Branches in focus at LG

LG Electronics (Thailand) managing director Sung Nak-kil, second left, deputy managing director Alongkorn Chujit, second right, and a pair of presenters show off new flat-screen television products at Wednesday’s dealer conference on Koh Samui.

The South Korean electrical-appliance manufacturer said it would invest US$15 million (Bt517 million) in the company's 14-rai Rayong plant this year, particularly in manufacturing lines for front-loading washing machines, flat-screen television sets and computer monitors, mainly for domestic sale. The company has frozen export lines at the plant until the baht is more stable in the middle of next year. The plant employs 3,500 workers.

Managing director Sung Nak-kil said that as part of its branch-operation strategy, the company had begun setting up its first three branches last December, in Hat Yai, Chiang Mai and Nakhon Ratchasima.

The new upcountry offices, all handled by branch managers, will operate as profit centres in charge of local sales, marketing

activities and all key performance indicators, particularly in the areas of sales, net profit, market share, budgets and expense management. The headquarters will take care of all support functions, such as product planning and brand marketing.

Sung said the branch-operation strategy had been successful in many Asian countries, including India, Indonesia and the Philippines. He said LG had applied the strategy in India for more than 10 years, and more than 100 branch offices have opened there. LG is now the market leader in India in all product categories except audio products and mobile phones.

"The branch strategy will help LG Electronics assess the market situation and consumer insights in all important markets upcountry, which are unique from region to region. Different marketing and advertising tools will be applied differently to particular markets," said Sung.

He gave the example of television advertising, which is the most effective medium in the South, while billboards and newspapers have become more useful in communicating with consumers in the North.

"With branch operations in particular markets, we're able to provide quicker responses to our customers living in the provinces, as the branch managers will make all major decisions by themselves. The strategy will develop the capabilities and management skills of LG staff, particularly the branch managers," said Sung.

Sung said the strategy would be applied fully in Thailand within the next three years and that more than six major branch offices would be opened in major provinces in each region, especially in the northeastern, central and southern regions.

LG Electronics has allocated $25 million this year for marketing and advertising, with 30 per cent going to branch offices for local marketing and media campaigns and the rest to be used by the main headquarters in Bangkok.

The company's first-half sales reached Bt18 billion, up 30 per cent year on year, with about 65 per cent coming from exports.

Sung said major driving forces included the company's product-leadership strategy, which focused on developing products with unique functions and beautiful designs, and the branch-operation initiative.

"Starting this year, we'll stand on basic marketing principles, with a focus on our customers' insight," said Sung, adding that the company expected to achieve sales of Bt33 billion this year.

Sung said the baht's appreciation had seriously affected its exports, which experienced a 5-per-cent drop in profit. However, the company's cost-reduction and waste-elimination measures had reduced expenses at its factory 15 per cent so far this year.

He said LG was the market leader in Thailand in many product categories, such as washing machines, microwave ovens, plasma television sets and optical disk drives. The company expects to take the top position in other major products this year, including vacuum cleaners, flat-screen televisions and air-conditioners.

Kwanchai Rungfapaisarn

The Nation