based on case study why do you think it's important for companies to respond to local market

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Two decades ago, managers at South Korea’s LG Electronics decided to solve a long- time problem for homemakers: how to keep the kimchi from stinking up the fridge. Kimchi, made from fermented cabbage seasoned with garlic and chilli, is served with most meals in Korea. Any leftovers in the refrigerator are inevitably going to taint other foods and leave a pungent odour that lingers for weeks. LG built a refrigerator with a special compartment to isolate the smelly kimchi and it quickly became a must-have in Korean homes.

LG managers realised that their understanding of Korean culture led to an amazingly successful new product. So, they reasoned, why not apply that concept to designing products for other markets? LG doesn’t just build a standard appliance and expect the whole world to love it. Instead, it taps into local idiosyncrasies in key markets by opening in-country research, manufacturing and marketing facilities, enabling the company to ‘speak to consumers individually’, as one manager put it. The approach led to products such as the Kebab Microwave in Iran, which includes a microwave-safe skewer rack and a preset for reheating shish kebabs, and the Karaoke phone in Russia that can be programmed with the top 100 Russian songs, whose lyrics scroll across the screen when they’re

played. The phone was an instant hit in a country where people like to entertain at home during the long winters.

In India, LG has introduced a number of successful products, such as refrigerators with larger vegetable- and water-storage compartments, surge-resistant power supplies and brightly coloured finishes that reflect local preferences. Microwaves are designed with a dark interior to hide masala stains. After learning that many Indians use their televisions to listen to music, LG came out with a model featuring an ultra-sound system. These efforts made LG the unprecedented leader in appliance sales in India. Global sales reached US$2.27 billion in 2005 and LG’s market share in some categories was nearly twice that of the competition.

By making an effort to learn about local tastes and preferences, LG has become the appliance maker to beat in emerging global markets. Managers have now turned their attention to China, where LG is building extensive in-country facilities and learning all it can about local cultural preferences in the world’s biggest consumer market. By 2012, LG’s globalisation led it to employ over 80 000 employees in its home country of Korea, and over 50 000 people abroad, and it continues to grow and prosper via a series of award-winning products for homes and business applications.

By the first quarter of 2013 LG had become the world’s third-largest vendor of smartphones, shipping 10.3 million units in just the first quarter of the year. LG wants to increase its market share in India and has invested in some Bollywood stars to promote their phones to the country’s youth. LG will offer the Indian market 40 different choices of handsets ranging from entry level to smart phones, some with Android operating systems and some with the less popular Windows platform. Unlike Nokia, LG has paid close attention to the expectations of the Indian youth, ensuring that even their cheapest phones have enough memory to play popular games such as ‘Temple Run’.

Sources: Esfahani, E. (December 2005). Thinking Locally, Succeeding Globally. Business 2.0, 96–8;

(22 February 2006). LG Electronics Record US$2.27 Billion Sales in 2005 in MEA. Albawaba

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No 3 Spot in Smartphone Market. The Wall Street Journal, http://blogs.wsj.com/digits/2013/05/06/

lg-takes-no-3-spot-in-smartphone-market/ (accessed 25 June 2013); (18 February 2010). LG

Eyes 10% Market Share In Mobile Handset. Business Standard, http://www.business-standard.com/article/

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