Samsung Mobile in the UK Analysis

Executive Summary

In the modern world of communication & technology, we cannot think of a day without a mobile phone. It becomes part and parcel of our daily life. Samsung is the most dependable and attractive in the mobile phone market in the United Kingdom. Samsung phone’s features, style, and user-friendly software make it popular and increase the demand for it. According to Hunter (2007), “Samsung Electronics (UK) Ltd entered the UK market in 1984 and has since seen explosive growth and success, especially within the mobile phone market, with projected revenues of £995 million in 2005.”

Samsung has built a strong position in Europe. As Europe is a more attractive market than the USA, Samsung tried to build a strong position in EU markets. Samsung team has done a great job in the EU. Its efficient management is the key to its success.

UK Trade and Investment (2007) shows that “[i]ts office in Chertsey, Surrey operates as the European headquarters with around 450 staff, while R&D is carried out in Middlesex, with more than 150 research engineers” At present Samsung has two Distributor in the UK but they are not sufficient to the proper distribution of mobile phone. And it has been proved by the higher demand for Samsung mobile phones in the 20:20 gray market. Increasing demand in the gray market causes headaches to the distributor as well as the concerned authority. 20:20 gray market selling the product is cheaper rate than the authorized distributors. It minimizes their profit limit and causes an uncontrollable market situation. So it becomes a challenge to the Samsung Company.

Mission

The mission of Samsung is to be the market leader. From the beginning of the production of mobile phones, Samsung wants to enter into new markets. At that time is plays the penetration pricing strategy. Then their motive is to be the lower-priced market leader. Still, now Samsung wants to be the market leader but not the low price market leader, it wants to be the market leader of quality products and services.

Samsung mobile phone in the UK market: History

According to the Korean language, Samsung means ‘three stars. LeeByung-Chul founded Samsung in 1938 in Seoul as a small trading company with forty employees. “The company did fairly well until the Communist invasion in 1950 which caused great damage to his inventories. He was forced to leave and start over in Suwon in 1951” (Brands History and Wikipedia). Khanna, and Yafeh (2007). argue that the company’s assets had grown twenty-fold in just a year. “Samsung Group later formed several electronics-related divisions, such as Samsung Electron Devices Co., Samsung Electro-Mechanics Co., Samsung Corning Co., and Samsung Semiconductor & Telecommunications Co., and grouped them together under Samsung Electronics Co., Ltd. in the 1980s. Its first product was a black-and-white television set” (Brands History). Lee Kun hee said Samsung became the largest producer of memory chips in the world in 1992. In 1995, it built its first liquid-crystal display screen, eventually equalizing its technology to Sony’s. Kugan (23 April 2006) pithily states that “Samsung has also tried hard to improve its international image. It has spent more than $6 billion since 1998 on marketing; sponsoring the last five Olympics and erecting a large video sign are in Times Square in 2002” “Samsung is very involved in the Asian Games, contributing Samsung Nations Cup Riding Competition, Samsung Running Festival, Samsung World Championship, and still many more around the globe” (Brands History and Wikipedia).

Samsung mobile phone has made a niche in the UK market of being the sober and gorgeous phones that have been able to offer cutting-edge technology. Attracted by the innovative and refreshing ideas, the manufacturer has generated handsets that exhibit high-quality LCD displays, rocking ringing tones, digital cameras, music players, and well-equipped multimedia gadgets. In the UK, Samsung mobile phones are offered network service by leading network providers (Weathers, 2007). But Orange hits the list by offering some special packages, attractive plans, and tariffs. Once you have purchased a Samsung handset with Orange network, you are offered special prices and offers on the given terms and conditions. The users are provided with free weekend calls for a specific period, free SMS within the UK, etc. Even you are provided with a pay-as-you-go plan which is the cheapest of all Orange plans. Meyers and Weathers (20 January 2007) state that as following way:

“The models of Samsung are regarded as the world’s slimmest handsets that come with clamshell or slide opening mechanisms. Consequently, a large number of people prefer Samsung mobile phones that include Samsung C120, Samsung D900, Samsung E900, Samsung X700, Samsung Z400, and many more. With the availability of Orange network in the UK, the phone offers network and connectivity very smoothly and perfectly”.

Orange has scattered its network in every part of the globe and consequently, the user gets a tri-band or quad-band network to connect the handset globally. Infect, Samsung mobile phones basically offer a quad-band network along with Bluetooth, GPRS, EDGE, WAP browser, and so on.

You can talk, work and play on a Samsung mobile phone with the support of the Orange network at an affordable rate. Simultaneously, the user can get pre-installed games and can download new games on this network. Even you can download the latest polyphonic ring tones and new applications with the aid of Java technology in the Samsung mobile phone at Orange network. Overall, Mobile Orange Phone Samsung helps you to communicate freely and effectively and get the first-hand experience on the latest multimedia features that really take the world in your hand.

Context

Business Context: Segments, Products, Competition and Recent

Performance

The UK is the most attractive segment to the Samsung Company. UK’s huge demand for mobile phones and growing market is preferable to the USA. Samsung’s research and technology helps to segment its market and satisfy the segment with their demand. Samsung has innovated and developed newer products in order to keep pace with the modern world and the newer demand of customers. UK Trade and Investment (26 Sep 2007) argued that

“Europe is a bigger market for Samsung than the US, and the UK is its largest European market, with sales of US$2.65 billion in 2006. Samsung attributes this in part to a design literate and technology-savvy population with an appetite for high tech products; a mindset that also contributes to a pool of skilled, creative professionals.”

Samsung holds one of the leading positions in the UK market. It provides goods and services smoothly and efficiently. Its present performance and growth are satisfactory. Once Samsung was thinking about being the leader of cheaper priced products. But now it is thinking about the higher-priced and fashionable as well as high technology product.

Segments

Market segmentation is one of the basic tools of marketing strategy. The market consists of buyers and the buyers are different with their buying behavior. So a company must segment its market. Kotler & Armstrong (2003) state in his renowned book:

“Market segmentation is dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require the separate product or marketing mixes” (p.239). Another two things of segmenting are Target Market and Market Positioning. Samsung has targeted its market very well and also captured a big share of the market to take a position. The amount sells in the 20:20 gray market proves its positioning in the UK market.

Samsung seeks top UK marketer

Samsung Mobile is hunting its first top UK marketer to capitalize on buoyant handset sales worldwide. Until now, marketing for Samsung’s mobile business has been overseen by Mark Mitchison, general manager of its wireless division, and Eammon Collins, head of marketing communications for the brand. The successful candidate, who will report to Mitchison, will develop handset campaigns and online activity for the Fun Club loyalty scheme. They will also work closely with retail partners and mobile operators, who market the handsets to customers as part of tariff offers. Samsung has a 13% share of the global mobile phone handset market, according to Strategy Analytics, and has been gaining customers from Nokia. Whose market share has now dropped below 40%. Samsung Mobile’s advertising is handled by Korean agency Cheil. It is reviewing its global account, which WPP is tipped to win. Cheil’s local work will be unaffected.

Products

A report ‘No end in sight to Samsung and 20:20’s grey stock row'(2008) Shows that Samsung’s pricing is more out of whack between markets than other tier-one manufacturers’, and the extremely good reliability of Samsung devices means distributors can take a hit on the odd faulty device going uncovered by warranty in the UK (Mobilenews). The research and development department of Samsung invented a newer model as well as newer technology for their product. And the mobile phone is no exception to it. The unique features and styles of Samsung mobile occupied the leading position in the market. The customers of the UK prefer Samsung for its style and durability. It is proved by the Bunny Connect (2007-2008) in the following ways:

“The latest models of Samsung are equipped with advanced technologies and features. These include polyphonic ringtones, MP3, video recordings, digital camera, mobile games, Bluetooth technology, etc.” The reasons that make Samsung different from other mobile phones and achieve consumer’s preferences are described shortly below.

Marketing Manager of Samsung Mobile Phones, South Africa, says: “Samsung will continue to deliver the best possible user experience in the most attractive design to satisfy mobile phone users worldwide” (ITWeb, n.d.)

Battery life

Generally, a standard battery should last two days with average use. Samsung battery provides more than 200minutes of talking time and more than 300 hours of standby time.

Internet

Samsung mobiles are suitable for Internet use. Its PC suite software gives the customers a huge opportunity to use wireless internet connection. Its built-in modem is faster and reliable. The clever Smart-Fit Rendering functionality of its mobile phone allows internet web pages to fit mobile dimensions and it works.

Connectivity

The Bluetooth, Infrared, and high-speed USB 2.0 cable connection offers downloads, data transfers, and wireless connections to headsets and mobile printing devices. Bluetooth gives instant sharing facilities to its users.

Availability

The Samsung mobile phone is easily available. Samsung mobile phone posses a superior quality but is reasonable in price.

New technology

“Samsung is expanding its mobile phone R&D activities in the UK with the creation of an advanced technology group at its west London-based research center. A group of 10 mobile communications system developers will start developing intellectual property (IP) for the generation of mobile communications which will follow 3G. Although the group will initially be involved in pure research, the intention is for the UK design group, which has been largely involved in Samsung’s GSM/GPRS and 3G developments so far will create software and hardware IP for 4th generation (4G) mobile products for around the year 2010.” (Samsung sets up 4G mobile team in the UK)

Competition & Recent Performance

In a report, Samsung shows that the latest Samsung range is proving to be very popular, mainly due to its great-looking and user-friendly designs (Landmark Internet, n.d.).

Louise Hunter from Samsung (2007) said that Samsung was aware of the development of IT Dealer from the very start “We were immediately excited about the development of a whole new way to access the UK channel and started talking right away about how we could get the maximum benefits out of it,” said Louise Hunter from Samsung. As Channel Marketing Manager Louise is constantly in pursuit of new ways to promote Samsung products to resellers as well as direct to the public. Hunter (2007) said specifically that “[o]ur promotional campaigns include everything from major sponsorship of Chelsea Football Club to teaming up with singer Beyoncé to market a mobile phone. Though this represents the more glamorous side of our marketing activity, our B2B promotions aimed at resellers play just as vital a role in our overall strategy,” she explained.” Samsung sets up 4G mobile in the UK. This caused a new demand for Samsung mobile phones. There are currently 60 engineers at the UK center who has been responsible for the GSM/GPRS technology behind handsets to introduce by Samsung later this year. The facility will become the firm’s main center for wireless research by 2002 when around 120 will be employed.

Analysis and Strategic Agenda

Internal Scan: SWOT

SWOT analysis is the most effective tool to measure a business condition. It is a simple framework by which the present situations of the Samsung mobile phone can be evaluated or analyzed. SWOT stands for Strength, Weakness, Opportunity, and Threat. To measure the UK market condition of Samsung mobile phones a short analysis is discussed below.

Strengths

Samsung has positioned a strong place for electronic goods in the UK market. Electronic goods already acquire the customer’s confidence and loyalty. Samsung mobile is no exception.

Insight UK (n.d.). scrutinize that “Samsung is the market leader in many product areas such as Computer Monitor, Fax Machines, Digital Cordless Telephones, Microwave Ovens and many other emerging technologies such as MP3 players and Mobile Telephones. These products offer solutions to a range of business and consumer requirements are designed and produced from Samsung’s established technical expertise in accordance with the company’s commitment to quality, value, and reliability.”

Samsung had its own strong research and development team. This ensures the superior quality of the product as well as the innovation of new products. Samsung has a strong distribution channel to ensure proper distribution.

Weaknesses

Basically, Samsung has no serious weaknesses. But it has a problem to maintain the price of the product in the UK. The web page named Channels (2008) shows that “[i]t has left Data Select and recently installed distributor Brightstar as the only two distributors in the UK market with an official Samsung distribution license. 20:20 sources claimed that the price between official stock and grey stock makes it impossible for any distributor to remain profitable and buy a stock only from the official. It is a problem that hampers Samsungs image in the UK as well as to its customers and to distributors.

Opportunities of UK Market

As the UK has a huge mobile phone market, it brings many opportunities to the mobile phone companies. The opportunities are from a different angle. In short, the opportunities are described below.

Firstly, The manufacturer enjoys various people with various choices and buying habits. The manufacturer can do their business on the basis of any factor, quality, or price. But the fact is that they have to inform the customers about their product.

Hunter (2007), asserts that “[u]niquely, the service allows us to directly compete against other vendors through intelligent search advertising. IT Dealer Senior Account Manager Rupesh Vara has been very proactive in ensuring continued high response rates for Samsung’s advertising.”

Secondly, the manufacturer companies always have to be aware of what the customers need and want. Samsung has a strong research and development team which can easily find out the customer’s desires and bring them in front of the customers as a product. And highlight the product which is much demandable. Hunter (2007) again tries to explain the issue as:

“Sometimes if we know a certain Samsung product is a better price or has a higher specification than our competitors, our banner will specifically highlight this,” said Louise. She added: “We also use IT Dealer for cross-selling. For example, if a reseller is searching for a particular Samsung product, IT Dealer makes sure that they are also exposed to other related items that may interest them.”

Thirdly, In the UK sellers are enjoying mass media facilities to advertise their products. There are many web-based organizations or retailers, they are informing the customers about their mobile phones and sell through the internet. At present customers are also habituated with this. It is a great opportunity for the sellers to sell the product with less effort.

“Louise backed this up, saying, “every media has its value, but we consistently find online advertising to be the most cost-effective. It is the most measurable and gives us the very best return on investment. “We were fast to recognize that IT Dealer would become an invaluable tool to channel partners,” she concluded” (Hunter, 2007).

Fourthly, the young generation is very much fond of mobile phones. It is not only an essential part of communication but also a symbol of fashion and style. The mobile phone market in the UK is increasing.

Challenges or Threats of UK Market

There are some challenges that the Samsung mobile phone company is facing in the UK. The challenges sometimes come as a threat to the company. It is true that Samsung is one of the leading companies in the UK. But the customer of UK is very much aware and frequent changing buying behavior. So, it has to always concern with the hold and retaining customers. Channels (2008) states that “[t]The distributor has claimed that Samsung prices are 20% cheaper on the grey market because Samsung’s global business is cutting prices for operators in emerging markets to build market share”

Analysis of Recent Competitive Environment

Samsung Cuts Sales Forecast

Samsung Electronics Co. trimmed its sales forecast for this year on global economic woes but said profit will increase, helped by earnings growth in key areas such as memory chips, flat-panel displays, and mobile handsets. WTOP News. (2008) explained that “Global economic uncertainty will continue this year, affecting our management conditions.” WTOP News ( 2008) explains that Chief Executive Yun Jong-Yong remarks as “[the company] expects competition to become fiercer globally amid higher oil prices and the dollar’s weakness.” The WTOP News ( 2008) added Samsung’s aims to raise its 2008 sales by 10 percent on-year without providing specific figures in their news. The WTOP News ( 2008) forecasted that the Samsung Company is lower than the 15 percent on-year increase it projected in January. Canoe (n.d.) asserts the capital investment of the company will be at a similar level to that of last year. The WTOP News ( 2008) states that “Samsung, the world’s largest memory chip maker, posted 7.43 trillion won in net profit in 2007 on a parent basis, up 12 percent from a year earlier. Sales rose 7 percent to 63.18 trillion won.” The WTOP News (28 March 2008) explains the analysis of expert’s expectation of Samsung to report first-quarter results next month with the chip business in the red for the first time since 2001, weighed by a sharp fall in chip prices.

Orange, a leading network provider in the UK, started its operation in April 1994, when the country was flooded with the mobile phone market which was inexplicable, rigid, and expensive. But Orange has entered into the market with firm determination to become an undisputed leader among service providers by making communications spontaneous and easily accessible part of daily life. The success of Orange came just after three years of operation when the company had gained 1 million customers owing to its lower churn rate, better margins than its competitors, and flexible plans. Orange provides service to all the leading manufacturers of mobile phones that include Nokia, Samsung, Sony Ericsson, LG, Siemens, and many more with attractive plans and tariffs.

Strategy to Sustain and hold market share

Samsung is very skilled to hold and retain its market share and to do so takes several strategies and methods. Analyzing the history of Samsung it is found that Samsung is always trying to hold its market share. It is definitely a good strategy. Capturing market share is very hard and it is much harder to retrieve the market share, which has been lost. Samsung has strong and efficient research and development center, which innovate and improves its products. Thus, Samsung is able to lunch newer products continuously in the market. It attracts the customer and gains their loyalty. Again from the beginning, Samsung does not want to produce the higher-priced product, it wanted to be the lowest-priced market leader. That shows a nice strategy to enter a new market. This process is called in the language is market price penetration strategy. Now Samsung not only captures the market share but also gaining customer loyalty and occupies a strong position in the market. “We’ve divided British business into ten broad sectors. We are running a top 100 list in each sector, highlighting the achievements, colorful backgrounds and in some cases the unusual personal interests of the highest-placed executives” (Cave, 28 April 2008)

Strategy to Remove Competition

Handel the competitive situation proves the efficiency of a company. Samsung takes several strategies to remove competition. “Today we’re examining the intensively competitive technology and telecoms sector” (Cave, 2008)

They are-

1. Lunch new product in the market and product development: Samsung frequently launches new products in the market to keep pace with the change of taste of the consumers. As the young generation of UK is very fond of fashion and technology, they prefer it most. This strategy plays a superior role to expand its market as well as capture new market share, which helps to remove the competition.
2. Set reasonable prices for the products: Samsung always tries to set a reasonable price for its mobile phones. It increases the sales as well as increases the profit volume.
3. Moderate pricing policy: Another policy of Samsung is maintaining a moderate pricing policy. If Samsung makes the price low to capture the market share or increase sales, it could start price wars among the company. So it is a good policy as well to keep away from the competitors.
4. The attractive style of cell phones: Samsungs gives an attractive outlook to its mobile phones. Its finishing and packaging keep it away from its competitors.
5. After sells service: Samsung gives a warranty to every mobile set. It also provides superior service to its customers. From the Samsung website we get, Samsung Fun Club – The Official Samsung Mobile site for Samsung phone information, downloads, software, giveaways, competitions, and more! (Samsung Mobile).
6. Proper distribution: Proper distribution is the key to the success of a manufacturing business. Samsung maintains a good channel of distribution to provide a regular supply to the customers. According to the selling concept of marketing, the customer will not buy any product unless selling effort is taken. That means the customer will buy any product if he is forced or motivated. In this point of view, Samsung plays a great role to sell its products. This process ultimately keeps away its customers.

Strategic Risk and Uncertainty

The main challenge to Samsung Company is now to remove the price uncertainty of the market. Due to some strategic problems, the Samsung mobile phone market is now going to be unstable.

Due to the capture market share, Samsung sells mobile phones at a cheaper price in third-world countries. But those products come to the developed countries like the UK and cause unstable price problems.

Strategic Process to Remove Threats

Samsung has a huge demand in the UK market. But due to the 20:20 grey market, it becomes an unstable market situation in the UK. It also creates dissatisfaction for the distributors and customers. Thus it is a great challenge to remove this problem. Samsung has taken some initiatives to remove this problem. “Samsung is poised to block warranty requests from handsets bought outside the EU in a bid to tackle grey market buyers” (Boreman, 2008). It has lessened the distributors of UK but dissatisfied few customers. This can be clear from the following quotation. 20:20’s new CEO. Boreman, (2008). Meinie Oldersma said: we were really disappointed that Samsung has taken such a short-term view, but the customers are the real victims here. Samsung has some beautiful products, so it is a real pity.”

To remove this problem permanently the Samsung authority and the Dealers sit in a meeting. After brainstorming with Samsung marketing personnel, the IT Dealer proposed a three-pronged relationship.

Firstly, IT Dealer Senior Account Manager Rupesh Vara would work closely with Samsung to manage a rolling intelligent search advertising campaign. This enables Samsung to target resellers when they search for competitors’ products.

Secondly, Samsung registered as a listed vendor with IT Dealer, to ensure a continual and easily updatable presence on the site.

And finally, Hunter (2007). IT Dealer developed a bespoke Samsung-branded portal, offering free, but password-protected reseller access.

Conclusion

From the evaluation of the UK market of Samsung mobile phones, it has been found that Samsung posses a strong position in the UK market. Visibly there is no threat to Samsung mobile phones. But the fact it UK market is now crowded with many manufacturers of mobile phones and they are always trying to capture market share. Besides this the consumers need and want is increasing. So, Samsung has to always be aware of the need and wants of the customer as well as it has to maintain continue research and development to innovate new products. Proper distribution is the key success of a company’s revenue. Samsung has to be aware of the proper distribution and block the entrance of unethical enter into its market.

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