LG to invest Rs 800 crore on India-specific R&D

LG Electronics India has chalked a Rs 1,500-crore investment plan for 2011.

Mr Soon Kwon, President-South West Asia and Managing Director, LG Electronics India, told Business Line the company will invest Rs 800 crore in capacity expansion for various product categories and India-specific R&D, and Rs 700 crore in marketing and enhancing brand visibility. India is the most focused market for LG.

“It has a lot of consumer segments with varied requirements and we want to cater to them all,” he said.

According to Mr Kwon, who recently took over as LG's MD, the company's manufacturing facilities are currently running full capacity in all product categories – excluding air-conditioners as it is more a seasonal product. With the demand from rural markets expected to grow at a much higher pace in the years to come, and more brands coming into the market, “we have to prepare for a more competitive market place than ever before – be it in terms of our products, in terms of manufacturing and in terms of people we invest in. So, our focus is more on strengthening our leadership position further here”.

Talking about the brand perception, he said though LG has a fairly good brand position and enjoys market leadership in majority of product categories, and the consumer perceives LG as a top-end brand, “we have a feeling that the perception is still not as good as our products are, and we need to work on changing the consumer perception by making our communication strategy even more effective – the way we communicate with our consumers and channel partners..,” he said.

In addition to print and TV commercials, LG has been investing in above-the-line marketing through associations with sports activities such as ICC and IPL.

On the company's after sales service network, he said LG is currently second to none. “But, if you ask me whether it is good enough and we are happy about it, I would say no. We have to strengthen our service network further.” The company, apart from franchisee service centres, has 10 direct service centres in the country that takes care of almost 25-30 per cent of service requirements. The plan is to double the count during the current year.

On the retail front, though the company's focus will be more on increasing sales through modern trade and other multi-brand outlets, its exclusive brand outlets such as Brand Shoppe “will also go up from the present 375”. Besides, LG has launched 50 exclusive stores for its air-conditioners under the brand – LG AC Solution Plaza - where the company besides showcasing all its air-conditioner models, offers consultancy and after-sales services.

LG posted a turnover of Rs 16,000 crore for 2010. The target for this calendar year is Rs 20,000 crore, and “we are well on track so far”.