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Jan. 20, 2003
LG Air Conditioner ranks World No. 1 for 3 Consecutive Years
LG Air Conditioner ranks World No. 1 for 3 Consecutive Years
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- Sales of total 6.7 million units in 2002 ∼1 out of 7 air conditioners in the world made by LG
- LG to expand Global No. 1 Market Share from 23 countries in 2000 to 41 in 2002
RAC(Room air conditioner) from LG Electronics Inc. has topped the global sales for 3 consecutive years.
LGE hosted “Global No.1 for 3 Consecutive Years - New Products (for Korean domestic market) Launching Ceremony for 2003” event at Grand Hyatt Hotel in Seoul, Korea on January 13, 2003 and announced that with global sales of 6.7 million units of room air conditioners in 2002 (total global market volume: 47 million units), it has successfully maintained global No. 1 position for 3 consecutive years from 2000. More specifically, LGE has 14.3% of global RAC market. It means that every 1 out of 7 air conditioners sold around the world was from LG.
Until mid 1990s, world air conditioner market was led by Japanese companies owing to high demand in Japan - a country that accounted for 1/4 (7 million units) of global demand at the time. But LGE, which has taken its international sales in the U.S., Middle East and Europe, emerged as No. 1 in 2000 and held on the position now for 3 years.
In 2002, LG air conditioner reached world No. 1 in sales in total 41 countries. The number of top selling countries rose from 3 in 2000 to 15 countries in 2002 in Europe, from 5 to 10 countries during the same period for North America & Latin America, to 11 in Middle East and to 5 countries in Asia.
At the January 13th event, Mr. Ishida, the President of Japan Air Conditioning Journal, Heating & Refrigeration News (JARN) and Mr. Kobayashi, general manager of Fuji-Keizai, one of the top market research firms in Japan, were present to celebrate global sales No. 1 to LG Electronics.
“I am very proud of LGE’s achievement of maintaining top seller position for 3 consecutive years. It is indeed a rare achievement in the cut-throat competition of global home appliance market,” said Vice Chairman S.S. Kim of LGE. Adding “LGE will continue to lead the industry with world leading technologies and products.”
After recording total sales of US$2.2 billion in 2002, LGE plans to aggressively target premium air conditioning market to increase sales to US$3.5 billion by 2005.
■ Background for LG Air Conditioner’s 3-Year Reign of Global Market
▲ Strengthening Price Competitiveness by Expanding Global Manufacturing Bases
LG Electronics has worldwide production bases, operating air conditioner production sites in total 8 countries (Korea, China, Turkey, India, Thailand, Vietnam, Indonesia and Brazil).
In particular, to go towards Chinese room air conditioner market that is recording impressive annual growth of over 12% (market volume for 2003 expected to be around 10 million units in volume), LGE increased production capacity of LGETA (LG Electronics Tianjin Appliances Co., Ltd.) to 1.5 million in 2002 and will expand to 2.5 million units this year. In India - the second largest market in terms of growth potential after China - LGE began producing room air conditioners at its subsidiary LGEIL(LG Electronics India Ltd.) in New Delhi, India, from 1998 and succeeded in increasing its presence in the local market which had been dominated by Japanese and American companies as well as local makers. LGE became No.1 RAC seller in India for the first time last year (Annual sales of 200K units/30% of the market).
▲ Localized Strategies
LGE conducted detailed consumer and market surveys to develop products tailored to local consumer requirements as part of its marketing strategy aiming for full localization.
Looking at specific features of LGE marketing strategies by region:
1. U.S.
In the U.S., whose annual volume is around 5.5 million units, LGE improved its cost competitive edge in core components like compressors and heat exchangers that take up large portion of end price to compete Japanese makers. Against Chinese companies that were courting customers with their low prices, LGE countered with world first cutting-edge technologies like Plasma Air Purifying System, Plasma Heat Exchanger that had firstly succeed in commercializing and Turbo Fan. As a result, LG took No. 1 position in 2000 with market share of 25% and plans to maintain leadership by increasing the market share to 37% in 2002 and 43% in 2003. In particular, sales of window type air conditioner are on the rise in the U.S. market.
2. Middle East
Known as a tough market for foreign brands, LGE employed its own “Customer-Oriented Marketing” efforts which included focusing its distribution network by organizing global dealer meetings and regional exhibitions to make effective foray into the market. Recently, LGE opened its own Training Center in Dubai to bolster its marketing efforts through dealer training. LG air conditioner is currently No. 1 in 11 countries of the region including Saudi Arabia.
3. Mexico
LGE implemented 3 marketing strategies specifically developed by the market:
△ Promoter: Sales promotion personnel system: Over 250 LG Promoters visit shops with LG products everyday to improve display and educate sales personnel. It is a unique LG’s own brand of marketing technique developed by LGE’s Mexico subsidiary to improve service of its local dealers.
△ Express Service: LGE built large scale customer service centers in 3 major cities including Mexico city where all service requests are handled within 24 hours upon request. It also organized nationwide free service tours.
△ Sports Marketing: LGE sponsored professional football team in Mexico to leverage huge popularity of football in Mexico as a fast track for increasing awareness of LG brand here.
4. Central & Latin America
Despite the region’s economic recession in recent years, LGE braced the risk management and maintained partnership with local distributors. LGE’s commitment to the region paid off, helping it overcome cultural barriers and win long-term relationship with distributors. LGE currently enjoys No. 1 position in 9 countries.
△ Becoming First in Securing World’s Best Core Technologies and Promoting Growth of Core Component Business
LG Electronics adopted 6σ (Six-Sigma) campaign from 1996 in all areas of its business from R&D to production and every sales and services. Every LGE employees are engaged in more than 1 project a year to achieve 6σ (3.4 defects per million). The 6σ activities have also been expanded to LGE outsourcing partners in component production.
Such efforts especially earned high recognition in markets of advanced countries where consumer magazines’ product evaluation exert strong influence. For example, LGE was able to gain more consumer trust than any advertisements with its window type air conditioner being selected as Best Buy for 2 consecutive years by Consumer Report in the U.S.
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