LG to invest $1.5 billion for 'premium' image

LG Electronics, the South Korean consumer durable giant, plans to infuse approximately $1.5 billion this year for repositioning and branding its products globally.

Not only that, the wholly owned Indian subsidiary of the group has lined up Rs 480 crore for brand building as well as research and development (R&D) in India.

This calendar year, LG plans to pump in 4 per cent of its total revenue for marketing and repositioning its brands across the globe.

"The group has global revenues of $42 billion. Four per cent of it works out to around $1.5 billion," Moon Bum Shin, managing director, LG Electronics India (LGEIL), said today.

The proposed investment is primarily aimed at repositioning the company's products into the "premium" segment. "Premium products means all the group brands which are priced higher than the rival companies still finding wider acceptance," he added.

In line with its parent company, LGEIL has also increased investment for R&D and brand building in India to Rs 480 crore this calendar year, which is the highest ever capital infused by the company for the purpose in India.

"Last year, the company infused around Rs 260 crore for marketing, which also included sponsorship of the cricket world cup. This year without sponsoring any premier sports event, the company proposes to put in Rs 360 crore for brand related exercise. This is the highest ever capital outlay by the company for marketing in India," Shin said.

The company has increased its advertisement expenditure by 30 per cent and additional Rs 120 crore would be pumped in for research and development.

The company is looking at launching India specific products. The company will soon enter the air purifiers and wine sellers segment. India contributes $2.5 billion to global revenues of LG.

The company aims to achieve 40 per cent market share in the premium segment of the consumer electronics and home appliance businesses by 2010. At present, LG holds 20 to 30 per cent market share in these segments.

Also, the company wants to be a market leader in the flat panel display (FPD) product segment and aims to increase market share to 30 per cent this year from 20 per cent last year.