DESIGNING COMMUNICATION PROGRAMS FOR LG SHINE IN VIETNAM

MINISTRY OF EDUCATION and TRAINING HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BUSINESS SCHOOL MBMM PROGRAM BÙI MINH TUẤN Topic: DESIGNING COMMUNICATION PROGRAMS FOR LG SHINE IN VIETNAM Tutor: NGUYỄN THỊ MAI TRANG FINAL PROJECT MASTER IN BUSINESS and MARKETING MANAGEMENT Ho Chi Minh City 2007 TABLE OF CONTENTS Executive summary No Part I Part II 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2 2.2.2.1 2.2.2.2 2.2.2.3 2.2.2.4 2.2.3 2.3 2.4 2.4.1 2.4.2 2.4.3 2.5 Part III 3.1 3.1.1 3.1.2 3.1.3 3.2 3.2.1 3.2.2 Part IV Content Executive summary Introduction Situational analysis Macro Marketing environment Industry trend Political environment Economic Socio cultural Micro Marketing environment Company analysis Competitors analysis NOKIA Samsung Motorola SONY Erickson Consumers’ analysis SWOT analysis Target market Segmentation Targeting Positioning Marketing objectives Designing a communication program for LG Shine ATL TVC Print advertisement OOH BTL PR/Event In store communication Recommendations & conclusions Page 2 2 3 4 5 6 7 9 10 12 12 13 14 15 15 16 18 LIST OF TABLES and FIGURES Figure 1: Total market by brand share Page Table 1: Market share by phone type Figure 2: Total market by price band analysis by brand Table 2: Shine communication structure - 10 Figure 3: Overall implementation plan 11 Table 3: Estimated airing schedule - 12 Table 4: Estimated printing schedule 13 Figure 4: Pre launch stage programs - 15 Figure 5: Post launch stage programs 16 EXECUTIVE SUMMARY LG Electronics Vietnam is the electronics company that its main products are home appliances, digital display and media devices Its sales performance of mobile phones is very poor In the very competitive market of mobile phones, there are many top players like NOKIA, Samsung, and Motorola… LG seems to be a late comer with 2% of market share In June 2007, LG launches new model called LG Shine, which is a full metal body slider phone, wide screen TFT LCD and rolling keys LG select the high price model market for this model This model is hoped to be a milestone for LG conquer Vietnam market Besides other business strategies, this project focuses on designing a communication program for Shine in Vietnam market The communication program includes two main parts called Above the line and Below the line activities In the first part, LG aims to remind consumers remind its product concept is “Styled in Metal” with the main theme “Born to Shine” Through media advertising, LG wants to establish quick and high awareness of the product and uplift the brand image In the later part, it insists on the in – store communication through display, POSM and PR/Events as well The key successful factor of this communication program is to implement all of activities synchronized and integrated LG can maximize the effectiveness of this program to increase its sales performance and increase its brand awareness in mobile market -1- Part I: INTRODUCTION With a 60-year history, LG Group has pioneered many business areas such as the energy industry, and is well – known for its commitment to corporate governance and transparency At present, LG Corporation is a holding company for 31 companies including LG Electronics (LGE), LG Chemicals, and LG Telecom In Vietnam, LGE established LGE Vietnam (LGEVN), which its main business domain is home appliances, digital display, digital media and mobile communication (MC) products, as its subsidiary Being No.1 company in Vietnam by achieving sales amount $200M with annual growth rate is 50,4% through LGEVN Way, which is Creating value, Change Management, Clean and Clear, team work and global standard, is LGEVN’s vision and mission In order to achieving the company mission and vision, LGEVN should maximize its sales performance of all kind of product category However, its MC business is very weak and has no brand reputation due to lack of brand communication program It is one of the reasons that LGEVN’s mobile sales amount is extremely low among its product categories The objective of this project is to design a communication program for LG Shine, launched in Vietnam in June’07, to make an improvement in its mobile business in Vietnam The following parts will present the market situation, marketing objectives, marketing program and implementation plan of designing a communication program for LG Shine in Vietnam -2- Part II: SITUATIONAL ANALYSIS 2.1 Macro Marketing environment 2.1.1 Industry trend: There will be a fierce competition between GSM Operators for obtaining more subscribers (Calling fees …) As a result, operators, like Mobile Phone, Vinaphone, Viettel, will jump into handset business This trend is a positive impact to a market demand due to consumers has many choices for owning their mobile phones 2.1.2 Political environment The Vietnamese government tries its best to build a market – oriented economy in order to double 2000’s GDP by 2010 as targeted Moreover, relations with the US are improving, following the full restoration of diplomatic relations in 1995, the normalization of trading relations in 2001 and the trade agreement in May 2006 In addition, the Vietnamese government recognizes the threat that corruption presents to its legitimacy, and has acted to clamp down on graft among party officials Above all, it shows a good signal for reforming a market – oriented economy in Vietnam 2.1.3 Economic: Vietnam began its program of economic renovation in 1986 While reform has been gradual, the country will continue to experience strong economic growth, driven in most part by the dynamic private sector Entry to the WTO is expected to boost export levels In addition, WTO memberships will give Vietnam access to both foreign markets and capital, while making Vietnamese enterprises stronger through increased competition Next, in preparation for membership, the government has spurred forward Vietnam’s transition from a centrally planned economy to a market-orientated one Moreover, Vietnam continues to keep the -3- high GDP growth rate and double the GDP per capita in 10 years’ time from USD 620 in 2006 to USD 1,450 in 2016 GDP grows steadily to guarantee high purchasing power 2.1.4 Socio cultural: The total population of Vietnam is approximately 84 million The average household size is 4.8 It is forecasted that the total population will reach 100 million in 2016 It is estimated that the working age population in Vietnam is 42, million people, approximately 61% of the total An estimated 10, million live in urban areas, with the remaining 31, million in rural areas “Technically skilled workers” form an estimated force of 8,84 million, accounting for 20.99% of the total The south east region has the highest rate of skilled workers (30.13%), followed by the Red River Delta (27.99%) and Coastal South Central (20.85%) The lowest rate was reported in the north-west region Concerning education level, the adult male illiteracy rate was estimated at 4% in 2000 and 9% for females, with the youth illiteracy rate 3% for both genders 2.2 Micro Marketing environment 2.2.1 Company analysis: The disadvantage of the company is low market share with around 2% -4- Figure 1: Total market by brand share 100% 80% 3 2 4 2 2 2 2 2 2 7 19 18 19 19 20 21 20 20 20 19 18 18 18 2 19 18 OTH ER S BENQ- SI EM ENS SONY ER I CSSON 60% SI EM ENS SA M SUNG 52 50 51 50 50 50 51 50 51 52 52 52 52 53 52 40% PA NTECH PA NA SONI C NOKI A M OTOR OLA LG 20% 18 22 21 20 20 20 21 22 20 19 20 19 18 Ja n Fe b 17 19 0% Fe b M a r A p r M a y Ju n Ju l A u g Se p Oc t No v D e c Y T D YT D Source: GfK Asia – 2/2007 Therefore, the company has started to invest strongly in Mobile business from the end of 2006 The brand image and awareness of the company are still strange to customers In addition, lacking of model line up lessens the competitive ability of company However, Black Label series category is rather successful with Chocolate phone KG800 in Vietnam It is very strange that most of consumers know Chocolate pet name of LG Mobile phone rather than LG Mobile brand Furthermore, the company can utilize advantages from consumer electronics products because LG has experience and well reputation from consumer electronics products, especially air conditioner and TV 2.2.2 Competitors analysis LG has many competitors in the market such as NOKIA, Samsung, Motorola, and Sony Erickson…The following is some analysis of their competitive advantages 2.2.2.1 NOKIA: -5- It is the market leader (52% of market share) with successful “Pull Strategy” It has a strong brand communication: “Connecting people” NOKIA is popular because it has a full line-up with various models from low tier to top tier and its policy starts focusing on the low tier to keep its market share NOKIA N series and E series are very successful in Vietnam market as hi – tech and luxury brand They have very clear image to consumers that they are for stylish and successful businessmen 2.2.2.2 SAMSUNG It holds the market share of 19% and has big investment in ATL (Above the line) for Ultra collection Its policy is focusing on Premium Tier with ultra series However, it has difficulty in low tier models (>Born to Shine Emotional touch >>Shining Moment Shine Shine Main Main Theme Theme Born Born to to Shine Shine Objective How to Key Idea TV TV // Cinema Cinema Print Print // OOH OOH POP POP Online Online PR PR // Event Event Create Awareness & Curiosity Reminder & Create Preference Making Product Distinctive Specific Info Create WOM Create Awareness & WOM Product focused story Emphasis on product attractiveness Maximize product exposure Stimulating user participation Introduce shining moment The moment that you hold the Shine can turn the night into day Product centric under ‘Shine’ concept Product centric with iconic symbol Product Centric under emotional & Tech based concept Connect Consumer’s shining moment with Celebrity’s The overall picture of launching Shine and its activities are shown in Figure We divide in three stages, which are Pre – launching, launching, and post launching Here, we deeply know the implementation plan through activities in ATL and BTL Figure 3: Overall implementation plan Pre-Launch Pre-Launch 01/ 04 01/ 05 Objectives Objectives Create buzz and excitement Launch Launch 01/ 07 01/ 06 Post-Launch Post-Launch 01/ 08 01/ 09 Maximize aw areness Boost sales volume Born to shine TV on-air A TT LL A TV TV Lifestyle Magazine Print Print Mass MZ Emphasis on product attractiveness Outdoor Outdoor PR PR // Event Event New spapers Pre-PR Press conference Product Review ( On/ off) Shine Ambassador Consumer trial program Consumer competition MZ Advertorial B TT LL B Online Blog / User club Online Online Online AD / I nteractive Campaign in Micro- site II nn-store store Etc Etc Dealer seminar FSM training / Display tour POP Distribution Display Check Ad monitoring - 12 - 3.1 Above the line (ATL) 3.1.1 TV Commercial (TVC) The objective of advertising on TV is to establish quick and high awareness of the product and uplift the brand image With the total budget of USD 400,000, LGEVN selects to advertise on VTV, Hanoi TV and HTV It should be aired one month after launching because it needs at least one month for all Shine to be in mobile shops The airing period lasts two months from July to August’07 The detail of airing agenda is as the following table: Table 3: Estimated airing schedule Market Chennel/ Titles Jul-07 16 23 30 Aug-07 13 20 27 TOTAL TELEVISION VTVNationwide VTV Ha Noi HCMC 5 8 4 6 - 5 5 $118,791 Hanoi TV - - - $17,922 - $258,699 395,412 6,326,598,400 HTV 10 10 5 Total TVBudget inUS$ (without VAT+loadingfee andafter discount ) Total TVBudget inVND(without VAT+loadingfee andafter discount ) 5 Concerning the TVC, its role is to create curiosity and interest towards Shine by effectively presenting the product as well as its communication concept LGE use the idea of changing something via phone will become one of the key creative ideas that will be applied consistently throughout many more Black Label Series campaigns to come in the future In order to encompass Shine’s communication concept, TVC uses the idea of changing night into day through the phone itself Compared to Chocolate’s TVC, which heavily focused on the models’ style and overall premium image, Shine’s TVC clearly presents phone itself as the hero Herein is the snapshot of Shine’ TVC - 13 - 3.1.2 Print Advertisement: It works as a rational and emotional medium Through print ads, LGEVN directly communicates product information, effectively presenting the product’s distinct qualities and stimulating consumer interest This is the key tool to announce to target consumers that Shine arrives So, it is run from the launching stage to post launch with the detailed agenda as the following tables: Table 4: Estimated printing schedule Market Chennel/ Titles Duration/Size Jun-07 11 18 PRINT North skew The Thao Van Hoa - Weekly/Wed-Fri-Sat Newspaper FPFC An Ninh The Gioi- Wed/Sat Newspaper FPFC An Ninh Thu Do-Daily Magazine FPFC 1/2 horizontal page Hanh phuc Gia Dinh - Weekly/Fri Magazine FPFC 1 Total Insertions Phu Nu TP.HCM- Weekly/Tue,Fri South skew Newspaper FPFC 1/2 horizontal page Tuoi Tre - Daily Newspaper FPFC Thanh Nien - Daily Newspaper 1/2 junior page Tiep thi & Gia Dinh - Weekly/Tue Magazine FPFC 1 Total Insertions 11 Total Print Budget in US$ (without VAT + loading fee and after discount ) Total Print Budget in VND (without VAT + loading fee and after discount ) 25 Jul-07 16 23 30 Aug-07 13 20 27 Sep-07 10 17 24 $12,727 $11,414 2 1 1 1 5 1 4 7 10 12 4 1 5 12 1 12 $3,068 $1,534 $6,568 $9,450 $4,950 4 TOTAL $108,688 $73,592 $29,058 261,049 4,176,780,568 - 14 - In order to make strong impression to target consumers with Shine product centric, LGEVN uses this Marquette for all newspapers and magazines With the black background, Shine will be outstanding appeared as the movie star 3.1.3 Out of home (OOH) This alternative medium communicates Shine at areas where TV and Print advertisement cannot be reached Why? Awareness of Outdoor Advertising is increasing This has attributed to the industries efforts to improve site locations, upgrade structures, and educate agencies and advertisers about the most effective types of creativeness When comparing cost per thousand (CPM), outdoor media is the most cost efficient medium This is due to several factors: - Continuous Exposure - Unlike other media, which have airtimes or life spans of seconds, minutes, or hours, outdoor provides days of uninterrupted exposure - 15 - - Gross Rating Point (GRP) Delivery - When purchasing media, the target GRP levels are generally achieved through accumulation over the course of the display period When purchasing outdoor, the desired GRP level is delivered on a daily basis for the entire duration of the display period - Limit Wasted Circulation - The ability to deliver messages within specific geographic areas allows advertisers to buy media where they need it most - Outdoor advertising is great because you cannot turn it off, turn to the next page or throw it away It is exposed to everyone regardless they travel by car, bike, bus, or on foot LGEVN executes via large-scale advertisement panels located in highly exposed public places or eye-catching places such as supermarket, high traffic areas, and color panel at airports Once again, LGEVN will use the same Marquette of print advertisement for outdoor advertising in order to announce to public that Shine arrives 3.2 Below the line (BTL) 3.2.1 PR/Event In this part, LGEVN focuses on three stages with continuously activities In the pre – launch stage, LGEVN wants to create buzz and excitement behind the launch of second handset within LG BLS, pet – named LG Shine The detail of program is illustrated in this chart: Figure 4: Pre launch stage programs - 16 - Programs A-1 Teaser Release - Circulate the teaser press release to key media targets and maximize media interests leading to product launch - Target Media: Online media, Tech media, Lifestyle media, Trade media including mobile and retail publications A-2 Ambassador Program - Designate a brand ambassador who has powerful impact on media and consumer in all age groups (20's-40's) - Utilize the brand ambassador to participate in following activities: + Participation in lifestyle launch event + Participation in various consumer programs + Media release / Interviews + Advertorial model A-3 Pre-seeking / Review * Pre-distribute products to selected media, bloggers, celebs for product review write-ups prior to the launch - Media: product review write-ups - Bloggers: product reviews placed in blogs - Celebrities: receive product feedbacks and quotes to use in press material and websites Next, in the launching stage, the objective is to maximize brand awareness of the launch of second handset within LG BLS, pet – named LG Shine LGEVN will organizes and executes a launch event in linkage with the campaign slogan, “Born to Shine”, together with the product launch of LG Shine They will organize a creative “talk – of – the – town” launch party to invite media, brand ambassador, key bloggers and retail VIPs Finally, in the post launch stage, LGEVN aim at drive consumer product trail and experience among mass target groups to generate strong sales volume They will maximize product trial or experience among wide consumer age groups to leverage brand positioning of LG Shine as a mass target brand to generate eventually mass volume sales Figure 5: Post launch stage programs Programs C-1 Consumer Trial program - Consumer trial programs targeting wide age targets +20's: universities +30 - 40's: major office buildings C-2 Consumer Competition -Organize various consumer competitions under the slogan of "Born to Shine" in conjunction with selected target media (e.g: radio, online, lifestyle magazine, etc…) 3.2.2 In-store communication C-3 Advertorial - Plan and execute advertorial using brand ambassador and/or photo sketches from the launch event to creatively communicate LG Shine launch and "born to Shine" campaign messages - 17 - It is the main part of in-store brand exposure LGEVN will maximize their brand awareness in mobile shops through LG mobile corners display, shop window displays, POSM… Herein are some examples - Window display and shop display corner: - POSM [Key Visual (Poster)] [Press kit folder] [X-banner] [Sticker] [Wobbler] [Leaflet] [Shopping bag] [Sales guide book] - 18 - Part IV: RECOMMENDATIONS & CONCLUSIONS This communication program is more effective if it is integrated and supported by another marketing program In other words, marketing mix plays an important role to facilitate for the success of communication program First, related with products features, LG has designed Shine with full metal body, wide – mirror TFT LCD screen with 2.2” and scroll controlling key This is the first mobile phone, which is really made by metal material There is only LG has this metal material phone while another main competitors like NOKIA, Samsung and Motorola not have this characteristic It has convenience that consumers can use its wide-mirror TFT LCD screen as a mirror for looking their faces, making cosmetic… With a scrolling key, consumers can easily control and quickly use all function of Shine Next, concerning with price of Shine, it is better that LG sets up the price from USD 400 to USD 450 The price band from $400 to $450 is not so seriously competitive LG will face up with three key models of competitors They are E65 model of NOKIA with USD 453, K800i with USD 465 and W850i with USD 444 of Sony Erickson Because of this, Shine can get price competitive advantage over competitors’ models Then, for channel distribution, most of the main competitors currently use distributors to distribute their products Let’s say NOKIA, Samsung, Motorola use FPT like a solely distributor Then, FPT distributes to some master dealers and mobile marts However, LGEVN is different LGEVN directly distributes its products to master dealers and mobiles marts LGEVN does not use any solely distributor like other main competitors In 2007, LGEVN should focus more on big mobile mart systems like Vien Thong A, Mobile World and Phuoc Lap - 19 - because these are direct sales channel Beside, the conventional channel as dealers should be enhanced Moreover, cooperate with some operator like Viettel, Mobile phone… is also the new market entry In the scope of this project, I cannot mention everything that make LGEVN mobile business be more successful in Vietnam I just focus on designing program of the communication for launching Shine in Vietnam It comprises two main parts that are ATL and BTL activities - Concerning ATL activities, they include advertising and printing advertisement and outdoor advertising It should be implemented as schedule - Concerning BTL activities, in store communication and PR/Events are the key tools to get attraction from public LIST OF REFERENCE William Cohen, The Marketing plan – Third Edition George E Belch & Michael E Belch, Advertising and Promotion: An integrated marketing communications perspective – Seventh Edition, Mc Graw – Hill International edition Ogenyi Omar, Retail Marketing – Financial Times Pitman publishing LGE internal training document, PMS Process Overview Michael R Solomon, Consumer Behavior: Buying, Having and Being – Sixth Edition, Pearson Prentice Hall Malcolm McDonald, Marketing plans: How to prepare them – How to use them –Fifth edition – Elsevier Philip Kotler – Gary Armstrong – John Saunders – Veronica Wong, Principle of Marketing – Third European Edition, Pearson Prentice Hall Ashok Ranchhod, Marketing strategies: A Twenty – first Century Approach, Prentice Hall Financial Times Keith Blois, The Oxford Textbook of marketing, Oxford university press