SAMSUNG ELECTRONICSEnd-of-module assignment CW2

Grade:70%

TABLE OF CONTENTS Project’s DescriptionCountries ComparisonSituation Analysis: ChinaMarketing Strategies

Financial SituationInternational Marketing of the ProductConclusionsReferences

DESCRIPTION OF THE PROJECT Wireless Ear Bud with automatic translation

« SAMSUNG UNIVERSAL EAR »

Our Marketin

g Concept

INNOVATION Create a new market

and demand in a saturated market Competitive

advantage Good for the

company notoriety

STANDARDIZATION AND

INTERNATIONALIZATION

Contributor to the National and International Economic

Well-Being Increase our activity Increase our portfolio

Comparative advantage

New Product Category

Newness to market

Newn

ess t

o co

mpa

ny

New to the

world

(Doole and Lowe 2012)

INNOVATIONS AND OBJECTIVES

Identification of needs: What is desirable to users? What is possible with the technology? What is viable in the market place?

PROBLEM OF COMMUNICATION BECAUSE OF THE LANGUAGE BARRIERS

PRODUCT LIFE CYCLE

Introduction stage

RESOURCES & CAPABILITIESVRIO Framework V R I O Competitive

implication

Strong corporate culture ✓ ✓ ✓ ✓ Sustainable competitive advantage

Strong investment in R&D ✓ ✓ ✓ ✓ Temporary competitive advantage

Human resources (management team) ✓ ✓ ✓ ✓ Sustainable competitive

advantage

High qualified employees ✓ ✓ ✓ ✓ Sustainable competitve advantage

Innovative and premium product ✓ ✓ ✓ ✓ Sustainable competitive

advantage

‘The VRIO Framework asks a set of four questions: whether firm’s resources are valuable, rare, costly to imitate and exploited by the organization. It helps managers to identify their firm’s core competencies and their firm’s competitive advantage.’ (Frynas and Mellahi 2011)

SAMSUNG STRATEGIC CAPABILITIES

COUNTRIES COMPARISON

TURKEY CHINA BRAZIL SOUTH AFRICA

Population 79,414 thousands 1.3 billion 204,259,812

million53,675,565

millionOfficial mother tongue

Turkish Mandarin Portuguese English

GDP per captita (PPP)

USD$18,884.02 9,800 12,100 12,446.37

GDP growth 3.1% 7.4% 0.1% 0.7%

GNI per capita (USD$) 10,840 7,380 26,372 6,800

Literacy rate 95% 96% 88% 94%

Regional trading areas

Free Trade Agreements with EFTA

APECASEAN FTA MERCOSUR None

Outbound tourists 9,800,000 62,000,000 7,900,000 5,169,000

% of English speakers 17% 0,73% 5% 31%

References:

(The World Bank 2015)

(Trading Economics 2015)

(Statistiques mondiales 2015)

(Statista 2015)

(Export.gov 2015)

(Investopedia 2015)

(Coface 2015)

(European Comission 2015)

CO

NT

RIE

S

SITUATION ANALYSIS: CHINA

In 2014, the GDP in China was worth USD$10,360.10 billion, which represents 16.71% of the world economy.

Figure 1 : China’s GDP Break-Up

WHY CHINA ? In terms of Economy

Figure 2 : China GDP PER CAPITA

China could overtake the US if the GDP continues to increase The GDP per capita was last recorded at 3865.88 US dollars (2014) which is

equivalent to 31% of the world’s average. The world’s first exporter and holds foreing reserves in the world. Exports : 1972.24 billion (November 2015) Imports : 1431.14 billion (November 2015) Inflation rate : 1.5 percent (November 2015)

(World Bank 2015)

Middle class growth, who consume more and more of imported product. (Over the past 35 years, 600 millions Chinese have joined the consumer class).

The Chinese have a high level of involvement when they are buying products for their social value.

The social significance of products is highly important, it allows to express their status.

Self-esteem is very important to Chinese consumers and physiological needs are less important.

WHY CHINA ? In terms of Culture

(Doole and Lowe 2012: 74)

TRADE AREATHE MAIN TRADING AREA :

MEMBER OF :China has 13 free trade agreements

implemented, and 6 free trade agreements under negotiation.

(Doole and Lowe 2012: 58)

SLEPTS ANALYSIS CHINA

S

- Population 1,367,820,387 of inhabitants in 2015- China’s unemployment rate is around 4%- Abundant and skilled labour- Potential urban growth- Rise of the middle class which change the social trends and cultural values- Emphasize on education with over 90% of literacy rate- 10% of the population lives with less than $1 per day

L- Chinese regulatory and legal landscape constantly changing- Over control by the government : Censor- Modern legal system but suffer from corruption

E- Significant growth over the past few year- Formal member of the WTO- Second largest economy after the US- GDP USD$10,360.10 billion in 2014 : 16.71% of the world economy

P- Communist party- Part of the ASEAN - No international conflict- 2011-2015 plan initiated a quality driven local market Focus on innovation

T- More than 720 million of Internet users (but internet access is controlled)- About 15 billion YUAN of revenue in Telecommunication industry in 2015- Deployment of 4G all over the country- In 2009, 13,5 billion YUAN spent on R&D projects

S- Largest emitter of CO2 in the world- China focuses on green Energy, low carbon resources- In 2009, USD$34.6 billion spent on the renewable energy sector

SWOT ANALYSISSTRENGTHS WEAKNESSES

- Strong market position - Leader in the electronics industry

- Research and Development Investment

- 2 production plants in China- Brand value- Know-How

- High prices of the products- Patent litigations

- Dependence to Android

OPPORTUNITIES THREATS- Low cost of labour

- Educated and skilled workforce- Stable employment

- Most of the world’s trade and economic activities are highly dependent on the industries

within China- Shanghai Free Zone

- ASEAN and WTO member- Rise of China’s Middle Class

- Under-capitalized banks- Weak round of economic data

- High inflation rate- High property prices

- Corruption- Protectionism

- High control of the government (censure)

- Weak intellectual property protection

RISK EVALUATION

The four-risks matrix

It is important to measure the possible risks we would face in the chosen country. Indeed, there are several types of risks which could be apparent in that market (political, commercial, industrial, or financial). Therefore, we have to assess the degree of thoses risks (Doole and Lowe 2012: 103).

Country: China Risk LevelRisk type

Low Moderate Some Risky Very risky Dangerous

Political ✓Commercial ✓

Industrial ✓Financial ✓

(Doole and Lowe 2012: 103)

MARKETING BARRIERS TARIFFS BARRIERSSince WTO member Liberalized its

foreign trading system and reduce its administrative barriers to trade.

According to WTO, China’s average applied MFN tariff rate was 9.4% in 2013.

Corporate income tax is lowered of 25% (from 30%) for both domestic and foreign-invested enterprises from January 2008.

13 Free trade agreements implemented, and 6 Free trade agreements under negotiation.

NON-TARIFFS BARRIERSRed tapesRegulatory protectionBeijing also has the world’s

most extensive system of subsidies, which block foreign access to the Chinese market.

Insecure ownership of non-state companies.

(Heritage 2012)

MARKETING STRATEGIES

SEGMENTATIONSegmentation is the ‘partition of a market in submarkets in order to

find in each submarkets customers who share the same will and expectations’ (Doole and Lowe 2012)

Determine which part of the Chinese population can use this product and afford it

Target different sectors : - Trade- Tourism- Event

Target different types of employees in order for them to :- Better perform in their work- Improve their exchanges with their guests, customers, suppliers,

partners or shareholders

TARGETING

The aim is :- To acquire customers and retain them

A target is someone or a group of potential buyers.

The targets will be :- The Chinese upper class- People who work in international companies - People who work in the Tourism, Trade and Event sectors- Political fields (political assembly and meeting as COP21

or G20)

POSITIONNING GLOBAL POSITIONNING STRATEGY

“Developing and maintaining a global brand name is one of the best ways for firms to build global recognition”

(Cavusgil, Knight and Riesenberger 2012: 525)

Products are more valued by the customers

More confidence in buying them.

This strategy is efficient to : to acquire and to retain customers to gain brand loyalty In China, Samsung is well-known and has a strong position in the

market.

In addition, our business philosophy is to deliver premium products therefore our product the ‘Samsung Universal Ear’ suits with our brand image

ProductUNIVERSAL EAR (Wireless

Ear Bud Instateneous Translator)

Laucnhing date: 10 January 2017For the Chinese

New YearPhysical Evidence

- Brand name and reputation

Place- Samsung’s

stores - Websites

(online purchasing)

People- Chinese upper-

middle class- Multinational

companies- Tourism sector

Politics

PromotionAdvertising, pull

marketing (media), push

marketing (trade shows,

street marketing))

MARKETING

MIX

Price249,99 EUR = USD$273.163 = 1,801.06

KRW

POSITIONNING

China:• Regional HQ (2)• Production (13)• Sales (2)• Research (7)• Design Center (1)• Others (8)• Staff 60,316

(Samsung Sustainability Report 2015)

POTENTIAL COMPETITORS

SAMSUNG GLOBAL LEADER IN THE ELECTRONICS INDUSTRY.

Main competitors : Apple, Huawei, Xiaomi in China in the electronics industry.

They probably would imitate or create a similar product.

The launching of the wireless ear bud will hit the market of translator application It will maybe replace it, since we will make a better service for the customer.

Skype has developed an application enabling an automatic translation (Le Monde 2016) Fig 3 - Samsung

Sustainability Report (2015)

(Samsung Electronics Annual Report 2014)

COOPERATION AND PARTNERSHIP

As we use Android as operating system, we will have to make other partnerships with Google and work together in order to make this new product viable and acceptable for the customers and to limit the competition.

FINANCIAL SITUATION

CHINESE’S CONSUMERS FORECAST New product on the market Compare different products which are

also categorized as accessories or wearables devices as the smartwatch « GEAR » and headsets and headphones on the market.

Analyze these different markets to have a basis of their sales to forecast the sales for our new product.

Samsung Galaxy Gear –Smartwatch - $350 (in China)

1.2 million sold worldwide in 2014

180,000 sold in 8 hours in China ≈ 500,000 sold in 2014 (based upon my critical analysis)

Samsung Level U Wireless Headphones – $69

Headsets + Headphones : 290.9 million sold worldwide in 2014 (all brand combined)

40% of the overall earphone and headphone market in 2014 in Asia = 116 million of unit (Japan excluded)

Samsung and Apple represent 62% of the market = 72 million

Samsung is the leader, so the estimation of its sales is 40 million unit sold

Estimation : the Chinese market absorbs 30% of the sales

Estimation of 12 million of headphones and heasets sold in China in 2014

12 types for this range of product available on Samsung website : 750 thousands of sales per product

(Android Authority 2015)

(Joshua Swingle 2015)

(Statista 2015) (Strategy Analytics 2015)

Target Population Estimation Forecast

Outbound tourists 62 million 1/150 tourist 413,000

Chinese upper-middle class

(including the employees of Chinese exports companies)

671 million - 150,000

CHINESE’S CONSUMPTION 5 YEARS FORECAST

Year % of increase Forecast1st Year 563,0002nd Year 10% 619,3003rd Year 5% 650,2654th Year 5% 682,7785th Year 5% 716,916

Outbound tourists: Chinese upper-middle class:(Press Hotels 2014) (Travel China Guide 2015) (Business Insider UK 2015) (Central Intelligence Agency 2015)

SALES AND REVENUES FORECAST

• Almost 0.1% of the global turnover

(Samsung Electronics Annual Report 2014)

MARKETING COMMUNICATIONS BUDGET

Marketing communications budget (advertising and promotion) represents 5,5% of the revenue(Samsung Electronics Annual Report 2014)

Price for the final

customer

Product sold to

distributors

Samsung’s margin

(after deduction of the production cost, R&D, salaries and marketing

communications)

Production costs

Net Profit for one unit

$ 273,163 $ 150 30% $ 105 $ 45

ESTIMATION OF THE NET PROFIT

INTERNATIONAL MARKETING OF THE PRODUCT

INTERNATIONAL MARKETING STRATEGY

CUSTOMER ACQUISITION

It is ‘the process of persuading a consumer to purchase a company’s goods or services’ (Business Dictionary n.d).

METHODS TO DO THIS WITH OUR WIRELESS EAR BUD: Use the product placement strategy in the clips and in many films Integrate adverstising in the most read magazins Use the sponsorship to create a link between the company and an event:

Using Luxurious Hôtel, Politics Area… Be present in several shows in the country Create a serious and seductive argumentative discourse to give a

good brand image to potential customers and remain in their minds.

INTERNATIONAL MARKETING STRATEGY

CUSTOMER RETENTION

It is ‘the long term clients, the loyal customers’ (Business Dictionary n.d).

METHODS TO RETAIN THEM WITH OUR WIRELESS EAR BUDD Create Samsung’s events, where one can acquire the ear budd at the

entrance and can be used for free throughout the day. This will enable concumers to familiarize themselves with the product and be convinced of its efficiency.

Do satisfaction surveys, to demonstrate a good after sales service. Create a ear budd community: Active forum about a commited

community is a good way to build customer loyalty and long-term visitors. Welcoming and congratulating, immediately after the purchasing

with an individual e-mail

Types of advertising

meanAdvantages Disadvantages

Television Very efficiency: Dominance of TV Station Expensive: Price inflation

Press: Newspaper and Magazines

Fashion magazines: rising affluence of Chinese consumers

Wealthy consumers have more lifestyle and leisure choices: Fashion magazines

appeal them

Not all the population have time to sit and read a

newspaper – price of press remain high

InternetIncrease of the use of Social Networks

and Online Gaming : opportunity to make association

No disadvantages

Outdoor advertising Public places: viewed all day Expensive

Mailing Development phase – could attract customers of Samsung Not very used yet

ADVERTISING CAMPAIGN

We will mostly use the « Pull marketing » which means « pull » the client to the product via mass media and advertising communication. The aim is to « Catch the

eye » of the consumer.

PRODUCT ADVERTISING

TELEVISION

95% of the Chinese population watches television the best way to touch a maximum of consumer.

The main television stations and the most viewed:

Anhui TV (AHTV) Broadcast China Central Television (CCTV) News Beijing TV (BTV) Broadcast Sichuan TV Culture and entertainment

With your Samsung Universal Ear, you are going to love

speaking with your foreign partners

(China Business Review 2010)

PRODUCT ADVERTISINGINTERNET: e-marketing, social media

Internet advertising is expected to surpass the newspaper advertising. .

In 2014, China has around 591 million internet users (half of the population) and 91% of Chinese internet users have a social media

account (Emoderation 2014)

The average Chinese internet user follows eight social networks, and 38% of internet users make shopping choices based on

recommendations they read on social networks

Most of common social networks as Facebook and YouTube are blocked by the government. We have to use the

local ones to engage consumers.(China Business Review 2010)

THE MOST POPULAR SOCIAL NETWORKS IN CHINA

Sina WeiboThe most popular social network

in China, with around 280 million active users and 500

million registered users.(Equivalent of Twitter)

Tencent WeiboThe third most popular social

network in China with more than 230 million active users.

(Equivalent of Twitter)

QzoneThe second most popular social network in China, with between 240 million and 600 million

monthly active users.(Equivalent of MySpace)

(Emoderation 2013)

PRODUCT ADVERTISINGPRESS

As we have to adapt our advertising campaign to the New Information and Communication Technologies, we will use the magazines and newspaper websites since as we saw Chinese

are now online.

The most read newspapers and magazines have websites :

China Daily Pekin Times

(China Daily 2015) (Pekin Times 2015)

PRODUCT ADVERTISINGOutdoor advertising

(China Business Review 2010)

CONCLUSION

Samsung had already created and sold Bluetooth headsets which are connected to smartphone in order to have free hands.

The increasing of Chinese multinationals that will push European countries to cooperate, in different languages.

Chinese culture based on self-esteem and they are willing to climb in the social ladder.

Infatuation for automation and artificial intelligence

The emergence of new technologies allows the company to create this type of product.

Good sales forecast and net profit Therefore, the product will contribute to to the sustainability of the

company.

With its strategic capabilities and competitive advantage, this project is feasible for Samsung

THANK YOU VERY MUCH FOR YOUR ATTENTION.

IF YOU HAVE ANY QUESTIONS, PLEASE ASK.

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as No.1 [online] available from <http://www.androidauthority.com/samsung-no-1-smartwatch-sales-593790/ [9 January 2016]

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21 December 2015]

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