Strategic Marketing Management of Samsung in Canada - Essay Example

? Strategic Marketing Management: Samsung in Canada Executive Summary Samsung has a magnificent growth opportunity in the Canadian market. Although the firm has been able to capture the global market for the Smartphone market, it has not done as good a job in the Canadian market. Being able to tap this market will help Samsung to be able to increase its market and also to have a good market where it can use price skimming. This will however require planning so as to mitigate various market entry obstacles. Introduction Situation analysis Mission statement Samsung has its mission very well defined which says that Samsung “will devote our talent and technology to creating superior products” In this regard, Samsung will endeavour to always deliver the best products by harnessing its talent and experience to develop the best products for consumers. Brief History Samsung electronics is one of the Asian technology firms which have been able to capture a good market in the global market. The firm is a part of the Samsung conglomerate that provides a number of services and products. The firm has been able to establish a large enough market niche, overcoming global giants such as Apple, BlackBerry and Nokia. In terms of its Smartphone sales, Samsung has been able to provide a strong competition in the global market, and this has enabled the firm to be able to increase its sales and revenues. However, although Samsung has been able to capture a big market share on the global market, the firm has not been able to capture the Canadian market where its main competitor, Blackberry, has a stronghold on the market. This is critical because the Canadian market is a particularly good one given the fact that the market is a high end market, with numerous potential customers. Goals To be the market leader Samsung intends to be the market leader in consumer electronics. The firm intends to capture various world markets where its presence has not been felt. These markets includes nut are not limited to the western markets such as the USA and Canada where the firms still faces competition from local electronics manufacturers. Samsung also aspires to be able to deliver the best quality products at the lowest possible prices. It also aspires to be able to deliver the best most innovative products especially in the smart phone industry. Increase a cream of the market customer base (price skimming) In the technology industry, price skimming is the best way for firms to get their research and development costs returned as soon as possible. Price skimming refers to the firm being able to sell of a new innovative product and a considerably high price to those people who are can to pay more to be the first to use the product (Baker and Hart 2008). Once this happens, the firm recovers its research and development costs which were incurred in developing that product. The firm can now sell the product to the lower market at a lower price. Since Samsung has a global market, the Canadian market could be the best market to act as its high profile market. Although the market for Samsung is a global one, it fails to have a market stronghold in market areas where the firm can use the market for price skimming. This is because of a number o reasons. First one is the fact that the main markets where Samsung has a stronghold on the market cannot be used for effective price skimming. Black Berry has a stronghold in all the high profile markets, and this makes it possible for Black Berry to use price skimming. This ability also makes it possible for Black Berry to be able to invest properly without worrying about its research and development costs (Martin 2013). If Samsung is able to increase its market share in the Canadian market, it will also be able to do effective price scheming and thus positively affect its research and development process. Fig. 1.0 showing the market share of the main Smartphone brands. Note that Samsung is the only experiencing growth. Increase customer base Apart from having a good base to be able to carry out price skimming and promote research and development processes within the firm, being able to increase market share in the north American market will help Samsung to be able to increase its market share globally in a highly huge way. This is because the North American market has millions of the adult population who are able to buy these products. Americans also keep a phone for a relatively short time and buy another one, which means the market offers repeat sales in higher frequency than the other market such as Africa where people keep one phone for a longer while before buying a newer one. In marketing, considering repeat sales is a truly significant thing because repeat sales help the firm to remain the market (Capon and Hulbert 2009). Increase market research due to increased customer demand While the Canadian market is more ready to pay higher prices for a product they also demand more in terms of quality, and this is what Black Berry has capitalised on and managed to deliver high quality for the market and thus making them be able to sustain their relationship with the market. If Samsung is able to capitalise on the North American market, it will be a motivation to increase and improve its research and development for its products. This is important because as Dubois and Muhlbacher (2007) say, understanding the local market and delivering goods that meet the expectation for the firm will help any firms to be able to remain relevant to the consumers. Industry analysis The smart phone industry has been one that is very competitive and players in this industry have to be very competent in order retain their market. The following gives an industry analysis for the Smartphone industry in Canada. PEST analysis Political factors Political factors in an industry define and describe the extent to which the central government of a country interferes or regulates an industry. In Canada, there are fewer and non significant political factors and this makes the market much easier to enter. The political environment in Canada is conclusive for new market entrants especially in the technology sector. Samsung will therefore be able to penetrate the market without any major problems. Economic factors Canada was one of the few first world countries that did not have economic problems in the past economic recession, the Canadian economy is good and is growing at a significantly god rate. Most Canadian can afford any well priced Smartphone and this is critical in the design and the pricing of the products. Samsung should be able to come up with ways in which it will take advantage of the good economic conditions in Canada. Unlike in Africa where Samsung has been trying to get a string foothold, Canada has a much better economic conditions and this means that any firm will can take advantage of the situation. Social factors There are a number of social factors that will affect the way the Canadian market is able to absorb more products of the Smartphone calibre. These include the fact that Canadians do not have a consumerism culture like other developed countries like the United States. This will be a significant factor. At the same time however, population growth is going to provide for more market. However, with a vibrant population with demographics indicating that a majority of the Canadian population are actually young people who are likely to be buy the new and sleek technology. Technology One main important factor in the Smartphone industry is the fact that the firm has to do a lot of R&D in order to remain relevant in the market. Technology grows at a rate of 100 % annually and this requires the firm to do a lot of research and development for its products. Competitor analysis: Black Berry Black Berry is Canadian Technology Company that was founded in the early 1980s and has since achieved a lot of success in terms delivering the best and most innovative products to the market. There are a number of factors that Samsung will need to take care of before it is able to fully compete with Black Berry. The following is a SWOT analysis for Black Berry. According to Ranchhod and Gurau (2007), in any market entry situation, being able to edge the current major competitor in the market is the main challenge that a firm will have. The main competitor for Samsung in Canada is Black Berry. Strengths As Wilson, Richard and Gilligan (1997) say, pioneers are usually likely to have an easier ride in the market, and this is likely to offer the firm an upper hand in the matter. Black Berry is a local firm and is more likely to be accepted in the local market, and this is a vast advantage to Black Berry. The other strength that the firm has is the fact that Black Berry is one of the firms that were the first to start producing smart phones. Black Berry was a pioneer for developing what was then known as Portable Digital Assistant (PDA) which was hand held devices that provided users with computer like functions on a hand held devices. Black Berry is a local firm and, most of its production and management are done locally in Canada, and this will give it an advantage with regard to management and especially logistics. Weaknesses The main weakness that Black Berry has is the fact that although it is a pioneer in the Smartphone sector, the firms has been seen to decline in terms of its research and development and in 2012 almost went out of the market. As compared to Samsung, Black Berry doesn’t have a bigger global market and this as Fifield (2007) points out can be a particularly big barrier to this development. Although Black Berry has been successful in the local market, it has a number of marketing issues that threatens to weaken its ability to continue it. Samsung on the other hand, not only has a successful global market but has been extremely consistence in the research and development ant it is has become a leading producer of smart phones around the globe. Opportunities Black Berry can make use of experience and research in order to capture the global as well as the local market. Black Berry can use its past glory of the Black Berry PDA era to recapture the market. The firm is able to capture the customers who once used its innovative products, the firm will be able to capture the market and be able to deliver on a truly good level (Clark 2013). Threats As Aaker and McLoughlin (2007) say, new entrants are major threats to any firms, not only because it shrinks the market for a firm's but also because it increases costs by increasing marketing costs. One of the principal threats that Black Berry faces is an entry of foreign products that act as competition to its products. The main competition comes from Apple, from the neighbouring country of United States of America. This has been extremely big challenge to the firm as foreign products have being getting into the market and causing competition to hike up. The other threat that the firms is facing is lack of adequate research and this can affect the way the firm will perform in the market. The Smartphone industry is a truly dynamic and demanding one and failing to carry out continue research can lead to the firm losing its market. Five forces competitive analysis for Samsung in Canada Suppliers According to Bradley (2007), suppliers play a significant role in the way a firm will be competitive in the market. This is in regard to whether the suppliers have bargaining power or they don’t. Usually, supplier power is measured in terms of those suppliers who supply a firm with raw materials for production. In the case for Samsung though, this is a little different and the supplier the firm will have to be worrying about are not those who provide them with the raw materials but those who provide them with distribution networks. The electronic industry is highly versatile, and distribution is of vital proportion because every time a firm produces a new product it has to be sold quickly before it becomes obsolete (Piercy 2009). There is one significant factor that will make these suppliers to have a bargaining power over Samsung, and that is the fact that the suppliers are spoilt of choice. With so many new entrants in the market and a stiff competition among the pioneers in the Smartphone industry, the distributors who supply these firms with distribution networks will have a bargaining power over the firms, and this will mean that Samsung will not be spared. Buyers Bargaining power of buyers is one of the factors that affect the strategic competency of a firm (Piercy, 2009). Samsung will face various challenges. Many Smartphones are in the market, and better ones are developed by numerous manufacturers every day. This will meant that the buyers will be spoilt of choice and can choose to buy from the manufacturers who make the best and the most affordable products. To be able to be compete in the Canadian market where the there are other products from firms such as Black Berry and the American Apple inc. Samsung will have to strive to produce much better products and also try to sell them at the most affordable prices. Substitute products As Baker and Hart (2008) say, substitute products offer a bigger challenge to a firm's marketing than is never bargained for. However, this will not be a large problem for Samsung. However, it cannot be ignored. There are at least two products that can be considered to be substitutes for Smartphone. One such device is the traditional phone. A person can choose not to have a Smartphone because even a non smart phone can still give the user most of the typical uses that a Smartphone can do. The other device that can be a substitute for a smart phone is a tablet computer. A typical tablet computer has a SIM card capability which means they also act as a phone. The tablet is as portable as a Smartphone and provides all the functions that a smart phone provides in addition to being a device that is easier to use. Most tablet users are foregoing the use of a smart phone because once a person has a tablet computer, a smart phone becomes redundant. New entrants As Wilson, Richard and Gilligan 1997) argue, new entrants from a formidable force against the pioneers. These new entrants, although have an insignificant share of the market individually, have a larger market share together. However, the main issue is the fact that these new entrants continue to have a bigger bite of the market share. The problem is the fact that in the smart phone industry, there are no powerful barriers which can be used to prevent new entrants from coming in. The only barriers to entry only seem to be the R&D that requires to be done by these firms before they can enter the market. The issue of new entrants is the fact that increase completion, reduce the marketplace, and this has a fundamental effect on the existing firms Kotler, et al 2009). With regard to the Canadian market, this will be a problem for Samsung and the firm will need to have a plan to deal with the issue of new entrants. Competition from the industry Given the above four forces discussion, it is no surprise competing among the market players has increased and that this will create a burden in Samsung in its attempt to enter the Canadian market. However, the popularity of the Smartphone continues to increase, and the stiff competition will not be so harmful as to warrant not taking advantage of the ripe market. Samsung SWOT Analysis Strengths One of the main strengths of Samsung is the fact that the firm has been able minimise its costs due t affordable labour in the local market. Unlike its main competitor in the Canadian market, Samsung operates in an environment where professional skills are available at lower costs thus making it easier for the firm to be able to develop its products at lower costs. This has an effect on the way the firm is able to deliver the product to the market (Hooley and Nicoulaud 2008). Secondly, Samsung has been able to have a bigger global market, exceeding BlackBerry’s market, and this will help it to be able to have more flexibility in the way it deals with the market. This will help the firm to be able to conquer eve more markets and the firm may actually be able to reach a bigger market in the future. Weaknesses In terms of accessing the Canadian market, the main issue Samsung will face is the fact that Black Berry has convinced the market that their products are the best. Canadians have a highly strong faith in Black Berry products, and that is why they are always willing to pay a little extra for Black Berry products. Being able to crack this belief and convince the local market that can also be able to deliver high quality products will be a challenge for Samsung. As Kotler, Goodman, and Torben (2009) argue, market entry is the most difficult part of marketing and Samsung has to overcome this barrier before it is able to tap into this market. Fig 1.2 showing the continual growth of Samsung market share in the global market Opportunities The very fact that Canadian market is a believer in high quality and worry less about the price of goods is an opportunity for Samsung. This is because as long as Samsung will be able to deliver the high quality and be consistent, it will be able to get a better part of the market and expand its market share within the American market. Samsung should look at this, not as a challenge but as a market opportunity that it can use to expand its American market share. Threats One of the main threats that Samsung faces is the fact that it is in a foreign market and may not receive as much support in the local market as it may desire. However, it is also good to note that other foreign firms have managed to get into the American market and got accepted. Product Focus The product which Samsung intends to introduce in the Canadian market is the Smartphone. To achieve this, Samsung must have specific objectives for the Canadian market. Market objectives Gain 30 percent of the Canadian smart phone market. Currently, Samsung only has less than five percent of the Canadian market. Samsung seeks to gain at least 30 percent of the market by asserting itself as the innovation leader in the smart phone subsector. This will mean working very hard on order to edge out the already existing market players. While this may sound like a difficult task, it will be much easier because of a number of factors. For instance, the good thing with smart phones as a product is that the users buy new ones almost every year in order to upgrade to the latest. Samsung intends to use its advanced innovations to make sure that it provides those who want to upgrade their smart phones with highly innovative and competitively priced products. In doing so, the firm intends to make sure that at least 3 out of every 10 people intending to change their smart phones will choose to by a Samsung smart phone. Product objective To be able to remain competitive in the Canadian market, it will have to have a clear product objective. The product objective is to make the Samsung smart phone the most formidable smart not only in the Canadian market but also in the global market. This will make it easier for the firm to be able to penetrate the market as the market will readily buy the new products. Target market The target market for the Samsung smart phone will be the younger people between the ages of 16 and 30. These are the people who are most likely to be able to provide a good market and offer Samsung repeated sales. This is because younger people always like to own the latest and the most innovative smart phone at any time and are always willing to drop an older one for the newest one. Differentiation Samsung has been very good at using innovations to differentiations its products from the rest of the market. This will be very helpful in the Canadian market. Samsung will offer the most differentiated products in order to make sure that the firm is able to compete with the other market players. Marketing Mix To be able to tap into the Canadian market, Samsung will need to get a good marketing plan. The main challenge will be in convincing the local market that the company’s products are good for the market. These are some of the main opportunities that the firm should be able to use; Use the local cell network operators; Colluding with the local network operators is becoming a highly good way for market entry. The way this works is by asking the local operators to sell the specific item to their subscribers. With the issue of cell phone registration becoming a global phenomenon, Samsung can work with local cell phone operators in the Canadian market in order to achieve its marketing goals. Working with the local cell phone operators will give Samsung the following advantages in the process of market acquisition; Gain acceptance One of the mina advantages that Samsung will gain by working with the local cell phone operators will be the fact that Samsung will gain acceptance in the local market. Samsung will need this more than anything else if it is to be able to gap the local market. This is because Canadians are more likely to accept and trust products from Canada and other places such as the united states of American and the United Kingdom. If Samsung is able to convince the local network operators to endorse the products, the local people will accept it and trust the quality. This will be a particularly good opportunity to seize the market and prove to the market that Samsung is able to provide products that are as good as any other western firm (Piercy 2009). Fig. 1.3 showing the comparison of growth between quarter one of 2010 and quarter 1 of 2011. Samsung had the most significant growth. Compare the growth of Samsung to that of RIM (blackberry) Reduce marketing budget If Samsung is able to do this, it will be able to reduce its marketing budget because the firm only has to convince the operators about the products and not the individuals. As Hooley and Nicoulaud (2008) point out, product introduction is usually an extremely vital part of marketing. Convincing consumers about the product can be a highly expensive process and massive marketing campaigns are supposed to be carried out. In this regard, being able to access the market through the network providers will be an essential way to reduce marketing budget. However, this will not mean that the firm will not have to carry out any marketing campaigns. Advertisements and other forms of marketing sensitization will still have to be carried out for the firm to be able to take advantage of the market. Overcome distribution logistics Logistics and distribution form a highly serious aspect of any marketing campaigns (Dubois, and Muhlbacher 2007). Even the best and most aggressive advertising cannot be able to help the firm to access the market if the firm is not able to distribute the products. Working with the local operators will mean that Samsung will have managed to overcome significant logistics problems and will have reduced its budget for setting up distribution network. The products can be distributed through the operators’ service shops across the nation and this will help in making the product more accessible. Create a market for future products Once Samsung is able to achieve this, it will be able to access the market and the importance of this is that the market will have tasted its products and this will be important as a way to make future sales. This means that as Samsung tries to go into the Canadian market, it should aim at creative repeat sales so as to guarantee that it will have a continued market. This is especially so due to the fact technology products have a highly short life cycle and the firms will need to continually provide the market with new products. Advertising Samsung will also have to use advertising as a way to sensitize the market about its product. Television is going to be a particularly good advertising medium, and this will help in making sure that the firm is able to reach to as large a market as it is possible. Adverting will help in making the market and the potential customers aware about the products and features which are being offered by the firm (Capon and Hulbert 2009). Participating in trade fairs Trade fairs are becoming a main aspect of product promotion and advertisement. Samsung will introduce its products to potential consumers by attending trade fairs. Technology trade fairs will especially be a truly good medium to educate the potential users about the product. Projections Marketing and distribution budget Product R&D $5,000,000 marketing research $500,000 advertisement 1,000,000 Distribution $3,000,000 Sales and profit projection Sales year 1 year2 year3 year4 Revenues 2,000,000 3,000,000 20,000,000 50,000,000 Costs 9,000,000 9,000,000 9,000,000 9,000,000 Profits -7,000,000 -6,000,000 11,000,000 41,000,000 Marketing programme In the long term, the strategy of the firm will include developing products which meet the needs of consumers and which the consumers cannot wait to have (Lvvit 1979). Technology products have relatively shorter product life cycles and this can as an advantage and also as a disadvantage. It is an advantage because this helps the firm to have repeat sales (Doyle 2008). A person who buys the most recent Smartphone will likely have to buy another soonest time possible because newer and more modern ones will be in the market. This is why price skimming is very useful to technology firms. The products have extremely short life cycles and firms can produce a newer product every year, or even ion a shorter time, and this makes it possible for a firm like Samsung to be able to have repeat sales to the same market. On the other side, short life cycles can be seen as a disadvantage to the firms because it means that the firm has to maintain a particularly dynamic research and development process. If the firm delays even in the shortest time the research and development, it will be so easy to be pushed out of the market. This has occurred to various firms in the same industry. A good example is Black Berry which lost its touch with R&D in 2011 and lost its market around the globe as other newer technology products manufacturers captured the market with new innovative projects. The same thing happened to Nokia around the same time. The technology industry is extremely dynamic, and the product life cycles is short, and if Samsung fails to observe this especially in Canada where the product life cycle is even shorter, will mean that the firm may have to lose its market. Although Samsung has been able to succeed in other markets, such as Asia and Africa, it has to understand that the western market such as Canada has a shorter life cycle for the products and therefore more effort has to be put into remaining relevant in this market. Conclusion Samsung has a growth opportunity in the Canadian market. However, to be able to take advantage of this market, the firm will have to look at a number of issues prevent it from taking advantage of the available market. However, working with the local network operators will help he firm to get into the market. Bibliography: Aaker, D. A., and McLoughlin, D., 2007. Strategic Market Management, European Edition. Chichester: John Wiley & Sons Ltd. Baker, M. J., and Hart, S., 2008. 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