Marketing Strategy - Samsung

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Executive Summary

Samsung was founded in Samsung town, Taegu, Korea in 1969 by Byung-Chull Lee.  Less than 60 years ago, the Samsung Group was a small Korean trading company, supplying rice and agricultural commodities to neighboring countries. Today, Samsung is composed of 35 businesses including electronics, chemicals, machinery, construction, textiles, entertainment, financial services, and insurance, with 423 offices and facilities in 68 countries (Samsung, 2011).

1996 saw a turnaround of a lot of events in the organization.  A new CEO, Yun Jong Yong addressed the financial crisis aggressively by enunciating some bold moves and strategies.  He wanted to bring a change in the organization and the manner in which business was run.  Yun recruited new staff that would act as change agents and help in achieving the organizational goals.  He wanted Samsung to be the number one brand in consumer electronics and change their market position from being price oriented copycat manufacturers to being premium-priced product leaders.  Yun lay off 24000 employees, shut down factories and sold off business units which did not fit his strategic plans.

The new strategy was to discard the failing strategies and build a new brand.  In order to gain worldwide recognition, a lot of advertising and marketing activities were undertaken, in particular, Samsung being the official wireless sponsors for the Olympics and other major sporting events.  Samsung has come a long way since 1969 to has become one of the most reputed and recognized brands globally.


Table of Contents


Discarding a failing strategy

Until 1998, Samsung relied on a strategy of competing on price with products that were based on technologies that had been developed by other firms.  Samsung was generating a majority of its profits from the lower priced appliances that consumers bought since they could not afford a higher priced brand such as Sony or Mitsubishi.  The success of this price competitive strategy was tied to the ability of Samsung to continually explore for locations that would allow it to keep its manufacturing costs down.  At the same time, it would need to keep generating huge orders to maintain its economies of scale and keep its production costs low (Dess, Lumpkin, & Eisner, 2010).

In 1996, the president and CEO, Yun Jong Yong was concerned about the future prospects of the firm and its heavy reliance on a strategy of competing on price.  There was also a growing concern about the competition that the firm would likely face from the low cost producers from China and other countries.  The financial crisis of 1997 made conditions worse for Samsung as it was left with huge debts due to a drop in demand and a crash in the prices of many electronic goods which resulted in their warehouses being stacked with unsold products (Dess, Lumpkin, & Eisner, 2010).  After much consideration, Yun set the stage for gaining global leadership by enunciating a bold strategy (Aaker, 2008).  To start with, he decided to lay off about 24000 employees, shutdown factories and sold off about $2 billion worth of businesses like pagers and electric coffeemakers that were perceived as to be of marginal significance for the firm’s future (Dess, Lumpkin, & Eisner, 2010).

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Evolution of a new Samsung

As a company, Samsung lacked any common brand identity; it was a ‘house of brands’ which enjoyed minimal recognition and positive evaluation by consumers, and so lacked brand equity.  As part of the makeover, first, Samsung adopted a top-down “single Samsung” policy to develop its business across the globe.  Samsung concentrated primarily upon increasing brand recognition and esteem, using billboards to plaster its logo and products across the planet and associating these with prestigious events and associated life-styles (Willmott, 2010).  Second, Samsung changed its market position from being a price-oriented copycat manufacturer to ...

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