LG haunted by marketing dilemma
Optimus G Pro
By Cho Mu-hyun
Most will agree that LG Electronics has one of the best smartphone portfolios, with products ranging from low-end handsets to high-end ones like the Optimus G and Optimus G Pro.
The recently launched 5.5-inch Optimus G Pro and the smaller 4.7-inch Optimus G garnered praise from U.S. consumer websites, trumping smartphones from competitors.
Given these positive reviews, why aren’t these smartphones selling like hotcakes? A possible answer is the lack of marketing due to a significant cash shortage at LG.
Like many smartphone manufacturers, LG was caught with its pants down by Apple’s iPhone. Before that, the firm only worried about its local rival, Samsung Electronics.
According to LG officials, the firm was forced to choose between cutting the budget for development and marketing. It eventually decided that the product comes first before the marketing.
“Our investments in research and development have been consistently high in next generations of our commercial products. We are also conducting research on future products along the lines of the Google Glass or the Apple iWatch,” said a senior official at LG’s R&D division who requested to remain anonymous.
Officials with over 20 years at the firm based in Yeouido, Seoul lamented the significant cash shortage prevents them from sufficiently promoting its products.
“No one who is knowledgable of IT doubts the competitiveness of our products. Our lack of marketing is about focus — we have to make the most out of what we have. The top brass decided the limited amount of resources would be better spent on R&D than marketing,” he said. Although the official declined to comment on the precise amount LG spent on marketing last year, an official in a different division of the company estimated that last year’s budget for mobile phones was a third lower from three years ago.
Choices have consequences, and LG officials correctly expected the lack of marketing may lead to consumer amnesia. Knowing the problem but being powerless to alter it has hurt the company officials more.
When it rains, it pours. Mobile operators across the world feel the lack of LG product commercials or promotions is unfortunate given the average consumer’s very short attention span. However, these operators don’t have an incentive to promote LG.
“It is hard for AT&T strategically to promote LG products when they don’t support us with a substantial marketing budget,” said an official of the U.S. carrier. Indeed, money talks the loudest.
He said that as a long-time fan of all LG products — from televisions and refrigerators to washing machines — he was concerned of the noticeable decline in the company’s advertisements and television commercials.
“It wasn’t like this two to three years ago. There was a wide demand for Asian contents that LG delivers, especially from Asian Americans in the U.S. Solid products notwithstanding, the LG brand has just disappeared from the consumer’s mind,” he said.
Nevertheless, LG has successfully leveraged the resources it had; most recently, its “LG Optimus G is here 4 you now!” billboard in New York’s Times Square poked fun at Samsung’s “Be Ready 4 the Next Galaxy.” What a way to put a spoon in a rival’s marketing budget.