Key R and mass manufacturing to stay ahead,

                                                                                                            

Key
Marketing issues/challenges:

I
believe the key issue with Samsung was that their management had a tunnel
vision focus on developing any new products, low focus on marketing the brand
and had short range plans in terms of growing their business globally. In the
1990s, in terms of strategy, the company vision was bound with their native
South Korean market and it was not ready internally to become a global player
or to compete on other continents with competition from established brands. There
was more investment focus on certain regional markets and on business units
within the company that did not pay good dividends as expected. Even with the
advent of the digital era, the strategy was heavily focused towards manufacturing
products that were deemed ‘safe’ and in demand as per the need of the time i.e.
semiconductors. (Table A)

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Solution
A:

One
solution is to have technical leadership among consumer electronics and try to
build a loyal customer base by providing cutting edge technology at reasonable
pricing. The advantage provided by this strategy is that Samsung can compete to
chip into the existing markets of the more established brands like the leading
Japanese or American companies (Table B) and at same time conquer new markets
due to demand for cutting edge technology. However, investment required for
R&D and manufacturing would be enormous and Samsung would have to sustain
continuous innovation and product growth year after year. They would also need
to increase the range of products offered by them in different markets and
compete across multiple product lines at the same time and sustain the R&D
and mass manufacturing across all product lines, which would be very expensive
year after year. There is also possibility of being blind sided by new
technological breakthroughs by the competition. Thus, this solution may pay
rich dividends to the company while they are technologically leading and can
fund the R&D and mass manufacturing to stay ahead, else it can backfire.

 

Solution
B:

Another
solution is to work on shorter product life cycles and aggressively break into
markets with less local competition from native companies offering quality
products e.g. BRICS markets. With the incoming digital age, all consumers,
whether personal shoppers or businesses, in many developing countries would be
looking forward to upgrading their electronics and would be glad to have an
option of a wide range of quality products. Samsung could leverage the cheaper
resources from those countries to research, manufacture locally and market the
products according to the price-conscious behaviors of the local consumer. The
agile nature of the products in terms of innovation, technology and price will
generate great interest in an untapped market and put Samsung years ahead of
any competition from other brands. Its recommended that they build a single
brand for all consumer electronics offered by Samsung and build their image in
such a way so as to be ‘preferred’ or a ‘loved’ brand by the households.

 

Best
alternative:

I would recommend that Samsung go with Solution B.
Considering that they want to dominate the global market, it would be
imperative for them to explore new markets and carve out a lead for themselves
against other brands. It would also be important for Samsung to develop a
significant relationship with their client base that would generate brand
loyalty, customer satisfaction and high name recognition. The following
analysis of the quantitative studies done support this decision.

 

As seen from the following results of the FCB
relationship monitor study,

Exhibit
12.A – shows that Samsung did not do well in European countries
like Germany and UK, with 27% and 23% consumers being non-committal to the
brand. This maybe because of lack of the wow factor in Samsung’s offerings to
these markets or it maybe because of the presence of strong known and trusted
local brands. This is contrasting to the information from Exhibit 5 regarding investment by Samsung by regions.

 

Exhibit
12.B – While the numbers re-iterate the non-committal feelings,
it also appears Samsung consumers think of them as emulating the technology of
other brands rather than offering cutting edge technology advantage themselves.
This goes in direct opposition to the R and optimized manufacturing
processes that Samsung prides themselves in.

 

Exhibit
12.C – in the electronic gadget category of cellphones however
Samsung does well with the China market, with consumers saying it’s a perfect
fit (169) and they are delighted (149) along with the US market saying
overwhelmingly that it’s a delighter (327) as well. It appears that Samsung
cellular products offered in the same price range as the competition have done
well.

 

Over all 3 exhibits, the Hong Kong market has
consistently been non-enthusiastic about Samsung perhaps due to presence of
quality native companies meeting the needs of the affluent demanding consumers.
Samsung would do well to identify and establish limits of their focus on such
markets where growth is limited, and competition is intense.

 

Samsung’s mission is to become a top-10 global
company by 2005 and be known as a market leader rather than just yet another
middle tier electronics company. By taking the recommendations from Solution B
and exploring new avenues of revenue generation, Samsung can chart a new path
in the digital age.

 

In
Exhibit 13, the brand profiles, the personality of the Samsung brand
had a couple of negative sentiments attached to it like arrogant, off putting.
The reaction to their products was similarly negative in some areas like Not
visible, no exposure (failed advertising), difficult to use (not ergonomic),
can’t relate to it (not intuitive). This is where effective advertising and a
global brand strategy at executive comes into picture. Every market reacts
differently to advertising i.e. Indian subcontinent Vs Scandinavian market. Studying
what works in each market and would send the right message to their target
consumer base will help Samsung utilize their resources soundly. At the same
time, having a global brand that not only offers big products but also caters
to customer service requests and complaints, big or small, will only increase
trust and delight and make Samsung from just another electronics company to a
household name.

 

Plan
for implementing the chosen alternative

It’s
recommended that Samsung consolidate its marketing strategy at the executive
level under one umbrella so that branding, advertising, budget proportion and
allocation, product commercialization, public relation policy etc remains
identical globally. There can be further breakdown at regional offices level
for other business processes as follows:

 

In the immediate future (over next 3-6 months),
it is recommended to:

–         
Change internally first and be prepared to face
the challenges of going global and into new markets in terms of logistics,
manufacturing, project management etc. Invest in data collection and sound
research.

–         
Explore each business process for optimized
results and perform cost Vs benefit analysis.

–         
Set metrics for measuring performance at
project/product level and set appropriate targets at manager level. Encourage decision
making backed by data.

o   Examples
of project level metrics – implementation of user stories into products,
productivity, defect monitoring and complaint resolution.

o   Examples
of executive target metrics – customer satisfaction and sentiment analysis, performance
of each product against competition, resource consumption report for each
regional office against revenue etc.

 

In the short term (over next 1-1.5 years), it is
recommended to:

–         
Have sub-strategies under the general marketing
plan. Focus on consumer behavior of each market. What works on the Indian
subcontinent may not work in affluent markets like Europe or North America,
depending on local competition which are trusted brands, cultural behavior like
price-mindedness, purchasing for need Vs status etc.

–         
Focus on agile nature of production in terms of
converging features from different products and bringing them to the regional
markets – rather than re-inventing the wheel.

–         
Internally educate the regional divisions to be
sensitive to the needs of the consumers and the culture of the region. Many a
good product idea can come from being sensitive to needs of their consumer
base.

–         
Samsung could use similar technology across
different product lines and leverage their enhanced manufacturing capability to
offer an integrated Samsung experience to their affluent customers. This is
mainly for the high-end consumer market, the people who want their homes,
businesses and social lives integrated.

 

 

In the long-term plan (over next 5-7 years), it
is recommended to:

–         
Prepare for a price war with low cost
manufacturing companies from China, Vietnam and other countries offering cheap
labor.

–         
Politically South Korea has a very positive
relationship with most of the countries in the world. Samsung can use this
positive image to their advantage and to break into untapped markets where
trust can be an important factor to do business.

–         
Partner with smaller brands in the local regions
to improve Samsung’s supply chain and manufacturing aspects. Partnering with a
regional player can also help with gaining the trust of a foreign consumer
market.

–         
It would also be important to have product
differentiation as per the market of the specific region or country. For e.g.
broad band may be available in most affluent markets and therefore products
using the IOT (Internet of Things) concepts may be more popular than in
developing countries. At same time, some developing countries may have a larger
market but may still be few years away from cheap mass internet access, thus
limiting consumer demand for IOT products.

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