Thursday, October 15, 2009


Shin’s visit to some villages is paying huge dividends for LG today. Here, he gives a few strategies that helped LG stay ahead

In May 2009, Moon Bum Shin, Managing Director, LG India visited a couple of villages in far flung areas. He wanted to get a handle on the needs and demands of the rural consumer so that LG could adapt their product portfolio accordingly. The result of that tiring yet illuminating journey is now ready. The Korean consumer durable behemoth is all set to roll out a 50-litre refrigerator (by the festive season) based on the insights that Moon Bum Shin gained during his rural sojourn. Wondering why we are telling you their future plans instead of throwing light on their strategies during the last year to beat the slowdown. Well, that’s because Shin and co. have followed a similar ‘insightful’ strategy even amidst the difficult times.

Ask Shin and pat comes the reply, “As an organisation we were well prepared for the slowdown. So we focused heavily on launching insight-based products and named them ‘Stars of India’, which captured the needs of the Indian consumers.” The head honcho of LG India goes on to elaborate the three-pronged strategy of LG during the slowdown months. The first, of course, was focus on product innovation. LG has injected investments worth Rs.60 crore in R&D over the last one year. Besides, the company also launched a strong retail drive, working hard on giving face lifts to all its retail stores. Not only that, LG’s corporate team went all out on imparting ‘product demonstration’ training to all its store employees. The bid was to equip them to better handle consumers. Explains Shin: “The revamp cost for retail stores was not high. But we spent huge money on training manpower. The aim was to effectively channlise our resources into brand building.”

The third strategy that LG adopted was to expand its marketing focus from merely urban to India’s vast rural markets, a move that increased their marketing spends by at least 10% during the year. Avers Shin, “We have leveraged cricket as a property very well during the last year with our ‘Lead XI’ campaign during the Twenty20 World Cup, where LG was the official sponsor. That association really helped us,” explains Shin. Not only this, the consumer durable major specifically targeted public sector employees as their target audience in the latter half of 2008, primarily wishing to cash in on the 6th Pay Commission largesse. These master moves have paid huge dividends for LG in the form of a smashing 18% growth in the first three months of 2009, much higher than other competitors in the segment.

Given the success of LG’s new rural strategy, honchos at the Korean major’s corporate headquarters are now aiming at about 40% sales contribution from rural markets in coming times. In the calendar year 2008, the company posted a turnover of Rs.10,730 crore. But now, LG has tightened its belt to increase that figure by 25% and take it to a mouth-watering Rs.13,000 crore by end 2009.

Did anyone ever really tell them about a slowdown?!

Neha Saraiya

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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