Development of Samsung by Competing with Sony and Apple - Essay Example

Development of Samsung by competing With Sony and Apple Samsung has gradually captured the global electronics and mobile market to an extent that the reigning champions of electronics and gadgets industry Sony and Apple are finding it difficult to stay in the limelight. Samsung has become the global leader in memory chips, flat screens, and a variety of consumer products within a short span of time (Agtmael, 74). Today, when the name Samsung appears on a product, be it a phone or semiconductors, household product or digital TV, the consumers instantly relate innovation, versatility and reliability to it. This used to happen only with Sony and Apple products before. Samsung is not only one of the greatest businesses today, but the company tends to have a great goodwill as a responsible global entrepreneurship. The objective of this paper is to explore the tactics and strategies that were employed by Samsun to climb up and reach the top of the success ladder at such lightning speed. It is important to review the success story of Samsung before analyzing the strategies it has utilized for achieving the numero uno spot in corporate world. Samsung came into being in 1938, as a small trading company and transformed into a business group. And from its branch in Tokyo it started to expand its business first by entering in the textile business, then started establishing electronics, introduced the company in heavy industry by affiliating in shipbuilding. Samsung itself had built huge companies based on sugar and seasonings and textiles; and LG on chemicals for household and industrial consumption (Michell, 13). It also expanded the business by acquiring Hankook Semiconductor. Later on it also introduced first 10 – million seller cell phones, became world’s best TV manufacturer. And today Samsung claims to have the largest share in the global smartphone market, which is because of the Galaxy smartphones of Samsung. In 2012 it was awarded as world’s ninth best brand (Tek, n.p). Samsung now stands among the top tier global corporations, possesses good ranking in the superior management, and provides innovation in design along with improving its sales and earnings (Lee, 9). The competition between the two famous smartphones brands Samsung and Apple started in 2008, when Samsung targeted the smartphone market by investing on large scale in it. Apple is a multinational company, which provides phones, personal computers, iPads, iPods and much more. In 2008, the most valuable company of the world was Apple because it had the shares with prices up to $ 373 (Zylla-Woellner, n.p). Samsung and Apple without any doubt were leading the cellular especially the smartphone industry, however, Samsung suddenly shifted gear and turned the entire game in its favor. Apparently, Samsung’s most significant tactic is that the company never ceased to introduce variety in their products and in their strategies of selling the products too. Samsung Corporation has successfully blended speediness, imagination and affordability in their offerings to capture the consumers’ attention. While Samsung was busy investing huge sums on extensive research and development to gain the market share, Apple was stagnant using only 2.4 percent of its revenues on innovation (Roll 154). Samsung spent around US$ 2.3 billion on research and development (Roll, 154). The major competitors Sony and Apple were badly defeated by Samsung. The reason is that whenever these companies introduced a new product Samsung copied the concept and followed their path to introduce similar product but with a definite edge and innovation from its predecessors. In order to learn latest designs in trend, Samsung even started comprehensive training sessions for all employees. Apple only introduced several versions of iPhone whereas in the meantime Samsung not only introduced Samsung galaxy, note book, smart TV and other economical smart phones but has been regularly updating its products’ specs with every new version. This is one of the main reasons why Samsung beat Sony, because Sony did not realize the need of inducing innovation into its products and kept on milking its Trintron technology although flat screen TVs were introduced. Apple’s idea of smartphones was outstanding but Samsung used a technique of pricing to target the market. Apple’s mistake was to heighten the price of their products up to an unreasonable level. Samsung after Sony started giving Apple’s iPhone a tough time by introducing the similar look and feel as Apple’s iPhone was providing but the key point Samsung gave was lower price (Baaghil, 134). When the fans of Apple were waiting for iPhone 4S, just at that time Samsung introduced galaxy S II at $300 less than the price of iPhone 4S. Samsung used the tactic of providing high standard, fully equipped yet affordable products at a time when every other company was charging high for smart phones. Samsung galaxy star, yet being a smartphone is approximately of US $100, making the customers happy with all the features and applications that are at par with those found in expensive phones but in affordable price. Samsung was able to increase its sales because people got brand in affordable prices whereas Sony always kept the price of its products high instead of having the same quality which caused its failure (Pride and Ferrell). In 2000, there was a huge difference observed in Sony and Samsung’s sale, Samsung had a sale only of US$ 28 billion on the other hand Sony was having a sales of US$ 70 billion (Michell, 4). During 2005, Samsung earned seven times Sony’s net profit of just over 1 billion on revenues of $56 billion, that were lower than Sony’s $66 billion (Agtmael, 60). Soon in 2006 Samsung had market capitalization to $106 billion. Innovation and pricing were not the only strategies employed by Samsung, but the company has been introducing high-quality products too. So, consumers shifted their attention to this company because they were getting good quality appliances and fully loaded phones within their budget. Sony also had a great innovative team yet it was troubled with its signs of aging in both structure and organization. Sony believed in its future outlook, that the new products were their strength but their play station in 2007 was out sold by Microsoft’s Xbox 360 and Nintendo’s Wii, which led to failures (Michell, 14). Today, Sony’s stature on the corporate front is in extremely susceptible situation. It is the same company which made Walkman a style statement and had been ruling the electronic industry far longer than both Apple and Samsung. However, its success graph was lowered by Samsung, and this has now compelled Sony to lower its prices and widen the market (Chang, 8). Samsung’s another strategy was to follow the trends and business model of Apple and Sony and then use the same model to sabotage their market stature. The biggest mistake that both Sony and Apple made over the years was underestimating the strength and proficiency of Samsung’s team along with overlooking their own vulnerability to staying in the competition. Overconfidence, probably, created this unforgiving situation for these two corporate giants. Samsung followed the business model of Sony initially but later on when it strengthened its presence on the global front, it started targeting Sony with it too. On the other hand, Sony never considered Samsung as a potential threat to their market standing and believed it to be just another struggling supplier (Chang, 10). Samsung introduced wide range of handsets, galaxy series, following the success path of Apple and targeted the phone introduced by Apple in 2007. Samsung targeted two main features one was the use of android operating system (OS) and the second was the similarity in Samsung galaxy phones design and Apple’s phones. Soon Samsung was able to fetch Apple’s market by having rapid launches of many smartphones models of galaxy, providing the users an opportunity to get smartphones with new design and lesser prices as compared to Apple whose prices were high and not much variety in smart phones. Samsung while grabbing 23.8% of the market share became the leading smartphone vendor leaving behind its competitor with only 14.6% market share in 2011 (Giachetti, 9). However when Apple felt its market going down, it introduced iPads which were not in the portfolio of Samsung, but soon Samsung started competing with Apple by introducing galaxy tab. It not only introduced the same kind of product but started providing innovations in the product and soon it got the position of second best tab distributor. While Samsung was continuously targeting Apple, Apple registered even a complaint against Samsung, that it copied Apple’s features which caused Samsung to stop its selling in Australia and Germany. Samsung lost the battle as it was found guilty of invading apple’s technology. Samsung made use of advertising as a weapon against Apple. It very thoughtfully made use of Apple’s flaw in making the phone available to the customers timely, and by targeting this flaw it gained the market. In this battle both the companies used thousands of competitive strategies. By the end of second quarter 2012 Samsung clearly surpassed Apple’s shipment of 26 million iPhone sales, as reported by the company for the same period (Sadeghi, n.p). Another significant tactic was that Samsung used aggressive advertising strategies and used brand communication extensively. It is obvious that Samsung had to fight hard, to gain its position in the market for which Samsung adopted aggressive branding and advertising strategies. Samsung built the philosophy of branding on five main pillars that is innovation, cutting edge, technology (world class designs), recruiting the world’s best talents and internal branding. Samsung believed that innovation in technology was the key to success and bringing in superior products than their competitors will surely beat the market leaders that are Apple and Sony, which certainly proved productive (Roll, 15). Samsung focused on two main objectives, to reposition Samsung and second is the aim to see and accept itself as a brand on a par. Samsung established its name as a brand and sponsored events like Olympics, the winter games and extreme sports to make its presence felt in the market widely and rapidly. The lessons that can be learned from the growth of Samsung are many and wide ranged. The ability to make good decisions in tough times or even crisis situations is what makes the difference and so does making bold strategic moves. It turns out that to make the brand globally identified it is necessary to work on quality, design and technology. The astounding success achieved by Samsung strengthens the belief that it takes some time to come to certain position; that patience ultimately pays off in high profits and that an overhasty brand strategy can lead to the end of a company. Samsung being just another supplier 20 years back is heading towards becoming the largest electronic company because it just focused on the quality, design and price and did innovation which brought them to this stage. Years of determined focus on quality, design and technology brought Samsung’s products to world-class levels. Samsung used many strategies to compete with its biggest competitors, like it did not stick to one kind of business it went across the boundaries and entered into almost every industry. Sony because of its mistakes could not keep its position and now it will be interesting to see if Samsung continues to maintain its success graph by making the right decisions at the right time. Samsung has to look after its position and has to keep the level of designing, retailing, advertising and technology top notch. Samsung is the brand which has made an outclass way over 20 years, and nothing seems to be difficult for this brand to stop them from growing but the attainments of today does not make them a brand consistent for tomorrow, every day they have to earn the equity. Works Cited Agtmael, Antoine Van. The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World, Simon and Schuster. New York, America. 2007. Print Baaghil, S Said Aghil. The Power of Belonging: A Marketing Strategy for Branding, 2nd ed, iUniverse. Bloomington: 2013. Print Chang, Sea Jin. Sony vs Samsung: The Inside Story of the Electronics Giants' Battle For Global supermacy, Jhon Wileys and Sons. Singapore 2008. Print Giachetti, Claudio. Competitive Dynamics in the Mobile Phone Industry, Macmillan Publishers Limited. Hampshire 2013. Print Lee, D Dongyoup. Samsung Electronics: The Global Inc, Dongyoup Lee, YSM, Inc. Korea. 2006. Print Michell, Tony. 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