What makes the Samsung brand successful

Marketing has been defined by The Chartered Institute of Marketing (2001) as …“the management process responsible for identifying, anticipating, and satisfying customer requirements profitably”… This essay will focus on the technology sector and attempt to uncover what makes the Samsung brand successful. Using key marketing theories of branding concept, brand equity and brand positioning in a logical order it will critically evaluate these concepts in the context of the chosen brand. Supporting academic theories, relevant brand examples and critical evaluation will be offered throughout each of the theories explored. In conclusion, a summary of these theories will be discussed in relation to the success of the brand.

Founded in Suwon , Korea in 1969, Samsung electronics has arguably grown to become one of the most successful companies of modern times. In 1993 chairman Lee Kun Hee laid out his vision for the future and what the company had to do to achieve success. It was to become a global leader in consumer electronics by focusing on creating high quality premium products. By 2012 Samsung had established itself as the world’s largest information technology company for revenues standing at $200 billion with 236,000 employees in 79 countries. It currently holds No.1 global market share for 13 of its products. Its marketing spend for 2012 was $4 billion - 4 times that of its nearest competitor, Apple.

Branding is used by companies to define and differentiate themselves from their competition and is an important part of the tangible product. It creates an indelible mark that traditionally takes the form of a logo or symbol and creates a product consisting of physical, functional and psychological values. A company must create an identity based on its core beliefs, values and purpose. The brand is then imbued with the philosophy of the company where consumers place their trust in the brand with which they have aligned their own values. …“Branding is the process by which companies distinguish their product offerings from the competition. By developing a distinctive name, packaging and design , a brand is created”…(Jobber, et al, 2012, p.314).

The brand conveys not only the difference in the products functional offering, but the intangible aspect of its philosophy which can meet the psychological needs of the consumer. …“Successful brands create strong, positive and lasting impressions through their communications, and associated psychological feelings and emotions, not only their functionality through use”… (Baines, et al, 2013, p.213) Brand creation is an extension of the core product. The features of a product can be turned into benefits that satisfy both the consumers’ functional and emotional values. Various tools such as brand name and image, service , guarantees , packaging , delivery and quality and design can be used to augment a product to satisfy these consumer values.

…“A brand is created by augmenting a core product with distinctive values that distinguish it from the competition”… (Jobber, et al, 2012, p.321)

All brands have potential for success or failure when being created and not all features of a product communicate benefits to consumers. Product augmentation can be used to overcome this and increase attractiveness. The augmented product then is identified with the company and becomes its brand. The successful augmentation of a product that meets the values of the consumer will enable a strong brand to be established and built upon.

Building strong positive associations with the core product and focusing on quality is an essential part for overall brand success.

…“it is vital to build quality into the core product: a major reason for brand failure is the inability to get the basics right”… (Jobber, et al, 2012, p.325)

Focusing on quality , positioning, and being first to market are among some of the strategies available that can be used to build the brand. The quality of a product should meet the expectation that the market has of it. If it does not, consumer perceptions can become negative and affect the image of the brand.

…“For brand building a good product , effective communication and appropriate service and support are essential”… (Brassington & Pettitt, 2006, p.117) Samsung has created its brand by focusing on its core product being made of quality. It understands the importance of branding and brand to create success along with positive associations and consumer perception. Executive Vice President & Chief Marketing Officer, Sue Shim said… “New technologies come and go. The Samsung brand is the only asset that will live on beyond our products”… Samsung outlines its business philosophy as one that is dedicated to devoting its talent and technology to creating superior products and services that contribute to a better global society.

Shim continues by saying …“Our definition of the Brand Ideal is based on our deep understanding of consumer trends. A greater focus on social purpose represents a major shift in the expectations of today’s consumers, and this is a shift we must address with our new brand strategy”… Brandindex, which measures consumer perception of brands, ranks Samsung as the strongest international performer two years in a row and the brand appears in the Top 10 lists for eleven out of fourteen countries monitored. Samsung has entered the top Ten for Brazil and China rankings and is the only brand to be ranked number one in more than one country.

Being first to market is a clear strategy Samsung employs to build its brand. By innovating and entering the Smartwatch market before Apple it has established itself in this market segment which is estimated to grow from $1.6 billion to $5 billion within five years. Effective brand positioning is crucial if companies are to achieve success in the marketplace. Therefore, it is necessary for a company to ensure it thoroughly assesses its ability to succeed before entering a market by making full use of the various tools available.

A brand must be superior in its ability to add value to the target market within the market segment it has positioned itself .Brand positioning essentially consists of two key concepts : target market and differential advantage. To identify a target market a company must initially go through a market segmentation process. Market segmentation can be defined as

…“the identification of individuals or organizations with similar characteristics that have significant implications for determination of marketing strategy”… (Jobber, et al, 2012, p.286)

Market attractiveness will consider three main areas: Market, Competitive and Political, and Social and Environmental factors. These factors have sub-groups such as new entrants, price sensitivity and social trends that allow a company to evaluate how likely it is to succeed based on its resource and competences. A company will segment the market into groups where customers have similar characteristics. The consumer market has three main categories: behavioural, psychological and profile. It is then necessary to form sub-categories such as benefits sought, lifestyle and socio-economic. Online market segmentation is similar to the consumer market, however, organisational markets are segmented by macro and micro segmentation methods.

…“Market segmentation involves dividing a diverse market into a number of smaller, more similar sub markets”…(Jobber, et al, 2012, p.290) Market opportunities can be uncovered when performing market segmentation. Companies need to maintain vigilance in the segment they are operating and guard against threats from competitors.

Target marketing is when a company targets a market segment it concludes it will be successful in serving. Once a target market has been selected it is then necessary to pursue the second concept of brand positioning, differential advantage.

…“The creation of a differential advantage ,then, comes from linking skills and resources with the key attributes (choice criteria) that customers are looking for in a product offering”… (Jobber, et al, 2012, p.302)

Price, place, promotion and product are the constituent factors making up the marketing mix and can be utilised to establish differential advantage. If a company has a supplier that can provide goods and services cheaper than its competitors then a price advantage can be gained in the segment that values it. In addition to securing differential advantage it is necessary to implement four factors of clarity, consistency, credibility and competitiveness to help successfully cement positioning strategy.

Perceptual mapping can be used by management to gain an understanding of consumer perceptions. Qualitative and quantitative research is carried out that can help determine where opportunities may lay in market segments. Differential advantage can then be targeted at the segment. Poor performance or changing customer preferences can lead a company to perform a repositioning strategy utilizing four options available: Image, product, intangible or tangible repositioning.

…“Highly successful tangible repositioning strategy was undertaken by Samsung electronics, which was once an unfocused manufacturer of cheap undifferentiated televisions and microwaves”… (Jobber, et al, 2012, p.292)

China is one of the fastest growing and largest smartphone markets in the world. Low cost android solutions have enabled Samsung to target the behavioural segment where price and quality are key variables affecting consumer purchase decisions. Samsung has identified market attractiveness, positioned itself well in the market and gained differential price advantage over rivals such as Apple. Also, by offering multiple smartphone versions Samsung has managed to meet the needs of differing market segments and take advantage of the disposable income available. To overcome market saturation Samsung creates new growth by continuing to introduce new technology products to existing markets.