Leading mobile phone companies such as Samsung, LG Electronics and SonyEricsson are rushing to introduce strategic handsets, aiming to win a larger chunk in the market. In the fiery competition space, LG Electronics has introduced its first black-label (premium label) mobile phone which called ¡§Chocolate¡¨ for the competition, and tried to use its new marketing strategy for spreading into a new market place that no one has took up before. This report first of all will start from over viewing LG Company and its strategy by present. Secondly will go into specifically to analyze the strategy which on launch its ¡§Chocolate¡¨ model and its competitors, and also to analyze the feasibility of its strategies through understanding its strength and weakness. Finally, the report will apply the key factor to its global capability, to discuss the further modification and development opportunity.
LG Company Overview
In 1947, LG Group founder Koo In-hoe established Lucky Chemical Industrial Corp. (currently LG Chemicals) in South Korea, LG initially manufactured a cosmetic called Lucky Cream. After 50s to the end of 70s, LG established its other business more widely into different areas. Now LG is a manufacturer which field in three main businesses which are Electronics, Chemicals, and Telecommunications & Services (LG official website). The company is based in Seoul, South Korea, they are operating around 130 subsidiaries around the world with around 120,000 employees in 2005. The company recorded revenues of KRW84 trillion during the fiscal year ended December 2005, an increase of 21.2% over 2004. The increase was primarily attributable to the increase in revenues from the telecommunication equipment and handset segment, and they plan to reach the sales of KRW92 trillion in 2006 (LG official website). For the LG Electronics aspect, that we are going to focus on in this report, according to its 2004 Annual Report, they represented they achieved KRW 9.5 trillion in total sales with an operating profit of KRW 636.2 billion. The total sales and operating income were up by 55% and 99% respectively over the previous year. The growth brings LG Electronics to become a global top four handset manufacturer.
Demonstrate an Understanding of Marketing Strategy at Different Levels (Corporate Mission, Corporate Strategy, and the Actual Marketing Strategy)
LG Electronics (LGE) is the world's leading manufacturer of CDMA handsets and the fastest growing manufacturer of mobile phones worldwide. The company provides a total range of wired and wireless technologies, and is rapidly establishing a global presence through international market share in 3G handsets (Dano, 2003). The initial strategy of LG Electronics was that of low cost by taking advantage of economics of scale and by leveraging subsidized cost of capital and low cost of labour in Korea. We can say here it liked every other companies were using Red Ocean Strategy to play the competitive rules of the game. The Red Ocean Strategy is competition-based strategy, it means companies can do promotions such as price cutting. However the market space easily to get saturation and the profits will reduce. Through this, a product can be a commodities and lose its worth, the market become a cutthroat killer to exploit the company bloodily just like its name-¡§Red Ocean¡¨ (Kim & Mauborgne, 2005). However, the customers of Korea became quality conscious. As a result, LG started to change their strategy by focusing on quality products, it made them got 800% increase of their income in three years. Furthermore, to enhance its global competitiveness, LG continued to forge strategic partnerships with major players included Intel, Microsoft, Sony, Philips and Hitachi. LGE followed a differentiation strategy to concentrate on the high-end of the entire products segment it entered. It made the image of a leader in both technology and quality. It launched models with innovative...