Marketing Strategy of Samsung - Assignment Example

Table of Contents Table of Contents 1 1. Introduction 2 2. Situation Analysis 3 3. Recommendations 7 4.0 Conclusion 11 References 13 1. Introduction This report seeks to investigate the market position of Samsung in UK and recommend marketing strategies which is to be put into practise by the company. In doing so, the report will carry out a situational analysis which will first shed light on the competitive landscape of the mobile phone market and analyse the position of key players operating within the mobile phone industry. The report will also carry out a SWOT analysis to uncover the internal strengths, weaknesses and external opportunities and threats of the company. On the basis of the findings, the study will recommend few strategies for improving the future performance of the company. 1.1 Company Overview Samsung Electronics is a South Korean based multinational electronic products manufacturing and marketing company (Casali, 2008). It is the flagship subsidiary of Samsung Group and has been the world’s larges technology company in terms of revenue since the year 2009. The Samsung group was incorporated in the year 1969 and Samsung Electronics was founded in the year 1988. However the history of the company dates back to 1938, when it was founded by Lee Byung-chull as a trading company. It is presently headquartered at Suwon, South Korea and is headed by Gee-Sung Choi. The company has presence all over the world and employs around 221,726 people. Some of the major products of the company include LCD and LED panels, mobile phones, semiconductors, televisions, digital cameras, tablet PCs, and home appliances among others (Samsung, 2013a). According to reports, the net revenue of the company is ₩201.103 trillion and the net profit was ₩23.845 trillion in the year 2012. Some of the key competitors of the company are Apple Inc., Nokia, HTC, Research in Motion (Blackberry), and Motorola among others (Yahoo Finance, 2013). The USP (Unique Selling Proposition) of the company lie in its service quality, quality products at affordable pricing. The company is also the world’s largest vendor of smart phones since the year 2011. In the context of its mobile phone division, the company has been witnessing colossal growths since the mid of 2000. According to industry experts, the major reasons behind the growth is the introduction of low and mid ranged phones and providing Android operating system with the high range phones. Another driving factor was the introduction of several phones at the same which allowed the company to make the availability of wide range of options for the customers. In addition, promotional technique, strong distribution network, and superior after sales service also played crucial roles. The company caters to business segment as well as consumer segment and targets almost all the age groups. Figure 1 – UK market Share of Mobile phone Companies (Source: Smith, 2012) The section below will carry out a SWOT analysis and will provide insights into the competitive landscape of the mobile phone industry of UK. 2. Situation Analysis 2.1 SWOT Analysis Strengths Samsung manufactures products in such a way that most of the operating system and application software can be easily integrated with it. This gives an edge to the company over its rivals. Especially, integration with the android OS allowed the company to gain high market share. Apart from that, another major reason for the company to embrace maximum mobile phone market share is their excellence in engineering department. This has led the company to ensure effective and efficient production. Hence, the research and development, along with the engineering department can be considered as an area of competency for the company (Tolentino, 2000). Another major strength of the company is the product innovation and design. With superior design and product features, Samsung has been able to surpass Apple’s sales figures in the US market, which is the home of Apple. The mobile phones of the company are eco friendly and do not contains any form of PVC and BFRs. In addition, Samsung has also developed several programs pertaining to the preservation of the environment. Therefore, the corporate social responsibility program of the company can be considered as one of the biggest strengths of the company. Moreover, with this approach the company has been able to create a positive image in the minds of the consumers. The company also focuses on low operation and production cost. This is the reason why Samsung has set up its production facilities in low cost countries. This facilitates the company to manufacture the end products at low cost, which further allows them to offer phones at low prices. The financial stability can also be considered as one of the biggest advantages for the company. Finally, the ability of the company to create awareness about the brands through end to end promotion is also an area of competency for the company. Figure 2 (Source: HSBC, 2013) Figure 3 (Source: Wordpress, 2012) Weaknesses Samsung is alleged to have imitated the product design of Apple and some other companies. As a result of this, the company had to pay large sums of money as a penalty. This has seriously threatened the reputation of the firm and as a consequence there is a possibility that Samsung may face a PR crisis. Apart from that one of the weak areas for the company is the low profit margin for mobile phones (Michell, 2010). Samsung also do not own any operating system which can be a weakness for the company. Moreover, it also increases the overall production cost. However, the most interesting finding is that the competitors are also the major customers of the company. Hence, any day those companies can discontinue their association with Samsung, which can seriously impede the financial situation of Samsung. Opportunities The biggest opportunity of the company lies in the growing demand of smart phones. In the developing economies such as India, and China the demand of Samsung phones is high. In addition, the company also has the opportunity to tie up with operating system service providers. Threats The intensified competition of the mobile phone market in UK is the biggest threat for the company. Moreover, with rapid technological changes and innovative approaches adopted by the company, it may get outplayed by the rivals. Another area of concern is the low profit margins of the company and if competitors also pursue price cutting strategy, it may erode the profit margin of Samsung to a great extent. 2.2 Competitive Edge In order to identify the competitive edge of Samsung over its competitors, it is necessary to put forward a brief overview of the competitors of the company. 2.2.1 Competitive Analysis Nokia – Nokia Corporation is a Finnish multinational company involved in manufacturing and marketing of mobile phones. The company has been operating in the industry for more than 150 years and as a result of that it has been able to generate a sense of trust in the minds of the consumers. Some of the major products of the company are Mobile phones, Smart phones. The company has both high end and low end phones and with those offerings the company had once been the market leader. The company offers windows operating system and Symbian OS. The USP of the company is the durability and sustainability of the products. Research In motion (Blackberry) - Research In motion is a Canadian company offering tablets and smart phones. The company is headquartered at Waterloo, Ontario, Canada and was incorporated in the year 1984. The company is best known for its QWERTY keypads and BBM messenger. Moreover, it is the company to have launched a business phone consisting of push mail services and e-mail facility. HTC – HTC Corporation is a Taiwanese based mobile manufacturing and marketing company. The company is known for high ranged products and elegant display. HTC also has tie ups with both windows and Android manufactures. As a result of that, the company has been able to offer mobile in both Android and Windows version. Apple Inc. – Apple Inc. is a US based multinational technology company involved in the manufacturing and marketing of technology products. The mobile division of the company has been one of the strongest revenue generators for the company. The iphone series of Apple has actually changed the concept of mobile design. Moreover, they are the company which first introduced the concept of touch screen mobiles. Apple is best known for its innovative product design. 2.2.2 Competitive Edges The competitive rivalry within the UK mobile phone industry is increasing at a rapid pace. Companies were also adopting different practices to differentiate themselves from the other players. With the saturation of the market, the mobile companies belonging to UK started to put emphasis on the domestic consumers. Moreover, the mobile phone companies also stated to make localised pricing that led to reduction of prices, higher cost of advertising, and increased customer incentives. The industry was also found to be fairly attractive with low bargaining power of suppliers and moderate buying power of the buyers. Moreover, the threat of substitute and threat of new entrant is also low. Thus, with a large number of favourable factors and a bunch of competencies, the company is expected to outplay the rivals. From the competitor analysis, it is evident that Samsung has been highly successful in differentiating itself from the competitors by providing products of high quality at affordable prices. Moreover, the company has also been able to generate a sense of trust in the minds of the customers by sustaining in the market for a long period of time. Another important finding from the analysis was that all the elements of the marketing strategy provided the desired result for the company. The strategy to launch low ranged, mid ranged and high ranged products and target people from every section of the society was also a viable decision and it paid off to a great extent. It is often referred to as the possible cause of the company’s massive growth. 3. Recommendations Although Samsung is well positioned in the market in terms of sales figure and yearly turnover, there are still some areas which need to be developed. The analysis identified certain gaps in the strategy of the company which needs to be fixed. This section will provide recommendations to the company regarding segmentation, positioning and targeting, the marketing goals and objectives for the company. In addition, the study will recommend the 4Ps for Samsung. 3.1 Segmentation Targeting and Positioning Segmentation involves segregating the whole market into smaller sub segments. It is generally done when a group of customers share common interest. Moreover, segmenting the market allows companies to effectively cater to each segment. Segmentation is mainly carried out on the basis of demography, geography, psychograph and behavioural patterns. Samsung in general segments its market on the basis of geographic factors. However, the company is recommended to consider their segmentation on the basis of demography. Hence, apart from location, the company should also consider other variables such as income level to segment their market. With the current product line and considering geo-demographic segmentation, the company is recommended to target the following group of consumers. Products Target 1 Target 2 Target 3 Samsung High range Phones Higher Income group Samsung Mid range Phones Middle Income Group Samsung Low range Phones Middle Income Group It is also important to note that only having effective segmentation and targeting strategy will not help the company to serve the purpose. A company should also try to position itself in such a way that reflects its intentions. Currently Samsung positions itself as a company which offers value for the products. However, along with that the company should also position itself as a company that offers wide variety of products. In addition, the mission and vision statement of the company should also reflect in its positioning strategy. Therefore in order to reflect the same, the positioning statement for the company can be as follows: - We believe in Quality, Value and innovation. 3.2 Marketing Objectives and Goals The marketing objectives and goals of the company should be in line with its mission and vision. Currently the vision statement of the company, “Inspire the World, Create the Future" clearly reflects its commitment towards creating a better future (Samsung, 2013b). The company is driven by its three key strengths innovative products, new technology, and creative solutions. With these efforts the company strives to create a better world and offer richer experience to the people. Apart from that, the marketing objectives of the company should also remain consistent with the previous marketing objectives of the company such as “to sustainably increase the market share, especially sales of products under Samsungs own brand name rather than under private levels” (Koekemoer, 2004, p.192). Therefore with regards to the previous objectives and vision statements, Samsung should try to enhance its brand value and increase the brand awareness. The company should also try to provide products of high quality and offer customers the value for money. Marketing Goals: - The Company has recently launched a number of mobile phones which includes both high ranged and low ranged. It allows the company to target customers from every section of the society. Moreover most of the phones, come with Android operating system, which has been experiencing strong demands in the recent past. In addition, the company has been able to invest large sums of money in the field of advertisement and communication activities. This in turn helped the company to create awareness about its mobile phones. Hence, considering all these factors Samsung should target 15-20% increase of the sales value and gain further market share. It is also recommended that Samsung must also increase the visibility of products. 3.3 Marketing Strategies and Programmes 3.3.1 Product Samsung is known for its wide range of products. The mobile division of the company also focuses on product variety and hence offer customer with several options. The existing mobiles of the company includes the smart phones, CDMA phones, QWERTY phones, essential phones and tablet smart phone among others. In addition, to this the company also offer variants in these categories. Hence, the company is recommended to focus in its existing product line and add new features to the existing products. However, in terms of its software, the company either provides Bada OS or Android, but there are no mobile phones that come with a windows operating system (Karch, 2011). The company is recommended to make tie ups with Microsoft and integrate Windows operating into their devices. This approach will also help the company to target those customers who prefers a windows phone. It may also increase the market share of the company and can provide tough competition to the companies like Nokia and Sony. It is also recommended that the mobiles should come with an in-built storage capacity of a minimum of 4 GB. This is primarily because mobile phones nowadays are being highly used as a media player and having more storage capacity is an encouraging factor. It will also allow the company to attract customers who prefers to use their mobile devices as a media player and digital camera. Mostly teenagers will be the target customers for the company. Another recommendation for the company is that they should try to provide high capacity batteries. Most of the Samsung phones come with a battery of 1000 mah, however they are recommended to provide 2400 mah batteries. This will allow the company to compete strongly with phones such as Nokia which is known for long battery backups. 3.3.2 Price The company is well known for its value pricing and innovative designs. Presently, the company pursues cost plus pricing stagey and keeps low margin for itself. As a result of that, the net profit margin of the company is very low and is one of the probable weaknesses of the company. However, pricing strategy of the company is possibly one of the biggest elements towards the colossal success of the company. Hence, any major changes in the pricing strategy are not desirable. Nevertheless, the company can consider premium pricing for its high end products such as the Galaxy S series or the phones that targets belonging to the higher income group. The study has also pointed out the company pursues skimming pricing, but it recommended that the company should pursue competitive pricing strategy. This may help the company to remain competitive from the day of its launching. In addition, the company is also recommended to consider localised pricing. 3.3.3 Place The company is recommended to carryout both retailing activities as well as in store operation. This will give the company a greater access and coverage of the market. Apart, from that the company is also recommended to consider direct selling for the B2B (business-to-business) clients. 3.3.4 Promotion The company is recommended to follow a pull strategy where the company should create awareness of its products and make it available for the customers to buy. Hence, the company is recommended to use both above the line and below the line promotion. Above the Line Activities Media Implementation The figure below depicts the marketing budget of the company in the last four years. It is evident, that Samsung is the company with highest marketing budget. The promotional techniques used by the company are mainly television advertisement and news paper advertisements. In addition, the company uses other techniques such as billboard promotion and deferment type of marketing campaigns. However, the company is less active in sponsoring activates, hence they are recommended to sponsor large sporting events. Also efficient use of social media is recommended to the company. Figure 4 (Source: Yarow, 2012) Below the Line Activities In Store Promotion Samsung is recommended to carry out regular in house promotions in order drive sales. In this context, the company can offer cash back offers, discount coupons, free products such as headphones, storage devices, LCD guard etc. 4.0 Conclusion The analysis clearly suggested that the company is positioned well in the market but still there are areas which need to be developed. It has been found that the company has low profit margins and therefore the company is recommended to consider premium pricing for its high end products. Moreover, the company is also recommended to integrate windows operating system and target customers who prefer windows phones. In the context of the promotional activities, the company is recommended to host large sporting events so as to reach out to mass audiences and thus can help Samsung to create awareness of its brands. References Casali, D., 2008. New Empires. North Carolina: Lulu.com. HSBC, 2013. 1-Year MYR Autocallable Equity Linked (Samsung Electronics Co Ltd) Structured Investment-i. Available at: < https://www.hsbc.com.my/1/PA_ES_Content_Mgmt/content/website/personal/investments/home/916.html> [Accessed 24 April 2013]. Karch, M., 2011. Android Tablets Made Simple: For Motorola XOOM, Samsung Galaxy Tab, Asus, Toshiba and Other Tablets. New York: Apress. Koekemoer, L., 1992. Marketing Communications. Cape Town: Juta and Company Ltd. Michell, T., 2010. Samsung Electronics: And the Struggle For Leadership of the Electronics Industry. New Jersey: John Wiley & Sons. Samsung, 2013a. About Samsung. [online] Available at: [Accessed 24 April 2013]. Samsung, 2013b. Vision. [online] Available at: [Accessed 24 April 2013]. Smith, T., 2012. Mobile phone sales slump bites Nokia: Finnish firm ahead of Apple but trailing Samsung. [online] Available at: [Accessed 24 April 2013]. Tolentino, P. E., 2000. Multinational corporations: emergence and evolution. London: Routledge. Wordpress, 2012. Samsung Electronics Co Ltd (005930.KS). [online] Available at: < http://thecitytrader.wordpress.com/tag/samsung-electronics/> [Accessed 24 April 2013]. Yahoo Finance, 2013. Samsung Electronics Co. Ltd. (005930.KS) –KSE. [online] Available at: [Accessed 24 April 2013]. Yarow, J., 2012. Chart of the Day: Samsung's Massive Marketing Budget. [online] Available at: [Accessed 24 April 2013]. Read More