LG unveils major retail initiative for handsets

LG unveils major retail initiative for handsets

Author | exchange4media News Service | Monday, Jun 14,2004 8:34 AM

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LG unveils major retail initiative for handsets

LG Electronics is targeting 500 multi-brand mobile handset dealers to work as partners in its drive to push sales of its GSM handsets. Says LG GSM division product group head Praveen Valecha, ‘‘We have already taken on 150 retailers as LG Mobile Partners (LMPs). Since mid-April when we began the initiative, these 150 LMPs have contributed around 10-15 per cent to total GSM sales. Once the initiative is in full swing, we expect at least 50 per cent of sales to come in from these 500 LMPs this year.’’

‘‘LG Mobile Partners will be mobile phone dealers who will give us minimum of 50 per cent of space on their counters. In turn we will give them various incentives like turnover tie-ups, discounts on LG products and ad support,’’ adds Mr Valecha. At least 18-20 per cent of the company’s A&P budget will be spent on the retail initiative.

‘‘We could on an average spend up to Rs 50,000 on an outlet on in-shop branding, PoP displays, events and road shows. New product launches would also take place at these counters. Special promotions will also be organised with them like bundling offers with DVDs, vacuum cleaners etc,’’ he said.

Besides the LMPs, the company is also exploiting its consumer electronics and home appliances (CE & HA) channel to sell its handsets. It has 1,500 CE and HA outlets that also sell handsets. Such outlets have provided good sales specially in upcountry areas.

The company is targeting sales of 3 lakh handsets this year, 10 lakh next year and 20 lakh units in 2006

Between January and May 2004, LG has sold 1 lakh GSM units. The company is targeting a sale of 3 lakh handsets this year, increase it to 10 lakh next year and 20 lakh units in 2006. The targeted sale in value terms is Rs 280 crore in 2004, Rs 650 crore next year and Rs 1,200 crore in 2006.

Regarding manufacturing, Mr Valecha says, ‘‘We will evaluate the feasibility of local manufacturing once the budget is announced, after seeing whether there are any tax and export benefits.’’ Currently, the large portion of its handsets are imported from Korea and some from its China facility.

Other recent initiatives have included the ‘Switch to Colour’ exchange offer last month in a bid to push upgrades to colour phones. Seeing the success of this initiative (it accounted for 35 per cent of total sales in May) the company plans to introduce the offer again in the next few months. The scheme, which ran in the states of UP, Haryana and Punjab, offered discounts of up to Rs 10,000 depending upon the models chosen and the condition of the old handsets.

LG is also offering Free Theft Insurance with the purchase of all its phones.

LG’s focus this year will be on camera and colour handsets, which should constitute about 60 per cent of the total market size by early next year. LG has only one black and white phone in its portfolio. This year it plans to introduce 6 new models over the next 3 months, of which 2 would be camera phones and 4 colour models. The new range would be priced between Rs 5,500 and Rs 20,000. Its existing models range from Rs 4,800 (B&W) to Rs 20,000. Since the trend is moving fast towards camera phones, the low-end price range might shift to around Rs 4,000 or Rs 5,000.

On the service front, the company is already present in about 110 cities for After Sales Service. New initiatives will include providing ‘Service within 1 hour’ in the next 2 to 3 months.

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