Marketing Strategy Analysis – Samsung case Essay Sample
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Marketing Strategy Analysis – Samsung case Essay Sample
In every successful business, marketing plays an important role in its performance in the purpose of maximizing the brand value. Marketing is the process which combines both strategy and tactics in order to build up the relationship with customers and create value for both buyer and seller. (Definition of Marketing, 2014). According to Marian, B. W. (2007), the marketing environment nowadays has become extremely fierce and dynamic, a marketing strategy needs to be updated in order to maintain the competitive strength. An efficient marketing strategy is not only has ability to adapt a change in the market but also satisfy the customers’ minds at the same periods. Therefore, there is no marketing strategy could maintain forever but should change at every different suitable situation.
To do so, a company might have several alternative plans which probably promptly implement in necessary cases. Samsung Inc. is one of the outstanding samples in term of successful marketing strategy. Samsung was established in 1938 in South Korea from the modest company to the global corporation with the annual turnover of over $USD 100 billions. Samsung has generated the business into three majors: “electronics, engineering and chemicals. This paper is going to examine the marketing strategy which Samsung has applied and give out lessons and recommendations in order to prepare for the future growth. QUESTION ANSWERING
1. Question 1
Samsung was from the modest company, currently has developed magically to the multi-national conglomerate. Efficient marketing strategies were one of the key elements of Samsung’s success today that lead its brand value rapidly increased the most in recent years. As reported by VietnamMarcom (2012), the brand value of Samsung in 2000 was approximately $USD 5.2 billions. Samsung subsequently expensed $USD 508 millions in order to boost up its brand value over than $USD 6.3 billions in 2001. According to the data collection of Gregory, L. (2005), the brand value of Samsung was $USD 14.9, ranked as 20th while the first three positions were Coca Cola and followed by Microsoft, IBM with the brand values were $USD 67.5 billions; 59.9 billions and 53.3 billions.
At that period, some competitors of Samsung in the market such as Nokia had $USD 26.4 billions of brand value, ranked at 6th position; Sony had $USD 10.7 billions of brand value, was as 28th in ranking; Motorola was ranked as 73th with $USD 3.8 billions of brand value and Panasonic was at 78th with $USD 3.7 billions in the ranking. As we can see in the figure 1, the brand value of Samsung grew continuously and dramatically from 2001 to 2005 while some the other competitors had a slight fall or maintained at the same level. Table 1: Brand ranking by value in 2005
Figure 1Brand Value from 2001 -2005
There is no doubt to confess that Samsung has gained a certain success in building brand value through those periods of time. In order to stand stably in this fierce market, Samsung has applied its strategies efficiently and distinctly. An efficient marketing strategy may bring success to its business but a good quality of products is what keeps the trust of customers. The more quality of the products are, the more loyalty of the customers will be. Therefore, Samsung has issued a very strict quality control policy. This is one of the factors that bring success to Samsung today. For example, any mistake occurs in its production process will be stopped immediately to fix in order to guarantee a good quality and high accurate standard. Based on the global strength, Samsung is flexible in gathering efficient international resources. In 1990s, Samsung adopted cheap scientific experts from Soviet and hired them to work in the Seoul labs in the early year of 2000. One of the successful innovations, which is introduced at Samsung by those Soviet scientists, is TRIZ project.
TRIZ project is the methodology which identifies the contrary of the existing technologies and the needs of the customers in order to innovate further ideas. Samsung has successfully controlled the products quality. This is the first and the heart in business philosophy of Samsung. Any business needs to understand the customers’ perspective and places them at the first concerning. When customers make a decision to try a new product, they would expect a good quality’s purchasing. And this is a chance for a business to keep customers’ loyalty and increase the prospect of brand by customers’ recommendation to their network. So if this was not a case, those customers would not come back and looking for other options. Thus, the quality control policy plays an important role in enhancing the customers’ satisfaction and loyalty. Besides, it would help to contribute the long term prospect and revenue of company and avoid the risk of replacement cost of defected products.
A company, which has a strong reputation in product quality, will be outstanding in the current fierce market today. One of other successful factors of Samsung’s strategy is promotion. Due to different kinds of product and different segmentations of customer, Samsung has applied variety ways of promotion and specific channel in order to approach the market. The marketing mix 4P’s strategy has been generated efficiently by Samsung. The company used strong tactics to pull customers to itself by providing printed brochures, posters, specialization sheets and public information on Samsung’s website, Samsung aimed to raise the awareness of customers. Besides, the activities to be the sponsorship in particular famous events such as: Royal Windsor Horse Show and Samsung Open Tennis Tournament. On the other hand, Samsung gave several interesting offers and discounts to their trade partners and dealers in order to push the sale of Samsung’s products. All of promotional activities are aimed to support a new product launching.
Launching successfully a new product has never been an easy issue, especially it is aimed to dominate other competitors in current market. In 1990s, Samsung has done an exclusive research in DVD market and understand the problem occurring at that time in order to identify the opportunity. From that, the company could find the suitable way for its strategy and satisfy the market demands to gain the competitive advantage. For instance, Samsung provided a DVD product with much greater data capacity and sophisticated features, but with the very reasonable price; or taking another product of Samsung is TFT flat screen monitor, this monitor also provides a greater convenience than CRT screen. The TFT screen is made by the liquid crystal display (LCD) with sharp displayed image can save a space of the room, lower power consumption and less harmful radiation. This is called the unique selling price that makes Samsung to be the leader in the electronics market. One of the elements of 4P’s strategy is distribution (Place), Samsung has used various channels in the market from the dealers, retailers and distributors and gave free sampling in order to attract more the customers’ concern.
Due to different kind of product, Samsung has applied a different kind of strategy to approach the market. The market segmentation for the TFT monitors were aimed for business such as officers, financial centers in the city or fashion outlets, etc. In order to encourage the TFT monitors purchasing from business, the marketing strategy needs to replace in order to adapt a change in a specific situation. The advertisements on this sector focused on potential customers who are business users. Newspapers and magazines were also used for advertising, especially the type of one-to-one advertising, mailing directly to the business users are effectively. Samsung was the newcomer in the mobile business sector in 1990s.
Today, Samsung was ranked as the world’s largest corporation in technology industry in term of revenues. The way to do the marketing promotion for this kind of product still differs from the other products. The marketing research and segmentation were exclusive implemented in order to understand the consumers’ demands and segment the potential customers. Samsung still used newspapers, magazines, TV advertisements, media means and to be a sponsorship for famous events in order to raise the perspective of customers in brand recognition. The contribution is more focused on retailers and the retail staff are well trained to be professional. In conclusion, the marketing strategy of Samsung is a valuable lesson to every marketer. Samsung has sought a international quality of product and implemented several marketing strategies in trying to dominate the market.
2. Question 2
SWOT analysis of Samsung
Table 2: SWOT of SAMSUNG
Samsung SWOT analysis
2. Innovation and design
3. Advanced technology
4. Lower cost
5. Large market share
6. Ability in brand marketing
1. Patent issue
2. Lack of its own OS and software
3. Wide range of products
1. Demand on smart- phone
2. Demand on tablet
1. Saturated in mobile market
2. Price wars
3. Technology changes
4. Chinese products
1. Reputation: Samsung has high reputation and is familiar all over the world. It helps to increase the customers’ trust in making purchasing decision. Samsung has recently received many possible responses from public then make its reputation continuously grows. 2. By understanding deeply customers’ mind, Samsung has received many innovation and design awards. Samsung offers the product which has more benefits than the competitors do, and each type of customers has different suitable product. 3. Samsung has ability to use the latest technology for its products. 4. Low cost: Samsung generated its production in the low cost countries. Hence, it helps to save production cost in order to offer a product to customer with a lower price.
5. Large market share: Samsung has a wide range of products. Hence, Samsung holds a large portion of market share in almost products they sell. Large market share helps Samsung in reducing costs and more demand in contract conditions. In addition, it also allows Samsung to earn high return and diversify risks and failures. 6. Samsung was ranked as the top company which has ability to push the brand name efficiently and was ranked at the 9th most valuable brand with $33 billion dollars. This success is caused by the sponsorship in sport champions, social activities, etc. Weaknesses
1. Patents issue: Samsung had problem in patent infringement with Apple. Apple sued Samsung that the Samsung galaxy 4 and Samsung’s tablet copied iPhone and iPad. This thing seriously damages to Samsung’s reputation and cost $1 billion dollars in fine. (BBC, 2012) 2. Lack of its own OS and software: Samsung pay an intention on innovation. However, Samsung has never introduced its own new product with its own OS. Samsung focus on mass market rather than niche market when setting the price of the products at a level of average low. A general psychology of customers is to assume a low price of product is low quality. 3. Samsung has 3 major markets: Electronics, Engineering and Chemicals and each industry has a huge product which needs to concern. Thus, Samsung loose an attention and advantage in competing with the competitors. Opportunities
1. The demand on smart- phone market is continuously increasing comparing to electronics market. Thus, Samsung should create its own software for correlative hardware devices. And then, Samsung could launch a new product with outstanding features, has its own OS, user friendly sooner than the competitors could do. 2. The demand on tablet is expected to grow in the next few years. Thus, Samsung could expand this market by launching a new innovative design and better technology quality in order to dominate the market. Threats
1. Mobile phone market seems to be saturated in almost countries, especially in developed countries. Thus, the purchasing power might not as high as it used to be in previous years. 4. There is a threat from the companies from China who has ability to produce a product at lower price with a similarity of design and features. TOWS matrix analysis
Table 3: TOWS matrix of SAMSUNG
TOWS matrix analysis
External Opportunities (O)
External Threats (T)
1. Invest in tablets
2. Expand mobile phone market
1. Saturated in mobile market
2. Patents issue
3. Price wars
4. Technology changes
5. Chinese products
Internal Strengths (S)
1. Developing a newer not only in technology but also in design for tablets and smart – phone in order to dominate the global market 2. Establish more multiple national companies
3. Participating to be a sponsorship for sport events in order to raise the brand value
1. Investment in digital market, develop Core Digital Technology, home networking 2. Pursue new product development: wearable, pen computing
3. Developing super -outstanding smart –phone
1. The largest memory chip in the world
2. Global corpration
3. Strong reputation
4. Wide market circle
5. Strong cash flow
6. Strong innovation and design
7. High brand value
8. Active participant in social activities
Internal weaknesses (W)
1. Focus on niche market
2. R&D in technology WT
1. Research to explore new market
2. Develop the quality of technology to be superior
3. Wide range of products
4. OS and software
3. Question 3:
In the current years, Samsung is one of the biggest manufacturers in term of android smart- phone. They are also successfully in the industry of engineering to sell monitors, TV LCD, etc. Samsung has an incredible growth rate over the time to have this leader position today in the fierce market. (Kristijan, L., 2014). It might be said, 2013 is the bright year for Samsung to have ability to own the market. However, 2014 might be the challenging year when the CNN’s analysis pointed out that Samsung’s strategy starts revealing its weaknesses. (Lan. H, 2014). Smart- phone Galaxy S4 was considered as the failure of Samsung in all aspects. The Galaxy S4 was blown up its capacity features to conquer all customers in over the world. However, this smart- phone was only improved modestly in a comparison with the old version Galaxy S3. Even though the turnover for the Galaxy S4 was relative high but not as high as the company‘s expectation. Even though Samsung is still the leader in the market of smart- phone but there is no increasing in the market share in 2013.
It means that Samsung has stopped magically increasing as it used to. And the first time since 2011, the profit of Samsung had a slight decrease in the Q4 of 2013. In the fierce competing race of smart- phone, while the competitors have ability to produce to a smart – phone with greater incredible features by its own operating system and software, Samsung still have not given any sudden attack technology and outstanding product. Hence, this is the first failure in the marketing strategy of Samsung in smart- phone sector. Due to CNN analysis, Samsung is not only needed to have a strong marketing promotion but also pay much concern on the quality and outstanding features of the new product. It means that, in 2014, Samsung should set modest goals in order to achieve in certainly, avoiding the disappointment from the customers and deliver a truly changing technology mobile instead of only focus on marketing and bigger screen. Samsung and Apple are the two leaders in the racing of mobile phone industry.
In practically, Samsung is the largest player in term of revenue but Apple is more profitable. Samsung targeted to the mass market when setting the price of smart phone at relative low to premium while Apple;s products are set at premium segment. The average price of Apple’s products is quite higher then competitors’ in smart phone industry and this leads very high margins for Apple. In 2011, Apple Inc. sued Samsung when claiming that Galaxy smart- phone and tablet copied from iPhone and iPad. In final, Samsung had to pay $1 billion dollars for its compensation. (Yukari, I.K. and Ian, S., 2011). This thing seriously damages to Samsung’s reputation and cause in decreasing profit in 2011. Hence, Samsung still has challenges to compete with Apple. Apple has strong and distinct band which was built for a decade, and now, has its own consumers’ loyalty and advantages competitive in the exclusive mobile industry.
In order to have ability to beat Apple’s products and becomes a dominant in mobile industry, Samsung needs to focus on improving software and operating system. (Luke, W. 2012). A particular focus on technology and strengthen software capabilities must be implemented order to not only satisfy and maintain the current consumers but also to serve new customers’ experiment. It is suggested that Samsung could plan to develop its own Bada operating system in order to serve group customers of low- end market. Besides, Doing investment in order to offer a premium product which target at high- end market, higher positioning as higher quality products providers. It helps Samsung to focus on niche market rather than set a product at medium price to serve consumers in a mass market. Besides, Samsung also pays more attention on promotion and selling campaigns for digital products such as Core Digital Technology, Pen Computing, DRAM, etc. 4. Question 4:
“Internal marketing is orienting a motivating customer contact employees and supporting service people to work as a team to provide customer satisfaction.” (Phillip, K and Gary, A., 2012). According to Burkitt and Zealley, the important of internal marketing is to make employees are conscious to serve customers well and reinforce their behaviors to perform efficiently. Hence, the concept of internal marketing covers the aspects of HRM, operation and marketing such as in particular: motivation, leadership, structure, delivery system and marketing management. The internal marketing is used to enhance the customer focus and market orientation. Even though the term relates to marketing but it uses quite a lot of HR principles because both of the marketing and HR are dealing with people. Since understanding the term of internal marketing, employees are should be concerned equally to customers because employees are who directly bear the value to an organization. It is clearly and obviously to see the link between the employees motivation and their performances toward an organization.
The higher satisfaction employees are, the better they perform in external services and the faster a company can achieve a goal. Therefore, if a company only focuses on customers care but lack of employee’s motivation, it could meet some struggles. In Samsung Corporation, incentives and welfare program are used to motivate their employees in order to better performances and satisfactions. Samsung has offered a very interesting welfare program to concern only for employees but also for their families about house, education, health and retirement. Besides, employee who has ability to perform outstanding or carry out a significant project is worth to receive an additional incentive. Hence, Samsung’s employees can live and work in the pleasant environmental. (Samsung, 1995) Base on the internal theory of internal marketing, there are some suggestions for Samsung to increase its quality of internal marketing. First of all, it is necessary to create a staff communication in order to listen to their employees’ opinions and ides.
Besides, it is also useful to have time for briefing every week to discuss about what has been done during a week, is there any problem that needed to be solved timely or share successful stories together. This thing is very efficiently not only in creating a friendly relationship between staff and managers together but also timely grasp the current operating status of a company. Secondly, Samsung could give to their employee training to empower their relevant knowledge.
Besides, employee motivation is always an important part. There are some theories about employee motivation such as Maslow and Herzberg, given some factors to fulfill the satisfaction of employees. Incentives and rewards could be a positive method to motivate employees. Culture is one of the factors that affects to employee’s behaviors. Employees might feel uncomfortable or comfortable due to its company environment. Business to business relationship is important to maintain success of a corporation. Business relationship management (BRM) is different from customer relationship management (CRM), but still simultaneously executes together. BRM is used to enhance the positive relationship with customers.
This paper has been done in examining the successful marketing strategy of Samsung over the past years. And then using SWOTs to analyze the weaknesses, threats as well as the strengths, opportunities of the company and using TOWS matrix to suggest solutions of taking its strengths and opportunities to cover its weaknesses and threats. Finally, there is a discussion about the internal marketing of Samsung. Samsung was from the modest family company to the top global corporation in this fierce market today is worth lessons for all marketers. By distinct and flexible strategy, Samsung raised its brand value to be ranked at 8th in interbrand’s Best Global Brands in 2013. An exclusive marketing research is employed to understand the market deeply whenever issue a strategy was effectively performed by Samsung. Personal experiment
The case study of Samsung is worth to learn for every business. By observation through this case study, in personality, I could understand these following points. Firstly, every business should set clear goals in both short term and long term in order to step by step achieve them. Segmentation is needed to identify potential customers, and search for the unmet demands in the market. It is also useful to understand the customers’ behaviors in order to satisfy them as good as possible. Secondly, promotion is one of the important factors in marketing strategy. There are several ways of promotions and depend on each specific situation that we could apply a different promotion in order to approach the market. For instance, depend on segmented group of customers whether low-end market or high- end market, we could apply a suitable promotion.
Using the power of information to raise the brand awareness of the public such as delivery brochures, leaflets, sufficient information on website, or even samplings the let people experience a new product. The quality control policy must be first priority as the philosophy of a business. Furthermore, Research & Development (R&D) also needs to have adequate concerning in order to satisfy and keep the customers’ loyalty. One thing is important that there is no marketing strategy could remain its efficiency forever. Since situation changes such as technology or market changes, a new alternative suitable strategy should be executed to adapt a new environment. In conclusion, this exercise is very useful for who wants to start up a new business or wants to expand its current one. The theories of Marketing research, marketing mix, segmentation, etc. should be grasped in order to practice effectively.
SamSung’s marketing strategy
Quality control policy
The production will be stopped when fault detected
Strict and first priority
Identify unmet demands
Brochures, leaflets, websites, samplings
Distribution channels: dealers, retailers, distributors
Advertisements: magazines, newspapers, TV ads, journalist on launching day
Sponsorship in sports, social events
Increase brand value
Samsung SWOT analysis
8. Innovation and design
9. Advanced technology
10. Lower cost
11. Large market share
12. Ability in brand marketing
4. Patent issue
5. Lack of its own OS and software
6. Wide range of products
3. Demand on smart- phone
4. Demand on tablet
5. Saturated in mobile market
6. Price wars
7. Technology changes
8. Chinese products
TOWS matrix analysis
External Opportunities (O)
External Threats (T)
5. Invest in tablets
6. Expand mobile phone market
6. Saturated in mobile market
7. Patents issue
8. Price wars
9. Technology changes
10. Chinese products
Internal Strengths (S)
4. Developing a newer not only in technology but also in design for tablets and smart – phone in order to dominate the global market 5. Establish more multiple national companies
6. Participating to be a sponsorship for sport events in order to raise the brand value
4. Investment in digital market, develop Core Digital Technology, home networking 5. Pursue new product development: wearable, pen computing
6. Developing super -outstanding smart –phone
9. The largest memory chip in the world
10. Global corpration
11. Strong reputation
12. Wide market circle
13. Strong cash flow
14. Strong innovation and design
15. High brand value
16. Active participant in social activities
Internal weaknesses (W)
5. Focus on niche market
6. R&D in technology
5. Research to explore new market
6. Develop the quality of technology to be superior
7. Wide range of products
8. OS and software
1. Disappointed of public for Galaxy S4.
Profit went down
2. Technology changes
Samsung still have not given any outstanding features of smart- phone 3. Lack of OS and software
4. Patents violence
5. War price and fiercer competitive
6. Mass market
Problem solving’s suggestion
develop its own OS and software
2. modest objectives in 2014
3. Offer outstanding smart- phone
4. Niche market focusing
5. Focus on digital industry: Core Technology, Pen Computing, TVs, etc.
1. Staff communication
2. Employee’s training
3. Employee motivation
4. Incentives and rewards
List of References
BBC (2012). “Apple awarded $1bn in damages from Samsung in US court” [Online] Available from: http://www.bbc.co.uk/news/technology-19377261 [Accessed: 6th November 2014] Definition of Marketing (2014). What is Marketing? Tutorial. [Online] Available from: http://www.knowthis.com/what-is-marketing/definition-of-marketing [Accessed: 25th October 2014] Gregory, L. (2005) Global Marketing Strategy. [Online] Available from: http://www.samsung.com/us/aboutsamsung/ir/ireventpresentations/analystday/downloads/analyst_20051103_1600.pdf [Accessed: 27th October 2014] Kristijan, L. (2014) Samsung’s Current Situation And What Comes Next [Online] Available from: http://www.androidheadlines.com/2014/08/samsungs-current-situation-comes-next.html [Accessed: 6th November 2014] Lan, H. (2014). Chien luoc cua Samsung lo nhieu diem yeu. [Online] Available from: http://vnreview.vn/tin-tuc-kinh-doanh/-/view_content/content/938438/chien-luoc-cua-samsung-lo-nhieu-diem-yeu [Accessed: 6th November 2014] Luke, W. (2012). Samsung says it needs to improve software. [Online] Available from: http://www.cnet.com/news/samsung-says-it-needs-to-improve-software/ [Accessed: 7th November 2014] Marian, B. W. (2007) Essential Guide to Marketing Plannin. 2nd Ed. England: Pearson Education Limited Phillip, K. and Gary, A. (2012). Marketing: An Introduction. 11th Ed. Prentice Hall Samsung (1995) Employment [Online] Available from: http://www.samsung.com/us/aboutsamsung/corpcitizenship/environmentsocialreport/environmentsocialreport_Welfare.html [Accessed: 6th November 2014]