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Samsung Electronics Company

The Samsung brand
Originated as low-cost manufacturer of black and white televisions in the year 1969, super sized with a
semiconductor segment in 1970s, Samsung delivered massive volume of low-cost consumer electronics
to domestic and OEM products to both domestic and global markets until 1993. Due to this fact, company
didnt develop global brand awareness until then. In the global arena, Samsungs brand message was
fragmented and its logo presentations were inconsistent.
In the year 1993, new management initiative started transform Samsung from a cheap OEM to a high
value-added products provider. At this point, company realized to take the brand to global platform and
started thinking the importance of global positioning and the powering the brand. Initially, management
targeted to build corporate brand image across 200 countries with focus on 17 selected products. But, in
the early period, internal challenges of marketing misconceptions among the top level managers turned
down efforts of this visionary growth measures.
But, the companys challenges turned into a different outcome in the wake of the Asian financial crisis in
year 1997. Fast actions were required to curtail the financial threats and massive restructuring efforts
were imminent. Samsung utilized this opportunity wisely and the result was a turnaround from $15 billion
debt to $4.6 billion within a short period of 5 years.
Samsungs global marketing director is assessing how to build the global brand reputation of the company
further and upgrade the companys worldwide brand image to show how to build a global brand. The
challenge of Samsungs marketing director is the branding strategies in global markets. Marketing team
has to examine the organizational dynamics to develop a strong global brand.
Success factors:
Management Efficiency: During the 80s, the companys refocus to manufacturing quality and technical
leadership and profits reinvestments in R&D, state-of-the-art manufacturing, and supply chain activities
helped the company to grow in a great extend. This management vision was not only upgraded the
companys products to compete in the high-tech electronics industry but also gave foundations of its
global brand awareness.
Transparent disclosure practices: By 2003, Samsung was the most widely held stock among all emerging

market companies due in part to relatively transparent disclosure practices. This is evidenced with the fact
that over half of its shares held outside Korea, and the stock price had increased tenfold between 1997
and 2002.
Plant/R&D locations: To keep costs low, the company operated in different geographical locations like
China (manufacturing) and India (R&D).
Fast and efficient product life cycle: Multiple technology capabilities of its many designers and engineers,
speedier decision-making processes, and fewer levels of organizational bureaucracy reduced the time
taken to commercialize products from drawing board, from 14 months to 5 months. This is twice as fast as
its Japanese rivals.
Innovative products: Samsung was progressing in almost all markets with its innovative products.
Midrange and high-end cell phones, first mover with the color screen phones, smart phones, and wireless
AV center with web surfing capabilities, systems-in-package semiconductor flash memory, SDRAM for the
mobile products are some of its great products shown market acceptance.
Vertical Integration: Samsung opted to use its core manufacturing competence in all components of
electronics. By transferring the capital investment and inventory risk, between 1998 and 2003, Samsung
invested 19 billion in new chip factories and estimated another 17 billion in TFT-LCD manufacturing.
Companys quality products had been used by many other leading brands like Sony. This will increase the
Samsung brands awareness in consumers mind. Although commoditization and downward pressure on
prices and margins might argue against vertical integration, Samsung overcame this situation by
customized as much production as possible.
Weaknesses
Country of origin: In highly competitive global marketplace, consumer attitude about the country of origin
might be one reason of Samsungs slow adaptation of globalizing its brand. As China became Samsungs
major manufacturing location just like any other leading brands, consumers may look into products
originating country for a final decision of their loyalty to a product.
Although South Korea has fair image in the technological world, Samsung has to work with its government
officials to strengthen and entice political freedom in global trading and manufacturing. Communicating
regional values will help both tourism and trade.
Hardware focus: Unlike rivals such as Sony and Apple, who are focused on the software technologies,
Samsung decided to focus on the hardware side with an open architecture concept. Samsung argued that
this concept enable consumers being able to access more software through its devices that its

competitors products. Additionally, they argued about the increased challenges associated with protecting
proprietary content from piracies.
However, consumers will ultimately looking into the convenience and functionality of the product. Most of
these features are coming from the software programs embedded with the hardware. So, Samsungs
argument is not convincing to the consumers as they have to go for a different vendor to use its products
effectively or pay premiums to use other software in these hardware.
Multi-category focus: Unlike many of other companies like Nokia or Sony, who are specialized in cell
phones and consumer electronics respectively, Samsungs products are diversified in nature. Almost all
major categories semiconductors, telecommunications, digital media, digital appliances, and other minor
categories are all performing with operating profits. But, this diversification is not giving the company a
strong footage in any one category.
Low brand awareness and loyalty: For any global brand, marketers must consider two major markets
Europe and North America. Being in strong in the southern Europe, brand is not reasonably endorsed by
northern Europe. The Germans in particular are fiercely loyal to German brands and the fragmentation of
retail distribution makes Samsung behind in all product categories.
Although Samsung brand was at the turning point stage in U.S., lack of brand awareness and loyalty are
far below those of first tier brands like Sony. One of the main reasons was locked partnerships with low
price giants like Wal-mart and Target which are not reaching a big segment of high-end consumers.
Samsung has to reach high-end retail chains and price clubs extensively and market their customized
products if needed.
Opportunities, Threats and Recommendations
In the beginning of year 2003, Samsung management categorically unveiled a corporate vision where the
company is heading to:
"We are investing aggressively in marketing to transform our company to be truly market driven and to
establish our Samsung brand as the most trusted and preferred brand in the market
It was clear that at that time Samsung wasnt a trusted and preferred brand in the market. This means if a
household need home electronics, Samsung wasnt the first brand come into their consideration. This is
due to the lack of brand knowledge and brand is not positioned in consumers memory. But at the same
time, other Japanese rival products are still positioned in consumers mind and remains as preferred
brands. So, Samsung has to revitalize and revisit following areas of marketing and sales activities to
position the brand as a most trusted and preferred brand in the market.

Bigger and better new products: Samsung has to increase its R&D spending to compete highly
entrenched brands like Sony. This will be a better investment and too much focus on youth and creativity
is not always appropriate.
Cellular phone Industry: Samsung has grown from 2.7% in 1997 to 10% in 2002. This might be attributed
by the growth in the cellular communication industry. By continuing focus on mid-range and high-end cell
phones, the company has potential to grow much more if they consider focusing standard level cell
phones at low prices.
Handle absence of signature product: Despite all its progress, particularly in cell phones and TVs,
Samsung lacks a signature product like Sony's Walkman or Apples iPod. Signature products are crucial in
bringing crowd into the market places that people will acquire knowledge about companys other products.
Although it looks like a sales activity of signature product, its an indirect opportunity of marketing other
products without much spending of marketing dollars.
Samsung has to either reenergize its R&D team to find a signature product that gives a unique value and
emotions or turn one of its current products (Eg: TV with high-speed internet connectivity and browsing
capabilities using its own remote control or remote keyboard) as a signature product. Latter option should
be priced affordable to majority consumer segments.
Increased competition: Almost all rival products continuously releasing better functions and features in
their product lines. Therefore, Samsungs marketing communications must stress out clear differentiation
and value-added pricing.
Downward pressure on pricing: Increased competition and market-share strategies are pushing Samsung
prices down. Still, the company can consider a moderate realistic profit based pricing.
Compressed product life cycle: Models of big screen TVs, cell phones, LCD displays, MP3 players, and
other consumer products seem to be reaching the maturity stage of their life cycle more quickly than
earlier versions of these products. Samsung must have contingency plans to keep sales growing by
adding new features, targeting additional segments, and adjusting prices.
Strategic Alliances: To deliver comprehensive sales, marketing and merchandising activities at top
retailers worldwide, development and management of strategic alliances are required to support its retail
segment. A performance-driven, full-time team of territory representatives and part-time weekend warriors
task force is essential in this task. To educate Samsungs reps as well as retail salespeople worldwide, an
integrated retail support solution encompasses a brand champion program as well as a product
knowledge site for consumer electronics training must be established.

Marketing budget: In 1999, despite an $800M annual marketing budget, Samsung Electronics was
encountering challenges in transforming perceptions of its brand among retail salespeople and
consumers. These numbers were considerably decreased in the later year and seem it had encountered
marketing budget crunch. Since consumer electronics industry needs to go mass marketing, Samsung
has to consider more marketing budget. Also following additional marketing techniques must be
considered:
Products must be displayed and functioned at Restaurants, clubs, and bars especially providing sports
events.
Pursue Hotel chains which required massive replacement of in-room entertainment needs to retain
competitive advantage
Improved and new volume channels to consumer markets, through direct price clubs and large chains
Sponsorship of high profile sports events and engage in high involvement activities. While this clearly
has an impact on the consumer, which in turn drives demand through the channels and other B2B
relationships, special event attendance opportunities can also be used with B2B decision makers.
Production cycle: As one of the line manager commented, Samsung must be ready with its production
lines that helps move products at retail next Monday morning. Current production facilities are not
equipped and resourced for these speedy deliveries. Company has to automate its production facilities
with most modern equipments and services.
Re-vitalization of retail segment: Samsung has to strengthen its retail operations with participations of
third party consultancy services. Conduct more frequent consumer surveys in the field of trend changes,
satisfaction, competitors marketing techniques, new outside
Rapid reaction: To establish a global brand, Samsung should keep an eye to respond quickly any potential
market crisis. It may hurt the company if it takes long to respond to any type of crisis. Management has to
mobilize sufficient incentive programs to its marketing/sales force to report any potential crisis and if it hits,
sufficiently rewarded to act and resolve quickly.
Internal Marketing and consumer advocacy: To buildup a global brand, everyone inside Samsung has to
understand the essence of the brand and translate internal education into communicable message.
Samsungs groundbreaking innovations are capable enough to make this possible and intrigue
consumers. Visual simplicity and functional performance of new products will be added advantage in the
marketing process. These first time consumer experiences make them advocates of the brand for many
years.