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Samsung China
International Marketing
2008120000 Yi Yong Sup 2008120000 Yi Yong Sup
00 Contents
Contents
Introduction Problems Segmentation Strategy Suggestion Current Situation
Introduction
01 Introduction
Environment
The Macro Environment
China is socialist state. Competition Among Governments : Self-Interest vs National Interest Difference in Emphasis on Economic Profitability vs Social Profitability The Over Employment problem
18" 23%
Market Share
17" 29" 4% 2%
25" 11%
20" 24%
21" 36%
01 Introduction
Environment
1994, China had 300millions households Just 41% of the households had color TV
80% of 80million urban households owned color TV 28% of 220milion rural household own color TV
Population TV Owners
100
50 0 Rural Urban
01 Introduction
History of TV
LCD
Liquid Crystal Display Lots of Liquid Crystal Open Close
PDP
Plasma Display Panel Lots of Liquid Crystal Turn on & off More Electricity But clear picture
2011 3/42011 1/22011 1/4 2010 2009
LED
Light Emitting Diode Use LED at the Back
PDP LCD
OLED
Organic Light Emitting Diodes Change color it self
AMOLED
Active Matrix Organic Light Emitting Diodes Control OLED
Problems
02 Problems
Major Problems Samsung faces as it tackles the television market in China? Chinese Govt Product differentiation brand recognition Smuggling Piracy
Competition
Sony Matsushita (First mover) Brand recognition High-end consumer market share Japanese firms expand production (19->30) Late mover disadvantage (customer loyalty) China indigenous firms focused on low-end market segment
Market Share
Others Sony&Matsushita 0 10 20 30 40 50 60 70 80
Segmentation
03 Segmentation
Segmentation
High-end:
Japanese firms, especially Sony and Matsushita with market share of 75% combined. Sharp, Sanyo, Toshiba, Mitsubishi, JVC, and Hitachi had also established significant market share
Medium-end:
Partly by multi national corporations and partly by local firms.
Low-end:
More than 20 indigenous firms
03 Segmentation
TV Size Segmentation
- 17~29 inch TVs were available - Demand for small size TVs were shrinking, while mid~large screen color TV market was growing rapidly - Together the 20-inch and 21-inch screen sizes represented 60 per cent of the total in 1994 - Chinese firms concentrated on the popular sizes (18~21) 17-inch or less 18-inch 20-inch 21-inch 25-inch 0% 20% 40% 60% 80% 100% 29-inch
Strategy(STP)
04 Strategy
Strategy
Samsung China: - Should target high-end market - Premium brand image - Aligns with Samsungs commitments at the time
Vs.
Korean Headquarter: -Chinas rapid growth -Hard to improvelow-end market started out with low-end from the beginning -Should target brand image when -per capita income is only $353 -Must build competitive advantage over Japanese firms -Competition with local firms is easier
-Need to increase marketing and R&D budget (Sony invests heavily on these)
04 Strategy
Strategy
- Another plausible market: low~mid-end large screen TV - Chinese firms only have expertise in 19~21 inches TV sets - Samsung has technical advantage in large screen TV production
Suggestion
05 Suggestion
China
1. Consumption of polarization 2. New Consumer group (want to show ones power, money) 3. Rapid urbanization 4. Thirties led consumption of car, leisure, appliances
05 Suggestion
China Customers
1. Compare with neighborhood, keep face
05 Suggestion
Samsung :
Advantage
High demand in rural areas Fast cash conversion cycle Existing production facilities Loyalty of consumers in low-end market (Tend to keep buying from the same firm)
Disadvantage
Low profit margin Market might change to high-end centered in the long run Fast growth of state enterprises local firms have dominance in low-end markets
Disadvantage
Loyalty to Japanese firms Replacement of production line High promotion cost expected (for brand image) Collision with the Chinese government (domestic market-centered vs export-centered)
05 Suggestion
Brand Repositioning :
Follow the Trend
High end market Design High quality Low price quality ratio
Product Advantage *(cell phones) Better technology (Develop New Tech : LCD) Bigger size
Ex) Samsung vs Sony
Quality
Life Design Function Sound Usage 0 10 20 30 40 50 60
China Company growth is so rapid Making New Single Brand Which target low end market To protect advanced image of Samsung
(Not just cheap product image fresh and easy brand) *(PUMA)
05 Suggestion
Marketing :
Active support of cultural industries *(LG Concert) Cultural Marketing Naming, designing (Orion, Whisen) Logo, Slogan, Package Contribution to society, build positive image Localization of production personnel
Advertising should be attractive to customer - Loyal to specific brands - High Quality *(Korea Tire, Orion) - Chinese sense of pride feel proud to buy samsung - Using Celebrities *(Amore Pacific) - Holiday Labor day, Dano, Harvest fest, National day
Current Situation
06 Current Situation
Current Situation
2005~2008 : First China Companies Cut price Market Share 80%
Follow : Korea Japan companies Low price strategy
(2005 Samsung 40 TV 24000yaun 5990yaun 70%)
Market Share 50%~60% But The war of cutting price made hard time 2007 Sony Samsung recorded deficit.
06 Current Situation
Change in TV
160 140 40"~ 120 100 80 60 40 20 0 LCD TV PDP TV Projection TV 0 10"~19" 20"~29" 30"~39"
TV Size
2005 2004
2004
2005
20
40
60
2008 LCD TV 85% PDP TV 15% After 2008 Global Crisis China companies start to cut Price 30% decrease 2006 China market share get over 50% 2009 68% of the market share is China Company
06 Current Situation
LCD TV 89.5%
06 Current Situation
China Company
Recently China Companies
TCL 6 Hisense 8 Skyworth 10 ChangHong 13 Konka 14 World TV Market Share
Other 14% China 20%
Korea 30%
Japan 36%
To become world's top China Companies are entering new emerging market
(India, Pakistan, Sri Lanka, the Philippines, South America, Egypt, Africa)
Konka ChangHong Skyworth Hisense TCL 0 100 200 300 400 500 600 700 800
2011 2006
06 Current Situation
TV Sale
600 500 400 300 200 100 0
Hisense
Skyworth
TCL
ChangHong
Konka
Haier
Sharp
Sony
Samsung
LG
China TV Market is 20~25% of World TV Market Inside China Samsung has market share 3%
CF) 42 LCD TV Price Samsung : 8000yuan (1,450,000won) vs China Firms : 500yuan (940,000won)
06 Current Situation
ChinaChinaChina
China is still big market
New technology AMOLED More Big Size TV Technology Internet access, variety of contents, cloud computing, M2M communication Fusion of 3 network (TV. Internet. Communication) Buy new TV = Govt give 10% of price Samsung is Smart TV, 3D TV Also making low price model
Q&A
Thank You