Key Marketing issues/challenges:
I believe the key issue with Samsung was that their management had a tunnel vision focus on developing any new products, low focus on marketing the brand 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 good 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 the more established brands like the leading Japanese or American companies and at same time conquer new markets due to demand for cutting edge technology. However, investment required for R&D and manufacturing would be enormous and Samsung would have to sustain continuous innovation and product growth year after year. They would also need to increase the range of products offered by them in different markets and compete across multiple product lines at the same time and 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. Thus, this solution may pay rich dividends to the company while they are technologically leading and can fund the R&D and mass manufacturing to stay ahead.
Another solution is to work on shorter product life cycles and aggressively break into markets with less local competition from native companies offering quality products e.g. Indian subcontinent. Its recommended that they build a single brand for all consumer electronics offered by Samsung and build their image in such a way so as to be ‘preferred’ or a ‘loved’ brand by the household. With the incoming digital age, all 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.
I would recommend that Samsung go with Solution B considering that they want to dominate the global market, it would be imperative for them to explore new markets and carve out a lead for themselves against other brands. It would also be important for Samsung to develop a significant relationship with their client base that would generate brand loyalty, customer satisfaction and high name recognition.
As seen from the following results of the FCB relationship monitor study,
Exhibit 12.A – shows that Samsung did not do well in European countries like Germany and UK, with 27% and 23% consumers being non-committal to the brand. This maybe because of lack of the wow factor in Samsung’s offerings to these markets or it maybe because of the presence of strong known and trusted local brands.
Exhibit 12.B – While the numbers re-iterate the non-committal findings, it also appears Samsung consumers think of them as emulating the technology of other brands rather than offering cutting edge technology advantage themselves. This goes in direct opposition to the R and optimized manufacturing processes that Samsung prides themselves in.
Exhibit 12.C – in the electronic gadget category of cellphones however Samsung does well with the China market, with consumers saying it’s a perfect fit (169) and they are delighted (149) along with the US market saying overwhelmingly that it’s a delighter (327) as well. It appears that Samsung cellular products offered in the same price range as the competition have done well.
Over all 3 exhibits, the Hong Kong market has consistently been non-enthusiastic about Samsung perhaps due to presence of quality native companies meeting the needs of the affluent demanding consumers.
In Exhibit 13, the brand profiles, the personality of the Samsung brand had a couple of negative sentiments attached to it like arrogant, off putting. The reaction to their products was similarly negative in some areas like Not visible, no exposure (failed advertising), difficult to use (not ergonomic), can’t relate to it (not intuitive).
Samsung’s mission is to become a top-10 global company by 2005 and be known as a market leader rather than just yet another middle tier electronics company. By taking the recommendations from Solution B and exploring new avenues of revenue generation, Samsung can chart a new path in the digital age.
Plan for implementing the chosen alternative
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 an important factor to do business.
– 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 affluent markets and therefore products using the IOT concepts may be more popular than in developing countries. At same time, some developing countries may have a larger market but may still be few years away from mass internet access.
– Samsung could use similar technology across different product lines and leverage their enhanced manufacturing capability to offer an integrated Samsung experience to their affluent customers. This is mainly for the high-end consumer market, the people who want their homes, businesses and social lives integrated.
In the short term (over next 1 year), it is recommended to:
– 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, cultural behavior like price-mindedness, purchasing for need Vs status etc.
– Partner with smaller brands in the local region to improve their supply chain and manufacturing aspects. Partnering with a regional player can also help with gaining the trust of a foreign consumer market.
– 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 the culture of the region. Many a good product idea can come from being sensitive to needs of their consumer base.