Promotional and Advertising Strategies in Samsung, Sony and LG - Case Study Example

Promotional and Advertising Strategies Introduction In normal operations, companies create goods to cater for diverse consumer demand. Also, different companies create the same product in a given market economy. In this case, consumers could buy such a product from any company according to their utility. However, it is the desire for every company to be a market leader in that product. Thus, enabling such a company to move more goods, increase its market share and consequently its profit. To achieve this, such a company needs to go beyond just creating those products and making the goods available to consumers. Companies, therefore, find the need to advertise and promote their products. This is done to provide information to consumers, to increase the demand of a certain product or even to make the product stand out from those similar ones from other companies. Companies will, therefore, use different modes of advertisement and product promotion in a bid to get an advantage over their competitors. Companies have no option, but to employ different modes in order to edge out their competition. These strategies are mainly targeted at the consumers. Research has showed that consumers are responsive to these strategies and increase their usage in all companies. In this essay, we are going to delve in the global market of television sets. We shall also review the two market leaders in this category, Samsung and Sony companies. Sony has been the traditional electronics company and has enjoyed some monopoly in the past. On the other hand Samsung is relatively new and has derived strategies to build its brand. Since these two companies produce similar products in the form of TV sets, they have similar strategies to promote their products. Both Sony and Samsung have massive investments in advertising done using modes of advertisement such as print and electronic. Television and internet are the most preferred electronic modes since they have the widest reach. In print media, these companies usually put up billboards and buy space on newspapers and magazines. Advertising helps both companies to delve into new markets, establish and retain their brand and increase their sales in the market. Apart from advertising, the two companies normally use other promotional strategies. The promotional plans are evident through gifts, coupons and other print outs to existing and potential consumers. In most cases, these two companies come up with promotions where consumers are promised cash prizes or even more products as an award. In order for one to win such prizes, they will be required to buy an electronic product- TV before winning. Such a promotional strategy from both Sony and Samsung help these companies to push their sales and build their brand. Both Sony and Samsung have, therefore, used similar advertising and promotional strategies to drive their TV sales, and increase their brand likability (Andrews, 2013, P. 46). In contrast, Sony and Samsung have also used different strategies to promote their products. If we narrow down and look at sales of smart TVs in the last 2013, it is clear from Strategy Analytics that Samsung had the most volumes of smart TVs sold. These statistics are evident from analyses made on sales of electronic goods. Also, Samsung got 26% of all sales, compared to Sony’s 14%. The difference was due to the different strategies and diverse intensity that each company used in 2013. Being a leader in 2013, it will be interesting to see which strategies Samsung used, and how different it used them to become the best-selling firm.Samsung has invested heavily in TV advertising, led by bumper sponsorship deals in the English premier league. Since the premier league enjoys a global audience of 4.7 billion viewers, it is a perfect audience for Samsung to advertise its smart TVs. This campaign has led to an increase of 8 points from 2012. The aggressive advertising has led to Samsung toppling Sony in the sales of smart TVs. It is also essential to note that Samsung has embraced social media to advertise its TVs more than Sony. Also, the comparison in advertising of each company is evident on social network. For instance, Facebook shows that Samsung’s page has 2,309,811 likes compared to Sony’s 167,877. The values show a 70% difference that Samsung enjoys in the global market over Sony. In addition, Samsung has more consumers at its disposal and can be attributed to the higher sales of smart TVs made in 2013 (Belch, 2013, P. 146). There is also a contrast in other promotional strategies in these two companies. Sony having enjoyed a monopoly in the past, has always had fixed prices. On the other hand, Samsung has employed pricing strategies to kill off competition. Samsung has used mainly competitive pricing, loss leader and multiple pricing as consumer oriented promotional strategies. Whereas Sony sells a 40 inch smart TV for $13,000, Samsung will sell a similar set for $10,000. Since everybody wants a better deal, most consumers will be attracted to the lower price and end up buying the smart TV from Samsung. I would recommend that Sony uses advertising in social marketing and product promotion so as to differentiate itself from the competition. As seen from the preceding discussion, Sony has lagged behind in advertising and product promotion. It was once the ‘best manufacturer of electronics but, nowadays consumers have forgotten the model for upcoming models such as Samsung. Sony needs to realize that trends have changed, and nowadays consumers sample products online before they can go to a shop to make purchases. The company needs to increase its online presence in order to interact with consumers. As with the case with Samsung, Sony has a big lesson to learn. Samsung interacts at a great level with consumers online and can persuade a lot of people to buy its TVs. Sony also need to increase its use of product promotion to increase its sale of smart TVs. Product promotion could be enhanced in the form of creating competitions or offering discounts for purchases. In order to aid the company’s short term and long term sale of smart TVs, a company needs to employ two consumer oriented marketing strategies. These are product differentiation and pricing strategies. Since many companies are producing TVs, it is wise for a company that wants to get ahead of the competition to differentiate its TV sets. It is also fundamental to add more features such as power saving, camera and internet port to a TV brand in order to make it different from other brands. Consumers always demand more value for their money. A TV that has more features and sophistication will be preferred by a consumer to an ordinary TV (Haves, 2010, P. 70). Pricing strategy is another factor that a company could use to increase its sale of smart TVs on short and long term sales. Pricing is a very sensitive issue with consumers since they always prefer the lower price for similar products. If TVs have the same features, consumers will tend to consider pricing only instead of the model of the company. The company that quotes a lower price will drive more sales of their TVs. Ultimately, each company must choose the most appropriate and efficient mode to advertise so that consumers will be informed. Samsung, being the leader in the global sale of smart TVs, has been aided greatly by making informed price decisions. It employs two pricing strategies in competitive pricing and loss leader strategy to win more consumers. In competitive pricing, Samsung compares the price of smart TVs from its close competitors Sony and LG before quoting its price. A quick window shopping for a 40 inch smart TV shows the retail prices as follows: Sony-$ 1,359, LG- $ 1,499, and Samsung 1,149 . Samsung prices its TV $ 210 cheaper than its closest competitor. In a market filled with smart TVs from different established brands, consumers will most likely jump at the cheaper TV. The price competition has even seen former vice president of, marketing strategies in LG, Mr. Berret move to Samsung. It shows that the price competition is an important move in making and retaining consumers (Chang, 2011, P, 100). Samsung has also used pricing strategy to stay ahead of the competition. They use the loss leader in order to lure consumers. Since Samsung is a huge company that makes a huge range of electronics, it can afford to quote insanely low prices for some of its products. As a matter of fact, Samsung has one of the cheapest mobile phones in the world. It can afford to sell low end phones for $ 10- $ 20 per item. With such cheap yet good quality items, consumers will most definitely recognize Samsung as a price-friendly brand. Whenever any of these consumers would like to buy or recommend a smart TV to anybody, they will go for Samsung TV since they have experience of good pricing through the very cheap handsets. Reading reviews of the consumer electronics reveals that consumers believe that Samsung has the ‘right’ price for smart TVs, and most of them don’t even bother to compare its prices with those of competitors such as Sony and LG. As seen from the strategies being employed by Samsung, I would suggest that both Sony and LG use pricing and advertising in order to differentiate their TVs. Since there are both lagging behind in advertising, they should invest more ineffective modes like TV and online advertising. Advertising is a very effective strategy that pushes more sales while also building the respective brands. The two companies should also ensure that the price of their TVs is close enough to Samsung’s, in order to eliminate the obvious profound differences in pricing. A fair price is always motivating to a consumer which makes them buy more. The two strategies- advertising and pricing are effective in product differentiation and should, therefore, be used by Sony/LG if they ever want to compete with Samsung. The most effective medium for advertising smart TVs according to Starcom is ‘media buy’. This in simple terms entails both broadcast and social media modes. Apparently, there seems to be no distinctive leader between broadcast advertising and social media advertising. It is suggested that a blend of the two is the most effective mode to advertise for companies selling TVs. Samsung knows so well about this and has extensively used these modes. With audiences of 5 billion viewers globally, TV is a powerful mode to advertise. Samsung sponsors major TV events like football, American football and music concerts to tap into the increased market. Likewise, social media has a wide following of active users. Surveys conducted by Marketing Land, 91% of people have visited a store after seeing an ad, promotion or description of the product online. This shows that the online medium is so productive, and companies should most definitely use it (Close, 2012, P.70). In conclusion, the influx of similar products leads companies to promote them across the global market. Product promotion strategies like advertising and pricing strategies are consumer oriented. They are intended to give the consumer more rationale for buying a certain product from one company instead of buying it from the competitor. Product promotion strategies also ensure that companies differentiate their products which make it easier for the consumer to decide where they will buy their product from. Companies should, therefore, choose the most effective product promotion strategies so as to increase sales, enhance their brand and increase their sales. References Andrews, C., & Shimp, T. (2013). Advertising Promotion and Other Aspects of Integrated Marketing Communications. USA: Cengage Learning. Belch, A., Powell, I., & Belch, G. (2009). Advertising and Promotion: An integrated marketing communications perspective. New York: Mc Graw Hill. Chang, S. (2011). Sony vs Samsung: The inside story of the electronics giants battle for global supremacy. New York: John Wiley & Sons. Close, A. (2012). Online Consumer Behavior: Theory and research in social media, advertising, and e-mail. UK: Routledge. Haves, T. (2009). Global television marketplace. London: BFI. Michell, T. (2010). Samsung Electronics: And the struggle for leadership of the electronics industry. New York: John Wiley & Sons. Mullin, R. (2010). Sales Promotion: How to create, implement and integrate campaigns that really work. Great Britain: Kogan Page Publishers. Read More