Samsung Growth Strategy

Samsung has used various growth strategies throughout the decades. It has entered many markets, which ensured significant coverage and sales across the globe. Now, the company employs the following strategies:

• Market penetration: Samsung increases the sales of its products to existing and new customers. For instance, when it comes to smartphones, the company has more than a 30% share of the world market for this kind of product. At that, the segment of smartphones is not the most successful one among the organization’s operations. The segment of components (especially memory shipments and semiconductors) is much more successful as regards sales. Thus, the company’s cash balance increased significantly to $64 billion.
• Market development: Samsung keeps entering new markets. This expansion is not geographical only. The company explores new opportunities in such emerging markets as the market of mobile information technology used for healthcare needs. The company sees great potential in that area as it will enable Samsung to attract more customers and come up with new products.
• Alternative Channels: Clearly, Samsung uses a variety of channels to promote their products. Some of these channels are the retail chain, a net of distributors, online sales.
• Product Development: The company invests a lot in its R&D operations. Notably, Samsung tends to sell its products to existing customers through the attraction of new customers is also one of the company’s goals.
• Horizontal Integration: Samsung conglomerate announced the decision to implement the merger of two affiliates of the company, which led to a certain debate on the benefits of this.

To consider Samsung’s growth strategy it is necessary to carry out the marketing mix analysis:

• Promotion: Samsung pays close attention to promotion and allocates significant funds to promote the brand and its products. It is important to evaluate three major methods employed:
  • Advertising: Unlike such companies as Coca-Cola or Pepsi that concentrate on brand promotion, Samsung advertises its major products and most important novelties. At that, commercials are high-quality, which is achieved through the use of technology and the attraction of celebrities. For instance, the commercial of the Galaxy S6 is appealing to the customer as many sports celebrities, as well as ordinary people, are involved. Importantly, the commercial is based on the world-famous Marvel’s story of Avengers. Galaxy 11 commercial also involves such sports stars as Ronaldo and Messi, which makes it very effective.
  • Sponsorship: The company is one of the biggest sponsors as it currently sponsors Australian Olympic Team, Sydney Opera House, NSWIS Awards, Australian Rugby Union, Oceania Foundation, non-governmental organization Life Education as well as such celebrities as James Magnussen, Guillaume Brahimi, and Ahmed Kelly. Samsung is also a sponsor of many smaller-scale events (concerts, sports games, and so on). This strategy is effective in brand promotion. It has also contributed to the high position of the brand that is among the top ten brands in the world. It is also necessary to add that the company enjoys significant loyalty among its customers.
• Placing: The company employs channel marketing, which implies the use of service dealers when it comes to corporate sales. Samsung is a well-established brand and, hence, retailers include its products into their list to provide a wide range of high-quality products to their customers. At that, there are three principal segments:
  • Sales and service dealers: As has been mentioned above, these are involved in corporate sales. Such dealers are also allowed to launch exclusive showrooms.
  • Modern retail: These are dealers operating in the modern retail chain of electronics. These are Croma, Vivek’s, Hypercity, and so on.
  • Distributors: The company makes a contract with a single distributor in some locations. This contributes to the reduction of costs and larger revenue
• Price: The company’s pricing strategy is one of its competitive advantages. The strategy is utilized with all products (components, smartphones, TV sets, laptops, refrigerators, and so on). Importantly, when competitors offer a product that is characterized by a lower price, higher quality, or more attributes, Samsung can easily lower prices down. In this way, Samsung products are popular worldwide. Importantly, Samsung has become one of the principal competitors of Apple, which is in the upper-end market of consumer electronics. However, pricing policies, as well as product development and marketing strategies, make Samsung competitive. The price is also important for market penetration. Samsung items can be successfully marketed in developed as well as developing countries. The company operates effectively in such emerging markets as China, India, or Russia.

• Product: The company produces a wide range of products including tablets, smartphones, LED TV sets, Smart TV, LCD Plasma TV, HDTV, camcorders, cameras, air conditioners, refrigerators, washing machines, microwave ovens, laptops, accessories, printers, semiconductors, and various components. The company’s primary strategy is diversification. At that, Samsung put the major focus on consumer electronics (mainly smartphones) several years ago. However, this policy was quite unsuccessful as the profit margins of the mobile division of the company decreased by approximately 7%. However, the margins of semiconductors and memory items, as well as other components, grew by 3% (to 22%). The tablet division has been also successful lately. At the same time, the company still operates in many segments to increase its revenues and minimize risks. When considering product development, it is essential to pay attention to innovation.

• • Radical innovations: Samsung has come up with various revolutionary products. Importantly, radical innovation implies that a completely new idea is brought to life. Samsung has come up with various radical innovations. Some of the most recent radical innovations are as follows:
    • Galaxy Note can be regarded as an illustration of the radical innovation employed by the company. This was a completely new product as it was a hybrid of a smartphone and tablet. The product incorporated major features of the two devices. It received controversial responses as people argued that it was too large and inconvenient, but Samsung sold 10 million items. Upgraded Galaxy Notes have been popular as well.
    • Flexible OLED display panels are illustrations of radical innovation as well. The company produces these items in their 5.5-Gen line. The displays are 0.12 mm thin. It is characterized by a Full-HD resolution and a curvature radius of 400mm. The company’s competitor LG has managed to come up with a similar product, but it is significantly thicker which reduces the curvature radius.
    • Mirror and Transparent OLED is another radical innovation. This item is characterized by 100% color gamut (compared to 70% in conventional LED panels), 45% transmittance (10% in conventional LED), better clarity, and more than 40% transparency. The item is appealing to consumers who value innovation and unconventional ideas.
• • Incremental innovations: Incremental innovation is another important characteristic feature of Samsung. The company develops many new products, which makes it competitive with such an innovation-focused company like Apple. Incremental innovations allow Samsung to produce many new products that are slightly different from old items. The competitive price of new products contributes to the increased sales and popularity of the brand. The innovation is mainly achieved through software updates. Android is upgraded steadily. Some examples of incremental innovations are:
    • Tablets Galaxy Note 10.1 are now equipped with the version that enables the device to run two applications on a split-screen. This feature is especially welcomed by those who love instant messaging and use social networks extensively. The stylus can be used to write and draw on the device’s screen. These slight but helpful changes attract more customers.
    • Galaxy Edge can be regarded as another incremental innovation. The smartphone allows checking some features without taking the device out of the cover. It also has major features modern smartphones possess such as an efficient camera, valuable applications, significant storage capacity (32 and 64 GB). The lasting battery is another feature known to Samsung customers.
    • The Serif TV can also be seen as an incremental innovation as the design of a conventional LED TV is changed (it is modified quite significantly). Major features of the LED TV remain, but the design of the piece is changed considerably. Two famous designers Bouroullec worked on the new design. The new TV sets have a flat surface on the top and bottom, which can be used as shelves for vases, books, photo frames, and so on.

References

Bouroullec Brothers Design Serif – TV that Interacts with its Surroundings. 2015. Web.

Cheng, Jonathan, and Min-Jeong Lee. “Samsung Shareholders Back $8 Billion Merger, in Blow to US Hedge Fund.” The Wall Street Journal 2015. Web.

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Gupta, Vivek. Samsung’s New Strategy Is a Worry for Apple. 2013. Web.

Kovach, Steve. “How Samsung Is Out-Innovating Apple.” CNN News. 2013. Web.

Marvel’s Avengers: Age of Ultron and Samsung Mobile Present Assemble Part 1. 2015. Web.

Masterson, Rosalind, and David Pickton. Marketing: An Introduction. Thousand Oaks: SAGE, 2014. Print.

Samsung Display Introduces First Mirror and Transparent OLED Display Panels. 2015. Web.

Trefis Team. “Samsung Could Refocus Growth Strategy as Q3 Earnings Plummet.” Forbes 2014. Web.

Yuan, Gao. “Samsung’s Strategy Officer Eyes Health Sector for Growth.” China Daily 2015. Web.