LG Improving Supply Chain Management Structure

By Havis Kwon

Executive Vice President, LCD TV Business

Goals & Challenges in LCD TV Industry

LG still plans to solidify its position as one of the top LCD makers in 2009.

The global economic situation will certainly have an affect on all manufacturers, as consumers spend less and ultimately lower overall consumption levels, which will increase competition in the market.

However, we at LG believe there are several key areas in which we can excel.

First, we plan to leverage our technological advantage over our competitors.

Our LED backlighting and 240Hz LED-scanning technologies not only provide better picture quality and value for the money, but can help save energy and lower usage costs.

During the current economic downturn, we feel it's more important than ever to provide real benefits to consumers, and many of our technologies and features do just that.

Additionally, we have begun implementing business initiatives designed to maximize efficiency and widen our consumer base.

For example, LG's improved supply chain management (SCM) structure is already helping us cut production and distribution costs and will also help us get new products into the market faster.

Sales Channels

We're addressing the economic recession and supply situation in many ways. Such as introducing never-before-seen technology including LED backlighting, TruMotion 240Hz and energy saving modules that will provide the most enjoyable viewing experience available along with superb picture quality with less energy, which is better for the environment and consumers' energy bills.

We are also focusing on providing products that meet the needs of diverse consumer segments.

LG has a full product line-up, including small, medium and large TVs, available with regular or premium features and quality.

LG will also adjust product specifications according to demand. This way, we can ensure that consumers will have the widest choice possible to fit their needs.

LG spends a great deal of time and effort developing consumer insight.

While this is of course used for creating new product features and designs, it is also how we determine what models, sizes and pricing segments consumers want.

By being sensitive to both aspects of consumer needs, we believe we will be able to remain competitive and maintain growth in the North American market.

For North America in particular, LG is using extended distribution channels, from premium sellers to mass merchandisers like Wal-Mart and Costco.

Again, this is part of ensuring that we reach all consumers via the products and channels that best suit them.

Viewing Experience: Key Trend

The major trend for LCD TVs in North America will be technological improvement in viewing experiences.

LG expects image clarity and quality to be primary, especially as backlighting and scan rate technologies continue to be refined.

Additionally, technological solutions to issues such as content and aesthetics will play a role, which is why LG has introduced its LHX set, the world's slimmest LED backlight TV, with local dimming technology, which also features a 240Hz scan rate, wireless operation and broadband capabilities.

Our LHX model provides unmatched picture quality with clearer and more natural images resulting from the perfect combination of LED backlighting and local dimming technologies.

Furthermore, this TV is truly wireless - 1080p Full HD signals are transmitted to the LHX without any compression or loss through a set-top box that can be placed up to 30 feet away from the TV, letting consumers enjoy a pure viewing experience untouched by the distracting clutter of cables.

Crystal clear images with natural movement are guaranteed at all times with LG's exclusive 240Hz LED-scanning technology and remarkable response time.

Action will seem smooth, clear and real, regardless of movement on screen.

Additionally, network access and downloadable content is no longer limited to computers but available through your TV thanks to LG's collaboration with major portals.

Other trends that we see for next year include eco-friendly technology, reflecting a continuing interest in saving energy.

When it comes to design, LCDs will differ only slightly from last year.

Consumer electronics manufacturers tried in earnest to appeal to consumers emotionally in 2008 by applying distinct design elements to their products, but given the economic difficulty, practical purchases are expected to increase dramatically.

Location-Based Marketing

Investment in these efforts will continue despite the economic downturn.

LG anticipates a real opportunity to enhance its brand by focusing on key attributes like stylish design, smart technology and consumer value.

Marketing activities will be based on LG's new brand identity. Integrated advertising campaigns under this umbrella theme will take place globally and enhance LG's overall brand value.

Last year in particular, we enjoyed great successes from global marketing activities for the Scarlet TV set.

The campaign effectively raised consumers' brand awareness of and preference for LG, and also showed a more interesting personality and approach than most TV manufacturers have used in the past.

In 2009, we will carry out more location-based marketing campaigns customized to local and regional conditions, following up on the success of the Scarlet campaign.

Localization for Emerging Markets

There is increased demand worldwide for small TVs due to the global transition from CRT to small flat panel TVs and the LCD TV business will promptly respond to these needs by producing and enhancing small LCD TVs.

LG will also create products that are specifically designed for local market needs based on insight from our customers in the Middle East, Africa and other regions.

For example, LG developed the world's first Qu'ran TV, which allows people to read or listen to the Qu'ran more easily.

It fits well into Middle Eastern customers' lifestyles, winning it strong praise in the region.

Support for Nigerian tribal languages is another localized feature that enhances the viewing experience and usability of LG TVs, helping increase brand preference for LG TVs in Nigeria. In India, the audio in LG TVs is tuned to make local dialects sound better and include menus in a wide range of local languages.

The company has also included a cricket videogame in some Indian models and is a sponsor of the Cricket World Cup.

Such localized features and considerations have not only helped increase sales but improved LG's brand awareness and preference.

This brand power is the key to LG's future success in emerging markets.