Among the methods that enable an organization to be profitable, marketing is the best form to ensure that consumers know about the product, offered by an organization. Through marketing, an organization can achieve various goals. First, the institution can get new customers, since they are given some new information about the product, which they did not know before. Second, the organization can retain the customers that it has already had by continuing to keep them informed about specific products that it sells. The company, therefore, gets a feedback from customers regarding a specific product. It is at this stage that the company chooses whether to keep the same goods in production, to change them according to certain customers’ requirements, or even to start brainstorming in order to get new innovative thoughts and launch another product. On the one hand, marketing is what enables companies to grow from small local entities into global corporations. On the other hand, it has also caused bankruptcy of some multinational giants. Therefore, a company, which uses marketing in a proper way, ensures its success. LG
Electronics is one of the companies that have used marketing to expand their businesses. This paper analyses how marketing was useful for LG on its way to success.
LG Electronics Inc. is a multinational company that deals with electronics. It is a subsidiary company of the LG Corporation and it deals with home entertainment, vehicle components, home appliance and air solution, as well as mobile communications. Since its foundation, LG Electronics Inc has been continuously growing up to the position, which it occupies today. This company has 119 local subsidiaries globally, which employ about 82000 workers. LG Electronics has achieved a great success in the recent years. It plays an important role when the global electronic industry is considered. Its presence in the world is noticeable due to the production of new smartphones and televisions as well as some higher technology. In 2013 LG was the second largest producer of LCD (Liquid Crystal Display) televisions worldwide (Yang, 2011). Back in 2006, LG Electronics recorded a 14 percent brand growth globally, showing that its growth was steady.
Business sphere of LG can be divided into four main areas: home entertainment, vehicle components, home appliance and air solution, and mobile communications. LG Electronics has made significant technological achievements, especially in mobile devices and televisions (LG, 2016). In the television sector, LG has produced various televisions, supporting new technologies, such as LG Smart Televisions as well as 65-inch and 77-inch OLED televisions (LG, 2016). These two televisions have been among the trendsetters in their categories. They use a platform known as webOS, which has a ribbon interface. Other LG’s products that are successful are smartphones and tablet computers. Apart from these computing devices, LG Electronics has also added smart watches and Rolly keyboards to its range of mobile communication. As far as Home Appliances are concerned, LG Electronics produce various home appliances that are useful in the day to day activities at home. They include refrigerators, vacuum cleaners, air conditioning equipment, dishwashers, dryers, iron boxes, and home theaters among others. Recently LG has started trials on using home automation, whereby a homeowner can control a particular appliance remotely by using a mobile phone. The trial has only been happening in Korea in combination with the HomeChat messaging service. Homeowners can send text messages to their home appliances in order to monitor, control, or even share content with them.
The SWOT analysis is a tool that has been used by many companies to show various external and internal factors that are either good or bad for their businesses or to achieve the objectives, set by the corporation. In order to be able to survive, LG Electronics has to conduct a SWOT analysis that shows various opportunities, weaknesses, strengths, and threats in the electronics market. LG Electronics has different strengths that enable it to be among the leading companies in the market worldwide. First, LG has been able to develop its brand globally and it is available in most of the countries worldwide. With its current slogan “Life’s Good”, LG has developed a customer base of loyal clients that appreciate the products, which they develop. LG is not only available in the developed countries, but it also produces goods for developing countries, hence, its huge customer base is spread globally. Another strength that LG possesses is that it has the largest production of plasma panels. The company makes profit from this feature and, thus, it has been able to survive in the market.
Therefore, most of the plasma panels, used by people throughout the world, have been mostly manufactured by LG Electronics. Moreover, products of LG Company have an easy to use interface, which is customer friendly. The corporation also uses modern designs and produces reliable goods. Hence, many people prefer using LG products to those of other companies. Due to its experience in the Electronics section, LG has been able to expand from producing appliances mostly used at home to those that are seen as luxury products. This diversification of products has provided the continual survival of LG Electronics in the market. It has ensured that all categories of customers are being served.
To be able to produce high-quality products, LG Electronics has invested fully in research and development to satisfy different requirements of the customers, to produce goods, which are right for them, and to guarantee that they use modern technology. This research has also brought innovations to the goods, produced by the company. Through achieving customer satisfaction and introducing innovations, LG has been able to retain their current clients as well as to expand its customer base and to gain a market share. LG Electronics, being a multinational company, receives various tax incentives in many countries so as to establish a base there. It has enabled LG to diversify its manufacturing sites globally. The diversification has increased the number of manufacturing units that the company produces every day, thus, being able to serve the needs of its customers. LG, therefore, has wide channels of distribution in the electronics industry, possesses 47 branches, and has about 10000 trade partners. LG also made a variety of branding efforts in the world by sponsoring various lifestyle events and sporting activities such as formula one championship, ICC cricket world cup, and soccer matches among others. Finally, one of the strengths that enabled LG to get such a big market share is the fact that it is usually among the first companies or in most cases the first company to introduce a new appliance to the market. It can be seen in the example of steam washing machines, as LG was the first company to produce them.
Apart from the strengths, LG Electronics also has several weaknesses, which it should address to ensure that it remains among the leading companies of electronics manufacturing. The first weakness is that its management was undermined by the global diversification of product categories. Due to a great number of products that LG has and because of its extensive presence in the market, the company is not able to focus on a specific product only, which has led to a loss in a market share of some products such as refrigerators, and televisions among others. Diversification has also resulted in a lack of a specific product, which could be especially profitable for the company. When compared to its competitor, Samsung, whose main sources of income are smartphones and smart televisions, there is no equipment that LG can call such a source. The lack of it is a reason to worry, and LG should ensure that it has at least one product, in which it can specialize.
Moreover, the products, offered by Samsung in Korea, is another weakness that LG is currently facing. Globally, LG faces some weaknesses such lack of training in some of its distribution branches. Such a case has happened in the company’s branch in Morocco, where its workers were unable to operate complex machines that the company produces due to a lack of training. Lastly, LG Electronics lacks influence in the segment of early adopters, especially in the environment of social media. These weaknesses are some of the areas that LG Electronics needs to improve to be the best in the electronics industry.
Apart from the strengths and weaknesses, LG Electronics also faces some opportunities in the electronics market. The first opportunity that LG Electronics should take advantage of is the fast growth of various electronics and home appliances in many developing countries. It is a result of improved living standards in those new economies. There has also been a rise in the population in the urban areas, so the demand for these appliances has also grown. Competitors are also providing LG with an opportunity to increase the market share. It happens due to the fact that the intense competition has made the goods, produced by LG Electronics, suitable fro the society. LG can, therefore, use this factor to its advantage and can increase its market share by observing the moves, made by competitors. The company can also increase its market share by penetrating into new economies, which provides a new consumer base for the products. Lastly, LG can take advantage of strategic partnership. With the help of strategic alliances, LG can make use of the resources of other corporations to ensure its faster development. It is especially helpful in technological advancement and in identification of business opportunities.
LG Electronics can also focus on its research, innovation, and development to retain their loyal customers and to get newer clients for their products. It is possible, because people will always give preference to newer technology in the market. Just recently, LG Electronics was given a patent for a washing machine, which it produced in the Republic of Korea. The company can use it as an advantage and a way to enhance the brand of the company.
Finally, devices, produced by the company, have been manufactured to consume less power than those of their competitors. It means that customers from different parts of the world can be attracted to buying their products. LG Electronics can use the above opportunities to its benefit and can develop them to become company’s strengths.
Apart from opportunities that LG Electronics can turn into its strengths, there are also threats, which should be correctly checked, otherwise, they can cause a complete loss of the market share. The first threat appears due to competitors, producing the same products as LG Electronics. Continued research, development, and innovations make the products of the competitors better, and it can lead to the loss of a market share by LG Electronics.
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The company faces strong competition from various companies including Samsung, which is also located in Korea, Sony, Panasonic, Toshiba, and Whirlpool among others. Another threat that LG faces is the current economic crisis, which is felt globally. This financial crisis is affecting the buying power of different consumers, and, as a result, the customers are not able to buy the goods. However, this threat is not affecting the company alone but all the other members of the industry as well. LG also suffers from price wars with its competitors. It means that sometimes competitors establish a lower price for their products, and if LG cannot afford to propose the same price, its products appear to be expensive for the consumers. Clients, therefore, opt to buy cheaper products, which results in a loss of price share in the market. China has emerged to be a producer of cheaper appliances. It happens mainly as a result of the availability of cheaper labor force in China. These appliances are affordable to many people and are considered to be of the standard quality. This cheap production from China is therefore affecting LG’s performance. Another threat to LG’s products in the electronics market is the urban demand dynamics that have remained in the state of stagnation.
The urban markets have been left with a little space to grow, since more and more companies are venturing into this over-competitive market. The threat appears, when LG depends on these markets too much. Moreover, government policies and regulations, regarding using innovative technology for power and energy conservation is affecting the whole industry. The policies of most governments are forcing the members of the industry to turn from non-renewable to renewable sources of energy. Lastly, due to the raising minimum wage and cost of raw materials in different bases of operations, LG’s margins continue to decrease every day, and it is continually making the functioning of the business less profitable. If LG Electronics still wishes to hold a commanding market share as far as electronics is concerned, then it needs to consider threats carefully to ensure that they are overcome, and to find a solution is order to prevent them from affecting the business in the wrong way.
To be able to increase its market share, LG had to develop a remarkable marketing strategy. Initially, LG’s goods were deemed low-quality products and this perception of the consumers did not allow LG to get a market share it wanted. In order to remove this perception from the minds of the consumers, LG developed a marketing strategy that involved getting its products distributed in high-end retailers. This decision avoided the path of the least resistance and also aimed at developing a distribution of LG’s products in high-end retail stores (Berger, 2012). This plan worked marvelously and eliminated the wrong perception in the minds of consumers. Not only did they distribute their products to these stores, but they also provided the staff of these stores with necessary trainings and other incentives, so that they were able to become better sales managers. This move served one goal: the salespeople were most likely to recommend LG’s products to any customer, who needed to buy an appliance. It overcame the established opinion that LG’s products were of low quality. Another popular marketing strategy that pushed LG to the top is the consumer advertising, adopted by the corporation. The company developed its motto “Life’s Good” and also personalized the brand by adding a cherry face to its logo. LG relies on the loyalty of its customers and various other communication tools to enhance its marketing. It introduces new products by using various marketing techniques such as advertisements and Internet and also uses these tools to achieve more brand awareness.
To understand how LG Electronics continues its day to day marketing, the company needs to be analyzed from the perspective of the marketing mix. Marketing mix is a set of tools, used by marketers for marketing. They include product, price, place, and promotion (4Ps). For the product in the marketing mix, LG has several products, which it provides to the consumers. They include various television brands, mobile devices, and home entertainment products, including DVD players, home theaters, BLU Ray players, and music systems. LG has also specialized in a variety of home appliances such as dishwashers, refrigerators, air conditioning equipment, vacuum cleaners, air purifiers, and microwave ovens among others. The second P in the marketing mix stands for the place. Place refers to geographical regions all over the world, where LG has its branches and a customer base. LG occupies the global market with an aim of a faster growth that can only be achieved through globalization. Apart from Korea, the first place, where LG sold its products, was the United States (Bhasin, 2015). It is after making sales in the United States that LG expanded its operations to other countries around the globe. In today’s age of digital marketing, LG has enabled online shopping of its products over the Internet on various shopping sites. The company has put its focus on the supply chain, so that excellent distributors have enabled it to be successful in terms of place, in regards to the marketing mix.
Apart from the place and product, LG Electronics also utilizes the third P of the marketing mix, which is price. LG uses a certain pricing policy that includes cost plus a fixed markup. It means that the price of a specific product is set by its total cost plus a sizeable amount of profit. Before setting the price, the market is researched in order to find out the prices of the competitors and the thoughts of the consumers. Then the analysis is conducted to finally set the price of the product.
Finally, the last P in marketing mix stands for promotion. LG Electronics has developed a culture of promotional advertising to make its products known among the consumers. In order to sell the products, the company has developed a system that ensures direct communication with the clients. It is realized in the form of adverts in newspapers, magazines, and televisions. LG has also sponsored various sporting events such as the cricket world cup and formula one among others in order to advertise its brand. The utilization of the marketing mix by LG Electronics has ensured the survival of the company in the over-competitive business of electronics.
In conclusion, LG Electronics has been able to remain in the field of electronics due to several reasons. SWOT analysis helps, for example, to identify which position the company occupies in regard to its competitors. The strengths show why LG is a profitable company, and they include such factors as being a leader in the plasma panel production, having a wide range of products, and developing products of a higher quality through research and innovation. The weaknesses and threats show areas that LG needs to improve and to be aware of respectively. The opportunities represent spheres that LG needs to take advantage of to be able to increase its market share globally. If LG Electronics carefully follows the SWOT analysis, then not only will it gain a bigger market share, but it will also have an increase in its profits.