A Comparative Study.
By ANNIE IDREES MEMON
Department of Management Sciences
Isra University Hyderabad.
June 10 - 16, 2002
The study is based on the comparison of marketing
strategies applied in LG. and Dawlance. In this study, the main focus to
see the effectiveness of the marketing strategies applied by both the
companies — Dawlance and LG, for selling their products particularly
Just to understand the marketing strategies in
general and refrigeration market in particular, one should know that
what marketing strategies ought to be? Who are the main players in the
market? What kind of other products do they produce? How do they promote
and supply their products? What type of competition is going on in the
market? And finally what are the marketing strategies being applied by
both the companies? These are the questions to be addressed, but the
main theme is the marketing strategies of Dawlance and LG Refrigerators.
This paper is mainly divided in to four sections.
The first section deals with the marketing strategies
in general. The second section focuses on the main players of
Refrigerators in the Pakistan market. The third section sheds light upon
the marketing strategies of Dawlance and L.G. Though the marketing
strategies of all the products may be the same. But mainly it has been
focused on the refrigerator marketing strategies here. Finally, the
paper is concluded in the last section.
All the information that is presented in this paper
has been acquired and extracted from various primary and secondary
sources. In this study, best possible efforts have been made to collect
the correct and uncovered information. For this, the information has
been collected by both primary and secondary sources. Primary data is
based on the interviews from the top officials of both the companies
based on the semi-structured questionnaire. The secondary data is based
on the published reports and Internet.
1. MARKETING STRATEGIES IN
Fluctuating customer requirements and competitive
forces are putting more pressure on marketing and are demanding superior
marketing strategy and tactical execution. The cycle time from product
creation, to product launch, for a winning go-to-market strategy, leaves
no margin for error.
Marketing puts the customer at the center of the
organization. The organizations, which do so, reap the profits. The idle
marketing ought to be or the key steps to a successful strategy can be
1.1 BE CLEAR ABOUT MISSION
The common, customer-orientated thread running
through all the activities of the organization and how we define the
kind of market oriented organization we want to be.
1.2 MARKETING RESEARCH
In marketing strategy some one should do know about
the marketing potential for his the product and should find out through
WHO ARE OUR CUSTOMERS?
What do we really know about their needs,
preferences, behavior and their life styles?
What can we offer them... at a price... that other
companies do not?
How do we perform in comparison to our competitors?
How are we currently performing for our customers?
Where are the gaps, the weak points, the fudges, and
the point of excellence... the USPs (Unique Selling points)?
How are we different?
Why are we different?
How can we better delight?
How do we change?
What do we change?
How clever are we with our market intelligence?
How well is our market research working?
Consider groups who share a similar need and who will
respond in a similar way.
1.5 Design a Marketing Strategy
To achieve specific marketing objectives, based
(e.g.) on the Marketing mix.
1.6 Set Tactical Plans, Budgets, Programs
Assign individual responsibilities to achieve the
1.7 Monitor Progress
MEASURE AGAINST STANDARDS AND
2. Main Players of the Refrigerators in Pakistan
Just to understand the refrigeration market, first of
all we should know who the main players in the market are? Actually
there are two types of marketers: those who manufacture refrigerators
locally and those who import and market the same in Pakistan.
Local Manufacturers of Refrigerators are: Dawlance,
Waves, Pel and Singer. These manufacturers roughly cater 80% need of the
Imported Manufacturers of Refrigerators are: LG,
Super, General, Hair, Sam Sung, Indesit, Semins,
Parties import refrigerators from their principal and
market the same in Pakistan. In-fact these all parties contribute only
20% of the market requirement. The above all are direct competitors of
Dawlance and LG. electronics.
3. "Marketing Strategies of Dawlance and L.G
Before discussing the marketing strategies of
Dawlance and L.G, first we will go through the profiles of the companies
Dawlance United Refrigeration Industries Ltd. was
established in 1980. It is the Largest Company in Pakistan engaged in
appliance business. Dawlance stands for durable & reliable household
appliances. Its refrigerator Factory is located in Hyderabad. The main
Objectives are to provide dependable and reliable product at reasonable
price to majority of Pakistanis and to enhance their quality of Life.
Present Market Share of Dawlance product is: refrigerators 65%, Washing
Machines 35%, Microwave Oven 40%, Chest Freezers 45%, Air Conditioners
Haniska International is a multinational company,
located in Korea. LG is an agent of Haniska International in Pakistan
market. LG is an importer of home appliances in Pakistan. It imports
Refrigerators, Air Conditioners, Washing Machines & Microwave Ovens
from Korea and China. LG has got around 300 dealers all over the
country. Marketing objectives of L.G are: to provide world class product
to upper and upper middle class to enjoy real luxury in their life.
Present Market Share of L.G product is: Refrigerators 4%, Washing
Machines 2%, Microwave Oven 3%, Chest Freezers nil, Air Conditioners
3.1. MARKETING STRATEGIES
The marketing mix is the organization's overall
offer, or value, to the customer. 'The basic marketing mix is often nick
named "the 4Ps" (product, place/distribution, pricing,
promotion); these are elements in the marketers armory — aspects that
can be manipulated to keep ahead of the competition'. Here I've explored
the marketing strategies of Dawlance in terms of marketing mix have been
3.1.1 PRODUCT STRATEGY
The object of Dawlance is to provide refrigerator to
all people who fall in lower middle, middle, and upper middle class in
this country such that most of the families should have refrigerators in
their home because they enhance better quality of life. Dawlance has got
products, which are as per international standards and carry all the
basic features, which need in any such type of appliances.
Dawlance believe that whatever they provide to their
customers should be durable and reliable. All the products, which
Dawlance market, are durable enough and customer can keep on using them
for quite many years without any problem. It provides its refrigerators,
3 years compressor guarantee and 1 year chest freezer, and free service
in spare parts under normal use.
Whereas, LG's objective is to provide world class
product to upper class and upper middle class to enjoy real luxury in
their life. Since LG is a Korean brand and being imported from Korea, it
has very advanced features, which are normally demanded by in developed
LG also insures that whatever product they market
should be durable enough which last quite many years and give trouble
free service to their customers. It provides its refrigerators, five
years compressor guarantee and one year free service in spare parts
under normal use.
3.1.2 PRICING STRATEGY
Dawlance has got around 52 models in their
refrigerator product line. From the price list and discussion had with
their management, it appears that they have position their product
pricing in such a way that their main focus is middle and upper middle
class. However, they have some selected range for upper class as well.
Product-wise price list enclosed in appendix for reference.
Dawlance has got a policy that their all product
price should be the same in all cities and town in Pakistan market.
Dawlance bear freight cost and make their product available to their
dealers irrespective of where they are located. For this, they give
uniform margin to their dealers irrespective of whether he is big or
Dawlance consider pricing as one of an important
element of marketing mix. It believes that their retail prices should be
uniform all over the country irrespective of whether customers buy from
Peshawar or Karachi. In order to maintain a uniform price all over the
country, Dawlance bear transportation charges and make the product
available at cost price at dealer premises.
Whereas the LG pricing strategy is cost + fixed mark
up to cover their GP. Since they cater to upper middle and upper class,
therefore their 90% dealers are in big cities only. Product-wise price
list enclosed in appendix for reference. LG follows pricing policy in
which their normal formula is import cost + reasonable gross profit to
cover their marketing expenses and also give them reasonable profit.
3.1.3 PROMOTION STRATEGY
Dawlance promotion budget is around 1.75% of their
turnover. 40% spending of their budget is Print Media, 20% goes on TV,
20% on Out door activity and balance 20% on Sales Promotion activity.
They believe that print media and out door activity help them to reach
to their target customer. Due to satellite transmission and having
multi-channels, it does not pay one unless you have very huge budget to
spend on this media. On promotion, their spending is more on consumer
incentive schemes. Since it pay them and there is direct relationship
between sales and consumer. Further, it gives customer a direct benefit
in shape of price reduction.
As far as Advertising strategy of LG is concerned, it
is being planned and executed by LG, Korea through their Pakistan Office
keeping in view their global approach and theme line. Local Agent of LG
simply gives advice and coordinate in its implementation. Since LG is a
multi-national brand, their spending on advertising is in such a way
that their all product get promoted. Although for different product they
have got different agent; like for TV, New Electronics/Karachi. For
computer monitor, Vision Computer. For mobile phone, Chimera.
It was not possible to get the exact advertising
budget of LG, but it appears from their spending and the figures
collected from Pakistan Advertising Association and from some other
sources that their spending is around 6/7 per cent of their sales in
Pakistan territory. Due to being a multi-national company and as a part
of their global Strategy they, most of the time, divert their funds from
strong market and spend more on weak or under developed markets.
Further, as far as Sales Promotion strategy is
concerned, it is being designed and implemented by their respective
agent of each product in Pakistan. For the promotion of Home Appliances
products: Hanaska International designs their own strategy. Their major
approach and emphasis on promotion through trade. They offer very
handsome incentives to their dealers, who in return push their product
among the customer and thus they get their desired volumes in Pakistan.
It has been noted that due to being import base product they are always
high price vis-a-vis other brands in the market and it is one of the
reason why they give so much emphasis on the motivation of dealers.
3.1.4 DISTRIBUTION STRATEGY
Dawlance has got around 800 dealers all over the
country. Dawlance ensures that its refrigerators are available almost in
all appliances markets of Pakistan. They have got 80% penetration in
dealer sector. One can get very easily their product in any city or
small town of Pakistan.
Dawlance has got various types of dealers according
to their potential. Around 25% of dealers are "A-class"
dealers who sell over 1000 units and above per year. "B-class"
dealers are those dealers who sell from 400 units up to 999 units per
year. They are around 50% in total dealer and the rest are in best 25%
of "C-class" dealers sell from 200 up to 399 units per year.
In order to provide quick and timely delivery to
their dealers: they have got big warehouses located in almost all big
cities and towns. Whenever they get order from the dealer they try to
provide supplies to their dealer from closest warehouse. In case stock
is not available in the warehouse then it is delivered directly from
Hyderabad Factory. The maximum delivery time incase stock is delivered
from Hyderabad Factory is four (4) days. However if supply is given from
closest warehouse then hardly it takes 2-3 hours time. They believe
that, timely delivery of their product to the dealer, is one of an
important element in their success in Pakistan.
As it has already been stated in earlier that LG
refrigerators are imported. Mostly they import from Korea and some of
the models are imported from China as well. LG relatively don't maintain
loose stock at their end. Simply based on historical forecast and
feedback of their dealer about the possible demand, they import from
They ask their dealer to maintain sufficient stock
at-least 4-6 week at their end. Rather they believe in replenishment of
dealer stock based on their sales. It means dealers stock always remain
in within a limit, doesn't exceed beyond 6 week level.
As mentioned above, they have only 300 dealers mostly
in big cities and some in small towns. They also have got a policy that
retail price all over the country should be uniformed for the customers,
whether he/she buy from Karachi, Islamabad, or Peshawar.
They also bear transportation cost and thus provide
supplies at uniform rate to their dealers. They have got three big
warehouses in Karachi, Lahore and in Islamabad. From these warehouses
they feed their product to their dealers and thus they make their
product available to them.
3.1.5 PRODUCT LIFE CYCLE
Dawlance is an ISO 9000 certified company and among
its mission statement. It is one of their missions to provide quality
product to their customers. Therefore, they ensure that every product,
which is delivered from their factory, must go through rigorous quality
check. So that only perfect product, free from any defect is delivered
to their customers.
Since LG is an international name in home appliances,
therefore LG ensures that their product must meet their rigorous quality
standard. So, when it is delivered to the customer, it must meet
3.1.6 AFTER SALES SERVICES
Dawlance believes that after sales service is one of
the most important elements of marketing mix and thus give due emphasize
in providing quality after sale service to its refrigerator customers.
Dawlance has got qualified foreign-trained engineers in its team of
after sale service and also properly trained technicians and supervisors
who look after service centers and provide reliable quality after sales
service to its customers.
Dawlance has got 17 its own service centers in
different parts of country. Besides, they have got 34 franchise
workshops to cover remote areas, where its service center doesn't exist.
These are service centers and franchise workshops cover almost 99%
market of Pakistan. Wherever Dawlance dealer is, there you'll find
Dawlance workshop or either franchise workshop to take care of service
In order to provide satisfactory after-sales service,
Dawlance ensures that in all of its service centers sufficient inventory
of spare parts is maintained, even these are available with franchise
Dawlance has got the policy first of all to carryout
repair, if required at customer place. Incase if refrigerator problem is
not diagnosed at customer premises then it is taken to its workshop.
Whenever they get any complain, they prepare job sheets and puts its
record in computer and whenever at later date if complain is repeated,
in that case they also have a history with them of such product in their
data bank. Even after five years if you want to find out from Dawlance
service center that how many times there refrigerators have been
referred on account of technical problem to their center, they can dig
out from their computer record. In nutshell, we can say that Dalliance's
after sales service workshops are very well properly organized and they
work according to international service standard. As far as service
charges are concerned Dawlance consider that it is not a profit center
rather it's a support center for sales.
As it has been mentioned earlier that LG has got
market of refrigerators only in big cities and some of its big towns in
Pakistan. Therefore, they have got relatively lesser number of service
centers as compared to Dawlance. At present LG has got only eight after
sales service centers in Pakistan. From these service centers LG
provides after sales service to each customers. They also maintain spare
parts of serviceable items. Since their product is 100% imported, the
souring of spare parts is only import based.
Relatively LG refrigerator's parts are expensive
comparative to locally made because LG imports spare parts from Korea
and various other LG production centers. One of the reasons for being
these parts expensive is that LG's local agent has to pay almost 70% of
the product cost towards import duty, sales tax and other import cost.
We can say that LG also believe in quality, after
sale service to its customers and also considers after sales service as
one of the important element of marketing mix.
From the above information, it has been analyzed that
there is no comparison between Dawlance and LG. There are several
reasons behind it. For example: Dawlance is a big local manufacturer of
refrigeration industry in Pakistan. It has got all engineering
capabilities and very good finance and of course technical know-how to
produce internationally accepted quality refrigerators locally. On the
other hand L.G is a multinational company and has got different agents
in some of the big cities of Pakistan. It is simply an importer and
imports refrigerator from Korea and markets the same in Pakistan.
Since Dawlance has very strong industrial base as
well as deep-rooted marketing network in Pakistan, they don't feel any
threat from any of their competitors, either local or from importers. In
the contrary L.G refrigerator is an import-based activity. Every year
due to weakness of Pak Rupee, US $ cost of import is going up and thus
LG refrigerator is becoming costlier day by day. Therefore, they have a
big challenge before them to maintain their market share and also to
maintain their reasonable growth against local manufacturers.
All Dawlance products are made for middle,
upper-middle and upper class. While LG products are made for
upper-middle and upper class. Present market share of Dawlance
refrigerators is 65% while L.G's present market share for refrigerators
In the light of above evidences, it could be said
that Dawlance is a leading company as compared to LG, due to its
dominance in the market, lower prices, and availability of spare parts
and after sale service, etc. Hence people prefer to buy their products.
Dawlance is dominant in the Pakistan market because not of its marketing
strategies but least competition by L.G. L.G being a foreign company
suffers because of government policies by paying heavy import taxes. It
means, it is not only the marketing strategies of any company which
plays a dominant role but it the success of product lies in the
marketing strategies as well as the policies of the Government i.e
favorable or unfavorable. As far as the case of L.G is concerned, it is
suggested that instead of depending on import it should install its
plant in Pakistan so that it may lessen its burden on taxes.
* Annie Idrees is the final year student of MITM at Isra University
Hyderabad. The writer is very grateful to Professor Dr. Amanat Ali
Jalbani, Chairman Department of Management Sciences, Isra University,
Hyderabad, who very kindly has provided full support and guidance for
writing this paper, otherwise it would have been very difficult to