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JUNE 11, 2003
The Push to Polish Samsung's Brand To succeed in America, the Korean electronics giant has too convince consumers that its goods are a cut above. Here's the plan In the key North American market, success is achieved one product at a time, believes Samsung America President Oh Dong Jin. With a $110 billion consumer market as the prize, Oh is rushing to get his three core divisions -- semiconductors, telecom, and consumer electronics -- to move in lockstep in the quest to dominate the digital home. Oh and his subordinates are racing to churn out hit cell phones, tech toys, and chips, as well as to increase distribution and boost marketing. The goal: to strengthen Samsung's place in the ranks of elite consumer-electronic companies. "Our weakness is still brand perception," says Oh. For years, Samsung concentrated on the low end of the market, especially in microwaves and TVs. Under Samsung Electronics CEO Yun Jong Yong, the company has moved to reposition the brand at the high end, going after youngish affluent customers (see BW Online, 6/11/03, "Samsung's "Sashimi Theory" of Success"). The first leg in this strategy has been to use Samsung's manufacturing technology to turn out a string of products that the company can legitimately call the "world's first." Since 1997, Samsung has introduced the first handset with voice-activated dialing, the first Internet-enabled handset, the first wireless phone to have an embedded MP3 player, the first global-positioning-satellite-enabled wireless phone, and the first fully integrated combination Palm-phone device with a color screen (see BW Cover Story, 6/16/03, "The Samsung Way"). In the cell-phone market, that plan has helped Samsung become the world's No. 3 manufacturer in just five years. SEEKING RELATIONSHIPS. Recently, Samsung has won raves for both its DLP TV -- the first big-screen TV featuring digital light-processing technology -- and the Duocam, a camcorder/digital camera combo that has dedicated, swivel lenses for taking pictures and shooting video. Next up: This summer Samsung will begin marketing under its own name the flash memory cards that have become a staple in digital cameras and music players. Oh contends that with Samsung branding on both the inside and outside, such products can help make the name as synonymous with quality as rival Sony's (SNE ). "This is a kind of slogan: We can compete with Sony in terms of technology, in terms of brand image, in terms of operational excellence," he says. To do that, Samsung must continue to win approval from its distribution partners. It hopes to cement happy relationships with such retailers as Best Buy (BBY ), Circuit City (CC ), and Sears (S ) by not only turning out glitzy new products but also getting those products to "talk" to each other. READY TO EAT. This month, Samsung will begin showing its "extended home theater" software technology to consumer electronics standards groups. Essentially, this software would give devices and PCs a Web address, which would allow them to exchange information through wireless networking. For example, a consumer on the way home from work could use a cell phone to remotely turn on the oven to warm up dinner. If the technology is as easy to use as advertised, consumers may well rush to embrace Samsung products, boosting sales for both the company and retailers. "It's a win-win for everybody," Oh says. Samsung hopes to begin rolling out such gizmos early next year. Of course, rivals aren't standing still. Sony recently announced it will spend $3 billion over the next few years to step up its investment in chip technology, and on June 10 it unveiled a new strategy for selling high-end electronic gear. TOO CLOSE FOR COMFORT. On the cell-phone front, Nokia (NOK ) and Motorola (MOT ) say they'll significantly boost the number of models they introduce this year. Even Apple Computer (AAPL ) has moved to fend off Samsung's increasing strength in the digital-music player market. The Korean company had planned to release its well-reviewed Yepp YP-900 hard-drive digital-music player in May but has delayed it until fall because Apple threatened to sue, claiming the device looked too similar to its hot iPod. Samsung execs say the Yepp will be redesigned. Such challenges are to be expected, says Oh. But with Samsung's early base of young, upper-income customers for its high-end products, the increasing excitement behind the Samsung name will be the tie-breaker, he believes. "Where there's competition, we should win," Oh says. He'll need such confidence to become king of the crowded North American market.  By Cliff Edwards in San Mateo, Calif. Edited by Patricia O'Connell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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