STRATEGIC
MARKETING
SAMSUNG
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-Ã -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),
Posts
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