Samsung Electronics Co Ltd Background
Discuss About The Samsung Electronics Co Ltd Marketing Strategy.
The report examines the marketing techniques utilized by Samsung Electronics Co Ltd in order to stay ahead in the competitive market as one of the best innovative pioneers in connection to the products they produce to attract and keep customers. The situation analysis gets analysed which is followed by competitive analysis, customer buyer characteristics, the target market, positioning, segmentation, marketing mix, extended marketing mix and at the end of the report a conclusion is given stating the position of Samsung Electronics Co Ltd.
The company began in South Korea as a small family-owned enterprise whose operation was to trade grocery and merchandise which later changed to textile business, securities, and insurance and later to specialization in electronic in 1960. This became the key business for the organization and expansion grew seeing the company open branches in different parts of the country. They specialized in electronics and endeavoured to fabricate their television sets. Later in the years, they entered into the telecommunication sector specializing in products related to hardware in 1980. They changed their strategy and reshaped the focus to three sectors to chemicals, electronics, and engineering. As a result of the strategy shift and focus, the organization has ventured full into the electronics sector and has expanded to various parts of the globe commanding the huge number of customers. It is currently dealing with mobile phones and has created different brands targeting different customer taste and preferences. In order to keep up with the competition in the competitive market, the parent organization has set up a manufacturing company in Texas, Austin city. In addition, the company set up Samsung Electronics Co Ltd as a subsidiary of Samsung Corporation to deal specifically with smartphone industry and situated it at Suwon in South Korea
The aspects that impact on the organization in the process of making decisions are external factors such as politics of a country, the technology present, the economy of a nation, laws/regulations and socio-cultural aspects. As per Mora (2013) an organization gets placed to strategically make the strategic decision when there is cognizance of the situation in the working environment. In view of this, a situation analysis on the business environment under which Samsung Electronics Co Ltd operates gets analysed with use of PESTEL model.
The environment in which Samsung is operating is favorable as well as encouraging despite in some few countries like India where it experiences some turmoil (Arnett & Wittmann, 2014). The good political environment that has been availed by good democracy in many international nations allows internationalization of Samsung Electronics Co Ltd business. This is augmented by democracy awareness and education facilitated by cross-border movement of people. Irrespective of these good conditions, Samsung Electronics Co Ltd has experienced headwinds in the home country emanating due to increased tension between South Korea and North Korea. This has compelled the company to try and cope with this political instability with great caution of war that may erupt in the Peninsula of Korea. In addition to this, the organization faces political instability in a number of African countries like Sudan, Kenya, and Congo among others as well as in Latin American countries. These instabilities emanate due to constant changes in the governance structures (Ashill & Jobber, 2014).
The Situation Analysis
The expansion of Samsung Electronics Co Ltd to the developing countries is an essential factor as this will make the company stamp its footprints in emerging markets. However, this aspect does not anchor well with the organization because of the global economic turmoil. This crisis created by the tumbling global economy affects the purchasing power of the target customers in a developed market, thus forcing the company to look for profitable ventures in emerging markets. It is worth noting that the global market under which the company is operating is prone to volatility and uncertainty. It has made the company to re-strategize on the best strategies so as to keep pace at the competitive market; and hence the company has embarked on an aggressive push to the emerging markets and adjusting to the disposable income of the target clients with the anticipation of making up lost business in those developed markets (Wilden & Gudergan, 2015).
Samsung Electronics Co Ltd is owned by the family, it operates as a Korean company irrespective of the global outlook. It implies that the company has adapted to the local conditions and at the same time adapting the global conditions as far as socio-cultural aspect is at play. Therefore, in the emerging markets, the organization employed the Glocal strategy. In addition, it tailored its products to be in tandem with customer’s preferences which are dynamic with time. The market in which Samsung Electronics Co Ltd is operating is influenced by lifestyle preferences and in view of the fact that socio-cultural factors are not the same in every region, the company has to re-strategize in every country accordingly (Glowik, 2017).
The Samsung Electronics Co Ltd is in the forefront in embracing and applying technology in the creation of its products given the changing technological needs of the customer. In this respect, the organization gets to innovate and invent its products so as to meet the dynamic needs of the customers driven by the mission to be ahead of technology and innovation. However, the company’s habit of imitation of its competitor’s product is creating legal and regulation scrutiny which is not anchoring well with the organization’s image and business (Bhattacharjee & Dey, 2015).
In the process of being ahead of innovation and creation, the company imitated Apple’s Inc. products iPad and iPhone. This has resulted in the many lawsuits against the company and thus its strategies for innovation and creation has turned down customer perception. This is a blow that is following the company even to the emerging market (Glowik, 2017).
Samsung’s PESTLE Analysis
The increase of customers in emerging market being incognizant of ethical issues, the organization task is to make brands that are socially and environmentally acceptable. In addition, there is need to ensure that the working condition of its employee is not in compromise as well as remunerating them appropriately (Bhattacharjee & Dey, 2015).
- The brand value is high
- The financial position is strong
- Leading in the mobile industry
- Leadership in visual display market segment
- Rely on other firms for OS as well as software
- Tainted image because of safety issues
- The product portfolio is extensive
- Unsustainable competitive advantage
- R&D investment
- Strong focus on advertisements
- Presence in growing markets
- Collaboration strategies
- High competition in the industry
- Disturbance in creation of new products
- Lawsuits due to patent infringement
- Competitors disruptive innovation
In the smartphone arena, Apple is the first competitor of Samsung. Apple uses unique value proposition instead of emphasis on the price of its products. The marketing strategy employed is way out of the ordinary, the company relies on product placement with celebrities and social media reviews.
Huawei despite being new and young in the market has grown tremendously to become number two competitor of Samsung. Huawei employs impressive designs in order to impress its customers. It is coupled their product’s functionality. They as well use pricing penetrative strategy which is the same for all competitors of Samsung except Apple which uses the strategy of skimming their prices. The company is becoming a very strong contender to Apple and Samsung.
The characteristics of buyers are based on the roles they play in the society, the occupation, lifestyle, the family among others. These factors affect customer’s motives of purchasing. In the smartphone industry, these factors play a role in in buying based on the type of phone, the brand and the company from which the phone was manufactured (Losada-Otálora & Casanova, 2014). In addition, the circumstances where customers work compel them to make a decision to buy (Jung Chang, Yan & Eckman, 2014). The Samsung’s smartphones are majorly internet based and this feature compels customers with same attributes to buy like for instance the purpose – used for socialization, education, transactions via online etc. Moreover, psychological influences like for example meeting the needs based on the hierarchy of need as espoused by mass law theory will make customers to have a perception towards getting a smartphone (Läsiluoto, 2014). Currently, the global market and particularly in the emerging markets have customers still in the social needs stage. In this stage, they will want to have smartphones so as to be in a certain social class. This is a benefit to Samsung’s products (Wang & Chou, 2014).
The organization utilizes both behavioral segmentation and division based on demographics. The behavioral aspect split populace into classifications in view of their conduct with or acts toward a presented product. The organization’s item specialization in distinct categories encourages the getting all of the segments in view of their way of life and age sections (Baker, 2014).
SWOT Analysis
The organization is endeavoring to offer the best items in the market with a first-class quality. The organization is situating its product by placing creativity, trust and confidence in its products in the market. The company is prone to use imitative strategy to position itself in a better place as compared to its competitors. Likewise, they employ an anticipatory strategy to position themselves in anticipated future product e.g. image sensors for mobiles that are anticipated to pick up in the coming future (West, Ford & Ibrahim, 2015).
The successes of Samsung are due to the technique of targeting many segments. This is attained through the development of different brand packages of products and services. For instance the Samsung’s smartphones of S – series and Samsung Note 3+ which come in different features, screen resolutions, functionalities and each with different prices and thereby meeting the need of varying clients with different financial capability.
In order to strive to enhance brand value, Samsung employed the following brand strategies to reach to target market:
Setting unique brand identity-the organization created their brands to have uniqueness as opposed to those of competitors in the market
Brand repositioning-they placed their brands to target different market and classes of customers
Strategic pricing-they used both skimming strategy
Research and development- the company invested heavily in research and product development
The trust created by the organization over its brand bestows greater benefits in the markets as compared to those of the competitors in the market. This has been attributed to the manner in which the products of the organization has been performing over time with no issues and last longer, thus earning customers’ trust. The creation of smartphones like S9 galaxy is known to come with status. In addition, the services offered to the customers are incredible. The company has built a strong product portfolio (Bhasin, 2018).
The company uses different pricing strategies in relation the different categories of products they present. The first strategy employed is skimming strategy. The company employs skimming strategy on new products which are the market leader in relation to the features they present. The Samsung Note 3+ Gear is a new product that attracts many customers. The company endeavors to get high value on these products prior to competitors coming into to dilute the market, and when a similar product is on the market, the price is then decreased. On the other side, the company employs a competitive strategy for other products besides the smartphones that have no competitiveness in the market (Yeung, 2016).
Competitive Analysis
The organization has a belief that customers get pulled together through the use of advertising and at the same time uses sales techniques to push the product to its clients and hence employs sales promotion. In order to augment this, the organization takes advantage of festive times as well as other normal occasions with no festivities. They give discounts as well as offers to the client on their selected products. The other strategy is digital marketing. The organization uses this through use of social platforms so as to reach to tech-savvy clients. These strategies are working well for the company and thus are commensurate with the increase in Samsung’s brands (Wrenn & Mansfield, 2014).
In ensuring that products reach to the clients, the organization employs sales and service dealers, retail segment and distribution network. The sales and service dealers’ get to get products from Samsung and are spread in various parts of the covered market globally, they hold key accounts for the company and get involved in corporate sales and may set of showrooms specifically for Samsung products. There is the use of retailers as well for the distribution of the products. These retailers are as well spread globally in different regions in which the market covers. Retailers keep Samsung’s product as the main product owing to its well-established reputation so as to keep their clients. Distribution being another strategy adopted by the company, they have set a single distributor in every city in a territory so that they get to distribute in that territory (McDonald & Wilson, 2016).
In recognition that people are key drivers for the company’s business, the organization builds closeness with its customers through the social media and other platforms. The networking platform creates by Samsung serve as a place for creating and enhancing the relationship. This facilitates the use of the push strategy and hence products get pushed to the clients on these platforms. In addition, the organization uses celebrities and sports and another means of getting to the target market (Parente & Strausbaugh-Hutchinson, 2014).
In the organization, the delivery of services meet the client’s expectation, they handle clients’ complains faster and effectively and they get to see issues prior to happening. It is apparent that the trust and confidence attributed to the company’s products get augmented by the services offered to clients by the customer service section (Jugenheimer, Sheehan & Kelley, 2015).
The organization uses distributors to ensure that products remain visible to the customers in the market. There is pulling strategy at work where the clients are pulled to the product and therefore maintaining physical presence. Through the use of sports particularly during international games like soccer or athletics, the organization utilizes these avenues to ensure that physical presences of their products are felt (Parente & Strausbaugh-Hutchinson, 2014).
In ensuring that there is the distribution of their products, the organization creates the partnership with retailers and network carriers which are situated in other nations. This is done through the use of varied sales promotion. With the use of subsidy as well as the arrangements of contracts with the network carriers, clients are able to get Samsung’s products at an affordable price. As a way of motivating the partners, the company gives discounts so that they continue to distribute the company’s products (Wrenn & Mansfield, 2014).
Conclusion
The strategies employed by Samsung Electronics Co Ltd to marketing their products have made the organization to be among the top companies in the mobile industry irrespective of the competitive international environment. The situation analysis shows that political and economic turbulence is posing serious hurdles in the market.
Even though the organization has ventured into the emerging markets, the global economy still hits and get felt in those emerging markets. Additionally, a number of countries in the emerging markets in African and Latin America still have political instabilities taking place because of changes in their governance structures.
This notwithstanding, the organization have laid down strategic plans and have targeted the expanse market, established its position in the market, and segmented the market based on the need of its customers and diversified its products so as to meet the needs of clients in these markets. It is through this that the organization has a well-structured marketing mix and extended marketing mix that increases competition.
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