Marketing and Samsung Electronics

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Executive Summary
Samsung Electronics was established in 1969 and successfully developed its own products internally in 1980s. The company grew very fast and even continued to lead the market with an 8% growth in gross sales during Asian crisis in 1997. Now it is transforming to a global digital company with many products occupying substantial market shares in the world.

Samsung Electronics attributed its success to four main factors; (1) Highly creative employees can develop new technologies; (2) cooperation among business partners throughout the supply chain; (3) its ability to penetrate new markers; (4) high speed of innovation and product development. The company spent high budget on R&D, product design and marketing and successfully differentiated its products from the competitors and positioned the products as “high quality” and “high-tech”.

Samsung Electronics faced a challenge of differentiating its product from the competitors. The company needed to defend the market share and profitability due to the fierce competition with many global competitors. Some competitors offering the products at low cost base also posed question on Samsung’s R&D strategies. Many competitors outsourcing R&D and product design works to lower the costs. The new trend also let Samsung Electronics to rethink R&D and product design outsourcing strategies.

Samsung Electronics can explore new market given the past successful experience to enter the market like India. The existing R&D, product design and marketing strategies successfully differentiated the products from the competitors and should not be changed. Low price strategy is also not a viable option for Samsung Electronics.

Background

Samsung Electronics Company was established in 1969 in Korea and improved its capabilities via joint-venture with many foreign technology suppliers in 1970s. In 1980s, Samsung Electronics established Korean based R&D centers to develop products internally and to reduce the reliance on foreign suppliers. From 1990 onwards, the imported electronics good in Korea increased from 5% in 1990 to 15% in 1991 and the competition of Korean electronics good companies with the global competitors was very fierce. Samsung Electronics unveiled its “New Management” in 1993 to transform the management and emphasized decentralization, innovativeness, globalization, and out-looking management.

During Asian financial crisis in 1997, Samsung Electronics still continued to lead the market with an 8% growth rate in gross sales. In 2000, the company had a new mission to transform the company to a digital company of leading the digital convergence. The company in 2007 held the largest market share for LCD and TV.

Successful Business Strategy

Samsung Electronics attributed its success to four main factors; (1) Highly creative employees can develop new technologies; (2) cooperation among business partners throughout the supply chain; (3) its ability to penetrate new markers; (4) high speed of innovation and product development.

Samsung Electronics also spent huge R&D budget, say 6.35% of net sales in 2007, higher than 3.2% and 4.1% of net sales for Apple Computer Inc. and LG Electronics respectively. Moreover, the company not only had 6 R&D centres in South Korea but also operated 16 R&D centres in 8 countries. The company gathers the worldwide expertise and understand the market demand of different countries.

Samsung Electronics had worldwide design centres to understand lifestyles, trends, cultures of different countries and allowed the local design centre to accommodate specific market needs and cultural context in the product design.

In 1990s, the United States realized products from Korea as cheap commodity. Samsung Electronics spent 3% of net sales on marketing and advertisement to reposition its brand as “high-tech” and “high quality”. It was evidenced by its brand equity sharply increasing from USD15 billion in 2005 to USD16.1...
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