LG Care cuts prices 20-30%

A year after launching its high-end products in India, LG Care, the FMCG division of Korean consumer electronics giant LG, has slashed prices by 20-30 per cent.

Though company officials refused to comment, retailers confirmed the price reduction.

They said the move is a step to improve LG Care brands' sagging fortunes. Besides shampoo and toothpaste, LG Care also sells soaps, detergents and diapers through a sole licensee agreement with Chennai-based India Household and Healthcare Ltd.

Analysts are doubtful as to whether price cuts alone can turn the company's performance around. Says Hemant Patel of Enam Securities, "At least in the higher end of the market, its not the pricing alone but also the brand equity that matters. LG Care is a fringe player in a market that's large. It may require more than price cuts to sell in the league of HLL and P&G".

Other analysts say that a price cut that only matches competition and is not in any way substantially lower than them will not be enough to push brands forward, especially in case of a relatively new player like LG Care.

LG Care made its Indian debut with high priced products when most established players in the market were cutting prices. Though this high-end strategy did relatively better at supermarkets and malls, it has led to stagnant sales at smaller retail outlets. While the company had targeted a market share of 4 percent in the year of launch, it has managed to gain less than 1 percent so far.

Brand consultant Anand Halve says that using the LG name has also played a role in the poor performance of the company.

"The consumer associates LG with durables. LG was never an umbrella that was large enough to hold FMCG products as well."

Some analysts also feel that LG Care's advertising strategy and its `Life's Good' campaign brought in small brand awareness and did little good for its individual brands.