Samsung Electronics is a South Korean multinationalelectronics and it has information technology headquarter in Samsung Town-Seoul. The assembly plants and sales networks are available in many countries around the world, thus Samsung has hired 160,000 employees.
In 2009, the company has become world’s biggest electronic devices maker by surpassing the previous leader Hewlett-Packard. Its sales revenue in the areas of Liquid Crystal Display (LCD) and Light-Emitting Diode (LED) displays and memory chips are number one in the world. Therefore, Samsung has become a legend in Information Technology (IT) areas.
Samsung has a very humble beginning which started in 1938 whereby the Samsung’s founder Byung-Chull Lee set up a trade export company in Korea, exporting fish, vegetables, and fruits to China. Within a decade Samsung had flour mills and confectionary machines and became a co-operation in 1951. It is an excellent beginning.
From 1958 onwards Samsung began to step into other industries such as financial, media, chemicals and ship building throughout the 1970’s.
In 1969, Samsung Electronics was established producing what Samsung is most famous for, Televisions, Mobile Phones (throughout 90’s), Radio’s, Computer components and other electronics devices.
In 1987, Byung-Chull Lee passed away and Kun-Hee Lee took over become a chairman to replace Byung-Chull Lee. Up to 1997, Kun-Hee Lee has lead Samsung to expand globally by building factories in the US, Britain, Germany, Thailand, Mexico, Spain and China.
In 1993 Samsung developed the ‘lightest’ mobile phone of its era. The SCH-800 and it was available on Code division multiple access(CDMA) networks. Then they developed smart phones and a phone combined mp3 player towards the end of the 20th century. Now Samsung are dedicated to the 3G industry. Samsung is designing and producing smartphones at a fast speed to keep up with consumer demand. Samsung has made steady growth in the mobile industry. This development continued on through the next decade as Samsung kept on going beyond its boundaries and restructuring its business plan to accommodate the global scene. Adopting a new form of management proved to be a wise move for the company as its products made their way on the list of top must-haves in their various fields. TV-LCD’s, picture tubes, Samsung printers and other high-tech products became popular acquisitions due to their high quality.We focus two products at this market, Television and Smart phone.
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Market Segmentation
The chosen methods of segmentation for Samsung are geographic and demographic segmentation. Geographic segmentation is based on region such as Asia, Europe, North America, South America and South Africa and county size while demographic segmentation depends on the variables such as income, life style and education level segmentation. The results of the research on these topics will prove to be the information basis of the target market section.
The first demographic market segmentation of Samsung is age segmentation which based on few stages of age such as teenagers, adult and old people. Samsung mostly target teenagers with Samsung tablet Personal computer (pc) or camera. For example, tablet pc can be used for gaming. On the other hand , Samsung targeted adults with Samsung hand phone or laptop for the business use. Lastly, Samsung target old people with high definition (HD) television because they need a clear vision interface for their eyes. Samsung has the best quality screen among all products.
The income segmentation target both high income family and low income family, those have their own power to demand Samsung products. Samsung has developed very high quality product for high income people because high technology usually come with high cost. Besides that, Samsung also produces some products which are useful and affordable to lower income level people.
Occupation segmentation target consumer based on the occupation of consumers. Workers who are working in office require electronic products such as laptop of tablet pc.
Education level segmentation is a segmentation which targets consumers which is highly educated. High-educated consumers need laptop computer to aid in their study, work or even sure purposes. Therefore, Samsung had taken the advantage to develop laptop computer with affordable price to these consumers to satisfy them.
Life style segmentation is a segmentation based on the life style of consumers. For example, consumers which live in the city are very busy. They need products which are useful and most important is convenient to them. Thus, Samsung has developed products such as smart phones or laptops which are easy to carry and light weight. Samsung try very hard to reduce the weight and size of these products.
Market Targeting
Samsung Company is using differentiated marketing strategy. Samsung targets several market segments and designs separate offers for each. Samsung Company is targeting and selecting target segments which are more profitably and able to generate higher sales and profits. Samsung targets teenagers or young people with products which are more innovative such as Samsung Galaxy S3 because the smart phone comes with smooth, gentle and innovative curve. When targeting aged consumers, Samsung tries to attract this market segment with products which are elegant such as elegant smart phone case and plasma TV. In addition, Samsung also targets the Generation X because this generation is currently the wealthiest generation in the world. Therefore, they may generate very high sales and profits to the company.
Besides that, Samsung Company also using niche marketing strategy because Samsung has recognized a niche market for flip smart phone. Samsung tries to attract consumers who are interesting to flip phone. Therefore, Samsung is trying to release a flip smart phone which is known as Samsung SCH-W2013 in 2013. This phone is targeting the Chinese market.
Market Positioning
Diagram 1: Samsung Overall Positioning Strategy
Source: Armstrong & Kotler (2012)
Price
More Same Less
More for more
(Samsung TV)
(Smart phone)
More for the same
More for More
The same for less
Less for much less
More
Benefit Same
Less
Positioning is what the customer believes about Samsung product’s value, features, and benefits. The full positioning of a brand is called the brand’s value proposition.
More for more positioning involves providing the most upscale product or service and changing a higher price to cover the higher cost. Example: Samsung TV can earn more profits even the price is high.
More for the same positioning involves introducing a brand offering comparable quality but at a lower price. Example: smart phone can earn more profits with the same price as compare to other brand such as HTC, Nokia.
Marketing environment
Micro environment
Suppliers
Suppliers form an important link in Samsung Company’s overall customer value deliver system. They provide the resources needed by the company to produce its goods and services. Suppliers’ problem can seriously affect marketing. For example, supply shortages or delay, labour strikes and other events can cost sales in short run and damage customer satisfaction in the long run. If the raw materials such as Plastic Synthetic Rubber and Titanium Dioxide Powder prices are rising, this may force the price of the products to increase and harm the company’s sales volume.
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Marketing Intermediaries
Marketing intermediaries help the Samsung Company to promote, sell and distribute its goods to final consumers or buyers. These include wholesalers and retailers. Wholesalers such as Tesco purchases large quantities of products from Samsung and store them in a warehouse and then sells smaller quantities to retailers. The retailers will purchases smaller quantities of goods from wholesalers or directly from Samsung Company. Retailers will store the goods at a store and resells them to individual consumers.
Competitors
Samsung Company must provide greater customer value and satisfaction than its competitors to be successful. Samsung Company must make use of its competitive advantages to compete with its competitor. For example, Samsung offers a wider variety of phones, with a wider array of features and price points, than Apple. Samsung has generally been willing to further decrease or go down their product’s price.
Besides that, Samsung’s DRAM supplier provides the company with this raw material in a very low price and high quality than other supplier of its competitors. This helps to reduce the production cost, thus Samsung is able to reduce the price of its products. As a result, it will generate a high sales volume of its products.
Macro environment
Economic environment
Nowadays, the economics of the world is facing downturn condition. The income level of the people has been reduced. Therefore, consumers’ spending patterns have been changed. They are spending more carefully. Thus, Samsung Company needs to introduce products which are affordable to them in order to maintain its sales. For example, Samsung Galaxy Y, the price is just only RM 427,90 and it’s a affordable by every layer of society class.
Technological environment
The technological environment is the forces that create new technologies, producing new product and market opportunities. The technologies of the world is improving and changing at a fast paced. Therefore, Samsung Company needs to introduce products which have the newest technologies to attract new customers, retaining existing customers and at the same time competing with its competitors.
Political Environment
The political environment consists of laws, government agencies and pressure groups that influence the limit various organizations and individuals in a given territory. There are laws or legislation which protects Samsung Company’s copyright. Samsung Company is also protected from unfair business with these legislations. For example, legislation that states that hearing a phone when driving is illegal has increased the sales of hand free of products.
4Ps Marketing Mix
Product Strategy
The product mix of Samsung is the total variety of products Samsung sells. Firms may decide to split their product mix into groups known as product lines. A product line is a group of products grouped together based on similar or same characteristics. The characteristic used to split products, will depend on the firm and its product strategy. They include product quality, product price, target group of the product, and product features. The product mix width is the number of different product lines the company carries. Samsung has two different product lines which is smart phones product line and television product line.
The product line length shows the number of different products in a product line. For example, Samsung’s smart phones are divided into product lines based on the following features such as touch screens, slider or folders and QWERTY keyboards. Samsung also divided their televisions into product line based on Smart TV, LED, flat and Plasma TV.
Product mix depth refers to the number of versions offered of each product in the line. Some of the product types in a product line may be split again into group. The product line depth shows how many subgroups the product line contains. For example, Samsung has splits their smart phone into the product line based on following features such as touch screens, slider or folders and QWERTY keyboards. Each of these product lines can be further split into subgroups at the time of writing this assignment Samsung had 7 slider phones,4 QWERTY keyboards phones and 32 touch screen smart phones, 32 is a deep product line. For television, Samsung had 25 types of LED TV, 11 types of Plasma TV, 2 types of flat TV and a Smart TV.
Product mix consistency refers to how closely relate the various product lines are in end use, production requirements, distribution channels, or some other way. Samsung’s product lines are consistent in so far as they are consumer products that go through the same distribution channels such as retailers. All of Samsung’s products are fall under shopping product categories. Shopping products are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style.
Samsung offers the most diverse product in the 3D market. They are offering LED, LCD and Plasma 3D TVs. Samsung’s cash cow product in the 3D market is the LED 9000 series. The LED 9000 series Plasma 3D TV is in the cash cow category because it has low growth rate but high market share. It is a very successful product which needs less investment to hold their market share. It has a very high sales volume, thus generate a lot of cash to the company.
Place Strategy
Samsung Company sold their products mostly online because customers are provided with services such as free shipping and setting up. This will enable consumers to check for the featured of their products and analyses the information they have found to aid in their purchase decision rather than them from a retail store. Samsung will not sell their products through wholesaler like Tesco Extra, but Samsung will sell their product through retailer stores like Senheng and Thunder Match. Retailers such as Maxis and Hotlink will purchase the product from Samsung Company and resell it to other retailers or directly to final consumer at a profit.
A channel level is each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. There are two customer marketing channels used by Samsung. One of it is direct marketing channel which has no intermediary levels whereby Samsung sells directly to consumers. The other channel is indirect marketing channel which is the opposite of direct marketing channel. This channel contains one or more intermediaries.
Manufacturer
Manufacturer
Retailer
Consumer
Consumer
Figure 3.1 direct marketing channel Figure 3.2 indirect marketing channel
Source: Armstrong & Kotler 2012 Source: Armstrong & Kotler 2012
Price Strategy
The price of the 9000 series is RM 18,372. However, Samsung’s diverse product mix of 3D TVs ranges from RM3, 675 to RM21,438. Samsung has developed and improves their technology since Samsung bought DRAM technology from other company citation?. Samsung has released many products that is high technology products and low or affordable price. Since high technology product requires high cost to develop, Samsung has built a main Research and Development facility and fib line in South Korean to reduce the cost of producing a product because having many branches in several countries require high cost. These cost leadership came from Samsung policy, which is “We will devote out human resources and technologies to create superior products and services thereby contributing to a better global society” citation?.
The price of Samsung smart phones is affordable to people with all level income. The range is from RM 183.75-RM 2,144.
Price Adjustment of Samsung
Psychological pricing is adjusting prices for psychological effects of price ending in 9.99. Samsung setting prices ending in 9.99 on major products. Some consumers will see the RM 1999.99 as a price in RM 1000 range rather than the RM2000 range. The RM1999.99 will more likely be seen as a bargain price .
Promotional pricing is temporarily reducing prices to increase short-run sales. Samsung use Special-event pricing during festive season to draw more customers such as Chinese New Year, Christmas and electronic fair days. For example, when Chinese New Year Samsung will come out the product with red colour such as red colour casing for Samsung Galaxy S3 and some chinese cute doll for decoration. When Christmas, Samsung company will also come out the casing with Santa picture. Besides that, Samsung company will come out the new devices and promote in the electronic fair days.
Promotion Strategy
Samsung Company promotes its products through many ways or tools. One of it is advertising which is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. For example, Samsung advertise its product through newspaper, website and television to inform customers about the features of their new or existing product and to increase the sales of products. Most people need to hear information more than once before they retain it, so reinforcing the message becomes another reason to advertise. Moreover, educating consumers through advertising creates an easier selling climate for the sponsor because customers are already familiar with the products.
Next is sales promotion which is short-term incentives to encourage the purchase or sale of a product or service. For example, Samsung gift smart phone case or hand free to its customer when customer buy a smart phone from their company. Besides that, Samsung also gives discount or rebate on their smartphone when customers buy a smartphone and at the same time they sign up a data plan package. In addition, Samsung gives free cinema vouchers to their customers when customers buy Samsung products. Samsung also give a RM300, RM600 or RM 1200 gift card to customers which can be used to buy other Samsung’s products when customers buy a Samsung product.
Furthermore, the next tool is personal selling. Personal selling is personal presentation by the firm’s sales force the purpose of making sales and building customer relationships. For example, Samsung hires many sales persons to promote their products to the customers and serve them. Selling face-to-face (personal selling) is a very efficient way to promote product to customers. Through personal selling, customers is able to gain better understanding about Samsung’s products as they could ask the salesperson directly when they have questions.
In addition, the last way is public relations (PR). PR involve building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. For example, Samsung sponsor and donate many third parties such as natural disaster victims. For example, Samsung donated 3Millions to Hurricane Sandy victims in the east coast. Samsung also actively involved in charity activity such as Habitat for Humanity; United Way Agencies; tree planting; Build-A-Bear for children in the hospital; park clean-up and others.
Proposals
Samsung not only can produce smart phones which run android system, it also can consociate with Microsoft.This is because Windows 8 was recently launched in Malaysia and Window 8 is more comfortable for touch screen device. Therefore, Samsung Company can produce smart phones which run Windows 8 too.
Samsung Company should try to reduce their price of some products so that it is more affordable by low income consumers. Furthermore, Samsung Company should try to improve their repairing services so that the services are more efficient and time required for products repairing can be reduced.
Samsung Company should improve the quality of their smart phones, they should come out with smart phones which is waterproof and would not break easily if the phone drops on the floor. The other side, Samsung Company should also improve their smart phones’ camera quality, come out with higher megapixels built in camera. The Samsung should improve the battery quality of the smart phones so that the battery life can last for longer and increase the standby time of the phone.
Lastly, Samsung Company should introduce aluminum case for its smart phones and laptop computer so that it can release heat faster.
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