India's Home Appliance Penetration Aiming to Surpass 29%... LG Electronics Makes a Bold Move with 'Floral Refrigerators'

The threshold for the Indian home appliance market was higher than expected. As of 2024, the penetration rate for refrigerators in India stood at 49%, while the penetration rate for washing machines remained at the 29% level. It was an environment where more than half of the total population still lived without home appliances. To attack this massive market, LG Electronics launched the 'Indian National Home Appliance Project,' which is completely different from existing product development methods.

The core of the Indian market analyzed by LG Electronics was not simply 'low income.' While the local infrastructure was as poor as Korea's in the 70s and 80s, consumers' standards were the same as modern people following the latest trends along with the spread of smartphones. Constraints in the living environment, such as frequent power outages and water cuts, low water pressure, and hard water where detergent does not dissolve well, were practical barriers preventing the purchase of home appliances. In particular, unlike refrigerators or TVs intended for the whole family, washing machines were perceived as products that replace 'mother's labor,' causing them to fall behind in purchase priority. The development team in the video explained the situation at the time, saying, "Because there is a substitute in the form of hands, people do not know how hard it is, and since it is a product for a mother's preference alone, it always went to the bottom of the purchase priority."

Washing machines that overcame power outages and low water pressure, and refrigerators reflecting vegetarian culture

LG Electronics redesigned products from 'zero base.' They directly embedded unique selling points (USP) into the products that could overcome India's specific environment. In the case of washing machines, considering the environment where water is scarce, they introduced a 'manual water supply' function that allows users to pour water directly. Additionally, for environments where it is difficult to operate due to low water pressure, they applied a 'low water pressure solution,' and equipped an 'auto restart' function that restarts the latter half of the washing process after power is restored even if washing is interrupted due to a power outage.

The refrigerators precisely reflected Indian food culture. To match the local characteristic of a high proportion of vegetarians, the capacity of the vegetable compartment was expanded by 23% compared to existing models. They also added a mode specifically for storing essential dairy products such as milk. Considering that housing structures have weak insulation and are sensitive to external temperature changes, they also planned a function that automatically adjusts the refrigerator's set temperature according to the season. This was a measure to resolve the inconvenience of users having to change the temperature every season.

"Changed the approach for 30% growth"... The technology of cost reduction

The process of securing price competitiveness while including high functions was a series of intense internal conflicts and coordination. There were sharp differences in opinion between departments emphasizing design and specifications and departments prioritizing cost reduction. The development team in the video shared the intense situation at the time, saying, "At first, the design side proposed that these specifications must absolutely be included, and the other side spoke negatively, asking how they would handle the costs." LG Electronics chose a 'fundamental approach for 30% growth' rather than the existing method of 'improvement for 5% growth.' As they set a high target, a method was introduced to re-examine all parts from the design stage.

A specific example of cost reduction is the simplification of the 'multi-duct' component structure, which reduced its size by more than 90%. In the case of the vegetable compartment, they achieved both design differentiation and cost reduction by using a material that is half transparent and half opaque. For the compressor, a core component, instead of using existing products as they were, they directly developed and applied a new model that maintains performance while lowering costs. Thanks to these all-around cost reduction efforts, the refrigerators and washing machines were able to form an accessible price range of approximately 250,000 to 300,000 won (equivalent to a month's salary in terms of local perception).

The 'Sold Out Legend' of 'Floral Refrigerators' brought by local-focused design

The success of the products was supported by a thorough localization strategy. Unlike the existing method where the headquarters leads the product decision and sends it to the local site, this project involved the local Indian subsidiary from the commercialization stage to reflect their opinions. The development team stated, "We judged that since it is an Indian national product, the opinions of the Indian subsidiary should be heavily included, so we invited the subsidiary from the commercialization stage." In particular, the strategy emphasizing 'iconicness' in terms of design was successful. The 'Gold Flower Pattern' refrigerator, introduced to target Indian consumers who prefer colorful patterns, recorded a sell-out locally and received a great response. According to the video, it seems that LG's refined gold flower pattern achieved a marketing effect by revealing a sense of luxury among the colorful patterns of local houses.

LG Electronics highly evaluates the growth potential of the Indian market. Referring to the case where the home appliance penetration rate surged in Vietnam at the point of a GDP 3,000 mark, they are taking preemptive action, seeing that the penetration rate in India will also explode around 2030. Based on the current success, LG Electronics plans to expand its lineup with higher-grade models that reinforce functions. By drawing feedback from local consumers such as "It runs well even in low water pressure environments" and "I can finally buy LG products," the company is solidifying its position as a popular 'national home appliance' while maintaining a premium brand image.

Source: original video (YouTube)