In 2016, South Korean tech giant Samsung experienced an embarrassing and financially challenging issue. The Galaxy 7 Note mobile phone was connected to dozens of reports of the devices overheating and in some cases bursting into flames (BBC, 2017a). Images and photographs could be found on postings and websites around the globe. The fire hazard led the U.S. Department of Transportation to ban the device from all domestic flights (Jansen, 2016). Company officials responded with an immediate recall and replace program, which many customers ignored (at their peril).

The financial impact was immediate. The company reported a net loss during the financial quarter in which the recall occurred. Image damage from negative publicity occurred worldwide. Eventually company leaders blamed the defect on batteries made by suppliers.

The medium term impact on the marketing department was profound.

Marketers had to be concerned with any spill-over effects, wherein the problems with the Galaxy 7 Note could be attributed to other products produced by the company. Advertising, public relations, and promotional programs had to be put on hold and then reconfigured to deal with negative consumer perceptions. The company released several statements indicating how the problem had been solved and would not recur.

Retail outlets and their employees also dealt with various aspects of the product’s problems. They were being asked to explain the problem and the remedies offered by Samsung. Decisions were made regarding their willingness to continue to carry the Samsung line in individual stores.

Individual salespeople would logically be inclined to steer customers towards other companies and brands.

The saving grace financially was Samsung’s diverse line of products. The majority of the company’s profits earned during the 2016 calendar year came from selling various components, such as semiconductors, memory chips, and display screens. Oppo, LG, and Dell all use Samsung parts in phones, televisions, and laptops. Consequently, the firm returned to profitability in the fourth quarter of 2016 and enjoyed a profit for the full year as well (Pham,

2017).

Questions

1. Using a SWOT analysis, what strategic issues did Samsung’s management team face during the product recall crisis period?

2. Using a SWOT analysis, what tactical issues did Samsung’s marketing team face during the product recall crisis period?

3. Beyond a reliance on diversification (numerous products and product lines), what strategic responses would you recommend for Samsung going forward?

4. Choose four global regions (Pacific Rim, NAFTA countries, etc.).

Explain how marketers of Samsung products would need to respond to consumers (and retailers) in those regions.

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