The ‘premium’ niche offers better margins
when Korean consumer durable major LG decided to shed its mass-marketer tag globally and reposition itself as a premium segment player, more than a few industry watchers smirked with disdain. After all, the fortune is at the bottom of the pyramid... so, why is LG digging its own grave? But hey, LG may yet have the last laugh, at least in India. Here’s why...
Traditional consumer demographics are changing, disposable incomes are on the rise and the new Indian consumer is actively seeking the best fit for his individual lifestyle, which is definitely NOT mass. With consumers no longer beating the oft-trodden path and having more money in their wallets too, LG’s strategy is bang on the mark. Says V. Ramachandran, Director, Sales & Marketing, LG, “Consumers are shifting from conservative product lines to modern and niche commodities thanks to higher incomes and increased awareness. Attractive loan schemes have further added to this demand,” adding that the premium category within the mass has more acceptability among Indian consumers than ever before.
Ajay Sharma, Country Manager, HTC India (which makes PDAs and Palmtops) says, “More companies are launching products targeting the premium segment. Niche marketing is also catching up, as differentiating your product from peers has become an imperative in today’s competitive scenario.”
Many marketers, like Chinese consumer durable company Haier, are therefore even choosing to differentiate their product by giving it a heavy price tag and labelling it as ‘premium’. There’s also the lure of higher margins enjoyed by the premium segment products. When the Korean chaebols entered the Indian market, they sold their stuff at dirt cheap prices to compete with well entrenched players like Videocon. More than a decade later, LG & Samsung are clamouring to gain acceptance as premium segment players. The bid is also to earn more profits per unit sold. “Where mass marketing helps us to increase our profit, selling to the premium segment helps us to attain an absolute high margin per unit,” asserts Ramachandran. The recent launch of LG Viewty – a five mega pixel camera with a three inch display screen and LG Pearl Black LCD – the first piece in the company’s proposed Design series, is a step taken by the company to reach the premium segment. Both these products are targeted at high-end consumers. Even Samsung recently unmasked a fantastic 70-inch LCD TV (with a 7 digit price tag) for the ‘ultra’ hi-end consumer.
when Korean consumer durable major LG decided to shed its mass-marketer tag globally and reposition itself as a premium segment player, more than a few industry watchers smirked with disdain. After all, the fortune is at the bottom of the pyramid... so, why is LG digging its own grave? But hey, LG may yet have the last laugh, at least in India. Here’s why...
Traditional consumer demographics are changing, disposable incomes are on the rise and the new Indian consumer is actively seeking the best fit for his individual lifestyle, which is definitely NOT mass. With consumers no longer beating the oft-trodden path and having more money in their wallets too, LG’s strategy is bang on the mark. Says V. Ramachandran, Director, Sales & Marketing, LG, “Consumers are shifting from conservative product lines to modern and niche commodities thanks to higher incomes and increased awareness. Attractive loan schemes have further added to this demand,” adding that the premium category within the mass has more acceptability among Indian consumers than ever before.
Ajay Sharma, Country Manager, HTC India (which makes PDAs and Palmtops) says, “More companies are launching products targeting the premium segment. Niche marketing is also catching up, as differentiating your product from peers has become an imperative in today’s competitive scenario.”
Many marketers, like Chinese consumer durable company Haier, are therefore even choosing to differentiate their product by giving it a heavy price tag and labelling it as ‘premium’. There’s also the lure of higher margins enjoyed by the premium segment products. When the Korean chaebols entered the Indian market, they sold their stuff at dirt cheap prices to compete with well entrenched players like Videocon. More than a decade later, LG & Samsung are clamouring to gain acceptance as premium segment players. The bid is also to earn more profits per unit sold. “Where mass marketing helps us to increase our profit, selling to the premium segment helps us to attain an absolute high margin per unit,” asserts Ramachandran. The recent launch of LG Viewty – a five mega pixel camera with a three inch display screen and LG Pearl Black LCD – the first piece in the company’s proposed Design series, is a step taken by the company to reach the premium segment. Both these products are targeted at high-end consumers. Even Samsung recently unmasked a fantastic 70-inch LCD TV (with a 7 digit price tag) for the ‘ultra’ hi-end consumer.
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Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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