Chasing the pack

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ON A ROLL: Ki Wan Kim is confident that he can compete with Nokia and Samsung and increase LG’s market share in the Middle East to 10%, from 5% today.

Despite global economic turmoil, LG Electronics is bullish about boosting sales and increasing its market share.

Handset manufacturers are starting to feel the effects of a tumultuous global economy, with declining sales, profit warnings and redundancies all taking hold at mobile manufacturers around the world.

Earlier this year, Sony Ericsson posted a massive 97% drop in second quarter profits before announcing that it would have to lay off 2,000 employees globally.

Nokia's third quarter results, released last month, show the Finnish handset giant's net sales to have fallen, as its share of the market continues to fall, albeit at a gradual rate of one percentage point, year-on-year.

But one manufacturer's loss can be another's gain. LG's fortunes have improved over the last 12 months, with global second quarter market share (based on sales) increasing from 6.8% last year, to 8.8% in 2008, according to figures from research firm Gartner. Arch rival and fellow Korean manufacturer Samsung also saw a 2% rise in share, taking its slice of the market to 15.2%.

It is a figure that Scott Ahn, president of LG's mobile communications division, has set his sights on.

"We want to become a firm top-three player by 2010, and become number one eventually," Ahn said in an interview with the Financial Times in August, while outlining plans to increase LG's global market share to 15% within 18 months.

LG Electronics' Middle East and Africa CEO, Ki Wan Kim, is clear about the role that his region must play if LG is to achieve its target, and he is bullish about LG's prospects in the Middle East, saying that he will increase market share in the region from 5% to 10%. "I will do it," he insists.

Handset expert Neil Mawston of Strategy Analytics, says that if LG is to succeed in its aim of doubling market share in the Middle East, it will have to do so at the expense of its two closest rivals. "Nokia and Samsung make up well over 80% of handset shipments in Middle East and Africa today, so any market share gains by LG will inevitably come partly from these two mega brands," he says.

Despite the dent to Nokia's market share, it is still way ahead of the pack, consistently selling almost three times as many handsets as its closest rival Samsung. It is a fact that irritates Kim.

"Consumers, they are too much obsessed with Nokia," he says. "Even though we offer an even better product than Nokia, they don't consider it because they have a very strong perception. It is very hard to break such a fixed perception, and this is a big challenge for all manufacturers in the region," he adds.

Mawston says that Nokia will need a three-part strategy. "First, LG will have to raise its brand awareness through more marketing activity. Second, it will require an attractive handset portfolio that meets local users' needs in the mid and high tiers. Third, and most importantly, LG will have to expand its retail presence and get its product onto more store shelves," he says.

Image boost

Part of LG's strategy for breaking Nokia's stranglehold is to improve its image with consumers in the Middle East and Africa. The latest device to be released by the Korean manufacturer, the KF510, was unveiled at a press conference along with LG's latest "brand ambassador" Wael Kfoury, and it is hoped that some of the Lebanese singer's popularity will rub off on the device.

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