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MBASummer2010
Term Report: Strategic Analysis of LG and TV Industry
1. BUSINESS SCOPELG Electronics, Inc.(LG) is a global leader and technology innovator in consumer electronics,
mobile communications and home appliances. LG is one of the world's leading producers of flat
panel TVs, audio and video products, mobile handsets, air conditioners and washing machines.
LG's efforts continue to enhance the global presence of the LG brand and to maximize profitable
growth. In particular, LG Electronics is focusing on achieving profitable and sustainable growth
in the mobile communications and home entertainment sectors to strengthen its leadership in the
IT industry.
Global, Tomorrow, Energy, Humanity and Technology are the pillars that this corporation is
founded on; with the capital letters L and G positioned inside a circle to center their ideals above
all else, humanity. The symbol mark stands for their resolve to establish a lasting relationship
with, and to achieve the highest satisfaction for their customers. 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 LG's efforts to keep close relationships with their customers
around the world. The symbol consists of two elements: the LG logo in LG Grey and the stylized
image of a human face in the unique LG Red color. Red, the main color, represents their
friendliness, and also gives a strong impression of LG's commitment to deliver the best.
1.1. Regions
LG is targeting in all cities in Pakistan including:
TIER NO:
01KARACHI LAHORE ISLAMABAD FAISALABAD
PESHAWA
R
OTHER BIG
CITIES
TIER NO:
02
GUJRANWAL
A
HYDERABA
D QUETTA
WAHACANT
T SIALKOT
OTHER
SMALLCITIES
1.2. What Customer Wants?
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Customer wants new innovative features, styles, wide range of screen sizes, attractive
design, good sound quality and outstanding after sales services but at reasonable price.
1.3. Functions / Applications
LG TV provides wide range of televisions along with LCDs that covers screen size ranging from
21 inches to 50 inches. This range is fulfilling the entertainment need of varied customers. The
company provides LCD, Plasma, conventional, Analogue, CRT and Flatron TVs according to the
needs of its various customers that belong to the category of different economic groups.
1.4. Customer & Users
LG has targeted its market on the basis of the product that they are offering to the consumer.
They are targeting:
Upper Upper Class
Upper Middle Class
Middle Class
1.5. Added Value
LG is adding value to its brand to deliver something extra to their customers. Some of the value
addition in television is introduction of Bluetooth technology, and introduced sensors in its LCD
TVs which detects the environment of the room and changes the color preferences automatically.
LG Intelligent Sensor technology evaluates ambient light conditions in the room and
automatically adjusts brightness, contrast, and color balance to optimize picture quality. The LG
TV series are also providing full HD picture quality with an ultra slim design perfect for
customer bedroom, kitchen or office. With Smart Energy Saving Plus technology, USB
connectivity. LG TV will also save customers money on their electricity bills.
1.6. Considerations
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Term Report: Strategic Analysis of LG and TV Industry
The consideration of LG involve future scope, in which LG is tailoring their products according
to the future demand of the customers, Innovation focused for taking competitive advantage
using existing competencies and capabilities, bringing product range to new segments. LG
started introducing quality products in the economy range, focusing on innovation led growth.
They are planning to introduce 3D Screens in Pakistan
The competition scenario of LG in the Television industry of Pakistan, facing competition from
different competitors like: Sony, Samsung, Panasonic, Haier, Toshiba, and great competition
from low cost Chinese televisions.
Competitors like Sony define its technology, Like no other. Samsung defines as, Everyone is
invited the product for every one focusing on every ones needs. New Year slogan of Samsung
is Turn on tomorrow be ahead in innovation.
1.7. Intended Business
LG is currently focused on T.V, Cell Phones, Home Appliances, I.T Products and AirConditioners segment. In order to expand its business in future LG should expand its target
market. LG future consideration is SOLAR SYSTEM segment which gives great opportunities to
LG in future.
1.8. Competitors and Their Businesses
LG major competitors in Television industry are:
Sony provides complete range of product i.e. BRAVIA LCD.
Panasonic is another major competitor of LG which also deals in LCD, LED & CRT T.Vs.
Samsung is a major competitor of LG in the television industry. Its major products are LCD,
LED and CRT T.V
1.9. The Business In Which LG Is Not In:
In PakistanLG basically providing electronics related product but in which they are not catering:
o Camera & Camcorder
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Term Report: Strategic Analysis of LG and TV Industry
o Printers & Peripherals
o Play Stations, X-Box
2. EXTERNAL ANALYSIS
2.1. Market Structure
TY companies in Pakistan are offering their products basically to following three
segments:
i. Status Conscious Segment
ii. Style Conscious Segment
iii. Price Sensitive Segment
Some TV models of major players in TV line are following:
Status Conscious Style Conscious Price Sensitive
LG Extra smart 3D LG PG-61 Plasma TV 42PG61UR LG Golden Eye
Samsung LED 9000LG XCanvas Time Machine
42LC2RR LCD TVLG Sound Max Plus
Sony-ready edge-lit LED Samsung LA40A610 LCD TV
Sony's KV-24FS120 24-inch
WEGA TV
LG 42SL9000 42" LEDSony BRAVIA KLV-46X350A 46-
inch Full-HD LCDSamsung CS-29Z50 CRT TV
Smuggled Chinese CRT TV
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Implication
LG television being in High-tech industry has three types of end users which are classified as:
Price Sensitive: These are those Consumers which demand for lowest possible price. Their enduser application is only mode of entertainment. Mostly CRT TV is preferred by price
sensitive customers.
Style Conscious: The customer who belongs to this category has major focus on theirpersonality and they choose brand which best suits their style. Their end user application is
home theater representing the style besides mode of entertainment. This is the segment for
LCD TV market.
Status Conscious: The Customers which belong to this group are mostly of Upper class which
purchases brands that represents their Status and prestige. Their end user application is
representing the social status besides the mode of entertainment. This segment is for LEDTV market.
2.2. Distribution Channels
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Pricesensitive
CRT TVs Plasma &
LCD TVs
3D & LEDTVs
StatusConscious
StyleConscious
DISTRIBUTOR
TVCompanies
Family &RelativesFriendsSociety
END USER
PRODUCTS
CHANNELS
INFLUENCERS
WHOLESELLERS
RETAILERSBRAND
SHOWROOMSHYPER
MARKET
The above chart is showing the distribution channels of TV companies. As we know that there
only assembling plants are set up in Pakistan therefore TV companies are using distributors in
Pakistan for supplying their products in local market. Companies deliver their products to
distributors and distributors supply them to retailers, hyper market and other non- exclusive
channels. Companies are also using Brand Show Rooms (Makro, Micro, Agas Super Store and
others) for targeting their market.
3.3. Change & Effect Analysis
The consumer electronics (TV) companies are facing many difficulties due to changes in
environment and their impact on doing business in Pakistan, out of which some changes
and their effects are attempted to show in following table:
CHANGE EFFECT
Increasing inflationary rate in Pakistan Decreasing purchasing power of price sensitive
segment.
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New technology Increasing competition, product innovation
and improved quality
Imposed taxes on importing electronic
items in Budget 2010
Increase in cost of doing business
Smuggled cheap Chinese Televisions Decline in sales
Worse law & order situation Distributors are reluctant to cover northern
areas of Pakistan
3.4. Market Size
Market growth rate in terms of units (Past)
Market
segment 2006-07 2007-08 2008-09 2009-10 Growth Rate
Status
Conscious- - 85 110
4%
Style
Conscious78,500 80,000 81,500 82,500
3%
Price Sensitive 825,800 875,000 910,000 945,000 6%
Total Growth
rate5%
Market growth rate in terms of Rs. in millions (Past)
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Market
segment 2006-07 2007-08 2008-092009-10 Growth Rate
Status
Conscious- - 17,000,000 22,000,000
4%
Style
Conscious3,925,000,000 4,000,000,000 4,075,000,000 4,125,000,000
3%
Price Sensitive 16,516,000,000 17,500,000,000 18,200,000,000 18,900,000,000 6%
Total Growth
rate5%
Average Selling Prices for Last Four Years:
Status Conscious LED = Rs. 200,000
Style Conscious LCD = Rs. 50,000
Price Sensitive CRT = Rs. 20,000
Assumption for Growth:
Status Conscious :
According to our analysis, LED that is catering Status Conscious segment was launched in the
beginning of 2008 in Pakistani market & its market size is showing 4% growth rate. The reasons
of growing market of LED are:
o LEDs new technology, product design, quality, innovative features and high life style
symbol therefore those people who belong to upper upper class, are showing interest
towards LED buying.
o This segment user has no effect of increasing inflation factor therefore we are observing
positive growth for LED market.
o All big names in TV market like LG, Samsung, Sony are focusing on this segment and
making strong distribution network to cater this segment.
Style Conscious :
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Companies are targeting this segment with best cost providing strategies therefore the prices of
LCD is going down with the passage of time, thats why its market is also showing increasing
growth rate by 3%. Other reasons behind growing market of LCD are:
o LCDs slim body, product design, quality and innovative features attracted this segment
user because before entrance of LCD in this segment, users are buying CRT TVs and
they had no option for others because style conscious people are price sensitive to some
extent.
o LCD market shifted from Status conscious to Style conscious segment therefore those
people who couldn't afford LCD due to high prices, now they can purchase it.
Price Sensitive :
CRT TVs is volume builder product line for TV making companies. In Pakistan, there are a lot
of people those want cheap entertainment in form of TV therefore we are observing 6% growth
rate here. Other reasons behind growing market of CRT are:
o Smuggled cheap Chinese TVs is the major factor of growing this segment because price
sensitive people are appreciating Chinese TVs in lower prices.
o Majority of rural area people are shifting to urban and sub urban areas therefore they can
also access to CRT TVs.
o There is developing a market of used TV sets therefore price sensitive people are buying
those used TV sets.
Market growth rate in terms of units (Future)
Market
segment2009-10 2010-11 2011-12 2012-13 Growth Rate
Status
Conscious110 135 155 185 3%
Style
Conscious82,500 84,000 85,500 86,500 2%
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Price
Sensitive945,000 948,000 950,000 952,000 2%
Total growth
rate2%
Market growth rate in term of Rs. in millions (Future)
Market
segment2009-10 2010-11 2011-12 2012-13
Growth
Rate
Status
Consciou
s
16,500,000 20,250,000 23,250,000 27,750,000 3%
StyleConsciou
s
3,300,000,000 3,360,000,000 3,420,000,000 3,460,000,000 2%
Price
Sensitive14,175,000,000 14,220,000,000 15,500,000,000 16,545,000,000 2%
Total growth
rate2%
Average Selling Prices for Last Four Years:
Status Conscious LED = Rs. 150,000
Style Conscious LCD = Rs. 40,000
Price Sensitive CRT = Rs. 15,000
Assumption for Growth:
Status Conscious :
According to our analysis, The growth rate of LED market is expected to grow by 3% in future,
3D Smart Tv is recently introduced in the market therefore companies are expecting that this
segment has potential to grow and focusing on this segment with strong distribution network and
effective promotional activities; brand showrooms and hyper market are ensuring this segment
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Term Report: Strategic Analysis of LG and TV Industry
growth. Since this segment has no effect of increasing inflationary rate thats why companies can
cater this segment with high prices and increasing innovative features.
Style Conscious :
This segment is also being expected to have positive growth by 2% in future because accordingto our future analysis companies are trying to reduce their prices in future therefore this segment
people have potential to buy LCD in upcoming years but the ratio of buying is relatively
decreasing as compare to past growth rate.
Companies are catering this segment with best cost providing strategies; importing cheap
electronic parts from china, reducing other operational costs and outsourcing in non-core sectors.
Price Sensitive :
Due to increasing smuggled Chinese TV and buying of used TV sets we are expected positive
growth by 2% in future. This growth rate is relatively low before past years but due to decreasing
purchasing power of people, it is expecting that decreasing growth rate of CRT TV in Pakistan.
3.5. Competition Matrix
Competition Status
Conscious
Style
Conscious
Price Sensitive Overall
1 LG 5% 25% 70% 100%
2 Samsung 3% 32% 65% 100%
3 Sony 5% 95% 0% 100%
4 Panasonic 0% 95% 5% 100%
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5 Nobel 0% 0% 100% 100%
6 Philips 0% 90% 10% 100%
7 Haier 0% 0% 100% 100%
8Smuggled
Chinese TVs0% 0% 100% 100%
Historical Growth 4% 3% 6% 5%
Projected Growth 3% 2% 2% 2%
Analysis:
o LG is catering larger share of LCD, LED and CRT market segments, Samsung and Sony
are close competitors in its LCD and LED market.
o Smuggled cheap Chinese TV brands are major threat for LGs CRT TV market therefore
well known companies like LG, Haier, Panasonic and Nobel should have some action
plans to compete with smuggled brands because these smuggled Chinese brands will be
major threat for their LCD and LED market.
3.6. Product Life Cycle Stage
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Term Report: Strategic Analysis of LG and TV Industry
Market
SegmentIntroductory Growth Maturity Decline
CRT
LCD
LED
PDP
3D
INDUSTRY
Introduction: 3D TV is recently introduced in Pakistan by LG and yet it is on testing stage for
both LG and industry.
GROWTH: LCD and LED markets are growing for both LG and industry and they are
supposed as current bread & butter winners for L.G. LGs LCD and LED segments are present in
the growth phase. LCD has been introduced by the company a couple of years back in Pakistan.
Therefore, LCD tends to be one of the main products of LG in TV segment contributing annual
sales of around 22,000 units in 2008 whereas LED is also sharing positive growth rate.
MATURITY: LGs CRT is the one that reached the maturity stage due to rapid entrance of new
competitors in the local market offering stylish and economical products to the middle class
segment of customers that covers the huge market. The main competitors faced by LG in CRT
TVs are Philips, Toshiba, Nobel, and other Chinese brands.
3.7. Distribution Structure
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In (%)
Television Market
2009 2013
Whole sellers 8 4
Brand Show Room 4 12
Retailers 85 75
Hyper Market 3 9
Total 100 % 100%
Analysis:
Whole sellers: It is expecting that companies will generate 4% turnover in future as compare to
8% in 2009 because companies are planning to reduce their whole sellers in upcoming years.
Brand Show Room: 12% turnover is expecting form Brand Show Rooms in future.
Retailers: 75% turnover is expecting from retailers in future.
Hyper Market: 9% turnover is expecting from hyper market in future.
Market Coverage (2009)
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%ALL PAKISTAN
DISTRIBUTION
COMPANY,S
TURNOVER SHARE
(LG)
#1 COMPITITOR TUR-
OVER SHARE (Samsung)
OUTLET COVERAGE
LG
OUTLET COVERAGE
(Samsung)
Retailers 85% 80% 75% 40% 35%
Whole sellers8% 15% 10% 50% 45%
Hyper Market 3% 5% 7% N/A N/A
Branded Showrooms/
ExclusiveShowroom4% 0% 8% 0% 10%
Analysis:
LG has approx. 1300 retailers all over Pakistan those are distributing through its two
distributors.
LG is covering only 40% retailer network whereas Samsung is covering 35%, it has a
positive effect on profitability of the company with 80% turnover share. There is still
potential to optimum earning through retail outlets.
LG whole sale coverage is 15% whereas Samsung is covering 10%, it has also a positiveeffect on profitability of the company with 15% turnover share.
Hyper Market (Makro, Metro, Nahid Stores) are new market coverage places in which
LG is behind Samsung and there is a gap which should be fulfilled by increasing LG TVs
coverage in hyper markets.
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LG has no any brand showrooms in Pakistan and facing gap with Samsung. LG should
discuss it with its new distributor.
3.8. Driving Forces
EconomicForces
Political-LegalForces
TechnologicalForces
Social &CultureForces
INTERNALENVIRONMENT
Competitors
GovernmentSuppliers
Customers Industry
Social Interest Groups
Economic Forces
The worsened economic situation in Pakistan that prevailed in between 2008 and 2009 led to the
decline in the television sales all over the country. This provided the company a drastic set back
in its sales as it experienced the worst ever drop in its Top line in the last four years of more than
55 percent. The main factors behind the drop in TV market sales during last year includes the
hike in inflation in 2008, declining rupee value against dollar as the spare parts imports become
costlier and mounting electricity tariffs during 2008-09.
Political Forces
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The strict import policies by the government and imposition of Excise Duty of around 40 to 60
percent have also affected the imports of electronic parts. Companies import their components
from South Korea to assemble them in Pakistan at their factory located at Lahore. However, due
to the recent economic meltdown and increasing competition, Companies have decided to cut
their costs by shutting down the plant operations.
Bargaining Power of Customers
The increasing competition from Sony, Samsung, Philips, Panasonic and Chinese TV products
have led to the increasing customers bargaining power. Philips, Panasonic and Chinese products
are giving LG tough time as they are providing people CRT TV to the huge local market at the
attractive and economical price along with the same shape, look, size and design. On top of that
the Chinese products are providing customers with more than 80 percent price differential in
CRT TVs if compared to others CRT. LG, Samsung and other known brands provide the 21inch CRT TV at the price range of Rs.22000 to Rs.25000, whereas the same featured Chinese
CRT is available at around Rs.5000 to Rs. 8000 in the local market.
Industry Trends
PORTERS FIVE FORCES
1. COMPETITORS
There are many competitors of LG in the market which includes Sony, Samsung
from the same country Korea, Philips Panasonic, Electrolux and low cost Chinesecompetitors.
The major player in the LED and LCD segment are Samsung at first, LG at
second and Sony at Third.
The Philips and Panasonic are major players in CRT TV but not in LCD andLED.
LG, Samsung and Sony compete in LED and LCD segments with almost similaroffering to their customers.
There are high exit barriers because this is high-tech industry which needs heavy
investments it is not easy to exit.
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Cross company rivalry increases the chances for decreased profitability for one
company and increases for other one; because companies want to grab higher marketshare.
2. BARRIERS TO ENTRY
High Capital investment is a barrier to entry in such a high tech industry.
Government Regulations, policies and economic down turn are also proved to be
the barriers to entry.
3. SUBSTITUTE PRODUCTS
There is no such Substitute of TV for the purpose of entertainment via picture
display.
4. CUSTOMER POWER
Customer demand and preferences push pressure on the company for price down,
new features and durability and a high level of service.
Due to many competitors providing similar sort of product customer may switch to
competitors product.
5. SUPPLIER POWER
Good relations with the suppliers can create cost advantage while poor supplierrelation may increase the cost of production.
Few suppliers are also a threat they may become a threat in increasing the cost ofcomponents.
LG and other brands have shifted to import components from china rather than Korea
due to costly components.
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3.9. Top External Trends and Their Impact
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TREND POTENTIAL IMPLG Sony Samsun
Introduction of newand compact technol
Increasing competiti
providing more innovdesign.
YES YES YES
Increase in import dIncrease cost of elect
partsYES YES YES
Outsourcing cheap
electronic partsImport form china YES NO YES
Increasein exclusive
distribution networ
Increase thenumber of
Brand showroomsNo YES YES
I n c r ea sed em an d o f
c u s t o m e r s a n d i m p r o
qual i ty
Intensefocused on R&YES YES YES
Increase in smuggl
Chinese brands in Pa
Affectsales of Price
sensitive segmentYES YES YES
Introductionof new 3D
technology
Launching of 3D SmaTv
in PakistanYES NO NO
3. INTERNAL ANALYSIS
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3.1. SWOT Analysis
STRENGTHS WEAKNESSES
Strong Global Marketing
Strong Brand image
LG has the wide distribution
system in Pakistan
Strong R&D
Focus on innovation and new
product development
Catering localized needs
Cost/Price
Don not have own sales force.
High dependency on distributors
OPPORTUNITIES THREATS
Shifting to the rural market
Manufacturing units in China
Grasping more elite customersthrough 3D T.V
Incremental duties
Entrance of cheep Chinese brands
in Pakistani Market
Threats and Weaknesses Which Could Be Converted Into Opportunities and Strength
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Analysis:
Rural Markets : L.G has been emphasizing on urban areas mostly but if it also focus on
rural areas demand by making customized products (low cost and price) for rural
markets; it can lead to enhanced market share.
EFFECTIVE LOCAL TVs: Currently there is no TV commercial that promotes LG
TV; it should be emphasized to attract more number of customers.
Growing LCD Market: LCD market is growing rapidly which is a great opportunity for
LG to cash its LCD technology.
Innovation: The introduction of blue-tooth technology in Televisions is a great
opportunity for LG and the company is endeavoring hard to grasp this opportunity. In
addition to this the 3D technology is also expected to become LGs strength.
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Low Cost Provider China: Most parts are imported from china due to cheap cost and it
is required that it should be revised to import all or most of the parts and CBUs from
china. As it takes high cost to import a complete CBU or parts from Korea.
Cheap Brands from China: Unbranded TVs from china is a threat for LG but the
quality and features of LG is its strength through which it is fighting against competitors.
The CRT and LCD segment are being affected most by these Chinese brands.
3.2. The Customer: Basis of Business
The Relative Importance Factors
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Factors
Absolutely
Critical
5
Very
Important
4
Quite
Important
3
Nice to Have
2
Not
significant
1
Dont Want i
0
Innovative
Features
Price
Size
High Screen
Resolution
Durability
Customer
complain service
Exchange facility
Home Delivery
Credit Facility
Sound
Attractive
Design
Analysis
The most important factors considered by the consumers are Innovative Features, High
Resolution Screen, Durability, Sound and Affordable Price.
The top priority of LG is Innovative features and High Screen Resolution because these
are the two most important factors which a customer wants in a T.V, which reflects the
fact that LG is customer focused.
Rating Against Customer Buying Criteria (Evaluation Table)
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QUALITY AND PRICE LG SONY SAMSUNGNON PRICE ATTRIBUTES AFFECTING
CUSTOMER CHOICE% Weight
PRODUCT-RELATED85%
InnovativeFeatures25% 24% 23% 24%
Sound 10% 9% 9% 9%
High ScreenResolution 15% 13% 14% 13%
Durability 10% 7% 8% 8%
Size 15% 10% 10% 10%
Design 10% 9% 6% 9%
SERVICE RELATED
15%
Customercomplain service 10% 7% 5% 6%
Exchange Facility 5% 2% 4% 3%
Total100% 81% 79% 82%
Has quality gone up and down Improved Improved Improved
Relative pricetoday(Rs.)15,000 to
400,000
30,000 to
250,00015,000 to 400,000
Relative price 4 yearsago(Rs.)20,000 to
150,000
25,000to
150,00020,000 to 150,000
Implication
During the purchase decision a television customer look for product related features as Style,
size ease of portability, sound and other features while service related only after sale service
factor is taken into consideration. The three competitors have been assigned different
percentages on these features according to our evaluation which a customer considers during
purchase of one of these brands. When we measure quality LG, Sony and Samsung have
improved.
When we talk about relative price today of these three competitors LG is at moderate level,
Samsungs prices are high and Sonys Prices are much higher than these two.
The Relative price four years back LG and Samsung was both at high prices and Sony was again
at very high prices at that time. This is because Sony remained focusing to upper class only while
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Samsung and LG focused on upper and upper middle class. But now LG is focusing on lower
and middle class as well thats why LG is focusing on low cost strategy.
Customers Buying Criteria: Price..%, Quality Attributes..%
Question
its Cost Keep it up
Do not
SweatImprove
FastAttributes Important to Customer
RelativePerformanceRatingBetter
Customer
Complaint Service
Innovative Features
Attractive Design
SoundHighScreen Resolution
Same Price DurabilitySize
Worse Exchange Facility
10% 20% 30%
Analysis Of Consumer Buying Criteria (LCD Segment)
L.G is focusing on innovative feature, attractive designs, high screen resolution and
sound which are considered as most important factors by the customers and it is needed
that L.G should continue to emphasize on these factors.
Size is also considered as important factors by the customers and it is required that L.G
should improve more in these factors.
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Customer complaint service is considered as another important factor by the customers
but not at top priority of customer in LCD segment but L.G has scored good marks than
its competitors.
Price is least important factor in LCD segment and LG has scored the same as
competitors.
3.3. Impact of Issues on Strategic Profile
Issue number Issue no 1 Issue no 2 Issueno 3 Issue no 4 Issue no 5
Issue Name Cost/PriceHigher
dependence onDistributor
Influx Of ChineseBrands
Insufficient LocalMarketing
Incremental Duties
Customers +++ ++ ++ ++
Market Segments ++ +
Products
(prices)/services ++ +++
Market Share ++
Dealers + ++
Profit Margin ++
Analysis
ISSUE NO: 01
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Due to innovative features in its products like Bluetooth and 3D etc the manufacturing cost of the
products goes high and customers have to pay high prices for new products which is against the
criteria of value + Cost, which customer wants.
In addition to this, high manufacturing cost may lead towards the elimination of CRT as Sony
has already withdrawn from CRT segment due to low margin in CRT segment.
ISSUE NO: 02
Another issue is that L.G does not have its own sales force in Pakistan. They have only 23
employees in all over Pakistan. L.Gs sales totally depend upon the distributors sales force.
These two distributors are including Mega and Allied distributors are also delivering same
services to Samsung and Sony. So its pretty difficult to make significant difference in market
share under such situation.
ISSUE NO: 03
The influx of cheap Chinese brands in Pakistani market is another major issue because it is
exploiting the market of CRT segment which is the volume builder for L.G. In addition to this
Chinese brands have also entered into the LCD segment. LCD segment is a growing segment and
LG is expecting more profits out of this segment but entrance of Chinese brands is a serious
issue for them.
ISSUE NO: 04
Although L.G has very strong global marketing but they are lacking in Local Marketing. Local
marketing is also a kind of support for local dealers to boost their sales.
ISSUE NO: 05
The increase in duties by the government on parts and CBUs is another major issue for L.G
because it has forced the TV industry to raise its prices due to high import duties.
4. VISION AND MISSION STATEMENT
Vision Statement
LG strives to be the top three rank consumer electronic company in the world by 2010. With the
concept of Great Company, Great People, enhancing customer value with innovation &
design.
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Mission Statement
LG mission is to focus on the premium segment of the market that fetches greater margin
opposed to volumes, and to utilize their core capabilities of product leadership, market leadership
and people leadership and enhance their corporate culture of team work and fun workplace to
become top three brands in electronic industry.
Strategic Direction
LG Electronics set its mid- and long-term vision a new to rank among the top 3 electronics,
information, and telecommunication firms in the world. By embracing 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." Likewise, LG seeks to secure
three core capabilities: product leadership, market leadership, and people-centered leadership
Objectives:
To expand the LED/LCD/Plasma TV business in Pakistan and to achieve at least 30%
market share in LCD TV and 50% market share in Plasma TV by the end of 2011
To support the sales by launching attractive TVC by the end of September 2010
To make LG a premium brand by focusing on innovation and customizing their products
according to the needs of customers
Reinforce premium strategy market centering on customer value, promote alliances and
outsourcing in non-core sectors, strengthen soft capabilities (brand, design, key technology)
and pursue top tier level operations
To minimize the cost of products by 2% to 3% by importing parts from china instead of
Korea
To strengthen the relationship with distributers by offering more incentives so, that they can
focus more on LG brands
5. KEY ISSUES
According to our analysis, we have found some key issues with LG which have major impact on
their business.
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Increase in cost and prices
Higher dependency on distributor
Smuggling of cheap Chinese CRT television
6. ACTION PLAN
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WHAT HOW
Decrease CostStartedimportingitscomponentsfo rmLowcostProviderChinar
thanKorea
Increasing M arket ShareByChangingtheDistributionstructure,byturningdistribut
dependenttoindependentandfocusmo reonpow erretailer
thandeale rs
Increased interaction with customer
FocusingonCustomerservicetobetterserveth emLGisopen
ow ncustomercarecen tersinPakistan. ThePro cesshasbeenst
andonecustomercarecenterhasrecent lyestablishedatShahFaisalandothersareintheprocess
Intensefocus on R & D Customerexpectationareincreasingveryrap idly,andto cate
expectationL.GshouldfocusmoreonitsR&Ddepartment