Alternative Solutions

Transcription

1 Alternative Solutions Corporate Growth Strategies As already mentioned before, Samsung was at growth-to-maturity stage. In that stage, there are four possible alternatives; those are market penetration, market development, product development and diversification. Samsung already had strength beating other competitors in diversification as well as in their vertical integration. Therefore, Samsung should applied market penetration in order to gain market share from competitors. Market penetration is a strategy increasing sales to current market segments without changing the product. Since Samsung involved in technology industry, product development is also very important because companies compete their innovativeness among each other. Source: Kotler, P. & Armstrong, G. (2010). Principle of Marketing. Toronto: Pearson Prentice Hall Market penetration can be done by either increasing promotional activities or reducing price to reach more customers. Increasing promotional activities in market penetration could encourage current customer to become more loyal and concentrate their purchases. As in home-electronics industry, customer was price sensitive, by reducing price Samsung could reach wide range of customers to make customers change their brand. 29

2 On the other hand, as technology continues to develop, Samsung had to involve in product development to ensure business sustainability. Samsung could improve their current product, create product-line extensions, or create new products for same market. Therefore, investment in R&D is needed to enhance the company s innovativeness. Generic Business-Level Competitive Strategies As Samsung fighting their brand towards the competitors, Samsung needed to clear strategic movements to win the competition. Robert Miles and Charles Snow described business strategies based on product-market development. They identified four strategic moves: prospectors, defenders, analyzers, and reactors. Michael Porter identified three competitive positions that businesses pursue to gain and maintain competitive advantage: overall cost leadership, differentiation, and focus. Porter describes companies that lack a distinctive strategy as being stuck in the middle and predicts that they will perform poorly. Samsung could use analyzers as their competitive strategy as Samsung wanted to retain their strong position within their core business units and look for opportunities to expand into new and closely related product-markets. Analyzers strategy is also fit with Samsung as the company competes in global markets. Analyzer An intermediate type; makes fewer and slower product-market changes than prospectors, but is less committed to stability and efficiency than defenders. Attempts to maintain a stable, limited line of products of services, but carefully follows a selected set of promising new developments in its industry Seldom a first mover, but often a second or third entrant in product markets related to existing market base often with a lower-cost or higher quality product or service offering. Source: Adapted from R.E. Miles and C.C. Snow Organizational Strategy, Structure and Process. New York: McGraw-Hill. 30

3 Samsung didn t need to use prospector strategy, as it s risky to create a new market without even a guarantee of success. Samsung could spend the cash building their brand rather than trying to be a first mover. Meanwhile, Defender strategy could be used in some market where Samsung already had a big market share and stability. Therefore, combined with Michael Porter strategies, Samsung should use differentiation rather than cost leadership since the company wanted to move upmarket. Thus, Samsung needed to stay on their core, home-electronic business. Do at what they best do. Yet, Samsung also had to keep looking on opportunities in the related product technology. They had to keep innovative on launching new products in each business unit such as mobile phone, televisions to avoid losing from their competitors and keep challenging as a blockbuster brand. Source: Mullins, Walker, Boyd en Lareche. (2003) Marketing Management, A strategic decision making approach, Mc Graw- Hill 31

4 Solutions Market Trends As electronics-market trends keep changing, Samsung had to adapt and focused their production based on customer. Samsung had to create more segmentation rather than using one size fits all strategy as today. Each customer would not react in the same way. There is no one-way to satisfy every customer. Therefore, creating more segmentation to build more personalized devices is a must to follow the market trends. Based on FCB study on market trends (exhibit 2), Samsung must have an excellent product that pleased customers. Samsung s product should focus on customer wants not customer needs. Samsung have to create more value-added features on their products to fulfill customer wants. Samsung features would differentiate Samsung from other competitors. Therefore, innovativeness is a key role. The more Samsung put an effort on differentiation (as in their value-added features) the more Samsung would gain competitive advantage. Samsung products have to be user-friendly to the majority of the customers. Samsung should bring sophisticated product yet keep it easy to use. Customers were less interested with the details of how products work; they were more enthusiastic on what products could do. Unfortunately, Samsung products were difficult to use Almost all competitors has the same advanced product, therefore product appearance became more essential. It is because customers decision affected by how good the product-appearance is. By creating aesthetic appearance, Samsung could differentiate from Sony in term of product design. Design is not just what it looks like and feels like. Design is also about how it works. Customers like to customize their electronic devices and make their devices very personal as in their personal mobile device. Therefore, Samsung product should enhance personalization to customer. Samsung product should able to build an intimate relationship with customers to gain customers loyalty. 32

5 In conclusion, creating valuable features to gain competitive advantage with userfriendly interface and great product design. The goal is to create products that give an exceptional experience; excited feelings, delighted, worthy, proud, amazed. Products that will lead customers to recommend Samsung brand to friends and colleagues and make them loyal - even though there is same product cheaper elsewhere Marketing Budget Samsung should use the M-Net program recommendation. M-Net program revealed current opportunity and ideal allocation budget by analyzing the result of past marketing plans and expenditures. M-Net program should be used in every product segment to allocate ideal marketing budget. M-Net program conclude (exhibit 3) some regions have too much allowance as in Russia, Spain, South Africa, and Portugal. These marketing allowances could be modified and spend it to other regions, which have more opportunities in other countries like Mexico, Italy, United States Hong Kong, Argentina and United Kingdom showed bigger opportunities. Therefore, allocation should be moved within these countries. With M-Net program, the marketing budget could be maximized. Samsung would increase efficiency only by reducing misallocation marketing-budget. The second solution was to increase the marketing budget in each subsidiary from their sales. Samsung had to increase the marketing budget and then spend it to build their brand. Samsung Headquarters should supervise each subsidiary that they didn t cut the marketing budget to increase their profit. Branding The most noticeable result from vanguard consumer study (exhibit 7) was that Samsung brand perceived as sophisticated, inventive, exciting and fashionable. Sony, on the other hand, received more positive image compared to Samsung, where 33

6 customers perceived Sony brand as adorable, smart, cool, popular, visionary, and trendsetter. Even though Sony gave more impression to the customers, Samsung still on the right track.. In the early 1990 s, everyone thought of Samsung as cheap and generic brand, mostly in U.S. market and European market. In the late 1990 s, Sony s VCRs (video cassette recorder) were sold for almost at doubled priced that Samsung s were, even though the product has the exact same functionality (the price gap mainly because of the brand). Therefore, Samsung were in growth stage, so it s understandable to see Sony lead the customers perception On negative side, Samsung was considered as not attractive, arrogant, and loner. Therefore, Samsung had to create a better brand image. The company should create an advertisement that shows Samsung was more than just a product. Samsung have already gain awareness among customers, the next step was to convince customers that Samsung was not just great, but exceptional. Creating an advertisement that described Samsung as life s companion, customer s best friend, with the most advanced product customer s could have on the market. Advertisement was proved to affect firm value, both tangible assets (profits and sales) and intangible affect (Joshi, 2010). The study showed that advertisement gave both direct and indirect effect toward firm value. The investment on advertising could increase the sales and revenue in the short run, which cause positive long-term effect on market value. Therefore, as our objective was to increase market value, increasing advertisement budget and use it to branding Samsung seems to be suitable solution. Advertising could lead to increase on brand s equity by increasing brand awareness, brand association, and perceived quality. The advertisement can increase brand awareness, which affect customer-purchasing behavior by familiarity, therefore creating more profit. It also could be a tool to differentiate Samsung from Sony, which increase perceived quality and brand association. Advertising with celebrity endorser could also be one of the solutions. Samsung could gain positive outcomes when using celebrities as endorsers, which lead to instant recognition by the customers with an immediate cut-through of the clutter of other advertisements, a potential cool factor, a competitive advantage of brand recall, and 34

7 rising company s market value. The matrix revolution marketing campaign was proven to be successful, which reminds customers the true value of the emerging Samsung brand. The third solution is to involve in more sports marketing. Samsung had already gain partnership in Olympics; therefore expanding their partnership to other sports could maximize the effort. Sony, for example, created a partnership with a world class Italian football club, Juventus in Their brand name was put on the football kit as the part of the sponsorship deal. Focusing in sport marketing could give best effect on enhancing brand awareness. 35