Group 12 - LG Product & Brand Decisions PDF

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TOPIC 12

MARCH 19 Member List: 1. Nguyễễn Ng cọ Hằằng 2. Nguyễễn Long Thằắng 3. Đỗễ Quang Tùng 4. T ừ Đức Vinh

CLASS: INTERNATIONAL BUSINESS ADMINISTRATION 59A - EEP Authored by: GROUP 12

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TOPIC 12. DISCUSS THE PRODUCT AND BRAND DECISIONS OF LG PART I. Introduction of the company LG Electronics Inc. (Korean: LG 전자; RR: LG Jeonja) is a South Korean multinational electronics company headquartered in Yeouido-dong, Seoul, South Korea. LG Electronics is part of the fourth-largest chaebol in South Korea (LG Corporation) and in 2014 global sales reached $55.91 billion (₩ 59.04 trillion), LG comprises four business units: Home Entertainment, Mobile Communications, Home Appliances & Air Solutions, and Vehicle Components, with Starion India as its main production vendor for refrigeration and washing machines in the Indian subcontinent. LG Electronics owns Zenith and controls 37.9 percent of LG Display and since 2008, LG Electronics remains the world's second-largest LCD television manufacturer. The company has 128 operations worldwide, employing 83,000 people. G Electronics has five business units:  Home Entertainment  Mobile Communications  Home Appliances & Air Solutions  Vehicle Solutions  Business Solutions Slogans  "We put people first" (1997–1999)  "Digitally Yours" (1999–2004)  "Life's Good" (1999–present in Australia and 2004–present in the rest of the world)

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PART II. Choose one of the company’s brand: What are the core, actual and augmented product benefits of the brand? Three levels of LG TV

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PART III. What are the sources of brand equity for any given brand of the company? 1. AWARENESS South Korea’s LG was above multinational names Google and Apple as well as much bigger domestic rival Samsung in this year’s Harris Poll, annual consumer survey of 100 most visible companies in corporate value and brand awareness. According to the 2018 Harris Poll Reputation Quotient poll published on March 13, LG Corp., the holding company for South Korea’s fourth largest conglomerate units including top appliance maker LG Electronics, ranked 25th with a score of 78.92 in measurements on emotional appeal, products and services, social responsibility, vision and leadership, workplace environment and financial performance. Its ascension comes stunning as it was dropped from the top 100 visible list last year. It outperformed Google at 28th, Apple 29th, Sony 31st, and Samsung 35th in this year’s corporation reputation rank. In the product & services category, LG scored fourth after Amazon.com, Tesla Motors and Wegmans. LG has become top seller in the global premium white-goods and TV markets with its blockbuster Signature appliances brand and OLED TVs. In 2017, LG Electronics’ earning from home appliance sales reached 1.5 trillion won and from TV sales 1.6 trillion won with the profitability against revenue at around 8 percent in the two businesses. U.S. market research firm Harris Insights & Analytics announces the reputation ratings for the 100 most visible companies every year. This year’s rating interviews took place online between December 11 and January 12, 2018 among 25,800 U.S. adults to obtain an average of approximately 300 ratings per company. 2. BRAND ASSOCIATIONS LG Electronics has received awards and widely acknowledged by var-ious associations and organisations and this has been communicated bythe LG to their users which has played an important role in the perception of its brand value from the consumer‟s point of view. These awardsinclude “European Imaging and Sound Association (EISA) Awards” in fourareas, “iF DesignAwards” in 7 Areas, “CES Innovations Awards” in four-teen Areas and “reddot Design Awards” in seven different Areas.

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PART IV. What marketing targeting and positioning would you recommend for a selected brand of the company? The marketing targeting and positioning we would recommend for LG TVs: 1. TARGETING LG should target its market on the basis of the product that they are offering to the consumer. They should target: Upper class segment Upper and they should target those consumers who are more concerned about lifestyle products. Their product is more upper mid class and premium segment, so their target audiences are those consumers, who want quality products at the best price. They have LCD and Plasma Television for the premium segment. They should also target those consumers, who are more concerned about safety and health issues. LG also should consider to shift over to the mid class segment and want to mass market their product. 2. POSITIONING With the tagline Life’s Good; LG positioning is to differentiate their products on the basis of technology which appeals to the consumer on the basis of health benefits. With the tagline ‘Life’s good’ its corporate philosophy to make people lives better, convenient and healthier. Their positioning strategies are technologically intelligent and futuristic. As they are in the upper and premium segment, they are featuring that their brand is young, vibrant and premium. LG has differentiated its product using technology and health benefits. We think this positioning is so good so LG should remain it and develop in this way.

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PART V. Use Kotler and Amstrong (2010)’s 4 major brand strategy decisions: How the company communicate its brand to international markets? 4 MAJOR BRAND STRATEGY DECISIONS

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BRAND POSITIONING

1.1. ATTRIBUTES LG is a global technology brand that aims to enrich people’s lives through the use of technology. It’s brand slogan is “Life’s Good”. The brand defines itself as a smart brand that believes in bringing surprising delights for the customers. The Life’s Good slogan is also represented in its logo which is a red circle with the letters L and G inscribed in it. Its philosophy is to connect with humanity. Its logo symbolizes four things – world, future, youth, humanity and technology. The logo also represents LG’s connection with humanity globally. In its branding strategy, LG has focused on creating a strong and differentiated brand identity. Its connection with humanity is visible in the smiling and delighted human face at the center of the unique logo. There are two versions of the LG logo – one is the corporate version and the other is the 3D version. The corporate logo is found on the stationary items, Office templates, awards, badges and corporate signs. The 3d logo on the other hand is found on

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advertisements, websites, microsites, promotional literature, packaging, retail signs and POPs, shopping bags and service vehicles. 1.2. BENEFITS In recent days, LG has also updated its positioning strategy and its brand image to a smarter brand with a smarter face. The new face of LG is technologically smarter, like the products it has brought to the market. Its products are smarter plus priced competitively. Apart from quality, the brand’s pricing strategy is also a critical part of its marketing strategy. LG is a futuristic brand, focused on innovative technology, bringing great and unique products to the market and invested in creating a great brand dedicated to humanity. 1.3. BELIEFS AND VALUES LG has positioned itself as a smart and customer-friendly brand. Apart from that, the focus is on reliability where LG always tries to provide its customers with products that are safe and valuable. A chief focus of the brand is quality. The ‘Life’s Good’ branding strategy has helped it create unique value for its customers globally. It is working on making people’s life good and safe. In recent years, LG has focused sharply on increasing its presence and penetration in the Asian markets. It has brought an array of products to the market, that are not just smarter but also distinctively intuitive. In this way, LG has been able to update its brand image to that of a Lifestyle brand that brings additional comfort and fun to people’s lives. From curved televisions to new models of washing machines, all of them have been created with a focus on people’s lifestyle needs. LG focuses heavily on marketing and spends a large amount on advertising. It advertises its products through several channels including the traditional and digital channels. It advertises its brand in print channels, online, on the television and outdoors. Apart from that it uses websites and micro-websites dedicated to the regional markets through which it markets its brands. Its website provides information on the product strategy and other various aspects of its business operations. In print, LG advertises through magazines, newspapers and other several channels of publication. Apart from that LG also makes use of social media for advertising and marketing. In order to better market its brand and create a unique brand identity, it has focused on connecting with customers. From various channels it focuses on collecting feedback from them and using it to improve its brand strategy and experience.

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By focusing on quality, design, customer value and several other aspects, the brand has been able to create a unique image. In the recent period, the brand has also seen sharper growth based on innovation. Most of its new products are marketed through online videos. The brand has posted more than 500 videos on YouTube that show LG products adding ‘lifestyle value’ to customers’ lives. LG has uploaded a variety of videos that showcase its stylish products and the benefits they provide. Several of its videos are highly informative and inform about the products’ features and advantages. V20 to G5, Xseries and several other models are highlighted on YouTube. LG also uses Twitter for advertising and for deepening its customer connection.The brand has more than 286K followers on Twitter. After Twitter and Facebook, the brand has also used other social media channels for marketing and advertising. LG has placed strong focus on marketing plus customer engagement and retention. 2. BRAND NAME 2.1. SELECTION

LG is the brand that is Delightfully Smart. "Life's Good" slogan, and futuristic logo are a great representation of what LG stands for. Global, Tomorrow, Energy, Humanity and Technology are the pillars that this corporation is founded on; with the capital letters L and G positioned inside a circle to center our ideals above all else, humanity. The symbol mark stands for LG's resolve to establish a lasting relationship with, and to achieve the highest satisfaction for their customers.

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The letters "L" and "G" in a circle symbolize the world, future, youth, humanity, and technology. Their philosophy is based on Humanity. Also, it represents LG's efforts to keep close relationships with our customers around the world. The symbol mark consists of two elements: the LG logo in LG Grey and the stylized image of a human face in the unique LG Red color. Red, the main color, represents their friendliness, and also gives a strong impression of LG's commitment to deliver the best. Therefore, the shape or the color of this symbol mark must never be changed. LG has two versions of their logo: Corporate Logo and 3D Logo.The updated 3D Logo retains the heritage and equity of the Corporate Logo, while aligning with their new positioning. It was redrawn to strengthen the visual impact of their symbol mark and help communicate their attributes. 2.2. PROTECTION Copyright of LG LG Electronics, Inc. and its affiliates (hereinafter "LGE"), respects the intellectual property rights of others. In doing so, LGE complies with the provisions of the Digital Millennium Copyright Act (DMCA) applicable to internet service providers (17 U.S.C. §512, as amended). In appropriate circumstances and at the discretion of LGE, it is LGE's policy to disable and/or terminate the accounts of users who infringe, or are repeatedly charged with infringing the copyright(s) or other intellectual property rights of others. LGE may remove content that is alleged to infringe the copyright(s) or other intellectual property rights of third parties. 3. BRAND SPONSORSHIP LG TV - MANUFACTURER’S BRAND TVS  OLED TVs  NanoCell TVs  ULTRA HD 4K TVs  Smart TVs

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 LED TVs LG Signature The LG SL9000 was one of several new Borderless HDTV's advertised for release at IFA Berlin in 2009. LG Electronics launched an OLED TV in 2013 and 65-inch and 77-inch sizes in 2014. LG Electronics introduced its first Internet TV in 2007, originally branded as "NetCast Entertainment Access" devices. They later renamed the 2011 Internet televisions to "LG Smart TV" when more interactive television features were added, that enabled the audience to receive information from the Internet while watching conventional TV programming. LG manufactures remote control models that use Hillcrest Labs' Freespace technology to allow users to change channels using gestures and Dragon NaturallySpeaking technology for voice recognition. As of 2014, LG is using webOS with a ribbon interface with some of its smart TVs. LG reported that in the first eight months after release, it had sold over 5 million webOS TVs. In 2016, exclusively to India, Indian arm of South Korea's LG Electronics Inc started selling a TV that would repel mosquitoes. It uses ultrasonic waves that are silent to humans but cause mosquitoes to fly away. It was released on 16 June 2016. The technology was also used in air conditioners and washing machines. The TV is aimed for lower-income consumers living in conditions that would make them susceptible to mosquitoes. In 2018 it was reported that LG was planning to sell big-screen televisions that could be rolled up and retract automatically with the push of a button come 2019 (LG Signature OLED TV). 4. BRAND DEVELOPMENT 4.1. NEW BRAND In 1995, the inexpensive, poor quality, Korean appliance, and home electronics brand, Lucky Goldstar, became LG with the slogan, Life’s Good. By the 2005 Consumer Electronics Show in Las Vegas, LG along with its Korean competitor, Samsung, were the two appliance brands with the most innovative products on the convention floor. Since then, LG has morphed from offering low-price, standard appliances into a brand that also offers luxury appliances as well under the rubric: LG Signature. LG has created a credible, upstream elegant luxury offering that can now compete with U.S. brands Sub Zero, Viking, Wolf and European brands such as Miele.

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To cement its luxury position and enhance its image, LG is now marketing an upscale, luxury line called LG Signature as evidence of the epitome of form and function, the maximization of art and technology. 4.2. LINE EXTENSIONS How did LG successfully migrate a line extension into the luxury arena? There are two important brand issues and both are evident in LG’s example. First, recognizing the necessity of a long-term focus for creating a brand. Second, building a brand by leveraging a Paradox Promise, one of the best ways to address customer needs. Focus on the Long-Term The move towards the luxury end of the spectrum did not take place overnight. First, LG had to establish itself as a higher quality, more reliable, more desirable brand than its Lucky Goldstar heritage. LG erased the Lucky Goldstar brand and re-launched it as LG. This was not just a marketing activity. It was not merely about a new advertising campaign. The product had to be improved. This was a design and manufacturing challenge. LG did this over time, not instantly. The transformation spanned decades of brand development. In today’s business environment, long-term tends to be swept under the rug of “results in-the-year-for-the-year.” This attitude underpins the brand treachery of financial engineering that shifts monies from brand investment into stockholders’ pockets. Spending decades to build a brand is not a beloved approach within many organizations. Activists and Private Equity firms want profits now regardless of the harm to brands. Short-term profits are what matter. LG focused on the very long-term. From 1995 to 2005, LG focused on innovating its mainstream products. LG focused on manufacturing and marketing attractive, innovative appliances, TVs, phones. They appear on the Lowe’s website in the same range as Samsung, KitchenAid and Bosch. The development of the LG Signature line could only credibly happen after the LG brand became re-established as a quality, middle market brand. LG was patient. LG was consistent in establishing a credible reputation for reliability, quality and innovation. The brand is now recognized as a high quality brand. Its luxury brand would build on the LG brand’s reputation for quality and innovation. This year, 2019, the prestigious J.D Power report lists LG as ranking highest in customer satisfaction across all appliance categories. LG is “number one in reliability, performance, features, styling and warranty,” according to the PR Newswire report of July 31, 2019. This is its third year in the number one spot. Reported by PR Newswire, J.D. Power

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stated that LG is the brand that received more J.D. Power awards for kitchen appliances than any other manufacturer. Additionally, LG is number one in product quality and service quality in the 2018 ACSI survey (American Customer Satisfaction Index®). For its luxury brand, LG Signature uses the brand’s focus on innovation and takes it to a higher level by optimizing the artistry of design. Rather than create a new brand with no connection to the LG heritage, LG Signature brings technological innovation that is gorgeous underscoring the fact that this is not technology for the sake of technology or art for the sake of art. Brand building is ongoing. It does not stop. Brand building takes time and focus and discipline. Short-termism will not create or build successful brands such as LG. Leverage a Paradox Promise A Paradox Promise addresses customer-desired yet conflicting needs by delivering a brand that offers the benefits of no trade-off. A Paradox Promise offers the best of both worlds; a Paradox Promise brand provides a solution that maximizes conflicting benefits. Customers do not want to trade-off elements of a brand experience in return for gaining other brand elements. In today’s world, people want brands to optimize not compromise. Promising and delivering Paradox Promises generate high quality revenue growth. Technology is not usually considered an art form nor are technology-based products considered to be works of art. Steve Jobs realized that technology could also be beautiful. Apple products are both innovative and beautifully designed. LG Signature promotes the same Paradox Promise. LG Signature maximizes art and technology in its products. LG Signature focuses on both the engineering and the architecture of its products. A Paradox Promise is an important way to satisfy customer needs profitably. People prefer to avoid compromise. Brands that solve for conflicting needs offer an optimal, desired solution. Brand building is big business. Brands do not have a natural lifecycle. Brands do not inevitably die. Brands can live forever, if properly managed. Take a page from the LG playbook: be disciplined, take time to do things correctly and satisfy people’s paradoxical needs. - The end -

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