MKT 6301.502 – SAMSUNG CASESTUDY
Key Marketing issues/challenges:
I believe the key issue with Samsung was that their management had a tunnel vision focus on the development of new products, low focus on marketing and had short range plans in terms of growing their business globally. In the 1990s, in terms of strategy, the company vision was bound with their native South Korean market and it was not ready internally to become a global player or to compete on other continents with competition from established brands. There was more investment focus on certain regional markets and on business units within the company that did not pay dividends as expected and even with the advent of the digital era, the policy was to continue to manufacture products that were deemed ‘safe’ and in demand as per the need of the time.
One solution is to have technical leadership among consumer electronics and try to build a loyal customer base by providing cutting edge technology at reasonable pricing. The advantage provided by this strategy is that Samsung can compete to chip into the existing markets of more established brands and at same time conquer new markets. However, investment required for R&D and manufacturing would be enormous and Samsung would have to sustain continuous innovation and product growth over the years. They would also need to increase the range of products offered by them in different markets and compete across various product lines, sustain the R&D and mass manufacturing across all product lines, which would be very expensive year after year. There is also possibility of being blind sided by new technological breakthroughs by the competition.
Another solution is to work on shorter product life cycles, build a single brand for all consumer electronics offered by Samsung and aggressively break into markets with less local competition from native companies offering quality products e.g. Indian subcontinent. With the incoming digital age, consumers, whether personal shoppers or businesses, in many developing countries would be looking forward to upgrading their electronics and would be glad to have an option of a wide range of quality products. Samsung could leverage the cheaper resources from those countries to research, manufacture locally and market the products according to the price-conscious behaviors of the local consumer. The agile nature of the products in terms of innovation, technology and price will generate great interest in an untapped market and put Samsung years ahead of any competition from other brands.
a. Quantitative Analysis (of the data given in the case) (5 points)
b. Qualitative Analysis (does your decision stay within the mission and strengths of the company?) (4 points)
Mission – the mission was to become a top-10 global company by 2005, be known as a market leader rather than just yet another middle tier electronics company.
4. Develop a specific plan for implementing the chosen alternative. Your plan should be specific, measurable, achievable, relevant, and time-bound. (4 points).
4 It’s recommended that Samsung consolidate its marketing strategy at the executive level under one umbrella so that branding, advertising, budget proportion and allocation, product commercialization, public relation policy etc remains identical globally.
In the long-term plan (over next 5 years), it is recommended to:
– Prepare for a price war with low cost manufacturing companies from China, Vietnam and other countries offering cheap labor.
– Politically South Korea has a very positive relationship with most of the countries in the world. Samsung can use this positive image to their advantage and to break into untapped markets where trust can be a factor.
– It would also be important to have product differentiation as per the market of the specific region or country. For e.g. broad band may be available in most developed countries and therefore products using the IOT concepts may be more popular than in developing countries.
In the short term:
– Have sub-strategies under the general marketing plan. Focus on consumer behavior of each market. What works on the Indian subcontinent may not work in affluent market like Europe depending on local competition which are trusted brands, consumer behavior, need vs status etc.
– Samsung could use similar technology across different product lines and leverage their enhanced manufacturing capability to offer an integrated Samsung experience to their customers. This is mainly for the high-end consumer market, the people who want their homes, businesses and social lives integrated.
– Focus on agile nature of production in terms of converging features from different products and bringing them to the regional markets.
– Internally educate the regional divisions to be sensitive to the needs of the consumers and
1. Smart TV with hulu Netflix etc
2. Affluent markets