Achieving Corporate Success
Case Study Samsung
Before the Korean electronics giant Samsung entered the 1998 Asian economic crisis, it was widely regarded as a supplier of cheap imitations of superior Japanese products. At the time, the focus of its business was on memory chips and low margin items such as microwave ovens and cheap TV’s, which were mainly sold through discount stores. Following a major restructuring of its strategy and operations, it has turned itself into the fastest growing player in the global electronics industry, with sales of approaching US$305 billion expected for 2013. With recent net income estimated at $22.3 billion, it has become the most profitable new technology company ahead of Microsoft, IBM and Intel. Employing approximately 489,000 people in 90 countries, the company consists of five main consumer –related business units, the details of which are shown below;
||TVs and monitors
|Large LCD &
DVD and CD drives
|Mobile phone handsets
Wireless network systems
Integrated access platforms
Samsung Electronics Ltd has built up its position through rationalisation and diversification of its activities, together with strong marketing and innovative product design. It is now recognized as the world’s leading consumer electronics’ company ahead of the Japanese Matsushita, which produces JVC, Panasonic and Technics brands, and Sony which markets a range of products under the parent brand name. From its strong position as a manufacturer of essential electronic components, Samsung has built a reputation as a major consumer brand in a range of different product categories. The company is the market leader in the microchip and TFT-LCD screen sectors and is the world’s largest producer of colour TVs, monitors and VCRs. It is also now the second largest producer of mobile handsets having overtaken Nokia and now Apple.
Samsung has used its success in the cell phone market to drive its brand performance, which can be attributed to a strategy of delivering innovative products at premium prices. According to their chief, Eric Kim, much of their achievement has stemmed from identifying at an early stage that the cell phone was changing ‘from a utility item to a fashion statement’. This led them into the camera phone market and they became the first producer to equip a cell phone with an MP3 player. They are currently launching a mobile TV phone as well as talking phones that can read mail Short Message Service(SMS) messages to listeners. In addition they are using their powerful chip technology to drive cell phones that act as a personal entertainment module, which can hold 10,000 songs and over 10 hours of video film and play 3-D video games. Such innovation has been at the heart of the Samsung brand, whose ‘coolness’ factor received a big boost when one of its futurist phones was featured in the follow up instalments of the Sci-fi movie The Matrix; consequently its handsets are priced up to 40% higher than most of its rivals.
The change in direction of the company over the last decade is based on the relisation that there was more money to be made from innovating and setting the pace than from producing only me-too products. To do this has not only been able to draw upon its extensive manufacturing and R&D capability (20,000 researchers in 15 laboratories worldwide) but has also worked closely with strategic partners including competitors as well as customers in establishing new industry standards. The approach which has proved so successful in their cell phone business is now regarded as the basis for further growth in all customer sectors, with a particular emphasis on the use of wireless technology in the home.
Supporting all its developments has been the extensive use of marketing to communicate with customers and build a brand which is increasingly recognized as a world-leader. However, in order to achieve its ambition of becoming and remaining number one in the consumer electronics market, it plans to invest even more in research, development and design (up to US$6 billion) and at the same time review its brand positioning.
The above case material has been taken from Samsung’s official website and other various sources and may not be a true reflection of Samsung actual position today. It use is for academic assessment purposes only
Write a report 2000 words long that:
- Discuss how the macro environmental forces have influenced changes in the design, use and application of products in the electronics environment.
- Learning from the crisis of Note 7, explain how Samsung can make use of the various marketing communications tools to regain the customer confidence when launching a new mobile device
- Explain the concept of positioning and how this analytical approach can assist in identifying target market opportunities of Samsung’s cell phone product range.
- With reference to Samsung’s situations, outline the various stages of the Product Life Cycle and critically evaluate how each stage might impact on the company’s marketing decision-making process.
Note: Approximate length of each question 500 words.
- Consider the changes in terms of the types of products offered today, how the products are used, what they represent to the people who use them, how important they have become in their everyday lives. Now discuss the impact of the macro environmental factors/drivers in bringing about these changes.
- This question expects the candidate to explore the various promotional techniques/tools available to Samsung and to discuss the factors that influence their choice when developing a marketing communications campaign. Remember Samsung will sell to both B2C and B2B market segments.
- Two part question; the first of which expects you to discuss the concept of positioning generally, the second relates to how an understanding of positioning can help marketers explore target market opportunities in relation to Samsung’s cell phone range of products. Students should different perceptual maps for illustration.
- Again a two part question, the first expects candidates to discuss the concept of Product Life Cycle for the Samsung’s product portfolio and the second discuss how this concept affect strategy planning