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Samsung Electronics Company
The Samsung brand
Originated as low-cost manufacturer of black and white televisions in the year 1969, super sized with a semiconductor segment in 1970s, Samsung delivered massive volume of low-cost consumer electronics to domestic and OEM products to both domestic and global markets until 1993. Due to this fact, company didn’t develop global brand awareness until then. In the global arena, Samsung’s brand message was fragmented and its logo presentations were inconsistent.
In the year 1993, “new management initiative” started transform Samsung from a “cheap OEM” to a high value-added products provider”. At this point, company realized to take the brand to global platform and started thinking the importance of global positioning and the powering the brand. Initially, management targeted to build corporate brand image across 200 countries with focus on 17 selected products. But, in the early period, internal challenges of marketing misconceptions among the top level managers turned down efforts of this visionary growth measures.
But, the company’s challenges turned into a different outcome in the wake of the Asian financial crisis in year 1997. Fast actions were required to curtail the financial threats and massive restructuring efforts were imminent. Samsung utilized this opportunity wisely and the result was a turnaround from $15 billion debt to $4.6 billion within a short period of 5 years.
Samsung’s global marketing director is assessing how to build the global brand reputation of the company further and upgrade the company’s worldwide brand image to show how to build a global brand. The challenge of Samsung’s marketing director is the branding strategies in global markets. Marketing team has to examine the organizational dynamics to develop a strong global brand.
Success factors:
Management Efficiency: During the 80s, the company’s refocus to manufacturing quality and technical leadership and profits reinvestments in R&D, state-of-the-art manufacturing, and supply chain activities helped the company to grow in a great extend. This management vision was not only upgraded the company’s products to compete in the high-tech electronics industry but also gave foundations of its global brand awareness.
Transparent disclosure practices: By 2003, Samsung was the most widely held stock among all emerging market companies due in part to relatively transparent disclosure practices. This is evidenced with the fact that over half of its shares held outside Korea, and the stock price had increased tenfold between 1997 and 2002.
Plant/R&D locations: To keep costs low, the company operated in different geographical locations like China (manufacturing) and India (R&D).
Fast and efficient product life cycle: Multiple technology capabilities of its many designers and engineers, speedier decision-making processes, and fewer levels of organizational bureaucracy reduced the time taken to commercialize products from drawing board, from 14 months to 5 months. This is twice as fast as its Japanese rivals.
Innovative products: Samsung was progressing in almost all markets with its innovative products. Midrange and high-end cell phones, first mover with the color screen phones, smart phones, and wireless AV center with web surfing capabilities, systems-in-package semiconductor flash memory, SDRAM for the mobile products are some of its great products shown market acceptance.
Vertical Integration: Samsung opted to use its core manufacturing competence in all components of electronics. By transferring the capital investment and inventory risk, between 1998 and 2003, Samsung invested 19 billion in new chip factories and estimated another 17 billion in TFT-LCD manufacturing. Company’s quality products had been used by many other leading brands like Sony. This will increase the Samsung brand’s awareness in consumer’s mind. Although commoditization and downward pressure on prices and margins might argue against vertical integration, Samsung overcame this situation by customized as much production as possible.
Weaknesses
Country of origin: In highly competitive global marketplace, consumer attitude about the country of origin might be one reason of Samsung’s slow adaptation of globalizing its brand. As China became Samsung’s major manufacturing location just like any other leading brands, consumers may look into product’s originating country for a final decision of their loyalty to a product.
Although South Korea has fair image in the technological world, Samsung has to work with its government officials to strengthen and entice political freedom in global trading and manufacturing. Communicating regional values will help both tourism and trade.
Hardware focus: Unlike rivals such as Sony and Apple, who are focused on the software technologies, Samsung decided to focus on the hardware side with an open architecture concept. Samsung argued that this concept enable consumers being able to access more software through its devices that its competitor’s products. Additionally, they argued about the increased challenges associated with protecting proprietary content from piracies.
However, consumers will ultimately looking into the convenience and functionality of the product. Most of these features are coming from the software programs embedded with the hardware. So, Samsung’s argument is not convincing to the consumers as they have to go for a different vendor to use its products effectively or pay premiums to use other software in these hardware.
Multi-category focus: Unlike many of other companies like Nokia or Sony, who are specialized in cell phones and consumer electronics respectively, Samsung’s products are diversified in nature. Almost all major categories — semiconductors, telecommunications, digital media, digital appliances, and other minor categories — are all performing with operating profits. But, this diversification is not giving the company a strong footage in any one category.
Low brand awareness and loyalty: For any global brand, marketers must consider two major markets — Europe and North America. Being in strong in the southern Europe,