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Asim Raina & Balaka Baruah Aggarwal
LG Electronics India Ltd has denied market rumors about closing its IT business in the country attributing the rumors as mischief by its competitors who are seeking to gain marketshare at its expense. Said KR Kim, MD, LG India, "These are absolute rubbish and a pack of lies and is the handiwork of our competitors. We are very focused about the IT business and have recently invested $ 10 million in setting up our assembly lines for monitors at
NOIDA."
In fact, the IT division of LG Electronics is buzzing with activity these days. There is an agenda of expansion both in terms of reach and product portfolio. The company has appointed four new regional distributors in the last three months--Micromax for UP and Uttaranchal, Salora for North, Jupiter for the East and Wellwin for the South. This is in addition to its four existing national distributors--Aditya Infotech, ACI Computers, Priya International and Compuage
Infocom.
"The logic behind appointing regional distributors is to reach out to people in the C and D class cities. National distributors typically focus on high volume areas and in the process smaller cities with immense potential could end up being neglected," pointed out NS Bindra, GM (Sales and Marketing) - IT Products, LG India.
| LG to confer `authorized' status on channels
S Gopikrishna In a value-adding move, LG Electronics India is in the process of giving `authorized' relationship status to some of its key channel players in the local market here. LG has a good presence in the regional market distributing products mainly through Some of the channel players here who are doing a good business with LG presently are Supreme Computers, RM Computers, The other channel players short-listed in Tamil Nadu are "The `authorized' relationship status will add more value for the channels when they meet the customers and moreover, they are eligible for all benefit programs promoted by LG is also to conduct roadshows in Chennai and Coimbatore shortly as part of its promotion program. |
New appointments are therefore not expected to eat into the business of existing distributors since it is aimed at targeting those markets which were not being served properly. More appointments are on the anvil depending upon the market dynamics.
By January LG is also planning to flood the market with an array of new products including DVD RAMs (which would be the only available brand in the market), combo drives, and will be revamping its high-end monitor range. The 17, 19 and 21 inch monitors would be available in TFT and the 19-inch monitors would be elevated to the Flatron model. LG is also ready to launch its notebooks "as soon as the market conditions seem right". Officials estimate that the main product category would continue to be monitors contributing as much as 65 percent of its business.
But the trump card which LG is hoping to cash in on is its OEM strategy. It started local manufacturing in June this year and already has HCL as one of its clients. It is in the process of talking to Wipro and Zenith also. The plant has the potential to manufacture 3.5 lakh units annually with its current output standing at around 25,000 units per month.
With these initiatives in place, LG hopes to ramp up its growth rate in monitors from 40 percent in calendar 2001 to 70 percent in calendar 2002. The most significant thrust to its growth will come from the OEM foray. Defending the high growth estimate as being `very reasonable', Bindra, said, "Our strategy has been to focus on local manufacturing which would help bring down costs. We have also worked on improving our supply chain management and inventory which is all expected to add to our bottomline." He estimates LG's current marketshare to be in the region of 16-17 percent and is targeting to sell around six lakh monitors next year.
With the company's assembly line in place now, the next focus would be the roll out of its new product range.
LG versus Samsung
The comparison is inevitable. Both are Korean firms and both have similar product lines. Yet the IT business of Samsung has raced far ahead with a dominant marketshare in the monitors market (30 percent plus). LG officials point out that it is not fair to compare marketshare since the `addressable market' of Samsung is far wider than LG. And it has only now firmed up its OEM strategy and has a very focussed product range.
That being so, what about mindshare and brand recall? While officials admit that Samsung has done a good job in creating mindshare, it also adds that Samsung has indulged in a lot of push factor which is not necessarily healthy for the market.
Pointed out Ganesh Mahalingam, GM (Marketing), LG India, "Our monitors are positioned in the premium range and thus we do not have too many promotional schemes." He, however, admitted that LG did need to ramp up its visibility exercise.
"Visibility is a multi-faceted game having both good and bad aspects and in which we may not necessarily participate."
On his part, Bindra claimed that one little known fact about LG monitors is that it is highest selling brand in Delhi city--a fact that could not be corroborated in the market.
The next calendar year will be critical for LG as it expects its new initiatives to yield results by then. The organization undertook a revamping exercise in April by separating its IT division which was complimented by its decision to expand its reach by appointing more regional distributors.
In the process, LG's IT revenue in thew country is expected to reach Rs 650 crore in 2002 as compared to Rs 300 crore this year and Rs 220 crore in calendar 2000.
(CNS)