CASE STUDY

LG Electronics India Pvt. Ltd. (LGEIL), the home appliances and

consumer electronics major, was established in 1997 as a wholly-owned

subsidiary of LG Electronics headquartered in South Korea. LGEIL has

manufacturing facilities at Noida and Maharashtra, and manufactures

color televisions, washing machines, air conditioners, vacuum cleaners,

refrigerators, microwave ovens (MWO’s), etc. It is one of the most eco-

friendly LG facilities in the world.

LGEIL was a trendsetter in promoting its products to the consumers

through the platform of health. Its advertising campaigns focused on the

health aspect. The color television segment highlighted the “Golden

eye” technology that reduced strain on the eye while watching

television. The air conditioners’ campaigns emphasized the “Plasma

healthy air system” that gave pure and fresh air, keeping pollution at

bay. The MWO’s are promoted via the “Healthy wave” system.

Similarly, the washing machines were promoted as “Fabricare” systems

that take the health platform down to ones’ clothes. Analysts pointed out

that health was a valid platform for any brand to base its promotion on.

Moreover consumers aspired for more than just functional benefits and

companies could differentiate themselves through the health plank.

According to Mr.Arora, head marketing at LGEIL, “our advertising

strategy has been to communicate whatever products actually deliver

health convenience, advanced features, and technological superiority.

LG communication till date was centered at the theme of ‘protective

health’. It was driven by LG’s concern for the consumers’ health, and

having technology that work towards protecting them”.

To expand the microwave category, LGEIL decided to promote its

MWO’s through the direct marketing route on 2004. It fixed a

budget of about Rs.15million for direct marketing institutes for the

product. Mr.Saurabh Baisakhia(Baisakhia), product group head of

the MWO division, said, “We could achieve a major market share

in such a short span mainly due to the fact that we were able to

identify consumer buying behavior in different zones and realized

that he need of consumers’ vis-à-vis this product is not

homogeneous. Thus, we launched different capacity models for

different zones”. The company’s market research revealed that the

twenty-liter model was preferred in Kolkata, while in the North;

the thirty-liter one was sought. In Chennai, the basic MWO model

was popular since consumers were price-sensitive. The research

also revealed that customers were unaware of the usage and utility

of microwave ovens.

The primary objective of the direct marketing campaign

was to reduce the problems faced by consumers after product

purchase. LGEIL also aimed at removing the misconception that

MWO’s were just a heating device. As part of its direct marketing

efforts, it gave home demonstrations to explain all the features of

the microwave oven models. It also planned launch new models of

MWO’s to cater to tastes and convenience of different customers.

Baisakhia said, “We have tried to create excitement about this

category to our constant product launches which would cater to

each segment. Constant home demonstrations helped in attracting

consumer attention”. Direct marketing helped the company

communicate the product improvisations directly to the consumers.

For instance, the company focused on communicating a unique

feature such as the 25-recipe memory for the 25 liter grill.

Intense competition from players like Samsung and

Electrolux forced the company to opt for such aggressive and

unique means of promotions. Samsung electronics, its main

competitor, soon followed suit with its direct marketing campaign

called “Spot the Van cooking fiesta” in the northern states of the

country. As part of this campaign, a mobile van carried the entire

range of microwave ovens to dealers and consumers to

demonstrate the product features. Special offers were also made to

consumers during the direct marketing campaign. Samsung too

emphasized on the health aspect through its “freshetarian”

advertising campaign for its refrigerators and “Samsung bio TV”

for televisions, that was certified by the Indian Board of

Alternative Medicine. Sansui, another player in color TV segment

also introduced ‘Smart Eye’ TVs that reduced the strain on the

viewers’ eyes even after long hours of watching television.

QUESTIONS FOR DISCUSSION:

1. Enumerate the reasons for LG opting for the direct marketing

route to promote microwave ovens.

2. Many companies in the consumer electronics segment have

begun to focus on the ‘health’ platform in their advertising

campaigns for their products to attract consumers’ attention.

In such a situation, how could LG differentiate itself from the

clutter through the use of various other marketing

communication elements?

Student opinion: LG should continue its direct marketing campaign till

the time consumers’ start feeling comfortable and they become well

aware of the product. Once the consumer has gained the complete

knowledge about the usage of the product, the company can stop direct

marketing and switch to other media as direct marketing is a very

expensive method of marketing.

The company these days is facing immense competition from

“Samsung” as it is also trying to target its customers through the

platform of health. It should continue giving direct offers to the

customers through direct marketing and also find new and innovative

ways to differentiate itself.

ANS.1:  The route of direct marketing adopted and health

campaigns by LG proved to be very successful by taking it to the

number one position with the highest market share. The objective

of direct marketing was to serve the customers in a better way

after the purchase by teaching them the various uses of

microwave... Also, LG was able to identify customer buying

behavior in different zones and could customize its products

accordingly. Direct marketing also helped the company

communicate the product improvisations and customizations

directly to the customers. It was quick to respond as per the

customer requirements. Therefore LG opted for the direct

marketing route to promote microwave ovens.

ANS.2:  In case LG intend to have an entire range of washing machines

to cater to all segments of the market, it should have a smaller capacity

washing machine as Videocon ( 3 Kgs etc ) as the market for them is

still very large. The colors of LG Semi Automatic Washing Machines

(Off White, Pale Beige, and Light Grey) are very trendy and appeal to

the customers. It has to give more warranty periods like other players do

in the industry. More Demonstrators are required for LG Products.

Instead of go for a limited distribution network it has to build a wide

channel network. 

The communication strategies for washing machines are not

fruitful for the target segments.  So, there should be developed a

new communication strategy for it.  Instead of going for clean

clothes and longer life for clothes, the ad theme should target to

the women’s or females, which other players do like Videocon &

Whirlpool. Because, a lady in the family is the main buyer in

purchasing the product. So, a new USP was to be developed.