Differentiation Strategy
LG Electronics unveiled its new strategic G5 smartphone at the Mobile World Congress (MWC) 2016 held in Barcelona, Spain, on Feb. 21 (local time). In regard to the G5, Cho Joon-ho, president of mobile communications at LG Electronics, said it is the result of LG’s individual route. This was because LG believes that smartphones’ performance and price competition no longer matter much at the moment when Samsung and Apple are dominating the global smartphone market. He said the company will become one of the top three smartphone makers with its own unique strategy in the future. He also expected that LG will turn a profit in the mobile communications division in the second quarter this year.
At the press conference during the MWC 2016 on Feb. 23, Cho said, “The goal of the G5 project was to create LG’s unique value.”
The G5 has adopted modular design which has an ammo-clip-style removable bottom that allows you to swap in new high-end audio or camera hardware. It is considered the most conspicuous product among smartphones unveiled at the MWC 2016.
He said, “We didn’t mean to develop the modular design at the beginning. In order to meet consumers’ demands for removable battery, we agonized over whether to take a clip-style removable side or bottom, and chose the bottom. Then, we thought consumers might want to add some other hardware with the removable bottom, leading to the modular designed smartphone.”
He added, “It is true that we are relieved that our competitor pursues a different strategy from ours after looking at the Samsung Galaxy S7. Competition for performance and price no longer matters and LG will go its own way with its differentiated strategy.”
He also revealed the company’s goal to take “meaningful” third place in the global market. By releasing the G and V series in the premium smartphone market and the K and X series in the low-end market, LG Electronics plans to have full smartphone lineups.
He said, “It is important how much the company sells smartphones. But, we are aiming to create a large fandom who uses LG products, rather than the number three in terms of just sales figure. We have gained confidence with the G5 and we will be able to become the meaningful number three as more and more consumers prefer differentiated products.” The G5 is expected to be released at the end of March in Korea and around the same time in global markets.