1.1. Background Samsung is one of the world’s premium electronics manufactures. The estimated value of Samsung brand had risen from US$6.37 billion in 2001 to US$10.85 billion in 2003. A major factor behind this impressive growth had been Samsung’s effort to redefine itself as a vendor of cutting-edge, “gee-whiz” consumer technology. Samsung believed that repositioning the brand is a vital to the company’s future success.
While the Samsung had become more familiar and more favorably regarded among consumers, it still carried many strong associations with the company’s past, when Samsung’s consumer product line consisted primarily of low-to mid-range products sold at affordable prices via a hodgepodge of retail channels. Largely for this reason, many North American and European consumers still saw the company as a follower rather than a leader in bringing new consumer technologies to market. So that senior executives in Samsung’s head office believed that much work remained to be done in their effort to redefine their brand. 1.2. Business/Industry Situation
Internal : What’s Samsung facing today is how to increase the level of quality brand of Samsung, including the prices and products, and the best distribution that can help brand-building of the company. Now Samsung faced several situations in order to enhance brand-building, especially in Canada. Samsung has been known as a big electronics company, has a reliable quality product at an affordable price for the low-to mid-range society. Why Samsung chose to expand into Canada?
Because Canadian market was highly fragmented and the buyers were price sensitive. Canadian electronic buyers also placed a great deal of emphasis on good customer service and favorable return policies. External :
In the 1990s, the consumer electronics industry was rapidly and dramatically transformed by the emergence of digital technology. Digital products tended to produce higher quality sound and pictures enabled convenient interfacing with personal computers and the Internet. By the turn of millennium, a barrage of digital consumer product were being introduced, including MP3 audio players, digital cameras, PDAs, digital mobile phones, HDTV sets, DVRs and LCD computer monitors. 1.3. Competition Situation
From the 1960s until the early 1990s, consumer electronics were generally analog, a mature technology that was characterized by a steady flow of minor, incremental innovations. These were usually introduced by Japanese companies, such as Matsushita Electric (Panasonic), Sony Corporation, Toshiba Corporation, Japan Victor Corporation (JVC) and Hitachi. Of these, Sony was generally viewed as the most successful, and was recognized as having the most valuable consumer electronics brand in the world.
In addition to lacking a strong competitive edge in designing and manufacturing digital products, these firms also lacked some usual marketing advantages. Most early adopters of digital products were teenagers and young adults in their 20s – a group that was often skeptical of large corporations and receptive to products from nontraditional brands.
Samsung management, which had first begun to market consumer electronics under its own brand in the mid-1990s, perceived a golden opportunity, and resolved to become the leading global provider of next generation consumer electronics products. Samsung have made good progress but their unaided awareness and brand loyalty are still below Sony. 1.4. Problem Definition
Samsung wants to become as strong market leader. It means that they want to establish Samsung as a premier consumer brand. To achieve this there would be many obstacles such as: * How Samsung reposition their brand to become a market leader? * What changes should be made to Samsung’s marketing mix?
CHAPTER 2 THEORETICAL BASED
2.1. Marketing Mix Theory Marketing mix is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. Marketing mix is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4Ps are:
* Product (or Service) * Place * Price * Promotion A good way to understand the 4Ps is by the questions that you need to ask to define your marketing mix. Here are some questions that will help you understand and define each of the four elements: 2.2. Segmenting, Targeting, and Positioning
Segmenting, Targeting, and Positioning are one of fundamental things in marketing. Segmenting, Targeting, and Positioning is: • Segmentation: grouping consumers by some criteria, such that those within a group will respond similarly to a marketing action and those in a different group will respond differently. • Targeting: choosing which group(s) to sell to.
• Positioning: select the marketing mix most appropriate for the target segment(s).
CHAPTER 3 SAMSUNG ELECTRONICS 3.1. Company Profile Samsung Electronics is owned by the Samsung Group, one of Korea’s largest and most respected “chaebols”, or industrial conglomerates. Samsung was ranked 59th in Fortune magazine’s list of the world’s 500 largest companies and 15th in its Asia Top 50. Samsung founded in 1938 as a small trading company and had been a key player in the industrial transformation of Korea in the 1970s and 1980s, eventually evolving into economic powerhouse that boasted 175.000 employees worldwide and operations in 67 countries. 3.2. Product Information
The Samsung Group operated a broad range of business, but emphasized the three main core activities, such as: electronics, finance, and services. From the three main activities, Samsung Electronics is the one that can compete with other leading brands. Initially that making Samsung’s products are on the rise is the development of 256K dynamic random access memory (DRAM) computer chip and a VLSI (very large scale integration) version of the 64K DRAM chip.
By the turn of the millennium, the company’s successful introduction of leading-edge products such as mobile phones, MP3 players, digital televisions and personal digital assistants (PDAs). In SECA, products marketed fell into two broad categories: consumer electronics and appliances, and information technology.
CDMA mobile phones is highly successful products that were sold by SECA. The company also sold high-end televisions such as plasma and digital light processing (DLP) that enjoyed healthy contributions margins and strong outlook for growth. In the information technology division, Samsung’s LCD computer monitor was becoming a star performer of the company. The Samsung’s laser printers had also begun to establish a strong market share in Canada. After all, sales volumes for the products were good, research and development costs were virtually zero, and the lines were profitable for SECA.
CHAPTER 4 ANALYSIS 4.1. Marketing Mix & STP Samsung had their own Marketing Mix strategy, and also they had their own Segmenting, Targeting, and Positioning. Existing Samsung’s marketing mix and STP are: * Product: Samsung Group has 3 main core activities, such as electronic, finance and service. But the company biggest section of business is in electronics. * Place: In this case, they just mention the place that they are focus in is in Asia, USA, and Canada. * Promotion: * In 1999, the company launched a worldwide campaign using the tag line : “SAMSUNG DIGITall – everyone’s invited”
* Rollout of the new campaign coincided with consolidation of responsibility for Samsung’s global advertising from 54 different ad agencies to single agency of record : Foote, Cone & Belding.
* Moved into high profile sponsorship such as Sydney Olimpic Games
* The company paid to have its mobile phones prominently featured in popular science fiction films, The Matrix. * Price:
Samsung Electronics Products has wide prices range, some of products was categorized as a premium product. * Segmenting: Canadian market. * Targeting: Samsung management divided the consumer electronics market into four segments, high income family, the young generation, business users and hobbyists.
* Positioning: * As a provider of innovative digital consumer electronics that were also easy to use.
* As one of the world’s premium electronics manufactures.
4.2. Formula Alternatives Before formulating alternative, we should make SWOT analysis to know the Samsung strength, weakness, opportunity, and threats better. Here are the SWOT analysis. Strength: 1. Trend setter/pioneer in electronics technology 2. Have a more advanced R&D program in their company that produce a sophisticated product
3. Innovative marketing strategy 4. Have a partnership with Sony, which is their main competitor in technology
5. The Samsung’s technology is adaptable to use 6. Have a various range price of product
Weakness: 1. Limited budget for promotion, especially in Canada 2. Samsung sold a number of low-end items that were not especially compatible with the company’s new positioning 3. Do not have a courage to take a risk to build their own store 4. The lack of Samsung’s brand awareness of American and European (American and European assumed that Samsung is just a follower, not a trendsetter)
Opportunity: 1. Increasing demand of consumer for electronics devices 2. Globalization that makes expand the target market around the world
Threat: 1. Emergence of new product that provide more quallity and cheaper product than Samsung
2. Emergence of new innovative products from other companies
3. Because they are trendsetter in technology as a result there will be a follower that copy their product.
From the SWOT analysis we can formulate the alternatives to solve the problem :
* Maintaining their product quality * Hired young people who have competence in their ability
* Optimizing their investment in their Research and Development
* Keep developing innovative marketing strategy * Improve their internal marketing in the company to hiring, training and motivating employees who want to serve customers well.
* Build partnerships with well-known companies to prepare for globalization
5.3. Alternatives Analysis Problem Solutions| Adavantages & Disadvantages| Maintaining their product quality | Positive : Before investing their money into promotion program they need to maintain their high quality product. So maintaining the product quality is needed.Negative :
They still need much fund in R&D.| Hired young people who have competence in their ability and fired unproductive employees| Positive :
* Hired fresh graduate with low salary in order to minimize operation budget.
* Have youthful perspective to making the company attuned to global markets.Negative : * Lack of working experience. * The company need to invest in their training.| Optimizing their investment in their Research and Development| Positive :
* Developing innovation in their technology to create new products. * Increase budget for others department, such as promotion department.Negative : * Decreasing their advanced innovation technology.| Keep developing innovative marketing strategy | Positive : * To attract new costumer and increase brand awareness of Samsung.Negative :
* The company need to invest in their promotion.| Improve their internal marketing in the company to hiring, training and motivating employees who want to serve customers well. | Positive : * The company can maintain the relationship with customer, such as giving costumer excellent service.Negative :
* The company need to invest in their training. * Posibility to pay higher salary for employees.| Build partnerships with well-known companies to prepare for globalization| Positive : * Expand their opportunities to reach larger market. * Techonology exchange. * Reducing the R&D fund, because of the partnership.Negative : * Posibility of company’s secrets are treathen.|
5.4. Solution & Contingency Plan Samsung wants to become a strong market leader with their new positioning as a premium electronics in the technology industries, so the most feasible solution is: Optimizing their funding in Research and Development. It does not mean reducing the funding in R&D, but to used the funding more effective and effecient. So the company still can do the innovation on their products continuously and fulfil the customer’s needs. By optimizing their R&D, the company has more funding for other sector such as marketing or promotion sector to develop their innovative marketing strategy.
Samsung also should improve their internal marketing in the company to hiring, training and motivating employees to serve customers well. So the company can maintain the relationship with customer, such as giving costumer excellent services. With high quality products and excellent service, Samsung can expect to gain their product’s price higher. This solution has a risk and impact such as decreasing their advanced innovation technology. To avoid this impact, they can hire young people who have competence in R&D but with low salary to minimize the operating budget in R&D.
On the other hand, Samsung sold a number of low-end items that were not compatible with the company’s new positioning, so the company should have change their marketing mix strategy in place section, especially how their distribute the products. Samsung should have their own store for upgrading their brand image, but they still can sold some of the low-end items products in some retails. And also to expand their market, the company has to build partnership with well-known companies to prepare for globalization.