PRODUCT AND BRAND MANAGEMENT C A S E A N A LY S I S

SAMSUNG ELECTRONICS
G L O B A L M A R K E T I N G O P E R AT I O N S

I N T E R N AT I O N A L M A N A G E M E N T I N S T I T U T E , N E W D E L H I E X E C U T I V E P O S T G R A D U AT E D I P L O M A I N M A N A G E M E N T

SUBMITTED TO: P R O F. S . B A L A S U B R A M A N I A N

S U B M I T T E D B Y: VINEET DIXIT MODAK PRIY SUDEEP KUMAR KUNDU A L O K G U P TA S AT E N D A R T O K A S

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SAMSUNG ELECTRONICS COMPANY: GLOBAL MARKETING OPERATIONS Question 2 How strong is the Samsung brand? Can Samsung pass Sony and become a top ten global brand? Answer 2 Samsung Electronics Company was founded in the year 1969 as a low cost manufacturer of black and white televisions. In 1970, “Samsung acquired a semiconductor business” which would be a milestone that initiated the future for SEC. Entering the semiconductor industry would also be the beginning of the turnaround phase for SEC. In 1980, SEC showed the market its ability to mass produce. SEC became a major supplier of commodity products (televisions, microwave ovens and VCRs) in massive quantities to well known original equipment manufacturers (OEMs).By 2000, Samsung recorded a net profit of $5.9 billion on sales and by 2003, it became one of the worlds 25th most valuable brands with an estimation of $10.8 billion and was the fastest growing among the top 100 brands. With the initial philosophy of being a product driven company focussing on manufacturing as a core competence the company Samsung started its first initiative of building a brand name as a long term goal towards profitability was started in the year 1993 by the company chairman Kun Hee Lee and it was named “new management initiative”. The major focus was to revamp the initial image of the company from a” cheap OEM” to “a high value added product provider” focussing on innovation, premium product and brand value. Samsung brand was at different stages of development in different country market : USA: Here in USA the brand image was at a turning point stage where unaided awareness and brand loyalty were still below those of the first tier brands like Sony. Consumers still viewed the brand as a reliable, upcoming and credible w.r.t. Sony that had an image of being an established and a matured brand. Europe: In Europe Samsungs brand image was stronger in the southern half as compared to the northern part of Europe. Europeans were seen as being more loyal towards their own brands and on the top a fragmentation of retail distribution made the situation even worse for Samsung to generate sufficient sales volume and market attraction. Russia: In Russia Samsung had an image of being “Peoples Brand” but the motive of building a product innovator and market leader was still a distance away. China: Brand image of Samsung in China was into a transition phase heading towards the advanced stage. With slim profit margins the company had captured one third of the Chinese market. India: Samsung viewed India as an upcoming market opportunity with immense potential in value added reselling of software products. The company became a major supplier of Software products and had a good brand recognition which was far better than the companies like Intel and Microsoft who were the market leaders in this product category.

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Apart from the mixed responses of the brand image of Samsung across various countries, FCB (Marketing agency hired by Samsung) in the year 1999 researched on the companies present brand image towards various categories by way of product description and country specific parameters. Looking into the Exhibits 12A,B given in the case which gives a broad picture of the study conducted by FCB we find the following key highlights: 1. In China Samsung brand was strong in “delight me” but was not on “perfect fit” except in the cell phone category. 2. In USA the brand was found strong in “price based” and in the cell phone category its score on the attribute “delights me” was found significant. 3. In UK the brand was perceived as on who “follows the leader”. It was clearly signifying that the brand has much more to do before getting a reputation of being a top brand. 4. In Hong Kong the response of Samsung cell phone consumer’s index towards the country’s average was inclined to a price based brand. 5. In Germany it was found that the brand Samsung was far away from the target of being a top brand and was scored highest as a “Non-committal” brand. Looking into the detailed case facts and the analysis of the study conducted by FCB and shown in Exhibits it is evident that the company Samsung has to go through a long way and realise a need to develop more within the tight situation. Though the company has gained strong recognition in creating a high level of awareness as a first step towards its brand building step still it has to work on other aspects of building brand elements like 1. Meaningfulness: does the brand Samsung has descriptive meaning and suggest something about the product category? How likely are the consumers able to identify the product category for the brand based on any one brand element? Do the brand elements seem credible in the product category? Does the brand give the specific information about particular attributes and its benefits? 2. Likeability: Whether the consumers found the brand being aesthetically appealing. Is it likely visible? 3. Transferability: It measures the extent to which the brand elements add to the brands equity of a new product for the brand. In other words how useful is the brand element for line or category extension. Transferability also states to what extent the brand elements add to brand equity across geographical boundaries. 4. Adaptability: It refers to the adaptability and flexibility of the brand elements. 5. Protect ability: It refers to what extent the brand elements are protect able in legal and competitive sense. So from the above discussion it can be concluded that in order to build a strong brand image in global scenario and be one of the top 10 global brands within a short time frame of 2 years from now i.e till 2005 the company Samsung needs to focus on all the attributes of brand elements and channalise its marketing efforts towards attainment of such goals. Apart from putting its major emphasis on innovation and manufacturing the company should also look into the personalised need of consumers in various global markets and should customise its products to suit those segments of the market.

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Question 3 – As Chief Marketing Officer, what are Kim’s role and responsibilities? How has he built his influence? Answer 3 – The objective of the “new management initiative” was to transform Samsung from a “cheap OEM” to a “high value-added products provider”. The Vice Chairman Yun led the companywide effort to convert the company’s product line from low-end commodities to high-end premium goods. But for recognition as a Premium Brand, it required repositioning through an increased emphasis on marketing. Therefore Vice Chairman Yun recruited Eric Kim as executive vice president of global marketing. Roles & Responsibilities (1) To build the Global Corporate Brand image for Samsung across 200 country markets. (2) To educate the respective Divisional Managers on the role of marketing and the value of developing and communicating superior solutions for the target customers. (3) Kim is responsible for making all the people in the company to understand the essence of the Samsung brand. Roles & Responsibilities (1) Marketing Organization – Kim headed the corporate Global Marketing Operations (GMO) unit which coordinated Samsung’s marketing efforts and was responsible for developing the corporate marketing program for the Samsung brand outside Korea. There were three major teams in the GMO, the Marketing Strategy Team, the Regional Strategy Team and the Product Strategy Team, each with different responsibilities. (2) Allocation of Marketing Resources – The GMO recommended to SEC’s regional headquarters how to prioritize and allocate its funds and those of the business units by country and by product category. Kim accomplished substantial budget reallocations by deploying a computer program M-Net to help determine where funds could reap the highest returns. (3) Market Driven Change ( MDC ) - Kim’s marketing initiatives resulted in lot of companywide changes collectively referred to as Market Driven Change (MDC). MDC helped Samsung mangers view marketing as an important business function rather than as a series of one-off advertising campaigns and promotions.

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