Look Out Sony The Koreans Are Coming

Have you ever heard of Samsung? Probably not, unless you own a microwave oven (the com

pany's preeminent U.S. brand presence). But then again, not too many people had heard of Sony back in the early 1960s. Like Sony, which was initially known for its clock radios and small black-and-white TVs and was a secondary player relative to Motorola, Philips, and Zenith, Samsung has been known in the United States for low-end products, such as VCRs, TVs, and microwave ovens. Now the company wants to be like Sony in another way—by becoming a well-known, market-leading electronics brand. In fact, Korea-based Samsung has Sony in its crosshairs— its goal is to be a stronger brand name than Sony by the year 2005.

Not likely, you say? Well, don't tell that to Samsung. Consider this: While the Japanese companies Fujitsu, Hitachi, Matsushita, NEC, and Toshiba have all been losing money and Sony has been struggling, Samsung has been on a roll, turning a $2.2 billion profit on sales of $24.7 billion in 2001. Not only that, but Samsung now manufactures laptops, DVDs, cell phones, and flat-screen TVs (among many other products) and is ranked fifth in the world in patents, behind IBM, NEC, Canon, and Micron Technology. The firm's growth has caught the attention of the competition, who now no longer doubt that Samsung can do it.

Samsung's strategy is to reposition its current brands upward. The company's most well known brand, Sanyo, produced copycat products— cheaper versions of Sony or Mitsubishi products. But since 1997, the company has changed its image by producing more upscale, top-of-the line offerings. It is pulling out of big discount chains like Kmart and Wal-Mart, which focus on price over quality, and moving in to Best Buy, Circuit City, and other specialty stores. And while its brands are still slightly lower priced than the very top names, the Samsung label is right there with them in quality.

The change in image has been supported by changes in advertising and promotion. A new campaign, "DigitAll:Everyone's Invited," attempts to position Samsung products as exciting, cutting edge, and reasonably priced. The company's 55 different advertising agencies were consolidated into one. Over $900 million was to be spent on global IMC marketing campaigns in 2002, $70 million of it in the United States, including the cost of a redesigned 65-foot-high electronic billboard in New York's Times Square and a high-profile presence at the Olympic Games in Salt Lake City. The current advertising campaign is designed to raise awareness, as well as to enhance the brand image. The focus of the ads is surreal, many featuring the "snow woman"—a hauntingly beautiful woman who imparts an expensive and classy feeling to the viewer and, hopefully, to the brand. The ads will appear on television, in print, and on retail and outdoor billboards.

Samsung's Olympic sponsorship typifies the repositioning strategy the company has undertaken. Samsung's objectives in Salt Lake were "to provide Olympic fans, athletes and their families with entertaining and memorable Olympic experiences" and "to showcase [its] leadership in digital convergence by letting spectators touch and feel products that will soon be unveiled to the U.S. market" (Il-Hyung Chang, head of Samsung's Olympic projects). The Olympic Rendezvous was the centerpiece of the sponsorship. Located in Salt Lake Olympic Square, the sponsorship provided daily entertainment shows, athlete appearances, future product displays, free phone calls, and other forms of entertainment. More than 240,000 people visited the Rendezvous during the 16-day period, and it was rated the top attraction in Olympic Square by visiting fans. Perhaps more important, 74 percent of the visitors stated they now had a more positive image of Samsung, and 76 percent indicated a willingness to purchase a Samsung product in the future.

The Internet is also a major part of the new IMC program. Samsung will have front-page sponsorships on 50 major websites, including Fortune.com, Forbes.com, BusinessWeek.com, and other business publication sites. CNN.com and EW.com will also be included in an attempt to reach 300 million "hits"

per month. By being on these sites, Samsung hopes to associate its brand with other well-known, and well-expected, brands. Joint product development ventures with strong-brand-image companies such as Sprint, Texas Instruments, and Dell are also working to reposition the brand.

So far, the efforts appear to have gone well. According to Interbrand—a brand consulting firm in New York—Samsung's brand-value rank is 43 (Sony's is 18). While still behind Sony, the brand's value rose 22 percent in 2001, with only Starbucks doing better. The Samsung brand ranks number 1 in flat-panel monitors and DRAM semiconductor memory chips. It is number 2, behind Sony, in DVD players and number 3 in mobile handsets. Samsung is, by far, the largest corporate presence in South Korea. Overall, Samsung is the second most recognizable consumer electronics brand in the world, according to Interbrand. A very strong player in China, Russia, and Korea, Samsung has now become a global brand as well, with 70 percent of its sales outside these three countries.

Can Samsung overtake Sony? As of now, the company has less than half the revenue of Sony, but it is no longer just making cheaper versions of Sony products. Robert Batt, of Nebraska Furniture Mart, thinks Samsung can outstrip Sony. To quote the $300 million retailer, "Someone shook that company up. It's moving up with the big boys." Look out big boys!

Sources: Christopher Saunders, "Samsung Ramps Up Web Efforts in New Campaign," InternetNews.com, May 24, 2002, pp.1-2; William J. Holstein, "Samsung's Golden Touch," Fortune, Apr. 1, 2002, pp. 89-94; Frank Gibney, Jr., "Samsung Moves Upmarket," Time, Mar. 25, 2002, pp. 49-52; Heidi Brown, "Look Out, Sony," Forbes, June 11, 2001, pp. 96-98.

The Samsung example is just one of many image-creating strategies that demonstrate a number of important marketing strategies that will be discussed in this chapter. These include the identification of market opportunities, market segmentation, target marketing and positioning, and marketing program development. Samsung's recognition of the importance of a strong brand image coupled with a strong IMC program reflects the solid marketing orientation required to be successful in today's marketplace.

In this chapter, we take a closer look at how marketing strategies influence the role of promotion and how promotional decisions must be coordinated with other areas of 38 the marketing mix. In turn, all elements of the marketing mix must be consistent in a strategic plan that results in an integrated marketing communications program. We use the model in Figure 2-1 as a framework for analyzing how promotion fits into an organization's marketing strategy and programs.

This model consists of four major components: the organization's marketing strategy and analysis, the target marketing process, the marketing planning program development (which includes the promotional mix), and the target market. As the model shows, the marketing process begins with the development of a marketing strategy and analysis in which the company decides the product or service areas and particular markets where it wants to compete. The company must then coordinate the various elements of the marketing mix into a cohesive marketing program that will reach the target market effectively. Note that a firm's promotion program is directed not only to the final buyer but also to the channel or "trade" members that distribute its products to the ultimate consumer. These channel members must be convinced there is a demand for the company's products so they will carry them and will aggressively merchandise and promote them to consumers. Promotions play an important role in the marketing program for building and maintaining demand not only among final consumers but among the trade as well.

As noted in Chapter 1, all elements of the marketing mix—price, product, distribution, and promotions—must be integrated to provide consistency and maximum communications impact. Development of a marketing plan is instrumental in achieving this goal.

As Figure 2-1 shows, development of a marketing program requires an in-depth analysis of the market. This analysis may make extensive use of marketing research as an input into the planning process. This input, in turn, provides the basis for the development of marketing strategies in regard to product, pricing, distribution, and promotion decisions. Each of these steps requires a detailed analysis, since this plan serves as the road map to follow in achieving marketing goals. Once the detailed market analysis has been completed and marketing objectives have been established, each element in the marketing mix must contribute to a comprehensive integrated marketing program. Of course, the promotional program element (the focus of this text) must be combined with all other program elements in such a way as to achieve maximum impact.

Figure 2-1 Marketing and promotions process model

Marketing Strategy and Analysis

Target Marketing Process

Marketing Planning Program Development

Opportunity

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