‘Fandom’ failed smartphone… LG’s choice and concentration shouted’customer impression’
Digital New Year video message from LG Group Chairman Kwang-Mo Koo[사진=LG 제공]
[아시아경제 김흥순 기자] The keyword that LG Group Chairman Koo Kwang-mo emphasized this year is customer impression. The aim is to satisfy customers’ aspirations and make them a fan. Based on this message, investments are being strengthened in future businesses, while businesses with poor customer satisfaction are speeding up selection and concentration by reviewing the direction. The recent announcement that LG Electronics will review the smartphone business that has been in deficit for several years is also an evaluation that it is not irrelevant to the customer satisfaction that Chairman Koo emphasizes.
LG handsets are far behind competitors in preference. According to Consumer Insight, a market research firm, 10% of them expressed their intention to purchase LG products as the first among about 40,000 domestic mobile phone holders as of the second half of 2019. The gap was wide with Samsung (56%) and Apple (22%). Since 2007, when the survey started, it has been around 10%. Even if it is limited to smartphones, the satisfaction with the product was 612 points out of 1,000, which was lower than that of Apple (706 points) and Samsung (661 points).
In response to such market reactions, the Mobile Communication (MC) division, which manages LG Electronics’ smartphones, recorded an operating loss for 23 consecutive quarters since the second quarter of 2015. The cumulative operating deficit by the end of last year was 5 trillion won. LG Electronics said, “Competition in mobile business including smartphones in the global market is getting fiercer,” and said, “We have reached the point where we must calmly judge the current and future competitiveness of the mobile business and make the best choice.”
LG Rollable, unveiled at CES 2021.[사진=LG전자 제공]
This has formed a consensus in LG Group including Chairman Koo. At the moment, the group is drawing a line saying, “LG Electronics will design specific directions such as withdrawal, sale or reduction of the business.” However, since the inauguration of Chairman Koo in June 2018, it is highly likely that LG will follow the precedent of boldly sorting out non-mainstream or inexpensive businesses by affiliates and strengthening investment in future businesses.
In the former chairman’s system, non-core businesses were either rearranged or sold. LG Chem sold the LCD polarizer business to a Chinese company in June of last year, and LG Electronics also sold water treatment management and operating company Hientech and environmental facility design and construction company LG Hitachi Water Solution in July 2019. On the other hand, investment in core future businesses such as robots, artificial intelligence (AI), and future cars has been strengthened. A representative example is the establishment of a joint venture (JV) with Magna International, the world’s third-largest auto parts maker, in December of last year. This month, it also revealed its will to strengthen the AI business by launching the’LG AI Researcher’, an AI organization dedicated to 16 affiliates.
To impress customers, Chairman Koo emphasized, “Use digital technologies such as AI and big data, and think about how to reflect customer insights in products and services.” An LG Electronics official said, “Based on the accumulated customer data, we are steadily incorporating AI technology that considers consumer convenience and characteristics in home appliances and business products, and the range of applications will be much wider in the future.”
Reporter Kim Heung-soon [email protected]