Executive Summary
Samsung remained the biggest smartphone maker in the world until Huawei surpassed it in April 2020. The market share of the North Korean company dropped only to 17%, which is enough to stay ahead of Apple and Xiaomi, who are their main global rivals (Singh, 2020). Such changes can be explained by the Covid-19 pandemic that at the time severely hit American, Indian, and European smartphone markets, while China, where Huawei has a dominant position, is already rebounding. Offering the wide product line that addresses the needs of many different target groups is the main idea of Samsung’s global strategy. Nevertheless, the leading technology enterprise should make some changes to its marketing strategy, especially regarding African countries. Diversification strategy would help to introduce more mid-range smartphones for a reasonable price supported by proper local advertisement campaigns.
Environmental Analysis
Environmental analysis is an essential strategic tool designed to assess a company’s global performance. The PESTEL analysis, which comprises political, social, economic, technological, legal, and cultural factors, will be further used to evaluate the current business environment of Samsung (Schlegelmilch, 2016). In general, Samsung Electronics (SE) had gone through challenging times to transform from a small local company to a multinational conglomerate and the brand that is known everywhere.
Political
It is challenging to maintain proper activity and avoid losses when a country is under rapid political transformation accompanied by instability. Today, Samsung is present in 80 countries while its devices can be purchased almost in every country (Razdan, 2017). SE plays a vital role in domestic politics and economics; thus, the 2016 corruption scandal that involved Samsung’s successor Jay Y. Lee and then-president Park Geun-hye adversely impacted the brand. According to Kim (2020), Lee ultimately apologized for the bribery following all procedures and voiced his intention to became the last conglomerate’s heir from his family. Moreover, SE faced political pressure from South American and African states, whereas they received mild complaints from India. Nevertheless, emerging markets currently offer a business-friendly environment. Such issues, like terrorism and the Covid-19 pandemic, also affect the performance and strategy of the conglomerate.
Economic
The financial health of any company is usually determined by exchange rate fluctuations and the high stock market volatility. SE recently overcame the crisis of their home country’s economy when domestic debt surpassed the company’s revenues of KRW 200 billion (Shamout & Elayan, 2020). Samsung is highly dependent on the American and European market share; thus, the company’s strategy has been aimed at aggressive expansion into emerging countries. These aggressive pushes, together with an extensive product line, help to make up losses in developed states and compensates long breakeven of their luxury offerings. In terms of competition, Google, Apple, and Huawei remain the main global rivals of SE, while companies like Oppo locally overpass the leader in terms of sales.
Social
Covid-19 recently influenced this dimension that is about change in consumers’ preferences. People turn to online marketplaces to buy electronic appliances instead of conventional physical sites. According to Razdan (2017), today’s shoppers value instant satisfaction; hence, impulse purchasing is currently increasing. People still perceive product price as an essential factor for purchasing. SE lost its status as a cheap but high-quality brand to Chinese manufacturers, and it also fails to deliver software to its customers.
Technological
The recent strategy of SE tells about their intention to become a first mover in the industry. For instance, the Galaxy Fold series have been recently presented to impress the tech world. Massive investment in research and development (R&D) became a competitive advantage of the South Korean company. The leadership in the electronic industry can be maintained only with the help of continuous technological innovation. Such mistakes as faulty batteries of Galaxy Note 7, which lead to several explosions, should be avoided in the future as it adversely impacts consumers’ loyalty.
Environmental and Legal
SE’s strategy perceives environmental issues not as a challenge but rather as a competitive advantage because customers prefer to purchase eco-friendly brands. In regards to sustainability, Samsung established energy management systems and chemical product management policies designed to reduce gas emissions and energy/water consumption. For instance, the conglomerate reduced gas emission by almost 250 tons and energy consumption by 40% (Shamout & Elayan, 2020). The main legal issues are property rights and disputes over patents. Some scandals negatively impacted Samsung’s reputation, especially those that emerged between Apple and SE. This legal war is still ongoing, while Huawei accused the Chinese department of Samsung of patent infringement in 2016.
Situational Analysis of Kenya
Kenya was chosen to be more targeted among African countries because of its business-friendly environment. Doing Business rating saw Kenya taking 56th place in 2020, which is better by 57 spots than it was before thanks to a wide range of successful reforms (World Bank, 2020). A stable macroeconomic environment and higher investments provided a 6% annual growth of the economy in 2019. The population of this multi-ethnic country is approximately 53 million. Rural areas are more populated than urban ones; hence, only 30% of its inhabitants live in cities. Moreover, 75% of Kenyans are people under 35 years who are highly interested in advanced technologies (Gitogo, 2020). Many people, especially young unemployed citizens, perceive multinational companies as new colonizers because of their policy that marginalize local professionals, who usually lack management skills.
Kenya is known for its ongoing reforming process that influences the business environment. For instance, the government adopted a law that eases access to credits for enterprises and enforced minority investor protections (World Bank, 2020). Such legal reforms, together with modern technological solutions, make Kenya a promising country for further expansion. Kenya has been a democratic republic since 2010 when the new constitution was adopted.
SE seemingly should focus on the local demands of Kenyans and provide cheaper and more basic products to the rural and low-income populations. Robust information systems allow the company to turn collected data into organizational knowledge. It is especially crucial for the company that enters Africa that is both region of opportunity and high-risk market, because of political instability, exchange rate volatility, and limitations of wire transfer (Park & Kim, 2019). Big data that comprises information about consumer behavior and preferences should be used to define which goods will be popular in the region.
General Strategy
The marketing strategy that aims at targeting a specific region or country should be based on a proper segmentation approach. According to Green and Keegan (2020), market segmentation variables include demographic, psychographic, behavior, benefit, and ethnic segmentation. A company utilizes it to determine if its business will be successful in a particular market, possible cultural conflicts, and who should be targeted. In terms of SE, demographic segmentation would be used to identify the number of potential Samsung customers and their purchasing power.
The benefits of using Samsung devices should cater to the needs of local citizens what is a reasonable price for good quality instead of fancy design and luxury status. For instance, Samsung has started selling A-series smartphones in Kenya in 2019, which became a successful move, as these mid-range devices had an acceptable price for the given specifications (Otieno, 2019). Concentrated targeting seems to be the best choice to enter Eastern Africa. The market is currently saturated by cheap products offered by Transsion and Huawei. Thus, it is time for Samsung to become a leader both in terms of luxury and mid-range offerings. The positioning strategy must focus on the establishment of the image that Samsung’s devices have higher quality and reasonable price in comparison to ones offered by rivals.
Samsung is known for its strategic geocentric orientation, accompanied by a high standardization of products marketed in different regions around the world. Moreover, SE is already present in Kenyan’s market and is one of the most admired brands. The company allegedly had applied direct exporting what is selling directly of its devices from the national markets (Almutairi et al., 2019). SE should establish more offices and construct an assembly plant in the country to increase its presence and oust Infinix and Tecno out of key market segments. Moreover, the dual sourcing approach that is about using two different suppliers for the same component is the best choice. It allows Samsung to cut costs and lead competitive pricing in different regions of the world. For instance, Samsung Galaxy S10 models had different chipsets depending on the market. To cut costs, the company uses in-house Exynos processors to target Asian and European markets, while the US-based Qualcomm chipsets feature devices in North America and Europe.
Specific Plans and Strategies
Competitive Advantages Strategies
Porter’s Five Forces is a simple but essential tool to analyze the market competition. In terms of competitive rivalry, the smartphone industry has rigid competitiveness, especially between Samsung, Apple, LG, Lenovo, Huawei, and Xiaomi. Although Apple enjoys one of the largest supply chains in the industry, it incurs minimal expenses to Samsung and Huawei (Shamout & Elayan, 2020). It can be explained by the low bargaining power of suppliers because there is high competition between them. Nevertheless, smartphone software makers, such as Microsoft and Google, possess more power than component makers.
The consumer’s power of bargaining that is the ability to influence the price and quality of the products, is moderate. Consumer demands usually are price-conscious and flexible; thus, smartphone vendors have to meet them to increase profit. There is a moderate threat of product substitution because such devices as laptops, tablets, phablets, and flip-phones offer similar functionality, applications, and interfaces. On the contrary, the threat of new entrants in the smartphone industry is high, and they influence the attractiveness and profitability of the sector. To address all previously mentioned issues, SE should apply a competitive approach based on red ocean strategy, and simultaneously lay more emphasis on innovation. It seems that the strategy of differentiation would help to gain a foothold both in the global and African market by developing a unique product or service that are not similar to the competitor’s ones.
Product and Brands
Samsung focuses mostly on the product element of its marketing mix (4Ps). The multinational electronics company has 34 R&D centers and more than 50 production sites (Razdan, 2017). SE manufactures different mobile devices, including smartphones, wearables, tablets, and accessories. The Samsung Galaxy S series are the company’s flagships, the Samsung Galaxy A series are mid-range devices, and the Samsung Galaxy M lineup can be defined as entry-level one. Such differentiation is one of the organization’s advantage; thus, more entry-level and mid-range devices should be developed to target Africa successfully. The company would better off to continue the policy of manufacturing different devices under the same brand.
Price
In general, Samsung uses two common strategies of pricing; one of them is skimming that is selling the product at the highest possible price. This policy is usually implemented during the launch of a new product and helps to recover costs and reach a high-profit margin (Almutairi et al., 2019). Nevertheless, such prices would be challenged by a competitor’s cheaper offerings who already launched products with similar features. In that case, SE turns to a competitive pricing strategy and sells its products according to the competition. This strategy is a superior one and should be used further because it brings a competitive advantage over Apple.
Place and Distribution
Samsung sells directly to retailers and customers; that is another advantage. There is no wholesaler between manufacturer and consumers, and the company does not use country tiers; hence, SE is free to choose which market they want to saturate with their devices. The electronics manufacturer uses all available distribution channels from its existing businesses. Samsung does not need much to enter markets with its new devices. Today, it is vital to improve the online method of distribution that becomes more and more popular and apply blockchain technology.
Promotion
Vivid TV commercials usually accompany the Samsung Galaxy S line’s promotion. For instance, the Galaxy S20 advertisement involves a young girl that demonstrates the technical features of the flagship by taking photos of her friends at the party (Samsung, 2020). Promotional materials often appear on the pages in popular newspapers. Such advertisements usually have a maximum of images and a limited number of words telling about the main improvements. Today, the best way to promote a new product is to launch a social media campaign. Moreover, sales promotion programs, as one dedicated to the Olympic Games 2020, when specially designed line of Galaxy S20 + smartphones were released, highlight the company’s strategy to sponsor significant events (Bonifacic, 2020). This approach attracts people who like sports and creates a positive brand image. The current integrated marketing communication strategy (IMC) of Samsung is almost standardized as its products. It means that the company strives to disseminate the same message and brand image among different regions using all available channels.
CSR Strategies
The main difference between Kenyan’s local companies and Samsung lies in the way the latter capitalizes on the growing technology cluster in East Africa. South Korea dedicates more than 4% of its GDP to invest in technology development (Park & Kim, 2020). It is one of the reasons for SE’s dominance in the region, while an excellent brand image should be credited to successful social responsiveness activities. In 2016 Samsung Electronics Africa intensified its cooperation with local governments to help the region achieve its sustainable development goals (Standard Reporter, 2016). The main ways to fulfill it are providing better access to education, new healthcare facilities, reducing the impact on the environment, and conducting skills development and training for youth. For instance, in 2017, SE partnered with Karura Forest to plant more than 10 000 trees by 2020 (Samsung, 2017). It eventually boosted the country’s forest cover by 10% and proved the efficiency of CSR initiatives both for brand image improving and sustainable development.
References
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