India has always been a lucrative market for the MNC due to its size, population and spends habit. With the end of licence raj in 90’s Indian consumers is being wooed by every company on the planet from consumer durables to FMCG to electronics with its products. Lucky Gold star (L.G) as we know it is one of the companies which established it’s shop in India after the end of licence raj in 90’s, and is enjoying a healthy market share, while competing with other electronics giants. The Journey of L.G had its own up & downs but the success it enjoys today is very much due to the strategies in marketing or communication adopted by the group from time to time which has propelled its growth.
LG started its operation in 1947, when its founder Koo In-Hwoi started Lak-Hui (pronounced as Lucky) Chemicals. In 1952 it became the first Korean company to manufacture plastic. The group established another company known as Goldstar Co. Ltd to manufacture radio sets competing with other brands like Murphy, Philips among others. In 1958 both the companies were merged under to form Lucky-Goldstar.
During the licence raj, and with the start of colour-television in India post 1982, there was a tremendous increase in demand for television sets in India. As the state owned broadcast company started beaming sponsored programmes more and more consumers were looking to buy television sets which was a good sign for MNC’s, but the then existing policies did not allow the vendors to establish or sell their brands directly resulting in many JV and new companies. Groups like Toshiba joined hands with Videocon, JVC entered Indian market with Onida and BPL which had the licence to manufacture television set choose Sanyo. The then unknown company L.G joined hands with an India consumer electronics company Bestavision, but the JV failed like many others due to financial aspects as the Indian partner was not financially strong. It tried again in the mid-1990s, this time with the CK Birla group, but this failed, too for some unknown reasons.
The company decided to re-enter Indian market and when the Foreign Investment Promotion Board allowed it to set-up its plant in 1997, it started its operations in India under the brand name of Goldstar and produced T.V sets with Golden-Eye technology. The technology promised strain free T.V viewing experience. Even this time the product could not achieve resulting in hasty retreat.
The failed product (Goldstar) was discontinued and before restarting its operation the group invested considerable time in understanding what went wrong. One thing was clear that restarting with name Goldstar would create a negative brand, thus the operations would be started with a new name.
The other issue which was creating problem for the group was lack of local market knowledge as the group day to day operations were controlled by professionals from outside India.
The other problem which was hurting its interest was that company doing precisely what other white goods brands of the 1990s were doing, that is half-hearted advertising, and pushing the products only when the consumer entered the store
The biggest challenge for the group was lack of proper brand image. While home grown companies like Videocon, Onida had a good head start, the Japanese giants like Sony, Akai, and Panasonic enjoyed a good brand equity, which was simply missing in its case. Add to the fact that group had recently burned its hand with a failed product was rubbing salt to the wounds.
The findings were discussed and a strategy was chalked based on which it was decided that the
a) Group would re-establish itself with a new identity known as L.G.
b) Operations in India would be handled by local hired professionals.
c) To create a better brand image company decided to invest in something which was unheard in Indian market that is, better service and experience for customer.
d) To take on competitors with better pricing options for the price sensitive Indian markets.
With this new insight the company commenced its operation and within a span of 7 years it emerged as a winner beating competition and sending them back to the drawing board to rework on their strategies.
Strategies that made LG’S (Life Good) leader in Indian market
L.G came up with innovative marketing strategies, specifically tailored for Indian markets.
L.G invested heavily in R&D and introduced innovative technologies in consumer electronics and home appliance segment.
L.G launched series of products like “Health Air System” AC’s and “Health Wave system” microwave ovens, backed with strong communication which explained and educated consumers about it.
For the price conscious customers it introduced low priced “Cineplus” and “Sampoorna” range for the rural markets
India where cricket is a religion, L.G decided to connect better with the audience using it as a medium, which included leading cricketers endorsing the brand as well as bundled cricket game on it T.V sets to full the Indian appetite for the game.
L.G shifted its manufacturing base for many products which reduced its cost which was passed on to customer and also helped the company to come up with products like CTVs with Hindi and regional language menus options.
It had a distribution network in which the distributors work directly with the company, and while the competition was still fighting for a space in metro’s, L.G was entering tier II and tier III cities and in reaching out to audience in rural area as well.
The success story of LG is a function not just of what a group must do for success, but also of what its competitors should not do. The super-premium price and positioning of technologically superior brands like Sony and Panasonic made them inaccessible to most of the Indian market. On the other hand, lower-priced Indian brands offered old-generation products; they did not invest sufficiently in R&D because they were not able to launch new products quickly enough to amortize those costs.Posted: 12th December 2012 in Brand Story by Reetesh Singh
Tags: brand, Brand Management, Brand Perception, brand Promise, communication, Competition, LG, marketing, strategy, technology, television