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Marketing strategy of samsung in India

Marketing Strategy of SAMSUNG in India

A report towards the partial fulfilment of the requirements of the two year full t...

       I do hereby declare that the project entitled ―Marketing Strategy of SAMSUNG in India‖
submitted by m...
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Marketing strategy of samsung in India

  1. 1. Marketing Strategy of SAMSUNG in India A report towards the partial fulfilment of the requirements of the two year full time Post Graduate Diploma in Management Submitted by: Vikas Chauhan Post Graduate Diploma in Management (General) Roll No: 2k11a38 2011-2013 ASIA PACIFIC INSTITUTE OF MANAGEMENT 3&4, Institunal Area, Jasola, New Delhi-110025 1
  2. 2. DECLARATION I do hereby declare that the project entitled ―Marketing Strategy of SAMSUNG in India‖ submitted by me to the ―Asia Pacific Institute of Management‖, is in partial fulfilment to the requirement for the award of Post Graduate Diploma in Management. To the best of my knowledge and beliefs, the information contained in this report are true as on the date of this report & observation recommendations set out in this report are my own views. However, the report should be considered as a general guide only & appropriate professional advice should be taken before acting on the basis of the information. New Delhi Vikas chauhan Date- Project Guide Prof. Ashutosh Kumar 2
  5. 5. EXECUTIVE SUMMERY SAMSUNG is a company that has been steadily growing throughout the past decade. The following report will help SAMSUNG maintain the growth that has been enjoyed in the past, with a strong emphasis on the growth of the all consumer durables and mobile divisions. By analyzing customers and what they want, strategies can be devised as to how SAMSUNG can increase their share of the market. Furthermore, by comparing SAMSUNG's strengths and weaknesses to that of the competition, opportunities can be identified and capitalised on. SAMSUNG entered into Indian market with its technologically advanced home appliances. But when it entered in an Indian market, it had to face very tough competition and still it‘s facing tough competition, but now it has gained the top position among different companies in India. Not only SAMSUNG has highest market share in home appliances, but also in Smartphone market. SAMSUNG created its own marketing strategies and also defined there target market to penetrate into Indian market. SAMSUNG aims to have more market share in Indian market. India is a country having its major consumers in high and medium income, as the poverty level is declining the major group is turning into medium income group with some purchasing ability. SAMSUNG India is now available with a big target market. Already in the Market major companies are available which is having a trust among the consumer with respect to the quality, durability & price. The major competitors in Electronic consumer goods market are LG, Sony, and Panasonic etc. and in Smartphone market Apple, LG, Nokia, Blackberry, HTC etc. are the major competitors of SAMSUNG. In this project we try to find out some important things; the different kind of marketing strategies of SAMSUNG in Indian market. Market strategy, positioning strategy, Marketing Mix (Product Strategy, Price Strategy, Promotion Strategy), Financial, Innovation, Branding strategy etc, Competitive advantage of SAMSUNG, SWOT analysis of SAMSUNG. 5
  6. 6. SAMSUNG History Unlike other electronic companies SAMSUNG origins were not involving electronics but other products. In 1938 the SAMSUNG's founder Byung-Chull Lee set up a trade export company in Korea, selling fish, vegetables, and fruit to China. Within a decade SAMSUNG had flour mills and confectionary machines and became a co-operation in 1951. From 1958 onwards SAMSUNG began to expand into other industries such as financial, media, chemicals and ship building throughout the 1970's. In 1969, SAMSUNG Electronics was established producing what SAMSUNG is most famous for, Televisions, Mobile Phones (throughout 90's), Radio's, Computer components and other electronics devices. 1987 founder and chairman, Byung-Chull Lee passed away and Kun-Hee Lee took over as chairman. In the 1990's SAMSUNG began to expand globally building factories in the US, Britain, Germany, Thailand, Mexico, Spain and China until 1997. In 1997 nearly all Korean businesses shrunk in size and SAMSUNG was no exception. They sold businesses to relieve debt and cut employees down lowering personnel by 50,000. But thanks to the electronic industry they managed to curb this and continue to grow. In 1993 SAMSUNG developed the 'lightest' mobile phone of its era. The SCH-800 and it was available on CDMA networks. Then they developed smart phones and a phone combined mp3 player towards the end of the 20th century. To this date SAMSUNG are dedicated to the 3G industry. Making video, camera phones at a speed to keep up with consumer demand. Employing approximately 138,000 people in 124 offices in 56 countries. The Making of a Global Brand - In 1993, as a first step in its globalization drive, SAMSUNG acquired a new corporate identity. It changed its logo and that of the group. In the new logo, the words SAMSUNG Electronics were written in white color on blue color background to represent stability, reliability and warmth. The words SAMSUNG Electronics were written in English so that they would be easy to read and remember worldwide. The logo was shaped elliptical representing a moving world - symbolizing advancement and change. 6
  7. 7. Company History in India SAMSUNG Electronics commenced its operations in India in December 1995 and is today a leading provider of Consumer Electronics, IT and Telecom products in the Indian market. SAMSUNG India is the Regional Headquarters for SAMSUNG‘s South West Asia operations, which provides employment to over 8,000 employees with around 6,000 employees being involved in R&D. In 2010, SAMSUNG India achieved a sales turnover of US$3.5 billion. SAMSUNG began operations in India through its manufacturing complex located at Noida (UP), which today houses facilities for Colour Televisions (including 3D, LED and LCD Televisions), Mobile Phones, Refrigerators, Washing Machines and Split Air Conditioners categories. SAMSUNG commenced operations of its second state–of-the-art manufacturing complex at Sriperumbudur, Tamil Nadu in November 2007. Today, the Sriperumbudur facility manufactures Color televisions, Fully Automatic Front Loading Washing Machines, Refrigerators and Split Air Conditioners. SAMSUNG India has two R&D Centers in India – at Delhi and Bangalore. While the Delhi R&D Centre develops software solutions for hi-end televisions such as Plasma TVs, LCD TVs and Digital Media Products, the Bangalore R&D Centre works on major projects for SAMSUNG Electronics in the area of telecom, wireless terminals and infrastructure, Networking, SoC (System on Chip) Digital Printing and other multimedia/digital media as well as application software. SAMSUNG India is a market leader in product categories like LED TVs, LCD TVs, Slim TVs and Side by Side Refrigerators. While it is the largest mobile handset brand in India, it leads in the smart phone segment in India. SAMSUNG India has won several awards and recognitions for both its corporate initiatives as well as its product innovations in audio visual, home appliance, IT and telecom product categories. Apart from development of innovative technology, SAMSUNG places great importance on acting as a responsible corporate citizen in the communities where it operates. Its CSR programs respond to the social and environmental needs and seek to give back to communities that support the company. In 2009, SAMSUNG launched the company‘s Corporate Social Responsibility initiative – ‗SAMSUNG Hope Project‘ with projects in the areas of education, culture, sports, social welfare and community development. Each program under the Hope Project uniquely addresses the needs of individual communities while emphasizing on innovations for development of the community including education, technology, engineering and IT technical training. Company consists of five main business units: o Digital media Business o LCD Business o Semiconductor Business o Telecommunications o Digital Appliance Business 7
  8. 8. SAMSUNG India Mobile: SAMSUNG India Mobile a telecom equipment manufacturer, head office in New Delhi and country head Mr. Ranjit yadav. SAMSUNG has divided the mobile business in to areas: CDMA Mobile Business GSM Mobile Business 8
  12. 12. LED TV LCD TV Plasma TV 12
  13. 13. Ultra Slim Fit TV Flat TV 13
  14. 14. Blu-ray DVD Player SMART Cameras Camcorders 14
  15. 15. Home Appliances Refrigerator Air Conditioner Washing Machine Microwave Oven 15
  16. 16. Laptops NP305E5Z-S01IN NP530U4C-S01IN NP540U3C-A01I N NP-N100S-E01IN Laser Printer/Multifunction ML-2166W SCX-4521F SCX-3401 16
  17. 17. The SAMSUNG Philosophy SAMSUNG follows a simple business philosophy: to devote our talent and technology to creating superior products and services that contribute to a better global society. Every day, our people bring this philosophy to life. Our leaders search for the brightest talent from around the world, and give them the resources they need to be the best at what they do. The result is that all of our products—from memory chips that help businesses store vital knowledge to mobile phones that connect people across continents— have the power to enrich lives. And that‘s what making a better global society is all about. Company’s Values - We believe that living by strong values is the key to good business. At SAMSUNG, a rigorous code of conduct and these core values are at the heart of every decision we make. People Quite simply, a company is its people. At SAMSUNG, we‘re dedicated to giving our people a wealth of opportunities to reach their full potential. Excellence Everything we do at SAMSUNG is driven by an unyielding passion for excellence—and an unfaltering commitment to develop the best products and services on the market. Change In today‘s fast-paced global economy, change is constant and innovation is critical to a company‘s survival. As we have done for 70 years, we set our sights on the future, anticipating market needs and demands so we can steer our company toward long-term success. 17
  18. 18. Integrity Operating in an ethical way is the foundation of our business. Everything we do is guided by a moral compass that ensures fairness, respect for all stakeholders and complete transparency. Co-prosperity A business cannot be successful unless it creates prosperity and opportunity for others. SAMSUNG is dedicated to being a socially and environmentally responsible corporate citizen in every community where we operate around the globe. 18
  19. 19. Vision 2020 As stated in its new motto, SAMSUNG Electronics' vision for the new decade is, "Inspire the World, Create the Future." This new vision reflects SAMSUNG Electronics‘ commitment to inspiring its communities by leveraging SAMSUNG's three key strengths: ―New Technology,‖ ―Innovative Products,‖ and ―Creative Solutions.‖ -- And to promoting new value for SAMSUNG's core networks -- Industry, Partners, and Employees. Through these efforts, SAMSUNG hopes to contribute to a better world and a richer experience for all. As part of this vision, SAMSUNG has mapped out a specific plan of reaching $400 billion in revenue and becoming one of the world‘s top five brands by 2020. To this end, SAMSUNG has also established three strategic approaches in its management: ―Creativity,‖ ―Partnership,‖ and ―Talent.‖ SAMSUNG is excited about the future. As we build on our previous accomplishments, we look forward to exploring new territories, including health, medicine, and biotechnology. SAMSUNG is committed to being a creative leader in new markets and becoming a truly No. 1 business going forward. 19
  20. 20. ACHIEVEMENTS OF THE COMPANY 1995:- SAMSUNG India Electronics (SIEL) products launched in India. Certificate for commencement of business received by SAMSUNG 1996:- Foundation Stone laid for CTV Factory at Noida, Uttar Pradesh. Launch in South Home Appliances Launch 2002:- Construction commences for 5,000,000 refrigerator plant in Noida SAMSUNG unveils new technology for Consumer Home Entertainment (DNIe™) ELCINA (Electronics Industries Association of India) Awards for ‗Excellence in Electronics‘ instituted by the IT department of the Government of India. SAMSUNG India received the 1st Prize in the Consumer Electronics category for productivity, exports, R&D and quality assurance in 2002 2003:- Inaugurated SAMSUNG's new, High-Tech, advanced Refrigerator facility. Commencement of production at refrigerator facility in Noida. Merger of SIEL with SEIIT. Software technology park set up at Noida 2004:- SAMSUNG received the Golden Peacock Special commendation Certificate for Corporate Social Responsibility (Private Sector) for the year 2004 from Mr. Shivraj Patil, Union Home Minister. India made regional headquarters for SAMSUNG Southwest Asia. Mr. K. S. Kim appointed as the First President and Chief Executive Officer of SAMSUNG South West Asia. 2005:- The India Retail Forum has awarded SAMSUNG as the Best Retailer of the year 2005 in the consumer Durables category. Most Trusted Company Award 2005 by Var India. Mr. S. H. Oh appointed as the President and Chief Executive Officer of SAMSUNG South West Asia. 20
  21. 21. 2006:- Developed the world's first real double-sided LCD Developed the worlds' first 50nm 1G DRAM Unveiled 10M pixel camera phone Launched the worlds' first Blu-Ray Disc Player Developed 1.72"Super-Reflective LCD Screen 2007:- No.1 worldwide market share position for TVs achieved for the seventh quarter in a row Developed the world's first 30nm-class 64Gb NAND Flash™ memory BlackJack bestowed the Best Smart Phone award at CTIA in the U.S. Attained No.1 worldwide market share position for LCD for the sixth year in a row 2008:- Became the official sponsor of 2010 Guangzhou Asian Game Developed the world's first 2Gb 50 NANO SAMSUNG takes No. 1 spot in U.S. cellphone market Opened Global Brand PR Centre ‗SAMSUNG D'light' No.1 worldwide market share position for TVs achieved for the 9th quarter in a row 2009:- Released the world‘s first solar -powered mobile phone in India SAMSUNG took up a record high market share in LCD monitors Released the ―Corby‖ full touch phone targeted at younger users 2010:- SAMSUNG Electronics launched World‘s first 3D home theatre SAMSUNG Electronics launched WAVE, the first Smartphone based on Bada platform SAMSUNG Electronics began mass producing industry‘s first 3D TV panels 21
  22. 22. NEED FOR THE STUDY The basic idea of taking up this study is to analyze the market share of SAMSUNG consumer durables and mobile phone in New Delhi. At the same time, an attempt was made to understand the Brand image of SAMSUNG in New Delhi. PRIMARY OBJECTIVES The primary objective of the study is to analyze the market share and understand the Brand image of SAMSUNG ELECTRONICS INDIA PVT LTD. SECONDARY OBJECTIVES - To find out the share of SAMSUNG product in the market. - To record who are the major players of consumer durables and mobile phone. - To find out which is the largest selling mobile among all the segments - To know the Brand Image of SAMSUNG. RESEARCH METHODOLOGY The essential part of any report is research methodology. The field study was conducted to analyze the market share and understand the Brand image of SAMSUNG products. Sample Size - The sample size was 30 respondents taken. Questionnaire would be: - It would be maximum 14 questions. - Time spent to respondents would be 5 to 10 minutes. Field work & Data Collection In the data collection phase, I tried to cover maximum area and the consumer of Uttam nagar (New Delhi). COLLECTION OF DATA Data used of this report is mainly primary data, which are collected first hand by Survey in the field. In some area secondary data may also be taken into consideration. 22
  23. 23. COLLECTION OF PRIMARY DATA The data was collected through the primary source by survey method using Questionnaire and taking respondent‘s personal interview. COLLECTION OF SECONDARY DATA The data collected from journals and internet. DATA INTERPRETATION AND ANALYSIS 1. Gender? 12 Male Female 18 Interpretation: From the above table, it can be observed that 60% males and 40% females have been taken in this survey. 2. Age? 3 2 Less than 18 5 18-22 11 22-26 26-30 9 More than 30 Interpretation: From the above table, it can be observed that the age of the respondents are less than 18 (6.67%), 18-22 (36.67%), 22-26 (30%), 26-30 (16.67%) and more than 30 (10%) have been taken in this survey. This numbers show that most of the respondents are young. 23
  24. 24. 3. Occupation? 5 College student 14 Business man 6 Working people Others 5 Interpretation: From the above table, it can be observed that the occupation of the respondents are college student (46.67%), Business man (16.67%), working people (20%) and others (16.67%) have been taken in this survey. This numbers show that most of the respondents are young and college students. 4. Do you have any of the following manufactured by SAMSUNG? Mobile 1 4 Tablet 3 TV 2 Home apps 19 PC/Laptop 1 Others Interpretation: From the above table, it can be observed that the respondents use SAMSUNG products- mobile (63.33%), Tablet (3.33%), TV (6.67%), Home apps (10%), PC/Laptop (3.33%) and others (3.33%). These numbers show that Samsung mobile are in the hands of most of the consumers. 24
  25. 25. 5. Which mobile phone you are using? Nokia 2 1 2 2 Samsung 3 LG IPhone 19 Blackberry Other Interpretation: From the above table, it can be observed that the respondents use SAMSUNG mobile more than other consumers. Nokia (6.67%), SAMSUNG (63.33%), LG (10%), I Phone (6.67%), Blackberry (6.67%) and others (3.33%). These numbers show that Samsung mobile are very famous in consumers. 6. How long you are using the current mobile phone? 2 1 Less than 1 year 6 1 – 2 years 2 – 4 years 21 Above 4 years Interpretation: From the above table, it can be observed that the respondents are using mobile phones less than 1 year. Less than 1 year (70%), 1-2 years (20%), 2-4 years (6.67%), and Above 4 years (3.33%). 25
  26. 26. 7. Are you satisfied with the SAMSUNG product? 2 Yes No 28 Interpretation: From the above table, it can be observed that the respondents are satisfied with SAMSUNG products. 93.33 % respondents are satisfied and 3.33% respondents are not satisfied. 8. What do you think is the differentiating factor of SAMSUNG compared with its competitors? 0 1 Affordable Price 3 6 Innovative Design 9 Technology 11 Applications Others Interpretation: From the above table, it can be observed that the respondents consider the SAMSUNG as an innovative product. Affordable price (20%), innovative (36.67%), design (30%), technology (3.33%), application (10%), and others (0%). 26
  27. 27. 9. Will you be ready to buy a SAMSUNG product just because of its brand name? 6 Yes No 24 Interpretation: From the above table, it can be observed that 80% respondents buy SAMSUNG products because of its brand name. And 20% respondents don‘t buy SAMSUNG products because of its brand name. 10. Do you believe SAMSUNG could become the market leader in majority of their product categories? 4 Yes No 26 Interpretation: From the above table, it can be observed that 86.67% respondents believe SAMSUNG could become the market leader in majority of their product categories. And 13.33% respondents don‘t believe SAMSUNG could become the market leader in majority of their product categories. 27
  28. 28. 11. Do you feel purchasing a SAMSUNG product to be worth? 3 Yes No 27 Interpretation: From the above table, it can be observed that 90% respondents feel purchasing a SAMSUNG product to be worth. And 10% respondents don‘t feel purchasing a SAMSUNG product to be worth. 12. Where do you often see the SAMSUNG advertisement? 0 T.V 1 3 News Paper 2 Magazine 1 1 Online Outdoor 22 Radio Leaflets Interpretation: From the above table, it can be observed that the SAMSUNG TV advertisements affect the respondents more. TV (73.33%), newspaper (3.33%), magazine (3.33%), online (6.67%), outdoor (10%), radio (0%), leaflets (3.33%). 28
  29. 29. 13. Why you like the SAMSUNG brand? Advertisement 11 Appearance 6 6 Price Functions 4 Quality 8 4 Brand Image Service Interpretation: From the above table, it can be observed that the respondents like SAMSUNG brand because of Quality. Advertisement (3.33%), appearance (20%), price (13.33%), function (13.33%), quality (26.67%), brand image (20%) and service (3.33%). 14. What is the image of SAMSUNG in your mind? 1 Economical 2 3 Durable Smooth product 22 Safe product Interpretation: From the above table, it can be observed that the respondents consider SAMSUNG as a durable brand. Economical (6.67%), durable (73.33%), smooth product (10%) and safe product (3.33%). 29
  30. 30. SWOT ANALYSIS OF SAMSUNG STRENGTHS Customers are loyal and appreciating the brand. SAMSUNG is enjoying very good position against its competitors. The company is maintaining very good relationship with its suppliers. The company is also maintaining with laborers. SAMSUNG is a financial strong and Stable. The production processes and procedures of inventory management are consistent with industrial standards. SAMSUNG enjoys the widest range of product portfolio which includes Mobile phone, Tablet, TV/Audio/Video, Camera, camcorder, Home appliance, pc, printer, memory cards and other accessories. SAMSUNG holds significant market share in most of the product categories. SAMSUNG is NO.1 in terms of market share in mobiles, it captured Nokia‘s market share by superior innovation in smart phones. SAMSUNGs is the best in terms of design features and technology. It was the first to introduced dual screen mobiles, 65k TFT/LCD colour phone, first phone with polyphonic ringtones, phones with rotating lens, thinnest and lightest note pad etc SAMSUNG enjoys the first mover advantage in terms of introducing advance features in LCD, refrigerator, Air conditioner etc. It introduced the world‘s smallest MP3 player and India‘s first 17‖ TFT-LCD-TV monitor. SAMSUNG took advantage of the growing economy of Asian market by setting up manufacturing plant in India there by reducing logistics and supply chain costs. SAMSUNG brand value increased by 80% in past three years. WEAKNESSES SAMSUNG is facing hard competition. South Korea‘s labor unions are strategically linked for collective bargaining and negotiation. SAMSUNG need improvements in defining the vision, mission and strategic corporate objectives. Marketing management needs improvement in all the facts of marketing. HRM also needs improvement in all the facts of human resources management. SAMSUNG Mobile launched a series of Smart phones recently which led to cannibalization. The demand for LCD panels is expected to decline in the future. Still Nokia is considered to be the most preferred product in India in terms of ease of use, reliability and resale value. 30
  31. 31. Chinese products focus on economies of scale and dump into Indian market for lesser cost. This results in reduction of sales. SAMSUNG is a hardware leader but has too much of dependence for software from other parties. Online stores which sell a wide range of products are giving better deals as they don‘t incur cost in distribution channel. OPPORTUNITIES The economic condition of South Korea seems favorable. SAMSUNG is interiorizing the social shifts. It is having constant policy given by the government. SAMSUNG is reasonable equipped to take care of technological changes. SAMSUNG is maintaining good international relationship with other countries and the local. SAMSUNG is planning to make the air-condition product category more strong with unique technology called ‗Triple protection proposition‘. SAMSUNG is the India‘s official ‗Olympic partner‘ for the 2012 London Olympic and recently launched ‗Olympic Ratna Program‘. This will result enhance brand awareness and increase the sales. SAMSUNG Mobile and Home appliance has future plans of launching Customized products for Indian market. This will improve the market share in rural market. The Indian youth population is growing and mobile phone sales are expected to increase due to lesser call rates. Its financial position is strong and there is a scope of entering into unrelated diversification THREATS The legislation has been passed frequently related to industry. Technological transformation takes place in the industry was very high. Regulatory issues and safeguarding of property rights was main threats in legislations. SAMSUNG has wide variety of product lines; failure of one product line will have impact on the other and will result in brand dilution. 31
  32. 32. The competitors like Nokia are focused focussed only in one segment. Since India is a potential market, entry of foreign players is likely high. Foreign players like Haier have already started gaining market share in India in home appliances. Threats from Chinese products. Retail Chains like Bigbazaar sell consumer electronics and home appliance in low cost strategy which is procured in bulks from foreign market. 32
  33. 33. Strategies of SAMSUNG in India PRODUCT STRATEGY: SAMSUNG India has segmented their products into five categories. 1) MOBILE PHONE 2) TV/AUDIO/VEDIO 3) CAMERA/ CAM RECORDER 4) HOME APPLIANCES 5) PC/PERIPHERALS/ PRINTERS SAMSUNG offers the most diverse product mix in the 3D market, offering LED, LCD and Plasma 3D TVs. SAMSUNG‘s cash cow product in the 3D market however, is the LED 9000 series. Reposition of its products. In early 1990th SAMSUNG was still perceived as a conservative manufacturer and always associated its brand with bargains. SAMSUNG realized that low price is just a major means to compete in the lower-market whereas in upscale market technology and brand are competitive means. SAMSUNG decided to penetrate the upscale market and gave up lower- market in order to exalt its brand image. It repositioned all series of its products such as mobile phone, consumer electronics and memory flash to upscale market. Correspond to SAMSUNG‘s new position in the market it has relatively higher price in it category. To SAMSUNG higher price would bring more profit and at the same time it is the better imply of good quality. The strategy of reposition helps SAMSUNG starting to build its noblest image. Technology innovation SAMSUNG recognized that digital is the future developing aspect of consumer electronics. They regard the digital age as having both incalculable potential and risks. It's a time of intense competition-fortunes can be made or lost in the blink of an eye. SAMSUNG took this challenge as an opportunity. They switched their core competitive power from mass manufacture to its own brand which based on digital technology. It is well positioned as one of the world's recognized leaders in digital technology and eventually become the world‘ top innovative company in technology. It starts to provide consumers with innovative and cutting edge products and rapidly become a huge player in electronics field competing toe to toe with another magnate Sony. SAMSUNG launched an industry design revolution in order to get rid of its image of imitator. It employed world top designers to expand their thought and keep track on the world highest level. It achieved most of the Award of American Industry Design which is the most important award in 33
  34. 34. industry design area on the global basis. Its brand was recognized by the consumers and specialists. The technology breakthroughs enhanced SAMSUNG‘s brand image of young, fashionable and strong function. Pricing strategy: Pricing also seemed to have played a significant role in SAMSUNG‘s success. Differentiation is the key for a brand to be preferred by consumers, when there are so many brands within the same product category. 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. For e.g. - In 2001, due to high competition in the 20‖CTV segment, SAMSUNG had to resort to price cuts. The company said that value engineering, new product lines and new chassis development had contributing in combating price erosion. SAMSUNG negotiated with its vendors to reduce costs on cabinets, plastics, speakers, harness coils, remote controls, etc. SAMSUNG‘s Brand image seemed to have helped it survive the price erosion. Dealers also agreed to lower margins owing to company‘s brand image. SAMSUNG in the year 2002 drastically reduced its operational costs which enabled the company to keep low prices for certain products and extract higher profit margin from premium products. This helped SAMSUNG to post a turnover of Rs.30 bn, a growth from the year 2001. SAMSUNG is very transparent in functioning. It has a fixed MoP (Marketing Operating Price) whereby the goods are sold to the distributors and to the customer‘s at a fixed market price only. 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. They have always been a hi-end technology driven player and want to keep that equity. Not surprisingly, the target customer for SAMSUNG products won‘t be found in the price-sensitive mass market. Adopting the lifestyle product platform, SAMSUNG‘s aiming for the high-end premium market. Hence SAMSUNG has always been keeping premium prices. SAMSUNG claims it‘s never been a price warrior - its focus has always been on the premium market, which is why it has remained a steady No. 2 or No. 3 player in most product categories. 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. 34
  35. 35. Later on SAMSUNG 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 ―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 Advertising and Sales Promotion - In 1995, when SAMSUNG entered India, it realized that Indian consumers were not familiar with the company. So, in order to establish itself in the Indian consumers ‗mind, SAMSUNG launched corporate advertisements highlighting its technologically superior goods. • Brand Ambassador: Aamir Khan • Providing free content on the mobile by collaborating with the copyright owners of Bollywood movies. For e.g Ghajini, Love Aaj Kal • Promotional offers like free entry to the show of ‗10 ka dum‘ • Organizing contests like ‗SAMSUNG Mobile Karaoke Festival‘ • Opening the SAMSUNG Fun Club for better customer relationships. • Free online software updates, tutorials and customer service • Highlights the innovative features of its products through a combination of innovative advertising and branding. • Established many SAMSUNG Mobile Stores to increase the visibility of the brand Promotion:- Offering advanced technology products and positioning itself on the technology platform will not help a company sell its products if it fails to communicate properly with the potential customers. To raise brand awareness and create strong, favourable and unique brand associations, SAMSUNG adopted various marketing strategies like celebrity endorsements, corporate advertisements, highlighting its technological superior goods and many promotional schemes. 35
  36. 36. Advertising: - SAMSUNG is involved in aggressive marketing and advertising of its product to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. Their main advertising channels include 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local and national) cinema, outdoors advertising (such as posters, bus sides). The initial advertisements communicated presence of SAMSUNG in worldwide markets and its dominance in those markets. To increase its brand awareness, SAMSUNG went in for celebrity endorsements. Initially, the company signed Hindi film actress, Tabu, to endorse its brand. Till 2002, SAMSUNG‘s ads focused on the technological supremacy of its products. But by late 2002, in addition to the technology plank, the company started advertising on the plank of ‗passion for country‘ and sports (cricket and football). Its latest ambassador is John Abraham for its mobile phone and Rahul Dravid for its Television range. Sales Promotion: Along with advertisements, SAMSUNG also focuses on promotional schemes to increase its sales. In October 2001, SAMSUNG launched its highly successful promotional scheme, the SAMSUNG ‗Phod ke Dekho Offer‘. This offer instantly boosted the sales of the company generating sales of Rs. 2.75 bn from this offer. The campaign was launched on an all India basis during the festival season. Under the scheme, consumers who bought any SAMSUNG product were given a tamper proof plastic coconut with three coins in it. One out of every 10 coconuts had a lucky coin with a gift printed on it. As a part of the campaign, SAMSUNG‘s brand ambassador, Tabu interacted with the customers and dealers of SAMSUNG in Bangalore and Chennai and handed over the lucky coconuts to select SAMSUNG customers. The prizes included products from the SAMSUNG range. The Phod ke Dekho offer was followed by another promotion scheme in May 2002, ‗Dabake Jeeto offer‘ coinciding with the football World Cup. During the promotion every customer who purchased company‘s electronics or home appliances product got plastic football with an alarm clock in it. The customer had to press the football from the top, and was given the free etched on the tamper-proof anodized sticker. Under this campaign, SAMSUNG gave out gifts worth Rs. 100 mn, which included SAMSUNG digital flat TVs, frost free refrigerators, microwave ovens, Karisma washing machines, mobile phones, cameras and Soccer 2002 official licensed T-shirts from Adidas. This campaign notched up sales worth Rs.310 Crores during the period of the Promotion. The next major promotional campaign was the ‗Phir Se Phod Ke Dekho offer‘. The offer was launched during October-November 2002 generating sales of Rs. 380 crores. It was a repeat of the earlier ‗Phod Ke Dekho‘ campaign. 36
  37. 37. On March 20, 2003 SAMSUNG Launched 'SAMSUNG Rang De Kismat Offer' for Frost Free Refrigerators which entitled a customer to Lucky Gifts worth Rs 4 Crores, with the purchase of any SAMSUNG Frost free Refrigerator. This Promotion derives its name from the 'Rang de Kismat' glass, which was handed over to a customer with the purchase of any SAMSUNG Frost Free Refrigerator. The Customer needed to pour chilled water into the glass and wait for the 'Bio' logo on the Glass to change colour to find out the gift won by him/her. There were Colour Codes for types of Gifts won by the Customer - For example, a Green 'Bio' entitled a customer to a SAMSUNG Microwave oven while a Red 'Bio' gets the Lucky winner a Gift Voucher from Tanishq worth Rs 30,000. This offer was launched to capitalize on the sales of its Frost free refrigerators in the summer months. The Company‘s market share went up to 21% in the Frost free refrigerator market after the offer. Following its success with its 'SAMSUNG Rang De Kismat Offer' SAMSUNG India come up with another innovative Consumer Offer ―SAMSUNG's Bundling Offer with Reliance India Mobile‖ for the buyers of its Consumer Electronics and Home Appliance Products in the Delhi and NCR Region on 25 July, 2003. A buyer of any SAMSUNG Consumer Electronics or Home Appliance products gets the option of walking away with a sleek, advanced SAMSUNG Mobile Phone N191 model along with a Reliance India Mobile connection, without having to pay any activation charges. Furthermore, the user gets free talk time worth Rs.600 over a 6-month period. All other payment terms are the standard billing terms and conditions offered by Reliance India Mobile depending on the package taken up by the customer. On 6 October 2003 SAMSUNG India Electronics Ltd launched its mega festival promotion called ‗SAMSUNG Pinning to Winning Offer‘ on an all India basis. In this Promotion, where the consumer stood to win an assured gift on the purchase of any SAMSUNG product, have gifts worth Rs. 100 crores to offer as prizes. The offer entitled the buyer of a SAMSUNG product, a card with a unique 16 digit alpha-numeric code. All the consumer had to do is SMS ―SAM‖ followed by the 16 37
  38. 38. character code to 8888 and s/he would immediately get a message showing what gift has been won. The Gifts won in the Promotion include; SAMSUNG Projection TVs, SAMSUNG Mobile Phones, SAMSUNG Yepp Disc Players, SAMSUNG DVD players, Titan Fast Track Glares, Touch Screen Landline Phone, Trendy Portable Travel Iron and Britannica Encyclopedia 3 pack CDs.This offer was basically launched to maximize its sales during the festival season. Following its success with its ‗SAMSUNG Pinning Toh Winning Offer‘ SAMSUNG India Electronics Ltd launched ‗the $-DOLLAR Program‘ for its IT Reseller and System Integrator fraternity on June9, 2004. The program meant for the System Integrators (SI) was applicable on SAMSUNG monitors, Hard Disk Drives (HDD) and Optical Media Storage (OMS) products. Each time a SI/reseller purchases SAMSUNG products from a SAMSUNG Star Elite or SAMSUNG Storage Preferred Partner (SSPP), the SI was issued a cheque. The cheque was of one of the four colours – White, Blue, Silver, and Gold – depending upon the products bought. SAMSUNG believes that its SIs and re-sellers play a pivotal role in business growth. They are the ones who provide them the edge that they need in today‘s competitive marketplace. This is why they have spearheaded revolutionary programs for them ensuring healthy growth in revenues and profitability. The next sales promotion offer was launched on Feb 3, 2005 called ―Fastest Finger First‖ which was a nation wide contest to find India‘s fastest SMSer. The message to be typed reads as follows: ―The razor-toothed piranhas of the genera Serrasalmus and Pygocentrus are the most ferocious freshwater fish in the world. In reality they seldom attack a human". This SMS had to be typed on the cellphone keypad, complete with punctuation marks and lower & upper case. No predictive text (T9 Dictionary), QWERTY keyboards/ any keyboard was allowed. SAMSUNG has launched many sales promotion campaigns, which were very successful in the Indian market. These offers generated huge profit for the company. YEAR STRATEGY SALES Oct 2001 ―Phod ke dekho‖ offer Rs.2.75bn May 2002 ―Dabake jeeto‖ offer Rs.310cr Oct-Nov 2002 ―Phir se phodke dekho‖ offer Rs.380 cr March 2003 ―SAMSUNG rang de kismet‖ offer Oct 2003 ―Pinning toh winning‖ offer June 2004 ―The $-dollar programme‖ offer Feb 2005 ―Faster finger first‖ offer And so on. 38
  39. 39. Sponsorship: SAMSUNG used sponsorship of events like Olympic series to boost its sales. SAMSUNG was the global wireless communications sponsors at the Athens Olympics. SAMSUNG used the strategy of relating itself directly with the values of the Olympic Games, which included attributes like world class, global, excellence, fair competition and peace. The Olympic series of August5, 2004 was SAMSUNG‘s salute to the Olympic values. SAMSUNG was the sponsor of Lakme India Fashion Week held on April21, 2005. Team SAMSUNG cricketers - Irfan Pathan, Mohd. Kaif and Virendra Sehwag launched the World‘s Best Handset, SAMSUNG D500 during the SAMSUNG Show at the Lakme India Fashion Week. The theme for the SAMSUNG Show was ‗The Best Thing Says Everything‘ in keeping with the positioning of SAMSUNG D500 - SAMSUNG‘s latest and path-breaking mobile phone which has been rated as the ‗World‘s Best Mobile phone‘ by the 3GSM Association World Congress held at Cannes in February 2005. SAMSUNG sponsored SAMSUNG & MTV Youth Icon 2005 on June10, 2005. The idea behind the sponsorship was that the SAMSUNG Mobiles were targeted at the fun loving, lifestyle oriented and trendy youth of today. By associating with the SAMSUNG & MTV Youth Icon, they are seeking to further strengthen their relationship with the youth. SAMSUNG mobiles make a style statement and by partnering with the Youth Icon, this positioning is further re-inforced. SAMSUNG was even the sponsor of SAMSUNG IIFA Awards held on June 13, 2005. Popular film actress, Preity Zinta was awarded the ‗SAMSUNG Diva‘ award while Hrithik Roshan was conferred the prestigious ‗SAMSUNG Style Icon‘ award at the SAMSUNG IIFA Awards 2005. SAMSUNG India had carried out an online voting process on the SAMSUNG India website between May 20th - June 5th 2005 for selecting the recipient of the ‗SAMSUNG Style Icon‘ and ‗SAMSUNG Diva‘ awards. The same was also promoted extensively on other sites like indya.com and msn.com as well. The Company received a phenomenal response to this online voting contest. ―The ‗SAMSUNG Style Icon‘ and ‗SAMSUNG Diva‘ awards which have been growing in popularity year on year, the company uses the response level received every year as its popularity indicator. Direct Mail: SAMSUNG even uses Direct Mail concept for its product promotion. SAMSUNG sends mail to target consumers depending on the database i.e. the frequency of site visit and on their purchases. SAMSUNG is very actively involved in e- commerce. 39
  40. 40. Target markets: SAMSUNG target market is high and medium income level communities. POSITIONING STRATEGIES The concept to position the brand may be based on the functions provided by the product, the experience it offers or symbol it conveys. Developing positioning strategy requires integrating the product, price, value chain, and promotion strategy to focus them on the market target. The positioning strategy matches the firm‘s capabilities with the buyer‘s preferences. Due to SAMSUNG‘s superiority in the general TV market, the threats as you can tell are minimal. However, in the strategies and opportunities sections you will find what we are doing to reduce the risk of these threats having an affect on SAMSUNG‘s market share. Developing a partnership with Microsoft will be a vital component to developing the 3D gaming content availability, which is the only relevant competitive advantage other thanpricing. As SAMSUNG introduces new 3D products to the market, the price of therecurrent products will drop, making them more readily available to lower class consumersand expanding the target market for their 3D products. Product Innovation - SAMSUNG's product range in India included CTVs, audio and video products, information technology products, mobile phones and home appliances. Its product range covered all the categories in the consumer electronics and home appliances. Analysts felt that the wide product range of SAMSUNG was one of main reasons for its success in the Indian market. SAMSUNG positioned itself on the technology platform. SAMSUNG‘s emphasis on Product Innovation and R&D has given the Company a competitive edge in the marketplace. SAMSUNG has two R&D Centres in India: SAMSUNG India Software Centre (SISC) at Noida, near Delhi. SAMSUNG India Software operations unit (SISO) in Bangalore. While the SAMSUNG India Software Centre develops software solutions for hi-end televisions such as Plasma TVs, LCD TVs and Digital Media Products, 40
  41. 41. The SAMSUNG India Software operations works on major projects for SAMSUNG Electronics in the area of telecom, wireless terminals and infrastructure, Networking, SoC (System on Chip) Digital Printing and other multimedia/digital media as well as application software. SAMSUNG India additionally carries out R&D for product hardware at its Noida R&D Centre. The focus of the Centre is to customise both audio visual and home appliance products to better meet the needs of Indian consumers. From Flat Televisions with 'Easy View' technology to Frost Free Refrigerators with Stabiliser Free Operations, the SAMSUNG R&D Centres in India help the Company to continuously innovate and introduce products customised for the Indian consumer. SAMSUNG India currently employs around 6000 employees across its R&D Centres at Noida and Bangalore. SAMSUNG on Tuesday, January 22, 2013 launched its latest offering from its popular Galaxy stable, under the Galaxy Grand label, with dual-SIM, priced at Rs 21,500. The Galaxy Grand is powered by Android Jelly Bean operating system and has 21 hours of battery life. 41
  42. 42. Branding Strategy: For any new company, when it makes its entry into the market, there are two ways to stimulate growth: intensive advertising campaign, and product offerings with unique functions. SAMSUNG recognized the potential of both. ―In terms of products, SAMSUNG introduced its leading- technology display products as well as printers in the Indian market and carried out SI meets all over the country to educate the channel community on its new products, ― says Ranjit Singh Yadav, Director – IT, SAMSUNG India. However, the power of brand building exercise was not lost on the company. In fact, SAMSUNG tilted more towards advertising and brand-making strategy – creating awareness of its name by investing large amounts of money in million-dollar brand- making campaigns. In India, SAMSUNG, in order to create its brand awareness, signed seven cricket celebrities and in doing this it aimed to cash in on the popularity of cricket in India which is considered a religion in India. Instead of just ads featuring cricketers, SAMSUNG launched its ―Team SAMSUNG India‖ campaign all over India. The focus of this concept was to create patriotism through cricketers, but under the SAMSUNG brand name the banner reads ―With Team SAMSUNG‖. The campaign was a huge success and it enabled SAMSUNG to increase awareness of its brand. As a result, it began to make impressive growth in India. ―In India, SAMSUNG‘s investment on branding has spanned our brand building and corporate initiatives, product investments and investments in the channel,‖ says Mr. Yadav. ―In the year 2008, SAMSUNG supported the Olympics cause in India by way of sponsorship of the Indian team, the support for select members of the Indian team. The company also organized the biggest-ever national level school quiz on Olympics for school children. Consequently, its Olympic-related advertising campaign brought the company‘s brand closer to customers. ―We supported the Indian team to the Beijing Olympic Games as well as provided scholarship support to six Indian athletes for their training expenses, including Abhinav Bindra whom we subsequently signed on as our Brand Ambassador for Consumer Electronics products, following his return from the Olympics,‖ adds Mr. Yadav. SAMSUNG hugely invested in sports, as it knew that sports attract crowds. In the Athens 2004 Olympic Games, it was named as Worldwide Wireless Communications Partner of the Olympic Games, but not without a cost. SAMSUNG provided 14,000 mobile phones and also supported equipment during the games. They also presented themselves in the Olympic Torch Relay, which took place in 27 countries. They also showcased their products for 17 days to the visitors at the Olympic event and also allowed 30,000 42
  43. 43. minutes of free calling grabbing the audience to its brand. It has been noted that older companies often portray their products as commodities and generally sell their products only on the basis of brand without enhancing their quality and lowering their price. However, SAMSUNG has proved to be an exception to this. The company not only invested hugely in brand creation campaigns, it also remained a cut above the rest by introducing innovation. In order to create a somewhat different image, SAMSUNG has positioned itself by developing innovative products, thus becoming a leader rather than a follower. The Success Secret Being ahead of the competition is the mantra of SAMSUNG‘s success. In business, it always pays to reduce the lead-time, as being late in business means business is over, which happened in the case of many big brands and competitors. For instance, the most advanced mobile phone has only two-mega pixel camera, but SAMSUNG offered 5-mg phone in 2005. SAMSUNG is offering new products lower than the market price. Yet, the company has been able to retain its standard and quality. However, part of this success was also SAMSUNG‘s openness. The company opened up and recruited employees from a global pool of talent bringing in talent from various countries, making these people work together at one table designing the best product. This trend boosted the company‘s perception and made it a global brand among the consumers. The strategy paid off and in the past five years, it has achieved the biggest gain among major brands, even surpassing Sony. SAMSUNG‘s approach is holistic reaching the world customer. It created its branding in multiple ways, ranging from traditional adds to billboards, racing, Olympic games, cricket matches, marathons. In short, wherever it saw the crowd, it communicated SAMSUNG message by presenting itself as a leader of innovation with affordable price. In the year 2009, SAMSUNG India is looking at strengthening both the product portfolio and the channel. The company will be tapping our existing brand shops as well as Large Format retail stores for our IT products.‖ We have just launched our comprehensive range of Notebook PCs and the ‗Live 360‘ campaign for Notebook PCs. In the year 2009, we will be expanding our portfolio in Notebook PCs, Display products as well as our Printer range,‖ says Mr. Yadav. SAMSUNG India will be continuing with its channel expansion in the year 2009 as well. ―We will be strengthening the corporate sales business based on our enhanced lineup,‖ adds Mr. Yadav. ―Market will see the introduction of new technologies in the marketplace and some of the trends that we saw in the year 2008 will get more pronounced. Thus, I expect the LCD Monitor category to dominate the market completely, even as the transition from Desk Top PCs to Notebook PCs and Netbooks will continue. The Widescreen format will continue to dominate in LCD monitors. Similarly, the 17‖ and 19‖ monitors will continue to dominate in terms of screen sizes. With the 43
  44. 44. introduction of new technology and convergence products, the Large Format Retail will continue to be a significant channel for selling IT products,‖ says Mr. Yadav. Successful branding is all about establishing a long-term vision and crafting the company‘s operations to meet that objective. ‗in 1993, as a first step in its globalization drive, SAMSUNG acquired a new corporate identity. The company changed its logo and that of the group. In the new logo, the words ―SAMSUNG Electronics‖ were written in white colour on a blue colour background to represent stability, reliability and warmth. The words‖―SAMSUNG Electronics‖ were written in English so that it would be easy to read and remember worldwide. The logo was shaped elliptical representing a moving world‖– symbolizing advancement and change. It was this sort of huge investment where millions saw the SAMSUNG‘s message. Their brand remained in the forefront of millions of people giving them an edge over its competitors. It is no surprise that SAMSUNG‘s brand building strategy overtook its competitors in less than the expected time. Brand association Brand Associations are not benefits, but are images and symbols associated with a brand or a brand benefit. 44
  45. 45. 45
  46. 46. SAMSUNG's Strategy to Gain Market Share in the Indian Mobile Phone Market The SAMSUNG management has initiated a market-mapping exercise to get into our fold distributors who have relevant knowledge of the market, credibility, a good distribution network and will therefore contribute in strengthening SAMSUNG's reach in the market. The new distribution strategy would take its penetration level in themarket from the current 55 percent to 85 percent by the end of the year. On the retail front, it was taking initiatives to increase the number of retailers enrolled as SAMSUNG Mobile Privilege Partners (SMPPs) from around 100 in 2007 to around 400 by the end of the year. Single and multi-brand retailers had shown an interest in becoming SMPP. In the same month, the company launched five new mobile phone models and said that it would launch another 13 by the middle of the year. The models that were launched included multimedia phones, phones for corporate customers, and acomparatively lower priced model aimed at a bigger chunk of the market. The company as of early 2008, its mobile phones were priced between Rs. 1,700and Rs. 28,000, but that the company would launch more expensive mobile phones in the future. The company also announced its new positioning with the new pay-off line 'Next is What?' and that it had roped in a leading actor of the Indian film industry Aamir Khan (Aamir) as its brand ambassador. Aamir would also feature in its new ads. Announcing the major celebrity endorsement for the brand, HB Lee, president and CEO, SAMSUNG (South-West Asia), said, "The SAMSUNG brand stands for qualities of innovation, change, discovery, self-expression, and excellence in performance. And these very same qualities are epitomized by Aamir Khan, whose quality and depth of work as well as versatility as an actor, have made him a much loved and respected actor in India today. We are indeed very proud and privileged to have him as our brand ambassador." 46
  47. 47. With Aamir's endorsement of SAMSUNG, the fight for the mobile phone market had also become a four-way battle with other leading actors endorsing the rival brands - Shah Rukh Khan endorsing Nokia, Abhishek Bachchan endorsing Motorola, and, Hrithik Roshan endorsing Sony Ericsson. According to SAMSUNG, the mobile phone market in India would be more than 100 million units in 20013-14. With all these new initiatives, SAMSUNG has around 46 percent share in the Indian smartphone market and SAMSUNG was confident of achieving its objective of cornering a 60 percent market share in the country. The company said that it had the necessary infrastructure to ramp up its production capacity at its manufacturing unit at Noida from the current 6 million units per annum, depending on the demand recently to have an impact on international prospective mobile phone users. SAMSUNG Bada to rival Android, Linux SAMSUNG entered into the mobile OS arena with Bada. The software, whose name is based on the Korean for "ocean," is designed to be open and will compete directly against rivals like Android or LiMo. It will be based on universal standards and won't consider even core aspects of the OS off- limits: developers‘ can not only use contacts, the dialler and other utilities but extend them with new features of their own. Most details are left vague, but Bada will have a central app store. Carriers will also have the option of customizing the OS to suit their own tastes. SAMSUNG expects the very first device using Bada to show in the first half of 2010 along with the initial app store. More phones should be ready by the second half of that year while the app store will expand to 30 different countries, including key countries in Europe. A more formal unveiling is due in the UK for December and will be followed by first looks for developers both in December and in January. The news backs analyst claims of SAMSUNG moving to its own plat formand adopting modern open platforms, including Bada. If fully representative, it also signals the likely ends of Symbian and Windows Mobile at SAMSUNG, as the forecast would have Symbian gone entirely by 2011 and Microsoft's OS at just 20 percent by 2012 where it makes up 80 percent of SAMSUNG phones today. Such a gesture will also render closed platforms like OS X iPhones and Windows Mobile the relative minority in numbers, though not necessarily market share. Recent happenings were the SAMSUNG Corby, which is a full-touch handset that places users at the centre of the social media 47
  48. 48. revolution with full support for a wide range of social networks. The new mobile compliments the Company‘s existing touch screen strategy ―touch for every lifestyle‖ by broadening the market and targeting the youth audience. The Corby represents a complete makeover for the youth segment, with its eye-catching design, which marks a significant break from the way full touch phones are usually designed. The SAMSUNG Corby is notable for both its body design and colours; it comes with bold colour options With Ghazini swiping the box office SAMSUNG has enchased on its brand ambassador Amir Khan by launching Ghazini mobile games on selected models which is a smart and innovative approach of marketing strategy. The future prospects of SAMSUNG mobiles don‘t seem gloomy with the above developments and with time to come there would be a tough competition with itsrivals. So Next is what? Distribution Channels: Along with the launch of new products, SAMSUNG also consolidated its distribution system. SAMSUNG had 18 state-level distribution offices and a direct dealer interface. The direct dealer interface helped the company get quick feedback from dealers, and enabled it to launch products according to consumer needs. SAMSUNG uses supply chain to enhance differentiation, increase sales and penetrate new markets and channels. Its supply chain is beneficial in several ways. It helps the company to deliver products to the customer faster. 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. To minimize time overruns, SAMSUNG delivered its products directly from its factories to its Regional Dispatch Centers (RDCs) and from there to dealers. SAMSUNG has sales and service networks all over India and more than 650 service points. SAMSUNG has implemented an innovative logistics system – Global Logistics Network Systems (GLONETS). GLONET application is used on the B2B i.e. Business to Business front for the vendors. This involved linking the key vendors, which form the bulk of SAMSUNG‘s sourcing (26 domestic and 30 international) through SAMSUNG‘s GLONET. This system enables SAMSUNG to connect its purchase department with the SAMSUNG headquarters and international procurement offices through integrated ERP systems. The integrated ERP system enables SAMSUNG to purchase its requirements from its international procurement offices and also from its Indian vendors. This application is also extended to order placement, production plan sharing and invoicing, resulting in shorter business cycles and reduced inventory levels and low waste. 48
  49. 49. In addition to GLONETS, SAMSUNG also believes in JIT (Just-in-Time) concept to its dealers. To make delivery of products within 48 hours of the expected date of delivery, the company has setup four RDCs, one at each regional location of the country. The distribution channel is structured very systematically wherein all the transactions and business conducted is documented. The program is based on incentives so that dealer payments can be made on time. The Company supplies its goods to the Star Elite who supplies goods to the distributor who in turn sell the goods via their own channel of retailers and distributors. The SAMSUNG Brand shop network complements the over 8500 retail points for SAMSUNG products located across the length and breadth of the country. SAMSUNG plans to continue enhancing its penetration levels in the country to reach out to more and more Indian consumers. They consider the Star Elite partner as their actual product champion as their link with the end customer. As, they have been adding value to the sale to the customer and guiding him to the right purchase decision at a fair price. 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. The exclusive showrooms: Keeping its target customer to display SAMSUNG products in a more lifestyle ambience and to communicate the product benefits in a more interactive manner, SAMSUNG India has set up a widespread network of over 100 exclusive showrooms comprising SAMSUNG Digital Zone (focusing on high-end digital audio-video products such as MP3 players, camcorders and LCD/plasma TVs). The SAMSUNG DigitAllhome goes beyond the concept of a Digital Plaza or a Brand Shop because in the DigitalAllhome, 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. The Company plans to supplement its existing SAMSUNG Digital Plazas' (Brand Shops) by setting up 'SAMSUNG DigitAllhomes' in select cities. The Company will also be creating exclusive SAMSUNG corners in multibrand outlets this year. The demands and needs within the distribution channel lead to the establishment of MyMemoryStore.com. The site was more than an ordinary selling site, infact it is an industry portal that allows the business partner to come in and track the relevant industry information within the channel, meaning minimizing the inventory overhead. But now this site has be closed due to some reasons. SAMSUNG is also planning to invest over $1 million in setting up a chain of exclusive outlets called `SAMSUNG Talkies'. The entire SAMSUNG mobile range including the latest handsets will be displayed at the outlets, which will be set up in more than 10 cities across India, including Bangalore, Mumbai and Hyderabad. 49
  50. 50. Company's manufacturing units (Noida and chennai) C & F agents (one in each state) Frenchized Distributers Big reataliers Retail chains outlets Small Dealers / Retailers Digital plazas Digital homes Digital worlds SAMSUNG has two manufacturing units on each in noida and chennai. A national distributor take care of the logistics associated with distributing the goods across the country. A carry & forward (C&F) agent is present in each of the main states. The C & F agent takes care of storing and transporting the goods onwards to dealers and distributors. While warehouses for storing the products are provided by the C&F agent the goods are still owned by the company. In big cities like Delhi the goods are shipped directly from the C&F agents to the dealers. In some cases the smaller dealers may be supplied by the some of larger dealers. For big retailers like – Zone and Next the goods may be shipped from the C&F agent‘s warehouse owned by the retail chain. In both the case once the goods are transferred to the dealers the ownership is taken over by them. The transactions are on cash basis and no goods are given on credit. In case of larger retail chains the purchasing decisions are taken at a national level and happen directly between the company and the head office of the retailer. Consumer electronics distribution Diagram shows the distribution network is in general for a consumer durables company. It has its own branch network acting as first level of distribution, which handle less storage and distribution of 50
  51. 51. goods. The next level is direct dealers whom the company‘s representatives visit regularly. These direct dealers help to disperse the goods to next level where company can not serve directly. The second diagram is where company has wholly owned wholesale buyers, who have braches countrywide for sale and after sales service. The company sells to wholesale buyers, which in turn supply to authorized dealers across the country Branch office Wholesaler / Godown Godown of Direct dealers wholesaler Only sales, Authorized sub dealers dealer Distribution network Marketing Strategy: SAMSUNG has to improve it‘s after sales service in order to retain customer and create brand loyalty. The current policy adopted by SAMSUNG is aggressive spending more on advertising and marketing and less on retaining customers that is after sales service. So the corrective strategy to be adopted by SAMSUNG must be to spend more on retaining customer rather than acquiring them as it costs 5 times more to the company to get to a new customer rather than pleasing existing ones. Moreover it costs 16 times to take the new customer to the loyalty stage. 51
  52. 52. They should have regional service centres in North, South, East, and West where the complaints can be received and processed quickly. Moreover they should employ and train the technicians to provide quality and timely sales service. Strategy to Expand Market Share: Currently SAMSUNG ranks second in the Indian consumer durable market whereas LG ranks first. The problem with SAMSUNG is that it is a premium brand and focuses only on urban and semi- urban markets whereas the rural market is neglected to a great extent which is why LG is dominating in that market. SAMSUNG earns revenue of only 30% from rural areas. India being a country of villages, SAMSUNG should focus more in the rural market in order to increase its market share. SAMSUNG should come out with new economic products like LG had taken out ―Sampurna‖ television range aimed only for the rural market. Hence SAMSUNG could have come up with a conventional range of television models which although are no very technologically advanced but fulfills the basic needs. All these strategies are very practical promising higher gains with less cost pains. Future Prospects: We found out common is that SAMSUNG lacks in after sales service. The drawback in their after sales service strategy is that they have only one customer service centre throughout India which is situated in Delhi. When a customer has a complaint he approaches his retailer who in turn registers the complaint in the Delhi service centre from where the complaints are processed and replacements are made. The presence of only one service centre makes it very difficult to give timely response as the complaints come throughout India. The complaints are not entertained for a period of 10 -15 days. Hence the customer is not satisfied with the after sales service of SAMSUNG. Social Contribution: Apart from developing innovative technology products, SAMSUNG places great importance on acting as a responsible corporate citizen in the communities where it operates. Its CSR programs respond to the social and environmental needs and seek to give back to communities where it 52
  53. 53. operates. In 2009, SAMSUNG launched the company‘s Corporate Social Responsibility initiative – ‗SAMSUNG Hope Project‘ with projects in the areas of education, culture, sports, social welfare and community development. Each program under the Hope Project uniquely addresses the needs of individual communities while emphasising on innovations for development of the community including education, technology, engineering and IT technical training. Notable local programs include: SAMSUNG Hope for Children, an initiative designed to help under-privileged children through e- learning centers. These e learning centres located in different parts of the country impart computer literacy to underprivileged youth and ensure placements as well. Innovations for development of the community, a partnership between SAMSUNG and various educational and media agencies to support grassroots innovations. SAMSUNG has instituted two programs: SAMSUNG Innovation Award with IIT, Delhi and SAMSUNG Innovation Quotient which recognizes India‘s best grassroots innovators from across the country Hope for Culture represents SAMSUNG‘s tribute to the rich Indian cultural heritage through Tagore Literature Awards that recognizes the best literary contributions in 24 Indian regional languages. SAMSUNG is partnering with the Sahitya Akademi for the Tagore Literature Awards. Additionally, SAMSUNG partners with INKO to present the SAMSUNG Women‘s International Film Festival that gives voice and expression to the perspective of women and celebrates her spirit through the medium of Cinema. Sports Sponsorship is an ongoing initiative wherein SAMSUNG supports top ranking athletes across individual sports disciplines with their training expenses while they prepare for the Asian or the Olympic Games. SAMSUNG is also the Sponsor of the Indian team to the forthcoming London Olympics. RURAL PENETRATION STRATEGIES • It has a better BRAND RECALL in rural market • Tying up with local co-operatives to push handset sales in the rural segment. SAMSUNG recently tied up with the Indian Farmers Fertilizer Co-operative (IFFCO) for rural telephony. • It has increased its distribution network in western and eastern parts by tie ups with SSK and Link respectively. • Developing partnerships with regional organizations. • Customization of software for local market-HINGLISH in text messaging 53
  54. 54. PORTER’S FIVE FORCES In this section, I analyze SAMSUNG using Porter‘s Five Forces model. As stated inthe instructions, the model is not explained but the model is applied to SAMSUNG. The five forces are analyzed with an additional element ―The impact of Stakeholders‖ on the business prospects of the company. Each of the forces is analyzed in detail and presented with respect tothe company‘s macro and micro environment. Threat of new entrants [High] There are lot of competition in Indian telecom and consumer durable market; Chinese mobile companies are also entering into the sector. In Indian telecom market having more than 400+ million subscribers with 42% of teledensity, still there is lot of potential is remaining. Bargaining power of suppliers [Low] As we know that there is very difficult to switch in B2B Market. Bargaining power of buyers [High] Indian market is very price sensitive market. Awareness about the mobile is very high so that bargaining power of the customer is also very high. 54
  55. 55. Threat of substitute products [High] There are so many companies in India which are selling same product with low cost and same quality, which is sold by SAMSUNG. GSM is as a substitution for the CDMA mobile so threat of substitute is high. Rivalry among competing firms [High] There is very high competition among the mobile equipment and consumer durable manufacturer. Chinese companies also coming in Indian market. Stakeholders: The impact of this element has been evident in recent times because of the riseof the environmentally conscious movement and thedrive towards CSR (Corporate SocialRespon sibility) that has seen the likes of SAMSUNG receptive towards the concerns of these groups. The fact that the shareholders are increasingly demanding more accountability and transparency following the recent scandals is proof of their growing power in making the management of SAMSUNG accountable and responsible. DISPLAY AS A GROWTH DRIVER India's domestic video device market is expected to grow at a CAGR of 22% between 2009-2013, to a value of US $15.2bn in that year. Television will remain the core product in this category, with sports events such as the India Premier League cricket and the 2010 Commonwealth Games in Delhi helping to drive demand for TV set upgrades. SAMSUNG Mobiles: Smartphone strategy for the Indian market In the mobile phone category, SAMSUNG has made sure to have a lengthy extension of its products starting from basic phones to the most advanced Smartphone‘s. In India the brand equity of SAMSUNG is very high. About a decade back what was once dominated by the Nokia and Motorola have now been captured by SAMSUNG. The brand ambassador for the company is Aamir Khan – known for his integrity in the Bollywood industry. Amir Khan mainly promoted the ―hero‖ series of mid-range phones. Later in 2009 SAMSUNG launched its ―corby‖ series which was believed to take the mobile phone market to a whole new level. Affordable cost multimedia combined with the mobile internet made customers go crazy after the product. The positioning of the ―corby‖ series was perfectly made by targeting the youth segment of the country, which constituted more than half of the target group in 55
  56. 56. the mobile phone segment. Instant updates on facebook and affordable touch screen phones added further value to the phones. In 2010 SAMSUNG further raised the bar by introducing the ―galaxy‖ series which took SAMSUNG to higher end segment – which was enjoyed only by ―APPLE‖. Ads were made targeting the customers of Apple. Most of the ads implicitly instigated customers to move from apple to SAMSUNG. SAMSUNG promised better feature at a lower cost. SAMSUNG Mobile‘s line-up of Smartphone‘s and tablets has helped the handset maker rally a significant share in a market that is largely dominated by Nokia. SAMSUNG sold 12.6 million Smartphone‘s in the quarter ended March 2011, boosting its global Smartphone market share by 7.4 percentage points from the previous year to 12.2 per cent. It now ranks fourth after Nokia, Apple and Research in Motion (RIM). SAMSUNG is only 1.2 percentage points behind RIM and is expected to grab the number three spot in 2011 if it maintains its current growth rate. Advance orders for SAMSUNG‘s Galaxy S2, which was released in April 2011, surpassed 3 million units within a week of the launch, posing a threat even to Apple. At this rate, its sales are expected to top 14 million units in the current quarter. Focus on India India is the fastest growing telecom market in the world and presents an attractive opportunity for handset makers like SAMSUNG. As per a GFK Nielson report, the Indian mobile handset market was pegged at around 155 million units in 2010. With the country adding 20 million mobile customers every month, the mobile device market is expected to grow at over 16 per cent year-on- year. Driven by the launch of 3G services, the Smartphone market alone is likely to grow at over 50 per cent per annum for the next two years. The Korean handset maker‘s smartphone strategy has clicked well in the Indian handset space. The company opened its smartphone account in India in June 2010 with the launch of its Galaxy S and Wave models, and now has over 12 Smartphone on almost all the popular platforms including Android, Windows and its internally developed software, Bada. SAMSUNG had a share of 10-15 per cent in the smartphone market as of January 2011, and is aiming to notch it up to 40 per cent by end-2011. According to company officials, in 2011, SAMSUNG‘s mobile handset division will be driven by two key factors – touch screens and Smartphone. In this segment, the company has also launched its tablet PCs. Thanks to the hugely positive response that the Tab has received across India, SAMSUNG is targeting a 50 per cent share of the Indian tablet market in 2011. While tablet PCs are still a niche segment in the country, if SAMSUNG positions its products well, it could well succeed in meeting its targets. A key area of focus for SAMSUNG will be the enterprise segment, which is showing an increased demand for such devices. In all, SAMSUNG has over 50 handset models in India, ranging from entry-level to mid-range and high-end Smartphone. According to a GFK Nielsen report, the company‘s overall market share stands at around 23 per cent of the Indian mobile market in value terms. 56
  57. 57. Manufacturing and R&D SAMSUNG has two manufacturing units in India, in Chennai and Noida, and produces around a million units of mobiles per month. While the company currently manufactures only its entry-level Guru series at these units, it plans to start producing Smartphone as well in India going forward. The company has also increased its focus on applications to provide users with a wide range of applications across various platforms like Android, Windows and SAMSUNG‘s own Bada. The company is reportedly working with around 800 application developers in the country to develop customized applications for the Indian consumer. However, offering innovative products in the global and Indian markets warrants a strong focus on R&D and SAMSUNG is not cutting corners. Over 9 per cent of the company‘s global expenditure is spent on R&D every year. The company has a team of 3,000-odd engineers across its two R&D facilities in India, customizing its Smartphone and tablet PCs, fine-tuning its mobile operating system, creating applications, etc. SAMSUNG has two software development centres in the country – the SAMSUNG India Software Centre (SISC) in Noida, Uttar Pradesh, and SAMSUNG Electronics India Software Operations (SISO) in Bangalore. The latter is already working on more advanced technologies like 4G. In fact, the mobile communication team at SISO is at advanced stages of developing devices on technology platforms including LTE, HTML5 and Android OS for tablets and dolphin browsers in Smartphone. The Bangalore R&D centre has collaborated on global projects and developed a dongle for 4G mobiles that has been launched in Norway, Sweden and Finland. The road ahead SAMSUNG sees the increasing demand for 3G-enabled handsets as an opportunity to grow in 2011. According to data from Gartner, the sales of 3G-enabled handsets comprised 16.7 per cent of the industry‘s total sales in 2010, up from 9.2 per cent in 2009. By 2011-13, 3G device sales are expected to account for 69 per cent of total sales. With an array of 3G devices launched for the Indian consumers, SAMSUNG has created a market demand for 3G Smartphone and is also offering users access to content and downloadable application software. At present, SAMSUNG has 17 handsets with 3G applications in India, with prices ranging from Rs 8,990 to Rs 29,290. However, the company needs to watch out for competition. LG, for instance, is lining up several new Smartphone. Its new mid-priced Optimus One handset has done well and LG has announced its target to double its global smartphone shipments to 15 million units in 2011 How SAMSUNG is making it big in India SAMSUNG has a clear view of how it can reach the No.1 slot in the Indian smartphone market: SAMSUNG Electronics launched its smartphone platform "Bada" in India at the Global Developer Day organized by the company in June 2010 in Bangalore. The India event was preceded by a 57
  58. 58. Global Developer Day in Seoul in March 2010 and was followed by similar events in the UK and US. In October 2010, SAMSUNG launched its first tablet device, the SAMSUNG Galaxy Tab, in India, the first three markets in the world where the tablet PC was unveiled. The company opened its Smartphone account in India in June 2010 with Galaxy S and Wave, and now has 12 Smartphone on almost all the popular platforms Android, Windows its own "Bada". The idea, says SAMSUNG, is to "democratize the Smartphone experience". In all, SAMSUNG has over 50 models in India from entry level to mid-range to high-end, including Smartphone. Get the drift? India, the world's second-largest mobile phone market after China, is key to SAMSUNG's growth and it will do everything it takes to tap the next big opportunity here - the Smartphone market. "Bada", meaning "ocean" in Korean, will be a pivot in realising SAMSUNG's vision of a 'Smartphone for everyone.' "We have the potential to reach the No.1 position in numerous categories in a country like India where markets are maturing and the potential for growth is unlimited," said JS Shin, president of SAMSUNG Electronics Southwest Asia, while unveiling its new mobile devices at the company's recent Southwest Asia regional forum. In India, as well as in other markets, SAMSUNG's telecom vertical will be largely driven by two key factors - touch screens and Smartphone - in 2011. "Our current market share (in mobile phones in India) as per GFK Nielsen stands at around 23.4 per cent in value, and by the end of this year, the target is to reach 40 per cent," asserts Ranjit Yadav, country head, SAMSUNG Mobile and IT, SAMSUNG India. Anshul Gupta, analyst with technology research company Gartner, points out, "You cannot afford to ignore India which is likely to contribute approximately 13 per cent to the worldwide handset market." Gupta believes that the Indian mobile device market will grow at over 16 per cent year-on-year, while the Smartphone market will grow at over 50 per cent y-o-y for next two years. Last year, as per a GFK Nielsen report, the total mobile market in India was around 135 million units. 58
  59. 59. Innovate, innovate, and innovate SAMSUNG leapt early into the Android tablet space, even though the Google OS was not fully ready for larger screen devices; so its Galaxy Tab was something of a compromise gadget, mostly designed to give a head start. Yet the product sold over one million units worldwide and more impact is expected once SAMSUNG launches the 10-inch form factor, with the new Android Honeycomb release and video capabilities next month, to compete more closely with the Apple iPad. Yadav says, "We will launch the 10-inch tablet PC at around Rs 35,000 and the 8-inch device will be priced around Rs 28,000. While the tablet PC market today stands at around 25,000 units a quarter, we expect it to grow exponentially here on." Introducing innovative products in the global and Indian market warrants relentless focus on R&D and SAMSUNG isn't skimping. The company spends over 9 per cent of its global spends in R&D every year. The company has a team of 3,000-odd engineers across its two R&D facilities in India customising its Smartphone, tablet PCs, fine-tuning SAMSUNG's mobile operating system, creating apps for Indian users. The reliance of SAMSUNG on its open source mobile OS, Bada, comes through when Dipesh Shah outlines what his team is doing at the company's research labs. SAMSUNG has two software development centres - SAMSUNG India Software Centre (SISC) and SISO at Noida (Uttar Pradesh) and Bangalore respectively. The latter is already working on far advanced technologies like 4G. In fact, the mobile communication team at SISO is in advanced stages of developing devices on cutting edge technology including LTE, HTML5, Android OS for tablets and dolphin browsers for Smartphone. The Bangalore R&D centre of the company has collaborated on global projects and developed a dongle for 4G mobiles that has been launched in Norway, Sweden and Finland. Design and innovation are two key focus areas for SAMSUNG to deliver products with unique user experience. "In fact, India is among the only four markets globally to have a specialised and dedicated product innovation team outside the US, UK and China," Shah informs. Shah, who is working with around 800 application developers in the country to develop applications for the Indian consumer, adds that almost 3 million downloads of Bada have been made from India so far. 59
  60. 60. "SISO is driving new technologies in internet browsing on Smartphone by adding features like HTML5, inline video, and web-to-native interaction and to connect high performance graphics engine to enhance the web gaming experience," Shah lists. Other major technologies the centre is working on are voice over IP for the LTE platform, 3D video capability on mobile devices and full HD (1080p) recording and playback on handsets. Best foot forward The company's Indian manufacturing facilities - Chennai and Noida - are producing around a million units of mobiles per month. The company plans to manufacture Smartphone in India, besides the entry level Guru series that it manufactures currently, but Yadav refuses to put a date on it. "We have been thinking about expanding our manufacturing capacity by making Smartphone in India, but we haven't got everything worked out yet," he says. Armed with 12 Smartphone models for the Indian market - including the recently launched Galaxy Ace, Pop and Fit models - across price points, SAMSUNG is strengthening its offering and will selectively market devices in the urban markets and in the hinterlands. "It is critical that feature phones reach their target customers on time while Smartphone need to be promoted in metros and tier-1 towns. Distribution is everything in our business," says Yadav. Another area of focus for SAMSUNG will be the enterprise segment. While executives at SAMSUNG would not say this aloud, the company clearly failed to anticipate the enterprise demand for QWERTY devices - an opportunity that RIM cashed on with its BlackBerry. But Yadav and his team hope to stage a comeback in the segment. He asserts, "We have seen growing interest of corporations and larger enterprises for our tablet PCs and Galaxy Smartphone. Our customers are asking us to develop apps for enterprises that will enable customization and add a layer of security to the devices. We expect many more Indian enterprises, both large and small, to convert their workers to tablet PC this year." Gupta of Strategy Analytics sees sense in SAMSUNG's approach. "The tablet PC market is niche in country like India but if SAMSUNG positions its product well, it can be successful. So far the Galaxy family has done well in all markets. It definitely helped SAMSUNG getting mindshare of high ARPU subscribers." 60