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EXECUTIVE SUMMARY

The scope of the project is to analyze the current advertising strategy of LG mobiles Pakistan and suggested or recommend advertising plan. First the Industry analysis is discussed in which market share and the market segmentation is included, followed by consumer behavior and consumer buying patterns. Then the focus is shifted on the client. After discussing the target market and Marketing mix (Product, Price, Distribution and Promotion) their current strategy and ads are discussed. It has been observed that LG mobile is perceived to be a low quality brand primarily due to ineffective promotions. Now LG has an opportunity to change this perception considering two major players are leaving the market. The new plan suggested incorporates as to how LG mobiles can seize on this opportunity. The strategies adopted by the competitors and the competitive posture of LG mobiles against it are discussed. In the new marketing mix strategies also emphasizes on the advertising, which is proposed along with its benefits. The media selection for the new strategy along with the implementation of the strategy is also discussed. In the end the challenges in the proposed strategy is discussed followed by conclusion. In our suggested advertising plan we completely discussed budget which is required for advertising and promotion. Budget including cost of promotion, public events, electronic media, print media, place advertising, transit media, etc.

Company Overview

LG Electronics Mobile Communication Company (LG) is a global leader and innovator in the worldwide mobile market, providing consumers with better mobile experiences through its advanced mobile technology and premium handset design capabilities. LG is the largest handset provider in the global CDMA market, and is rapidly expanding its presence in the GSM market. In Pakistan LG mobiles was launched when LG electronics ventured with New Allied Electronics few years back. LG aims to provide the best quality products and technologies for consumers and to become the undisputed leader in the mobile industry. The company is strengthening its presence in the global market and earning favorable reputation as a top-quality brand. LG has combined its cutting edge design and technological capabilities to create a more emotional experience for customers with the launch of its Black Label product under the edge of LG's Black Label series, showed the company's commitment to high-end premium design products. it was also a commercial and industry success, selling more than 7.5 million units last year and winning numerous design award. This year, LG will keep the momentum going by continuing to focus on handset style and usability. LG Electronics pursues its 21st century vision of becoming a true global digital leader who can make its customers worldwide happy through its innovative digital products and services. LG Electronics set its mid- and long-term vision anew to rank among the top 3 electronics, information, and telecommunication firms in the world by 2010. As such, we embrace the philosophy of Great Company, Great People, whereby only great people can create a great company, and pursue two growth strategies involving fast innovation and fast growth. Likewise, we seek to secure three core capabilities: product leadership, market leadership, and people-centered leadership.

Situation Analysis

Industry Analysis & Market Share


Pakistans handset market is primarily a low-end market with majority of volume comes from low-end mobile phones. Another important aspect is that our handset market is extremely price sensitive just like any other handset market of a developing country. To comprehend the local market dynamics, below is the price segmentation analysis along with the market share each price segment comprised upon.

Now let us take a look at the market share of handset manufacturers in Pakistan

These figures might be shocking for some people, since in Pakistan most of the people still think Sony Ericsson is the second major player in the Pakistans handset market which isnt correct any more, As mentioned earlier Pakistan is primarily a low end market with approx 63%-65% volume generates from phones worth less than 3000 and if we look into Sony Ericsson local product portfolio you will not find a single Sony Ericsson model in this price range, strangely enough their majority of portfolio compete in a price segment (High-end) which is just a mere 5% of the total handset market. Motorola is just vanishing in Pakistan, the disaster of their F-3 model started a vicious slide from which they never recovered with the future seems more bleak. The Koreans are playing their cards really well with the success of both Samsung & LG they are really flying high. Especially the success of Samsung is very impressive with a very strong portfolio (the most balance portfolio in the industry covering all price segments with good products). This success in Pakistan has come down from the global success Samsung Mobile has been enjoying from the start of 2007. Their flagship model SGH C-160 targeting the low-end category is making waves in the most lucrative (volume vise) price segment in Pakistans

handset market. With more emphasis on R&D & product development the future looks bright for this giant conglomerate. LG has also succeeded really well through getting direct benefit from the absence of any substantial products by Sony Ericsson. But the question mark on the product quality is hurting the brand to grow exponentially; I believe that they need to work very hard in building their brand image (development of high perceived value through High-end Flagship model) as LG still have very low brand image in comparison with the competition. Nokia, the global leader in the world is still the player to beat in Pakistans handset market with the resounding success of Nokia 1200 and Nokia 1208, this global giant has so much to offer interms of quality products. In Pakistan, Nokia plays a major role in 3 main price categories (Lowend, Low Mid & High) which comprised upon 82% of the total market. If we look at how the current market stands with respect to market share of each handset manufacturer, Nokia still has a sizeable lead though their market share has been deteriorating steadily (from 65% in 2006 to 48% at the end of July, 08). The progress of Samsung has been phenomenal from 8% market share in 2006 to the current 30% with indication of further progression in 2009. LG is the second biggest gainer (approx 17% share for a player who has just been active since 2 years) with most of the success came from its 2 successful models LG KG195 & KG270. Sony Ericsson & Motorola represent 2 of the biggest losers in the handset market with only 5% & 1% share in the market.

COMPETITOR ANALYSIS
Let us now take a look at what companies like Nokia, Samsung and Sony Ericsson is doing in terms of their ad campaigns.

The ads of these companies are not locally made so they have adopted a regional if not a global strategy. Sony Ericsson If we take the example of Sony Ericsson the ads shown in India are the same that run here. Sony Ericsson has a well defined product line meaning everyone knows that Walkman phones of Sony Ericsson are the W series and they Cyber shot phones are the K series so the customers can relate to it. The ads that run of each line are different and tailor made for each segment. Also the tagline of I (logo of Sony Ericsson) has proved to be very effective. It sends a consistent message. Nokia Recently Nokia has introduced a line of music phones known as express music they are introduced to compete with Sony Ericssons Walkman phones. The ads truly depict the core benefits of the products. Like Sony Ericsson, Nokia has a well defined product line. The customers know what to expect from N-series and Eseries. The latter is a sophisticated product line designed for the corporate and N-series for gaming. Samsung Samsung has recently launched Omnia to compete against Apple I phone but surprisingly Samsung hardly advertises its products. The ads we see on television are not on our local

channels. One thing that they do is that they bundle their phones with their other products such as LCDs and home theatre system. So essentially they are cashing in on their strong brand name. When it comes to advertising their phones separately they have no defined plan as such with reference to our market.

COMPETITIVE POSTURE
LG mobiles has an advantage over its competitors that it makes local ads in which usually the medium of communication is Urdu, the reason why it is crucial because it is the most understood language among the masses. Same is not true for its competitors in which the medium of language is English. Ads by LG usually have a local touch which is a double edged weapon because on one hand masses do understand the product and on the other perceive it to be sub standard since it gives a local touch.

PRODUCT LIFE CYCLE

In the product life cycle LG mobiles is currently in the growth stage and this can be substantiated from the data above which says that it has increased its market share to 17% in just two.

Sales History
Many companies announce their results for the first quarter of each year in the second half of April. The situation seems grim at LG's handset division, given the 20% slump in sales in January-March 2010 as compared to the same period of 2009. It is surprised to know that since everything was coming up roses in Q4 last year, when sales hit the record 33.9 million units sold. The volume now seems to have shrunk with nearly 6.8 million to 27.1million cell phones. As a whole, however, the operating profit of LG's mobile division for the first quarter of 2010 remains stable and there is neither major slump nor substantial growth alongside of the financial result registered in the last three months of 2009.

However, LG Mobile Communications Company reported a 19.4 percent decrease in sales revenue, year over year. LG shipped 27.1 million phones, but sales dropped 19.7 percent yearover-year. The company also reported that its operating profits dropped 0.9 percent year-overyear, and attributed investment and marketing expenses to the decline.

Consumer Purchase Process


The mindset of our local mobile phone user is very unique & complex. Influences of socioeconomic & demographic factors, peer pressures & life style etc are the main driving force through which the consumer ends up owning a particular model for his/her communication needs. A rough estimate suggests that in Pakistan the usage span of a new cell phone is mere 3 months (means majority of local users upgrade their cell phone within 3 months time).

Pakistans mobile user can be divided into two main categories (2 basic types of users). 1. Those who are driven by their needs 2. Those who are driven by their aspirations (Users who can easily suffice their communication requirement through a say Rs. 10k mobile phone but instead they choose to carry a cell phones worth Rs. 40K or more) In every mobile phone users mind there is a battle going around, a battle between their needs & aspirations. Some own phones to suffice their communication needs while some own phones to meet their aspiration urges. Now look at the mobile phone user preference chart while making actual decision, the data is a study & extrapolation is used for analysis purposes as it enable us to understand the psyche of local consumer. Also take a look at the chart depicting local consumer purchasing pattern.

The above chart suggests that the consumer is sensitive to a number of factors and it is difficult to point out just one or two.

Purchase Patterns
Following table shows the prominent factors that influence the customers in buying a phone:

It is a high involvement product. We can see that referral and advertisement both play a vital role when a phone is being bought. Building a strong brand image and ensuring a positive word of mouth are the two key success factors for any player in the industry.

Distribution Methods

Direct channel (selling through personal contact of manufacturer) Indirect channel (selling through third party) LG mobiles using both direct and indirect channels but they are more relay on indirect channel. There is no such better infrastructure for E-commerce and other direct distribution channel. They are using indirect methods include, wholesalers, distributors and retailers.

Target market description

LG mobile caters to both high and low end market by providing a diversified product line. This has already been discussed earlier that the market is segmented essentially in four broad categories Low-End Low-Mid High-Mid High-End

Now let us take a look what products of LG caters to which segment

Low-End End

Low-Mid

High-Mid

High-

LG G 1600 GSM KU Price: Rs.2,200.

LG KG 195 Price: 6,000

LG KE 970 Price: 14,000

LG 990

Price: 30,000

Also LG has launched an exclusive phone for females this is in response to Motorola pink phones:

LG KG 270

So it is difficult to say that LG targets a specific segment the range of products is as such that it caters to all broad categories that are there in the market. From advertising perspective the ads shown do not target any segment specifically rather they are generic ads which are a major drawback because you first need to identify the target market according to the product and then make ads accordingly.

Marketing objectives
Sales Target & Need Satisfying Objective
These objectives, intended to reinforce LG's status as a global top tier display maker, include increasing total display sales by 30% to $20bn and tripling productivity by 2010. LG will take a four-part approach to achieving its ambitious goal to increase overall display sales to $20bn by 2010. This includes upholding its image as a premium brand, increasing returns on invested capital, maintaining product leadership and expanding its business portfolio.

LG has established itself as a premium brand by systematically focusing on brand marketing activities, for its products which balance stylish design and smart technology. The company plans to invest in marketing and will take a segmented, regional approach. LG will maximize its return on invested capital through outsourcing, innovative manufacturing technology, and an advanced supply chain management system. In order advance its global supply chain management, LG will control its supply network in real-time and improve network visibility from supply to distribution. In addition, introducing a cell production system will allow LG to manufacture large volumes of a few products or small quantities of niche products, helping the company triple its productivity in two years.

To ensure product leadership, LG is dedicated to creating products that offer differentiated value, based on customer insights

Marketing Mix
Product
LG mobiles provide a diversified line of products of handsets in order to cater to different segments. Currently it is providing a variety of more than twenty phones in the market. They include the phones that were launch with the intention that they would compete with Nokia and other brands and then there are some which are completely different. Some categories of phones that are as follows LG KG series LG KU series LG KF series

LG KM series LG KP series

Within these series variety of sets are offered keeping in mind the pricing and the features that have to be offered with it.

Price
The price range varies from Rs. 2,000-30,000 depending on the features and design of the phones. The nature of the product is as such that it has to cater to various segments and obviously you cannot charge a similar price to all the segments so this variability in price provides flexibility.

Distribution
LG has its own showrooms where their products are displayed and sold but primarily it is sold through distributors namely Advance Telecom and United Mobile. These distributors have contracts with LG mobiles and they also claim the warranty in case of any damage or malfunctioning of the product.

Promotions(Communication) & Role of Advertising


LG has remained one of the top advertisers for the year 2009 yet it has not been able to define its clear position in the market although the market share of LG is increasing but that is due to the fact that one of the major player i.e. Sony Ericsson is leaving the market.

If we look at the promotional campaign of LG mobiles we see heavy use of celebrity endorsement in all their advertisements whether print or media. They have used celebrities like: Abrar Ul Haq Ali Zafar Atif Aslam There is nothing wrong with using celebrity endorsement but if you rely heavily on it and do not highlight the brand, the celebrity becomes bigger than the brand and that is exactly what is happening with LGs campaign. This is one of the reason why LG phones are perceived to be sub standard. The impact on the high end products is greater than the low end products because consumers are not willing to spend a lot of money buying a LG phone. In their ads they do focus on the features of the product but in the end it gives an image of a sales pitch. It does not talk about building brand or building relationship with the customers. According to experts analysis, the issue is not of the product or the quality the issue is of the perception. So far none of their campaigns tries to resolve that issue. Earlier when consumer buying behavior was discussed we observed that the brand name plays a vital role but unfortunately LG has not been able to establish that. Due to ineffective promotions LG has also been a victim of negative word of mouth, people who have not used the phone still have to say something bad about it because they do not like the ads that they have seen on TV or print media. They started of their campaign with Abrar ul Haq and the TV commercial gave an image of a low quality and low price brand although it had all the features to compete with Nokia and Samsung. Then they bought in Atif Aslam in LG KG ads which were much better than the previous one and now they are using Ali Zafar. So that there have been no cohesion between these campaigns and the

message was confusing. It is giving an image that LG is relying on celebrities to compensate for lack of quality in the products. Media Selection As discussed earlier LG mobile has been one of the top three advertisers on TV having said that they do advertise on print media as well but primarily they focus on the TV. Print media includes advertisement in news papers and billboards as well. LG mobile hardly uses radio for advertising.

To sum up the analysis of the current campaign of LG mobiles, here are the salient features of it:

Advertising Plan Suggested


The plan suggested would focus on building a stronger brand image for LG mobiles. The plan would require a more sophisticated and customized approach while designing the campaign.

Advertising Objective

The objective of the plan proposed is to build a strong brand image of LG mobiles so it can penetrate into high end market. This is important because the penetration of LG mobiles in high end market is very less. The ads designed should reach out to the High end market. Currently none of their ads appeal to this class this includes all their celebrity endorsed. Their ads should be focusing on the brand rather than the strategy. One thing that they are doing well is explaining the product features well so I would not recommend changing that considering the nature of the product however the brand LG mobiles should be focused as well.

The plan would also include defining each product line again taking example from its competitors Nokia has a well defined product line( N-series, E-series) but LG doesnt have that all they have is their LG KG series but no one know how it is different from its other products.

Advertising (Creative) Strategy Market positioning


The plan suggested would project LG mobiles as a high quality brand. Considering Sony Ericsson and Motorola are leaving the market and the consumers are running out of alternatives, now would be the best time for LG mobiles to take advantage of the phone. Consumer Behavior analysis and purchase patterns suggest that the perception of the brand is important. The plan would try to improve that.

Advertising Message
The advertising message should show sophistication and they can use punch lines such as Sophistication with Style The appeal of these advertisements should primarily be slice of life. The music especially in the TV ads should be sober yet classy. They focus on the product features which are essential but they also need to focus on the brand as well. This advertisement is from their current campaign and I believe it is a pretty decent ad but somehow these kind of ads are over shadowed by celebrity endorsed ads. They have to do away with too many celebrities that are currently endorsed and move their focus to the brand. Making sophisticated ads like Nokia does is important for a better brand image.

They should not mention the price with their every ad because in the end the product is perceived to be sub standard. If we look at the competitors no one shows the price of the product in the ads. In the ads they have to use more sophisticated colors such as black also they need to come up with a jingle like Nokia and Sony Ericsson has. Jingle leads to an immediate brand recall. LG mobile needs to have one as well which is sophisticated.

Advertising Budget

Trade promotion
For trade sales promotion we have

Clock Calendars Free paint of shop Sign board

Cost of Trade Promotion

CLOCK

25*150= 3750 5000 2000*25=50,000 100*50=5,000

KEY CHAINS PAINT Calendars

Total

63750

Public Events
PLACE OF EVENT: Celebrities: Fortress Stadium Lahore Abrar-ul-Haq Hadiqa Qayani Ali Zafar

Cost
Cost of Arrangement Cost Of Celebrities: Abrar-ul-Haq Hadiqa Qayani Ali Zafar TOTAL COST 5,00,000 6,00,000 7,00,000 22,00,000 5,00,000

Marketing Communication Options

The attempt to inform, perused, and remind to consumer about the brand. We have put over budget for the promotion of this product is 40 million. Advertising

Television Radio Print Online place Promotion Consumer promotion


Trade promotion

Mobile marketing units (MMU) Event Marketing

Electronic Media

There are various channels that show the different program. TVC AD COST Production Cost Hum TV: AAJ TV: Geo TV: one Weeks one Weeks one Weeks 5,00,000 10,13,438 11,64,375 14,95,900 18,90,000 50, 63,712

All Cable Channel in LHR 6 Month Total cost of TVC

Spot ad Radio Cost Radio commercial cost 10,000

Radio commercial will be played 5 times a day in Lahore for 2months Cost of radio add 1, 00,000

Print Media
We are using the most selling newspaper and magazine which have much circulation of daily.

News Paper Jang, Naw-e-waqat, Express, Khabrain Per month cost of news papers Jang Express Khabrain Total 11, 90,700*3 11, 88,000*3 11, 52,000*3 71, 44,200 71, 28,000 69, 12,000 2, 11, 84,200

Magazines
Family Magazine, Akbar Johan. Total 1, 74,000*4 90,000*4 6,96,000 3,60,000 1056000

Place of Advertising
Streamer Hording Transit Ad Mope MOPE Skin cost=600 Rate of 6 month =3,00,000 Total cost =3,00,600

Transit Media Daewoo 5*15,000 75,000

Bus Stops

5*12,000

60,000

Total Cost for Transit Add

11, 35,000

Cost of Bill Boards BILL BOARDS (6 months) LAHORE HOTEL (60*20) FERDOUSE MARKET (10*20) KALMA CHOWK (10*20) PUNJAB UNIVERSTY (10*20) MOUGHAL PURA (10*20) ICHARA (10*20 ) SHADRA (10*20) 6,00,000 5,54,000 4,80,000 5,54,000 4,42,000 9, 00,000 7,20,000

YADGAR THOKAR TOWNSHIP

4,42,000 4,80,000 3,60,000

Streamers 1 cost is2800 and skin cost is 600and 1 streamer cost is3200) (For 15 DAYS) LOCATIONS STREAMER (QTY) FEROZEPUR ROAD (50 streamers ) BAGHWAN PURA ROAD (50 streamers) KANAL (MALL TO DOCTOR HOSPITAL) (300 streamers) BUND ROAD (50 streamers in a Road) RS 1,60,000 1,60,000 9, 60,000 1,60,000

450 STREAMERS

14,40,000

Total Budget for Advertising


Electronic Media Cost of TVC Website cost 50, 63,712 10,000

Cost of Spot ad Print Media Newspaper Magazine


Out Door Media

1,00,000

2, 11, 84,200 7, 92,000

Hording STREAMERS
TRANSIT AD

55, 86,000 14, 40,000 11, 35,000 63,750 3,00,600 27,00,000 3,89,34,262

PROMOTION
MOPE

PUBLIC EVENT
Total

MEDIA We believe the media vehicles used by LG mobiles now are fine but we would like to propose advertising more on print media and radio.

The sole focus of LG mobiles current advertisement is TV. The new strategy would require LG to shift its focus slightly from that to other media as well. LG should advertise more in

Newspapers and radio following the footsteps of Nokia because they are the market leaders right now. Outdoor advertising would include billboards and point of sales (Mobile Markets).

Considering it to be a high involvement product direct mail can be effective and would give a more personal touch to the potential customers.

Evaluation
The strategy proposed can be evaluated through the following Increase in sales of high end products Customer surveys as to how they perceive the brand after the campaign Feedback from distributors

Challenges
The challenges that can be faced while this strategy is adopted can be the strong influence of the Parent company as it would be difficult to create a separate positioning for this particular product line. Considering the recent financial crunch allocating huge costs to advertisements can be a threat. Stepping into high end market would mean additional competition from brands like Blackberry and I phone so that is a major challenge.

Conclusion
LG mobiles are increasing its market share but that is only due to the sales of low end products. At this point market is flooded with counterfeiting phones coming from china. So they must explore new markets or re visit their strategy in their existing markets. It is about time LG focuses on its advertising strategy for high end products and have more sophisticated approach.

This would improve the brand image of LG mobiles in the market. If LG is able to change the perception of the consumers about the brand it will for sure see a growth that is sustainable in the long run as well.

References

http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan %E2%80%99s-handset-market-%E2%80%93-an-analysis/ http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-ofmobile-phone-users-the-battle-of-needs-aspirations/ http://pakgsm.com/lg_mobile_rates.html http://www.lgmobile.com.pk/experiencelg.php http://geo.tv/geopages/ratecardgeonews.htm