Samsung India Essay Example
Samsung India Essay Example

Samsung India Essay Example

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  • Pages: 14 (3622 words)
  • Published: April 27, 2018
  • Type: Case Study
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The Samsung Group, headquartered in Samsung Town, Seoul, South Korea, is a multinational conglomerate corporation and the largest chaebol in South Korea. It is also the world's largest private conglomerate by revenue with an annual revenue of US $172.5 billion in 2009. In Korean, the word "Samsung" means "tristar" or "three stars," representing its vast size, abundance, strength, and longevity.

The Samsung Group consists of several international affiliated businesses that primarily operate under the Samsung brand. Among these businesses are Samsung Electronics, the world's largest technology company in terms of sales, and Samsung Heavy Industries, the second-largest shipbuilder worldwide. With a stake in over 20% of South Korea's total exports, Samsung Group holds a monopoly in various domestic industries and frequently dominates specific markets. Its revenue is comparable to the total GDP of certain countries. Numerous co

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mpanies view Samsung's global achievements as a standard to aspire to.

History

Founded by Lee Byung-chull in 1938, Samsung originally started as a small trading company with forty employees in Su-dong (now Ingyo-dong), dealing in groceries produced locally and producing its own noodles. The company flourished and Lee relocated its headquarters to Seoul in 1947. Additionally, he established a sugar refinery called Cheil Jedang in Busan. After the war, in 1954, Lee founded Cheil Mojik and constructed a plant in Chimsan-dong, Daegu. This woolen mill became the largest in the country, solidifying the company's status as a major player.

Samsung expanded into multiple industries while Lee aimed to position Samsung as a leader in various sectors, including insurance, securities, and retail. Emphasizing industrialization, Lee strategized economic development by supporting a select few

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large domestic conglomerates, safeguarding them from rivalry and providing financial aid.

During the 1990s, Samsung went through major transformations led by CEO Lee Kun-hee. Under his leadership, ten subsidiaries were sold and some divisions were merged to streamline operations. This allowed Samsung to concentrate on three key industries: electronics, engineering, and chemicals. Furthermore, in the 1980s and 1990s, Samsung also had involvement in aircraft manufacturing. In 1999, a merger took place between Samsung Aerospace, Daewoo Heavy Industries, and Hyundai Space and Aircraft Company to establish Korea Aerospace Industries (KAI).

Samsung, currently the second largest chip manufacturer in the world after Intel, gained prominence in 1992 as the top producer of memory chips. In 1995, Samsung introduced its first liquid-crystal display screen and eventually became the leading global manufacturer of such panels. Additionally, Samsung Electronics surpassed Sony in 2004 and 2005 to claim the #19 spot worldwide as a popular brand for consumer electronics. Furthermore, it holds the title of being the second-largest cell phone producer globally, ranking just behind Nokia. Notably, Samsung enjoys a significant market share in North America and Western Europe.

About Samsung Electronics

was founded in 1969 and has its headquarters in Suwon, Gyeonggi-do, Korea. The company is renowned for manufacturing and selling a wide range of electronic products, communication devices, and semiconductors. In January 2009, Samsung underwent an organizational restructuring to improve synergy among its different business sectors while considering technology advancements, market trends, and customer preferences. Consequently, it replaced the division-based system with two business units: Digital Media & Communications (DMC) and Device Solution (DS).

Source: Samsung Electronics Sustainability Report 2009 Figure:

Global Network of Samsung Electronics. Presently, Samsung Electronics has formed a worldwide network comprising of 111 subsidiaries that encompass production, sales, distribution, and research laboratories. Furthermore, there are eight overseas business divisions that represent different regions including North America, Europe, China, Southeast Asia, Southwest Asia, Central and South America, CIS (Commonwealth of Independent States), the Middle East and Africa.

Vision

Samsung Electronics has a goal of "Inspire the World, Create the Future" for the new decade. This objective demonstrates their commitment to inspiring communities with New Technology, Innovative Products, and Creative Solutions. They also strive to enhance value in their core networks of Industry, Partners, and Employees in order to make a positive impact on society and improve overall experiences. Samsung's plan encompasses reaching $400 billion in revenue by 2020 and establishing themselves as one of the top five global brands.

Samsung has incorporated three key strategies - Creativity, Partnership, and Talent - into its management in order to explore new fields like health, medicine, and biotechnology. Moreover, Samsung is committed to becoming a leading player in emerging markets and strives to be the top business in the future.

Organisation Structure

Branding Strategy of Samsung

Branding is essential for any corporation as it serves as its lifeblood.

Samsung Electronics Corporation (Samsung) joined forces with the International Olympic Association (IOA) in 1998 to support the 1998 Seoul Olympics, aiming to establish Samsung as a global brand. This partnership successfully increased brand visibility and recognition among consumers worldwide.

Samsung's brand recognition was boosted in the late 1990s through global marketing alliances and event sponsorships. This led to a significant growth

in its brand value, which went from $5.2 billion in 2001 to $10.8 billion at present, marking an impressive increase of over 200%. In 2002, Interbrand ranked Samsung as the twenty-fifth most valuable brand worldwide, making it the only non-Japanese Asian brand included among Interbrand's top 100 global brands.

Samsung became the top player in the US cell phone market, surpassing Motorola in late 2008. It also established itself as the leading provider in the global memory chip market. Additionally, Samsung allocated more funds to research and development than IBM in 2007 and ranked second in the number of patents granted by Americas patent office, closely following IBM. Fortune magazine recognized Samsung Electronics (SEA) as sixth in the electronics industry segment for its commitment to innovation and unique design.

Samsung introduced its branding strategy in 1996, spearheaded by Chairman Kun Lee. This initiative aimed to establish Samsung as a global brand. Over the past ten years, Samsung has successfully implemented its comprehensive brand building strategy. The company devotes approximately US$3 billion annually to branding and marketing efforts in order to enhance its international brand recognition. For new companies entering the market, there are two methods to drive growth: an intensive advertising campaign and offering unique product functionalities.

Samsung acknowledged the potential of both products in India and introduced their advanced display products and printers. They held SI meets across the country to educate the channel community about these new offerings, as mentioned by Ranjit Singh Yadav, Director of IT at Samsung India. Additionally, they recognized the significance of brand building and allocated substantial funds towards advertising and brand-making campaigns.

Samsung in

India signed seven cricket celebrities in order to create brand awareness. The goal was to capitalize on the popularity of cricket in India, which is considered a religion in the country. Instead of using only advertisements featuring cricketers, Samsung launched the "Team Samsung India" campaign nationwide. The concept aimed to foster patriotism through cricketers, but the banner under the Samsung brand name read "With Team Samsung". This campaign was highly successful and significantly increased brand awareness for Samsung.

In India, Samsung experienced significant growth. In 2008, the company supported the Indian Olympic team through sponsorship and organized a national school quiz on the Olympics. These efforts brought the brand closer to customers. Older companies often rely solely on their brand and do not focus on improving quality or lowering prices.

Samsung stands out by investing significantly in brand creation campaigns and innovation, which has helped establish its leadership position and distinctive image. Staying ahead of the competition is vital for Samsung's success since tardiness can result in failure, a lesson numerous major brands and competitors have learned.

Samsung achieved its success by being open and inclusive. They hired employees from various countries, embraced diversity, and encouraged collaboration in product design. This strategy significantly improved their reputation and helped them become a global brand. Consequently, Samsung has seen tremendous growth over the last five years, surpassing Sony as one of the top brands. In conclusion, effective branding necessitates establishing a long-term vision and aligning all operations to achieve that goal.

In 1993, Samsung implemented changes to its corporate identity as part of its globalization efforts. These changes included modifications to both the

company logo and group logo. The updated logo featured "Samsung Electronics" in white on a blue background, representing stability, reliability, and warmth. This significant investment allowed Samsung's brand message to effectively reach a large audience, giving them a competitive advantage over rivals. Unsurprisingly, Samsung's brand building strategy surpassed expectations in terms of speed and success.

Samsung in India

Samsung India is the central hub for Samsung's operations in the South West Asia region. Under the leadership of Mr. J S Shin, President & CEO, the South West Asia Headquarters oversees Samsung's business in Nepal, Sri Lanka, Bangladesh, Maldives, Bhutan, and India. Since its founding in December 1995, Samsung India has generated sales exceeding US$ 1Bn within a decade. The headquarters are located in New Delhi and maintain an extensive network of sales offices nationwide.

The Samsung manufacturing complex in Noida, near Delhi, houses manufacturing facilities for Colour Televisions, Mobile phones, Refrigerators and Washing Machines. Samsung exports its Made in India products like Colour Televisions, Mobile phones and Refrigerators to Middle East, CIS and SAARC countries from this complex. In November 2007, Samsung started manufacturing Colour televisions and LCD televisions at its advanced facility in Sriperumbudur, Tamil Nadu.

The Company manufactures fully automatic frontloading washing machines at its Sriperumbudur facility. Samsung has highly automated manufacturing facilities at its Complex in Noida and its recently inaugurated Sriperumbudur facility in Chennai. Samsung India's Noida CTV Plant is ranked number one among all Samsung subsidiaries in terms of its colour television productivity.

Samsung subsidiaries will meet with Samsung overseas vendors to benchmark their processes. Samsung is also providing eco-partnership training to its vendors to ensure

that the components they manufacture comply with ROHS norms and are eco-friendly. Currently, Samsung products manufactured in India have a localisation level of over 50%. Since 1995, when it was relatively unknown, the Samsung brand now has an awareness level of over 65% and a positive opinion of over 80% in the country today (source: BAS 2007).

The success of Samsung in the Indian market can be credited to its introduction of World First, Wow, leading technology products and its efforts to customize products for Indian consumers. Through its technology leadership, product design, and innovative marketing, Samsung has become a well-known household name in India. To raise consumer awareness, the company has organized over 170 Dream Home Road Shows across metropolitan and smaller markets. These four-day exhibitions showcase Samsung's new products and technologies.

Samsung India has established a wide network of Samsung Digital Plazas throughout the country to showcase their products in a lifestyle-oriented setting and engage with customers. These digital plazas complement Samsung's extensive retail presence of over 8500 outlets across India, as the company aims to expand its reach and connect with a larger audience of Indian consumers.

The market shares of both the American and European regions will decline due to market saturation. The only factor that will result in an increase in demand is the introduction of new technology.
In 2010, the estimated value of the consumer electronics devices market in India, which includes computing devices, mobile handsets, and AV products, was US$28.6bn. As incomes rise and affordability increases, it is expected to reach US$45.7bn by 2014.

In 2009, some product categories saw a decline in growth. Nevertheless,

the market quickly rebounded during the festive sales season up until Diwali. Retailers witnessed a growth rate of 20-40% during this time. The expected compound annual growth rate (CAGR) for consumer electronics devices is 12% until 2014. This growth is mainly fueled by touch-screen mobiles, LCD TV sets, set-top boxes, and notebook computers. The demand from India's rural population plays a crucial part in propelling this growth.

Display as a Growth Driver

The domestic video device market in India is predicted to increase at a compound annual growth rate (CAGR) of 22% from 2009 to 2013, reaching a value of US$15.2bn in the final year.

Television will continue to be the main product in this category, fueled by sports events like the India Premier League cricket and the 2010 Commonwealth Games in Delhi, which will boost the need for TV set upgrades. Source: Display Search India Figure: Contribution of video and audio in Consumer Electronics market The Indian market presents a paradox compared to others, as CRT TVs are outdated globally but are still being sold in rural India, while there is a increasing demand for LCD TVs in the country.

Intermediaries offer the firm a range of benefits that it cannot attain independently due to their connections, expertise, focus, and size. These channel partners perform several roles, including gathering information on customers, competitors, and the marketing environment, creating and sharing persuasive communications to encourage purchases, negotiating agreements on prices and other terms to enable the transfer of ownership or possession, and placing orders with manufacturers.

Finance inventories at various levels in the marketing channel, assuming associated risk. Facilitate

the storage and transportation of physical products. Enable buyers to pay bills through banks and other financial institutions. Supervise the transfer of ownership between organizations or individuals. All channel functions share three commonalities: utilization of limited resources, potential for specialization, and ability to be redistributed among channel members.

By delegating functions to intermediaries, manufacturers have the potential to decrease costs and prices. However, intermediaries will impose an extra fee for their services. If intermediaries are more efficient than manufacturers, this should result in decreased prices for consumers. Moreover, if consumers are capable of performing certain functions independently, they can expect even lower prices.

Channel Management Decisions

After selecting a channel alternative, a company needs to choose, train, motivate, and evaluate individual intermediaries. It is also important to modify channel arrangements over time.

Selecting Channel Members

Careful selection of channel members is essential for companies.

The company's reputation among customers is affected by its channels. If any of their outlets or dealers consistently provide a negative experience, such as being dirty, inefficient, or unpleasant, it will have a negative impact on the company. To help choose channel members, producers should identify the unique qualities of exceptional intermediaries. These qualities include the number of years they have been in operation, the range of other products they offer, their track record of growth and profitability, financial stability, level of collaboration, and service reputation. When considering sales agents as intermediaries, producers should also assess the quantity and quality of other products they sell and the size and competence of their sales force.

When department stores want exclusive distribution, the producer should assess

location, potential for future growth, and the type of clientele.

Training Channel Members

Companies must have strategic planning and comprehensive training programs for their intermediaries in order to succeed. It is essential that the company consistently emphasizes the significance of intermediaries as valuable partners who collaborate to fulfill the needs of end users.

Both coercive and reward power can be objectively observed, while legitimate, expert, and referent power are more subjective and rely on the ability and willingness of parties to acknowledge them.

Motivating Channel Members

To effectively engage with both end users and intermediaries, a company must understand and address the needs of both groups. This requires creating a channel positioning strategy that offers superior value to intermediaries. By comprehending the desires and requirements of intermediaries, the company can incentivize them to perform optimally. To accomplish this goal, the company can implement diverse programs such as training, market research, and capability-building initiatives to enhance intermediary performance.

Evaluating Channel

Producers must regularly assess the performance of intermediaries based on various criteria, including achieving sales quotas, maintaining average inventory levels, meeting customer delivery time, handling damaged and lost goods, and collaborating in promotional and training efforts. At times, producers may find that they are overpaying certain intermediaries for their actual contribution. Producers should establish functional discounts whereby they allocate specific amounts for each service provided by the trade channels. Intermediaries who fail to meet expectations should be offered guidance, training, motivation, or dismissed altogether.

Modifying Channel Arrangements

To successfully meet consumer expectations and adapt to changes in the market, including buying patterns, market

expansion, competition from new entrants, innovative distribution channels, and the later stages of a product's life cycle, producers need to carefully assess and modify their channel arrangements.

Levels of Marketing Segmentationsandtargets

In markets that are extensive, diverse, or broad, effectively targeting all customers is impossible for a company due to the lack of uniformity and variations. Customers have distinct characteristics and can be classified based on one or more factors.

Segmentation Marketing

The idea of segmentation is based on mass marketing, which involves selling a single product to all customers through production, distribution, and promotion. Supporters of mass marketing believe that it can generate a large market with cost reduction and the potential for lower prices or higher profits. However, opponents argue that the market is becoming increasingly fragmented, presenting difficulties for mass marketing. The rising number of advertising media and distribution channels has made it harder and more expensive to reach a broad audience.

There are claims regarding the decline of mass marketing, as more companies are embracing micromarketing at different levels such as segments, niches, local areas, and individuals.

After identifying market-segment opportunities, the firm must determine the number and specific targets to focus on. Marketers are now combining multiple variables to find smaller, more defined target groups. Successful target marketing involves identifying and profiling buyer groups with differing needs and preferences, also known as market segmentation.

Choose one or multiple market segments to focus on (market targeting). For each selected segment, determine and communicate the unique advantages of the company's product or service (market positioning).

The leader and the challenger have differing

spending habits. The leader could make a mistake in assessing its competition, leading to falling behind. The dominant firm may appear outdated in comparison to newer and more energetic rivals. Excessive costs for the dominant firm could result in a 27 * 32 increase and harm profits, while a discount competitor may offer lower prices. Leaders have three options when faced with an aggressive competitor; firstly, the firm must find ways to increase overall market demand.

Secondly, the company needs to safeguard its existing market share by implementing effective defensive and offensive strategies. Furthermore, the company can strive to expand its market share, even in the presence of a constant market size.

The dominant firm in a market usually reaps the most advantages when it comes to market growth. It is crucial for the market leader to either find new customers or persuade existing ones to use their product more. Each product category has the chance to entice buyers who may not be aware of the product or have concerns about its cost or characteristics.

There are three potential user groups that a company can target. The first group includes individuals who have the potential to use the product but currently do not (market-penetration strategy). The second group consists of individuals who have never used the product before (new-market segment strategy). The third group comprises individuals who live in a different location (geographical-expansion strategy). To increase usage, companies can focus on increasing both the level or quantity of consumption and the frequency of consumption.

The dominant firm must continuously defend its current business while also trying to expand the total market

size. They lead the industry in developing new products and customer services, improving distribution effectiveness, and cutting costs.

It is constantly growing in its competitive strength and value to customers.

Expanding Market Share

Increasing market share can enhance profitability for leading companies, but this may not apply to labor-intensive service firms lacking economies of scale. The success of expanding market share relies on the company's strategy. Thus, before pursuing greater market share, a company should assess four factors to determine if the costs outweigh the revenue value.

The potential for triggering antitrust action. Economic costs associated with pursuing the incorrect marketing-mix strategy, as well as the impact of increased market share on both actual and perceived quality.

Distribution Channel of Samsung

Samsung's Distribution Channel includes two manufacturing units located in Noida and Chennai. The distribution process involves a national distributor responsible for logistics and distribution of goods across the country. Additionally, the company also works with C&F agents, franchised distributors, big retailers, retail chains, outlets, small digital plazas, digital homes, digital worlds, dealers, and retailers to reach a wider customer base.

A Carrying & Forwarding(C&F) Agent is available in each of the main states. The C&F agent is responsible for storing and transporting the goods to dealers and distributors. The company still owns the goods, even though the C&F agent provides warehouses for storing them. In major cities like Delhi, goods are directly shipped from the C&F agents to the dealers. In some cases, smaller dealers may receive supplies from larger ones. For larger retailers like e-zone and Next, goods may be shipped from the C&F agents' warehouse

to a warehouse owned by the retail chain.

After the goods are given to the dealers, they become the owners of those goods. The transactions are done in cash and no credit is provided for the goods. When dealing with big retail chains, purchasing decisions happen nationally and involve direct communication between the company and the retailer's head office.

Consumer Electronics Distribution

The diagram shows the standard distribution networks for a consumer durables company. The company has its own branch network, which acts as the first level of distribution and is in charge of storing and distributing goods.

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