“Life’s Good,” is LG Electronics’ ad slogan and, based on comments by president/CEO Michael Ahn, could describe how the company thinks about itself as it faces the second half.
During its product preview last Tuesday evening which was held on a yacht that set sail from a Manhattan pier, Ahn discussed LG’s expanding presence in the U.S. market as well as unveiled some CE and appliance products for the third and fourth quarters. “At LG, ‘Life’s Good’ is more than a marketing theme. It captures the essence of what LG is about — our products and technologies and their impact on people’s lives.” The ongoing 18-month campaign has put LG in BusinessWeek’s Interbrand listing of the top 100 most powerful brands, he said.
In addition, according to the numbers Ahn provided, LG is having an impact on plenty of U.S. consumers. LG’s U.S. operation has had a 12 percent sales gain during the first half to $3.6 billion. Every division is up, Ahn said, with CE leading the pack with a growth rate of “a phenomenal … 68 percent.”
In terms of market penetration, Ahn said that since the fourth quarter of last year through June, LG has the No. 2 market share in plasma TV and continues to expand its share of the LCD TV market. LG mobile phones were also No. 2 in market share in the United States during the first quarter with almost 18 percent of the market, and No. 1 in CDMA phones, Ahn said.
Ahn commented that flat-panel displays this year, “have been great, but there has been significant price erosion. Demand is up because consumers are now interested in buying large-screen plasma or LCD products. This provides a good value to consumers.”
He added that the effect on the industry has been that manufacturers “that are not ready for price erosion like we have seen have had to streamline operations, cutting costs here and there. Some companies can’t compete. It is a survival game.”
Ahn said LG is in a unique position since it owns the “original technology patents of 8-VSB” for digital television due to its acquisition of Zenith several years ago and that LG receives “licensing fees for all HDTV products sold by anyone.” In addition LG is a “leading worldwide supplier of plasma TV to many of our competitors, a leading LCD supplier too,” Ahn noted.
Bob Perry, LG’s sales VP and channel marketing head, added, “We are the largest flat-panel supplier in the world.” But he warned, “The industry projected priced declines of 40 percent … for this year. And the way it is going by the end of the year the industry will be there. Demand for plasma and LCD is exceeding CEA estimates for the year.”
Perry noted that LG’s approach to the marketplace can be summed up in one word: “Honesty. We have a one price policy for all of our retailers. It is the same for everyone across the board.”
“We don’t sell our line with everyone. Either you support us completely or you can’t carry the line. But if you do we will support you.” Perry said that LG does sell buying groups, “If they are focused on value and have distribution discipline, we will partner with them, such as HTSA [Home Theater Specialists of America], PRO Group [Progressive Retailers Organization] and MARTA.”
Perry added that LG’s approach is to “Take the friction out of the equation between suppliers and retailers. We took the conflict out. We serve the dealer and are humble about it. Dealers are under plenty of stress. They’ve always asked, ‘Can we trust the supplier?’ “Are we getting enough ad support?’ ‘Are we getting the best price?’ We are confident about what we do to make dealers, and ourselves, successful. We want to be a partner with our retailers, not an opponent.”
On the appliance side, LG home appliances began shipping to Home Depot in June, Ahn said, with “front-loaded washers and dryers and bottom-freezer refrigerators. Unlike most of our competitors we focus on the premium segment of the market with premium products at premium prices.”
Teddy Hwang, president of LG Digital Appliances, said that since Home Depot has two store formats. “With one of them we supply 18 SKUs, the other gets 12 SKUs.” The rollout is all but national now in and that LG is part of Home Depot’s on-time delivery “Digital Direct” program.
John Herrington, digital appliance VP, said with the introduction of the LG Range (see related story above) it gives LG “A full rollout lineup of products in key major appliance categories since its introduction two years ago, from laundry to refrigeration, dishwashers and now ranges. Along with the 1700 Home Depot locations LG is supplying, the company’s appliance line is also being sold by Best Buy, among others, giving it 3500 retail locations nationwide.