LAS VEGAS (Reuters) - South Korea’s LG Electronics plans to soldier on as a premier brand in North America, targeting high-income shoppers despite the challenging economy, a senior executive said in an interview on Wednesday.
Michael Ahn, president and chief executive of LG Electronics North America, told Reuters he expects the company to gain overall market share in 2009, even if revenue growth proves difficult as the weak economy causes consumers to delay buying until prices fall.
Experts say sales of flat-panel television sets will hold up this year, but consumers are more likely to buy smaller screens that bring in less revenue for manufacturers.
“Even though the market has a ‘downgrade’ trend for the high-income segment, there is still a premium market and they need to differentiate innovative products, technology wise,” Ahn said in an interview at the Consumer Electronics Show in Las Vegas.
“We are going to continue to develop such a product so that we can keep LG as a premium brand and we can enjoy that market,” he added.
LG has, in recent years, undergone a campaign to U.S. increase market share pitting its mobile phones, flat-screen TVs and appliances against Sony, Nokia, and Whirlpool.
Ahn said LG exceeded its goals for 2008, achieving revenue of $13.2 billion, a 16 percent increase from 2007. Five years ago, LG’s North American revenue was $5.6 billion.
But with the economic slump, Ahn concedes that revenue could fall.
“If we could keep same revenue as this year, it means that we increased market share,” he said. “I think that we can gain market share a bit more this year, even though we don’t expect any revenue increase, frankly speaking,” he said.
LG said earlier on Wednesday that it plans to boost its spending on research and development this year. In 2008, LG spent about 4 percent of total revenue on R&D, Ahn said.
“Even though we have a recession now, like everybody, we do not want to reduce our marketing spending and we want to invest more money on R&D and customer service service and eco-friendly and environmental issues,” Ahn said.
“It is a hard decision because revenue could be reduced because of the recession and profit will reduce because of competition. But we want to invest for our future,” he said.
Ahn said he did not expect to have to manage costs through major restructurings, but that the company would take advantage of falling material costs.
He also said LG may expand its retail footprint by selling its products through mass merchandise clubs like Costco Wholesale Corp.
Reported by Franklin Paul, editing by Tiffany Wu, Leslie Gevirtz