Samsung case study


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Samsung case study

  1. 1. 2012Samsung: Redefining The Brand- Case Analysis Lecturer Name: Sim Lim Guan Jujhar Singh Sidhu Student ID: 12667282
  2. 2. I. Current Background Samsung Electronics part of “Samsung Group” is one of the most respected IndustrialChaebols. Samsung was founded in 1938 and has been the most important player in theindustrial alteration in early 70’s and throughout 1980’s. Now Samsung is a power housewith 175,000 employees worldwide with operations in 67 countries. With sales of 116.8billion in 2002 it exceeded Hyundai to become the top group in South Korea. Listed as 15 th inAsia and 59th in world by fortune magazine Samsung indeed has come a long way. Globally, Samsung Group concentrated on four core activities: finance, electronics, andtrade services, but Samsung Electronics is the flagship and largest business of SamsungGroup. Pat Button Vice-president, sales also said that domestically, they are the largestelectronics company in South Korea, with investment of 7% of revenue in R&D whichresulted in Samsung establishing itself as a reliableperformer by providing products thatrange from mobile phones, high-definition TV’s to PDAs with front-line technology. Toincrease brand awareness Samsunglaunched a very powerful campaign worldwide“SAMSUNG Digitall – everyone’s invited”. Canada’s consumer electronics market consisted of four apparatuses: business users,young generation, high-income familiesand hobbyists. Consumer electronics in Canada weresold only at large specialty stores like Wal-Mart and Future Shop in addition to onlinestores.While the average per capita income of Canadians was less than Americans still theywere not hesitant to spend money. Samsung in Canada faced some issues like weather to giveextra budget for advertising, distribution, pricing in order to strengthen their position inCanada. 1
  3. 3. II. Case Issues The challenges faced by Samsung was of suitably shifting their product line, evaluatinglevels and distribution strategy, they also wanted to reposition their brand as a leading brandfor the Canadian market. The Swot analysis of Samsung Canada shows: Strengths Weakness • Product Innovation • Contempt certain product line due to • Fast in making decisions regarding tremendous focus on already successful processess product line • Knowledge in digital electronics • Impact on revenue from sales after • Variation in range of product giving retailers profit margain • Powerfull marketing techniiques • Huge R&D investments SWOT Analyis Opportunity Threats • Less price penetrating • Supremacy from main competitor, Sony • Return policies favourable • Attainment of future shop by best buy • Request for good customer service • Opposition from • Swift adoptation new technologies Chinese, Korea, Eurpean and Japanese • Highly technically savvy electronics company Figure 1. SWOT Analysis Samsung Canada also faced problem with the promotional budget, whether to increasethe budget or not, but on the positive side SECA benefited from spill over of USA and otherglobal branding efforts. Another issue was SECA sold low-end products that were not goingtoe to toe with companies new brand position, but these were the products that weregenerating revenues and were a strong point of Samsung in Canada. J.S. Park, president ofSECA had to come up with a new emerging policy for starting Samsung as a premiumconsumer brand in Canada. For a new strategy to work Park should decide whether or not to 2
  4. 4. make changes on products, price and advertising budget including distribution strategy.Therefore, problem here is to achieve redefining Samsung as a premium consumer brandwhile not to have loss. III. Analysis The SWOT analysis shows that SECA wanted to increase the brand image in Canadaand also are careful that in doing so that they do not harm the company’s image.Opportunitylies infavorable return policies, technology savvy and less price penetrating. In return,maintaining strengths enable them to do product innovation and huge R&D investments.Theweaknesses needs to be short-lived and, SECA can do this by increasing the revenue byincrease in prices or generating new product line. Porter Five Forces analysis shows that, SECA needs to be conscious on threat arisingfrombuyers and suppliers. SECA needs to provide supplementary value on product andservice toprogress their value chain activity with this they also need to protect negotiatingpower from supplier and buyer. Separating and continuingorigination and high qualityproduct will help company to survive in the market. New Entrance – High Power of Buyer - Medium • Company with strong financial support • Hard to satisfy customer can enter. • Low cost switching to other brand • Specialist knowledge Industry Competitiveness – High More competitor in premium range of electronics industry High quality differentiation Power of Supplier – Medium Substitute Product - High • Samsung has own distributon channels • Not a unique product • Lot depends upon Wal-Mart, Zellers & • More innovations but equally strong Future Shops competition • High performance in subtitute product 3
  5. 5. Channel distribution have two ways through which they can distribute the products: directchannel, IE: selling though wholly owned showrooms to customer, the other channel isIndirect channel: selling through third-party arbitrators (Keller, 2008) like Future Shop, BestBuy and Wal-Mart. Currently SECA is using both direct channel as well as indirect channelto sell the products . SECA used to sell all the major products through retailers and SECAalso sold most of its products to high end chains. SECA also sold products through Wal-Mart,Best Buy, and Future Shop. The main strategy used by SECA was to involve these big chainsin the partner like relationship and involve them in product development stage. On the other hand, Samsung promotion was driven by Samsung activities in UnitedStates, these things had both negative and positive effect, on positive side SECA was able toaccess the promotional material and use it in the Canada market, but on negative side itlowered the SECA ability to tailor the promotion in such a way that it is suitable for Canadianmarket. SECA knew that if they are not careful in redefining their brand then they could haveincrease in promotional expenses and decrease in revenues if product lines areforewent.Aaker, in 1991 identifiedsome workings of brand equity that are brand loyalty,brand awareness, perceived quality, brand association and some other brand assets. Brandequity is a set of brand assets withaccountabilities that are linked to brand that can add valuefrom the product. This shows that it is important for Samsung and SECA to maintain theirbrand equity so that they can create brand loyalty and they could add more value as theircompetitive advantage (EURIB, 2009) 4
  6. 6. Brand Equity Model-Aaker Two pillars marketing strategy can be adopted by SECA.For SECA and SamsungGroup to be a premium brand, brand and its elements must play an important role. Samsunghas a very unique logo and one of the most recognised logo. The logo which is blue in colourrepresents “trustworthiness, reliability and commitment in service.These brand elementsfacilitate customersthinking patterns and it means a lot to the consumers what exactly does abrand represent. SECA haseminent their product in term of quality and invention from itscompetition in Canada. They are first in many things. To redefine their brand SECA needs toretain the core value and come up with unique products and fresh ways to deliver productsand service so that they can they keep their policy of redefying their brand on track. To sum, SECA, due to its enormous capital, needs to be careful on their expenditureon promotional activities and maintain their core image and redefine the image at the samego. Increase in sales volume without any good brand equity,and without any after sale 5
  7. 7. service, the image of the SECA and Samsung would decline. On the other side, focusing theirbrand equity will delaythe profits they are making now. 6
  8. 8. IV. Formulation & Evaluation of Alternatives Reject to increase the Budget Partially Accept (increase of budget for redefine the image of and abolish of some high revenue Full increase in Budget Samsung in Canada products) Advantage Disadvantage Advantage Disadvantage Advantage Disadvantage Will not be Maintain the Concentrate more Able to be Will lose able to touch Affect the overall loyalty to on new products; appealing and premium masses and revenue, popular customer who develop the new more recognized positioning and may not products will have found the brand products into bestBrand in Canada uniqueness complete their a setback unique. sellers.Attribute mission Increase in Can maintain Will not be They can People associated chance to get Can lose loyal good consumer able to maintain quality with brand before advertise more, customer who relations, and strengthen the control, more hold redefine can and will be able wanted unique can maintain brand and over distribution possibly divertBrand to have brand their uniqueness redefine it of products from brandAssociation identity Brand Image will People who Samsung can Will help This will not be uplifted and thought that Weaken because provide redefine the help in people around Samsung is not for customer emotional value brand and expanding the will come to masses and percieved are not and mental increase brand brand in know more about specially for them unique anymore image inBrand knowledge Canada Samsung and they will wither consumers mindImage their mission away Will Maintain Can sell It is will be Brand positioning worldwide, help distinctive and it around the globe to achieve will deliver and will organizational constant quality strengthen their goal, boost upBrand to customer footprints in profitPositioning Canada Consumers will Will be be able to relate Old consumers will strengthen as more to the Loyalty will be leave and they wll people will be brand and will increases many think that they are able to relate stay loyal if it is people will join no longer more to the able to project SECA important as it isBrand brand itself in a good for the massesLoyalty light Help to strengthen the Samsung will image of the have higher brand Redefining the brand and with equity due to brand will give launch of new refining the brand higher return to projects it is and they will be shareholders better for able to sustain in company to a long runBrand leave footprintsEquity in sand Redefining the Well-known Will be able to brand is a hard brand and with Problem would be reach more work and require redefine of the Will be able to to sustain a long consumers and loads of brand it will reach to more term commitmentFuture company will be financing, this stay in hearts of customers and as newGrowth more immune to will have an people and target a large organizations areand threats, higher impact on the SECA would be customer base coming up withPotential sales volume finances of able to manage better pricesProblem Samsung it. 7
  9. 9. V. Recommendation The best alternative for SECA is to capitalize on its customer service rather than changing theirproduct line. They should also focus on customer satisfaction rather than bring changes in their price,distribution and product line. Firstly the main challenge is to eliminate some products line becausethough they are profitable products but still they are low-end line of stuffs which is inconsistentwithSamsung’s strategy to reposition them. I can recommend that Samsung should not kill any of theirproduct line which is making money and generating revenue for the company so that they can rebuildthe brand name; there are other ways to do the same. Another serious issue was pertaining to price of the products, which were already priced at alow range and the pricing of these products might damage company’s determination to refurnish thebrand image. Contrariwise, raising prices for these products of Samsung might have negative impactand consumers can be choosing other brands over Samsung as Canadian market is very pricesensitive. Raising price itself does not necessarily mean that the brand is the best or premium. The features or the positive point that Samsung products different from other brands are theafter sale service and quality of the product is of high standard. Another high is that most ofSamsung’s products are sold in retail shops like Best buy, Future Shop, in addition to the products arealso sold by large merchants like Wal-Mart and Staples and they are all big organizations and withgood brand name.To remove these product ranges from Wal-Mart, Best Buy and other stores becauseof their less pricing will weaken the company image and reduce sales volume and it is for sure thatnobody in the management would want the sales volumes to dip.Lack of direct relationship between how the products are circulated with that image of Samsung is ahindrance, because if customers are well-informed about the product range and about the brand theywill buy the products no matter where they are sold. To add more I believe that most of the consumersare looking for suitability of finding products anywhere.For the reasons shown above, I suggest SECA not to make any changes in these three areas. Instead,SECA should invest in its customer service and focus on customer satisfaction because even thoughthe brand is premium, electronic products might still cause a problem. If the company immediatelysolves any problems and satisfies customers’ wants and needs, they will become loyal to the brandand make Samsung a premium brand. 8
  10. 10. VI. Implementation SECA can improve on few things so that its customer service is world classHelpline URL menu should be made consumer friendlyso that it would be easy to reach thespecific department if that is their whole purpose. Step should be taken to reduce the waittime on phone for people trying to reach technical support when customers have questionsabout products, defective products should be replaced with temporary products till the time itis being repaired and customers will not feel left out or their daily work is stopped. Informing customers about the repairing process and letting them how long it willtake. Customers will be satisfied by implementing all of the above; they will know thatSamsung is taking care of their problems. This willeventually lead to a word of mouth andwill eventually help bring in more customers and will make Samsung the best brand in theelectronics consumer market and SECA would be very happy with all the transitionshappening. It is also a fact that when it comes to electronic market word of mouth travelsfaster and people buy the products if recommended by friends or relatives. 9
  11. 11. ReferencesSamsung Logo. (2008, december 12). Retrieved from, R..(2008). The Employer Brand: Bringing the Best of Brand Management UK: John Wiley & Sons 10