Samsung group is a South Korean multinational conglomerate founded by Lee Byung-Chul in 1938. During the beginnings the group was already very diversified with areas like food processing, textiles, insurance, securities, and retail. In the late 1960s they integrated to the group the electronics area which increased the group’s growth a lot. After the founder’s death in 1987, Samsung was separated into four business groups: Samsung Group, Shinsegae Group, CJ Group and Hansol Group. Today Samsung Group employs less than 500.000 people (2014) and has a revenue of $305 billion (2014) with a net income of $22.1 billion (2014).
Within Samsung Group, there is Samsung Electronics (1969) which is a subsidiary where Samsung phones are developed. Samsung Electronics is also the most important source of income and the world’s 2nd largest information technology company measured by 2015 revenues. It employs about 300.000 people (2016) with $180 billion revenue and $25 billion net income (2016)
In October 2016, Samsung, the South Korean giant electronic giant has known a huge worldwide scandal. After the release of its Samsung Galaxy Note 7 in mid-August 2016, the brand stopped selling it because several reports told that some devices caught fire and even exploded. The scandal spread on the social media with pictures and photos of damaged phones and mostly the case of a phone which started to catch fire mid-air on a Jet Airways Delhi-Indore Flight.
Samsung really struggled from the Note 7 scandal and back then many thought this was the end of the Samsung Galaxy Note phones. But this helped the company to focus on reinforce their security and improve the way they communicate with their customers. Samsung have learned from its situation and they demonstrate it with the Samsung Galaxy S8 and Note 8 which are two great success for the brand. They still had good financial results which a gradually increase of phone sales. The brand was able to compensate this scandal with their other phones. They get back the customers trust.
BRAND STRATEGY, PROMOTIONAL STRATEGY AND TARGET CUSTOMERS, AND COMPETITIVE ANALYSIS
As a multinational company, Samsung needs to build up a strong, durable and reliable strategy to sustain in a very competitive market.
Samsung adopt a special strategy, they observe its competitors and their new products, to launch lately with eventually new features. This makes Samsung’s products in maturity phase while the others became dead weights. It is known that Samsung never the first to launch a new kind of product.
In Telecommunication sector it is true that Samsung takes a little their competitor’s idea for their phones, and mainly Apple ideas. However, their choice of creating their own OS and keep reasonable costs allow a new vision for the brand. This renewal of image allowed Samsung to overcome many competitors since the beginning and still today. It is not certain that it stays like that, considering the multiplication of competitors and new technologies concerning telephony and networks. (Analyse stratégique de Samsung, 2011)
With the recent failures, Samsung had to polish its image. They made some choices to improve safety with new productions policies and deeper control with their partners, especially suppliers.
This safety process would ensure a new quality security which had not obviously existed before. This process is also way more complete than the industry standard safety check. Samsung has thus acquired the means to control its product safety and develop it as a force. “It also used the opportunity to find a bigger brand purpose for itself and creating an internal culture of change that encourages and prides itself on taking risks.” (Businessinsider.fr, 2017)
The Galaxy Note 7 recall influenced Samsung to put safety in the heart of their promotion. To get the customers faith back, they had to speak publicly about this issue and to show that they solved it. With social medias and classic medias such as TV, they could spread a new message of transparency toward their solutions. In a Youtube video from their official channel, Tim Baxter Samsung’s COO, speaks directly with the customers with this message: ‘At Samsung our highest priority is our customers, their aspirations, their needs, their safety. And with battery cell defects in some of our note 7 phones, we did not meet the standard of excellence that you expect and deserve. For that we apologize. Especially to those of you who are personally affected by this to those of you who love the note, the most loyal customers in our Samsung family. We appreciate your passion and your patience, and we take seriously our responsibility to address your concerns about safety.’(Youtube.com)
With this message, Samsung grapple the scandal and by apologizing and assuring that they will do everything they can to get back their customers trust.
Pio Schunker, SVP of integrated marketing communications at Samsung Mobile Communication, speaking for the Association of National Advertisers’ Masters of Marketing Conference said: ‘We knew we couldn’t afford the luxury of a fetal position and just lie there, so the first thing that we did to make things right was to take accountability,’ he said. ‘For Samsung, it wasn’t just the right thing to do, it was the only thing to do.’ They did a video advertisement on TV and YouTube where the viewer could see the different tests they did on the new Galaxy range phone. They spoke about the Galaxy Note 7 with honesty by saying that they figured out the problems but now they ensure that they do all the tests needed and even farther. As Russel Feldman said: “In anticipation of the Galaxy S8’s arrival, Samsung’s January global TV advertising campaign focused on quality and the thorough nature of its testing process comprising a new 8-point battery check in an attempt to reassure consumers that it has taken extensive measures to ensure there isn’t a repeat performance.” (thedrum.com, 2017)
Samsun has also a strong CSR policy with a dedicated Youtube Channel about their CSR actions and also a section on their website where the brand explains their approach in the different subjects.
From the beginning, Samsung had to ﬁght hard to change customers’ perceptions of it as a manufacturer of cheap electronic goods. Starting in 1993, Samsung has adopted an aggressive branding and advertising strategy. (https://martinroll.com/resources/articles/marketing/samsung-global-asian-brand/)
Samsung’s branding philosophy is built on ﬁve main pillars: innovation, cutting-edge Samsung was known as a thigh-lipped nature for answering questions and giving interviews, which was perceived as arrogant by the press. Their communication is now clearly more open because this Galaxy Note had definitely impacted their profits but especially the image and marketing for their products. The brand wanted to build “brand love”, Pio Schunker said “We needed to reclaim our leadership”. Indeed, the brand identity was “immensely fragmented which lacked warmth and humanity” and that is why they create the tagline “Do What You Can’t”. (Business Insider, 2017)
PROMOTIONAL STRATEGY AND TARGET
Samsung has used all possible communication channels to convey its brand’s positioning and personality. Mass media advertising, public relations, event sponsorship, sports sponsorships, product placements, the Samsung experience gallery and Samsung experience retail stores have been its major brand communication channels. (Martin Roll)
The brand communication had two main objectives. Firstly, to reposition Samsung as a premium, world-class brand offering quality, credibility and design and, secondly, initially to be seen and accepted on a par with the likes of Sony and more recently to be the top consumer electronics brand globally. After Sony’s decline and Samsung’s aggressive entry in the premium smartphone’s category, Apple is now Samsung’s biggest competitor in the high growth categories of smartphones, tablets and smart wearables. (Le Monde, 2017)
Samsung’s targets is very large. Indeed, they provide a large range of phones that fit with all generations. Their retail prices are also large from 149 to 1,100 pounds (shop.samsung.com). This means that they don’t target a specific and unique target but several. Samsun phones are suitable for a teenager, business man, elder and so on.
PORTER FIVE FORCES
Porter’s Five Forces analysis model helps to see if a company is able to sustain on a specific market/industry. These five forces are:
- Threat of new entry
- Buyer Power
- Threat of substitution
- Supplier Power
- Competitive Rivalry
For Samsung this model allows to understand if the place of the brand in the smartphone industry is a threat or an opportunity.
As the Porter’s Five Forces analysis shows every aspect are fragile except for Supplier Power which could be the only aspect which is quite strong.
New competitors are gaining market shares (Huawei, OPPO, Xiaomi) which affect Samsung because they propose similar phones like Samsung’s. Buyers have also the capacity to choose a brand whenever they want. In fact, the price of a phone is an important part of the buyer’s budget so it is an important choice for them.
Buyers want a reliable product for the best price possible and a lot of brands propose good phones such as Samsung’s phones for a decent price. The threat of substitution is thus high for Samsung. Supplier Power is quite low because lots of them are willing to work for Samsung and they do not really have bargaining power.
However, if issues such as the battery of the Samsung Galaxy note 7 could affect the image of these suppliers an Samsung has a lot of suppliers. Concerning the rivalry, its high because of the well-established companies on the phone industry such as Apple, the main competitor of Samsung and also Sony, LG, Motorola. The strong rivalry with Apple affects the brand image of Samsung because both brands have a strong community which spreads lots of messages denigrating the “enemy” devices.
Local and international competition
Samsung has four critical areas in its branding strategy that it needs to address to remain competitive in the future:
- Strengthen its value brands in the categories they compete in
- Maintain the differentiated image of its premium brands, which have been built up over the years through sizeable financial and manpower commitment
- Define and maintain an image of the corporate brand, which encompasses the company’s offerings across the value and premium ends of the categories it plays in
- Put in place a brand architecture in the organization, which emphasizes the relationships between the corporate brand and the product brands and how the identity and image of each can help strengthen the others
Samsung has invested heavily in R&D to churn out new technologies. In 2016, the EU Industrial R&D Investment Scoreboard ranked Samsung as the top technology spender and second highest global spender with USD 13 billion in R&D spends. In 2013, the company also announced an additional R&D spend of USD 4.5 billion with five new R&D centers in its home country. Today, the company has over 50,000 people working in R&D globally, spreading out across its 42 global research facilities, including R&D centers and design centers. The company is committed to invest at least 9% of its sales revenue into R&D activities.
In today’s fast changing consumer culture, huge companies like Samsung has to develop a strong and reliable strategy. Even though it is a big company, consumer from the phone market are very versatile. This versatile consumption is known by Samsung because of the Galaxy Note 7 which had a profound effect on everything. They faced a big loss economically, consumer faith and image.
As they faced a scandal, it is interesting to see how they react and how it affected the whole market. Now, Samsung reinstated to their before scandal level and even higher cause they improved a lot in several domain such as safety and communication.
- Martin Roll, 2017: Samsung – The Global Asian Brand https://martinroll.com/resources/articles/marketing/samsung-global-asian-brand/
- Samsung, CSR Youtube Channel: https://www.youtube.com/user/SamsungCSR/videos
- C.Boyles, 2015: Samsung Mobile Brand Guideline https://fr.slideshare.net/chrisboyles/samsung-mobile-brand-guideline
- R.Dissanayake, T. Amarasuriya, 2015: Role of brand identity in developing global brands: a literature based review on case comparison between Apple Iphone vs Samsung smartphone brands https://www.researchgate.net/publication/282323997_Role_of_brand_identity_in_developing_global_brands_a_literature_based_review_on_case_comparison_between_Apple_Iphone_vs_Samsung_smartphone_brands
- P.Juneja, No date: PESTLE Analysis of Samsung https://www.managementstudyguide.com/pestle-analysis-of-samsung.htm
- N.Mortimer, 2017: Can Samsung’s Galaxy S8 marketing strategy help repair its Note 7 wounds? https://www.thedrum.com/news/2017/03/30/can-samsung-s-galaxy-s8-marketing-strategy-help-repair-its-note-7-wounds
- Business Insider, 2017 https://www.businessinsider.com/sites/maribellopez/2017/01/22/samsung-reveals-cause-of-note-7-issue-turns-crisis-into-opportunity/
- Samsung Website, No date: The values that define Samsung’s spirit https://www.samsung.com/latin_en/aboutsamsung/vision/philosophy/samsung-spirit/
- Burton.J (2016) Samsung’s communication stratgy koreatimes.co.kr/www/news/opinon/2016/10/197_216407.html
- L’express, (2016) : L’affaire du Samsung Galaxy Note 7 et ses batteries explosives expansion.lexpress.fr/high-tech/l-affaire-du-samsung-galaxy-note-7-et-ses-batteries-explosives_1838245.html
- Burton.J (2016) Samsung’s communication strategy koreatimes.co.kr/www/news/opinon/2016/10/197_216407.html
- Androidpirdpit France (2016) Galaxy Note 7 : Samsung peut-il survivre au scandale ? youtube.com/watch?v=ZbllbavW1_8