KOREAN CONQUEST:HOW LG AND SAMSUNG WON OVER THE INDIAN MARKETPresented by:

M. Arsalan Sheikh (#7989)

Ahsan Bham (#8106)

Sobia Khan (#6316)

CONSUMER DURABLES INDUSTRY:OVERVIEW

Fastest growing industry in India

Advertising and brand building has a key role

Demand is seasonal and cyclical

Price and brand differentiation

Technology driven

Continuous innovation

Supply and distribution network

High involvement in R&D activities

After-sales services

CONSUMER DURABLES INDUSTRY:PRODUCT SEGMENTATION

Consumer Durables Consumer Appliances Consumer Electronics

White Goods Brown Goods Mobile phones Televisions MP3 players DVD players VCD players

Refrigerators Washing machines Air conditioners Speakers and audio equipment

Mixers Grinders Microwave ovens Iron Electric fans Cooking range Chimneys

CONSUMER DURABLES INDUSTRY:PERFORMANCE

• Expected to drive the market to a value of $7.7 billion by the end of 2013, an increase of 60.7% since 2008. An anticipated CAGR of 10% for the five-year period 2008-2013

• In 2013, the Indian household appliances market is forecast to have a volume of 52.2 million units, an increase of 50.4% since 2008. The compound annual growth rate of the market volume in the period 2008-2013 is predicted to be 8.5%.

CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO

In term of purchasing power parity (PPP), India ($3.55 Trillion) is the 5th largest economy in the world and overtake Japan in the near future become the 4th largest.

The middle class in India is fueling economic growth and disposable incomes are expected to grow at an average of 8.5% per year until 2015.

The urban market has now largely become a product replacement market.

CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO

Indian consumer durable market is expected to reach Rs. 40 Billion by on 2010

The Indian household appliances market grew by 32% in 2010.

The top 67 cities in India are the key potential markets for appliances. These cities contribute 14% of the GDP.

The market share of MNCs in the consumer durables sector is 65%.

CONSUMER DURABLES INDUSTRY:RURAL MARKET

The rural market is growing faster than the urban market.

Rural sector offers huge scope for consumer durables industry, as

it accounts for 70% of the Indian population.

The urban market and the rural market are growing at

the annual rates of 7%-10%and 25% respectively.

Rural areas have the penetration level of only 2% and

0.5% for refrigerators and washing machines respectively.

In case of television the penetration level is 18%.

CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO

CONSUMER DURABLES INDUSTRY:BRANDS

MNCs National Regional Korea o LG o Samsung o Hyundai

Onida Videocon BPL Kelvinator Allwyn Godrej Voltas IFB

Bush Crown Salora Weston Beltak Oskar

China o TCL o Haier

Holland o Phillips

Japan o Sony o Panasonic o Sharp o Hitachi o Sansui o Akai o Aiwa o Whirlpool o Electrolux

CONSUMER DURABLES INDUSTRY:WHITE GOODS

1995-1996 2005-2006 2009-2010

Demand 3.43 million 8.72 million 13.14 million

Penetration level 149 per 1,000

households 319 per 1,000

households 451 per 1,000

households

CONSUMER DURABLES INDUSTRY:MARKET SEGMENTATION

Demographic

Income

Occupation

Geographic

Tier 1 Cities

Tier 2 Cities

Psychographic

Life style

Personality

Behavioral

Value

Benefit sought

DEMAND & GROWTH DRIVER

Personal Income

Availability of financing

Product affordability

Increasing share of organized retail

Entry of heavyweight retail players

Increasing appreciation of the Rupee

Technological and design advancements

Innovative advertising and brand promotion

CONSUMER DURABLES INDUSTRY:WHITE GOODS

CONSUMER DURABLES INDUSTRY:COMPETITIVE STRUCTURE

COMPANY PROFILE

Situation

LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January 1997 after clearance from the Foreign Investment Promotion Board.

Growth Strategy

Focused on innovative, feature-rich products –”Value-plus” platform

Offering affordable products at a lower margin –cutting on volume to bring in revenues

Key Success Factors Innovative marketing strategies

LG has differentiated its products using technology and health benefits.

Local and efficient manufacturing to reduce cost

Implementing a “digital manufacturing system” (DMS) as a cost-cutting innovation.

Product localizationLG came out with Hindi and regional language menus on its appliances

Regional channel strategy and wide distribution network

LG has over 46 branch offices and 110 area offices across the country.

COMPANY PROFILE:

ObjectivesThe aim of LG is to provide the customers with utmost

satisfaction through leadership.The fundamental policy of development is to secure

product leadership that the Customers may have the utmost satisfaction.

Core Competency Product leadership, Market leadership, People leadership

COMPANY PROFILE:SWOT ANALYSIS

Strength Market leader in home

appliance segment Manufacturing unit in tax-

incentive areas Wide range of product

categories to tap the consumer upper-middle class and upper-upper class

LG, having the widest distribution network in the industry

Good after-sales services

Weakness

Consumer compare LG

products with its

competitor Samsung and

Sony, not with other

foreign brand

Similar product categories

as compare to its close

competitors Samsung

COMPANY PROFILE:SWOT ANALYSIS Opportunity Shifting to rural market

Control over the white goods market, as we know the highest market in home appliance market

Home appliances market is growing very fast, so there is an opportunity for LG to launch new technological products.

Threat

The closest competitors Samsung is also from South Korea, and consumer compare LG products with Samsung products

Price-against-benefits war with its closes competitors, Samsung & Sony

Competitors from Indian brand and new entrants.

COMPANY PROFILE

Situation

Samsung India Electronics Ltd. is a subsidiary of Samsung Electronics Corporation (SEC) headquartered in Seoul, Korea. Samsung India was formed in 1995.

Growth Strategy

Building an affluent customer base –higher priced products

Creating a premium brand image –design and technology innovations

Key Success factorsInnovative promotion and advertising

Branded its products as superior technology and environment friendly ones.

Launching the best in design and technology

Samsung has won over 150 awards in India for its technology and design based products.

Customized products for its consumers

understands the local cultural sensibilities to customize its products according to the market.

Manufacturing plant and localization

COMPANY PROFILE

Objectives

Samsung aims to become India’s leading volume retailer in the consumer electronics segment

Achieving its aim by focusing on its Core Strategy

Work on strengthening its unique Brand Image

Gaining Customer Satisfaction

Core competency

Technology leadership

COMPANY PROFILE:SWOT ANALYSIS

Strength Core value: Approach

market through technology and design leadership

Launching hi-tech and contemporary products with zeal and speed

Created a Unique Brand Image for itself as a high end value driven brand

The Samsung Marketing Academy

Weakness Approach market through

technology and design

leadership: a slow process.

Not targeting the mass

market

Not spreading the brand

all over India

COMPANY PROFILE:SWOT ANALYSIS

Opportunities The Indian Mass Market.

The high end value driven

proposition helps increase

the Market Share.

Samsung is well known for

it product differentiation

Threats Indian Mass Market may

be captured by a rival company, LG, Onida, Videocon;etc.

Increased emergence of modern retail chains- a problem as Samsung is investing in building a retail network across the country

COMPETITOR ANALYSIS

Localized positioning

Focus on local R&D Range of products in a

wide range Dealer network is very

strong Many products specially

for India Positioning on a global

basis Centralized R&D Lesser Range of

products Dealer Network not as

strong Less Indian Customer

Centric products