Samsung Scores with Newest TV Tech

(page 2 of 2)

One of the first moves was to dominate shelf space at major retailers. To this end, Samsung came up with a full lineup of four different models of LED TVs, in sizes ranging from 32 to 55 inches, and launched them globally in March at the same time. Rivals introduced only one or two models. That has allowed Samsung to dominate the LED category so far this year. Market researcher DisplaySearch expects Samsung to grab a share of some 60% for all of this year in the segment, which is expected to rise from 3.7 million units in 2009 to 64 million in 2012.

The Korean company also splurged on hundreds of millions of dollars in ads and other campaigns to promote TVs using LED technology. It declined to give details of its marketing spending but said this year's marketing expenditure for its TV business tripled that of last year. One example: Samsung is spending more than $25 million for a U.S. deal this year with the National Football League and various promotions tied to it.

Profit Margin Estimate of 12%

The promotional campaign was as active online as offline. To attract consumers, Samsung hired a British TV studio to make a short but odd video of sheep covered with LED lights being herded around a hillside in the darkness. As the flock moves across the hill, viewed from afar, the lights form and reform into various shapes and ultimately bounce through fields like the old Pong video game. The online video managed to generate 4 million hits in the first eight days and more than 10 million hits so far. The company also bought search-related ads to make sure Samsung will be the first item in search results related to LED TVs.

Dividends from the marketing investment have been handsome in the traditionally razor-thin TV business. Samsung's Digital Media Div., which makes TVs, computers, printers, and audio and video consumer devices, reported a respectable profit margin of 9% on sales of $9.5 billion in the three months to June, without providing a breakdown of the contribution from TVs alone. Song Myung Sup, electronics analyst at brokerage HI Investment & Securities, figures the company's TV business profit margin was 12%.

Now, with signs that the global economy is recovering from recession, Samsung is spurring its efforts to cement its leadership. TV business chief Yoon says his company aims to sell at least 10 million LED-lit LCD TVs next year, about five times its targeted volume this year, as the LED segment gains popularity and competition gets tough. "We will work hard to deliver new values to consumers at competitive prices when they want them," says Yoon. "I'm confident we'll maintain our leading status."

Moon is BusinessWeek's Seoul bureau chief.

Business Exchange

Track and share business topics across the Web.