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Jagmohan S. Raju, another Wharton marketing professor, points out that Best Buy warranties are another way to comfort nervous buyers

Best Buy might even be considered a "lifestyle" retailer that is able to build a level of intimacy with customers by matching them with gadgets that suit their particular psychic needs, says Wharton marketing professor Peter Fader. "At Best Buy, they really care about what the customer is doing and thinking. [They] want to make their stores into an experience so that customers might say on a Saturday night, 'Let's go see what's going on at the Best Buy.' You don't go to Wal-Mart for fun."

For a consumer buying a new television set, the big issue is simply size, not the differences in technology that are hard to detect to the untrained eye, Zhang adds. "Given that most of the technology is more or less standardized, people will look for price." In that case, Wal-Mart's scale and its ability to negotiate sharp prices from its vendors will allow it to pass along substantial savings to shoppers. "If I were Best Buy, I would be a little bit scared, given that Wal-Mart is moving in a big way into consumer electronics. Wal-Mart has the scale and a huge customer base."

Even though Wal-Mart's price is not always lowest, Zhang notes, most consumers perceive that to be the case, thereby making Wal-Mart the choice for price-conscious consumers, particularly during the current economic downturn.

Best Buy should make the most of its low-price guarantee, which provides peace of mind to consumers most concerned with price. At the same time, the guarantee would not have a major impact on margins because, in practice, only about 15% of shoppers actually make an effort to find a lower price elsewhere.

Wal-Mart, for its part, could become even stronger if it began to develop better relationships with customers, says Zhang. The company falls short in developing these connections because it does not emphasize loyalty programs.

bundling should happen only if it is more efficient than selling the products separately. Where there is less than perfect competition--that is, most markets--economic models suggest that bundling sometimes benefits consumers and sometimes producers

Price discrimination in general, and bundling in particular, is usually a profit-maximising strategy for a producer that enjoys substantial market power, says Mr Economides. But if there is a deal of competition, two rivals selling bundled goods may see their margins fall even more readily than if they were not bundling.

Last week, Nokia reported a third-quarter loss of $1.36 billion as sales fell 20 percent globally — and 25 percent in North America — from a year earlier.

Kim sees a way to outmaneuver Samsung in two ways. One is speed: LG beat Samsung in rolling out camera phones and MP3 phones in the U.S. The other tactic is product differentiation. The company sells its high-end goods under the LG name, and lower-priced electronics as Zenith, a U.S. brand it bought in 1996. (A third brand, GoldStar, is being phased out.) This strategy allows LG to expand market share fast without tainting the LG brand.

Although LG isn't anywhere as well-known as Samsung, it's being taken far more seriously than it used to be by carriers and consumers alike. Last year it sold 3 million pricey third-generation cell phones to Hutchison Whampoa Ltd. (HUWHY
), making it the largest supplier of 3G phones to the Hong Kong-based company, which has networks in eight Asian and European countries. LG, which doubled its U.S. handset shipments to 20 million in 2004, expects its American phone sales to rise 70% more this year. Last year it sold 11 million handsets to Verizon Wireless and 6 million to Cingular Wireless LLC and its merger partner, AT&T Wireless. And this year, Cingular selected LG as the featured vendor for a phone it's promoting on the American Idol TV show. LG "has developed an attractive portfolio of handsets with respectable quality," says Mike Cost, who oversees Cingular's handset purchases.


LG has come a long way from the days when it was known as Lucky-GoldStar -- a name LG would just as soon forget. Ask executives what LG stands for and they'll tell you "Life's Good," the slogan marketers dreamed up a year ago to retrofit the company's name. Founded in 1958 as a maker of fans, GoldStar Co. became Korea's first electronics company a year later when it started manufacturing radios. The outfit eventually made everything from refrigerators to elevators and semiconductors. Meanwhile, the group's chemical unit, Lucky, was expanding into plastics, cosmetics, batteries, and more, and in 1995 the chaebol changed the group's official name to LG. Until perhaps two years ago, if consumers in the U.S. or Europe had ever even heard of LG, they would typically associate it with low-quality goods.

Russians have the most positive image about Koreans among people in 25 countries, followed by Canadians, Saudi Arabians, Mexicans, Filipinos and Italians, according to this poll. The survey found that Koreans, meanwhile, were less popular in the United States, Japan, Germany, Hong Kong and Taiwan.