MARKETING EXCELLENCE SAMSUNG

Korean consumer electronics giant Samsung has made a remarkable transformation since its founding in 1938. Originally created as an exporter of dried Korean fish, vegetables, and fruit, the company evolved into a pro­vider of value-priced commodity products during the 1970s and 1980s that original equipment manufacturers (OEMs) sold under their own brands. When Samsung’s founder passed away in 1987, his son Kun-Hee Lee succeeded him and restructured the company with the goal of becoming one of the world’s top electronic companies.

Samsung initially focused on volume and market domination rather than profitability. During the Asian financial crisis of the late 1990s, other Korean chaebols or conglomerates collapsed beneath a mountain of debt, but Samsung took a different approach. The company cut costs and refocused its vision on product quality, complete customer satisfaction, and manufacturing flex­ibility. This revolutionary strategy allowed its consumer electronic products to go from project phase to store shelves within six months. Samsung invested heavily in innovation, and many of its products—from semi­conductors to LCD screens—gained significant market share and became industry leaders in their respective categories. The company also focused intently on its memory-chip business, which established an impor­tant cash cow and made it the largest chipmaker in the world.

Samsung continued to pour money into R&D during the 2000s, budgeting $40 billion for 2005-2010 alone. The company made innovation one of its highest priorities and emphasized its importance through extensive train­ing and recruiting. As a result, it introduced a wide range of electronic products under its strong brand umbrella. Samsung also partnered with longtime market leader Sony to create a $2 billion state-of-the-art LCD factory in South Korea and signed a milestone agreement to share 24,000 basic patents for components and production processes.

Today, Samsung is a global marketer of premium- priced, Samsung-branded consumer electronics such as smart phones, flat-screen TVs, digital cameras, batteries, digital appliances, and semiconductors. The company’s high-end smart phones and cell phones are now its growth engines, leading to a steady stream of innovations including the first cell phone with an MP3 player, the first Blu-ray disc player, and the first Smartwatch.

Samsung’s success has been driven not only by successful product innovation, but also by aggressive brand building. The company has spent billions of dollars in marketing over the past decade, including sponsor­ing the Olympics since 1998 and running several global ad campaigns themed “Imagine,” “Quietly Brilliant,” and “Men Are Idiots,” all of which included brand messages such as “technology,” “design,” and “human sensation.” In 2005, Samsung surpassed Sony in the Interbrand ranking for the first time, and it continues to outperform Sony today.

Samsung faces competitors in several different industries, including Google and Apple. However, the company is unique because, unlike rival firms, it has become a global leader in making both the components for electronics products and the actual devices sold to consumers. It controls virtually everything in the smart phone supply chain, from the chips to the screen, while Apple has to outsource these products. As a result, Samsung can keep costs low, create many products for many needs, make design changes quickly, and intro­duce new products at an unusually fast pace. The com­pany recently passed Apple as the number-one player in smart phones.

With record sales of $327 billion in 2013 and more than 275,000 employees worldwide, Samsung continues to work toward its goal of earning $400 billion in revenue by the year 2020.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.