1.SWOT 3.1 Strengths a)Strong Customer Preference and Brand Identity: Right from its entry in the Indian market since 1997, LG resorted to aggressive marketing. This helped them in getting maximum market share, making the business run on high volumes and low prices. This strategy worked for them, and resulted in high level of brand recognition and identity. Also LG promoted all its products on the “Health” platform. This platform for promotion was selected after extensive study on the emerging needs of the Indian consumers and was used to make them aspire products like air-conditioners, washing machines and refrigerators for leading healthy lives. E.g. Launch of ‘Golden Eye’ TV’s for wrinkle free eyes or ‘Health Wave’ microwaves2. This not only hit the other Indian brands hard but also made LG a favored brand among the masses and it became known as a family brand. This customer preference and brand identity that was established by LG in its formative years in the Indian market continues to be one of the strong pillars for LG in the market3.
b)Market leader in Refrigerators and Washing Machines: LG has consistently maintained its market leadership position in refrigerators since 2004 as per the GFK Neilson survey. The same is also be true for the Washing machine segment. This was observed by us when we did a dipstick study among various dealers in Mumbai. For maintaining its upper hand in these segments, LG resorts to continual improvements in the products. Eg. Power cut ever cool refrigerator was launched in 2013, keeping the Indian consumers in mind. These refrigerators have a patented technology using which food inside refrigerators stays cool for 7 hours after power cut100. With this LG is planning to further strengthen its presence in this segment. LG has a wide variety of both these products to suit different market segments4.
c)Good product quality and value for money: LG established itself in the Indian market by providing imported product quality at price of an Indian product at a lesser cost to the Indian consumers. Over the years LG continues to maintain this strength and hold in this aspect.
d)Wide distribution Network: LG has a strong and wide distribution network across the country. This includes 20,000 retail points, including 1,600 LG branded stores7.
a)Lack of continual innovation: With an increase in buyer power, innovation has become the order of the day. LG is somehow lacking in this section and this may be one of the reasons for LG’s drop in the market share. With consumer needs changing at a lightning speed, LG needs to increase its pace of innovation.
b)Almost nil presence in the Mobile segment: LG though being a major player in the home appliances segment has failed to establish itself in the mobile phones segment. It has been noted that LG has not been able to keep pace with the rapidly changing mobile phone segment. The dealers also find it not viable enough to keep LG phones due to lack of demand9.
c)Uneven focus on dealers: During the dipstick survey we found that focus on dealers was quite uneven. It was observed that the larger dealers were much favored over the smaller dealers. This was one of the reasons due to which the smaller dealers were not proactively selling LG products.
d)Weak in the AC segment LG has lost its dominance in the AC segment to local players. Few of the reasons include trimming of its window AC product and also shift of focus from multi brand outlet sale to its own showroom sales10.
a)Fast growing premium segment: Premium product segments are growing at a much faster rate as compared to the other segments. With the number of consumers willing to spend more on products of their choice, LG should leverage this opportunity effectively to increase its market share in the industry10.
b)Focus on mass product image to expand its rural market: Rural market segment is expected to grow at rate of 25% CAGR. Also there has been a substantial rise in the per capita purchasing power in the rural market. More and more rural areas are getting access to power, making it easier for companies like LG to enter in to the market. LG can tap into the rural market with more of user friendly, low on power consumption and attractive products to capture this growing market.
a)Rapidly evolving technology: Rapid change in technology across the consumer durable segment requires the company as a whole to keep pace with it in terms of introduction of newer models in the consumer goods segment as also refinement of features of existing models. LG’s innovation has to be on the go to combat the ever changing trend.
b)Existing and New Competitors: Existing competitors like Samsung, Sony, Videocon etc. and new entrants are rapidly catching up with market trends and newer innovations and features.
c)Increasing general Input cost and Technological advances: Increase in raw material cost has led to rise in costs of consumer durable products. On the other hand constant innovation and increasing competitiveness has resulted in reduction of prices and decrease in profits.