Seminar assignments – Marketing plan, Samsung

Seminar assignments – Marketing plan, Samsung
Marketing Foundations (University of Technology, Sydney)
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Executive Summary
Marketing
Foundations
Assessment 2: Marketing Plan
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The purpose of this marketing plan is to outline the marketing strategy that Samsung
Electronics will implement for their new Galaxy Ring. Samsung Electronics introduced their
largely successful Galaxy range of smart devices in 2009; now in 2014 the company is
introducing the newest addition to the series, the Samsung Galaxy Ring. The marketing plan
aims to initially examine the market for the Galaxy Ring by considering factors pertaining to
competitor, PESTL, SWOT, and SMART analyses. The primary target market is university
students, the secondary target market consists of two groups – business workers and the
elderly. The marketing mix for each target market is explored, and a promotion budget for
the Galaxy Ring has been developed. Recommendations for the marketing strategy have
been identified and an evaluation of the strategy has been provided.
2.0 Overview
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Founded in 1938, Samsung Group has grown from a simple exporter of produce and food
goods into a multinational company spread across many industries. Samsung Electronics is
one such subsidiary created in 1969; specialising in household electronic appliances such as
TVs and microwaves. As the company began to grow rapidly, Samsung Electronics soon
spread into other markets and has experienced exponential growth over the years; with the
company currently sitting 14th on the global top 500 revenue list and 2nd on the global top
500 most valuable brand list.
A popular product range introduced by Samsung Electronics in June 2009 was the Galaxy
series. The Galaxy range introduced consumers to the first smartphones offered by
Samsung, with the Galaxy S phones quickly becoming one of the most popular smartphones
sold globally. As the Galaxy series obtained more followers, Samsung began to expand the
product line, offering the market Galaxy tablets, phablets, smart cameras and more recently
smart watches. A key selling point to this range was the ability to sync multiple devices and
have them interact with each other at the touch of a finger; allowing users to incorporate
technology effortlessly into their everyday lives.
The Galaxy Ring is a new innovative product Samsung Electronics plans to introduce to the
market that will add another element to the Galaxy range. The Galaxy Ring is the first of its
kind and enables a user to control their environment wherever they are. The ring is worn on
a user’s finger and is able to connect to multiple smart devices, giving the wearer the ability
to wirelessly control multiple devices with a simple gesture.
The ring allows a user to do some of the following:
 Create text messages by gesturing letters from an in-built alphabet
 Control house appliances such as TV’s and lights
 Create and program new gestures to control other appliances/smart devices
 Open source software enables users to become developers for the new ‘ring store’
Samsung Electronics vision for the new decade is to “Inspire the World, Create the Future.”
The Galaxy Ring aims to achieve this by introducing a new technology to the market; one
that has the potential to grow into a great product, offering many benefits to multiple
consumer groups.
3.0 Situational Analysis
3.1 Competitor Analysis
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Electronic gadgets are available almost everywhere nowadays; therefore this market is very
competitive. Samsung Electronics strong product which combines the possibility of all
activities at the tip of your finger is a new and innovative idea. Hence, it is possible to
achieve a monopolistic market at first as there are no other direct competitors.
Other companies such as Apple and Nokia can potentially create similar types of products.
Samsung Electronics has to keep on innovating the ring in order to stay on top of market and
have the majority of market share, offering consumers more at the augmented level of the
total product concept.
Apple is a strong competitor as it currently holds the majority of the smart devices market
share. If Apple were to develop a similar product to the Galaxy Ring in the future, Samsung
Electronics will need to keep on innovating to maintain their market share. Samsung
Electronics’ current advantage is that the company is launching the Galaxy Ring first in the
market which will enable Samsung Electronics to gain more experience in this new area.
Google Glasses are a strong competitor for the Galaxy Ring as it is a current motion sensitive
gadget leader. Its major advantage is the product’s ability to inform the user of everything
directly in their field of view. The Galaxy Ring will be more focused on hand movement,
writing, and other controls related to hands. Since Samsung Electronics is also in cooperation
with Google, it is recommended to form a partnership with Google; rather than
competing with their product. In this way, the Galaxy Ring may be complemented by the
gadgets that have already been developed to add a visual element to the Galaxy Ring.
The primary target market competitors for Samsung’s Galaxy Ring are as follows:
– Apple
– Google Glasses
– Leap Motion
– HTC
3.2 Political, Economic, Sociocultural, Technological and Legal forces
(PESTL)
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Political and Legal Factors
Political and legal factors such as political stability, government policy, laws, and regulations
have an enormous impact on how companies such as Samsung Electronics carry out their
business functions. Samsung Electronics is required by law to comply with regulations have
been put in place pertaining to the maintenance of market efficiencies and the protection of
consumer rights when implementing marketing strategies for the Galaxy Ring. Under the
Trade Practices Act, Samsung Electronics is protected from negative publicity, expensive civil
damage suits, and potential fines if the company complies with all relevant restrictions when
developing the marketing strategy for the Galaxy Ring. Several laws exist in regards to proper
advertising practices and the handling of disadvantaged consumers that Samsung Electronics
must take into consideration when planning marketing strategies. Samsung Electronics is
required to adapt their marketing strategy to comply with current and anticipated future
laws and regulations.
Economic Factors
Interest rates, economic growth, inflation, and disposable income are a few economic
factors that will have a significant impact on how profitable Samsung Electronics will be from
the release of the Galaxy Ring. Macro-economic factors such as that of interest rate control
and taxation policies aid governments in managing demand. Micro-economic factors such as
disposable income and unemployment rates determine how companies and individual
consumers will spend their incomes. It is essential for Samsung Electronics to monitor
economic conditions and trends when planning the marketing strategy for the Galaxy Ring.
The health of the economy will have either a positive or negative effect on the level of
disposable income available to consumers and will therefore influence the price consumers
are willing to pay for the Galaxy Ring.
Sociocultural Factors
The success of Samsung Electronics’ Galaxy Ring marketing strategy will be determined by
how well it reflects the needs and desires of consumers. Environmental awareness, age
distribution, career attitudes, and health consciousness are some sociocultural factors that
Samsung Electronics must take into account when defining consumer needs and wants. A
key sociocultural issue that has become increasingly relevant in the past few decades is the
issue of environmental sustainability (Elliott, G. et al 2012). By understanding the
importance of environmental sustainability and related issues, Samsung Electronics is able to
implement a marketing strategy for the Galaxy Ring that will adequately respond to
consumer concerns regarding this issue.
Technological Factors
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Samsung Electronics must utilise modern technological advancements that have the
capability to increase the effectiveness of the company’s Galaxy Ring marketing strategy. The
adoption of new technologies allow Samsung Electronics to potentially develop and
implement new methods of producing and distributing goods and services and new ways of
communicating with targeted markets. These new methods of carrying out existing business
processes will enable Samsung Electronics to create a business environment that thrives on
efficiency and effectiveness.
3.3 SWOT Analysis
Strengths
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 Successful company with an excellent reputation
 Pre-established customer base
 The Galaxy range of products developed by Samsung Electronics have been well
received by consumers
 The Galaxy Ring is a new and innovative product with a combination of unique
features
 The Galaxy Ring is the only electronic device of its kind to implement open-source
development capabilities
Weaknesses
 Difficult for Samsung Electronics to execute a user-friendly design that incorporates
high-levels of functionality with minimum expenditure
 Sizing of the Galaxy Ring may potentially become an issue
 Some existing Samsung customers that are reluctant to accept the Galaxy Ring as a
viable investment as the product is a unique and revolutionary concept
Opportunities
 Open-source software development capabilities combined with the revolutionary
Galaxy Ring have the potential to attract new customers to the market
 Software developers are able to design brand new applications through the Ring
Store
 Developers are able to design applications that provide aid to the elderly or disabled
 The Galaxy Ring will play an integral part in expanding the wearable electronics
marketplace
Threats
 Negative criticism of the Galaxy Ring may result in a decrease in sales
 Upon release of the Galaxy Ring, competition from equally successful companies
(such as Apple) will arise.
 Open-source software nature of the product may be at threat
 Competitors may use the Galaxy Ring’s software in order to release similar products
which will be in direct competition to the Galaxy Ring itself
4.0 SMART Objectives
Specific:
The initial objective was to get the Galaxy Ring funded, to enable production. With
$250,000 being the initial goal, the concept of the Galaxy Ring was so popular that it raised
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over $400,000 in the first 5 days of being released. The new objective is to complete the
programming and hardware designs, before the Galaxy Ring is able to be mass-produced,
and released to international consumer markets by July 2014. Samsung’s overarching goal is
to make the Galaxy Ring an effectual and lucrative innovation.
Measurable:
In order for Samsung to determine whether the Galaxy Ring is worth investing resources in,
Samsung has been able to use data from the concept release on ‘Kickstart’. Samsung has
also been able to undergo product testing and the survey of customers’ satisfaction,
providing important feedback on weaknesses and strengths of the product design. The
information gathered is able to ultimately provide Samsung with a greater indication of how
the Galaxy Ring will be received by the public and consequently, will determine whether the
Galaxy Ring is worth investing in.
Achievable:
Due to the high levels of interest and funding indicated by ‘Kickstart’, it is obvious that the
Galaxy Ring has potential to be a successful product. The Galaxy Ring could be identified as
being desirable to the consumer market as it is:
-Wearable Technology
-Novel/innovative/creative
-New and different
-Makes mundane actions easier/ more interesting
-Able to provide possible aid for the elderly or disabled
The Galaxy Ring’s uniqueness is a critical component to its potential success and
international attention. There is evidence to suggest that wearable technology has become a
key technological trend of 2014, with wholesale revenues jumping to $18.5million. It would
be rational to believe that the Galaxy Ring will have a major impact of the market and thus
will achieve Samsung’s objectives.
Realistic:
The success of the product indicates that the production of the Galaxy Ring is indeed a
realistic objective. Samsung Electronics is planning to release the Galaxy Ring at a price
range starting at approximately $165 on first release, but hopefully moving down to the
$100 mark to attract a larger number of buyers. This is known as price skimming. The Galaxy
Ring being affordable to the general public makes it a more realistic product to achieve a
greater sales velocity.
Time Specific:
Samsung is hoping to introduce the Galaxy Ring to international stores by July 2014.
With the introduction of the Galaxy Ring there will be a diffusion of innovation emerging
throughout various cultures. Beginning with the innovators buying at the higher price ($165
roughly) for the new technology, moving through to early adopters, early majority, late
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majority and finally laggards, where the Galaxy Ring is estimated to cost around the $100
mark. Time is an important factor to take into consideration when analysing a product’s
return rate.
5.0 Target Market
Samsung Electronics uses customer segmentation to identify the groups of consumers it
markets its products to. This is chosen over the undifferentiated market approach (which
targets products to the entire market) and the one-to-one market approach (which targets
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products to individual customers) as the Galaxy Ring will not appeal to the entire market,
and Samsung Electronics aims to appeal to groups of consumers, rather than individuals.
Samsung Electronics will adopt a differentiated targeting strategy for the Galaxy Ring; which
involves developing a different marketing mix for each target market segment. This strategy
entails high costs and relies on a high market share and strong customer loyalty; both of
which are currently present within the company.
5.1 Primary Target Market
The primary target market is where most marketing resources will be directed; as it is in this
consumer segment that a higher volume will be sold and a greater profit level achieved. The
primary target market for the Galaxy Ring are 16-25 year old educated male/female
students, with a male skew who are located in or near major cities. Young adults can use the
ring as a device that will allow them to control their environment and encourage new skills
to be learnt with the open source software. It will also encourage safer habits such as hands
free car connectivity.
Samsung Electronics vision of inspiring the world to create a better future can best be
achieved by offering the latest technologies to the younger generation who are the future.
5.2 Secondary Target Market
The secondary target market is another segment that Samsung Electronics has identified as
a potential area where profit can be made. The Galaxy ring will also be marketed towards
30-45 year old business males/females who lead a busy lifestyle and currently own another
business orientated Galaxy product (such as a Galaxy Note). The Galaxy Ring will be able to
integrate into their daily lives; connecting to their current smart devices and allowing for
quick and efficient replies to incoming messages.
A final new potential target market identified by Samsung Electronics are males and females
aged 65 and over who suffer from mobility issues, who could use the Galaxy Ring to control
household appliances. With the ability to connect to smart power point adaptors, TV’s, lights
and sound systems; the Galaxy Ring could be used by a member of this segment to gain
control of their home environment without the need to move around. As this segment will
not draw a large customer base, the marketing to this segment will be minimal and simply
highlight the benefits of owning the Galaxy Ring.
6.0 Marketing Mix: Positioning
To determine the most effective positioning for a product, the product’s current position
must be understood, and an ideal position developed. However, given the Galaxy Ring is a
new product; determining its current positioning is feasible only to the extent to which we
measure the brand equity and loyalty inspired by Samsung itself. We can, however, influence
the ring’s future positioning with respect to our target markets.
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Our primary target market, as previously stated, is 16 to 25 year old educated students,
located in or near major cities and with a male skew. Although we will undertake further
qualitative research to understand this segment, we expect they will be technologically
savvy, and particularly motivated by new trends and developments. The Galaxy Ring will be
primarily marketed to this group as an innovation, appealing to their taste for new
technological trends. The absence of competitors and initial exclusivity of the product will be
emphasised heavily, and coupled with prestige pricing, a perception of innovation and
originality will be cultivated. In turn, we expect this will influence the late adopters of the
product (by which time we assume competition will exist) to choose Samsung’s Galaxy Ring
over competing offers.
With respect to our secondary target market, that of 30 to 45 year old businessmen and
women owning a Galaxy product, we will market this product from the standpoint of
enhanced functionality, control and efficiency in daily business life. By demonstrating the
product’s ability to take notes in meetings, send messages quickly and other similarly timesaving
uses, we aim to position the ring and Galaxy brand as synonymous with efficient
business practice. With regard to future competitors, Samsung’s Galaxy Ring will be
positioned through advertising and promotion as the pioneer in the new technology,
allowing for price skimming strategies to be implemented successfully.
For the elderly segment of the market, particularly those physically impaired or suffering
from poor mobility, the Galaxy Ring is able to provide necessary assistance. Arising from the
frequency it will be used, the technology must be reliable, and equally important from a
marketing point of view, perceived as such. Consequently, advertising to this target segment
will emphasise the reliability of the technology, and the product’s sale at reputable and well
known retail stores such as David Jones and Myer complement its positioning as a reliable
product. The product can also be trialled at nursing homes, with ensuing word of mouth
advertising positioning the brand and product as a reliable and capable device.
7.0 Marketing Mix Strategy
7.1 Product
The Samsung Galaxy Ring is a new and innovative product developed by Samsung
Electronics that will add a new concept to the Galaxy series; creating a new link that is able
to connect multiple smart devices, allowing a user to take full control of their environment.
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In order for Samsung Electronics to have a successful product launch, marketers must be
fully informed of the product and its benefits.
The Samsung Galaxy Ring is a consumer product that will be purchased by individuals for
their own private use; it is classified as a speciality product as it is a highly desired product
with unique features that consumers will make considerable efforts to obtain. The product is
currently in the introduction stage of the product life style and will be appearing in stores in
the coming weeks. This is a difficult stage as their will be a lot of money invested into
advertising the product to make consumers (specifically the target market) aware of the
Galaxy Ring. It is not until the product reaches the growth stage that a large increase in sales
will occur, resulting in profits being generated.
In order to gain the attention of the primary target market, the Galaxy Ring needs to create
interest within young adults and draw their attention to the product. Samsung Electronics
will create advertisements through multiple media forms in order reach out to consumers.
Samsung Electronics is already an established brand name and has a positive brand image
with a strong customer following. With the correct marketing techniques implemented, the
Galaxy Ring will be a successful product, aiding Samsung to obtain more market share.
7.2 Price
The key to successful marketing lies in the creation of a mutually beneficial exchange of
value between one party and another. That is a buyer will only purchase a product if the
benefits gained from the use of that product are greater than the amount paid for it, and a
seller will only sell a product if the price a consumer pays is greater than the cost of the total
inputs used to create the product. This demand/supply system needs to be understood by
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Samsung Electronics in order to set a price for the Galaxy Ring that will not discourage
buyers from purchasing the ring while generating profit for the company.
Due to the Galaxy Ring being a new product in the market and having no direct competitors
at this current point in time; Samsung Electronics has decided to use a price skimming
strategy (more beneficial in inelastic markets). Price skimming involves charging the highest
price that customers who most desire the product are willing to pay. This strategy will allow
Samsung Electronics to generate cash flow quickly to offset product development and
launch costs; reaching the breakeven point at a much quicker rate than using penetration
pricing. Due to the high volume of consumers experienced with the launch of any new
Galaxy product; price skimming will allow Samsung Electronics to have a better control over
the demand as the higher price limits some buyers from purchasing the product until the
price is dropped.
It is essential that Samsung Electronics price the Galaxy Ring in such a way that consumers
can clearly see that the expected product benefits outweigh the price paid to obtain the
product. The current positioning of Samsung Electronics and its perceived value will allow
for prestige pricing (a higher price charged to convey quality), as well as odd-even pricing (a
strategy used to psychologically alter the perception a consumer believes they are paying for
a product). The Galaxy Ring will be released in Australia with a price of $199. Samsung
Electronics feel this is a fair amount to charge for a never before seen product that has a lot
of future potential.
7.3 Promotion
As the Galaxy Rings primary target market is 16 to 25 years old students; made up of a
generation who spend a large amount of time on social media every day; Samsung
Electronics will use this form of promotion in order to reach out to its audience. The main
method of promotion for the Galaxy Ring will be advertising through YouTube, Facebook,
Twitter, Google+, TV and magazines.
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Social media platforms are networks which connect with our target market and potential
customers. It offers companies a medium to promote the Galaxy Ring to our target
customers effectively and directly on a more personal level. Also, the advertisements on
these platform can be done in multiple forms such as videos and photos with long
descriptions and links to Samsung website.
The use of popular stars among young people in promotional material will be a key
component in the promotion strategies. They are the idol of existing customers and help to
attract more potential customers.
In addition to this, an in-store promotion will be run in local stores, which includes a combo
package sale of Galaxy ring and other products of the Galaxy series. This is an effective way
to attract new customers while giving them special discounts and extra benefits. It is
recommended that a staff incentive program can be adopted in Samsung stores in order to
increase the sales volume of Galaxy Ring.
7.4 Place/Distribution
The Samsung Galaxy Ring will be sold primarily through the Samsung Experience stores
located in the major capital cities around Australia. Other high end electronic stores such as
JB Hi Fi, David Jones, Myer, Dicksmith, and Harvey Norman will also stock the product, as
well as mobile phone companies such as Vodafone, Telstra and Optus who already sell
Galaxy products.
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Since the primary target market for the Galaxy Ring are 16-25 year old young male/female
students with common interests in new technologies; the main focus will be on stores who
already attract these people (such as JBHI-FI). The online store will also enable consumers to
purchase the ring and have it delivered to their door step.
8.0 Budget/Financials
Projected Income Statement (Year 1)
Revenue 9,950,000
Cost of Sales (5,970,000)
Gross Profit 3,980,000
Sales Promotion (350,700)
Commission & Service Charges (398,900)
Advertising Expense (175,300)
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Transportation Expense (160,300)
Wages & Salaries Expense (241,100)
Research & Development Expense (614,000)
Warranty Expense (127,100)
Other (214,700)
Income Before Tax 1,697,900
Income Tax Expense (509,370)
Net Income 1,188,530
Income Statement Projections
Revenue; projected revenue for the item was based on conflicting sales reports for Samsung’s Galaxy
Gear, a smart-watch released worldwide in 2013. The watch’s sales figures were utilised as a
reference to predict Galaxy Ring sales because the products share common characteristics – they are
both new products, and the eventual sales will both inevitably factor in Samsung’s brand equity and
customer loyalty. Some sources report the item as having sold 800,000 units in the final two months
of 2013, whilst other sources suggest this figure represents shipments to retailers and is in fact
exaggerated. Thus, we have conservatively estimated sales of 1,000,000 units worldwide, five
percent of which will be to the Australian market. At $199, this totals 9,950,000
http://www.engadget.com/2013/11/19/samsung-800000-galaxy-gear-sales/
All Expenses; due to a lack of information present regarding associated costs, the above figures are
estimated based on Samsung’s financial statements. Each expense item is divided by the company’s
total revenue to attain a ratio for the cost of that item, from which the income statement above is
extrapolated. The tax rate is assumed to be 30%. Refer to page 66 of Samsung’s notes to the financial
statements for associated expenses, listed below.
http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2
013/2013_con_quarter04_note.pdf
Start-up Costs; despite an initial fundraising goal of $250,000, the project has been pledged just over
$880,000. Consequently, we will assume that start-up costs, which include the necessary research
and development required to create the initial product, are $880,000.
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9.0 Implementation/Evaluation
Tactic Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Magazine
Advertisements
Magazine
Competitions
Radio
Advertisements
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Television
Advertisements
Product Display
Incentives
Mobile Stand
(Electronics
Conventions)
Evaluation
It is essential to evaluate our marketing strategy to ensure that it properly represents the
overall effectiveness of Samsung Electronics’ Galaxy Ring strategy. Samsung Electronics
needs to monitor key campaign areas of their marketing strategy such as – profits,
effectiveness of promotion, and consumer attitudes toward the Galaxy Ring. Research
procedures and measuring facilities are available to Samsung Electronics’ marketing team in
order to aid the evaluation process.
10.0 Conclusion/Recommendations
This report illustrates the marketing plan for the Samsung Galaxy Ring in Australia. There are
two market segments identified; the primary (16-25 year olds with a male skew) and
secondary target markets (business people and the elderly). Based on the cost-benefit
analysis; there is room for Samsung Electronics to enter the marketplace and be able to
meet sales expectations, which will offset product development and advertising expenses;
resulting in an overall profit for the company.
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This marketing plan provides evidence that the Samsung Galaxy Ring is able to enter and
compete well in the market. Therefore, it is recommended for Samsung management to
accept this marketing plan to support and promote further growth in the market.
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