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Questions for Samsung China Case

Q1. Major problems Samsung faces as it tackles the


television market in China?

Q2. How would you segment the Chinese TV market?


Q3. What should Samsung do in terms of STP Q4. Suggest Samsung to adopt?

Samsung China
International Marketing
2008120000 Yi Yong Sup 2008120000 Yi Yong Sup

: The Introduction of Color TV

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%

The Micro Environment


At 1995 China can produce 18,000,000 TV Prefer TV Size 18 20 21

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

250 200 150

Population TV Owners

100
50 0 Rural Urban

Rural area mostly prefer(can afford) small TV sets 19 or 21


First mover enjoy advantages Consumers had a tendency to be loyal to a first movers product Cheap labor Large market potential (rural area)

01 Introduction

History of TV
LCD
Liquid Crystal Display Lots of Liquid Crystal Open Close

Braun tube TV (CTR)


Cathode Ray Tube Shot Electron Beam to all screen Use lots of electricity

4000 3500 3000

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

2500 2000 1500 1000 500

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

5. Twenties are interested in advanced tech, IT technology

05 Suggestion

China Customers
1. Compare with neighborhood, keep face

2. Prefer quality guaranteed foreign products (High end products)


3. Before purchasing, there is on significant impact of reputation from others 4. Large regional differences (Income level, Cultural differences) 5. Quite sensitive to national pride

6. Sensitive to price (even if is low or high)

05 Suggestion

Samsung :
Advantage

Where should Samsung go?

China (Low end)

Japan (High end) Advantage


Differentiation from local firms Increasing purchasing power High added-value per unit Samsung Electronic's global awareness economy of scale (Europe, North America)

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

Consideration Criteria at China


Brand

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 :

To make Positive Brand Awareness

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

Recent Market Size


2012 4/4 China TV Market 12,690,000 12% increase from 2011 4/4 27% increase from 2012 9,960,000 (Price cut) 2012 More than 40,000,000 Color TV will be sale

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%

Such are in Global Top 10


Low cost + China Market

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

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