Marketing assignment

SAMSUNG

Keith Brumfield, David Greenfield, Cathrine James

MKT 421

June 22, 2015

John Brady

Introduction

Introducing a new product or service in the marketplace requires a lot of time and resources. Firms must carefully plan and strategize to achieve successful results, which are often measured by net revenue. Samsung, although a well- known brand, is no different from any other firm. Samsung must strategically move through the steps of identifying its target market by way of market segmentation, understand the reasons its customer will purchase the new product, clearly define the product, being sure to appeal to both the logical and emotional needs of the consumer. Samsung must also rely on analyses such as SWOT to identify its current areas of strengths and weaknesses, and Porter’s 5 competitive forces to identify potential areas for competition as well as the industry’s strengths and weaknesses. This paper will address all areas necessary for Samsung to introduce and capitalize on its soon to be released Gear A smart watch.

Overview

On March 1, 1938, founding chairman Byung-Chull Lee started a business in Daegu, Korea, focused primarily on trade export. Mr. Lee sold dried Korean fish, vegatables and fruit to Manchuria and Beijing. In a little more than a decade, Samsung owned its own flour mills and confectionery machines and its own manufacturing and sales operations. From these humble beginnings, Samsung would ultimately evolve to become the modern global corporation that would still bear the same name today ("Samsung", 2015). By the 1970’s, Samsung started investing heavily in chemical and petrochemical industries. It was at this point Samsung began to dabble in the home electronics market. Samsung started to manufacture its own electronics and exporting for the first time. In the 1980’s, Samsung restructured its business models to become the world’s top five electronics companies. In the 1980’s Samsung expanded its business and technology globally. The 1990’s were a big challenge for Samsung, the market was booming and the technology was changing so fast it was hard to keep up with demand. Samsung changed the way business took care of their customers in the 1990’s. They dedicated themselves to total customer satisfaction and making sure that quality was their main objective. During the late 1990’s financial crisis, Samsung continued to grow. This is mainly due to Samsung’s leadership and network technologies concentration on electronics. This kind of preparation and leadership is what encourages investments and long term customers. In 1998, Samsung developed a completely flat television screen. This technology would eventually revolutionize the television industry. Samsung also makes appliances along with home electronics. In 2004, Samsung produced the first wrinkle-free steam washer. Also in 2004 they became the top ranked mobile phone provider in Russia. Samsung has also developed the world’s first-ever speech recognition phone. Samsung has been a global leader in the research and development for flat screen LCD manufacturing since 2004. Samsung has been recognized globally as an industry leader in technology and now ranks as a top 10 global brand ("Samsung", 2015).

Product Description

It seems that 2015 is going to be the year of the smart watch. In this modern day of technology, it seems that having a smart phone, smart car and a smart home isn’t going to be enough. A smart phone that can be used literally at your fingertips is the next new thing. Samsung Gear A smart watch will have a round face and the rim of the watch will actually rotate so you can scroll through the options and apps on the watch. The watch will be synched to your Samsung phone and can control certain aspects of your phone via your watch. The Samsung Gear A smart watch will be geo tracked and perform as a fully functional navigation system such as the ones used on smart phones and vehicle navigation systems. Samsung also has introduced a new app for their smart watches. Being how they are geo tracked, they can be used in case of emergencies. The Gear A smart phone has a “911” option that will send emergency services to your location depending on the nature of your emergency. Many cell phones are broken or misplaced during a car accident or a fall and cannot be accessed to call 911. Having your smart phone on your wrist will ensure you have access to emergency services immediately after an incident.

SWOT Analysis

A SWOT analysis is a strategic balance sheet of an organization; that is the strengths of the organization, the weaknesses of the organization, the opportunities facing the organization, and the threats facing the organization. It is one of the cornerstone analytical tools to help an organization develop a preferred future. It is one of the time tested tools that has the capacity to enable an organization to understand itself ("Swot Analysis", 2010). Every major corporation has what’s called a SWOT analysis ran every year in order to give the organization a better understanding on where they stand in the current market. Samsung’s SWOT begins with the “strengths”. One of Samsung’s biggest advantages is that they are very advanced. They have invested heavily in technology and research. They are globally known for their technologically advanced products. Samsung invest not only in technology but also in human resources. They believe that a happy customer is a returning customer. They listen to what the customers not only want but what they don’t like as well. Making improvements off what customers have complained about previous products is why Samsung has so many loyal customers.

Every corporation has its strengths, but they also have their weaknesses. Samsung’s weakness is that they don’t always have a new product to introduce to the market. Samsung seems to wait for their competitors to introduce a new product then they spin off of that product and make it their own. Samsung also sets their prices very low and in return customers perceive this as low quality products. Samsung has also developed a reputation as not being very user friendly. In a market of smart phones that not everyone has caught onto yet, this could be a hurdle for them to get over.

Product variation is a great opportunity for Samsung. Samsung needs to introduce new products that are unique and provide the customer with variety. Along with making a variety of different products, Samsung needs to focus on making them more user friendly and kill two birds with one stone.

Unfortunately, Samsung has many threats in the electronic industry. This is a very popular and in demand market so of course there are going to be a lot of corporation wanting in on the market. Just a few examples of threats to Samsung would be Sony, 3G, Nokia, and LG just to name a few in the telecommunications industry. The telecommunications industry is literally growing in leaps and bounds by the day. Samsung needs to increase its advertisements to at least its competitors mark. Samsung need for excessive advertisement could lead existing customers to defect to other companies from viewing their advertisements ("Samsung Swot", 2014).

Porter’s Five

Porter’s 5 forces of competition was founded by Michael E. Porter. The model allows firms to determine the strengths and weaknesses of a given industry by simply identifying and analyzing its competitive forces. The five forces are as follows:

Competitive rivalry

The Samsung Gear A watch faces a great or intense competition from companies like Apple and Sony who have produced some other smart watches. Samsung has a great amount of resources at their disposal and thus the performance of this watch will gain a large market share for the upcoming model. They own the patent for this round smart watch and thus none other will be produced on the same design.

Competitive rivalry

Bargaining power of suppliers

Threat of substitute products

Bargaining power of suppliers

Threat of new entrants

Bargaining power of suppliers

The Samsung Gear A watch will be affordable on the wholesale customers at a low price and also favorable price on the consumer end. The brand is worth its cost since it will be build with a software that can hold many apps. The rotating bezel will help to scroll through the various apps on it and can control some features on your phone.

Bargaining power of customers

The bargaining power will be low since the product will be produced in limited quantity and thus it will not flood the market. This helps the device to remain on the same cost that it was introduced in and thus making the sale very clear. The company supplies a low quantity of numbers of the device so as to maintain its planned cost from the sellers.

Threat of new entrants

Samsung have invested in a lot of capital in branding this watch and thus it will be difficult for existing companies to produce it. They have also hidden a lot of details on how the watch will be and patented it so no one can steal the design.

Threat of substitute products

Only the Apple Company has come up with a watch that is closer to this watch but Samsung have added new apps to be used. The watch is bound to run on the NFC technology which helps to facilitate its mobile payments.

Segmentation and Target Market Criteria

Prior to determining a target market, it is necessary to break down a market, moving from mass or all customer needs to specific or homogeneous, to become clear on whom exactly the firm is aiming to assist. This is done by way of market segmentation. Market segmentation, which according to “Business Dictionary” (2015), is “the process of defining and subdiving a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.” There are various criteria for segmenting. “Good market segments meet the following criteria: homogeneous or similar, heterogeneous or different, substantial, which means the segment should be large enough to turn a profit and operational, which means the group dimension should aide in identifying customers and deciding on marketing mix variables (Perreault, Cannon & McCarthy, 2014, Chapter 4).

In an effort to achieve successful results we too will use segmenting to narrow the larger group down to a specific target market. Criteria such as those mentioned above, homogeneous, heterogeneous, substantial and operational, will be used. However, in addition we will use accessible, and actionable criteria. Knowing how the target market will be accessed, in person, via email, or mailers, is an important factor, as the necessary method may or may not be feasible from a finance and marketing standpoint. Actionable criteria will reveal whether or not a group has data that supports “a marketing position or sales approach that have outcomes that are easily quantified (Perreault, Cannon & McCarthy, 2014, Chapter 4).

Clearly defined market segmentation criteria not only ensure that customers are more likely to identify and purchase the product that is right for them; it also minimizes wastage of resources, reducing the time spent marketing the wrong products to the wrong customers (“Mba&company”,2015).

In addition to selecting criteria for market segmentation, a firm must also use criteria such as geographic, demographic, psychographic and behavioral factors, to select its target market. Geographic limits the market search to a specific region or location. Demographic considers factors such as age, gender, income, family size, education, income, ethnicity and social class. Psychographic involves a person’s daily living patterns as shown in their activities, interest and opinions. Behavioral factors focus on why people or consumers buy the way they do with the understanding that need is the greatest determinant.

Depending on the group our product may not be considered a need. Due to same we must be careful to target those who believe they cannot live without this newest and hottest gadget. Due to price the large size of the watch’s face, it will more than likely appeal those in a certain income bracket and to men more so than women. We understand that our customer will probably reside in a larger city and have the need to gain access to information immediately due to a busy lifestyle. In addition, another customer may be retired with children and grandchildren in other cities. The ability to communicate or receive pictures while vacationing will be attractive.

To reach our desired target market we will view demographics such as age, gender, income, social class, education and occupation. We will view specific activities, interest and prior buying patterns. We will also view behavior factors in an effort to identify those who purchase new gadgets as soon as they become available.

Target Market Description

Our ideal customer is a male, age 20 – 65 years of age, who loves gadgets but loves convenience even more. He is either a student, a working professional who has the need to access information quickly or he is a regular vacationing grandfather who often connects with and sends/receives pictures to/from family members and friends. He, or his parent, in the case of the student, has an income of $70,000.00 plus per year and enjoys getting together with friends to talk about new “toys” or upcoming gadgets. The ideal customer is enamored by technology and believes every item was created to make his life more manageable and balanced without reducing professional and social output.

Causes to Buy

When firms clearly understand why people buy they have an opportunity to sell more. Most may believe that people buy what they need instead of what they want but Torok (2015) asserts that “our emotions trigger us to buy.” He warns people to not “make the mistake of thinking people buy what they need…Needs are driven by logic while wants are driven by emotions.” (We buy what we want). This belief is supported by Perreault, Cannon and McCarthy (2014) who says “everybody is motivated by needs and wants…When a need is not satisfied, it may lead to a drive…A drive is a stimulus that encourages action to reduce a need.”(Chapter 5)

There are various needs that will cause a person to take action. Some of these needs are physiological, which involve biological concerns such as self -preservation, food, rest, sleep or liquid; psychological, which involve concerns such as self-identification, power, personal fulfillment, and pride; social, which involve concerns such as love, status, and esteem; desirous, which involve concerns such as respect, status, and sociability.

Our target market will be buy for the same reason other people buy, to fulfill a need or a want. It is one’s own logic that will drive him or her to purchase. For instance, logical drivers consist of supportive thinking such as the ability to replace for several gadgets with one, saves time, allows for better organization and cost effective. However, as noted above, the true reason for purchasing will be an emotional one such as the excitement of owning a new gadget, status, fun and recognition. Of course each purchase will vary from one individual to the next.

Positioning Statement

To everybody who lives in the 21st century or those who are trying to simply catch up, the Samsung Gear A watch aka Orbis, allows you to do so. Sometimes carrying your cell phone is not an option, or say you accidently leave it at home. Well fear not, when you have the Samsung Gear A smart watch, you will still be able to go about your daily business, as we know life doesn’t slow down. The Gear A smartt watch is going to have multiple functionalities, from being able to function as a key to your car all the way to being a remote control for your television. It will have Bluetooth capabilities and also connect to Wi-Fi. You will be able to talk on it and or send messages from it. It will even monitor your heart rate. The Gear A has a round face and is sleek enough to wear with any style. Watches like the Apple Watch, Motorola Moto 360, and the LG G Watch R will try to keep up with Samsung. With Samsung you will get what you expect and then some.

Conclusion

Samsung believes the Gear-A smart watch will be a cut above the rest. Offering features such as the first round face, the first item of its kind with a mobile payment system and emergency service features, the competitors will have the work cut out for them. Offering a product with great attractive features without completing the necessary leg work prior to a launch will potentially lead to lost revenue. Samsung will need to perform as though it is a new firm entering a new market. This means studying the buyers, identifying its target market, and using various strategizing resources such as SWOT and Porter’s 5 competitive forces model, understanding what will drive the buyers to purchase. Should Samsung do its homework it should see huge profits on its newest product, the Gear A smart watch.

References

Business Dictionary. (2015). Retrieved from http://www.businessdictionary.com/definition/market-segmentation.html

MBA&Company. (2015). Retrieved from http://www.mbaco.com/resources/marketing/market- segmentation-five-essential-criteria

Perreault, W.D., Cannon, J.P., & McCarthy, E.J. (2014). Basic Marketing (19th ed.). Retrieved from The University of Phoenix eBook Collection database.

Samsung SWOT. (2014). Retrieved from http://www.freeswotanalysis.com/telecommunication- companies-swot-analysis/10.html

SWOT analysis. (2010). Retrieved from http://www.ryerson.ca/~kjensen/strategic_planning/swot.html

Samsung. (2015). Retrieved from http://www.samsung.com/in/aboutsamsung/

Torok, G. (2015). Articles for business professionals. Retrieved from http://www.torok.com/articles/marketing/5EmotionalTriggers.html