LG gives heavy push to handsets

New Delhi: LG Electronics is pushing its mobile handsets hard having set a steep sales target of 3 lakh handsets this year, 10 lakh handsets next year and 20 lakh units by 2006. The targeted sale in value terms is Rs 280 crore in 2004, Rs 650 crore next year and Rs 1,200 crore in 2006.

For this initiative the company while pushing the handsets at its own retail outlets, is roping in multi-brand mobile handset dealers to work as partners in its drive to push sales of its GSM handsets. The target is to bring in as many 500 dealers and has already taken in about 150 retailers who will work with the company as LG Mobile Partners (LMPs).

According to the company, the LMPs have proved extremely productive having contributed around 10-15 per cent to total GSM sales till now. The company feels that once the initiative is in full swing at least 50 per cent of sales will come from the 500 LMPs this year.

The company has identified the LG Mobile Partners as those mobile phone dealers who will give LG a minimum of 50 per cent of space on their counters in return for various incentives like turnover tie-ups, discounts on LG products and ad support.

The company is planning a substantial outlay on its retail initiative of at least 18-20 per cent of the company''s A&P budget. The average spend per outlet in terms of in-shop branding, PoP displays, events and road shows will be of the order of up to Rs 50,000. The outlets will also be used for new product launches, special promotions like bundling offers with DVDs, vacuum cleaners etc officials said.

The other avenue LG is using are its own consumer electronics and home appliances (CE & HA) outlets to push the handsets. The company has 1,500 CE and HA outlets.

Between January and May 2004, LG sold 1 lakh GSM units. Currently a large portion of LG''s handsets are imported from Korea and from its China facility. The company will evaluate the feasibility of local manufacturing once the budget is announced this year, after seeing whether there are any tax and export benefits.

The handsets come with various promotional offers like the one introduced in the North which included the ''Switch to Colour'' exchange offer last month in a bid to push upgrades to colour phones. The initiative accounted for 35 per cent of total sales in May in the northern states. The scheme, which ran in the states of UP, Haryana and Punjab, offered discounts of up to Rs 10,000 depending upon the models chosen and the condition of the old handsets.

LG''s focus is on camera and colour handsets, which is targeted to comprise 60 per cent of the total market size by early next year. While LG has only one black and white phone in its portfolio now, it plans to introduce 6 new models over the next 3 months. Of these two would be camera phones and 4 colour models priced between Rs 5,500 and Rs 20,000. LG''s existing models range from Rs 4,800 (B&W) to Rs 20,000. Since the trend is moving fast towards camera phones, the low-end price range might shift to around Rs 4,000 or Rs 5,000. LG is also offering Free Theft Insurance with the purchase of all its phones.