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 a premium-priced product leader whose wares were sold in upscale retail outlets. Third, they would continue to be vertically integrated and turn their memory and component design and manufacturing into an asset by gaining direct access to the latest technology. Fourth, Samsung would be a world leader in creating new products designed to be distinctive and cool; the organization would become much faster to market with these products (Aaker, 2008).
Samsung wanted to follow a differentiated strategy compared with its past strategy of being low cost leaders by offering new cool, innovative and distinctive products. Rather than being cheap copycat manufacturers whose products appealed to laggards, Samsung wanted to be premium-priced innovative product manufacturers whose innovative products were targeted towards a section of consumers called innovators. Acceptance of their products by these consumers would pave way for other consumers who would want to buy Samsung products. Instead of creating an order qualifying product, Samsung wanted to focus on creating order winning products which would help them to be successful and competitive globally.
Source: (Rogers, 2003)
In order to achieve these objectives, the organization refocused on its business by investing heavily in corporate branding and R&D with a strong support from the Korean government (Yeung, 2007). The focus of all these initiatives was on quality, listening to markets, creating distinctive advantages, being the best, anticipating the future, creating an organizational environment to foster innovation and growth, and contributing to a better global society (Aaker, 2008). Samsung has since then maintained its design and technology leadership through a strong commitment towards R&D, to come up with innovative and differentiated products.
Source: (Oswald, 1996)
Developing a Premium Brand
Samsung began developing its own products rather than copying those that other firms had developed. In particular, Yun placed considerable emphasis on the development of products that would impress consumers with their attractive designs and their advanced technology which would allow Samsung to become a premium priced brand (Dess, Lumpkin, & Eisner, 2010). To achieve this goal, Yun recruited new managers and engineers, many of whom had both knowledge of the local market and experience in the international market; who would have a key influence on the development of the organizations plans (Lin, 2009). To create incentives for this new talent, Yun discarded Samsung’s rigid seniority based system and replaced it with a merit-based system for advancements.
Close links with retailers helped Samsung to get information regarding the needs of the customers and come up with distinctive, innovative and attractive products to meet these needs. Samsung began launching an array of products that were designed to make a big impression on consumers and were focused on the specific un-met needs of the prospective customers. Samsung calls these customized versions of their core products as ‘WOW’ products (Dess, Lumpkin, & Eisner, 2010). Finally, to help Samsung change its image among consumers, Yun hired Eric Kim, who worked hard to create a more upscale image of the firm and its products. He consolidated the disparate business operations and drove towards a single vision based on the new cool, upscale Samsung brand of technology leadership in digital convergence by replacing the firm’s 55 advertising agencies with one global agency and delivering a presentation to top Samsung managers in English (Aaker, 2008).
Alternative Value Propositions
A successful business strategy needs to add value for customer, and this value needs to be real rather than merely assumed. Value is more likely to be real if it is driven from the customer’s perspective rather than from that of the business operation and must be recognized and perceived as worthwhile by the customers. A business has to make what customers want to buy. Samsung has been able to sustain its value proposition by owing important product dimensions which can be differentiated from its competitors (Aaker, 2008). Samsung has invested in continuous improvement and R&D activities which have helped them to stay ahead of their competitors. The strategic options that the company has followed over the last decade have allowed it to remain competitive across the globe and are discussed in this section.
Source: (Aaker, 2008)
Being Global - Samsung invested in a lot of activities to be perceived as a global brand. It associated itself with global events and personalities to build its brand equity. A successful brand would allow it to compete in the global markets and the more the number of its consumers; the higher will be its brand value. This could translate into the share of voice leading to a share of mind which leads to a share of the market.
Appealing Design – The innovative and distinctive design of Samsung products will appeal to a customer, providing them with substantial self-expressive and functional benefits. In order to make the designs credible and visible, Samsung associated with branded sports personalities.
Superior Customer Relationship – Samsung listened to the needs of the market and created products which catered to these un-met needs. Their products were able to deliver a satisfying experience to its customers on several levels e.g. self-expressive, social.
Quality and Value – ‘Quality first’ is a core value of every product Samsung sells. By creatively applying technological expertise, Samsung enhances the value of their existing products and develops new categories of breakthrough ideas. Samsung’s world-class products don’t just meet consumer needs, they exceed them, and delight customers with benefits not found in competitive products (Oswald, 1996).
Brand Familiarity – Successful brands drive consumer preferences, preserve margins and build customer loyalty, even in the face of tough competition. Brands provide peace of mind to consumers and create value for shareholders (Oswald, 1996). Samsung has been investing a lot in advertising and marketing in order to constantly remind the consumers of their presence.
Getting Noticed
According to Chairman Lee Kun-Hee, “Devise strategies that can increase brand value, which is a leading intangible asset and the source of corporate competitiveness, to the global level” (Samsung, 2011). By sponsoring various global sports events including the Olympics, Samsung announced its arrival on the global screen. The sponsorship associations suited perfectly with the CEO’s vision of becoming a global brand by showcasing the company as hard working, striving for excellence in the industry, being focused and creative and being fiercely competitive. Samsung acquired a new corporate identity by changing its logo and that of the group. The white colored letters on a blue color background represented reliability, stability, and warmth. Samsung was written in English so that it would be easy to read and remember globally. The logo was shaped elliptical representing a moving world - symbolizing advancement and change (Fine, 2005)
Apart from communicating its brand identity through sport event sponsorships of various kinds, Samsung also used other channels to communicate its identity. Samsung associated itself with the South African fashion industry and sponsored many fashion events. It also joined hands with the famous fashion house- Giorgio-Armani to introduce a new mobile phone which was the size of a credit card. This initiative was a big hit with fashion conscious customers. Samsung also ventured into sponsoring Hollywood movies, notably The Matrix trilogy. All these initiatives have helped build its brand over the years.
References
Aaker, D. A. (2008). Strategic Market Management. New Jersey: John Wiley & Sons, Inc.
Dess, G. G., Lumpkin, G. T., & Eisner, A. B. (2010). Strategic Management. New York: McGraw - Hill Irwin.
Fine, J. (2005, October 31). Samsung The Network: Blurring the line between ads and media like never. Retrieved April 4, 2011, from Business Week: www.businessweek.com
Lin, H. (2009). Competition Based on Marketing Resources : Catch-up Strategies of South Korean Firms in China. China Information , 129-157.
Oswald, F. J. (1996). The Spirit of Competition. Seoul: Office of the Executive Staff of the Samsung Group.
Rogers, E. M. (2003). Diffusion of Innovations. New York: Free Press.
Samsung. (2011). About Samsung. Retrieved April 05, 2011, from Samsung: http://www.samsung.com/nz/aboutsamsung/management/index.html
Willmott, H. (2010). Creating 'value' beyond the point of production: branding, financialization and market capitalization. Organization , 516-542.
Yeung, W.-C. H. (2007). From followers to market leaders: Asian electronics firms in the global economy. Asia Pacific Viewpoint , 1-25.