A dossier on the brand Samsung Product: Samsung Smartphone Submitted to Prof Srinivas Govindrajan on 10-Aug-2013 Prepared by Anirban Ghosh (A13001) Ayan Das (A13005) Page 1 Debayan Datta (A13006) What it includes Page No. 3 4 8 10 14 15 2 19 21 22 23 23 23 23 24 27 28 36 37 Page Sl. Topics No. 1 PHASE ONE 2 Early history of the brand and its evolution over time 3 Initial positioning and subsequent repositioning 4 Advertising, sales promotion and segmentation strategy followed by the brand 5 Analysis of product and generic competition to the brand 6 Strategies adopted over time by the brand to tackle competition or prime market expansion 7 Distribution strategy followed by the brand 8 Conclusions regarding the future directions for the brand 9 PHASE TWO 10 List of Hypothesis to be listed 11 Data collection method 12 Sampling plan and Sampling Size 13 Method of Data Analysis 14 The Questionnaire 15 PHASE THREE 16 Market Research 17 Conclusion from Analysis 18 Bibliography Page 3 PHASE ONE Early history of the brand and its evolution over time From its inception as a small export business in Daegu, Korea, Samsung has grown to become one of the leading electronics companies of our planet, specialising in a wide range of digital applications. Today Samsung's innovative and top quality products and processes are world recognised. Let us see how Samsung managed to get up there. Let us have a journey through time. Samsung’s Beginnings (1938-1969) On March 1, 1938, founding chairman Byung-Chull Lee started a business in Taegu, Korea, with 30,000 won Diversifying in Industries and Electronics (1970-1979) In the 1970s, Samsung laid the strategic foundations for its future growth by investing in the heavy, chemical and petrochemical industries Entering the Global Marketplace (1980-1989) Samsung's core technology businesses diversified and expanded globally during the late 1970s and early 1980s Competing in a Changing Tech World (1990-1993) The early 1990s presented tremendous challenges for high-tech businesses Becoming a Global Force (1994-1996) In the mid-1990s, Samsung revolutionised its business through a dedication to making world-class products, providing total customer satisfaction and being a good corporate citizen – all under the vision of 'quality first.' Advancing the Digital Frontier (1997-1999) Page 4 Despite the 1997 financial crisis that affected nearly all Korean businesses, Samsung was one of few companies that continued growing, thanks to its leadership in digital and network technologies and its steady concentration on electronics, finances and related services Pioneering the Digital Age (2000-Present) The digital age has brought revolutionary change – and opportunity – to global business and Samsung has responded with advanced technologies, competitive products and constant innovation Page 5 Below are some of the statistics about the phones produced back then in regard to the ones from today through Infographics. 6 Page Initial positioning and subsequent repositioning It does not require the genius of a rocket scientist to recognize that branding is the lifeblood of any corporation. Samsung’s association with the Olympics helped the company increase its brand visibility and brand recall among its consumers worldwide. The company was ranked as the fastestgrowing brand in the world by Interbrand. Samsung’s approach is holistic reaching the world customer. It created its branding in multiple ways, ranging from traditional adds to billboards, racing, Olympic games, cricket matches, marathons. In short, wherever it saw the crowd, it communicated Samsung message by presenting itself as a leader of innovation with affordable price. Successful branding is all about establishing a long-term vision and crafting the company’s operations to meet that objective. The words “Samsung Electronics” were written in English so that it would be easy to read and remember worldwide. The logo was shaped elliptical representing a moving world– symbolizing advancement and change. It was this sort of huge investment where millions saw the Samsung’s message. Their brand remained in the forefront of millions of people giving them an edge over its competitors. It is no surprise that Samsung’s brand building strategy overtook its competitors in less than the expected time. Strategies Adopted 7 Changing Brand image Tacking brand repositioning cost as long term investment Proactive measures from reactions from competitors Renewed pricing strategies Focus on R&D and innovation Extensive market study and Data Analysis Page 1. 2. 3. 4. 5. 6. Positioning attributes 1. 2. 3. 4. 5. Preferred good internet access Long battery life Ease of user Camera and touchscreen Fast and good speakers Brand Communications Mass media advertising, multidimensional event sponsorships, product placement and the Samsung experience Gallery Positioning Statement To cater mobile professionals who need to be always turned with the ever changing technology and style, Samsung is the ultimate solution that gives you user friendly, cost effective, stylish and innovative products to stay connected with the fast moving world. Vision 2020 of Samsung As part of this vision, Samsung has already mapped out a plan for reaching $400 billion in revenue and becoming one of the world’s top five brands by the year 2020. To this end, Samsung has also established three strategic approaches in its managements: Page 8 CREATIVITY PARTNERSHIP TALENT Brand Association Advertising, sales promotion and segmentation strategy followed by the brand Page Launch of Team Samsung campaign. Also brought about the Samsung Cup to showcase the biggest cricketing spectacle involving India and Pakistan in 2004 Apart from cricket, Samsung sponsored the Indian contingent for both the Olympics and the Asian games. It also ran training programs 9 Advertising is intrinsic to a product whereas Sales Promotion is not. Samsung carried out a vast plethora of advertising and sales promotion by taking up the following initiatives: for a lot of Indian upcoming athletes under the Olympic Ratna banner. Samsung helped in bringing the Olympic torch relay to India, an initiative for the first time The World Cyber Games, regarded as the Olympics of the cyber world, is also brought about by Samsung, a yearly event Considering a series of innovative below the line activities, Samsung collaborated with noted painter Satish Gujral, for his paintings to be available as downloads on Samsung mobile phones. Product placement was carried out in popular television soaps like Jassi where Samsung products were set in lifestyle environments Samsung ran a Kitchen On Wheels program where demonstrations were carried out with regards to microwave cooking and its advantages Samsung branded its products as superior technology and environment friendly ones specially after their launch of “Bio” range of products and “Silver Nano Health System” for electronic appliances like refrigerators and air-conditioners Launched a marketing campaign for Flat televisions, “Duniya Hain Gol, TV Flat” along with attractive exchange offers Product Customization for India Page Samsung set up a “usability lab” at the Indian Institute of Technology in Delhi, to customize some of their products to meet the specific needs of Indian consumers. This industry-institute partnership is helping Samsung to analyze and study customer response in aspects of product design, including aesthetics, ergonomics and interface. Through its research done on consumer preferences in India, Samsung concluded that Indian consumers want more sound oriented products. Thus, Samsung televisions in India have a higher sound capacity than their foreign counterparts For the semi- automatic segment of Samsung washing machines, Samsung introduced a feature called “Super Dry”, an initiative for the 10 Keeping into account the Indian market, Samsung took a few steps in further customizing their products. They are as follows: first time in India. This probably took into account the general humidity levels of the Indian subcontinent They also have a “memory restart” that takes care of the frequent power failures in India Promotion Tools The main consumer promotion tools are as follows Samples They are offers of a trial amount of a product. It consists of inviting prospective purchasers to try the product without cost or at a lower cost in the hope that they will buy the product. Samples may be free or discounted. Coupons Coupons are certificates that give buyers a saving when they purchase a specified product. Coupons can be mailed, placed in advertisements or included with other products Rebate Rebate is also known as cash refund offers. Rebates are offers to refund part of the purchase price of a product to its customers who send a proof of purchase to the manufacturer. These are like coupons except that the price reduction occurs after the purchase and not at the point of sale. Price packs Cents-off deals or price packs offer consumers savings by way of reducing prices that are marked by the producer directly on the package. Premiums These are the goods offered either free or at a low cost as an incentive to buy a product. Premiums may be in-pack or on-pack (outside the pack). Prizes Page 11 They are offers of chance to win something such as cash, trips or goods by luck or through extra efforts. Contests of talent and sweepstakes or draws the most popular prize offering promotions. Tie-in promotions Tie-in promotions involve two or more brands or companies that team upon coupons, refunds or contests to increase their pulling powers. Cross promotions Cross promotions involve using one brand to advertise non-competing brand. Advertising Specialities These are useful articles imprinted with an advertiser’s name, given as gifts to consumers Patronage Rewards They are cash or other awards for the regular use of company’s products or services. They are values (in cash otherwise) that are proportional to one’s patronage of a certain vendor or a group of vendors. They aim at building brand loyalty. PoP Promotions Page 12 Point of purchase (PoP) includes displays and demonstrations that take place at the point of purchase or sale. Analysis of product and generic competition to the brand Samsung Mobile Phones SWOT Analysis 2013 STRENGTHES 1. Hardware integration with many open source OS and software 2. Ability to market the brand through Innovation, Design and multiple Sponsorships 3. High Market Share in mobile phones and its continual Growth ( 2nd place in smartphones sales ) 4. Excellence in Engineering and producing hardware parts and consumer electronics 5. Well Diversified and Differentiated product line to meet changing customer needs 6. Practice the Good Leadership Theory WEAKNESS 1. Patent infringement 2. Too low profit margin 3. Main competitors are also largest buyers OPPORTUNITIES 1. 2. 3. 4. 5. 6. Growing India’s smartphone market Growing mobile advertising industry Growing demand for quality application processors Growth of tablets market Product variation in existing product line User friendly technology Rapid technological change Price wars Saturated smartphone markets in developed countries Declining margins on hardware production Macroeconomic issues Low cost competitors in the great China ( Emulation mobile phones ) Legal war with Apple, Nokia Page 1. 2. 3. 4. 5. 6. 7. 13 THREATS Strategies adopted over time by the brand to tackle competition or prime market expansion The Generic competitors of Samsung mobile phone are Sony, Nokia, LG etc. In 2009, the market share of Samsung was 14%.But in 2012,it was 26%.So It increased by 12 percentage point whereas Nokia had almost 70% share in 2009.But in 2012.it was 23% only. Samsung’s Key Issues Though Samsung has continued its success in the mobile phone business, it faces a number of challenges to keep the growth momentum in the future. First, competition in the mobile phone market will become more intense. Lower entry barriers will bring in more competitors to the market, and the “digital convergence” will accelerate the competition even further. Page Third, Samsung is highly dependent on foreign companies for core technologies and modules. For example, it sources core CDMA base-band chips from Qualcomm and sophisticated camera-phone modules from Japanese firms. 14 Second, the sustainability of Samsung’s high-end strategy, which was attributed to Samsung’s brand building, may be in question. Samsung has achieved high profit margin, which is comparable to that of Nokia, mainly based on its high price, while Nokia has done so based on its cost dynamics. Fourth, Samsung needs to strengthen its product portfolio in next generation phones Strategies Adopted over time by Samsung to tackle competition The launch of Galaxy 3 smartphone is based on the success of the Galaxy S II which contributed significantly to Samsung global sales and making them the largest Smartphone producer today. Samsung made the best Android phones on the market. From the screen to the camera to battery life, the Galaxy S3 bested its competitors before even getting to the litany of software features and customizations. Samsung's impossibly powerful marketing arm then took those advantages and trumpeted them on every surface and airwave possible, and the phone took over the industry. The point to note is the impact of consumer marketing approach used and an effective tactical move to penetrate the mass market with (by right) and very much niche market of smartphone. The company has significantly changed the platform of competition in smartphone market, which has been earlier dominated by Apple and HTC, not to forget the historical Windows phone like Dopod, HP, Palm, O2 and some others like Nokia, Sony, Motorola, etc. Samsung crafted their own path which lead to the indisputable No.1 in smartphone. They have combined the niche and the mass to formulate the hybrid of segments which are so resilient in consuming a phone, or perhaps a tablet. Yes, it is the intelligent and prospector approach in taking such risk to offer various models as compared to the strategic competitors: Apple and HTC. This has given the options for consumer to compare and find the best model to suit their needs and wants. As such, this has also transformed into a threat to the competitors, not because they have more models for the consumers, but the delay of purchasing the competitors' products. Normally, consumer will have to go through 5 simple stages in purchasing decision. Samsung strategy is to mainly speculate stage (2), and (3) consumer purchase decision. Changing Consumer Attitude; the more models with 15 Identifying the need Searching for information Evaluate the products Purchase decision and lastly Post-purchase evaluation Page 1. 2. 3. 4. 5. Page Recently Samsung seems to have adopted a trend of offering numerous side models to accompany a new release, such as the Mini, Active, and Google Edition Galaxy S4s. But what if I told you that the company was about to take this even further? Samsung Electronics is gearing up for a change in its smartphone marketing strategy. The technology giant is actually planning to sell even more models than it currently does, in a bid to appeal to a broader consumer base. So, the rumours that we’ve heard about four, or possibly eight, different versions of the upcoming Galaxy Note 3 appears to be the first of many future ranges which will offer consumers a broader choice of options within each product line. But is this really such a good idea considering that the smartphone market is already ultra-competitive? Do we really need any more choice? Samsung certainly seems to think so. Well that’s actually the point, according to Samsung. The smartphone market is already so heavily saturated with products, smartphone penetration has already surpassed 70% in North America, Europe and East Asia, that manufacturers need to look further afield in order to find new business opportunities. Emerging markets like South America and Africa are areas which Samsung would love to break into, but the company currently can’t compete with the price point of cheaper products coming from China. To combat this growing problem, Samsung supposedly intends to attract budget orientate consumers through product diversification and customized services. In other words, Samsung wants to offer consumers more choice, and products that fit with the particular type of market. Their 16 similar specifications there are in the market, consumer tends to take longer time to evaluate the products, due to more information provided by the producers. If you realize, most models will have pros and cons in comparing to each other. That way, consumer will try to identify the 'Justnoticeable-differentiation' (JND) of each of the interested products. Consumer will then notice that many products from different brands in the market trends to have some form of weaknesses. Brand will also be associated with such weaknesses or vice versa (similar to strengths as it would reflect the uniqueness of a particular brand). When Samsung provide so many models and each tends to show little differences in terms of specification, consumer would then identify the JND within the brand, and not towards other brands (because it is enough for a consumer to read and play with each models within the Galaxy family). Subsequently, consumer will unconsciously compare the various Galaxy models and not with other brand. strategy is to maximize the market share with a number of small hit models, not one single mega hit model. Thus Samsung has communicated to the mass that smartphone is not only for the niche. Now, everyone can be 'Smart', as long as you are within Samsung "Galaxy". Samsung’s competitive advantage over its competitors Page 17 Technology driven niche products Strong infrastructure High investment for Research & Development Wide range of products High brand value Higher economic scale and scope Horizontal and vertical integration Higher yields than most competitors R&D facility at one single location thus exercising absolute quality control Untraditional human resource practices based on meritocracy and not on seniority Attractive organizational hierarchy in terms of pay scale, bonuses and incentives yielding better output Financially strong, large resources at disposal Distribution strategy followed by the brand Samsung is so much more than a smartphone-maker. It is a conglomerate, a manufacturer, and the world's largest chip-maker. It makes many of the components that go into its smartphones giving it a cost advantage and allowing it to be much more flexible in terms of what it produces and when. There exist various Samsung Enterprise Alliance Distributor programs that offers 1. 2. 3. 4. Assistance in training sub channel partners Provision of sales and marketing collaterals Technical support and training Logo for accreditation as Samsung Authorized Sales Partner (subject to meeting criteria) 5. Assistance in developing business plans and joint go-to-market strategies (subject to Samsung subsidiary) Distribution Channels Page 18 1. Samsung have state-level distribution offices and direct dealer interfaces which helps the company to launch products as per consumers’ needs or wants. 2. Efficient, optimized supply chain partners armed at the right time with right information adding to the total yield 3. Samsung has sales and services network all over India and has more than 650 service points 4. Samsung uses innovative logistics solution GLONETS ( Global Logistics Network Systems ) coupled with ERP systems resulting in shorter business cycles, reduced inventory levels, low waste and hence reduces cost 5. Samsung uses JIT( Just in Time ) approach with 4 RDC( Regional Dispatch Centre ) installed at India 6. Samsung has many exclusive showrooms, Shop-in-shops as well as online purchasing options 19 Page Conclusions regarding the future directions for the brand Although Samsung has captured the highest market share in Indian market, the company had to face a lot of problems. An example in this case would be the Apple Samsung conflict where Apple accused Samsung of copying their designs and features. This blame damaged the reputation of the brand all over the world but still Samsung is India’s favourite brand whether it is electronic consumer goods or smartphones. It means despite of problems, Samsung has successfully positioned itself as a quality brand in the mind of their consumers. So what is Samsung’s Future? To survive in the market she needs 1. Time 2. Resources Apple and Samsung are involved in ongoing copyright disputes in 10 countries, as competitions in the smartphone sectors grows even more intense. Page 20 If the injunction of Samsung products could not be lifted, it may create a significant impact on its earnings. Page 21 PHASE TWO List of Hypotheses to be listed Given the various number of smartphones available in the android market, we feel that Samsung rules the market in terms of its features, innovation, and price and customer satisfaction 1. Samsung has the highest brand awareness in the smartphone category. 2. Samsung enjoys maximum customer satisfaction in the smartphone category. 3. Samsung smartphones have the best battery life. Data collection method: For any marketing research we have three main instruments for the collection of primary data 1 .Questionnaires 2. Qualitative measures 3. Technological measures Out of the available options we have chosen the most common instrument questionnaire because of its flexibility and convenience to administer on a large scale. Questionnaire Method 1. Close ended questions 2. Open ended questions Page We have targeted the people of age group between 18 years to 30 years. Here we have used simple random sampling without repetition. The total Sample Size is 50. 22 Sampling plan and Sampling Size: Methods of Data Analysis: Graphical Representation: Pie Chart: We can use a pie chart to know the preferences of the people. This will help us to know market share of Samsung smartphones as compared to other smartphones as well as what quality a customer looks for in a Samsung smartphone brand. Thus it will help us to analyze our hypothesis. Bar Diagram: Questionnaire: 1. NameGenderAge2. Which brand comes to your mind when you think of smartphones? 3. Do you currently use a smartphone? 1. Yes 2. No 4. Which brand of smartphone do you own? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Others 5. If you were to buy a smartphone today, which of the following brands would you choose? 3. Sony Page 2. Samsung 23 1. Apple 4. Nokia 5. Others 6. While buying a smartphone which aspect do you think is the most important? 1. Design and look 2. Operating platform 3. Battery life 4. Brand 5. Media features 7. For the following smartphone brands, please rate the following aspects,1 being the best and 5 being the worst. 1. Screen Size 2. Browsing and Internet 3. Sound Quality 4. Battery life 5. Camera and picture quality 6. Touch sensitivity 8. How often do you change your mobile handset? 1. Never 2. Once every couple of months 3. Every six months 4. Every year 1. Nokia Page 9. Please rank the following smartphone brands in terms of After Sales Service 24 5. Every two years 2. Samsung 3. Sony 4. Apple 5. Blackberry 10. Which brand of smartphone do you think has the best resell value? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Blackberry 11. Which brand of smartphone do you think gives the best value for money? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Others 12. Which of the following brands do you think has the best battery life? 1. Apple 2. Samsung 3. Nokia 4. Blackberry 5. Sony 6. Others 2. Between Rs 2, 00,000 and Rs 5, 00,000 Page 1. Less than Rs. 2, 00,000 25 13. Please mention your average family income 3. Between Rs 5, 00,000 and Rs 8, 00,000 lakhs 4. Between Rs 8, 00,000 and Rs 10, 00,000 5. Greater than Rs 10, 00,000 Page 26 PHASE THREE Market Research 1. NameGenderAge2. Which brand comes to your mind when you think of smartphones? We have got these information from this. 2% 7% 15% 2% 63% 9% 2% Samsung HTC Nokia Micromax Apple Sony Spice So we can conclude that the people’s top of mind brand is Samsung as we have the highest no of responses from the above questions. 3. Do you currently use a smartphone? 1. Yes Page We have set this question to know that the our respondents have a smartphone or not .We have also framed this question in specific way to 27 2. No know that which brand does a respond own if he responses ‘Yes’ and If he responses ‘no’ then which brand does he buy . 4. Which brand of smartphone do you own? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Others 4% 18% 11% Apple 46% 21% Samsung Nokia Sony Others We can see that Samsung smartphones have the maximum no of users. Then here comes Nokia. 5. If you were to buy a smartphone today, which of the following brands would you choose? 1. Apple 2. Samsung 3. Sony 4. Nokia Page 28 5. Others 6% 11% 22% Apple 22% Samsung 39% Nokia Sony Others Respondents those who do not have a smartphone,if they wish to buya smart- phone then the maximum respondents would buy a samsung smartphone. 6. While buying a smartphone which aspect do you think is the most important? 1. Design and look 2. Operating platform 3. Battery life 4. Brand 5. Media features 29 10% 33% 36% 16% 5% 100% Page Design and look Operating platform Battery life Brand Media features Total 5% 10% 16% Design and look Operating platform 33% Battery life 36% Brand Media features While buying a smartphone, most respondents are concerned about battery life. So Battery life is a key factor here. 7. For the following smartphone brands, please rate the following aspects, 1 being the best and 5 being the worst. 1. Screen Size 2. Browsing and Internet 3. Sound Quality 4. Battery life 5. Camera and picture quality 6. Touch sensitivity 35 30 25 20 15 29 21 20 15 Respondent votes 10 Apple Samsung Sony HTC Page 0 30 5 We have plotted battery life score here against various brand .We can see that Samsung smartphone has a lower score. So in terms of battery life, Samsung is not that good compared to other brands. 8. How often do you change your mobile handset? 1. Never 2. Once every couple of months 3. Every six months 4. Every year 5. Every two years 9. Please rank the following smartphone brands in terms of After Sales Service 1. Nokia 2. Samsung 3. Sony 4. Apple 5. Blackberry 3 5 8 14 8 3 4 7 2 8 13 8 5 1 2 8 4 23 31 2 12 13 7 2 4 Page Nokia Samsung Sony Apple Blackberry 1 13 13 1 11 0 Total Responses 38 38 38 38 38 40 34 35 30 30 25 22 21 20 Respondent votes 15 10 7 5 0 Nokia Samsung Sony Apple Blackberry Here from the above graph, we can conclude that Samsung smartphone have best after sales service. 10 .Which brand of smartphone do you think has the best resell value? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Blackberry 7% 4% 11% 33% Apple Samsung Nokia 44% Sony Page From the above pie chart, we can see that Samsung smartphone has best resell Value. 32 Blackberry 11. Which brand of smartphone do you think gives the best value for money? 1. Apple 2. Samsung 3. Nokia 4. Sony 5. Others 7% 5% 20% Apple Samsung 23% Nokia 45% Sony Others Most of the respondents think that Samsung has the best value for money 12. Which of the following brands do you think has the best battery life? 1. Apple 2. Samsung 3. Nokia 4. Blackberry 5. Sony Page 33 6. Others 0% 2% 2% 11% Apple 16% Samsung Nokia Sony Blackberry 68% Others Here, we can see that nokia has best battery life .So here Samsung is not the highest. 13. Please mention your average family income 1. Less than Rs 2, 00,000 2. Between Rs 2, 00,000 and Rs 5, 00,000 3. Between Rs 5, 00,000 and Rs 8, 00,000 lakhs 4. Between Rs 8, 00,000 and Rs 10, 00,000 Page 34 5. Greater than Rs 10, 00,000 CONCLUSIONS FROM ANALYSIS From the questionnaire 2, 4 and 5 whatever data we got, after analysing those data, we can conclude that Samsung has the highest brand awareness in the smartphone category .So Hypothesis 1 is true. We are accepting the hypothesis From the questionnaire 9, 10 and 11whatever data we got, after analysing those data, we can conclude that Samsung enjoys maximum customer satisfaction in smartphone class. So hypothesis 2 is true. We are accepting the hypothesis. Page 35 From the questionnaire 6, 7 and 12 whatever data we got, after analysing those data, we can conclude that Samsung smartphones do not have the best battery life. So here hypothesis 3 is not true. We are rejecting the hypothesis. 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