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Samsung Brand Management Case

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This is a Samsung Brand Management MBA Marketing Case Study presented at Rutgers Business School.

This is a Samsung Brand Management MBA Marketing Case Study presented at Rutgers Business School.

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  • Samsung was founded back in 1938. In the beginning, they sold farm equipment and other related products. In the 1970's Samsung expanded into shipbuilding, chemicals, and textiles. This division the Samsung electronics Company (SEC) formed in 1969. SEC was in the business of low cost manufacture of monochrome televisions. They were an OEM manufacturer that is where Samsung produces the product and other companies put their name, logo, and brand on the product. In the 1970's they acquired a semiconductor business. During the 1980's they supplied TV, VCR, and microwave ovens to OEM's. The company increased emphasis on quality and technical leadership. Profits were reinvested into R&D. In 2002, they almost double their profits on sales from 1999 levels, $5.9 billion in profits on $44.6 billion of sales in 2003, compared with $2.8 billion in profits from $28 billion dollars of sales in 1999. Between 1998 -2003 they invested n new chip factories and invested in LCD factories. Samsung believed that manufacturing is one of their core competencies. Chairman Yun stated “Everyone can get the same technology now but not everyone can make an advanced product.” SEC’s main line of business is tech devices like televisions, computers, cell phone and other appliances. Also they manufacture the microprocessor and memory that control such devices. Some of the issues that Samsung faced were that people saw their brand as a second tier brand. In addition, the marketing teams at Samsung were split into three groups with defined responsibilities. The three groups were never in communication with each other. There is the marketing strategy team, which developed the global marketing strategy, oversaw the customer relationship management, and controlled the GMO budget. There is the regional strategy team, which planned the strategies for the regional markets and communicated with the regional managers about marketing issues. Another team that they have is the product strategy team. This team researched and gathered information about the competitors, represented Samsung at trade shows and also planned the marketing for new products.
  • Financially we are very strong since posting 44.6B in sales and 5.9B in net profit last year, roughly a 13% net margin, but we need to close the gap between sony and the top 10. Sony has had tremendous success in their brand building efforts as they have built up their brand over the last 20 years, they spend nearly 3 times as much as us.Although we’ve been pretty lucky so far, there hasn’t been a substantial strategy in place to connect the vision moving forward. There’s been some slight confusion between the signals that we’ve been sending out, Which leaves us with the task of getting us to become the premier brand by 2005.
  • Effective Segmentation Criteria list: Measurable, Substantial, Accessible, Differentiable, ActionableCriteria to use in picking the target segments: 1) Attractiveness of the segment; 2) compatible with the company's resources and objectivesIn order to make sure we are aligned to our company resources, lets take a look at some of our segments.As you can see we are fairly diversified through various categories
  • Looking at some of the segments from FCB study across countries Brazil, China, Germany, USA…with the exception of China mobile telephones, we haven’t had much success breaking into delight me and perfect fit customer base. In fact, we lag behind Sony and some of the upper echelon brands that are out there.Sneak peak into some secondary studies that going to help us think about…
  • SWOT:Strengths: -We have great vertical integration and continue to pride our manufacturing as a core competency (where many others have failed), we’ve built our business model to continue to remain competitive by directly managing our capital investment and inventory. -We have a great team in place as well as 17,000 scientist, engineers, and designers to continue the flow of new product pipelines to continue to tap on the strong innovative abilities-We have faster product release times and can move from idea creation to commercialization in as little as 5 monthsWeaknesses:We have low brand image from still trying to rise out of the view of being a low-cost OEMWe haven’t participated in the software industry, where Sony has build a extensive content library of movies, music, and games.Ineffective Marketing CommunicationsOpportunities :-As we move towards devices being able to control multiple electronic devices, we have the opportunity to leverage digital convergence-There is a growing mobile device market-The ability to grow market share in all major electronic categories-Better connection with the customer as technology becomes more converged with their lifestyleThreats:-We might suffer from being too diversified while most of our competitors are in leading positions and can become industry specialized-As technology continues to evolve and develop, there’s shorter product lifecycles leading prices to decline sharply and consumers to look for the next big thing-We also have a large investment in infrastructure, so we bear a lot of risk when we invest billions into factories for mass distributions and can’t drive the sales-There’s somewhat of mixed feelings about the brand’s role around the world
  • We believe Samsung has right Band Elements which includes its Brand Name, logo and Slogan ““DigitAll-Everyone’s Invited”. We believe Samsung’s Brand elements are Memorable, Meaningful, Likable, Transferable, Adaptable and Protectable and does not require any changes. All we have to do is design Holistic Marketing, Leverage appropriate Secondary associations to promote the brand further to build brand equity, at same time we need to ensure Internal Branding is taken care. ***Include POD and POP in Slogan thoughts…..
  • CRM (Do we know what CRM Software available in 2003 ?):  To improve Band Equity, we will go with holistic marketing which includes implementation of CRM process that will capture every contact of customer with Brand and their experience, put necessary processes in place to ensure every Brand Contact is positive.
  • We continue working with cooperative and well known customers like JPMC  and Boolmberg to promote Samsung’s Brand, we will explore more Secondary Associations like continuing Olympic Games sponsoring to promote our Global Brand. We will also participate in trade shows and sponsor appropriate events to get better visibility to Samsung’s brand.
  • Effective Segmentation Criteria list: Measurable, Substantial, Accessible, Differentiable, ActionableCriteria to use in picking the target segments: 1) Attractiveness of the segment; 2) compatible with the company's resources and objectives
  • Audit (indirect): uncover critical sources of brand equity as from brand personality at this stage, and use the ways mentioned in previous slides to improve and leverage its equity. Conduct Audit when setting up marketing plans and when considering shifts in strategic direction. Tracking: Collect Quantitative data from consumers over time about how brands and marketing programs are performing. Helps to understand where, how much brand value is being created, to help day-to-day decision making.
  • Global Audience: (C.S. America, Europe, China, North America,SE Asia,SW Asia,Middle East,Africa,Korea)Objectives: We want our consumers to recognize and recall Samsung to be able to tap into perceptions and experiences while coming into touch with our products. we are currently at $10.8B and #25 in terms of brand equity, we want to beat sony and be in the top 10 brands of all time.Design Comm: we want to leverage our message strategy to allow people to feel connected to our devices, we want to motivate and stir up our consumers emotion with a transformational approach by allowing our marketing teams to create campaigns that appeal to consumer’s life experiences, our message source is going to be reliant upon the strong brand that we already have…we are going to leverage Samsung’s name to create a consistent message that allows us to fully connect with our consumers at a global level.Channels: we are going to integrate both personal and non-personal communications, we are going to tap into our CRM processes and holistic marketing approaches to allow us to touch each other personally…on the other side we are also going to allow our marketing team to creating advertising to leverage our secondary associations and brand to create a uniform mass communication to our audience.Budget: We are going to utilize the objective to task method and request 40% of our GMO budget to brand building efforts for this initiative.Media Mix: We are going to allow our internal team to utilize a very diverse set of media mix ranging from TV, cinema(warner bros), internet(google, samsung.com), magazines, newspapers, social networks(facebook, youtube, twitter), mobile phones to communicate “one vision”Measuring Results:We are going to measure our results to brand audits and tracking previously mentioned, additionally we are going to review financial performance indicators such as revenues, net profits, net margins, share price appreciation, market share, and brand valuations to our baseline valuation of $10.8B, revenues of $44.6, and profits of $5.9B in 2003.
  • We do understand that our strategy involves some financial risk and investment and we are proud of the successful that we have achieved throughout the company’s growth but we understand that these steps are necessary to take our company to the next level. If executed properly the rewards will outweigh the risk and we can become a first tier service provider of digital products.
  • Need to add material from the case study

Transcript

  • 1. Samsung Electronics Company Jim Chan Richard Chan Vince Kazmierski Lakshmaiah Lingam Jeff Roberson Martin Zhao
  • 2. Agenda1. Background2. Problem Statement3. Situation & SWOT Analysis4. Options5. Implementation6. Final take-aways / Conclusion
  • 3. Samsung Background 1970s – expansion into 1998-2003 – 1938 – shipbuilding, ContinuedSamsung was chemical, investment in Founded textiles manufacturing 1969 – 1980s – Tremendous Samsung supplier of TV. Growth Electronic VCR, moving ahead Company microwaves (SEC)
  • 4. Product Mix Product Mix Width TV Mobile Phone Camera SDRAM Refrigrator Washer TFL-LCD DVD Player … HDTV UFB-LCD Phone Digital Camera 512M DRAM Normal Freezer Top Load 54" TFT-LCD HD DVD CombProduct Line Length TFT-LCD Color Dig. Still TFL-LCD Phone Camera 128M SDRAM Bottom Freezer Front Load 40" TFT-LCD All-In-One DVD 16 Chord High Eff. Front PDP-TV Phone Mega Pixel Dig. 128M DRAM Side-by-side Load 3D TFT-LCD DVD-R Plasma TV PDA Phone Long Zoom 128M Flesh French Door Washer 30" TFT-LCD Point and 33" Double TV Phone Solution 1G DRAM Water Filter PureCycle Frig. With ice TV Remote Watch Phone Optical Zoom 64M DRAM maker PowerFoam External Flesh 256M DRAM Electric Dryer Top Load Alpha Chip Steam Dryer Electronic Steam Dryer
  • 5. Problem Statement• Samsung currently ranked #25 in Brand Value ($10.8B) – Needs to be top 10 by 2005 – We are looking to beat Sony• Growth in Brand Equity Starting to slowdown• No formal marketing strategy to connect the vision
  • 6. Segmentation Analysis • Top Level – Geographic Segmentation: – North America, Central and South America, Europe, Middle East, Africa, Southeast Asia, Southwest Asia, China, Korea • 2nd Level – Product Category Segmentation: – TFT-LCD, Television, DVD Players, MP3 Player, Camera, Camcorder, SDRAM, SRAM, NAND flesh memory, Disc Drive (optical and non-optical), Mobil Phone, PDA device Top C.S. Europe China North SE Asia SW Asia Middle Africa KoreaLevel America America East 2nd TFT-LCD TV Mobile SDRAM SRAM NAND DVDLevel 2nd MP3 Camera PDA Refrigerator Air Microwave Vacuum Washer Conditioner Oven CleanerLevel
  • 7. Competitive Dynamics
  • 8. SWOT Analysis• Strengths: • Opportunities: – Vertical integration, core – Digital Convergence competence – Growing mobile device market – Strong innovative ability – Growing market share in all major – Faster new product releasing categories time interval – Better connection with customer• Weakness: • Threats: – Low brand image due to rising – Many rivals in leading position from a low-cost OEM – Shorter product lifecycle – Not participating in related – Large investment in infrastructure software industry – Internal disagreement of brand – Ineffective marketing role communication
  • 9. Global Marketing Organization Marketing Strategy Team Regional Marketing Team Product Marketing Team
  • 10. Alternative: (1) “Status Quo”Continue “Product Driven Approach”Pros Cons• Proven successful as a • Has not been able to take us business model to our goal (Top 10 Brand) – Growth from year to year – Still second tier when• Low risk to resources compared to upper echelon brands like Sony – Already effectively deployed – Continue current R&D and • Can cause complacency marketing allocations – Not creating barriers for entry• Already have company – Not in touch with consumers “Buy-In”
  • 11. Alternative: (2) “Rethink Marketing”Creating a “Customer Driven Approach”Pros Cons• Elevate our brand to a place • New thinking we have yet to enter – Reach our goal and become a – Must communicate internally top 10 brand by 2005 and externally• Increase customer loyalty • Get buy-in of the new vision – Get consumers to identify with internally the brand • Must be consistent with our• Drive production from me-too marketing externally products to innovative products • Peeling way from a – Become a pioneer creating successful business strategy innovative products and create new markets
  • 12. Recommendation? (2) “Rethink Marketing” Strategic Initiative – Build Brand Equity• Create effective strategy for STP• Evaluate brand elements• Evaluate our current relationship with our customers• Communicate “One Vision” – Internally and Externally• Evaluate using metrics for Brand Equity
  • 13. POD and POPwith Rethinking Marketing Approach • PODs – Humanized and better Personal Experience – Customer insight Products – Innovative technology • POPs – Continued high quality
  • 14. Segmentation, Targeting, Positioning• M-Net Studies to help identify key strategies around STP, and allocation of resources – Segmentation • Accelerator • Turning Point • Advanced – Targeting • Advanced • Turning Point – Positioning • Become a truly preferred brand in the consumers mind, emphasizing humanization and improved personal experience
  • 15. Choosing Brand Elements• Logo:• URL: www.samsung.com• Slogan: “Everyone’s Invited” – POP and POD – Utilize concept of humanization and lifestyle• Name: Samsung
  • 16. Designing Holistic Marketing• Holistic Marketing: – Implement CRM processes – Capture our customer’s contact with the Brand • Databases • Post Cards • Registration • Online Message Boards • Call Center experiences
  • 17. Leverage Secondary Associations• Continue to Leverage Relationships: – JP Morgan and Bloomberg – Warner Bros movie studios• Explore more secondary associations: – Olympic games – Trade Shows – Social Networks
  • 18. Internal Branding• Internal Branding Segment – all employees – marketing partners: Distributors, dealers• Effective, informative and energizing top-down internal communication process – Town hall Meeting – Intranet: internal web application header and footer – Stationery: letter head, email footer• Activities to inspire employees – Samsung Morning Coffee• Link internal branding campaign with external marketing effort – Training for employees to understand and appreciate branding notions – Communicate all the employees about Global brand building efforts – Take employees opinions and make them partners into our brand campaign
  • 19. Budget Allocation • Total Samsung’s marketing Budget Allocations budget is $1 Billion. (based on $1 billion) • We will use 40% of this Global Brand Building Product Level Promotion budget for our new Global Marketing brand building 40% efforts • Rest 60% used for local product level promotions.60% • Budgets will be adjusted through annual Brand Equity metrics.
  • 20. Measuring Brand Equity• Brand Audit – Identify Sources of Brand Equity: • Brand Personality: Inventive, Smart, Cool, Sleek, Friendly • Consumer Index from Relationship Monitor – Find ways to improve Brand Equity – Conduct on annual basis and adjust Marketing Strategy accordingly.• Brand Tracking Studies – Collect Quantitative data • CRM statistics data: re-purchasing rate; first purchase rate • Market share cross products – Make appropriate Marketing decisions • Where, When, Who, and How
  • 21. Communication • Audience: relationship styles of “Price-based”, “Follow-the- leader”, “Reliant”, and “Caring” • Objectives: Brand Purchase Intention • Communication: Sensory Strategy; Informational & Transformational appeals; Expertise & Likability (who) • Channels: Non-personal channels (events, Expo, movie) & Personal channels (Facebook, e-Mail, online ad, virtual communities) • Budget: Global Strategy: 40%; Product Strategy: 60% • Media Mix: Television, Cinema, Internet, Magazines, Newspapers, Social Networks, Mobile • Measuring Results: Brand Audit, Brand Tracking, Financial Performance • “Delivery of the Brand for our products, services, and organization with consistency over time”
  • 22. Timeline Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9STP Analysis ReviewSloganInternal BrandingCRM ImplementationIntegrated Marketing Efforts
  • 23. Conclusion – Humanization of our products • Build products that the customers wants • Focusing on producing quality digital products • Concentrating on developing and retaining “Loyal” Customers – Building Brand Equity • By Identifying the Right Brand Elements • Allocation of Resources (1 Billion) across countries and categories to reap the highest reward – Rethinking our current Marketing strategy • Creating Holistic Marketing Activities • Internally and Externally communicate and promote the vision for our brand • Targeting and building campaigns to target our Turning Point and Advanced customers – Samsung Products • Migrate away from R&D in which a great product will sell itself • Continue with manufacturing of products as the core of what we are about • Continue to leverage our strong and innovative R& D of 17,000 associates
  • 24. Questions?
  • 25. BACKUP
  • 26. Brand Value Chain