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Samsung Sources of Competitive

Advantage
March 18, 2019 by Abhijeet Pratap

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Introduction
Samsung is a leading electronics brand with a formidable presence in the smartphones and
tablet market. Apart from that, it has also acquired a leading position in the consumer
electronics market. Despite the heavy competition in the smartphone and consumer
electronics industry, Samsung has maintained its leading position due to its focus on
technological innovation. The result has been growth in popularity and sales. Some of its core
strengths include advanced technology, supply chain, marketing and brand image. However,
its leading position is supported by several sources of competitive advantage. It is also a
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 leading chip maker and its Galaxy smartphones are among the most popular that compete
with Apple’s iPhone. Have a look at how its various sources of competitive advantage have
helped it strengthen its position in the consumer electronics and particularly the smartphone
market.  

Research and innovation :-

Samsung is an innovative brand that focuses a lot on innovation to bring efficient products
that are excellent in terms of performance as well as productivity. Apart from its smartphones
which are both attractive and efficient, the brand is also a leader in the chip industry. Galaxy
is a market leading model of smartphones whose popularity around the globe is high. It is
among the leading competitors of Apple’s iPhone. The computing and smartphone industry
has grown highly competitive and to remain ahead of the others, it is important to focus upon
research and innovation. Samsung invests a large sum each year in Research and
development. This enables it to respond faster to changing demand and customer trends as
well as release new features and models. It also enables higher user engagement, better brand
recall as well as higher customer retention. Samsung is also a leading innovator and invests
heavy sums in modern technologies like AI, IoT, security and privacy as well as autonomous
mobility and data infrastructure.

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Brand image:-
Brand image plays a central role in making a large and global business like samsung
successful. Samsung is a leading technology brand with a strong presence in smartphone and
tablet as well as consumer electronics and chip industry. One major reason behind the global
success of the brand is its strong brand image. It is a customer centric brand that has
consistently focused upon the consumers’ tastes and preferences as well as overall customer
experience. All these things have together resulted in a strong brand image and brand equity.
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 Supply chain:-
A strong supply chain is also a determinant of the competitive  strength of a brand. It enables
faster production, smooth operations and faster delivery. Overall, a strong supply chain is
important for maintaining your leadership position and a healthy bottom line. Global brands
that have successfully managed their supply chains have been able to reduce their operational
costs and pass on the savings to their customers. Samsung is a global brand and sources its
raw material from thousands of suppliers from around the world. It has been able to manage
its suppliers well using digital technology. Samsung operates its supply chain with the help of
around 2,500 suppliers from around the world. Apart from focusing on sustainability in its
supply chain, the company has also built a code of conduct for its suppliers and provides them
the necessary support for compliance. The company has also started several innovation
initiatives for engaging its suppliers and for driving innovation throughout the supply chain. It
conducts regular audits of supplier factories and also provides tools and training that make
them more efficient and productive.

Marketing strategy :-
The marketing strategy of Samsung is also a primary driver of its growth and profitability as
well as competitiveness. Its marketing strategy is focused at the customers as well as the
quality of its products. Marketing plays a central role in driving demand higher and growing
the sales of a company as well as creating a strong brand image for any product or business.
Samsung invests a large sum each year in marketing and promotions of its brand and
products. In 2018, the advertising expenses of Samsung were around 4 trillion Korean won
and sales promotion costs totalled around 7.1 trillion Korean Won. Total marketing
expenditure of Samsung was higher than 9 Billion US dollars in 2018. It shows how much
Samsung spends on growing the sales and demand of its products. Apart from that the brand
is using digital technology heavily for marketing and customer engagement. The result is
higher customer retention as well as faster growth of customer base. Overall, this has worked
to make Samsung’s position in a highly competitive industry and global market stronger.

Pricing
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 strategy:-
Samsung’s pricing strategy is also an important support behind its competitive strength and
global leadership position. It   has brought products for both the higher and the lower end
market. Apart from the premium Galaxy models of smartphones, the company has also
brought a large range of affordable smartphones to the market. This is an important reason
behind the brand’s competitive strength and a reason behind its large customer base. Apart
from the mobile phone segment, in the consumer electronics segment too, it has brought
products in both the premium and the lower end segment.

Customer base:
Samsung is a global company and its products are famous all over the world. Some of its
market leading products like Galaxy smartphone and its range of televisions are highly
popular and have a very large customer base. The company keeps releasing new features and
models to keep its customers from all over the world engaged. A large customer base also
means higher sales and revenue. Samsung focuses a lot on customer retention and for that
purpose invests a large sum each year in marketing as well as R&D. This enables the brand to
produce new market leading products and to engage its customers better. In this way, the
brand has kept expanding its customer base globally.

Customer loyalty:
Apart from having a large base of customers from around the world Samsung has been
successful at building high degree of customer loyalty as well. Competition in the consumer
electronics industry as well as the smartphone industry has grown intense. Building
customer loyalty requires a large investment in research and innovation to remain ahead of
competition as well as a major investment in marketing to retain market share and for
customer engagement. Samsung focuses on both promotions and customer engagement.
Therefore, the brand has been able to build strong customer loyalty. It’s a major source of
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 competitive advantage for Samsung.

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Sources: Samsung Annual Report 2017.

Filed Under: BUSINESS

About Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016.
He graduated with a Hons. in English literature from BRABU and an MBA from the
Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his
knowledge and research in business management, marketing, literature and other
areas with his readers.
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