15439436 LG Mobiles Pakistan

7/31/2019 15439436 LG Mobiles Pakistan

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Adverting Plan for

LG MobilesPakistan

Submitted by: Muhammad

Mohiuddin Baig

2

009


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EXECUTIVE SUMMARY

The scope of the project is to analyze the current advertising strategy of LG mobiles

Pakistan and recommend changes in it.

First the Industry analysis is discussed in which market share and the market

segmentation is included, followed by consumer behavior and consumer buying

patterns. Then the focus is shifted on the client. After discussing the target market

and Marketing mix (Product, Price, Distribution and Promotion) their current strategy

and ads are discussed.

It has been observed that LG mobile is perceived to be a low quality brand primarily

due to ineffective promotions. Now LG has an opportunity to change this perception

considering two major players are leaving the market. The new plan suggested

incorporates as to how LG mobiles can seize on this opportunity.

The strategies adopted by the competitors and the competitive posture of LG

mobiles against it are discussed.

New strategy is proposed along with its benefits are discussed. The media selection

for the new strategy along with the implementation of the strategy is also

discussed.

In the end the challenges in the proposed strategy is discussed followed by

conclusion.


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COMPANY PROFILE1

LG Electronics Mobile Communication Company (LG) is a global leader and

innovator in the worldwide mobile market, providing consumers with better mobile

experiences through its advanced mobile technology and premium handset design

capabilities. LG is the largest handset provider in the global CDMA market, and is

rapidly expanding its presence in the GSM market.

In Pakistan LG mobiles was launched when LG electronics ventured with New AlliedElectronics few years back.

LG aims to provide the best quality products and technologies for consumers and to

become the undisputed leader in the mobile industry. The company is strengthening

its presence in the global market and earning favorable reputation as a top-quality

brand.

LG has combined its cutting edge design and technological capabilities to create a

more emotional experience for customers with the launch of its Black Label product

under the edge of LG's Black Label series, showed the company's commitment to

high-end premium design products. it was also a commercial and industry success,

selling more than 7.5 million units last year and winning numerous design award.

This year, LG will keep the momentum going by continuing to focus on handset

style and usability.

LG Electronics pursues its 21st century vision of becoming a true global digital

leader who can make its customers worldwide happy through its innovative digitalproducts and services. LG Electronics set its mid- and long-term vision anew to rank

1

http://www.lgmobile.com.pk/experiencelg.php
http://www.lgmobile.com.pk/experiencelg.phphttp://www.lgmobile.com.pk/experiencelg.php


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among the top 3 electronics, information, and telecommunication firms in the world

by 2010. As such, we embrace the philosophy of Great Company, Great People,

whereby only great people can create a great company, and pursue two growth

strategies involving fast innovation and fast growth. Likewise, we seek to secure

three core capabilities: product leadership, market leadership, and people-centered

leadership.

INDUSTRY ANALYSIS

Pakistans handset market is primarily a low-end market with majority of volume

comes from low-end mobile phones. Another important aspect is that our handset

market is extremely price sensitive just like any other handset market of a

developing country.

To comprehend the local market dynamics, below is the price segmentation analysis

along with the market share each price segment comprised upon.


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Source: http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan%E2%80%99s-handset-market-%E2%80%93-an-analysis/

Now let us take a look at the market share of handset manufacturers in Pakistan

Source: http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan%E2%80%99s-handset-market-%E2%80%93-an-analysis/

These figures might be shocking for some people, since in Pakistan most of the

people still think Sony Ericsson is the second major player in the Pakistans handset
http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/


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market which isnt correct any more, As mentioned earlier Pakistan is primarily a

low end market with approx 63%-65% volume generates from phones worth less

than 3000 and if we look into Sony Ericsson local product portfolio you will not find a

single Sony Ericsson model in this price range, strangely enough their majority of

portfolio compete in a price segment (High-end) which is just a mere 5% of the total

handset market.

Motorola is just vanishing in Pakistan, the disaster of their F-3 model started a

vicious slide from which they never recovered with the future seems more bleak.

The Koreans are playing their cards really well with the success of both Samsung &

LG they are really flying high. Especially the success of Samsung is very impressive

with a very strong portfolio (the most balance portfolio in the industry covering all

price segments with good products). This success in Pakistan has come down from

the global success Samsung Mobile has been enjoying from the start of 2007. Their

flagship model SGH C-160 targeting the low-end category is making waves in the

most lucrative (volume vise) price segment in Pakistans handset market. With more

emphasis on R&D & product development the future looks bright for this giant

conglomerate.

LG has also succeeded really well through getting direct benefit from the absence of

any substantial products by Sony Ericsson. But the question mark on the product

quality is hurting the brand to grow exponentially; I believe that they need to work

very hard in building their brand image (development of high perceived value

through High-end Flagship model) as LG still have very low brand image in

comparison with the competition.

Nokia, the global leader in the world is still the player to beat in Pakistans handset

market with the resounding success of Nokia 1200 and Nokia 1208, this global giant

has so much to offer in-terms of quality products. In Pakistan, Nokia plays a major

role in 3 main price categories (Low-end, Low Mid & High) which comprised upon

82% of the total market.

If we look at how the current market stands with respect to market share of each

handset manufacturer, Nokia still has a sizeable lead though their market share has


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been deteriorating steadily (from 65% in 2006 to 48% at the end of July, 08). The

progress of Samsung has been phenomenal from 8% market share in 2006 to the

current 30% with indication of further progression in 2009. LG is the second biggest

gainer (approx 17% share for a player who has just been active since 2 years) with

most of the success came from its 2 successful models LG KG195 & KG270. Sony

Ericsson & Motorola represent 2 of the biggest losers in the handset market with

only 5% & 1% share in the market.

PRODUCT LIFE CYCLE

In the product life cycle LG mobiles is currently in the growth stage and this can be

substantiated from the data above which says that it has increased its market share

to 17% in just two years.

CONSUMER BEHAVIOR

The mindset of our local mobile phone user is very unique & complex. Influences of

socio-economic & demographic factors, peer pressures & life style etc are the main

driving force through which the consumer ends up owning a particular model for

his/her communication needs.


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A rough estimate suggests that in Pakistan the usage span of a new cell phone is

mere 3 months (means majority of local users upgrade their cell phone within 3

months time).

Pakistans mobile user can be divided into two main categories (2 basic types of

users).

1. Those who are driven by their needs

2. Those who are driven by their aspirations (Users who can easily suffice their

communication requirement through a say Rs. 10k mobile phone but instead they

choose to carry a cell phones worth Rs. 40K or more)

In every mobile phone users mind there is a battle going around, a battle between

their needs & aspirations. Some own phones to suffice their communication needs

while some own phones to meet their aspiration urges.

Now look at the mobile phone user preference chart while making actual decision,

the data is a study & extrapolation is used for analysis purposes as it enable us to

understand the psyche of local consumer. Also take a look at the chart depicting

local consumer purchasing pattern.

Source: http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-

battle-of-needs-aspirations/
http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/


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The above chart suggests that the consumer is sensitive to a number of factors and

it is difficult to point out just one or two.

PURCHASE PATTERNS

Following table shows the prominent factors that influence the customers in buying

a phone:

Source: http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-

battle-of-needs-aspirations/

It is a high involvement product. We can see that referral and advertisement both

play a vital role when a phone is being bought. Building a strong brand image and

ensuring a positive word of mouth are the two key success factors for any player in

the industry.

TARGET MARKET

LG mobile caters to both high and low end market by providing a diversified product

line. This has already been discussed earlier that the market is segmented

essentially in four broad categories
http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/


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Low-End

Low-Mid

High-Mid

High-End

Now let us take a look what products of LG caters to which segment

Low-End Low-Mid High-Mid High-

End

LG G 1600 GSM LG KG 195 LG KE 970 LG

KU 990

Price: Rs.2,200. Price: 6,000 Price: 14,000

Price: 30,000

Also LG has launched an exclusive phone for females this is in response to Motorola

pink phones:

LG KG 270

So it is difficult to say that LG targets a specific segment the range of products is as

such that it caters to all broad categories that are there in the market. From

advertising perspective the ads shown do not target any segment specifically rather


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they are generic ads which is a major drawback because you first need to identify

the target market according to the product and then make ads accordingly.

SWOT ANALYSIS

Strengths Weaknesses Opportunities Threats

Strong brand

name

Ineffective

promotions

Growth in the

Telecom Industry

Counterfeiting

phones

Technological

Innovation

No defined

position against

competition

Using

promotions to

establish a

competitive

position

Strong

Competition

Increasing

Market share

Negative word of

mouth

Targeting low

end market

Market for

second hand

phonesDiversified

product line

Relatively new in

the market

Strengths:

LG has a strong brand name which is mainly due to the other electronic items that

are there in the market. When we talk of LG mobiles we see that LG is constantly

innovating, it is bringing in new features in its phones. This is primarily due to the

competition that is there for example if Nokia or any other competitor would launch

a new phone, LG would be quick to launch a similar phone with same or even more

features. Another key attribute that LG has is its strong financial backing. LG

provides a diversified product line targeting both high and low end customers.

These phones vary in design, features and prices in order to cater to each segment.LG has been one of the prominent brands in the cellular industry which increased its

market share considerably.

Weaknesses


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If we look at the promotions of LG mobiles we can identify a number of flaws. They

play heavily on the celebrity endorsement and in the end the celebrity turns out

bigger than the brand. Also we would not find and cohesion between the

promotional strategies. Another key issue is that even if they produce a quality

product the customers would perceive it to be sub standard because of the negative

word of mouth. LG provides all features at a relatively cheaper price but somehow

customers dont associate quality with it. LG mobile is a relatively new player in the

market. It has only been there for two years, considering Nokia have been in the

market for a long time.

Opportunities

Pakistan has seen immense growth in the telecom industry over the last few years.

According to PTA (Pakistan Telecommunication Authority) 91% of Pakistans

population is covered with mobile. LG mobile has a huge market that it can cater to

thereby it can increase its market share. If LG formulates a consistent promotional

strategy and define its position it would be able to compete with giants like Nokia.

This is crucial because even if it continues to produce quality products,

incorporating new features it would continue to suffer because of the ineffective

promotional strategy. As discussed earlier chunk of the revenue in the industrycomes from the low end market so LG should strongly focus on that to increase its

market share.

Threats

The major threat for all mobile producers including LG is the presence of

counterfeiting phones which are the replica of the original phones. They provide the

same features and sold at half price or even lesser than that in the market.

Considering the decreasing disposable income due to inflation customers are

switching to these phones. With reference to LG mobiles it is facing stiff competition

from big players like Nokia the reason is that the loyal customers of other brands

refuse to switch to any LG. Pakistan is a host to one of the biggest mobile for used


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phones and customers prefer to buy a second hand Nokia phone instead of getting

a new LG phone because they relate reliability with Nokia not LG mobiles

MARKETING MIX

Product

LG mobiles provide a diversified line of products of handsets in order to cater to

different segments. Currently it is providing a variety of more than twenty phones in

the market. They include the phones that were launch with the intention that they

would compete with Nokia and other brands and then there are some which are

completely different.

Some categories of phones that are as follows

LG KG series

LG KU series

LG KF series

LG KM series

LG KP series

Within these series variety of sets are offered keeping in mind the pricing and the

features that have to be offered with it.

Price


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The price range varies from Rs. 2,000-30,000 depending on the features and design

of the phones. The nature of the product is as such that it has to cater to various

segments and obviously you cannot charge a similar price to all the segments so

this variability in price provides flexibility.

Distribution

LG has its own showrooms where their products are displayed and sold but primarily

it is sold through distributors namely Advance Telecom and United Mobile. These

distributors have contracts with LG mobiles and they also claim the warranty in case

of any damage or malfunctioning of the product.

Communication/ Current Promotions

2

LG has remained one of the top advertisers for the year 2008 yet it has not beenable to define its clear position in the market although the market share of LG is

increasing but that is due to the fact that one of

the major player i.e. Sony Ericsson is leaving the

market.

If we look at the promotional campaign of LG

mobiles we see heavy use of celebrity

endorsement in all their advertisements whether

print or media. They have used celebrities like:

Abrar Ul Haq

Ali Zafar

2 research carried out by media track


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Atif Aslam

There is nothing wrong with using celebrity endorsement but if you rely heavily on it

and do not highlight the brand, the celebrity becomes bigger than the brand and

that is exactly what is happening with LGs campaign. This is one of the reason whyLG phones are perceived to be sub standard. The impact on the high end products is

greater than the low end products because consumers are not willing to spend a lot

of money buying a LG phone.

In their ads they do focus on the features of the product but in the end it gives an

image of a sales pitch. It does not talk about

building brand or building relationship with the

customers. According to my analysis the issue is

not of the product or the quality the issue is of

the perception. So far none of their campaigns

tries to resolve that issue. Earlier when

consumer buying behavior was discussed we

observed that the brand name plays a vital role

but unfortunately LG has not been able to

establish that. Due to ineffective promotions LG

has also been a victim of negative word of

mouth, people who have not used the phone still

have to say something bad about it because

they do not like the ads that they have seen on TV or print media. They started of

their campaign with Abrar ul Haq and the TV commercial gave an image of a low

quality and low price brand although it had all the features to compete with Nokia

and Samsung. Then they bought in Atif Aslam in LG KG ads which was I believe

much better than the previous one and now they are using Ali Zafar. The point that I

am trying to make here is that there have been no cohesion between these

campaigns and the message was confusing. It is giving an image that LG is relying

on celebrities to compensate for lack of quality in the products.

Media Selection


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As discussed earlier LG mobile has been one of the top three advertisers on TV

having said that they do advertise on print media as well but primarily they focus on

the TV. Print media includes advertisement in news papers and billboards as well.

LG mobile hardly uses radio for advertising.

To sum up the analysis of the current campaign of LG mobiles, here are the salient

features of it:

COMPETITOR ANALYSIS

Let us now take a look at what companies like Nokia, Samsung and Sony Ericsson is

doing in terms of their ad campaigns.


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The ads of these companies are not locally made so they have adopted a regional if

not a global strategy.

Sony Ericsson

If we take the example of Sony Ericsson the

ads shown in India are the same that run

here. Sony Ericsson has a well defined

product line meaning everyone knows that

Walkman phones of Sony Ericsson are the W

series and they Cyber shot phones are the K series so the customers can relate to it.

The ads that run of each line are different and tailor made for each segment. Also

the tagline of I (logo of Sony Ericsson) has proved to be very effective. It sends a

consistent message.

Nokia

Recently Nokia has introduced a line of music

phones known as express music they are

introduced to compete with Sony Ericssons

Walkman phones. The ads truly depict the core

benefits of the products. Like Sony Ericsson, Nokia

has a well defined product line. The customers

know what to expect from N-series and E-series.

The latter is a sophisticated product line designed for the corporate and N-series for

gaming.

Samsung

Samsung has recently launched Omnia to compete against Apple I phone but

surprisingly Samsung hardly advertises its products. The ads we see on television

are not on our local channels. One thing that they do is that they bundle their

phones with their other products such as LCDs and home theatre system. So

essentially they are cashing in on their strong brand name. When it comes to

advertising their phones separately they have no defined plan as such with

reference to our market.


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COMPETITIVE POSTURE

LG mobiles has an advantage over its competitors that it makes local ads in which

usually the medium of communication is Urdu, the reason why it is crucial because

it is the most understood language among the masses. Same is not true for its

competitors in which the medium of language is English. Ads by LG usually have a

local touch which is a double edged weapon because on one hand masses do

understand the product and on the other perceive it to be sub standard since it

gives a local touch.

PLAN SUGGESTED

The plan suggested would focus on building a stronger brand image for LG mobiles.

The plan would require a more sophisticated and customized approach while

designing the campaign.

OBJECTIVES

The objective of the plan proposed is to build a strong brand image of LG mobiles so

it can penetrate into high end market. This is important because the penetration of

LG mobiles in high end market is very less. The ads designed should reach out to

the High end market. Currently none of their ads appeal to this class this includes all

their celebrity endorsed. Their ads should be focusing on the brand rather than the

strategy. One thing that they are doing well is explaining the product features well

so I would not recommend changing that considering the nature of the product

however the brand LG mobiles should be focused as well.


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The plan would also include defining each product line again taking example from

its competitors Nokia has a well defined product line( N-series, E-series) but LG

doesnt have that all they have is their LG KG series but no one know how it is

different from its other products.

STRATEGY & IMPLEMENTATION

Market positioning

The plan suggested would project LG mobiles as a high quality brand. Considering

Sony Ericsson and Motorola are leaving the market and the consumers are running

out of alternatives, now would be the best time for LG mobiles to take advantage of

the phone. Consumer Behavior analysis and purchase patterns suggest that the

perception of the brand is important. The plan would try to improve that.

Advertising Message

The advertising message should show

sophistication and they can use punch lines such as

Sophistication with Style

The appeal of these advertisements should

primarily be slice of life. The music especially in the

TV ads should be sober yet classy. They focus on

the product features which is essential but they

also need to focus on the brand as well. This

advertisement is from their current campaign and I

believe it is a pretty decent ad but somehow these kind of ads are over shadowed

by celebrity endorsed ads.

They have to do away with too many celebrities that are currently endorsed and

move their focus to the brand. Making sophisticated ads like Nokia does is important

for a better brand image. They should not mention the price with their every ad

because in the end the product is perceived to be sub standard. If we look at the

competitors no one shows the price of the product in the ads.


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In the ads they have to use more sophisticated colors such as black also they need

to come up with a jingle like Nokia and Sony Ericsson has. Jingle leads to an

immediate brand recall. LG mobile needs to have one as well which is sophisticated.

BUDGET

Considering LG mobiles is among the top advertisers for the last year so one can

safely assume that the company has no major financial constraint. The costs of

showing new ads which have a more sophisticated look and message which lead to

brand building are as follows:

The cost would be assumed for a campaign of one month:

Newspaper ads (The News and The

Jang Urdu) on weekends. Half page

ads

Rs. 800,000

Television Geo TV and Hum TV. One

minute commercial 4 times on

alternate days on each channel

Rs. 100,000,00 approx


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during prime time and regular as

wellOutdoor advertisements Rs. 50,000,00 approxMisc. Rs. 50,000

The costs are high because it would be a month campaign focusing on brand

building.

MEDIA

I believe the media vehicles used by LG mobiles now are fine but I would like to

propose advertising more on print media and radio.

The sole focus of LG mobiles current advertisement is TV. The new strategy would

require LG to shift its focus slightly from that to other media as well. LG should

advertise more in Newspapers and radio following the footsteps of Nokia because

they are the market leaders right now. Outdoor advertising would include billboards

and point of sales (Mobile Markets).


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Considering it to be a high involvement product direct mail can be effective and

would give a more personal touch to the potential customers.

EVALUATION

The strategy proposed can be evaluated through the following

Increase in sales of high end products

Customer surveys as to how they perceive the brand after the campaign

Feedback from distributors

CHALLENGES

The challenges that can be faced while this strategy is adopted can be the strong

influence of the Parent company as it would be difficult to create a separate

positioning for this particular product line. Considering the recent financial crunch

allocating huge costs to advertisements can be a threat. Stepping into high end

market would mean additional competition from brands like Blackberry and I phone

so that is a major challenge.

CONCLUSION

LG mobiles is increasing its market share but that is only due to the sales of low endproducts. At this point market is flooded with counterfeiting phones coming from

china. So they must explore new markets or re visit their strategy in their existing

markets. It is about time LG focuses on its advertising strategy for high end

products and have more sophisticated approach. This would improve the brand

image of LG mobiles in the market. If LG is able to change the perception of the


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consumers about the brand it will for sure see a growth that is sustainable in the

long run as well.


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References

http://www.pro-pakistan.com/2008/08/30/the-state-of-

pakistan%E2%80%99s-handset-market-%E2%80%93-an-analysis/

http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-

mobile-phone-users-the-battle-of-needs-aspirations/

http://pakgsm.com/lg_mobile_rates.html

http://www.lgmobile.com.pk/experiencelg.php

http://geo.tv/geopages/ratecardgeonews.htm
http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://pakgsm.com/lg_mobile_rates.htmlhttp://www.lgmobile.com.pk/experiencelg.phphttp://geo.tv/geopages/ratecardgeonews.htmhttp://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/08/30/the-state-of-pakistan's-handset-market---an-analysis/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://www.pro-pakistan.com/2008/09/08/an-insight-into-the-mind-of-mobile-phone-users-the-battle-of-needs-aspirations/http://pakgsm.com/lg_mobile_rates.htmlhttp://www.lgmobile.com.pk/experiencelg.phphttp://geo.tv/geopages/ratecardgeonews.htm

15439436 LG Mobiles Pakistan

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