered India there were companies that had been concentrated in this business such as Carrier, National etc. However LG has been successful in gaining the market leadership from these strong players in just a matter of 3 years.
Their strength apart from the good quality and excellent penetration strategy of their products lay in their strong strategy of branding. Strategic Brand
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Management plays a very crucial role in any companys success in achieving their corporate objectives such as becoming the market leader, positioning a product in the minds of the consumers such that product recall is high and enhancing the goodwill of the company so that the intangible asset of the company would grow which at present happens to be a crucial component of the Balance Sheet of almost all the companies. However an interesting observation with regards to brand management is that while a substantial amount of research has gone into the brand perception, brand logo, brand growth etc. input perspective of branding not much research is in evidence on the concept of brand manners. (Brand manners are the synthesis of all the behaviors, which enable the management to align the internal values of the company with the external values of the brand.). This is the prime motivator behind taking up Brand manners as a part of research. The problem statement identified for the purpose of this research is: Problem Statement: 1. How is LG Air-conditioner Brand preferred amongst Dealers? 2. How is LG Air-conditioners Perceived amongst Customers? 3. How as a Brand is an LG Air conditioner differentiated from, or valued in isolation from the Umbrella Brand LG? 4. How does the concept of brand manners offer an explanation to the above questions?
Objectives:
To critically analyze the penetration strength of LG Air conditioners in Bangalore. To understand the customer perception of LG Air conditioners. To draw the Brand Essence of LG air conditioners in terms of brand manners. Understand LGs Brand Management strategy. Research has thrown some light on the intriguing aspect of a global branding strategy and provided learning with regards to the successful marketing strategy followed by LG. Some major learnings of the research can be stated as Amongst dealers of AC across Bangalore a majority of the dealers Research also states that a majority of consumers prefer to purchase AC from a dealer and Dealer Customer Relationship plays a key role in the purchase decision of the consumers especially with regards to the purchase of AC. A strong literature survey and field research has assisted in coming to the above findings; however more comprehensive research information on the subject and industry follows in the coming chapters. The focus has been to unravel the intent behind various strategies, models and concepts in brand management that have been incorporated by LG and to analyze the degree to which the Brand managers and strategists at LG have been successful in implementing these concepts. Based upon this research work an elaborate set of recommendations has been listed in chapter 6. However some significant recommendations are listed below. Recommendations:
prefer to promote LG Air conditioners
can profitably put the concept of experiential marketing in its LG LGs inherent success in the market has been driven largely by the strength of its brands. This success may not be guaranteed in future, because of the aggressive strategies of its competitors. As a future safeguard, we Innovate the product such that it can be used on alternative source of energy. This is important in India as half the country experiences frequent power cuts or no power at all. recommend the Brand Asset Management (BAM) to LG. marketing strategy.
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BRAND
A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors.
Revolution of the Concept of Brand:

Incubation of the Concept of Brand Equity: The 1980 marked a turning point in the conception of brands. Management came to realize that the principal asset of a company was in fact its brand names. A lot of writing followed this incubation of the idea of Brand Equity, or the financial value of the brand. In fact, the emergence of brands in activities, which previously had resisted or were foreign concepts e.g. in Industry, banking, the service sector etc vouched for the new importance of brands. This is confirmed by the importance that so many distributors place on the promotion of their own brand. The best brands convey a warranty of quality and in complex symbol, which can convey up to six levels of meaning. a. b. c. d. e. f. Attributes Benefits Values Culture Personality User
Brands vary in the amount of power and value they have in the market place. David Aaker distinguished five levels of customer attitude towards their brand, from lowest to highest namely: i. ii. iii. iv. v. Customers will change brands, especially for price reasons. Customer is satisfied. No reason to change the brand. Customer is satisfied and would incur costs by changing brand. Customer values the brand and sees it as a friend Customer is devoted to the brand.
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Brand equity is highly related to how many of a brands customers are in classes 3, 4 and 5.Moreover it is also, related, according to Aaker, to the degree Brand name recognition Perceived quality of brand Strong mental and emotional association Other assets such as patents, Trademarks and emotional associations.
Brand Equity is therefore an intangible asset i.e. it cannot be seen, tasted, heard or smelled before it is bought. Example: According to a study conducted in 1997, about 84 percent of the market value of ten of the leading FORTUNE 500 companies was attributed to intangible assets. Similarly an indicative analysis by the agency Price Waterhouse Coopers, of listed companies with a 1997-98 turnover of more than Rs. 100 crores, identified 25 companies which in todays market command a market value which is more than 4.5 times the book value of tangible assets.
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A Brand is more than a Product

Chart: 1 Chart showing that a Brand is more than a product
Emergence of Brand Management Concept:

Brand management is still in a nascent stage even though brands are a business asset. At present, in many cases, the tendency is to manage products, which happen to have a name. Yet brand management involves different and specific reasoning and approaches. Till date the management books and marketing bibles have not yet assimilated the full implication of the brand revolution. Marketing books focus on the process of launching new products, when marketing the brand is considered merely as a tactical and final decision, which is developed through communication such as advertising, packaging and the logo. Yet the reality of the situation is very different. From now on companies will be faced with the strategic issues of whether or not growth should come about through existing brands by developing their sphere of activity or through new brands. Classic strategy models talk about product portfolios, whereas in reality companies have to manage their brand portfolios. Several companies have product managers but few have brand managers. This may cause problems in so far as more and more brands are being M.P.Birla Institute of Management Page-14
extended to more and more differentiated products, resulting in the delegation of the management of value to several decision centers. In the medium term this may diminish brand equity because decisions are taken without any integration of the decision centers. The brand is not the product but it gives the product meaning and defines its identity in both time and space. Companies are discovering that this brand equity has to be managed, nourished and controlled.
The Evolution of the Concept of Brand Identity

Brand Identity It is the common element sending a single message amid the wide variety of its products, actions and slogans. Brand identity is a recent concept; however researchers have already delved into the concept of corporate identity by the late 80s so to simply put it Corporate Identity It is what helps organization, or a part of it; feel that it truly exists and that it is a coherent and unique being, with a history and a place of its own, different from others. Thus we can infer that an identity means being true to yourself, driven by a personal goal that is both different from others and resistant to change. Thus a brand identity will be clearly defined once the following questions are answered: 1. 2. 3. 4. 5. 6. What is the brands particular vision and aim? What makes it different? What need is the brand fulfilling? What is its permanent nature? What are its values? What are the signs, which make it recognizable?
This type of official document would help better brand management in the medium term, both in terms of form and content, and so better address future communication and extension issues.
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Why speak of identity rather than image?

Brand image is on the receivers side. Image research focuses on the way in which certain groups perceive a product, a brand etc. The image refers to the way in which these groups decode all of the signals emanating from the product, services and communication covered by the brand. Identity is on the senders side. The purpose in this case is to specify the brands meaning, aim and self-image. Image is both the result and interpretation thereof. In terms of brand management identity precedes image. Before projecting an image to the public, we must know exactly what we want to project. Branding is raising new questions for managers: i. How many brands do we need? ii. How do we manage our brand portfolio? iii. What extensions can we give the brand and which products and services could and should these encompass? iv. Into what areas should we not extend the brand even if you expect it to sell? v. Going too far may weaken brand equity. How do we manage brands over time and keep them up to date, as technology, products and customers change? vi. How do we change while still staying the same? vii. How do we manage coherently and benefit from the synergy of a range of products sold under a single brand? viii. How do we optimize image in the relationship between products and their brand? ix. How far can a brand be extended geographically? x. Does it have the potential to become a homogeneous global brand in all countries? xi. Several companies have the same name as their brand (e.g. Renault, LG, Nestle etc) so what is the difference between managing a brand image, a corporate image and an institutional image? xii. Given that brands have a value, how can this be measured so as to survey and control it? xiii. Should it be included on the balance sheet to indicate its true economic value to shareholders, investors and financial partners?
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These are some very crucial questions that requires significant amount of attention from the brand management perspective, for a long time the answers to these questions were found intuitively and the decisions made on a trial and error basis. However, now these questions are addressed based upon some latest strategic models that have evolved based upon continuous and persistent research that continues to be undertaken in this field. Another impediment to brand management is that too often brands are examined through their component parts: the brand name, its logo, design or packaging, advertising or sponsorship, the level of image and brand awareness and a more recently evolved concept of financial valuation. Real brand management, however, begins much earlier, with a strategy and a consistent, integrated vision. Based on this information we can define brand management as
Brand Management:
The process of defining a brand identity and managing it.
There are three models of brand management: i. ii. iii. Prism Model for single brands The Pyramid Model for multi product brands Platform for rejuvenating brands
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1.
Brand identity is best represented by six-sided prism.
Chart 2: Chart showing the six-sided prism model of Brand Identity
Source: Strategic Brand Management Kapherer Pg 100 Physique: A brand first has a physique: a combination of independent characteristics, which may be either prominent or dormant. Personality: A brand has personality: It acquires a character. If we identify the brand with a person, we form a picture of that person by the way in which he speaks of products or services. Culture: The brand has its own culture. The culture implies a system of values, a source of inspiration and energy. Relationship: A brand is a relationship: It often provides the opportunity for an intangible exchange between persons. This is particularly true for brands in the services sector and retail brands.
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Reflection: A brand reflects a customers image. There is often confusion between reflection and a brands target. The target describes brands potential purchasers or users. It is type of identification.
Self Image: The sixth face of brand identity is the customers self image. Through our attitude towards certain brands, we develop a certain type of inner relationship with ourselves.
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2.
The Pyramidal Model of Brand
To manage a brand through time, it is essential to analyze it as a 3-tier pyramid incorporating time dimension. Chart 3: Chart showing the Pyramidal Model of Brand
Source: Strategic Brand Management Kapferer Pg 173
At the top of pyramid is the brand focal point or the source point must be known,

but must remain unspoken of and invisible it is the brands deep identity, its core value. As such it is permanent over the long run. In the middle of the pyramid, we have style and codes of the brand. It is the stylus- a brands specific means of con veying a message is a reflection of the brands core identity. The lower stage of the pyramid relates to the communicate themes, the brands current advertising positioning. The customers look at the brand bottom-up. They discover it by its products, its themes, and the style of its communication.
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Steps involved in brand management

i. Brands age because of mismanagement The brand has to be managed as per ever-changing environment. A lax or reluctance in changing with the environment made by a company would easily open the gates for new entrants to scavenge on the market share. ii. The brand may have a built in element of mortality: Brand extensions are must. People buy brands, but behind this lie number of motives, and if you do not create a new brands that match evolving consumer wants, you will have problem. iii. The Brand Growth: The brand growth is associated with changes in needs, wants, tastes and preferences. As the customer needs change, even a company with one brand targeted at a homogeneous market may feel the need to change. As a brand is extended to cater to the need of a heterogeneous market, the life of the brand increases. iv. Brand identity is not something you shop for or borrow from someone: The brand always starts with as a name of a new product. LG Health Zone Air conditioner was the name coined by the company. Whisen is the brand name used by LG for its new higher end range of Air conditioner. But to build this name into a brand takes some time. So the identity prism is filled step by step over the life of the brand. v. There is an order in which the faces of the prism are filled: Brands start with product. So the physical face is the concrete part of the brand. When you start communicating, you always show, in your ads, picture of the typical customer. Generally you also draw, internally, for your own purpose, pictures of expected customers. These fill in the faces of customer reflection and target audience. Later, your other marketing actions will fill the other faces. The first face to be filled in is always product.
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vi.
Branding can never become a substitute for Marketing: The strength of LG is not just the brand; it is its distribution system. Wherever you go, you will find a dealer of LG Air conditioners. And that is important. What is the use if you can never find brands that you like?
Another Roland Berger proposes more comprehensive and effective model of Strategic Brand Management, which will be highly effective in the case of a global brand like LG
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Chart 4: Chart showing the Five Step Strategic Brand Management Model by Roland Berger
Source: Strategic Brand Management by Roland Berger PDF file PVP: Projected Value Propositions: The past and current value projections of a brand PVP: Projected Value Propositions: The past and current value projections of a brand through the entire marketing mix including all communication AVP: Actual Value Perception: The actual value perception of a brand as seen by the consumers as sum of all factors influencing a brand account TVP: Target Value Proposition: "Ideal" brand position in the future as result of the strategic process directions for adjustment of entire marketing mix FX: Future Execution/ Projection: Future value projections to be executed in the future marketing mix of the brand including communication Moment-of-truth: The consumer "tests" the projections/ promises of a brand and creates/ adjusts the brands perception in his or her mind
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Chart 5: Chart showing the Process of Strategic Brand Management
Source: Roland Berger - Strategic Brand Development Group This model has been widely used by large corporations and hence has its own strong standing in the field of Strategic Brand Management.
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COMPANY PROFILE:
HISTORY OF LG
Founder and chairman In-hwoi Koo, with the pen name of Yonam established the Lucky Chemical Industrial Co (Pusan Trading Company). Present LG Chemical in 1947, heralding the LG history. LG, which started its corporate activities with the production of Lucky Cream, advanced into plastic industry for the first time in Korea in order to develop a cap of cosmetics, which is not breakable. LG elevated the standard of living of the Korean people by producing plastic goods including combs, soap cases, toothbrushes and tablewares. With the development of toothpaste for the first time in Korea with its own technology, LG dominated the domestic toothpaste market. In the mean time, LG established Goldstar Co. (Present LG Electronics) in 1958 in the process of expanding its plastic industry area. It has inaugurated a new epoch of the electronics industry by manufacturing a radio in 1959 for the first time in Korea. At present LG Electronics is a major player in electronics and telecommunications, operating 72 subsidiaries around the world with around 51000 employees worldwide.
CORPORATE INFORMATION
Corporate Name: Established: Corporate Office: Number of Employees: LG Electronics Inc. October 1, 1958 (As a private company) LG Twin Towers 20, Yoidodong, Young1dungpo-gu Seoul, Korea 150-721 51300 (25700 in Korea/25600 Overseas)
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Key People
1. 2. 3. Chairman, LG Group: Koo Bon Moo Chairman and CEO: Kim Ssang-Su President and CTO: Paik Woo-Hyun
Core Values:
LG Electronics believes in The changing way of thinking can change the world. We of LG Electronics change our ways constantly. Hatching new ideas is how we give the customers a greater value. A corporations core values are mirrored in its business performance innovation, openness, and partnership. Cultivating a challenging spirit, it musters every bit of creativity it can. With minds wide open, it treasures the wisdom of customers suggestions. On the basis of win -win reciprocity, we are enhancing partnership with customers, outsourcing contractors, and joint companies.
Innovation:
Creating new and unique values.
Openness:
Responding to the changing environment with an open mind and a flexible behaviour.
Partnership:
Establishing cooperative relationships to ensure the best performance through our full entry.
Core Competencies:
LGs digitalists are building up marketing experience and technical expertise for greater competence, Intriguing designing for an intricate network. The core competences they have built up are indispensable for their growth into a global digital leader. LG hatches products from many bright ideas.
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Marketing:
The ability to clearly understand and analyze customer needs and then, link them to business, continuously controlling the brand image.
Technology:
The ability to develop unique product concepts with new proprietary technology, ahead of others and then, commercializes them.
Design:
The ability to plan projects and business effectively to maximize results. Corporate Identity The significance of Logo The symbol-mark, the visual representation of LG, is the most significant element of LG CIP (Corporate Identification Program). The Letters L and G in a circle symbolize the World, Future, Youth, Humanity and Technology. Their philosophy is based on Humanity. Also, it represents LGs efforts to keep close relationship with their customers in the world. Red, the main color, represents their friendliness, and also gives a strong impression of LGs commitment to the best. The elements of the international corporate signature the most effective visual representation - include the LGs symbol -mark and the logotype. Different versions of the international signature have been developed to accommodate the variety of situations requiring its use. However, in order to present a single image, the exact ratio and size must never be altered, and must be reproduced by typography or computer graphics, based upon the manual. It is not necessary to print LG in Korea unless you are forced to do so.
Top Competitors
Daewoo Electronics Corporation Matsushita Electric Industrial Co., Ltd. (MC) Samsung Electronics Co., Ltd. LG has a strong international positioning, with domestic sales accounting for only 36.6% of sales in 2001. The company has lessened its dependence on the South Korean market over the review period, with domestic sales accounting for a slightly larger 37.9% of M.P.Birla Institute of Management Page-27
sales in 1997. Sales in South Korea showed notable growth in 2001, although this slowed in the second half of the year as the economy showed signs of weakening.
LG VISION FOR 21ST CENTURY

In the 21st Century, the world economy will be defined by the diversification of business locations to various corners of the world and by the rapid proliferation of the information revolution. In line with these fast changes, LG wants to focus its efforts on differentiating its competitive strength by creating higher values with its own unique core competencies and healthy financial structure. This will equip LG with the corporate strength to generate profits in different business environments. As a global business operator, LG wants to remain committed to doing business from a global perspective. Thus, the company wants to strive and procure and leverage human, financial and technological resources at the global level for the global optimization of its business system.
LG VISION
The vision of LG is to Secure world class competitiveness in core businesses and keeping up with rapidly changing business environment, LG has set the management strategies for the 21st Century as to aim at a leading company in the core business fields such as Information & Telecommunications, Bio-technology and Internet and to create a new centurys organizational culture that cultivates human resources equipped with creativity and challenging spirit. Since world is rapidly shifting into the information society, thus the development of information technology represented by Internet has enabled people to jump over the limit of time and space and create countless El-Dorados. Just a click brings forward the whole world and barriers between regions and countries no longer exist. Besides, cooperation between companies is everyday occurrences under the circumstances of fierce competition. Second, LG is introducing more top tier products and services than ever in the global marketplace. Its R&D experts are developing distinctive technologies ahead of M.P.Birla Institute of Management Page-28
competitors. Marketing, manufacturing and procurement experts are increasing product value. While lowering cost price, Sales and service experts are working to create more customer satisfaction in order to win an maintain consumer trust. Thirdly, the company is changing its way of thinking and attitude and wish to set up more challenging targets than the competition and taking pole positions in core industries by rapid adaptation of new and innovative best practices. Lastly, the company would like to emphasize its preparedness for the future, while the utmost goal has been to deliver growth and profit. From now, LG is trying to draw on LGs new strategic vision, together wi th the hopes and expectations for the future believes to continue and adhere to the new focus, driven by a challenging and winning spirit based on the management of substance philosophy. The potential and tremendous opportunity ahead of LG is unlimited for 2002 and beyond.
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GLOBAL TOP 3 by 2010

LG Electronics pursues 21st century vision of becoming a true global digital leader who can make its customer worldwide happy through its innovative digital products and services. LG Electronics set its mid and long term vision anew to rank among the top 3 electronics, information and telecommunication firms in the world by 2010. As such, we embrace the philosophy of Great Company, Great People, whereby only great people can create a great company, and pursue two growth strategies involving Fast innovation and Fast Growth. Like wise, we seek to secure three core capabilities: Product leadership, market leadership and people-centered leadership.
GROWTH STRATEGY
Fast Growth: Fast growth is the result of strategies designed to expand the market size and earnings quickly, in the process improving growth rate in terms of monetary value rather than quantity. Fast Innovation: Fast innovation involves setting extremely high innovation goals and securing a competitive edge, aiming for a target of 30% more than what competitors can do. Fast innovation also means 30% more sales and improvement in market share, new product development and unveiling that are faster by 30% and technology development and establishment of corporate value three years ahead of competitors.
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CORPORATE CAPABILITIES: Product leadership: Refers to the ability to develop creative, premium products through new technologies. Market Leadership: Refers to the ability to achieve the LG brand is No.1 People Leadership: Refers to talented people who perform excellent by internalizing and practicing innovations. CORPORATE CULTURE Though a company implements perfect management strategies and boasts of outstanding and talented people, it should have an appropriate corporate culture to unleash the power of these capabilities No NO Challenge: We foster a corporate culture whereby we suggest an alternative before saying No and aggressively work towards fulfilling our goal. Fun to Work: We create a workplace where individuals creativity and freedom are respected and working is made fun.
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BUSINESS AREA MAIN PRODUCTS:

1.
Digital Display & Media Company

Digital TV PDP Monitor CD-ROM Drives CD Re-writable Recorder VCR DVD Player Audio Security System Recording Media Video Phone PC Camera Banking Automatic System PCB
2.

Digital Appliance Company

Air Conditioner Refrigerator Microwave Oven Washing Machine Vacuum Cleaner Compressor for Air Conditioner Compressor for Refrigerator
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3.

Telecommunication Equipment and Handset Company

TDX STAREX Optical Switching Systems Implementation of Advanced IBS (Information Building System) System Integration (SI) Service Handsets for Satellite Mobile Multimedia and IMT 2000 Services
LG IN INDIA
LG Electronics India is the fastest growing company in the consumer electronics, home appliances and computer peripherals industry today and continually providing superior technology products and value for money to its customer in India. - K.R.Kim, MD, LG Electronics India
The data used in the following section has been called from company reports The efficiency of LG can be gauged from the below given figures of LG which clearly states how stable and strong LGEIPL is currently in India.
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Table 1: Tables showing the performance LG over a period of past three years. i. Net Sales
Sr.No. 1 2 3 Year 2000 2001 2003 Net Sales 1585.72 1813.1 3815.28
Ne t S a le s
4000 3500 3000 2000 1000 500 0 1585.72 1813.1 1500 3815.28 2500 N et S ales
2000
2001 Ye a r
2003
ii.
Net Profits
Sr.No 1 2 3 Years 2000 2001 2003 Profit 46.89 54.83 116.2
Profit
120 100 80 60 46.89 54.83 40 20 0 116 .2 Pro fit
2000
2001 Yea r
2003
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iii.
Operating Margins
Operating Sr.No 1 2 3 Year 2000 2001 2003 margin % 6.66 7.65 8.03
Operating margin % 9 8 7 6 5 7.65 4 3 2 1 0 2000 2001 Year 2003 8.03 6.66 Operating margin %
iv.
Net profit margins

Net profit Sr.No 1 2 3 Year 2000 2001 2003 margin % 2.95 3 3.02
Ne t P rofit M a rgin % 3.02 3 2.98 3 2.96 2.95 2.94 2.92 2.9 3.02 N et P rofit M arg in %
200 0
200 1 Ye a r
200 3
Source: CRISIL 15 months M.P.Birla Institute of Management Page-36
However these are figures just give us an insight into the financial and operational soundness of the company. However apart from being sound managerially its strategic focus is also very lucid and precise LGs projection comparison of their stand at present and where they would be 1 year hence, reflects the keen awareness of it top management and their focus in India.
LG Today and Tomorrow

Table 2: Tables showing the LGs present business performance and expected performance for 2004 i. Today 2003
% of total Sr.No 1 2 3 Business Home appliances Consumer electronics IT division Business 44 46 10
LG Today 2003
10% 44% 46% Hom e applianc es c ons um er elec tronic s IT divis ion
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ii.
Tomorrow
% of total Sr. No 1 2 3 4 Business Home appliances Consumer electronics IT division GSM Business 48 37 11 4
LG Tom orrow 2004 (Target)
11%
4% H om e applianc es 48% c ons um er elec tronic s IT divis ion GSM
37%
Source: GSM (Global systems for mobile communications)
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A Brief History of LG Air Conditioner in India

LG launched its window AC s in India in April 1998. By April 2001, it had displaced Carrier as Indias No 1 seller. Its sale in calendar year 2000 stood at 88,000 units in an organized sector market placed at 3,50,000 units. Chart 6: Chart showing the success of LG Electronics in the AC market in the year 2000.
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Strategy of LG:
It is interesting to know how in such a short period of time it became the top AC marketer in India some reflections with regards to their extremely successful strategy are mentioned below: LGs strategists focused on and were interested in expanding the Indian AC market than wresting share away from other players. LG shouldered the strong responsibility of expanding the Indian market, which is small and very much susceptible to downturns. It very cleverly targeted the home installation segment, which boomed while the corporate segment went into a gloom. (In March 2000) It reflects the high degree of wisdom of the MD of LGEIL Mr.K.R.Kim of very accurately analyzing the opportunity of a new player is better off things differently in a competitive market that is split between price-fighters and technology-boasters. LG decided to be a value-driver, selling novel product benefits. LGs then GM Sales Mr. Pradeep Tognatta zeroed in on a very crucial change in the consumer expectation from an AC, which I quote here, is At one time an AC was just a cooling machine. But now people want it to improve the aesthetics of the room, give them status, be easy to operate and improve health Based upon this insight into consumer insight LG Air conditioner captured the health position in the consumer mind space, LG has been able to alter the perception of what purpose an AC must serve. In fact, it has taken the satisfaction parameter to a new plane altogether. Another thing that LG did differently and rather boldly was to go retail in a big way putting its AC s right up in front, in easy access of the consumer. Before LG entered the market, ACs were not considered show room display items. They had to be ordered and were not very visible. After the initial outburst of distribution expansion, LG is proceeding cautiously into new zones. Mr. Pradeep Tognatta strongly believed in Philip Kotlers AD IACS Theory of selling Attraction, Desire, Interest, Attention, Conviction and Selling. Mr. Tognatta stated that the target audiences for AC s are those who wish to upgrade from room coolers to ACs. Right now, the penetration is less than 2 percent. Half the country doesnt have electricity, and the other half experiences power shortage.
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The company precisely understands that AC satisfaction depends on service, to some extent. So its no point selling a product where the service back up is inadequate. If an AC breaks down in the middle of the night, the consumer wants it fixed immediately. This is why LG has the Happy Call system. As soon as the dealer concludes a sale, he calls control cell, which pages the field staff. After three days the control cell calls back the customer to see if he/she is satisfied. For 15 days, at the peak of the season, all dealers provide service till 2.30 at night. All the SSDs are trained intensively by LG, and every technician is given world-class instructions on how to handle complaints. Some are even sent to Korea for a stint at the global headquarters, hence involving them closely with a corporation they can proud of. LGs credo is clear: if the company is professional, everyone associated with the brand must project the same image. All those measures add up to create customer satisfaction. And this spells consumer pull. This gives LG enormous clout with the trade. With ACs, as with other products, LG has stuck to its rule of no credit to dealers.
LGs back up plan to ensure targets are achieved:

An ingenious idea that LG has set up in a case where targets look undoable! In such a case LG has other ideas up its sleeve. It would use Target Marketing i.e. sniff out segments with a need for specific features, and tap it. Plasma ACs are aimed at clinic and software companies where germs and dust are fatal. On the whole LG runs tight operations, with strict sales forecasts expected of all parts of the chain. Inventory levels are kept low this way. If demand picks up, systems will become more efficient.
Page-41
Current Date Scenario of Air Conditioner market in India:

Over the last decade the decrease in duties, combined with an increase in household incomes, has put the room air conditioners well within the reach of urban households. The excise reductions announced in the last budget from 32 to 24 per cent resulted in price cuts. This saw the prices of branded ACs dropping to sub Rs. 20,000 levels. The cost benefit has actually opened the economy segment and the array of finance facilities on offer has in effect improved the market scenario. These benefits have prompted Samsung, Whirlpool, Daikin and Fujitsu to enter the domestic market and roll out a slew of models with cheaper prices to cheer the consumer. Infact the AC market has witnessed growing trends over the last couple of years, between 20 and 25 percent. In the retail segment, the middle-income group has suddenly become the target for a lot of companies. According to an industry player, the retail segment is estimated to grow at a compounded annual growth rate of 25 percent in the next three years. To take on the retail and home segment, LG is expanding its portfolio of AC products and we have in the pipeline a range of over 30 new launches this year, the largest number of new products that will be put in the market by any air-conditioning company, says room AC product group head Salil Kapoor. The air conditioner division notched up 50 % higher sales of 3, 00,000 units (Worth Rs.50 Crores) for the first year 2003 as compared to 2,00,000 units during the previous year. This translates into a 30 per cent market share. The company plans to sell 4, 00,000 units in 2004 which will account for a turnover of Rs. 850 Crores
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PRODUCT PROFILE
Multi-Split
Model No
Description MRP Multi Split AC
Price (INR) List
LM-2461C2I
48,000.00
48,000.00
LM-3661C2I
Multi Split AC
52,200.00
52,200.00
LM-4865C2I
Multi Split AC
62,000.00
62,000.00
Page-43
Split
Model No
Description
Price (INR) MRP List
LSL1262QC
Air Conditioner 22,990.00 21,990.00 Split
LSK1862QC
Split AC
32,490.00 29,103.00
LST1862QC LST1862PC
Split AC
36,990.00 31,358.00
Split AC
39,490.00 32,500.00
LSK2461QCC
Split AC
44,990.00 36,995.00
LPK3685QC
Split AC
59,000.00 59,000.00
Page-44
WHISEN
Model No
Description MRP
Price (INR) List
LW-Q1262PC
Whisen AC
25,490.00
21,033.00
LP-K2465QC
Whisen AC
52,000.00
52,000.00
LP-K3065QC
Whisen AC
55,000.00
55,000.00
LS-P1260HD
Whisen AC
59,990.00
59,990.00
LS-P1260HM
Whisen AC
59,990.00
59,990.00
LP-P2461PH
Whisen AC
66,000.00
66,000.00
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Windows AC
Model No
Description MRP Window AC
Price (INR) List
LW-C1263BC
19,990.00
16,420.00
LW-C1263QC
Window AC
21,990.00
17,445.00
LW-C1263QCP
Window AC
23,990.00
18,983.00
LW-M1863QC
Window AC
22,990.00
18,990.00
LW-N1860HI
Window AC Window AC, Get Free 20 ltrs
25,990.00
19,803.00
LW-M1863BC
Solo Microwave MS 192W
21,490.00
21,000.00
Model No
Description
Price (INR)
Page-46
MRP
List
LW-M1863PC
Window AC
26,490.00
21,500.00
LW-M1863QCP
Window AC
24,990.00
21,545.00
LW-N2466BC
Window AC
28,490.00
22,673.00
2 Ton LW-N2466PC Window Plasma AC 30,990.00 24,280.00
LW-N2466QCP
Window AC
31,490.00
25,645.00
LW-N2466QC
Window AC
29,490.00
23,698.00
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As already mentioned in the first chapter Strategic Brand Management is a very virgin topic making it extremely essential to accumulate comprehensive literature for getting in-depth insight into the concept of Brand identity, brand equity, brand extension, brand rejuvenation, brand growth, brand valuation and various other related concepts. Apart from this theoretical literature survey, in-depth literature survey on LG Electronics Company, LGs operations in India with special emphasis on LG Air conditioners has been undertaken to further facilitate in correlating and observing how well LG Electronics Inc. has been successful in maintaining a strong brand identity.
Significant excerpts from the Literature Survey:

Strategic Brand Management Creating and sustaining Brand Equity Long

Term second edition Jean Noel Kapferer
Preview
This book happens to be one of the very few books available on the subject of strategic brand management. There is comprehensive literature available on the various facts of brand management and some of the very recent concepts that have evolved in the field of Brand management. There are different chapters given in this book that deal with important concepts like Brand Equity Chapter 1 The brand is a focal point for all the positive and negative impressions created by the buyer over time as he comes into contract with the brands products, distribution channel, personnel and communication. On top of this, b y concentrating on a single name, the latter acquires an aura of exclusivity. The brand continues to be, at least in the short term, a by word for quality even after the patent has expired. The brand performs an economic function in the mind of the consumer and thus has a lasting and memorable effect on the companies activities , be it as distributor or owner of the brand. The value of a brand comes from its ability to gain an exclusive, positive and prominent meaning in the minds of a large number consumer.
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Brand Identity Chapter 2

Brand identity is a recent concept, however researchers have already delved into the concept of corporate identity by the late 80s so to simply put it It is the common element sending a single message amid the wide variety of its products, actions and slogans. Corporate Identity - It is what helps organization, or a part of it; feel that it truly exists and that it is a coherent and unique being, with a history and a place of its own, different from others. Identity Vs Change Chapter 6
Brand image is on the receivers side. Image research fo cuses on the way in which certain groups perceive a product, a brand etc. The image refers to the way in which these groups decode all of the signals emanating from the product, services and communication covered by the brand. Identity is on the senders side. The purpose in this case is to specify the brands meaning, aim and self-image. Image is both the result and interpretation thereof. In terms of brand management identity precedes image. Before projecting an image to the public, we must know exactly what we want to project. Brand Architecture - Chapter 7
It addresses the crucial issue of brand product relationship. LG follows the strategy of umbrella brand. This strategy suggests that all the operations of the company across the globe use a single brand name. It does have various product lines but all of them use a single brand name. The main advantage of umbrella strategy is the capitalization of one single name and economies of scale on an international level. LG follows this strategy and has been quite successful in its venture across the globe. It also permits considerable savings when they enter new strategic markets. An umbrella brand strategy allows the core brand to be nurtured by association with products with which it was not previously associated. Also umbrella brands impose very few constraints. Each division has its own communications to increase its market share M.P.Birla Institute of Management Page-49
and to emphasize the specific qualities of its own brand. A note of caution here is that only companies that are able to launch superior new products can use the umbrella strategy. In each new market, the product will have to succeed on its own merits, despite its brand name. LG has been extremely successful in not only launching new product categories in new markets but also in a very short time span become leaders in the markets it ventures into. Brand Extension Chapter 8

Brand extension involves entering into new product markets using a single brand name. LG as a strategic intent announced itself as a company that follows umbrella brand strategy hence it opts for brand extension. The only note of caution in Brand extension is that the communication of the product must be integrated across the various product lines, failing to do so would almost definitely result in the dilution of the brand. LG has stated its focus across products has a health focus. This ensures that the brand does not get diluted and infact assists in creating a strong brand awareness and goodwill. This ensures that the brand image across products and various segments of products and consumers remains positive. Multi Brand Portfolio Chapter 9 This chapter focuses on the companies that would like to focus on developing multiple brands. The chapter provides insights on the company and strategies that address the core issues of developing and sustaining multiple brands. Decline, ageing and revitalization - Chapter 11
Brand entropy and degeneracy occur all so frequently in the current marketing scenario where and competition is intense and companies in order to grow follow high growth and expansion strategy. The brand value gets diluted and this leads to decrease in sales in the long run. In the present business environment a lot of focus is given to the intangible assets of the company in deciding the sale value of the company. In such times if the brand is declining or aging which happens in its normal course of life will lead to significant financial loss to the company. To ensure that the brand does not degenerate strategies are chalked out in this chapter. It also states tips as to how to identify whether a given brand is degenerating or not. Making brands go global Chapter 12 Page-50
World is turning into a global village. Given this latest evolution in the business scenario where the massive revolution in the telecom and transportation sector has left the companies coming in close proximity of each other a lot of companies are contemplating opportunities to go global. LG already is a strong global brand. This chapter gives insight into the various aspects and resources that are essential for a company to contemplate building a global brand. Brand Valuation Chapter 13

This chapter provides processes in valuing a brand. Brand is considered to be an intangible asset of the company however in recent times the companies have become sensitive to the fact that this asset actually happens to be a strong force in the balance sheet and hence various methods of valuing a brand are being evolved to derive the fair value of the company. This chapter states some of the methods that are currently in use and also the problems that the company could encounter while valuing its brand.
Advertising Management by M.V.Kulkarni 4th Edition 2003 published by Everest Publishing
The advertising management book has Chapter 12 totally dedicated to the concept of brand management. It has given the steps of brand management, which have been included in the introduction.
Strategic Brand Management Process by Roland Berger - Strategic Brand Development Group
Roland Berger has published an article that provides a 5-step model for Strategic Brand Management. Berger has stated the five main steps to be considered while stating the model for Brand management the points are: LG Air conditioners Redefining Satisfaction Strategy by Sridatri Banerjee A&M 15 June, 2001 Pg 36
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Preview
This article was published at a time when LG had just about found a firm foothold in this lucrative market of India and was at a juncture of making extremely quick inroads into this market. The author very appropriately in a concise form states the core of LG Air conditioners strategic focus. The article starts of with this powerful statement by the author Health focus and power of reach. The story of LG Electronics won the Indian market for room air conditioners These two lines are sufficient to aptly express the strategic intent of the company to Position the product on the health platform by claiming that the company is very

health conscious and the product is for those consumers who want the air blowing into their living space to be germ and bacteria free air. LGs focus on the aggressive penetration strategy to ensure that the product reach is extensive. The focus on the home segment.
The article highlights how the LGs strategists focused on expanding the AC market than wresting share away from the other players. The companys insight into the fact that being a multi products company has turned out to be an advantage. Aware of the fact that an ACs only company would be seen as the expert, LG laid greate r emphasis on the product differentiation It lucidly takes us through the incubation of the company into this market to the leadership position that it has gained within a short span of 3 years. It further highlights the core competitive advantage that LG had over Carrier that leveraged the company to the helm of the industry, i.e. its extremely strong distribution network. LG started the retailing of AC in the Indian market. LG has a strong retailer network of more than 2500 retailers. Intensive training is imparted to the sales personnel of these dealer outlets on the product knowledge and the appropriate way of delivering a convincing sales pitch.
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After the initial burst of distribution expansion the company is now proceeding

cautiously into the new zones. The channels are more tightly controlled for ACs. This article also highlights the fact that LG is quite aware of the needs of the consumer by understanding the fact that AC satisfaction depends on service, to some extent. So its no point selling a product where the service back-up is inadequate. For this LG has set up the Happy Call system that is a 24 -hour call line for service and maintenance related complaint handling system. This facility also ensures that the customers have been getting proper service delivery in case of any fault immediately the service staff is asked to pay a visit to the customer. For 15 days at the peak of the season, all dealers provide service till 2.30 am. To motivate the technicians few are even sent to Korea for a stint at the global headquarters, thus involving them closely with a corporation they can be proud of LG NO 1 Cover Feature, Business India July 5 -18, 2004, Pg 48.

Preview
This article that recently appeared in Business India provides a birds eye view of the functioning of LG Electronics India operations in the reign of Mr. Kwang-ro Kim, MD of LG Electronics India Ltd. Over the 7 years of it s operations in India LG has scaled many a mile. Its been consistently becoming a market leader in all its various product lines. It touched the astronomical sales figure of 4500 Crores in 2003. LG has the biggest share of the pie in quite a few products that have been launched under its single brand name. To further elaborate
Table 3: Table showing LGs market sha re in various brands for 2004 Sr.No 1 2 3 Brand and product Color Television Refrigerator Microwave Market share % 22.6 23.6 40.7
Page-53
Air conditioner
30
Source: ORG-GFK report
Other significant excerpts of this article are:

1. LGs achievement in the first quarter of this year i.e. (January-April 2004) Vis a Vis the same quarter last year has amplified the Indian managements positive attitude. During this quarter, LG logged 38% growth in consumer electronics

51% growth in home appliances

69% growth in its IT business.

Overall sales grew 53% to cross Rs 1000 Crores. 2. The article gave a brief insight into the principal values that drive Kim MD LG
Electronics India. He follows to fundamental principals they are self control and rational thinking. A ll wars, even the recent Iraq one, are not won after the air strikes are over but when the army takes on the enemy on the ground, he says. This is what Kim believed even before he waged war for the Korean company in the Indian market. He calls his aggressive market play feet marketing, which he feels is the key factor that made LG a formidable force in the consumer durables. 3. Kim has also taken a clue from Jim Clemmer, the Canadian management expert
who has described passion as a burning commitment to a cause. The article did shed some light on LGs expectation and vision in India making its intentions about getting the latest technology innovations to India clear. 4. LGs rural focus:
Innovation in product offerings and building strong brand equity are one part of the success story. But the real one that has driven LGs numbers to heights is the rural mantra. For LG, rural markets include all other cities excluding metros and the A+ class cities. In its marketing framework LG caters to both urban and rural populations. The Indian rural market with its large size and demand base, offers great opportunities to marketers. The semi-urban and rural contribution to turnover is 65%. To address this
Page-54
market we have not only launched economy-range products but also invested heavily in building infrastructure. Says head Girish Rao. 5. In addition, its association with the health platform and cricket helped it in wrest a strong position in the mind space of consumers in rural India. 6.

LGs Marketing Force LG has appointed 4 marketing managers (north, south, east and west) 40 marketing managers in the branches.
The article states numbers based upon their independent research with regards to the print advertisement spends by the major companies in and the general trends of advertisement spends in this country. Some important excerpts that are worth a mention are: Companies have reduced their spend in Air conditioner advertising as compared

to the year 2000. A drop of 12% has been observed as compared to the year 2000. Advertisements spend on AC show a seasonal characteristic with reference to

print advertising. The research as done over the past three years i.e. (2000-2003) indicates that the spend peaks in the 2nd quarter of the year which is when the summer is at its peak and the build up for the same starts from the 1st quarter. The least spend is observed in the 3rd quarter. An interesting pattern can be observed with regards to retail advertising

(advertisements released directly by dealers and not by the manufacturer). The research indicates the following o o The share of retail advertising of the Air-conditioners category has always been higher compared to all retail advertising over the past few years. The share of spend in retail advertising is consistently rising. In the year 2003 it stands at 7%. This trend is observed when the share of all retail advertising has been more or less stagnant, with a share hovering around the 2 % mark. M.P.Birla Institute of Management Page-55

LG covers India with 72 regional offices, 61 central area offices, and 43 branches. Additionally it has over 1123 regional area offices at the district level. Below these area offices there are 80 remote area offices currently. AdEx India Analysis May 21, 04
Average Ad size in the Air-conditioners category shows a decline since 2000,

falling by 30% Top 10 advertisers in this category contribute 90% of the advertising expenditure.

LG electronics has been the Top advertiser in this category in 2000 and 2003.
TITLE OF THE STUDY Strategic Brand Management of LG Air-conditioners at LG Electronics India Pvt. Ltd., Bangalore. PROBLEM STATEMENT:
1) 2) 3) 4) How is LG Air-conditioner Brand preferred amongst Dealers? How is LG Air-conditioners Perceived amongst Customers? How as a Brand is an LG Air conditioner differentiated from or valued in isolation from the Umbrella Brand LG? How does the concept of brand manners offer an explanation to the above questions? The above problem statement has been crystallized into the following specific objectives:
OBJECTIVE OF THE STUDY:

To critically analyze the penetration strength of LG Air conditioners in Bangalore. To understand the customer perception of LG Air conditioners. To draw the Brand Essence of LG air conditioners in terms of brand manners. Understand LGs Brand Management strategy.
HYPOTHESES:
H1 H2 Brand Preference of LG Air conditioners amongst dealers is substantial vis a vis other air conditioners Customer Perception of LG brand is positive.
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H3
LG Air conditioners have created a unique brand image for itself, which is independent from the umbrella brand.
SCOPE OF THE STUDY

The study is limited to all the dealers and consumers residing in Bangalore city.
TYPE OF RESEARCH
The research investigation is explorative and analytical in nature, as it seeks to attract the brand essence of LG air conditioners.
COLLECTION OF DATA
Data is collected from Primary and Secondary sources. Sources of primary data Primary data has been collected by using the following tools Interview Schedule Structured Questionnaire Personal observation of dealer outlets Social Network.
Sources of secondary data Secondary Data has been collected from Websites, Research papers Newspapers Magazines Company brochure.
SAMPLING TECHNIQUE
The sample is based on convenient sampling method.
Page-57
SAMPLE SIZE:
A sample of 50 customers and 24 dealers has been considered for the study.
SAMPLE AREA:
The main focus in selecting area for the dealer survey is to cover the whole of Bangalore region; all the 24 dealers included in the survey are spread across the city. The customer sample is of people across Bangalore city.
SAMPLE DESCRIPTION 1) Dealer Sample:

The sample consists of the renowned outlets across Bangalore. Wholesale dealers of Home appliances e.g. Viveks, Girias are the main focus of the survey as was required by LG. i. Bangalore. ii. The other major outlet chain is that of Girias with 5 outlets. (Both these Dealers are considered to be a formidable strength in terms of their brand recognition and a quality outlet for purchase of Home Appliance products) iii. The other outlets are Uday Home world chain of outlets that command a strong loyalty of locale. There are 8 outlets of Viveks spread across the whole of
2)

Customer Sample
The sample is taken from various parts of the city. The annual income of these respondents has varied from 100000-500000 in majority. 40 respondents range in this region. The focus on them is because these are the evolving customers. LG Air conditioners new target segment happens to be customers in this region and above.
In total from the sample taken 17 respondents have a club membership of which 13 are businessmen
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Of all the respondents 20 are businessmen, 8 are in government service, 13 are professionals i.e. employees and academicians, and the remaining 9 are retired personnel.
TOOLS USED
Dealer Survey: Through Interview Schedule, Observational Study. o o o Tools used: o Statistical Test Normal Z Test two sample independent parametric test Test of Proportions Parametric Test o Qualitative observation Sample (Based on database available) Sample 50 (to be increased in case needed) Random Sampling Consumer Survey: Questionnaire, In depth Interview
INSTRUMENTATION TECHNIQUES
In Dealer survey the method used is Mystery Shopping In customer survey personal interview based upon a structured questionnaire has been administered over the sample. Observational study has been a significant part of this research work.
ACTUAL COLLECTION OF DATA

Dealer specific data have been collected by interacting with the dealers by personal visits to the outlets under the guise of consumers. Users and Non users alike have been personally interviewed and their verbatim responses have been recorded and used for analysis.
Page-59
LIMITATIONS OF THE STUDY

city. Since the research is partly qualitative, bias or prejudice, which is deadly to research, cannot be totally eliminated. There is a strong geographical constraint of being restricted only to Bangalore
H1
Brand Preference of LG Air conditioners amongst dealers is
substantial vis a vis other Air conditioners. Analysis:

The tool used to generate this data is a questionnaire that has been administered on the dealer outlets by using the mystery shopping method. The following is the analysis of the collected responses. Based upon the criteria for analyzing the responses it has been quite evident that the Hypothesis is positive Total score of outlets over 4 parameters is 160. Therefore overall average points = 160/24 = 6.67 The number of outlets figuring above average is 14. Table 4: Table showing famous outlets in Bangalore and their preferred Brand of AC. Sr. No. 1 2 3 4 5 Outlet Code Viveks R.T.Nagar Viveks Blore Central Viveks Jayanagar Viveks Rajajinagar Viveks J.P.Nagar Brand Preference Voltas LG LG LG LG Points 11 12 11 10 10
Page-60
6 7 8 9 10 11 12 13 14
Viveks K.H.Road Girias Sadashivnagar Girias Jayanagar Devi International Sri Balaji Electronics Uniq R.T.Nagar Griha Vaibhav (VV Puram) Uday Enterprises Jayanagar India Home World Golf Course.
Carrier LG LG LG LG LG LG Onida Samsung
06 10 11 10 08 08 02 09 11
Source: field investigation. Table 5: Table showing above average outlets top brand preference Dealers Voltas LG Carrier Onida Samsung Total Source: Field investigation Outlet Top Brand preference 1 10 1 1 1 14
Dealer preference of LG air conditioners amongst the above average Outlets
Voltas LG Carrier Onida Samsung 10
Interpretation:
Of the 14 dealers who feature in the above average category of dealers 10

promote LG Air conditioners. Of the 10 who promote LG 7 have given LG a grade point of at least 10.

The maximum of 13 points a brand can get. Hence to get a 10 would imply

getting 75 % score which LG Air conditioners has been successful in 7 times amongst the above average dealers. However amongst all 24 dealers 16 dealers promote and prefer LG.

On an overall brand rating LG scored a massive 181 points with the second most

preferred brand i.e. Carrier scoring only 55 points.
Testing of Hypothesis
H0: LG and Onida are equally preferred amongst dealers Ha: LG is preferred more by dealers. Test administered is Normal Parametric Test for two independent samples Z test. Level of Significance: 95% Hence Ztab = 1.96 Hence Reject H0, when Zcal > Ztab The above given hypothesis can be conclusively proved by comparison of mean scores between LG and Onida from the data of dealer survey findings.
Formulae:
Zcal = 1-X2 1 1 + n1 n2 n1*s12 + n2*s22 n1 + n2 xi n1
1=
X2 = yi n2 M.P.Birla Institute of Management Page-62
Calculation table:
Sr No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 3 12 11 10 10 8 9 5 10 11 3 5 10 13 8 11 8 8 3 LG xi 2 6 11 5 5 3 1 7 Onida yi (4.542) 4.458 3.458 2.458 2.458 0.458 1.458 (2.542) 2.458 3.458 (4.542) (2.542) 2.458 5.458 0.458 3.458 0.458 0.458 (4.542) 2 (2) (4) 6 (3) (1) 20.63 19.87 11.96 06.49 06.04 0.21 2.13 6.46 6.04 11.96 20.63 6.46 6.04 29.79 0.21 11.96 0.21 0.21 20.63 4 4 16 36 9 1 (x-x ) (y-y) (x-x )2 (y-y)2
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20 21 22 23 24
2 8 4 6 3 xi = 181
1 9 5 yi = 55
(5.542) 0.458 (3.542) (1.542) (4.542) =0
(4) 4 0 =0
30.71 0.21 12.54 2.38 20.63
16 16
(x-x)2 = (y-y)2 = 254.4 102
Here n1 = 24 n2 = 11 Therefore, X = 181 = 7.542 24 Y = 55 = 5 11
s12 = (x-x) 2 = 254.4 = 11.061 n-1 24-1 s22 = (y-y)2 = 102 = 10.2 n-1 10-1 = 24*11.061 + 11*10.2 24+11 = 3.285
Normal Test
Zcal = 7.542 5 3.2851 + 1 24 11 = 2.125 M.P.Birla Institute of Management Page-64
For 95 % level of significance Ztab = 1.96 Hence 2.125>1.96 Therefore, Zcal> Ztab Hence Reject H0 Conclusion: LG is preferred more by dealers.
H2
Customer Perception of LG brand is positive
Data Analysis of the responses collected from the sample has been set up in the form of their rank preference of the product and the conclusion can be very easily be drawn that Customer Perception of LG Brand is positive to further substantiate this statement a brief analysis is given below: Table 6: Table showing rank preference of Respondents for various brands of AC. Count of Sr.No. Total Count of Sr.No. Total Count of Sr.No. Total Count of Sr.No. Total Count of Sr.No. Total Rank 1 NR Blue Star Carrier LG Onida Samsung 1 4 11 20 1 9 Rank 2 NR Blue Star Carrier LG Onida Samsung 1 13 11 11 0 8 Rank 3 NR Blue Star Carrier LG Onida Samsung 1 10 2 13 3 10 Rank 4 NR Blue Star Carrier LG Onida Samsung 1 8 8 3 7 11 Rank 5 NR Blue Star Carrier LG Onida Samsung 1 6 8 1 12 10 Voltas 4 Grand Total 50
Voltas 6
Grand Total 50
Voltas 11
Grand Total 50
Voltas 12
Grand Total 50
Voltas 12
Grand Total 50
Page-65
Count of Sr.No.
Rank 6 NR Blue Star Carrier LG Onida Samsung Total 1 8 10 1 26 1 Source: Field Investigation * NR = No Response
Voltas 3
Grand Total 50
Table 7: Respondents Rank Preference Rank LG 1 2 3 4 5 6 Sum 20 11 13 3 1 1 49 9 8 10 11 10 1 49 Respondents rank preference Samsung Voltas 4 6 11 12 12 4 49 Carrier 11 11 2 8 7 10 49 Blue Star 4 13 10 8 6 8 49 Onida 1 0 3 7 12 26 49
Rank preference of Respondents
30
No. of respondents
25 20 15 10 5 0 1 2 3
Ranks
LG Samsung Voltas Carrier Blue Star Onida
Source: Field Investigation M.P.Birla Institute of Management Page-66
Table 8: Table showing Weighted Rank analyses of respondents Weighted rank analysis Brand LG Samsung Voltas Carrier Blue Star Onida Weighted rank 11.38 8.95 7.71 8.43 8.24 4.24
Source: field investigation.

Weighted rank
12 10 8 4 2 0 Carrier Blue Star Voltas LG Samsung
11.38
Weighted rank
8.95 7.71 8.43 8.24 4.24
Interpretations:
Onida
Of the 50 respondents there are 20 respondents that ranked LG as the most

preferred brand. LG also ranks top on grounds of weighted ranks second to Samsung.

Testing of Hypothesis:
H0: LG and Carrier are perceived to be equally good by consumers. Ha: LG is perceived to be better than Carrier by customers.
Test administered is Normal Parametric Test for two independent samples Z test. Level of Significance: 95% Hence Ztab = 1.96
Hence Reject H0, when Zcal > Ztab The above given hypothesis can be conclusively proved by comparison of total of 1st three ranks scores between LG and Carrier from the data of consumer survey findings.
Formulae:
Z cal = P1 P2 PQ ( 1 + 1 ) n1 n2
Where P1 = r n1 P2 = s M.P.Birla Institute of Management Page-68
n2 P = (r1+r2+r3+s1+s2+s3) n 1 + n2 Q = 1-P
Where: P1 = Proportion of LG P2 = Proportion of Carrier r = Summation of 1st three ranks preference of LG brand as stated by consumers. s = Summation of 1st three rank preference of Carrier brand as stated by consumers. n1 = total number of respondents for LG n2 = total number of respondents for Carrier
Calculations:
P1 = 44 = 0.898 49 P2 = 24 = 0.490 49 P = 68 = 0 .694 98 Q = 1 0.694 = 0.306 Zcal = 0.898 0.490 (0.694)(0.306)( 1 + 1) 49 49 = 4.56 For 95 % level of significance Ztab = 1.96 Hence 4.56 >1.96 Therefore, Zcal> Ztab M.P.Birla Institute of Management Page-69
Hence Reject H0 Conclusion: LG brand is perceived to be better than Carrier by consumers. As Carrier is the second most positively perceived brand once a proportion test is administered between LG and Carrier it can be safely implied that the LG brands perception is more positive then any of the other brands.
H3
LG Air conditioners have created a unique Brand image for itself,
which is independent from the Umbrella Brand. Analysis:

A response on awareness of the core technology of LG Air conditioners i.e.

Plasma Gold Technology has been collected from a sample of 50 respondents which included LG users as well. A surprising observation is that of the 50 respondents Table 9: Table showing the awareness of respondents with regards to Awareness of Plasma Gold Technology Awareness of Plasma Gold Technology Yes No of Respondents Source: Field Investigation 12 No 38 50 Total
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Awareness of Plasma Gold Technology
24% Yes No 76%
Rating based on Perception of Respondent of Promotional Campaign and over all

perceived performance of quality of product. o The respondents when asked as to how would they rate the advertising and promotional campaign of LG Air conditioners on a scale of 1 to 7, the overall points tally based upon their collective response is 197. The maximum point that could be awarded is 50*7 = 350; hence the scoring of LGs promotional campaign is 56.2857 o When asked on overall performance (how do they perceive an LG air conditioner would rate) The answer is pretty close at 195 points. The maximum points that could be awarded is 50 *7 = 350, hence scoring of LG air conditioner on overall performance stands at 55.7142% o Overall points on perceived effectiveness of Advertising and promotional Campaign is 197. The maximum points that could be awarded were 50*7= 350; hence the scoring of LGs promotional campaign was 56.2857%. A clear interpretation of it is that the company has followed a strategy of promoting all its products under the roof of one umbrella brand i.e. LG but however at the same time they M.P.Birla Institute of Management Page-71
have ensured that individual brands also have their own distinct identity, which is what justifies its efforts of promoting LG Air conditioners under the caption of HEALTH ZONE air conditioners. A strategy, which has ensured that the product is strongly positioned in the minds of the consumers as one, that provides healthy and clean air.
Table 10: Table showing the Brand preference of LG in terms of purchase Brand preference in terms of Purchase Brands LG Samsung Hitachi Blue Star Voltas Carrier Daikin O General Total Source: Field Investigation No of respondents preference of Product 21 8 5 3 5 6 1 1 50
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Product purchase preference of the respondents

LG Samsung Hitachi Blue Star Voltas Carrier Daikin O General
12% 10% 6% 10%
2%
2% 42%
16%
When asked about whether or not the respondent would opt for the Air conditioner It is evident that the popularity and enthusiasm amongst the consumers to purchase an LG Air conditioner is quite high but when asked the reason thereof the most popular response is Good Brand Recognition. However when asked about the TV advertisements that LG has aired to create awareness of the LG Health Zone Air conditioners, there seems to be a clear confusion observed and a partial lack of being able to recall the advertisement indicating that though LG has been making conscious efforts at promoting the air conditioner brand, its promotional strategies with regards to the umbrella brand have been more effective in creating awareness and a brand identity for all its products.
Testing of Hypothesis:
H0: LG Air conditioner has created a brand image independent from the umbrella brand Ha: LG Air conditioner has not created a brand image independent from the umbrella brand
Test administered is Normal Parametric Test for two independent samples Z test. Level of Significance: 95% Hence Ztab = 1.96
Hence Reject H0, when Zcal > Ztab M.P.Birla Institute of Management Page-73
Data taken into account to prove this hypothesis is Awareness of Plasma Gold Technology in isolation from the LG brand Consumers perceptions of how on over all performance will an LG product rate
on a scale of 1 to 7. and taking only the respondents who rate LG greater that 4.
Formulae:
Z cal = P1 P2 PQ ( 1 + 1 ) n1 n2
Where P1 = r n1 P2 = s n2 P = (r+s) n 1 + n2 Q = 1-P
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Where P1 = Proportion of awareness of Plasma Gold Technology P2 = Proportion of consumers giving a score of greater than 4 to LG on overall performance. r = Summation of respondents aware of plasma gold technology s = Summation of respondents giving a score of greater than 4 to LG on overall performance n1 = total number of respondents aware of plasma gold technology n2 = total number of respondents giving LG a score of more than 4 on overall performance
Calculations:
P1 = 12 = 0.24 50 P2 = 29 = 0.591 49 P = 41 = 0.414 99 Q = 1- 0.414 = 0.586 Z cal = 0.24 0.591 (0.414)(0.586)( 1 + 1 ) 49 50
= 3.567 For 95 % level of significance Ztab = 1.96 Hence 3.567 >1.96 Therefore, Zcal> Ztab Hence Reject H0 Conclusion: LG Air conditioner has not created a brand image independent from the umbrella M.P.Birla Institute of Management Page-75
brand.
DATA INCIDENTAL TO RESEARCH

I. MEDIA AWARENESS
Table 11: Table showing the usage of media sources for the promotion of AC. Sr.No. 1 2 3 4 5 6 7 8 9 TV Radio Jingle Newspaper Friend Relative Hoarding Showroom Display Other Internet Total Source: Field Investigation
Respondent's Media exposure and awareness
50 45 40 35 30 25 20 15 10 5 0
Media Source
Exposure (No. Of Respondents) 43 04 35 22 19 11 22 06 01 163
43 35 22 4 19 11 22 6 1
respondent s
No. of Respondents
Interpretation:
Maximum Air conditioner product exposure happens through the TV media
!
Print Media happens to be the next most widely known source for promotion of
!
Air conditioners.
R ad Ad io jin gl Pr e es s ad s Fr ie nd R el at iv e H oa rd in Sh rm g .D isp . O th er s In te rn et
Media source
TV
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Internet though being called very popular and growing medium of gaining brand
"
awareness happens to have the least exposure in real sense, so Promotion of AC through Internet is not a feasible channel of gaining product exposure. Showroom display in the case of AC does not have much prominence however is
"
preferred as much as word of mouth which implies that there is a growing awareness for display in the Indian AC market.
II.
PREFERRED POINT OF PURCHASE

Table 12: Table showing respondents preferred point of pu rchase for AC.
Preferred point of purchase Dealer Manufacturer Malls Total No of respondents 36 11 3 50
Source: field investigation.

Responent's preferred point of purchase
3 11 Dealer Manufacturer Malls 36
Interpretation:
LGs strategy to go retail with AC is a strategically very sound because majority of the consumers now prefer to purchase from the dealers. Only AC producing companies like Carrier never promoted the products through via the dealer channel. Thus taking dealer assistance right from their initial venture into the Indian market has provided LG with the first mover advantage of strengthening its penetration
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III.
st
BRAND RECALL
1 on Brand recall is Samsung 2nd on Brand recall is Voltas The brand recall was tested on a question on which other brand of AC is the customer aware of? The above two brands had the highest recall amongst the sample respectively.
IV.
ADVERTISING
SPENDING
PATTERNS
IN
THE
AIR
CONDITIONER INDUSTRY
While browsing through secondary data on Advertisement expenditure some interesting facts have come to light: Air conditioner advertising expenditure has fallen as compared to year 2000. IT has
# # # #
shown a drop of 12% AC also shows seasonal characteristic on print advertising. As can be clearly seen in the graph below. Chart7: Print Advertising Spends
A irc o n d itio n e r A d v e rtis in g S p e n d s o n P rin t
200 3
200 2
200 1
Source: Press Adex (2000-2003) The graph states that in the second quarter each year the print advertising expenditure in the AC industry peaks and the build up for this is initiated right from the end of 1st quarter. This research also states that retail advertising (advertisements released directly by dealer and not by the manufacturer) is on the rise.
200 0
q1
q2
q3
q4
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V.
AWARENESS OF POWER CONSUMPTION
The majority of AC users are unaware of the power consumption of their AC units implying that the customers are not too sensitive to power consumption while contemplating a purchase decision with regards to an AC.
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Major findings of this research have been listed below: (Some of these findings have emerged from our personal enquiry notes.)
1. LG has focused at market expansion rather than trying to snatch customers from competitors, this has been their prime advantage because a very fundamental strategy with regards to entry into new markets is Never get into a head on collision with the existing strong brands of the market while entering a new market. 2.
$ $
LG has identified two major areas to focus in their marketing strategy i.e. Health focus Power of reach Of the 14 dealers who feature in the above average category of dealers, 10 promote LG Air conditioners. However amongst all 24 dealers, 16 dealers promote and prefer LG.
3.
4.
Dealers play a key role in a customers choice making of the product the fact that the dealers are promoting LG product so strongly even though LG follows stringent policies with regards to credit to dealers, implies the present scenario of the Indian AC market. It is indicative that LG does provide a large amount of incentives to its dealers and also that LG AC has a strong pull in the market.
5.
The maximum of 13 points a brand can get from a dealer. Hence to get a 10 would imply getting 75 % score which LG Air conditioner has been successful in getting 7 times amongst the above average dealers.
6. 7. 8.
Of the 50 respondents, there are 20 respondents that ranked LG as the most preferred brand. When the respondents are required to state their choice of AC given a chance to purchase one right away, 21 respondents picked up LG. LG has been very focused in terms of their promotional and brand building exercise. They have generated considerable amount of awareness for Air conditioners in terms of their brand extension but at the same time consolidated their Umbrella brand strategy, which has been justified and proved in Hypothesis.3. LG has followed the single brand name strategy and it has been highly successful.
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9.
%
LGs brand building exercise has been very focused and follows a very clearly cut out strategy i.e. They identified the power of their Umbrella brand strategy and converted their being a company dealing in diversified products scenario into their strong competitive advantage. Their positioning strategy of using the Health focus concept has successfully
10.
11.
12.
13.
made a strong impact in the minds of customer, which gives them a strong platform for differentiation and creating their unique brand identity. LG has incorporated the fact that products and brands have a natural life and that they degenerate in their Vision statement. This is indicative of the awareness that LG has with regards to brand management. Their brand extension and growth strategy is very well planned and will ensure that even though the brand would degenerate, the company would be prepared and will have just the right strategy to revive the brand as and when the need arises. Majority of customers prefer to purchase an AC from the dealers. LG has been the pioneering company in Indian market to use the dealer channel in promoting AC and it seems to be a very appropriate strategy that the company has incorporated. LG has a very strong Penetration strategy planned for Rural India. The brand managers for the company have kept this objective in their mind and appropriately promoted the product from the cricket platform which will make it easy for the rural consumers to identify with the product and has kept LG at a position where it is prepared to aggressively penetrate this lucrative Indian Rural Market when the time is right with their most popular aggressive marketing strategy which the MD LG Electronics has named as Feet Marketing LG is strongly investing in India and are coming up with a new unit near Pune, which is going to benefit India in multiple ways. It also makes the companys intentions of strongly associating with our country clear.
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Following are a set of recommendations that would presumably keep LG Air conditioners brand management team on track to achieve their ultimate objectives; o o 1. Strong positioning of the product on its quite successful HEALTH PLATFORM. Ensure strong penetration of the Indian Market The print advertising trends shows a clear increased prominence of retail advertising. LG has a very strong dealer network which is widely spread across the country. It will be essential for LG to consider having a central unit for screening the print advertisements that these dealers propose to send to the popular newspapers in their region to ensure that the brand communication across all these regions is homogenous. It is extremely important for the strengthening of the brand identity. 2. Indian market is very erratic, at the same time half of the country suffers from lack of power or frequent power cuts. It would provide the company a strong competitive advantage if it can come up with an innovative technology of using alternative source of energy. Energy, which is environmental-friendly e.g. Solar. 3. LG has employed 4 main Marketing Managers for the 4 main different zones. All these managers report to the top management directly. It would be extremely effective to have a National Brand Manager whose main profile would be to integrate the ideas and strategies of all the zonal managers and generate a branding strategy that is homogeneous across the nation and takes into consideration the vast cultural diversity that is the hallmark of our country. 4. Being an Umbrella brand operating in 4 different businesses with a wide variety of sub brands in each business makes it impossible for the company to take services from one advertising agency. Employing services of more than 1 advertising agency has an in-built threat of miss- communication as all agencies have their own unique style of generating a media strategy. To ensure that there is homogeneity in communication across the various business promotions so that the Umbrella brand does not get diluted the company should have a system of screening all the promotion material under some set standardized parameters and requirements. This would ensure strengthening of the umbrella brand. 5. LGs Air conditioners TV advertisements, (it has been observed over the interview with respondents) do not have an effective recall amongst customers. The new theme on which these advertisements have been constructed is family centric M.P.Birla Institute of Management Page-82
advertisement theme that happens to be quite identical to the Samsung advertisements. To overcome this brand diffusion effect, the company should focus on creating something unique in their TV advertisement theme, which would help customers to identify with the brand at the same time, ensure sound advertisement recall. 6. The value equation is very significant for LG. After all, the difference between the leader in each market and also runs can be summed up this way. We take the leaders name and we get a sharp image of a particular value proposition it is offering the customers. We take the name of any of the followers and all we get is a diffused picture. Companies generally choose the Constellation of values they want to deliver and then organize their operations accordingly. It is better to be outstanding in one or two chosen values than be marginally better in half a dozen. Thus all products/brands need to be positioned in the market; the value equation focuses on the need to position the company as well. The value equation shoueld be based on the Strategic drivers of brand value. These drivers are shown in the following chart: Chart 8: Chart showing St rategic Drivers of Brand Value Strategic Drivers of Brand Value
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7.
Brand portfolio economics is also quite significant for LG. Managing a brand portfolio poses many challenges. Any laxity in managing them will not only have its effect on marketing and create confusion for customers but will also affect corporate profitability. To effectively manage the portfolio of brands, LG can follow the following ground rules:
Aligning the brand portfolio with business design. Considering brand pyramid building. LG can benefit by building a pyramid of brands, creating brands at different price points or catering brands tailored to different segments.
Growing winners and harvest-losers. New brands to the portfolio can spruce up market penetration but companies can benefit from focusing on a few powerful brands that usually enjoy benefits like premium price, efficient distribution, economies of scale etc.,
Play the cards: Companies having strong brands usually try to stretch their brands to unrelated areas. This results in erosion of the existing brand equity. Instead, a company can be more effective when building a new brand.
A companys understanding of the brand equity and its economic contribution to the profitability will help in developing a winning brand portfolio. 8. LG can profitably put the concept of experiential marketing in its marketing strategy. This concept is based on the premise that the extent to which brands can be expanded and leveraged into new categories determines the brand value. In this brand-led world, products like air-conditioners are no longer bundles representing functional characteristics but means to provide and enhance customer experiences. The brand experience map (BEM) is quite helpful in this regard. The key components of BEM are: customer actions, contact employee actions and the support process. The brand steps involved in plotting a brand experience are: Identify the process to be mapped Map the process with the customers point of view. Identify the lines of interaction Identify the lines of visibility Identify the lines of internal interaction. Map internal support activities. Page-84
system.
Link the customers and employees activities to the support activity Add evidence of product service at each customer action step. Add information wherever necessary to increase clarity of these evidences.
In brief, the BEM projects brand manners in terms of four dimensions of customer experience: The rational experience What goes on? The emotional experience - How they feel? The political experience Why it is right for them? The spiritual experience - Where it leads them to or wither?
Experiential marketing is eclectic, it focuses on the customer experiences, treating use of a product as a holistic experience and recognizing both the rational and emotional drivers of use of the product. LG can develop Strategic Experiential modules and track the customers experiences in terms of sense, feel, think, act and relate. This will boost the brand value of LG.
9.
LG can also enhance the power of i ts power brands through an appropriate dealer decision support structure which is highlighted below:
Chart 9: Chart showing Dealer Decision Support Structure Dealer Decision Support Structure
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Integration of dealer initiatives is worth considering in this context. The road map to integration is given below. Chart 10: Chart showing Road map to Integration of Dealer initiative Road map to Integration of Dealer initiative
10.
LGs inherent success in the market has been driven largely by the strength of its brands. This success may not be guaranteed in future, because of the aggressive strategies of its competitors. As a future safeguard, we recommend the Brand Asset Management (BAM) to LG. The BAM manages the key touch points of customers in terms of emotional and self-expressive benefits. BAM orientation may create profound shift in the company as highlighted in the following Table:
Table 13: Table showing the difference between Traditional Brand Management & BAM No. 1 2 3 4 5 6 Traditional Brand Management Brand managers Customer satisfaction Product-driven revenues Market share gains Marketing manages the brand Brand is driven internally Brand Champions Customer commitment Brand-driven revenues Stock price gains All functional areas manage the brand Brand is driven externally Brand Asset Management
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The whole idea of BAM is to prevent the following common mistakes, which sound the death knell for brands: 11. Brand Amnesia Brand Ego Brand Megalomania Brand Deception Brand Fatigue Brand Paranoia Brand irrelevance We also recommend that LG should focus on designing/re-designing its brands for psychological/Social instrumentality. There are three types of psychological/social instrumentality: Psychological/social instrumentality as the intrinsic, core benefit of the product/service Psychological/social instrumentality as a benefit resulting from the major tangible benefit (For e.g. feeling satisfaction following the conclusion that we acted sensibly taking advantage of an attractive deal) Psychological or social instrumentality as a value added feature which is, nonetheless, the major benefit. 12. Managing brand relationships is indispensable to LG. The emergence of hypercompetition has transferred power to customers and dealers. One way to retain customers is to develop a holistic relationship with them through Brand Relationship Management (BRM). Identifying the key value drivers that contribute to brand preference Measuring the utility that customers attach to the brand Analyzing the way the actual choices reflect customer preferences and situational constraints. Developing for each customer a market response profile, measuring his/her propensity to respond to various marketing stimuli. Grouping target customers into actionable segments based on profitability, usage characteristics and/or common needs. M.P.Birla Institute of Management Page-87
Defining offers and corresponding value propositions that meet the identified needs. Reconciling the value of the customer to the value of the brand and understand the trade-offs in revenue management and customer relationship management
13.
Creating mechanisms that can generate positive interactions between the customer and the firm. Measuring the returns on the implementation of a BRM strategy. LG can use profitably the 360 0 Brand engagement a sophisticated and powerful brand management tool. A typical 3600-brand engagement can be distilled into a clear four-step journey:
Ensure that the top team knows why they are embanking on the journey in the first place. Communicate a compelling story to employees, which explains the brand significance and its delivery. Help people to experience the story and understand the role they can play in making it happen And finally, re-enforce it through the processes the company uses to manage the business.
The above steps are highlighted in the following chart: Chart 11: Chart showing The Brand to Life Journey
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14.
The brand extension strategy of LG is currently comfortable. LG is reaping such benefits of brand extensions as leveraging brand equity, distribution and promotion synergies, parent brand re-enforcement, expanding to a wider market. However considering the future risks to the LGs flagship brand, we recommend that it should focus on the following critical issues of brand extensions:
Identifying brand personality Category size Promotion strategy Brand portfolio comfort level Tianing of the stretch Compatibility of brand associations.
We give below the Mega Brand Pulley Strategy, which is quite helpful in managing brand extensions: Chart 12: Chart showing Mega Brand Pulley Strategy
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15.
LG can profitably adopt the concept of Brand Assimilation (BA), which
involves aligning employees around its brand. Employees can make or break a customers experience with the brand. Taking a strategic approach to brand assimilation will ensure the companys brand building efforts create deep relationship with the customers. BA is a set of programs designed to ensure that all employees understand and embrace the companys brand and are able to bring it to life inside and outside the company. The phases of structural brand assimilation are portrayed in the following chart: Chart 13: Chart Showing Phases of Structural Brand Assimilation
The reasons for BA are straightforward and difficult to dispute: BA provides a tangible reason for employees to believe in the company, which keeps them energized. BA allows each employee to see how he/she fits into the scheme of delivering the brand promise BA develops a level of pride to fulfilling the brands promise. BA confirms that the customer and the brand are the things to focus on.
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16.
LG may be called upon to do Brand Surgery in future in view of the turbulence in the market for air-conditioners. We are, therefore, prompted to give below some benchmarks for the brand surgery (avoiding tragic mistakes):
The companies should under-promise and over-deliver the brand cult. If the company says that it is going to do something, it must do it. No excuses, even if it is something small, customers will base the companys trustworthiness on the smallest of factors.
The company should spell out what it can do and cannot do in its branding materials. The company should make it clear if something is outside its area of expertise.
The company should be bold about its personality with the prospects. Its quirks will drive away some but attract others. The company should not believe that lower price would do the miracle. A quality customer will pay what the brand is worth instead of trying to get the company to discount by holding out the carrot.
To sum-up, it is re-iterated that the current brand health of LG is comfortable but after a healthy period in its maturity phase, the brand may show a sluggish fall. Rather than incorrectly assuring that the brand is in terminal decline, analysis should be undertaken to evaluate whether it is viable to inject new life. New brands are expensive to launch and their future is very uncertain. By contrast, revitalizing brands may well be less expensive route to follow, with a greater likelihood of success. Legendary racer Ayrton Senna, was once asked about the dangers of racing, he replied, there is minimum danger to me because I know all my risks. This holds so very true for a brand in todays competitive environment. The key step in sustaining brand equity is to identify the risks to a brand in the present context as well as in the future. We modestly venture to claim that our recommendations are quite helpful in maintaining the robust brand power of LG and in continuing the Aggressive Strategist status of LG for year s to come.
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DIRECTIONS FOR FURTHER RESEARCH

In our view, Strategic Brand Management is a fertile and growing field particularly in the FMCG sector. The scope for further research is abundant. Perhaps the line of thinking on which our research investigation is based may propel research investigation in the following green pastures of Strategic Brand Management: Brand core values vis-avis Brand Manners. Brand Audit and new brands launched in the past five years Brand Image variations in the life cycle stages of the product/brand. Brand Surgery practices in leading companies in FMCG sector. Brand Entropy and Brand Revitalization Case studies. Brand Valuation Models. Strategically building and sustaining brands. Brand leadership Managing product/brand platforms. Brand Amnesia Brand Megalomania Brand Deception Brand Fatigue Brand Paranoia Brand Catalyst and Customer Relationship Management The cognitive Neuroscience way of branding.
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ANNEXURE
I. Questionnaire Dealer Survey Questionnaire
1. What products do you stock? 2. My requirement is 1.5 tonne A/c. suggest a Suitable Model. Do you take into account Customer requirement? 3. Please comment on your price structure. 4. What is your discount Policy? 5. What are the various payment schemes available? 6. What schemes or other facility shall be available apart from the product? 7. What is the most distinct feature of the Product? 8. What are the various pre sale, post sale and in sale services status? 9. Guarantee and warranty available. If any? 10. Suggest the distinct feature of the product? 11. Which other places across Bangalore is the product available? 12. What is the complaint management policy on various products? 13. Component rates on need of replacement? 14. Any latest technology if introduced by the company? 15. Re-sale value of the A/C. 16. Power consumption rate of the A/C. 17. Degree of accuracy on Temperature control possible. 18. What is the noise level? 19. What types of dealer contests take place? 20. What are the types of incentives made available by the dealer?
Consumer Survey Questionnaire

Please Note: For the ease of interviewing a common questionnaire has been developed for AC users and non-users. Some of the more product specific responses, which have been invited, are not applicable to the non-users; hence their response is not sought for the same.
QUESTIONNAIRE
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Dear Sir/Madam, I Niraj S Kakkad a student of MPBIM am conducting a research on customers perceptions with regards to Air conditioners. The information provided for the below given questionnaire is of prime importance to my research, I request you to kindly spare some time with regards to the same. I assure you that the information provided by you is to be used strictly for Academic purpose and shall be kept confidential.
Respondents Profile
1. Name: ____________________________________________________________ 2. Address: __________________________________________________________________ __________________________________________________________________ Your Occupation: ___________________________________________________
& ' ' '
Your Spouses Occupa tion: ___________________________________________ Educational Qualification: Yourself: _________________________________________________________ Your Spouses: _____________________________________________________ Are you a member of any club in India: _________________________________ _________________________________________________________________
3. Contact No: ______________________________________________________ E-mail id: _________________________________________________________
4. Annual Income: (Please tick ( ) whichever is Applicable) a) < 1,00,000

(
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b) 1,00,001<3,00,000 c) 3,00,001<5,00,000 d) 5,00,001<10,00,000 e) 10,00,001>
Product specific Responses

5. You have an LG Air conditioner which is Model No. ________________
)
Purchased on ______________ From ____________________ At Rs. ____________________ You also have Model No. ___________________
)
Purchased on _____________________________ From ___________________________________ At Rs. ___________________________________ (a) If you have to purchase an air conditioner, where would you buy? From the manufacturer directly.
0 0 0 0 0
From the dealer From the super market/ Departmental store/malls.
6. Did you receive any gifts or discounts at the time of Purchase? Yes No.
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If yes, what? ________________________________________________________________
7. What made you aware of this product: (Please tick ( ) whichever is Applicable) a. Television advertisement b. Radio Jingle c. Newspaper Advertisement d. Friend e. Relative f. Hoarding g. Showroom Display h. Others: (Specify___________ ________________________ On a scale of 1 to 7. How do you rate the advertising media impact of LGs promotional campaign? Poor Excellent 1_________2__________3__________4_________5_________6_________7 8. Which other Air conditioners are you aware of? ________________________________________________________________ ________________________________________________________________ 9. How long did it take for you to decide on the product and place an order? _________________ 10. How would you rate the performance of LG Air conditioners? (Please tick ( ) whichever is Applicable) Very Poor ------ Poor--------Good--------Very Good-------Excellent
1 1
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(a) Do you get pre sale, during sale and after sale service Yes
2
No.
2
If YES how would you rate the pre sale, during sale and after sale service of LG Air conditioners? Pre Sale
2
Very poor------Poor---- Good------Very good-------- Excellent During Sale

2
Very poor------Poor---- Good------Very good-------- Excellent After Sale

2
Very poor------Poor---- Good------Very good-------- Excellent
11. From whom do you get Product Service? Manufacturer

3
Dealer
3
12. From whom would you prefer to get Product service? Manufacturer
3
Dealer
3
13. How much did you pay for the service? Actual Cost of Service
2
Nominal Price
2
Subsidized price.
2
14.
Are you aware of how many units of Power does youre a/c. consume? ____________________________
15. Are you aware of Plasma Gold Technology? Yes No M.P.Birla Institute of Management Page-97
16. Do you have a Complaint against LG Air Conditioners? Yes No If Yes! Please elaborate ____________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ 17. How was the response to your complaint? a. Instantly b. Reasonable delay c. Unreasonable Delay
19.
Given a second opportunity to purchase an Air conditioner, which Brand would you prefer to purchase? (Please tick ( ) whichever is Applicable) a) LG b) Onida c) Voltas d) Carrier e) Samsung f) Others Specify ______________ Why? _________________________________________________________
4
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_________________________________________________________ _________________________________________________________ 20. Do you feel the Prices of different models of LG Affordable/Reasonable? Yes
5
No
5
21.
How would you rate the dealer support to LG air conditioners? Quite Good
5
Very Poor
5
Requires acceleration.
5
Brand Specific questions 22. Rank on your preference amongst the given brands of Air conditioners? LG Voltas Carrier S7amsung Blue Star Onida 23.. How do you feel on overall performance LG Air conditioners rate? (Rank on a rating of 1 to 7) (Please tick whichever rank is applicable) Poor Excellent
1_______2_________3__________4___________5___________6_______7
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II. SELECT BIBLIOGRAPHY:

LG Air conditioner Brochure Books: o Marketing Management by Philip Kotler millennium edition o Strategic Brand Management by Jean Noel Kapferer 2nd Edition 2002 published by Kogan page India Pvt ltd. o Advertising Management by M.V.Kulkarni 4 by Everest Publishing o Brand Warriors edited by Fiona Gilmore, Profile books publication, UK 1999. o Building, measuring an d managing Brand Equity by Kevin Lane Keller, Prentice Hall of India ltd, New Delhi 2003. o Branding by Geoffrey Randall, Cross publishing house, New Delhi 2003. o Brand Manners by Hamish Pringle and William Gordon, John Wiley & Sons publication, 2003. o Brand Mindset by Duane.E.Knapp Tata McGraw Hill publication, New Delhi 2003. o Branding by James.R.Gregory Tata McGraw Hill publishing company publication, New Delhi 2004.
th
Edition 2003 published
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o Brand Marketing by Joe Marconi, NTC books publications,Delhi 2002 o Managing Brand Equity by David Aaker Free Press publications Delhi 2002. o Branding in Action by haninson.G and Cowking.P. McGraw Hill publication, 1993. o Brand Marketing by W.Weilbactier NTC publications, Chicago, 1993. o From Brand Vision to Brand Evaluation Strategically builiding and sustaining brands by Leslie de Chernatony, Butterworth Heinermann publications, UK 2001. o Brand Leadership by David.A.Aaker and Erich Joachimsthaler, Free Press publications, New York 2000. o Creating Powerful Brands by Leslie de Chernatony and Malcom McDonald, Butterworth and Heinermann publication, UK 1999. o Brand Management Perspectives and Practices edited by Naveen Das, ICFAI publication, Hyderabad 2002.
Articles:
o LG NO 1 Cover Feature, Business India July 5 -18, 2004, Pg 48. o LG Air conditioners Redefining Satisfaction Strategy by Sridatri Banerjee A&M 15 June, 2001 Pg 36 o AdEx India Analysis May 21,04 o Strategic Brand management by Roland Berger - Strategic Brand Development Group file from Internet. o LG: The Aggre ssive Strategist by Shishir Kumar in Marketing Mastermind June 2004. o Managing Brand Relationships for Success by Subrat Sahu and Bharat Dalal in Indian Management September 2002. o Brand Experience Mapping for Brand Alignment Global Executive summaries in Marketing Mastermind February 2003. o The making and faking of Emotionally Significant Brands by Dan Herman in Advertising Express November 2003.
Page-101
o LG Management Perceptions of the importance of Brand Awareness research paper by Emmu McDonald quoted in Marketing Mastermind February 2002. o Brand Sense building brands with sensory connections White paper sourced from harvest Consulting Group LLC quoted in Marketing Mastermind February 2002. o Maintaining Brand Health by Martin Payne in Mark eting Mastermind February 2002. o Brand Failures by Morth Halg Book summary by Anshul Kaushesh in Marketing Mastermind September 2003. o Brand Asset Management by Scott Davis in Marketing Mastermind April 2003. o Experiential Marketing by Bernol.H.Sch mitt Book Review by Roli Sehgal in ICFAI Journal of Marketing Management, May 2004. o Living the Brand by Nicholas Ind Book Review by Mr. Y.Chandra Shekhar in ICFAI Journal of Marketing Management, May 2004. o Brand Portfolio Economies Global Executive Summary in Marketing Mastermind, May 2002. o Brand Review Covert Report in A&M Batch number 29 -02-2000. o Top Brands An A&M ORG-MARG Survey in A&M 31 -10-1998. o 4 -D Branding A survey in Advertising Express October 2003. o 360 0 Branding by Phil Askham and Susannoh Feckbey in Strategic Marketing March -April 2004. o Brand Positioning: Issues and Analysis A Survey in Advertisement Express March 2003. o Branding The cognitive Neuro-Science Way by Noel Coburn in Advertising Express February 2 004. o Brand Due Intelligence by David Haigh in Marketing Mastermind December 2002. o Creating Brand Personality for Generation X by Sullaja Motwani in Strategic Marketing Nov -Dec 2003. o Feeling Growth through Ingredient Branding by Roy George in Adv ertising Express April 2003.
Page-102
o Brand
Assimilation
by
Scott.M.Davis
and
Michael Dunn
in
Advertising Express December 2003 o Managing Brand Extensions by K.Suresh in Marketing Mastermind October 2003. o Brand Mascots by Jagdeep Kapoor in Strategic Mar keting March April 2004.
Websites surfed o www.marketingprofs.com o www.brandchannels.com o www.google.com o www.lge.com o www.lgeil.com o www.lgezbuy.com o www.retailyatra.com o www.expresscomputeronine.com o www.rediff.com o www.hinduonnet.com o www.thehindubusinessline.com
Page-103
III. Explanation to the research instruments used:

Dealer Survey Analysis Dealer Survey Data Tabulation and Table stating the point scoring system Sr.No. Parameter 1 2 3 Product Stocked Preferred by Dealer Aesthetics Outlet Brand 4 3 2 1 4 Salespersons product knowledge 4 3 2 1 5 6 Salespersons preferred brand Display 3 2 1 7 Promotion Material 1 1 Points awarded to 1st preference Points awarded to 2nd preference Points awarded to 3rd preference Point awarded for making available the promotion material. M.P.Birla Institute of Management Page-104 1 3 2 3 Specific information All the brands stocked by the dealer get 1 point. Points awarded to 1st preference Points awarded to 2nd preference Points for Excellent Points for Good Points for OK Points for Poor Points for Excellent Points for Good Points for OK Points for Poor Points awarded
8 9 10.
Finance Scheme and product price Awareness of the power consumption Warranties and Guarantee 1
Point awarded to the brand that provides the maximum discount. Point is awarded
Point awarded to the Brand providing the maximum warranty.
Note: 1. Maximum points an Outlet can get is: Parameter Aesthetics Salesmans product knowledge Promotion material made available Awareness with regards to power consumption Total 10 Point 4 4 1 1
2. Maximum points a Brand can score is: Parameter Product stocked Dealers preferred brand Display Salesmans preferred brand Promotion material Finance scheme and discount Warranty and Guarantee Total Point 1 3 3 3 1 1 1 13
Page-105
Data Analysis and Tabulation

Sr.No. Name of the Dealer Total Points For Outlet 1. 2. Viveks R.T.Nagar Viveks Central Bangalore 3. 4. 5. 6. 7. 8. 9. 10. 11. Viveks Jayanagar Viveks Rajajinagar Viveks J.P.Nagar Viveks Indiranagar Viveks Koramangla Viveks K.H.Road Girias Sadashivnagar Girias Jayanagar Girias Gandhinagar M.P.Birla Institute of Management Page-106 3 3 8 11 6 1 8 10 1 2 7 5 4 6 4 9 4 1 4 8 2 1 1 10 10 4 1 7 10 4 3 7 11 4 3 2 9 12 3 3 8 LG 3 Brands Voltas Carrier Samsung 11 Ondia Videocon Others
Gandhinagar 12. Girias Brigade Road Sr.No. Name of the Dealer Total Points For Outlet LG 13. 14. 15. Devi International Yesbee Electronics Sri Balaji Electronics Rajajinagar 16. 17. 18. Jyothis R.T.Nagar Pai International Uniq R.T.Nagar 19. 20. VGP Limited Griha Vaibhav V.V.Puram 21. 22. Sonovision Jayanagar Uday Enterprises Jaynagar 9 4 9 6 8 5 7 3 2 1 7 1 2 9 8 6 1 4 8 2 1 1 1 4 11 3 8 8 5 4 6 13 1 1 8 10 Voltas Carrier Samsung Ondia Videocon Others 5 1 Brands 6 5 11
Page-107
23.
Uday home world Golf Course
11
24.
Coolwell Electix Total
5 160
3 181 44 15
1 18
5 55 3 12
Table showing the above average ranked outlets for AC purchasing in Bangalore Sr.No. Outlet 1 2 3 4 5 6 7 8 9 10 11 12 Griha Vaibhav (VV Puram) 13 14 Uday Enterprise Jayanagar India Home World Onida Samsung 9 11 Viveks R.T. Nagar Viveks Blore Central Viveks Jayanagar Viveks Rajajinagar Viveks J.P.Nagar Viveks K.H.Road Girias Sadashivnagar Girias Jayanagar Devi International Sri Balaji Electronics Uniq R.T.Nagar Brand Preference Voltas LG LG LG LG Carrier LG LG LG LG LG LG and Videocon Points 11 12 11 10 10 6 10 11 10 8 8 2
Overall Points Tally Rank 1 2 Brand LG Onida Score 181 55 Page-108
3 4 5 6 7
Voltas Samsung Carrier Others (Godrej, Hitachi, Electrolux, Kenstar) Videocon
44 18 15 12 3
The maximum score that a brand can get across all the dealers is (13*24) = 312 Based on this maximum points LG scores a 58% across dealers
6 6
Onida the next most promoted and preferred product however stand at a weak 17.62%
Page-109

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STRATEGIC BRAND MANAGEMENT OF LG AIR CONDITIONERS AT LG ELECTRONICS INDIA LTD., BANGALORE.

REG.NO-02XQCM6022 (ADJUNCT PROFESSOR)

M.P.BIRLA INSTITUTE OF MANAGEMENT

M.P.Birla Institute of Management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

Mr. Niraj Suryakant Kakkad

M.P.Birla Institute of Management

Chapter-1 Introduction. Chapter-2 Review of literature. Chapter-3 Research methodology.

PART-B RESEARCH FINDINGS

Data analysis and Interpretation

PART-C CONCLUSION AND RECOMMENDATION. Chapter-5 Major findings of the research.

Chapter-6 Recommendation. Chapyer-7 Directions for the further research.

M.P.Birla Institute of Management

LIST OF TABLES AND CHARTS

M.P.Birla Institute of Management

prefer to promote LG Air conditioners

M.P.Birla Institute of Management

Revolution of the Concept of Brand:

M.P.Birla Institute of Management

M.P.Birla Institute of Management

A Brand is more than a Product

Emergence of Brand Management Concept:

The Evolution of the Concept of Brand Identity

M.P.Birla Institute of Management

Why speak of identity rather than image?

M.P.Birla Institute of Management

M.P.Birla Institute of Management

Brand identity is best represented by six-sided prism.

Chart 2: Chart showing the six-sided prism model of Brand Identity

M.P.Birla Institute of Management

M.P.Birla Institute of Management

The Pyramidal Model of Brand

Source: Strategic Brand Management Kapferer Pg 173

M.P.Birla Institute of Management

Steps involved in brand management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

Chart 5: Chart showing the Process of Strategic Brand Management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

M.P.Birla Institute of Management

LG VISION FOR 21ST CENTURY

M.P.Birla Institute of Management

M.P.Birla Institute of Management

GLOBAL TOP 3 by 2010

M.P.Birla Institute of Management

M.P.Birla Institute of Management

BUSINESS AREA MAIN PRODUCTS:

Digital Display & Media Company

Digital Appliance Company

M.P.Birla Institute of Management

Telecommunication Equipment and Handset Company

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120 100 80 60 46.89 54.83 40 20 0 116 .2 Pro fit

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Net profit margins

Source: CRISIL 15 months M.P.Birla Institute of Management Page-36

LG Today and Tomorrow

M.P.Birla Institute of Management

LG Tom orrow 2004 (Target)