Promotional and Advertising Strategies of LG and Samsung - Assignment Example

Marketing Strategies Samsung, the South Korean Multinational Electronic Company, is popularly known for its value innovation program. The company has succeeded in maintaning its top position in the television industry by capturing the world’s largest market share of 26.4% in smart TV industry recorded in 2013. Samsung believes in continuous innovation development in order to sustain its position in the market which is why it is always coming up with newer technologies in the marketplace. In the recent years it has been seen that the television market has become competitive enough and the strongest competitor of Samsung, LG, took a lead by registering a 14.4% market share in the television industry in 2013. In this volatile market it is necessary for each of these companies to come up with unique marketing strategies, these strategies play a vital role in brand building and differentiating one company from its competitors. The paper discusses the major marketing, pricing, and consumer oriented promotional strategies for the two most aggressive players in the television market: Samsung and LG. (Briel, 2014) Promotional Strategies of LG and Samsung It is observed that both LG and Samsung have effectively utilized all the 4P’s of marketing mix. Both the players are almost running head to head in the television market with Samsung being a little ahead of LG. However, according to Korean Times LG has recorded higher sales of its products especially television sets in the Indian market as compared to Samsung. This is due to two very different marketing approaches used by each of these companies. Indian market is largely dominated by rural areas, among the total population of 1.1 billion people, 200 million people live in deserted, rural areas which means they are naturally poor and cannot afford very expensive television sets. In such situation Samsung decided to target the elite sector of the market, mainly due to two reasons. Firstly, it realizes that India is one of the emerging markets around the world and selling its product at a premium rate would increase its probability of succeeding in such a market. Secondly, selling the products at a premium rate is always good for a brand in the long term to establish itself as the global premium brand. In the other hand LG, another Korean giant company, has clearly adopted the market penetration strategy in Indian market. LG sells its television sets comparatively at a lower price to provide an access to the richer segments as well as to those with lower income. Like Samsung, LG imports premium products from Korea but increasingly promote it locally and customize it according to the needs and tastes of the people there. For example, after doing a thorough research LG got to know that there are about 16 official languages spoken in India, realizing that LG came up with the idea of providing the customers with a wide option of selecting 16 different official languages to be displayed on the screen and manual of the television set. In addition to that LG realizes that the people of India have strong emotional and cultural bonds attached with cricket, so LG decide to come up with the in-built cricket games in its television sets which have brought it into the limelight in front of the whole of India. (Soon-kyoo, 2012) Samsung promote its televisions sets mainly through advertisements on TV to attract the upper middle and upper class sector of the market, this explains that Samsung is aware that the market penetration of television throughout the country is only 40 per cent covering most of the urban region in India. Most of its advertisements emphasize the market leading position of Samsung and its technology best products globally. In contrast, LG realizing the unavailability of television in rural areas promotes its television sets through a campaign called ‘van marketing’. The campaign is carried out by several trucks loaded with LG products which visit these cities, villages, towns, and advertise personally. (Soon-kyoo, 2012) However, this doesn’t mean that LG is superior to Samsung as both the companies have adopted two different approaches to reach its target customers in the Indian market. It is not necessary that the company with the larger sales is also profitable, there are many costs attached to every strategy a company undertakes to promote its product. Since both of the companies’ target markets are different so their promotional strategies have to be different, it cannot be said that LG’s promotional strategy is more effective than Samsung’s promotional strategy because both are utilizing the medium of communication to the target audience in the most appropriate way. Looking outside of India, Samsung and LG both use all the mediums available in order to reach its customers globally. For that matter they advertise and promote their television sets through various channels like TV, radio, flyers, magazines, internet etc. (Kotler, 2012) Differentiating in the Marketplace: As stated earlier, the television market is becoming more and more volatile day by day, in such a situation it becomes very difficult for a company to think of ways to differentiate itself from the other competitors. And even if it does succeed in differentiating itself soon the other competitors will copy its Points of Differences (PODs) and push it back to its original position. Therefore, it is important for a company to keep on innovating and implementing new ideas, and features into the product. (Kotler, 2012) Television industry has seen many technological advancements, recently the LCD TVs are made obsolete with the emergence of an extremely slim of just 2.99cm thick LED TVs. One does not need to see into the crystal ball to look into future with the launch of 3D TVs with which you can actually step into future. You do not need to go to a cinema when you can have a whole theater experience sitting at your homes. Technology is changing at the roller coaster pace, stopping for a single second means you are already 3-4 years behind in this technological race. In order to differentiate a company must first understand the PODs of the existing competitors in the market and incorporate their PODs as Points of Parity (POPs) in their own products. For example, if a company intends to compete with Samsung then it can differentiate itself on the affordability and provide the customer with the same features and facilities Samsung provides but at a lower price. Another way to differentiate itself is by coming up with a slimmer television or it can also differentiate itself by the services it provide. It can facilitate its customers with after sales services, for example it can introduce an offer of old television replacement with a new one of the same company. In this way it can induce its consumers to buy the same company’s television if the previous one breaks down or becomes obsolete. (Kotler, 2012) Uses for Customer Oriented Promotions in Short and Long Term for a Company: The intensity of promoting a company’s product depends upon the life stage at which it stands. For example in the introductory and growth stage heavy advertising and promotion is needed because a company has to create its brand awareness among the people. Similarly, sometimes the situation is such that a company has to introduce strategies to boost up its short term sales. Although generally short term offers and strategies are referred to be dangerous for the company in the long run but if crafted carefully then these can do wonders for the company. (Kotler, 2012) For a company sometimes short term promotions become necessary, there can be many reasons for that like to clear off its inventory, or if a new company enters the market and in the initial stages it captures a huge slice of the market then the existing company feels threatened by it. To avert this long term risk many companies now and then come up with short term promotional strategies. For example, in the television market a company can gain the attention of people by promoting its product at a lower price or it can announce its soon to be launched products in advance. Firstly, by lowering the price in short term people will resist the pulling force from other competitors and decide to stay with the previous company. Secondly, if the company announces its soon to be launched products in advance then the consumers will forego the decision of switching to other companies’ product and will stay with the previous company. In this way different short term promotional strategies can be helpful for the company both in short term and long term. (Kotler, 2012) Pricing Objectives of Samsung: Because of its presence in different product categories, Samsung uses different pricing strategies for each of its product. Samsung follows two pricing objectives in the television market, these are: maximum market skimming, and product quality leadership. Maximum Market Skimming: Market skimming is the strategy in which the company first enters the market with a high price but later when it has skimmed the maximum amount of revenue from various segments of the market the price drops steadily. According to the industry publication TWICE, Samsung has followed Sony in reducing the price of its 55- and 65-inch 4K ultra High-definition-resolution televisions by $1000 and $1500 respectively. (Katzmaier, 2013) Product Quality Leadership: In addition to maximum market skimming another pricing objective thoroughly followed by Samsung is product quality leadership. Since Samsung is a specialty product it is characterized by high levels of perceived quality, status, and design with a price just high enough not to be out of consumers’ reach. The following objective is used to communicate the premium quality Samsung TVs provide to its customers. Differentiating upon Pricing Strategy: One way in which a company can differentiate from its competitors is by following the maximum market share pricing or market penetration pricing. This type of strategy can be used in price sensitive market, for example the Middle Eastern countries of the world are the most price sensitive. In such a market generally lower price stimulates the market growth. Overall this is not a bad strategy since the population of poor countries cannot afford highly priced TVs so a company can differentiate itself on the lower price criteria. Also, low price will discourage the actual and potential competitors and push them out of the market. (Kotler, 2012) Secondly, the company can come up with captive pricing strategies. In this strategy a company sells its main product at a lower price but the accompanying parts of that product are priced at higher rates. The following strategy is generally practiced by printing companies as the consumer first buys a printer and later as the cartridge gets used up he has to buy a new one. So in the case of television a company can charge lower price for the television itself and later it can charge higher for increasing the capacity of channels the television can support. (Kotler, 2012) Most Effective Advertising Mediums: One of the most effective advertising methods a company can adopt is the use of television. In the world today each two of the three households have a TV set at their homes. Advertising on TV gives the company a unique advantage of controlling the aspects of the brand and product on which to focus communication. For example, in the case of 3D television the advertisements can show a person stepping into the TV screen and entering into another dimension. Another advantage of advertising on TV is that it permits the sellers to repeat a message again and again, and increase their chances of capturing a place into the consumer’s mind. Moreover, a seller can easily exaggerate different aspects of the product by enhancing its features through editing. For example, a TV company can show the clarity of picture by enhancing its color and contrast or it can claim to be extra slim by adjusting its thickness through editing software. (Kotler, 2012) Works Cited Soon-kyoo, C. (2012, April 6). How LG surpassed Samsung in India. koreatimes. Retrieved May 21, 2014, from http://www.koreatimes.co.kr/www/news/bizfocus/2012/04/342_108490.html Katzmaier, D. (2013, August 26). Samsung, Sony cut 4K TV prices - CNET. CNET. Retrieved May 24, 2014, from http://www.cnet.com/news/samsung-sony-cut-4k-tv-prices/ Briel, R. (2014, February 18). Samsung global smart TV market share reaches 26%. Broadband TV News. Retrieved May 24, 2014, from http://www.broadbandtvnews.com/2014/02/18/samsung-global-smart-tv-market-share-reaches-26/ Kotler, P. (2012). Marketing management (14e éd.[française]. ed.). Paris: Pearson. Kotler, P., & Kotler, P. (2011). Principles of marketing: a South Asian perspective (13th ed.). Delhi: Pearson Prentice Hall. Read More