Chosen Company Case: Name:

Primary Marketing Issues and Problems

Case Discussion Questions and Answers

Marketing Strategy Recommendations

Current and Future Implications of the Recommended Marketing Ideas

Fostering Marketing Orientation: How to Maximize Positive Outcomes from the Relationships with Customers and Suppliers in a Competitive Market

Examples of Global Marketing Practices

Examples of Socially Responsible Business Practices

Conclusion

References

Samsung: A Strategic Plan for Success

Youre probably familiar with Samsung. Maybe you have one of the companys hot new Galaxy smartphones or tablets that track your eye movements to help you navigate the screen. You might be doing your homework on one of its cutting-edge laptops. Or perhaps youve seen one of its dazzling new ultra-high-definition curved-screen smart TVs with Nano-crystal technology.

Chances are good that you or someone you know owns a Samsung product. After all, Samsung is the worlds largest consumer electronics manufacturer, producing gotta have products in just about every electronics category, including TVs, DVD players, home theaters, digital cameras and camcorders, mobile devices, smartwatches, home appliances, laptops, printers, and LED lighting.

But only 20 years ago, Samsung was little known, and it was anything but cutting-edge. Back then, Samsung was a Korean copycat brand that you bought off a shipping pallet at Costco if you couldnt afford a Sony, then the worlds most coveted consumer electronics brand. However, in 1993 Samsung made an inspired decision. It turned its back on cheap knock-offs and set out to overtake rival Sony. At the time, no one outside of Samsung believed that was possible. But the Korean manufacturer passed Sony in just 10 years, and Samsung has been widening the gap that separates it from the former market leader ever since.

The New Management Strategy

How did Samsung move so far so fast? The dramatic shift came about as a result of a top-down mandate to reform Samsungs business model and culture. In 1993, CEO Lee Kun-hee unveiled a new strategy. The goal: Dethrone Sony as the biggest and most desirable consumer electronics brand in the world. Turn Samsung into a premier brand and a trailblazing product leader. To that end, the company hired a crop of fresh, young designers and managers who unleashed a torrent of new productsnot humdrum, me-too products, but sleek, bold, and beautiful products targeted to high-end users. Samsung called them lifestyle works of art. Every new product had to pass the Wow! test: If it didnt get a Wow! reaction during market testing, it went straight back to the design studio.

Beyond just seeking cutting-edge technology and stylish designs, Samsung put the customer at the core of this innovation movement. Put simply, our differentiation is centered on producing innovative technology that brings genuine change to peoples lives, said Sue Shim, Samsungs chief marketing officer. We do this by bringing a relentless focus on consumer experience and product innovation in everything we do.

With its fresh customer-centered focus, Samsung made quick work of surpassing Sony. Today, Samsungs annual revenues of $196 billion are more than two and a half times Sonys $75 billion. And over the past five years, as Samsungs sales and profits have seen double-digit growth, Sonys revenues have declined and losses have compounded. According to brand tracker Interbrand, Samsung is now the worlds seventh most valuable brandahead of megabrands like Disney, Pepsi, Nike, and Toyotaand one of the fastest-growing brands in the world. And Sony? It has fallen from grace as the value of its brand has declined as dramatically as Samsungs has risen.

But more than growth, Samsung has achieved the new product Wow! factor it sought. As evidence, Samsung is a dominant force at the annual International Design Excellence Awards (IDEA) presentationsthe Academy Awards of the design worldwhich judge new products based on appearance, functionality, and inspirational thinking. Year after year, Samsung emerges as the top corporate winner. Last year, Samsung claimed 10 awards, more than three times as many as the runners-up.

Good companies achieve their strategic goals. Great companies modify their strategic plans as goals are met, always looking to the future and positioning themselves to remain in front. After Lee was named top CEO of the Decade by Fortune Korea, he announced that the new management plan was old news. After 17 years of remarkable success, Lee admitted that Samsungs main products would likely become obsolete within the next 10 years. He then unveiled the underpinnings of a new strategic direction based on the Chinese axiom mabuljungjemeaning horse that does not stop. In a memo to Samsung employees, Lee said, The new management doctrine for the past 17 years helped catapult the company into being one of the worlds best electronics makers. Now is not a time to be complacent but a time to run.

Although Samsung doesnt claim to know what will replace todays products as they become obsolete, it is investing heavily to ensure that it is the company that develops them. Even with its new product systems in place, CEO Lee stresses the need for Samsung to completely overhaul its business model or risk losing market share. Fortunately for Samsung, profits have been so good that it has the funds to support its quest to remain at the top of the innovation heap. Year after year, Samsung boosts its innovation investment budget to record highs, even as its competition makes cuts. Its most recent research and development expense of $13.4 billion was second only to Volkswagens $13.5 billion and more than double that of Amazon, IBM, or Cisco. Sony, Toshiba, Sharp, and HitachiSamsungs more traditional competitors in the pastdidnt even come close.

The folks at Samsung know that future success will require much more than flashy hardware gadgets. For that reason, Samsung isnt really paying attention to Sony anymore. Samsung knows that it cannot thrive in the long term by merely offering sharper colors, better sound quality, or even Wow! designs. Over the past half-decade, Samsung has focused on competing with the likes of Apple for dominance of the mobile device market and for the content and advertising that go along with such devices.

That focus has paid off, and Samsung has surged to the top of the smartphone market. Just a few years ago, Samsungs goal was to double its share of the smartphone market from 5 percent to 10 percent. But the success of the Galaxy line catapulted Samsung into the position of market leader, besting Apple with a global market share of more than 30 percent. And although Apple has the jump on controlling content with more than 100 billion downloads through its App Store, Samsungs Galaxy App Store is holding its own.

The Internet of Things

Despite its indisputable success in smartphones, Samsung knows that that success can be short-lived. Although it still maintains the lead in the market, Samsungs fortunes have waned in the past year as the latest rendition of the iPhone cut its market share in China in half, reducing its global market share to 25 percent. In a saturated and cut-throat market, Samsung knows that future growth will not come from a bigger, better smartphone.

Rather, Samsung is again shifting its strategic direction. Samsung wants to take the lead in the Internet of Thingsa global environment where all electronic devices, appliances, vehicles, and even static items such as clothing will be digitally connected with each other, with the people who use them, and with the companies that make them.

In recent years, Samsung has quietly gone about creating a foundation for establishing an interconnective web between all of its products and linking them with the rest of the world. It already makes products in just about every imaginable category of home devices. Not many years ago, it dove into semiconductors, a business that has been growing rapidly for the company in terms of size, innovation, and profitability. And last year, it purchased SmartThings, a smart-home start-up company.

But at the recent Internet of Things World event in San Francisco, Young Sohn, Samsungs chief strategy officer, blew things wide open. He unveiled a plan that makes Samsungs intentions clear. The company is committing a funding pool of $100 million to start-ups that want to help build the ecosystem. Committing to a policy of openness and collaboration, Sohn unveiled a new line of semiconductor chipsstate-of-the-art processors that combine hardware and softwarethat are now available for sale, helping companies large and small quickly and easily build Internet-connected devices. And to meet what it expects will be enormous demand for these and future chips, Samsung is investing $14 billion in a massive semiconductor manufacturing complex.

To accomplish its goal of becoming a leader in the Internet of Things market, Samsung is taking on its biggest challenge yet. For starters, this shift in strategy broadens Samsungs list of competitors from an already daunting set to one that includes just about every company in every field of high technology and even some beyond that. Adding to that challenge, there are no common standards for technologies required to connect the many devices of the worldtechnologies that involve networking, software, and hardware. As a result, there are thousands of companiesfrom Google and Apple to myriad start-upstrying to move their products toward interconnectivity but not getting much closer to a state of universal compatibility.

To add to this challenge, the many participants in the Internet of Things game dont see eye to eye, a competitive dynamic that makes the process much more difficult. As the many players work toward compatibility, they employ numerous and often incompatible approaches. And whereas Samsung and many others have committed to collaboration and an open ecosystem, others intend to go it alone and develop their own systems. For example, Apple is developing its HomeKit platforma proprietary system that allows users to command the devices in their homes through Apple TV using Siri. Remember Intel Inside? Picture a Made for iPhone logo on devices that would ensure shoppers of interoperability under the Apple system.

But these challenges are not dousing Samsungs fire. The companys motivations go beyond greater financial performance. According to Alex Hawkinson, CEO for SmartThings, Samsung is trying to lead by example and trying to do what is right by the customers by giving them more choice and flexibility. We will focus on creating amazing experiences in both software and hardware, and win through the power of our innovation rather than trying to win by locking others out or limiting choice, Hawkinson says.

So far as the Internet of Things goes, the ultimate goal is to build artificial intelligence technology that can gather data from smart homes, cars, and wearable devices and turn them into useful insights. That might sounds just a little too Big Brother-ish, but the wheels are already in motion. According to one conservative estimate, the number of networked devices will surge from about a billion today to 26 billion by 2020, representing a $3 trillion market. By that time, Samsung claims that 100 percent of the products it makes will be Internet-connected.

Twenty years ago, few people would have predicted that Samsung could have transformed itself so quickly and completely from a low-cost copycat manufacturer into a world-leading innovator of stylish, high-performing, premium products. But through savvy strategic planning, thats exactly what Samsung has done. And not so long ago, few if any would have predicted that Samsung would be one of the driving forces behind creating a world that is entirely interconnected. Yet, while that much remains to be seen, Samsung certainly seems to have all the right ingredients. And, based on it record of success, Yoon may have waxed prophetic as he unveiled Samsungs new strategic direction: We have to show consumers whats in it for them and what the Internet of Things can achieveto transform our economy, society, and how we live our lives.

Questions for Discussion

How was Samsung able to go from a copycat brand to an innovation leader?

In recent years, how has Samsung achieved its goals in markets where it had little presence, such as smartphones?

What challenges does Samsung face with such a diverse product portfolio? What benefits?

Is Samsungs current and future strategy customer focused? Why or why not?

Will Samsung be successful in achieving its goal of becoming a leader in the Internet of Things market?