Tuesday, May 8, 2012

STRATEGIC MARKETING at SAMSUNG




STRATEGIC MARKETING

SAMSUNG

Case Studies, Samsung Electronics Co Solve Case, MBA Case Study, MBA Reports, SWOT Analysis

Table of Contents






INTRODUCTION

The case is about the Samsung Electronics Co. The Samsung Group is a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is the world's largest conglomerate by revenue with annual revenue of US$173.4 billion in 2008 and is South Korea's largest chaebol. The meaning of the Korean word Samsung is "Tri-Star" or "three stars".
Samsung Group formed several electronics-related divisions, such as Samsung Electronics Devices Co., Samsung Electro-Mechanics Co., Samsung Corning Co., and Samsung Semiconductor & Telecommunications Co., and grouped them together under Samsung Electronics Co., Ltd. in 1980s. SAMSUNG’s aim is to develop innovative technologies and efficient processes that create new markets, enrich people’s lives and continue to make Samsung a trusted market leader.
Today, Samsung Electronics global presence includes a total of 111 subsidiaries in the form of production subsidiaries, sales subsidiaries, distribution subsidiaries, research laboratories and eight overseas business divisions representing North America, Europe, China, Southeast Asia, Southwest Asia, Central and South America, CIS, the Middle East and Africa.
The Samsung Electronics Co. invited us as a consultant to design strategy for its company. Our team will be responsible for making a report on the company that will contain a detailed analysis of the company and then formulating strategy for Samsung. The case was presented in front of us that describe the current situation of the company. We will try to fully analyze the situation and prepare a detailed report on it.






HISTORY OF THE CASE:

Samsung Electronics was founded in 1969 in Suwon, South Korea as Samsung Electric Industries, originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air conditioners and washers.
Samsung won five awards in the Industrial Design Excellence Awards (IDEA) making it the first Asian company to win more awards than any European or American rival. And since 2000, Samsung has earned a total of 100 citations at top design contests in the U.S., Europe, and Asia. Brokerage Hyundai Securities expects Samsung to earn $10.3 billion on sales of $52.8 billion this year, up from profits of $5.2 billion and $39.8 billion in revenues last year.
The case begins with the scenario that the Samsung designers taking the pain in creating the design of their product and observing the people and taking their opinion in order to improve their product design and performance. It is mentioned in the case that inside skyscraper Samsung is creating design while outside no changes taking place.

DECADE OF DETERMINATION
Samsung in 1994 moved its design center to Seoul from sleepy Suwon. That same year, Samsung hired U.S. design firm IDEO to help develop a computer monitor the first of many such collaborations with IDEO and other leading consultancies. Then in 1995, the company set up the Innovative Design Lab of Samsung (IDS). Samsung designers were dispatched to Egypt and India, Paris and Frankfurt, New York and Washington to tour museums, visit icons of modern architecture, and explore ruins.
Many of the new design ideas are coming from outside. Last year, Samsung started sending designers abroad to spend a few months at fashion houses, cosmetics specialists, or design consultancies to stay current with what's happening in other industries. But in the Digital Age it's not too hard for strivers such as Lenovo of China and BenQ to make products that approach the quality of long-standing industry giants such as Sony, Panasonic, or Philips Electronics Samsung, of course, was an upstart itself not long ago.

FRONT-LOADED DESIGN
So Samsung must continue to reinvent itself. In the past four years, the company has doubled its design staff, to 470, adding 120 of those just in the past 12 months. And since 2000, its design budget has been increasing 20% to 30% annually. To keep an eye on trends in its most important markets, Samsung now has design centers in London, Los Angeles, San Francisco, and Tokyo, and this year it opened one in Shanghai.
Samsung's designers these days no longer have to find a way to put their boxes around the devices that engineers cook up. Instead, they often give concepts to engineers, who must then build the machine inside the box dreamed up by the designers.
The usability lab was built to provide a lifelike forum for tests. It looks like a typical living room, with a kitchen in the corner for testing cooking appliances. It's that commitment to research that has given Samsung its edge. Many designers sit in on focus groups and watch closely as potential customers provide feedback on their new models. And each foreign lab has a researcher on site -- unusual in the industry.
Some skeptics say the company still doesn't have the breadth and depth in design of Sony, or the ingrained design culture of Apple Computer Corp. "Samsung has improved, but I don't see an identity in their design that really speaks to consumers," says Jim Wicks, Motorola Inc.'s vice-president in charge of designing cell phones. Still, few would deny that Samsung has managed to inject the importance of design into its corporate DNA. In this era of cutthroat competition, that may be just what it takes to create a lasting advantage.

SWOT ANALYSIS

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.
A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model.
  • Strengths: characteristics of the business or team that give it an advantage over others in the industry.
  • Weaknesses: are characteristics that place the firm at a disadvantage relative to others.
  • Opportunities: external chances to make greater sales or profits in the environment.
  • Threats: external elements in the environment that could cause trouble for the business.











OPPORTUNITIES:
  • The economic condition in South Korea apparently seems favorable.
  • Samsung is internalizing the social shifts.
  • Samsung is having consistent policy given by the government.
  • Samsung reasonably equipped to take care of the technological changes.
  • Samsung is maintaining good international relations in other countries/global.

THREATS
  • The legislation has been passed frequently related to industry.
  • Technological transformation is taking place in the industry.



STRENTHS

  • Customers are loyal and patronizing the brands.
  • Samsung is enjoying formidable position against competitors.
  • The company is maintaining good company relationship with suppliers/vendors.
  • The company is maintaining good relationship with labors.
  • Samsung is financially strong and stable.
  • The production process, procedures, policies, system, quality assurance, inventory management are consistent with industry standards.


WEAKNESSES

  • Samsung is facing fierce competitors.
  • South Korean trade unions are strategically links and they are strong while bargaining and negotiating.
  • Samsung needs improvement in defining the vision/mission and strategic corporate objectives.
  • Marketing Management needs improvements in all the facts of marketing.
  • Human Resource Management needs improvements in Human Resource Management.


STRATEGIC MARKETING OBJECTIVES:

  • To improve the sell of all brands of the company from 55% to 90%.
  • To create new market driven strategy and also create valuable design for their customer.

SEGMENTATION STRATEGY:

Segmentation variables may be used to divide the product-market into segments. Demographic and psychographic (lifestyle and personality) characteristics of buyers are of interest. The use situation variables consider how the buyer uses their product. Variables measuring buyer needs and preferences includes brand awareness, and brand preferences. Purchase behavior variables describe brand use and consumption. Demographics are often more useful to describe segments after they have been formed rather than to identify them. Geographic location may be useful for segmenting product markets. Demographic information helps to describe groups of buyers such as heavy users of a product or brand. Life style variables indicate what people do, their interests, their opinions and their buying behavior. Lifestyles characteristics extend beyond demographics and offer a more penetrating description of the consumer.
The core theory of product segmentation is that a company can produce a single product with relatively minor variations, market it to different customer groups -- sometimes under different brand names -- and thereby increase market share while reducing the cost of developing radically different products. Segmentation relies on market research to identify the product characteristics that resonate with target markets. Product development engineers then provide different iterations of the same basic model that meet the preferred traits for each market segment.
Market targeting is the second step of a market strategy. Once the market has been segmented, the ideal segment needs to be chosen or targeted. The first thing to do is to analyze the segment attractiveness. Some of the characteristics for an ideal segment include size of the segment, growth rate of the segment, brand loyalty of existing customers, level of competition, and most importantly, potential for profit. This information can be acquired through market research. The next step would be to do an internal analysis to determine compatibility levels with the segment.
The most important question would be to see if the firm can offer a superior value as compared to what already exists. The other thing to keep in mind is the firm’s availability of resources vis-à-vis capital requirement for the segment. At an operational level, it is important to see if the firm has access to the distribution channels for the segment. Once these steps are taken care of, the following market targeting strategies can be followed:
Single segment strategy: A single market segment is targeted with the entire product mix. This strategy is usually followed by small firms with limited resources. This allows the firm to focus exclusively on the segment and gradually expand.
Product specialization strategy – The firm specializes in a particular product and targets various segments using different market strategies. This strategy is helpful if the firm has a flagship product with universal appeal.
Market specialization strategy – The firm specializes in a particular market and provides various product combinations for this market. This strategy is helpful if the firm has an established presence in a particular market, but no flagship products to leverage.
Mass marketing strategy – The firm targets all the market segments with the entire product mix. There is intensive investment in market and advertising strategies because competition levels are very high. This strategy is followed by corporate giants with large amount of resources.
Niche strategy- This is a special case of single segment strategy, when the segment is extremely small and/or non conventional. This is the exact opposite of mass marketing wherein the firm focuses on its key strengths which may have little or no universal appeal. However, if successful, this can be the most successful of all strategies, with high growth rates and brand loyalty.

POSITIONING STRATEGY:

Positioning is what the customer believes about your product's value, features, and benefits; it is a comparison to the other available alternatives offered by the competition. These beliefs tend to based on customer experiences and evidence, rather than awareness created by advertising or promotion.
Generally, there are six basic strategies for product positioning:
1. By attribute or benefit- This is the most frequently used positioning strategy.
2. By use or application- The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Apple positions its computers based on how the computer will be used.
3. By user- Facebook is a social networking site used exclusively by college students. Facebook is too cool for MySpace and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs.
4. By product or service class
5. By competitor
6. By price or quality-

PRODUCT STRATEGY:

SAMSUNG India has segmented their products into five categories.
MOBILE PHONE
TV/AUDIO/VEDIO
CAMERA/ CAM RECORDER

HOME APPLIANCES
PC/PERIPHERALS/ PRINTERS
Reposition of its products. In early 1990th Samsung was still perceived as a conservative manufacturer and always associated its brand with bargains. Samsung realized that low price is just a major means to compete in the lower-market whereas in upscale market technology and brand are competitive means. Samsung decided to penetrate the upscale market and gave up lower-market in order to exalt its brand image. It repositioned all series of its products such as mobile phone, consumer electronics and memory flash to upscale market. Correspond to Samsung’s new position in the market it has relatively higher price in it category. To Samsung higher price would bring more profit and at the same time it is the better imply of good quality. The strategy of reposition helps Samsung starting to build its noblest image.
Technology innovation Samsung recognized that digital is the future developing aspect of consumer electronics. They regard the digital age as having both incalculable potential and risks. It's a time of intense competition-fortunes can be made or lost in the blink of an eye. (Samsung group timeline and history, 2005) Samsung took this challenge as an opportunity. They switched their core competitive power from mass manufacture to its own brand which based on digital technology. It is well positioned as one of the world's recognized leaders in digital technology and eventually become the worldÂ’ top innovative company in technology. It starts to provide consumers with innovative and cutting edge products and rapidly become a huge player in electronics field competing toe to toe with another magnate Sony.
Samsung launched an industry design revolution in order to get rid of its image of imitator. It employed world top designers to expand their thought and keep track on the world highest level. It achieved most of the Award of American Industry Design which is the most important award in industry design area on the global basis. Its brand was recognized by the consumers and specialists. The technology breakthroughs enhanced Samsung’s brand image of young, fashionable and strong function.

PRICING STRATEGY:

Price is one of the classic “4 Ps” of marketing (product, price, place, promotion). There are different strategy is made for retailer which is different from the pricing strategy of customers because retailer buy product in bulk amount as compare to the customers so the get the discount in purchase of bulk quantity.
As the customers are becoming more prices sensitive so they want a good quality product in low or in a reasonable price. The company is focusing on the customers to satisfy them with the classic and superior quality product in a reasonable price. Samsung is making different brands under its product category and that price reasonable so that the more price sensitive people can easily buy it.

PROMOTION STRATEGY:

There are different type of promotional mix will be used in order to promote ne classic brand. Traditional media is used to promote the brand also the non traditional media is also used.
A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organizations promotional mix strategy can consist of:
ADVERTISING:
The company will use any non personal paid form of communication using any form of mass media to promote the new brand.
PUBLIC RELATIONS:
It involves developing positive relationships with the organization media public. The art of good public relations is not only to obtain favorable publicity within the media, but it is also involves being able to handle successfully negative attention.
PERSONAL SELLING:
It involves selling a product service one to one basis and make customer aware about the new brand.
SALES PROMOTION:
This is commonly used to obtain an increase in sales in short term. It could involve using money off coupons or special offers. The firm provides special offers and discount for the new brand.
DIRECT MAIL:
Direct mail allows an organization to use their resources more effectively by allowing them to send publicity material to a named person within their target segment. By personalizing advertising, response rates increase thus increasing the chance of improving sales so direct mail will be used to attract customer. The firm provides information about the new brand and its collection to attract more customers.








INTERNET MARKETING:
By internet marketing the company will promote and sell company services online to there customers.

CHANNEL STRATEGY:

The producer and the final customer are part of every channel. These channels are different levels. A one-level channel contains one selling intermediary, such as a retailer. A two-level channel contains two intermediaries. In consumer markets, these are typically a wholesaler and a retailer. A three-level channel contains three intermediaries. In the meatpacking industry, wholesalers sell to jobbers, who sell to small retailers. From the producer's point of view, obtaining information about end users and exercising control becomes more difficult as the number of channel levels increases. SIEL is having three types of distribution system. Two of them come under one-level channel and last one comes under two-level channel.
ONE LEVEL CHANNEL:


TWO LEVEL CHANNELS:



RECOMMENDATIONS:

After going through this report and completely analyzing this report, it is recommended to the management of Samsung that top management must accrue the above stated strategic marketing strategy to get benefits and achieve objectives. If the company implements all these strategies then the company will deserve the position for which it is known. The company will enjoy increase in sale and other benefits and will gain competitive advantage over their rivals by creating and delivering superior customer value.

AANEXURE / ATTACHMENTS:

General Information
Samsung Electronics Co., Ltd. ("SEC") was incorporated under the laws of the Republic of Korea to manufacture and sell semiconductors, LCDs, telecommunication products, and digital media products.]
General Information
Samsung Electronics Co., Ltd. ("SEC") was incorporated under the laws of the Republic of Korea to manufacture and sell semiconductors, LCDs, telecommunication products, and digital media products.
Korea STECO, SEMES, Samsung Electronics Service, Living Plaza, Samsung Electronics Logitech,
SECRON, S-LCD, Samsung Electronics Hainan Fiberoptics Korea,
Samsung Electronics Football Club, Samsung Mobile Display, World Cyber Games,
Samsung Venture Capital Union #6, #7, #14 and #20, Ray, GES, Prosonic

Americas Samsung Electronics Canada (SECA), Samsung Electronics America (SEA),
Samsung Electronics Latinoamerica (SELA), Samsung Electronics Mexico (SEM),
Samsung Electronics Argentina (SEASA),
Samsung Receivables (SRC), Samsung Semiconductor (SSI),
Samsung Information Systems America (SISA), Samsung Telecommunications America (STA),






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2 comments:

may i know who is the writer of this report?

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