Number of Words : 1952
Number of References : 8
This assignment is based on the following case study –
Before the Korean electronics giant Samsung entered the 1998 Asian economic crisis, it was widely regarded as a supplier of cheap imitations of superior Japanese products. At the time, the focus of its business was on memory chips and low margin items such as microwave ovens and cheap TV’s, which were mainly sold through discount stores. Following a major restructuring of its strategy and operations, it has turned itself into the fastest growing player in the global electronics industry, with sales of approaching US$50 billion expected for 2010. With recent profits estimated at $6 billion, it has become the most profitable new technology company ahead of Microsoft, IBM and Intel. Employing approximately 88,000 people in 46 countries, the company consists of five main consumer –related business units, the details of which are shown below;
Appliance Digital Media LCDs Semiconductors Telecommunications
Vacuum cleaners TVs and monitors
Laptops Large LCD &
TFT screens Memory chips
DVD and CD drives Mobile phone handsets
Wireless network systems
Integrated access platforms
Samsung Electronics Ltd has built up its position through rationalisation and diversification of its activities, together with strong marketing and innovative product design. It is now recognized as the worlds leading consumer Electronics Company ahead of the Japanese Matsushita, which produces JVC, Panasonic and Technics brands, and Sony, which markets a range of products under the parent brand name. From its strong position as a manufacturer of essential electronic components, Samsung has built a reputation as a major consumer brand in a range of different product categories. The company is the market leader in the microchip and TFT-LCD screen sectors and is the world’s largest producer of colour TVs, monitors and VCRs. It is also now the second largest producer of mobile handsets behind Nokia, having just overtaken Motorola.
Samsung has used its success in the cell phone market to drive its brand performance, which can be attributed to a strategy of delivering innovative products at premium prices. According to their chief, Eric Kim, much of their achievement has stemmed from identifying at an early stage that the cell phone was changing ‘from a utility item to a fashion statement’. This led them into the camera phone market and they became the first producer to equip a cell phone with an MP3 player. They are currently launching a mobile TV phone as well as talking phones that can read mail Short Message Service (SMS) messages to listeners. In addition they are using their powerful chip technology to drive cell phones that act as a personal entertainment module, which can hold 10,000 songs and over 10 hours of video film and play 3-D video games. Such innovation has been at the heart of the Samsung brand, whose ‘coolness’ factor received a big boost when one of its futurist phones was featured in the follow up instalments of the Sci-fi movie Inception; consequently its handsets are priced up to 40% higher than most of its rivals.
The change in direction of the company over the last decade is based on the realization that there was more money to be made from innovating and setting the pace than from producing only me-too products. To do this has not only been able to draw upon its extensive manufacturing and R&D capability (20,000 researchers in 15 laboratories worldwide) but has also worked closely with strategic partners including competitors as well as customers in establishing new industry standards. The approach, which has proved so successful in their cell phone business, is now regarded as the basis for further growth in all customer sectors, with a particular emphasis on the use of wireless technology in the home.
Supporting all its developments has been the extensive use of marketing to communicate with customers and build a brand, which is increasingly recognized as a world-leader. However, in order to achieve its ambition of becoming and remaining number one in the consumer electronics market, it plans to invest even more in research, development and design (up to US$6 billion) and at the same time review its brand positioning.
This paper answers the following questions on the case study – <br />a) Identifies changes in the electronics marketing environment generally and discusses the drivers that have brought about these changes over the past 10 years <br />b) Explains how the following planning tools can help Samsung with its investing decisions by develop its marketing objectives and strategies for all its products<br />i) Boston Consulting Group’s Product Portfolio Analysis<br />ii) Ansoff’s Growth Matrix<br />c) Explains the concept of market segmentation and how this analytical approach can assist in the development of Samsungs cell phone product range and marketing mix<br />
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AKey : MESM-17587