Strategic Business Operation in Samsung - Case Study Example

Strategic Business Operation in Samsung Introduction The global business environment has significantly changed over the past few decades. Such change in environment is characterized by the change in the nature of competition, strategy and most importantly that of marketing. Today’s business environment is typified by intense competition among the organizations. In such a competitive business scenario, marketing plays a very important role in making a product or brand successful. Today marketing has become more ‘specific’ than it was ever before. Each and every specification that are related to the customers, consumers, competitors are likely to have crucial impact on the performance of a business firm. Today marketing strategies, especially the product related strategies are centered on three major factors namely segmentation, targeting and positioning. Each of these factors is equally important for the organizations. In case of segmentation, age of the consumer is one of the most important factors that need to be given importance while making any strategic decisions regarding the company’s existing or future product line. This report focuses on one of the largest electronics company, Samsung and its relation with the people of United Kingdom. In fact, the principle objective of preparing this report is to identify and analyze the recent change in the nature of population of UK and its possible impacts on the existing and future product base of Samsung. The report starts with a brief description of the chosen company and its products. Then it attempts to give a clear picture of the UK population by focusing on the age factor in particular. “A recent statement by the UK Office for National Statistics highlights that for the first time in 2008 the number of 60 year olds exceeded the number of 16 year olds in the UK” – this is the statement that will be the centre of focus in this report. This project attempts to identify the implication of the above report on the products of Samsung. Samsung Over the last 70 years, Samsung has been dominating various business segments starting from electronics to construction, from semiconductors to skyscraper and from petrochemicals to medicine (Samsung-a, n.d.). However the organization is renowned worldwide for its flagship company – Samsung electronics. Samsung electronics Co. Ltd. is one of the largest players in segments like telecommunications, semiconductors, digital convergence technologies and digital media. In 2008, the company’s consolidated sales amounted to almost US $96 billion. It is comprised of two separate business units which are device solutions and digital media and communications. There are 61 countries in the world where Samsung electronics ltd has its strong foothold. More than 164,000 people are employed in the company throughout the world. The company produces mobile phones, digital televisions, TFT LCDs and memory chips (Samsung, n.d.). As far as mobile phones are concerned, Samsung produced mobile phones are available in all the major markets of the world. UK, being one of the most developed countries in the world, has always been the most preferred choice of most of the leading mobile phone manufacturers. In this market Samsung has been competing with players like Nokia, LG, Sony Ericson, HTC etc. In 2008, the market was dominated by Nokia with almost 38.6% market share. Samsung was found to be holding the number two position with only 16.2% market share (Snol, 2009). However in 2010, the scenario is found to have changed as Samsung has managed to improve its market share from 16% to almost 21.2%. 40% annual growth of business has made such improvement possible (Maisto, 2010). The vast array of Samsung mobiles are meant to ensure that the entire population of the country can have an access to it. Some sets are made exclusively for high end customers whereas some are within the reach of ordinary people. It is found that the company is set to launch a marketing campaign worth 12 million euro for the purpose of promoting its two flagship handsets – Samsung Galaxy S and Samsung Wave (Millett, 2010). On the other hand there is Samsung Genio Slide is exclusively targeted towards the youth population of the country (Anonymous, n.d.). Hence it can be said that demographic factors like age and income play a crucial role in the decision making process regarding the product. Population of UK As on June 2010, there are almost 61,284,806 people in UK. Among them only 16.5% fall in the age group of 0-14 years, whereas almost 67.1% people is found to be within the range of 15-64. The population of the country is growing at rate of 0.282% (Central Intelligence Agency, n.d.). The most notable feature of UK’s population is that, number of people above 60 years of age exceeds the number of children below 16 years. This important statistics was first observed when the Office for National Statistics gave a detailed report on the population of UK in 2008. [Source: Office for National Statistics] The picture presents the population of UK based on ‘age’. It is pretty clear that in both the cases (male and female) number of people below 16 years of age is slightly lower than the number of people above 60 years. The Office for National Statistics believes that the UK population is ageing. In 1983, number of people aged 65 or more was 15% of the country’s total population. However over the past 25 years, this number has increased significantly. In 2008, it was found that such increase is close to 1.5 million. In other words almost 16% of the total population is having age 65 or more. It is also revealed that during the same period of time (1983-2008) number of people having age 16 or below has decreased from 21% to almost 19%. In simple words it can be said that in UK, number of young people is decreasing and that of aged people is increasing on a constant basis. The most ominous fact is that this trend is expected to continue. It has been predicted by the Office for National Statistics that by 2033, 23% of the country’s total population will be having age 65 or more. Statistics provided by the ONS also say that the number of people falling in the age group of 85 and above has increased at the fastest rate. This age group is better known as ‘oldest old’. In 1983 there were almost 600,000 people in the country aged 85 and above. In 2008, this figure is found to have doubled as it reached 1.3 million. The Office for National Statistics has predicted that by 2033, number of people having age 85 or more will be almost 3.2 million. Over the past 25 years there has been a significant change in the definition of median age. In 1983, the median age in UK was characterized by 35 years, but in 2008 it is understood as 39 years (Office for National Statistics, n.d.). Such breathtaking statistics clearly indicate that UK population is becoming aged and this transformation is taking place at a significant rate. [Source: Office for National Statistics] The above mentioned facts and figures are considered to be very important for the companies like Samsung that produce electronics products like mobile phones. Situation will be clearer when some facts are presented regarding the use of mobile phones by various age groups. It is found that almost 70% of UK population has mobile phones and 79% of people whose age is ranging in between 18-24 years have mobile phones. As far as children are concerned, in UK two-thirds of the total numbers of children who are aged between 8-15 years possess a mobile phone. Almost 49% children belonging to the age group 8-11 own a mobile whereas almost 82% of those having age in between 12-15 years have a mobile (Ofcom, n.d.). Moreover, according to the report of Ofcom, almost 42% of these 12-15 years aged children pay ‘their own mobile phone bill’ (Ofcom, n.d.). Various researches have shown that in UK, children as well as the young people are very fond of their mobile phones. In fact young people believe that mobile phone is more important that television. As far as senior people are concerned, significant portion of them use mobile phones. However, the important fact is that a large section of these people feel hesitant and intimidated by new technology. It is found that in UK only 44% of senior people have shown a positive attitude towards a new technology (Doro, 2010). An important fact that came out during a survey conducted in 2006 is that most people belonging to the age group18-40 years feel that their lives have been considerably improved after the advent of mobile phones. On other hand at least half of the people having age 40 or above nurture a different notion (Anonymous-a, 2006). All these above mentioned facts are figures are expected to have significant impact on Samsung and its products. Possible implications are identified and discussed in the next section. Implications for Samsung Samsung is known for its new high end technologies which are used extensively in its products like mobile phones and televisions. It is expected that young people throughout the world will accept these high end products more as compared to senior people. Advanced technologies, excellent designs and models, vivid use of color– all these factors basically characterize today’s young generation. More so, when the youth belong to one of the most developed nations. UK is one of the technologically most advanced country and one of the largest markets of mobile phone. Quite obviously giants like Samsung will be influenced by the country’s population and its age. Samsung mobile phones are mainly targeted to people who fall in the young or middle age group. Furthermore this young age group includes the children whose ages fall in the range of 8-15 years. The fact that is likely to have a significant effect on the company and its business is that number of young people in UK is continuously decreasing while the number of aged people is increasing. This actually means that the number of target customers of the company in UK is decreasing. Reduced number of target customer is likely to reduce its sales volume which will further result in decrease in revenue. Moreover reduced volume target market means companies will compete for less number of people. As a result the intensity of the competition is likely to increase significantly. The aspect that is likely to be most influenced by the ‘ageing’ nature of UK population is its product. Both existing product line as well as future product development programs of Samsung is required to be redesigned after taking into consideration the above mentioned facts and figures regarding the UK population. Currently, most of the products of the company are designed to target the needs of the young generation of the country. For instance the new Genio Slide is made exclusively for the young generation. The phone is available in attractive bright colors like pink, yellow, orange etc. which are chosen keeping in mind the choice of youth of the country. Phones like Samsung wave which is powered by advanced internet and communication technologies is likely to be purchased by the young professionals. There is hardly any phone that is made by Samsung which focuses on the needs of the people belonging to the age group 60 or above. The simple reason is that these people are usually not supposed to be ‘tech savvy’. They are not expected to be heavy user of ‘mobile internet’ and various other related technologies. However, statistics show that aged people have outnumbered the youth and this is precisely where Samsung is expected to face a tough challenge. Moreover, aged people are likely to be more conscious about the disadvantages of using a high end mobile phone. Simple issues that are generally ignored by the young people are given much importance by the aged people. This is another major problem for the companies like Samsung. In order to deal with the above mentioned situation, the company should try to modify its existing product line. Samsung should change its marketing strategies. The company has to target the senior citizens of the country as their number is growing rapidly. Any company which will ignore this section of the population will have to struggle to maintain a sustainable growth. Products that are launched primarily for the country’s youth can be re-launched for the older people by making some modifications in the technology, design and color. For instance, Genio which is introduced in different colors to attract the youth can be re-launched in two-three sober colors which are expected to be liked by the aged people. Samsung can introduce a series of phones meant exclusively for the senior citizens of the country. These phones will have the required technological back up yet it will be user friendly so that older people can easily use it. These phones must be heavily promoted in the both electronic as well as print media. There might be some older people interested in advanced technologies and high end mobile phones. Samsung should give proper importance to these people while launching its future product line. The products that will be launched in the near future should not be marketed only for the young section of the population. The company should give special attention while choosing the color and the design of the phone – in no way should these phones look like as if made exclusively for the young generation of the country, rather they should be designed keeping the senior citizens in mind. Conclusion Like most of the developed countries, the population of UK is also becoming aged and this is likely to impact companies like Samsung which is one of the most respected electronics companies in the world. The fact that aged people has outnumbered the youth is expected to have a significant influence on the existing product line and the future product development programs of the company. Samsung can effectively tackle the situation by bringing the older citizens of the country within its fold. Such steps are necessary in order to stay ahead of the rivals well in advance, as the competition is likely to grow more intense due to the reduced size of the target market. 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