On entering the threshold of twenty first century, the world has to cope with serious pollution, shortages of raw materials, increased costs of energy and requires for practical actions to improve the situation. LG Electronics has accepted its responsibil

appreciated. State also has lots of reforms to encourage more investment and encourage domestic

investment in R&D.

In Vietnam, entrepreneur law, business law still exist a lot of negligence that need to be fixed

in the future. The government also have environment protection law and protection of

consumers’ rights to treat firms when they do things wrong to environment or customers. Tariffs

on electronic components cut from 9.41% to 6.36% in 2008 but still is a high rate. Many firms

suggest that this tariff should reduce to 0-3% so that domestic companies could compete with

imported products (Sean 2009).

Moreover, Vietnam is a large “grey” market for illegal and fake products. Although

Intellectual Property Law has been imposed since 2006, the implementation is not strict enough.

In the open-economy condition, Vietnam is listed among countries with the most seriousness of

the law violation.

3. Competitor analysis

Competitor analysis in marketing is the process of assessing the strengths and weaknesses of

a firm’s current and potential competitors. The goal of it is to understand: with which

competitors to compete, competitors' strategies and actions, how the competitors might react to a

firm's actions, how to influence the competitor using the firm's own advantages. Competitor

analysis helps the business itself creates marketing strategies that take advantages of competitors’

weaknesses and improves its own performance. In the case of LG, an understanding of the

company’s specific competitors in Vietnam will be crucial to its survival and sustainable

development.

To begin with, LG has no big indirect (substitute products) competitors in Vietnam, since

other methods for cleaning clothes are minor, and only hand washing can substitute for the use of

a washing machine when mentioning about washing clothes. Therefore, it is even more important

to consider about the direct competitors of LG in Vietnam.

As the market of today has been globalized, there are many brands that offer same type of

products and compete against each other to gain share in the market. In the 2005 washing

machine market, Sanyo has the largest share of 40%, LG has the second largest share of 18%,

Toshiba owns 11% of the share, and the rest of the share belongs to Samsung, Panasonic,

Daewoo and other brands (GFK, cited in Phuong 2005).



Figure 2. Share in Vietnam's washing machine market

3.1. Direct competitor analysis



It is such a tight competition that all of these brands have to try their best to attract and keep

customers with them. LG Electronics is not an exception. In order to “win” in the competition,

firstly, LG’s competitors should be identified. As it can be clearly seen, LG’s major competitors

in the washing machine market are Sanyo, Toshiba, Daewoo, Samsung, Panasonic. In the scope

of this report, two of the above mentioned brands, namely Samsung and Toshiba will be taken

into account.

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3.1.1. Samsung



Mr. Ko Tae Yeon – the general director of LG Vietnam has stated in an interview that

Samsung is one of the main competitors of LG in Vietnam (cited in DDDN 2011 ).

Samsung is known globally for its electronic products and it is one of the most successful

brands in the electronic industry. LG and Samsung have many features in common: they are both

Korean electronic brands with advanced technology, their target customers are the same in

various countries, etc.

Strengths:

•

•

•



Samsung is known for its technologically advanced products: washing machines that

have bubble generators, Power Foam technology or larger washers, VRTÔ Plus which

reduces noise from the machines, etc.

It attracts customers by offering new and innovative design through understanding the

customers that which type of designs are suitable to customers and what they want or

asked about.

Samsung focuses more towards the innovations and try to keep improving the products to

attract more customers and capture more market share.



Weaknesses

•

•

•

•



Although Samsung focuses on innovation, it is not proactive to introducing new products,

it waits to attack the competitors.

It also lacks in product differentiation.

Samsung caters mass market instead of niche market so for this purpose it sets low prices

of products and low price products seem as low quality products, so Samsung products

perceive as low quality as compared to competitors’ products.

Most of the Samsung products are not user friendly which is a hurdle for Samsung to

make it market leader.



3.1.2. Toshiba



Toshiba is a diversified manufacturer and advanced marketer of electronic and electrical

products. Its product portfolio includes information and communication equipment and system,

internet based solution and services, electronic components and materials, power system,

industrial and social infrastructure system, and household appliances.

As shown in Figure 1, Toshiba is about to catch up with LG with its market share of 11%.

Different from LG and Samsung, Toshiba is a company originating from Japan – a country that is

famous for high-quality technology products.

Strengths:

• Have good reputation of a Japanese brand.

• Strong research and development: washing machines with the S-DD/ DD inverter motor.

• Growing organic electronics

Weaknesses:

9



•



Product’s designs are not diversified, not very appealing to customers



3.2. Positioning map



In order to satisfy diversified customers’ needs and wants, dealers have to keep the products

of various brands for their customers. As there are many players in the market offering washing

machines of the same quality, appearance and sub-functions, how different companies have

positioned the stock in is of great importance.

Samsung: Samsung positions itself as a brand which offers freshness with technological

strength. Samsung offer washing machines with price range from 3,990,000 VND to 19,390,000

VND.

Toshiba: Toshiba offer products remarkable for their innovation and artistry – contributing to

a safer, more comfortable life. Customer can own a Toshiba washing machine if they have

between 3,490,000 VND and 11,690,000 VND

LG: LG aims at enhance the customer’s life (and life style) with intelligent features, intuitive

functionality, and exceptional performance. Choosing LG is the form of self-expression and selfsatisfaction. The price of an LG washing machine ranges from 3,675,000 VND to 39,480,000

VND.



High technology

Toshiba



Low perceived quality

and status



High perceived quality

and status



Low technology



10



Figure 3. Positioning map of LG, Samsung, Toshiba

4. Customer analysis



Caring about the customers’ needs and wants plays an important part in the work of the

marketers. Customers, when buying the products, often care about the product quality, price,

feature, design and so on. LG is one such company which has brought technologically advanced

products for its customers keeping in mind that today’s customer are placing greater weight on

quality and value in making their purchase decision. The company based on demographic,

psychographic and behavior to plot its marketing strategy.

4.1. Customer segmentation



4.1.1. Demographic

Base on demographic analysis data, LG categorizes customers by income and family size.

Customers with different income and family size can choose to own LG washing machines of

different levels of price and capacity (shown in figure two and three). We can clearly see from

the figure that the largest number of washing machines belongs to the price range from 5,000,000

VND to 10,000,000 VND (11 washing machine). This statistic proves that in Viet Nam, LG

mainly targets middle-income customers who want quality products at the best price. The

washing machine that has been chosen (LG WD-9990) is perfectly fit for this criterion.

Price range (VND)

< 5,000,000

5,000,000 – 10,000,000

10,000,000 – 15,000,000

15,000,000 – 20,000,000

> 20,000,000



Number of washing machines

4

11

6

4

5



Figure 4. LG washing machine categorized by price

In addition, according to figure three, there are 17 washing machines that have the washing

capacity of 7-9 kilogram which can best support a family of four people (PNO 2011). A family of

four members is a typical family structure in Vietnam nowadays (QD 2005), so we can conclude

that LG also aims at the average family in Vietnam to sell its washing machines. LG WD-9990 is

again under this segmentation.

Capacity of washer (kilogram)

7–9

9 – 11

11 – 13

13 – 16



Number of washing machine

17

7

5

4



11



Figure 5. LG washing machine categorized by capacity

4.1.2. Psychographic



LG also target buyers who concern about safety and health issues. In its sustainability report

(LG, 2008, p. 7) LG has shown its ambition in satisfying customers who were worrying about

their health and the future in the form of a wish: “It would be great if there were a washing

machine that thought about the environment and its customers’ health”.

4.1.3. Behavioral



Benefit sought: With the tagline “Life’s good”, LG positioning is to differentiate their

products on the basis of technology which appeal to the consumers on the basis of health

benefits. Consumers who seek for products that can improve their quality of life would definitely

go for a LG washing machine. There are some distinctive features of LG washing machine that

attracts users all over the world in general, and in Vietnam in particular: clean lint filter that

removes residues and cleans clothes better, direct drive motor in LG washing machines is so

quiet that you could run it in the middle of the night without disturbing your sleep, etc.

Brand familiarity: LG is a multinational company and a recognized brand around the world.

It has successful established in Vietnam. People can easily recognize the logo of the brand when

they come across it. LG has also been the sponsor for a popular TV game show for high school

students called “Race to Mount Olympia” for more than 10 years. This has helped promote LG’s

image in every family in Vietnam.

4.2. Decision type



For the washing machine that we have chosen, the decision type will be limited problem

solving. Consumers will be highly involved with a expensive (worth more than 10 million

VND), infrequent purchase, but see little differences between brands (LG – Samsung – Toshiba … ).

5.



Brand analysis



The Vietnamese market has seen many changes because the government has applied a lot of

open policies with a view to encouraging development. There was total disappearance of a

simple market, where all the customers were happy with the products provided. Women

nowadays are busy with not only housework but also their own career. As a result, they need

smart home appliances, which can do perfectly as they do. To satisfy the need of customer,

recently, many electronics companies have presented many smart washing machines and LG

Electronics (LGE) is not out of this trend.

5.1. Product life cycle: Growth stage



In 2010, GFK, one of the four biggest market research companies in the world, has certified

LG Electronics with the best selling washing machine brand in Pacific Asia based on real

statistic in 8 major countries including Viet Nam (SMJ 2011). The 6 Motion washing machine

line using direct driver (DD) plays an important role in the success of LGE recently.



12



LGE have made strong investment in smart washing machine segment. They have introduced

the fist 6 motion Direct Drive (DD) washing machines. The 6 Motion DD line went public the

first time in October 2009. Until now it has achieved a new record in sales with 2.25 million sold

out products, in which the amount of front loader washing machines is 1.25 million. With DD

technique, LG washing machines always work effectively and economical. Model LG WD-9990

is a typical example.

5.2. Marketing strategy using 4Ps strategy

5.2.1. Product



A white WD-9990 with DD motor providing less noise, less vibrations, less energy and water

consumption and greater durability . Some key feature of WD-9990 are listed below:

•

•

•

•

•

•



Load detection: LG Direct Drive Motor detects how many laundry is loaded, and selects

the optimum washing time, rinsing times, and water consumption based on this

information make the washing machine work more effectively.

Intelligent Washing System: detects and adjusts imbalances and excessive suds during

operation for the best washing performance. LG WD-9990 washing machine also have 10

washing program for every kind of clothes, such as: Baby care, Hand wash, Delicate, etc.

Quick 30 Function: total cycle time is reduced to 30 minutes, including wash, rinse and

spin.

Energy saving: according to researches from LG laboratory, washing machines using DD

technique can save about ¼ of electricity and ½ water consumption compare to others

that use old technique.

LGE also provides a 10 years warranty for their DDmotor while their competitor,

Samsung only have a 5 years warranty for their products.

Besides modern technology, LG is also a pioneer in creating user-friendly product, with

beautiful design and can easily fit with every living space. LG WD-9990 is slim compact

powerful washer with a depth of 550mm; the perfect solution for people with space

constraint problem.



5.2.2. Price.



LGE has used a very competitive price strategy. A LG washing machine is always a little bit

more expensive than a Samsung one. Specifically, a LG-WD 9990 is 10,385,000 VND while a

Samsung WF 8690 with the same functions is 8,490,000 VND, which is about 2,000,000 VND

cheaper than the LG one. Higher price may prove the quality of the brand . Additionally, LG

also tries to price up to local purchasing power rate in Vietnam.

5.2.3. Place



In Viet Nam, LGE have many official distributors and showroom from the North to the

South. In big cities like Ha Noi, Ho Chi Minh, Hai Phong, Da Nang… LG’s products are sold in

big malls or trade centers, for examples, Pico Plaza, Nguyen Kim and Viet Long Plaza. In these

centers, LG washing machines are always located in big and nice spaces. For customers, who

live far away from big cities, LG provide them with a home free delivery and installation.

5.2.4. Promotion

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The successful promotion strategies help LGE become the world's leading brand. They have

already invested very high amount in promotion, approximately 6- 7% of their revenue. LG’s

promotion activities include advertising, public relationship sponsor, sale promotion. In different

ways LG are promoting its products in Vietnam, including:

•

•

•

•



Television advertising at “Gold hour” on different channels, namely VTVs, HTVs, Star

World.

Magazines and newspapers articles.

Marketing team: LGE expert teams are well trained about the company and the

company’s product lines. They give advices and samples to potential customers to

persuade them to buy the products.

Website: LG has an attractive company’s website with multiple animations and categories

to describe the details of their products and promote the products.



6. SWOT Analysis

6.1. Strengths

• Diversity operation: LGE is a multinational company, so the company business is also



geography diversified, in Europe, North America, Korea, China, Asia. A diversified

operation enables the company to take advantage of opportunities within specific market

and geography, and at the same time protects it from segment specific setbacks.

• Strong financial position.

• Advantage technology: LG is providing user innovative products combining style and

technology. While leading the industry in green technology, LG is also using the most

advanced technology and the most insightful designs.

6.2. Weakness

• Lack of skilled employees: one of the big problems LG is facing is that it has very few

competent employees. Most employees are not skilled enough and also there is no

training and development concern for employees although they have located 2 big

factories in Viet Nam.

• Comparison of customers: consumer compare LG’s products to its competitor Samsung’s,

not with other brands

6.3. Threats

• Close competition: When customer want to buy a new washing machine, they have a

variety of choices, such as :Samsung, LG, Electrolux, etc. Due to less functional

differentiation there is an intensive competition in the market.

• Higher distributor margins: Dealer want to have the higher distribution margin from the

supplier in order to advertise a firm’s product through their advisory services as there is a

big impact of dealer’s advice on the customer’s buying behavior.

• Inflation: The condition of economy all around the world is currently not very good and it

is affecting the purchasing power and priorities of the customers. People are facing

difficulties in satisfying basic needs, so how they can spend on electronics which is

considered as premium items.

6.4. Opportunities:

• Growth in population: Growth in population is always a big opportunity for firms to

enhance their product lines and capacity as this increase demand accordingly. Viet Nam is

a developing country with the population of 86,936,464. Rising income and GDP growth

14



•

•

•



are increasing affordability, with a huge and relatively untapped market in the rural and

suburban areas.

Availability of consumer financing: Availability of consumer financing increased the

buying power of customers. This trend is big opportunity for the firms to offer valuable

products at an extra prices.

New technology: New technology is proved to be a big driver for the new product

development and development of existing product. So new technological trends always

provide ultimate opportunities to the firm o develop their products in a new way.

Potential to capture additional market share: Firm can capture additional market share

through diversification strategies.



III. CONCLUSION AND RECOMMENDATION

According to the analysis above, some recommendations are given with the view to

accomplish the stable standing of LG Electronics in the home appliances market.

Viet Nam is not only a potential market but also a promising source of labour. The important

thing to be suggested is that LG should make use of Vietnamese workforce, which is large,

skilled and low-cost, to make a more competitive price in market. Additionally, lack of trained

and skilled employees is also a big problem that must be solved right away. The way to deal

with this problem might be investing in training the employees before hiring them. This way is

much more cheaper than having hired a foreign expert or firing an employees right after the

recruitment because they don’t have enough skills for the job.

LGE is a company, which always have responsibility for environment protection and society

development. “Vì một Việt Nam mãi tươi xanh” is a declaration of the company. LGE could

actively participate in social activities and environment protection. This may bring about increase

the market presence of the brand. Similarly, word of mouth advertising is important in promoting

and positioning company’s product. With highly effective products, the consumers do not only

satisfy with the products but they also tell their friends, family and network and recommend

them to use it. That would help the company to expand its fame in Viet Nam home appliances

market.

To sum up, LGE is such a giant in the industry that its brand name has gained a lot of

customer recognition. Furthermore, it holds many more strengths than weaknesses, which has

helped the company to maintain its leadership in the industry. Also, from the case of LGE, it is

the lessons for new companies that want to enter this booming market to make use of any

advantages and try their best to eliminate all the difficulties to achieve their goals.

Word count: 4,940



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