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From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Harvard Case Study Solution

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From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution & Analysis


Introduction

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution is a well-known international brand name in technology market, established in 1938 by Lee Byung Chul, in South Korea. From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry handle a great deal of product classifications consisting of Semiconductors, Telecom, Digital Media, Digital Appliances and a lot more other electronic items. Historically, the business's core consumers consist of the Original Equipment Manufacturers (OEMs), which used to sell Samsung items withtheir own brand. Till early 1990s, the core proficiency of Samsung depend on its low price offerings than its rivals by manufacturing existing products at economies of scale. Its client circle consists of Original Equipment Manufacturers (OEMs), who used to sell From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution products with their own trademark name. Samsung was not merely known outside Korea. There were also no or little interest in developing the brand name globally. Marketing spending plan was managed by production department with a prime focus on supplying inexpensive products.During the 1997 Asian Financial Crisis the company practically got insolvent, but with the Vision of Chairman Lee it completely turn its fortune around and in 2002 was listed the top 25 most valuable company on the planet. When Kim was worked with as a Chief Marketing Officer in 2000 the company was not even noted. He repositioned Samsung as a worldwide brand and informed his divisional managers to comprehend marketing and its value. Now their objective is to arrive 10 by 2005.

Problem Declaration

Samsung's transition from a product based to a marketing company is not going as efficiently as planned.Overcoming the reluctance of divisional supervisors to integrate marketing efficiently is still a significant challenge. Creating a constant brand identity throughout the whole world and using marketing techniques that finest fits the regional culture is no simple task. The M-net program analysis have actually been truly practical in identifying the high and less prospective growth locations, however allocation of resources appropriately is not well received among the managers. There is no agreement amongst the hierarchy concerning the best matched future strategy.
Executive Summary
Situational Analysis

Yun had a quite clear picture in his mind about how From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution can transform from a low end to a high end product service provider. He knew that change can only be done through positioning Samsung as a company providing high-end products and this could just be done through high level of marketing.

In spite of having a clear vision about how to develop Samsung brand, with a prospective assistance of its executives, Yun faced numerous marketing obstacles in early years of its efforts.

Among the marketing challenges for Yun was the perceptions of executives about the worth of marketing. They considered marketing and selling as same tools and thought that quality products do not needed marketing for increasing sales. As their focus towards marketing was quite low in their previous organisation practices, and the existing marketing requirement was excessive high, the gap was too broader and to fill this gap with incorrect perceptions about marketing was rather challenging for Yun.

As mentioned above, marketing focus was really low in previous practices, for that reason there were no appropriate marketing spending plans for each of the item on the portfolio. There was no marketing preparation done for the existing products. Along with it the item variety of the company was increasing with the ripening of new product ideas by the R&D sector of Samsung. Yun had a difficulty to carry out marketing preparation and to produce marketing budget plans for existing in addition to for brand-new items from the very start, and this would take a substantial time.

A substantial shift would be needed in present marketing expenditures to develop the From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis brand. This would lead to increased marketing expenses for Samsung and might disturb the administration concerning increased expenses, as they hesitated to marketing expenses formerly and an unexpected big shiftwould make them interrupt. This could result in declining executive assistance for global marketing. In this situation, Yun deals with a challenge for validating increased marketing expenses by demonstrating the long term value of substantial marketing expenses.

Internal Analysis
SWOT Analysis
Strengths


From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help strengths lie in its substantial product portfolio. Samsung has biggest number of patents in the market with overall number of 15499 patents granted in United States( USP).

Another strength of From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help is its ability to develop innovative items at a continuous rate. It major shows for the innovation and item developing of Samsung is that the business has gotten so many awards for its innovation and item style.

Unlike Apple and other competitors, Samsung is focused on producing devices which can be easily integrated with any type of open source Operating System (OS) and software. This supplies Samsung an edge over Apple devices.
Porter's 5 Forces Analysis
Samsung's ability to produce high end products at low expense of production is also among the significant strength of Samsung as it makes it possible for the company to capture more market by supplying quality products with expense control.

Weaknesses

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help weaknesses are hidden in the company's dependence on outsourcing software for its devices due to company's failure in developing software application, unlike Sony. Samsung likewise has low earnings margins as compare to Apple due to substantial distinction in the rates of Apple and Samsung with a much lower difference in quality. The diverse focus of the company due to large number of items in its portfolio, result in the less effective production and make the business not able to charge greater prices like Apple. The company is likewise ineffective in handling its patents and frequently deals with the problem of patent violation.

Opportunities

Opportunities for Samsung lie in the growing Mobile phone market and the business's performance in the market. It can increase its market share and revenues from mobile phone as the company is quite effective in smart phone market. Samsung presently runs in about 80 countries and the business has an opportunity to increase its geographical growth by moving towards more emerging markets outside Asia. Samsung can move towards acquisitions to get patents. It would allow the company to increase its product portfolio with an increase in its wealth.

Threats

The vibrant market environment of technology market pose an extreme danger on Samsung's survival and force the business to spend much of its revenues share on R&D in order to endure in the long run. The market saturation in developed nations i.e. saturation of mobile company is also a huge risk for the company's growth in the existence of strong rivals like Apple.

4 P's of Marketing
Swot Analysis
Product

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution provides quality items and has a quite abundant portfolio which accommodates different sections. The majority of the items are in the top three of their particular markets. LCD and smart phones are the biggest items of Samsung, whereas DRAM is also not far behind in contrast of them. Following is the line of product of Samsung:

• LCD/ TV
• Laptops.
• Mobile phones.
• Air conditioner.
• Desktop computer.
• Disk drives.
• Washing machines.
• Refrigerators.
• Cameras.
• Microwaves.
• Flash memory.
• DRAM.

Cost.

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution utilizes both market competitive and market skimming rates methods for its wide range of items. In competitive prices it changes the price according to the competition in order to acquire benefit, whereas, it uses market skimming method where the product has actually an added worth and by offering a couple of items it can reach break-even.

Place.

It has one of the very best supply chain networks, with retail distributors, their own sole distributors, E commerce channels like Amazon etc. All its items are timely provided to the selling location/ provided to the clients straight in case of online order.

Promotion.
Vrio Analysis
It uses both offline & online channels of promotion to market their items. Paid item advertisements, social promo and digital ads are uses to produce awareness about Samsung items.

Value Chain Analysis.

It's an analytical framework for determining service activities that include worth or competitive advantage for the company.

Inbound Logistics.

It has one of the most reliable and effective supply chain network and has more than 2700 suppliers throughout different industries around the world. Almost 80% of which is based in Asia and the staying around the globe. For its incoming logistics it owns various logistics companies as it subsidiaries. It cares for its suppliers and develops an unified relationship with them and even reduced their payment cycles to boost this relationship even more which adds value to their chain network.

Operations.

Samsung's core competency is its mass manufacturing it produces 90% of its items internal. Divided into three different divisions its operations are namely IT & Mobile Communications, Device Solutions and Customer Electronics. It is maintaining operation centers worldwide to further add worth to its value chain network.

Outbound Logistics.

Its outgoing logistics system efficiency is one of the main reasons From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis has the ability to take on Apple. Samsung's own Electronic Logitec system plays a major role in the outbound logistics operations. It even carries out the jobs of collection of payment, settling insurance claims, etc. on behalf of Samsung.

Marketing and Sales.

Attracting target client attention towards the item is done through marketing and sales to communicate with them the worth and competitive advantage the item provides. From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution marketing budget plan is continually growing considering that they began their rearranging globally and will continue to do so as they are continually looking to invest and broaden in high possible development markets. The spending plan is invested in events, print and media ads, public relations and so on.

Samsung Service. Samsung put their consumers on top and constantly make every effort to provide unmatchable customer service requirements. As after sales service is ending up being extremely crucial to keep customers happy and engaged, they even conduct studies through third parties to discover their consumer's feedback and execute it in the favorable method to minimize or if possible entirely eliminate their client issues. By adding a direct assistance line to contact them 24 hr they have further increased the included worth of From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help service.

Division.

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution has actually diversified market division, based upon its provision of wide variety of items to large number of customers. Samsung target customer sections can be divided into 3 categories i.e. From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help IT and Mobile Communications, Samsung Consumer Electronic Devices and Samsung Device solutions.

Geographical.

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution geographical division is based upon 2 criteria i.e. region and density. Samsung serves about 80 countries worldwide with its items supplied to Urban as well as Rural areas of the country. The Samsung is also growing its global existence and the business's versatility in finding its plants motivates global expansion of Samsung.

Demographic.

Samsung produces items that can be used by both males and women. The target customers for Samsung IT and mobile communication items have an age variety of 18-65 with bulk at a young or freshly wed life cycle stage. Apart from it, Samsung Customer Electronic devices are targeted to a consumer sector with an age range of 25-65.

Psychographic.

The psychographic division of From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis s based upon the social class and the life style of the consumer. Samsung target customers on the basis of social class are mainly upper middle, middle and working class customers, as Samsung sell products like cell phones very little less expensive i.e. Motorola as well as not much pricey i.e. Apple. It offers quality products to middle level consumers at a slightly high price than others targeting the exact same sector.

Behavioural.

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution bulk target consumers have unique behavioural qualities. They are drawn in towards Samsung since of its moderate prices with a level of quality.

Quantitative analysis.

Sales of Samsung has increased astonishingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net revenue of.48 billion $ to 5.9 billion $. It has likewise reduced its financial obligation from 15 billion $ to 4.6 billion $. Digital media is the biggest selling category of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Profits/ sales are increasing but net revenue is not increasing accordingly since of the high overhead cost. New growths and employing's were the main factor of the boost in the overhead expenses, with china currently not offering any revenue to Samsung, however there is a lot potential in the existing market with 75 % yet to be explored.

Qualitative analysis.

Yes, this choice is based upon the objective of Kim to target the younger audience and create a global brand picture of the business. Whereas, the core strength of the company is currently producing however long gone are those days when excellent items were offering themselves. In the existing age marketing is really essential and companies can not prosper without it. Kim has currently started to enhance the marketing activities of Samsung and very soon it will turn into one of its core strength like producing if not much better.

VRIO.

Value.

Samsung runs styles, produces and offer a large portfolio of consumer electronics. It runs in an exceptionally competitive environment and has actually effectively positioned itself as the maker of quality products. So, the answer is yes.

Rarity.

As, said previously that From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis runs in an extremely competitive environment, which indicates all the business have similar items. The answer for rarity is no.

Imitability.

Due to the nature of the market, it is very easy for rivals to comprehend the functionality of the items and quickly make their own models. Yes, Samsung is just behind IBM in registering new patents annually, but the benefit is very short term in this market.

Organization.

Chairman Lee has entirely turnaround Samsung, from going nearly insolvent throughout the Asian monetary crisis of 1997 to the leading 25 company on the planet. Definitely yes there appertains organization in the business and the outcomes speak for themselves.

External Environmental Analysis

PESTLE Analysis

Political

Being an international brand name spread nearly in every country worldwide, majority of the environments like U.S.A., Europe, China etc., are really conductive for its operations. Nevertheless, it deals with some political pressures in less developed nations where order scenario is not good. Latin American, African and some Asian nations fall in this classification, where political instability do have an effect on From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution operations.

Economic

Purchasing power of clients is essential for business like Samsung to prosper and grow. Emerging markets like India, middle-eastern countries etc. offer growth chances, whereas, due to economic crisis even the clients of industrialized countries suffer badly. It is extremely crucial for the company to keep an eye on the ongoing economic circumstance of the country before entering the market.

Socio-Cultural

Multinational business have to face different social and cultural issues throughout its operations in a foreign nation. Samsung has actually also dealt with many concerns but have embraced to the regional environments of the majority of the countries extremely well. It has tailored its products, practices, policies and so on appropriately in order to be successful.

Technological

With a yearly expense of 2.4 billion dollars in Research & Development, and with continuous innovative product launches, From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution is among the top ingenious business of the world. With a clear mission to be ahead of the rest when it pertains to technological advancements, Samsung has actually increased to the no 25 of the leading successful companies of the world.

Legal

Each nation has their own laws and policies, being a multinational business Samsung need to strictly follow those laws in their jurisdictions. Failure to do so, will result in serious legal effects. It has to study or employ a regional law expert prior to starting its operations in a specific country.

Environmental

With the increasing awareness amongst consumers about the ecological & ethical offenses of business, Samsung needs to ensure that it follows all the security guidelines. Environmental damages, ethical misconducts are not acceptable and in some nations the effects can be extremely serious. On the other hand it needs to do some Corporate Social Responsibility practices to show the residents that it cares about their environment and people.

Porter's 5 Forces

Threat of Substitution

Threat of replacement for Samsung's each item category is quite significant. Running in an extremely dynamic industry lead the company to deal with a high risk of replacement. Factors for high threat of alternative for From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help Mobile phone include the existence of high variety of suppliers and Market saturation in industrialized countries, which make the expense of switching for consumers almost no. Replacement risks for Samsung visual display depend on the altering life style of customers. Customers can switch to enjoying visuals at home towards outside activities. In addition to it, Samsung printing solutions products are threatened by the increasing attraction of customers towards cloud storage.

Rivalry Amongst Existing Firms:

The rivaly amongst Samsung and its close competitors is intense. The major factor behind this is the approach of market saturation in various number of product classifications, forcing Samsung to introduce more ingenious functions in existing items and brand-new innovative products to maintain its growth. The significant rivals for From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Help samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO and so on.

From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution has a vast supply chain including about 2700 suppliers throughout the world.( Samsung Sustainability Report, 2016) Supplier's bargaining power for Samsung is low as Samsung runs economies of scale and its orders are of possible size and worth. These substantial orders enable Samsung to negotiate costs with its providers. Due to incapability of Samsung to construct its own software application, it has to outsource its software advancement to Google, which becomes a prospective provider of software for Samsung, resulting in high bargaining power of Google. Although, in most of cases Samsung has a power to work out rates, but it provide significant costs to its providers to build a strong supply chain and to have strong relationships with its suppliers.

Bargaining Power of Buyers:

Haggling power of purchasers for different variety of item classifications of Samsung is intense. Among the element resulting in the intense bargaining power is the availability of a great deal of rivals in nearly each product category i.e. competitors of Samsung Smart device, with a really little distinction. The high schedule of suppliers of Mobile phones with minimum differentiation, make the changing expense for buyers nearly zero, hence increasing the bargaining power of purchasers. Market saturation in most of the product categories likewise make the bargaining power of purchasers more extreme in for From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis. In spite of igh bargaining power Samsung is rather capable of selling its items at a higher price than much of its competitors, due to high end quality product and a fair brand image.

Threat of New Entrants:

Threat of brand-new entrants for From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Analysis is quite low. Along with it, requirement of big competence and research study and advancement expenses for survival in the market likewise make new entrants reluctant to enter in the market. Market saturation is likewise one of the barrier of entry in technology industry.

Competitive Analysis

Samsung's high product diversification supplies it distinction from its competitors. It is among the three leading brands by market share. Unlikely to its close rivals consisting of Sony, Intel and Nokia, who focus majority on a single item category with Sony focusing on customer electronic devices, Nokia on cellular phone and Intel on chips, Samsung had a substantial R&D costs on all of its product classifications which make it possible for the company to make potential income from sales of nearly all of its items. (See Exhibit) Nevertheless, due to the wide product range the company faces high variety of competitors.

The company ranks first in 4 item categories i.e. DRAM Chips, LCD Displays, Big Screen Televisions and Microwave, in terms of global market share, among 8 various product classifications. Samsung was the worldwide leader in making DRAM, SRAM and NAND flash chips. Although, Samsung profits from chips was less than Intel but its revenues from chips was growing much faster than Intel and has actually grown close to the income levels of Intel, as given in the case Exhibit 2.

In addition to the chips Samsung mobile market was likewise thriving at a high rate than its competitors i.e. Motorola and Nokia. Samsung's cellular phone's sales development was 51% as compare to Motorola with just 4% and Nokia with zero sales growth. The major reson behind Samsung's high development despite of higher costs than Nokia and Motorola was the business's high-end quality cell phones.

Samsung was likewise profiting from increasing market share of luxury LCDs as given up case Display 3. The significant factor, making the company make it possible for to get the chance is its mass production at low cost. Sony was the most significant competitor for From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution in LCD market, however, it had also started joint endeavor with Samsung in 2003 for LCD manufacturing, minimizing the competitors for Samsung.

Porter's Competitive Technique

Low Expense Leadership strategy of porter is totally implemented by Samsung the way they attain economies of scale by strengthening their core competencies of production. They always bring something brand-new and ingenious whether it's a product or a service.

Alternatives

Alternative Service 1

The Chief Marketing Officer (CMO) of From Blockbuster To Video On Demand Distribution Channel Innovation In The U S Video Rental Industry Case Study Solution would create a brand-new brand name image by targeting the more youthful generation of the specific country. As, particularly smart phones of Samsung are very popular amongst the more youthful market.

Pros

1. It is the best technique to develop Customer Lifetime Worth (CLV) by producing a long-term relationship with customers. Develop loyalty through providing value and reap the benefits for long-term, as research study has actually revealed it is much cheaper to keep present consumers than to attract new ones.
2. Another pro of this alternative is that word of mouth spread more quickly amongst more youthful individuals and which in turn will generate new customers for my products.

Cons

1. Old consumers who were related to Samsung before may not like this new image the company is trying to depict.
2 It will incur further expenses to reposition some products and it might not even bring success as the patterns alter really quickly amongst the younger market.

Alternative option 2.

Samsung has actually made making its core proficiency for the many part of their service and due to which its managers are not scared to fully get out of their comfort zone. It would be done by arranging training workshops during which importance of marketing will be taught and numbers will be offered. Failure to get the passing scores will get demoted. Marketing environment should be created internally initially as real marketing starts inside the corporation.

Pros

1. Its pro will be that all the marketing approach advocates will come out and also the opposite ones.

Cons

2. Its con can develop a very unhealthy environment in the workplace, as people typically resist change because they fear it.

Determine the best option

Very first alternative is the best as it clearly has more pros since once a Customer Life time Worth is built the company will benefit from it till that client lives and has purchasing power too. Plus, our target consumers are the more youthful generation which are bound to live longer than the current old age people. Samsung's primary objective is to create loyalty amongst its consumers and make them redeemed it from them and even buy their various items.

Application Strategy

• Targeting younger generation through social marketing, creating a link with them like Pepsi finish with music. And set the expectations practical and attainable.
• A group including best marketing and sales professionals must be assemble, and both views ought to be taken into account before protecting the resources needed to execute the strategy.
• Thorough interaction of the plan ought to be done as it is very essential for everyone to be on the same page to make it work.
• Tasks and timelines should be develop and interacted accordingly to each person accountable.
• The manager need to use a control panel which shows the development of all the jobs which have been done or about to be done and by whom.
• The manager must keep track of and keep a continuous examine the general and specific efficiency.
Since any brand-new pattern or policy may come in due to which all the things currently prepared have to be changed, • Everyone ought to be prepared to adjust midway. It's better to have contingency plans already prepared.
• At the end of the campaign the manager need to communicate the outcomes and if effective need to commemorate with the team.

Spending plan

This modification the budget allocation of different nations and lots of supervisors were unhappy and argued however the analysis done by the program was precise and revealed figures like North America and Russia growth prospective merited a 35% allotment while they were receiving 45%. It really helped to relatively disperse the resources and catch more clients by investing more on ads on the high growth capacity areas of the world.
Recommendations
Conclusion

Its constant financial investment in R&D and innovative practices have propelled them to brand-new heights however for them its' only the start and they desire to be amongst the leading 3 brand names in the world. Their marketing efforts ought to be directed towards more youthful demographic amidst the internal arguments about marketing and should develop Client Lifetime Value as it will not just give them benefits now however will continue to gain it till the customer lifetime. As the expense of keeping the customer is much more affordable than bring in a brand-new one.