Samsung – The Making of A Global Brand
“Now they're in consumers' consideration set. After Sony, they have the potential to be the No. 2 brand globally.” -Jan Lindermann, Global Director for Brand valuation, Interbrand in 2001.
In 1998, South Korea’s leading consumer electronics major, Samsung Electronics Corporation (Samsung), entered into an agreement with the International Olympic Association to sponsor the 1998 Seoul Olympics. According to company sources, Samsung wanted to sponsor Olympics to establish itself as a global brand. Analysts felt that by associating itself with the Olympics, Samsung would increase its brand visibility and brand recall among its consumers worldwide. They also pointed out that to become the next Sony (Refer Exhibit I) of the consumer electronics market, Samsung would have to invest heavily in marketing. In the late 1990s, Samsung entered into various marketing alliances with companies worldwide and sponsored events to enhance its brand awareness. Due to its marketing efforts, its brand value appreciated by 200% from $3.1 billion in 1999 to $8.3 billion in 2002. Consequently, in 2002, Samsung emerged as the only non-Japanese brand from Asia to be listed in the global top 100 brands valued by Interbrand Inc1 (Refer Table I). The company was ranked 34th in Interbrand’s list of the world’s top 100 brands. In spite of the worldwide downturn in 2002, Samsung posted a net profit of 1.7 trillion won2 for the third quarter of 2002-03, which was much higher than its net profit of 425 million won in 2001 for the same period. In 2002-03, Samsung emerged as the number three player in the global cell phone market after Motorola and Nokia. It also emerged as the world leader in the $24.9 billion memory chip market.
Table I Brand Value of Samsung
(in $ billions) YEAR 1999 2000 2001 2002 RANK 43 42 34 BRAND VALUE 3.1 5.2 6.4 8.3
Source: www.samsung.com According to industry sources, Samsung’s innovative advertising strategies, improvements in product design and focus on global markets helped it achieve an increase in earnings over the years.
Interbrand is a leading brand consultant established in 1974. Interbrand lists top 100 brands of the world in association with the BusinessWeek Magazine. 2 As on March 3rd 2003, 1 US$ = 1,188.60 Won. (KRW)
Samsung was established in 1969 as the flagship company of Samsung Corporation (Refer Exhibit II). It was the third largest player in the Korean electronics market after Lucky Goldstar (LG) and Daewoo.3 Samsung achieved fast growth through exports, which constituted around 70% of its total production. Most of the exports were to the USA on Original Equipment Manufacturer (OEM) basis. It supplied components for high tech industries in the USA. In the early 1970s, Samsung decided to venture into the television market, and in 1972 it started production of black & white television sets for the local market. After its success in the television market, Samsung set up its home appliances plant in 1973. By 1974 it started manufacturing refrigerators and washing machines. By the mid 1970s, Samsung started production of color TVs (CTVs) and energy efficient high cold refrigerators. By the late 1970s, the company’s exports to the US markets exceeded US $100 million. During the same period, it established a marketing subsidiary in the USA. In the 1980s, it started manufacturing microwave ovens and air conditioners. In 1980, it acquired Korea Telecommunications Corp, which was renamed Samsung Semiconductor & Telecommunications Co in 1982. In the same year, Samsung established a sales subsidiary in Germany and its first overseas plant in Portugal to cater to European markets. In 1986, research labs were established in Santa Clara (California) and Tokyo to improve the product line. In 1988, the Samsung Semiconductor business was merged with Samsung. By the end of 1989, Samsung was ranked 13th in...
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