Samsung - Strategic Marketing and Innovation - Case Study Example

Samsung: Strategic Marketing and Innovation Name Course Tutor Date Samsung: Strategic Marketing and Innovation Executive summary This report is documented to analyze strategic marketing and innovation at Samsung Company. This report will specifically compare Samsung’s smart TV and HD TV and Apple TV. The aim of this report is analyze the market opportunity through concept and vision, market analysis, customers and customer development, competition and positioning, business model and go-to-market philosophy and identify potential opportunities. Contents Samsung: Strategic Marketing and Innovation 2 Executive summary 2 Contents 3 1.0 Introduction 4 2.0 Company Background 4 3.0 Concept and Vision 5 4.0 Market Analysis 6 5.0 Customers and Customer Development 7 6.0 Competition and Positioning 8 7.0 Business model and Go-to-Market Philosophy 10 7.0 Potential Opportunities 11 8.0 Conclusion 11 9.0 References 11 1.0 Introduction Globalization and advancement in technology have increased competition in international markets. In the current competitive business environment, experts argue that many managers now understand the need for the organizations to change to sustain change and gain competitive change. Basadur & Gelade (2006, p.46) believes that for a manager to re‐engineer an organization effectively, he or she ought to rely on breaking paradigms as opposed to employing usual knowledge. This is true according to the statement that, doing the same thing over time will always lead to similar results. Moultrie & Young (2009, p.301) contend that to break away from the chains of doing the same thing, managers must create a culture of creativity and innovation within the organization. Information is one of the most competitive industries today that market players must innovate to remain relevant. This is the root Samsung has taken to remain a strong brand. Hence, this report will analyze strategic marketing and innovation at Samsung Company. 2.0 Company Background Samsung Company is a multinational conglomerate with Headquarters in Seoul, South Korea. The company was established in 1938 by Lee Byung-chul and has since grown to become a global brand (Samsung Group, 2014). Today, the company is mostly known in the technology and electronics with its products comprising of smartphones, LED and LCD panels, Semiconductors, televisions, Refrigerators, Microwaves, digital cameras and MP3 players among others. The company ventured into technology in the 1960s and today as the largest technology company based on the revenue (Samsung Group, 2014). Samsung Company holds a strong influence in various development indicators of South Korea including economy, politics, social issues and media. According to Al-Akhir (2013), the company’s revenue contributes 17 percent of South Korea’s GDP which stands as $1,082 billion. Television has become one of the leading products which has contributed to the company’s revenues. Samsung has undertaken a number of innovations on smart TV and HD TV to compete with Apple TV. Over the years, the company has employed different strategies including creativity and innovation, positioning and customer devilment among others to gain market advantage. 3.0 Concept and Vision Samsung ventured into Television market in 2008 with flat-panel televisions (Samsung Group, 2014). However, it needs to improve vision and concept to be able gain competitive advantage. Therefore, the vision of the company will emphasize on three factors including Smart Content, Smart Innovation and Smart Interaction. When Samsung first introduced its TVs in the market, in 2009, the company sold approximately 31 million televisions making it to remain the leading market player with highest share of the market for the fourth successive year (Kosner, 2013). However, many companies continued to innovate or to enter into the television market hence escalating competition. Nevertheless, it was the arrival of Apple TV in March 2012 that made Samsung to consider innovation further so as to stamp its authority in the technology market (Kosner, 2013). Therefore, in 2014, Samsung Electronics via its contracted company Starcom Worldwide will introduce SMART TV which has a good voice and motion control features, depicting the start a new category of TV (Samsung Group, 2014). This vision is to get customers out of their houses and into retail outs to feel the Samsung class on TV. This will compete with Apple TV which has no internal controls like Smart of HD TV and is only controlled externally. Similarly, Smart TV will become the first 3D Television to have 3D content, 3D glasses and Blu-ray player (Samsung Group, 2014). 4.0 Market Analysis A report conducted by market research in 2010 claims that general smart TV or HD TV market was equivalent to $88 billion and projected to increase by 2016 to $266 billion with a compound annual growth rate of 17 percent (Al-Akhir, 2013). Tchorek (2011) claims that in 2010, based on total unit shipment, the smart TV was approximated to be 43.8 million units exported and is projected to reach 66 million by 2011 with a yearly increase of 48 percent. There is a tremendous increase in the number of players in television market escalating competition. Some of the competitors in the market include Apple, Panasonic, Sony and LG among others. The market is highly dependable on disposable income (Tony, 2010). Therefore, economic growth is one driver which is likely to increase consumer’s spending power on electronic goods. The Middle East and Eastern Asian markets, especially South Korea, China, UAE, Qatar, Taiwan, and Singapore look potential for Samsung Smart TV or HD TV because of the recent improvement of the economy (Park & Park, 2010). The rate at which the market is experiencing the higher embracing of HD or smart TVs in developed and emerging markets is a good sign of growth (Tchorek, 2011). Samsung is set to rip big from its internet-enabled, high quality and strong brand. Timmons & Spinelli (2009) contend that due to many technologies savvy consumers, Europe and America remains most attractive markets. A new research carried by Strategy Analytics in 2013 claims that Samsung is still holding the biggest share of market of international shipment of Smart TV, having 26% of TV market (Kosner, 2013). The same research argues that that the company is attempting to combat declining selling prices and competition of Flat Panel TVs by improving premium features which match ever-changing viewing habits (Kosner, 2013). 5.0 Customers and Customer Development The company has specified its target markets, which also forms majority of its customers. To be precise, Samsung Smart TV target will comprise of both male and female in the age of 25‐50 who hold higher interest in news, business news, sports, movies and social programs. They consider this age group as educated, successful and have high disposable income which can make them to remain up to date with the most recent technology (Tchorek, 2011). The consumers in this category want a greater quality television, which they interact through the downloadable TV and internet applications. The audience here spends day by day leisure watching TV programs, and is frequently enhancing the television feel by improving their house technology. Madden, Fehle & Fournier (2006) posits that majority of customers within the target does not consider price as the most significant factor when making purchase decision of purchase but rather looks at the quality and content. Some of the smart TV which has had good sales since 2013 include The F8000 series (figure 1) and F8500 Plasma TV which were flagged 2013. F8000 series boasts of a dazzling design which matches any room in a house. It provides the liveliest colors and has downloadable-apps. Figure 1: Samsung F8000 Smart TV Figure 2: Third generation Apple TV 6.0 Competition and Positioning There are stiff competition in the Smart television market with top companies comprising of Samsung, Sony, LG and Sharp taking the largest share of the market (Tony, 2010). Through innovation of its Smart TV series up to Samsung F8000, Samsung has upheld its top position in the international market in 2013 with a market share of 26.4% (see figure 1). The comparison between Samsung Smart TV and Apple TV, shows Apple Inc cannot match Samsung presently and even in the next five years. Consumer Electronics Show which took place in Las Vegas and Mobile World Congress held in Barcelona proved this fact (Kosner, 2013). Samsung launched Smart TVs which can be regarded as all-in-one solution which people have been anticipating just from Apple. Apple has various inabilities which make unable to compete with Samsung. For instance, F8000 Smart TV produced in 2013 support apps, browser, social networks and internet unlike Apple which lack browser functionality. In 2014, the company has improved their new Smart TV and now in-built Skype app which can be used for video conferencing (Kosner, 2013). Samsung Smart TV’s features give it significant advantage making hard for Apple TV to reach much its levels and sales. Based on such functionalities and high quality, Samsung positions itself as a premium pricing company. Even with such pricing strategy, customers are willing to buy its Smart TVs because of quality and value proposition. Kotabe & Helsen (2010) argue that this pricing brings perception to customers that the company makes outstanding products with new experience. Figure 3: Smart TV market share 7.0 Business model and Go-to-Market Philosophy Today, Samsung has changed their business model of charging fee for their downloadable apps on its Smart TVS to provide them for free. In March 2014, Samsung Company stated that it will longer distribute paid apps and will refund customers have paid for apps via its Smart TV framework (Samsung Group, 2014). It also announced it would develop apps revolving around free app offerings. The new model works as the go-to market strategy to woe its customers. Samsung Group. (2014) asserts that even though the company uses premium prices different from its competitors, it now considering providing free internet applications to make customers feel they are not charged twice for the same television. The strategy is viable because most customers have become technology savvy and uses the various applications to get have the feel and experience of technology. 7.0 Potential Opportunities Kotler & Armstrong (2010) believe that there are many untapped markets, which can provide an opportunity for Samsung Smart TV. Such markets are the fastest growing countries such as Singapore, Qatar, UAE, Indonesia and India among others (Figliolini, Hofmann & Kanjirath, 2008). The company has the opportunity to capitalize on the cloud-oriented services which is increasingly growing fast. Samsung can incorporate cloud platform which customer can use record and store programs and repeat them at the required time. 8.0 Conclusion The report has established that Samsung Smart TV or HD TV is currently enjoying the dominance of the world television market due to its strong brand and global presence. The company has continued to use its strength to uphold and improve its market share over the years. However, its business is now threatened with increased competition and substitutes. There are several opportunities that exploit can still exploit comprising of trying to invest in developing countries, using pricing and promotion strategy. 9.0 References Al-Akhir, J. (2013). Samsung brings the future of smart TV to the Saudi market. Retrieved November 19th 2014 from http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20120513123994 Basadur, M & Gelade, G.A. (2006). The Role of Knowledge Management in the Innovation Process, Creativity & Innovation Management, Vol.15, No.1, pp. 45-62. Figliolini, A.J., Hofmann, A. & Kanjirath, T. (2008). Growth in the Middle East and HR Capabilities. Center for Advanced Human Resource Studies Kotabe, M., & Helsen, K. (2010). Global marketing management (5 ed.).Hoboken, N.J:John Wiley & Sons, Inc. Kotler, P. & Armstrong, G. (2010). Principles of Marketing, 13th Ed. Upper Saddle River, NJ: Prentice Hall. Madden, T.J, Fehle, F & Fournier, S.M. (2006). Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value through Brands. Journal of the Academy of Marketing Science, Vol. 34, No. 2, pp. 224 Moultrie, J., & Young, A. (2009). Exploratory study of organizational creativity in creative organizations, Organizational Creativity in Creative Organizations, Vol.18, No.4, pp.299- 313. Park, D., & Park, J. (2010). Drivers of Developing Asia’s Growth: Past and Future. Asian Development Bank Economics Working Paper No.235, December 2010, Manila: Asian Development Bank (ADB). Timmons, J. A., & Spinelli, S. (2009). New Venture Creation – Entrepreneurship for 21st Centure, 8th ed, New York, Mc Graw Hill. Samsung Group. (2014). Samsung Group Official Website. Retrieved November 19th 2014 from http://www.samsung.com/ Tony, M. (2010). Samsung Electronics: And the Struggle For Leadership of the Electronics Industry. John Wiley & Sons. Tchorek, K. (2011). Samsung: Proud tradition of math proves a strong draw. The Financial Times (London). Kosner, A.W. (2013). Will Apple's iTV actually be Samsung's SmartTV? Forbes. Read More