China: The Introduction of Colour TV

Alex Dorward, Liam McGean Matthew Tomlinson, Yixi Hao

Agenda
General Background Chinese Market Overview Marketing Mix SWOT Analysis PEST Analysis Marketing Strategy Proposals Proposed Marketing Mix -Yixi -Yixi -Matt -Liam -Alex -Alex -Matt

General Background Samsung (South Korea)

1938-1969 1970-1979 1980-1989 1990-1993 1994-1996 1997-1999 2000-present Starting The industrial age Into the global technology market Went on the world stage New business age Digital Frontier Samsung Guide the digital age

Samsung Philosophy: to devote the talent and technology to creating superior products and services that contribute to a better global society. Samsung Electronics vision for the new decade is:inspire the World, Create the future.

General Background Samsung (China)

In 1985, Samsung established the Beijing office In 1991, Samsung set up offices in Shanghai and employed by South Koreans April,1992, Samsung established the first joint venture in Tianjin, China August 1992, Beijing and Seoul established diplomatic relations; Samsung China began to develop fast. January 1995, Samsung began to strengthen business in China, established Samsung China headquarters. In 1996, set up the Samsung (China) investment company

Chinese Market Overview

-In 1992, 60 million Chinese had capita purchasing power exceeding US$1000 and by the year 2000 the number will be 200 million -China had more than 20 indigenous firms which focused on the low-end market segment ( Changhong, Panda, Konda and so on) -Major segments of the color TV market:18-inch 23%, 20-inch 24% and 21-inch 36% -Depend on the unit sales, Chinas market size was 1.5 times as large as Japan

Chinese Market Overview

-China was a highly protected market. eg. The tariff for colour TVs was 60% in average in 1995 -Chinese consumers had a tendency to be loyal to a first movers products -Urban consumers more concerned about brand names and the functionality of the products while rural consumers preferred reasonable quality and lower price

Marketing Mix
Product Place

-High quality colour TVs in various sizes

-Sizes (in inches) include: 13,14,16,18,20,21,25,26,27,28, 29,31,33 Price -Prices range based on screen size -20 TV $210, 27 TV $430 -Penetration pricing strategy is used due to very low price

-Production in: Mexico, Hungary, UK, Turkey, Thailand and China

-Sold in many countries around the world Promotion - Limited advertising compared to other companies -Spent significantly less in advertising than top three competitors (1968-1994)

SWOT Analysis
Strengths
Strong customer base in the USA Samsung has a much wider variety of TV sizes than other competing companies in China High TV quality index compared to competing firms Overall price position cheaper than competing firms

SWOT Analysis
Weaknesses
Limited market penetration Significantly less advertising than competing firms Little brand loyalty in China Lack of innovation in product development and design

SWOT Analysis
Opportunities
Overall market is expected to grow by 10% per year Medium and large colour TV markets are rapidly growing 171 million households without colour TVs in China Income levels in China are rapidly increasing Tariffs on colour TVs are decreasing Taxes are low Chinese colour TV market second largest to the United States

SWOT Analysis
Threats
The first companies are automatically recognized Samsung was experiencing increased competition in home market, as well as global market Japanese production bases are expected to increase from 19 to 30 within China Increasing labour costs in South Korea, where Samsung headquarters is based

PEST Analysis
Political
-Relations between SK and China have improved -Chinese tariffs are high -Chinese tariffs are on a decreasing slope -Taxes in China are low -Reform and Opening policy -Reduction in subsidies and export credits for big businesses in South Korea

PEST Analysis
Economic
-Chinese economy is growing -9.2% average GDP growth from 1994-2000 -Chinese average incomes are increasing -Additional disposable income due to housing subsidies in China -Increase in labour costs in South Korea -Removal of entry barriers in South Korea

PEST Analysis
Social
-Chinese prefer the first mover -Brand names are not easily taken to -Many Chinese do not report income, thus income levels are higher than recorded -A trend of urbanization -Less children per household

PEST Analysis
Technological
-Technology is becoming cheaper -Demand for larger TVs is increasing in China -Other forms of TV technology are emerging (LCD, Plasma, LED, 3D) -Potential for TV being watched online on laptops

Marketing Strategy Proposals

-Target the Upper Medium class in the Chinese market meaning high quality with a reasonable price - Target those in the Upper class using a high quality, high price ratio - Target the Lower Medium class using a medium quality, low price ratio with limited promotion

-Target the Upper class by significantly promoting high quality, setting the price high thus establishing a brand name. Then reduce price and effectively target Upper Medium Class.

Marketing Strategy Proposals

-Target the Upper Medium class in the Chinese market meaning high quality with a reasonable price - Target those in the Upper class using a high quality, high price ratio - Target the Lower Medium class using a medium quality, low price ratio with limited promotion

-Target the Upper class by significantly promoting high quality, setting the price high thus establishing a brand name. Then reduce price and effectively target Upper Medium Class.

Proposed Marketing Mix

Product Place

-Eliminate the section of TVs that are 17 inches or smaller -Remain focused on current high quality levels Price
-$230 (after brand has been established) for the 20 TV -$550 (after brand has been established) for the 27 TV -These prices are comparable to Sharp

-Keep selling in urban areas -Sell in Department stores and Electronic stores

Promotion
-Initially significantly increase advertising to Panasonic levels to establish brand recognition -Once brand is recognized, reduce advertising to similar level as Sharp

Thank you
Any questions??