Steps Undertaken by Management in Samsung - Essay Example

? Management Sur Educational Table of Contents Table of Contents Samsung 3 Steps Undertaken by Management 4 Brand Assessment Galaxy 6 Managerial Implications 8 Conclusion 10 Recommendation 11 Other Considerations 11 References 12 Samsung Samsung is a well known multinational company. The company is headquartered at Seoul, South Korea. Samsung was established by Lee Byung-chull in the year 1938. Although Samsung has long business history, they have recently entered into smart phone market. This essay will focus on challenges faced by Samsung Galaxy brand during initial period. The company entered smart phone market with Galaxy S (sub brand of Galaxy) to compete with market leaders, such as Apple. The company within next two years slowly expanded the product portfolio under Galaxy brand name. Product portfolio of Samsung Galaxy brand can be described in the following manner. Galaxy S Galaxy S 2 & S 3 Galaxy Note Galaxy Tab Galaxy Ace Galaxy Nexus Galaxy Tab Samsung Galaxy S series is complemented with Android operating system. In the initial phase the company implemented latest hardware technology to improve performance of the phone. The company promoted the product with triplet unique selling proposition: Multimedia phone with latest application Slim and trendy look (thickness of 9.91mm) Unique design with feeling of human touch Branding Assessment Consumer’s perception about the brand In recent years Samsung Galaxy shows strong brand association among customers. Customers believe the Galaxy brand has revamped the traditional image of Samsung by implementing unique design and technical application in the brand. Customers prefer to work on wide touch screen of Galaxy phones. Corporate Decisions The company has increased product line periodically after the first launch of Galaxy phone. The company takes help of above the line promotion to promote the brand. In the press release Galaxy brand emphasizes on product specification to attract customers. Corporate Activities Management of the company has taken decision to push the brand further and introduced low priced smart phones in the developing countries. (Source: Author’s Creation) Steps Undertaken by Management In the initial stage many critics pointed out that Galaxy would not be successful venture in a market dominated by Apple. Customers criticized Galaxy phones due to their caught in between nature (First model of Galaxy S was somewhere between tablet and smart phone due to its absurd size). Management has taken to steps to modify the phone by increasing screen size and application in their Galaxy S2 model. In the smart phone segment Apple was the leader and Samsung classified as new player in the segment. Customers accustomed with smart phone usage has raised question over display of the phone and rejected it. Management took the rejection as challenge and changed their research and development model to overcome initial problems. People have rejected initial models of Galaxy due to its unstable quad-core processor. Quad core processor of Galaxy was working slowly in comparison to Apple’s iPhone. The company has increased processor speed by increasing Ram memory in their next models. No one can deny that initial models of Galaxy smart phones were associated with cheap and plastic look and that is the main reason why people rejected initial models. The company is still working on that issue and with their all new metallic Galaxy S III they have somewhat sorted out the problem. Research & development team has designed new models with polycarbonate material to enhance the look of the product. iPhone users criticized Galaxy smart phone due to poor wireless connectivity and slow media file sharing while Galaxy has answered back critics with their modified models. In the initial stage people were confused about applicability of Samsung Galaxy smart phone, and the company has not tried sufficiently to clear out confusion in the mind of customers. Brand image of Apple as smart phone maker was already established when Samsung launched Galaxy. Many users had no idea about distribution channel designed by Samsung to distribute their Galaxy smart phones. Sales volume for Galaxy was way behind in comparison to iPhone. International business for iPhone contributes more than sixty percent to total sales revenue, and also the company has established strong presence in developing nations like China and India. Apple has increased various applications like entertainment for kid, monitoring blood sugar, excel data using, doing social networking, making corporate presentation and many more in their offering (iPhone) to fulfill needs of multi segments of consumer. The company has increased depth of product offering by customizing the design of the phone in accordance with requirement of multi segment customers rather than designing the phone for technical people. They not only incorporated simplicity in product design but created multi application platforms like jawbone’s audio gear, easy file-sharing for users. They created book manuals to create interest about multi functionality of the phone among users. Multi application of Apple has helped the brand to build brand equity among customers whereas in the initial stage Samsung Galaxy needed the same kind of strategy to establish position in the market. Managers have started to promote their Galaxy brand with the help of television commercial, print ads, and sales promotion to increase the brand image among customers. The management of the company has shifted their focus to improve quality of their smart phones. They also took help from their suppliers like SMEs to increase brand power. They supported global suppliers for Galaxy smart phone with financial schemes and other incentives to improve their performance. Suppliers also helped the company to reduce the cost of value chain, and Samsung channelized their financial resources on research and development to improve design of the product. In developing country Samsung has tried to push Galaxy brand by decreasing price for their low end model. These strategies were fruitful for the company because market share of Galaxy in global smart phone segment has increased to 20 percent in 2011 with respect to mere 4 percent in 2009 (Samsung, 2012). Brand Assessment Galaxy Samsung Galaxy’s branding concept is debated among research scholars due to multidimensionality as well as varied functionality of the product. Marketers define a brand as an intangible asset complemented by logos, characters, colors and symbols representing perception or image of the company among consumers. David Aaker argued that applying concept to everything is not justified rather marketer should use branding terms only for purchasable action (Aaker & Biel, 1993, p. 69). Samsung uses deep blue color to define their brand whereas brand equity of Galaxy is purely product driven (AlShebil, 2007, p. 11). Brand Image. Brand image of Galaxy is associated with new invention and unique design. Tagline for the product says that it is designed for human. Human touch factor is an important part of Galaxy smart phone’s branding strategy. Brand Awareness. Customers are familiar with design of Galaxy S III, and people can recognize Galaxy as provider of world’s thinnest smart phone. The following picture will be helpful to understand product design of Galaxy S III. Brand Element. Samsung uses white and blue color as brand element. The company used the slogan of “vivid, fast and slim” for the second generation Galaxy smart phones which they changed for third generation Galaxy smart phone as “designed for human”. Brand name. Galaxy name is easy to pronounce, and the name signifies a deep meaning. Brand color. Samsung name is written in shinning bright silver color on the top of the phone. Brand Positioning. The company establishes point of parity with other smart phone makers by developing same applications, such as web browsing and media applications, while the brand has achieved point of differentiation in terms of design and style. Brand Personality. Brand personality means the idiosyncratic expression of the brand. Brand personality helps customers to distinguish the brand from its competitors. Brand personality of Galaxy depends on sophisticated technology, innovation, and reliability (Gelder, 2005, p. 41). Managerial Implications Management of Samsung has pushed the Galaxy brand with the help of digital marketing. They organized series of events like Extreme Unboxing series to promote Samsung Galaxy SII and social media contest for Galaxy S III. The company organized Extreme Unboxing series in London, and this event company asked people to review Galaxy SII’s performance in different ways, such as in roller-coaster, in helicopter, while parachuting, and in racing car. The concept was hit in terms of creating brand awareness among people. The management also uploaded video regarding various application of Galaxy smart phone in YouTube in order to create buzz about the brand. The brand faced setback during august 2012 in terms of losing legal lawsuit against Apple. The iPhone maker charged Samsung Galaxy brand for imitating the design and applications of iPhone. Court announced decision in favor of Apple and ordered Samsung to pay $1.049 billion as a monetary fine to former. Management of Samsung is confident about sorting out such kind of embarrassment in future. Management of Samsung has established strategic partnership with Google to improve performance of Nexus (a sub brand of Galaxy). They are working on 10-inch Nexus tablet for improving internal performance. The company has invested more than 1 billion dollars on research and development to create Galaxy product line. The company employed more than 0.15 million employees to provide after sales service to their customers. The company invested more than 25 million dollars to incorporate dynamic random access memory (DRAM) in low priced Galaxy phones in order to improve performance (Noergaard, 2005, p. 174). Samsung has raised the price of their Galaxy iPhones for developed countries in order counterbalance negative effect created by increased DRAM price. Recently the company has launched Galaxy SIII Mini to overshadow iPhone 5 launched by Apple. Galaxy SIII is complemented with dual core 1 GHz processor, 16 GB internal storage, 5MP camera and AMOLED screen 4.8 inch screen. Galaxy smart phones are with Jelly Bean (Android Application) offered by Google. Big players, such as Nokia, HTC, Apple, Sony and other mid level players are also implanting state of art technology in their smart phones hence the market became hypercompetitive. Management of the company has found unique way to achieve market leadership in this situation by concentrating on designing Galaxy smart phones unique in design and application. Current market share for Galaxy brand is 32.6% which is way above than their competitors. In 2011, the company shipped 50.2 million smart phones in the world in comparison to Apple’s 26 million shipments. Conclusion The story of Samsung Galaxy brand can be classified as how marketers develop a brand. In 2009 very few of the world knows about Galaxy brand, but three years later Galaxy smart phones has become hot topic among smart phone lovers. Management has carefully developed the brand in order to achieve market leadership. They used integrated marketing communication (IMC) to build the brand. Integrated marketing communication has emerged as important ‘magic bullets’ for marketers to gain competitive edge over others. Advertising, Sales Promotions, Direct Response Marketing, and Public Relation are four pillars of integrated marketing communication. The company used TV commercials as general advertising to build brand image among customers while public relation helped them to discuss point of differentiation for Galaxy smart phones with customers. Digital marketing was used to increase brand interactivity with customers. Importance of brand equity can be understood by analyzing value of the brand in economic term (Franzen & Moriarty, 2008, p. 459). Brand equity concept is highly influenced by consumer franchise of brand or in simple word, brand equity contributes additional cash flow by linking the brand with underlying product mix or service mix. Financial perspective of brand equity shows strong brands often termed as power brands due to their ability achieve higher economic value than weaker competitors (Thomas, 2008, p. 44). Recommendation Implementing new product line with state of art technology is associated with fixed cost. This study will recommend Samsung to follow iPhone’s subsidy structure. iPhone puts pressure on carriers to provide service in fare rate by minimizing subsidy ratio. Apple saves lot of carrier cost by putting pressure on internet service provider. Samsung should adopt iPhone’s subsidy model of raising early-termination and data fees in order to cope with future cost. Other Considerations The company has build brand personality for Galaxy in a right manner, and they also aesthetically crafted other attributes of the brand for last three years. Initially the Galaxy brand focused on promoting product specification in their advertisements (Holt, 2002, p. 311). Now, after building strong brand equity and brand attribute, the company is synchronizing emotional touch and human feeling with Galaxy (Elliott & Percy, 2007, P. 88). The company should decrease the price of their Galaxy brand further to increase penetration level in Asian market. Decreasing the steps of value chain will help the company to achieve cost leadership and deliver brand promise (King, 2006, p. 75). References Aaker, D. A., & Biel, A. L. (1993). Brand equity & advertising: Advertising's role in building strong brands. London: Routledge. AlShebil, S. A. (2007). Consumer perceptions of rebranding: The case of logo changes. Michigan: ProQuest. Elliott, R., & Percy, L. (2007). Strategic brand management. Oxford: Oxford University Press. Franzen, G., & Moriarty, S. (2008). The science and art of branding. Armonk, New York: M.E. Sharpe. Gelder, S. V. (2005). Global brand strategy: Unlocking brand potential across countries, cultures & markets. London: Kogan Page Publishers. Holt, K. (2002). Market oriented product innovation: A key to survival in the third millennium. Berlin: Springer. King, J. M. (2006). Copywriting that sells high tech: The definitive guide to writing powerful promotional materials for technology products, services, and companies. Issaquah: WriteSpark Press. Noergaard, T. (2005). Embedded systems architecture: A comprehensive guide for engineers and programmers. Amsterdam: Elsevier. Samsung. (2012). Global harmony with people, society & environment. Retrieved from http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2012/2012_sustainability_rpt.pdf. Thomas, N. (2008). The strategy and tactics of pricing: A guide to growing more profitably. (4th ed.). New Jersey: Pearson Education. Read More