Case Study: Samsung ElectronicsEssay Preview: Case Study: Samsung ElectronicsReport this essayCase Study: Samsung Electronics[Md. Shafique Ahmed, MBA Program, North South University, Dhaka, Bangladesh]AbstractSamsung Electronics is one of the world giants in the business of electronic appliances such as memory chips, system-LSI and LCDs as well as A/V, computers, telecommunication devices, home appliances and other stand-alone products into a total solution of digital convergence era. The cases study has briefly focused on SamsungÐŽ¦s performance and challenges faced by them in the consumer electronics market, where I tried to describe and evaluate SamsungÐŽ¦s market targeting strategy for its consumer electronic products, analyze the challenges confronting Samsung in building a strong brand for high end products, evaluate SamsungÐŽ¦s product portfolio strategy and finally develop a critical analysis of SamsungÐŽ¦s value chain initiatives. I hope the study will give the potential readers a good understanding, based on which further research on these topics may be pursued.-Shafique Ahmed, 23 November, 2005
Description and Evaluation of SamsungÐŽ¦s Market Targeting Strategy for Its Consumer Electronics ProductsSamsung has core strengths in many fields and ÐŽÒConsumer Electronics ProductsÐŽ¦ is one of their product lines. Their product mix has a width covering their product lines such as microelectronics, telecom equipment appliances, personal computers and consumer products. They are positioned in each of this major segment quite strongly and aim to complete with world giants like Sony, Philips and Nokia in the market of similar products with intense rivalry. The competitive structure is a perfectfectly competitive market situation, where both major players and their challengers face hard competition from each others besides their followers and market niches.
The Strategy
SamsungÐŽ¦ aims to build a broad portfolio of brands and industries that make use of one of the first four global consumer electronics markets. That’s the strategy for SamsungÐŽ¦, but when we think about it, it looks pretty simple. These two product categories are:
A high-end category. These companies have high-end electronics designs and products as well. You can consider this product category as a high-end segment, especially because it provides a market market for consumer electronics. They offer higher performance devices, mobile and industrial applications because it is a high-end category as well.
High-end category. You can consider this product category as a high-end segment, especially because it provides a market market for consumer electronics. They offer higher performance devices, mobile and industrial applications because it is a high-end category as well. Existing business.
What all of these categories combined to create a broad segment? The SamsungÐŽ¦ consumer electronics segment represents a different part of their market than the European category that started in 2012. Their goal is that consumers will become more involved, thus leading to more market experience and better products for consumers. This is the big difference across consumer electronics from consumer electronics and consumer devices from the EU product range as well.
This new category covers the “highend”, and the “small, affordable” category. In this category, Samsung is interested in products priced out and to the point where other companies are also pushing products that don’t have a high value.
Flexibility
This category is a great example of what we hope to achieve through SamsungÐŽ¦ with this strategy and its products. We feel that this product segment is the largest component of their business and that this kind of performance strategy will allow both consumers and businesses to have better results on the road more successfully.
The Strategy
In fact, we hope to create such a market, so that more retailers have some chance to purchase its products at an affordable price. With their current pricing structure we hope to achieve higher levels of performance and high customer satisfaction.
We think this approach and the product portfolio that this kind of strategy is applied to will help the brand become a world-class brand that brings the users more experience and business support to SamsungÐŽ¦.
With that in mind, I would like to thank you, all. Please send us your feedback and comments about the strategy, including questions about this design strategy.
In addition, as mentioned, I’d like to point out that I’m not speaking about any particular price level of SKUs and this sort of thinking is limited to such designs. I’m referring to the design concepts that SamsungÐŽ¦ has set out to develop. I hope that it will be useful for companies to apply this strategy and this strategy to other global markets like the United States.
Sincerely,
Mark
LG Electronics –
Samsung targets for ÐŽÒdifferentiated marketingÐŽ¦ operating in different market segments and designs different offers for each segment. Samsung produces its consumer products with innovative and cutting-edge design in VCRs, DVD players, TVs, LCD monitors and mobile phones and distributes to different geographies viz. Far East, the North America, the entire South Africa, Western Europe and Indian Subcontinent. The sheer pace of new electronic product offerings is still staggering across the world including new market like Australia and New Zealand and parts of Eastern Europe. This year Samsung launched 100 new products in the U.S., including 53 new TVs. Over the past five years, Samsung has earned 18 industrial design awards; last year alone it won five from Business Week/IDSA, a total matched only by Apple Computer.
Because Samsung has developed a stronger position within several segments including consumer products, their target marketing strategy certainly creates more total sales than an undifferentiated marketing strategy, where a firm ignores the market segment differences and goes after the whole market with a single market offer. However, by creating separate marketing plans for their different lines of products, their effort also increases the cost of business. Developing separate marketing plans for separate segments with different lines of products requires SamsungÐŽ¦s extra marketing research, forecasting, sales analysis, promotion planning and channel management across the world. And as Samsung is trying to reach different market segments with different advertising, it increases their promotion cost as well. So, Samsung should weigh their increased sales against their increased costs when deciding on this differentiated target marketing strategy.
SamsungÐŽ¦s new product line strategy also includes adaptive replacement of exiting as well as imitative products ÐŽVwhich have been influenced by the feed back from their worldwide customer base, marketing intermediaries, trade association and their own sales forces. We see that in the coming years, they want to capture the world market with future generation products ranging from affordable digital televisions and ÐŽÒsmart cardsÐŽ¦ loads with movies, sleek wireless phones enabling users to access the web, watch TV and listen to music.
Analysis of the Challenges Confronting Samsung in Building a Strong Brand for High End ProductsA few years ago it was unthinkable that Samsung could pose any threat to leaders in the consumer electronics business. The Korean conglomerate was hardly known for breakthrough products. Its global reputation was based on manufacturing memory chips and selling cheap, knock-off microwaves and TVs through discount retailers. Samsung was focused with their overall cost leadership generic business strategy, where they worked hard to achieve the lowest possible production and distribution costs so that they could price lower than its competitors and win a large market share. They have had been good at engineering, purchasing, manufacturing and physical distribution in Korea and other far eastern countries in the early days.
With this strategy, over time, they grew large inventory costs and accounts receivables, high debts, assets unrelated to their core business, amalgamation of financial and managerial activities between Samsung Electronics and other Samsung companies. This also had resulted recruiting a huge workforce. Cheap commodities were their main dependence instead of high end products employing good innovative design. Their marketing skill was limited to target markets mainly based on economy of their consumers, more specifically the people of South Korea at that time.
Instead, SamsungÐŽ¦s main competitors like Sony Corporation and Philips Electronics concentrated on achieving superior performance in quality leadership and pursued high technology products by making products with the best components, putting them together expertly; inspect them carefully and effectively communicating their quality to the world market.
Besides, their competitors like LG Electronics, Dayoo Corporation and many other Chinese electronics companies entered the market with still lower costs and hurt Samsung that once rested its whole future on cost only. In one side the competitive attack with superior quality, high performance products and in another side, cheaper products from SamsungÐŽ¦s followers confronted Samsung in building a strong brand for high end products.
Until recently Samsung has adopted just-in-time approach to production that has enabled them to save $3 billion in inventory costs and accounts receivables. These have helped them reduce their cost dramatically and improve in other areas of