ksom REPORT ON SAMSUNG SMARTPHONE
This report is acollective effort and not my sole ownership -
SAMSUNG
Samsung has been in the business for over 70 years that includes advanced technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels and many more. Their flagship company Samsung Electronics leads the global markets in high-end electronics manufacturing and digital media.
They offer a plethora of products which includes
· Mobile Phones
· Tablet
· Television, Audio & Video Players
· Camera & Camcorder
· Home Appliances
· PC, laptops, peripherals & Printers
· Memory Cards
website: www.samsung.com
SMARTPHONE- It's a mobile phone built on a mobile operating system and has a far more advanced computing capability , features and connectivity than a feature phone.
The evolution of Smartphone is rapid and now it includes high-end technologies like high-resolution compact digital cameras, pocket video cameras, GPS navigation and other computing features which form a single multi-use device
ORIENTATIONS TO THE MARKET-CONCEPTS
Holistic Marketing Concept : Samsung Smartphone follows Holistic Marketing Concept as it has a integrated system. Almost all the parts like semiconductors, chips, graphics are manufactured by Samsung. It has R&Ds to develop new features. Samsung has Samsung stores to sell the product and Service Centres for after sales maintenance and service. Samsung has good marketing department to oversee promotions etc. According to a news in Korea Tikmes Samsung has formed a different department to oversee Public Relations
MARKETING MYOPIA
SAMSUNG has no danger for marketing myopia as it conducts extensive research on their products and the consumer wish. They have two R & D Centres in India
· Samsung India Software Centre (SISC) at Noida, near Delhi-They develop software for televisions
· Samsung India Software operations unit (SISO) in Bangalore-They work on the area of Telecom, wireless terminals, Networking, System on Chip etc
The two R&D centres are dedicated to innovations and keep their product up-to-date. Samsung India currently has 6,000 employees in their two R&D Centres in Noida & Bangalore
Their global R&D employees number 42,000 presently. They have a plan to increase it to 50,000. This depicts they don't have marketing myopia
SWOT ANALYSIS
Following are the strength weakness opportunity and threat of Samsung Smartphone.
The most interesting thing that has come up in the SWOT analysis that the Design seem to be both a strength and a weakness for Samsung. Samsung Smartphone has cool trendy look which very appealing. But the customers say that the designs in various phones are too similar. e.g very little artefact difference is there in Samsung Wave y and a Galaxy.
Strength: Samsung's strength lies in their technology. They use high-end technology so it gives them an edge. Their R&D Centres are crucial in this front. They always come up with new features and applications. Their numerous Mobile Applications also attract customers. As they manufacture almost all the part, they don't depend much on outside source. They also have Smartphones fit for every pocket from INR 6,990 to INR 39,990. The design of Samsung Smartphone is attractive.
Weakness: Their Smartphones are vulnerable to damages. They should also give attention to the artefact variation. Almost all phones have little difference in artefact among themselves. The phone is also not user-friendly.
Opportunity: Smartphone market is growing rapidly. They have a chance grow their market share if they can continue with their aggressive marketing. Rural market is untapped. Samsung should introduce a lower price range to capture that. More tie-ups with service providers can be fruitful
Threats: Competitors like Nokia and Apple are the main threat. The upcoming Chinese mobile phone companies like Micromax, Karbon etc also gaining momentum in low price range
BCG MATRIX
The global Smartphone shipment increased by 41 per cent last year. The total shipment jumped from 103 million units in Q1 of 2011 to 145.3 million units in Q2 of 2012. Samsung Smartphone shipment rose from 12.6 million units to 44.5 million units in the same period-a growth of almost 253%. So Samsung Smartphone's share in the Smartphone market in Q2 of 2012 is almost 30.6%. Next is Apple with 24.15% and Nokia with 8.19%
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STAR |
QUESTION MARK |
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CASH COW |
DOG |
HIGH ^
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RATE OF MARKET GROWTH |
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LOW |
| HIGH LOW
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Global Smartphone market has a high growth and Samsung Smartphone has high market share in the Smartphone kmarket so Samsung features in the star segment in the BCG matrix
POTTER'S 5 FORCES
THREAT OF NEW ENTRANTS
Samsung gives quality product within affordable range. New entrants like Micromax etc has a disadvantage on quality front. also Samsung has all the up-to-date features
COMPETITORS
Samsung saw the potential in the Smartphone market before its competitor Nokia. Samsung Smartphone provides much better and much more features and applications Another competitor Apple has a price range which is affordable only to premium segments
SUBSTITUTES
Samsung has a product in every price range and also maintains a quality superior to others. It is loaded with up-to-date features. And no other brand can give any feature which is not present in Samsung Smartphone. Samsung Smartphone provides applications exclusively to Samsung users via Samsung Apps portal
SUPPLIER BARGAINING POWER
Samsung has an extensive distribution network. It is self-sufficient. Also it provides good incentives and profit margin to its suppliers. Samsung have a high market share in Smartphone segment and suppliers will find more takers of Samsung Smartphone than its competitors
BUYER BARGAINING POWER
Buyers will find Samsung Smartphone fit for every pocket and much superior in terms of quality and performance than any other brand. They have a wide range of product in various price range. Also Samsung has a look which is quite attractive
MASLOW'S HIERARCHY NEEDS
Samsung Smartphone fulfils all the Maslow's hierarchy needs starting from physiological need to self actualization need.
Physiological needs: The basic needs of a phone is to make call, text messages, surfing on internet. All these needs are satisfied by Smartphone.
Safety needs: Samsung Smartphone comes with various inbuilt antitheft software such as Mobile Tracker. Samsung is the first company to innovate such safety software.
Social Needs: Samsung Smartphone has various social networking application such as whatsApp, face book, Skype etc.
Esteem needs: Samsung Smartphone are sleek smarty and trendy looks which makes a consumer feel pride of ownership.
Self Actualisation needs: Samsung Smartphone has various application which may develop skills of a consumer. There are piano, guitar and also educational applications in Samsung Smartphone.
VALUE DELIVERY CHAIN
Samsung produces almost all the parts(including processing chips, semiconductors) of the Smartphone themselves across various units spread all over the world.
Samsung has two state-of-the-art manufacturing units in India
· in Uttar Pradesh(Noida) started in 1997
· in Sriperumbudur, TamilNadu started on November 2007 to cater the South Indian market
The former unit in UP manufactures Smartphone in India. Samsung vendors then send the product overseas for quality check. The product is sold to the consumers via retail sellers, institutional sellers like Mobile Store etc, online market like E-bay etc and Samsung's own Centres and Samsung Eshop in samsung.com
Samsung has a consolidated distribution system consisting of 18 state-level distribution offices and a direct dealer interface.
BUSINESS UNITS PLANNING
SAMSUNG has 18 state-level distribution system. It has business units in the following countries
· MEXICO, SYRIA, UAE, IRAN, CHINA, THAILAND, VIETNAM, INDONESIA, AUSTRALIA, PHILIPINES, JAPAN
· INDIA
and other places. They have also plans to build new units.
In India, Samsung has two manufacturing units. One in Uttar Pradesh(started in 1997) and in Sriperumbudur in Tamil Nadu started in 2007 to cater Southern states.
Globally it has 6 R&D centres in Korea and 18 others in 9 countries including the US, UK ,Russian Federation, Israel, India, Japan and China
It has two R&D centres: Samsung India Software Centre (SISC) at Noida, near Delhi. Samsung India Software operations unit (SISO) in Bangalore
MICRO ENVIRONMENT
Most of the parts of the SAMSUNG Smartphone are manufactured internally by Samsung. It has manufacturing units all over the globe including two in India (UP & Tamil Nadu).
Samsung's Memory Division produces integrated circuits like SRAM, DRAMs , NAND Flash Memory & Solid State Drives(SSDs)
System LSI Division manufactures and designs logic and analogue IC devices
Storage Systems division produces high quality and high performance disk drive
Samsungs Display division produces and upgrades digital displays from time to time
It has many R&D Centres globally including 6 in Korea and 18 others in 9 countries like the US, UK, Russia, Israel, India, Japan and China. 2 R&Ds are situated in India( Noida & Bangalore)
This makes them self-sufficient and outside dependency is low. From Chips to Cases Samsung mostly uses its own technology
MACRO ENVIRONMENT
Because of their extensive R&Ds they contribute a lot to the Smartphone industry. They used to supply chips to Apple till the recent confrontation. They provide parts to many organisations thus vastly contributing to the industry as a whole. They produce semiconductors, ICs, chips which are essential part of the Smartphone.
Global Smartphone market has grown by 41% annually from 103 million units in Q1 of 2011 to 145.3 units millionQ1 of 2012. Samsung's share rose 253% from 12.6 million units to 44.5 million units in the same time.
CONSUMER BUYING BEHAVIOR
Though mobile phones has become a necessity nowadays Smartphones are still considered a luxury. But the thought is rapidly changing as access to net has become very important.
Consumer buying behaviour towards Smartphone is mainly influenced by the groups of people around them. Because most of the people possess Samsung Smartphone the reference groups is the main influence for choosing Samsung Smartphone.
Some are driven by necessity such as corporate who require net access, office tools, presentation software etc
Samsung has a good range of Smartphones to cater these needs
Samsung Wave series is the hot choice for students and college goers because it has all the necessary items in a low price and good looks.
The affluent young adults and fresher in corporate industries mostly go for Galaxy series
Corporate prefer Samsung Tabs and Galaxy Series phone because their need is different.
Samsung via promotions presented the Smartphone as something which is meant for youth. So the young population buys Samsung Smartphones
Price factor is always there while choosing a Smartphone. Samsung has products ranging from INR 6,990 to INR 39,990. Customers chooses the type of phones according to their pockets
Samsung's brand ambassador Mr. Amir Khan is also a great influence because consumers can relate to his genuineness and perfection
BUSINESS TO CUSTOMER MARKETING
In Business to Customer Marketing the company is selling the product to the customers. This type of transaction is mainly common.
SAMSUNG sells its Smartphone to customers through
· their own Samsung Stores located in Major cities and towns
· Institutional sellers like Mobile Stores, Reliance Digital, Croma etc
· the retail sellers via distributors or dealers
· online markets like e-bay etc
· Samsung ESTORE in www.samsung.com
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BUSINESS TO BUSINESS MARKETING
Business to business marketing happens between two organisations. Here the customer is an organisation. The buying decision is usually taken by a core group who deals with the purchase of buying organisation. Bulk purchase is prevalent in such transaction.
ICFAI business school made a tie up with Samsung. In this tie up the institute purchased bulk Samsung tablets for their students. This deal is a good example of Business to business marketing.
Croma retail, Mobile store, Spice such type of organisation makes bulk purchase of Samsung smart phone, hence it is another example of business to business marketing.
SEGMENTATION
A market segment consists of a group of customers who share a similar set of needs and wants
Some researchers try to define segments by looking at descriptive characteristics: geographic, behavioural, demkographic, and psychographic. Then they examine whether these customer segments exhibit different needs or product responses.
DEMOGRAPHIC
Samsung Smartphone Users mostly are of the age between 15 to 40 years. School and college goers find the range between INR 6,990 to INR 15,000 affordable while corporate and affluent people choose the Smartphones of INR 20,000 and above. Fresher in organisation and affluent young adults from upper middle class go for the range 15,000 to 25,000.
Samsung caters almost all Social Economic classes from Middle class upwards
GEOGRAPHIC
Company concentrates mainly the population living in urban areas. With purchasing power of Indians increasing Smartphones are sought after in suburbs also
PSYCHOGRAPHIC
Samsung concentrates on the population having fast as well as modern living standard and savvy people
BEHAVIORAL
Audience targeted by the company will be the technology lovers.
Product-Samsung has various segments of Smart phone to cater different type of market segments. Samsung classified its products into basically 3 broad segments- the Wave series, the Galaxy Series, the Tab. Y series of the first 2 classes are the lowest in price within the class. The Galaxy S Series is for is basically for premium segments so is the Tab
TARGETING
There are many statistical techniques for developing market segments. Once the firm has identified its market-segment opportunities, it must decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better –defined target groups.
Samsung has a wide range of products to target a large range of consumers
From the segment of age group, the main target of Samsung is the youth. Though Corporate people are target customers for the Tab segment. School goers and college students are targeted so are the Fresher in companies and people with mediocre salary
Its product has a huge price range from INR 6,90 to 39,990 i.e. Wave, Galaxy, S series etc. so its target customer range is broad
Samsung has targeted to fill up the gap by introducing the Smartphone in the Indian market because Nokia was unaware of this segmentation and the apple was out of reach from the common people or middle class people.
POSITIONING
An effort to influence consumer perception of a brand or product relative to the perception of competing brands or products. Its objective is to occupy a clear, unique, and advantageous position in the consumers mind. It is a process by which the marketers try to create an image or identity in the minds of their target market for its brand, product, or organization.
Samsung has positioned its Smartphone to reach out to the youth segment. Its quotation “CHANGE TO SMART” appealed to the customers to change for better, to be smart and to be up-to date. Samsung product also is status symbol.
One of their advertisement show young people voting via WhatsApp to pass a resolution and the resolution was passed quickly. This showed Samsung Smartphone as a tool which empowers youth
Mr. Amir Khan as the brand ambassador of Samsung mobile gives high advantages to the company. This was the first time when Amir Khan advertised any gadget, and the company successfully created a position of Mr. Prefect in relation to the perfect gadget.
Samsung is able to create a royal image in market. It’s a matter of pride for the youth having a Samsung Smartphone with them.
PRODUCT LIFE CYCLE
SAMSUNG has an organisation is in a stage of Maturity. They avoided decline by constant repositioning and innovation in their product as well as diversification. Though they had ups and downs their graph is more or less constant. SAMSUNG-the organisation in MATURITY Stage. They are diversifying and entering new products as well as increasing their product range.
SAMSUNG SMARTPHONE is in a Growth Stage. The Smartphone market is almost new, hardly 4-5 years old. Samsung realised the potential and entered it in an early stage. Now it is in GROWTH Stage making innovations in their product, adding new features and applications and trying elevate it to the next level. Their market has grown from 12.6 million units in 2011 to 44.5 million units in 2012 -a rise by almost 253 percent. Market share has grown from almost 12.2 % in 2011(Q1) to almost 30.6% in 2012(Q1)
BRAND EQUITY
SAMSUNG is a known brand globally. Also it constantly takes initiative to enhance their brand
www.samsung.com-They have a well developed and well-maintained website which upheld their brand and gets connected to the customers.
They have Mr. Amir Khan as a brand ambassador whose genuineness and perfectionist image render an image of trust and perfection to the brand
They are constantly sponsoring events on global, national as well as on a local scale. Recently they sponsored the LONDON OLYMPICS whose motto 'inspire a generation' was similar to youth theme.
They had an advertisement showing people voting for a resolution with help of their WhatsApp. Samsung presented themselves as tool to empowering youth
SAMSUNG
Samsung has been in the business for over 70 years that includes advanced technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels and many more. Their flagship company Samsung Electronics leads the global markets in high-end electronics manufacturing and digital media.
They offer a plethora of products which includes
· Mobile Phones
· Tablet
· Television, Audio & Video Players
· Camera & Camcorder
· Home Appliances
· PC, laptops, peripherals & Printers
· Memory Cards
website: www.samsung.com
SMARTPHONE- It's a mobile phone built on a mobile operating system and has a far more advanced computing capability , features and connectivity than a feature phone.
The evolution of Smartphone is rapid and now it includes high-end technologies like high-resolution compact digital cameras, pocket video cameras, GPS navigation and other computing features which form a single multi-use device.
PRODUCT MIX
The following are the product range of SAMSUNG
· MOBILE PHONES
· TABLET
· TV/AUDIO/VIDEO
· CAMERA/CAMCORDER
· HOME APPLIANCES
· PC/PERIPHERALS/PRINTER
· MEMORY CARDS
· ACCESSORIES
PRODUCT MIX FOR SAMSUNG MOBILE PHONES-SMARTPHONE falls within the mobile phone segment of SAMSUNG. The total product line includes:
· TABLET SMARTPHONE
· SMARTPHONE
· DUAL SIM PHONE
· TOUCH PHONE
· QWERTY MESSAGING PHONE
· MULTIMEDIA PHONE CDMA PHONE
· ESSENTIAL PHONE
SAMSUNG SMARTPHONE PRODUCT LINE (present)-
· GALAXY SERIES-
· GALAXY S
· GALAXY SII
· GALAXY SIII
· GALAXY NOTE
· GALAXY NOTE II
· GALAXY S ADVANCE
· GALAXY S DUOS
· GALAXY CH@T
· GALAXY DUOS LITE
· GALAXY BEAM
· GALAXY Y CDMA
· GALAXY ACE PLUS
· GALAXY ACE DUOS
· GALAXY ACE S5830
· GALAXY POCKET
· GALAXY Y
· GALAXY Y DUOS
· GALAXY PRO DUOS
· GALAXY TAB 620
· OMNIA M
· WAVE SERIES
· WAVE Y
· WAVE 3
· WAVE M
FIVE PRODUCT LEVEL IN SAMSUNG SMARTPHONE
1) CORE BENEFIT PRODUCT-
It is the fundamental level. It's the service or the benefit the customer is really buying. For Samsung Smartphone the core benefits that the customer is buying is to make phone calls, sending text messages etc. Each and every Smartphone of Samsung provides that benefit to its customers.
2) BASIC PRODUCT-
Turning the core benefits into a basic product is the second level of the product strategy. Thus the basic product of Samsung Smartphone is provided with the facility of calling, texting, taking pictures, listening to the radio, browsing, reading documents etc.
3) EXPECTED PRODUCT-
It is the third level of the strategy. When a consumer buys a product he/she normally expects a bundle of attributes and conditions.
SAMSUNG SMARTPHONE has
· high quality camera
· good media player
· memory capacity
· quality sound
· good browser
· efficient office tools
4)AUGMENT PRODUCT-
The product which have features that exceeds the customer expectations is known as the Augmented product and it is the fourth level of the hierarchy system. The Samsung Smartphone is provided with a lot of applications like
· Google maps
· GPS Navigation
· Front Camera for video conferencing
· Motion sensor
5)POTENTIAL PRODUCT-
It is the last and the final level of the product levels. here the product encompasses all the possible augmentations and transformations the product might undergo in the future. Samsung Smartphone is continuously updating itself to satisfy the new customer needs and wants. SAMSUNG has numerous R&D centres across the globe including 2 in India which are constantly innovating new features.
· Potential Augmentation that can be possible in future
· screen with in-built projector
· 3D video calling
· Bendable screen that can be worn like a watch
PRODUCT HIERARCHY OF SMART PHONE INDUSTRY
PRODUCT
CLASSIFICATIONS
DURABILITY
Samsung Smartphone is a durable good and it has an life of 3-4 years
TANGIBILITY
Though SAMSUNG SMARTPHONE as a product is tangible, it provides some services (supported by service providers) which is intangible in nature. These include GPS, GPRS etc.
Also it provides warranties , maintenance and repairing services through its service centres which is intangible
USES
SAMSUNG SMARTPHONE has many uses. Besides a phone it acts as
· internet browser
· camera/video recorder
· media player
· social networking etc
CONSUMER-GOODS CLASSIFICATION
Consumer goods classification is done on the basis of shopping-habits. It is distinguished among convenience, shopping, speciality and unsought goods.
Convenience Goods- These are the goods which the consumer buy frequently, immediately and with a minimum effort. It can be again further classified into i) Staples and ii) Impulse.
Shopping Goods- These are the goods that the consumer characteristically compares on such bases as suitability, quality, price and style. Shopping goods are again of two types:-
i) Homogenous Shopping Goods- They are similar in quality but different enough in price to justify shopping comparisons.
ii) Heterogeneous Shopping Goods- These goods differ in product features and services that may be more important than price.
Speciality goods- Have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort. These goods do not require comparisons. Buyers invest time only to reach dealers carrying the wanted products.
Unsought Goods-These are the goods that the consumer does not know about or does not normally think of buying.
Smartphone segment in mobile phones category for long was unsought goods because consumers in India was either unaware or because of high price. Samsung is the company who identified this potential segment and bought Smartphone within the reach of mass market, which Nokia failed.
Mobile phones in general are homogeneous shopping goods but SAMSUNG SMARTPHONE falls in the category of heterogeneous SHOPPING GOODS because various companies produce variety of Smartphone's with features whose patents belong to them only.
Also Smartphone's are high involved buying
· GALAXY SII Rs 25,990
· GALAXY SIII Rs 35,499
· GALAXY NOTE Rs 29990
· GALAXY NOTE II Rs 37990
· GALAXY S ADVANCE Rs 19,890
· GALAXY S DUOS Rs 17100
· GALAXY CH@T Rs 8660
· GALAXY DUOS LITE Rs 6990
· GALAXY BEAM Rs 29900
· GALAXY Y CDMA Rs 7590
· GALAXY ACE PLUS Rs 15750
· GALAXY ACE DUOS Rs 12100
· GALAXY ACE S5830 Rs 10650
· GALAXY POCKET Rs 6990
· GALAXY Y Rs 7190
· GALAXY Y DUOS Rs 8660
· GALAXY PRO DUOS Rs 9690
· GALAXY TAB 620 Rs 25900
· OMNIA M Rs 16400
· WAVE 3 Rs 16200
· WAVE M Rs 13950
From the above list (obtained from www.samsung.com on 31.10.12) it can be seen Samsung targeted almost the all of middle and upper economic classes.
While Apple could only target the premium segment, BlackBerry could not provide so much variation.
7 P's
1.PRODUCT
· SAMSUNG provides
· Sleek design
· High resolution camera and image viewer
· Front camera for video chat
· High speed Wifi for surfing
· Adobe Reader, Opera mini, Google etc other high-end applications
· Think free Office for Office files
· GPS enabled NAVIGATION software
· High quality video and audio player
SAMSUNG PROVIDES ALL THIS PLUS MANY MORE APPLICATIONS AND FEATURES AT A PRICE AFFORDABLE TO ALL.
2.PRICE-
Samsung has a Smartphone for each and every pocket. its competitors have either higher price or low quality but no one gives value for money like Samsung.
Its product has a huge price range from INR 6,90 to 39,990 i.e. Wave, Galaxy, S series etc. so its target customer range is broad
Samsung has targeted to fill up the gap by introducing the Smartphone in the Indian market because Nokia was unaware of this segmentation and the apple was out of reach from the common people or middle class people.
3.PROMOTION-
SAMSUNG is a known brand globally. Also it constantly takes initiative to enhance their brand
www.samsung.com-They have a well developed and well-maintained website which upheld their brand and gets connected to the customers.
They have Mr. Amir Khan as a brand ambassador whose genuineness and perfectionist image render an image of trust and perfection to the brand
They are constantly sponsoring events on global, national as well as on a local scale. Recently they sponsored the LONDON OLYMPICS whose motto 'inspire a generation' was similar to youth theme.
They had an advertisement showing people voting for a resolution with help of their WhatsApp. Samsung presented themselves as tool to empowering youth
4.PLACE
SAMSUNG has 18 state-level distribution system. It has business units in the following countries
· MEXICO, SYRIA, UAE, IRAN, CHINA, THAILAND, VIETNAM, INDONESIA, AUSTRALIA, PHILIPINES, JAPAN
· INDIA
and other places. They have also plans to build new units.
In India, Samsung has two manufacturing units. One in Uttar Pradesh(started in 1997) and in Sriperumbudur in Tamil Nadu started in 2007 to cater Southern states.
Globally it has 6 R&D centres in Korea and 18 others in 9 countries including the US, UK, Russian Federation, Israel, India, Japan and China
It has two R&D centres: Samsung India Software Centre (SISC) at Noida, near Delhi
Samsung India Software operations unit (SISO) in Bangalore
BECAUSE OF ITS GLOBAL DELIVERY CHAIN SAMSUNG CAN SELL PRODUCTS MUCH CHEAPER THAN ITS COMPETITORS
5.PEOPLE
SAMSUNG has a large employee strength who are dedicated and always keeps in touch with its consumers. It has a large chain of service centres and selling points. They conduct in-store surveys in popular places to look after customer needs.
6.PHYSICAL EVIDENCE
Most of the parts of the SAMSUNG Smartphone are manufactured internally by Samsung. It has manufacturing units all over the globe including two in India (UP & Tamil Nadu).
Samsung's Memory Division produces integrated circuits like SRAM, DRAMs , NAND Flash Memory & Solid State Drives(SSDs)
System LSI Division manufactures and designs logic and analogue IC devices
Storage Systems division produces high quality and high performance disk drive
Samsungs Display division produces and upgrades digital displays from time to time
It has many R&D Centres globally including 6 in Korea and 18 others in 9 countries like the US, UK, Russia, Israel, India, Japan and China. 2 R&Ds are situated in India( Noida & Bangalore)
This makes them self-sufficient and outside dependency is low. From Chips to Cases Samsung mostly uses its own technology
7.PROCESS
Samsung produces almost all the parts(including processing chips, semiconductors) of the Smartphone themselves across various units spread all over the world.
Samsung has two state-of-the-art manufacturing units in India
· in Uttar Pradesh started in 1997
· in Sriperumbudur, TamilNadu started on November 2007 to cater the South Indian market
The former unit in UP manufactures Smartphone in India. Samsung vendors then send the product overseas for quality check. The product is sold to the consumers via retail sellers, institutional sellers like Mobile Store etc, online market like E-bay etc and Samsung's own Centres and Samsung Eshop in samsung.com
Samsung has a consolidated distribution system consisting of 18 state-level distribution offices and a direct dealer interface
DISTRIBUTION SYSTEM
In India Samsung distributes mobile phone by two main distribution channel.
1)Trading Dealer Network. (TDN)
2)Modern Trade Chain System. (MTCS)
TRADING DEALER NETWORK (TDN)
Ø Under this system the product is distributed from national warehouse situated in Delhi to various regional hubs.
Ø This regional warehouse is a third party distributor. Responsible for the direct delivery to city distributor.
Ø Such regional warehouse are the single point of distribution in a whole state.
Ø Then comes the city distributor, they purchase product from regional hub on a 20 days post dated check policy.
Ø Only single distributor is assigned to distribute product for a particular city.
Ø These distributor provide direct store delivery (DSD) to various stores of a city.
Ø Stores and various sales point purchase from city distributor on a 15 days credit policy.
The Flow chart below explains the distribution channel of Samsung mobile phone under TDN system for Bhubaneswar, Odisha.
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MODERN TRADE CHAIN SYSTEM (MTCN)
Ø Under this system product is distributed from national company's warehouse situated in Delhi to warehouses/hubs of various branded mobile shops chain such as Mobile stores, Croma, Spice etc.
Ø Such chain have their zone wise warehouses for example mobile store have its warehouse in Kolkata for whole eastern zone.
Ø This system is based on B2B(business to business) marketing.
Ø Purchase made by such chain is in bulk and their payment terms are also flexible as compared to payment system in Trading Dealer Network (TDN).
The Flow chart below explains the distribution channel of Samsung mobile phone under MTCN system in reference to Mobile Store for Bhubaneswar, Odisha.
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PRICING DECIDED BY UNORGANISED RETAILERS
The retailers get a fixed percentage of profit on the selling price which the official distributors of Samsung set( let us call this price as the distributor selling price or DSP). This pricing and profit percentages are solely decided by the Samsung distributors. Distributors will give the assured percentage to the retailers even if they sell the product at the DSP. But the retailers set their selling price by adding some profit to the DSP. Let us call this selling price-the retailer selling price(RSP). Now when the customer bargains with the retailers they allow discounts up to the DSP. This means if the retailer sells the product at actual selling price(ASP i.e. The price on which the retailers sells the smart phone to the consumers) which is Rs x + DSP then they will have a profit=profit percentage assured by the distributors+(ASP-DSP). Usually for the retailers, DSP,RSP,ASP are below the maximum retail price printed on the Smartphone boxes.
NOTE:
Profit percentage assured by the distributor to the retailers vary from distributor to distributor. But since the distributors have specific area of operations and within which he is the sole distributor, the profit percentage assured to all the retailers within a specific area is usually the same and hence the DSP.
Now, additional profit set by the retailers on DSP to obtain RSP varies from retailer to retailer. So, RSP varies from retailer to retailer. That is why 2 retail shops within proximity can have different RSPs.
This profit is range which the retailers uses to give discounts to the consumers. The more the discount the less the additional profit earned by the retailers.
The profit assured by the distributor is usually same for the retailers. So this profit i.e.(ASP-DSP) makes the total profit made by a retailer vary from that made by another retailer.
Again consumer bargain with retailers to give discounts. And the retailer sells the product to the consumer at ASP. Since discount allowed by the retailers vary from one retailer to the other the ASPs also vary.
When questioning the retailers we got to know that they usually have profit by selling a Smartphone in a range of Rs 100-Rs 200 (subject to verification of the information given by the retailers)
IN SHORT,
Selling price set by Samsung India + profit assured by the distributor to the retailers=DSP
DSP + some profit added by retailer=RSP
RSP-discount offered by the retailers=ASP
So total profit for the retailers=profit assured by the distributors + (ASP-DSP)
DEMO SMARTPHONES
Distributors provide demo Smartphone's to the retailers so the retailers to help the customers get the feel of the phone in reality. They charge the retailers with 50% of the price and the retailers allowed to keep it for the showing purpose after that they are allowed to use it for personal use.
The distributor representatives visits the shop periodically to know about the dummy sets
INSTITUTIONAL SELLERS
Institutional sellers like big bazaar, mobile store etc usually buy the product directly from Samsung India. This is a business to business transaction. They buy at a price which they is set mutually by the seller as well as Samsung India and which is mentioned in the contract between them. Since pricing is a sensitive issue Samsung does not discloses the profit margin they gain during such transactions.
Institutional sellers on the other hand set a profit margin on the price they bought from Samsung and sell it in their stores. This price is their own pricing strategy and they don't disclose the profit margin
They also provide additional benefits like insurance, theft warranty for which they charge according to their pricing strategy
Ex- in mobile store, the price for an anti theft warranty varies from rs 99-rs 299* depending on the value of the mobile.
Similarly, warranty price varies from Rs 49 to Rs 299* depending on the value of the mobile.
*these are figures only for the Smartphone's which we had access to.
Procedure followed to replace the sold mobile
Based on the demand every retailer keeps a certain number of Smartphone sets in their store for sale. When a certain number a particular Smartphone gets sold the distributor provides that number of new Smartphone sets again to be sold to the consumers.
The distributor agents or representatives comes to the shop periodically to know the details of the Smartphone's sold
Suppose a retailer keeps 5 no of s3 and 10 no of wave y among others and in a certain period he sells 4 s3 and 6 wave y sets. The distributors then send new 4 s3 and 6 wave y sets to be sold to the consumer.
This method is followed by almost all stores be it retail or institutional sellers
For institutional sellers the details of sale are tracked by the inventory management of the institutional seller.
E.g. in mobile store this is automatically arranged by a software. The people in each mobile store inputs the number of sets sold on areal-time basis. The software automatically calculates and generates data about how many sets sold and how many sets have to be sent to each particular store.
COMMUNICATION CHANNELS
Samsung uses through the line marketing.
Above the line marketing includes:
· ADVERTISEMENTS-
· Tv commercials-both on national and regional television. Amir khan is shown in the ads.
· Print ads-on important national and regional dailies
· Bill boards-on important cities and suburbs
· Display boards
· Unipoles
· Bipoles
· Triads
· Point of purchase displays
Below the line marketing includes
· SALES PROMOTION
· Contests & games-they organise contests and games in various city malls and important places
· Trade shows-present in almost all major electronics & communication trade fairs
· Tie-ins-have tie up with Airtel
· Events-sponsors major events like cricket, football matches etc. Sponsored London Olympics 2012
· DIRECT & INTERACTIVE MARKETING
· Mailings
· Telemarketing
· E-mails-they take mail address from consumers and constantly keep in touch with them
· Websites-they promote through their website www.samsung.com
Presently Samsung has 3 promotions in its website
1. Picture perfect vacations-Rs 7000 worth travel vouchers free with a Samsung camera
2. Awesome 2 some offer-1 year additional warranty and a toner worth rs 1999 free with Samsung ml-2161/XIP printers
3. Cookery kit and cookbook free with Samsung microwave
GLOBALISATION
Samsung is a Korean company. Yet it has a global market. They are present in almost 80 countries worldwide.
In major countries Samsung has subsidiaries which look after the operations in their country. Example in India Samsung India looks after Samsung electronics' India affairs
Also they have strategic business units in various countries.
SAMSUNG has 18 state-level distribution system. It has business units in the following countries
· MEXICO
· SYRIA
· UAE
· IRAN
· CHINA
· THAILAND
· VIETNAM
· INDONESIA
· AUSTRALIA
· PHILIPINES
· JAPAN
· INDIA
and other places. They have also plans to build new units.
In India, Samsung has two manufacturing units. One in Uttar Pradesh(started in 1997) and in Sriperumbudur in Tamil Nadu started in 2007 to cater Southern states.
Globally it has 6 R&D centres in Korea and 18 others in 9 countries including the US, UK ,Russian Federation, Israel, India, Japan and China
It has two R&D centres: Samsung India Software Centre (SISC) at Noida, near Delhi
Samsung India Software operations unit (SISO) in Bangalore
