【文章內(nèi)容簡介】 d to grow quickly for the same reason in near future Price of mechanical grill product in YYSC Price of single function products in YYSC Percent of mechanical grill to single function products in YYSC 04008001 , 2 0 01997 1998 1999 2023 Source: SIC 13 010326SH_120703_085v5i 7940 39 37 36 35 3434 36 37 37 37371326 25 26 27 28 299DEMAND FORECAST ANALYSIS SHOWED THAT COMPUTER GRILL PRODUCTS WILL HAVE THE HIGHEST GROWTH RATE FOR THE NEXT FIVE YEARS ? Price of puter grill products will go down to RMB 540 560 in 2023 ? Price of mechanical grill will go down to RMB 470 490 in 2023 ? Price of single function will go down to RMB 360 380 in 2023 Market size forecast by product type Thousand sets 100% = 1997 2023 2023E 2023E 2023E 2023E 2023E Key assumptions CAGR Percent Computer grill Mechanical grill Single function 1,900 4,400 9,800 8,600 7,500 6,400 5,400 18 20 19 14 Source: Team analysis, China Statistic Yearbook HIGH ESTIMATE 14 010326SH_120703_085v5i WITH THE OVERALL PRICES DROP, MECHANICAL GRILL PRODUCTS ARE GOING TO GAIN MORE IMPORTANCE OVERTIME 101520250 10 20 302023 2023 growth potential CAGR Profitability LG marginal profit in percent of sales Market size today Single function Mechanical grill Computer grill HIGH ESTIMATE Market size in 2023 Single function products have little room for further price reduction, with material cost reduced by 5 % ., thus having improving profitability 15 010326SH_120703_085v5i TODAY39。s DISCUSSION 182。The Microwave oven market in China will continue its strong growth and should reach million units in 2023. Primary regions will be Central China, followed by South and Southwest China. Other regions should develop as ine grows. Computer grill and mechanical grill should further increase their share as prices decline. 182。Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and generic buyers. All segments, except premium buyers, are highly pricesensitive, thus skewing market demand towards lowend products. At the same time, reliable performance, ease of use, and good afterservice are important across segments. 182。The petition in China is already intense and will continue to increase, as Galanz and Midea have huge ambitions in the market. In addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for all but the lowest cost players. 182。LG has built a successful platform for growth, being 2 in China, although far behind Galanz, by focusing on premium products and in the Beijing area. Faced with the issue of further growth and improving profitability, LG now needs to choose between a high growth strategy, with the objective of being the leading player and to reach breakeven in 2023, or to remain a premium niche player for the foreseeable future. 182。To achieve the aspiration of being a profitable 1 Player in China, LG needs to launch 5 strategic initiatives: (1) launch a three step regional expansion, first from Beijing to Wuhan, (2) introduce entry products to cover all price points while continuing to introduce high end products to create margins, (3) improve channel coverage by increasing the distributor work and the sales force resources, (4) increase significantly advertising spending while optimizing media mix, (5) reduce aggressively cost by leveraging economies of scale. 16 010326SH_120703_085v5i MICROWAVE CONSUMER SURVEY DESIGN Geography coverage ? Urban area of Beijing, Shanghai, Guangzhou, Tianjin, Shenyang, Chengdu, Wuhan Sample size ? Total 875 samples in urban area who are decision makers in microwave ? In each location –In Beijing, Shanghai, Tianjin: 100 MWO owners, 50 MWO potential buyers (in next 12 months) each –In Guangzhou, Shenyang, Chengdu, Wuhan: 60 MWO owners, 40 MWO potential buyers (in next 12 months) each Methodology ? Doortodoor random sampling ? Facetoface interview Field period ? March 9 16, 2023 Detailed explanation 17 010326SH_120703_085v5i FOUR DISTINCTIVE CUSTOMER SEGMENTS ARE DERIVED FROM THEIR RESPECTIVE KEY BUYING FACTORS 25332021100% = 875 microwave oven owners plus potential buyers Price sensitive consumers take up more than half of the market Premium buyers ? Most care of performance, design and quality ? Least price sensitive and has highest incidence of using premium brands, ., National and sophisticated models, ., puter grill 1 Basic brand buyers ? Looking for reliable brand for quality assurance 2 Rational technophiles ? Knowledgeable buyers who understand what they need from a microwave oven ? Care less about brand, more price sensitive, requiring a lot of product information to make the purchase decision 3 Generic buyers ? Buyers who are nervous to handle the microwave oven ? Look for simple machine and need good aftersales support 4 Source: AMI customer survey 18 010326SH_120703_085v5i WHILE PRICE SENSITIVITY DIFFERS ACROSS SEGMENTS, RELIABLE PERORMACE, EASE OF USE, AND GOOD AFTERSALES SERVICE ARE KEY FOR EACH SEGMENT Ranking of KBFs 10025676262714872331683687071100294834482188100634654934348283100967875413151373422Reliable performance Low price Ease of use Good aftersales service Famous brand Lots of features Nice appearance Advanced technology Word of mouth Product promotion Premium buyers Basic brand buyers Rational technophiles Generic buyers Top 5 KBFs Source: AMI customer survey 100817569655751503724Total urban 19 010326SH_120703_08