New product development strategy of samsung r&d

1. Logo
College Name
Subject
A
Report On
New Product Development Strategy of
Samsung R&D
Submitted to
Name
Teaching Faculty
Submitted by:

2. Table of Contents
S.No.
Topic
Page No.
1.
Introduction
i.
History
ii.
About Businesses
iii. Vision 2020
iv.
Financial Data
v.
Market Share and Penetration
vi.
Samsung in India
3
3
4
4
4
5
5
2.
Objectives
6
3.
Methodology
7
4.
Data Collection, Analysis and Findings
i.
Samsung‟s meteoric rise
ii.
In a galaxy on its own
iii. Samsung‟s Investment for R&D
iv.
Smartphones hitting new heights
v.
Comparative Analysis of various brands
8
8
9
10
11
11
5.
Findings: The next big thing
12
6.
Conclusion and Limitations
i.
Conclusions: Breakthrough innovation
ii.
Limitations: Expand into new categories
14
14
14
7.
References
15
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3. Introduction
 History

Samsung
Group
was
founded in 1938 as exporter
of dried fish, vegetables,
and fruits and flour mill and
confectionery machines.

In Korean War, Samsung
lost all assetsaimed to help
rebuild Korean economy;
entered the manufacturing
industry (sugar,fabrics). It
became a leader in modern
business
practices
(recruiting from outside)
Samsung Electronics in 1938

In 1960‟s expansion of key industries, entered electronics and chemical industries

In January 1969 Samsung Electronics Co.was established.

In 1970‟s bet the future on electronicslaid the groundwork for electronics in
Korea which helped the domestic economy grow and paved the way for exports

In 1980‟s, a more comprehensive electronics company; it established plants in
Portugal and US. It also established Semiconductor and Communication
corporation and began memory chip business

Samsung‟s Logo used so far:
The
Samsung
Byeolpyo
noodles
logo, used from late
1938 until replaced in
1958.
The
Samsung
Group logo, used
from late 1969 until
replaced in 1979
The Samsung Group
logo (“three stars”),
used from late 1980
until replaced in 1992
The
Samsung
Electronics
logo,
used from late 1980
until replaced in
1992
Samsung's
current
logo, in use since 1993
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4.  About Businesses



Samsung basically operates in five major divisions.
It provides an array of devices and solutions that can be tailored across industries.
These enterprise solutions help you move information efficiently and securely,
integrate technology with relevant industries for a smarter ecosystem, and
facilitate the necessary collaboration of colleagues and partners.
Samsung Enterprise
Business
Education

Retail
Hospitality
Healthcare
Finance
Apart from these businesses, it also provides solutions also:
o Mobile Solutions
o Printing Solutions
o Large Format Display Solutions
o Hospitality Display Solutions
 Vision 2020
 The underlying principle that defines our vision for the future of Samsung Electronics
is "Inspire the World, Create the Future".
 Financial Data
The various financial data for Samsung Group is as follows:
o Revenue
US$ 268.8 billion (FY 2012)
o Net income
US$ 30.1 billion(FY 2013)
o Total assets
US$ 590.4billion (FY 2013)
o Total equity
US$ 256.3 billion (FY 2013)
o Employees
427,000 (FY 2013)
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5.  Market Share and Penetration
o In the field of Smartphone, Samsung is the global leader with 33% market share
(2013)
India Marketshare
Samsung
11%
3%
Nokia
3%
Micromax
Karbonn
4%
43%
4%
Apple
HTC
4%
BlackBerry
5%
Lava
LG
8%
Sony
12%
Others
3%
Source: Cyber media‟s Voice & Data Annual Survey of the Industry 2013
 Samsung in India
o Samsung Electronics commenced its operations in India in December 1995 and is
today a leading provider of Consumer Electronics, IT and Telecom products in
the Indian market.
o Samsung India is the Regional Headquarters for Samsung‟s South West Asia
operations, which provides employment to over 8,000 employees with around
6,000 employees being involved in R&D. In 2010, Samsung India achieved a
sales turnover of US$3.5 billion.
o Samsung India is a market leader in product categories like LED TVs, LCD TVs,
Slim TVs and Side by Side Refrigerators. While it is the second largest mobile
handset brand in India, it leads in the smart phone segment in India.
o
Apart from development of innovative technology, Samsung places great
importance on acting as a responsible corporate citizen in the communities where
it operates. Its CSR programs respond to the social and environmental needs and
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6. seek to give back to communities that support the company. In 2009, Samsung
launched the company‟s Corporate Social Responsibility initiative – „Samsung
Hope Project‟ with projects in the areas of education, culture, sports, social
welfare and community development. Each program under the Hope Project
uniquely addresses the needs of individual communities while emphasizing on
innovations for development of the community including education, technology,
engineering and IT technical training.
 Objectives
 To understand new product development strategy overview in Samsung R&D:
As new technologies are being constantly introduced to the market, speed is
essential for remaining competitive in today's digital era, and new markets have to
be pioneered continuously. Through the interplay of creative, imaginative people;
a global R&D network, an organization that encourages collaboration and
cooperation among business partners all along the supply chain, and a strong
commitment to ongoing investment, Samsung has put R&D at the heart of
everything
 To understand methodology followed by Samsung R&D in New Product
Development phase:
The popularity graph of the Samsung mobile phones shows an ascending curve.
The reason for such a rise obviously directs to the dedication of the makers in
offering a state-of-the-art technology that is cost-effective, stylish, and most
importantly user friendly. Being the owner of a wide range of service support
centers throughout the globe, the popularity of the Samsung models of this make
stems from the reason of cost-effectiveness of the phone models.
 To study effect of Consumer behavior on New Product Development of Samsung:
Customers are seemed to move to those products which have good balance
between style, technology and price of the product. Samsung is one of the leaders
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7. that have sensed the pulse of the mobile phone users. Mobile phones from this
technological giant are a rare admixture of style and functionality.
 To challenges and problems faced by the organization in the process
 Here we are considering only the Mobile Market segment of Samsung
 Methodology
The methodology followed by Samsung in the New Product Development is as follows:
Planning
Research
(e.g.
patents)
Samsung
design lab
(e.g. GUI/
Interfaces)
Standard
Product
Developm
ent (in
Korea)
Customize
d Product
Developm
ent
Regions
(India
/US/
Vienna)
Testing
(alpha/
beta)
Improve
and
Version
releases
1.) Planning: In this phase, Samsung plans about the type of products it has to develop
depending upon the choice and requirements of the customers. For this, company does a
market survey about the requirements of the customers. Depending upon these data from
the market, Samsung designs its new products suiting the consumers.
2.) Research:After getting the requirements of customers about the new product, Samsung
according to its already available technologies design the product prototype. In this phase
it also searches for the appropriate patents for the same technology.
3.) Samsung Design Lab: After these initial steps, the prototype goes to Samsung Design
Lab where the basic design and research is carried out.
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8. 4.) Standard Product Development: In this phase, all the standard features of the product are
development giving a shape to the product.
5.) Customized Product Development: After the standard product development, product is
now send for customized product development where it is developed for various
advanced and customized features of the product, before sending it for testing.
6.) Testing: In testing phase, the product is subjected to two phases viz. alpha and beta
testing. In alpha testing product is tested by the company R&D department only. It is
given to testing officials who test the various features in the products and then it is passed
for beta testing. Now in beta testing, the product is given to few selected customers who
use the product for some definite time and then the product is qualified for launch in the
customer market.
7.) Improvement: After the product is released in the market, various versions and releases
are made into the market. These releases are mostly available free of cost to the
customers.
 Data Collection, Analysis and Findings
 Samsung’s meteoric rise:
A: Samsung‟s growth was mainly fuelled by sales of digital TVs (in particular LCD TVs)
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9. B: Global sales of electronic products were affected by the economic downturn. Samsung‟s
phenomenal growth was dragged down by the downturn that affected the US and Western
Europe.
C: Samsung managed to achieve stellar growth, driven primarily by sales of its smartphones,
in particular its Galaxy range.
 In a galaxy on its own:
o Samsung‟s ascendance as the market leader in mobile phones was mainly
powered by sales of its Galaxy range of smartphones, especially its flagship
Galaxy S3 and Note 2 models.
o Samsung leveraged the Galaxy branding and offered a cheaper version, the
Galaxy S3 Mini for emerging markets. The combination of flagship and cost
competitive models allowed the Korean chaebol to leapfrog Apple Inc. by a
substantial 50% margin in volume sales.
o Apple Inc. insistence on a streamlined product line-up and higher profit margins
helped the company rake in record revenues, but had an adverse impact on its
market share in volume terms. Critically, the lack of a low-cost iPhone affected
its sales in the burgeoning emerging markets.
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10. o Nokia Corp and Research in Motion Ltd continued their transition, and struggles
to offer an operating system to compete with Android and Apple‟s iOS saw sales
of these two companies fall sharply.
 Samsung’s Investment for R&D
In 2010, Samsung Electronics invested $ 0.01 trillion, or 6.1% of consolidated sales in R&D.
Currently, has 50,084 R&D personnel which is equivalent to 26% of our total workforce. In
recognition of R&D endeavors, Samsung Electronics was included among the top 10 global
companies in R&D investment announced by the U.K. Department for Business, Innovation
and Skills.
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11.  Smartphones hitting new heights:
o Samsung leads the global smartphones market and commanded 40% of retail
volume in the high growth markets of Asia Pacific and the Middle East and
Africa in 2012. Its share in Eastern Europe was 27% and 31% in Latin America
in 2012. Both regions were traditionally strongholds for Nokia.
o Samsung's market share was nearly double that of second ranked Apple in 2012,
aided by both its flagship models like the Galaxy S3 and Note 2, and low-cost
variants like the Galaxy S3 Mini, developed for emerging markets. A
comprehensive suite of products allowed Samsung to dominate the smartphone
market while BlackBerry (marred by its BB10 operating system), Nokia
(transition to Windows) and Sony (financials and change in strategy) were
unable to mount a serious challenge to the South Korean chaebol.
 Comparative Analysis of various brands
Landscape Samsung
Electronics
Product
Consumer
Offered
Electronics
(LCD TV‟s,
Microwave
Ovens, PC‟s
etc.)
Apple
Computer Inc.
PC‟s, portable
music players,
Mobile
communication
devices etc.
LG
Electronics
Consumer
Electronics
(Mobile
handsets,
Front
loading
washing
machines,
AC‟s etc.)
Nokia Corp.
Sony Corp.
Motorola Inc.
Leading
Mobile Comm.
Company
(started
as
wood
pulp
producers)
Electronic
games,
Motion
pictures,
Financial
services etc.
Mobility
solutions,
mobile
services,
cellular comm.
Devices etc.
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12. Innovation Focuses on
and Design Reason and
feeling
to
create
a
design and
used global
localization
strategy to
establish as
a first class
consumer
(user
centric)
Marketing
Digital
convergence
using
EProcesses
and efforts
in
improving
design by
investing in
R&D
Occupies
„feeling zone‟
and emphasis
on
the
simplicity
of
products
in
terms of design
and instability
Concentrated
on 5 areas:
Mobile
comm.,
Digital
appliances,
digital
displays,
digital media
and
home
networking
and design
their
products by
using
4
values:
Theme,
Style,
interface and
finish
Improvement in Originally
design
and produces
product features electronics
for
mass
consumption
but
later
transformed
to produce
premium
consumer
products for
attracting
premium
customers
and to gain
brand image
Adopted
telecom as its
core business
and designing
was based on 3
principles:
Simplicity,
Relevance and
Experience
Creates
Value added
products by
doping
4
principles of
design:
Originality,
Lifestyle,
Functionality
and
Usability
Focus on two
criteria‟s for
products
for
their
consumers:
personalization
and
socialization
Product
categorization
is done by:
Explore Live
classic, classic,
achieve
and
entry
and
communicating
brand value to
the customers
Do not rely
on customer
surveys and
create value
added user
experience
through
feature
design,
concept
development
and
ecofriendly
sustainable
design
Paid attention
on
development
of
new
revenue
generating
services and
technologies
and enabling
customers to
experience
media
mobility.
 Findings: The next big thing
o Internal memos presented as evidence during the Apple-Samsung lawsuit dented
Samsung‟s image asan innovator, but the lawsuit also showed consumers
Samsung‟s relentless pursuit and obsession to mimic and beat Apple‟s iPhone while
creating its smartphone range.
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13. o The company‟s sponsorship of the London‟s Olympics in 2012 and the 2-minute
advertisement during the Super Bowl in 2013 reinforced the Samsung brand image
in the minds of the consumers.
o Samsung has been spending consistently on advertising and is one of the largest
advertisers globally. Ad Age reported that Samsung spent US$4.3 billion
worldwide in 2012, four times more than Apple.
o
Not content with its success in smartphones and TVs, Samsung has also identified
several other categories in which it intends to compete aggressively, such as
appliances, cameras, health and medical equipment and printers.
o The five forces are:
Relations with suppliers: It means that Samsung needs to improve their
relations with the suppliers. This can be done with Suppliers relationship
management and by bringing the suppliers on a single platform.
Relations with buyers: Customer is the king. There is a need to improve their
relationships with the buyers or customers by developing appropriate
marketing strategy, timely delivery of the products and supply chain
management
New Entrants: It is important for Samsung to analyse the threats from new
entrants in the customer electronic market
Substitutes: With the emergence of Chinese products in the market which can
act as the substitutes for Samsung products. Hence, it is important for Samsung
to implement Generic technology strategies which includes:
o Cost Leadership (e.g. Lower/cheaper material input, logistics)
o Differentiation (e.g. Enhance features, deliverability)
o Cost focus (minimum features)
o Differentiation (niche markets)
Rivalry among established firms: There is a strong competition between the
already existing firms like Nokia, Sony, Apple, LG etc. Therefore, Samsung
will have to improve its competitiveness in the market.
In order to sustain its position in the near future Samsung will have to consider all the above
mentioned points.
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14.  Conclusion and Limitations
o Conclusions:Breakthrough innovation
Within smartphones, the South Korean manufacturer banked on its
AMOLED screen and custom UI for its Android-powered flagship
smartphone, and single-handedly created the phablet (phone/tablet)
market, with its Note smartphones sporting a large screen back in late
2011.
Samsung demonstrated that it was not short on ideas and was focused on
catching up with both Apple and Nokia in the mobile arena, as well as on
strengthening its lead in digital televisions in 2012. Now that Samsung is
the market leader, there must be a significant shift in its strategic direction
if it is to build on its position.
Samsung has to show its competitors that it is confident and knows exactly
where it intends to steer the market. The market is expecting Samsung to
create category defining products, much as Apple has done with
smartphones and tablets.
o Limitations:Expand into new categories
Samsung is still not strong in cameras and laptops, which offers it room
for growth, while the company is also aiming to consolidate its lead in
mobile phones and digital TVs. While forecast growth for cameras and
laptops is lower than smartphones, these products offer relatively high
average unit prices and longer replacement cycles than smartphones.
- Samsung‟s know-how in large-scale manufacturing and its economies of
scale give the company an advantage over competitors like Acer in
computers and Nikon in digital cameras. In addition, Samsung can
leverage its strong brand: Consumers are likely to be willing to give
Samsung‟s foray into these new categories a try.

- However, Samsung has to be selective in its product line-up and avoid
direct competition with its rivals. For example, Samsung should focus on
high-end fixed lens cameras and compact system (mirror less) cameras,
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15. and not try to compete with established players like Canon in the DSLR
market.
 References
o
www.samsung.com/us/aboutsamsung/samsung_electronics/business_area/rd_page/
o
http://www.businessinsider.in/Samsung-Has-A-Totally-Different-Strategy-FromApple-And-Its-Working-Great/articleshow/21250813.cms-
o
http://www.portal.euromonitor.com/portal/default.aspx
o http://www.businesskorea.co.kr/article/1505/samsung-group-marking-300-trillionwon-revenue-500-trillion-total-assets
o http://articles.economictimes.indiatimes.com/2012-1130/news/35483331_1_samsung-targets-asim-warsi-samsung-electronics-india
o http://www.engadget.com/2013/07/03/samsung-to-build-five-new-randd-centers/
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