Market Oriented Product Innovation - Case Study Example

?Business Strategy Table of Contents INTRODUCTION 4 History 4 Organizational Culture 4 Success Factors 5 CRITICAL SUCCESS FACTORS 5 Product Range 5 Strategic Capabilities 6 New Product 6 Competitor Analysis 7 SELECTION OF STRATEGIES 7 Strategic Options 7 Strategic Option Tools 8 Diversification 10 IMPACT OF STRATEGIES 11 Impact 11 Difference between Old Products and New Products 11 Conclusion and Recommendation 12 References 13 INTRODUCTION History The Samsung group is a multinational conglomerate which is headquartered at Seoul, Samsung Town, South Korea. The company deals in diversified businesses and products. The company was founded in 1938 by Lee Byung-chull. Samsung entered the electronics industry in 1960s, and the mobile segment was launched in 1983. The first phone that the company launched was called the automobile phone or car phone in 1986, but because of poor sales, the production was stopped. In 1993 Samsung launched SH-700 which was a smaller and sleeker mobile phone with better sound quality. Moreover, Samsung Mobile also got into aggressive marketing, so it captured half of the mobile market share, which was previously ruled by Motorola. Organizational Culture Samsung follows a simple philosophy to devote their technology and talent in order to create better-quality products and services. They prefer to hire skilled workforce and bright talents around the world; and offer them all the resources that they require to utilize their skills. Samsung follows a strict code of value in the organization. Firstly, they comply with the ethical standards and the laws; secondly, customers are always respected; thirdly a clean organization culture is followed; fourthly, focus towards cresting eco-friendly and healthy products have been always there and lastly, the company is always socially responsible for the society. Creativity, hard-work and intelligence are valued at Samsung (Samsung, 2011). Success Factors Samsung is successful because of three major factors, namely design, technology and branding. The company invests heavily in research and development activities in digital technology, by employing scientists around the world. The LCD, plasma display, innovative cell phones, voice recognition technology, speech converted into text technology are a few developments that the Samsung labs have offered to the world. It is also a world leader in production of memory chips, and the creator of the first 1 megabit chip in the world. Samsung is also the largest producer of SRAM and DRAM chips in the world. The Galaxy S series is the turning point for Samsung Mobile because it has given stiff competition to the market leader in the smart phone segment, Apple Inc. This is the reason why this product has been chosen for this study. CRITICAL SUCCESS FACTORS In this section, the critical success factors of Samsung would be discussed in details in order to evaluate the competencies of Samsung in terms of its product range, strategic capabilities, new products and competitor analysis. Product Range This study would focus on the Samsung Galaxy brand mobile, as the company entered the smart phone market with Galaxy brand to compete with market leaders such as Motorola, Nokia, Apple, HTC, and others. Samsung expanded the product portfolio under the Galaxy brand name. Under the product line of Galaxy, Samsung launched Galaxy S, Galaxy S II & S III, Galaxy Note I, II, Galaxy Tab, Galaxy Ace, and Galaxy Nexus. The Galaxy S series was launched to directly compete with Apple’s IPhones. Samsung Galaxy S series supports the Android operating system, which is another competence that has given stiff competition to Nokia which uses Symbian and Windows operating system, while Apple uses iOS. Strategic Capabilities The Galaxy S series is a reflection of enhanced design and technology of Samsung. The new Samsung Galaxy S III has been launched with the new version of the Android platform called Jelly Beans. This means that the strategy of Samsung is to bring out the most innovative technology in the market through its products before anyone launches it. Jelly Beans utilized by Samsung Galaxy S has been considered the most popular operating systems. Samsung Galaxy has shown strong brand association for its customers. Customers admire the Galaxy brand because of its unique design and technical applications. Apart from that, the high end features and quality of Galaxy S is offered by the company at a price lower than the competitors. Samsung has redesigned not only its products, but also their production, operation, and delivery system (Gelder, 2005, p. 41). New Product Galaxy S III of the Galaxy S series of Samsung, created a buzz in the market because the company has launched Galaxy S III to overshadow iPhone 5 launched by Apple. Galaxy S III has dual core 1 GHz processor, 16 GB internal storage, 5MP camera and AMOLED screen 4.8 inch screen. Galaxy smart phones are powered by Jelly Bean Android Application offered by Google. Samsung has adopted aggressive marketing policies for the Galaxy brand with the help of digital marketing. They have organized series of events like Extreme Unboxing series to promote the Samsung Galaxy S II and social media contest for Galaxy S III. It also promoted Galaxy S III by displaying video of various applications of Galaxy smart phones on YouTube, for creating buzz about the brand among people (Franzen and Moriarty, 2008, p. 459). Competitor Analysis Big players such as Nokia, HTC, Apple, Sony and other mid-level players are also implanting state-of-the-art-technology in their smart phones; hence, the market is becoming hypercompetitive. Management of the company has found a 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 their competitors’. In the year 2011, Samsung shipped 50.2 million smart phones around the world in comparison to Apple’s 26 million shipments. However, the brand faced setback during 2012, as it lost legal the lawsuit of $1.049 billion against Apple (Noergaard, 2005, p. 174). SELECTION OF STRATEGIES Strategic Options The strategic options that Samsung has utilized to become the market leader in the smart phone segment mainly comprises brand competitiveness, brand strategy in terms of technology, promotion, product quality and design, and introduction of the ‘WOW factors’ in products through innovative features. Samsung Galaxy S series portrays all the strategic options formulated by Samsung mobiles to give a stiff competition to the market leaders in the industry. Galaxy S III was branded as a major competitor of the leading mobile brands in the market. It possesses the support of cutting-edge technology, high-budget promotional campaigns and innovative features borne by the latest android version called Jelly Bean. It also has an amazing display which is extremely user-friendly, so the “WOW factor” is also there in S III (The Tech Journal, 2013). Strategic Option Tools In order to analyze the strategic options of the Galaxy S III in details, two strategic option tools would be utilized, namely a) Porter’s Generic Strategies, and b) Scenario Analysis. The porter generic strategies would assist in analyzing the route of Samsung mobiles in choosing its strategic options, while scenario analysis would give a view of the market conditions due to which such strategic options were chosen. a) Porter’s Generic Strategies: Michael Porter introduced this generic strategy to analyze how the success of the company rests on the strategic options with respect to the market. He argued that the strengths of the firm fall under two categories, namely differentiation, cost advantage, and focus, as can be seen in figure 1. Figure 1: Porter Generic Strategies Source: (PDF Cast, 2011) Cost leadership signifies high profit because of low cost of production and operation; differentiation signifies creating a product which has unique features or qualities. Focus means segmenting the market and targeting a certain group of customers. Samsung Galaxy S III has followed differentiation strategy to offer certain cutting-edge technologically advanced features which are best in the industry. Though Galaxy S III is a high range smart phone, it is offered at a much lower price compared to the smart phones of other companies in the same level. It also has cost leadership in the smart phone market and the sales of Galaxy S III are high compared to IPhone 5 of Apple or Nokia Lumia series. Samsung does not have niche customer group, as they target the mass. The company is already offering distinguishing features in Galaxy S III at a reasonably lower price. The company has utilized the exceptional digital promotional strategies and distribution channels for reaching out to customers faster (The Inquirer, 2013). b) Scenario Analysis: Scenario analysis would assist in analyzing the trend of the world market, so that the circumstances that propelled the company towards the strategic options can be evaluated. It is a five phased analysis process: 1. Defining the problem: Samsung faced a setback in the year 2012, when it lost the legal lawsuit against Apple. Apple accused and sued Samsung for imitating design and applications of iPhone and using them in the Galaxy brand. Court declared the decision in favour of Apple and Samsung had to pay $1.049 billion fine to Apple Inc. 2. Gathering Data: Samsung established strategic alliance with Google to enhance the performance Galaxy. The company has invested more than 1 billion dollars on the research and development functions in order to create Galaxy product line, specifically the S series. 3. Segregating certainties from the uncertainties: The Company was certain that through their core competencies they would be able to cope up with the damage that the embarrassing situation had created for them, but the uncertainty related to customer’s reaction towards the brands after such an incident prevailed. 4. Development of scenarios: The Company engaged more than 0.15 million employees to offer after sales services to customers. It invested more than 25 million dollars to integrate dynamic random access memory (DRAM) in low priced Galaxy phones for improving performance. 5. Utilising those scenarios for planning: Samsung S III was launched with enhanced features and designs. Its applications are supported by the latest and the most popular operating system in the world called Jelly Bean. The Galaxy S series has overshadowed the Iphone series in most of the aspects, proving their strengths and competencies to competitors and customers (Bennett, Coleman & Co. Ltd., 2013) Diversification Samsung Galaxy S series were a series of smart phones, but the Galaxy S series was not only a much more improved version of the other smart phone, but it can be also called a diversification, because most of its application, technology on which it functions and design is completely different. The Galaxy S series, especially the S III brand is the most innovative product of Samsung smart phone range. IMPACT OF STRATEGIES The strategic options planned and implemented by the company should also have a certain impact on the company, its revenue stats and the brand equity of the product line. This section would be analysing the impact of the strategic options for the Galaxy S series. Impact According to the Korean Economic Daily, the Galaxy S III received about 9 million pre orders around the world. It has captured a considerable amount of market share in many countries around the world. It was estimated that around 60 percent of the market share has been capture by S III, which is much better than its previous performance which was about 46 percent. The market share of Samsung Galaxy S III is more than that of IPhone 5. Around 10 million handsets have been sold. Difference between Old Products and New Products During 2009 very few customers around the world knew about Samsung Galaxy smart phones but three years later Galaxy smart phones has become very popular among smart phone lovers. The Company carefully developed the brand in order to achieve market leadership. They used integrated marketing communication and utilised the concept of cost leadership to build the brand (Holt, 2002). The old products in the Galaxy brand were based on the same android platform and they were cost effective enough; but the quality of the phone and the application was not up to the mark, and they were not durable enough. Apart from this there were issues with the software. However, in the new Galaxy S series all these problems were rectified and the best technology and applications has been utilised to design the S series, as discussed above (Samsung, 2013). Conclusion and Recommendation The study evaluates the critical success factors of the Samsung Galaxy S series and analyse the strategic options that has been utilised to achieve those success factors. Further, the strategic option tools have also been utilised for deeper insights into the strategic implementation and its impact on the company. However, it would be recommended that Samsung mobiles not only focus on Galaxy S series for competing with Apple, but it also focuses on the improvement of the other smart phones in the Galaxy segment, so that the customers who have lower budget can also opt for a high-tech Samsung Galaxy phone. References Bennett, Coleman & Co. Ltd., 2013. UK Retailers Recommend Samsung Galaxy Smartphone over Apple Iphone'. The Times of India. [online] Available at: [Accessed 29 January 2013]. Franzen, G., and 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. Noergaard, T., 2005. Embedded Systems Architecture: A Comprehensive Guide for Engineers and Programmers. Amsterdam: Elsevier. PDF Cast, 2011. Porter's Generic Strategies. [online] Available at: [Accessed 29 January 2013]. Samsung, 2011. Our Culture. [online] Available at: [Accessed 29 January 2013]. Samsung, 2013. Home. [online] Available at: [Accessed 29 January 2013]. The Inquirer, 2013. Samsung Galaxy S3 hits Iphone sales in the UK. [online] Available at: [Accessed 29 January 2013]. The Tech Journal, 2013. Apple’s iPhone Sales Up 90% from Same Time Last Year. 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