2012

Samsung: Redefining The Brand- Case Analysis

Lecturer Name: Sim Lim Guan

Jujhar Singh Sidhu

Student ID: 12667282

I.

Current Background

Samsung Electronics part of Samsung Group is one of the most respected Industrial Chaebols. Samsung was founded in 1938 and has been the most important player in the industrial alteration in early 70s and throughout 1980s. Now Samsung is a power house with 175,000 employees worldwide with operations in 67 countries. With sales of 116.8 billion in 2002 it exceeded Hyundai to become the top group in South Korea. Listed as 15 th in Asia and 59th in world by fortune magazine Samsung indeed has come a long way. Globally, Samsung Group concentrated on four core activities: finance, electronics, and trade services, but Samsung Electronics is the flagship and largest business of Samsung Group. Pat Button Vice-president, sales also said that domestically, they are the largest electronics company in South Korea, with investment of 7% of revenue in R&D which resulted in Samsung establishing itself as a reliable performer by providing products that range from mobile phones, high-definition TVs to PDAs with front-line technology. To increase brand awareness Samsung launched a very powerful campaign worldwide SAMSUNG Digitall everyones invited. Canadas consumer electronics market consisted of four apparatuses: business users, young generation, high-income families and hobbyists. Consumer electronics in Canada were sold only at large specialty stores like Wal-Mart and Future Shop in addition to online stores. While the average per capita income of Canadians was less than Americans still they were not hesitant to spend money. Samsung in Canada faced some issues like weather to give extra budget for advertising, distribution, pricing in order to strengthen their position in Canada.

II. Case Issues

The challenges faced by Samsung was of suitably shifting their product line, evaluating levels and distribution strategy, they also wanted to reposition their brand as a leading brand for the Canadian market. The Swot analysis of Samsung Canada shows:

Strengths
Product Innovation Fast in making decisions regarding processess Knowledge in digital electronics Variation in range of product Powerfull marketing techniiques Huge R&D investments

Weakness
Contempt certain product line due to tremendous focus on already successful product line Impact on revenue from sales after giving retailers profit margain

SWOT Analyis

Opportunity
Less price penetrating Return policies favourable Request for good customer service Swift adoptation new technologies Highly technically savvy

Threats
Supremacy from main competitor, Sony Attainment of future shop by best buy Opposition from Chinese, Korea, Eurpean and Japanese electronics company

Figure 1. SWOT Analysis

Samsung Canada also faced problem with the promotional budget, whether to increase the budget or not, but on the positive side SECA benefited from spill over of USA and other global branding efforts. Another issue was SECA sold low-end products that were not going toe to toe with companies new brand position, but these were the products that were generating revenues and were a strong point of Samsung in Canada. J.S. Park, president of SECA had to come up with a new emerging policy for starting Samsung as a premium consumer brand in Canada. For a new strategy to work Park should decide whether or not to make changes on products, price and advertising budget including distribution strategy.
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Therefore, problem here is to achieve redefining Samsung as a premium consumer brand while not to have loss.

III. Analysis
The SWOT analysis shows that SECA wanted to increase the brand image in Canada and also are careful that in doing so that they do not harm the companys image. Opportunity lies in favorable return policies, technology savvy and less price penetrating. In return, maintaining strengths enable them to do product innovation and huge R&D investments. The weaknesses needs to be short-lived and, SECA can do this by increasing the revenue by increase in prices or generating new product line.

Porter Five Forces analysis shows that, SECA needs to be conscious on threat arising from buyers and suppliers. SECA needs to provide supplementary value on product and service to progress their value chain activity with this they also need to protect negotiating power from supplier and buyer. Separating and continuing origination and high quality product will help company to survive in the market.

New Entrance High

Power of Buyer - Medium

Company with strong financial support Hard to satisfy customer can enter. Low cost switching to other brand Specialist knowledge Industry Competitiveness High
More competitor in premium range of electronics industry High quality differentiation

Power of Supplier Medium

Samsung has own distributon channels Lot depends upon Wal-Mart, Zellers & Future Shops

Substitute Product - High

Not a unique product More innovations but equally strong competition High performance in subtitute product

Channel distribution have two ways through which they can distribute the products: direct channel, IE: selling though wholly owned showrooms to customer, the other channel is Indirect channel: selling through third-party arbitrators (Keller, 2008) like Future Shop, Best Buy and Wal-Mart. Currently SECA is using both direct channel as well as indirect channel to sell the products . SECA used to sell all the major products through retailers and SECA also sold most of its products to high end chains. SECA also sold products through Wal-Mart, Best Buy, and Future Shop. The main strategy used by SECA was to involve these big chains in the partner like relationship and involve them in product development stage. On the other hand, Samsung promotion was driven by Samsung activities in United States, these things had both negative and positive effect, on positive side SECA was able to access the promotional material and use it in the Canada market, but on negative side it lowered the SECA ability to tailor the promotion in such a way that it is suitable for Canadian market. SECA knew that if they are not careful in redefining their brand then they could have increase in promotional expenses and decrease in revenues if product lines are forewent. Aaker, in 1991 identified some workings of brand equity that are brand loyalty, brand awareness, perceived quality, brand association and some other brand assets. Brand equity is a set of brand assets with accountabilities that are linked to brand that can add value from the product. This shows that it is important for Samsung and SECA to maintain their brand equity so that they can create brand loyalty and they could add more value as their competitive advantage (EURIB, 2009)

Brand Equity Model-Aaker

Two pillars marketing strategy can be adopted by SECA. For SECA and Samsung Group to be a premium brand, brand and its elements must play an important role. Samsung has a very unique logo and one of the most recognised logo. The logo which is blue in colour represents trustworthiness, reliability and commitment in service. These brand elements facilitate customers thinking patterns and it means a lot to the consumers what exactly does a brand represent. SECA has eminent their product in term of quality and invention from its competition in Canada. They are first in many things. To redefine their brand SECA needs to retain the core value and come up with unique products and fresh ways to deliver products and service so that they can they keep their policy of redefying their brand on track.

To sum, SECA, due to its enormous capital, needs to be careful on their expenditure on promotional activities and maintain their core image and redefine the image at the same go. Increase in sales volume without any good brand equity, and without any after sale

service, the image of the SECA and Samsung would decline. On the other side, focusing their brand equity will delay the profits they are making now.

IV.

Formulation & Evaluation of Alternatives

Full increase in Budget Advantage Able to be appealing and more recognized in Canada Increase in chance to get advertise more, and will be able to have brand identity Will help redefine the brand and increase brand knowledge Can sell worldwide, help to achieve organizational goal, boost up profit Will be strengthen as people will be able to relate more to the brand Disadvantage Will lose premium positioning and uniqueness Reject to increase the Budget for redefine the image of Samsung in Canada Advantage Maintain the loyalty to customer who found the brand unique. Can maintain good consumer relations, and can maintain their uniqueness Samsung can provide emotional value and mental image in consumers mind It is will be distinctive and it will deliver constant quality to customer Consumers will be able to relate more to the brand and will stay loyal if it is able to project itself in a good light Help to strengthen the image of the brand and with launch of new projects it is better for company to leave footprints in sand Well-known brand and with redefine of the brand it will stay in hearts of people and SECA would be able to manage it. Disadvantage Will not be able to touch masses and may not complete their mission Will not be able to strengthen the brand and redefine it This will not help in expanding the brand in Canada Partially Accept (increase of budget and abolish of some high revenue products) Advantage Concentrate more on new products; develop the new products into best sellers. They can maintain quality control, more hold over distribution of products Brand Image will be uplifted and people around will come to know more about Samsung and their mission Will Maintain Brand positioning around the globe and will strengthen their footprints in Canada Disadvantage Affect the overall revenue, popular products will have a setback People associated with brand before redefine can possibly divert from brand People who thought that Samsung is not for masses and specially for them they will wither away

Brand Attribute

Brand Association

Can lose loyal customer who wanted unique

Brand Image

Weaken because customer percieved are not unique anymore

Brand Positioning

Loyalty will be increases many people will join SECA

Brand Loyalty

Old consumers will leave and they wll think that they are no longer important as it is for the masses

Redefining the brand will give higher return to shareholders Brand Equity Will be able to reach more consumers and company will be more immune to threats, higher sales volume Redefining the brand is a hard work and require loads of financing, this will have an impact on the finances of Samsung

Samsung will have higher brand equity due to refining the brand and they will be able to sustain in a long run

Future Growth and Potential Problem

Will be able to reach to more customers and target a large customer base

Problem would be to sustain a long term commitment as new organizations are coming up with better prices

V. Recommendation
The best alternative for SECA is to capitalize on its customer service rather than changing their product line. They should also focus on customer satisfaction rather than bring changes in their price, distribution and product line. Firstly the main challenge is to eliminate some products line because though they are profitable products but still they are low-end line of stuffs which is inconsistent with Samsungs strategy to reposition them. I can recommend that Samsung should not kill any of their product line which is making money and generating revenue for the company so that they can rebuild the brand name; there are other ways to do the same.

Another serious issue was pertaining to price of the products, which were already priced at a low range and the pricing of these products might damage companys determination to refurnish the brand image. Contrariwise, raising prices for these products of Samsung might have negative impact and consumers can be choosing other brands over Samsung as Canadian market is very price sensitive. Raising price itself does not necessarily mean that the brand is the best or premium.

The features or the positive point that Samsung products different from other brands are the after sale service and quality of the product is of high standard. Another high is that most of Samsungs products are sold in retail shops like Best buy, Future Shop, in addition to the products are also sold by large merchants like Wal-Mart and Staples and they are all big organizations and with good brand name. To remove these product ranges from Wal-Mart, Best Buy and other stores because of their less pricing will weaken the company image and reduce sales volume and it is for sure that nobody in the management would want the sales volumes to dip.

Lack of direct relationship between how the products are circulated with that image of Samsung is a hindrance, because if customers are well-informed about the product range and about the brand they will buy the products no matter where they are sold. To add more I believe that most of the consumers are looking for suitability of finding products anywhere.

For the reasons shown above, I suggest SECA not to make any changes in these three areas. Instead, SECA should invest in its customer service and focus on customer satisfaction because even though the brand is premium, electronic products might still cause a problem. If the company immediately solves any problems and satisfies customers wants and needs, they will become loyal to the brand and make Samsung a premium brand.

VI. Implementation
SECA can improve on few things so that its customer service is world class

Helpline URL menu should be made consumer friendly so that it would be easy to reach the specific department if that is their whole purpose. Step should be taken to reduce the wait time on phone for people trying to reach technical support when customers have questions about products, defective products should be replaced with temporary products till the time it is being repaired and customers will not feel left out or their daily work is stopped.

Informing customers about the repairing process and letting them how long it will take. Customers will be satisfied by implementing all of the above; they will know that Samsung is taking care of their problems. This will eventually lead to a word of mouth and will eventually help bring in more customers and will make Samsung the best brand in the electronics consumer market and SECA would be very happy with all the transitions happening. It is also a fact that when it comes to electronic market word of mouth travels faster and people buy the products if recommended by friends or relatives.

References
Samsung Logo. (2008, december 12). Retrieved from http://www.famouslogos.us/samsung-logo/ Mosley, R.. (2008). The Employer Brand: Bringing the Best of Brand Management UK: John Wiley & Sons

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