Samsung Product Strategy

Samsung Group is a Korean Company founded 80 years back by Lee Byung-chul. The company have their business in various areas such as electronics, medical, telecommunication, apparels, equipment and home appliances. The company is known for its quality product serving whole world with continuous innovation in the field of technology. The company had earned consolidated revenue of 65.46 trillion South Korean won in the third quarter of 2018.

For the purpose of expansion and diversification in the global markets, Samsung group has done many joint ventures and acquisition so as to improve their brand stability. In this report, the marketing mix of Samsung is stated below.

Samsung spends lot in their research and development department to provide best products to their consumers and users. They are also consisting wide range of products in terms of different product categories. Their diverse offerings are divided into several categories such as apparel, medical equipment, chemicals, automotive, mobile devices, home appliances, TV/Av, Information technology and son on (Lee & Slater, 2007). The company also provides various services such as advertising, hospitality, information and communication technology, entertainment, etc.

In terms of smartphones, one of the major earning product was their galaxy series handphone, which gives Samsung a platform of inception. In today market, Samsung S9 and Galaxy Note 9 are the latest series phones enriched with many features and design like super AMOLED display, huge 4000 many batteries and many more (Kim, Dwivedi, Zhang & Jeong, 2016). To understand the stages from inception to maturity, it can better be explained with the help of product life cycle.

Stages Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Time Duration
Introduction	2001-2006
Growth	2006-2011
Maturity	2011- till now

From summer 2006, Samsung introduces various next generation mobile phones as per the market trend of increase in the screen size. They come up with multiple designs like Samsung F700 (Davies, 2012). In respect with Korean electronics giant, Galaxy S II was the device that pushes Samsung to truly break the market. After that, Samsung starts selling broad range of smartphones having different shapes, sizes and operating system (Segan, 2013).

Strong brands are clear about what they are and what they are not. They always have a strong and unique value proposition, which differentiate them from their competitors. Samsung is clear about their commitment to quality. This makes them asses every stage of the smartphone manufacturing process with the 8-point battery safety check. Their batteries are also tested with the help of careful inspection through X-ray and this all fulfil their commitment to the safer device now and in the future (Almitra & Salamah, 2017).

In addition, to being clear about who they are, Samsung is also consistent. They are always what they say they are. For Samsung, they are always focused on quality and they also do not change their centre from model to model (in any galaxy or note series). When new models and series come out each year, they are also superior in terms of quality (Cole & Matsumiya, 2007). Moreover, Samsung also communicates this aspect with the help of various promotional tools and through their established brand image in the market. Even low prices phones of Samsung are good in quality as per the various specifications like camera, applications and battery.

3Cs of Samsung

In terms of constancy, Samsung as a global brand always visible to their target audience. Moreover, Samsung always is there for the customers and prospects. Samsung has a global network of 320, 671 employees work across Samsung Electronics (as of December 2017). They are also connected with customers and targeted audience with the help of integrated marketing mix (Social Media). More than 47,424,864 people are following them on Facebook as the company communicate various news as for spreading information or for doing promotion. This helps the company to bring loyal customers and in creation of strong brand identity.

In building and nurturing a strong presence in the market, Samsung has to lot more to think about than these three C’s as this is an era of globalization which brings strongest competitors from the various global markets.

In terms of strategy, Samsung differentiates themselves from the competitors by being as a leader in the digital market (Ali, Muhammad & Park, 2011). As per their policy, they devote out human resources and technologies to build superior products and services in respect with the betterment of the global society. They also have differentiated themselves from the competitors on three bases i.e. product attributes, firm linkages and firm customer relationships (Macintosh, 2007).

The level of brand equity gained by Samsung can be justified with the help of Keller’s Brand Equity Theory. The first fundamental element is the “salience” (Hur, Kim & Woo, 2014). It is connected with brand identity and communication of the right messages. Samsung always let their customers perceive its brand with noble quality products at a premium price. Moreover, with their market growth it can be said that Samsung continues to be success in their mission due to the acceptance of the price from the side of customers. The second level is the “meaning”. It has two aspects – performance and imaginary. In addition, with the help of CSR activities, Samsung brings high loyalty to the brand.

The third level is “Response”. It is related with the judgments and feelings and the focus is on the reputation. Samsung keeps upgrading their brand position by introducing more high quality products in comparison with their rivals like Apple and deliver them in accordance with the needs and wants of the customers (Kim, Han, Holland & Byon, 2009). The last level in this theory is “Resonance” which can also be said as “Relationships”. It represents customer loyalty. Samsung definitely so successful to have several consumers made communities under them.

Therefore, it can be said that Samsung has strongly organized themselves in according to Keller Brand Equity Theory and this makes them be a highly valued company all over the world.

Having a wide variety of the products to offer to its consumers, pricing plays a significant role in the marketing mix of Samsung. In respect with targeting several customer segments, the company uses various pricing strategies and their marketing strategy revolved around the pricing of its different brand’s portfolio and models. The two major pricing strategy use by them are – Skimming price strategy and Competitive price strategy.

Competitors’ differentiation and brand equity

In skimming price strategy, Samsung makes their product price higher so that fewer sales are needed to break even. They believe that scarifying of high sales will bring high profit to them in long term (Che, 2009). This strategy is generally used by the early adopters of the product. Their new product launched in the market named as Galaxy S9 and S9+ also use skimming pricing strategy and this holds quite a strong customer affinity. However, like every time, they will drop the market price of these products when the competitors try to enter into the market.

Other than flagships products, Samsung also launches various number of smartphones and for these products, the brand uses competitive pricing to compete with the various other big brands like Huawei, LG, Nokia etc. on respect with brand value, price and features.

For the effective analysing of Samsung pricing strategy, Samsung Galaxy S9+ is selected that is selling at a price of total $1,099.99 to the customers. As per the report by IHS Markit, Galaxy S9+ material costs $43 more than previous versions. This cost is increased due to the well imporved camera and advanced DRAM memory (Rassweiler & Larn, 2018).

In the new Samsung S9+, there is 64 gigabytes (GB) of NAND flash memory and this represents a bill of material cost of $375.80, which is more than their previous series of smartphone. The preliminary estimated total is $43.00 and it is higher than the Galaxy S8+. As per the report, the unsubsidized retail price for a 64GB Galaxy S9+ starts at $839.99.

The main objective of Samsung to launch Galaxy S9+ is to bring dual camera in the new segment. The company also give a promotional title – “ReImagIned”. The company always move up with the latest trends in the market. Moreover, there growth was shirnk by 1 percent last year, the company now focuses more on featured design so as to encourage customers to ditch their old phones.

In addition, DJ Koh, Samsung president of IT also stated that one of the major motives to launch this phone today is to adopt “visual communications” and thus Galaxy S9+ has been designed for the visual and social generation (Sandle & Lee, 2018). It comes with improved cameras, voice tool powered with AI, upgraded social media functions and with newer auto slow-motion camera.

In the future, Samsung will use skimming price strategy only and thus decrease the overall price of the product by 15 to 20 % in the near future (two to three months after the launch).

As per the reports by Consumer Intelligence Research Partners, there was more activation of Samsung Galaxy S9 + as compared to Apple. Their reports (March Quarter, 2018) states that Samsung accounted for 39% of US mobile phone activations in comparison with the Apple accounting for 31% only. This shows that in future, their demand can be rise.

In response to their distribution medium for their products, Samsung follows channel marketing just like the other brands. The brand has various associations with many large and small retail giants that can effectively hold the sales of company. In spite of these retail distributors, Samsung have a huge base of their own sole distributors and these distributors only sell Samsung products.

Samsung Price Strategy

Samsung also utilizes the potential of various e-commerce channels like Amazon and Facebook in respect to selling their products (Najmi, Hashmi, Malik, Rezgui & Khan, 2015). They have an exclusive partnership with these brands that enable them to reach out to a larger customer base in an economical manner. Moreover, if the retailers are ready to take out their stock, Samsung can sell the products anywhere in the world. In this manner, the company can sell their respective products in both direct and indirect manner to the customers.

In addition, Samsung also has the caability to rapidly enlarge and saturate the market with their products anywhere in the globe. The company also have an existing distribution network from their current business. These distribution channels will also be there for the future dissemination of the Samsung products.

Samsung as a brand also possess an advanced approach to a new channel activity and this will make easier for solution providers to source product in respect with “Samsung Team of Empowered Partners” (STEP) program. Currently, product line and efforts divide Samsung channel efforts and it can be said as Samsung is making concerted efforts to get more numbers of allies and thus exploit various number of opportunities.

In other term, Samsung’s new channel effort could be called a “channelification” of the business.

While choosing an effective channel, there is various consideration adopted by Samsung so that there will be no negative implications in future. Some of the considerations are related with the products like unit value of the product need to be sold in the market, nature of technology, etc. For example, if the product is technical in nature, Samsung will not sell directly to the consumer and the user may not aware of the necessary technicalities of the product. While choosing channel, Samsung also considers various market aspects, like number of buyers, types of buyers, buying habits and size of markets (Mo Yang, Seok Choi, Jin Park, Soo Suh & Chae, 2007).  For example, if the number of buyers is large, the company will take the help of intermediary’s services in response to the distribution of goods.

Promotion and advertising play a key role in creation of awareness about the launch of new products of Samsung. Various combinations of online and offline promotional channels are used by Samsung for the promotion of their products. The company uses combination of social media sites and channels, paid digital promotions, and product advertisement to bring more awareness about their products in the minds of the customers.

With the help of various trade partners, the company also push their products to offline channels. Samsung also does push marketing with the help of celebrity endorsements and several events including sports and entertainment shows. The brand has also hold various accounts in social media sites like Youtube, Facebook and Twitter where they have millions of followers (Lee & He, 2009).

In promotion strategy, Samsung also uses some sort of pull marketing efforts. With the help of social media, the brand builds a long-term relationship with the customers through a 24×7 hours online presence. Moreover, most of their advertisement initiates a system for pull strategy.

In respect with product life cycle of Samsung, majorly there are four stages where the company use various promotional activities. This is necessary for healthy success and the life of the product.

The first phase is the Introduction where Samsung target audience of its entry so that to push the product through the introduction stage of PLC.  The main objective in the introduction stage is to inform consumer in effort to increase their level of awareness. With the launch of any new product like curve TV, Samsung always works with gaining new coverage, online promotions and with the help of building social campaigns. The promotional objective of this stage is – “To inform”.

The next phase is the growth stage where the snowfall effect occurs and the sales of the product rise due to the awareness between the customers in relation to the benefits. In this phase, Samsung tries to increase loyalty with the customers in respect with that new product and persuade the consumer to buy that product. This phase also covers Samsung improved latest technology such as its Galaxy products. Although Samsung will not change price point, it could decrease or increase slightly as per the market demand and competition. Other retailer locations as per the distribution channel include Wal-Mart, Best Buy and other online retailers (Lee & He, 2009). Moreover, personal selling could also be proved to be an effective tool in this phase. The promotional objective of this stage is – “To persuade”.

In the maturity phase, there is a highest competition-taking place. Moreover, Samsung modified their product price slightly so as to achieve competitive advantage. They also acquire number of distributors and offer various incentives who display and sell their products to the customers. In addition, Samsung will also enhance the quality of service by maintaining boosters both in international and domestic (Lee & He, 2009). The major promotional activities used by Samsung in this phase will be sponsoring of events for maintaining customer loyalty. In addition, they can also use direct mail technique, which can encourage repeat purchases. The promotional objective of this stage is – “To remind buyers of the product existence”.

The last phase for Samsung will be declining stage where product sales will start to fall off and here the company motive will different. In this stage, Samsung tries to innovate as per the market trend and thus launch new series of their product portfolio, for example, Galaxy S10 or S10+. In addition, they also spent little on the promotional mix. The promotional objective of this stage is – “To phase out”.

As a global brand, Samsung disbursed 11.5 trillion Won (around 10$ billion) on marketing its company and products to all over the globe. Also, they spent 4.4 trillion won (around $4 billion) of its marketing budget on advertisements and it is 15 percent more in comparison to the year before (Rutnik, 2017).

Conclusion

The brand name Samsung has contributed to the latest technologies in various ways. The company has been evolved in the technical world with their innovation and excellent products. Every quarter or year, the company is coming with new product series in the smartphone, which not only excites customers but also stimulates in satisfying their superior needs.

Samsung has always been an excellent product with high quality features. However, in this competitive market, Samsung need to be good at promotion as this will help in increasing their sales with its featured products. Therefore, having an adequate marketing plan can help company in increasing the customer satisfaction and give the company a considerable success.

References

Lee, J., & Slater, J. (2007). Dynamic capabilities, entrepreneurial rent-seeking and the investment development path: The case of Samsung. Journal of International Management, 13(3), 241-257.

Rutnik, M. (2017). Here’s how much Samsung and LG spent on marketing in 2016. Retrieved from: https://www.androidauthority.com/samsung-lg-marketing-budget-2016-761744/

Segan, S. (2013). Samsung’s Smartphone History: From Zero to Galaxy S4. Retrieved from: https://www.pcmag.com/feature/309047/samsung-s-smartphone-history-from-zero-to-galaxy-s4

Davies, C. (2012). Samsung: Our 2006 phone concepts prove Apple is a hypocrite. Retrieved from: https://www.slashgear.com/samsung-our-2006-phone-concepts-prove-apple-is-a-hypocrite-25240191/

Rassweiler, A., & Larn, Wayne. (2018). Galaxy s9 materials cost 43 more than previous versions his market teardown shows: https://technology.ihs.com/601100/galaxy-s9-materials-cost-43-more-than-previous-versions-ihs-markit-teardown-shows

Sandle, P., & Lee, J. (2018). Samsung launches Galaxy S9 with focus on social media. Retrieved from: https://technology.ihs.com/601100/galaxy-s9-materials-cost-43-more-than-previous-versions-ihs-markit-teardown-shows

Purcher, J. (2018). Samsung’s Galaxy S9 Launch led to 39% of US Smartphone activations in Q1 2018 with Apple close behind. Retrieved from: https://www.patentlyapple.com/patently-apple/2018/04/samsungs-galaxy-s9-launch-led-to-39-of-us-smartphone-activations-in-q1-2018-with-apple-close-behind.html

Preimesberger, C. (2018). How Samsung Galaxy S9 Stacks Up for Business Use. Retrieved from: https://www.eweek.com/pc-hardware/how-samsung-galaxy-s9-stacks-up-for-business-use

Kim, Y., Dwivedi, R., Zhang, J., & Jeong, S. R. (2016). Competitive intelligence in social media Twitter: iPhone 6 vs. Galaxy S5. Online Information Review, 40(1), 42-61.

Almitra, D. L., & Salamah, U. (2017). The Use of Internet-Based Organization’s Media and Social Media in Handling Crisis Communication: A Case Analysis of Samsung Galaxy Note 7 Explosion. In Indonesia International Graduate Conference on Communication (IndoIGCC) Proceeding, 1(2), 939-954.

Cole, R. E., & Matsumiya, T. (2007). Too much of a good thing? Quality as an impediment to innovation. California Management Review, 50(1), 77-93.

Ali, M., Muhammad, A., & Park, K. (2011). A spiral process model of technological innovation in a developing country: The case of Samsung. African Journal of Business Management, 5(7), 2874-2889.

Macintosh, G. (2007). Customer orientation, relationship quality, and relational benefits to the firm. Journal of Services Marketing, 21(3), 150-159.

Hur, W. M., Kim, H., & Woo, J. (2014). How CSR leads to corporate brand equity: Mediating mechanisms of corporate brand credibility and reputation. Journal of Business Ethics, 125(1), 75-86.

Kim, S. H., Han, H. S., Holland, S., & Byon, K. K. (2009). Structural relationships among involvement, destination brand equity, satisfaction and destination visit intentions: The case of Japanese outbound travelers. Journal of Vacation Marketing, 15(4), 349-365.

Che, Z. H. (2009). Pricing strategy and reserved capacity plan based on product life cycle and production function on LCD TV manufacturer. Expert systems with Applications, 36(2), 2048-2061.

Najmi, E., Hashmi, K., Malik, Z., Rezgui, A., & Khan, H. U. (2015). CAPRA: a comprehensive approach to product ranking using customer reviews. Computing, 97(8), 843-867.

Mo Yang, H., Seok Choi, B., Jin Park, H., Soo Suh, M., & Chae, B. (2007). Supply chain management six sigma: a management innovation methodology at the Samsung Group. Supply Chain Management: An International Journal, 12(2), 88-95.

Lee, K., & He, X. (2009). The capability of the Samsung group in project execution and vertical integration: Created in Korea, replicated in China. Asian Business & Management, 8(3), 277-299.