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Samsung Electronics
(WAC)
This case study analysis is on Samsung Electronics Company (SEC) and how it has climbed up the ranks in the past decade via calculated marketing strategies, extensive market research and analysis, and a risky bet on how the market will evolve. Samsungs principle outlook took time and education from within and thereafter the general market. Samsung Electronics Company (SEC) began doing business in 1969 as a low-cost manufacturer of black and white televisions. In 1970, Samsung acquired a semiconductor business which would be a milestone that initiated the future for SEC. Entering the semiconductor industry would also be the beginning of the turnaround phase for SEC. In 1980, SEC showed the market its ability to mass produce. SEC became a major supplier of commodity products (televisions, microwave ovens and VCRs) in massive quantities to well known original equipment manufacturers (OEMs). For this reason, Samsung was able to easily transition into a major player in the electronic products and home appliances market Samsung Profit decreased by 15% from 2007. In 1996, Samsungs C.E.O. focused on innovative products and he encouraged his work force. Samsung focusing on higher end products that the higher end products can generate more revenues but it is facing difficulty to rely on its hardware as the product life cycle is shorter in case of electronic products and price of an electronic item decrease dramatically with the new technology that come in the market. Now the Samsung has to now its Competitive Advantage over its competitors, ways for reduction its costs to be competitive in lower margin products and ways to recover the cost incurred in research and development as the product life cycle is short. SEC began doing business as a major manufacturer for basic electronics and home appliances for well known OEMs. As stated in the case study, Samsungs branding was focused in neither the message nor the logo that was used. The marketing budget was focused more on short-term results versus long term branding creation. Since the marketing was focused on cheap OEM, Samsung was not able to develop effective branding. Branding is essentially creating a difference from one product to another. A lack of brand knowledge was also a factor in Samsungs weak brand name since the message or the logo was not the same everywhere Samsung was sold.

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Since there were no campaigns related to brand knowledge, Samsung was not able to create a unique brand association with customers. Another problem was the managers ability to appreciate the value of marketing or in the current case branding. The root of this problem was that managers perceived marketing as being equal to selling. Again, Samsungs top executives were on a mission to change from cheap OEM manufacturer to a top of the line product manufacture. This change came after a decade (1980s to 1993) of being an OEM provider without much regard to their brand. SEC managers did not grasp the concept that SEC was trying to develop a global brand on high quality products that Samsungs R&D centers were creating. The asset in the manager eyes was the strong product. This point of view is stated in the case study when Mr. Kim, the executive VP of global marketing, explained that managers: believed that good products sell themselves, that marketing was nothing more than selling, and that selling was only needed when you have a me-too or weak product A solution to the weak brand is to outsource the development of the brand to an expert in the advertising field. The pros to outsourcing advertising are: Ability to perform a complex local, regional and global market research Create a logo that will be accepted and recognized globally Send out a strong message that will create brand knowledge among current and future customers. The cons to outsourcing advertising would be to relinquish control of the most important asset Samsung was trying to create, its brand, and place it in another companies hands. A solution to the managers perception of marketing was simple, education. The pro would be that Samsung would now have the total support of the entire company and the focus would now lie on branding and R&D. The con is that it will take time to have all the managers buy into the concept. In order to resolve the managers lack of understanding the value of marketing, they should all be sent to a value added seminar that is focused on the scope of branding. Some of the concepts that should be covered are brand equity and brand knowledge. Regarding the development of a weak brand, the VP of Global marketing should create an effective marketing team that is composed of a:

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Marketing Strategy team whose main task is to develop global marketing strategy. This team should control the global budget, control the global brand campaign and oversee global CRM. Regional Strategy team that has the same focus as the Marketing Strategy team, but at a regional scale. Product Strategy team who will be the worker bees of the entire group and focus on conducting market research (globally and regionally), gathering the information and analyzing information The challenge behind the development of these teams would be the ability to recruit qualified personnel who are either ready to take on the challenge or have the experience to take on this important task. If the personnel fall short then micro-managing may occur or the teams may have problems sticking to a budget. As stated in the case study, Samsung Electronics Company via its new branding strategy campaign was able to rank No. 1 in many digital/electronic categories at a Global scale. These categories included Big-Screen TVs, LCD Displays, DRAM chips, and Microwave Ovens. Under their Digital brand campaigns and partnerships with chains like Best Buy, SEC has instilled its brand equity and brand knowledge on consumers at a global scale. Additionally, via its marketing strategic team, SEC has continued to reinforce its brand by associating it with popular media (e.g., the movie Matrix Reloaded). As to educating the managers on the importance of branding, I think that the fact Samsung has climbed up the ranks in the electronic sector speaks for itself There were two major ingredients to SECs corporate turnaround strategy. The first was when the top management decided to transform Samsung from a cheap OEM to a high value-added products provider in 1993. The second was when Samsung transitioned into a digital technology manufacturer and focused its 17,000 scientists, engineers and designers who worked in Samsungs R&D centers. The implications for marketing were that it needed to put together a powerful and decisive marketing strategy team whose sole purpose was to make the Samsung brand competitive at a global scale. Additionally, Samsung needed to know where it stood regionally all over the globe in order to determine a marketing strategy in any global region the following questions to be considered:

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How strong is the Samsung brand? Can Samsung pass Sony and become a top ten global brand? According to the editor in www.brandchannel.com, SECs has climbed from 42 in 2001 to 25 in 2003. Samsungs position, at 25, shows that its brand has gathered momentum against its major competitors. It is currently the third largest electronics maker in the world, behind Sony and Matsushita. The article also states that consumers appear to take Samsung seriously as a quality brand of VCRs and TVs, and even consider it a superior brand in areas like mobile phones where it competes with Nokia, Motorola and Sony-Ericsson. Samsung may eventually become a top ten global brand if it can do at least two things. It should continue to focus on quality and introduce cutting edge technology. Additionally, it should move its product from price-driven stores like Wal-Mart to more focused retailers like Best Buy. As CMO, Kims main role and responsibilities has been to educate Samsung internally to believe that branding is just as important as the quality of the product. Additionally, he is the vital conductor within Samsungs powerful marketing orchestra that must be in sync with the global market. Essentially, if the music is not heard, it will not be appreciated or valued. He controls the very essence of what Samsung is and wants to be, it brand name. He has been able to build his influence by demonstrating proper management of marketing resources that have been put in his charge; as a result, he helped to quickly elevate the brand to the level it is today.