SAMSUNG Electronics Company : Global Marketing Operations

Presented by

Mithisar Basumatary

SAMSUNGTHE FASTEST GROWING KOREAN

BRANDFOUNDER: LEE BYUNG CHUL

CURRENT CEO: CHI HUN CHOI (2014 ONWARDS)

CURRENT CHAIRMAN: LEE KUN HEE

SUBSIDIARIES: SAMSUNG ELECTRONICS LTD., SAMSUNG HEAVY INDUSTRIES, SAMSUNG C&T CORPORATON , SAMSUNG SDS.

Introduction

• INDUSTRY: CONGLOMERATE• FOUNDED: FOUNDED 1ST MARCH, 1938• HEADQUARTER: SEOUL, S. KOREA• AREA SERVED :WORLDWIDE• REVENUE :US$ 305 BILLION (2014)• NET INCOME: US$ 22.1 BILLION (2014)• TOTAL ASSETS :US$ 529.5 BILLION (2014)• TOTAL EQUITY :US$ 231.2 BILLION (2014)• NUMBER OF EMPLOYEES:489,000 (2014)

INTRODUCTION-PROFILE

• 1938: Produced agricultural products.

• 1969: Founded Samsung Electronics Company.

• 1970: Acquired semiconductor business.

• 1970s: Focussed on shipbuilding, chemicals & textiles.

• 1980s: Launched home appliances.

• 2003: Introduced TFT-LCDs for TVs & Montors.

QUESTIONS OF THE CASE

1. Financial crisis occurs in Asian market in 1997 proved negative net profit of 3% with only SEC sales were $16 billion. HOW SAMSUNG RESPONDED?

2. RESULTS

3. MARKETING STRATEGIES IN ITS GLOBAL MARKET

4. RECOMMENDATIONS AGAINST ITS COMPETITORS.

WHAT SAMSUNG DID IMMEDIATELY?

1. 1997: Dismissed 29,000 employees globally

2. 1998: Sold $2 Bn worth of its capital assets

3. 1999-2003: Instead of outsourcing its production to external houses, it manufactured in its own competence

4. 1998-2003: Invested $19 Bn in chip factories

2.8 5.928

44.6

0

20

40

60

1999 2002

SALES AND PROFIT

SALES

NET PROFIT

IN Bn

5. Digital Product Innovation with investment of $2.45 Bn annually, involving 17,000 scientists, engineers and designers

6. Employed CDMA in its devices: Code Diversification Multiple Access

7. Digital Convergence: i.e. merging of different technologies into one major product. Introduced SPH-i-700 Camera Phone and Palm OS-based smart phone

by 2003 end.

THE MARKETING ORGANISATION

• Eric Kim headed the Global Marketing Operations (GMO) unit in 1999.

• GMO coordinated Samsung’s overseas business and watched its marketing operations.

• GMO has the following team:

1. Marketing strategy team

2. Regional strategy team

3. Product strategy team

1. GMO funds were only use for advertising and other brand franchising activities.2. GMO funded 70% of its fund in fashion and 30% on other opportunities.3. Invested $400 Mn in 2003

4 P-STRATEGIES OF SAMSUNG

1. PRODUCT

2. PRICING

3. PROMOTION

4. PLACING

MARKET

DOMESTIC INTERNATIONAL

1. PRODUCT STRATEGY

I. In 1970, Samsung made cheap 12 inch television sets under Sanyo label.

II. High investment in research and technology.

III. In 2005 Samsung spent about 9% of revenue, amounting to $5 billion.

IV. In 2002, it introduced coloured screen phones in US

V. It was the first company to manufacture 57 inch LCD screens

2. PRICING STRATEGY-

I. Competitive pricing: Samsung Elec. used this policy for products like TVs, ACs, Refrigerators against the models of LG and Panasonic.

II. Between 1998 and 2003, it invested $19 Billion for manufacturing chips, like NAND, etc.

III. In 2003, it invested $17 Billion in TFT-LCDs

1. Skimming pricing strategy was used by Samsung Electronics for smart phones.2. It didn’t consider vertical integration and investment in manufacturing, and R&D not as Fixed Costs, but rather flexible.

3. PROMOTIONAL STRATEGY:

I. Product Placements.

II. Sponsorships, eg Sydney Olympics 2000, 2002 Winter Olympics in Salt Lake City, 2004 Summer Games, Athens, 2006 Winter Games, Torino, 2008 Summer Games, Beijing.

I. Media Advertising.

II. Internet Advertising.

POMOTIONAL STRATEGY:

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of target market.

I. The Korean Company changed its logo, by symbolizing the world moving through space and writing “Samsung” in English to reach global market.

II. By partnering , it targeted customers looking for prestige, quality and wealth.

4. PLACING STRATEGY

I. EUROPE: Samsung was stronger in the southern countries of the Europe like Spain, Italy. In North, people were loyal to German brands. They explored B2B opportunities in the enterprise space.

II. ASIA: Asian markets include Russia, China, India and South-East Asia. They launched in Russia with their market needs in late 1980s. Chinese market estimated 5 Mn customers in 2002 with telephone services. It opened its manufacturing plant in China and R&D in India in 2003.

EXHIBIT: Results indicated that Samsung brand was at different degrees of development in different countries.

III. US electronics market was popular with Sony. So Samsung partnered with chains like Walmart, Target, Best Buy, and Circuit City, etc as the top 10 chains accounted 60% of electronic sales.

70%

15%

8%

7%

ELECTRONICS MARKET SHARE 2002

S. KOREA

AMERICA

EUROPE

ASIA

DOMESTIC

• SAMSUNG had over 50% of the market share in South Korea (70% in 2002).

• Being a mountainous state, S. Korea proved a good market for wireless services. So it invested huge fortune on wireless technologies, Chip-sets, etc.

Result

• By 2002 Samsung recorded net profit of $5.9 billion.

• Samsung’s sales grew by 51% as against 4% of Motorola and Nokia’s at less than 4% in 2002

• Ranked in 25th position in world’s most valuable brands in 2002 (34th position in 1997)

• Fastest growing brand in the top 100 valuable brands

Results

Results

M-NET recommendations

1. SEC was overspending about 45% of its current budget in N. America and Russia as they did not have high market potential. So 35% should have been done!

2. Europe and China had huge market potential. But only 31% was invested. 42% should be done!

3. Again it was investing more on mobile phones, vacuum cleaners, ACs, and NOT on DVD players, TV, PCs or refrigerators.

OUR RECOMMENDATIONS FOR 2002

1. Like Sony’s PlayStation, Samsung should build gaming appliances.

2. Samsung should tap the youth market, like Sony and Nokia,

3. Samsung should develop proprietary software like Sony, on music, movies, etc.

4. Like Nokia and Motorola, Samsung should invest on low-end cell phones also.