Samsung Electronics: Global

SAMSUNG ELECTRONICS: Global Marketing Operations Group 4: Alok Gupta Modak Priy Satendar Tokas Sudeep Kumar Kundu Vineet Dixit 1

INTRODUCTION 1938 : Samsung conglomerate was founded and produced agricultural products 1969 : Samsung Electronics Co.( SEC) was founded as a low cost manufacturer of black and white televisions. 1970: Samsung acquired semiconductor business thereby setting a stage for future growth in Electronics. 1980: Samsung became a more comprehensive electronics company – Started producing commodity products like TVs , VCRs and Microwave Ovens. – Sold their products to OEMs. – The mission at this time was to pay emphasis on “Manufacturing Quality and Technical Leadership”.

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1993 : Samsung started its first imitative of building a Brand Name as a long term goal towards profitability by introducing the “New Management Initiative”. – Major focus: To revamp the initial image of the company from “a cheap OEM” to “a high value added product provider” focussing on Innovation, Premium Product and Brand Value. 2002 : The company recorded net profits of $5.9 billion on sales of $44.6 billion. 2003 : The company was one of the most widely held stocks among all emerging market companies. Mission And Objective: “The companies mission at this point of time was to become one of the top 10 global brands by 2005 contemplating the companies transformation from an Also-run into a Blockbuster Brand.” 3

Products ( in 2003) Home Multimedia

Personal Multimedia

Mobile Multimedia

Core Components

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Question 1 What are the ingredients of SEC’s corporate turnaround strategy? What is the implication for marketing? Answer 1 Ingredients of SEC’s corporate turnaround strategy : VERTICAL INTEGRATION : -Manufacturing as a core competency -To make the plants competitive by forcing them to compete with outside companies for internal business -To cut the cost to its minimum -Flexible plant locations and R&D facility -To avoid the commoditization trap SEC customized the production of its memory chips which resulted in the increase of its average prices 17% above industry levels HARDWARE FOCUS: -Developing no proprietary software and content (music, movies and video games) unlike its rivals Apple and Sony -Major focus was on hardware and collaboration with the content providers. PRODUCT BREADTH: -Samsung’s product diversification differentiated the company from its competitors. 5

Product Range

3.8

4.8

13.9

11

11 Semiconductor Digital Media Other

Telecommunications Digital Appliances

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DIGITAL PRODUCT INNOVATION : - Transition from Analog to Digital technology - New innovative products - Setting new standards for quality performance and award-winning design -Propelled “Sashimi Theory” where new fresh technological products are sold at higher prices but decline later DIGITAL CONVERGENCE : - Merging of different technologies into one major product - Multiple technologies linked by one major network IMPLICATIONS FOR MARKETING Market Segmentation-Samsung segmented its products to all ranges from middle segment to higher classes with a goal to reach the target in all product lines Product Differentiation- Samsung launched wide range of new innovative products catering to its varied segments Technology Competence- Samsung focussed on Digital technology as its core competence.

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Question 2 How strong is the Samsung brand? Can Samsung pass Sony and become a top ten global brand? Answer 2 Samsung brand was at different stages of development in different country market : COUNTRY WISE SPECIFICATION USA : Here the Brand was at a turning point stage where Awareness and Brand Loyalty were still below those of the first tier brands like Sony . Consumers viewed the brand as a Reliable, Upcoming and Credible w.r.t. Sony that had an image of being an Established and a Matured Brand. Europe : Brand was stronger in Southern part as compared to Northern part . Europeans were loyal towards their own Brands and fragmentation of retail distribution made the situation more worse for Samsung to generate profitability. Russia : Samsung had an image of being “Peoples Brand” but the motive of building a product innovator and market leader was still a distance away. 8

China : Brand image of Samsung in China was into a transition phase heading towards the advanced stage. Samsung had captured one third of the Chinese market but profit margins were slim. India : India was an upcoming market opportunity with immense potential in value added reselling of software products. The company became a major supplier of Software products and had a Brand recognition better than Intel and Microsoft.

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FCBs STUDY : STRENGTH AND WEEKNESS OF SAMSUNG BRAND COUNTRY

STRENGTH

WEAKNESS

China

Delights Me

Perfect fit

USA

Price Based ,Cell phone category

Perfect fit ,delights me

UK

follows the leader

Perfect fit ,delights me

Hong Kong

follows the leader

Perfect fit ,delights me

Germany

Follow the Leader

Perfect fit, delights me

Brazil

Reliant, delights me and caring

Perfect fit 10

PRODUCT CATEGORY WISE POSITION OF SAMSUNG Category

Global Market Share

Samsung Rank

Competitors

Big Screen TVs

32%

1

Sony(25%), Mitsubishi(25%)

Cell Phones

10%

3

Nokia(36%),Motorola(15 %)

Flash Memory

14%

2

Intel(27%),Toshiba (11%)

LCD Display

18%

1

LGPhillips(17%)

MP3 Player

13%

3

Sonicblue(18%), Apple(17%)

DRAM Chip

32%

1

Micron(17%)

DVD Player

11%

3

Toshiba(15%), Sony(14%)

Microwave Oven

25%

1

LG(22%), Galanz(19%) 11

SONY VS SAMSUNG:COUNTRY WISE COMPARISON BRAZIL

CHINA

GERMANY

ATTRIBUTE SAMSUN SONY G

ATTRIBUTE SAMSUN SONY G

ATTRIBUTE SAMSUN SONY G

Perfect Fit

95

127

Perfect Fit

109

131

Perfect Fit

35

137

Delights Me

102

92

Delights Me

150

153

Delights Me

96

94

Caring

103

94

Caring

79

73

Caring

43

59

Reliant

127

48

Reliant

86

132

Reliant

91

123

Follow the Leader

100

109

Follow the Leader

67

64

Follow the Leader

220

91

Price Based

86

81

Price Based

98

131

Price Based

29

110

79

Non-Committal 131

64

Non-Committal 150

Non-Committal 101

Exhibit 14 A, B, C

89

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CONCLUSION From the above Exhibits and the Business Week ranking it can be concluded that – There is an opportunity for Samsung to increase its brand name and beat Sony. – But to become a Top 10 global brand in the next two years still much more has to be done.

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Question 3 As Chief Marketing Officer, what are Kim’s role and responsibilities? How has he built his influence? Answer 3 Kim’s Roles & Responsibilities : – –

–

To build the Global Corporate Brand image for Samsung across 200 country markets and SEC’s 17 product-focussed business units To educate the respective Divisional Managers on the role of marketing and the value of developing and communicating superior solutions for the target customers To make all the people in the company understand the essence of the Samsung brand by the use of three words – WOW , SIMPLE & INCLUSIVE

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Kim’s Achievements : (1)

Marketing Organization:

–

Kim headed the corporate Global Marketing Operations (GMO) which developed a corporate marketing program for Samsung brand outside Korea. There were three major teams in the GMO - Marketing Strategy Team, Regional Strategy Team and Product Strategy Team each with different responsibilities In 2001, under Kim’s leadership, the GMO implemented the initiative to consolidate SEC advertising with a single global agency, Foote, Cone & Belding(FCB) to deliver a consistent brand message worldwide.

–

(2) Allocation of Marketing Resources – – –

GMO recommended to priorities and allocate funds by country and by product category . Developed a computer program M-Net to help determine where funds could reap the highest returns 16

(3) Market Driven Change ( MDC ) – – – –

MDC has put greater focus on customer insight into the new product development process. MDC initiative revealed that the Samsung brand lacked stature With FCB’s help, a new umbrella campaign was launched in 2002 – “DigitAll – Everyone’s Invited” which generated tremendous brand visibility for Samsung

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