Samsung: Building a Great Brand Presented By: Michael Baccus, Marcial De Castro, Judith Dupin, Monica O’Neil, and Jose Santillan Marketing Management- MAR 3023-P80 October 5, 2011 Samsung grew its brand equity by 186 percent in just five years from 2000 to 2005. “Brand equity is the value of the brand name, its worth as an asset to the company. ” (Marketing Principles, 2011, Module 6 p. 1). When new management came into the South Korean based firm, it scraped the all the various brand names that the company was selling low end electronics under, and consolidated by branding all of the company’s products as Samsung. Ten years later,
Samsung is a force to be reckoned with to its competitors and a global brand name. However, the decision to only use the brand name Samsung is not the critical key to its success. Samsung has focused on innovation and product design to build its brand equity and it is working. Samsung implemented different innovative ways to inspire and deliver great designs. The former chairman hired hundreds of new designers, implemented usability laboratories, and opened design centers around the world. The investment in product design, the progressive culture, and Samsung’s ability to step outside the box has all been invaluable in uilding a great brand. The critical activity in the process of Samsung’s transformation into a world- beating developer of new cell phone handset designs and other product line designs was its innovation with investment in product design and quality. Samsung built its brand into a superior brand by thinking and acting outside of the box. Instead of focusing on textbook product development funnels, it focused on more cutting edge methods such as the implementation design centers staffed with highly trained, creative, and skilled young designers and no bureaucracy to get in the way of design and innovation.
According to Roll (2011), “Samsung has created a strong brand around innovation, cutting edge technology and world class design. ” (para. 1). Samsung Chairman Lee Kun Hee concluded that “great design and innovation would be the way to build Samsung into a great global brand,” and he was correct (Marketing Principles, Module 6, p. 1). Instead of forming panels and hiring managers or more marketers to come up with new gimmicks, he hired hundreds of designers. The designers were from prestigious colleges of design and had an average age of just 33. The design force at Samsung multiplied y over 400% to over 400 designers in 10 years. This out of the take on product development allowed Samsung to transform its product line into world class. Competitors such as Sony have also followed in Samsung’s footsteps. According to Kunkel: “With nearly 250 industrial designers; graphic, packaging, and logotype designers; user- interface specialists and Web designers working in offices from Tokyo to San Francisco to Cologne, the Sony Design Center is responsible for nearly 2,000 new products, concepts, packaging schemes and design strategies every year, driving sales of products nd services totaling nearly $50 billion per year” (Product Description, para. 2). Although Sony also employs a lot of designers, Samsung still leads the industry in allowing their designs to inspire innovation. Samsung’s progressive culture of effective, efficient, and fast implementation is part of its advantage over competitors. According to the dynamic theory of competition presented in Marketing Principles (2011): “Suppliers with an insatiable improvement drive are more competitive. ” “Suppliers who implement effectively, efficiently, and faster are more competitive. ” (Module 1 p. 6).
Samsung changes its product line three times as fast as its competition such as Motorola. Samsung has shown agility, according to Marketing Principles (2011) “… i. e. the ability to implement change to change processes to introduce new technologies, new skills into the organization very quickly and effectively” (Module 1 p. 7). Change is managed very well at Samsung and they have lower manufacturing cost on top of their time to market being faster than that of competitors. Samsung avoids bureaucracy at its 24/7 design centers. Designers can work through problems without being delayed by non-productive orporate presentations and politics. Samsung has a constant focus on improvement and being faster and implementing the next innovation before the completion. Fackler (2006) explained, “”Our TVs are better,” Nobuyuki Oneda, Sony’s chief financial officer, said in an interview earlier this year. ”But Samsung’s cash flow is amazing. It is hard to invest in and develop products” at the same pace as Samsung. ” (para. 23). Samsung’s use of usability laboratories have been key in its market orientation skills and understanding the user interface. Samsung does not follow the textbook best-practice of product development, which is idely now considered “yesterday’s best practice” in product development. According to Marketing Principles, Samsung uses concurrent engineering and fast prototyping in an around the clock approach to problem solving (Module 6 Case 2 p. 1). The traditional best practice only produces a success rate of 50 percent in product development. This out dated way of thinking is burdened with “gates”. These gates are where bureaucracy in an organization can delay forward movement of the product design. Samsung has “decentralized” and broke away from this way of development.
It is actually criticized in the case study with the example of the use of Samsung’s design centers. Product development is free to develop in a creative environment without lawyers or other hold ups. Samsung has taken its out of the box approach and its investment in design and turned it into profits. As Marketing Principles explains, according to the current CEO of Samsung “we still have a lot of things to do before we are a great company. ” (Module 6 Case 2 p. 2) With that approach and its constant drive to beat itself, The Samsung brand equity is likely to continue to grow. References:
Marketing Principles. (2011). Portsmouth, NH: Backbone Press Frackler, M. (2006). Electronics company aims to create break-out product. The New York Times, p. C. 1. Kunkel, P. (1999, September 4). Product Description [Review of the book Digital Dreams: The Work of the Sony Design Center]. Amaonz. com. Retrieved from http://www. amazon. com/Digital-Dreams-Work-Design-Center/dp/0789302624 Roll, M. (2011). Samsung: Building brand equity through brand community. Venture Republic. Retrieved from http://www. venturerepublic. com/resources/Samsung_Building_brand_equity_through_brand_community. asp
