MARKETING POLICIES IN

LG ELECTRONICS INDIA Pvt. Ltd.

SUMMER TRANNING PROJECT REPORT SUBMITTED

TOWARDS PARTIAL FULFILLMENT

OF

BACHELOR OF BUSINESS ADMINISTRATION

(Affiliated to Ch. Charan Singh University, Meerut)

Academic Session

(2005-2008)

Under the Guidance Of:-

Deputy Manager MRS Geeti Sharma

Sanjeev Srivastava IMS Ghaziabad

Submitted By:-Mansi Aggarwal9359622

1

INSTITUTE OF MANAGEMENT STUDIESC-238, BULANDSHAHR ROAD, LAL QUAN, PB NO. – 57, GHAZIABAD-201009

2

Acknowledgment

The successful comletation of any work would be always be incomplete unless

we mention the valuable cooperation and assistance of those people who were a

source of constant guidance and encouragement, they served as bacon light and

crowned our efforts with success.

I would like to extend my sincere gratitude to our MRS GEETI SHARMA for his

guidance

3

Declaration by the Candidate

MANSI AGARWAL student of BBA VI of institute of management and studies

(I.M.S),Ghaziabad (2005-2008) bearing enrollment number . I ----------------

hereby declare that the research project report titled “ TO determine the market

share of branded computers”

Is the outcome of my own work and same has not been submitted to any

university / institutions for the award of any degree or any professional diploma.

Date: ( )

Sign of candidate

4

TABLE OF CONTENTS

EXECUTIVE SUMMARY 5

INTRODUCTION 6

OBJECTIVE OF RESEARCH 15

RESEARCH METHODOLOGY 53

TABULATION& ANALYSIS OF DATA 60

FINDINGS 76

SWOT ANALYSIS 79

LIMITATIONS 81

CONCLUSION 82

SUGGESTIONS AND RECOMMENDATIONS 84

APENDICES 85

BIBLIOGRAPHY 89

5

Executive Summary

In today’s scenario, Marketing of a product is acknowledged as one of the most

potent sources in contributing directly and significantly in the growth of any

organization.

This project attempts to explore the most effective “Marketing Strategy” for

smooth sailing of an organization.

The objective of the study is “To determine the market share of branded

computers”. The main theme was to check the current & future demand of PCs

in the market.

The objective of the topic “Market study of Branded PCs” consists every

major & minor aspect of the term Marketing.

The topic consists valuable findings & suggestions made on the basis of

sequential marketing research process for the marketing mix as Product, Price,

Place, Promotion and intermediary’s channels, services provided by the LG

Electronics India Pvt. Ltd.

6

INTRODUCTION

ABOUT PC INDUSTRY

The PC industry is one of the strongest in the world. There is probably no other

type of product that is so technologically sophisticated, sells for so much money,

and yet is sold by so many companies for so little profit. The severe competition

in the industry is the reason why those who deal with PC vendors encounter so

many problems.

In this report we have tried to bring forth the major areas in which a new PC

vendor can enter and penetrate in the market. The segments that are important

to the PC vendors, their buying behavior, purchasing power, etc. are segregated

in this report.

 

With the presence of so many PC vendors in the organized and unorganized

sector that consists of assembled PC market it is not very easy to launch a new

company in the same field.

Over the last decade or so, the PC industry in India has undergone a sea

change. The entry of MNC brands in the 1990s changed the rules of the game,

as the industry at that time was predominantly the domain of assemblers and

some local manufacturers. Given these dynamics, the going, at least initially, was

not easy for the Compaqs, HPs and the IBMs, as they had to struggle to build

brands as well as to give their offerings as much of a local flavor as would make

them attractive to the Indian buying segments. Moreover the MNCs also had to

combat the goodwill, the trust and the loyalty that the friendly neighborhood

assembler had built over the years with clients cutting across the big through

7

small-enterprise markets. But as the years rolled on, the branded- PC industry

secured what today constitutes a major slice of the Indian PC market pie.

Today it is fashionable to talk about the new economy. Now a days businesses

around the globe are operating in globalize economy because most of the

economies of the world have become broader. The old economies were simple

then todays. It was based on industrial revolution and managing manufacturing

industries. But the new economy, in contrast, is based on the Digital Revolution

and the management of information. Things are moving at a nano second pace,

markets for every product category is highly competitive and consumers are

more empowered and having awareness regarding products offered in the

market by manufacturers.

With the growing need for computerization, branded PC demand in public sector

organizations and in the government is on the rise. Demand from the private

sector, especially in the educational institutes and home segment, is already

rising. The small office home office (SOHO) and small-and-medium enterprise

(SME) segments are also driving hardware demand. The growing popularity of

the Internet has also raised the demand for branded PCs.

In such circumstances it is very difficult to survive for the small players. But

MNCs like LG, HCL, HP, IBM Computers, etc. are doing good job and earning

heavy profit consider the economy of our country. It is also emerging into a

powerful economy and after a decade or so; India will be an economic power of

this region.

The main aim of my study is that find out the market share of branded PCs &

future aspect of LG MyPc in Indian market. For this purpose I critically examined

8

the sales of different brands of PCs like HP, LG, IBM Compaq, HCL, PCs, Zenith,

Wipro.

9

INTRODUCTION OF MARKETING

In the decades of 50’s marketing was a far simpler subject. Consumer marketing

largely operated on mass of marketing principle & business-marketing principle

concerned itself will how to build the sales force. In those days, marketers faced

a number of tough decisions. They have to determine products features &

quality, establishes accompanying services set the price, determine the

distribution channel.

Many managers think of marketing as a company department whose job is to

analyze the market, discern opportunities, formulate marketing strategies,

develop specific strategies & tactics, propose a Budget & establish a set of

control. But there is more to marketing: marketing must also push the rest of the

company to be customer oriented & market driven.

Marketing is more then a company department; it is an orderly & insightful

process for thinking about and planning for market. The process is applicable to

more then just goods & services. Anything can be marketed – ideas, events,

organizations, places, personalities.

The process is being with researching the relevant marketplace to understand it’s

dynamics and to identify opportunities to meet existing or latent needs. It involves

segmenting.

The marketing & those segments that the company can satisfy in a superior way.

It involves carrying out a plan, evaluating the results & making further

improvements.

10

A social definition shows the role marketing plays in society. One marketer said

that marketing’s role is to “deliver a higher standard of living”. A social definition

that serves our purpose follows: -

“ Marketing is a societal process by which individual & groups obtain what they

need and want through creating, and freely exchanging products & services of

value with others.”

For a managerial definition, marketing has often been described as ‘the art of

selling products.’ But people are surprised when they hear that the most

important part of marketing is not selling! Selling is only a tip of the marketing

iceberg. Peter Drucker, a leading management theorist, puts it this way:

There will always, one can assume, be need for some selling. But the aim of

marketing is to make selling superfluous. The aim of marketing is to know & and

understand the customer so well that the product & service fits him & sell itself.

Ideally, marketing should result a customer who is ready to buy. All that should

be needed than is to make the product available.

Coping with exchange processes calls for a considerable amount of work and

skill. Marketing management takes place when at least one party to a potential

exchange thinks about the means of achieving desired responses from other

parties. Marketing management as the art & science of choosing target market &

getting, keeping & growing customers through creating, delivering and

communicating superior customer value.

Evolution through the changes: -

Marketing activities should be carried out under well – through – out philosophy

of efficient, effective, & socially responsible marketing. However, there are five

competing concepts under which organizations conduct marketing activities: the

11

production concept, product concept, selling concept, marketing concept &

societal marketing concept.

THE PRODUCTION CONCEPT: -

The production concept holds that customers will prefer products that are

widely available inexpensive.

Managers of production based business concentrate on achieving high

production efficiency, low cost, & mass distribution. They assume that consumers

are primarily interested in product availability and low prices.

It is used when a company wants to expand the market. This orientation makes

sense in developing countries, where consumers are more interested in obtaining

the product than in its feature.

THE PRODUCT CONCEPT :-

The product concept holds that consumers will prefer those product that offers

the most quality, performance, or innovative features.

Managers in these organizations focus on making superior products & improving

them over time. They assume that buyers admire well-made products and can

appraise quality and performance. However, these managers are sometimes

caught up in a love affair with their product and do not realize what the market

needs.

THE SELLING CONCEPT:-

The selling concept holds that consumers and businesses, if left alone, will

ordinarily not buy enough of the organization’s products. The organization must

therefore, undertake an aggressive selling and promotion effort.

This concept assumes that consumers typically show buying inertia or resistance

& must be coaxed into buying. It also assumes that the company as a whole

12

battery of effective selling & promotion tools to stimulate more buying. The selling

concept is also practiced in the nonprofit area by fundraisers, college admission

offices, & political parties. Most firms practice the selling concept when they have

over capacity. Their aim is to sell what they make rather than make what the

market wants.

THE MARKETING CONCEPT: -

The marketing concept is a business philosophy that challenges the three-

business orientation. The marketing concept holds that the key to achieving its

organizational goals consists of the company being more effective than

competitors in creating, delivering & communicating customer value to its chosen

target market.

The marketing concept has been expressed in many colorful ways:

“Meeting needs carefully”

“Putting people first”(British Airways)

“Partners for profits” (Milliken & company)

The marketing concept rests on four pillars: target market, customer needs,

integrated marketing, and profitability.

THE SOCIETAL MARKETING CONCEPT: -

The societal marketing concept holds that the organization’s task is to determine

the needs, wants & interests of the target market & to deliver the desired

satisfaction more effectively & efficiently than competitors in a way that preserves

& enhances the consumer’s & the society well being.

The societal marketing concept calls upon the marketers to build social & ethical

consideration into their marketing practices. They must balance & juggle the

often-conflicting criteria of company profit, consumer want satisfaction, and public

interest.

13

Yet a number of companies have achieved notable sales & profit gains by

adopting & practicing the societal marketing concept.

We can say with some confidence that “the marketplace isn’t what it used to be.”

It is changing radically as a result of major societal force such as technological

advancement, globalization, and deregulation.

Customers increasingly expect higher quality & service & some customization.

They perceive fewer real product differences and show less brand loyalty. They

are showing greater price sensitivity in their search for value.

Brand manufactures are facing intense competition from domestic & foreign

brand, which is resulting in rising promotion cost & shrinking the profit margin.

Store-based retailers are suffering from an over saturation of retailing. They are

facing growing competition from catalog houses; direct-mail firms, newspapers,

magazine & TV direct customer to ads & the Internet. They are marketing an

“experience” rather than a product assortment.

14

EVOLVING VIEWS OF MARKETING’S ROLE IN THE COMPANY

a) Marketing as a equal function

b) Marketing as a more important function.

15

Production Finance

Marketing Human resource

c) Marketing as a major function

(d) The customer as the controlling function

(e) The customer as the controlling function &Marketing as the integrative function.

16

OBJECTIVES OF THE RESEARCH

The objective of the study is “To determine the market share of

branded computers”. The main theme was to check the current & future

demand of PCs in the market.

The objective of the topic “Market study of Branded PCs” consists every

major & minor aspect of the term Marketing.

The topic consists valuable findings & suggestions made on the basis of

sequential marketing research process for the marketing mix as Product, Price,

Place, Promotion and intermediary’s channels, services provided by the LG

Electronics India Pvt. Ltd.

I have got major opportunity to explore all the aspect of Marketing under the topic

“Market study of Branded PCs” in particular of LG Electronics India Pvt. Ltd.

These aspects are really treasure for the researcher as well as for the reader of

the research to attain maximum knowledge about the term Marketing.

The main theme of research was to check the demand of PCs and sales of PCs

of other companies in the market. All the market research has to design on the

basis of above discussion.

Following are the main objectives of my research

Know the market share of branded PCs like IBM, HCL, Compaq, PCs, HP

Zenith, LG My PC.

To know the future aspect of LG My PC in NCR region.

The main theme was to check the current & future demand of PCs.

To know the retailers view about the market & customers.

17

COMPANY PROFILE

LG Electronics Inc . LG Electronics, Inc. was established in 1958 as the pioneer in the Korean consumer electronics market. The

company is is a global force in electronics, information and communications products with 2004 annual

sales of US $38 billion (consolidated). With more than 66,000 employees working in 76 subsidiaries in 39

countries around the world, LG Electronics is comprised of four main business companies including

Mobile Communications, Digital Appliance, Digital Display, and Digital Media.

Corporate NameLG Electronics Inc.

EstablishedOctober 1, 1958 (As a private Company)

Corporate OfficeLG Twin Towers 20,Yoido-dong, Youngdungpo-gu Seoul, Korea 150-721 Tel: 82-2-3777-1114URL: http://www.LGE.com

Vice Chairman & CEOS.S.Kim

Business Area and Main ProductMobile Communications CompanyWired -wireless handsets and network services, CDMA, GSM, 3G(WCDMA / cdma2000)

Digital Appliance CompanyAir Condit ioner, Refrigerator, Microwave Oven, Washing Machine, Vacuum Cleaner, Compressor for Air Condit ioner, Compressor for Refrigerator

Digital Display CompanyDigital TV, PDP, Monitor

Digital Media CompanyCD-ROM Drives, DVD-ROM Drives, CD Rewritable Recorder, VCR, DVD Player, Audio, Security System, Recording Media, Video Phone, PC Camera, Banking Automatic System , PCB

Number of Employees66,614(31,614 in Korea/ 35,000 overseas)

18

In India

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 (FIPB). The trend of beating industry norms started

with the fastest ever-nationwide launch by LG in a period of 4 months with the

commencement of operations in May 1997. LG set up a state-of-the art

manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of

Rs 500 Crores. The LG manufactures Color Televisions (CTVs), Washing

Machines, Air-Conditioners (ACs), Microwave Ovens, Refrigerators PCs and

Monitors. In the short span of eight years, LG has achieved the position of a

premium brand in the Indian market and is today the most preferred brand in the

consumer durable and home appliance segments. In 2004, the company's

turnover touched Rs65bn, the highest among any company in this segment in the

country. The company has set a target of achieving a turnover of Rs90bn in

2005. LG wants its Indian unit to generate US$10bn in annual revenue by 2010.

Around 30% of these revenue will come from exports. During the year 2001, LG

also commenced the home production for its Eco-friendly Refrigerators and

established its assembly line for its PC Monitors at its Greater Noida

manufacturing unit. The beginning of 2003 will see roll out of the first locally

manufactured Direct Cool Refrigerator from the plant at Greater Noida.

The Greater Noida manufacturing unit line has been designed with the latest

technologies at par with international standards at Korea and is one of the most

Eco-friendly units amongst all LG manufacturing plants in the world.

19

Financial Performance:

Turnover for

1997RS. 125 Crores

Turnover for

1998RS. 485 Crores

Turnover for 1999

Rs. 1056 Crores

Turnover for 2000

Rs. 1903 Crores

Turnover for 2001

Rs. 2216 Crores

Turnover for 2002

Rs.3000 Crores

Turnover for 2003

Rs.4500 Crores

Turnover for 2004

Rs.6500 Crores

20

LG has been able to craft out in five years, a premium brand positioning in the

Indian market and is today the most preferred brand in the segment

Various studies have shown that the consumer is well informed on the health

awareness front. LG was one of the first companies who recognized the

emerging change in consumer needs and decided to differentiate their products

on the basis of technology, which appealed to the consumer on the basis of

health benefits. Its vision was to become a 'Health Partner' for its consumers

worldwide and therefore formulated its corporate philosophy to make peoples'

lives better, convenient and healthier. The CTV range offered by LG has 'Golden

Eye' technology, which senses the light levels in the room and adjusts the picture

to make it more comfortable for the eyes. The entire range of LG air-conditioners

have 'Health Air System', which not just cools, but keeps pollution out. Similarly,

microwave ovens have the 'Health Wave System', refrigerators have the 'PN

System', which preserve the nutrition in food and washing machines have

'Fabricare System', which takes the health factor down to ones clothes. All the

products offered by the company have unique technologies, developed by its

R&D departments that give customers a healthier environment to live-in.

The year 2001 witnessed LG becoming the fastest growing company in the

consumer electronics, home appliances and computer peripherals industry. The

company had till the month of October 2001 achieved a cumulative turnover of

Rs 5000 Crores in India since its inception in 1997, making it the fastest ever Rs

5000 Crores clocked by any company in the Indian consumer electronics and

home appliances industry. Having achieved this milestone, LG achieved another

benchmark with the first ever sales of One Lakh ACs (Windows and Splits) in a

calendar year. LG is poised to surpass its turnover target of Rs. 2700 Crores this

year and clock a turnover of Rs. 3000 Crores.

21

This year, LG has emerged as the leader in Colour Televisions, Semi Automatic

Washing Machines, Air Conditioners, Frost-Free Refrigerators and Microwaves

Ovens. In Colour Televisions having set the sales target of one million units of

Color Televisions for 2002, LG has already achieved the one million mark in the

month ahead of its target.

LG Electronics India is the fastest growing company in the consumer electronics,

home appliances and computer peripherals industry today. LG Electronics is

continually providing superior technology products & value for money to over 50

lakh households in India.

LG is a No. 1 in the Air Conditioners in India and among the top priority in the

sale of all other consumer electronics. In addition, LG’s Golden Eye television

offers the world’s most advanced picture system.

There are 18 branches offices covering whole of India in the following cities –

Ahmadabad, Bangalore, Bhuwaneshwar, Kolkata, Chandigarh, Chennai, Cochin,

Patna, Guwahati, Hyderabad, Indore, Jaipur, Lucknow, Mumbai, New Delhi,

Haryana, Meerut & Pune. While corporate office is situated at Greater Noida, U.P

& Regd. Office at Okhala Industrial Estate, New Delhi.

New Manufacturing Plant:

Encouraged by this stupendous growth, LG Electronics India started building

another manufacturing facility at Ranjangaon, some 50 km away from Pune in

Maharashtra at an initial investment of Rs1.5bn (US$32mn). Spread over an area

of 50 acres, the sprawling new facility is designed to manufacture CTVs,

Refrigerators, ACs, Washing Machines, Microwave Ovens and Color Monitors.

The plant commenced commercial production in June 2004, three months ahead

of schedule. At present, it manufactures CTVs and Refrigerators besides

22

assembling of a couple of GSM mobile handsets. The Ranjangaon facility is in

line with LG's vision of making India the global export hub. The new plant, in

addition to the Noida factory, will enable LG to expand its consumer reach and

ensure better supply chain management that would translate into a faster

response time. The company aims to pump in Rs5bn in the plant over the next

five years. At present, it has a manpower strength of 2,000 people, and can go

up to 5,000 by the year 2010. The new plant will contribute 10% of LG's total

projected revenue of Rs90bn in 2005. It aims to double this every year and plans

to increase it to 30% by the end of 2007.

Production Capacity:

CTVs - 5 lakh units per annum

ACs - 1 lakh units per annum

Refrigerators - 5 lakh units per annum

Washing Machines - 2 lakh units per annum

Microwave Ovens - 0.5 lakh units per annum

Mobile phone handsets - 10 lakh units per annum

Monitors - 1 lakh units

R&D Thrust:

LG aims to spend 2-3% of its total revenue on Research & Development (R&D)

and hopes to establish India as an R&D hub for consumer electronics, home

appliances and GSM handsets.

At the end of 2004 LG had around 70 people in R&D at Pune, including

Hardware and Software. This will be scaled up to 350 by the end of 2007, and

550 by 2010.

23

At Noida, its R&D strength was 190 at the end of last year. This will be increased

to 210 by the end of 2007, and further to 300 by the end of 2010.

At its Bangalore centre, the R&D strength was 420 by the end of 2004. This will

go up to 900 by the end of 2007, and 1500 by the end of 2010.

By the end of 2010, LG will have 1,690 people doing R&D in Software and

another 660 in Hardware, taking its total manpower strength in R&D to 2,350.

At the end of 2004, LG had spent US$23mn and US$20mn on its Software and

Hardware centres in the country respectively. By the end of 2007, it will increase

to US$67mn and US$43mn. By 2010, it will go up further to US$124mn and

US$88mn.

Market Share:

CTVs - LG has sold the highest ever number of CTVs in a month, and has set a

landmark for the industry by selling over one million CTVs in a single calendar

year. According to the recent retail audit conducted by ORG-GFK (Jan 2005), LG

has consolidated its leadership position in CTVs with a market share of 26.7%.

Washing Machines - In the overall category, LG has emerged and established

itself as the No.1 brand with a market share of 35.2%. In the Semi Automatic

segment, it has attained a market share of 36.5% while in the Fully Automatic

segment it makes up 34.5% of the total market.

Refrigerators - LG leads the market in refrigerators with a market share of 28.1%.

Further in Frost Free LG has emerged as the undisputed leader with a market

share of 35.4%.

ACs - The company currently enjoys a market share of 45% in the Room AC

(Window and Split) segment.

24

Microwave Ovens - LG is the leader in this category with a market share of

41.4%.

IT Products - LG has already become No.1 in the Optical Storage Devices (OSD)

segment and is fast emerging as the market leader in the monitor segment also.

It has around 34% share in Monitors and 44% in OSD apart from 15% in

Personal Computers (PCs).

Financial Results:

Division 2002 2003 2004

  (Rs cr) % contribution

(Rs cr)%

contribution%

growth(Rs cr)

% contribution

% growth

Consumer Electronics

1495 45 2049 46 37 2810 43 37

Home Appliances

1507 45 1996 44 32 2760 42 38

IT 313 10 448 10 43 715 11 60GSM *     7     215 3 2971Total 3315   4500   36 6500   56* LG entered the mobile phone market in October 2003

25

Vision 2010

LG Electronics India aims to become Rs450bn Company in India. Out of this,

Consumer Electronics will account for Rs112.5bn; Home Appliances Rs12.5bn;

IT Rs67.5bn and Mobile Phones Rs157.5bn. Exports will constitute 30% of total

revenue at Rs140bn.

PHILOSOPHY

Complete in the International Market with a Global Mindset.

Maximize value for Customers, Employees and Shareholders.

Pursue the best in the class through Management by Principal.

Contribute to the society through good “corporate citizenship”.

INITIATIVES

Redesign business portfolio.

Develop new strategic business.

Globalization.

Acquire promising differentiated technology.

Cultivate high performing leader.

26

Life-Cycle Assessment (LCA) of LG Electronics

27

Web-based Eco-Design SystemOf LG

28

MARKETING MIX

“Marketing mix is the set of marketing tools that the firm uses to pursue its

marketing objectives in the target market.”

McCarthy classified these tools into four broad groups called 4P’s of marketing:

Product, Price, Place, & Promotion. These marketing variables are shown in the

following figure:

Marketing Mix

Product Promotion

Price Place

29

The First P—‘PRODUCT’

Product is a key element in the market offering. Marketing mix planning being

with formulating to meet target customer’s need & wants. The customer will judge

the offering by three basic elements- features & quality, services mix & quality &

price appropriateness.

Kotler says that ‘A product is anything that can be offered to a market to satisfy

the wants or needs of the consumers.’(*)

Products that are marketed include physical goods, services, events, experience,

persons, place, properties, organizations, information’s & ideas.

A firm is not selling a product. It sells only the ‘product benefit’. Product is most

important variable in the marketing mix of the firm. If the product is sound &

easily acceptable to the market if it satisfies reseller’s need & consumer

preference & is carefully fitted to the needs & desires of the customers, sales

success is assured. Hence ‘product’ is the center of all-marketing policies &

decisions. The marketing planning begins with the product & also ends with the

product. (**)

(*) Philip Kotler, Marketing Management, Millennium Edition, PHI, N.D.

(**) S.A. Shrelekar et al. Principle of Marketing, II ed. Himalaya Publication N.D.

As for as the LG Electronics India Pvt. Ltd. Is concerned near about 11

products. All of these are available in the market. Company plans to increase

their product range in the future. A brief description of some products is as

follows: -

30

Products Name:

1.Air conditioners

2.Audio/Video/Home Theatre

3.Mobile

G1600 C2100 T5100

4.IT Products

31

Note book

5.Television

6.Refrigerators

32

7. Washing Machines

THE SECOND P- ‘PRICE’

33

Sales are only income fore any business concern. But price is the main factor,

which affects the sale of the market. If the price is high, few buyers purchase and

if the price is low many buyers purchase. Therefore a sound pricing policy must

be adopted to have maximum sale revenue. Moreover, it is only through proper

pricing policy the already laid down marketing objective and corporate goals

could be achieved.

Price is the exchange value of a product or service always expressed in tem of

money. In other words, price of a product or service is what the seller feels its

worth on term of money, when offered to a buyer.

To the customer, the price is an agreement between seller & buyer concerning

what each is to receive. The buyer is interested in the ‘price’ of the whole

‘package’ consisting of physical product plus a bundle of expectation and

satisfaction. The consumer has numerous expectations such as after sale

service, replacement of parts, technical guidance & money other benefits.

However, to the seller, price is a source of revenue and a main determinant of

profit. To the seller, price is equivalent to the total product offering. This offering

includes a brand name, a package, product benefits, after sale service and so

on. We can define price as the “money of the product or service agreed upon in a

market transaction”.

So,

Price in money = physical product + bundle of expectations

34

The Price Factor of PCs

India is a price-sensitive market. When the PC was launched in 1984, it cost well

over $4,450 here, and in the late 1980s, the price was around $2,220.

While the price was around $1,100 in the mid-90s, today, a MNC brand with

multimedia costs only around $761.

The Indian market has seen local assemblers stealing a march over their

domestic and multinational computer hardware rivals. More than 50 percent of

total PC shipments are now from unbranded manufacturers, the magazine said.

Four years ago, they accounted for less than 40 percent of the market.

The Indian PC industry has also witnessed the rise and fall of many a domestic

brand. Prominent players who fell out include DCM-DP, Usha, PCL, Sterling and

Unicorp, though many Indian brands including HCL today account for nearly half

of the branded PC sales in the country.

Pricing adopted by the LG Electronics India Pvt. Ltd.

The pricing adopted by LG Electronics India Pvt. Ltd. Can describe under this

subhead: -

Competitive pricing: - LG Electronics India Pvt. Ltd. adopted the method

of pricing called competitive pricing for their PCs. Under this policy, the

price of LG PCs is fixed according to the price of other competitor brand of

the market & the price moves accordingly.

The price list of the IT Products of LG Electronics

India Pvt. Ltd. Is as follows: -

35

GSC 50-5Intel Celron M1.3Ghz, 256RAM, 40GB Hard disk, 15”TFT Display

MRP : RS 37,920

LSC 50-EIntel Pentium M 1.6GHz, Mobile Tech. 256MB RAM 40GB Hard Disk15”TFT Display

MRP :RS 52,480

LSC 50-E Intel Pentium M Processor 1.6GHz Mobile tech. 256RAM, 40 GB Hard disk15”TFT Display

MRP : RS 60,280

XS3-E049NPGIntel 865GV-Chipset

,256 MB-DDR

MRP Rs.39990

XS1-D419HPGIntel 845GV-Chipset

,128 MB-DDR

MRP Rs.29990

XS1-WH19LP1Intel Celeron

2.0,128 MB-DDR

MRP Rs.19990

XS1-WH1SLP2BCI0115Intel Celeron

Processor 2.0 GHz , 128 MB RAM

MRP Rs.18630

36

XS1-VI1SLP1BCI0117 Intel Celeron D Processor 2.50 Ghz, 128 MB RAM, Free Gifts:UPS,Edurite CD Pack

MRP Rs.22790

XT1-2219LP1BCI0115Intel Pentium 4

Processor 2.26 GHz, 128 MB RAM

MRP Rs.23050

XR1-D41SLP1BCI2115Intel Pentium 4

Processor 2.40GHz, 128 MB RAM. Free

Gifts:Tata Walky Phone,UPS

MRP Rs.26950

XR1-D819LP1BCI0115Intel Pentium 4 Processor 2.80 GHz ,128MB RAM , 40GB

HDD,Free Gifts:Laser Printer

MRP Rs.31110

PA_110Single Intel®

Pentium 4 Processor @ 3.0 GHz with

800MHz FSB with Hyper Threading ® Technology,1 X 36 GB U320 SCSI 10K

rpm NHS

MRP Rs 67793

PA_105Single Intel®

Pentium 4 Processor @ 3.0 GHz with

MRP Rs.56293

37

800MHz FSB with Hyper Threading ® Technology ,1 X 80

GB SATA 150 MB/s, 7200 rpm

GCR-8523BCD-ROM Drive

MRP Rs.650

GCE-8525BCD-R/RW Drive

MRP Rs.1250

GCC-4521BCombo Drive

MRP Rs.2250

GSA-4163BDVD Rewriter

MRP Rs.4050

E700S17 inch FLATRON

Monitor

MRP Rs.8500

900B19" Studio works

Monitor

MRP Rs.12500

700ENormal Monitor

MRP Rs.4500

500G15" Studio works

Monitor

MRP Rs.4750

38

L1720B17 inch LCD

MRP Rs.26000

THE THIRD P – ‘PROMOTION’

Promotion is the process of making communication involving information,

persuasion and influence. Promotion has three specific purposes. It

communicates marketing information to the customers, users & retailers.

Promotion persuades and convinces the buyer & enters into this consumer

behavior. Promotional efforts act as powerful tools of competition providing of

cutting edge of its entire marketing programmed. Promotion has been defined

as “the coordinated self initiated effort to establish channel of information &

persuasion to facilitate or faster the sale of goods or services, or the

acceptance of ideas of points of view.” It is a non-price competition.

Broadly speaking, promotion means to push forward or to advance ideas in

such a way as to gain its acceptance & approval. It is an effort by the

marketer to inform and persuade buyer to accept, resell, recommend, or use

the article, services or ideas, which is being promoted. The promotional

activity always attempts to affect knowledge, attitude, preferences & behavior

of recipient, i.e. buyers. The element of persuasion to accept ideas, products,

services etc., is the heart of promotion.

You may have the best product, package & so on. It may have a fair price.

But people will not buy your products, if they have never heard of it, and they

are simply unaware of its existence.

The market must communicate to his prospective buyer & provide them

adequate information in a persuasive language. People must know that the

right product is available at the right place & at the right price. This is the job

39

of promotion in marketing. In essence, promotion is the spark plug in our

marketing mix. It is said that:-

“Nothing until somebody promotes something”

Promotion can create & stimulate demand, capture demand from rivals and

maintain the demand of your products even against keen competition. It is

true that nothing can be sold & nothing can make money (except mint)

without means of promotion. The communication & promotion mix includes

four ingredients viz.

1. Sales promotion.

2. Advertising.

3. Publicity.

4. Personal selling.

5. Trade Fairs & Exhibitions

6. Demonstration

1. Sales promotion

Sales promotion is an important instrument in marketing to lubricate the

marketing efforts. Today, sales promotion is a necessity & not a luxury. It is

not expenditure, it is an investment, which can pay a rich dividends. It is an

integral part of marketing effort.

“In a specific sense, sales promotion includes those sales activities that

supplement both personal selling & advertising & coordinated them and help

to make them effective such as displays, shows and expositions,

40

demonstration and other nonrecurring selling effort not in a ordinary routine.

Sales promotion aims at stimulating the purchasing at the point of sales &

dealer’s effectiveness at the retail channel of distribution.

Sales promotion with the reference of LG Electronics India Pvt.

Ltd.

Company plans to follow two kinds of promotional tool for their products.

They are: -

(a) Dealers promotion

(b) Customers promotion

(a) Dealers promotion

To make a proper channel of distribution & to increase the market share of the

company, corporate plans to promote their dealer or retailers through the various

promotional strategies. Under which they provide a price off, a straight discount

off the list price. The offer encourages retailers as well as distributors to buy a

quantity or carry a new item.

As it is company provide allowances to the distributors for the carrying out of the

company’s brand. An advertising allowance compensates retailers for advertising

the company’s products.

Company also provides free goods to the distributors as the offer for taking up

extra goods or for carrying new products. In the extra company plans to organize

the industrial associations in the form of trade fairs & conventions o stimulate the

sale result of their intermediaries.

41

(b) Customers promotion

Due to the proper attention towards the channel of intermediaries, company is

not able to give proper attention towards consumer’s promotion but they arrange

whole the method of local promotion for the awareness of the local customers.

As it is they also provides demonstration & gifts to the customers shortly by

which products of the company are able to create a spec in the customer’s mind.

2. Advertising

The modern age is an era of competition. To withstand competition manufactures

have to think of new & unfamiliar uses for their products or they have to find out

new buyers for their products. The patent medicine people were the first to prove

what advertisement could do. They sold “Life ka naksa badal de.”

“Advertisement is the art of influencing human action’ the awakening for the

desire to possess & possess your product.”

“Advertisement consists of all the activities in presenting a group a non-personal,

oral or visual, openly sponsored message regarding a product, services or idea.”

Advertising with the reference of LG Electronics India Pvt. Ltd.

At present time the chairman of LG Electronics India Pvt. Ltd. give attention to

make proper distribution channel for their products. It is the company’s policy that

firstly they make proper distribution channel for their products by which any

customer either he/she will be belongs to rural area or belongs to urban area got

the product easily. After to make proper distribution channel corporate plans to

come through the media, because advertisement on media requires heavy

investment.

42

As far as advertisement is concerned LG Electronics India Pvt. Ltd. provides

claim to their respective stockiest of the different districts of the state for the local

awareness / promotion as per required by the stockiest of the districts.

Local promotion includes Banners, Holdings, and Cable TV. Ad. Installing, Trade

fairs, Sponsorship etc. for the awareness of their products to the local customers.

Because of the company doesn’t come through the media in present time i.e.

why company bears all the expanses for the local promotion as required by the

distributors?

It is true, that it is not sufficient in today’s high competitive marketing scenario,

but after the attainment of the proper distribution channel company definitely

come through the media which is a powerful source of demand generation in

today’s tough marketing scenario & it is definitely provides a strong consumer

pull to the new products of the LG Electronics India Pvt. Ltd.

3. Personal selling

A salesman is one who practices the profession of selling. One can learn a lot

about selling and salesmanship just by thinking about definition of personal

selling.

American marketing association defined salesmanship as ‘the process of

including and assisting a prospective buyer to buy a commodity or service

or to act favorably upon an idea that has commercial significance to the

seller.’

E.F.Schumaker defined selling as ‘the process affecting the transfer, with a

profit to buyer & seller, of goods & services that gives such lasting

43

satisfaction that the buyer is predispose to come back to seller for more of

the same.’

Personal selling refers to oral presentation in conversation or more prospective

customers for the purpose of making sales.

Personal selling involves two-way communication, “a well defined problem is

half solved.” Due to seller buyer interaction, personal selling alone can provide

immediate feedback of information, which enables salesman to understand

properly the buyer’s mind, his problems, his needs & his preferences.

Personal selling with the reference of LG Electronics India Pvt. Ltd.

As far as the LG Electronics India Pvt. Ltd. is concerned corporate plans the

effective medium of personal selling for their products. They provide full support

to the salesman for selling their products. Effective communication & facilities

motivate salesman to make a good relationship with the customers. Corporate

actually knows the importance of the phenomenon of the personal selling I.e.

why they tries to implement the ‘A-I-D-A-S’ formula of personal selling. The brief

description of this formula is as follows: -

A: - Attention – The ‘Attention’ of the customer.

I: - Interest -- Create an ‘Interest’.

D: - Desire -- Ignite the ‘Desire’ of the customer.

A: - Action -- Gaining an order.

S: - Satisfaction – Customer ‘Satisfaction’.

4. Trade Fairs & Exhibitions

Trade fares and exhibitions are the oldest forms of sales promotions. Trade fairs

and exhibitions provide companies with the opportunities of introducing and

44

displaying their products. This brings company’s product and consumers in direct

contact. “Seeing is believing” is the essence and basic concept of large-scale

exhibitions and trade fairs. These works at all the three levels viz.; consumer

level and sales force level.

5. Demonstration

Demonstration is those tools of sales promotion, which are used for all the three

levels of sales promotions. Viz., consumer level, trade level & sales force level.

Companies reset to product demonstrations when it comes up with a new

product.

Following are different forms of demonstration:

Demonstration at retail stores

School demonstration

Door to door demonstration

Demonstration to key people

45

THE FOURTH ‘P’ -- PLACE

Marketer has to ensure the availability of its products to the target customers. If a

product is not available to the target customers at the right place, then he/she

may shift to competitive products. So place decision relates to :

(i) Channel decision – what kind of distribution channels a company

adopts between plants & consumer.

(ii) Distribution channel policy – whatever to go for extensive or

selective or exclusive distribution.

(iii) Degree of selectivity among wholesalers & retailers.

(iv) Effort to get the cooperation of the trade.

(v) Physical distribution decision includes logistics, transportation,

warehousing, material handling, bulk packaging; etc.

Meaning of channels of Distribution

Goods produced by the manufacturers must come to the knowledge of the

ultimate consumers. This is arranging by the sales promotion activities like

salesmanship & advertising. By mere knowledge, the prospective consumers are

not happy. The products must reach their hands for actual use. Channels of

distribution are paths through which products move from the point of production

to the point of consumption. Distribution channels are also called Trade

channels.

46

Distribution Channels ofLG Electronics India Pvt. Ltd.

State

Eastern Central Western

Distributors Distributors Distributors

Retailers Retailers Retailers

Customers Customers Customers

47

COMPETITORS

Major Brands of Computers in India

HCL Infosystems

HCL Infosystems Ltd is one of the pioneers in the Indian IT market, with its

origins in 1976. For over quarter of a century, we have developed and

implemented solutions for multiple market segments, across a range of

technologies in India.

The country’s number one desktop brand had yet another great year selling

4.76 lakh units. The company targeted aggressively the B and C class cities and

upped its distribution network. The significant milestones over the last year

include the launch of the low cost Ezeebee Pride that came with an attractive

price tag of Rs 12,990. It attacked all the buying segments with low cost

processors like Via to industry standard P4 HT offerings. The aggression HCL

showed in pricing its product in a way kick-started the price war with brands like

Acer, and vendors like HP cutting down end-user price points. Another significant

development for HCL was its launch of the high-end home PC called Neo,

complementing its Beanstalk range. Neo was also the first desktop brand in India

to come with Windows XP Media Center OS. Meanwhile, on the Notebooks front,

HCL is the exclusive distributor of Toshiba in India whose volumes scaled to

20,000 units, compared to last year’s 11,600 units. With Toshiba aligned to the

Higher end of the spectrum HCL was unable to tap the low and mid-end

segments of the portables. And to plug that, during the year the company made a

low key launch of its own brand of notebooks called eZeebee and Powerlite,

which summed up to 3,000 units during the fiscal. Meanwhile, the banking

vertical did buy aggressively with large mandates from SBI and other

48

nationalized banks. From the government side, nodal agencies like Tamilnadu’

ELCOT also went for large-scale installations. As a result of growing demand for

its offerings, the company is in the process of expanding its Pondycherry plant.

Acer Computer International Ltd

Few IT companies offer the breadth and depth of products that Acer Group does.

Leveraging the vast collective technological resources available - Acer India (Pvt)

Ltd., was incorporated as a wholly owned subsidiary of Acer Computer

International Ltd. on 9th September 1999. Acer's mission in India is to translate

the Group's goal of making computer technology easier to use and more

affordable - to everyone in this country. With a focused customer-centric

approach, Acer in India is offering unmatched uptime for all it's systems through

a vast network of Service points, innovative and user friendly functionality while

continuously lowering barriers that limit the access to the fruits of technology.

Zenith Computers

This Indian company has, over the years, reinvented itself in more ways than

one. In that, FY 2004-05 can be called the year of innovation and new product

launches for Zenith. It launched seven notebooks—calling it the power of seven

—and priced it aggressively, starting from Rs 35K for a low-end model and a

Centrino at the sub Rs 60K. With its state of the art plant in Goa, enith’s

manufacturing capabilities got upped considerably and as a result of the number

of manufacturing best practices the company put in place, it went ahead full

steam. The company claims that its impressive performance was a result of it

introducing higher and better range products, and backing them with superior

quality control and distribution. Meanwhile, on the exports front, the company had

mandates from Bangladesh and other SAARC countries, and its entire product

offerings were certified with CE and FCC norms.

49

IBM

The acquisition of IBM’s PC division by Lenovo in December 2004 was probably

a shocking and unexpected development in the global PC industry. Lenovo took

over IBM’s personal computing division and in the bargain became the third

largest computer company in the world. According to IDC, Lenovo’s 2004 product

volumes stood at 14 mn units. Meanwhile for IBM India, in the first three quarters

of 2004, it shipped close to 39,450 ThinkPad notebooks as against 16,036 the

corresponding period the previous year, representing a 146% growth. What

drove the demand is buying from two kinds of consumers—first time notebook

buyers went for the low cost sub Rs 40k notebooks, while consumers who

already owned notebooks went for high-end wireless notebooks. Overall, IBM’s

market share in the notebook space hovered around 26% during the year.

HP (Hewlett Packard India Ltd.)HP delivers vital technology for business and life. The company's solutions span

IT infrastructure, personal computing and access devices, global services and

imaging and printing for consumers, enterprises and small and medium business.

The 2002 merger with Compaq Computer Corporation forged a dynamic,

powerful team of 140,000 employees with capabilities in 178 countries doing

business in more than 40 currencies and more than 10 languages. Revenues for

the combined companies were $72 billion for the fiscal year that ended October

31, 2002. Chairman and CEO Mark Hurd leads HP, which has corporate

headquarters in Palo Alto, California.

In 1993, Vectra was the first foreign PC to be marketed in India. However, its JV

with HCL ran into trouble and HP reentered the Indian PC market in early 1998.

50

By that time, IBM and Compaq had entered and established their brands at the

premium end. HP immediately made a dent into the market through its

attractively priced PCs bundled with peripherals.

Since then, both HP and Compaq have been engaged in a relentless price war to

woo the homebuyer. According to IDC, HP has moved up to be the No.2 brand

behind HCL in the fourth quarter of 1999.

HP has an assembling facility in Bangalore with a capacity to assemble 20,000

PCs a month. It has a retail presence in 60 cities through 135 stores.

Compaq India

The world’s largest seller of PCs entered India in 1994. Initially, the commercial

segment (large corporations, government, educational & research institutions)

was its main target segment. But with recession in the economy in mid 1990s

and the consequent slashing of IT budgets of corporate, it turned its attention to

the home segment. However, it soon realized that its PCs, although perceived

well on reliability and quality, were considered too expensive. The assemblers

and Indian brands were cornering a major chunk of the market. It slashed prices

of its sub brand Presario from Rs65, 000 to Rs50, 000 to penetrate into the price

conscious Indian households.

At the same time, Compaq is aggressively going after corporate segment by

offering a range of products tailored around services to meet specific needs. Its

merger with Digital Equipment further strengthened its position in the high-end

server market.

51

Wipro Ltd.

Wipro intends to focus more on the lucrative services business in future. Already,

services accounts for more than half of its turnover. In contrast, the contribution

of systems business dropped from 43 per cent to 25 per cent.

It had a joint venture with Acer for marketing the Wipro-Acer brand of PCs.

However, they called it off in 1999.

Wipro has a 500-strong dealer network. It also distributes IBM PCs and Sun

Microsystems.

52

RESEARCH METHODOLOGY

RESEARCHResearch Methodology is a systematic way, which consists of series of actions or

steps necessary to effectively carry out research and the desired sequencing of

these steps. The marketing research is a process of involves a number of inter-

related activities, which overlap and do rigidly follow a particular sequence. It

consists of the following steps:

1. Formulating the objective of the study

2. Designing the methods of data collection

3. Selecting the sample plan

4. Collecting the data

5. Processing and analyzing the data

6. Reporting the findings

53

54

SAMPLE DESIGN

DATA COLLECTION

DATA ANALYSIS

FINDINGS

RESEARCH DESIGN

OBJECTIVES OF THE RESEARCH

SIGNIFICANCE OF RESEARCH

“All progress in born of enquiry Doubt is often better than overconfidence, for it

leads to enquiry, and enquiry leads to invention” is a famous Hudson Maxim in

context of which the significance of research will be understood, increased

amounts of research make progress possible.

The role of research in several fields of applied economics, whether related to

business or to the economy as a whole, has greatly increased in modern times.

The increasingly complex nature of business and government has focused

attention on the use of research in solving operational problems. Research, as an

aid to economic policy, has gained added importance, both for government and

business.

Research provides the basis for nearly all government policies in our economic

system. For instance, government’s budgets rest in part on an analysis of the

needs and desires of the people and on the availability of revenues to meet

needs. The cost of the needs has to equate to probable revenues and this is field

where research is most needed, through research we can devise alternative

policies and can as well examine the consequences of each of the alternatives.

Decision-making may not be a part of research, out of research certainly

facilitates the decisions of the policy maker. Government for dealing with all

facets of the country’s existence and most of these well be related directly or

indirectly to economic condition. The plight of cultivators, the problem of big and

small business and industry, working conditions, trade union activities, the

problems of distribution, even the size and nature of defense services are the

matters which requires research. Thus research is considered necessary with

regard to the allocation of nation’s resources.

55

RESEARCH DESIGN

Research Design specifies the methods and procedures for conducting a

particular study. A Research Design is the arrangement of conditions for

collection and analysis of the data in a manner that aims to combine relevance to

the research purpose with economy in procedure. Research Design is broadly

classified into three types as:

Exploratory Research Design

Descriptive Research Design

Hypothesis testing Research Design

On the basis of the objective of study, the studies which are concerned with

describing the characteristics of a particular individual, or of a group of individual

under study comes under Exploratory Research Design.

Exploratory Research Design

Exploratory Research is also termed as Formulative research studies. The

main purpose of such studies is that of formulating the problem for more precise

investigation. The major emphasis in such studies is on the discovery of new

ideas and insights.

Since our aim is to obtain complete and accurate information in the said studies,

the procedure to be used must be carefully planned. The research design make

enough provision for protection against bias and must maximize reliability, with

due concern for the economical completion of the research study.

In this research design the objective of study is clearly defined and has accurate

method of measurement with a clear-cut definition of population which is to be

studied.

56

SAMPLING DESIGN

It is needless to say that no investigator can study the entire population and

hence selects a few individuals belonging to the population for the purpose of

investigation.

A Sample Design is a definite plan for obtaining a sample from a given

population. It refers to the technique or the procedure adopted in selecting items

for the sample. The main constituents of the sampling design are as below: -

1. Sampling Unit

2. Sample Size

3. Sampling Procedure

4. Collection of Data

SAMPLING UNIT

A sampling framework i.e. developed for the target population will be sampled i.e.

who is to be surveyed.

Retailers & Distributors of PCs

SAMPLE SIZE

57

It is the substantial portion of the target population that are sampled to achieve

reliable results.

I have taken 55 Retailers & Distributors as a sample.

SAMPLING PROCEDURE

The procedure to choose the respondents to obtain a representative sample, a

probability sampling technique is applied for the target – market.

NON-PROBABILITY SAMPLING

It is a purposive sampling which deliberately chooses the particular units of the

universe for constituting a sample on the basis that the small mass that they so

select out of a huge one will be typical or representative of the whole. Non-

Probability sampling technique is used in the study because the random

selection of the universe i.e. all retailers can’t be available randomly.

DATA COLLECTION

PRIMARY DATA

The primary data are those data that are collected afresh and for the first time.

And happen to be original in character. The primary data to be collected for the

study are: -

By Interviewing the retailers & distributors of PCs.

By Structured Questionnaire.

SECONDARY DATA

Secondary data are those data which have already been collected by someone

else and which already had been passed through the statically process. The

secondary data to be collected for the study are: -

58

Publication of the company

Periodical of the company

By Companies Websites

RESEARCH INSTRUMENT

STRUCTURED QUESTIONNAIRE: -

A Questionnaire consist of a number of questions printed or typed n a definite

order on a form or set of forms. It is the set of questions presented to the

respondents for their answers. When the questions have only two alternatives or

of multiple choices, then it is known as closed-end questionnaire, which is hence

used the given study.

Research Step

Step-1

The topic “MARKET STUDY OF BRANDED PCs” was selected and a

synopsis containing the title of the organization & objective was prepared.

Step-2

A questionnaire is prepared for Retailers & Distributors consists of objective

type questions; & given to the respondent.

Step-3

The questionnaire was circulated to a random sample of 55 Retailers &

Distributors in order to find out answers to the given questions.

Step-4

The researcher for data analysis collected the questionnaire duly filled by the

respondents.

Step-5

59

After going through the entire questionnaire, researcher is able to find out

various aspects related with topic.

TABULATION & ANALYSIS OF DATA

Data analysis with the help of questionnaire filled up by the Retailers and

Distributors. The responses are very encouraging. 75% responses are obtained

& analyzed carefully.

DATA ANALYSIS FOR QUESTIONNAIRE OF RETAILERS

Market share of major players in the industry

The study shows the following figures about the market share of major players in the

industry, which is shown in the table and pie chart below:

HCL 12.25HP 10.65LG 10.25IBM 5.78

Wipro 2.53Zenith 3.75Lenovo 10.50Compaq 13.99

Dell 5.25Apple 0.01Others 0.04

Assemble 25.00

60

Market Share of Branded PCs in Industry

The pie chart above shows that. The assembled market share is 48% then HCL share is

14% then comes HP at 12.65% % LG market share is 2.84 in Indian Market. Majority of

people preferred the unorganized assemblers due as they were providing the PCs at low

cost. The difference between assembled and branded PCs was around 18%-20%. After

slash of duties from March 1, 2005 and April 1, 2005 this difference has come down to

3%-4% only. So, new opportunities have opened.

61

The total output of the PCs in 2003-04 & 2004-05

Total Output UnitsCompany 2005-06 2006-07

  Units Units

HCL 273445 300790

HP 227620 250382

IBM 109570 120527

ZENITH 82669 90936

Lenovo 180030 198033

Compaq 585200 731500

Dell 95000 104500

LG 115600 127160

Wipro 46434 51077

Apple 25000 27500

Assembled 102812 113093

Total 1843380 2115498

This chart shows that the maximum turnover of others & assembled computers in

2003-04 & 2004-05 then the turnover of HCL is greater then other brands and LG

turnover in 2004-05 is 95600.

62

Market share of branded PCs

HCL 8HP 6IBM 4

ZENITH 3Lenovo 2Compaq 8

Dell 3LG 10

Wipro 2Apple 2Others 2

Assemble 22Total 55

Market Share of Branded PCs

This pie chart shows that the highest market capture by the HCL in branded market &

its share is 15% then HP covers the 12% market & LG has also capture 9% of the

market in 2004-05 but the assemble computers capture the 37.57% of the market

share. Here the assemble PCs also cover the big market share in this region.

63

Types of PCs sold by the Retailers & Distributors

Branded18 Retailers &

Distributors

Assemble12 Retailers &

Distributors

Both25 Retailers &

Distributors

Total

55 Retailers &

Distributors

45% retailers & Distributors selling both the assembled & branded computers,

33% retailers & Distributors selling only the branded computers & 22% retailers &

Distributors selling only assembled computers.

64

Customer preference of the PC

Customer preference of the PC

Branded, 35, 64%

Assemble, 20, 36%

Branded

Assemble

64% retailers & Distributors said that the customer purchase branded computers

& 36% retailers & Distributors said that the customers purchase the assembled

computers.

Retailers & Distributors

Branded 35

Assemble 20

Total 55

65

No. Brands sold by the retailers & distributors

16% retailers & distributors dealing with only one brand of the computers, 24%

retailers & distributors dealing with two brands of the computers, 35% retailers &

distributorsdealing with 2 to 5 brands of the computers & 25% retailers &

distributors deal with more then 5 brands in the market.

No. Of BrandsRetailers & Distributors

Only 1 9

2 13

2 to 5 19

More the 5 14

Total 55

66

PC Brands Higher In Demand

9% retailers & distributors said that the customer prefer LG, 15% retailers said

that the customer prefer HCL, 13% retailers & distributors said that the customer

prefer HP, 9% retailers & distributors said that the customer prefer Compaq, 5%

retailers & distributors said that the customer prefer Zenith, 4% retailers &

distributors said that the customer prefer Wipro, 9% retailers & distributors said

that the customer prefer IBM & 36% retailers & distributors said that the customer

prefer Assembled computers

BrandsRetailers &Distributors

LG 5HCL 8HP 7Compaq 5Zenith 3Wipro 2IBM 5Assemble 20Total 55

67

Average monthly demand of the LG MyPc

No. Of PCs Retailers

Up to 10 31

10 to 20 14

Above 20 10

Total 55

Average monthly demand of LG MyPc

3114

10

Upto 10

10 to 20

above 20

31% retailers & distributors said that average demand of LG computers is up to

10 units monthly, 14% retailers & distributors said that average demand of LG

computers is 10 to 20 units monthly & 10% retailers & distributors said that

average demand of LG computers is above 20 units monthly.

68

Pricing Factor affects to the customers

Importance Retailers & Distributors

Very much 27

Almost 16

Less 7

No effect 5

Total 55

49% retailers & distributors believe that price is the very much important affecting

factors to the customers, 29% retailers & distributors believe that price is almost

important affecting factors to the customers, 13% retailers & distributors believe

that price is the less important affecting factors to the customers , 9% retailers &

distributors believe that price is not important affecting factors to the customers.

69

Responses on the statement “Customer is always best product seeker.”

23 retailers & distributors are strongly agreed with the statement that customer is

always best product seeker, 16 retailers & distributorsare agreed with the

statement that customer is always best product seeker, 11 retailers & distributors

are disagreed with the statement that customer is always best product seeker &

5% retailers & distributors can’t say any thing on the

statement that customer is always best product seeker.

Strongly agreed 23

Agreed 16

Disagreed 11

Can’t say 5

Total 55

70

Important factors affects to the PC customers

FactorsRetailers & Distributors

Price 12

Quality 16

Brand 14

Availability 4

Advertisement 9

Total 55

22% retailers & distributors believe that price is the important factor at the time of

purchasing a product, 30% retailers & distributors believe that product is the

important factor at the time of purchasing a product, 25% retailers & distributors

believe that brand is the important factor at the time of purchasing a product, 7%

retailers & distributors believe that availability is the important factor at the time of

71

purchasing a product & 16% retailers & distributors believe that advertisement is

the important factor at the time of purchasing a product.

Services makes good relationship with customers

&retailers

93% retailers & distributors said that service provided by the company makes a

good relationship with customers as well as with intermediaries also & 7%

retailers & distributors said that service provided by the company not makes a

good relationship with customers as well as with intermediaries also.

Yes 51

No 4

Total 55

72

73

Importance of profit margin for retailers & Distributors

Most important 33

Important 17

Not important 5

Total 55

60% retailers & distributors believes that profit margin on the product is most

important for the retailers & distributors, 31% retailers & distributors believes that

profit margin on the product is important for the retailers & distributors & 9%

retailers & distributors believes that profit margin on the product is not important

for them.

74

No. of brands confused the customers

Yes 35

No 20

Total 55

64% retailers & distributors are agreed with the statement that large number

of products makes customer confused, 36% retailers & distributors are not

agreed with the statement that large number of products makes customer

confused.

75

Average monthly sale of computers in NCR region

Brands UnitsLG 250

HCL 425HP 375IBM 100

Compaq 125Dell 50

Zenith 85Assembled 850

Total 2260

76

FINDINGS

Indian PC buyers find value in brands

The market for assembled personal computers (PCs) is shrinking fast as branded

majors continue to slash prices and plug the gap. Even as assemblers realize

that they no longer have an edge, either in pricing or after-sales service,

optimists indicate that it's not the end of the road for them yet.

As of now, the message is loud and clear. Gone are the days of 65-70% market

share for the assembling segment when first-time PC buyers preferred going to

standalone hardware professionals. With the crashing prices of branded PCs, the

Indian consumer, including the first time user, is seeing more value in branded

products. While the total Indian PC market has been growing between 25-30%

annually, the assembled segment has actually reported a negative growth over

the past 12 months. Till a year ago, the price difference between branded and

assembled PCs was 15-20%. Now, it is 6-8%. Why will a consumer buy an

assembled PC rather than a branded PC? In the last one-year, PC

manufacturers like HCL, Zenith, PCS and even local brands like Amar PC, have

been successful in bringing operational efficiency in souring hardware

components. Together with lower duty structures and efficient management PC

production, the brands have been able to offer desktop computers at sub Rs

18,000 level for entry-level users.

Branded computer vendor has to pay an average tax of 10-12%. With the

customs duty touching zero on 200 IT hardware components and devices from

March 1, and introduction of value added tax (VAT) from April 1, the simplified

tax structure will help the organized player rather than the unorganized

assemblers.

77

Desktops: The Volumes Game

In the previous year (FY 2003-04) the major trend was the assemblers shedding

market share in favor of the branded players. That trend saw further escalation

during FY 2004-05 with the assemblers’ slice shrinking further as against the

previous year’s 58% to 48% for FY 2004-05. A further downslide is expected on

the assembler space in the days ahead. With the Intel based branded PC coming

into the sub-Rs 18,000 mark, the assemblers found the going difficult. Some took

the more lucrative route by becoming resellers, and in the bargain averaged

better margins.

Demand of the PCs

With the growing need for computerization, branded PC demand in public sector

organizations and in the government is on the rise. Demand from the private

sector, especially in the educational institutes and home segment, is already

rising. The small office home office (SOHO) and small-and-medium enterprise

(SME) segments are also driving hardware demand. The growing popularity of the

Internet has also raised the demand for branded PCs.

About The Assemblers:

The once ubiquitous neighborhood friendly assemblers were losing their face in

the heat of intense competition from the branded segment of the PC industry.

Industry estimates peg the share of assembles for the fiscal at around 48%. A

MAIT-IMRB study said that market share for assembled PCs, which was 57% in

FY 2003-04 was reduced to 44% in the first-half of FY 2004-05. Margin

pressures and the 4% countervailing duty (CVD) that the government imposed

on computer components put great stress on assemblers. In this scenario, better

margins are there for those manufacturers who import fully built PCs as there

would not be multiple taxation. While big players absorbed the tax and duty

changes, the budget-constrained assemblers found the going difficult as

78

customer loyalties shifted more to the branded side. Also, PC buyers found the

service levels deficient with assemblers who were not able to offer quality and

timely service unlike a branded PC manufacturer. In all, tough times are ahead

for assemblers unless they re-invent and align with branded players.

Good News For PC Vendors:Indian PC Market up 34.4% in 2004

The industry recorded the second highest shipments at 33.87 lakh in Asia-

Pacific region

Gartner, an industry expert, expects Indian market to grow by 29.3 per

cent in 2005, due to the strong economic indicators.

32,67,885 desktops were sold in 2004 in India.

PC Industry grew at a healthy rate of 26%, with volumes crossing 3.3 mn

units

Assemblers found the going difficult as cheaper branded PCs gained more

market share

B and C class regions continued to represent a big opportunity for PC

business

In FY 2004-05, assemblers lost share to brands in a big way. Their market

share shrink further—from 58% to 48%

Assemblers and Intel got very aggressive in B and C class towns with

active marketing and promos

79

SWOT ANALYSIS

S: - STRENGHTS

Quality based products.

Experience of international market.

Developed R & D.

Increasing range of products.

Suitable hierarchy of organization.

Reliable products.

Customer satisfaction oriented.

Skilled employees at all level.

Ethical work towards society.

Looking forward for different types of other field to make organization

wealthy.

W: - WEAKENESSES

Unawareness of Brand Name.

Small market segment.

Duplicity of products.

Lesser control over duplicity.

Price discrimination & wrong pricing.

No proper promotional strategies.

Weak market intelligence system.

O: - OPPORTUNITIES

Grasp maximum market share by utilizing well-developed R & D.

Having large no. Of professionals in surroundings.

Customers are highly aware with the brand name & quality of the

products.

80

Rapid increase in demand of PCs, therefore highly potential market is

available.

Well-developed distribution channel in other electronic goods.

T: - THREATS

High competition from other brands.

Market slump.

Customers are highly confused by the promotional strategies followed by

the competitors.

Retailers are demand oriented.

High market share of assembled PCs

Beyond the above description I would like to mention it that in LG

Electronics India Pvt. Ltd. The whole pattern of marketing is quite

effective and is appreciable because they have established so huge

empire with in three to four years.

81

LIMITATIONS

Every research is conducted under some boundations and this research is

not an exception. While doing the research some of the restraints had to

be faced such as: -

The researcher could not cover each & every retailer & distributor because

the sample survey was done.

There might have been tendencies among the respondents to amplify or

filter their responses under the testing conditions.

Since the results have been drawn on the basis of the information

provided by the respondents, chances of error might have crept in.

Since the study involved sampling method, ‘Drop in’ or ‘Go through’ error

might have crept in.

Unintelligent answers or misinterpretation of any question by the

respondent could not be corrected.

Personal Biases of retailers and distributors may affect their responses.

From all surveyed retailers and distributors only 75% have responded

positively.

.

82

CONCLUSION

The outlook for FY 2005-06 is very positive, as vendors are bullish on huge

volume growth in both home and the enterprises, which could further drive the

PC volumes. A consolidation of vendor growth estimates for the ongoing

fiscal puts the volume grow that 32-34%. Intel’s P4 HT configurations will see lots

of traction and will start cannibalizing on its entry-level Celeron based offerings

as one is seeing a declining interest in Celeron based machines. The consumer

will be more willing to pay a small premium for P4 desktops. However, on the

portables front, mobile Celeron will be key to the growth of entry-level offerings

with the education segment expected to drive bigger volumes. Similarly, the

Centrino-based notebooks will further become affordable and will breach the Rs

45K barrier in the ensuing quarters of FY 2005-06. With the impact of the new tax

and duty regimes in place, most vendors consider that it only created a brief

confusion on the part of the vendors, channels, and the consumers, and many

believe that it will not create any major pricing fluctuations. It was a very eventful

year for the PC business in India and one only hopes this revival will drive bigger

growth in the days ahead.

As I made a comparative study of Monthly sale of different brands of PCs like

L.G, HP, Compaq, IBM, HCL, Zenith. I found HCL and HP to be the cutthroat

rival of L.G. This is because of the reason that many other brands deal in mainly

in their branded PCs and concentrate on them. But HCL & HP like the policies of

LG concentrate on the peripherals market too.

According to my study I found some discrepancies by the side of LG Electronics.

Many retailers and distributors complained of not having a proper channel for

sale. The problem arrives when the distributors start selling products to

customers directly, when the customer get the products at some what lower

83

prices from the distributors, then it is very obvious why will they go to the dealer

& retailer.

So a proper channel should be made in which the distributors should supply

products to sub distributors, then the sub distributors should supply products to

the retailers or dealers. And finally it should reach to the customers through

them.

84

SUGGESTIONS AND RECOMMENDATIONSAlmost 50% of the Retailers and distributors contacted complained of the

services given. So satisfaction of these 50% of retailers and distributors is

necessary, so the company should take measures by service section to come up

to their expectations, following are the main suggestions to be followed by the

company to improve the sales.

LG MYPCs price should be less.

Advertising material is not available there is a lack of pamphlets &

brochures for advertising.

Service should be improved.

Onsite service should be also improved.

Proper channeling of products from distributors to retailers.

Consistence policies should be followed regarding distributors.

Direct interaction between service members & dealers should be there.

Improve dispatch and delivery of goods.

Action must be taken if call is not attended after 24 hrs of registration

call.

There should be proper coordination between sales person & service

people, because the sales person says something else & the service

people do something else.

Many dealers are unaware of LG MyPCs so it should be properly

supplied & made known to them.

The sale of LG MyPc is not very good in NCR region, if above suggestion

will be positively accepted by the company then the day is not far when

LG will be the best in this region.

85

APPENDICES

QUESTIONNAIRE FOR RETAILERS & DISTRIBUTORS

We are carrying out a study for the knowledge of the current market share of the

Branded PCs, percentage rise in the sales of branded PCs & the future aspect of

LG MyPc in NCR region. We would appreciate if you will please convey your

view on the different questions referred to this questionnaire. On behalf of the

sponsor of this research study I thank you for sparing your valuable time.

Name of the shop…………………………………………………………..

Address ……………………………………………………………………...

1. Which PC you sell in the market?

a) Branded

b) Assemble

c) Both

2. In your view which PC do the customers prefer?

a) Branded

b) Assembled

3. How many brands you sell?

a) Only1 b) 2 Brands

86

c) 2 to 5 Brands d) More then 5

4. Which PC is having mostly the higher demand?

a) LG b) HCL c) HP

d) IBM e) Compaq f) Zenith

g) Any other……

5. What is the average monthly demand for LG MyPc?

a) Up to 10

b) 10-20

c) Above 20

6. In your opinion how much pricing factor affects to the customer?

a) Very much

b) Almost

c) Less

8. Are you agreed that the customers are always best product seeker?

a) Strongly agreed

b) Agreed

c) Disagreed

d) Can’t say

9. In present scenario which one is the most important factors for customers,

which affects the purchasing decision?

87

a) Price

b) Quality

c) Brand

d) Availability

e) Advertisement

10. Services make good relationship with customers & retailers?

a) Yes

b) No

11. How much importance of profit margin for retailers & distributors?

a) Most important

b) Important

c) Not important

12. Does the large numbers of product makes customer confused?

a) Yes

b) No

13. Monthly Sales In Percentage :

LG

HCL

IBM

Compaq

88

Zenith

HP

IBM

Dell

Wipro

Assembled

15. Opinion/suggestion for LG Electronics India Pvt. Ltd.

------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------

Thanks for giving important details Name & Signature

89

BIBLIOGRAPHY

BOOKS:

1. Kotler Philip, marketing management, millennium edition, New Delhi,

PHI 2002.

2. Sherlekar S.A. et al, Principles of Marketing, Second edition, Himalya

publication, New Delhi.

3. Kothari C.R. Research Methodology, Second edition, Wishwa

Publication, 2002.

CATALOG:

Catalog of LG Electronics India Pvt. Ltd.

MAGAZINES:

(a) Business standard

(b) Business world

(c) Data Quest.

INTERNET:

Information from official website of LG Electronics India Pvt. Ltd.

www.lge.com www.dqindia.com

www.lgindia.com www.pcquest.com

www.lgezbuy.com

90

www.google.com

JOURNALS :

1. INDIAN JOURNAL OF MARKETING

2. ECONOMIC REVIEW

NEWSPAPER:

1. TIMES OF INDIA

2. HINDUSTAN TIMES

3. ECONOMIC TIMES

91

92

93