Case Study - Samsung Electronic Company
Case Summary – Samsung Electronic Company: Global Marketing Operations
GRBA 813 Fall 2008
Over the past 39 years, Samsung Electronics Company (SEC) has evolved from a low cost manufacturer of black and white televisions, to one of the most technologically advanced and prestige companies of modern day time. Throughout the 1990’s, SEC’s chairman, Kun Hee Lee, demanded that the company as a whole re-think their key fundamentals and set the stage for long-term commitments to investment in innovative, premium products and brand value. As a result of the recognized opportunities, Samsung pursued a bold combination of strategies to re-define themselves. Many of these methods were unconventional but lead to great success over the next several years (Exhibit 1). As Samsung continued to grow, Executive VP of Global Marketing, Eric Kim, was forced to make a difficult decision. Should Samsung continue to offer a “one size fits all” product promotion or shift their focus towards more complex customer segmentation? The most important factors in determining whether or not Kim should pursue more customized devices in his marketing planning revolve around Samsung’s ability to continue to reduce manufacturing costs and increase marketing costs, and their ability to make the brand name more personal through customer insight and exposure. One of the strategies that Samsung implemented to control costs was their ability to be flexible in plant locations. They operated 12 manufacturing plants in China and also set up R & D facilities in India to take advantage of the low-cost human capital. This strategy in keeping production costs low was not viewed as a fixed cost but rather a source of flexibility and control of the entire production process. Many of their competitors chose a less risky option by outsourcing production in order to focus on internal core competencies. Samsung considered manufacturing to be one of its vital core competencies. As the manufacturing
GRBA 813 Fall 2008
Over the past 39 years, Samsung Electronics Company (SEC) has evolved from a low cost manufacturer of black and white televisions, to one of the most technologically advanced and prestige companies of modern day time. Throughout the 1990’s, SEC’s chairman, Kun Hee Lee, demanded that the company as a whole re-think their key fundamentals and set the stage for long-term commitments to investment in innovative, premium products and brand value. As a result of the recognized opportunities, Samsung pursued a bold combination of strategies to re-define themselves. Many of these methods were unconventional but lead to great success over the next several years (Exhibit 1). As Samsung continued to grow, Executive VP of Global Marketing, Eric Kim, was forced to make a difficult decision. Should Samsung continue to offer a “one size fits all” product promotion or shift their focus towards more complex customer segmentation? The most important factors in determining whether or not Kim should pursue more customized devices in his marketing planning revolve around Samsung’s ability to continue to reduce manufacturing costs and increase marketing costs, and their ability to make the brand name more personal through customer insight and exposure. One of the strategies that Samsung implemented to control costs was their ability to be flexible in plant locations. They operated 12 manufacturing plants in China and also set up R & D facilities in India to take advantage of the low-cost human capital. This strategy in keeping production costs low was not viewed as a fixed cost but rather a source of flexibility and control of the entire production process. Many of their competitors chose a less risky option by outsourcing production in order to focus on internal core competencies. Samsung considered manufacturing to be one of its vital core competencies. As the manufacturing