What have been the key success factors for Samsung?
What have been the key success factors for Samsung?
Samsung had done excellent jobs in three main areas which are technology, design and branding.
Technology
Samsung invested R&D in digital technology. It employs scientists and researchers in labs worldwide. As a result, it makes the world’s biggest LCD display and plasma HDTV. In addition, Samsung has cell phone innovations, model that uses voice recognition technology to convert speech into text messages. Furthermore, it invented the model that automatically scans business cards and inserts the details in the user’s address book
Samsung is also a leader in producing memory chips. It created the world’s first one-megabit chip and the first chip that held 256 megabits. Thus, Samsung is now the world’s largest producer of DRAM and SRAM chips. The chips and LCD divisions sell to other Samsung businesses and outsiders for the same price, with no favoritism. This assures Apple, HP, and other clients that they are treated fairly and knowledge of their buying patterns offer valuable intelligence to Samsung. Samsung showed its advance in business market as Apple announced that the iPod Nano would use flash chips rather than a hard-disk drive and Samsung intends to invest more on new chip making facilities. Consequently, Samsung is the world’s largest producer of thin film LCD screens and computer monitors according to its huge investment in technology.
Samsung has great success on product development using same manufacturing techniques and parts to introduce more products which enables huge cost savings. It also encourages competition between its product divisions, leading to some novel innovations such as a contest between the digital-camera team and the camcorder unit to produce the Duocam, a product that combine both. Moreover, it modified cell phone product to build its brand, Samsung new image. Also, Samsung is successful in its launch the first clamshell handsets that worked with both the CDMA and GSM systems used in different parts of the world.
Design
According to the article, Samsung CEO believes that the good design is the most important way to differentiate itself from its competitors. Samsung has changed into good internal management and staff and resource management. In order to be successful in that, Samsung changed its hierarchical structure, encouraging younger designers to challenge their superiors when they came up with ideas for new products. Samsung invested in designer staff by sending them to work at furniture, fashion and industrial design houses to keep abreast of the latest trends and by opening design centers in main cities over the world.
Branding
To achieve brand repositioning, Samsung embraced change in all aspects including product design and distribution. It made brand development a corporate performance target Additionally, Samsung invested in advertising campaigns, introduces its futuristic gadgets appeared in Matrix Reloaded and was principal sponsor of the 2004 Olympic games in Athens.
Discussion questions
What have been the key success factors for Samsung?
In a survey of the top 100 global brands, Samsung's brand was valued at over $14 billion in 2005, making it the world's topmost electronics brand, a position held by Sony for a long period. Samsung's key success factor was its strategy to build a strong, single brand experience coupled with innovating well-design digital products. Samsung was paying too much attention to quantity and the cost of production, and was ignoring customer value. In order for them to survive, Samsung would have to make high quality, exciting products. However, this required major changes within the company. After a decade of trial and error they finally hade stylish product portfolio and the company was able to record higher sales and higher profits. Management attributed the company's success to the design and compatibility capabilities of its products. Even though Samsung had the resources to invest into product design, the problem was convincing management. They were opposed to this strategy seeing that the company’s objective was exporting in Bulk and outselling rivals at the lowest price. Samsung not only redesigned its products but also redesigned the production, operating and delivery system. Samsung was an engineering-driven company which left very little room for product design. However Samsung realized the importance of teamwork between all departments on the development of their products.
Where is Samsung vulnerable? What should it watch out for?
Samsung’s strength is their work ethic and the
ir ability to evolve, but their weak point is their lack of creativity, diversity and tolerance within the market. Samsungs consumer devices might not always satisfy consumer needs especially user interface designs but the R & D for their technology is definitely of a high standard. A user friendly interface is vital to emphasize product capability. Samsung’s very strength also makes it vulnerable because having the majority consumers in the U.S. consumers expect lower prices or additional incentives; this can have a great impact on sales for Samsung.
Samsung’s high priced product line might not reach sales target due to consumers’ low cost expectations, another issue that might have a greater impact is subsidies from U.S. mobile operators that offer package deals to consumers where they pay nothing for their phones so that the mobile operators can get new subscribers.
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What recommendations would you make to senior marketing executives going forward? What should the company be sure to do with its marketing?
The first vital step for Samsung is to ensure building better ties with major U.S. carriers and to expand to become the preferred supplier of high-end phones across all major carriers. Samsung needs to focus on joint ventures with all major Network Service Companies especially marketing their multi-featured phones because subscribers spend more money on their monthly bill if they have more features available to them such as internet connection, email service, MMS service etc. This would attract more customers to buy package deals from a Mobile operator which in turn would generate more sales for Samsung. Once Samsung has proven its worth in the U.S. market it could easily expand globally by working with international mobile operators.
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