PRESENTATION ON

LG’S RESEARCH ON RURAL

MARKETING AND DISTRIBUTION
MANAGEMENT
FOR CONSUMER DURABLES
 RESEARCH METHODOLOGY

PROCESS
DEFINING IDENTIFYING INTERPRETING IDENTIFYING
PROBLEMS RESEARCH DATA ACTION
OBJECTIVES PLAN
DI SCR IP IT IV E
RES EARCH
 This type of research is where a researcher has to
report what has happened or happening or likely to
happen.
 Here normally market data is collected through
observations ,mail method or personal interview’s.
 Customers preferences can also be studied through
observations.
 Our research is a Descriptive research, where we
have collected market data
 INT ROD UCT ION
LG Electronics has a total turnover of Rs. 4500 crore & share
of 55 percent from the rural and semi-urban market .

 With such kind of contribution from the rural India, corporate

houses perceived great opportunity in the rural markets and
tapped the countryside to enlarge their market share.

 HLL, ITC, Coca-Cola, LG, Britannia, Philips, Colgate-

Palmolive etc., penetrated aggressively into the rural markets
and spent heavily
•It is predicted by LG’S analysts that by 2009 – 10, the urban
households are projected to grow by 4 percent while rural
households are expected to grow by 11 percent.

•The colour televisions, refrigerators, air-conditioners and

microwaves have become a household sight in villages and
small townships that was long thought of as a luxury and
domain of urbanites.
Co ntd …… ..
 In 1993, LG entered the Indian market
through a joint venture with the Delhi-based
consumer electronics company Bestavision
for selling colour televisions under the
brand name Goldstar.
1. Market Demand
▷ Regional approach in marketing is required.
Purchasing power by Region

1. Market is different

Consumer Behavior
NORTH
- S/W : Shift to Mid-High Segment
Traditional Split A/C, FTV, W/M
Market 39% Agriculture base
LG 37% Extreme Temp. - N/E : Conservative,
Win.A/C, 2Tub W/M, 1Dr Ref

EAST 2. Different culture, life style

Market 9%
LG 8% Diversity in lifestyle
WEST
- Food Habits / Clothing
Market 25% Conservative - Language :18 official
LG 24% Poor Region - Customs/Religion
Humid
Cosmopolitan
Commercial
Modern Trade
SOUTH High Literacy
Market 29%
Industrial Zone
LG 28% Modern Trade

D
Re aso ns f or g rowth
* The rise in disposable income of the rural families
* The economic boom
* Rural population involved themselves in business
* Increase white-collar jobs in nearby towns
* Commercialization of agriculture
* Saturation of the urban markets
* Media penetration in rural areas (particularly satellite
channels)
* Globalization
* Economic liberalization
* Revolution in the Information Technology
* Women empowerment
* Improving infrastructure
Su rprisi ng facts
 In many villages, one can see today the alternate use
of the products other than for their actual purpose.
 People in the state of Bihar feed the cattle with
Horlicks as a health drink to fatten them!
 Similarly, people in Punjab use washing machine not
for washing clothes but to make frothy lassi in huge
quantities!
 Animals are rubbed with Iodex on their skins to relieve
them from muscular pains after a day's hard work
 Paints meant for houses are used on the horns of
cattle for easy identification and theft prevention!
LG PR ODU CTS L INE
 Business Areas & Main ProductsCategoryMain Products

 Consumer Electronics :TV , Plasma Display , Display Panel, Color

Television, Home Theatre System, Music system, DVD
Recorder/Player, MP3 & MP4 Player.

 Home Appliances: Room Air Conditioner, Commercial Air

Conditioner Refrigerator, Washing Machine, Dishwasher,
Microwave, Vacuum Cleaner

 Computer Products: Laptop, Personal Computer, LCD monitor, CRT

monitor, Optical Storage Devices

 Mobile Phone :Premium trend setter phone , Camera Phone , Music

Phone , Color Screen GSM Handset
 In the rural India possessing a TV is
considered a symbol of social status as the
customers there prefer bigger televisions.

 LG moved quickly on both fronts. It has

introduced cheaper products like it
Sampoorna television range.

 But LG isn't the only white goods

manufacturer that is striking deep into rural
India. There's also Mirc Electronics which
late last year launched its Operation Vistaar
(meaning expansion).
 The urban consumer durable market for
products like colour TVs, washing machines,
refrigerators and air conditioners is growing
annually at between 7 per cent and 10 per
cent.
 Whereas the rural market is booming by an
annual growth rate of 25%.
 Leading the way is LG. The majority of LG's
revenues are now coming from smaller towns
like Hapur, Trichy, Jorhat and Asansol.
 Rural Population Distribution

Distribution of villages in India

1. Bottom Heavy Cluster among Villages

68 % of the villages in India are below the 1000 Populat

Population Number of Villages % of Total - Marketers overlooking the same

Less than 200 114267 18% - Reaching out to these villages critical to exponential
- Bottom Cluster with greater than 2000 Popl slowly sa
200-499 155123 24.30%

500-999 159400 25.00%

2. Logistics - The 3rd Generation Challenge
1000-1999 125758 19.70%

2000-4999 69135 10.80%

- Servicing him is an absolute mandate
5000-9999 11618 1.80%
-strong supply chain critical to reach to these mass
10000 and above 3064 0.50%
- Rural centric product and sound communication es
Total 638365 100%
 The Road Map

Regional Marketing Approach

Deep Channel Penetration

Rural Centric Marketing Promotions

BEST PRACTICE – DISTRICT NETWORKING(Example)

B.O (Branch Office)

- Profit Centre
RAO -Heading & supporting AO’s.
Population - 21 Mil. -Equipped with Stock point, ERP.
72 % Rural -Equipped with Functional Manpower.

RAO (Remote Area Office)

- Sales & A/R Collection
RAO - Enhance mkt penetration
-Enhance Relationship
--Accounting Solutions
Equipped with Infrastructure
& Manpower
BO
RSO (Remote Sales Officer)
-Covers Sub-Dealer
Network. -PR & Motivation
- of SD.
Enhance penetration & extraction
Sales & Service Infrastructure

Rural focus through excellent reach Reach

Jammu
Branch Off : 40
RAO : 63
Chandigarh
Jalandhar
Ludhiana Dehradun
Kundli Ghaziabad
Gurgaon Delhi(2) Guwahati Rural Sales Channel
Patna
Lucknow
Varanasi Dealers/SD : 9000
Jodhpur
Jaipur AsansolBANGLA
Ranchi DESH Distributors : 1100
Ahemedabad Kolkata
Bhopal
Surat Bhubaneshwer
Thane
Indore
Channel
Mumbai
Raipur ASC : 1080
Pune Nagpur
Hyderabad SSD : 600
Goa
Hubli ASP : 590
Bangalore
Chennai Statistics
Kozikode
Coimbatore
• ASC - Authorised Svc Centers MW : 5
• ASP -- Authorized Svc Provider Cochin Stock Point : 46
• SSD - Sales and Svc Dealers Br Warehouse : 36
• MW - Motherware House
SRI LANKA
 Rural Marketing - Promotion Support initiatives of

LG Mobile Van at Kasargod

Exhibition
Exhibition at
Rajamundry

Cookery Classes at
different locations
for Rural
Housewives
Rural Marketing - Promotion Support initiatives of

LG 1000 In Store Demonstrators

at Dealer counters in
Rural Cities
Road show
Road Show at Satna
 LG’S RURAL FORAY
LG India- tripled the number of its retail &
distributor outlets in rural areas from 2004 to 2006

The avg. price of its Sampoorna range of CTVs came

down to about the price so competitive that, thereby
bridging the gap between CTVs and other local B/W
TVs.
It also tapped local forms of entertainment like
annual haats and fairs and made huge investments
in infrastructure for distribution and marketing.
 Result
• The rural market accounts for 60 per cent of new CTV
buyers for LG

• The rural market for LG grew at 25 per cent over the last
year, against a 10 per cent growth in urban areas.

• Sampoorna TVs sold in the Indian heartland and the semi-

urban belts ,enforced a strong connection with India for
LG.