LG in India (B): Product Strategies in an Emerging Economy

Abstract

Entering an emerging economy can provide many opportunities as well as challenges. The external forces, in particular cultural and demographic, are quite different compared to those of a developed economy or the multinational company’s home market. MNEs typically use strategies such as product development, adaptation, and standardization to tackle competition in emerging economies. LG mapped its “go to market capabilities” and product strengths and crafted its strategies for growth in India along these lines. The three product level strategies (core product, product attributes, and support services) are investigated in detail.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Table I: LG No.1 Brand: Indian CTV Market

2000

2001

2002

2003

2004

2005

LG

8

9.2

14.3

18.7

23.8

26.5

Samsung

8.9

10.2

12.1

16.2

16.2

16

Sony

5.3

4.9

5.4

5.2

7.5

9.9

Onida

12.8

11.4

12.3

12

11.6

11.1

Videocon

9.9

9.7

7.5

8.6

8

7.7

BPL

15.3

16

12.8

5.9

2.2

0.9

Others

39.8

38.6

35.6

33.4

30.7

27.9

Table II: Market Share in %

Refrigerator

2002

2003

2004

2005

LG

15.0

21.4

27.3

29.7

Whirlpool

28.4

25.0

21.5

23.7

Samsung

5.9

8.6

11.8

14.2

Godrej

19.2

19.4

19.5

15.2

Videocon

6.6

6.4

5.2

4.9

Direct cool

2002

2003

2004

2005

Whirlpool

29.4

26.5

23.0

25.7

LG

10.8

16.5

23.2

27.2

Godrej

20.9

20.6

20.4

16.3

Samsung

4.0

6.5

9.2

11.1

Videocon

7.1

7.6

6.9

6.8

Frost free

2002

2003

2004

2005

LG

29.6

36.0

36.4

33.5

Samsung

12.2

14.9

17.7

19.0

Whirlpool

25.0

20.6

18.1

20.5

Godrej

13.3

15.8

17.3

13.4

Electrolux

5.1

6.2

6.5

6.6

Air conditioner

2005

LG

36.4

Samsung

15.5

Voltas

9.1

Onida

4.5

Videocon

6.5

Split air conditioner

2005

LG

36.6

Samsung

12.1

Voltas

9.3

Onida

7.2

Videocon

7.6

Window air conditioner

2005

LG

36.3

Samsung

18.4

Voltas

8.9

Onida

5.6

Videocon

6.2

Washing machine

2002

2003

2004

2005

LG

18.7

25.1

33.2

34.7

Whirlpool

23.0

16.9

14.4

14.5

Samsung

10.7

14.6

13.8

14.9

Godrej

14.9

13.2

10.2

9.4

Videocon

8.1

9.8

11.1

9.5

Microwave

2002

2003

2004

2005

LG

33.1

34.6

40.6

40.1

Samsung

28.0

30.8

22.7

21.5

Kenstar

12.3

8.7

10.3

7.9

IFB

3.3

6.9

10.7

7.4

Onida

-

-

0.0

3.4

Colour television

2002

2003

2004

2005

LG

14.3

18.7

23.8

26.5

Samsung

12.1

16.2

16.2

16.0

Sony

5.4

5.2

7.5

9.9

Onida

12.3

12.0

11.6

11.1

Videocon

7.5

8.6

8.0

7.7

Table III: LG Internal Channel Analysis 2005, 2006, 2007

Figure

Table IV: Rural Demand—Consumer Durables (% of All India)

1995–96

2001–02 (Estimates)

Consumer Durables

Scooters

33.1

39.4

Motorcycles

47.3

39.8

Mopeds

52.7

58.2

Cars/Jeeps

2.1

8.0

Automotives

37.9

36.0

Television

54.0

54.5

White goods

23.8

23.9

Fans

50.0

56.9

Low cost items

58.1

60.1

Table V: Share of Second Hand Goods in 2001–02 (Estimates) (% of Total Purchase)

Urban

Rural

Scooters

11.2

16.3

Motorcycles

4.5

12.5

Colour TV

1.8

3.0

Refrigerators

4.0

2.3

Washing Machines

1.4

5.6

Table VI A: Excise Duty on Consumer Durable Items: Trends

Excise Duties on CDs Items

FY

1997

1998

1999

2000

2001

2002

2003

2004

2005

CTVs

20%

18%

16%

16%

16%

16%

16%

16%

B&WTVs

Nil

Nil

Nil

Nil

Nil

4%

8%

8%

16%

AGs

40%

30%

30%

24%

16%

16%

16%

16%

16%

(+6% SED)

(+16% SED)

(+16% SED)

(+16% SED)

(+8% SED)

(+8% SED)

Refrigerators

20%

18%

18%

16%

16%

16%

16%

16%

16%

Washing Machines

20%

18%

18%

16%

16% (+16% SED)

16%

16%

16%

16%

Complied by INGRES

Union Budget for FY2005 has imposed a 2% education cess on customs duties.

Table VII B: Custom Duty on Consumer Durable Items: Trends

Customs Duties on CDs Items

FY

1997

1998

1999

2000

2001

2002

2003

2004

CTVs

50%

40%

40%

40%

35%

35%

30%

25%

B&WTVs

50%

40%

40%

40%

35%

35%

30%

25%

CPTs

30%

30%

30%

35%

35%

35%

30%

25%

ACs

50%

40%

40%

40%

35%

35%

30%

25%

Refrigerators

50%

40%

40%

40%

35%

35%

30%

25%

Complied by INGRES

Union Budget for FY2005 has imposed a 2% education cess on customs duties.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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