How LG is trying to beat Samsung in India

In a bid to catch up with South Korean peer Samsung, LG is changing its strategy in India by building products specifically to suit Indian needs and by doubling its marketing budgets.

Kim Ki-Wan, Managing Director of LG Electronics India, told BusinessLine in an interview that the company will double its marketing spend this year to accelerate growth in the country, with focus more on engaging with customers through roadshows and in-store marketing than just traditional TV and print advertising.

“Every year, we used to hold one Tech Showcase event in Delhi. That attracted about 1,000 of our partners. This year, we are extending it to 50 cities and inviting not just partners but also customers to come and see our existing and upcoming products,” Ki-Wan said.

As per filings with the Registrar of Companies (RoC), LG Electronics India's sales grew 12 per cent to ₹12,958.6 crore in the last fiscal year ended March, 2015. However, larger peer Samsung was at ₹41,575 crore in gross revenues in the same period even though it grew only 3 per cent over previous year.

LG had been struggling to grow in the Indian market for a long time as Samsung revenues skyrocketed in India.

“Since 2010, we haven’t made significant growth in India,” acknowledged Ki-Wan.

“We changed our organisation culture because since 1997, every year we’ve made remarkable growth. With such a growth, there was some mismatch in the company and we took time to adjust to the scale we reached. Now, again from last year we’ve started to see growth,” he said.

Ki-Wan was brought in to take charge of India operations in August last year to put LG India back on the growth path. The biggest difference between the two companies has been Samsung’s disproportionate marketshare in the mobile handset market. Samsung India earns about 70 per cent of its revenues from smartphone sales. While Samsung continues to be the largest phone manufacturer in India, LG is still scratching the surface with its high-end phones that hasn’t seen much acceptance in the Indian market.

“The bulk of the smartphone sales in India happen in the sub-15k segment. That’s why we haven’t been here. We have very premium phones. Since I came here, we developed some affordable priced products K7 and K10 for the Indian market. These are priced at ₹9,500 and ₹13,500, respectively. For the first time, we’ve launched phones at this price point,” Ki-Wan said.

He said similar tweaks in product and pricing strategies are being done in every product category as the company tries to steal the market share from Samsung across segments.

“We keep investing to identify consumer insights. If we can satisfy customer demands, then the growth will follow. I collect consumer purchase behaviour every day. We are incorporating that in our product development and marketing and communications strategies,” Ki-Wan said.

He said the company has been following this strategy in the last nine months, and in March and April the company is growing faster than any previous month in the last one year.

Ki-Wan said he also expects higher growth this year even from upcountry market despite of the drought situation in many States.

“This year will be better than last year because this year the harvest has been better than the last year and also monsoon is expected to be good this year. So we expect better sales from upcountry markets this year.”

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