The need for a stronger brand and lack of local seniority have long been considered the two main factors preventing LG from making more than a dent into the top tier of manufacturers.
LG has recently made it clear that it is addressing these concerns and will soon pile the pressure on Sony Ericsson and Samsung.
The manufacturer has loosened its central autonomy and is giving power to local markets, most significantly in the UK, where it has appointed its first chief operating officer.
Analysts say LG’s appointment of the former managing director of Green & Black’s chocolate, Ward Crawford, which Mobile reported last week (23 April), is a significant step towards building the brand outside of its Korean roots and moving closer to its local partners.
The appointment aims to give the UK more local power and supplant Sony Ericsson as the number three mobile manufacturer.
In the past, LG has been criticised for being a ‘pure manufacturer’ with little emphasis on brand, and its air conditioning units and white goods have been blamed for dragging the brand down. Experts believe consumers perceive LG as a company that ‘just makes things’, rather than carrying a brand with aspirational attributes that are cornerstones to successful consumer electronics brands, such as Samsung and Sony.
Strategy Analytics director Neil Mawston says: ‘With its brand, LG copies Samsung by building from the product up with memorable sub-brands. But it also invests in high-profile sponsorships such as Formula One, which started in 2009.’
Crawford (pictured) will head up LG’s UK division, including the mobile arm, as part of the manufacturer’s global realignment. LG Mobile’s head of marketing, Jeremy Newing, says the appointment is about the ‘consistency of the brand’ and ‘keeping the brand locally’.
The UK focus
LG’s strategy will continue with high-tier phones such as the Viewty to build sales, but it will also aim to build consumer desire around the brand. The remainder of this year is expected to bring feature-rich LG handsets, and smartphones on Windows, Symbian and Android.
The US is currently LG’s core market and made up 38% of its total shipments in Q4 2008; however, one analyst claims ‘LG has now definitely targeted the UK as a core market’ and is looking to pick up share. LG executives also believe the UK mobile division could achieve further growth, with share levels of the manufacturer’s handsets below 5% at Vodafone and 3.
The analyst adds: ‘In the UK it has expanded distribution, and increased its marketing and flagship feature phones. It had a 6% share in 2007 and an 8% share in 2008 – but in 2009 it is aiming for 10%.’
The strategic decision for a new UK COO was made in Seoul for more ‘non-Korean’ senior appointments in European markets, and to give power to the UK at an executive level.
There is hope that the deal will strengthen senior contacts between LG and its operator and retail buyer. Deals that were previously negotiated from Korea will now be made at a local level and the UK division will have more freedom in specific areas such as marketing.
Products and strategy will still be carried out from Korea, but allocation of devices, marketing, distribution, and operator and retailer prices will be set from the UK.
Mawston says: ‘I think there is an element of responsibility here – domestic takes on a region and then lets it go – you see that in most companies. They control from the centre and then realise the market is in a reasonable shape – Samsung was similar.’
Closer to the top
Crawford will sit above LG Mobile’s sales and marketing director, John Barton, and will report to the UK president, Brian Na. His appointment is the second newly created role at the manufacturer this year. In March, LG appointed former Sony Ericsson sales director Christine Howard as sales director for networks.
LG is performing well in the face of poor results from other manufacturers such as Nokia. It is understood to have had a record month in the UK in April, with the most recent weekly share reaching around 17%. The problems at Sony Ericsson and Motorola have combined to make LG the number three manufacturer globally behind Nokia and Samsung, but it is number four in the UK.
The COO role will be a huge challenge for Crawford; however, combined with clever marketing and a set of strong handset launches, he could be the catalyst in pushing LG closer to the top.