LG Electronics Inc.: Breaking the Ice in the North American Market for Refrigerators
The case describes the LG Electronics’ efforts to establish itself in the US market for white goods. It focuses on the refrigerator business, and details LG’s efforts to establish itself from 2002, when the LG brand is launched to 2006. The case focuses on the question of what should LG’s refrigerator line up in North America look like? Should it try to launch a radical new three-door refrigerator in 2007, ahead of Maytag which was working on a similar option, or should it opt for a more traditional product line up? The case provides a large body of qualitative and quantitative consumer research to enable a thoughtful discussion of what should LG do.
The objective of this case is to provide a broad understanding of marketing strategy. The case makes several important points. First, proper strategy development requires a focus on consumers, which means locating product development in the geography under consideration, aligning the entire organization to focus on the task and the consumer target, creating a multifunctional team headed by someone above the silos, in this instance the President and CEO for North America, Mr. Michael Ahn, to lead the effort, and articulating a process to systematically develop and deploy new products and services desired by the consumer.
Second, the case exposes participants to the role of distribution and the importance of having a distribution strategy that is built up from the desire to meet consumer needs.
Third, the case provides an opportunity to discuss different types of research, qualitative and quantitative, and the roles they play in developing consumer insights.
Finally, the case provides enough data to decide on what new innovations LG should focus on to build up its refrigerator product line and through it the LG brand.
This case is comprehensive and versatile and can be used in several different courses and with different audiences, including MBA, EMBA and executives. The case has been used successfully in the opening session of the marketing core course at INSEAD. In this context the case is best used to articulate the various decisions that will be covered in greater depth throughout the remainder of the course, while focusing the majority of the discussion on the SWOT analyses. It can also be used as the capstone case to integrate across the myriad decisions discussed during an introductory marketing management course. It enables students to think about all the different marketing mix decisions and enables the instructor to highlight the point that development of a coherent strategy requires coherence across the different marketing decisions pertaining to product, price, promotion and place, as well as aligning the organization to effectively achieve the same.
The case has also been successfully used in executive development programs for senior managers at the GM or higher level. In this context, the case has been used to highlight the importance of customer focus in driving business success. The case can also be used to highlight important elements of market entry in an international marketing course at the MBA/EMBA level. The case can also be used to illustrate how a company from a Newly Industrialized Country, Korea, cracked the US market for white goods, a mature business, and established itself as the flagship brand in the business.