Samsung Case Analysis

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Issues
As South Korea’s largest conglomerate, Samsung includes Samsung Electronics, Samsung Heavy Industries, and Samsung Engineering & Construction. Started in 1938 as a company that produced agricultural products, the company began to focus on shipbuilding, chemicals, and textiles in 1970. Since after Samsung Electronics Company (SEC) was founded in 1969, Samsung acquired a semiconductor business and supplied global markets with massive quantities of commodity products. With the transformation that was led by the leadership of SEC Chairman Kun Hee Lee, Samsung rebuilt its image as a global business leader. Following the chairman’s new management initiative, Samsung is now in a stage of investing in innovative and premium products to increase their brand value.

Despite Samsung’s rapidly increasing global market share, the Samsung brand was not widely known outside of Korea until Samsung decided to recruit a Korea-born general manager, Eric Kim. With his effort to build the corporate brand image across the markets of 200 countries, Samsung was able to generate tremendous brand visibility worldwide with its DigitAll campaign.

While Samsung has experienced great success in marketing, some important issues remain to be addressed to increase their market share and brand power:     Market share should be expanded by penetrating weaker markets; Marketing communications need to move more consumers into the “delights me” and “perfect fit” relationship categories; Less emphasis should be placed on youth and creativity, as that might be inappropriate; and A more complex customer segmentation should be marketed in its marketing planning.

Situation Analysis
Industry/Market Industry/Market Size In 1997, Samsung moved from manufacturing cheap home appliances to higher-quality products across all categories. Samsung is now the number one global manufacturer of DRAM (the semiconductor chips primarily used in PCs), SRAM (used in cell phones and handhelds), and NAND flash chips (used in digital cameras and MP3 players). The NAND market is projected to reach sales of $7 billion by 2005.



Telecommunication – Samsung is a leading provider of the newest CDMA digital phones and of thin-film LCD displays.





Cellular phone industry ($60 billion) – Samsung is a strong number three in the global market and held 10% of the global market in 2002 (2.7% in 1999). Samsung targets a higher price range. Sales grew 51% in 2002 while Motorola grew a meager 4%. LCD – Samsung entered into a joint venture with Sony to produce LCD in 2003.

Samsung Market Position by Categories Category Big-Screen TVs Cell Phones Flash Memory LCD Displays MP3 Players DRAM Chips DVD Players Microwave Ovens Global Market Share 32% 10% 14% 18% 13% 32% 11% 25% Samsung Rank 1 3 2 1 3 1 3 1 Key Competitors Sony (25%), Mitsubishi (25%) Nokia (36%), Motorola (15%) Intel (27%), Toshiba (11%), Advanced Micro (10%) LG Phillips (17%) Sonicblue (18%), Apple (17%), Creative (12%) Micron (19%) Toshiba (15%), Sony (14%), Panasonic (10%) LG (22%), Galanz (19%)

Source: Adapted from “The Samsung Way”, Business Week, June 2003, pp. 56-64

Trends Many of Samsung’s rivals, such as Sony and Apple, decide to focus on developing proprietary software and content, such as music, movies, and video games.     Hardware lifecycles are becoming even shorter Content offers higher margins Content also offers a hipper image and stronger appeal to the youth market Many of products are manufactured in China these days.

Technological Changes The two major characters of the industry are in shortened lifecycles and quickly reduced prices. However, Samsung’s commitment to manufacturing and investment in R&D facilities could help them to successfully become a global leader in rapidly changing technology.   Between 1998 to 2003 – invested $19 billion in new chip factories In June 2003 – Samsung planned to invest $17 billion in manufacturing facilities for TFT-LCDs over 10...
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