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Tuesday, July 18, 2006

Samsung's success story retold

In a recent study Samsung showed up as the 20th most valuable brand in the world. How did this South Korean brand manage to make its presence felt around the globe? This is one of the many ways it did that - at the Time Warner Center in the heart of New York is the 10,000 square feet Samsung Experience.

Here one can spend an entire day touching and getting a feel of Samsung's products. So, if you want to take out digital pictures of your family and shoot free photo, colour printouts while in the Big Apple, then you know where to go!

This is a Samsung Un store, that makes everything available to people but does not let you buy any of the stuff. So there are no price tags and no salesmen breathing down your neck. The idea is ofcourse, to showcase its entire product range and get people interested enough to buy it, at some point.

The attendants at the Samsung Experience are part-time artists, students or just geeks who easily explain technology and its usage to anyone who wants to know more, or learn for the very first time.

Senior Vice President, Consumer Electronics Business, Peter Weedfald told CNBC-TV18, "It's what we call a brand experential opportunity - to take all the assets of technology, engineering, design or images and build a emporium. A place for consumers to come to, that allows them to best understand the value of digital technology to enjoy a digital lifestyle."

And people who have visited Samsung Experience are clearly fans of Samsung products. Customer testimonials range from "their products are very fancy" to "their products show lots of innovation, so whoever does their product development, does a lot of research to "I may pick them over Motorola."

These are thriving on credit cards, high spending Americans doing the talking, so it goes without saying that North America is Samsung's top sixth strategic market. It also contributes nearly a fourth of the electronics division's annual turnover of over $55 billion.

Since customers want choice and will congregate around retail chains, Samsung is not planning any standalone stores. It is the global leader in computer chips and the No.2 player in the semiconductor business, while in the consumer business, it's their snazzy mobile phones which has given them brand equity in this market.

Weedfald acknowledges that and says, 'The mobile phone was one of our greatest brand drivers and contnues to be. There is a multitude of reasons why. Everyone has a certain personality and the cellphone is branding me 24 hours a day. Everytime, I'm ready to engage, it's a Samsung experience. It's is a very powerful orchestrator, navigator and articulator to proactively drive the brand.'

Samsung is going to take this much further by introducing the scent of Samsung which is basically a fragrance that will evoke the brand and will eventually find its way into product packages! So what does the fragrance smell like? First hand reports say, 'fresh, early morning and perhaps male.'

The idea behind this effort is, to consolidate the brand in the 52 countries it is already present in. Keeping this mind, at IFFA 2005 held in September in Berlin, Samsung displayed their products in one of the largest spaces. IFFA is a huge consumer electronics trade show.

Dealers from Europe, which accounts for 26% of Samsung's revenues were there. In the second quarter of FY05, Samsung placed first in TV sales beating compatriot LG and Europe's top ranker, Philips. In general, Samsung's sales was up 103% over a period of four years.

This kind of success wasn't always the case. About eight years ago, Samsung was an unknown brand and they tried to create awareness by branding luggage carts at airports. So people assumed they were the manufacturers of those carts! So, from not having any brand recall to being associated with wrong products, brand Samsung has been through it all.

This was also a result of changes being initiated right from the top. With the Chairman of Samsung, Kun-Hee Lee wanting quick results, it was imperative to start moving and making radical changes. It probably helped that he took a couple of the products and burnt them in a bonfire! President of Digital Media Business at Samsung Geesung Chol recalls, 'He (the chairman) urged us to change everything except our wife and children!'

With the intention of pushing the brand as a point of convergence for all of a customer's digital needs, Samsung has phased out its VCRs, analogue camcorders and all analogue-technology related products because that's no longer, where the company is headed. And India is a big part of this plan, even though it's lagging behind at the moment.

Deputy Managing Director of Samsung India, Ravinder Zutshi explains, 'The brand may be trailing in some respects but we are not trailing behind in the technology aspect.'

With regard to India Chol says, 'We used to be very good with IT products but we were a little bit late in home appliances and sometimes we didn't take certain decisions in some product areas. So, the company wants to grow and go to Indian consumers more quickly. We are hoping to win popularity with Indian customers.'

Another innovation that Samsung is counting on is anytime-anywhere TV. It has tied up with content providers like Discovery Channel for high definition TVs, HDTVs, and Microsoft's Xbox for its gaming console. Samsung is also investing in sports from sponsoring the Chelsea Football Club and the Winter Olympics 2006 or tailormaking the World Cybergames, it's doing a lot to become a well known entity.

So, Samsung has former Olympic skier Alberto Tomba as the brand's global athlete ambassador and he says the brand is popular in Europe in countries like France, Italy, Switzerland, Germany as well as in Japan.

But the real challenge for Samsung is to move up from being the 20th most valuable global brand to becoming the market leader, that's also an iconic brand.

Written for www.moneycontrol.com

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