Launching High End Technology Products Contributed Prof Ashutosh Prof Sarita

8/13/2019 Launching High End Technology Products Contributed Prof Ashutosh Prof Sarita

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Launching high-end technology products A Samsung case study

Introduction

It is very important that a company develops a coherent marketing strategy for the launch of each

individual product in its portfolio. It is of equal importance that these strategies are compatible

and support the firms overall objectives.

This case study examines how Samsung develops new high-tech products and brings them to the

mass market on an international level. Although Samsung is a multi-national company with 56

world wide subsidiaries, this case study concentrates on the UK market. It discusses three very

different products and how they require varying marketing methods and channels to supply three

different markets.

Background to Samsung Founded in 1938 in South Korea, Samsung has grown from a modest

trading company to a multi-national conglomerate with an annual turnover in 1997 of nearly

$100 billion. Samsung operates in three major markets - electronics, engineering and chemicals -

and employs people in more than 60 countries. The corporate philosophy is to devote its human

resources and technology to the development of a global society through ever better products and

services. Samsung pursues three strategies to achieve its objective of maintaining global

competitiveness.

Quality first

Samsung continuously strives to improve product quality, implementing numerous quality

control checks. For example, workers are allowed to halt production at any time if a fault is

identified.

The global strength of Samsung provides flexibility being a global organisation enables it to

find the best sources of raw materials, together with the best locations in which to manufacture

and assemble its products. Samsung has 26 factories across the world, therefore its global nature

has also resulted in an internationally recognisable brand name. Because Samsung operates in so


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many product and market areas, it combines all its expertise, technology and facilities in order to

improve product development. This is known as synergy. Additionally, Samsung is a vertically

integrated company, controlling all phases of the process, from raw materials through to

manufacture, the retailer and the customer.Promotion

A common feature of its marketing strategy is promotion, one of the four Ps. Samsung promotesits products in a variety of ways ranging from attending the relevant trade fairs for each of itsproducts, to providing print brochures, posters and specification sheets.Information about products is also available on Samsungs website and via brochure lines.Brochure lines are 0800 numbers which the public can use to find out more about specificproducts and at which retail outlets they are available. Samsung increases general brandawareness through corporate sponsorship, lending its support to such events as the RoyalWindsor Horse Show and the Samsung Open tennis tournament.

All of these methods of promotion are available to support the launch of a specific product. Themarketing approach for each product may vary, however they are co-ordinated and monitored bythe marcoms division, Samsungs internal communications network. Marcoms maintain accurateproduct and dealer information on a database allowing the employees ofSamsung to monitor what form of promotion is available to what product and who is to beinvolved.Samsung has played a leading role in the development of DVD (digital video discs), therevolutionary new format which provides near studio quality picture and sound reproductionusing the latest digital technology. The data capacity of DVD is up to 26 times greater than thatof a CD or CD-ROM, which means flexibility and quality can be vastly improved. Samsung has

included all the most sophisticated features, but at a very keen price. As increasing numbers ofelectronics companies have launched DVD models, the average price has fallen consistently andwas forecast to fall by 50 per cent during 1999.

The launch The launch of new high-tech products is always challenging, particularly when the product isaiming to replace a near universal product such as the video recorder, but the UK DVD markethas made a much stronger start than expected. A key factor in the popularity of DVD has beenthe mass availability of software via retail and rental outlets.There are also problems in the market. One problem is that film producers and distributors wantto control the release of home movies. This is because the films themselves are released atdifferent times around the world. Until now, this has been achieved by coding the videos or discsso that they can be played only on certain machines in different parts of the world. For example,discs sold in the USA cannot be played on machines sold in Europe. Non region-specifichardware products have proved particularly popular, although there may yet be legalimplications to this development.


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What has Samsung done to market DVD?

As the DVD players and discs are in joint demand, Samsung has been active in forging linkswith software manufacturers. The cross fertilisation of information between the two producershas given the retailers, dealers and consumers greater confidence in the new product. Attempts

have been made to develop marketing partnerships with software retailers so that they stockSamsung DVD players. Most DVD players are distributed through multiple retailer channels.Extensive above the line marketing has been employed, such as advertising in the specialist andconsumer press, emphasising the benefits of DVD technology. Samsung has tried to encourage

journalists in both hardware and software consumer magazines to run reviews and has placedadvertorials - editorial advertisements which provide ample descriptions of all facets of theproduct. Samsung is also promoting its product by developing sampler discs which are givenaway free on the covers of selected film magazines. Consumers are encouraged to take these to aretailer in order to try them out in a Samsung player. If the consumer subsequently buys a DVDplayer, he can claim up to six free DVDs supplied by the software manufacturers.For net surfers, DVD screen savers are being developed by a marketing consultant. They can bedownloaded to a PC from various film websites. The sites also explain the benefits of DVDtechnology. Increased publicity has come from cinemas through staged DVD events. At suchevents, the major software manufacturers screen the latest blockbusters. The cinemas screenDVD adverts and distribute promotional information and merchandise. TFT flat screen monitorsAs one of the largest mass producers of thin-film transistor (TFT) flat screen monitors, Samsunghas been able to control every stage of the development and production process. Based on liquidcrystal display (LCD) technology, these new monitors provide superior image quality, withsharper definition.The biggest disadvantages of conventional CRT screens are that they take up a great deal ofroom on any work station and consume a lot of power. TFT monitors, on the other hand, can beviewed from a wider range of angles and are both lightweight and space saving, with lowerpower consumption. They also emit less harmful radiation and there is a reduced risk of CVS(computer vision syndrome), a condition caused by over-exposure to older CRT monitors whoseperformance has not been regulated by the latest safety standards. Symptoms of CVS can includeburning eyes, blurred vision and headaches and may affect up to 15 million people.

Marketing strategy As TFT monitors are primarily aimed at corporate customers, the marketing strategy adopted bySamsung necessitates a completely different approach. Samsung has identified a potential market

amongst business users, whose employees might spend long periods of time in front of acomputer screen and need a larger display with better definition. The financial centres in the Cityhave likewise proved an important market. A further group of customers are high street shops, inparticular fashion outlets such as Jigsaw, who have installed Samsung TFTs at their point of saleterminals. As the customer steps up to the counter, the sales assistant records the sale, whilstimages and details of complementary products are displayed on the screen.


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To encourage business users to buy Samsung monitors, a radical marketing strategy has beendeveloped. With support from Head Office in Korea, a number of initiatives have beenintroduced to raise brand awareness and instil good perceptions of the product. An open day andseminar for corporate customers, along with a high profile press launch were organised.Advertising was carefully targeted at business users, particularly in the City and in productspecific magazines and papers. One-to-one marketing has also been used, mailing promotionalmaterial directly to the customer.The cost of this technology means that TFT LCD monitors are still more expensive thanconventional CRT monitors, although the price is falling steadily as manufacturingtechniques improve and more competitors enter the market.

Brand building Samsung is a relative newcomer to the highly competitive world of mobile communications,developing a cellular telecom system as late as the 1990s. Having established itself in the CDMAmarkets (including USA and Korea), Samsung has now decided to use the GSM (Global System

for Mobile communications) network to enter the international markets. As part of the trendtowards convergence in the electronics world bringing computers, entertainment andcommunications closer together Samsung has implemented a brand building exercise,stretching the brand name to take in new products. Drawing on the expertise and economies ofscale from being one of the worlds leading manufacturers of memory chips and display screens,Samsung will be able to compete with those firms already in the market.

New product development

Samsung developed a new product, a slimline phone with an innovative design, which has beendeliberately positioned in the mid to high end of the market. Due to its unique selling point -

voice activated, hands free dialling - Samsungs phones are specifically targeted at ABC1businessmen and women, aged between 25 and 44. This is known as market segmentation ordifferentiated marketing.The marketing strategy for the mobile phone market is different yet again. The promotionalstrategy, designed to increase brand recognition, has involved extensive sponsorship of some ofthe most prestigious sporting events broadcast across the globe. Sydney 2000 Olympics and theWorld Gymnastics Championships have been selected as platforms from which the Samsungbrand name is sported. An extensive mobile phone advertising campaign on terrestrial TV and inthe specialist press was reinforced by an outdoor campaign in the autumn of 1999 involvingadverts on the sides of taxis, on buses and on the underground.Having launched five mobile handsets on the market between 1998 and 1999, Samsung isalready working on its strategy for the new data communications market where consumers willbe able to access the Internet and e-mail via mobile phones. In this time, Samsung acquired asizeable portion of the market and demonstrated remarkable innovation in technology anddesign, as with the wrist phone and the MP3 phone.As mobile phones are usually bought through specialist retailers or through phone serviceproviders, the channels of distribution also differ from DVD and TFT monitors. Samsung has


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made it a priority to establish a solid distribution base by forming strategic trade partnershipswith the core retailers and mobile phone retailers. This base established, the strategy involvesextending these networks and searching for every opportunity to make the products available tothe consumer. Point of sale materials and brochures have been produced for impressive in-storedisplays and professional training sessions guarantee that retail staff have a thorough knowledgeof the products.

Conclusion By utilising its global qualities and substantial market knowledge, Samsung has developed threedistinct marketing strategies to launch three equally high-tech, but different, products.Throughsuccessful, diverse approaches to individual markets it has maintained its corporate philosophy -to devote its human resources and technology to the development of a global society throughever better products and services.

Contributed by: Prof. Ashutosh Pandey & Sarita Srivastav

Source: http://businesscasestudies.co.uk

Launching High End Technology Products Contributed Prof Ashutosh Prof Sarita

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