CASE STUDY

Name : Surmil Kapoor

Enrollment No. : A0102209200
Programme & Batch: MBA-M&S
Section : Section B
_______________________________________________________________________

Title of the Case: LG Electronics Pvt Ltd- Launch of Pre purchase support system

Abstract: Mostly companies have after sales support system but lack in the service of
pre purchase support system. Pre purchase support system can be defined as
customers’ queries before purchasing the product. Many customers look for
reliable source which can give them exact knowledge about various
dimensions of product. LG Electronics Pvt Ltd did primary research to study
their competitors and thereafter did pilot launch of pre purchase support
system to provide better enhance their service

Keywords: Customer Service, Pre purchase support system, Consumer durable

industry, Customer satisfaction, Brand Management
What do customers do if service is not satisfactory? 96% of the people don’t complain,
they just take their problems elsewhere and each unhappy customer will “corrupt” 10
others. It costs 5 times as much to attract a new customer as against retaining an existing
one. Every customer interaction is a Moment of Truth. It is an episode in which the
customer comes into contact with any aspect of the organization, however remote, and
thereby has an opportunity to make an impression. Moments of truth are not reversible,
they are everlasting. Once a customer transaction has taken place, there’s no turning
back. One can either enjoy or bear its results. Moments of truth can be a defining &
deciding force in customer service. Moments of truth stands on three pillars, i.e.
Delivering Right, Complete and Timely Information.

Pre purchase support system - Customer service

Mostly Companies have after sales support system but lack in the service of pre purchase
support system. Pre purchase support system can be defined as customers’ queries before
purchasing the product. Many customers look for reliable source which can give them
exact knowledge about various dimensions of product. Companies fail to address
customers and incorrect knowledge from wrong source becomes disaster for a marketer.

Customer Care Support for Pre Purchase is required as

• Customer service (also known as Client Service) is the provision of service to
customers before, during and after a purchase.
• A company may attempt to differentiate itself from its competition through the
provision of better customer service.
• Taking responsibility and making the customer feel important is considered an
important aspect of good customer service.

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LG Electronics Pvt Ltd- Introduction

LG Electronics Pvt Ltd pursues its 21st century vision of becoming a true global
digital leader who can make its customers worldwide happy through its innovative
digital products and services. LG Electronics sets its mid-term and long-term vision
a new to rank among the top 3 electronics, information, and telecommunication firms
in the world by 2010.

Established in 1997, LG Electronics India (LGEI) is a wholly-owned subsidiary of LG

Electronics, South Korea. It is one of the leading companies in consumer electronics,
home appliances and computer peripherals in India. It has a turnover of almost US$ 1000
million in India. LGEI’s sales are increasing with a CAGR of 40 per cent over the past
five years.
LG is the market leader in various segments like colour TVs, microwave ovens, frost-free
refrigerators, washing machines and air-conditioners, with market shares of 26.2 per cent,
41.2 per cent, 37.9 per cent, 34.1 per cent and 34 per cent respectively.
LG Electronics India received the Occupational Health & Safety Management System
OHSAS 18001:1999 certification from the British Standards Institution (BSI), India, for
a systematic approach towards Occupational Health and Safety Management System.
LGEI exported goods and services worth US$ 40 million in 2003. The major export
markets for LGEI are the Middle East, West Africa and Central Asia.
Product offered by LG Electronics Pvt Ltd

Company Main Products

Consumer Electronics Plasma Display Panels, LCD TV , Color TVs, Audios, Home
( CE ) Theater System, New Karaoke System ,DVD Recorder/Player
Home Air Conditioners, Refrigerators, Washing Machines,
Microwaves, Vacuum Cleaners
Appliances ( HA )
IT Personal Computers, Laptops, LCD monitors, CRT monitors,
Optical Storage Devices

GSM Color Screen GSM Handsets, Camera Phones

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Challenges faced by LG Electronics while entering Indian Market

The challenges faced by LG when it entered the market in 1995 were:

• Low brand awareness about LG in India.
• One of the last MNCs to enter India. (Samsung, Sony & Panasonic entered in 1995 &
LG in 1997)
• High import duty.
• Competition from local players and other multinational companies in the consumer
electronics segment.
• Price sensitiveness of Indian consumers.

LG has overcome these challenges to emerge as one of the prominent brands in the
Indian consumer electronics and home appliances market. LG has overcome its
challenges by key success factors like Innovative marketing strategies, Local and
efficient manufacturing to reduce cost, Product localization, Regional channel strategy
and wide distribution network.

LG Electronics – Customer service

LG Electronics has after sales support system (No pre purchase support) where it has
outsource its call center to Aegis ( BPO in Sector-16,Noida). The Customer Care Centre
executives saves or register the calls in their CRM network called the CS Net (Customer
Service Net). Whenever a query land on a customer care agent’s desk , agent would
capture the data of customer for that call in CS Net Report. So initially the observations
for Pre Purchase Calls were made from that report. It was observed by company Brand
Management Team that the data for the months of January, February and March -
around 6% of the total calls landing at the Customer Care Centre were of Pre
Purchase domain. Thus the customer in this case was left high and dry and had no
option but to look for other avenues of information which at times were not authentic.
This hampered the Brand Image of LG. Also due to this some prospective customers
were also lost which resulted in loss of revenue.

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Primary research by LG Electronics

The 360° analysis was carried out so as to understand what other brands in different
product categories were doing in pre purchase customer support. The analysis also helped
in understanding where existing LG customer care support lacked and how to equip it so
as to address all customer concerns with respect to product, price, place and promotion
and thus reinforce “one call does it all” brand campaign.

Brand Management Team decided to go for primary research where data was collected
through communication with customer care executives of different brands for different
product categories. The information was collected by means of questionnaire. The survey
was conducted on phone by calling up various customer care centers of different
companies and asking them questions related to pre purchase queries and analyzing as to
where LG stands viz a viz other brands in pre purchase support.

Sample Size: 10 agents of a brand for a product category were called and responses were
taken from them. For every product category, top 5 market players in that category were
taken. Thus, for a particular product category 50 respondents were there. In all for five
different product categories responses of 250 agents were taken.
The brands were chosen on the basis of their market share for every product category.

Top 5 market players in every product category were taken and their customer support
system was studied. Questionnaires for five different product categories namely, LCDs,
Split ACs, Refrigerators, GSM & IT products were filled having sections that covered
various information heads like:
• Product Informations,
• Price Information,
• Offers / Promotion Information,
• Place Information,
• Company / Branch Information, etc

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Research Analysis
Brand Management Team went for competitive comparison (pre purchase support
system) in consumer electronics (CE), Home Appliances ( HA) , IT and GSM with
respect to product, price, place and promotion.

Exhibit 1: Comparison-Pre purchase support system

(Full circle shows complete correct information provided, 3/4th circle filled shows

S a m p le
complete information was provided but was incorrect, half circle shows some of correct
Information was provided, Quarter filled circle shows information provided was of no
use, unfilled circle shows no information provided)

Conclusion drawn from above results

• Within CE & HA categories LG provides no price related and offer / promotion
related information.
• In IT Products category Dell sets the benchmark as it provides information within
all the information heads.
• In GSM mobiles category also LG fares very badly.

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Company also analyzed themselves in terms of Industry Comparison in accordance with
modes of Customer Contact for pre purchase support system.

Industr
Exhibit 2: Industry comparison- Modes of contact to company for pre purchase query

(Full circle shows complete information provided, Half circle shows some of information
provided, Cross shows no information provided)

Conclusion drawn from above results

• LG: For pre sales query diverted to nearest dealer or Website.

• Videocon: Gives number of sales dept on asking for pre sales support.

• Hitachi: Gives corporate office nos. when asked for pre sales support.

• Lenovo: Only company which reverts on sales & after sales query on SMS.

• Compaq: Only company with clearly distinguished pre & after sales number

• Sony: IVR differentiation for pre & post sales query.

• Most brands provide Product, Price & Place related information.

• Dell is the only brand which provides Promotion related information.

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Pilot Launch of Pre purchase support system

LG Electronics started with pilot launch with operational set up and planned for 5
desks. It was decided to go ahead with 5 Desks operational from 8a.m to 8p.m.

Pilot Launch was decided as company wanted to analyze the response of customers
than taking risk of going ahead with promotions, campaigns and huge cost
investment.

It was decided to go with the same number as of after sales service -1800 180 9999
(Toll Free) as the Number was popular among the Customers and it was being
advertised everywhere. If the number would be changed then the ads and all other
Branding Communications would suffer.

Company contacted Aegis (BPO- which provides after sales service support) for pre
purchase call center .Deal was finalized regarding financial aspects related to pilot
launch. It took around two weeks for company to finalize call script, hiring of agents,
training of agents, quality parameters for agents, customized website- changes made
in the LG website to launch this activity for north east region. Calls were catered in
three languages - Hindi, English and Bengali. All activities were done in accordance
with Aegis.

Brand Management team decided to analyze the situation after three weeks as it can
give picture about situation of customer service. In the mean time, one call per day
was made by the brand management team to keep a check of quality and information
provided. Entire three weeks, company was in direct contact with Aegis officials and
ask to provide with daily call report which highlights number of calls received ,
product wise calls, language wise calls , information seeked by customer .

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Review after 3 weeks

Brand Management team took a review after three weeks and data was formulated
from daily call report. It was resulted as follows:

Pre Purchase calls constitute 10% of Total Calls landing for LG customer support
service. The percentage of Pre Purchase Calls has been increasing steadily from 7%
to 9% to 11 % over 3 weeks.

Product wise calls were distributed to analyze, which product category consumer is
most interested in.

Exhibit 3: Product category wise distribution calls

High call flow can be seen for GSM calls, the area where company wants to get
establish and benchmark the competition. It can been seen that increasing number of
calls for pre purchase query can prove to be green signal for company to move ahead
in providing distinctive advantage to customer over their competitors.

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 Information seek by consumer was also analyzed to understand where the company is
lacking in their communication.

Exhibit 4: Information heads seeked by consumer wise distribution calls

It can be concluded from the study that Pre Purchase Customer Support System is
entirely different from a Post Purchase System. The customer is more than willing to
spend time to get the right information. Today’s customer doesn’t want just a mere
product but he is expecting complete home solutions from the durable provider.

QUESTIONS

Question 1 - LG Electronics Pvt Ltd should continue with pre purchase support
system? Support the answers with references given in case.

Question 2 – Suggest a future action plan for LG Electronics Pvt Ltd in accordance
with establishing pre purchase support system.

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