Samsung China

Colour TV
China


 Any multinational that ignores marketing

to a quarter of mankind is putting its future in
jeopardy
 Xu 1990
Contents


 Samsung and its competitors in the Colour TV

Industry
 SWOT Analysis
 The Marketing Mix
 Marketing Strategy
 Samsung US experience and lessons for China
venture



Market Segments
 High-end: Japanese firms, Sony and
Matsushita, with excellent brand recognition
had a combined market share of 75% in the
high-end market segment. Sharp, Sanyo,
Mitsubishi, Toshiba, JVC and Hitachi had
also established significant market share.
 Medium-end: Served partly by MNCs and
partly by local firms.
 Low-end: More than 20 indigenous firms
focused on the low-end market.

Core Compentency


 Its area of expertise is semi-conductors, and its

business strength lies in hardware
development
Business philosophy


 “to devote our talent and technology to

creating superior products and services that
contribute to a better global society”


SWOT Analysis
Strengths


 Prior International experience

 6 Fully functional Overseas Production Bases
 Ranked 221st in the fortune global 500
 Seoul -China fully functional diplomatic
relationships
Weaknesses


 Samsungs investment in building up

production capacities – making it difficult to
move away from the idea of high-end TV sets
 Late mover’s disadvantage
Opportunities
 Lower cost of production in China
 Chinese market is strategically important: as a
hub, you can cater to a host of other markets
 Chinese firms were less competitive due to low
technology, insufficient capital base and lack
of promotion
 App. 300 million household – Chinese market
– only 41% currently stands tapped
Threats
 Japanese firms intended to expand their
production base (in China) from 19 to 30
 Local Chinese companies manufacturing for
the low to medium end market, becoming
increasingly competitive
 Late mover are at a relative disadvantage in
China
 Social Profitability taking strong precedence
over economic profitability

The Marketing Mix


 Marketing is about projecting the right product

at the right price in the right way to the right
customers
 The 4Ps: Product, Price, Promotion and Place.
Product must deliver value to customers in the
target market by meeting customer requirements


 Detailed market research

 Identify the market
 Understand the needs of the market
 Identify what features the product must have
to meet customers’ needs.
Product:
 Samsung China has high levels of knowledge in
electronics. Samsung China (Color TV)
Analyzer was the first product of its type in a
growing market.
 The product differentiation through brand
name recognition posed another barrier
against firms relying on low prices for their
unknown branded product

Price
 Price needs to be competitive and offer
customers value of money
 Samsung China needs to make positive return
on its investment
Place


 Late-comer disadvantage
 In 1994 China had 300 millions

household. The percentage of

households with a color TV set was
just 41%
 Rural market largely untapped
Price


 To achieve market penetration, setting a

relatively low price can attract customer but
reduce the profit margin
 Possible to make short-term profit on low to
medium price product in China this
approach offers little in the longer term
Promotion
 Chinese TV set industry had invested heavily
in advertising, after-sales service facilities
and dealer networks to support their brand
image and to move from the low-end to the
high end market segment.
 Samsung would have to be able to compete
with the others in the high-end sector.
 Used its specialist knowledge of the market
and personal links with key customers to
promote its product.

Marketing Strategy
Target Market
 Samsung should target both the high-end
market segment as well as low-end market
segment because in both areas there are
opportunities.
 International brand: entry into either market
should not pose great problems
Market Share
 To enter in high-end market segment
Samsung has to build a competitive
advantage over others, which it can by its
better technology, plethora of features, or
low prices as compared to Sony and
Matsushita.
MarketShare

0% 20% 40% 60% 80%

Sony&
75%
Matsushita

Othe
rs 25%
 Market Penetration
 300 mn households
 Penetration: 41%
 Urban: 80%
 Rural: 28%
 Opportunities
boundless
Positioning
 Should focus brand image on traditions and
culture, as China has a traditional culture
 Focus on Pride of the nation so that a person
feels proud to buy a Samsung

Conclusion
 Samsung has a great future in Chinese markets
if it finds the right mix, and creates a niche
for itself
 Recommendation: concentrate on medium to
high-end markets, keeping in mind core
competence and business philosophy

Samsung’s US Experience:
Lessons to be learnt from China
 Samsung’s has 24 years of experience in the
US (1979-1995)
 6 international production bases, 4 upcoming
 Decades of int’l experience to be applied in
China

Market Entry: Low End
USA
 China


 Home-country, low-  Chinese labour cheaper

cost labour  Large market potential,
advantage
esp. in Rural China
 Large demand for low
 Indigenous firms
end
 Very little competition  better chance against

 Could compete better locals, than against

with low-end Japanese firms
producers than with
Japanese
Market Entry: High End
USA
 China

 Japanese firms  Japanese firms

changing focus to dominating the

high end market: First
 Low end market open mover advantage
for other countries 
Economies of Scale: Experience
Curve
USA
 China


 Popular size: 13” and  Rural market

19” selected for demand: 19” and

low-end 21”
 TTSEC
manufacturing 14”
in China
 Largest consumer
electronics of Korea
 221st in Fortune

Global
Brand: Samsung
USA
 China


 Stable business  Would give an insider

volume image
 Long-term plan  Invested more than

 One of top 12 $4bn in 2000

companies in US 

market
 Market Share: 3%
Legal issues, etc.
USA
 China


 Anti-dumping suit  High tariff on foreign

filed by US firms brands to

 Shifted production encourage local
from US to Mexico competition
to avail advantage  MNCs encouraged to

from NAFTA export

 Tariffs expected to be

lowered
USA
 China


 Low operating profit  Highly competitive

margin on low-end Chinese firms could
products lower already low
 Total Sales
profit margins in
1994: $14.6bn low-end segment
1995: $21bn
 Net Income
1994: $1.2bn
1995: $3.2bn
감사합니다
Thank You Very Much!
