Market Strategy Report of Samsung Electronic Company - Case Study Example

Market Strategy Report of Samsung Electronic Company Summary This report examines various marketing strategies of Samsung Electronic Company. The company is at the moment the leading Information Technology Company in the world having produced high profiled smart phones among other electronic products. The report examines the current situation within the company (internal environment) by focusing on strengths, weaknesses, challenges and opportunities. Cell phone brand and quality assurance of the company have been in the fore front and has earned the company a competitive advantage. However, transformation brought by compelling technology perhaps endorses a challenge to the company. The paper has also focused on the 7 Ps in providing recommendations on how the company should adopt some factors in order to create a competitive environment and be a leading competitor. Seemingly, the company is on the process of shifting to more strategic focus especially for its products. Introduction This report is about Samsung Electronics Company. Samsung is a multinational corporate business that has its headquarters located in Samsung town, South Korea. The current contemporary market environment composed of customers with particular needs of technology especially in telecommunications have stimulated the Samsung group to expand the mode of production particularly on cell phones. About a decade ago, Samsung’s position strategy in the market was very strong. It had a market capitalization of about $ 41 billion that made it the largest electronic company in Asia. At that time, Samsung had the highest growth rates from the best selling of Smartphone, Galaxy S, in 2010. This overtook the leading competitor in the market (Sony) which was also a part of customer industry. Today, the company is pretty much present in the global market with hundred and eleven subsidiaries in form of production, sales, distributions, research and market analysts. Samsung business divisions are also currently placed in most part of the world including Africa, North and South America, Europe and Asia. This is an amazing part of the company that defines its faster growth in the global market. Customers are normally concerned with the quality of a products, longevity, price as well as features of the products (Høj & Wise, 2006). Nevertheless, loyalty plus brand identity are often widened based on the stated factors (Wong & Radel, 2011). Samsung in this case has relatively focused on comprehensive market research and analysis for the introduction high profiled cell phones. However, the blow on global economies is still a main challenge. Therefore, when it comes to quality and prices for Samsung’s Smartphone it is reasonably fair as compared to other competitors like Sony Electronic Company in the market. The sequential order in terms of growth of Samsung group is, in 2005, Samsung group outdid Sony, in 2006, Business Week ranked Samsung as 20th globally in terms of Smartphone (Galaxy S) innovation, in 2007, BrandFinance ranked Samsung as 1st in the global brand development and recently in 2009, Samsung group went past Siemens to be a leading global technology company. The Current Market Situation of Samsung Electronic Company This section examines the current situations in the internal and external environment of Samsung Electronic Company. It is important to note that Samsung perhaps may not be the leader in all of its products in the market. However, cell phones are the leading brands that make Samsung Company a market leader. SWOT Analysis SWOT analysis is a market tool that evaluates strengths, weaknesses, opportunities and threats of a company in the industry in which it operates. Samsung Electronic Company exhibits the following: Strengths (features that give the business advantage over the others in the market) 1. Customer Loyalty and brand patronization As mentioned earlier in the introduction, Samsung Company currently offers products of high quality, durable and exceptional features at a fair price. Sony has been producing products of high quality with longevity but high prices. Samsung Company focused on development of products of the same characteristics (quality and longevity) as those of Sony but with fair prices on them. For instance, Samsung Galaxy Ace Duos and Sony Xperia Tipo Duos have the same features but the price of Samsung Galaxy Ace Duos is $184.99 while the price of Sony Xperia Tipo Dual goes for $189.99 in Indian market. These features however have made customers stick with the company. 2. Financial Situation of Samsung Company Currently, Samsung Company is strong and stable financially. From 2010 to June 2011, the company sold more than 22 million units of Galaxy S. From April 2011 to June 2012, the company sold more that 20 million units of Galaxy S2. This therefore raised company’s revenue beyond $128.4 billion at the end of June 2012 enabling the company to secure the 1st position as the globe’s largest Smart phone producer multinational corporation. This raised the market share by 4.2% in 2012 financial year (Samsung Marketing Strategy Report, 2012, 15). In 2009, the market share in smart phones of Samsung was only 3.7% but has significantly increased to 20.1%. 3. Policy System and Quality Assurance of Samsung Company In terms of quality assurance, Samsung Company has come up with Corporate Audit Program that diagnoses every aspect in quality management system. The program integrates training, audit execution and information control within the company. Apparently the process is inclusive in a way that it gives consideration to aspects that are pertinent to the community, local laws, environment as well as work place safety. The system comprehends preliminary re-examination, strategic business plan and evaluation. Seemingly, this enables the company to enhance continuous improvement of performance. On the case of policy system, the company has enhanced sustainability growth by acquisition of ISO 9001 (quality assurance policy) which is the integral aspect when it comes to investment and decision making process of the company. 4. Strategic Patent Management Samsung Electronic Company has already concluded licence agreement with IBM Company in United States so as to avoid the risk of future patent disputes as the company grows. Weaknesses 1. Strategic Corporative Objectives Samsung Company needs to improve on strategic objectives. As far as it is the leading cell phone production company in the world, the act of having a ‘supplier’ mentality in the contemporary market perhaps may not accelerate the identification of customer needs in the market where time remains as a factor of production. 2. Marketing Management Marketing management team needs upgrading due to the fierce competitors in the market. Sony and Apple family are the close competitors particularly in smart phones. Therefore, in order to build consistency in the market, Samsung Company is ought to build up on new market research tools for instance Google Customer Survey. Some competitors like LG, Siemens and Nokia in the market have managed well their customers through Google Customer Survey. Therefore, building a good marketing management team would perhaps raise the competitive advantage of the Samsung Company. Opportunities 1. The Economic Conditions The current economic situation in South Korea and the major markets of Samsung Company is quite favourable. According to the Heritage Foundation Journal (2013), South Korea’s economic freedom improved by 0.4% from that of last year making the country being ranked 8th in Asia-Pacific region. This implies that the outlook of South Korea’s economy is affirmative therefore loyal customers to Samsung Company would possibly enlarge their shopping baskets thus earning the company high revenue. Also across the border of South Korea to America, the economy is also on a positive trend. 2. Good international relations The company is enjoying a successful multinational partnership in smart phones with other nations like in Europe, Asia, America and Africa. This gives the company to intensify its market research on the new markets. Besides, companies like Siemens and LG have that have not very much flourished in their market strongholds perhaps have given Samsung an opportunity to fill the gap. 3. The company (Samsung) is very much equipped when it comes to adjusting to new changes brought by technology. According to the sustainability report (2011), the company was to supply chipset to the emerging Smartphone companies if in case there would be a fall-off in apple demand. 4. The company is also internalizing social changes that are brought by new technologies. Threats 1. Strong legislation framework that protect environmental issues and relates to the industry. 2. Transformation brought by technological advances in the industry for instance apple and IPhone family. The current performance indicators of Samsung Company are observed majorly on the areas of talent management, social contribution, economy, partner collaboration as well as product and services. Major awards have been presented to the company by major agencies and corporate partners. These awards include; Korea Multimedia Technology Grand Price 2010 IT category (Smartphone-Galaxy S), TreeHugger’s Best of Green Award (United States) 2010-Eco-friendliness of red-aim mobile phone, Green Common Award (Mexico) 2011-honour for eco-friendly product development and innovation. Green Product of the year (Korea) 2011-Solar Power mobile phone. Samsung External Business Environment Political factors: Globalisation has encouraged faster growth of Samsung Electronic Company. Samsung Company has established more than 111 franchises selling major brands of smart phones (Galaxy S and Galaxy S2) around the globe as a result of good will in the foreign nations like America, Europe, Africa, and Asia. Economic Factors: As mentioned earlier, the economic growth of South Korea and the major markets of Samsung have improved so customers are able to increase their shopping basket with the favourable economic conditions at the moment. Social Factors: The background of the contemporary society is in a digital world. Therefore, it has hastened the consumption of digital products from Samsung Company especially smart phones. Samsung Company recorded high revenue from superior phone brands (Galaxy S and Galaxy S2) in 2012. Technological Factors: Advance in technology have enabled the company to manufactures phones of high profile for instance, company have moved from java application to android and is in the process of fostering the collaboration between apple and Iphone family. Environmental Factors: Samsung Company has been long known as it produces eco-friendly products. It has received two awards out of these safe products (Green Common Award (Mexico) 2011 and TreeHugger’s Best of Green Award (United States) 2010). Competitive age of Samsung Company Samsung’s competitive edge is derived from the comparison of costs that is borne by the company and the competitors. Perhaps due to the outsized volume of purchase of Samsung cell phones in the global market, less shipping and distribution costs is apparent to the company. labour productivity on the other side of Samsung Company is closely rated compare to that of Apple family and highly rated to that Sony Electronic Company had a successful product mix strategy in 2011 (Samsung Marketing Strategy Report, 2012, 55). There was a wide development of new cell phone brands thus earning product portfolio. The effect brought by this large product portfolio back in 2011 is still experienced at the moment in the company. How did Samsung rise to the top is a big question other cell phone producing companies especially the close competitors as Apple family. In the first quarter of 2012, Samsung and Apple family recorded sales of 44.5 million and 35.1 million respectively. This was actually an amazing margin of sales between the smart phones (Samsung) and IPhones (Apple). There are a lot of reasons Samsung Cell Phone Company managed so as to reach such a competitive edge; Some of the competitors’ competitive advantage is basically defined from price, selection and economic factors. Samsung competitive edge however is defined from; 1. Wide variety of phones with an extensive range of features and price tags as compared to other competitors like Sony and Apple. iPhone doesn’t have a range of features therefore if one doesn’t like one basic iPhone then there is likelihood of rejecting another of the same family because of the same reason. With Samsung cell phones, a customer can find a phone to suit her/his test. 2. Samsung has been willing to go down the price curve while Apple on the other side maintains its prices at an affluence point. 3. It is unclear if Samsung is taking away Apple’s business since it persistently offer fair prices and high-feature phones in the market. Apple family would be more than happy if innovation of phone features reached an optimum point in Samsung Company. The long-term threat that the competitors particularly Apple and Sony fear is that Samsung would possibly capture low-end consumers/customers and eventually smartens their life with smart phones. Basically, the continuous production of high volume of Samsung smart phones could ultimately increase the margins of competitive edge and perhaps Apple’s and other close competitors would end. Segmentation, Targeting and Positioning Strategy The market segmentation of Samsung Company majorly is based on four important elements; Demographic (lifestyle), Psychographic (personality), Behavioural traits and Environment residency of the customers. Demographic (lifestyle): From the market research, it is realized that most people are educated not only in South Korea but also in most part of the world. Therefore, customers for smart phones are expected to increase relentlessly. Also nations are creating more opportunities for their citizens thus enabling them to get employment. Psychographic (personality): Samsung has variety of brands to meet different preferences of the customers. For instance, in the mobile company there are phones with java applications, android application and ios and customers can chose their preference. Also the prices of the products are relatively fair for the customers. Generally, Samsung products are environmentally friendly. Behavioural: Research by Deshpande (2011) shows that the use of internet is not only narrowed to the western but also it has now widened to most part of the world even in the developing nations. Therefore, basing on behavioural aspects, Samsung have increased its franchises not only in the west but around the globe. Environmental: The purchasing power of the customers is relatively high at the moment due stable state of economy brought by political stability and development of contemporary business culture. Samsung Company therefore, is expanding its market share to most parts of the nations with stable economy and political stability. Targeting Strategy ; The main question in the Samsung Company at the moment is if the company can tender quite a superior product to what is already there in the segmented markets? Basically, Samsung Company has reasonably met the requirements of the distribution channels for the identified segments. Therefore, intensifying on complete market coverage rather than market specialization and product specialization would be much advantageous to the Company. With full market coverage, Samsung Company offers all the products produced basing on the customer’s needs. Samsung received award of the best Smartphone manufacture in 2012. As a result, this award positioned the company in the market as the leading Smartphone producer. The product approved three positioning concept; functional (provides benefits to the consumers), symbolic (it has a social meaningfulness) and experiential positions (provides both cognitive and sensory stimulations). Marketing Objectives and Goals of Samsung Electronic Company The demand of cell phones in the global market is currently high. Producers are at present looking for a way to maximise their market share. With the Samsung Cell Phone Company, it should adopt new objectives in order to keep its potential customers as well as improving its market share. The following are the recommended three objective of Samsung Cell Phone Company; To raise the smart phone sell units beyond 40 million units by the end of the year 2013 To retreat from ‘supplier’ mentality and develop advanced market focused strategy that entails current customer needs assessment for smart phones beginning 2014. To offer subsidy prices to the low-ended customers as a way of reaching and making them potential to the company in the second and third quarter of year 2013. Goals of Samsung Electronic Company The following four goals are also recommended for the company; To promote and maintain its first position in the smart phone market at the same time strengthening collaboration with Smartphone applications software companies like android. To further strengthen the evaluation of smart phone product cycle. To allow an environment with an ‘open innovation’ such that R&D collaborations are toughened and outward involvement welcomed also for the purpose of cell phone feature upgrade. To cultivate a sound work environment that will involve employment of creative, innovative and advanced-mind personnel for the purpose of continuous improvement of cell phone production. 7 Ps of Samsung Company According to Chartered Institute of Marketing (2009, 4), successful marketing of products comes in when a company emphasize on what it is going to produce, how the charge (price will be, mode of delivery to the consumers/customers, mode of communication to the customers about the products and services they produce. Therefore, this section will analyse the 7 Ps of Samsung Electronic Company and possible recommendations for the improvement of every aspect in the model. Unlike SME (Small or Medium Size Enterprise), Samsung at the moment is a large corporation that deal with divers products in the global market. However, the challenge still remains the effort of the company in knowing its customers well especially with the contemporary world of globalisation. 1. Product With the current competition in the market, there is no need to produce a product that would not be bought by anyone in the market. Some companies engage in developing a product first then go looking for market for the product. However, this shouldn’t be the case in the current market especially with more competitive companies. Samsung Company should find out what the customers wants and then go and develop the right product. Introduction of high profiled Smartphone by Samsung perhaps was from evaluation of the current lifestyle of people. Customers needed to check office dealings outside their work station and that is whey they developed it. Therefore, basing in the idea that market assessment is prior to the development of the product, Samsung Company should consider a perfect product that would ultimately give value to the customer, Google Customer Survey to assess the review of customers on the product and much customization of the product may not be fine whatsoever. 2. Price According to Chartered Institute of Marketing (2009), a product or service is only valuable if the customers are ready to pay the stated price. However, this does not mean price stated for the product should be cheap but rather it should be relative to the features it presents. As far as Samsung Company is advancing it terms of smart phones production, price remains a key factor since it is the only element that creates revenue to the company. It is clear that prices of cell phones have actually positioned Samsung Company on a competitive edge. However, the company should factor in other factors as sensitivity of price especially to the new customers that will grand a reason of focusing on them and decision of high-price tag in relation to the quality of product. This should meet the expectations of the customer in order to position the company in the market. 3. Place Place getting the product and distribution of the product to the customers is an important consideration. Samsung Company has build up more than 199 subsidiaries with 10 regional headquarters around the globe to allow cell phones to be in the right place at a right time (Sustainability Report, 2011, 10). Therefore in distribution its products around the globe, Samsung Company should concentrate much on customer survey especially when choosing its supplier. 4. Promotion Promotion involves activities such as branding, public relation, advertising and exhibitions. Basically, promotion should gain attention and pass a consistent message why the customer should buy the product. Samsung has advertised the introduction of Galaxy S and Galaxy S2 through major media like DSTVs, internet and even the local TV stations. Perhaps brochure may not be the best way of promoting Samsung products since once the information in it cannot be manipulated if anything arises. The company should also emphasize on promoting the benefits obtained from the product not only emphasising on the features. This is a big challenge especially when promoting Samsung Smartphone. 5. People Market researches by MKTGatHPU (2013) shows that anyone who come in contact with the customer have a reflective effect which can be either positive or negative. It is exceptional that most employees in the Samsung Company have the right attitude. However, the company should exclusively focus on the following factors; right person for the right job and a thick line between the right employees of the company and those people who are helpful to the company. 6. Process The way a company serves its employees is very important especially when it comes to service delivery to the customers. Free information flow in the market allows customers to conceptualize and fully comprehend a product in the market. Samsung in this case therefore should continue keeping its employees happy and satisfied through an effective system. In some instances that the customer has to wait, employees should be very sincere of how long it will take for him or her to get the product. Customers should be informed of the reason as to why they have to wait, for instance, whether the product have not been delivered yet or it is out of stock. Some instances perhaps may call for a customer to reach the company by phone. Samsung Company should significantly raise the number of customer care since the company have enlarged. 7. Physical Evidence Some willing customers may not have an opportunity to experience Samsung products physically but rather see them only on adverts. For instance, decade ago Sony products were considered the top in most part of Africa. However, Samsung’s smart phones were only advertised but not physically experienced in most parts. Along the way the Company embraced case studies and testimonials for its products and thus raising the competitive advantage. A big challenge still remains as how to provide a product in a formal setting. Samsung Company unlike other competitors like Sony and LG should fully scrutinize customers’ feedback and develop reference materials of how the product was experienced. This would help the company in three ways; 1) The company would realize the attitude of the customers towards cell phones produced by the company, 2) The company would comprehend the interaction of the product with the community and 3) The company can likely state the future of the smart phones in the market. Basically, each of the recommendations in the ‘ingredients’ of the market mix would exceptionally drive Samsung Company to high competitive edge. All the seven elements should be incorporated when strategizing any other product and service in the company. Conclusion Samsung Electronic Company is now a Global corporation and customers are at the moment more demanding. Cell phone brand valuation of the company over the last two years has been recognized on the financial statements while the industry pressure is radically growing. This has initiated quickening of change in the electronic industry. The management efficiency of Samsung Cell Phone Company has helped it to grow in greatly. This has made the company to shift to more strategic focus especially in market efforts. It is indeed very true that mutual development with partner corporations is very essential when it comes to gaining sustainable edge in the world market. The emergence of Apple family brings a sophisticated technology that at the end of the day a company sees difficulty to survive on its own. In other words, the current situation of the firm would be upgraded by bringing in the capabilities of SMEs in order to maintain the competitive advantage. In terms of materiality and responsiveness, Samsung Company has identified sustainability issues that are much concerned on the contemporary business environment and these progresses should be well communicated to the stakeholders of the company. Apparently, the mutual building up of the trust between the company and the suppliers in the market is integral for purpose of reaching low-ended customers. Bibliography Chang, S. (2008). Sony vs. Samsung: the inside story of the electronics giants' battle for global supremacy. Singapore: Wiley. Deshpande, R. (2001). Using market knowledge. Thousand Oaks, Calif.: Sage Publications. Høj, J., & Wise, M. (2006). Product Market Competition and Economic Performance in France. Paris: OECD Publishing. MKTGatHPU. (n.d.). Samsung - International Marketing Strategy. Upload & Share PowerPoint presentations and documents. Retrieved March 30, 2013, from http://www.slideshare.net/MKTGatHPU/samsung-5672631 Michell, T. (2010). Samsung Electronics and the struggle for leadership of the electronics industry. Singapore: Wiley. Samsung Marketin Strategy. (n.d.). Scribd. 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