The Samsung Electronics Group is part of the South Korea’s Samsung Group, largest conglomerate corporation founded in 1938. Samsung Group also owns the world’s second largest shipbuilder, a major global construction, and the largest life insurance company in Korea and it’s headquarter was located at Samsung Town, Seoul, South Korea. Under the direction of Lee Kun Hee, CEO and chairman of the third son of founder Lee Byung Chull, Samsung Electronics has made major stride.
In 1993, Lee unveiled what he called ‘new management’ a top-to-bottom strategy for the entire company. Then, his goal is he wanted Samsung to become a premier brand that would dethrone Sony as biggest consumer electronics firm in the world. • The company hired a new crop of fresh, young designers who unleashed a torrent of new products – not humdrum, me-too products, but sleek, bold, and beautiful products targeting high-end user. Samsung called them “lifestyle works of arts”.
Every new product had to pass the “Wow!” test, if it didn’t get a “Wow!” reaction during market testing, it went straight back to the design studio. The company also altered distribution to match; it abandoned low-end distributors like Walmart and Kmart, choosing to build strong relationships with specialty retailers like Best Buy and Circuit City.
Moreover, in less than 2 decades, Samsung Electronics has achieved its lofty goals- and much more. For instance, Samsung succeed as the world’s fastest growing brand over one fiveyear period, largest consumer electronics company in the world, largest TV manufacturer, second largest cell phone producer, world largest technology electronic components company and also world’s largest manufacturer of flash memory.
Then, Fast Company and BusinessWeek recently placed Samsung high position on their lists of the most innovative companies. Despite of that, as an evidence of its design prowess, Samsung took eight prizes at the International Design Excellence Awards (IDEA), where the judgment are based on appearance, functionality, and the thinking behind each one. Other than that, Lee admitted that the world’s largest technology firm’s current main products may likely become obsolete within the next 10 years, so he was dubbed Samsung’s newest strategy “mabuljungje” which is a Chinese axiom that bring the meaning of “horse that does not stop.”
In a memo to Samsung employees, Lee said, the “new management” doctrine for the past 17 years helped catapult the company into being one of the world’s best electronics makers. Now is not a time to be complacent but a time to run”. Then, Timopthy Baxter as president of Samsung Electronics America stated that Samsung will capitalize on interactivity which as in mobile phones with TVs and TVs with the internet. Samsung’s future will bring many products that will get people talking.
QUESTION 1 How was Samsung able to go from copycat brand to product leader?
There are some strategies will be able implied by Samsung for them to go from copycat brand to product leader:
a. In 1993, Lee Kun Hee unveiled “new management” which is a top-to-bottom strategy for the Samsung Company. He is really ambitious to take Samsung Electronics in new direction. Despite from that, he really determines to make the idea of being a copycat into an advanced product leader instead. This is because to survive, companies must develop a steady stream of new products and services.
b. The strategy used in this new direction is by using the new product development strategy for the development of the original products, modification and improvement of products and produces the new brand developed from the firm’s own by research and development (R&D) effort. So, the goal of this new management is making the Samsung become a leading brand that would defeat Sony as the biggest consumer electronics firm in the world.
c. Then, Samsung hired a new crop of fresh, young designers who unleashed a torrent of new product- not humdrum, me-too products, but sleek, bold and beautiful product targeting high end users. Every new product had to pass the “Wow!” test and should get “Wow!” reaction or it will straightly back to design studio. d. Lastly, Samsung abandoned low-end distributers because they decide to choose to work with specialty retailers such as Best Buy and Circuit City. That is why Samsung clearly want to show that they are no longer the cheap brand.
QUESTION 2 Is Samsung’s product development process customer centered? Team based? Systematic?
Samsung’s product development processes include all these three approaches which are:
1. Systematic new-product development is the process should be holistic and systematic rather than compartmentalized and haphazard. Samsung has implied “new management” a top-to-bottom strategy for the entire company. Any orders and final results will only be given from the top management and make sure the flow of information be more fluent and understandable.
2. Team-based new-product development is an approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. Since every new product was obtained through new product development by R&D itself, so it requires various company departments to work together. In addition, every new Samsung product had to pass the “Wow!” test to give the best of the best of product that will be produced by the company and if it did not get a “Wow!” reaction during the market testing, it went straight back to the design studio.
3. Customer-centered new-product development is focuses on finding new ways to solve customer problems and create more customer satisfying experiences. It be proved by the profit that successes collected by Samsung during 2009 which its revenues of $117 billion with the profits of $8.3 billion. The profits showed that Samsung’s product can be accepted and will be satisfied for customers need. For instance, Samsung’s Luxia LED TV, 55 inch model is a mere one-inch thick and weighs just 49 pounds helped in solving the customer problems. This unique and modern design eased the customers especially when they want to adjust it positions or bring this LED TV moved to another house.
QUESTION 3 Based on the PLC, what challenges does Samsung face in managing its high- tech products?
Product life-cycle is the course of a product’s sales and profits over its lifetime. It involves five distinct stages which are product development, introduction, growth, maturity and decline. After 17 years remarkable success, Samsung is now in the decline stage (the period when sales falloff and profits drops) of their high-technology products.
Nowadays, there are many competitors that produce the same line of products and because of too many competitors, the customer has a lot of choice to choose a product that they prefer to buy and it will lead to the shifting in consumer taste whether in telecommunications components, mobile displays or LED panel.
Lee admitted that the world’s largest technology firm’s current main products may likely become obsolete within the next 10 years, and then he has announced Samsung’s newest strategy which is “mabuljungje” from Chinese axiom that means “horse that does not stop”. He agreed that “new management” strategy helped catapult the company into being one of the world’s best electronics maker, so he stated that now is not a time to be satisfied but a time to run for a better future and success.
Product development begins when the company finds and develops a new-product idea. During product development, sales are zero, and the company’s investment costs mount.
– In this case, Research & Development department cooperate with the other department such as design studio to create new product development and through the “Wow!” test before it can be in market.
Introduction Stage is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction
– The new design is qualified to be in market after successes get the “Wow!” reaction during the test
Growth Stage is a period of rapid market acceptance and increasing of profits.
– In 2009, the company rang up revenues of $117 billion with profits of $8.33 billion and Samsung has been awarded with several prizes such as International Design Excellence Award.
Maturity Stage is a period of slowdown in sales growth.
– This stage occurs when many producers offer many products to sell and lead to greater competition and eventually the profit will drop.
Decline Stage is a period when sales fall off.
– This is because there are many competitors that produce the same line of products. Then, customer has a lot of choice to choose a product that they prefer to buy and it will lead to the shifting in consumer taste whether in telecommunications components, mobile displays or LED panel.
QUESTION 4 Will Samsung likely achieve its goals in markets where it does not dominate, such as smartphones? Why or why not?
In our opinion, Samsung will definitely achieve its goals in the market where it does not dominate. This is because according to survey, it showed that more than 100 mobile operators around the world will offer the Galaxy S as the top of smartphones. We believed Samsung can dominate the market with the latest strategy by using “mabuljungje”.
Moreover, according to Timopthy Baxter as the president of Samsung Electronics America, Samsung will capitalize on interactivity which as in mobile phones with TVs and TVs with the internet. Samsung’s future will bring many products that will get people talking. As this area still have not yet dominated by anyone, with the systematic management and cross-functional innovation among the department within the Samsung Electronics it will generate the fantastic ideas to convince that Samsung can dominate the market.
Other than that, Samsung will always alert with three considerations which are:
- Product decisions and social responsibility in which Samsung always carefully consider the public policy issues and regulations regarding the acquiring or dropping the products, patent protection, product quality and safety, and product warranties.
- International product which is Samsung has always to figure out what products to be introduced, standardize and how to make sure that the consumer can adapt with the technology in their country.
- Services marketing which Samsung changed the distribution of their products to match in the sequence of low-end distributors to build strong-relationship with specialty retailer such as Best Buy and Circuit City.
According to the founder of Samsung Group, the meaning of the Korean hanja, word Samsung came from "tristar" or "three stars". The word "three" represents something "big, numerous and powerful" and the "stars" mean eternity. The Samsung Group logo, used from late 1969 until replaced in 1979
The Samsung Group logo (“three stars”), used from late 1980 until replaced in 1992
The Samsung Electronics logo, used from late 1980 until replaced in 1992
Samsung's current logo used since 1993
- Phillip, K. & Gary, A. (2011). Principles of Marketing. England: Pearson Education Limited. Wikipedia. (2011, October 30). Samsung: Retrieved from http://en.wikipedia.org/wiki/Samsung