Progress of Marketing Capacity: The Case Study of Samsung

The case of Samsung symbolizes the progress of marketing skills in the process of company growth. When Samsung concentrated on OEM business, its international marketing capabilities remained weak. During the early 1980s in which Samsung maintained close relationships with OEM buyers such as GTE, Toshiba, IBM, Hewlett-Packard, RCA, and Crown Corporation, its clients did not provide Samsung with leading-edge product design. Hence Samsung could not upgrade its internal product design capabilities, confining itself to low-end market segments. In 1980s, major innovation activities were centralized, leaving product design and development activities for organizations in Korea, and this trend continued even in 1990s. As a result, the foreign affiliate failed to upgrade overall marketing capabilities. To decentralize some of its innovation activities and upgrade its product development capacity, Samsung established foreign design centers abroad. In the late 1990s, Samsung decentralized product development activities to specific region (e.g., Indonesian refrigerator affiliate) in order to carry out the product designs closer to individual markets.

In the IMF crisis, Samsung realized that it could not compete by price any longer due to rising labor cost and competition from lagging countries like China. Accordingly, Samsung transformed from a maker of low-end “me too” consumer electronics into high-value products. In the wake of the Asian financial crisis, Samsung began a major restructuring effort by changing the focus of its products. Cost was slashed by 30 percent, and low-performing divisions were sold off. Importantly, Samsung decided to take a bet on high-end products with aggressive marketing strategy.

Samsung launched one of the world’s most intensive rebranding campaigns. Samsung came to realize that brand was one of the most important assets and was determined to establish its brand to grow. Samsung developed and marketed breakthrough high-end products such as the most advanced television receivers including flat-panel sets, rear-projection sets, and mobile phones. Samsung succeeded in enhancing its premium brand image by using these products as marketing tools.

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