Samsung Electronics Co
INTRODUCTION TO CASE:
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:
The
case starts with the description about the office building of
northern New Jersey that the building does not show any latest
development but inside the building, the designers of Samsung
Electronics Co. are busy in hard efforts to gain knowledge about the
lifestyle of American consumers. In recent years, the South Korean
company has begun to speed up all it does, from financing to
decision-making to training and labs, to make Samsung a finely tuned
receptor of all the things that make its products must-haves in an
increasingly competitive marketplace. The focus is now shifted to
serve unanticipated needs of consumers.
The
change in Samsung started when in 1993, Chairman Lee Kun visited
retailers in Los Angles and found that there products lost in the
cluttered so he decided to pay more attention on designing unique
products. Samsung in 1994 moved its design center to Seoul and hired
U.S. design firm IDEO to help develop a computer monitor. In 1995,
the company set up the Innovative Design Lab of Samsung (IDS).
Samsung is the first Asian company outside of Japan to use design to
vault to the first tier of global companies and now Asian upstarts
are all looking to Samsung as a role model for their own
transformation into global brands. So Samsung must continue to
reinvent itself. In the past four years, the company has doubled its
design staff, to 470 and since 2000; its design budget has been
increasing 20% to 30% annually. 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.
To
make sure designers get heard, Samsung has created the post of chief
design officer. CEO holds quarterly design meetings where the chiefs
of all the business units review new products and evaluate their
designs.
Moreover,
two years ago Samsung opened what it calls a "usability
laboratory" in downtown Seoul. The usability lab was built to
provide a lifelike forum for tests where employees test all the
products they made. It's that commitment to research that has given
Samsung its edge and few would deny that Samsung has managed to
inject the importance of design into its corporate DNA.
The
product planners, designers, engineers and programmers enter into
Samsung’s Value Innovation Centre, and their bosses vowed to keep
them posted there until they had completed the assignment.
The
VIP Centre specialist also guides the team in discussing and
exploring ideas from entirely different industries. In the last week
of May, Samsung inched ahead of Sony to become the No. 1 LCD TV brand
in the world now the company wants to become top makers of Digital
TVs. It could become possible if the CEO can reinvest Samsung one
more time and get is engineers, designers and marketers to dream up
products and really fire consumers’ imaginations.
SWOT ANALYSIS:
SWOT
Analysis is a useful technique for understanding Strengths and
Weaknesses of organization and for identifying both the Opportunities
open to organization and the Threats that organization face.
Used
in a business context, a SWOT Analysis helps organization carve a
sustainable niche in its market. Used in a personal context, it helps
organization develop its career in a way that takes best advantage of
its talents, abilities and opportunities.
What
makes SWOT particularly powerful is that, with a little thought, it
can help organizations uncover opportunities that they are well
placed to exploit. And by understanding the weaknesses of its
business, organizations manage and eliminate threats that would
otherwise catch them unawares. More than this, by looking at itself
and competitors using the SWOT framework, organizations can start to
craft a strategy that helps them distinguish themselves from
competitors, so that organizations can compete successfully in your
market.
SWOT
ANALYSIS:
The swot
analysis of Samsung is as follows.
OPPORTUNITIES:
- The economic condition in South Korea apparently seems favorable.
- Samsung is internalizing the social shifts.
- Samsung is having consistent policy given by the govt.
- Samsung reasonably equipped to take care of the technological changes.
- Samsung is maintaining good international relations in the countries/Nobel.
THREATS:
- The legislation is being past frequently related to industry.
- Technological transformation is taking place in the industry.
STRENGTHS:
- The customers are loyal and penetrating the brands.
- Samsung is a join fore-biddable 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 inventory management are consistent with industry standards.
WEAKNESSES:
- Samsung is facing fierce competitors.
- South Korean trade unions are strategically thinks 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:
The strategic
marketing objectives of Samsung are:
- To improve the sell of all brands of the company from 65% to 95%.
- To make the company market-driven organization to create superior values for customers.
- To make strategies for the company that creates valuable designs for customers.
SEGMENTATION STRATEGY:
Segmenting is
the process of dividing the market into segment based on customer
characteristics & needs.
Segmenting
consists of:
1. Geographic segmentation
2.
Demographic segmentation
3.
Psychographic segmentation
Market
segmentation needs to be considered early in the development of
market-driven strategy. The starting point for discussing
segmentation in Samsung is mass marketing. In mass marketing, Samsung
engages in the mass production, mass distribution, and mass promotion
of one product for all buyers. The argument for mass marketing is
that it creates the largest potential market, which leads to the
lowest costs, which in turn can lead to lower prices or higher
margins. Samsung used demographic variables like age, income,
education to segment the customers for its mobile phone devices.
Similarly, Samsung also used lifestyle, interest and preferences of
the customers to segment its electronics market. The choice of a
segmentation method depends on such factors as the maturity of
market, the competitive structure, and the organization’s
experience in the market.
POSITIONING STRATEGY:
The positioning
strategy is the combination of
marketing program (mix) strategies used to portray the desired
positioning of management to targeted buyers.
The
positioning statement used by Samsung to position its brands in the
eyes of customers is to become a “Digital technology leader”. For
positioning, it
focuses more on the real margin which comes from mid-to-high-end
segments. Samsung has positioned itself as a pioneer in the 3G
segment of mobile phones. It has branded itself as a synonym for
quality and has created
a Unique brand Image for itself as a high end value driven brand.
The
positioning strategy places the marketing program (mix) components
into a coordinated set of actions designed to achieve the positioning
objectives(s).
PRODUCT STRATEGY:
Product refers
to a physical product or a service or an idea which a consumer needs
and for which he is ready to pay. Samsung's product range included
CTVs, audio and video products, Information technology products,
mobile phones and home appliances. Its product range covered all the
categories in the consumer electronics and home appliances. Samsung
has decided to focus on product design and launch innovative
products. 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 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.
In
early 1990th Samsung was still perceived as a conservative
manufacturer and always associated its brand with bargains.
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 its category.
PRICING STRATEGY:
Price is the amount charged for a
product or service. It is the consideration paid by consumers for the
benefit of using any product or service. Samsung
can use Competition based pricing or pricing based on distinctiveness
and value proposition. For premium pricing, Samsung can Introduce
Innovative technology. Samsung must also focus on cost cutting
measures. It can use fixed market operating pricing.
|
External factors
|
|
Nature
of market or demand for product.
Competitors'
costs and strategy price offers.
Other
environmental factors like economy, government’s policies,
etc.
|
Samsung
consider several external as well as internal factors before
finalizing the price of its products.
|
Internal
Factors
|
|
Cost
of the product
Marketing
objectives
Marketing
mix strategy
Organization for
pricing
|
|
Pricing Decision
|
A
successful pricing strategy requires a smart study of the market.
Sometimes, customers are willing to pay higher prices for the
product. At these times, maximum profit can be gained by Samsung. At
other times, profit may not be at a higher priority than beating
competition or building a reputation. New pricing strategies are
developed and user by Samsung managers every day. The goal is to keep
the business profitable and keep the customers happy at the same
time.
CHANNEL STRATEGY:
Place
is another important element of marketing mix. Once the goods are
manufactured, packaged, priced and promoted, they must be made
available to the consumers. Channel
of distribution denotes the intermediaries involved in the process
whereby a product passes from the manufacturer to consumers. Samsung
must make channel design decision using the following steps.
- It first analyzes the customers’ needs.
- Set the channel objectives and constraints.
- Identify major alternatives.
- Evaluating major alternatives.
- Designing the distribution channel.
Samsung
can use three types of distribution network.
One
level Channel:
Two
level Channel:s
PROMOTION STRATEGY:
Promotion
refers to using methods of communication with two objectives:
(1)
Informing the existing and potential consumers about a product, and
(2)
To persuade consumers to buy the product.
Advertising,
personal selling, sales promotion and publicity are the major tools
that can be used by Samsung. Samsung is the 2nd
largest user of print media for advertising. It can use television
and internet advertising as well. But the
promotion strategies that were formerly used cannot use today. The
reason is that a no. of nontraditional and new form of communication
is emerging. Consumers now consume media content in a wholly
different context, one that is embedded with many new cues.
Instead
of using traditional form of communication, company can used some of
the nontraditional form of communication to create awareness about
its brand such as official sponsorship of any sport and event like
Samsung Cup. Similarly, it can use Olympic winners or famous actors
and actress as its Brand Ambassador. Samsung can form point of sale
at the places where there customers shopping. Another
way of promotion is using sales promotion on special events also.
Company can also use web
marketing for its promotion.
RECOMMENDATION:
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 i-e
- To improve the sale of all brands of the company from 65% to 95%.
- To make the company market-driven organization to create superior values for customers.
- To make strategies for the company that creates valuable designs for customers.
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.
SUBSIDIARIES
OF SAMSUNG ELECTRONICS CO.:
Korea
STECO, SEMES, Samsung Electronics Service, Living Plaza,
Samsung Electronics,
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
Latin-American (SELA), Samsung Electronics Mexico (SEM),
Samsung Electronics
Argentina (SEASA),
Samsung Receivables (SRC),
Samsung Semiconductor (SSI),
Samsung Information Systems America
(SISA), Samsung Telecommunications
Samsung International (SII),
Samsung Austin Semiconductor (SAS),
Samsung Mexicana (SAMEX),
Samsung Electronics Latinoamerica Miami (SEMI),
Samsung Electronica Columbia
(SAMCOL), Samsung Electronica da Amazonia,
SEMES America (SEMESA),
Samsung Electronics Chile (SECH),
Samsung Electronics Peru
(SEPR), Samsung Electronics Venezuela (SEVEN)
SAMSUNG
- THE TOP BRAND IN THE WORLD:
According
to the global brand scoreboard of 2004 from Interbrand, Samsung, the
Korean based electronics brand, has boosted its profile and being
listed as 21st valuable brands in the world. Its brand value surged
by 16% to 12.5 billion US dollars compared to the figure in 2003
which is 10.8 billion US dollar. (Simon, 2004) It becomes the world’s
leading brand in electronics and digital industry. This achievement
is closely related to its sponsorship strategies. Samsung associate
its name to the “TOP” plan, which is “The Olympic Partner”
plan. It is a plan which leads Samsung to be the top brand in the
world. However, there are many other programs to support Samsung’s
sponsorship strategy. Without these strategies the “TOP” plan
will not have such effectiveness and efficiency.
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