Brio Business Plan

EXECUTIVE SUMMARY Brio stands for happiness, vigor, vivacity and most important, it stands for life. It also happens to be LG’s new retail initiative along with @home. Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG Electronics, South Korea. In India for a decade now, LG is the market leader in consumer durables and recognized as a leading technology innovator in the information technology and mobile communications business. LG is the acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation. @home, A Nilkamal Limited enterprise provides worldclass furniture, furnishings, accessories, lights, kitchens, flooring, decorative wall finishes and more. According to ‘The Rise of The Indian Consumer Market’ (A McKinsey report), the Indian consumer market is predicted to grow four times by 2025. As of September 2009, India continues to be among the most attractive countries for global retailers. With a worth of US $ 511 billion in 2008 the retail market is larger than ever and continues to draw both global and local retailers. Changing lifestyles, higher disposable income, greater product awareness, affordable pricing and a surge in advertising have been instrumental in changing the Business Plan for Brio-An LG Initiative

pattern and amount of consumer expenditure in India which has led to the robust growth of the consumer durables industry. The Indian consumer durables sector is estimated to be Rs. 41,500 cr as of November 2009. Keeping this in mind and with the results of the primary and secondary research conducted on consumer perception of LG, there was a need felt to come up with something new. Apart from having its presence in various electronic megastores, LG also has its exclusive retail stores and which extend to loyal customers be it for the products or services. Along with its current target audience, LG wants to cater to a higher income group in a different way, increasing its visibility and improving its perception in the process. And thus, Brand Brio was born. Through this novel undertaking, Brio aspires to give its customers a distinctive shopping experience. Its offerings include the entire LG product range as well as the classy and elegant home decors by @home, thus providing a refreshing mélange of quality technology consumer durables along with tasteful home furnishings. The objective is to empower the customer through customization, where they have the option to choose their own combinations of home electronics and Page 1

furnishings. They can walk into the store and either buy a single LG product or order an entire living room/kitchen set up.

Brio will go all out in its promotions pre, during and post its launch, making optimum use of the appropriate media platforms. It will have competitive pricing with

EXECUTIVE SUMMARY After its successful shoppes and exclusive stores, LG now proposes to set up a retail chain in association with the high end home lifestyle brand (@home) so as to distinguish itself from its competition by integrating superior technology and quality home furnishings in order to provide consumers with futuristic solutions to their living environment. This innovative venture will help strengthen its hold in the retail market and better the brand perception in the minds of the consumers. Brio is committed to providing quality with affordability. The ultimate objective of Brio is thus to build long-lasting relationships with its customers through a unique and satisfying experience of LG’s innovative products and services. Brio aims to target various demographic, psychographic, geographic, behavioral and sequential segments which have been mentioned in detail as the plan progresses. It also intends to exceed its competition and stand apart from the other consumer durables retail outlets. It seeks to create a niche for itself in the retail sector.

exciting and regular combo offers and freebies. In the short term, Brio intends to have two stores, one each in Mumbai and New Delhi. Depending on the success of these stores, it

will later venture out into the major metros making its presence felt in all parts of the country. LG has manufacturing units at Ranjangaon, Pune and at Greater Noida. Thus sourcing the products will not be a problem. @home goods will be sourced from the nearest stockist available or from their flagship stores if the need arises. It will follow the producer to customer method of distribution. Brio will be headed by the Vice President, Retail, LG with a team of efficient and dedicated professionals. It will also be equipped with an Advisory Board. The startup expenditure for Brio is estimated to be around 20 lakh (please see financial plan for details). Please read through the entire business plan for a better understanding and a detailed report on Brio.

Business Plan for Brio-An LG Initiative

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billion in 2008 the retail market is larger than ever and continues to draw both global and local retailers. According to the Department of Industrial Policy and Promotion (DIPP), Foreign Direct Investment (FDI) inflows as of July 2009 in single brand retailing stood at approximately US $ 46.60 million. Being a country with high growth rates spending rose an impressive 75% in the last alone. One of the main reasons for this is the increase of the disposable income among population.

consumer four years significant the youth

BUSINESS CASE RETAIL SECTOR ANALYSIS A T Kearney’s 8th Annual Global Retail Development Index (GRDI) of 2009 ranked the Indian market as the most promising emerging market for investment in the retail sector. The contribution of the retail trade in the country’s GDP which was between 8-10% in 2007 is now around 12% and is estimated to reach 22% by 2010. According to ‘The Rise of The Indian Consumer Market’ (A McKinsey report), the Indian consumer market is predicted to grow four times by 2025. As of September 2009, India continues to be among the most attractive countries for global retailers. With a worth of US $ 511 Business Plan for Brio-An LG Initiative

25%

20%

15% 2007

10%

2009 2010

5% 0% 2007

Page 3 2009

2010

BUSINESS CASE CONSUMER DURABLES SECTOR ANALYSIS Changing lifestyles, higher disposable income, greater product awareness, affordable pricing and a surge in advertising have been instrumental in changing the pattern and amount of consumer expenditure in India which has led to the robust growth of the consumer durables industry. The Indian consumer durables sector is estimated to be Rs. 41,500 cr as of November 2009. The Indian consumer durables segment can be segregated into White goods like refrigerators, washing machines, air conditioners, speakers and audio equipment; Brown goods/Kitchen Appliances like mixers, grinders, microwave ovens, irons, electric fans, cooking range chimneys and Consumer Electronics like mobile phones, televisions, MP3/VCD/DVD players, computers and laptops. As per a survey conducted by FICCI on the Indian consumer durables industry, a shift in consumer preferences towards higher-end, technologically advanced branded products has been quite discernable. This shift can be explained by narrowing differentials between the prices of branded and

Business Plan for Brio-An LG Initiative

unbranded products added with the high quality of after sales service provided by the branded player. The consumer durable market in India is a dynamic and fast growing market. With disposable incomes increasing, there is an

increasing demand for these products. The market size in India is today estimated to be around Rs 25000 cr. The chart below gives a graphic representation of the market size of different segments of this industry.

Projected Growth Rates for the Consumer Durables Industry:

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 Local manufacturing competitive

will

continue

to

stay

Challenges      

BUSINESS CASE

Heavy taxation Threat of new entrants Imported raw materials Competitive rivalry Wide variety and choice for customers Risk of unbranded and cheaper products in the market

Opportunities & Challenges of the Consumer Durable Industry Opportunities  Rising growth rate of GDP  Rising purchasing power of people with higher propensity to consume with preference for sophisticated brands  Increasing popularity of easily available consumer loans  Phenomenal growth of media  Vigorous marketing efforts being made by the domestic majors  Reduction in import duties may significantly lower prices of products Business Plan for Brio-An LG Initiative

W

WHY LG WANTS BRIO? For South Korean consumer electronics major LG Electronics, India graphed the highest growth rate in terms of sales compared with its other markets in the last five months, beating global trends of slackened consumer spending due to recessionary fears. LG Electronics India Ltd (LGEIL) clocked a growth rate of 18 per cent in the last five months compared with the corresponding period of 2008, mostly driven by Page 5

increase in sale of products in the refrigeration and AC segments. The company is aiming at a 25 per cent growth in turnover for 2009 to touch about US$ 2.68 billion. For now, the moves by manufacturers into the world of bricks-and-mortar retailing arguably are the most interesting parts of the trend to watch. Manufacturers are trying to directly reach consumers who might select their products or service and give them an opportunity to touch and feel a variety of their products, and also to leave them feeling good about the brand experience. Company stores are most helpful for manufacturers that want to maintain more of a luxury or status image for their products. Also, the marketing efforts of the independent retailers tend to benefit the company store automatically even at competitive pricing situations.

acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation. The trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997. LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Colour Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida.

GENERAL COMPANY DESCRIPTION LG Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG Electronics, South Korea. In India for a decade now, LG is the market leader in consumer durables and recognized as a leading technology innovator in the information technology and mobile communications business. LG is the Business Plan for Brio-An LG Initiative

In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that commences operations in October 2004. Covering over 50 acres, the facility manufactures LCD TV, GSM

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Phones, Color Televisions, Refrigerators, Microwave Ovens Color Monitors.

Air

Conditioners,

Both the Indian manufacturing units has been designed with the latest technologies at par with international standards at South Korea and are one of the most Ecofriendly units amongst all LG manufacturing plants in the world. LG has been able to craft out in ten years, a premium brand positioning in the Indian market and is today the most preferred brand in the segment. LG Electronics pursues its 21st century vision of “becoming a true global digital leader who can make its customers worldwide happy through its innovative digital products and services.” LG Electronics is pursuing the vision of becoming a true global digital leader, attracting customers worldwide through its innovative products and design. The company’s goal is to rank among the top 3 consumer electronics and telecommunications companies in the world by 2010. To achieve this, LG has embraced the idea of “Great Company, Great People,” recognizing that only great people can create a great company.

The story of @home began when the USD 215 million Nilkamal Limited, the world leaders in molded furniture and India’s number one Material Handling System Company, discovered a need for a classy one-stop home shop in India. The group initiated @home, an international format home décor store. Spread across major cities, @home offers more than 20,000 sq.ft. of world-class furniture, furnishings, accessories, lights, kitchens, flooring, decorative wall finishes and more. By 2010 @home aims to be the dominant national player with 50 flagship stores. The home maker store is dedicated to making you proud of your home, making you feel at home. Reliability is part of the bedrock of @home’s personality; it reinforces the stakeholder's trust in the company and helps them see @home as a 'genuine' company credible, dependable and faithful. @home has strong principles that everyone is entitled to be viewed as equal, to be free and be their own individual, an nondiscriminatory, un-biased and impartial outlook. Design and practicality are @home’s business for which they have been are admired and respected. @home is fresh and enthusiastic. It sees everything as achievable, is modern at heart and practical in approach. @home is the face of new India at home.

GENERAL COMPANY DESCRIPTION @home Business Plan for Brio-An LG Initiative

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elegant home decors by @home, thus providing a refreshing According to @ home, the best person to design your home is yourself. And it gives you the option of doing up your house in ten different styles. Their 3Dimaging Software helps you mix and match furniture, accessories and wall finishes for every room. @home provides FREE interior planning services, where you can bring your home plans and their designers will help you walk out with your dream home, just the way you want it. BRIO

Brio is a new retail venture by LG, and has tied up with @ home in a 70-30% percent partnership. Apart from having its presence in various electronic megastores, LG also has its exclusive retail stores and which extend to loyal customers be it for the products or services. Along with its current target audience, LG wants to cater to a higher income group in a different way, increasing its visibility and improving its perception in the process. And thus, Brand Brio was born. Through this novel undertaking, Brio aspires to give its customers a distinctive shopping experience. Its offerings include the entire LG product range as well as the classy and

Business Plan for Brio-An LG Initiative

GENERAL COMPANY DESCRIPTION mélange of quality technology consumer durables along with tasteful home furnishings. The objective is to empower the customer through customization, where they have the option to choose their own combinations of home electronics and furnishings. They can walk into the store and either buy a single LG product or order an entire living room/kitchen set up. After its successful shoppes and exclusive stores, LG now proposes to set up a retail chain in association with the high end home lifestyle brand (@home) so as to distinguish itself from its competition by integrating superior technology and quality home furnishings in order to provide consumers with futuristic solutions to their living environment. This innovative venture will help strengthen its hold in the retail market and better the brand perception in the minds of the consumers. Brio is committed to providing quality with affordability. The ultimate objective of Brio is thus to build longlasting relationships with its customers through a

Page 8

unique and satisfying experience of LG’s innovative products and services. The superior shopping experience, product innovation, friendly sales people, plush interiors, sophisticated ambience, prompt after sales service and helpful customer care are all woven into a brand that is Brio. It being an LG initiative it will follow all the principles, values and standards that the latter stands for. Its worldwide objectives and purposeful practices will be imbibed into the new venture. In addition to the above Brio seeks to add value to each purchase experience making every customer come back and relive the experience time and again.

PRODUCTS & SERVICES Brio will have the entire LG consumer durables range (white goods, brown goods/kitchen appliances, and consumer electronics) and a select range of complimentary lifestyle products by @ home. THE LG PRODUCT RANGE Business Areas & Main Products Category

Main Products

LCD TV , Plasma Display , Display Panel, Color Television, Consumer Electronics Home Theatre System, Music system, DVD Recorder/Player, MP3 & MP4 Player Room Air Conditioner, Commercial Air Conditioner , Home Appliances Refrigerator, Washing Machine, Dishwasher, Microwave, Vacuum Cleaner Computer Products Mobile Phone

Business Plan for Brio-An LG Initiative

Laptop, Personal Computer, LCD monitor, CRT monitor, Optical Storage Devices Premium trend setter phone , Camera Phone , Music Phone , Color Screen GSM Handset

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 29 (73 cms)

Televisions LCD TVS  LED LCD TV SERIES  JAZZ ATOM SERIES  JAZZ THEATRE SERIES  JAZZ (LG 80) SERIES  SCARLET 2.0 ( LH 70 ) SERIES

Digital Audio Video  Home Theatre System  Music Player  DVD Player

PRODUCTS & SERVICES    

LH 50 SERIES LH 35 SERIES LF 20 SERIES LH 20 SERIES

PLASMA TVS     

PS 80 SERIES PQ 70 SERIES PG 70 SERIES PQ 60 SERIES PQ 30 SERIES

ULTRASLIM TVS FLAT TVS  15 (38 cms)  21 (53 cms) Business Plan for Brio-An LG Initiative

Computer Products Monitor  CRT  LCD Optical Storage Devices Notebooks & Laptops Projector  Ultra Mobile Projector  Business Projector External Hard Disk Mobile Phones  Eigen Page 10

        

Viewty Smart Arena COOKIE GD900 GW525 GT505 KS660 KF350 GW300

Vacuum Cleaners

PRODUCTS & SERVICES



      

KM380T KS360 KF300 KF510 GM200 DYNAMITE ALL ROUNDER

Refrigerator  Side by side refrigerator  Frost free refrigerator  Direct cool refrigerator Washing Machine  Dish Washer  Steam Washer Dryer  Washer Dryer  Front Load Washing Machine  Top Load Washing Machine  Semi Automatic Business Plan for Brio-An LG Initiative

Microwave Oven  Solar Dom  Convection  Grill  Solo Room Air Conditioner  Inverter  Art Cool  Floor Standing  Multi Split  Hot and Cold AC  Split AC  Window AC Commercial AC  Ducted type AC  Non Ducted type AC Air Purifiers Page 11

Refrigerator Compressors

 Side table  Nest tables  Bar stools

 Bar units  Office tables

PRODUCTS & SERVICES THE @home PRODUCT RANGE Sleeping  Beds  Night stands  Dressers  Wardrobes  Study Desks  Utility Cabinets  Bean Bags  Study Chairs Living  Seating  Wall units

 A V trolley  Cabinets  Shoe rack  Centre table Business Plan for Brio-An LG Initiative

Dining  Dining table  Dining chairs  Service carts Furnishings  Bed covers  Cushion covers Home Accessories  Carpets  Mirrors  Photo frame  Planters  Show piece  Vases  Candle stand  Fruit bowl Lighting  Floor lamps Page 12

 Table lamps

BRIO CUSTOMER CARE & SERVICES (As per existing LG norms)       

Exchange Policies Service Centre Locator Complaint Registration Warranty Annual Maintenance Contract Extended Warranty LG’s 211 Service

What’s 211?

2 Call back to customers within 2 hours 1 Service engineer visit within 1 day 1 In a promised one hour time slot 2.1.1. is a service initiative from LG, that is first of its kind in India. A Prompt Response Service through which Brio will attempt to provide customers with a quick after-sales service to nurture their relationship with LG and ensure the sound functioning of all favorite LG products. In any one of the 135 cities where LG 2.1.1. service is currently operational, customers can log on to the website, give a call, send an SMS or simply a mail to get an instant registration. After which Brio’s endeavor will be to call the customer back within the promised one hour time slot. For Brio it means being there for the customer, and for the customer it is simply no waiting.

MARKETING PLAN

MARKET RESEARCH TO TEST CONSUMER BRAND PERCEPTION: PRIMARY & SECONDARY However good a product or service may be, no business can succeed without effective marketing. One of the essential elements for this in current times is Market Research. For in any consumer-driven business it is important to know what the consumers actually want and expect from the company/brand. Business Plan for Brio-An LG Initiative

Taking this into account, we conducted primary and secondary research before coming up with the concept of Brio. In primary research, we administered questionnaires among 50 people to find out how they relate to the LG Page 13

brand including its products and services. The objective was to get an idea about how Q1. Do you think LG is safe to use? consumers perceived LG, whether the brand has met their expectations and the areas that can be worked upon.

Based on the results of the research we have attempted to come up with solutions that aim to fill any gaps that hitherto may not have been touched upon. Through Brio, we intend to achieve the same. Q2. Do you think LG is consistent in delivering on the promise it makes?

In secondary research we went through a number of online references including the official LG website and various consumer forums along with certain print material.

Yes

No

0

10

20

30

40

50

60

MARKETING PLAN Q3. Do you think the products offered by LG are welldesigned? Business Plan for Brio-An LG Initiative

Page 14

Q4. Do you think LG offers good value for money?

Q.6. Does LG satisfy your needs through the variety of products they provide?

Q5. Does LG respond to your changing needs as a customer?

MARKETING PLAN Q7. Do you think that LG is innovative?

Business Plan for Brio-An LG Initiative

Page 15

Q8. Do you think LG supports the community?

Q10. Do you think LG has a healthy environment and a good employee relationship?

MARKETING PLAN Q11. Would you recommend LG to someone? Q9. Do you think LG practices good corporate ethics? Business Plan for Brio-An LG Initiative

Page 16

Q13. Would a discount offer on a particular brand make you change your decision?

Q12. Do you research before going in for a particular brand? Q14. Are you loyal to any one particular brand? If yes do not answer question no. 15 and 16.

MARKETING PLAN Business Plan for Brio-An LG Initiative

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Q15. Does the reputation of the brand matter to you while buying a product?

Q17. Would you be interested in having technology integrated furniture for your home?

Q16. Have you come across other bands which provide better products that LG?

Q18 Would you be interested in visiting such a store (if it existed) having only a single brand entity?

MARKETING PLAN Secondary Research Business Plan for Brio-An LG Initiative

Page 18

We conducted Secondary research to see how successful Brio would be as a retail venture. We did SWOT and PEST to find out how lucrative Brio would be to LG and @home. SWOT Analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. Strengths

 Relatively high cost structure for set up of the sore  Fixed price Opportunities  Explore market in other places  Tap potential customers  Generate employment  Help manufacturing unit to attain economies of scale Threats

 Prime location

 Well established competitors

 “Value for money”

 Competition for franchise store

 2.1.1 service

 Economic slowdown

 Customer life time value

PEST Analysis

 All LG electronic under one roof

PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.

 Joint venture of LG and @home Weakness  New entrant

Business Plan for Brio-An LG Initiative

Political Environment

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 Legislation such as the minimum wage or anti discrimination laws.  Voluntary codes and practices.  Market regulations.  Trade agreements, tariffs or restrictions.  Tax levies and tax breaks.

SOCIAL ENVIRONMENT  Family, friends, colleagues, neighbours, media & their attitudes, interests and opinions.  Younger population growing fast  Shopping: as a recreation

MARKETING PLAN        

Parking space –problem with M.P. – Ms. Priya Dutt Government Policies Tax policies Customs Duty VALUE ADDED TAX Municipalities levy tax on real estate Octroi

Economic Environment  India second fastest growing economy in the world.  Liberal, open economy.  7 % Economic future Growth.  Market conditions.  Decline in foreign exchange reserves, both IT and real estate.  High disposable income

Business Plan for Brio-An LG Initiative



     

Cultural habits changing o Acquiring Western look o Changing attitudes o Increasing awareness and spending on Grooming and lifestyle Competitive salaries. Middle class dwelling revamped. Modern conveniences natural and normal. o Hectic lifestyles and increasing disposable Incomes leading to increasing convenience sought. Convenience factors (working women, timesaving products). Higher end products increasingly becoming status symbols.

TECHNOLOGICAL ENVIRONMENT  Internet and other information exchange systems including telephone. Page 20

   

CCTV Cameras. Software. Quality products with superior technology. Technology up gradation. o Going for higher end products. o Spread of cable and satellite television. o Low power consumption, low service requirement, low cost of operation, etc.

Business Plan for Brio-An LG Initiative

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



Social class and occupation – upper middle class

MARKETING PLAN CUSTOMERS A marketer can rarely satisfy everyone in a market. Therefore, marketers start by dividing up the market into segments. They identify and profile distinct groups of buyers who might prefer or require various products and services mixed by examining demographics, psychographics and behavioral differences amongst buyers. The marketer then decides which segment present the greatest opportunity- which are its target markets. For each chosen target markets, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefits. Demographic profile for Mumbai and Delhi: 

 



Age – 25 and above. Our consumer will start working at the age to 21-23 and will think about buying various electronic goods when they have purchasing power Gender- both male and female Location- Initially we are opening at Delhi and Mumbai. Therefore we will be concentrating more on the customers in these places Income level - 25,000 and above

Business Plan for Brio-An LG Initiative

and upper class Geographic Segmentation: Young Digerati: for Brio we are targeting couples or single-headed households, most of them with kids, who have decided to stay in urban centers rather than flee to the suburbs. This sector includes a high proportional of affluent, tech-savvy, 20-something, who tend to hold master’s degrees and live in fashionable neighborhoods on the urban fringe. Demographic Segmentation: Life stage: Dividing a market into different groups based on which stage in the life-cycle, presented in the table below, reflects the fact that people change the goods and services they want and need over their lifetime. These life stages present opportunities for the marketers who can help cope with their major concern. For our retail store Brio we are targeting the following life stages Bachelor stage: young, single people not living at home. Working professionals tend to share flats. Hence they require basic electronic and furniture goods like refrigerator, microwave and laptop, beds, stools and study table etc. Page 22

 Newly married couples: Young, no children. Newlywed start looking for their own house therefore they require electronic and furniture Social grade

Description of occupation

Example

A

Higher managerial administrative or professional

Company director

Intermediate managerial, administrative or professional

Middle manager

B

 Generation Y (60 million) Born 1978-1994: Edgy,

focused on urban style, they are more idealistic than generation next.  Millennials (42 million people) born in 1995- 2000: multi- cultural, they will be text savvy, educated, grow up in an affluent society, and have big spending power. Social class is the single most used variable for research purposes, and divides the population into groups based on the occupation

like television set, A/C, laptops, home theater sofa, beds etc.

MARKETING PLAN  Full Nest I & II: couples with Kids. During this stage the couple like to redecorate there house and the electronic good are replaced with latest goods in the market hence Brio will be the store for them to buy LG electronics. Generation: Each generation is profoundly influenced by the time in which in which it grows up. For our retail store we are focusing on Business Plan for Brio-An LG Initiative

Psychographic segmentation In this segmentation, buyers are divided into different groups on the basis of psychological strokes, personality traits, lifestyle or values. According to the VALS system, Brio will target the following segments:  Innovators-

Successful, sophisticated, active, “take charge” people with high esteem. Purchases often reflect cultivated taste for relatively upscale, niche oriented products and services.

Page 23

 Experiencers-

Young, enthusiastic, impulsive people who seek variety and excitement. Spend a comparatively high proportion of income on passion, entertainment and socializing.  Strivers – Trendy and fun- loving people who are resourced constrained. Favor stylish products that emulate the purchases of those with greater material wealth.

focus on this segment as they will decide which product/ service/ brand to choose.  Buyer: These are the people who actually go and buy the products. Hence, they are of uttermost importance to Brio.  Users: These are the people who may not actually buy but are the end consumers of the product. If they are satisfied with the product, then they might become influencers, deciders and buyers for Brio. Behavior Variables  Occasions:

MARKETING PLAN

Most of the people purchase electronics during festivals. Therefore, Brio intends to come up with extensive promotional schemes.

Behavioral Segmentation Decision roles: People play five roles. For Brio we are targeting the following decision makers:  Influencers: Products like laptops, MP3 players

are used by students who do not have the earning power. Therefore, they influence their parents into buying them these products. Hence, this segment is important for Brio.  Deciders: They help in deciding upon a product/ service/ brand but may not go and buy. Brio will Business Plan for Brio-An LG Initiative

 User Status: Markets can be segmented into nonusers, ex- users, potential users, first time users and regular users of a product. For Brio we are targeting ex- users, potential users, first time users and regular users.  Usage Rate: Markets can be segmented into light, medium and heavy product users. Brio will target Page 24

on heavy users who will buy LG and @home products only once but in large quantities. For e.g. People looking for setting up the whole house and hence purchase LG television, refrigerators along with the furniture.  Loyalty Status: Brio is targeting hard core loyal, split loyal, shifting loyal, and switchers. Sequential Segmentation  Sophisticates- These class of customers want

speed in maintenance and repair, product customization and high technical support. Brio will be one shop stop for maintenance repair and customization of LG and @home products.  Price oriented customers- They want through lowest price.

Business Plan for Brio-An LG Initiative

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MARKETING PLAN COMPETITION Product Category

Product Category

AC

Washi ng Machi ne



--



--

Blue Star Ltd.

--

Bose Corp. Carrier Aircon

Other s

---

















Philips India



--

--

--



Samsu ng











Sansui



--

--

--

--

Sony India



--

--

--



Videoc on











Voltas

--





--

--

Whirlp ool

--









Toshib a









Others

Colored Televisi on

Refrigera tor





Onida



--

--



Panaso nic





--

--

--

--

--

--



--





--

--

Colored Televisi on

Refrigera tor

BPL



BenQ Corp.

Electrolu xKelvinato r

--









Godrej

--









Haier India

A C

Washi ng Machi ne

Compa ny

Compan y





Business Plan for Brio-An LG Initiative









Page 26

Hitachi Ltd

--





--

--

MARKETING PLAN Consumer Durable Chain Stores

Type Of Products Store

AV Products (TV, Home Theatre, Music Players etc.)

Croma Retail

Kitchen Appliances (Microwave, Mixer, Grinder etc.)

Personal Appliances (Electric Shaver, Hair Dryer etc.)

Technological Gadgets and Accessories (Computers, Hard disks etc.)



Home appliances (Washing Machine, Refrigerator etc.) 







Vijay Sales







--



Plug In/Next (Videocon)







--

--

Godrej Lifestyle







--

--

Vivek’s







--



E-Zone











Business Plan for Brio-An LG Initiative

Page 27

MARKETING PLAN NICHE

Promotion/Communication Strategy or Mix

Through Brio, LG proposes to bring to its customers its entire consumer durable range of products under a single roof. It will be an exclusive range of integrated LG and @home products which will bring together elegance of @home’s furnishings with the superior expertise of LG. The retail format of Brio will be a novel concept to enter the consumer durable market. It aims to create an appeal among customers seeking to enhance any living space. It proposes to target an audience that looks for the perfect mix of technology products and class interiors. It is expected that the footfall of such a retail outlet will also be higher than any of the present LG stores indirectly boosting the sales of LG products.

Brio will make judicious usage of media channels in order to reach out to the target consumers. The target consumers being working professionals and persons looking to make provisions for a living space – be it in the office or the home. Hence, the focus media will be primarily the print, online and television media channels also including outdoor advertising before and during the launch of the stores. The websites of LG as well as @home can also be utilized in order to create awareness with existing consumers of both brands. Social and Online media can also be utilized effectively in order to tap into the growing base of young consumers who are seen to possess an increasing amount of disposable income.

STRATEGY

Placement of print advertisements in Interior Design Magazines like Interiors, Good Home, Inside Outside, Good Housekeeping etc. which reaches out to interior decorators and homemakers alike. These are the key

Products & Services have been mentioned in Chapter II Business Plan for Brio-An LG Initiative

Page 28

influencers when it comes to making decisions regarding purchases for the home or other living spaces. LG and @home’s respective websites will be hyperlinked to a simulated walk through of the proposed Brio store in the months leading up to the store launch in each of the two cities. Through this simulation, customers will be able to get a feel of the store as well as the benefits they can avail of by visiting the same. Thereby creating hype about the imminent tie up which will increase footfalls in the store. This online store will continue to feature upcoming improvements and services that will be launched at the stores. A consumer can be made aware of the new offers before they are launched so that they can be well informed and prepared to make purchases at the appropriate time. Online banners and Floating banner Ads can also be placed on websites that are related to design and luxury goods. Thus higher income individuals who consume these goods can browse through

MARKETING PLAN the new range of integrated products and services that is being offered by LG and @home.

Television advertisements regarding the new concept store as well as the innovative technologically products can be placed on lifestyle channels like Discovery Travel and Living, NDTV Good Times as well as other entertainment channels like Star World, Zee Café, NDTV 24x7, CNN IBN, AXN, NDTV Imagine, Star Plus, Sony etc. which have a large viewership numbers. In the months leading up to the launch of Brio, outdoor advertising like banners, hoardings etc can be utilized so as to create an interest in the concept store and its offerings. The new joint venture can be played up in the advertising. LG would like Brio to be positioned as the go to store for consumers looking to create living spaces that are aesthetically pleasing while also incorporating user friendly technology which further simplifies the daily living rituals of every consumer. The store should be seen as a place which houses products that keep the needs of the consumer in mind all the while maintaining versatile design principles that seamlessly fit into every home and office. The brand should also be seen as a socially responsible one which stocks products that are environment friendly thereby keeping in mind not just the consumer of today but also the future consumers of tomorrow by trying to reduce the use of hazardous materials in the creation of the products. Keeping in mind the existing graphic and color schemes of both companies, Brio, which is a Joint Venture of LG

Business Plan for Brio-An LG Initiative

Page 29

and @home, will maintain the red and white color schemes throughout its communication and advertising channels. Hence, the color scheme of the interior design at the store as well as the branding, logo, letterheads, brochures and signage will continue to adhere to the same. A representation of the logo has been attached to this copy of the business plan. Individuals who are repeat consumers will automatically be offered a customer loyalty card which automatically enrolls them into a customer loyalty program that offers them exclusive rewards and benefits based on a point system. Being a loyalty card holder also entitles them to privileged servicing of products at a minimum price. A loyalty card holder will also be invited to the store in order to avail of periodical offers and benefits at least a week before other customers. This will enable them to avail of products not yet available to the general public thereby creating a relationship with the consumer which makes them feel valued and important. Various contests and events can also be held to retain the interest of the consumers. Brand contact points are also very important as it is at the time of the purchase or just prior to it that the customer is most influenced. Thus point of sales must be impeccable which include display material as well as helpful and friendly salespeople.

Business Plan for Brio-An LG Initiative

MARKETING PLAN The whole idea is also to maintain brand salience and build brand feeling and resonance through the Integrated Marketing/Communication Mix. Price As LG products are available in other retail outlets as well, it is imperative that Brio has competitive pricing so that the customer makes the final purchase from Brio and nowhere else. Also considering the tie-up with @home prices have to be assigned accordingly so as to provide the customer with some of the best price options. At Brio, all products, be it by LG or @home will be affordably priced at 10% less than the normal Market Retail Price (MRP). In comparison to other retail outlets where LG products are sold with other competing brands, the pricing at Brio will have a competitive advantage. Considering LG will be manufacturing and retailing itself there will be no middleman costs occurring which gives LG the option to sell its products at such rates and still make decent profits. There will be various timely discount schemes like when a customer buys an LG product from Brio; they can avail of a 10% discount on their next purchase from all Brio stores. This is mainly to encourage customers to Page 30

buy their LG products from Brio only and not any other retail outlets.

During festivals like Diwali and New Years, there will be special ‘free gift’ offers, such as ten computer accessories/printer-scanner-photocopier free on the purchase of an LG notebook or a table lamp free with a study table, etc. Combo offers: At Brio there will there will be combo offers such as an LG refrigerator and a dining table set/kitchen panel by @home for a particular amount which is lower than the combined MRP of both products. Other combo offers could include an LG LCD TV with a @home wall unit, etc. Proposed Location In the initial stage, Brio is proposed to have two stores opening almost simultaneously located in the following cities: Short-Term: Mumbai The first store will be located in Mumbai keeping in mind the existing LG manufacturing operations in Pune (Ranjangaon), Maharashtra. @home has its own retail Business Plan for Brio-An LG Initiative

outlets and stockist in Mumbai where Brio can source the products from.

MARKETING PLAN New Delhi The second store will be existing manufacturing New Delhi. @home has Ghaziabad from where from.

located in New Delhi as LG has operations in Greater Noida, a retail outlet and stockist in Brio can source the products

Long-Term: In the roll out phase, Brio plans to expand to cities like Bangalore, Chennai, Hyderabad, Pune, Chandigarh and Kolkata depending on the success of the Mumbai and New Delhi retail outlets. With this endeavor, Brio will make its presence felt throughout the country, be it north, south, east or west, catering to all its target audience as well as tapping and creating potential markets for itself. Distribution Channel Brio will follow the Producer to Customer method of distribution. This is the simplest and shortest channel in which no middleman is involved and producers Page 31

directly sell their products to the consumers. It is a fast and economical channel of distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has full control over distribution. A producer may sell directly to consumers through door-to-door salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial products of high value. Small producers and producers of perishable commodities also sell directly

to local consumers. Thus for Brio, LG and @home will follow the producer to consumer distribution channel. The manufacturing units from where the products will be sourced for the retail outlets have been touched upon in the proposed location section earlier in the document. After a particular purchase the customer can take the product(s) himself or if wanted Brio will have its sales representatives deliver the product(s) to the customer’s place. In cases of home furnishings if orders have to be placed, they too will be sent directly to the customer destination after the allotted time period. Door step delivery will thus be an option at Brio. This also includes an installation procedures if involved, till the product is Business Plan for Brio-An LG Initiative

in working condition and the customer is satisfied with the functioning of the product. Depending on the profitability of the store, Brio will gradually introduce online purchasing options as well on its website, wherein the customer can see the LG products or the simulation of interior furnishings and place orders instantly. Online payment facilities will be made available, thus making the online purchase experience a smooth transaction.

OPERATIONAL PLAN LOCATION The proposed location for the Brio stores has been discussed earlier in the Marketing Plan section.

Physical requirements 





Amount of space: 10000-15000 square feet + Parking area of around 5000 square feet Type of building: Vertically integrated, will be using existing building infrastructure Zoning: High streets of the metros

Page 32

ENVISIONED STORE STRUCTURE Brio will have spacious set-ups with two floors of the store displaying LG and @home products. Three fourth area of the first floor will have the entire LG product range on display. The remaining one fourth area on the floor will exhibit the @home furnishing range choicely picked to compliment LG’s consumer durables. The second floor will have various simulations of home and corporate expanses which intend to give the customers a view of what the products could look like in such environments and also giving them the option to buy or order a simulated set up. This seeks to provide a unique and satisfying experience to each and every customer that sets foot into the retail store, making them want to come back to Brio for their

next purchase as well. The store infrastructure and atmosphere will be such that it helps form an association with the customers. EQUIPMENT Necessary equipment required for proper functioning of the retail store will be as follows:  Barcode ( Printers and readers, scanners and software) Business Plan for Brio-An LG Initiative

 Bullet resistant glass  CCTV (security)  Cash registers and counters  Display units and showcases  Bags, Pricing/Tagging Gun  Lights/Electricity  Air Conditioners  Other security equipment SURROUNDING ENVIRONMENT The stores will aim to be strategically located in up market areas in both the metros, targeting high income consumers. Thus the proposed areas for the LG retail stores are Bandra and South Extension in Mumbai and Delhi respectively.

OPERATIONAL PLAN PRODUCTION/SUPPLIERS The products for both the LG retail outlets will be produced and transported from the LG manufacturing units/factories located in Pune and Greater Noida. @home products will be sourced from the closest retail store or stockist. We will identify the key suppliers and

Page 33

source the products accordingly. There will be back-up suppliers in case of short-term delivery problems. LEGAL ENVIRONMENT Health, workplace or environmental regulations Brio’s working hours will be from 10 a.m. to 10 p.m. all seven days a week. Staff will work from 9 a.m. to 11 p.m. The lunch break will be divided among the staff from 1- 3 p.m. and a tea break from 4-5 p.m. All employees at Brio will receive the same health benefits as the LG employees.

 Trademark for the Brio logo and layout  Copyright for any audio visual communication Licensing and bonding requirements  Brio is a Joint Venture between LG and @home  Stakes involved: LG will have 70% and @home will have 30% of Brio The following are the requirements that the companies need to full-fill to enter into a joint venture: JOINT VENTURE AGREEMENT BETWEEN

Insurance policies Property insurance that will provide protection against most risks to the property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance,

At Home, Nilkamal Ltd, Nilkamal House, 14th Street, MIDC, Andheri(E), Mumbai- 400 093. And LG Electronics India Pvt Ltd, Plot no- 51, Surajpur Kasna

OPERATIONAL PLAN earthquake insurance.

insurance,

home

insurance

or

boiler

Liability Insurance is a part of the general insurance system of risk financing. Trademarks, copyrights, or patents  Permission for LG and @home logos Business Plan for Brio-An LG Initiative

Road, Greater Noida- 201 306 (UP)

BACKGROUND A. The Members wish to enter into an association of mutual benefit and agree to jointly invest and set up a joint venture enterprise. Page 34

B. The terms and conditions of this Agreement sets out the terms and conditions governing Brio. LG and @home will have to acknowledge the following to start the joint venture: Formation By this Agreement the Members enter into a joint venture (Brio) in accordance with the laws of India. The rights and obligations of the Members will be as stated in the applicable legislation of the Indian subcontinent otherwise provided in this document. Name The business name of the venture will be Brio. Initially we are setting it up at South Extension in Delhi and Bandra in Mumbai. After looking at the profitability of the store we will set up more retail stores at other metros and mini metros. Purpose LG has always delivered quality to the consumer through its Shoppes and exclusive stores. With proposes to set up a retail chain in

solutions to their living environment. This innovative venture will help strengthen its hold in the retail market and better the brand perception in the minds of the consumers. The ultimate objective of Brio is thus to build long-lasting relationships with its customers through a unique and satisfying experience of LG’s innovative products and services. Term The venture will begin on April 30th 2010 and will continue to be effective and in full force for two years or until terminated as provided in this Agreement. Place of Business The principal of the venture or such other time

office and legal address of the business will be located at Mumbai and New Delhi place as the Board Members may from to time designate.

The LG and @home management will decide upon major issues concerning the venture. Unanimous approval will be required as and where indicated in this Agreement.

association with the high end home lifestyle brand (@home) so as to distinguish itself from its competition by integrating superior technology and quality home furnishings in order to provide consumers with futuristic Business Plan for Brio-An LG Initiative

Page 35

OPERATIONAL PLAN Capital Contributions

Delhi respectively. The storing facility (go downs) would be the basement of the outlet itself.

Each of the Members has contributed to the capital of the Venture, in cash or property (credit) in agreed upon value as At Home will contribute 30% and LG will bring 70% of the capital.

CREDIT POLICIES

PERSONNEL Each store will have approximately 25-30 employees per outlet. The estimation is made keeping in mind services right from the store manager to the security personnel.

1. Cash, Credit & Debit Card facility: Payment can

2.

The Sales team will include professionally trained staff. They will be traditional Brio employees having knowledge about both LG and @home products and services.

3.

INVENTORY PLAN

4.

The entire LG range and the selected @home goods will be displayed in the store. LG products will be stocked in a part of the retail outlet and @home goods will be available on order so will not require much stocking at Brio. As mentioned earlier, the LG goods will be transported from the main factory in Pune (Ranjangaon) and Greater Noida to the go downs in Mumbai and New Business Plan for Brio-An LG Initiative

5.

be made in cash or card at the time of the purchase Financing options: Brio offers Easy Monthly Installment (EMI) facilities to its all its customers for products above Rs. 50,000. This is an industry requirement and expected by our clientele. Prompt payment discounts will be offered on the total amount of both LG and @home products if paid by cash or card. Value Added Tax (VAT) will be charged as per norms. Warranty & Guarantee

Page 36

In case any of the above persons is lost or incapacitated, the immediate next senior will take over. In this case, it would be the Asst. General Manager.

MANAGEMENT & ORGANIZATION

Vice President/ General Manger: Involved in the main strategizing part which includes what kind of retail chain to introduce, where to launch it, goods offered in the store, etc.

BRIO MANAGEMENT As the CEO of LG will be the same for BRIO, the business on a day-to-day basis will be handled by Vice President (Retail), General Manager, Zone Manager, Regional Manager, Branch Manager, Assistant Branch Manager and Sales. These managers bring the experience of ‘customization’ to customers who visit the store by attending to their individualistic needs and providing them a holistic experience for lifestyle. A manager should have business knowledge which is one of the most important competencies for the success of such a retail chain. The next important competency is customer service which includes meeting and exceeding the expectations of the consumers. Also qualities such as effective leadership, organization and integrity play an important role.

Business Plan for Brio-An LG Initiative

Zone Manager: Involved in the key functioning of the four zones- north, south, east, west. In charge of deciding where the store will be situated, what color will be used, which brand, etc. Regional Manager: Involved in deciding strategic regions for the location of the stores to enable high accessibility. Branch Manager: Involved in display of items in every particular branch, helping distribution to the respective branches and warehousing. Asst. Branch Manager: Helping the Branch Manager to conduct all the above mentioned activities and replacing him in case of his absence. Page 37

Sales: Involved in extensive market research and keeping track of sales of the goods at every retail store. Board of Directors:

 Shareholders  Investors

 3 executives from LG  2 executives from @home

MANAGEMENT & ORGANIZATION

Business Plan for Brio-An LG Initiative

Page 38

MANAGEMENT & ORGANIZATION BRIO ADVISORY BOARD

Business Plan for Brio-An LG Initiative

Page 39

No business is too small to benefit from having an Advisory Board and it is such a powerful management tool that no small business should operate without one. Unlike a one-time or casual event, the Advisory Board is composed of people with a genuine interest in the business and a desire to see it do well. It is a management think tank. The Advisory Board members will serve as a sounding board, a source of ideas and expertise - giving honest advice. The Professional & Advisory Support Team for Brio would include the following:  Board of Directors  Management Advisory Board

 Attorney  Accountant  Insurance Agent

 Banker

Kishore Biyani MD, Pantaloon Retail  Y C Deveshwar ITC Chairman Attorney For Brio we have decided to use LG legal department for set up Brio. But if for some reason LG refuses then we will hire Rights & Marks for helping us with the legal documentations. About Rights &Marks Rights & Marks founded in 2000 by Mrs.S. Balajanaki is a leading international law firm. Practices patent, trademark, and copyright law with services ranging from International patent prosecution, International trademark prosecution, Intellectula property litigation, and Intellectual property contacts and license agreements. A registered patent attorney can also assist you with Patent Cooperation Treaty (PCT) Procedure, and the JMadrid International trademark Protocol.

 Consultant or consultants  Mentors and key advisors For Brio our advisory board we are thinking of including people like Business Plan for Brio-An LG Initiative

MANAGEMENT & ORGANIZATION Rights & Marks have Practice offices in the City of Chennai, Bangalore, Hyderabad, Coimbatore, Madurai, London, and Dubai. Our core values include a strong Page 40

focus on helping our clients and our own people to achieve their ambitions. We believe in good communication as the key to cementing successful relationships, whether with our clients, or across the firm. Our lawyers are supported by 40 bar legal members of staff, ensuring that they have the resources they need to deliver a service of the highest quality. In addition to the usual administrative support, the firm attaches great importance to providing its lawyers and clients with first-class technical and research/information facilities. Our librarians and researchers have access to an impressive range of databases providing them with on-line international legal and business information. Accurate information on any legal or commercial matter is therefore available on request. The firm has long recognized the integral role played by many industries in our service delivery and continues to make significant investments in this resource. Insurance Agent For Brio store we require a comprehensive insurance policy which will cover the store from fire, thefts etc. Therefore Reliance Standard Fire and Special Perils Policy Reliance Standard Fire and Special Perils Policy

Business Plan for Brio-An LG Initiative

Feature In a competitive business environment, damage to your property or goods can have an adverse impact on your profitability. Insurance is an essential to protect yourself against losses that could devastate your business. Reliance has provided Reliance Standard Fire and Special Perils Policy with a combination of both standard and optional features so that you can choose the cover which best suits your business. Property that can be covered under the Reliance Standard Fire and Special Perils Policy includes: Industrial/manufacturing risks Property located outside the compound of Industrial/ Manufacturing risks, namely: dwellings, offices, hotels, shops, etc utilities storage risks tank farms/gas holders

Page 41

 

MANAGEMENT & ORGANIZATION Key Benefits Customized Coverage This policy provides comprehensive coverage to your property You can enhance your cover with a range of addons Range of add-on covers to enhance customization You can also exercise the option to delete a few covers you may not need Multiple policy options comprising floater policy, declaration policy and floater declaration policy



Attractive discounts  Long term polices for 'dwellings' with attractive long-term discounts  Discounts available if you choose to delete a few covers -pls confirm  Discounts for favorable claims experience and risk improvement measure such as installation of fire extinguishing appliances

 

    

 



  

 Explosion / Implosion  Aircraft Damage  Riot, Strike and Malicious Damage Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation Impact Damage Subsidence and Landslide including Rockslide – demolition, construction, structural alterations or repair of any property or ground works or excavations Bursting and/or Overflowing of Water Tanks, Apparatus and Pipes Missile Testing Operations Leakage from Automatic Sprinkler Installations excluding loss, destruction or damage Bush Fire Architects, surveyors & consulting engineers fees upto 3% of claim amount Debris removal upto 1% of claim amount

Policy Coverage   

Fire Lightning

Business Plan for Brio-An LG Initiative

Policy Options

Page 42

Each business has its unique requirements and to customize the policy to your business needs we offer the following covers at an extra premium:  Earthquake (fire & shock)

Loss of rent clause  Additional expenses towards alternative accommodation  Start-up expenses 

rent

for

an

MANAGEMENT & ORGANIZATION 

Architects, surveyors & consulting engineers fees in excess of 3% of claim amount  Debris removal in excess of 1% of claim amount  Deterioration of stocks in cold storage due to o Accidental power failure consequent to damage at the premises of power station due to an insured peril o Change in temperature arising out of loss or damage to the cold storage machinery in the insured premises due to operation of insured peril

Molten metal spillage



 

    

The Reliance Standard Fire and Special Perils Policy comes with the option of choosing from the following variants: Floater Policy – appropriate for stocks at various locations under a single sum insured  Declaration Policy – takes care of frequent fluctuations in stock/stock values  Floater Declaration Policy – combines the features of both floater and declaration policies 

Forest fire Impact damage due to insured's own rail/ road vehicles, forklifts, cranes, stackers and the like and articles dropped there from Spontaneous combustion Omission to insure additions, alterations or extensions Spoilage material damage Leakage and contamination Temporary removal of stocks clause

Business Plan for Brio-An LG Initiative

Page 43

more likely to purchase products and services from the business well into the future. This can be initiated by can start the relationship building process by getting to know the customers personally when they visit the store by simply

CUSTOMER LIFETIME VALUE talking to them and getting to know their names. In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value (LTV) and a new concept of "customer life cycle management" is the present value of the future cash flows attributed to the customer relationship. Use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales. At Brio, we will have great emphasis on CLV. To grow market share in the highly competitive retail arena, you need an energized frontline staff, with the right product knowledge, cross-selling and referral skills, and a relationship-based approach to your customer and their needs. Some of the ways of attaining CLV at Brio will be as follows:  Building relationships: Customer lifetime value is influenced greatly by the duration that the customer remains a customer. If they feel that they have a relationship with Brio they will be Business Plan for Brio-An LG Initiative

 Up-selling to current customers: As each customer makes their routine purchases from the business their net present value can be increased by increasing the profitability of their orders and purchases. Customer lifetime value increases dramatically if one can increase the total expected revenue on the average customer’s purchase. Sometimes the up-sell can be as simple as impulse items at the register or related product listing in the online shopping basket or online checkout sequence.

 Follow-ups: Following up with customers after

sales or inquiries are important. This method of increasing customer lifetime value attempts to increase the regularity of customer patronage Page 44

while simultaneously working on the relationship. When a customer makes a purchase they are more likely to come back for more, come back sooner, and more often to refer other customers to you if you follow-up with them after their purchase. Email communication is most effective as it requires little overhead costs and can be personalized as much or little as you wish. Brio intends to integrate this practice in its functioning.

 Communication: Communicating to customers through newsletters in print or via email. This will reacquaint customers with Brio products and services and encourages an increase frequency of customer patronage.

 Referral programs: Offering referral programs to

current customers targets the value of the customers to increase shopping frequency while simultaneously lowering costs on customer acquisition. If current customers have an incentive in referring new customers such as a discount; they will be more likely to be a more

CUSTOMER LIFETIME VALUE  Offering support and being responsive: Making yourself available to the customer increases the likelihood of repeat business and referrals. Both of these desired outcomes increase customer lifetime value and minimize loss of customers due to their possible disenchantment of the businesscustomer relationship.

Business Plan for Brio-An LG Initiative

frequent patron. The costs of discount are offset by cost savings of acquisition and thus the net present value of current customers’ increases as does the entire customer base.

Page 45

START UP EXPENSES & CAPITALIZATION  Retaining profitable customers: Brio will data mine its most profitable customers and offer programs to retain them. Retention costs will lead to long durations of patronage.

 Loyalty programs: The Brio club similar to the LG club can be started, wherein various membership privileges can be provided to the customers such as earning reward points on purchase, earning bonus points on any existing Brio product the customer may have, refer and earn bonus points, complimentary insurance coverage, regular performance check of your Brio products, discounts on annual maintenance contract, special invites for free service camps, special offers from Brio and associated brands and regular updates on new product launches. Through the above mentioned pointers Brio intends to create a meaningful and long-lasting Customer Lifetime Value.

Start-up costs election statement. If you elect to amortize your start-up costs, attach a separate statement that contains the following information. A description of the business to which the start-up costs relate.  A description of each start-up cost incurred.  The month your active business began (or was acquired).  The number of months in your amortization period (which is generally 180 months). 

Brio an LG initiative: It’s an electronic retail store for LG products. To give the store an edge LG has tied with @home, a furniture franchise store. Apart from having its presence in various electronic megastores, LG also has its exclusive retail stores and which extend to loyal customers be it for the products or services. Along with its current target audience, LG wants to cater to a higher income group in a different way, increasing its visibility and improving its perception in the process. Expenses required in the business

Business Plan for Brio-An LG Initiative

Page 46

1. Getting a Lease for the store: If you get a lease for business property, you recover the cost by amortizing it over the term of the lease. The term of the lease for amortization purposes generally includes all renewal options (and any other period for which you and the lesser reasonably expect

earnings during any period in which the business would not otherwise be available or operational. 6. Workforce in place: This includes the composition of a workforce (for example, its experience, education, or training). It also includes the terms and conditions of employment, whether

START UP EXPENSES & CAPITALIZATION

2. 3. 4.

5.

the lease to be renewed). However, renewal periods are not included if 75% or more of the cost of acquiring the lease is for the term of the lease remaining on the acquisition date. We intend to lease the store in Mumbai and Delhi by the end of December 2009. Cost incurred for the store layout. Cost for stimulated rooms Goodwill for the brand Brio: This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. Going concern value: This is the additional value of a trade or business that attaches to property because the property is an integral part of an ongoing business activity. It includes value based on the ability of a business to continue to function and generate income even though there is a change in ownership. It also includes value based on the immediate use or availability of an acquired trade or business, such as the use of

Business Plan for Brio-An LG Initiative

contractual or otherwise, and any other value placed on employees or any of their attributes. 7. Business books and records, etc: This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. It also includes the cost of customer lists, subscription lists, insurance expirations, patient or client files, and lists of newspaper, magazine, radio, and television advertisers. 8. Patents, copyrights, etc. This includes package design, Brio Logo, jingle etc. 9. Customer-based intangible. This is the composition of market, market share, and any other value resulting from the future provision of goods or services because of relationships with customers in the ordinary course of business. For example:  A customer base. Page 47

A circulation base. An undeveloped market or market growth. Insurance in force. A mortgage servicing contract. An investment management contract. Any other relationship with customers involving the future provision of goods or services. 10. Supplier-based intangible. This is the value resulting from the future acquisition of goods or services used or sold by the business because of business relationships with suppliers.  A favorable credit rating.  A favorable supply contract.  A favorable relationship with distributors (such as favorable shelf or display space at a retail outlet) 11. Government-granted license, permit, etc. This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. For example, vehicle for transformation for LG products to the store, license for display board 12. Franchise, trademark, or trade name. You must amortize franchise, trademark or trade name purchase or renewal costs, other than certain contingent payments that you can deduct currently.      

Business Plan for Brio-An LG Initiative

13. Any interest in a corporation, partnership, trust, or estate. 14. Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. 15. Any interest in land. 16. Computer software for Brio like billing machine and software from IBM. 17. An interest under either of the following. a. An existing lease or sublease of tangible property. b. A debt that was in existence when the interest was acquired. 18. Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized.

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Name of the company

Brio

REFERENCES/BIBLIOGRAPHY April

May

June

July

August

Sept

October

Nov

Dec

January

Feb

March

10,00,0 00 20,00,0 00 30,00, 000

5,00,0 00 2,00,0 00 7,00,0 00

7,00,00 0 5,00,00 0 12,00, 000

3,00,0 00 5,00,0 00 8,00,0 00

2,00,0 00 5,00,0 00 7,00,0 00

3,00,00 0 7,00,00 0 10,00, 000

50,00,00 0 50,00,00 0 1,00,00, 000

4,00,0 00 1,00,0 00 5,00,0 00

1,00,0 00 7,00,0 00 8,00,0 00

8,00,00 0 5,00,00 0 13,00, 000

2,00,0 00 4,00,0 00 7,00,0 00

5,00,00 0 2,00,00 0 7,00,0 00

2,00,00 0 50,000

2,00,0 00 50,000

2,00,00 0 50,000

2,00,0 00 50,000

2,00,0 00 50,000

2,00,00 0 50,000

50,000

2,00,0 00 50,000

2,00,0 00 50,000

2,00,00 0 50,000

2,00,0 00 50,000

2,00,00 0 50,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000

5,000 5,000 10,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000 5,000

5,000

5,000

5,000

5,000

5,000

10,000

5,000

5,000

10,000

5,000

5,000

3,00,00 0 2,00,00 0

3,00,0 00

3,00,00 0

3,00,0 00

3,00,0 00

3,00,00 0

3,00,000

3,00,0 00

3,00,0 00

3,00,00 0

3,00,0 00

3,00,00 0

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

1,000 500

Revenue LG Products

At home Products Total revenue

Employee related expenses Salary expenses Wages expenses Outside services (when employee go out for official work)

Meals & Entertainment Security Other Professional Fees Client Entertainment

2,00,000

Office expenses Rent

Grand Opening Transportation

2,000 2,000 3,000 Office Cleaning 1,000 1,000 Dues and Subsciptions 500 500 Repairs and maintenance 10,000 Website hosting 250 4,00,00 Advertising Business Plan 0 for Brio-An LG Telephone

Supplies (office and operating)

Security Accounting and legal

1,00,00 0

Initiative

4,00,000

4,00,00 0

Page 49

“Marketing Management: An Asian Perspective” by Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha (13th Edition) “LG India” http://www.in.lge.com/ “LG to add 25 more outlets by 2009” (as appeared in the ‘Financial Express’) www.financialexpress.com/news/lg-toadd...outlets...2009/345617/ “Industry Information – Consumer Durables” http://info.shine.com/Industry-Information/ConsumerDurables/902.aspx “Consumer electronics cos. witnessing 30% growth in sales” (as appeared in the ‘Economic Times’) http://economictimes.indiatimes.com/news/news-byindustry/cons-products/electronics/Consumer-electronicscos-witnessing-30-growth-in-sales/articleshow/5262373.cms “India records highest growth for LG Electronics” (as appeared in the ‘Business Line’) http://www.blonnet.com/2009/06/24/stories/2009062450530 500.htm

“India's Consumer Electronics Industry Scales New Heights” http://www.eetindia.co.in/ART_8800470743_18000 07_NT_5e6993e6.HTM “The Consumer Durable Market” http://retailmantras.blogspot.com/2009/09/consum er-durable-market.html “Consumer Durables” http://ibef.org/download %5Cconsumer_durable_28feb_0808.pdf “Consumer Durable Industry in India” http://www.cci.in/pdf/surveys_reports/consumerdurables-sector.pdf “LG Product Listing” http://www.in.lge.com/product/index.aspx “Industry Information – Retail” http://www.ibef.org/industry/retail.aspx “Consumer Durables Chain – Review” http://india.retailmantra.com/2009/01/consumerdurables-chain-review.html

“Consumer Markets” http://www.ibef.org/economy/consumermarket.aspx “LG Slogan – Life’s Good” http://www.lge.com/about/corporate/slogan.jsp

Business Plan for Brio-An LG Initiative

Page 50

7. Do you think that LG is innovative? (New products, features or services regularly). a) Yes b) No 8. Do you think LG supports the community? a) Yes b) No 9. Do you think LG practices good corporate ethics? a) Yes b) No

APPENDICES CONSUMER PREFERENCE SURVEY Name: Age: Gender: All you have to do is answer the following questions in a YES or NO: 1. Do you think LG is safe to use? a) Yes

b) No

2. Do you think LG is consistent in delivering on the promise it makes? a) Yes

b) No

3. Do you think the products offered by LG are welldesigned? a) Yes

b) No

4. Do you think LG offers good value for money? a) Yes b) No 5. Does LG respond to your changing needs as a customer? a) Yes b) No 6. Does LG satisfy your needs through the variety of products they provide? a) Yes b) No

Business Plan for Brio-An LG Initiative

10.Do you think LG has a healthy environment and a good employee relationship? a) Yes b) No 11.Would you recommend LG to someone? a) Yes b) No 12.Do you research before going in for a particular brand? a) Yes

b) No

13.Would a discount offer on a particular brand change your decision? a) Yes

b) No

14.Are you loyal to any one particular brand? If yes do not answer question no. 15 and 16. a) Yes b) No 15.Does the reputation of the brand matter to you while buying a product? a) Yes b) No Page 51

16.Have you come across other bands which provide better products that LG? a)Yes b) No 17. Would you be interested in purchasing furnishings which integrate technologically innovative electronic products with aesthetic designs? a)Yes b) No 18.Would you visit a store which sold such products if it housed only a single brand? a)Yes b) No

APPENDICES

Business Plan for Brio-An LG Initiative

Page 52

APPENDICES

Business Plan for Brio-An LG Initiative

Page 53

Business Plan for Brio-An LG Initiative

Page 54