business planning of samsung.pdf

BY: INMACULADA SANCHEZ CANO

PROFESSOR: DR. THOMAS GEIß

SAMSUNG BUSINESS PLANNING 2014

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-‐INDEX-‐ -‐Present Strategies-‐ ...................................................................................................................................... 3

1.Introduction .......................................................................................................................................... 3 2. Vision And Mission ............................................................................................................................... 3 3. Previous Directional Strategies ............................................................................................................ 3 4. Previous Generic Strategies ................................................................................................................. 4 5. Previous Products To Offer .................................................................................................................. 6 6. Previous Market Segments To Target ................................................................................................. 7 7. Previous Market Position Tactics ......................................................................................................... 8

-‐Internal Analysis-‐ ......................................................................................................................................... 9 -‐Porter’s Five Forces Analysis-‐ .................................................................................................................... 10 -‐PESTEL Analysis-‐ ........................................................................................................................................ 11

1.Political ................................................................................................................................................ 11 2.Economical .......................................................................................................................................... 11 3.Social ................................................................................................................................................... 11 4. Technological ...................................................................................................................................... 11 5. Environmental .................................................................................................................................... 11 6. Legal ................................................................................................................................................... 11

-‐SWOT Analysis-‐ ......................................................................................................................................... 12 -‐Future Strategies & Innovations-‐ .............................................................................................................. 13

1. Samsung’s Future Mission Statement ................................................................................................ 13 2. Future Directional Strategy Samsung ................................................................................................. 13 3. Future Generic Strategy ..................................................................................................................... 14 4. Future Products to Offer .................................................................................................................... 15 5. Future Innovations Robots ................................................................................................................. 15 6. Mobile Payment System ..................................................................................................................... 16 7. Value And Revenue Propositions. ...................................................................................................... 16 8. Less Consuming LCD Screens: ............................................................................................................. 17 9. Next Generation Smartphone And Tablet Application Processor: ..................................................... 17

-‐Actual Innovations-‐ ................................................................................................................................... 18 1. Home Appliances. ............................................................................................................................... 18 2. Cameras ............................................................................................................................................. 18 3.Mobile Phones And Televisions ........................................................................................................... 18

-‐Pricing Strategy and Channels of Distribution Of Samsung-‐ ..................................................................... 19 1. Penetration, Market Skimming and Value Pricing .............................................................................. 19 2. Samsung Channels Of Distribution ..................................................................................................... 19 3. Convenience Of Those Channels Of Distribution And Prices. ............................................................. 19 4. Pricing & Distribution Strategy For 2015 ............................................................................................ 20

-‐Market Segmentation-‐ [] [] ......................................................................................................................... 21 1. Segmentation ..................................................................................................................................... 21 2. Market Targeting [] ............................................................................................................................. 21 3. Kotler Segments (2003) ...................................................................................................................... 21 4. Samsung’s Positioning Strategy[][] ...................................................................................................... 22


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-‐PRESENT STRATEGIES-‐

1.INTRODUCTION

Samsung Electronics Corporation is a South Korean multinational electronics company. It is the flagship subsidiary of the Samsung Group. The company, according to 2011 unit sales, is the world’s largest mobile phone maker and the world’s second largest semiconductor chip maker. Since 2006 it has been the world’s largest television manufacturer and the world’s largest maker of LCD panels for eight consecutive years.

2. VISION AND MISSION

Samsung’s vision is based on the idea that with technological innovation we could create solutions for future issues. Technology allows the development of companies and people in emerging markets by entering digital economy.

Samsung wants to develop new opportunities and new markets so they can continue as market leaders as an E-‐digital company.

3. PREVIOUS DIRECTIONAL STRATEGIES

Every company needs to grow since its foundation in order to maximize shareholders’ funds in the long run and to increase assets.

The way to grow is through diversification strategies such as: vertical integration related or unrelated diversification. In our case, we are going to focus on Samsung’s strategies:

3.1. Vertical Integration:

Samsung is a good example of vertical integrated company because it monopolizes all aspects of the manufacturing process (raw materials-‐electronics). Besides, Samsung has entered smartphones market thanks to the development of Samsung Galaxy S series and the tablet market with Galaxy Tab,

E-‐digital company

"E" technology allows to operate the most ef7icient production processes and management

DIGITAL Create products that lead the industry

COMPANY Further strengthening the organization to continue as market

leaders as well as being respected and

responsible with all our stakeholders


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competing directly with Apple. Although Samsung is a specialized supplier most of its revenues comes from companies of TV production.

3.2. Diversification.

Since its start producing black and white televisions, Samsung has not stopped innovating. In the seventies began its diversification, integrating its manufacturing processes from raw materials to end products. As a result, many new companies were created, including Samsung Heavy Industries Company in 1974 and Samsung Shipbuilding and Samsung Precision Company (now Samsung Techwin) in 1977.1

Samsung's core technology businesses diversified and expanded globally during the late 1970s and early 1980s. In the early nineties, there were great opportunities for the development of high technology.. Samsung, like many companies began to rethink their technology and offer new products. Here began the development of mobile phones and Samsung’s continuous innovation.

We can say that Samsung is a clear example of a diversified company. The question is what kind of diversification they practice?2

Samsung follows an unrelated diversification, that is, multi-‐business model with the goal of increasing profits. This company produces

• Electronic market: mobile phones, computers, customers admire tablets because they meet both market and people’s needs.

• Home appliances: microwaves, refrigerators, ovens, air conditioners…which stylishly designed, with digital features and environmentally friendly.

• TV business: with LED TV’s we have had an explosive growth and we are in the top position of the market. To sustain this leadership, Samsung is innovating with 3D technology televisions.

• Medical equipment: better clinical environment for physicians and patients through highly reliable diagnostic results, and easy operations.

4. PREVIOUS GENERIC STRATEGIES

Samsung set into the market the Galaxy Y Duos for Rs 8500 following both cost leadership and differentiation strategy, reaching a stuck in the middle position. When first set into the market it was the most economical Android telephone while at the same time it offered special features along with the mobile phone having an attractive layout and shape.3 Following this same stuck in the middle strategy, Samsung has been able to launch a Galaxy Tab 2, which also works as a mobile phone. It is of a lower cost than its competitors (for example apple) and offers a differentiated product: it counts with a bigger screen (10.5 mm compared to apple’s 8.8mm, and weighs less, 344 grams to 601 grams respectively).4

Samsung was able to set the low price for the product as they count with an “offshoring” method, where the company uses the assets and facilities they already have in order to produce their own product achieving a lower cost: for example the company has their own manufacturing programs in their factories in China and India.5

Samsung is also able to provide a differentiated product along a broad target market with for example their “Ultrabook”, which is the thinnest laptop, (weighing 1,03Kg) in the windows line, being effective and attractive towards customers needs and eyes.6 Their launching of the Samsung Galaxy III

1 http://www.samsung.com/us/aboutsamsung/corporateprofile/history05.html

2 http://www.samsung.com/us/aboutsamsung/ourbusinesses/businessarea.html

3 http://www.slideshare.net/neoabhishek/generic-‐strategy-‐samsung

4http://www.pcworld.com/article/249851/samsung_launches_lowcost_android_40_tablet.html

5 http://www.craigeisenberger.com/samples/craig_eisenberger_samsung.pdf

6 http://www.slideshare.net/neoabhishek/generic-‐strategy-‐samsung


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was a complete “boom” in the market. Their marketing strategy, were they announced the product but did not release it to the market until months later created expectancy for customers.

The Android telephone offers customers services such as wireless charging, an application where the phone will recognize faces offering to share things directly, call, message… in a direct manner, as well as validating the use of “MicroSIM’s”. These services contribute to the many others the smartphone offers, helping differentiate their product in a noticeable way7.

Samsung has used a focus strategy set in India (best mobile phone market after China, able to reach a 13% contribution to the handset commerce), where they launched in 2007 a variety of mobile phones counting with a differentiating focus; long-‐time battery, integration of camera; achieving a high number of sales. In 2010 their first “Galaxy S and Wave”. Focusing in this narrower market helped them achieve the reach to a high number of customers, gaining reputation and loyalty. Today, they use a more cost focused strategy where they offer smartphones (today’s trend with distinguished services) at a lower price to reach higher masses, which they can afford due to their Research and Development and manufacturing programs.8

7 http://techsplurge.com/9048/boom-‐samsung-‐galaxy-‐s-‐iii-‐has-‐been-‐launched/

8http://www.rediff.com/business/slide-‐show/slide-‐show-‐1-‐special-‐how-‐samsung-‐is-‐making-‐it-‐big-‐in-‐india/20110505.htm#1


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5. PREVIOUS PRODUCTS TO OFFER

1970-‐ Black-‐and-‐white TV (model: P-‐3202) production started by Samsung-‐Sanyo.

1972-‐ Began production of black-‐and-‐white televisions for domestic sale.

1974-‐ Began washing machine and refrigerator production.

1977-‐ Started export of colour televisions.

1979-‐ Began mass production of microwave ovens.

1980-‐ Began producing air conditioners.

1983-‐ Began production of personal computers (PCs).

1986-‐ Developed the world's smallest, lightest 4mm video tape recorder.

1991-‐ Development of mobile phone handset completed.

1992-‐ Developed mobile phone system.

1993-‐ Samsung Advanced Institute of Technology (SAIT) developed first-‐ever digital video disk recorder (DVD-‐R).

1994-‐ Samsung Aerospace developed the world's first four-‐power zoom camera.

Samsung Heavy Industries developed first Korean-‐built electric car (SEV-‐III).

1995-‐ World's first 33" double-‐screen TV introduced.

Samsung Advanced Institute of Technology developed world's first real-‐time MPEG-‐3 technology.

1996-‐ Developed world's fastest CPU (central processing unit).

1997-‐ Developed world's lightest PCS (105g).

1998-‐ Development of completely flat-‐screen TV completed.

1999-‐ Developed wireless Internet phone (Smartphone), a small, multi-‐function phone.

Developed the world's first 3D TFT-‐LCD Monitor.

2000-‐ Develops the High Definition Digital TV

Develops Unique All-‐in-‐one DVD Player.

Launches PDA phone.

2001-‐ Develops World's first 40 inch TFT-‐LCD.

2002-‐ Launched new high-‐definition TFT-‐LCD colour cellular phone.

Development of the 54''TFT-‐LCD, the largest digital TV monitor in the world.

2003-‐ Released the first HD DVD combo.

2004-‐ Released 46'' LCD TV for the first time in the world.

Developed a 3rd Generation Optical Blu-‐Ray Disc Recorder.

Produced the first wrinkle-‐free steam washer.

2005-‐ Developed the first-‐ever speech recognition phone.

Released the world's first 7 mega pixel camera phone.

Developed the largest Flexible LCD Panel.

2006-‐ Launched the worlds' first Blu-‐Ray Disc Player.

Samsung’s beginnings

Diversifying in Industries and Electronics

Entering the Global Marketplace

Competing in a Changing Tech World

Becoming a Global Force

Advancing the Digital Frontier

Pioneering the Digital Age


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Launched ''Stealth Vacuum,'' a vacuum cleaner with the world's lowest level of noises.

Unveiled 10M pixel camera phone.

2008-‐ Launched OMNIA phone.

2009-‐ Developed the world’s thinnest 3mm LED TV panel.

Released the world’s thinnest watch phone.

Released the world’s first infrared video phone.

Released its 120Hz 3D monitor.

Released the “JET,” its new concept full touch screen phone.

Released the world’s first solar -‐powered mobile phone in India.

Released the world’s thinnest Blu-‐ray player.

Samsung Digital Imaging developed an innovative hybrid digital camera.

Released its V-‐line Crystal Rose LCD TV.

2010-‐ Samsung Electronics globally launched the World’s first “Full HD 3D LED TV”.

Samsung Electronics launched World’s first 3D home theatre.

Samsung Electronics launched OMNIA 7, the first Windows Phone 7 smartphone.

1. Market penetration: Samsung needs to create aggressive marketing campaigns in order to stay on top of the charts on the market.

2. Market development: As we can see in the history of our company, in 2009 Samsung released the world's first solar-‐powered mobile phone in India and they Also Introduced into the mobile WiMax Malaysia, with a very low price Compared to the European prices. This Way They come in a new market where They will have to invest in advertisements, in admin expenses, new production facilities, so on and so forth.

3. Product development: Samsung has based its development on all technology (mobile phones, TVs, computers, etc..) But, if you see their web page today, you could find TVs and Smart TVs, computers, laptops and all-‐in-‐one PCs, cameras and smart cameras, and, the most well-‐known, smartphones.

4. Diversification: If everyone thinks about this enterprise, they might visualize products such as TVs and smartphones.

But the truth is that they have introduced into their big range of possibilities, products like home appliances (washers and dryers, refrigerators, microwaves, dishwashers, vacuums, ovens and ranges, LED lightings) and many other electronic devices.

6. PREVIOUS MARKET SEGMENTS TO TARGET 9

Initially Samsung targeted its product at the high class and technology lovers because of its high price.

Samsung should aim both the high-‐end market segment as well as low-‐end market segment because in both areas there are opportunities. The international brands like Sony, Panasonic, LG, Philips and Sharp have more than 75 percentage share of the high-‐end market segment globally. Samsung being an international brand, it can easily step in both the high-‐end and low-‐end marketing segment because of its overall knowledge and ability to invest in the market.

9http://www.ukessays.com/essays/marketing/strategic-‐analysis-‐and-‐marketing-‐strategy-‐for-‐samsung-‐marketing-‐essay.php

Pioneering the Digital Age


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7. PREVIOUS MARKET POSITION TACTICS

7.1. Product

The Next generation of Samsung products are new innovative products. In simpler terms, the products include all features of innovation to provide true entertainment to its customers. The 3D televisions were voiced as the biggest innovation in the television history with combination of highest performance and stylish design.

7.2. Price

Customers not only look for price alone. The customers expect a proper service and value for the money they payed. They act in response to value so a lesser price does not essentially signify stretched sales if the product is not fulfilling the expectation of the customers.

7.4. Placement

Samsung unveiled its prestigious products globally in the major countries like US, UK, Australia and china. The products are launched in all the major stores.

7.5 Promotion

For example with 3D TVs the promotion takes the form of a new “Starter Kit” that offers U.S. consumers the chance to enjoy 3D movies in their own living rooms, rather than having to head to nearest cinema to check out the eye-‐popping action.

Samsung utilized the FIFA Football World Cup to publicize several value-‐added bundles along with its new product ranges.


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-‐INTERNAL ANALYSIS-‐ 1. PHYSICAL RESOURCES:

The physical resources and competence of Samsung products are that they incorporate the latest technologies and therefore there must be created new facilities specialised for this sector of white products.

2. HUMAN RESOURCES The staff used for the older products need to be trained to obtain the new knowledge in order

to be able to build the new products.

New staff must be recruited to train the old staff so therefore that would be an extra cost.

3. FINANCIAL RESOURCES 10 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Samsung Electronics Co., Ltd. and its subsidiaries

10 http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/annual_reports.html


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-‐PORTER’S FIVE FORCES ANALYSIS-‐ 1. THREAT OF SUBSTITUTES This element is high as the market for white goods its full with new substitute products so therefore the marketing department must be very cautious about choosing the appropriate marketing strategy. This is why many adopt a differential pricing strategy.

2. THREAT OF RIVALS This is specially significant for a white product industry such as Samsung because of the high number of multinationals rivalry Samsung cannot take its position in the market for granted, as in their market margins are tight and competition is intense.

3. THREAT OF NEW ENTRANTS It is often very difficult to enter an emerging market because many different factors have to be taken into consideration. The most important, the distribution network and the supply chain.

4. BARGAINING POWER OF SUPPLIERS Although the offer of suppliers is very high and they are all willing to offer their services at a discount such as Samsung always study the markets before setting up a shop.

5. BARGAINING POWER OF CUSTOMERS In this kind of markets buyers have most of the power so that is why Samsung post-‐selling service must be a very good quality service.


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-‐PESTEL ANALYSIS-‐ 1.POLITICAL

Apparently there is no direct relationship between our product and the type of political regime that governs a country, only in the extreme cases such as the dictatorship or the intervened systems of the remaining communist. Under these exceptional conditions our company and finally our product will be affected by the decision of the government. In the rest of the world, especially in the rest of the developed world, our product will be more or less sold depending on our abilities and capabilities.

2.ECONOMICAL

Due to its medium-‐high expensive technology and its high price, Samsung products have become low luxury products. Regarding this fact, our lines of products should be specially focused on the countries with healthy economic situations right now.

3.SOCIAL

As commented before Samsung’s products can be seen as low luxury products, due to their prices and features. However it does not produce a reject from the people and it is not seen as ostentatious as a Mercedes-‐Benz for example, so it should be very well accepted and bought in the proportion of the welfare of the region the products are sold at. So the target customer should be a medium-‐high class individual, couple or family with the desire of a high quality experience.

4. TECHNOLOGICAL

The companies involved in the latest technological innovation like Samsung need to invest a large sum of money to research and development to keep up in the market and bring new products to attract more customers who are willing to change in the near future based, because of the speed with which technology travels today.

5. ENVIRONMENTAL

Today, one of the most serious issues is the environmental protection. The companies involved in technology development should take into account the new regularization based on energy consumption, waste recycling; all of them related global warming.

Thus, if customers see how much a company cares about the environment, more faithful they will be.

6. LEGAL

Legal factors are an area in which all enterprises engaged in any sector, have to carry out and abide to keep everything legal and equal. Thus, all businesses have the same regulations related to minimum wages, hours of work per day, vacation days, etc. These factors can affect how a company operates, its costs, and the demand for its products.


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-‐SWOT ANALYSIS-‐11

11 http://www.strategicmanagementinsight.com/products/swot-‐analyses/samsung-‐swot-‐analysis.html


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-‐FUTURE STRATEGIES & INNOVATIONS-‐

1. SAMSUNG’S FUTURE MISSION STATEMENT

“To devote our talent and technology to creating superior products and services that contribute to a better global society.”

Since the prestige and value of Samsung has already been given and exist, and also the statement aims perfectly at what a big enterprise should reach at and pursuit, there is NO need to change the mission statement of the company.

2. FUTURE DIRECTIONAL STRATEGY SAMSUNG

The directional strategy of a firm is where the company is heading, how is it doing it, and how is it heading in a particular direction. In the case of Samsung, we can explain the main questions as it follows:

• Should Samsung expand, cut back or maintain the same?

This South Korean company is dedicated to the technological industry in all of its forms, from cell phones to microwaves, etc. In this industry, you always have to keep up with new inventions that either make things easier than with past products, or that satisfy other types of new needs. The discovery of new technological resources and how to apply them to your products is the key to success in this market, because not only can Samsung reach lower cost of production and implementation, but also gain customers from other firms which haven’t got that product on sale yet. SAMSUNG ALWAYS HAS TO KEEP GROWING (EXPAND).

• Should we concentrate our activities within the industry boundaries or should we diversify into other lines of business?

Samsung is known for the technological solutions it provides, so it could definitely diversify to other lines of business but always related to the technology. For example, if Samsung entered the automotive industry or the aeronautical one, designing parts of the engines, the electrical parts; or even selling cars at lower prices than the competitors, it could succeed. Why? Because people trust a company that comes from a segment of the market that is related in some way to this other one.

But if Samsung decided to start selling food, like soups, tomato etc, it would never acquired the trust of the consumers of this markets, because it comes from a radically different industry and even though the product could have high quality, people wouldn’t trust that a technological company can do things as good as a farmer or a food company.

• If we want to grow and expand nationally or internationally, should we do so via self-‐development or through acquisitions, mergers, or strategic alliance?

Samsung is already leader of the market in most of the products they sell. It is also so massive, innovative and known that expanding throughout acquisitions of competitors shouldn’t be the priority. It’s obvious that if they have the opportunity to buy a competitor at a low price or it is a very good moment to do it, it should be done, but the main objective of Samsung nowadays has to be self-‐development. With this we mean that the technological industry is always evolving, and buying new patents, signing deals with new suppliers, reducing costs of production, keeping a new and fresh company policy and statements, etc is a much better advantage for a giant company, than more of money that they already have.

• Regarding the Growth strategy of the company:

The Samsung enterprise, as said before, should be aiming to reduce costs, be faster and more efficient, etc (internal development) rather than to aim at mergers and company relations unless it’s a great opportunity. This leads us to the Vertical Integration as the best way


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for it to pursue the new objectives and products, so that it competes against itself in order to beat the prior stats, and to become bigger and better.

Since it is such a big company, the best option to take is the Balanced Vertical Integration, where we not only create subsidiaries that provide the materials to the company, but also distribute the products that are created to other firms or parts of the market

Actually, Samsung operates using a vertical integration method, which leverages all aspects of the manufacturing process from raw materials to electronics components to fully assembled products. Samsung creates its own supplies and also sells its quality supplies to other company, such as Apple.

• Regarding the Diversification of the company:

This ought to be a difficult decision for Samsung, because it is always good news to diversify the company to become bigger in the same market or to open new horizons in others.

Since it is one of the leaders of the technological sector, and it is very difficult to remain on top of this market through the years, they could choose not to enter other markets not to complicate things.

But in case that they wanted to diversify, the one and only option should be unrelated diversification: Samsung has already more than enough potential inside it’s own market, so there is no need to buy other rivals or companies inside the sector because the are “self-‐sufficient”; on the other hand, moving to other areas like building boats or infrastructures, or even open mines and create construction material could be great segments that are non-‐related with their top market (technology) but that create advertisement for the company, bring to the table new options and deals, ways to apply the technology to new things, new segment of clients, opening up of the business, etc.

The unrelated diversification could be the real deal for Samsung, but it is complicated to manage such a big amount of markets at the same time, but anyways this company is so big that they could do it. 12

3. FUTURE GENERIC STRATEGY

Samsung’s relative position within the electronics and phone industry determines whether its profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage combined with the scope of activities for which firms seek to achieve them, lead to three generic strategies for achieving the above average performance in an industry. The focus strategy has two variants, cost focus and differentiation focus

In cost leadership, Samsung set out to become one of the low cost producers in the electronics and mobile phone industry due to its structure way of accessing raw materials and its joint R&D, which gave Samsung a larger internal economy of scale, proprietary technology, which made Samsung a low cost producer, which is an advantage

In differentiation strategy Samsung seek to be unique in the electronics and phone industry buy introduce which is highly valued by buyers a type of warranty that no automobile industry have ever given in the world of automobile and its technological innovation in design, comfort ability and stability and low product price.

The generic strategy focuses on the choice of a narrow competitive scope within an industry. Samsung focus in every segment and class of people be it low income, middle income, high income it does not tailor its strategy to a specific and it pays them more in market share and profitability.

12 wikipedia.com, www.samsung.com, gerencie.com


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We could say that Samsung has been doing things well with a good balance of materials and functionality. This makes the company, Apple’s most direct competitor. In order to become the leader markets, we should keep our range of products and even go further, researching and developing new types of gadgets that the people want, such as connecting all of our devices by simply clicking a button, like the AppleTV application.

As a summary we can say that Samsung is doing a good job of keeping the second place but if they want to really become the leader of the market they should improve even more by increasing their quality with no increase in costs and also by creating something new by themselves and not been always at the tail of the leader.

4. FUTURE PRODUCTS TO OFFER

Samsung in 2012 proved to be a ground shaker when we talk about smartphones and tablets. Samsung just crossed Apple and Nokia and became the World’s Top mobile phone manufacturer with 22.9% of Market share. With smartphones providing every feature a smartphone could, Samsung have reached a spot where it rules.

Recently at the Consumer Electronics show (2013),Samsung Electronics showcased various products and their executives talked much about what they will be providing to people in 2014-‐2015, like “ Flexible phone, Galaxy exhibit, Galaxy pocket plus, Samsung smart TV “

A brand is a "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers, often it refers to a symbol such as a name, logo, slogan

and design scheme”13

Samsung has been able to create a really strong brand image.

“Competing successfully in the 21st century will require more than just outstanding product and quality functions. Intangibles such as corporate and brand image will be crucial factors for achieving a

competitive edge.

5. FUTURE INNOVATIONS ROBOTS

One future innovation for Samsung would be the industry of robots that help disabled or handicapped people in their daily life.

For example a robot that can accompany blind people, so instead of dogs we would have a robot that acts like a person and holds the hand of the disabled so he or she knows where he or she is heading. There is a big difference between dogs and robots in terms of guiding, since the client can introduce information inside the robot via USB or CD, with different places the person wants to go, and the robot would not only help the person but would also calculate the routes to know in advance where to head or which public transport to take.

Another personal robot could be one that does daily routines to help people. For example a robot that can be set to cut the grass, clean the pool, wash the clothes, etc. Like if it were a housemaid and that way people could dedicate their time to what they really need.

Finally we could also use robots for personal protection, like robots that don’t turn off at night and remain alert for possible intruders. These robots could be substitutes of the alarms, and instead of using violence; they could immediately call the police, close all doors, block entrances and wake up or alert the clients about any threat occurring. These robots could also be used for businesses, as police mates, etc.

13 http://www.marketingpower.com/_layouts/dictionary.aspx?dletter=b


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We all know that nowadays the robotical industry is something that already exists and keeps growing more and more, but there is a line that no company has crossed yet and that’s the line of personal robots with human size and human necessities to fulfil. The human life is already too short to waste time doing things that a robot could help us to do, so we can all have time for what we really need or want and leave the rest to the robots, that can overall make our lives much easier.

6. MOBILE PAYMENT SYSTEM

Central to the growth of any economy is a monetized system that makes business transactions and personal transactions efficient, fast and timely. With the technology advancing such a rapid phase, electronic payments in the next few years have the potential to replace in a substantial manner the legacy payments. But for that to happen, the players would have to understand the driving forces in the market for electronic payments. Even though currently there are many solutions which are available that supports connecting bank credit/debit card accounts to on-‐time virtual transactions, yet they suffer from the limitation of not changing the underlying value proposition which is the convenience to customers. Such a value proposition can not only be created but also appropriated only if the current limitations of smart phones as an instrument for mobile payment are removed through development of software that could facilitate the contactless payment system.

At the moment the technology is limited to business-‐consumer segments, but, it offers scope for development of a variety of payment system as for instance micro type of transaction and what the mobile industry and financial community suffers in this regard is the lack of a common vocabulary that would integrate the mobile technologies with financial service businesses. If Samsung focuses into such an area as its innovative strategy by using the popularity of its smart phones and user-‐friendly software, it would facilitate its capturing and appropriating value proposition in the form of a distinct competitive strategy.

7. VALUE AND REVENUE PROPOSITIONS.14

The value dimension here relates to both the needs of the customers and benefits they would derive from such a mobile payment system. As pointed out by Ondrus et al, (2005), Kim et al (2010), while the ‘anywhere, any time’ accessibility of mobile payments creates favourable ‘consumer-‐merchant nexus’, yet it falls short in the capturing of value because so far the system has failed to provide them the direct access to alternative payment execution options, support information as account balances on their finger tips etc. In short, as pointed out by Gumpp and Pousttchi (2005), the real value for the customers is caught through the information value, which is distinguished from the mobility value.

With its smart phones, having on hand its own operating system, if Samsung fills in the gap it would emerge as a winner with an innovative strategy which before others catches in, it would have en-‐cashed.

The scope of revenue proposition can be understood by the fact that estimated revenue of $800 to $900 is earned by the banking industry through payment transactions and if the company can make inroads even a small fraction of it would turn into multi-‐million dollars of revenue for it.

14https://sites.google.com/site/bestreviewsandarticlesxz/others/samsung-‐innovation-‐strategic-‐insightful-‐information-‐on-‐samsung-‐innovation

http://www.samsungvillage.com/blog/Innovation/


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8. LESS CONSUMING LCD SCREENS:

As we speak Samsung is developing for the next generation of smartphone a new, more sophisticated and efficient type of LCD, or liquid crystal display for its smartphones. This is actually very useful when using or working with very high definition pictures or videos, where the amount of pixels per unit is very high such as an entrepreneur that uses its smartphone as a camera, like and architect for example, mainly because it enables you to use your smartphone without making it go slower in terms of performance. Apart from this, Samsung grants that this future and new type of displays will save almost 25% most of battery compared with their current system.

9. NEXT GENERATION SMARTPHONE AND TABLET APPLICATION PROCESSOR:

With the launch of the Exynos 5, their current and very recently announced processor, Samsung is getting positioned as one of the most powerful inner components supplier of smartphones in the world. The current system is based upon 8 cores from which the application processor offers maximum performance and higher energy efficiency compared to the previous systems. But what it’s really interesting is that there’s been rumours that the next processor (supposed name: Exynos 6) is going to totally overwhelm the competence in terms of performance and energy and battery efficiency, which combined with the futuristic type of flexible organic light emitting Diode displays, where you can curve the screen of your smartphone, which has become the flagship of Samsung in term of beating its main rival, Apple.


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-‐ACTUAL INNOVATIONS-‐

1. HOME APPLIANCES.

Regarding microwaves, for example, Samsung has been improving their capacity (from 28 L until 36 L in GE614ST which also has a LED display type). Besides, their heat source has developed from convection to grill and microwave sources. Also design has changed: first microwaves' door opening type was to handle, nowadays we open them with a push button.

2. CAMERAS 15

Over almost the last decade, Samsung has shown a great devotion within the camera sector in their electronic devices, achieving a prominent position in the market. Camera’s themselves as a product could have faced some critical moments as technology has introduced them in mobile phones for example, but Samsung has well managed these situations by innovating the product itself, getting to offer for example WiFi in their WB150F model in order to be able to upload the pictures taken straight away into social nets for example. The next innovation Samsung had was the implementation of some “Android support”.

Reaching the end of the year 2012, Samsung managed the launching of a “Galaxy Camera”, meeting the most wanted needs: WiFi, touchscreen, applications and Android.

3.MOBILE PHONES AND TELEVISIONS

Samsung has been one of the most innovative and evolutionary of the companies related with the electronics and new technologies.

The considered as the most important area of Samsung nowadays are the Smartphones, which evolve quicker and quicker as time runs. Samsung introduces always all the new technologies available as soon as they get out in the market and that is how it has managed to get into the top rankings of sell of smartphones in all countries around the world. Recently Samsung has presented the new Samsung Galaxy S4 its most complete and innovative product in this area.

Even more, Samsung counts with an enormous percentage in the TV selling and productions. In this are Samsung has evolved in a vertiginous manner as in just a few years it has created its new SmartTV and even curved TV’s reaching this way the leadership of the market.

15 http://takethe5th.com/wp/2013_01/how-‐why-‐samsung-‐leads-‐innovation-‐in-‐electronic-‐devices/


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-‐PRICING STRATEGY AND CHANNELS OF DISTRIBUTION OF SAMSUNG-‐

1. PENETRATION, MARKET SKIMMING AND VALUE PRICING

• Price set to ‘penetrate the market’

• ‘Low’ price to secure high volumes

• Useful in launching into a new market

• High price, Low volumes

• Skim the profit from the market

• Niche marketing

• Price set in accordance with customer perceptions about the value of the product/service

2. SAMSUNG CHANNELS OF DISTRIBUTION

Consumers concern about: the availability of our products and the delivery time. They create reliable relationships with suppliers in order to satisfy consumers. When achieved, they establish a good price to reach being the first option beating competition. Regarding access to products, Samsung is the leader because of its high availability level: Samsung focuses in an intensive distribution channel approach. Samsung has an “existing distribution network from their existing businesses” as well as the will to sell their products through distributors who will meet their expectations within the offering of their product in terms of pricing, deliveries and returns, orders, guarantees and a set of requirements set by Samsung which the distributor will have to complete (image, reputation and prestige), between others. Samsung develops a marketing channel strategy; following both pull and push strategies.

Samsung also has distributors and offerings of products through e-‐commercial channels. Samsung has the potential to be able to obtain a smart market growth reaching a wide capacity of consumers.

3. CONVENIENCE OF THOSE CHANNELS OF DISTRIBUTION AND PRICES.

Samsung offers its products through e-‐commercial channels. Those channels present a lower cost, as it reduces the logistical problems; no physical store space, insurance or infrastructure investment, thus it makes it a lot more economical; higher margins as business can gain more control and flexibility and are able to save time when manual transactions are done electronically; a better customer service as online customer service makes customers happier (saves time and money); and a quick comparison shopping, helps consumers to compare products and choose de best one.

As this company focuses in an intensive distribution channel approach, it will place the goods and services offered into as many markets as possible. With this, the idea of Samsung is that making the products readily available to as many consumers as possible, the chances of generating sales are increased. When successful, an intensive distribution approach can greatly enhance the sales of their products.

Nowadays, Samsung is known because of its low prices. Why do they follow this strategy? Once achieved a market share they seek to increase the perception of image. When the products already have reached their ideal plot, price should play a stabilizing role able to consolidate the intended image. This is called maintenance strategy, where the greatest effort is to sell at market prices


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4. PRICING & DISTRIBUTION STRATEGY FOR 2015

In the fast-‐paced business of Information Technology, it is imperative to be on the move so that technology and the market stay within reach. It is not just the tech firms and high-‐tech products that need to be abreast of developments in the industry. However, when it comes to such products as mobile phones or LCD televisions, companies have no other option but to be on their toes. The market is flooded with products and brands vying for market share, technology keeps mutating constantly and the business environment is extremely volatile, which makes consumers susceptible to changing tastes and preferences pretty fast.

Consider Samsung:

The South Korean brand reinvented itself to develop high-‐end products and came to be perceived as a brand that could be at the cutting edge of technology. However, mere technological superiority wouldn’t be good enough if what is at stake is market leadership it takes a comprehensive approach that tackles pricing and branding as well, to excel in a volatile, competitive environment

Business and Technology:

On the technology front, while Symbian was the preferred Operating System, Google came up with Android. Then Nokia logged out of Symbian. Now, Samsung has decided to get its own proprietary Operating System up and running. It has come up with the idea of “Bada”, its new OS that it would weave its mobile technology on from the beginning of next year.

The Price Factor:

All said and done, price does matter. The company may be able to mutate and adapt to changing technology and may be considered sleek and flashy. However, to be at the top of the range requires proactive measures on the price factor as well. And Samsung did just that in its high-‐end LCD TV business in the US market, Samsung slashed prices like no other, pushing its LCD panels vigorously in the market. And it has seen results from its approach Samsung is the leader in the US LCD market.

The Brand Factor:

Technology, style and price have been taken care of so, what of branding? Samsung has worked on that too! Samsung is going for a major revamp on its Advertising and Branding Strategy, as it reviews its 2.3 million pound UK Advertising account to consolidate its brand and product advertising projects into a single advertising agency for the year 2010. In a strategy similar to that adapted by Vodafone in the UK, Samsung wants to do away with different marketing messages and give out a uniform look and feel across markets.16

16 http://ayushveda.com/blogs/business/samsungs-‐strategy-‐change-‐is-‐success/

http://www.businessinsider.com/samsung-‐corporate-‐strategy-‐2013-‐3

http://www.businessweek.com/stories/2003-‐06-‐15/the-‐samsung-‐way


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-‐MARKET SEGMENTATION-‐ [17] [18]

1. SEGMENTATION

Samsung’s current strategy in the market is the seize a dominant market share. For this Samsung has introduced its new slogan, “Inspire the world, create the future” and they have also re-‐organised their corporation to encourage cross-‐pollination and innovation.

As we already know the market segmentation is vital for a company, and Samsung has a very wide market segmentation. Samsung’s market target can be easily identified as the Early Adapter. We can define an Early Adapter consumer as a consumer who has a very quick rate of diffusion, the rate at which the market processes and accepts a new product or idea.

Considering all of the tools used for market segmentation in the case of Samsung the most valuable and useful would be the conjoint analysis (Conjoint Analysis [19]: Conjoint analysis is a statistical technique used in market research to determine how people value different features that make up an individual product or service) as they would need to know how people would value their new products in order to know how they would react within that product.

Samsung has established a plan to interact more with the target consumers and expose them to the products available.

2. MARKET TARGETING [20]

Regarding Samsung new products we can say that all the market targeting strategies are more and more obsolete nowadays, leaving only one possible solution, the individual marketing. As discuss previously in the Segmentation part we should be focusing our products in the individual, more specifically relatively young men, usually Caucasian, from the United States or from Europe, who are high quality tech lovers. Another interesting niche could be the families with high income, with both parents employed and only one child.

3. KOTLER SEGMENTS (2003)

Nowadays, at this market we will find a lot of competitors such as Apple, LG and so on.

Thus, the best action plan might be focus on differentiable segments. Why?

Young people are those who renovate most their mobile phones. So, Samsung needs to create attractive designs, modern applications for these customers to select them because of their last technology sources.

In other products, for example in home appliances, they focus on helping women at home, by making them things easier. Thus, they will try to create different advertisement to full their minds and be the first option when buying washers and dryers.

17 http://es.scribd.com/doc/48355873/Samsung-‐Marketing-‐Plan

18 http://www.samsung.com/uk/consumer/tv-‐audio-‐video/television/topic/bring-‐tv-‐to-‐life-‐with-‐3d-‐tv

19 http://en.wikipedia.org/wiki/Conjoint_analysis_(marketing)

20 http://www.netmba.com/marketing/market/target/


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4. SAMSUNG’S POSITIONING STRATEGY[21][22]

The key idea of positioning is that the consumer must have a clear idea of what our brand stands for in the product category. We can develop a positioning strategy through: distribution, packaging, pricing, marketing communications and advertising.

Using Product Characteristics Or Customer Benefits

We need to associate our 3D television with our brand. That means, that we need a competitive strategy over other brands. In Samsung, we have the advantage that if you keep your eyes in a range of 90 degree to TV all the time you will have a better clarity than with other 3D televisions. Besides our 3D glasses are well built in comparison with other brands, such as LG, and they do not break easily.

We also have to differentiate between physical and pseudo physical characteristics. Physical characteristics are important because we have to attract our customers not only with good quality in our glasses but also we need an attractive design in order to make de difference with our competitors. All of our products are built with a stylish design and environmental friendly, which is important to our customers because they are buying a television that will give them entertainment without damaging the environment.

Positioning By Price And Quality [23]

It is important to create a balance between price and quality in our products. The setting of prices is an important step in our company. We need our customers to spend their money in our products, in return, they need a good product, with the best quality for them.

Nowadays, as 3D television is a new technology, prices are high. These suppose that not everybody can afford this kind of technology. This happens with all new technologies, at the beginning their prices are high because of the innovation that they mean. After a few years, we learn how to decrease costs in production process so we can decrease our prices.

However, although Samsung 3D televisions are expensive, they are cheaper than our competence thanks to our vertical integration. We monopolize the whole manufacturing process, we have our own factories so, and although 3D televisions are expensive we are the cheapest option with a good quality.

Positioning By Product User

This positioning approach is to associate a product with a user or a class of user. In our case, we should use this approach with marketing campaigns.

Advertising is important because people get in contact with the product. We should create advertisements with current people, not famous one. Why? As 3D televisions are expensive, our customers could think that this is an elitist product. And they could feel discriminated.

Positioning By Product Class

The year 2012 has been challenging for many global companies, with the lingering fiscal problems in the euro zone economies casting shadows upon the world economic outlook and the pace of technology development and product innovations increasingly picking up speed.

When many companies are grappling to simply survive, maintaining a competitive edge has become much more difficult than ever. It is especially so in the high-‐tech industries where billions of

21 http://ayushveda.com/blogs/business/market-‐share-‐industry-‐growth-‐and-‐competitive-‐advantage-‐the-‐samsung-‐case/

22 http://www.allfreepapers.com/Business/Samsung-‐-‐Competitive-‐Analysis/12775.html

23 http://www.samsungvillage.com/blog/2012/08/leading-‐samsung-‐products-‐of-‐2011-‐the-‐nikkei-‐report.html


23

dollars in investment and continued research and innovations are just basic requirements to be considered as a player.

Samsung has number 1 position in seven technology products: Samsung Electronics’ smartphone, flat-‐screen TV, DRAM (dynamic random access memory), NAND flash memory and SSD (Solid State Disk), Samsung SDI’s PDP (plasma display panel) and Samsung Display’s OLED.

And the list remains dynamic, as Samsung not only has successfully kept its decades-‐long leadership in DRAM (since 1992) but continuously made forays into new area, also securing the lead in NAND flash memory (since 2002), flat-‐screen TVs (since 2006) and finally smartphones (in 2011). Regarding the latest, the Nikkei wrote: “With the success of Galaxy S series, Samsung Electronics strengthened its industrial leadership, showing rapid growth in the highly competitive smartphone market.”

Overall, the U.S. remains at the top of the list when it comes to the number of leading products and services it dominates; U.S. companies rank highest in 19 product and service categories in 2011, including personal computers and tablet PC. Japan comes next with nine No.1 products including automobiles, robots and digital cameras, closely followed by South Korea, which claimed the world leader position in eight items.

Positioning By Cultural Symbols

Culture plays a very important role in society today. In fact in democratic countries like India or USA, culture can vary in a matter of a few miles. Thus many brands as well as products have started positioning themselves depending on culture symbols and cultural values to set them apart from the competition. And there's something quite symbolic about the Samsung Android being represented by a little robot. In its little metal heart, the robot just wants to be human. It just wants to fit in. It just wants to be the same as everyone else out there.

Positioning By Competitors 24

In the process, the majority of companies lose their competitive advantage in recession. When investments in research and development are down and when companies do not invest in the market in advertising and marketing activities, market share is lost and advances in expertise are sacrificed for sake of maintaining cash flows. In effect, this becomes the perfect opportunity for market leaders to capitalize on.

And this is exactly what Samsung did this recession, shoring up its research and development investments in its highly successful chip making industry. Samsung is the leader in semiconductor manufacturing with over one thirds of the market in its control, and is a force to reckon with in chips meant for both computers as well as mobile gadgets. As markets went on hibernation, Samsung worked on its capabilities to get cutting edge chips meant for smart phones. Now, as the personal computer market picks up in the corporate sector, Samsung is in a position to capitalize on its efforts and patience. Samsung has also increases its market share in its mobile phone business, following Nokia closely. And Samsung is working on software, as it gets its own mobile operating system, ready for the market. As is evident from Samsung’s strategy, it would be wise to save some cash for the rainy day not just for sustenance but for gaining that vital competitive edge.

24 http://www.avsforum.com/t/1239698/samsung-‐3d-‐tv-‐vs-‐sony-‐3d-‐tv

http://www.hifivision.com/television/28139-‐samsung-‐3d-‐tv-‐vs-‐lg-‐3d-‐tv.html

http://smallbusiness.chron.com/examples-‐positioning-‐strategy-‐marketing-‐10166.htmlç

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