Lufthansa Case Analysis Case Study Solution & Analysis
Historically, the business's core consumers include the Original Devices Manufacturers (OEMs), which used to sell Lufthansa Case Analysis Case Study Help items withtheir own brand name. Its customer circle includes Original Devices Manufacturers (OEMs), who utilized to offer Samsung items with their own brand name. He repositioned Samsung as a worldwide brand name and informed his divisional managers to comprehend marketing and its significance.
Samsung's shift from an item based to a marketing company is not going as smoothly as planned.Overcoming the reluctance of divisional supervisors to integrate marketing effectively is still a significant difficulty. Producing a consistent brand name identity across the whole world and employing marketing techniques that finest fits the local culture is no easy task. The M-net program analysis have actually been actually helpful in determining the high and less potential growth areas, however allocation of resources accordingly is not well received among the managers. There is no consensus amongst the hierarchy concerning the very best suited future strategy.
Lufthansa Case Analysis Case Study Solution efforts for constructing its brand name across the world was started after presenting the "brand-new management initiative" by Chairman Lee in 1993. The goal was to transform Samsung from a cheap OEM to a high value-added product service provider. To make the vision of Samsung a reality, Chairman Lee appointed Yun as a vice chairman in 1997. Yun had a quite clear picture in his mind about how Samsung can transform from a low end to a high end product company. He understood that change can just be done through positioning Samsung as a company providing high-end items and this could only be done through high level of marketing.
In spite of having a clear vision about how to build Samsung brand name, with a potential support of its executives, Yun faced a number of marketing challenges 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 very same tools and thought that quality items do not required marketing for increasing sales. As their focus towards marketing was rather low in their previous organisation practices, and the present marketing requirement was too much high, the space was too broader and to fill this gap with incorrect understandings about marketing was quite tough for Yun.
As stated above, marketing focus was really low in previous practices, for that reason there were no correct marketing spending plans for each of the product on the portfolio. There was no marketing planning done for the existing products. Together with it the item series of the company was increasing with the ripening of new item ideas by the R&D sector of Samsung. Yun had a difficulty to carry out marketing preparation and to develop marketing budgets for existing along with for new items from the very beginning, and this would take a huge time.
A huge shift would be required in present marketing expenditures to develop the Lufthansa Case Analysis Case Study Analysis brand name. This would result in increased marketing expenditures for Samsung and could interrupt the administration relating to increased costs, as they were reluctant to marketing expenses previously and a sudden big shiftwould make them interrupt. This could result in declining executive assistance for international marketing. In this situation, Yun deals with a challenge for justifying increased marketing expenditures by showing the long term worth of big marketing expenses.
Lufthansa Case Analysis Case Study Analysis strengths lie in its big item portfolio. Samsung has largest number of patents in the industry with total number of 15499 patents approved in US( USP).
Another strength of Lufthansa Case Analysis Case Study Solution is its ability to develop ingenious items at a constant rate. It significant shows for the development and item designing of Samsung is that the business has gotten numerous awards for its development and product style.
Unlike Apple and other rivals, Samsung is concentrated on producing gadgets which can be easily integrated with any kind of open source Os (OS) and software application. This supplies Samsung an edge over Apple gadgets.
Samsung's capability to produce high-end products at low cost of production is also one of the significant strength of Samsung as it allows the business to capture more market by supplying quality items with expense control.
Samsung's weak points are hidden in the company's reliance on outsourcing software application for its gadgets due to company's inability in developing software application, unlike Sony. Lufthansa Case Analysis Case Study Help likewise has low profit margins as compare to Apple due to huge distinction in the costs of Apple and Samsung with a much lesser distinction in quality.
Opportunities for Samsung lie in the growing Mobile phone market and the company's effectiveness in the market. It can increase its market share and profits from cellular phone as the business is rather efficient in cell phone market. Samsung currently runs in about 80 countries and the company has an opportunity to increase its geographical growth by moving towards more emerging markets outside Asia. Samsung can move towards acquisitions to acquire patents. It would allow the company to increase its product portfolio with a boost in its wealth.
The vibrant industry environment of technology industry posture a serious hazard on Samsung's survival and force the business to spend much of its revenues share on R&D in order to make it through in the long run. The marketplace saturation in industrialized countries i.e. saturation of mobile company is likewise a big hazard for the business's development in the presence of strong rivals like Apple.
4 P's of Marketing
Lufthansa Case Analysis Case Study Solution uses quality items and has a quite rich portfolio which caters to various sections. Most of the products are in the top three of their particular markets. LCD and mobile phones are the most significant products of Samsung, whereas DRAM is likewise not far behind in comparison of them. Following is the product line of Samsung:
• LCD/ TV
• Smart phone.
• Desktop computer.
• Hard disks.
• Flash memory.
Lufthansa Case Analysis Case Study Analysis utilizes both market competitive and market skimming rates strategies for its variety of items. In competitive prices it changes the price according to the competitors in order to get benefit, whereas, it utilizes market skimming technique where the product has an included worth and by selling a couple of products it can reach break-even.
It has among the best supply chain networks, with retail suppliers, their own sole distributors, E commerce channels like Amazon and so on. All its items are prompt supplied to the selling location/ provided to the consumers straight in case of online order.
It uses both offline & online channels of promo to market their products. Paid item ads, social promotion and digital advertisements are utilizes to produce awareness about Samsung items.
Value Chain Analysis.
It's an analytical framework for identifying service activities that add value or competitive benefit for the business.
It has among the most efficient and effective supply chain network and has over 2700 providers across various industries around the world. Nearly 80% of which is based in Asia and the remaining around the world. For its inbound logistics it owns different logistics firms as it subsidiaries. It takes care of its suppliers and creates a harmonious relationship with them and even minimized their payment cycles to increase this relationship even more which includes worth to their chain network.
Samsung's core competency is its mass making it produces 90% of its products in-house. Divided into three different divisions its operations are namely IT & Mobile Communications, Gadget Solutions and Customer Electronic Devices. It is keeping operation hubs worldwide to further add value to its worth chain network.
Its outbound logistics system performance is one of the main reasons Lufthansa Case Analysis Case Study Help is able to compete with Apple. Samsung's own Electronic Logitec system plays a major function in the outbound logistics operations. It even performs the jobs of collection of payment, settling insurance coverage claims, etc. on behalf of Samsung.
Marketing and Sales.
Bring in target consumer attention towards the product is done through marketing and sales to communicate with them the worth and competitive advantage the item offers. Lufthansa Case Analysis Case Study Analysis marketing budget plan is continually rising since they started their rearranging globally and will continue to do so as they are continually seeking to invest and expand in high possible growth markets. The budget is spent on events, print and media ads, public relations etc.
Samsung Service. Samsung put their clients at the top and constantly strive to provide unmatchable customer service standards. As after sales service is becoming incredibly essential to keep customers delighted and engaged, they even perform studies through third parties to find out their customer's feedback and implement it in the positive way to reduce or if possible totally remove their client issues. By adding a direct assistance line to call them 24 hr they have actually even more increased the added value of Lufthansa Case Analysis Case Study Help service.
Lufthansa Case Analysis Case Study Help has actually diversified market segmentation, based upon its arrangement of wide range of products to large number of customers. Samsung target client sectors can be divided into 3 categories i.e. Lufthansa Case Analysis Case Study Help IT and Mobile Communications, Samsung Customer Electronic Devices and Samsung Gadget options.
Lufthansa Case Analysis Case Study Analysis geographical segmentation is based upon two requirements i.e. area and density. Samsung serves about 80 countries worldwide with its items offered to Urban as well as Rural areas of the country. The Samsung is likewise growing its global presence and the business's flexibility in finding its plants encourages international growth of Samsung.
The group segmentation of Lufthansa Case Analysis Case Study Analysis is based upon gender, age, life-cycle phase and occupation. Samsung produces products that can be utilized by both females and males. The target clients for Samsung IT and mobile communication products have an age variety of 18-65 with bulk at a young or freshly wed life cycle phase. They are mainly students, professionals and employees. Apart from it, Samsung Consumer Electronics are targeted to a client section with an age range of 25-65. They are mostly experts and staff members. Samsung Device Solutions are targeted at trainees, workers and specialists with an age variety of 25-65.
The psychographic segmentation of Lufthansa Case Analysis Case Study Help s based upon the social class and the life style of the customer. Samsung target customers on the basis of social class are generally upper middle, middle and working class clients, as Samsung offer items like cell phones not much cheaper i.e. Motorola in addition to not much pricey i.e. Apple. It provides quality products to middle level customers at a slightly high price than others targeting the exact same sector.
Lufthansa Case Analysis Case Study Help majority target consumers have distinct behavioural attributes. They are drawn in towards Samsung because of its moderate rates with a degree of quality.
Sales of Samsung has actually 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 minimized its debt 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. Because of the high overhead cost, incomes/ sales are increasing however net earnings is not increasing appropriately. New expansions and working with's were the primary reason of the increase in the overhead costs, with china currently not offering any revenue to Samsung, but there is so much potential in the existing market with 75 % yet to be checked out.
Whereas, the core strength of the business is presently making but long gone are those days when excellent items were offering themselves. Kim has actually currently begun to strengthen the marketing activities of Samsung and extremely soon it will end up being one of its core strength like producing if not better.
Samsung runs styles, produces and sell a huge portfolio of consumer electronics. It operates in an extremely competitive environment and has actually effectively positioned itself as the maker of quality items. So, the response is yes.
As, stated earlier that Lufthansa Case Analysis Case Study Help runs in a highly competitive environment, which means all the business have similar items. So, the answer for rarity is no.
Due to the nature of the industry, it is extremely easy for rivals to comprehend the functionality of the items and easily make their own designs. Yes, Samsung is just behind IBM in signing up new patents yearly, but the advantage is really short-term in this industry.
Chairman Lee has completely turn-around Samsung, from going almost bankrupt throughout the Asian financial crisis of 1997 to the leading 25 business worldwide. Definitely yes there appertains company in the business and the outcomes promote themselves.
External Environmental Analysis
Being a multinational brand spread almost in every country worldwide, majority of the environments like USA, Europe, China and so on, are really conductive for its operations. It deals with some political pressures in less developed countries where law and order circumstance is not good. Latin American, African and some Asian countries fall in this category, where political instability do have an impact on Lufthansa Case Analysis Case Study Analysis operations.
Buying power of customers is crucial for business like Samsung to prosper and grow. Emerging markets like India, middle-eastern countries and so on offer development opportunities, whereas, due to economic crisis even the consumers of developed countries suffer badly. It is really important for the business to keep an eye on the ongoing financial circumstance of the country prior to entering the market.
International companies have to deal with different social and cultural concerns during its operations in a foreign nation. Samsung has actually also faced many problems but have actually embraced to the regional environments of most of the nations exceptionally well. It has customized its products, practices, policies etc. appropriately in order to be successful.
With a yearly expenditure of 2.4 billion dollars in Research study & Advancement, and with continuous innovative item launches, Lufthansa Case Analysis Case Study Analysis is one of the leading innovative companies of the world. With a clear mission to be ahead of the rest when it concerns technological improvements, Samsung has risen to the no 25 of the leading effective companies of the world.
Each nation has their own laws and policies, being an international company Samsung need to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal consequences. So, it has to study or work with a local law specialist before starting its operations in a particular nation.
With the rising awareness amongst consumers about the ethical & ecological violations of companies, Samsung needs to make sure that it follows all the security standards. Environmental damages, ethical misconducts are not appropriate and in some nations the consequences can be really extreme. On the other hand it needs to do some Corporate Social Obligation practices to reveal the locals that it cares about their environment and individuals.
Porter's Five Forces
Hazard of Replacement
Hazard of replacement for Samsung's each item classification is quite substantial. Factors for high risk of alternative for Lufthansa Case Analysis Case Study Solution Smart device consist of the presence of high number of providers and Market saturation in industrialized countries, which make the expense of changing for customers practically zero. Along with it, Samsung printing options products are threatened by the increasing tourist attraction of consumers towards cloud storage.
Competition Amongst Existing Firms:
The rivaly among Samsung and its close rivals is extreme. The major reason behind this is the method of market saturation in numerous variety of product categories, requiring Samsung to introduce more ingenious functions in existing items and brand-new innovative items to maintain its development. Other aspect for the extreme rivalry amongst the rivals is the little product differentiation among the products. The prominent players in the technology industry are rather aware of the importance of R&D spending for their survival and are facing a race of marketing and R&D spending, to record the marketplace. The major rivals for Lufthansa Case Analysis Case Study Analysis samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc. High competition rivalry results in the fluctuating market shares which can be seen in Display F.
Bargaining Power of Suppliers:
Lufthansa Case Analysis Case Study Solution has a huge supply chain including about 2700 providers 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 prospective size and worth. These huge orders enable Samsung to negotiate costs with its providers. However, due to incapability of Lufthansa Case Analysis Case Study Help to construct its own software, it needs to outsource its software application advancement to Google, which ends up being a potential provider of software for Samsung, leading to high bargaining power of Google. In most of Lufthansa Case Analysis Case Study Solution has a power to negotiate rates, however it offer significant costs to its providers to develop a strong supply chain and to have strong relationships with its suppliers.
Bargaining Power of Purchasers:
Negotiating power of buyers for different number of product classifications of Samsung is intense. Among the element causing the intense bargaining power is the schedule of large number of competitors in practically each item category i.e. rivals of Samsung Smart device, with a very little differentiation. The high accessibility of suppliers of Smart devices with minimum distinction, make the switching cost for purchasers almost zero, for this reason increasing the bargaining power of buyers. Market saturation in most of the item categories also make the bargaining power of purchasers more intense in for Lufthansa Case Analysis Case Study Analysis. In spite of igh bargaining power Samsung is quite capable of selling its items at a higher cost than much of its competitors, due to high-end quality product and a reasonable brand image.
Threat of New Entrants:
Threat of new entrants for Samsung is rather low. Among the major aspect for low risk of new entrants is the high competition in the market. The requirement of substantial amount of capital to go into in the market is also one of the prospective barrier to entry. Along with it, requirement of huge knowledge and research study and development expenditures for survival in the market also make new entrants reluctant to enter in the marketplace. Market saturation is also one of the barrier of entry in technology market. High bargaining power of providers force the players in the market to charge as low costs as possible and this can only be attained by production effectiveness. New firms, in bulk cases, lack the production effectiveness, thus increasing the threats for entryway in the technology market.
Samsung's high product diversity offers it distinction from its competitors. Unlikely to its close rivals including Sony, Intel and Nokia, who focus bulk on a single item category with Sony focusing on consumer electronics, Nokia on cell phones and Intel on chips, Lufthansa Case Analysis Case Study Analysis had a substantial R&D costs on all of its item classifications which enable the company to earn potential income from sales of practically all of its items.
The business ranks first in 4 item classifications i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave ovens, in regards to global market share, among 8 various item categories. Samsung was the international leader in manufacturing DRAM, SRAM and NAND flash chips. Samsung revenues from chips was less than Intel however its revenues from chips was growing much faster than Intel and has grown close to the profits levels of Intel, as given in the case Display 2.
Along with the chips Samsung mobile market was likewise flourishing at a high rate than its rivals i.e. Motorola and Nokia. Samsung's cell phone's sales development was 51% as compare to Motorola with only 4% and Nokia with zero sales development. The major reson behind Samsung's high growth despite of higher costs than Nokia and Motorola was the company's high-end quality mobile phone.
Samsung was likewise profiting from increasing market share of high end LCDs as given in case Display 3. The major reason, making the company make it possible for to get the chance is its mass production at low cost. Sony was the greatest competitor for Lufthansa Case Analysis Case Study Solution in LCD market, nevertheless, it had likewise begun joint endeavor with Samsung in 2003 for LCD making, decreasing the competitors for Samsung.
Porter's Competitive Method
Low Cost Management strategy of porter is completely implemented by Samsung the way they attain economies of scale by strengthening their core competencies of manufacturing. They always bring something brand-new and ingenious whether it's a product or a service.
Alternative Option 1
The Chief Marketing Officer (CMO) of Lufthansa Case Analysis Case Study Solution would develop a new brand image by targeting the more youthful generation of the particular nation. As, specifically mobile phones of Samsung are preferred amongst the younger market.
1. It is the very best strategy to build Customer Life time Worth (CLV) by developing a long-term relationship with customers. Develop commitment through providing value and reap the benefits for long-term, as research has revealed it is more affordable to maintain current customers than to bring in brand-new ones.
2. Another pro of this option is that word of mouth spread quicker amongst younger individuals and which in turn will generate brand-new customers for my products.
1. Old customers who were related to Samsung prior to might not like this brand-new image the company is attempting to represent.
2 It will incur more expenses to rearrange some items and it might not even bring success as the trends change really quickly among the younger market.
Alternative solution 2.
It would be done by organizing training workshops during which importance of marketing will be taught and numbers will be offered. Marketing environment should be created internally first as real marketing starts inside the corporation.
1. Its pro will be that all the marketing technique fans will come out and also the opposite ones.
2. Its con can create a very unhealthy environment in the office, as people typically resist modification because they fear it.
Recognize the very best option
Very first option is the best as it clearly has more pros because once a Consumer Lifetime Value is built the business will make money from it till that client lives and has purchasing power too. Plus, our target customers are the younger generation which are bound to live longer than the present old age people. Nevertheless, Samsung's primary objective is to develop commitment amongst its clients and make them redeemed it from them and even purchase their different products as well.
• Targeting younger generation through social marketing, producing a link with them like Pepsi make with music. And set the expectations possible and practical.
• A team including finest marketing and sales specialists should be put together, and both views should be taken into account prior to protecting the resources needed to implement the strategy.
• Thorough communication of the strategy ought to be done as it is really important for everybody to be on the very same page to make it work.
• Jobs and timelines should be construct and interacted accordingly to each individual responsible.
• The supervisor should utilize a dashboard which reveals the progress of all the tasks which have been done or about to be done and by whom.
• The supervisor should keep track of and keep a consistent look at the individual and general efficiency.
• Everybody must want to adjust midway due to the fact that any new trend or policy may can be found in due to which all the important things already planned need to be adjusted. It's much better to have contingency plans already prepared.
• At the end of the campaign the manager need to communicate the outcomes and if effective ought to commemorate with the group.
The M-net program revealed engaging analysis about the low and high development possible areas and how much marketing spending plan should be assigned accordingly. This change the budget plan allowance of various countries and many managers were unhappy and argued however the analysis done by the program was precise and revealed figures like North America and Russia development potential warranted a 35% allowance while they were receiving 45%. Whereas, China and Europe need to be getting 42% however were instead given 31%. It actually assisted to relatively distribute the resources and capture more consumers by investing more on advertisements on the high development potential areas of the world.
Its consistent financial investment in R&D and innovative practices have propelled them to brand-new heights however for them its' only the start and they want to be amongst the top 3 brands in the world. Their marketing efforts should be directed towards younger group amidst the internal arguments about marketing and must create Consumer Life time Value as it will not just give them advantages now however will continue to gain it till the client lifetime. As the cost of retaining the customer is much less expensive than attracting a brand-new one.