We want to be there first - always. That is our USP.

afaqs!, Mmbai & Sabil Francis

28 Nov 2001 05:30 IST

New Update

Since joining LG Electronics in 1997, K.R. Kim, as managing director of LG Electronics India, has presided over the revival of the company's fortunes in the country. For him quality has been the key to the company's success in India. In a freewheeling interview to Sabil Francis of agencyfaqs! Kim said that that LG sees its long-term future in Internet-enabled consumer devices. Excerpts from the interview.

Edited Excerpts

LG seems to have put the initial period of difficulty behind it - finally. What is that key factor that has changed your fortunes in the country?

The secret is quality. We are always looking for quality in everything we do. The quality of the product, the quality of the people, the quality of the sales. That's what LG stands for today and that's what has given LG a good image.

LG is one of the few companies that went in for sales to build the brand rather than first building the brand and then selling. Why?

No, I do not agree with that. In 1997, we launched the LG brand for the first time. In the first year our turnover was US $35 million. Do you know how much we spend for marketing? Close to $10 million. That is, we spent more than one-fourth our turnover on marketing to build up the image of the brand.

There are reports of a possible slowdown in the consumer goods segment in India. Against this scenario, the recent launch of your Net-enabled products seem a bit over ambitious. What do you have to say?

Well, you are both right and wrong. Take the Internet-enabled fridge or washing machine. You have to concede that this kind of a product is a technology product, an image product. We do not hope to grow very much very soon in these markets. These are what we call prestige products and they help enhance the image of the brand. We can sell may be one piece per month, or one piece per year, and we know that. On the other hand, we want to be at the forefront of technological innovations. This range heralds a new trend. This is the technology of the future. As leaders in technology, we have to initiate this change.

But what about your other products, the products that are the bread-and-butter of LG? What happens to them in case the sector slows down?

You must remember business law. Business is a cycle, there are three-year-cycles and five-year-cycles. It's part of the game, and it's part of our plan as well. We do not stop being innovative if sales show sighs of slowing down. We have a strong belief that we have to prepare for the future during a lean period. That will be our strategy.

Your idea of a digital-network home has been taken up by, for example, Panasonic. It is trying to sell its products to offices first, in the expectation that consumers will then go for Panasonic when they furnish their homes too. Samsung is also aggressively moving on the digital front. In the midst of such competition what is your USP?

These companies you have mentioned are only talking about going digital now. We are the ones who are taking action. For example, who introduced the Internet refrigerator in the world first? Who introduced the Internet-enabled washing machine? It's us - LG. That is our USP. We want to be there first - always. We have already come out with our new-age products. We have grabbed the first mover advantage. We believe this will give us the edge over competition. That is our USP. While the others do the talking, we are the ones who actually do it.

LG is there in a wide variety of products. What will be your future growth areas?

It will be television and home appliances. And in IT. We are selling CD-ROMS, colour monitors, a lot of things. I see the computer and Information Technology appliances becoming consumer products eventually. These sectors will grow massively. We hope to come out with a wide range of products in these markets - products of superior quality.

I must add that we don't want to be the number one in terms of the total value. As I told you, we want to be the number one in sales in very specific segments. Let me elaborate.

Take the washing machine market. We don't want to be the number one in the overall market. We want to be the market leader in the six-kg and above segment. Most of the washing machines that are produced in the country are in the 4.5 kg or even lower. We don't see a problem if your competitors grab a big share of the market. We want to straddle the top-end of the market.

Any particular reason why you plan to concentrate your efforts in low-volume markets?

Because we have been latecomers in particular markets in the country, and we have to be different. That is why we have such a specific focus. You look at it as a low-volume market, for us it's a high value market.

How will the emergence of new technology, such as, interactive TV and convergence, change your marketing strategy? You are focussing so much on the online shopping experience with your Internet-enabled refrigerators, while for the common man shopping is still a sensual experience. Why and when do you think that consumers will opt for online solutions?

That is a very good question. Even though computers are everywhere these days, there are people who hate PCs - even today. Also, even where people have taken to the computer as part of their everyday lives, there are those who prefer the physical market, rather than the virtual one. And again, regarding shopping. The majority of people may go to the physical market, OK, let them go. I feel that the online and offline shopping experiences will coordinate with each other, rather than conflict with each other.

If you admit that a majority of people will go to the physical market, then won't this affect the mass marketing of such IT-enabled products?

Let me tell you about Korea. There, online shopping is very popular, especially among the younger generation. Why? Because young people are very busy these days - far more than the earlier generation. Either it is business or it is something else. Older people have a lot more time, and they might still go to the physical market. But there is a big population of working couples who are the potential targets for our online products.

Just see how things have changed today. In the past, the wife was usually working at home, but now she is also a business lady. This couple might not have the time or the convenience of owning their own car. Thus going to the super market or picking up the grocery tends to be inconvenient at times. So, these are the people who would prefer online shopping. It is a sector that is growing extremely fast.

But Korea and Japan are very technology friendly. Do you think that the Indian situation is the same?

Yes. India is an IT friendly country. In India too we have an online shopping mall, LGIndia.com.

What about infrastructure? Don't you foresee problems in this area?

No, I don't agree with you. You know, broadband is already available in some areas. Within three years, many more people will have access to broadband.

I agree. But the problem in India is the "last-mile problem". Even if online shopping malls are set up, the logistics remains very bad. The problem is in the delivery, not in the ordering.

It is the infrastructure backup that will determine the winner in this game. In LG we have overcome that problem. Try ordering an LG product online, and see how fast the delivery takes place.

But will the same be true for mundane products, such as, groceries?

Times are changing. The Internet, the cyber super market, all these are coming to India. And delivery of products ordered online will become a big business here too. In the United States, for example, in New York, there are companies that deliver anything ordered online within one hour. If they do not do so in one hour, they pay a penalty. I see that happening in India soon.

And, how do you hope to see LG in those times?

We want to be the number one in the cyber era. As we say in the company, we must become cyber LG. Because that is where the future lies - in Internet shopping malls and in Internet-enabled products.