MARKETING POLICIES IN

LG ELECTRONICS INDIA Pvt. Ltd.

SUMMER TRANNING PROJECT REPORT SUBMITTED

TOWARDS PARTIAL FULFILLMENT
OF
BACHELOR OF BUSINESS ADMINISTRATION
(Affiliated to Ch. Charan Singh University, Meerut)

Academic Session
(2005-2008)

Under the Guidance Of:-

Deputy Manager MRS Geeti Sharma
Sanjeev Srivastava IMS Ghaziabad

Submitted By:-
Mansi Aggarwal
9359622

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INSTITUTE OF MANAGEMENT STUDIES
C-238, BULANDSHAHR ROAD, LAL QUAN, PB NO. – 57, GHAZIABAD-201009

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 Acknowledgment

The successful comletation of any work would be always be incomplete unless

we mention the valuable cooperation and assistance of those
people who were a source of constant guidance and
encouragement, they served as bacon light and crowned our
efforts with success.

I would like to extend my sincere gratitude to our MRS GEETI SHARMA for his
guidance

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 Declaration by the Candidate
MANSI AGARWAL student of BBA VI of institute of management and studies
(I.M.S),Ghaziabad (2005-2008) bearing enrollment number . I
---------------- hereby declare that the research project report titled “
TO determine the market share of branded computers”
Is the outcome of my own work and same has not been submitted to any
university / institutions for the award of any degree or any
professional diploma.

Date: ( )
Sign of candidate

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 TABLE OF CONTENTS

EXECUTIVE SUMMARY 5
• INTRODUCTION 6
• OBJECTIVE OF RESEARCH 15
• RESEARCH METHODOLOGY 53
• TABULATION& ANALYSIS OF DATA 60
• FINDINGS 76
• SWOT ANALYSIS 79
• LIMITATIONS 81
• CONCLUSION 82
• SUGGESTIONS AND RECOMMENDATIONS 84
• APENDICES 85
BIBLIOGRAPHY 89

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 Executive Summary
In today’s scenario, Marketing of a product is acknowledged as one of the most
potent sources in contributing directly and significantly in the
growth of any organization.
This project attempts to explore the most effective “Marketing Strategy” for
smooth sailing of an organization.
The objective of the study is “To determine the market share of branded
computers”. The main theme was to check the current & future demand of PCs
in the market.
The objective of the topic “Market study of Branded PCs” consists every
major & minor aspect of the term Marketing.
The topic consists valuable findings & suggestions made on the basis of
sequential marketing research process for the marketing mix as Product, Price,
Place, Promotion and intermediary’s channels, services provided by the LG
Electronics India Pvt. Ltd.

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 INTRODUCTION

ABOUT PC INDUSTRY
The PC industry is one of the strongest in the world. There is probably no other
type of product that is so technologically sophisticated, sells for so much money,
and yet is sold by so many companies for so little profit. The severe competition
in the industry is the reason why those who deal with PC vendors encounter so
many problems.

In this report we have tried to bring forth the major areas in which a new PC
vendor can enter and penetrate in the market. The segments that are important
to the PC vendors, their buying behavior, purchasing power, etc. are segregated
in this report.

With the presence of so many PC vendors in the organized and unorganized

sector that consists of assembled PC market it is not very easy to launch a new
company in the same field.

Over the last decade or so, the PC industry in India has undergone a sea
change. The entry of MNC brands in the 1990s changed the rules of the game,
as the industry at that time was predominantly the domain of assemblers and
some local manufacturers. Given these dynamics, the going, at least initially, was
not easy for the Compaqs, HPs and the IBMs, as they had to struggle to build
brands as well as to give their offerings as much of a local flavor as would make
them attractive to the Indian buying segments. Moreover the MNCs also had to
combat the goodwill, the trust and the loyalty that the friendly neighborhood
assembler had built over the years with clients cutting across the big through

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small-enterprise markets. But as the years rolled on, the branded- PC industry
secured what today constitutes a major slice of the Indian PC market pie.

Today it is fashionable to talk about the new economy. Now a days businesses
around the globe are operating in globalize economy because most of the
economies of the world have become broader. The old economies were simple
then todays. It was based on industrial revolution and managing manufacturing
industries. But the new economy, in contrast, is based on the Digital Revolution
and the management of information. Things are moving at a nano second pace,
markets for every product category is highly competitive and consumers are
more empowered and having awareness regarding products offered in the
market by manufacturers.

With the growing need for computerization, branded PC demand in public sector
organizations and in the government is on the rise. Demand from the private
sector, especially in the educational institutes and home segment, is already
rising. The small office home office (SOHO) and small-and-medium enterprise
(SME) segments are also driving hardware demand. The growing popularity of
the Internet has also raised the demand for branded PCs.

In such circumstances it is very difficult to survive for the small players. But
MNCs like LG, HCL, HP, IBM Computers, etc. are doing good job and earning
heavy profit consider the economy of our country. It is also emerging into a
powerful economy and after a decade or so; India will be an economic power of
this region.

The main aim of my study is that find out the market share of branded PCs &
future aspect of LG MyPc in Indian market. For this purpose I critically examined

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the sales of different brands of PCs like HP, LG, IBM Compaq, HCL, PCs, Zenith,
Wipro.

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 INTRODUCTION OF MARKETING

In the decades of 50’s marketing was a far simpler subject. Consumer marketing
largely operated on mass of marketing principle & business-marketing principle
concerned itself will how to build the sales force. In those days, marketers faced
a number of tough decisions. They have to determine products features &
quality, establishes accompanying services set the price, determine the
distribution channel.

Many managers think of marketing as a company department whose job is to

analyze the market, discern opportunities, formulate marketing strategies,
develop specific strategies & tactics, propose a Budget & establish a set of
control. But there is more to marketing: marketing must also push the rest of the
company to be customer oriented & market driven.

Marketing is more then a company department; it is an orderly & insightful

process for thinking about and planning for market. The process is applicable to
more then just goods & services. Anything can be marketed – ideas, events,
organizations, places, personalities.

The process is being with researching the relevant marketplace to understand it’s
dynamics and to identify opportunities to meet existing or latent needs. It involves
segmenting.

The marketing & those segments that the company can satisfy in a superior way.
It involves carrying out a plan, evaluating the results & making further
improvements.

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A social definition shows the role marketing plays in society. One marketer said
that marketing’s role is to “deliver a higher standard of living”. A social definition
that serves our purpose follows: -

“ Marketing is a societal process by which individual & groups obtain what they
need and want through creating, and freely exchanging products & services of
value with others.”

For a managerial definition, marketing has often been described as ‘the art of
selling products.’ But people are surprised when they hear that the most
important part of marketing is not selling! Selling is only a tip of the marketing
iceberg. Peter Drucker, a leading management theorist, puts it this way:
There will always, one can assume, be need for some selling. But the aim of
marketing is to make selling superfluous. The aim of marketing is to know & and
understand the customer so well that the product & service fits him & sell itself.

Ideally, marketing should result a customer who is ready to buy. All that should
be needed than is to make the product available.

Coping with exchange processes calls for a considerable amount of work and
skill. Marketing management takes place when at least one party to a potential
exchange thinks about the means of achieving desired responses from other
parties. Marketing management as the art & science of choosing target market &
getting, keeping & growing customers through creating, delivering and
communicating superior customer value.

Evolution through the changes: -

Marketing activities should be carried out under well – through – out philosophy
of efficient, effective, & socially responsible marketing. However, there are five
competing concepts under which organizations conduct marketing activities: the

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production concept, product concept, selling concept, marketing concept &
societal marketing concept.

THE PRODUCTION CONCEPT: -

The production concept holds that customers will prefer products that are
widely available inexpensive.

Managers of production based business concentrate on achieving high

production efficiency, low cost, & mass distribution. They assume that consumers
are primarily interested in product availability and low prices.

It is used when a company wants to expand the market. This orientation makes
sense in developing countries, where consumers are more interested in obtaining
the product than in its feature.

THE PRODUCT CONCEPT :-

The product concept holds that consumers will prefer those product that offers
the most quality, performance, or innovative features.
Managers in these organizations focus on making superior products & improving
them over time. They assume that buyers admire well-made products and can
appraise quality and performance. However, these managers are sometimes
caught up in a love affair with their product and do not realize what the market
needs.

THE SELLING CONCEPT:-

The selling concept holds that consumers and businesses, if left alone, will
ordinarily not buy enough of the organization’s products. The organization must
therefore, undertake an aggressive selling and promotion effort.

This concept assumes that consumers typically show buying inertia or resistance
& must be coaxed into buying. It also assumes that the company as a whole

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battery of effective selling & promotion tools to stimulate more buying. The selling
concept is also practiced in the nonprofit area by fundraisers, college admission
offices, & political parties. Most firms practice the selling concept when they have
over capacity. Their aim is to sell what they make rather than make what the
market wants.

THE MARKETING CONCEPT: -

The marketing concept is a business philosophy that challenges the three-
business orientation. The marketing concept holds that the key to achieving its
organizational goals consists of the company being more effective than
competitors in creating, delivering & communicating customer value to its chosen
target market.

The marketing concept has been expressed in many colorful ways:

“Meeting needs carefully”
“Putting people first”(British Airways)
“Partners for profits” (Milliken & company)
The marketing concept rests on four pillars: target market, customer needs,
integrated marketing, and profitability.

THE SOCIETAL MARKETING CONCEPT: -

The societal marketing concept holds that the organization’s task is to determine
the needs, wants & interests of the target market & to deliver the desired
satisfaction more effectively & efficiently than competitors in a way that preserves
& enhances the consumer’s & the society well being.

The societal marketing concept calls upon the marketers to build social & ethical
consideration into their marketing practices. They must balance & juggle the
often-conflicting criteria of company profit, consumer want satisfaction, and public
interest.

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Yet a number of companies have achieved notable sales & profit gains by
adopting & practicing the societal marketing concept.
We can say with some confidence that “the marketplace isn’t what it used to be.”
It is changing radically as a result of major societal force such as technological
advancement, globalization, and deregulation.

Customers increasingly expect higher quality & service & some customization.
They perceive fewer real product differences and show less brand loyalty. They
are showing greater price sensitivity in their search for value.

Brand manufactures are facing intense competition from domestic & foreign
brand, which is resulting in rising promotion cost & shrinking the profit margin.
Store-based retailers are suffering from an over saturation of retailing. They are
facing growing competition from catalog houses; direct-mail firms, newspapers,
magazine & TV direct customer to ads & the Internet. They are marketing an
“experience” rather than a product assortment.

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EVOLVING VIEWS OF MARKETING’S ROLE IN THE COMPANY

Production Finance

Marketing Human resource

a) Marketing as a equal function

b) Marketing as a more important function.

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c) Marketing as a major function

(d) The customer as the controlling function

(e) The customer as the controlling function &

Marketing as the integrative function.

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 OBJECTIVES OF THE RESEARCH
The objective of the study is “To determine the market share of
branded computers”. The main theme was to check the current & future
demand of PCs in the market.

The objective of the topic “Market study of Branded PCs” consists every
major & minor aspect of the term Marketing.

The topic consists valuable findings & suggestions made on the basis of
sequential marketing research process for the marketing mix as Product, Price,
Place, Promotion and intermediary’s channels, services provided by the LG
Electronics India Pvt. Ltd.

I have got major opportunity to explore all the aspect of Marketing under the topic
“Market study of Branded PCs” in particular of LG Electronics India Pvt. Ltd.
These aspects are really treasure for the researcher as well as for the reader of
the research to attain maximum knowledge about the term Marketing.
The main theme of research was to check the demand of PCs and sales of PCs
of other companies in the market. All the market research has to design on the
basis of above discussion.

Following are the main objectives of my research

 Know the market share of branded PCs like IBM, HCL, Compaq, PCs, HP
Zenith, LG My PC.
 To know the future aspect of LG My PC in NCR region.
 The main theme was to check the current & future demand of PCs.
To know the retailers view about the market & customers.

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 COMPANY PROFILE

LG Electronics Inc.
LG Electronics, Inc. was established in 1958 as the pioneer in the Korean
consumer electronics market. The company is is a global force in electronics,
information and communications products with 2004 annual sales of US $38
billion (consolidated). With more than 66,000 employees working in 76
subsidiaries in 39 countries around the world, LG Electronics is comprised of
four main business companies including Mobile Communications, Digital
Appliance, Digital Display, and Digital Media.

Corporate Name
LG Electronics Inc.

Established
October 1, 1958 (As a private Company )

Corporate Office
LG Twin Towers 20,Yoido- dong, Youngdungpo- gu Seoul, Korea 150-721
Tel: 82-2-3777- 1114
URL: http://www.LGE.com

Vice Chairman & CEO

S.S.Kim

Business Area and

Main Product
Mobile Communications Company
Wired -wireless handsets and network servic es, CDMA, GSM, 3G(WCDMA / cdma2000)

Digital Appliance Company

Air Conditioner, Refrigerator, Microwav e Ov en, Washing Mac hine, Vac uum Cleaner, Compress or
for Air Conditioner, Compressor for Refrigerator

Digital Display Company

Digital TV, PDP, Monitor

Digital Media Company

CD-ROM Drives, DVD-ROM Drives, CD Rewritable Recorder, VCR, DVD Player, Audio, Sec urity
System, Recording Media, Video Phone, PC Camera, Banking Automatic System , PCB

Number of Employees
66,614(31,614 in Korea/ 35,000 overseas )

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 In India
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics,
South Korea was established in January 1997 after clearance from the Foreign
Investment Promotion Board (FIPB). The trend of beating industry norms started
with the fastest ever-nationwide launch by LG in a period of 4 months with the
commencement of operations in May 1997. LG set up a state-of-the art
manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of
Rs 500 Crores. The LG manufactures Color Televisions (CTVs), Washing
Machines, Air-Conditioners (ACs), Microwave Ovens, Refrigerators PCs and
Monitors. In the short span of eight years, LG has achieved the position of a
premium brand in the Indian market and is today the most preferred brand in the
consumer durable and home appliance segments. In 2004, the company's
turnover touched Rs65bn, the highest among any company in this segment in the
country. The company has set a target of achieving a turnover of Rs90bn in
2005. LG wants its Indian unit to generate US$10bn in annual revenue by 2010.
Around 30% of these revenue will come from exports. During the year 2001, LG
also commenced the home production for its Eco-friendly Refrigerators and
established its assembly line for its PC Monitors at its Greater Noida
manufacturing unit. The beginning of 2003 will see roll out of the first locally
manufactured Direct Cool Refrigerator from the plant at Greater Noida.
The Greater Noida manufacturing unit line has been designed with the latest
technologies at par with international standards at Korea and is one of the most
Eco-friendly units amongst all LG manufacturing plants in the world.

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 Financial Performance:
Turnover for
RS. 125 Crores
1997
Turnover for
RS. 485 Crores
1998
Turnover for
Rs. 1056 Crores
1999
Turnover for
Rs. 1903 Crores
2000
Turnover for
Rs. 2216 Crores
2001
Turnover for
Rs.3000 Crores
2002
Turnover for
Rs.4500 Crores
2003
Turnover for
Rs.6500 Crores
2004

Turover of the LGEIL

7000
6500
6000
Turover in Crores

5000
4500
4000
3000 3000
2000 2216
1903
1000 1056
485
0 125
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year

LG has been able to craft out in five years, a premium brand positioning in the
Indian market and is today the most preferred brand in the segment

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Various studies have shown that the consumer is well informed on the health
awareness front. LG was one of the first companies who recognized the
emerging change in consumer needs and decided to differentiate their products
on the basis of technology, which appealed to the consumer on the basis of
health benefits. Its vision was to become a 'Health Partner' for its consumers
worldwide and therefore formulated its corporate philosophy to make peoples'
lives better, convenient and healthier. The CTV range offered by LG has 'Golden
Eye' technology, which senses the light levels in the room and adjusts the picture
to make it more comfortable for the eyes. The entire range of LG air-conditioners
have 'Health Air System', which not just cools, but keeps pollution out. Similarly,
microwave ovens have the 'Health Wave System', refrigerators have the 'PN
System', which preserve the nutrition in food and washing machines have
'Fabricare System', which takes the health factor down to ones clothes. All the
products offered by the company have unique technologies, developed by its
R&D departments that give customers a healthier environment to live-in.
The year 2001 witnessed LG becoming the fastest growing company in the
consumer electronics, home appliances and computer peripherals industry. The
company had till the month of October 2001 achieved a cumulative turnover of
Rs 5000 Crores in India since its inception in 1997, making it the fastest ever Rs
5000 Crores clocked by any company in the Indian consumer electronics and
home appliances industry. Having achieved this milestone, LG achieved another
benchmark with the first ever sales of One Lakh ACs (Windows and Splits) in a
calendar year. LG is poised to surpass its turnover target of Rs. 2700 Crores this
year and clock a turnover of Rs. 3000 Crores.

This year, LG has emerged as the leader in Colour Televisions, Semi Automatic
Washing Machines, Air Conditioners, Frost-Free Refrigerators and Microwaves
Ovens. In Colour Televisions having set the sales target of one million units of

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Color Televisions for 2002, LG has already achieved the one million mark in the
month ahead of its target.

LG Electronics India is the fastest growing company in the consumer electronics,

home appliances and computer peripherals industry today. LG Electronics is
continually providing superior technology products & value for money to over 50
lakh households in India.

LG is a No. 1 in the Air Conditioners in India and among the top priority in the
sale of all other consumer electronics. In addition, LG’s Golden Eye television
offers the world’s most advanced picture system.

There are 18 branches offices covering whole of India in the following cities –
Ahmadabad, Bangalore, Bhuwaneshwar, Kolkata, Chandigarh, Chennai, Cochin,
Patna, Guwahati, Hyderabad, Indore, Jaipur, Lucknow, Mumbai, New Delhi,
Haryana, Meerut & Pune. While corporate office is situated at Greater Noida, U.P
& Regd. Office at Okhala Industrial Estate, New Delhi.

New Manufacturing Plant:

Encouraged by this stupendous growth, LG Electronics India started building

another manufacturing facility at Ranjangaon, some 50 km away from Pune in
Maharashtra at an initial investment of Rs1.5bn (US$32mn). Spread over an area
of 50 acres, the sprawling new facility is designed to manufacture CTVs,
Refrigerators, ACs, Washing Machines, Microwave Ovens and Color Monitors.
The plant commenced commercial production in June 2004, three months ahead
of schedule. At present, it manufactures CTVs and Refrigerators besides
assembling of a couple of GSM mobile handsets. The Ranjangaon facility is in
line with LG's vision of making India the global export hub. The new plant, in
addition to the Noida factory, will enable LG to expand its consumer reach and

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ensure better supply chain management that would translate into a faster
response time. The company aims to pump in Rs5bn in the plant over the next
five years. At present, it has a manpower strength of 2,000 people, and can go
up to 5,000 by the year 2010. The new plant will contribute 10% of LG's total
projected revenue of Rs90bn in 2005. It aims to double this every year and plans
to increase it to 30% by the end of 2007.

Production Capacity:

CTVs - 5 lakh units per annum

ACs - 1 lakh units per annum

Refrigerators - 5 lakh units per annum

Washing Machines - 2 lakh units per annum

Microwave Ovens - 0.5 lakh units per annum

Mobile phone handsets - 10 lakh units per annum

Monitors - 1 lakh units

R&D Thrust:

LG aims to spend 2-3% of its total revenue on Research & Development (R&D)
and hopes to establish India as an R&D hub for consumer electronics, home
appliances and GSM handsets.

At the end of 2004 LG had around 70 people in R&D at Pune, including

Hardware and Software. This will be scaled up to 350 by the end of 2007, and
550 by 2010.

At Noida, its R&D strength was 190 at the end of last year. This will be increased
to 210 by the end of 2007, and further to 300 by the end of 2010.

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At its Bangalore centre, the R&D strength was 420 by the end of 2004. This will
go up to 900 by the end of 2007, and 1500 by the end of 2010.

By the end of 2010, LG will have 1,690 people doing R&D in Software and
another 660 in Hardware, taking its total manpower strength in R&D to 2,350.

At the end of 2004, LG had spent US$23mn and US$20mn on its Software and
Hardware centres in the country respectively. By the end of 2007, it will increase
to US$67mn and US$43mn. By 2010, it will go up further to US$124mn and
US$88mn.

Market Share:

CTVs - LG has sold the highest ever number of CTVs in a month, and has set a
landmark for the industry by selling over one million CTVs in a single calendar
year. According to the recent retail audit conducted by ORG-GFK (Jan 2005), LG
has consolidated its leadership position in CTVs with a market share of 26.7%.

Washing Machines - In the overall category, LG has emerged and established

itself as the No.1 brand with a market share of 35.2%. In the Semi Automatic
segment, it has attained a market share of 36.5% while in the Fully Automatic
segment it makes up 34.5% of the total market.

Refrigerators - LG leads the market in refrigerators with a market share of 28.1%.

Further in Frost Free LG has emerged as the undisputed leader with a market
share of 35.4%.

ACs - The company currently enjoys a market share of 45% in the Room AC
(Window and Split) segment.

Microwave Ovens - LG is the leader in this category with a market share of

41.4%.

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IT Products - LG has already become No.1 in the Optical Storage Devices (OSD)
segment and is fast emerging as the market leader in the monitor segment also.
It has around 34% share in Monitors and 44% in OSD apart from 15% in
Personal Computers (PCs).

Financial Results:

Division 2002 2003 2004

(Rs cr)
% (Rs cr)
% % (Rs cr) % %
contribution contribution growth contribution growth
Consumer
1495 45 2049 46 37 2810 43 37
Electronics
Home
1507 45 1996 44 32 2760 42 38
Appliances
IT 313 10 448 10 43 715 11 60
GSM * 7 215 3 2971
Total 3315 4500 36 6500 56
* LG entered the mobile phone market in October 2003

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 Vision 2010

LG Electronics India aims to become Rs450bn Company in India. Out of this,

Consumer Electronics will account for Rs112.5bn; Home Appliances Rs12.5bn;
IT Rs67.5bn and Mobile Phones Rs157.5bn. Exports will constitute 30% of total
revenue at Rs140bn.

PHILOSOPHY

 Complete in the International Market with a Global Mindset.

 Maximize value for Customers, Employees and Shareholders.
 Pursue the best in the class through Management by Principal.
 Contribute to the society through good “corporate citizenship”.

INITIATIVES

 Redesign business portfolio.

 Develop new strategic business.
 Globalization.
 Acquire promising differentiated technology.
 Cultivate high performing leader.

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Life-Cycle Assessment (LCA) of LG Electronics

27
Web-based Eco-Design System
Of LG

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 MARKETING MIX
“Marketing mix is the set of marketing tools that the firm uses to pursue its

marketing objectives in the target market.”

McCarthy classified these tools into four broad groups called 4P’s of marketing:

Product, Price, Place, & Promotion. These marketing variables are shown in the

following figure:

Marketing Mix

Product Promotion

Price Place

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 The First P—‘PRODUCT’

Product is a key element in the market offering. Marketing mix planning being
with formulating to meet target customer’s need & wants. The customer will judge
the offering by three basic elements- features & quality, services mix & quality &
price appropriateness.

Kotler says that ‘A product is anything that can be offered to a market to satisfy
the wants or needs of the consumers.’(*)
Products that are marketed include physical goods, services, events, experience,
persons, place, properties, organizations, information’s & ideas.

A firm is not selling a product. It sells only the ‘product benefit’. Product is most
important variable in the marketing mix of the firm. If the product is sound &
easily acceptable to the market if it satisfies reseller’s need & consumer
preference & is carefully fitted to the needs & desires of the customers, sales
success is assured. Hence ‘product’ is the center of all-marketing policies &
decisions. The marketing planning begins with the product & also ends with the
product. (**)

(*) Philip Kotler, Marketing Management, Millennium Edition, PHI, N.D.

(**) S.A. Shrelekar et al. Principle of Marketing, II ed. Himalaya Publication N.D.
As for as the LG Electronics India Pvt. Ltd. Is concerned near about 11
products. All of these are available in the market. Company plans to increase
their product range in the future. A brief description of some products is as
follows: -

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Products Name:

1.Air conditioners

2.Audio/Video/Home Theatre

3.Mobile

G1600 C2100 T5100

4.IT Products

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 

Note book

5.Television

6.Refrigerators

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7. Washing Machines

THE SECOND P- ‘PRICE’

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Sales are only income fore any business concern. But price is the main factor,
which affects the sale of the market. If the price is high, few buyers purchase and
if the price is low many buyers purchase. Therefore a sound pricing policy must
be adopted to have maximum sale revenue. Moreover, it is only through proper
pricing policy the already laid down marketing objective and corporate goals
could be achieved.

Price is the exchange value of a product or service always expressed in tem of

money. In other words, price of a product or service is what the seller feels its
worth on term of money, when offered to a buyer.
To the customer, the price is an agreement between seller & buyer concerning
what each is to receive. The buyer is interested in the ‘price’ of the whole
‘package’ consisting of physical product plus a bundle of expectation and
satisfaction. The consumer has numerous expectations such as after sale
service, replacement of parts, technical guidance & money other benefits.
However, to the seller, price is a source of revenue and a main determinant of
profit. To the seller, price is equivalent to the total product offering. This offering
includes a brand name, a package, product benefits, after sale service and so
on. We can define price as the “money of the product or service agreed upon in a
market transaction”.
So,
Price in money = physical product + bundle of expectations

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The Price Factor of PCs

India is a price-sensitive market. When the PC was launched in 1984, it cost well
over $4,450 here, and in the late 1980s, the price was around $2,220.

While the price was around $1,100 in the mid-90s, today, a MNC brand with
multimedia costs only around $761.

The Indian market has seen local assemblers stealing a march over their
domestic and multinational computer hardware rivals. More than 50 percent of
total PC shipments are now from unbranded manufacturers, the magazine said.
Four years ago, they accounted for less than 40 percent of the market.

The Indian PC industry has also witnessed the rise and fall of many a domestic
brand. Prominent players who fell out include DCM-DP, Usha, PCL, Sterling and
Unicorp, though many Indian brands including HCL today account for nearly half
of the branded PC sales in the country.

Pricing adopted by the LG Electronics India Pvt. Ltd.

The pricing adopted by LG Electronics India Pvt. Ltd. Can describe under this
subhead: -

 Competitive pricing: - LG Electronics India Pvt. Ltd. adopted the method

of pricing called competitive pricing for their PCs. Under this policy, the
price of LG PCs is fixed according to the price of other competitor brand of
the market & the price moves accordingly.

The price list of the IT Products of LG Electronics

India Pvt. Ltd. Is as follows: -

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•

GSC 50-5 MRP : RS 37,920

Intel Celron M1.3Ghz,
256RAM, 40GB Hard
disk, 15”TFT Display
LSC 50-E MRP :RS 52,480
Intel Pentium M
1.6GHz, Mobile Tech.
256MB RAM 40GB
Hard Disk15”TFT
Display
LSC 50-E Intel Pentium M MRP : RS 60,280
Processor 1.6GHz
Mobile tech. 256RAM,
40 GB Hard
disk15”TFT Display

XS3-E049NPG MRP Rs.39990

Intel 865GV-Chipset
,256 MB-DDR
XS1-D419HPG MRP Rs.29990
Intel 845GV-Chipset
,128 MB-DDR
XS1-WH19LP1 MRP Rs.19990
Intel Celeron
2.0,128 MB-DDR
XS1-WH1SLP2BCI0115 MRP Rs.18630
Intel Celeron
Processor 2.0 GHz ,
128 MB RAM
XS1-VI1SLP1BCI0117 Intel Celeron D MRP Rs.22790

36
 Processor 2.50 Ghz, 128
MB RAM, Free
Gifts:UPS,Edurite CD
Pack
XT1-2219LP1BCI0115 MRP Rs.23050
Intel Pentium 4
Processor 2.26 GHz,
128 MB RAM
XR1-D41SLP1BCI2115 MRP Rs.26950
Intel Pentium 4
Processor 2.40GHz,
128 MB RAM. Free
Gifts:Tata Walky
Phone,UPS
XR1-D819LP1BCI0115 MRP Rs.31110
Intel Pentium 4
Processor 2.80
GHz ,128MB
RAM , 40GB
HDD,Free
Gifts:Laser Printer

PA_110 MRP Rs 67793

Single Intel®
Pentium 4 Processor
@ 3.0 GHz with
800MHz FSB with
Hyper Threading ®
Technology,1 X 36
GB U320 SCSI 10K
rpm NHS
PA_105 MRP Rs.56293
Single Intel®
Pentium 4 Processor
@ 3.0 GHz with
800MHz FSB with
Hyper Threading ®
Technology ,1 X 80

37
 GB SATA 150
MB/s, 7200 rpm

GCR-8523B MRP Rs.650

CD-ROM Drive
GCE-8525B MRP Rs.1250
CD-R/RW Drive
GCC-4521B MRP Rs.2250
Combo Drive
GSA-4163B MRP Rs.4050
DVD Rewriter

E700S MRP Rs.8500

17 inch FLATRON
Monitor
900B MRP Rs.12500
19" Studio works
Monitor

700E MRP Rs.4500

Normal Monitor
500G MRP Rs.4750
15" Studio works
Monitor
L1720B MRP Rs.26000
17 inch LCD

38
 THE THIRD P – ‘PROMOTION’

Promotion is the process of making communication involving information,

persuasion and influence. Promotion has three specific purposes. It
communicates marketing information to the customers, users & retailers.
Promotion persuades and convinces the buyer & enters into this consumer
behavior. Promotional efforts act as powerful tools of competition providing of
cutting edge of its entire marketing programmed. Promotion has been defined
as “the coordinated self initiated effort to establish channel of information &
persuasion to facilitate or faster the sale of goods or services, or the
acceptance of ideas of points of view.” It is a non-price competition.

Broadly speaking, promotion means to push forward or to advance ideas in

such a way as to gain its acceptance & approval. It is an effort by the
marketer to inform and persuade buyer to accept, resell, recommend, or use
the article, services or ideas, which is being promoted. The promotional
activity always attempts to affect knowledge, attitude, preferences & behavior
of recipient, i.e. buyers. The element of persuasion to accept ideas, products,
services etc., is the heart of promotion.

You may have the best product, package & so on. It may have a fair price.
But people will not buy your products, if they have never heard of it, and they
are simply unaware of its existence.
The market must communicate to his prospective buyer & provide them
adequate information in a persuasive language. People must know that the
right product is available at the right place & at the right price. This is the job
of promotion in marketing. In essence, promotion is the spark plug in our
marketing mix. It is said that:-

39
“Nothing until somebody promotes something”

Promotion can create & stimulate demand, capture demand from rivals and
maintain the demand of your products even against keen competition. It is
true that nothing can be sold & nothing can make money (except mint)
without means of promotion. The communication & promotion mix includes
four ingredients viz.
1. Sales promotion.

2. Advertising.

3. Publicity.

4. Personal selling.

5. Trade Fairs & Exhibitions

6. Demonstration

1. Sales promotion

Sales promotion is an important instrument in marketing to lubricate the

marketing efforts. Today, sales promotion is a necessity & not a luxury. It is
not expenditure, it is an investment, which can pay a rich dividends. It is an
integral part of marketing effort.

“In a specific sense, sales promotion includes those sales activities that
supplement both personal selling & advertising & coordinated them and help
to make them effective such as displays, shows and expositions,
demonstration and other nonrecurring selling effort not in a ordinary routine.

40
 Sales promotion aims at stimulating the purchasing at the point of sales &
dealer’s effectiveness at the retail channel of distribution.

Sales promotion with the reference of LG Electronics India Pvt.

Ltd.

Company plans to follow two kinds of promotional tool for their products.
They are: -

(a) Dealers promotion

(b) Customers promotion

(a) Dealers promotion

To make a proper channel of distribution & to increase the market share of the
company, corporate plans to promote their dealer or retailers through the various
promotional strategies. Under which they provide a price off, a straight discount
off the list price. The offer encourages retailers as well as distributors to buy a
quantity or carry a new item.
As it is company provide allowances to the distributors for the carrying out of the
company’s brand. An advertising allowance compensates retailers for advertising
the company’s products.

Company also provides free goods to the distributors as the offer for taking up
extra goods or for carrying new products. In the extra company plans to organize
the industrial associations in the form of trade fairs & conventions o stimulate the
sale result of their intermediaries.

41
(b) Customers promotion

Due to the proper attention towards the channel of intermediaries, company is

not able to give proper attention towards consumer’s promotion but they arrange
whole the method of local promotion for the awareness of the local customers.
As it is they also provides demonstration & gifts to the customers shortly by
which products of the company are able to create a spec in the customer’s mind.

2. Advertising

The modern age is an era of competition. To withstand competition manufactures

have to think of new & unfamiliar uses for their products or they have to find out
new buyers for their products. The patent medicine people were the first to prove
what advertisement could do. They sold “Life ka naksa badal de.”

“Advertisement is the art of influencing human action’ the awakening for the
desire to possess & possess your product.”

“Advertisement consists of all the activities in presenting a group a non-personal,

oral or visual, openly sponsored message regarding a product, services or idea.”

Advertising with the reference of LG Electronics India Pvt. Ltd.

At present time the chairman of LG Electronics India Pvt. Ltd. give attention to
make proper distribution channel for their products. It is the company’s policy that
firstly they make proper distribution channel for their products by which any
customer either he/she will be belongs to rural area or belongs to urban area got
the product easily. After to make proper distribution channel corporate plans to
come through the media, because advertisement on media requires heavy
investment.

42
As far as advertisement is concerned LG Electronics India Pvt. Ltd. provides
claim to their respective stockiest of the different districts of the state for the local
awareness / promotion as per required by the stockiest of the districts.

Local promotion includes Banners, Holdings, and Cable TV. Ad. Installing, Trade
fairs, Sponsorship etc. for the awareness of their products to the local customers.
Because of the company doesn’t come through the media in present time i.e.
why company bears all the expanses for the local promotion as required by the
distributors?

It is true, that it is not sufficient in today’s high competitive marketing scenario,

but after the attainment of the proper distribution channel company definitely
come through the media which is a powerful source of demand generation in
today’s tough marketing scenario & it is definitely provides a strong consumer
pull to the new products of the LG Electronics India Pvt. Ltd.

3. Personal selling

A salesman is one who practices the profession of selling. One can learn a lot
about selling and salesmanship just by thinking about definition of personal
selling.
American marketing association defined salesmanship as ‘the process of
including and assisting a prospective buyer to buy a commodity or service
or to act favorably upon an idea that has commercial significance to the
seller.’

E.F.Schumaker defined selling as ‘the process affecting the transfer, with a

profit to buyer & seller, of goods & services that gives such lasting

43
satisfaction that the buyer is predispose to come back to seller for more of
the same.’

Personal selling refers to oral presentation in conversation or more prospective

customers for the purpose of making sales.
Personal selling involves two-way communication, “a well defined problem is
half solved.” Due to seller buyer interaction, personal selling alone can provide
immediate feedback of information, which enables salesman to understand
properly the buyer’s mind, his problems, his needs & his preferences.

Personal selling with the reference of LG Electronics India Pvt. Ltd.

As far as the LG Electronics India Pvt. Ltd. is concerned corporate plans the
effective medium of personal selling for their products. They provide full support
to the salesman for selling their products. Effective communication & facilities
motivate salesman to make a good relationship with the customers. Corporate
actually knows the importance of the phenomenon of the personal selling I.e.
why they tries to implement the ‘A-I-D-A-S’ formula of personal selling. The brief
description of this formula is as follows: -

A: - Attention – The ‘Attention’ of the customer.

I: - Interest -- Create an ‘Interest’.
D: - Desire -- Ignite the ‘Desire’ of the customer.
A: - Action -- Gaining an order.
S: - Satisfaction – Customer ‘Satisfaction’.

4. Trade Fairs & Exhibitions

Trade fares and exhibitions are the oldest forms of sales promotions. Trade fairs
and exhibitions provide companies with the opportunities of introducing and

44
displaying their products. This brings company’s product and consumers in direct
contact. “Seeing is believing” is the essence and basic concept of large-scale

exhibitions and trade fairs. These works at all the three levels viz.; consumer
level and sales force level.

5. Demonstration
Demonstration is those tools of sales promotion, which are used for all the three
levels of sales promotions. Viz., consumer level, trade level & sales force level.
Companies reset to product demonstrations when it comes up with a new
product.
Following are different forms of demonstration:
• Demonstration at retail stores
• School demonstration
• Door to door demonstration
• Demonstration to key people

45
 THE FOURTH ‘P’ -- PLACE

Marketer has to ensure the availability of its products to the target customers. If a
product is not available to the target customers at the right place, then he/she
may shift to competitive products. So place decision relates to :
(i) Channel decision – what kind of distribution channels a company
adopts between plants & consumer.
(ii) Distribution channel policy – whatever to go for extensive or
selective or exclusive distribution.
(iii) Degree of selectivity among wholesalers & retailers.
(iv) Effort to get the cooperation of the trade.
(v) Physical distribution decision includes logistics, transportation,
warehousing, material handling, bulk packaging; etc.

Meaning of channels of Distribution

Goods produced by the manufacturers must come to the knowledge of the
ultimate consumers. This is arranging by the sales promotion activities like
salesmanship & advertising. By mere knowledge, the prospective consumers are
not happy. The products must reach their hands for actual use. Channels of
distribution are paths through which products move from the point of production
to the point of consumption. Distribution channels are also called Trade
channels.

46
 Distribution Channels of
LG Electronics India Pvt. Ltd.

State

Eastern Central Western

Distributors Distributors
Distributors

Retailers Retailers Retailers

Customers Customers Customers

47
 COMPETITORS

Major Brands of Computers in India

HCL Infosystems
HCL Infosystems Ltd is one of the pioneers in the Indian IT market, with its
origins in 1976. For over quarter of a century, we have developed and
implemented solutions for multiple market segments, across a range of
technologies in India.
The country’s number one desktop brand had yet another great year selling
4.76 lakh units. The company targeted aggressively the B and C class cities and
upped its distribution network. The significant milestones over the last year
include the launch of the low cost Ezeebee Pride that came with an attractive
price tag of Rs 12,990. It attacked all the buying segments with low cost
processors like Via to industry standard P4 HT offerings. The aggression HCL
showed in pricing its product in a way kick-started the price war with brands like
Acer, and vendors like HP cutting down end-user price points. Another significant
development for HCL was its launch of the high-end home PC called Neo,
complementing its Beanstalk range. Neo was also the first desktop brand in India
to come with Windows XP Media Center OS. Meanwhile, on the Notebooks front,
HCL is the exclusive distributor of Toshiba in India whose volumes scaled to
20,000 units, compared to last year’s 11,600 units. With Toshiba aligned to the
Higher end of the spectrum HCL was unable to tap the low and mid-end
segments of the portables. And to plug that, during the year the company made a
low key launch of its own brand of notebooks called eZeebee and Powerlite,
which summed up to 3,000 units during the fiscal. Meanwhile, the banking
vertical did buy aggressively with large mandates from SBI and other

48
nationalized banks. From the government side, nodal agencies like Tamilnadu’
ELCOT also went for large-scale installations. As a result of growing demand for
its offerings, the company is in the process of expanding its Pondycherry plant.

Acer Computer International Ltd

Few IT companies offer the breadth and depth of products that Acer Group does.
Leveraging the vast collective technological resources available - Acer India (Pvt)
Ltd., was incorporated as a wholly owned subsidiary of Acer Computer
International Ltd. on 9th September 1999. Acer's mission in India is to translate
the Group's goal of making computer technology easier to use and more
affordable - to everyone in this country. With a focused customer-centric
approach, Acer in India is offering unmatched uptime for all it's systems through
a vast network of Service points, innovative and user friendly functionality while
continuously lowering barriers that limit the access to the fruits of technology.

Zenith Computers
This Indian company has, over the years, reinvented itself in more ways than
one. In that, FY 2004-05 can be called the year of innovation and new product
launches for Zenith. It launched seven notebooks—calling it the power of seven
—and priced it aggressively, starting from Rs 35K for a low-end model and a
Centrino at the sub Rs 60K. With its state of the art plant in Goa, enith’s
manufacturing capabilities got upped considerably and as a result of the number
of manufacturing best practices the company put in place, it went ahead full
steam. The company claims that its impressive performance was a result of it
introducing higher and better range products, and backing them with superior
quality control and distribution. Meanwhile, on the exports front, the company had
mandates from Bangladesh and other SAARC countries, and its entire product
offerings were certified with CE and FCC norms.

49
IBM

The acquisition of IBM’s PC division by Lenovo in December 2004 was probably

a shocking and unexpected development in the global PC industry. Lenovo took
over IBM’s personal computing division and in the bargain became the third
largest computer company in the world. According to IDC, Lenovo’s 2004 product
volumes stood at 14 mn units. Meanwhile for IBM India, in the first three quarters
of 2004, it shipped close to 39,450 ThinkPad notebooks as against 16,036 the
corresponding period the previous year, representing a 146% growth. What
drove the demand is buying from two kinds of consumers—first time notebook
buyers went for the low cost sub Rs 40k notebooks, while consumers who
already owned notebooks went for high-end wireless notebooks. Overall, IBM’s
market share in the notebook space hovered around 26% during the year.

HP (Hewlett Packard India Ltd.)

HP delivers vital technology for business and life. The company's solutions span
IT infrastructure, personal computing and access devices, global services and
imaging and printing for consumers, enterprises and small and medium business.

The 2002 merger with Compaq Computer Corporation forged a dynamic,

powerful team of 140,000 employees with capabilities in 178 countries doing
business in more than 40 currencies and more than 10 languages. Revenues for
the combined companies were $72 billion for the fiscal year that ended October
31, 2002. Chairman and CEO Mark Hurd leads HP, which has corporate
headquarters in Palo Alto, California.

In 1993, Vectra was the first foreign PC to be marketed in India. However, its JV
with HCL ran into trouble and HP reentered the Indian PC market in early 1998.

50
By that time, IBM and Compaq had entered and established their brands at the
premium end. HP immediately made a dent into the market through its
attractively priced PCs bundled with peripherals.

Since then, both HP and Compaq have been engaged in a relentless price war to
woo the homebuyer. According to IDC, HP has moved up to be the No.2 brand
behind HCL in the fourth quarter of 1999.

HP has an assembling facility in Bangalore with a capacity to assemble 20,000

PCs a month. It has a retail presence in 60 cities through 135 stores.

Compaq India
The world’s largest seller of PCs entered India in 1994. Initially, the commercial
segment (large corporations, government, educational & research institutions)
was its main target segment. But with recession in the economy in mid 1990s
and the consequent slashing of IT budgets of corporate, it turned its attention to
the home segment. However, it soon realized that its PCs, although perceived
well on reliability and quality, were considered too expensive. The assemblers
and Indian brands were cornering a major chunk of the market. It slashed prices
of its sub brand Presario from Rs65, 000 to Rs50, 000 to penetrate into the price
conscious Indian households.

At the same time, Compaq is aggressively going after corporate segment by

offering a range of products tailored around services to meet specific needs. Its
merger with Digital Equipment further strengthened its position in the high-end
server market.

51
Wipro Ltd.

Wipro intends to focus more on the lucrative services business in future. Already,
services accounts for more than half of its turnover. In contrast, the contribution
of systems business dropped from 43 per cent to 25 per cent.

It had a joint venture with Acer for marketing the Wipro-Acer brand of PCs.
However, they called it off in 1999.

Wipro has a 500-strong dealer network. It also distributes IBM PCs and Sun
Microsystems.

52
 RESEARCH METHODOLOGY

RESEARCH
Research Methodology is a systematic way, which consists of series of actions or
steps necessary to effectively carry out research and the desired sequencing of
these steps. The marketing research is a process of involves a number of inter-
related activities, which overlap and do rigidly follow a particular sequence. It
consists of the following steps:

1. Formulating the objective of the study

2. Designing the methods of data collection
3. Selecting the sample plan
4. Collecting the data
5. Processing and analyzing the data
6. Reporting the findings

53
OBJECTIVES OF THE RESEARCH

RESEARCH DESIGN

SAMPLE DESIGN

DATA COLLECTION

DATA ANALYSIS

FINDINGS

54
 SIGNIFICANCE OF RESEARCH
“All progress in born of enquiry Doubt is often better than overconfidence, for it
leads to enquiry, and enquiry leads to invention” is a famous Hudson Maxim in
context of which the significance of research will be understood, increased
amounts of research make progress possible.

The role of research in several fields of applied economics, whether related to

business or to the economy as a whole, has greatly increased in modern times.
The increasingly complex nature of business and government has focused
attention on the use of research in solving operational problems. Research, as an
aid to economic policy, has gained added importance, both for government and
business.

Research provides the basis for nearly all government policies in our economic
system. For instance, government’s budgets rest in part on an analysis of the
needs and desires of the people and on the availability of revenues to meet
needs. The cost of the needs has to equate to probable revenues and this is field
where research is most needed, through research we can devise alternative
policies and can as well examine the consequences of each of the alternatives.
Decision-making may not be a part of research, out of research certainly
facilitates the decisions of the policy maker. Government for dealing with all
facets of the country’s existence and most of these well be related directly or
indirectly to economic condition. The plight of cultivators, the problem of big and
small business and industry, working conditions, trade union activities, the
problems of distribution, even the size and nature of defense services are the
matters which requires research. Thus research is considered necessary with
regard to the allocation of nation’s resources.

55
 RESEARCH DESIGN
Research Design specifies the methods and procedures for conducting a
particular study. A Research Design is the arrangement of conditions for
collection and analysis of the data in a manner that aims to combine relevance to
the research purpose with economy in procedure. Research Design is broadly
classified into three types as:

• Exploratory Research Design

• Descriptive Research Design
• Hypothesis testing Research Design
On the basis of the objective of study, the studies which are concerned with
describing the characteristics of a particular individual, or of a group of individual
under study comes under Exploratory Research Design.

Exploratory Research Design

Exploratory Research is also termed as Formulative research studies. The

main purpose of such studies is that of formulating the problem for more precise
investigation. The major emphasis in such studies is on the discovery of new
ideas and insights.
Since our aim is to obtain complete and accurate information in the said studies,
the procedure to be used must be carefully planned. The research design make
enough provision for protection against bias and must maximize reliability, with
due concern for the economical completion of the research study.
In this research design the objective of study is clearly defined and has accurate
method of measurement with a clear-cut definition of population which is to be
studied.

56
 SAMPLING DESIGN
It is needless to say that no investigator can study the entire population and
hence selects a few individuals belonging to the population for the purpose of
investigation.

A Sample Design is a definite plan for obtaining a sample from a given

population. It refers to the technique or the procedure adopted in selecting items
for the sample. The main constituents of the sampling design are as below: -
1. Sampling Unit
2. Sample Size
3. Sampling Procedure
4. Collection of Data

SAMPLING UNIT

A sampling framework i.e. developed for the target population will be sampled i.e.
who is to be surveyed.

 Retailers & Distributors of PCs

SAMPLE SIZE

It is the substantial portion of the target population that are sampled to achieve
reliable results.

57
 I have taken 55 Retailers & Distributors as a sample.

SAMPLING PROCEDURE
The procedure to choose the respondents to obtain a representative sample, a
probability sampling technique is applied for the target – market.

NON-PROBABILITY SAMPLING
It is a purposive sampling which deliberately chooses the particular units of the
universe for constituting a sample on the basis that the small mass that they so
select out of a huge one will be typical or representative of the whole. Non-
Probability sampling technique is used in the study because the random
selection of the universe i.e. all retailers can’t be available randomly.

DATA COLLECTION

PRIMARY DATA
The primary data are those data that are collected afresh and for the first time.
And happen to be original in character. The primary data to be collected for the
study are: -
• By Interviewing the retailers & distributors of PCs.
• By Structured Questionnaire.

SECONDARY DATA
Secondary data are those data which have already been collected by someone
else and which already had been passed through the statically process. The
secondary data to be collected for the study are: -
• Publication of the company
• Periodical of the company

58
 • By Companies Websites

RESEARCH INSTRUMENT
STRUCTURED QUESTIONNAIRE: -
A Questionnaire consist of a number of questions printed or typed n a definite
order on a form or set of forms. It is the set of questions presented to the
respondents for their answers. When the questions have only two alternatives or
of multiple choices, then it is known as closed-end questionnaire, which is hence
used the given study.

Research Step
Step-1

The topic “MARKET STUDY OF BRANDED PCs” was selected and a

synopsis containing the title of the organization & objective was prepared.
Step-2
A questionnaire is prepared for Retailers & Distributors consists of objective
type questions; & given to the respondent.
Step-3
The questionnaire was circulated to a random sample of 55 Retailers &
Distributors in order to find out answers to the given questions.

Step-4
The researcher for data analysis collected the questionnaire duly filled by the
respondents.

Step-5
After going through the entire questionnaire, researcher is able to find out
various aspects related with topic.

59
 TABULATION & ANALYSIS OF DATA

Data analysis with the help of questionnaire filled up by the Retailers and
Distributors. The responses are very encouraging. 75% responses are obtained
& analyzed carefully.

DATA ANALYSIS FOR QUESTIONNAIRE OF RETAILERS

Market share of major players in the industry

The study shows the following figures about the market share of major players in the
industry, which is shown in the table and pie chart below:

HCL 12.25
HP 10.65
LG 10.25
IBM 5.78
Wipro 2.53
Zenith 3.75
Lenovo 10.50
Compaq 13.99
Dell 5.25
Apple 0.01
Others 0.04
Assemble 25.00

60
 Market Share of Branded PCs in Industry

The pie chart above shows that. The assembled market share is 48% then HCL share is
14% then comes HP at 12.65% % LG market share is 2.84 in Indian Market. Majority of
people preferred the unorganized assemblers due as they were providing the PCs at low
cost. The difference between assembled and branded PCs was around 18%-20%. After
slash of duties from March 1, 2005 and April 1, 2005 this difference has come down to
3%-4% only. So, new opportunities have opened.

61
  The total output of the PCs in 2003-04 & 2004-05

Total Output Units

Company 2005-06 2006-07
Units Units
HCL 273445 300790
HP 227620 250382
IBM 109570 120527
ZENITH 82669 90936
Lenovo 180030 198033
Compaq 585200 731500
Dell 95000 104500
LG 115600 127160
Wipro 46434 51077
Apple 25000 27500
Assembled 102812 113093
Total 1843380 2115498

This chart shows that the maximum turnover of others & assembled computers in
2003-04 & 2004-05 then the turnover of HCL is greater then other brands and LG
turnover in 2004-05 is 95600.

62
  Market share of branded PCs
HCL 8
HP 6
IBM 4
ZENITH 3
Lenovo 2
Compaq 8
Dell 3
LG 10
Wipro 2
Apple 2
Others 2
Assemble 22
Total 55

Market Share of Branded PCs

This pie chart shows that the highest market capture by the HCL in branded market &
its share is 15% then HP covers the 12% market & LG has also capture 9% of the
market in 2004-05 but the assemble computers capture the 37.57% of the market
share. Here the assemble PCs also cover the big market share in this region.

63
  Types of PCs sold by the Retailers & Distributors

18 Retailers &
Branded Distributors
12 Retailers &
Assemble Distributors
25 Retailers &
Both Distributors
55 Retailers
&
Total Distributors

Types of PCs sold in the market by the Retailers &

Distributors

Branded, 18,
33% Branded
Both, 25, 45%
Assemble
Both
Assemble, 12,
22%

45% retailers & Distributors selling both the assembled & branded computers,

33% retailers & Distributors selling only the branded computers & 22% retailers &

Distributors selling only assembled computers.

64
  Customer preference of the PC

Retailers &
Distributors
Branded 35
Assemble 20
Total 55

Customer preference of the PC

Assemble, 20,
36%
Branded
Assemble
Branded, 35,
64%

64% retailers & Distributors said that the customer purchase branded computers

& 36% retailers & Distributors said that the customers purchase the assembled

computers.

65
 No. Brands sold by the retailers & distributors

Retailers &
No. Of Brands Distributors
Only 1 9
2 13
2 to 5 19
More the 5 14
Total 55

No. of brands sold by the Retailers &

Di stributors

More the 5, 14,

25% Only 1, 9, 16% Only 1
2
2, 13, 24% 2 to 5
2 to 5, 19, 35% More the 5

16% retailers & distributors dealing with only one brand of the computers, 24%
retailers & distributors dealing with two brands of the computers, 35% retailers &
distributorsdealing with 2 to 5 brands of the computers & 25% retailers &
distributors deal with more then 5 brands in the market.

66
  PC Brands Higher In Demand

Retailers
Brands &Distributors
LG 5
HCL 8
HP 7
Compaq 5
Zenith 3
Wipro 2
IBM 5
Assemble 20
Total 55

PC Brands Higher In Demand

LG
LG
HCL
9% HCL
Assemble HP
15%
36%
Compaq
HP
Zenith
13%
Wipro
Compaq
IBM Wipro 9% IBM
9% 4% Assemble
Zenith
5%

9% retailers & distributors said that the customer prefer LG, 15% retailers said
that the customer prefer HCL, 13% retailers & distributors said that the customer
prefer HP, 9% retailers & distributors said that the customer prefer Compaq, 5%
retailers & distributors said that the customer prefer Zenith, 4% retailers &
distributors said that the customer prefer Wipro, 9% retailers & distributors said
that the customer prefer IBM & 36% retailers & distributors said that the customer
prefer Assembled computers

67
  Average monthly demand of the LG MyPc

No. Of PCs Retailers

Up to 10 31

10 to 20 14

Above 20 10

Total 55

Average monthly demand of LG MyPc

10

Upto 10
10 to 20

31 above 20
14

31% retailers & distributors said that average demand of LG computers is up to

10 units monthly, 14% retailers & distributors said that average demand of LG
computers is 10 to 20 units monthly & 10% retailers & distributors said that
average demand of LG computers is above 20 units monthly.

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  Pricing Factor affects to the customers

Importance Retailers & Distributors

Very much 27
Almost 16
Less 7
No effect 5
Total 55

Pricing factor affects to the customers

9%
13%
Very much
49% Almost
Less
No effect
29%

49% retailers & distributors believe that price is the very much important affecting
factors to the customers, 29% retailers & distributors believe that price is almost
important affecting factors to the customers, 13% retailers & distributors believe
that price is the less important affecting factors to the customers , 9% retailers &
distributors believe that price is not important affecting factors to the customers.

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  Responses on the statement “Customer is always best product
seeker.”

Strongly agreed 23
Agreed 16
Disagreed 11
Can’t say 5
Total 55

25 23

20
16
Strongly agreed
15
Agreed
11
Disagreed
10
Cant't say
5
5

0
Strongly Agreed Disagreed Cant't say
agreed

23 retailers & distributors are strongly agreed with the statement that customer is
always best product seeker, 16 retailers & distributorsare agreed with the
statement that customer is always best product seeker, 11 retailers & distributors
are disagreed with the statement that customer is always best product seeker &
5% retailers & distributors can’t say any thing on the
statement that customer is always best product seeker.

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  Important factors affects to the PC customers

Retailers &
Factors Distributors
Price 12
Quality 16
Brand 14
Availability 4
Advertisement 9

Total 55

Important factors affects to the customers

16% 22%

Price
7%
Quality
Brand
Availability
Advertisement
25% 30%

22% retailers & distributors believe that price is the important factor at the time of
purchasing a product, 30% retailers & distributors believe that product is the
important factor at the time of purchasing a product, 25% retailers & distributors
believe that brand is the important factor at the time of purchasing a product, 7%
retailers & distributors believe that availability is the important factor at the time of
purchasing a product & 16% retailers & distributors believe that advertisement is
the important factor at the time of purchasing a product.

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  Services makes good relationship with customers
&retailers

Yes 51
No 4
Total 55

Services makes relationship with retailers &

customers

7%

Yes
No

93%

93% retailers & distributors said that service provided by the company makes a
good relationship with customers as well as with intermediaries also & 7%
retailers & distributors said that service provided by the company not makes a
good relationship with customers as well as with intermediaries also.

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  Importance of profit margin for retailers & Distributors

Most important 33
Important 17
Not important 5
Total 55

Importance of profit margin for retailers &

distributors

9%

Most important
31%
Important
60% Not important

60% retailers & distributors believes that profit margin on the product is most

important for the retailers & distributors, 31% retailers & distributors believes that

profit margin on the product is important for the retailers & distributors & 9%

retailers & distributors believes that profit margin on the product is not important

for them.

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 No. of brands confused the customers

Yes 35
No 20
Total 55

Does the large no. of brands makes customer

confused?

36%
Yes
No
64%

64% retailers & distributors are agreed with the statement that large number

of products makes customer confused, 36% retailers & distributors are not

agreed with the statement that large number of products makes customer

confused.

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 Average monthly sale of computers in NCR region

Brands Units
LG 250
HCL 425
HP 375
IBM 100
Compaq 125
Dell 50
Zenith 85
Assembled 850
Total 2260

Average monthly sale of PCs

LG
11% HCL
37% 19% HP
IBM
Compaq
Dell
4%
17% Zenith
4%
2% Assembled
6%

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 FINDINGS

Indian PC buyers find value in brands

The market for assembled personal computers (PCs) is shrinking fast as branded
majors continue to slash prices and plug the gap. Even as assemblers realize
that they no longer have an edge, either in pricing or after-sales service,
optimists indicate that it's not the end of the road for them yet.

As of now, the message is loud and clear. Gone are the days of 65-70% market
share for the assembling segment when first-time PC buyers preferred going to
standalone hardware professionals. With the crashing prices of branded PCs, the
Indian consumer, including the first time user, is seeing more value in branded
products. While the total Indian PC market has been growing between 25-30%
annually, the assembled segment has actually reported a negative growth over
the past 12 months. Till a year ago, the price difference between branded and
assembled PCs was 15-20%. Now, it is 6-8%. Why will a consumer buy an
assembled PC rather than a branded PC? In the last one-year, PC
manufacturers like HCL, Zenith, PCS and even local brands like Amar PC, have
been successful in bringing operational efficiency in souring hardware
components. Together with lower duty structures and efficient management PC
production, the brands have been able to offer desktop computers at sub Rs
18,000 level for entry-level users.

Branded computer vendor has to pay an average tax of 10-12%. With the
customs duty touching zero on 200 IT hardware components and devices from
March 1, and introduction of value added tax (VAT) from April 1, the simplified
tax structure will help the organized player rather than the unorganized
assemblers.

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 Desktops: The Volumes Game

In the previous year (FY 2003-04) the major trend was the assemblers shedding
market share in favor of the branded players. That trend saw further escalation
during FY 2004-05 with the assemblers’ slice shrinking further as against the
previous year’s 58% to 48% for FY 2004-05. A further downslide is expected on
the assembler space in the days ahead. With the Intel based branded PC coming
into the sub-Rs 18,000 mark, the assemblers found the going difficult. Some took
the more lucrative route by becoming resellers, and in the bargain averaged
better margins.
 Demand of the PCs
With the growing need for computerization, branded PC demand in public sector
organizations and in the government is on the rise. Demand from the private
sector, especially in the educational institutes and home segment, is already
rising. The small office home office (SOHO) and small-and-medium enterprise
(SME) segments are also driving hardware demand. The growing popularity of the
Internet has also raised the demand for branded PCs.

About The Assemblers:

The once ubiquitous neighborhood friendly assemblers were losing their face in
the heat of intense competition from the branded segment of the PC industry.
Industry estimates peg the share of assembles for the fiscal at around 48%. A
MAIT-IMRB study said that market share for assembled PCs, which was 57% in
FY 2003-04 was reduced to 44% in the first-half of FY 2004-05. Margin
pressures and the 4% countervailing duty (CVD) that the government imposed
on computer components put great stress on assemblers. In this scenario, better
margins are there for those manufacturers who import fully built PCs as there
would not be multiple taxation. While big players absorbed the tax and duty
changes, the budget-constrained assemblers found the going difficult as

77
customer loyalties shifted more to the branded side. Also, PC buyers found the
service levels deficient with assemblers who were not able to offer quality and
timely service unlike a branded PC manufacturer. In all, tough times are ahead
for assemblers unless they re-invent and align with branded players.

Good News For PC Vendors:Indian PC Market up 34.4% in 2004

The industry recorded the second highest shipments at 33.87 lakh in Asia-Pacific
region
Gartner, an industry expert, expects Indian market to grow by 29.3 per cent in
2005, due to the strong economic indicators.
32,67,885 desktops were sold in 2004 in India.

 PC Industry grew at a healthy rate of 26%, with volumes crossing 3.3 mn

units
 Assemblers found the going difficult as cheaper branded PCs gained more
market share
 B and C class regions continued to represent a big opportunity for PC
business
 In FY 2004-05, assemblers lost share to brands in a big way. Their market
share shrink further—from 58% to 48%
 Assemblers and Intel got very aggressive in B and C class towns with

active marketing and promos

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 SWOT ANALYSIS

S: - STRENGHTS
 Quality based products.
 Experience of international market.
 Developed R & D.
 Increasing range of products.
 Suitable hierarchy of organization.
 Reliable products.
 Customer satisfaction oriented.
 Skilled employees at all level.
 Ethical work towards society.
 Looking forward for different types of other field to make organization
wealthy.

W: - WEAKENESSES
 Unawareness of Brand Name.
 Small market segment.
 Duplicity of products.
 Lesser control over duplicity.
 Price discrimination & wrong pricing.
 No proper promotional strategies.
 Weak market intelligence system.

O: - OPPORTUNITIES
 Grasp maximum market share by utilizing well-developed R & D.
 Having large no. Of professionals in surroundings.

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  Customers are highly aware with the brand name & quality of the
products.
 Rapid increase in demand of PCs, therefore highly potential market is
available.
 Well-developed distribution channel in other electronic goods.

T: - THREATS
 High competition from other brands.
 Market slump.
 Customers are highly confused by the promotional strategies followed by
the competitors.
 Retailers are demand oriented.
 High market share of assembled PCs
Beyond the above description I would like to mention it that in LG
Electronics India Pvt. Ltd. The whole pattern of marketing is quite
effective and is appreciable because they have established so huge
empire with in three to four years.

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81
 LIMITATIONS
Every research is conducted under some boundations and this research is
not an exception. While doing the research some of the restraints had to
be faced such as: -

 The researcher could not cover each & every retailer & distributor because
the sample survey was done.
 There might have been tendencies among the respondents to amplify or
filter their responses under the testing conditions.
 Since the results have been drawn on the basis of the information
provided by the respondents, chances of error might have crept in.
 Since the study involved sampling method, ‘Drop in’ or ‘Go through’ error
might have crept in.
 Unintelligent answers or misinterpretation of any question by the
respondent could not be corrected.
 Personal Biases of retailers and distributors may affect their responses.
 From all surveyed retailers and distributors only 75% have responded
positively.
.

82
 CONCLUSION
The outlook for FY 2005-06 is very positive, as vendors are bullish on huge
volume growth in both home and the enterprises, which could further drive the
PC volumes. A consolidation of vendor growth estimates for the ongoing
fiscal puts the volume grow that 32-34%. Intel’s P4 HT configurations will see lots
of traction and will start cannibalizing on its entry-level Celeron based offerings
as one is seeing a declining interest in Celeron based machines. The consumer
will be more willing to pay a small premium for P4 desktops. However, on the
portables front, mobile Celeron will be key to the growth of entry-level offerings
with the education segment expected to drive bigger volumes. Similarly, the
Centrino-based notebooks will further become affordable and will breach the Rs
45K barrier in the ensuing quarters of FY 2005-06. With the impact of the new tax
and duty regimes in place, most vendors consider that it only created a brief
confusion on the part of the vendors, channels, and the consumers, and many
believe that it will not create any major pricing fluctuations. It was a very eventful
year for the PC business in India and one only hopes this revival will drive bigger
growth in the days ahead.

As I made a comparative study of Monthly sale of different brands of PCs like

L.G, HP, Compaq, IBM, HCL, Zenith. I found HCL and HP to be the cutthroat
rival of L.G. This is because of the reason that many other brands deal in mainly
in their branded PCs and concentrate on them. But HCL & HP like the policies of
LG concentrate on the peripherals market too.

According to my study I found some discrepancies by the side of LG Electronics.

Many retailers and distributors complained of not having a proper channel for
sale. The problem arrives when the distributors start selling products to
customers directly, when the customer get the products at some what lower

83
prices from the distributors, then it is very obvious why will they go to the dealer
& retailer.
So a proper channel should be made in which the distributors should supply
products to sub distributors, then the sub distributors should supply products to
the retailers or dealers. And finally it should reach to the customers through
them.

84
SUGGESTIONS AND RECOMMENDATIONS
Almost 50% of the Retailers and distributors contacted complained of the
services given. So satisfaction of these 50% of retailers and distributors is
necessary, so the company should take measures by service section to come up
to their expectations, following are the main suggestions to be followed by the
company to improve the sales.
• LG MYPCs price should be less.
• Advertising material is not available there is a lack of pamphlets &
brochures for advertising.
• Service should be improved.
• Onsite service should be also improved.
• Proper channeling of products from distributors to retailers.
• Consistence policies should be followed regarding distributors.
• Direct interaction between service members & dealers should be
there.
• Improve dispatch and delivery of goods.
• Action must be taken if call is not attended after 24 hrs of
registration call.
• There should be proper coordination between sales person &
service people, because the sales person says something else & the
service people do something else.
• Many dealers are unaware of LG MyPCs so it should be properly

supplied & made known to them.

The sale of LG MyPc is not very good in NCR region, if above suggestion
will be positively accepted by the company then the day is not far when
LG will be the best in this region.

85
 APPENDICES

QUESTIONNAIRE FOR RETAILERS & DISTRIBUTORS

We are carrying out a study for the knowledge of the current market share of the
Branded PCs, percentage rise in the sales of branded PCs & the future
aspect of LG MyPc in NCR region. We would appreciate if you will please
convey your view on the different questions referred to this questionnaire. On
behalf of the sponsor of this research study I thank you for sparing your
valuable time.

Name of the shop…………………………………………………………..

Address ……………………………………………………………………...

1. Which PC you sell in the market?

a) Branded

b) Assemble

c) Both

2. In your view which PC do the customers prefer?

a) Branded

b) Assembled

3. How many brands you sell?

86
 a) Only1 b) 2 Brands

c) 2 to 5 Brands d) More then 5

4. Which PC is having mostly the higher demand?

a) LG b) HCL c) HP

d) IBM e) Compaq f) Zenith

g) Any other……

5. What is the average monthly demand for LG MyPc?

a) Up to 10

b) 10-20

c) Above 20

6. In your opinion how much pricing factor affects to the customer?

a) Very much

b) Almost

c) Less

8. Are you agreed that the customers are always best product seeker?

a) Strongly agreed

b) Agreed

c) Disagreed

d) Can’t say

87
9. In present scenario which one is the most important factors for customers,

which affects the purchasing decision?

a) Price

b) Quality

c) Brand

d) Availability

e) Advertisement

10. Services make good relationship with customers & retailers?

a) Yes

b) No

11. How much importance of profit margin for retailers & distributors?

a) Most important

b) Important

c) Not important

12. Does the large numbers of product makes customer confused?

a) Yes

b) No

13. Monthly Sales In Percentage :

LG
HCL
IBM
Compaq

88
 Zenith
HP
IBM
Dell
Wipro
Assembled

15. Opinion/suggestion for LG Electronics India Pvt. Ltd.

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------

---

Thanks for giving important details Name & Signature

89
 BIBLIOGRAPHY

BOOKS:
1. Kotler Philip, marketing management, millennium edition, New Delhi,

PHI 2002.

2. Sherlekar S.A. et al, Principles of Marketing, Second edition, Himalya

publication, New Delhi.

3. Kothari C.R. Research Methodology, Second edition, Wishwa

Publication, 2002.

CATALOG:

Catalog of LG Electronics India Pvt. Ltd.

MAGAZINES:

(a) Business standard

(b) Business world

(c) Data Quest.

INTERNET:

Information from official website of LG Electronics India Pvt. Ltd.

www.lge.com www.dqindia.com

www.lgindia.com www.pcquest.com

www.lgezbuy.com

www.google.com

90
JOURNALS :

1. INDIAN JOURNAL OF MARKETING

2. ECONOMIC REVIEW

NEWSPAPER:

1. TIMES OF INDIA

2. HINDUSTAN TIMES

3. ECONOMIC TIMES

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