International Marketing: Samsung - Case Study Example

International marketing: Samsung Introduction Many revolutionary changes were taken place in the business world after the introduction of globalization, liberalization and privatization. At present countries are competing each other to attract as much as foreign direct investments possible. Free trade, outsourcing and offshoring like revolutionary business principles started to achieve huge popularity in the business world after the introduction of globalization. Moreover, the distance between global markets has been reduced considerably because of the rapid developments in computer and internet related technologies. In short, the present global business climate is extremely favorable for international companies. Headquartered in Suwon, South Korea, Samsung Electronics is one international company which was successful in utilizing the opportunities provided by the international market very well. The presence of Samsung is felt in more than 61 countries at present. More than 200000 employees are working for Samsung at different parts of the world. Until a couple of decades before, Samsung was an ordinary Korean company whereas at present it is an extra ordinary international company which enjoys huge success in global market. It is one among most valuable technology company in the world now. Moreover, Samsung is the second largest semiconductor chip manufacturer in the world at present. Samsung is currently causing huge damages and challenges to all international consumer electronics companies including Apple Inc. Even though Apple Inc. is believed to be the most valuable technology company in the world, it is believed that Samsung may expel Apple Inc. from that spot in near future itself. It is widely believed that Samsung Electronics is best positioned for the new developments in the smartphone market and will continue to expand its leadership in memory, as well as new components like AMOLED and Mobile AP. The company is more favourably positioned than before in most of its product categories: it is quickly becoming the number one player in handsets (from a distant third place behind Nokia and Motorola in 2005), its already the dominant number one player in TV (from fourth in 2004) and its a major player in new components like Mobile AP (part of System LSI) and AMOLED (part of Display Panel), which are relatively new businesses. It has several "stars" including smartphones, tablets, AMOLED and System LSI; a few "cash cows" such as DRAM and feature phones; and one real "dog" in LCD displays (Samsung Electronics: The Jewel of the Samsung Empire 151) Some of the major critical success factors of Samsung are its innovative product ranges and successful international marketing activities. It should be noted that the ability to develop innovative products alone may not guarantee success for a company in international market. For example, Apple Inc. was the first company which introduced touchscreen phones in the market. However, Samsung is the company which is successful in exploiting the opportunities provided by global touchscreen phone or smartphone market better than Apple Inc. Apple Inc. products are tasting success in less heavily populated and recession hit American and European continents whereas Samsung products are tasting huge success in heavily populated and rapidly emerging Asian market along with American and European market. This is because of Samsung’s better abilities in reading the market pulses very well compared to that of Apple Inc. and other competitors. This paper analyses the reasons why Samsung’s international marketing strategy are efficient and effective for its products from a strategic point of view. Samsung’s international marketing strategies from a strategic point of view (Wolf et al. 6) Product innovation refers to the delivery of a continual stream of stylish and innovative products. Samsung has introduced its first smartphone Galaxy S2 around three years before. Since then, a series of innovative smartphones such as Galaxy S3, Galaxy S4, Galaxy Note 2 and Galaxy Note 3 were introduced by Samsung. Moreover, Samsung has introduced plenty of LCD and LED television models, desktop top models, laptops, camera, washing machines and many other innovative home appliances in the recent past as part of their diversification of business. It should be noted that product diversification is necessary for companies to survive in the heavily competitive global market at present. Technology innovation refers the ability to quickly develop and retain key technologies and core R&D investments that separate the company from its competitors (Wolf et al.6). For example, “Samsung’s TouchWiz user interface allows seven applications to be easily managed from a bottom tray on the main screen. Users can also customize their home screens using Samsung’s Live Panel” (Boulton 34). It should be noted that no other smartphone manufacturers were able to provide this facility so far. Moreover, Samsung’s smart view mobile application helps customers to use their phones as a remote control for their television sets. Such innovative ideas and applications are helping the company to increase its sales. For example, a Samsung LED or LCD television owner would definitely think about the purchasing of a Samsung smartphone if he is knows about the smart view application. In short, the development of innovative mobile applications is helping Samsung not only to increase its smartphone sales but also the sales of other electronic equipment like TV. Marketing innovation in Samsung is meant for creating fresh approaches at every level of customer contact and to drive sales (Wolf et al.6).Ultimately customers decide the fate of a company. In other words, customers can make or break a company. Therefore, Samsung is keen in enhancing its relationships with the customers. Samsung products are getting better after sales service everywhere in the world. The company is keen in servicing existing customers while searching for new ones. Even good quality products may fail in the market if the marketing strategies are ineffective whereas bad quality products may excel in the market with the help of better marketing activities. Samsung knows this fact very well and they are keen in implementing innovative marketing strategies everywhere in the world. Many prominent companies have uses same marketing strategies at different parts of the world and failed miserably. For example, at the beginning of globalization, Parker Pen Company tried to use same marketing strategy everywhere in the world. They were of the view that same products need same marketing strategies everywhere in the world. However, Parker Pen failed to prosper in international market since they failed to account for the differences in the market. In other words, different markets require different marketing strategies even for same product, since markets are different in terms economy, environment, politics etc. Samsung is keen in implementing custom made marketing strategies at different parts of the world. For example, they use Indian celebrities as the brand ambassador for Indian market and Chinese celebrities as the brand ambassador for Chinese market. Thus Samsung’s marketing strategies account for the cultural differences in different markets. Samsung has restructured its electronics and appliances business to create two sales verticals in a bid to replicate its mobile phone success in the Indian consumer durables market. Samsung Electronics India now has two sales verticals - one selling products to distributors, stand-alone multi-brand outlets and Samsung brand stores, and other focusing only on national and regional retail chains (Mukherjee). Samsung has implemented unique marketing strategies for each market. They know that a marketing strategy successful in America may not be successful in India. Samsung studies the peculiarities of each market before the formulation of marketing strategies. Cost innovation refers to controlling of costs to complement and encourage innovation and increase market impact worldwide (Wolf et al., p.6). Samsung products are cheap compared to the competitor’s products. They have different products even for the same brand, to satisfy the needs of different customers. For example, Samsung Galaxy S2 is available with 16 GB memory and 32 GB memory. Customers can select the product based on their financial abilities. In other words, Samsung is ready to cater the needs of all types of customers with the help of cost innovation strategies. “Global management innovation refers to the development of highly localized product strategies that link strong local insight and key market presence with an ability to accelerate the decision making process and rapidly seize major opportunities worldwide” (Wolf et al. 6). Samsung knows very well that the purchasing capabilities of the consumers in different markets are different. For example, Galaxy S2, S3 and S4 are expensive smartphones whereas Ace and Grant are cheaper smartphones compared to the S series. Samsung is keen in marketing the expensive products in rich countries whereas in poor countries they are trying to market their cheaper products. Organizational culture innovation is for creating work environments where everyone shares the freedom to learn from mistakes and succeed (Wolf et al. 6). Organizational culture in Samsung is far better than that in some other organizations. Samsung provides enough freedom and liberties to the employees and hence employee loyalty towards the organization is extremely high in Samsung (Detailed descriptions about this topic is given later in this paper). Samsung Electronics Co. is so big and profitable that the measure for telling when the company is doing better than normal is when it goes on a streak of setting record quarterly profits. It happened in 2010 and it’s happening now. Samsung’s second quarter results broke the record set in the first quarter. Some analysts think the third quarter will be even better, but that net income will drop sequentially in the fourth (Samsung 5 Lessons: The 2nd Record Edition). These statistics underline the tremendous growth experienced by Samsung in recent times. Samsung’s annual revenue is more than $60 billion at present. The innovative marketing strategies are helping Samsung immensely in tasting huge success in international market. According to Renee Kim, Samsung’s current international marketing strategies can be summarised as follows; build layers of advantages, search for loose bricks, change the terms of engagement and use collaboration. It should be noted that Samsung has manufacturing units both in Korea and in China. International companies are currently shifting their manufacturing units to China as a measure to cut down the cost of production. China is the number one country in the world in terms of cheap labour availability whereas America is one country in which labour cost is extremely high. According to Porter, cost leadership, differentiation through quality and service and focus on ‘niche’ markets are the three basic elements which determine the competitive power of an organization (Golding 41). It should be noted that expensive labour always prevents an organization achieving cost leadership in the market. Apple Inc., the major competitor of Samsung is still reluctant in establishing manufacturing units in China like cheap labour oriented countries. They believe that Chinese made products are of cheap quality compared to American made products. As a result of that, they failed to achieve cost leadership in the market. However, Samsung is using China as their manufacturing hub since this strategy would help Samsung to manage their marketing activities in Asia more effectively. This strategy helped Samsung to improve its competitive power by reducing the cost of its products in global market. Samsung can reduce the supply chain cost in Asia since its manufacturing units are primarily located in Asian countries. Search for loose bricks is a strategy to exploit the expertise and weaknesses of competitors. For example, Apple Inc. was the first company which introduced the touchscreen phone. However, Samsung is the major beneficiary of this innovation now. It is an accepted fact that global wealth is currently shifting from less heavily populated American and European continents to the more heavily populated Asian countries. Moreover, Asian countries are developing much rapidly than American or European countries now. For example, India and China are developing much rapidly than any other countries in the world at present. Moreover, these countries offer an extremely big market for global companies. As a result of that, global companies are currently targeting Asian countries, particularly India and China. Samsung is one company which realised this fact earlier than many other companies. It should be noted that Apple Inc. is still reluctant in concentrating more on Asia and Samsung is reaping the profits of Apple’s failures. Samsung has established collaborations with plenty of companies such as Sanyo, Toshiba, Philips etc as a strategy to improve its competitive power in global market. This strategy helped Samsung to exploit the technology developed by other companies in producing home appliances. One of the interesting facts about this strategy is that Samsung is marching towards progress whereas Sanyo, Toshiba and Philips are struggling in global market. In other words, Samsung was able to grow at the expense of others. On the other hand, Samsung’s collaboration with Google is helping both Google and Samsung. Samsung’s smartphones and tablets are using Google’s Android operating system at present. Android is believed to be the best mobile OS available in the market. Even though Apple Inc. has its own OS, Samsung was able to defeat Apple Inc. in global smartphone and tablet market with the help of its strategic collaboration with Google. Moreover, Samsung was able to implement some customizations in Android OS while using it in its mobile devices. At present American market is causing some problems to Samsung because of its legal battle with Apple Inc. Americans have some sentimental attachments with Apple Inc. They always like to use American made products or the products from American companies because of their stronger emotions with respect to nationalism. They do believe that American technology is superior to any other technologies in the world and hence they mostly like to purchase American made products. However, Samsung is playing some games to solve their problems in America. They have already established business alliance with AT & T to counter the challenges of Apple Inc. AT & T and Samsung are giving lot of offers to the galaxy tab and smartphone owners in America to challenge the supremacy of Apple Inc. in American market. For a limited time, AT&T customers will receive a USD50 Media Hub Movie Rental credit with Galaxy Tab purchases. In addition to these Samsung Mobile features, the AT&T-powered Samsung Galaxy Tab also features AT&T Connection Manager, which automatically connects users to AT&T Wi-Fi Hot Spots to better manage data usage. Also, AT&T will offer two pay-as-you-go data plan options for the Galaxy Tab, a USD14.99 pay-as-you-go plan for 30 days with up to 250 MB of usage and a USD25 pay-as-you-go plan for 30 days with up to 2 GB of usage. In the event that customers use all the data included in their plan before 30 days, they can purchase another pay-as-you go plan. For additional convenience, these plans can automatically renew every 30 days, when customers pay for these plans with a credit card or debit card. Further, AT&T data plan subscribers also get access to AT&T’s entire national Wi-Fi network at no additional charge (AT&T to launch Samsung Galaxy Tab on 21 November 2010). Samsung is currently spreading the message that Apple can no more function as it did before because of the death of its charismatic leader Steve Jobs. They are trying to convince the American public that whatever the achievements made by Apple was the contributions of Steve it would be difficult for Apple to substitute Steve with another leader. They are currently trying to convince the American people that its technology is superior to Apple’s technology. They made serious efforts to change its image from a follower to a leader in technological areas. Innovation is currently accepted the core business concept in Samsung. “In 2004, Samsung signed a CPFR agreement with electronics retailer Best Buy for the North American market. The initiative improved efficiency by cutting costs for merchandising, inventory, logistics and transportation” (Samsung: supply chain-driven leadership, 2012). In short, Samsung is currently trying to penetrate deep into American market and the vacuum left behind by Steve is helping them in doing so. Another successful marketing strategy introduced by Samsung is the supporting services. For example, Samsung has an online store for providing various applications to its mobile device customers. Even though Android has a store for the customers to download interesting applications, Samsung has established its own store to service the customers further. Thus, Samsung’s mobile device users have access to two stores at present; one from Samsung and the other from Android. Thousands of useful applications are available in these online stores which force customers to purchase Samsung’s mobile devices again and again. Until recent times, Porter’s five forces model was used extensively in the corporate world to analyse the competitive power of an organization. This theory has plenty of loopholes and hence many other theories are currently getting prominence in the corporate world. Blue Ocean theory, formulated by Kim and Mauborgne is one such theory. According to this theory, “the key to exceptional business success is to redefine the terms of competition and move into the “blue ocean,” where you have the water to yourself. The goal of these strategies is not to beat the competition, but to make the competition irrelevant” (The Wall Street Journal). Samsung is one company which applied this theory into practice. They know very well that it would be difficult for them to silence companies such as Apple Inc. or Nokia. However, they know very well that they can cause big headaches to these companies with the help of innovative marketing strategies. Earlier, Samsung was blamed for the followership approach it implemented in its business strategies. Many of the products from Samsung were imitations of competitor products. In fact Samsung is currently facing many law suits in America with respect to violations of intellectual property rights. Apple Inc. has recently won a legal battle against Samsung in America. Samsung can no more function in America without paying a huge compensation to Apple Inc. Amidst all these accusations and legal battle, Samsung is developing many innovative technologies to silence the criticism against the company. At present, Samsung commands technology leadership rather than followership. “SEC commands technology leadership by launching innovative products such as 50-nanometer 16GbNAND flash memory and Mobile WiMAX, next generation wireless communication technology” (Samsung). It is impossible for international companies to sustain their success if they fail to implement sustainable business practices. Modern consumers are particular in knowing the image of the company first before taking any purchasing decisions. They wanted to deal with reputed companies which are committed to the environment and exhibit strong belief in corporate social responsibility. Samsung has engaged in many social activities at present. Samsung is one company which promises less and delivers more as far as corporate social responsibility is concerned. They are keen in providing something back to the communities in which they operate. Samsung Hope for Children, Innovations for development of the community, Hope for Culture and Sports Sponsorship are some of the social activities which are used cleverly by the company to increase its competitive power in the global market. Samsung Hope for Children is an initiative undertaken by Samsung to raise the educational levels of under-privileged children all over the world. Samsung is providing education to poor children all over the world with the help of internet related or e-learning technologies. Innovations for development of the community is a program designed by Samsung to encourage innovation at the grass root level whereas Hope for Culture is another program constructed by Samsung to honor the cultural heritages of communities. Moreover, the recently concluded London Olympics was officially sponsored by Samsung. In order to promote galaxy S3, Samsung has established an exclusive agreement with London Olympics organizers. All these activities help the company to increase its acceptance among global community in one way or another. “Samsung Electronics shares and cares about its employees’ concerns over their health, children’s education and post-retirement life and helps them prepare for their future in order to enhance employee satisfaction and provide better working environments” (Choi18). Samsung knows very well that satisfied employees always bring dividends to the company whereas unsatisfied employees may create problems. Because of this awareness, the company is keen in providing adequate working conditions and remunerations to its employees. Unlike Apple Inc., Samsung is respecting the concept of work life balancing. They are encouraging teamwork and providing enough luxuries to the employees. Supply chain management is an important aspect in international marketing. SCM or supply chain management is the “efficient integration of suppliers, factories, warehouses and stores is necessary for an organization to ensure that the goods produced and distributed were in the right quantities, reach the right locations at the right time, so that the total system costs would be minimized” (Simchi-Levi 4). If the customers face shortage Samsung products in the market, they will look for alternate options. For example, imagine a customer is getting the answer that Galaxy S4 is out of stock from a retailer. Instead of visiting another retailer shop, that customer may look for other options such as iPhone 5 or Sony Xperia. Samsung know this fact very well and gives ample importance to supply chain management. Shortage of Samsung products may not be experienced anywhere in the world at any time because of the efficient supply chain operations. Competitors like Apple are struggling to keep sufficient inventory in Asian and African markets because of supply chain management problems. One of the critical success factors of Samsung is believed to be its efficient supply chain management. Conclusions Samsung’s innovative marketing strategies help the company to excel in international markets. They have different marketing strategies for different markets and hence their products are moving well in international market. Samsung has diversified its business immensely to meet the challenges in international market. This strategy helped them to stay competitive all the time even if some of its products fail in the market. They are keen in providing different products to different customers based on their purchasing abilities. Moreover, they are giving ample importance to supply chain management so that their products will always be available in the market. Samsung is providing more importance to corporate culture and company reputation. They are keen in implementing sustainable business practices and protecting the environment. Commitment to corporate social responsibility is evident in all the activities of Samsung. The company normally delivers more than what it promises. As a result of that Samsung customers have immense faith in Samsung products. Product innovation, technology innovation, cost innovation, marketing innovation and organizational culture innovation are some of the other strategies which help Samsung to market its products successfully in international market. Works Cited “AT&T to Launch Samsung Galaxy Tab on 21 November 2010”. 2010. Corporate IT Update (M2), Nov 16, 2010. Print Boulton, Clint. “Samsung Galaxy Tab 7.0 Plus: From T-Mobile Costs $249.99”. eWEEK News. December 5, 2011. Print Choi, Hyun Jun. “Building a Creative Corporate Culture”. 2008. Web. 07 January 2014. Golding, Nicky. “Strategic Human Resource Management”. Web. 07 January 2014. Kim, Renee. “Samsung’s Competitive Innovation and Strategic Intent for Global Expansion”. Problems and Perspectives in Management / Volume 5, Issue 3, 2007. Print Mukherjee, Writankar. “Samsung Replicates Mobile Business Model For Consumer Durables”. 2012. 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