LG sees 25% growth despite 2-4% price hike
Korean electronics major LG india will close '07 with revenues of Rs 9,500 cr & is eyeing sales of $3 bn in '08.
By Vivek Sinha & Writankar Mukherjee, TNN |
NEW DELHI/KOLKATA: After experiencing two consecutive years of lower-than-targeted sales, India’s top consumer electronics player LG Electronics India is back on the growth track.
The Indian arm of the South Korean chaebol is all set to close 2007 with revenues of about Rs 9,500 crore and is now eyeing sales of $3 billion in 2008, translating into a growth of about 25%, the fastest increase in four years.
This in spite of a price hike.
LG is planning to roll out a new pricing structure, making its products getting dearer by 2-4%, next month. “The new pricing structure is due to rising costs of inputs such as picture tubes for televisions, low profitability in refrigerators and the overall strategy to reposition LG as a premium brand,” said LG Electronics India director (sales & marketing) V Ramachandran.
In the coming year, LG is also repositioning its marketing spends, resulting in a significant increase in its mass media expenditure for better brand visibility. LG had a marketing budget of Rs 320 crore in 2007 with a 60:40 split in favour of below-the-line activities. Next year, the company plans to increase the share of mass media even as overall marketing spends would be raised by just about 10-15%.
LG, which has achieved sales of Rs 8,780 crore during January-November 2007, looks to double its turnover and bottom line by 2010. “We want to double our present turnover and profitability by 2010. We will invest about $30 million in 2008 which may be further increased,” Mr Ramachandran told ET. To achieve this, the company intends to prise open new sales channels such as tying up with realtors to sell its products in new homes, expand its home appliances portfolio as well as beef up employee productivity.
“This is a global business model which LG plans to replicate in India,” said Mr Ramachandran. LG is going to expand its product portfolio in India with focus on IT, flat panel display (FPD) and mobile phones. “We will also expand our home appliances segment with new products such as wine cellars and vacuum cleaners. Besides, we will soon launch 22-inch LCD TV and 32-inch Plasma TV,” Mr Ramachandran said.
He said the company has identified FPDs and GSM handsets as future growth segments in India. While LG’s FPDs are growing at 514%, the handset category is witnessing growth upwards of 300%. “We want to position ourselves as a premium player in the IT & GSM market” he added.
LG India is going to launch its global blockbuster 5-megapixel touch-screen mobile handset ‘Viewty’ this month. “This will be priced at Rs 22,000 in India. It will be a little cheaper than the price points at which it has been launched in the West,” Mr Ramachandran said.
Explained Mr Ramachandran, “Deployment of senior management in new offices would help tap the market opportunities better. We have also given additional responsibilities to our regional managers who were earlier just regional sales heads.”
The Indian arm of the South Korean chaebol is all set to close 2007 with revenues of about Rs 9,500 crore and is now eyeing sales of $3 billion in 2008, translating into a growth of about 25%, the fastest increase in four years.
This in spite of a price hike.
LG is planning to roll out a new pricing structure, making its products getting dearer by 2-4%, next month. “The new pricing structure is due to rising costs of inputs such as picture tubes for televisions, low profitability in refrigerators and the overall strategy to reposition LG as a premium brand,” said LG Electronics India director (sales & marketing) V Ramachandran.
In the coming year, LG is also repositioning its marketing spends, resulting in a significant increase in its mass media expenditure for better brand visibility. LG had a marketing budget of Rs 320 crore in 2007 with a 60:40 split in favour of below-the-line activities. Next year, the company plans to increase the share of mass media even as overall marketing spends would be raised by just about 10-15%.
LG, which has achieved sales of Rs 8,780 crore during January-November 2007, looks to double its turnover and bottom line by 2010. “We want to double our present turnover and profitability by 2010. We will invest about $30 million in 2008 which may be further increased,” Mr Ramachandran told ET. To achieve this, the company intends to prise open new sales channels such as tying up with realtors to sell its products in new homes, expand its home appliances portfolio as well as beef up employee productivity.
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For starters, the company is planning to foray into the ‘in-built kitchen’ segment for which it will tie up with builders and architects. In fact, such partnerships will be used to sell home appliances and consumer durables as well. “This is a global business model which LG plans to replicate in India,” said Mr Ramachandran. LG is going to expand its product portfolio in India with focus on IT, flat panel display (FPD) and mobile phones. “We will also expand our home appliances segment with new products such as wine cellars and vacuum cleaners. Besides, we will soon launch 22-inch LCD TV and 32-inch Plasma TV,” Mr Ramachandran said.
He said the company has identified FPDs and GSM handsets as future growth segments in India. While LG’s FPDs are growing at 514%, the handset category is witnessing growth upwards of 300%. “We want to position ourselves as a premium player in the IT & GSM market” he added.
LG India is going to launch its global blockbuster 5-megapixel touch-screen mobile handset ‘Viewty’ this month. “This will be priced at Rs 22,000 in India. It will be a little cheaper than the price points at which it has been launched in the West,” Mr Ramachandran said.
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The key strategies being implemented include increasing the number of its regional offices from six to eight. LG has split its southern regional office into two, one comprising the states of Tamil Nadu and Kerala and the other consisting of Andhra Pradesh and Karnataka. In addition, it has split one of its northern regional office by making Uttar Pradesh a separate region after spinning it out from Delhi NCR. The other four regional offices takes care of East, Gujarat and Madhya Pradesh, Maharashtra & Goa and Punjab, Haryana & Rajasthan respectively.Explained Mr Ramachandran, “Deployment of senior management in new offices would help tap the market opportunities better. We have also given additional responsibilities to our regional managers who were earlier just regional sales heads.”
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