CASE-STUDY: Samsung

Course INTRODUCTION TO MARKETING

Blythe, J. and Martin, J. (2019) Essentials of Marketing. 7th

Case study Samsung
Edition. Harlow, Pearson Education.

Session The Marketing Environment

Academic Year 2022 - 2023

Lecturer Nguyen Thi Duc Hanh

Samsung was founded in 1938 in what is now South Korea. The company, whose name means ‘Three
Stars’, was originally a simple trading company, dealing in dried fish, groceries and noodles. During the
Korean War the company was forced to relocate to Seoul, the Korean capital, where it expanded to the
point where the company and its employee housing complex have become a fully-fledged suburb of the
city – Samsung Town.

It was not until the late 1960s that Samsung entered the electronics market, manufacturing a basic black
and-white television set. In 1980, Samsung bought out a company which manufactured telephone
switchboards and other telecom equipment: this was to be the start of the company's meteoric success
in the mobile phone market.

Prior to the 1980s, electronics theory held that mobile phones would be impossible to build. The theory
was that they would require an impossibly large power source, and would also take up an impossibly large
bandwidth in the electromagnetic spectrum – in other words, mobile phones violated the laws of physics.
However, engineers being engineers, a solution was found: each phone would operate in a small, local
area defined as a ‘cell’, connecting via local stations and using extremely high radio frequencies. Phones
could switch between cells instantly if the user was in a vehicle, or even walking.

This shift in technology opened up a huge opportunity for Samsung, and the company seized upon it (as
did many others). Samsung began to invest heavily in research and development, designing silicon chips
(the basic components in computer processors and memory), and LCD displays, which are a Samsung
invention. Samsung is now the world's largest chip manufacturer, and was approached by Sony for help
in designing and producing LCD screens. Samsung has been awarded more US patents than any other
company in the world, and its facility in Texas is one of the USA's biggest foreign investments.

Demand for mobile phones continued to grow through the early part of the twenty-first century.
Nowadays, landlines are rapidly becoming obsolete since virtually everyone has a mobile phone. Mobile
phones in the 1990s would make telephone calls and nothing else, but technology moved ahead, in
particular chip technology. More features could be crammed into smaller spaces, and more memory could
be added. LED technology allowed not only better screens to be added to the phones, but also allowed
the inclusion of miniature cameras. Gradually, manufacturers have added more features to the phones –
second cameras, better screens, touch screens, video capability and finally the fully-integrated
smartphone came into being in the early part of the twenty-first century.
 The smartphone acts as a complete communication
device on which the user can take and send
photographs and videos, conduct a video-enabled
conversation, send short text messages and access
the Internet. It can also act as a GPS device, a
personal organiser, a clock, and has many other
functions – all as a result of improved technology.

The smartphone, as pioneered by Samsung, has in

turn caused a revolution in the way people
communicate. It is as easy to have a face-to-face
conversation using the phone's internal camera
and screen as it would be to make an ordinary telephone call, so physical presence is no longer needed in
order to observe the other person's facial expressions. For small businesses, the smartphone has made it
unnecessary to have someone manning a telephone in an office – plumbers, builders, consultants and
even flying instructors can simply carry their office with them in a coat pocket.

In 2017 Samsung released the Galaxy Note8, a mobile telephone device with up to 256 GB of internal
memory. This is considerably more computer power than the NASA computers used for the first Moon
landings, so there should be enough there for the average person to record baby's first steps or a night
out on the town.

New products have to be launched very frequently if Samsung is to remain ahead of competition from
other countries. Although the company is now the world's largest manufacturer of mobile phones,
technology keeps moving ahead. Samsung not only keeps moving with it, but is actively driving it: a very
different business from selling dried fish and noodles.

QUESTIONS
1. What is Samsung's relationship to the technological environment?

2. Why do people want to buy the latest phones?

3. What were the driving forces behind the adoption of smartphones?

4. What effect have mobile phones had on the social environment?

5. What might be the limiting factors on further development of the smartphone market?