ZENITH READYING LIMITED-DISTRIBUTION PREMIUM LG-BRAND ROLLOUT

Zenith, which has sharpened its focus on digital products since LG bought it out of bankruptcy in 1999, will market high- end LG plasma sets and LCD TVs as well as HDTV set-top. Specific details, including pricing and product specifications, weren’t available. Zenith Senior Vp, Sales & Mktg. Kenneth Lee, said in letter to dealers that LG products would have added features and capabilities “to create new opportunities for selected [retail] partners.”

But preliminary reaction from at least one major retail account being targeted by Zenith for LG was very guarded. Executive there described Zenith’s strategy as flawed. He expressed frustration at having worked for last 2 years to help build Zenith as digital brand, only to have to start effort all over again with LG. Zenith seemed to anticipate similar flak when it addressed that subject in Q&A feature of employee newsletter. On question, “What makes us think this elite LG brand will succeed in this market” where others such as Thomson’s ProScan have failed, came this answer: Other attempts “started from scratch,” but LG brand “already has a huge global footprint and success in other digital products in the U.S.” For example, it said, by year-end, over 20 million Americas will be carrying high-tech LG mobile phones, and “that’s a great base to build on.”

New LG franchise comes as Zenith parent widens its presence in U.S. market through push into areas such as major appliances and cellphones. LG recently scored distribution coup on major appliances by signing on Best Buy, and LG cellphones are being sold through variety of U.S. carriers. Corporately, most of LG’s digital CE products will continue to be sold under Zenith brand, but adding premium LG label will allow company to “grow and bring new products to market more quickly,” Zenith CEO T.J. Lee said. He said using LG label was “natural choice,” given its “marketing synergies” with cellphones and appliances. Goal also is to utilize LG’s ad and marketing leverage in wireless communications and appliances to support video products, he said.

Zenith also will seek to broaden distribution of its own- branded products beyond existing roster that exceeds 200 accounts. Its CE sales force will preside over LG distribution and logistical issues, while Zenith’s Commercial Products Div. will have responsibility for lodging, health care, education, industrial and custom installation channels, Lee said. LG’s commercial group in U.S., which markets LG plasma monitors for airport placement and other such industrial applications, will be combined with Zenith’s commercial products operation, Zenith spokesman said. Meanwhile, responding to our question whether LG ultimately would replace Zenith as going CE brand, spokesman said “that’s certainly not the plan,” since company goal was to “maximize the value of both brands” as separate entities.

LG branding initiative gives Zenith 2nd shot at establishing line of higher end, limited-distribution products. Zenith unsuccessfully introduced Inteq goods in 1996, using Inteq as vehicle for launching NetVision PC/TVs in effort to establish viable “value-added distribution channel strategy,” then-Zenith Sales Pres. Gerald McCarthy said. But Inteq never caught on and was formally discontinued in 2001. For LG, effort would represent return to CE market in U.S., albeit with positioning much more upscale than commodity-oriented Goldstar. LG abandoned Goldstar for CE products in 1997, but has continued applying brand to air conditioners, microwaves, other appliances.