Samsung Malaysia: Business and Market analysis - Iloka Benneth Chiemelie

INTRODUCTION  

For over 70, Samsung has been dedicated to making a better world through diverse business that today spam advanced technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels, and more. The company’s flagship, Samsung Electronics, leads the global market in high-tech electronics manufacturing and digital media. (Samsung Official Website 2009)

Through innovative, reliable products and services, talented staffs, a responsible approach to business and global citizenship, and collaboration with other companies and customers, Samsung has taken the world in new imaginative directions with varieties of products, offering varieties of features with cutting edge innovations. (Samsung Official Website 2009)

In this assignment I choose Samsung 200HZ Motion Plus. It is the world’s slimmest television. The technology streamlines all the scenes on the screen by creating and inserting a ‘middle’ image between two neighboring scenes. Besides eliminating motion blur and distortion, this makes the display more enjoyable to watch, particularly those with ultra-fast action sequences.

This assignment will explains more detailed information about the company and its environment as well as how innovation has taken them to a new level. The whole assignment will be focused on the United States Market. For more information about the product features, seeAppendix 1

CASE STUDY AND ENVIRONMENTAL ANALYSIS                                                   

Samsung is one of the most widely used home Electronics in the United States. The demand for Samsung products in the US is high compared to its rivals. This is because if their uniqueness, products features and innovative technology. Samsung has since its establishment continued and as their vision statement lead, will still continue to, provide their customers with the best at all times towards serving them better. Samsung is guided by a singular vision: to lead the digital convergence movement.

The company believes that through technological innovations, they would be able find the solutions needed to address the challenges of tomorrow. From technology comes opportunity—for businesses to grow, for citizens in emerging markets to prosper by tapping into the digital economy, and for people to invent new possibilities. (Samsung Official Website 2009)

As Samsung aims to develop innovative technologies and efficient processes that create new markets, enrich people’s lives and continue to make Samsung a trusted market leader, this could be hindered by the environmental factors. Those environmental factors will be discussed below.

Political environment

Nationally, there is no political influence from the governments of us on the company. But as a foreign company to the United States, the company is obliged to function under standard set of principles for foreign companies in the US. These certain standard includes tax, regulated governance and integrated management to manufacture their products based on the taste of the United States customers.

Economic environment

With a net income of 19.2 billion US dollars as of 2008 year ended in the bags of Samsung, there is a 7 billion us dollars increase when compared to the 12.9 billion net profits of 2007. This creates a huge financial gap between Samsung and its rival companies. This has given them a competitive edge over their company in terms of publicity, research, promotion and advertisement.

According to the CEO, Mr. Lee, he stated in a press conference that ‘satisfaction is not a guarantee; it should be given to the customer’. This is one of the ways the company uses to encourage sales and promote brand royalty. With 174.2 US billion in sales, there is no doubt about the financials of the company. Samsung has a total asset worth 302.9 billion in US dollars across the globe. Globally, the company is financially stable and same nationally. The biggest threat was the recent global recession which threatened sales in US. But, with customers going back to market, there is a dramatic increase in sales once more. (Samsung official website, 2009) For more information about Samsung financials, see Appendix 2]

Socio- cultural environment

Considering the nature of the American market, and way of living, it has always been easy for Samsung to adapt and blend into the environment. The population of US as at 2000 is approximately 274 million with an annual percent growth of 1 percent. With Samsung haven positioned itself potentially in the minds of the American market, the need to provide the best in order to maintain their current position has ever since increased.

This could as well, be threatened with the shift in us population, as the population is not growing at a given rate across the whole American market in general. These different rates of growth are important to marketers. For example, sudden growth in one area may create a demand for many new shopping centers – while retailers in declining areas face a tougher competition for a smaller number of customers.

Technological environment

With new innovative products, Samsung has won the hearts of their customers. They have provided the best, sophisticated and cutting edge innovative technological products to their customer. Samsung has developed and edged over their competitors with much investment in research and technological advancement. (Samsung official website, 2009)

ANALYSIS AND EVALUATION                                                          

This section will cover how Samsung innovate and launch new products. Ranging from what can be changed and innovated in the new product, why I choose Samsung, LCD Television and American market for my assignment, the optimal time for introducing and launching the new product, and how to create tactical market plan to boost sales, increase market shares and maintain their market leadership position.            

WHAT BE CHANGED AND INNOVATED IN THE NEW SAMSUNG HZ 200 LCD TELEVISION

Infolive

Infolive streams up-to-date information (news, weather and stock information) through RSS feeds on TVs. Samsung should update the infoLive by putting WISELINK to enable quick multimedia connectivity (USB 2.0) with cameras, MP3 players and camcorders so that the customers can enjoy photos, music and movies through the TV.

Filter bright

On conventional screen, colors may be blurred or unfocused during the day due to external light and reflection. Samsung should incorporate the filter bright innovative technology of the Samsung 8 series into the 200HZ to advance the panel technology so that customers can get clearer images, with more precise black expression.

Design

The product should be crystallized, to maintain durability and to make it more environmental friendly. The design should also be much better and stronger to avoid cracks or damages due to excessive sunshine and humidity.

Power off function

The 200HZ Samsung TV does not have a power off function. You can put the TV on a standby mode, but there will be a red light power in front of the TV. To automatically put the TV off, you will need to switch it off from the socket. Samsung should design an automatic power off in the 200HZ since it would be more convenient to the customers and considering fact of global warming, it would also be a green technology and help people to save money through conserving energy. (Yahoo shopping, official website, 2009.

WHY THE PARTICULAR PRODUCT, TECHNOLOGY AND MARKET ARE SELECTED

Product

I choose Samsung LCD 200ZH series for my assignment because; it is currently the world’s slimmest television. It Provide many unique features and benefits to the consumer. It is a clear innovation incorporated into creativity, which makes it unique and beneficial.

Technology

The technology is a true genius born into creativity. Samsung's businesses harness the power of the digital revolution to create ground-breaking products and services that take consumers and businesses beyond imagination. (Samsung official website, 2009)

Market                                                                                                                                                             

I choose US market because I am familiar with it. It is so competitive and Samsung has its American head quarters in the United States. The product is also quite common in the chosen market.

THE OPTIMAL TIME OF ENTRY

The American market is so competitive and the population shifts continuously. In this kind of environment Samsung needed to come up with something tactical to determine how and when to enter the market. By designing innovative products and offering the market what other companies offer in a different way, Samsung has become pioneers of some of the American electronics. It makes it so easy for the company to penetrate into the market. Following the recent global recession, customers have been so keen on their spending. Samsung invested a lot into promotion and advertisement. The optimal time for them to enter into the market is when the demand for the product rises from the awareness created through advertisement. Following the recent economic turn-ups in the United States, it created an optimal period of entry for the company. As they continue to penetrate the market gradually, the company is so concerned about imitation from other companies so with promotion and advertisement they have gained competitive edge over their competitors being the pioneers of the product.

HOW TO CREATE PROFITING MARKET CONDITION                        

To create the desired marketing condition the company wants, they will need to develop a new product planning scheme. Samsung products have won loyal customers; it can be successful for a long time – even in a mature or declining market. However, continuous improvements are needed to keep customers satisfied especially if their needs shift. Identifying and developing new product idea – and effective strategies to go with them – is the key to keep Samsung in their current market position and make them more successful.  

New product planning involves series of steps from generation to commercialization that moves goods and services to the final consumer in their desired taste. (Williams & Jerome 2009, p.204) Figure 1 New-Product Planning Steps

 (Essentials Of Marketing: Williams & Jerome 2009, p.204) 

Idea generation

The company will implement a continuous, systematic search for new product opportunities to be acquainted with new idea sources and ways to generate ideas. This idea generation can be done through market research or laboratory oriented research. (Joel R, 2009)

Product screening

Samsung will need to screen out poor, unsuitable and unattractive ideas from potential products to meet customer’s taste and increase satisfaction. (Joel R, 2009)

After screening, Samsung should determine customer’s altitude to know if the product meets consumer taste before developing the product. (Joel R, 2009)

Business analysis                                                                                 

This involves detailed evaluation of such factors as consumer demand, production costs, marketing costs, breakeven points, competition, capital investment, and profitability for each proposed new product to ensure qualitative and quantitative product commercialization. (Joel R, 2009)

Product development

It is all about devising an actual product and a broad marketing strategy. After developing the product, it should be tested within a specific region to get customers feedback and observe real performance. (Joel R, 2009)

Commercialization

If the testing goes well, Samsung should enact a marketing plan that works towards product capabilities. The new product should be commercialized and introduced to the target market. (Joel R, 2009)

If these full steps are well enacted and the product regularly monitored for improvement, this will help them to gain a competitive edge over their competitors. Since the product is general, the competition is likely to be high. They have solved this problem by introducing market

For information on how product development can enable Samsung to develop a profitable market conditions, see Appendix 4.

HOW CHARACTERISTICS OF CONSUMERS IMPACT PRODUCT       DEVELOPMENT AND ADOPTION

Adoption process is the mental and behavioral procedures individual goes through when learning about and purchases. This consumer behaviors and characteristics affect product adoption and development in some ways based on the final consumer’s life styles. (Williams & Jerome 2009, p.204)

SOCIAL CHARACTERISTICS

The social profile of a consumer is based on a combination of culture, social class, social performance, reference group, opinion leaders, family life cycle, and time expenditures. (Williams & Jerome 2009, p.204)

The major aspect of social characteristics that affect product development and adoption is the social status. ‘This is the hierarchy by which individuals are classified on the basics of esteems and prestige’. (Joel Evans 2009). It involves what individuals earn and how they spend their earnings. Definitely, before the Samsung LCD 200HZ series will reach its final consumer, the consumer will have to purchase the products. Looking into the American market, they are lots of families that cannot afford the value for the product. In this case, when they go about to purchase a television, they will just over look the product and go for other products that they can afford.

This will affect the product development because during product testing, the company weighs the desire of the consumers that purchased the test product and if all was to afford it, it would more likely; change the product development plans and adoption process. (Joel R, 2009)

PSYCHOLOGICAL CHARACTERISTIC OF CONSUMERS

The psychological profile of a consumer involves his personality, attitude, class consciousness, motivation, perceived risk, innovativeness, and the importance of a purchase. (Williams & Jerome 2009, p.204)

Most consumers are not early adopters and they don’t like to take risks. This could affect the product adoption because this kind of consumers would not be willing to buy the product during introduction. They would like to wait and see how the product functions or how the early adopters value the product before they make purchases. This could also be due to the fact that during introduction stages, the Samsung normally use a market price skimming strategy. So the consumers tend to avoid the adoption stage until when the product has entered the market and probably the price decreased before they purchase the product.

Another consumer characteristic that deters product adoption and development is the consumer decision process. The purchase act is the decision made by consumer on where to buy and what to buy. This could lead to the consumer skipping the test market in search of more reliable market. In turn it will affect adoption and product development. (Joel R, 2009)

OPTIMAL SOLUTIONS FOR SAMSUNG TO CONTINIOUSLY MAINTAIN THEIR MARKET LEADERSHIP POSITION

Using the Porter’s Five Forces Strategy, Samsung should seek the best from the best they have, in order to remain the best.

Figure 2.  Porter’s five model for tactical marketing plan

            (Quick MBA Official Website, 2009)

Rivalry                                                                                                            

The American market is not disciplined, that means that rivalries between firms are high. This puts the need to gain competitive advantage of rival companies at a stake. In other to maintain their position as market leaders, Samsung should consider the following.

The rivalry is very high, especially with many telecommunication industries across the American market. The companies that threaten Samsung’s current marketing position include Sony, LG, and Panasonic. These rivalries are quite common because of different cultures and taste that exist in the American market.

Threats of substitutes                                                                                          

In Porter’s model, substitute products refer to products in other companies. A threat of substitute is said to exist when the demand for products, is affected by change in price of substitutes. (Quick MBA official website, 2009)

They are many substitute products for Samsung HZ 200, this includes the LG flat screen, Akira supermodel TV, LED TVs from many other electronics companies. 

Suppliers power

In other to manufacture the specified products, Samsung need raw materials to process those products. The suppliers can exert influence on the company by increasing the product price to milk the company’s profit. (Quick MBA official website, 2009)

The American suppliers are mainly money orientated than business orientated, because they are many companies that need their service for production.

Buyer power

This is the impact consumers have on producing firms. When this power is strong, it could lead to market monopoly. That is a situation where they are many companies offering many products with few buyers. In this kind of situation, the buyer sets the price and this leads to loss of market shares. (Quick MBA official website, 2009)

The availability of substitute products has made the customers more price orientated than quality orientated. It also decreases customer-to-company loyalty, since they can find a product that offers the same service or even better at a lower cost.

5.5 Barriers to entry

In the American market, there are no barriers of entry from the government over or against any company. By theory of existence, it is believed that any industry can enter or exit the American market. This threatens Samsung’s existence because companies can enter the market to imitate their products or pioneer new innovative products themselves, thereby, drawing out their customers.

For recommendations on strategies Samsung should implement for current and future profitable market conditions, see Appendix 5

For more information on how consumer behaviors affects product diffusion and adoption see Appendix 3

REFERENCES                                                                                                         

Joe, T, John, B & Keith, P, 2005, managing innovation: integrating technological, market and organizational change, 3^rd Ed, john Wiley, England.

Samsung Official Website 2009, Samsung HZ 200, online, retrieved on 10 July 2009, from  http://www.samsung.com.my

Quick MBA 2009, porter’s five forces, online, retrieved on 15 July 2009, from http://www.quickmba.com/strategy/porter.shtml

William, D & Jerome, M 1999, Basic marketing: a global-management approach, McGraw-hill, London.

William, M & Ferrell, O 2005, marketing: concept and strategies,10^th Ed, Houghton Mifflin, New York.

Wikipedia 2009, product diffusion and adoption, online, retrieved 17 July 2009, from  http://en.wikipedia.org/wiki/Diffusion_(business)