Learnings From Other Nations by Pranesh Misra
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Transcript of Learnings From Other Nations by Pranesh Misra
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LG Electronics
Discovering The 86% Solution.
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The 86% Solution
Prof Vijay Mahajan & Kamini Banga
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The Essence of The 86% Solution?
(insert cover of the book The 86%Solution here)
86% of worlds population
lives in the emerging anddeveloping worldaninvisible opportunity!
MNCs have traditionally
focused on developedmarkets like NA and Europe,ignoring 86% of the worldpopulace.
Branding and Marketingprinciples in emergingmarkets are quite differentfrom developed markets.
Innovationis the key to
success in emerging markets
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LG History
A Quick Review
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Early Beginnings as GoldStar:
Korea focusedSome Export to developed world.
1958GoldStar(today's LG Electronics)established
1959 Korea's firstradio produced
1962 Radio exported to the US and Hong Kongas Korea's first
1965 Korea's firstrefrigerator produced
1966 Korea's firstblack & white TV produced
1968 Korea's firstair conditioner produced
1969 Korea's firstwashing machine produced
1974 GoldStar Communications went public
1977 Color TV produced
1978Exports surpassed US$100 million asKorea's firstin the electronics industry
THE 1950s
THE 1970s
THE 1960s
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The 1980s: Global production centers
Initially in the developed world..
1980First EU sales subsidiary in Germany(LGEWG) established
1982Color TV plant in Huntsville in the USestablished
1984 Sales surpassed one trillion won
1986European-standard VCR plant in Germanyestablished
1989Sales subsidiary and a joint production
subsidiary in Thailandestablished
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The 1990s: Entry into China & India.
Acquisitions & Joint Ventures
1990Ireland-based design technology centerestablished
1993With the establishment of Huizhou subsidiary inChina(LGEHZ), marketing in China took full
swing
1995Company name changed to LG Electronicsandthe US-based Zenith acquired
199740-inch PDP TV and the world's first IC set forDTVs developed; Indiaproduction subsidiary(LGEIL) established
1998 World's first 60-inch PDP TV developed
1999LG.Philips LCD, a joint venture with Philips,established
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The New Millennium:
technology & innovation
2000The world's firstInternet-enabled refrigerator launchedGlobal sales of refrigerators reached the number one position
2001the world's firstInternet- enabled washing machine, air conditioner, andmicrowave oven launched
2003
World's firstsynchronous-asynchronous IMT-2000 mobile phonedeveloped; the world's first76-inch PDP TV developed;CDMA mobile handsets took the largest sharein the US & world CDMAmarket
2004
All-in-one LG 55" LCD TV, the worlds firstand largest among LCD
TVs, commercialized. The worlds largest and firstLG 71" plasma TVcommercialized. The worlds first terrestrial DMB phone developed
2005
World's firstDMB (Digital Multimedia Broadcasting) notebook PCunveiled. World's firstDMB Phone with Time-shift function developedNetwork solution joint venture of LG-Nortel launchedCDMA mobile phones ranked firstin the world in the 3rd quarter
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LG Today
Global Revenue: US $ 35 billion (consolidated $ 45 billion)
72,000employees working in 77offices and marketing unitsworldwide.
Worlds largestproducerof CDMA handsets, DVDplayers, optical storage devices, air conditioners, canistervacuum cleaners and micro ovens.
Growthdriven by globalization
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Driven by Globalization
80% of Revenue from outside South Korea
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005
Domestic International
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The Vision: Clear Global Aspirations
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The LG India
Story
So Far..
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125
485
1056
1930
2216
3315
4500
6500
0
1000
2000
3000
4000
5000
6000
7000
1997 1998 1999 2000 2001 2002 2003 2004 2005
T
urnoverin
Rs(C
r)
LGEIL-Winning Spirit 7200
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12.7
35.6
0
10
20
30
40
Samsung LG
LG Leads on Market shares (March 2005)
*Source: ORG-Marg
22.9
29.3
20
22
24
26
28
30
Whirlpool LG
18.1
39.4
15
20
25
30
35
40
45
Samsung LG
14.3
27.4
12
14
16
18
20
22
24
26
28
Samsung LG
Washing Machine Refrigerators
Color TVMicrowaves
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Proportion of intending buyers
Brand Most likely to buy (%)
*Source: AC Neilsen-ORG-Marg Brand Track, Jun 04-Apr 05
3 2
1 1
6 7
1 0
0
5
1 0
1 5
2 0
2 5
3 0
3 5
LG
Sam
su
ng
Whir
lpool
Godrej
Vid
eocon
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Top of Mind Brand Awareness
Figs in %
*Source: AC Neilsen-ORG-Marg Brand Track, Feb-Apr 05
2 9
1 21 1 1 1
8
0
5
1 0
1 5
2 0
2 5
3 0
LG
Godrej
Sam
su
ng
BPL
Vid
eocon
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Has LG Applied
The 86% Solutions
In India?
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1. Dont Build a Car, when you need a
bullock-cart
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LG India: Closely studied the local needs &
Adapted international technology
Watching TV causes eye strain
Food in the fridge goes stale
Expensive clothes should not bewashed in Washing Machines
ACs are for cooling so it is a luxury item
Golden Eye
Preserve Nutrition
System
Fabricare
HealthAir System
Discovering Key Category Barriers LGs Innovation
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Discover Local Insights:
Fear that TV Viewing will spoil childrens Eyes
2 X Golden Eye TVC
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LG Invented products to meet Indian consumers needs
TV Signals dont reach all over the country
World-cup Football Craze in 2002
Frost free refrigerators are unaffordable by masses
Agitators in washing machine can damage clothes
DTH TV
(Indias first)
Football shaped TV
IntroducedSemi Frost Free
Introduced
Chaos Punch
Local Market Insights LGs Innovation
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LG Innovated to meet
Indian consumers needs
Majority of Indian consumers dont read English
Big audiences on TV sets + high ambient noise
Cricket is the second religion for most Indians!
Cricket is a second religion for most Indians!
Indian-language
On screen instructions
Ballad TV
2000 Watt output
Free Cricket gameWith TV in 1999
World-cup
Sponsorships
Indian Consumer Needs LGs Innovation
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2. Connect Brands to the Market
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Grassroots Marketing An LG India Invention
Widest distribution networkcovering India inch by inch!:
51 branches
72 regional offices
61 central area offices
112 district area offices to cater to rural markets 100 remote area offices
SPEED to market: products reached 18 states within 3months of launch.
SERVICE at the doorstep: 1108 service centers
24 hour, hassle free service
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Not just Bottom of the Pyramid
The WHOLE Pyramid!
Covers the width of categories from Home Entertainment toHousehold Durables to IT services to Mobile Phones.
Wide price rangecater the entire population of India.
Latest technology inventions in top endworld class productsin the show rooms.
Keep refreshing the portfolio40 to 50 new models every
year.
Visibility at the retail outletsthe real on-ground battle field.
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3. Think Young!
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LG Indias Strategy: Associate with Youthful Symbols
Capitalize the Youth Passions: Cricket and Bollywood.
Early sponsorship and association with Cricket since 2000.
Abhishek Bacchan: The latest craze amongst youth.
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4. Discover the Lands of Opportunity
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LG Indias Strategy: Make Impossible possible
Have Faith in Indias Potential
Business Challenge: MARKET CREATION
New lifestyles = New Opportunities.
Innovate to meet local market needs and aspirations.
Greed for Speed!
Target the multiple consumer segments: The super rich, themiddle classes, the youth, the poor and the rural.
Price rightnot cheap.
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LG Indias Strategy:
Invest in communication to realize your dreams.
Set stretched goals
Disproportionately higher Share of Voice
Continuous presenceto maintain salience and top of mindawareness.
Invest in sponsorships: ICC sponsor for test and one days in2001, 2002, 2005.
Make presence felt at the street level.
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LG Indias strategy: Empower for Speed
Markets will not wait!
Deep distribution structure for quick reach of products
Empowerment at grassroots level to ensure speedy decisions
At national level Product Group Heads on key categoriesrun their categories as effective CEOs
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To
Sum Up
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LGs Global Success
Key Success Factors
Corporate ambition for Global Leadershipclearlyenumerated for every stakeholder.
Belief in The 86% Solution principles and markets as
engines of growth.
Focus on Growth and Innovation.
Speed a vital winning ingredient
Dream impossible dreams; fuel those with adequateinvestment to convert dreams to reality.
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Have A Wall?
A Global Ad from India
LG X Canvas TVC
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The World Can
Be Yours!