Analysis of IMC Mix Strategies of Samsung - Case Study Example

ANALYSIS OF IMC MIX STRATEGIES OF SAMSUNG By: + Executive Summary 31.0 Introduction 4 2.0 Literature Review 4 3.0 Smartphone market environment review: 7 4.0 Company strategies................................................................................................,.................10 4.1.0 Target audience 10 4.1.1. Media selection 11 4.1.2 Brand Positioning…….………………………..,,,,,,,,,,,,,,,,…………………………..11 5.0. Recommendations and Conclusion……………….…………………………………………12 6.0 Bibliography…………………………………………………………………………...……14. Executive summary Recently, Ofcom conducted a survey on the number of people owning smartphones in the UK and found a staggering 61% adults did own one such a gadget. In relation to the above, the firm estimated that by the year 2018, a whopping 78% of the residents in UK would be owners of these gadgets. In light of these revelations and predictions, Samsung saw it fit to analyse its IMC in order to understand if it was on track or not. In addition to this issue being the reason for this report, the company sought to understand how well IMC was working. It was discovered that Samsung has failed to retain clients but is popular among people who have not bought its Smartphones. Sadly, this report discovered that people in UK and elsewhere are eager to buy Samsung’s Smartphones but no sooner have they bought them, than they just switch to a rival, Apple. The reason behind this trend was intensively discovered, and results showed that there is a serious problem with Samsung’s customer-retention program. In other words, the company’s IMC requires some improvement in order to capitalize on the UK market which, needless to say, is pretty promising. 1.0 Introduction. It is no doubt that unlike in the past when ordinary phones were the only thing many companies sought to compete on, there is a new phenomenon. Electronic companies are working round the clock in a bid to outsmart each other in as far invention, production and the subsequent marketing of Smartphones is concerned. However, as with any other product, when the supply overshadows the demand, new strategies have to be developed to ensure profitability. This is a report for Samsung where the IMC mix has been closely analysed, findings have been studied, and recommendations offered. This report seeks to understand the market of Samsung’s Smartphones in the UK. To do this, all past studies by various institutions and individuals will be analysed in trying to understand what is missing and how Samsung could capitalize and increase its market share in the UK. 2.0 Literature review Many companies have discovered that integrated marketing communication (IMC) is essential when it comes to remaining dominant in the market. Unknown to some is that IMC plays a pivotal role in determining the sales a company makes. In essence, IMC refers to a particular approach applied by various businesses where different modes of communication work together with the sole goal of underlining the core message of the product (Gromark and Melin 2013). In other words, the essence of having an IMC is to ensure that all marketing communication aspects are fronted together to work in such a way that consistency is witnessed in uniform way. It, therefore, means that all marketing aspects work in unison as opposed to isolating them. In light of this understanding, it means that a company looks at the all platforms that are used in promotion and unifies them. For instance, social media, promotions, advertising, public relations and even direct marketing are normally organised in such a way that the message running across all of them is consistent. According to Mc Garth (2005), this approach usually saves a lot and instils confidence in the customer because none of the methods is inconsistent. In short, the message in social media corresponds with that of the advertisement, the one used during promotions. Besides being cost-effective and winning confidence, IMC goes further to increase sales especially because clients are subjected to the same message. Olof (2006) noted that when IMC is created in the best way, it could transform an organization in a very tremendous way. Some of the components of IMC includes client-centred whereby the organization is not just interested in winning a new customer, but to retain a loyal one. Unlike the traditional approach whereby many business owners were solely focused on winning a customer, the new IMC approach seeks to form a strong relationship with customers. According to Zethaml, Bitner and Gremler (2006) the reason many firms take this approach is because there is a realization that customers keep coming back. It, therefore, means that if a customer is treated well at the first time, there is a likelihood of their coming back the next time a company needs them. Product design is another vital component of IMC as it helps companies in understanding the kind of product to design. In the past, there was a tendency by companies to make products without firstly understanding the consumer needs. However, as Zethaml et al. (2006) noted, the importance of IMC is that it gives companies the guide on which product to develop and the methods to use. For instance, in the case of Smartphones, it became apparent that people’s tight schedules forced them have gadgets that could access internet without necessarily being heavy (Hey, Papay and Gyuri 2014). As a result, companies started developing easy-to-carry gadgets such as the tablets and Smartphones. The developing of such gadgets can and ought to be directed by customer needs and not anything else; this can only be the case if the company is in constant relationship with its clientele. Promotion comes in as an additional component of IMC and it is very essential to the brand being introduced or sold. This part involves firstly knowing the target group even before one launches the product. It is here that the company devises ways to advertise depending on the platforms used by a particular group (“What is IMC” 2014). For instance, the company analyses where young people are likely to be found and ensures advertisement is placed there. Even though the adverts will be targeting people in different age brackets, the message is the same as is the goal. It is highly recommended that a company first identify where people are likely to see adverts and ensure they are placed. Once advertisement are placed, the company has to be disciplined in tracking the promotions to assess which method is working and not. Many times companies request clients to leave a message indicating where they first heard about the product. Additionally, one could track as per mode of requests and sales being generated. The importance of tracking these sales is to improve or do away with the method that is least productive which consequently helps in saving money (Olof 2006) Leveraging is imperative when marketing because some platforms are weak and it is important to leverage. This could be done by purchasing a smaller space of advertisement in case it is a TV advert. Leverage could be easily done if the brand identity is strong, as is this case of Samsung. It was noted that companies whose brand name is household do not need to spend a lot in advertisement, as they are able to easily promote the products on various platforms (Gromark and Melin 2013). So far, the discussion has been about ensuring that all departments and people involved in marketing the product are on the same side in regard to the message to clients. This is the part known as synergy in the IMC and it is very important. Synergy works well with brand identity meaning that the brand is easily recognized firm various platforms. The importance of this step is that it helps in various things one of which is helping in publicizing the brand. The publicity of every brand is vital not just when it new but also in making sure it remains known in the market (Aula 2010) 3.0 Smartphone market environment review: It is no secret that the UK has a wide market for Smartphones evidenced by findings conducted in the recent times. Also, the fact that many companies – Nokia, Apple and Samsung- flock this country is a clear indication that the market exists. As a matter of fact, BBC (2011) reported that 58% of UK residents do own Smartphones. Surprisingly, it is not just the adults who are owners of these gadgets. It was revealed that young people as well do have them. For instance, over 60% of the teenagers do use Smartphones but it was not ascertained if they owned or simply used. Even though this number uses Smartphones for varied reasons, the point is that the UK provides companies like Samsung with an opportunity to increase profitability. However, at this point, it is important to realize that despite this market, Samsung reported a 60% profit plummeting in October 2014 (BBC 2014). Analysts were divided on the reason for this loss but the majority of them felt that Apple’s new product, iPhone 6- was responsible for this (Woollaston 2014). Others felt that the Galaxy model of Samsung had not been marketed appropriately thus giving competitive an edge. Notwithstanding these varied opinions in regard to the cause of this, Meunier-Fitzhugh and Piercy (2011) noted that it is vital for a business to understand the market by analysing various things. First, the consumer behaviour is imperative as it helps a firm understand where customers are inclined which then enables the firm make gadgets that will suit the need. Secondly, the attitude clients have towards a particular product or firm is vital as it could make significant difference. To illustrate how vital attitude is in a business, the figures in US and UK showed some very interesting features about clients. Firstly, data obtained from the Consumer Intelligence Research Partners (CIPR) in US reported one out of every five people was leaving Samsung products for Apple’s iPhone. It went ahead to report that even though many first-time Smartphones customers went for Samsung brands, they later forsook them for Apple’s. Interestingly, the report showed that Apple’s devices are owned by particular class of people in the society with younger, more educated and richer people preferring Apple’s Smartphones to Samsung’s. People who held the Masters degrees and doctorates went for Apple’s Samsung and shunned Samsung (Woollaston 2013). While the above figures may be the true reflection of the situation on the ground, the important thing firstly understands why clients are behaving that way. For example, one ought to ask how comes first time clients would rather go for Samsung as opposed to Apple. There are number of things that may contribute this one being that clients are not well maintained at Samsung. Secondly, it could be that the experience they have with Samsung’s products is not unpleasant. Finally, the relationship between the company and the customer may be wanting thus giving competitors an advantage. Gustafsson, Johnson and Roos (2005) assert that in order for a company to remain both profitable and dominant in terms of brand name, the relationship with the customer ought to be concretely cemented. Consumer behaviour a while ago mentioned as another key driver in the change of customers and it is yet again evident in the same findings. Woollaston (2014) reported that between June 2012 and June 2013, “Apple took 33 per cent more customers away from Samsung” (p.3). Even though in the year 2011 it was the other way round, the year 2013 did not just see Samsung lose clients normally; it was worse because it was three times more the number they had taken away from Apple. Notwithstanding these seemingly negative facts on the ground, Samsung was the best in various areas including popularity. For instance, 20% of people buying Apple stated they had owned a Samsung Smartphone. Between Apple and Samsung, the latter was the most popular among those who had never bought it as well as current owners. Again, 37% of people currently owning other Samsung phones upgraded to higher models by the same company (Woollaston 2013). Apparently, one cannot simply overemphasize Apple because of consumer behaviour but Samsung cannot afford laxity either. Moreover, Samsung has overtaken Apple in terms of overall market share with Apple losing its grip to stand at 14%. During the same survey, respondents who owned Blackberry stated if they were to upgrade, their choice would be Apple. On the other hand, Nokia and HTC owners expressed their preferences as that of Samsung (Woollaston 2013). From these statistics, one could assert that the market in UK is somewhat affected by the attitudes and behaviours of customers. However, it is evident that both Apple and Samsung are the most preferred but Samsung has a better opportunity because of the popularity. The data also paints a society that has preferences and at the same time loyalty, because it was noted that many first time customers still retained their Samsung phones even after switching to Apple (BBC 2014). This review would insufficient without revealing some other interesting statistics from the UK market which could be pivotal to Samsung’s market dominance. Out of every six adults, two owned a Smartphone while in total at least 61% of all had these gadgets. This figure had risen from 51% the previous year meaning the UK market is a rapid one as far as Smartphones are concerned. The interesting part that could benefit Samsung is that it has been forecasted that by the year 2018 at least 78% of all residents will own Smartphones. Further, it was discovered that teenagers are among the highest group of people who used Smartphones for socializing (Ofcom 2014). Therefore, it means that there is a current market as well as a future one provided Samsung can assess and improve its IMC. 4.0 Analysis of Samsung strategies Up to now, this report has highlighted some of the issues bedevilling Samsung as far as the UK market is concerned. It has been proved that consumer behaviour as well as attitudes have significantly affected the sales in this company. Now, this section seeks to scrutinize the company’s strategies to analyse if they were to blame or whether it was just a marketing problem. By the time one is through with reading this section, information on approaches Samsung applies in terms of target audience, brand positioning and the selection of media will be evident. 4.1.0 Target audience Samsung’s products are usually meant for every group in the society and that explains the popularity the company has enjoyed. However, as indicated earlier, the attitudes in the society have changed with regard to how people view Apple. To many, owning an Apple gadget is viewed as an achievement and high class (Woollaston 2014). Clearly, one can see that Samsung had a disconnection with the clients if data collected in 2012 and 2013 is anything to go by. UK research firm, Juniper reported that Samsung had increased its shipment of Smartphones to around 68 million, which was a 34% portion of the total gadgets. In the last quarter of 2012, Samsung recorded 63 million sales, revenues increased by 17% while operating profit shot by 54%. Surprisingly, this occurred despite the company’s delay in launching the S4 Smartphone, which could have had adverse effects on the sales. Conversely, Apple was struggling at the time and even though the explanation offered due to the decline, the invention by Samsung caught Apple by surprise (Shaughnessy 2013). Clearly, these figures seem to underline the assertion that Samsung tends to be somewhat disconnected from its client immediately a sale has been made. The issue here is that the company fails in retaining, not winning clients. 4.1.1 Brand positioning The brand Samsung seeks to advertise and ensure it reaches as many people as possible is Samsung Galaxy S5 whose features are amazing. This brand is being promoted at a time when Apple’s iPhone 6 is also in the market. However, this is product that has different features which according to Hughes (2014) could be used to ensure extension of market dominion. However, the iPhone 6 has its features, which could rival Samsung in the market (Johnson 2014) thus the need to create a better way to counter this competition. The current IMC is not strong because as much as it normally attracts new buyers it has a problem retaining them. Giachetti (2013) stated that since the mobile industry has become pretty competitive, the firm that tends to create the best IMC and monitor it has the higher chances of maintaining profitability. 4.1.2 Media selected by Samsung Normally, Samsung utilizes various platforms for marketing its products one of which is the website. Additionally, the firm uses TVs, newspapers, affiliation and social media in its promotion but these needs to be improved. Whereas the current problem facing Samsung’s Smartphones sales may not be attributed to the media used, it is imperative to assign individuals to manage each platform as per the agreement on the IMC. The key thing is to understand the marketing foundation and how to maintain as this is one way to win and retain clients. Instead of simply focused on making sales the day of launching, it is vital to ensure that firms have solidified their relationships with the customers (Pride and Ferrell 2014) 5.0 Recommendations and Conclusions In order for Samsung to sell Galaxy S5 and witness long-lasting profitability, it has to go beyond making sales. It has been concretely proved that the firm’s IMC has deficiency in the sense that it is wanting in terms of customer retention. Yet, this is the key to remaining profitable in the long-rung (Rao and Klein 2013). Customer relationship is vital and it has to emphasized at Samsung which clearly not the case today. To do this, the company needs to have channels where customers can give their feedback after purchase. It is unfortunate that many long to have Samsung Smartphones but quickly change to a rival company. This explains there is something amiss that require urgent rectification especially now that this new product is being promoted. As Sharabi (2012) rightly put it, business reputation is important to every business as it plays a role in attracting or discouraging new buyers. In conclusion, Samsung’s popularity in the market could be the deceiving factor because while there are a large number of people expressing preference on their products the profitability is not as much. Again, the fact that people are always desiring their products but shunning them as soon they buy means the issue is either the relationship or the gadget. In order to overcome all these hurdles which could give the rival companies an advantage, the company ought to create a strong IMC. A good IMC will not only make sure the brand is well received; it will have a booming increase on the sales. Apparently, Samsung has been conducting this part pretty well but the main concern lies, again, in the after-sales. The company’s questions before this report were, why are the sales plummeting despite the market share and popularity? 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