Marketing Strategy of Samsung in India

Section B Submitted by –Harsh Golan About Samsung: The Samsung Group is a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is the world's largest conglomerate by revenue. The Samsung Group is composed of numerous international affiliated businesses, most of them united under the Samsung brand including Samsung Electronics, the world's largest electronics company, Samsung Heavy Industries, the world's second largest shipbuilder and Samsung C, a major global construction company. Samsung has been the world's most popular consumer electronics brand since 2005 and is the best known South Korean brand in the world. Samsung Group accounts for more than 20% of South Korea's total exports and is the leader in many domestic industries, such as the financial, chemical, retail and entertainment industries. Samsung India Electronics Private Limited (SIEL) is the Indian subsidiary of the US $55. 2 billion Samsung Electronics Corporation (SEC) headquartered in Seoul, Korea. Headquartered in New Delhi, SAMSUNG India has widespread network of sales offices all over the country. SAMSUNG India is the hub for SAMSUNG’s South West Asia Regional operations. The South West Asia Headquarters looks after the SAMSUNG business in Nepal, Sri Lanka, Bangladesh, Maldives and Bhutan besides India. SAMSUNG India which commenced its operations in India in December 1995 enjoys a sales turnover of over US$ 1Bn in just a decade of operations in the country. From being a virtually unknown entity in the Year 1995, brand SAMSUNG today enjoys an awareness level of over 65% and a positive opinion of over 80% in the country today (source: BAS 2007). Initially, a player only in the Color Televisions segment, it later diversified into color monitors (1999) and refrigerators (2003). Today, it is recognized as one of the fastest growing brands in the sphere of digital technology. SIEL is the market leader in high end digital television (Plasma, LCD). STP APPROACH OF SAMSUNG: Segmentation: Segmenting is the process of dividing the market into segment based on customer characteristics & needs. Segmenting consists of: 1. Geographic segmentationation: it is nearly present in 14 countries but has maintained a nearly same price and quality tag worldwide. 2. Demographic segmentation: it has motto of ‘everyone’s invited’ so it produces goods for nearly every segment, from tech-savvy to gamers to middle class family. It has something in sort for you. Targeting: Is the process of focusing on a particular market with a particular product . ?LOCAL MARKET ?TEIR 1 CITIES ?TEIR 2 CITIES NICHE MARKET. Samsung produces goods for both tier1 and tier 2 cities and its nearly all electronic goods are available in both cities. The differences can be seen is the in tier1 cities it has exclusive Samsung showrooms while in tier2 and below cities it usually shares counter with other competitors . Also goods like smart phones and android phones, expensive models of TVs like 3d etc are found in tier1 cities . in tier2 and below cities it becomes a mass producer of electronic items at reasonable cost. Positioning: Samsung has positioned itself as â€Å"Digital technology leader†. In 1990 group chairman, Kun-Hee Lee(Lee), initiated transformation from a low-end OEM into a world-class electronics company and now Samsung came to be perceived as a company with exciting product portfolio. TOP Olympic Sponsor for the 2008 Beijing Olympics and Olympic Partner for the 2008 Olympic Torch Relay. Manavjit Singh Sandhu was its Olympic Brand Ambassador and launched the program ‘Spread the Olympic Flame' ? APPOINTS OLYMPIC GOLD MEDALIST ABHINAV BINDRA AS BRAND AMBASSADOR FOR ITS CONSUMER ELECTRONICS BUSINESS ? APPOINTS AAMIR KHAN AS ITS BRAND AMBASSADOR FOR MOBILE PHONES ? New, spunky, tagline – ‘Next is What? ’ It is being used in all of ‘Samsung Mobiles' communication material. Product Strategy: Samsung Electronics India manufactures a wide range of consumer electronics and home appliances. These products include: 1)Mobile phones with the accessories, )Television, Audio player, Video player, 3)Camera, Camcorder, 4)Home appliances, 5)PC, Peripherals and Printers. In the mobile phone industry, Samsung has the second largest share in the market with 19. 6% as per November 2010 consensus. The mobile phone market share is shown in Annexure 1. In the Indian mobile market, Samsung is the second largest player after Nokia with product line extending to over fifty products. The product line includes some of the most preferred mobile phones like Samsung Guru series, Corby series and many more. Recently Samsung has launched its Samsung galaxy series in the Indian market. Samsung is also into manufacturing televisions, audio players, video players, blu-ray players, home theatres and multimedia players. In India, Samsung is the first to bring the concept of LED technology in televisions. Samsung’s products, in this category, are known for their innovativeness and technology . These products are the first preference of the consumers who seek technology at an affordable cost. Samsung also manufactures digital cameras and camcorders. This product category includes world class products like Samsung NX series. Samsung digital cameras offer a diverse product line equipped with the most sought after features. Samsung cameras have always been recognized for their fine technology and optical innovations in such things as auto focus and â€Å"optical zoom† capabilities. These products, though, high on technology are an affordable option for those who have an edge for their photography hobbies. In the home appliances segment, Samsung manufactures refrigerators, microwave ovens, smart ovens, air conditioners and washing machines. All of these products define Samsung’s competitiveness and vision in terms of product innovations like silver nanotechnology, twin cooling etc. At present, Samsung is the leading home appliances manufacturer and many of products are the best in their respective sub-segments. Personal computers, peripherals and printers are also the part of Samsung’s innovative and high-end technology product line. These include laptop notebooks, VDAs, music speakers, Internal and external hard drives, optical disc drives and printers. Though, Samsung is not yet a leader in this segment but its inclination of high end technology shows into these products also. For Samsung, there is still scope for improving their products quality in the Indian market. The products sometimes develop technical flaws like display in the mobiles, gas kit leakages in frost-free refrigerators etc which are to be improved. Since, Samsung competes on the basis of the innovation and technology in the current market scenario; this plays a very important role in their major sales not only in India but in the whole world as a whole. As far as the after product service of Samsung is concerned, it needs major improvement in terms of contacting with customers. Since service is intangible, it needs to be provided as quickly as possible. Reducing the retention time in providing value to the customers can add to big advantage for Samsung considering the current market conditions. Place strategy: Samsung electronics employs different place strategies for different products. When we talked to marketing representative he said the whole of Samsung electronics India has divided its distribution systems into various regions on basis of demand and number of dealers per region for example we visited what he called the vidharba region. Samsung uses supply chain to enhance differentiation, increase sales and penetrate new markets and channels. It efficient supply chain is transparent, so that all the players in the supply chain have the right information at the right time about the movement of the products within the chain. This means lower inventories, elimination of waste, and reductions of costs. In addition to the intangible benefits like quick feedback from customers help in launching new products. Samsung has 24 state-level distribution offices and a direct dealer interface. The direct dealer interface helps the company to get quick feedback from dealers, and enables it to launch products according to consumer needs. Samsung also believes in JIT (Just-in-Time) concept to its dealers. To minimize time overruns, Samsung delivered its products directly from its factories to its Regional Dispatch Centers (RDCs) and from there to dealers. SIEL is having three types of distribution system: 1)A one-level channel contains one selling intermediary, such as retailer. 2)A two-level channel contains two intermediaries. In consumer markets, these are a wholesaler and a retailer. 3)A three-level channel contains three intermediaries. Other strategies: †¢Shop-in-shop: Samsung is ensuring a presence in most big malls and multiplexes; even in the multi-brand outlets, as the focus there is to create a shop-in-shop atmosphere. In the shops where we conducted studies we found around 30-50% of counter share was of Samsung. Thus Samsung believes in â€Å"jo dikhta he vo bikta he†. †¢The exclusive showrooms: Samsung India has set up a widespread network of over 80 exclusive showrooms comprising Samsung Digital home (focusing on high-end digital audio-video products such as MP3 players, camcorders and LCD/plasma/3D TVs). The Samsung Digital home goes beyond the concept of a Digital Plaza or a Brand Shop because in it, they are trying to create a more interactive environment and providing a more lifestyle orientation to the display, so that the customer can visualize the products in his/her own home settings. Samsung will add another 30 showrooms to its existing 100-odd this year. Over the next few months, the existing Samsung Digitall Homes will all be rebranded Samsung Plaza, in keeping with the global practice. Until now, India was the only market where Samsung followed a dual showroom strategy – larger (2,500 sq ft and more) outlets were dubbed Samsung Digitall Home, while smaller showrooms were called Samsung Plaza. It is not just about a name change, though. Samsung India also wants uniformity in appearance and sales experience at each of these showrooms – that means an emphasis on product demonstration, not just display. Pricing Strategy: Samsung believes in providing good products at reasonable prices to its customers. Samsung’s technology plank communications helped the company to gain market share, even though it did not offers any discounts or exchange scheme when it entered India. Samsung focuses on cost-cutting measures to keep its price low which helps to combat the discount schemes of the local companies. Samsung drastically reduced its operational costs which enabled the company to keep low prices for certain products and extract higher profit margin from premium products. Samsung India posted revenue of $2. 2 billion last year and this is expected to go up to $3. 5 billion this calendar year. Samsung’s global revenue is $116. 8 billion. The focus of its competitors is to penetrate in the rural and semi-urban mass markets. But Samsung insists that it's a high end technology driven player. That's why the urban areas are still a focus area for it and only 30 per cent of revenue comes from rural and semi-urban India. Howsoever in past few years samsung India.. Deputy Managing Director, Ravinder Zutshi says â€Å"Still, focusing on the premium customer will get you only so far – India is still a market powered by volume-growth the current strategy is to gain greater reach among the masses – not through pricing, but through product innovation†. he vehemently rejects the price warrior tag, though. â€Å"Samsung is not a price warrior but today we are as competitively priced as our rivals. The focus is on expansion and deeper market penetration,† he adds â€Å"We are aiming at market leadership not only in the premium category of products but also mass categories like flat televisions† It is difficult to achieve the ambitious targets keeping in mind the pricing strategy of Samsung. But, they believe that it takes time to ensure your supremacy in market share. Once you get your brand perception right in the minds of the consumers as a brand that delivers the best technology and gives you value for money, then ultimately market share goes up. Now Samsung has changed its policy a bit and instead of just remaining a high-end technology driven brand it tried to change its image to sell products to the huge number of middle income families in India. It started pricing its products on the â€Å"value for money† concept, keeping in mind the price sensitivity of Indian consumers. But still Samsung has the repute of being a premium brand, aggressive in launching newer models with the latest technology and at economic costs throughout the world. Promotion Strategy: â€Å"Turn on Tomorrow† â€Å"We are investing aggressively in marketing to transform our company to be truly market driven and to establish our Samsung brand as the most trusted and preferred brand in the market. † – Vice-chairman & CEO, Samsung Electronics Promotion stands for various activities the company undertakes to communicate and promote its products to the target market. The Making of a Global Brand When Samsung decided to become globalized, it acquired a new corporate identity by changing its logo and that of the group. In the new logo, the words Samsung Electronics were written in white color on a blue color background to represent stability, reliability and warmth. The words Samsung Electronics were written in English in process of globalization drive. The logo was shaped elliptical representing a moving world – symbolizing advancement and change†¦ To capture the retail market for consumer electronic goods, such as TVs, washing machines and microwave ovens, it formed partnerships with retailing giants like Best Buy. Advertising and Promotional Strategies To promote the ideas, goods or services advertising is important and in this course it launched promotion depicting product transformation into more advanced models, in course of time. This depicts the importance that they give to the research and development and making people understand that they are not just trend followers but are trend setters. Samsung launched corporate advertisements highlighting its technologically superior goods as they entered into the Indian market, and positioned itself in the mindset of consumer as the products are known for its quality like: †¢Samsung branded its products as superior technology and environment friendly ones with refrigerators and ACs incorporate with revolutionary new technology called Silver Nano Health System that ensures freshness and bacteria free environment. Also, it launched the â€Å"Bio† range of products. †¢Launched a special marketing campaign for Flat Tvs including a focused advertising campaign â€Å"Duniya Hai Gol, TV Flat† and attractive exchange offers. Adding to these, Samsung launches an extensive ad campaign in all sorts of media (like print, electronic) whenever a new product is being launched. These create public awareness and add to these media hoarding at major junctions and displays at point of purchases are done. Also, it offers special incentives like price off, patronage rewards, etc during festival season in order to create an incentive to buy the product, and a special ambience is created during the festive offers at the point of purchases to give the feel of Indian nativity of the company. Samsung built trust and confidence by their active promotion and advertising. Associations with various others across the world made the globally known and built its image on its association. †¢The partnership between Samsung mobile and SSAFW (Sanlam South African Fashion Week) shows the fusion of art, fashion and technology. It radiates technological elegance and stylish panache, by joining forces off SSAFW and enhances techno-fashion centered brand. †¢Samsung India associated itself with the ruling passion of Indian consciousness: Cricket. It launched a Team Samsung campaign, which caught the imagination of the entire campaign. Also, in 2004 it bought biggest spectacle debate of this decade to India vs Pakistan cricket series – â€Å"The Samsung Cup†. †¢Not confining itself to cricket, Samsung sponsors the Indian contingent to the Olympics and the Asian Games. It also ran training programmes for deserving Indian athletes under the Olympic Ratna banner. Samsung also helped India to bring the Olympic torch relay to India. †¢Samsung also brings the World Cyber Games, which is regarded as the Olympics of the Cyber World to India every year. †¢In mobile phones, Samsung tied up with a noted painter Satish Gujral for his paintings to be available as downloads on Samsung mobile phones. †¢Product placements were done in movies and popular television serials where Samsung products were set in lifestyle environments. For microwaves, Samsung ran a Kitchen-on-Wheels programme where mobile kitchens with microwave ovens went to various localities demonstrating the advantage of microwave cooking. Sports Partnership (Globally): †¢Samsung sponsored Olympic Winter Games in 1998 and will officially sponsor bOlympic Games and Olympic movements for the next 8 years and this would only enhance their global image. Samsung was official sponsor of telecommunications equipment category from 1998 to 2010. †¢Sponsors of English premiership club Chelsea FC, the premiership known globally and attract a good number of audiences all across the globe. Samsung also signed a partnership deal with Mexican football Team Club Deportivo Guadalajara for six years in 2008 and provides plasma and LCD screens for team’s new stadium Estadio Chivas, indirectly promoting the brand. †¢ In 2009, signed a 3 year deal with Brazillian Football Team Palmeiras, having their logo on shirts and products to the club. †¢Samsung Super League with International Federation for Equestrain Sports and FEI Nations Cup, the world’s oldest and best renowned equestrian series. †¢Also sponsors rugby league team Sydney Roosters in Australian National Rugby League. It is the sponsor of Essendon Football club in A – League. †¢Sponsor of NASCAR Nextel Cup, French People’s Baseball Team, running festival in Taiwan, and professional StarCraft team (Samsung Khan). †¢Official HDTV sponsor of the National Football League (NFL). †¢Official IAAF (International Association of Athletics Federations) partner of 2009 (Berlin, Germany) and 2011 (Daegu, South Korea), IAAF World Championships in Athletics and 2010 IAAF world Indoor Championships. Brand Ambassador: Samsung in India have various brand ambassadors for various divisions. Aamir Khan for mobiles, Priyanka Chopra has been recently chosen as brand ambassador for home appliances, Olympic Gold Medalist Abhinav Bindra for consumer electronic business. Aamir Khan was apart a various ad campaigns like Next is What, Wave, Galaxy series and so on. He is known in the industry as Mr. Perfect and they are using that indirectly to show that their mobiles are perfect. Also as Samsung is sponsor for Olympics the image of Abhinav Bindra, who is the first Indian individual Gold Medallist at Olympics. Annexure 1: Annexure 2: Samsung Product Line Samsung India product line as on the Samsung India website: The product line has been divided into five main categories as shown in the above figure. The mobile phone category has been divided into eight different sub-categories: The Tv/Audio/Video category is divided into five sub-categories: The Camera/Camcorder category contains: The Home appliances category has five main sub-categories: The PC/Peripherals category includes: