Samsung Electronics Co.’s Challenges in Canada

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Table of Contents

Stages of brand building
Market segments
Analysis of the Marketing Mix

The Samsung Group of companies ran various subsidiaries among them Samsung Electronics that owned Samsung Electronics Canada. As much as the company has been a success in Canada, it faced various challenges when the management under the stewardship of Park set up the strategy for branding in Canada. The first was the amount of Capital to invest in promotions. The challenge was whether the budget allocated on promotional services was to be increased or retained. There was another issue of the reasons behind either of the decisions.

In 2003, the management had introduced new brand-building initiatives, yet the amount allocated to advertisements and promotions had remained constant for half a decade. Over that period, more than half of the amount had been channeled to promotional services. In the same year, Park had to make a decision on whether the $ 15 million allocated to the sector was enough considering the new developments. To arrive at a progressive decision, Park had to consider two other issues. First, SECA was enjoying advantages of advertisement by SEA that had increased advertising coverage following a decision to increase expenditure in that business division. Secondly, the head office was planning to sponsor global events such as the Olympics. The decision to take full advantage of the spillovers was well advised. This is because to a large extend it cut down on the expenditure.

The second challenge was associated with company products and their distribution. New developments had indicators of abolishing low-end products that were valuable in Canada. The challenge for Park was that these goods formed the primary source of profits for SECA. The decision by Park to continue the production of the same was wise as it would not have made sense to kill the products that formed the base of the profits. In the same breadth, a challenge was whether SECA would change its distribution style to emulate Sony. As much as the system had merits, the challenge was that, the system was already associated with the rival. Allowing the chain stores to operate under the Samsung brand was wonderful while the company owned production part.

The third problem was related to pricing. A choice had to be made between retaining the existing retail prices and increasing them. In adopting the former, SECA would have to find other sources of funds for its repositioning efforts. In the latter, the company faced the risk of losing clients to competitors. Categorizing the products into various classes did the magic in differentiating the prices.

Stages of brand building

Brand Positioning

Samsung always endeavored to make sure that customers put great value on their products. Most goods were sold to end consumers using retailers. LCD monitors had to be sold directly to consumers since they became popular. Goods with real value were produced so that they capture customer interests. SECA however, used special stores such as future shops and Best Buys to release their products to the markets.

Attribute

The company products are characterized by their nature that falls into two categories. Consumer electronics that include appliances are on one hand and the Information Technology products on the other end. The basis of this strategy takes two dimensions. It puts into consideration the interests of retailers and the customer. The aim is to maximize sales volumes against the profit margins. SECA uses prearranged factory transfer prices. The VCRs were considered price-valued, Conventional televisions and appliances were premium-priced. Other products were categorized as mid-range. In the Information Technology division, LCDs recorded impressive records because of its fame and increased demand.

Benefits

SECA enjoys the use of various marketing mixes to promote its different brands. Most of them however, depended on the happenings in the US. The focus was to make sure that both current clients and target clients got information about products. Although the company profited from spillovers of advertisements, it became difficult to get tailor-made adverts for its Canadian market. High definition television sets and cable networks were flagship projects specifically for Canada.

Beliefs and values

Samsung’s values and beliefs are pegged on the production of a range of products under its brand. Television sets both audio and video, camera and their recorders, mobile phones, Home appliances and the PCs make up the various groups of products. The company has put together a team of professional experts to produce these goods. The designers segment the products to suit dynamic markets while at the same time keeping the quality high. Mobile phones, Television sets, laptops, and consumer electronics are priced to fit the disposable incomes of people in various cadres.

Market segments

The top management of SECA grouped the consumer electronics market in Canada into four. The segments were the young generation, hobbyists, high-income families and the business users. The company targeted the high-income consumers because from them bigger profit margins could be realized. This group was characterized by large, one-time purchases of goods whose durability was high. High quality televisions are some of the products that were common to these customers. The decisions made by this group were guided by the brand image. Statistics had shown that these consumers preferred associating with established brands. The result of this was that the company experienced twenty percent increase in sales from this group. This was more than the overall increase by the whole company.

SECA categorized the young generation as the second high-growth segment. Buyers in this grouped were teenagers and others barely thirty years of age. The catch was in their interests and enthusiasm for change. This group was however, hampered by limited resources. They therefore, tended to buy small gadgets. To cater for them the company vigorously marketed MP3 player and other high- tech digital products. The business user group was ranked third. It went for goods that were reliable and could satisfy their needs. Quoted here was when the banks replaced all their CRT monitors with LCD monitors in all their branches. Hobbyists were smaller group whose profit margin was modest since most of them were price sensitive.

Analysis of the Marketing Mix

Samsung Electronics owns the Samsung Electronics Canada. It is headquartered in Mississauga, Ontario. Most of its products come from Korea and US. The duties of the company include advertising and promotions, Sales force management and Customer service. The company uses various marketing mixes in all this. Product pricing is one method that it needs to improve. More categories of this should be added. This would make the company expand its idea of profits. It would maximize both sales volume and profit margins.

The company also uses its positioning and distributions as another mix. Adopting a wholesome approach where goods will be sold both in bulk and to individual consumers would open avenues for increased profits and customer contacts. In using promotion as a marketing mix, the company should develop specific promotional activities to suit their Canadian markets. SECA finally, uses its products as another mix. The range of products produced by the company must be increased. The company should learn from some of its flagship products that have done well in Canada. This area will make SECA venture into new market areas in addition to holding tightly in areas they fully control.

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