LG Electronics Canada Inc. is entering its next phase in its notebook channel strategy.With its third generation of notebooks now available, the subsidiary has made a bold move to open up its channel to the broad market.
According to Shawn Snobelen, national sales manager, digital display and media division for LG Canada, the demand for the notebooks was growing very rapidly and it needed the ability to market to more customers.
Since LG launched notebooks more than 14 months ago, the company maintained an authorized reseller program with 250 members. This enabled it to maintain a premium price for its notebooks and the resellers in the program earned top margins because of it.
However, this strategy limited LG Canada from acquiring more customers.
“We needed to open it up to a broader market,” Snobelen said. “We developed a strong demand for the product with a small number of resellers. It is sort of a greenhouse effect. We needed to get a base of sales growing and now we need to broaden it up,” he said.
LG’s factory in South Korea has been able to produce more competitively-priced notebooks, Snobelen added. This also helps LG Canada compete with other brands in the market.
“We can go out now with a $1,499 wide screen and attract a broad set of customers. It is more of two-tier strategy to get more market share. In a focused or controlled environment it is limiting in finding new customers,” he said.
LG’s third generation of notebooks will have a new colour scheme of electric blue, metallic ivory and silver. The new products will comprise of an entry-level $1,399 laptop, and go up to $2,999 model that is state-of-the-art with a wide screen. There will also be 14-inch wide display notebooks along with 15- and 12-inch wide display notebooks. One of its flagship models is the LW20, which is an Intel PCI Express unit with an internal DVD-RW optical drive and a 12-inch wide screen.
Snobelen said the benefits of this move out weigh the risks. His biggest issue will be managing the MSRP with LG’s authorized program. “I want to make sure top resellers maintain what they can earn. So it is a major concern to manage the price point levels and make sure it does not get into a price war,” he said.
With that, about 50 of the 250 authorized partners will be folded into the Elite Xteam program, where they will get more privileges to set them apart from the rest of the channel.
As for the remaining 200 on the authorized list, Snobelen said they all would have an opportunity to join the new program after they qualify.
“In the end we found that there were 50 of the 250 who can really turn over premium products, but as we go into the broad market we’ll start to bring more into the Xteam program,” he said.
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