A7G7 - Discuss the market segmentation of Samsung PDF

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NATIONAL ECONOMICS UNIVERSITYSCHOOL OF ADVANCED EDUCATION PROGRAMSCOURESE: INTERNATIONAL MARKETING Topic: Discuss the market segmentation of SamsungContentsI. Introduction of Samsung.....................................................................................1. History of the company...........

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NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS

COURESE: INTERNATIONAL MARKETING Topic: Discuss the market segmentation of Samsung

Contents I. Introduction of Samsung.....................................................................................1 1. History of the company.....................................................................................1 2. Samsung’s vision...............................................................................................1 3. Samsung’s mission............................................................................................1 II. Samsung segments in Korean market..............................................................1 1. Geographic........................................................................................................1 2. Demographic.....................................................................................................2 3. Psychographic....................................................................................................2 4. Behavioral..........................................................................................................3 III. Samsung segments international market........................................................3 IV. Discuss the effective segmentation of Samsung..............................................4 V. Evaluate effectivity of Samsung’s market segmentation.................................6 VI. Explain how the company combine its understanding of the market with its internal capabilities (SWOT MATRIX).........................................................10 VII. Discuss how the company differentiate and position its product for maximum competitive advantage in the marketplace.......................................13 1. Comparison between Samsung Galaxy A51 and OPPO A91 in Vietnam market..................................................................................................................13 2. The important of positioning criteria to chosen market..................................15 3. The company’s decision on positioning map..................................................15

I. Introduction of Samsung 1. History of the company The Samsung group is a South Korean multinational conglomerate headquartered in Samsung Town, Seoul. It comprises numerous affiliated businesses, most of them united under the Samsung brand. Samsung was founded by Lee Byung Chul in 1938 as a trading company. Samsung diversified into many areas including food processing, textiles, insurance, securities, electronics industries, shipbuilding industries, in particular, its mobile phones and semiconductors have become its most important source of income. As of 2020, Samsung has the 8th highest global brand value.

2. Samsung’s vision “Inspire the world, create the future”. Samsung will inspire the world with innovative technologies, products, and designs that enrich people’s lives and contribute to a socially responsible, sustainable future.

3. Samsung’s mission Samsung focuses on the following components in its corporate mission:  Human resources and technological resources  Superiority of products and services  Improvement of the global society II. Samsung segments in Korean market 1. Geographic Samsung supplies their products through Korean, both urban and rural. They always improve and upgrade their goods to satisfy almost the customer’s needs and give the customers the best experience with their goods. 1

2. Demographic Age: Samsung targets customers from teenagers like 16 to the olders like 65 years old. In Korean. Samsung products are popular, their mobile phones are used everywhere from school, university and office…. Samsung phones are diversified with modern design, from trendy to luxury; therefore they are suitable for the youth, business, workers….. Family size: Samsung products are offered for all family sizes. Gender: Samsung products can be used by both males and females. Their phones have many colors, the pink for girls who like trendy and attractive, even they have the blue for the man like comfortable and optimistic. Income: Samsung products are offered with various features to every income class. Samsung mobile phones are supplied with many ranges, each of range is suitable for the one class, from upper class, middle class to low class. Samsung Galaxy Note- one of the most modern forms of phones that Samsung supply with the large screen and S-pens attached the phones, which brings the effectiveness for using. With these features, Galaxy Note is suitable for the upper class, who have 1.500.000 won each month to 2.000.000 won. Samsung phones also have other ranges of products that have 100.000 won, 600.000 won… that attractive the youth and workers who don’t have much income per month. Occupation: Samsung has divided the customers into different groups based on their occupation: businessmen, self-employed, students….

3. Psychographic Lifestyle: Samsung is offered for customers who are from teens to olders who like trendy, modern, elegant, who like new technology and can afford to buy it.

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4. Behavioral Benefits: Customers are also targeted differently based on the benefits that Samsung provides. Some people may want good quality, some may want the simple appearance and effective…. User status: Samsung wants to know the user status in order to supply the best products; therefore they divide the users into ex-user, potential user, first time user, and regular user. Loyalty status: Target market of Samsung may contain people with different loyalty status; therefore Samsung separates their customers based on their loyalty: hardcore loyals, split loyals, shifting loyals, switchers.

III. Samsung segments international market Besides the inner market segmentation of Samsung, we can discuss how they segment their markets in international market. There are 3 factors that can affect to Samsung to broaden its market. Geographic: Samsung has a large market, their products appeared in 80 countries in the world. They divided the market into different regions, such as they have divided the Asian market into northern, eastern, and southern areas. Each market they have different strategies and different prices. Samsung makes slight variations in languages and applications to adopt the languages of customers. Political- legal: Samsung focuses on finding a good environment to develop, which means politically and legally. A country that has a good environment will promote their goods, keep good quality, safe and are consumed better. Cultural: Samsung always changes the approach to customers in different countries based on the way the people consume. For example, Samsung knows about the US market, the behavior of them. They like technology and they are able to pay money for their hobby. However, they are intelligent customers, when the 3

economics is not stable, they take a decision carefully. Therefore, Samsung sells products through the internet to reduce the fee and through the store which is expert in technology, not through mass retail like Wal-mart.

IV. Discuss the effective segmentation of Samsung Measurable Only about 10% of Samsung's revenue comes from the domestic market, so Samsung focuses more on international market. Moreover, Samsung’s IT & Mobile Communications segment is expected to contribute about $86 billion to Samsung’s Revenues, accounting for about 43% of the company’s total revenues. So, target customer of Samsung focus on people who follow the latest technology trends. Based on the table above, we can see that Samsung’s customers are mainly between the age of 25 and 34, and their lifestyles are driven by heavy consumption of TV and digital media.

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Substantial According to counterpoint, in 2020, Samsung is still the leading smartphone market share in the world, with about 20% in the first 3 quarters of the year and down to 16% in the fourth quarter. In Vietnam, Sam Sung takes up 24 % smartphone market share. Brands Apple Samsung

2020 Q1 14% 20%

2020 Q2 14% 20%

2020 Q3 11% 22%

2020 Q4 21% 16%

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Xiaomi Oppo Vivo Huawei Realme Others

10% 8% 7% 17% 2% 22%

10% 9% 8% 20% 2% 17%

13% 8% 8% 14% 4% 20%

11% 9% 8% 8% 4% 23%

Accessible Samsung Electronics has assembly plants and sales networks in 74 countries, 9 factories producing mobile phones globally, and employs around 290,000 people. The store network helps Samsung to understand customers better, meet as much them as they can and approach more people.

Differentiable Samsung has decided to sell its products from low-cost to high-end. This makes Samsung easy to reach many types of users, suitable for many industries as well as the purpose of using smartphones of customers and significantly increases sales. Moreover, the launch of devices in all price segments of Samsung also helps users to have many options, from price to features. Customers can consider which products to buy based on their economy as well as their own needs.

V. Evaluate effectivity of Samsung’s market segmentation Samsung Electronics is a global leader in consumer electronics, semiconductors, telecommunications, and digital media technologies with 236.81 trillion in revenue in 2020.

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Along with Apple and Huawei, Samsung has become one of the leading brands in the smartphone market. In particular, Samsung still leads the Vietnam’s smartphone market with about 38% market share.

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Samsung has been the world's largest television manufacturer since 2006 and is the world's largest producer of LCD panels. Samsung Electronics topped the global TV market for the 15th consecutive year, according to market research firm, Omdia. Newly released data notes that Samsung Electronics retained the largest annual category market share by revenue in 2020, at 31.9%. Besides, Samsung accounted for 53.5% of 80-inch or larger TVs sold in the third quarter in terms of sales value.

We think that Samsung should choose a differentiation strategy targeting a number of different market segments, such as the segment for people who like technology, or like convenience, or fashion,...Because of diversification with products and marketing strategies for customer segments, Samsung can meet the diverse needs and desires of the market. As a result, businesses have the ability to increase sales and penetrate deeper into many market segments. 9

VI. Explain how the company combine its understanding of the market with its internal capabilities (SWOT MATRIX) * Samsung’s strengths (Internal strategic factors) 1. Strong Brand Image Samsung has maintained the image of an innovative brand that delivers superior quality products. However, it is essential that Samsung maintains its image if it wants to retain its growth momentum. 2. Dominates the Smartphone Market Samsung has dominated the smartphone market for years. According to Gartner, in Q1 of 2020, Samsung has maintained the No. 1 spot globally with a 18.5% market share, where as Apple is at 13.7% market share. 3. Research and Development The foundation of Samsung has always been on Innovative research and development. Expenditure in these departments resulted in the company having a wide range of product portfolio among its competitors. These include tablet, camcorder, mobile phone, camera, TV/video/audio, Memory Cards, PC, and other accessories. They have 34 R&D (research and development) centers operating worldwide. 4. Large product diversity (Stability on sale) Samsung has a huge number of products in its product portfolio, it offers different types of products to its customers. In return, the profit it makes is very much stable. When the sale of one product goes down, other products may be experiencing an increase in sales.

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* Samsung’s weaknesses (Internal strategic factors) 1. Weak position in China China has grown into the world’s largest market for smartphones followed by India. Huawei leads the Chinese market with the largest market share followed by Vivo, Oppo, and Xiaomi. Samsung has a small and almost negligible share in the Chinese market. Its market share in China has kept fluctuating between 0 and 1%. 2. Heavily dependent on the American Markets It is estimated that both Apple and Samsung sold at least 70.8% of smartphones in the USA. While Samsung has diversified its resources and expanded its operations in Asia, it is still heavily dependent on the American markets. The American economy is very unpredictable and another recession could put Samsung’s revenues in jeopardy and can damage its operational resources. That’s why Samsung needs to involve itself into the Asian and European markets to ensure sustainability and avoid potential failures if the US economy ever collapses. 3. Decline in Smartphone Sales Samsung has been experiencing a decline in smartphone sales since 2017. A similar trend was seen in China due to the price sensitivity of the Chinese market. They dump a lot of those products in the Indian market at a lower cost which harms the Samsung sales. Samsung has tried to shift more focus in India, but that strategy did not produce substantial results for the company. 4. Too Large Product Diversity (lack of focusing on specific one) It takes a lot of work if the product portfolio is large. It cannot be possible to give concentration to each product with the utmost importance.

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* Samsung’s opportunities (External Strategic Factors) 1. 5G Technology As the world moves to 5G, Samsung has the capacity and know-how to exploit this opportunity. The company is already in active commercial discussions with operators in the EU to supply 5G and 6G network equipment. Samsung is one of the top companies in the UK’s list of potential 5G providers 2. Growing demand for digital services The demand for digital services have kept growing over the past several years. However, the demand for these services was boosted further due to the coronavirus since a large number of people were leading lives locked up inside their own houses and had to depend on digital services for several things ranging from ordering essential products to entertainment. Most of the people around the globe use their smartphones to avail of online services whether it is e-commerce or entertainment 3. Acquisitions and diversification There are emerging opportunities in several areas including the latest technologies like AI, IoT, self-driving cars, and other technologies. Samsung has made several acquisitions in its history. These acquisitions have helped the company cement its position in the electronics and smartphone industries.

* Samsung’s threats (External Strategic Factors) 1. Virus corona The largest economies and markets like the US and China have also felt a severe impact as unemployment levels ran very high as the pandemic broke out. In such an environment, the sales of Samsung products were bound to fall and they did. 2. High competition

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Despite being the global leader in the smartphone industry, Samsung is facing a lot of competition from China and the US-based smartphone manufacturers. Its leading competitor is Apple. Apple’s iPhone range is globally famous and it is the main rival of Samsung’s Galaxy range of smartphones. In the US market, there are more smartphone brands competing with Samsung including LG and Lenovo as well as One Plus. In the other leading smartphone markets too such as India and China, there is a lot of competition from the Chinese brands as well as Apple.

VII. Discuss how the company differentiate and position its product for maximum competitive advantage in the marketplace 1. Comparison between Samsung Galaxy A51 and OPPO A91 in Vietnam market * Product differentiation

Name RAM Display Internal Memory Battery Camera Price

OPPO A91 4 GB 6.4 in 128 GB 4025 mAh 48 MP Quad 6.990.000 VND

Samsung Galaxy A51 6 GB 6.5 in 128 GB 4000 mAh 48 MP Quad 7.990.000 VND

Price And Launch The launch Date of the first phone is December 20, 2019. The Expected cost of OPPO A91 is 6.990.000 VND. The launch Date of the second phone is January 29, 2020. The cost of Samsung Galaxy A51 is 7.990.000 VND. Display comparison Samsung Galaxy A51 has larger screen size of 6.5 inches in comparison to OPPO A91's 6.4 inch screen. OPPO A91 has AMOLED Screen type where as Samsung 13

Galaxy A51 has Super AMOLED Screen type. OPPO's phone has display density of 408 PPI & Samsung's phone has only 405 PPI display density. In terms of screen to body ratio, Samsung's phone has better screen to body ratio of ~ 87.4% than OPPO's phone ~ 85.5%. OPPO A91 has 20:9 aspect ratio where as Samsung Galaxy A51 has 20:9 aspect ratio. Memory comparison Samsung Galaxy A51's larger 6 GB RAM is better for playing games and all with respect to OPPO A91's lower 4 GB RAM. and both have same Internal Memory of 128 GB. Both of the devices have Memory Card Slot. Camera comparison They both have the same 48 MP Quad Rear Camera. Samsung Galaxy A51 will be better choice if you're looking to click lot of selfies as it has better 32 MP Front Camera in comparison to OPPO A91's 16 MP Front Camera. Positioning map

POSIONING MAP DESIGN 100 FEATURES

DISPLAY 50

0 BATTERY

PERFORMANCE

AUDIO OPPO A91

CAMERAS SAMSUNG GALAXY A51

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2. The important of positioning criteria to chosen market Positioning is creating an item and brand picture in the personalities of purchasing's Vietnam. It can additionally incorporate enhancing a client's observation about the experience they will have on the off chance that they decide to buy buy your item or administration. Most of Vietnamese people do not pay their attention to technology, they like the way of its design and the production cost instead. They also focus on the color of production. They believe that fateful color will bring luck. For young customer group, which is the main consumer of mid-range smartphone, they love to experience new technology, discover fashionable features, phones must be beautiful and good. But they also have many difficult to spen a large amount of money on smartphone.

3. The company’s decision on positioning map Use market Skimming Pricing Strategy: Skimming Price – Skimming pricing is used when a product, which is new in the market or just launched, is sold at a relatively high price because of its uniqueness, benefits to customers or its current Wow factor. However, slowly but surely when the product gets older in the market, then the price is dropped and the product is brought at competitive pricing. Use pricing Strategy: Since the target group is the younger population who mostly has a low income on average, it is recommended that the price penetration strategy. This strategy will involve initially introducing a lower price so to lure more youth to purchase and making it more affordable to this demographic. 15

Invest on R&D and launch new products in the mid-range segment targeting Vietnamese psychology and young people.

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