The consumer electronics industry is associated with rapid growing. springs in invention and ferocious competition. LG’s effort to let go of their latest engineering. the Watch Phone. is important in order to procure their current place as one of the dominant market leaders. With a well-integrated and effectual selling program. LG has the possible to alter the market with a merchandise that resembles a high-end timekeeper in add-on to the full functionality of a smart phone. After already holding launched the merchandise in Europe. LG is now faced with the undertaking of spread outing the device’s market to include Canada.
Having identified a clear mark market. the promotional program will concentrate on first raising consciousness of this new merchandise in the Canadian market. With important fiscal resources for a big selling budget. we recommend several signifiers of traditional agencies of advertisement every bit good as joint advertisement with telecommunications bearers. The merchandise should be conveying an image of a fashionable luxury good for immature flush professionals. Furthermore. pricing determinations reflect a skimming scheme and the merchandise will be distributed with the “big 3” telecommunications companies in Canada.
Through an analysis of the internal and external environment every bit good as menaces and chances confronting LG. we are confident that the company is poised for success in accomplishing significant gross revenues within the profitable market we have identified. We estimate warranting our budget with 25. 000 units sold and a net income border of 25 % . Ultimately. we want to achieve robust returns for our stockholders and capitalise on this chance to do LG the figure one family trade name for consumer electronics. The Canadian Market Launch
The LG Watch Phone is a radical new merchandise in the consumer electronics industry doing its manner to Canada for the first clip since its preliminary launch in Europe last twelvemonth. As this is a new merchandise in a section of its ain. set uping this merchandise as a success in the volatile engineering industry will be mostly attributed to the actions LG’s selling squad takes in the period taking up to the launch. Our occupation is to come up with a comprehensive selling program that will show the value of this merchandise to our mark market and guarantee that this merchandise will be successful in the Canadian market when it is launched.
Having completed a thorough analysis of our external environment. our internal competences and the demands of today’s consumers. we will place a mark market. a placement scheme. and a selling mix that will make high demand in the market. taking to an overall profitable launch and sustained merchandise life rhythm. Analysis External Influences One of the major chances for LG Electronics is the fact that the portable consumer electronics industry is exhibiting the highest growing in comparing to in-home and in-car electronic merchandises – in 2008 this section captured 46. 8 % of the entire consumer electronics market.
In North America. mobile phone merchandises are in sterling demand. late accounting for 18. 5 % of consumer electronics gross revenues. Additionally. experts observe that the industry has non been negatively impacted by the fiscal crisis and the monetary values for these electronics remain stable. Furthermore. the portable consumer electronics market presently demands changeless merchandise miniaturisation and incorporating multiple functional characteristics and multimedia in the device. which bodes good for LG’s Watch Phone. With this device. LG goes one measure further. presenting the first wearable smartphone of all time produced.
This merchandise is something that has great possible to catch on with the market. In footings of chances that are sole to the Canadian market. it is of import to advert that LG has been successful in Canada for many old ages and has established relationships with the telecommunications suppliers and other members of the distribution web. Finally. there is the chance to utilize Canada as the ‘test’ market. implementing the selling program and doing the necessary accommodations before a hereafter launch into the United States due to the similarities between these two markets.
However. LG’s way to success in Canadian market is loaded with menaces. First. although the industry survived the fiscal crisis without being badly impacted. it is unknown whether the monetary values for consumer electronics are non traveling to diminish in the close hereafter. Furthermore. it still has to be proven that the general populace is ready for aggregate commercialisation of wearable phones. Specific to Canadian market. the major menace is the ferocious competition. Albeit no competition has the same merchandise. the big participants in the market have much lower monetary values in comparing to the Watch Phone’s European offering in their ain merchandises.
In comparing with phones runing from $ 0 to $ 199. 99 on contracts and from $ 110. 00 to $ 699. 95 without it. LG’s European monetary value of $ 1. 290. 00 on a 12-to-24 month contract seems tremendous. There is a menace that the client will non be willing to portion with such money for the value that the LG Watch Phone provides them with. Internal Competencies and Deficiencies LG presently offers a assortment of different merchandises available through many different beginnings. Their merchandises are available at most chief retail merchants including Future Shop. Best Buy. and Rogers.
Within the consumer electronics industry. LG produces nomadic phones. telecastings. and place contraptions which are made to be observed as premium merchandises. With the premium placement of their merchandises comes higher monetary values in general compared to rivals. LG by and large incorporates telecasting and print ads for their new merchandise lines. which follows the industry criterions. In add-on to traditional advertisement LG has been involved in marketing runs with both Avatar and Transformers. Strengths:
LG is the fourth largest South Korean transnational pudding stone corporation as they have developed a strong trade name individuality and repute of being an advanced leader in the consumer electronics industry. The company is presently the 3rd largest phone shaper in the universe with a big market portion in the nomadic phone industry. Their market portion in the consumer electronics industry is 5 per centum. which is comparable to industry leaders. This is accomplished by ever presenting taking border merchandises by utilizing high quality stuffs in their production.
Besides. LG has a important sum of fiscal resources available for support of promotional runs. In add-on. LG has the advantage in production scalability from systematically presenting and bring forthing a assortment of trusty merchandises from old experience. Failings: On the downside. LG faces the biggest job of being new to the Canadian Market. LG is a company that has ne’er been in the industry of bring forthing tickers. Watch partisans may hold uncertainties as to whether LG is familiar with the ticker industry.
They besides like assortment and frequently like to have on different tickers for different occasions. There are presently legion new functionalities for a ticker and there may be concerns of this merchandise being able to accommodate to them. The Watch Phone is highly expensive at the current monetary value of $ 1290 on a 12 to 24 month contract in the UK and therefore the monetary value is high compared to rivals. Therefore. consumers must be enticed to go forth their bing phone contracts to exchange over. The Watch Phone may besides be seen as inconvenient due to its size of being excessively bulky.
The Young. Affluent Professional We have decided to aim work forces in their 20’s up to the age of 40. who have been university educated and are classified as “young professionals” in today’s demographic sections. This market internally emphasizes the importance of fashionable yet functional merchandises that deliver a marked sense of accomplishment and convey the individual’s refined gustatory sensation in the newest crazes and technological progresss. Geographically. the consumers are urban/suburban members of dumbly populated metropoliss in Canada.
In the concern universe. a ticker is regarded as an accoutrement to show wealth and power aside from the obvious map of stating clip. Thus we are looking to specifically aim university educated work forces with a medium to high income degree and who have a clear desire to prosecute farther fiscal success. This age group is targeted due to its Generation X and Y features that make the group more attracted to the Watch Phone. Both Generation X and Y are favourable possible consumers of the Watch Phone because of their usage and credence of engineering.
More specifically. Gen X has the disbursement power while Gen Y has a strong love for digital electronics such as cellular telephones. digital music participants and digital cameras. Based on the widely used psychographic system of VALS. the chief behavioral sections we aim to aim are the pioneers. winners. slaves and experiencers. The pioneers are characterized as successful. sophisticated alteration leaders who are active consumers and besides make purchases that reflect a gustatory sensation for finer things. Similarly. winners are besides active consumers who favour prestigiousness merchandises that demonstrate their success in add-on to the value in functional benefits.
Therefore a freshness merchandise that incorporates the capableness of a ticker and a phone together along with a fashionable entreaty that can convey success will provide to the gustatory sensations and penchants of these two VALS sections. The life style of slaves involves being voguish. fashionable and exposing position. The experiencers spend high parts of their income on being stylish and geting the latest in any tendency. Another large advantage that the ticker phone has is the ability to fulfill clients who are active in athleticss. With the rush of nomadic devices. people are progressively seeking to integrate the usage of them in their day-to-day athleticss activities.
Similar to the arm set strap of mp3 participants used by smugglers. the Watch Phone facilitates the usage of engineering while exerting. supplying enormous value to working professionals who besides are wellness witting and are actively trying to remain fit ( no wordplay intended ) . Decision Criteria The determination we make must be made to guarantee that a few cardinal standards are met: 1. Our activities create widespread demand for the LG ticker phone in the Canadian market 2. Our activities guarantee profitableness in the short term as the engineering industry is quickly germinating 3.
Any determinations we make must parallel the mission and values of LG Electronics. Inc. An Integrated Marketing Campaign To be able to name the LG Watch Phone a success in the Canadian market continuing the approaching launch. we need to set into gesture a full advertisement run that will present the market to our radical new merchandise. This LG Watch Phone will be portrayed as the latest and greatest in the consumer electronics industry ; this is a device that simplifies mundane life by being attached to your carpus at all times.
The LG Watch Phone will acquire widespread media attending through a assortment of promotional mediums including telecasting. magazines. and the Internet. This merchandise will be priced as a premium merchandise and will aim those immature professionals who lead a busy life and have a demand to remain on the taking border of technological invention. Through the usage of advertisement tactics aimed at straight aiming the immature. flush professional. we put ourselves in a good place to hold a successful launch in the Canadian market. Marketing Scheme
A differentiated cleavage scheme would do the most sense for a merchandise of this nature. Like many major nomadic phone releases. there are frequently several specifications to take from and could be distinguished through assortment in informations storage size. design ( ex. coloring material and size ) . screen declaration and most significantly monetary value. Further. service bearers in Canada will offer major price reductions on the retail monetary value of the phone if you decide to buy a 3-year program along with the phone. Consumers have the option of taking between paying full monetary value or a discounted monetary value with a contract by the bearer.
Service suppliers besides give a assortment of programs to take from that allow each monetary value section a different offering. Experienced professionals most likely wage full retail monetary value or mark with a program. The best placement scheme would be to concentrate on merchandise properties that are most of import to the mark market. Due to the freshness and advanced entreaty of the combination of a ticker and a phone. the merchandise mostly speaks for itself. It makes sense for the merchandise to concentrate on leading. puting importance on dimensions of invention. quality public presentation. design and dependability ( See Exhibit A ) .
Based on this scheme our placement statement is as follows: “For immature. flush professionals who are looking for a sleek. fashionable. nomadic phone. the Watch Phone is a radical smartphone that combines the convenience of a ticker with the engineering of a nomadic phone unlike any traditional smartphone. ” Consumers will look at this merchandise as 1 that will carry through a psychological demand. Many persons in our mark market will hold both a phone and a ticker. but a merchandise that will incorporate two really indispensable merchandises in a immature man’s life will be really attractive to that person.
The monetary value will be set at a premium. which means that one time they are cognizant and interested in the LG ticker phone through our promotional run. they will take action by doing a complex purchase determination in which a thorough information hunt will take topographic point. This means that it is vitally of import that the inside informations of the merchandise are readily available to all possible consumers. Marketing Mix Product The LG Watch Phone is the first of its sort by holding a wrist watch format with both the double maps of a phone and ticker. LG has a first mover advantage as a consequence of this.
Benefits include characteristics such as a touch screen. 3G connectivity. Bluetooth. web browse. calendar. rainproof stuffs and a speakerphone. The Watch phone provides the convenience of hands-free characteristics and text-to-speech. We will market the LG Watch Phone as a forte merchandise. Due to turning competition in the consumer electronics industry. consumers have a assortment of picks when sing a new nomadic phone purchase. This environment induces consumers to be extremely involved in the purchase by comparing different brands/models when sing their purchase.
The merchandise acceptance rhythm for the Watch Phone should be comparatively speedy. due to comparative advantage. compatibility. observability. and trialability. The LG Watch Phone is consistent with consumers past demand for nomadic phones in this market with extra advantages such as being portable. stylish. and convenient. Consumers will hold the ability to prove and see the phone at several different distributers. It should be seen as a “fashion statement” and as a position symbol. Today’s consumer has a high affinity for trade name names.
The “Watch Phone” name should be associated with the LG merchandise and have LG’s premium merchandise position when it is launched. Distribution Channels LG presently has the option to administer through multiple bearers or a individual bearer. It is best to remain consistent with LG’s current distribution theoretical account. by holding the Watch Phone available through a assortment of webs. The Watch Phone will hold a selective distribution scheme through the 3 chief bearers: Rogers. Bell. and Telus. These three hold 95 per centum of the Canadian market portion.
Koodoo and Virgin Mobile besides go against our product’s nucleus values by publicizing low cost phones with inexpensive programs. Rogers. Bell. and Telus are all good known to transport more expensive phones with high-end programs. Pricing Strategy Since the Watch Phone operates in the really unpredictable. fast traveling engineering sector. our chief aim is to follow a net income orientation to guarantee LG net incomes every bit much as possible from this merchandise before tendencies in the market decrease the demand for the ticker phone. This is a luxury merchandise. significance that demand for the ticker phone will be inelastic when factoring in the monetary value.
Besides. since there is no existent comparing to the merchandise in the market – we are the first-mover. This will let us to put the monetary value in a manner that reflects the inelasticity of this market section The Watch Phone operates in a Grey industry. On one side. the ticker market is really monopolistic. The smartphone market on the other side is monopolistic every bit good. with a few key participants such as Apple. Samsung. Blackberry. etc. The LG Watch Phone operates in a market of its ain. It is a amalgamation of the smartphone and ticker markets – a market we call the “SmartWatch market” – which is a monopoly.
This means that there is no monetary value competition – at least until other companies start fabricating their ain rendering of a watch-phone. To take advantage of this. we will implement a price-skimming scheme. We will put the monetary value high ab initio to capture big borders from the pioneers and early adoptive parents. who are willing to pay the monetary value premium in exchange for being one of the first to have such a radical merchandise. This scheme is really of import to be able to retrieve the costs associated with R & A ; D.
Once rivals enter the market. competition will coerce LG to take down the monetary value on the merchandise. which is in line with our initial monetary value planing scheme. This will capture the remainder of the market who were waiting for a more low-cost clip to buy. As the European Launch had the phone at over $ 1. 200 USD. we believe that with the grip the merchandise has in the market. we can be flexible and drop the monetary value down to $ 799 for the Canadian launch. Promotional Strategy As LG has a big budget for advertisement and publicity. holding to find our program of onslaught with respects to publicizing becomes really simple.
We can utilize an aim and undertaking method wherein the budget is brooding of all promotional activities LG deems necessary to make a demand for the merchandise. To make the demand that we are looking for. we will utilize a assortment of different mediums to draw our mark market to the merchandise: 1 ) Television Use of 30 2nd telecasting musca volitanss during flushing premier clip and featuring events will let us to make our mark market. who are likely to be watching the intelligence in the eventide and their favorite athleticss squads otherwise. ) Magazines We will be advancing the Watch Phone in magazines such as Forbes and Wired. These magazines epitomize the type of consumer we are aiming. and portray the professional and tech understanding lifestyles that our mark market thrives in. With about $ 600. 000 in magazine budget. we should we able to acquire 4 full page ads throughout the twelvemonth in Forbes and Wired ( see Exhibit E ) 3 ) Internet Since this is LG’s radical new merchandise. the watch-phone will do a large presence on LG’s web site.
LG’s web site will hold a “composer” tool that will let the consumer to “build” and monetary value their merchandise choosing from the assorted characteristics available. We will do usage of the synergistic nature of the cyberspace to make bombilation through societal media ( including Facebook. Twitter. and YouTube ) . every bit good as show some of the finer inside informations of the merchandise to portray the quality of the LG Watch Phone. Using a mixture of rational and emotional entreaty in our advertisement attempts will guarantee success for this merchandise.
Leting consumers to detect all of the antecedently unmet demands which can be met with this merchandise. along with making the sense of luxury. exclusivity and a manner statement will assist drive the demand for the Watch Phone. We have recommended an advertisement budget for the Canadian market of $ 5 million. In 2007. LG spent about $ 9 million on the advertisement of their new merchandise. the “LG Chocolate” . Taking into history the fact that this was in the United States. we predict a $ 5 million budget to be sensible for the size of the Canadian Market.
Included in this will be a $ 2 million endorsement trade with Canadian born Sidney Crosby. Sidney is an ideal pick for our famous person indorsement as he is a Canadian icon who fits the description of our mark market. He will do visual aspects in our commercials and in portrayals on our web site. Our budget will be broken down into three chief classs based on a $ 3 million allotment after our famous person indorsement outgo. as illustrated in Exhibit C. Expected Results
We did some computations in order to foretell our gross revenues for the first 3 old ages after the release of the phone in Canadian market. We know that in 2008 consumer electronic gross revenues in North America totaled $ 515 million. Furthermore. we know that cell phones constituted 18. 5 % of overall consumer electronic gross revenues. For the growing rate for world-wide consumer electronics gross revenues we used is 8 % in 2009 and 10 % in 2010. Reasonably low growing rates are being used because of uncertainness instilled by the recent fiscal crisis.
Besides we introduce a “Watch Phone restrictive factor” that lowers the forecasted gross revenues due to uncertainness of the existent ability of such a freshness appliance to derive the necessary grip in the market. Taking into consideration the proportion of Canadian population to the overall North American population. the LG’s market portion in the consumer electronics market. and the per centum of LG’s cell phone gross revenues in Canadian market that LG’s Watch Phone will account for. we are able to bring forth a reasonably conservative prognosis that still allow LG to interrupt even and gain a sensible net income.
Looking at Exhibit B. the perpendicular axis represents the jutting Watch Phone gross revenues in Canada ( in 1000s of dollars ) . Then. the otherwise coloured bars represent projections for assorted Watch Phone gross revenues per centums in relation to entire LG cell phone gross revenues in the Canadian market ( these are indicated on the right ; each colour corresponds to a per centum of LG’s phone gross revenues for 3 old ages after release ; 2009-2011 ) ( Exhibit F ) .
With a net income border of about 25 % . our $ 5 million advertisement budget is justified with 25. 000 units sold in Canada. On the graph. we can see that merely in the worst instance ( bluish saloon ) for 2009 do we non cover our selling budget being 1. 5 thousand units abruptly of the coveted sum. However. in subsequent old ages we feel that we can now non merely cover the selling budget. but besides generate solid net income.
