Samsung: From Gallop To Run

SAMSUNG: FROM
GALLOP TO RUN
 Prepared by:
 Le Quang Chien
 Pham Nguyen Anh Duc
 To Duc Trung
 Nguyen Thi Thu Huong
CASE PRESENTATION OUTLINE
• The background of Samsung company

• Question 1: How was Samsung able to go from copycat brand to product leader ?
• Question 2: Is Samsung’s product development process customer centered? Team
based? Systematic?
• Question 3: Based on PLC, what challenge does Samsung face in managing is high
tech product?
• Question 4: Will Samsung likely achieve its goals in markets, where it does not
dominate, such as smartphone? Why and why not?
• Conclusion
THE BACKGROUND OF SAMSUNG
• Samsung Group was founded in 1938 by Lee

Byung-Chul
• Samsung was a maker of cheap consumer electric
knock-offs from the time it started making
calculators and black-and-white TVs in 1969 till
the mid 1990s
 In 1993, Lee Kun-hee, CEO and chairman, the third son of founder Lee Byung-
Chul, unveiled what he called “new management”, a top-to-bottom strategy for the
entire company
 In 2009, Samsung rang up revenues of 117 billion with profit of 8.3 billion
 Interbrand crowned Samsung as the world’s fastest growing brand over one five-
year period
 Both Fast Company and BusinessWeek recently placed Samsung high on their
lists of most innovative companies
 Samsung also took home 8 prizes at the International Design Excellence Award
(IDEA), overcomed Apple, who only have 7 prizes
World’s largest TV
Major global manufacturer and
construction company second largest
cellphone producer
Largest consumer
Largest life insurance electronics company in
company in Korea the world
Q1. HOW WAS SAMSUNG ABLE TO GO FROM
COPYCAT BRAND TO PRODUCT LEADER?
LEE’s “new management” top to bottom

strategy for the Samsung company
Product Positioning
New Product Product “Test
and
Development Marketing”
Commercialization
 New Product Development
• Hired a new crop of fresh, young designers

• Sleek, bold and beautiful products targeting high-end users
• Concentrates on the development of
+ new products
+ product improvements
+ product modifications
+ new brands
 Product “Test Marketing”
• WOW test: integrated test of product and its entire

marketing program-targeting and positioning strategy,
advertising, distribution, pricing, branding and packaging,
and budget levels
=> Providing manager the information need to make a final

decision about whether to launch new product or going back
to studio
New Product
Launch New
WOW Test
Product
Design Studio
WOW Test Process

 Product Positioning and Commercialization
• Samsung is not El Cheapo product anymore
• Revamping its position to create stylish and innovative products
• Working with specialty retailers such as Bestbuy and CircuitCity
• Abandon low end distributors like K-mart and Wall Mart
=> Largest consumer electronics company in the world (since 2005)

SAMSUNG SONY
Revenue Rang up to $117 billion Decrease to $77 billion
Net profit / Net loss Net profit: $8.3 billion Net loss: $1 billion
Position of global
17 29
brands
=> Samsung has become cutting edge product leader

Q2. IS SAMSUNG PRODUCT DEVELOPMENT
PROCESS CUSTOMER CENTERED? TEAM BASED?
SYSTEMATIC?
Samsung’s product development process was compiled by all 3 in

different aspects and circumstances
 Samsung’s use of customer-centered product
development process
• Samsung revenue (2009) rang up to $117 billion with profits $8.3 billion
that resulted from consumer satisfaction towards Samsung products
• Samsung’ product had satisfied customers need by providing high-end
products
Samsung Luxia Tv’s that has 55 inches size and 49 pounds weight to
ease the customer adjusting it wherever they want to move
 Samsung’s use of team-based product
development process
• Hired a new team of young and creative designers

• Use of WOW reaction test -> take out put as consumer thoughts
about the product
• Used top to bottom strategy -> combine customer centered
approach with team to bring out an out class a competitive
product in market
 Samsung’s use of systematic product
development process
• Product development process should be systematic as it helps in

creating more innovative ideas
• Samsung can install an innovation management system to collect
new-product ideas, among which will be found some especially
good ones
Samsung Touch of Samsung HU7250
Samsung YP S2 mp3
Color DVD Series Curved UHD
Player
Blu Ray Player TV
Systematic New Products Development of

Samsung high-end products
Q3. BASED ON PLC, WHAT CHALLENGE DOES SAMSUNG
FACE IN MANAGING ITS HIGH TECH PRODUCT?
Current condition of Samsung
 “Now is not a time to be complacent but a time to run”

 Samsung unveiled a $23 billion investment plan
 It’s the company that develops high-tech products.
Product Life Cycle Stages
1. PLC Stage 1 (Product Development):

 Samsung spends a lot of money in investing in the new products:
If the new product with the new design failed the “Wow!” test
-> sent back to the design studio for improvement
-> more cost of developing product is needed
 The company’s investment cost is very high
2. PLC Stage 2 (Product Introduction):
 Much money is needed to attract distributors & build their
inventories
 Advertisements are very important and compulsory for Samsung
new product
3. PLC Stage 3 (Growth Stage):

 Achieved its lofty goals in less than two decades
 Samsung is by far the largest consumer electronics company in the
world
4. PLC Stage 4 (Maturity Stage):
 Samsung took home 8 prizes at International Design Excellence Awards
Samsung aims to double its market share of the higher-end market from 5-
10% in cell phone industry.
 Samsung competes strongly in the markets for DVD players, home theatres,
digital cameras and camcorders, home appliances, laser printers.
5. PLC Stage 5 (Decline Stage):

 Samsung is investing heavily
-> Ensure that: Samsung develops the “newer high-tech” products
instead of other companies like Sony.
• However it will risk losing market share if it didn’t completely
rebuild its business model.
Q4. WILL SAMSUNG LIKELY ACHIEVE ITS GOALS IN
MARKETS WHERE IT DOES NOT DOMINATE, SUCH AS
SMARTPHONES? WHY AND WHY NOT?
The Mabuljungje Strategy

1. Interactivity
2. Features and pricing

3. Expectations and aims
4. Product detection and responsibility
5. International products and standardized system
CONCLUSION
 From a maker of cheap consumer electronic knock-offs (1969 – the mid

1990s)
=>>> Samsung Electronics now is:
+ the second-largest cell phone producer
+ the world ‘s largest television manufacturer and offers the most cutting-
edge models
+ the world’s largest technology electronic components company
+ the world’s largest manufacturer of flash memory
THANKS FOR
LISTENING !

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SAMSUNG: FROM

• The background of Samsung company

• Samsung Group was founded in 1938 by Lee

LEE’s “new management” top to bottom

• Hired a new crop of fresh, young designers

• WOW test: integrated test of product and its entire

=> Providing manager the information need to make a final

WOW Test Process

• Abandon low end distributors like K-mart and Wall Mart

=> Largest consumer electronics company in the world (since 2005)

Revenue Rang up to $117 billion Decrease to $77 billion

=> Samsung has become cutting edge product leader

Samsung’s product development process was compiled by all 3 in

• Hired a new team of young and creative designers

• Product development process should be systematic as it helps in

Systematic New Products Development of

Current condition of Samsung

 “Now is not a time to be complacent but a time to run”

1. PLC Stage 1 (Product Development):

3. PLC Stage 3 (Growth Stage):

5. PLC Stage 5 (Decline Stage):

The Mabuljungje Strategy

2. Features and pricing

 From a maker of cheap consumer electronic knock-offs (1969 – the mid

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