marketing plan for samsung smart phone 2012 2015

By doing a 3600 marketing plan with efficiency and professionalism, Samsung smart phone will get the purpose to become a beloved smart phone brand and leader position in Vietnam market..

MBMM4

PHAN ANH KIET

MARKETING PLAN FOR SAMSUNG

SMART PHONE 2012-2015

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Prof Dr LE NGUYEN HAU

Ho Chi Minh City (2011)

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBMM4

I undertake that this is the project of my own Figures and result which are

mentioned in this project are righteous

Project Author

PHAN ANH KIET

I owe a debt of gratitude to many people who helped me complete this thesis I would like to acknowledge the help of all First of all I would like to

express my deepest acknowledgement to my supervisor, Prof Dr Le Nguyen Hau from Ho Chi Minh City University of Technology (HCMUT), for his valuable advice and recommendations

In the process of data collection for this research, many people contributed

to the task and I am particularly grateful for their contributions I am greatly indebted to Mr Lee HyungAhn, Mr Thai Manh Binh, Mr Ly Thai Bao, and Mrs Dang Thi Hoai An, Mr Pham Ky Vien for providing advices and resources for me

to fulfill my study

Special thanks are expressed to all professors from Solvay Business School and Ho Chi Minh City Open University as well as my classmates for their supports via lectures, discussions, debates, comments and feedbacks throughout my all

Master programs

Finally, to my parents and my wife, I wish to extend my loving thanks for their encouragement My greatest debt of gratitude is to my wife, Mrs Truong Pham Bang Phu, who was patiently waiting me during my study in Ho Chi Minh city This course could not have been completed without her daily encouragement

EXECUTIVE SUMMARY

With the advanced technology, smart phone gradually becomes smart tool to help users a lot in normal life Smart phone provide convenience, connection and entertainment which enable its users to perform various activities with it every time and everywhere including Value Added Services like Internet, 3G, GPS, Vietmap, etc…

This marketing plan illustrates Samsung smart phone getting customers and creating a solid revenue stream Our unique focus of creating smart phones with a differentiate products gives us an advantage compared to competitors Samsung tries to give customers a maximum satisfaction with the best product quality and services In addition, Samsung tried to please its distributors and retailers in developing long term benefit business with slogan “win to win”

By analyzing SWOT of Samsung smart phone, it helps understand Samsung strengths and weaknesses to develop own marketing strategy plan In the first two years, the project focuses on building brand awareness and increasing sales volume by flexible The market penetration strategies and “deeper and wider” channel expansion are action plans in next three years The marketing plan is fixed through marketing mix strategy including Products, Price, Place, and Promotion

By doing a 3600 marketing plan with efficiency and professionalism, Samsung smart phone will get the purpose to become a beloved smart phone brand and leader position in Vietnam market

TABLE OF CONTENTS

Abbreviations And Acronyms

Tables, Chart & Figures

CHAPTER III MARKETING PLAN 2012-2015 FOR SAMSUNG

SMART PHONE AND ACTION PLAN

ABBREVIATIONS AND ACRONNYMS

provides market share, market information among consumer electronic industry

Samsung products at retailer/shop

products follow guideline and can train for floor salesman

at retailer

APPENDIX, TABLES, CHARTS & FIGURES

APPENDIX

Appendix 1: Vietnam’s GDP from 2002 to 2010 31

Appendix 2: Vietnam’s CPI from 2000 to 2010 31 Appendix 3: Percentage of mobile users with a smart phone 32

Appendix 4: Channel comparison between traditional shop and

modern trade

33

Appendix 5: Comparison customer using smart phone and non-smart

Appendix 10: Key USPs of Samsung smart phone line up 37

TABLE

Table 3.1: Estimated plan sales of smart phone on Jan 2012 21 Table 3.2: Estimated plan sales of smart phone on Dec 2015 22 Table 3.3.5: Estimated budget allocation first 3 months of 2012 27 Table 3.3.6: The marketing budget can be spent maximum in theory 28

Figure 2.2 Technology household penetration 10

CHAPTER I INTRODUCTION 1.1 Background

Technology is growing fast in the world The mobile phone is not only a necessity

at this time but also a want among the people, especially smart phone The next few years will show that more and more people will be purchasing smart phones Today customers expect more choices, benefits to meet their demands

In year 2010, Vietnam mobile phone is quite noisily at growth rate 25% versus year 2009 However, the competition is also fierce Mobile phone becomes a fast moving consumer goods model in the world The retail chain stores develop strongly, especially

in two main cities Ha Noi and Ho Chi Minh City with professional service, selling consulting and value added service providing

Together with the success in 2009 at turnover‘s growth rate around 50%, in 2010 year, Samsung Vina continued successfully to increase mobile phone to 13.1% market share (as data from GFK 01/2011) Contributing to this achievement is smart phone line

up models which accounting for 60% market share It will be foreseen that in 2011 will

be a noisy year after global crisis The purchasing power of smart phone will increase higher The smart phone market competition is also stronger Hi-end and medium smart phone segment will increase faster

1.2 Samsung Introduction:

1.2.1 Samsung Electronics Co., Ltd.:

Samsung Electronics Co., Ltd is the chief subsidiary of South Korea's giant Samsung Group and one of the largest electronics producers in Asia Products built by Samsung Electronics include televisions and many other kinds of home appliances, telecommunications equipment, and computers Its most important product is semiconductors

Samsung Electronics was created in 1969 The division's first product was a small and simple black-and-white television that it began selling in the early 1970s

The digital age has brought revolutionary change – and opportunity – to global business, and Samsung has responded with advanced technologies, competitive products, and constant innovation

Samsung commitment to being the world's best has won us the No.1 global market share for 13 of our products, including semiconductors, TFT-LCDs, monitors and CDMA mobile phones At Samsung, we see every challenge as an opportunity and believe we are perfectly positioned as one of the world's recognized leaders in the digital technology industry

1.2.2 Samsung Vina Electronics Co., Ltd.:

Samsung Vina was a joint venture between Samsung Electronics Co., Ltd (Korea) and TIE joint stock Co., (Vietnam) from 15th Sep 1994 Up to 2002, Samsung mobile phone started selling at Vietnam market Samsung mobile phone ranked 2nd market share from 2007 to now

Although business environment still affected by global financial crisis, this achievement was the proof for continuously efforts of Samsung employees including in Vietnam Samsung is one of the beloved brands with the most famous electronics products such as 1st market share LCD television, LCD monitor and side-by-side refrigerator Its frequent customers are from low to middle income, and its brand is well-known for reliable and quality goods and services at reasonable price Mobile phone is one of the products contribute 45% total turnover (Source: Samsung internal report), achieved 13.1 % market share by quantity in Jan 2011 (Source: GFK Jan 2011) The mission of Samsung mobile phone is try to narrow big gap with Nokia in which smart phone tries to achieve number one market share

1.3 Problem statement

Vietnam mobile phone market in 2010 achieved 1.2bil USD, increased by 20% versus 2009 year in which smart phone’s market size accounted for 15% by quantity and 40% by amount (Source: Mobile Review)

The Vietnam phone market has more and more competition among top 3 brands like Nokia, Samsung and LG The gap of market share by quantity between Nokia and Samsung is 37.6 %, and smart phone is 56.8% (as GFK Jan 2011) According to Mr Thai Manh Binh, in charge of public relation of Samsung, 70% Samsung mobile phone sales volume came from low end models which Samsung portfolio is zero amounts Segment under 70 USD is main market that Samsung does not have to compete with Nokia and other brands

Thus, to keep its position in the Vietnam mobile phone market, Samsung has to develop on smart phone segment or Samsung needs to change its strategy concerning low end models business in traditional channel The following questions need to be addressed:

1 What are the opportunities, threats, strengths, and weaknesses of Samsung smart phone to utilize more customers in Vietnam market?

2 What need to do for marketing plan to achieve the first position of smart phone market share in Vietnam?

1.4 Objective:

The objective of this study is to develop a marketing plan to increase market share for Samsung smart phone and to reinforce channel expansion

1.5 Scope of works:

This project applies from 2012 to 2015 with geographic scope in Vietnam

The project only applies for smart phone

1.6 Method:

The framework analysis of marketing planning process of Phillip Kolter, the marketing plan will base on 5 steps Beginning with SLEPT model, external environment analysis will find out the opportunities and threats Internal analysis will give us competitive advantage to receive strengths and weakness Then, SWOT will be found After fixing the marketing targets and strategies, the project will come to marketing mix analysis The last step is marketing controlling (Source: Philip Kotler)

1.7 Structure of study:

The structure of the study is as follows:

The first chapter presents the overall introduction of the study including overall background, company description, problem statement, objectives, and scope of works, methodology and structure of the study The second chapter analyzes in depth of current situation of business environment, market analysis, competitor analysis and organization assets and skills in Vietnam that helps identify opportunities and threats for the Samsung mobile phone in general, and then point out strengths and weaknesses in particular A marketing plan 2012-2015 and action plan for Samsung as well as marketing programs is presented in Chapter 3 Last but not least, the conclusion Chapter will grasp what is analyzed and discussed in the study and make final conclusion on the topic

CHAPTER II ENVIRONMENTAL ANALYSIS 2.1 External environment factors: 2.1.1 Macro level: SLEPT Model Analysis

There are many factors in the macro-environment that will impact on Samsung

and its marketing strategy for smart phone products These factors include Social, Legal,

Economic, Political, Technological factors (SLEPT)

Social factors:

With the population of over 86.93 million people, 2/3 of which are under 30 years

old and 70.1% people lives in provinces (Source: General Statistic Office), Vietnam has

enormous young human resource The country records in continued improvement in key

human development indicators such as high literacy rates of above 90% education, health

improvement, life expectancy, and impressive poverty reduction The workforce is

highly motivated, adaptable and has strong work ethic

Figure 2.1: Vietnam Population Pyramid (Source: GSO 2009, TNS analysis)

In 2009 population structure, there are 55.6 million people age 20+, account for

65% of population There will be 17 million new and young customers enter into the

market in the next ten years Vietnam’s future consumer is huge This is an opportunity

for Samsung to have more consumers buying Samsung smart phones

Legal factors:

Implementation of Resolution No 02/NQ-CP on key measures of direction and implementation plans for economic - society development in 2011, the State Bank of Vietnam (SBV) has decided to adjust official exchange rate (the average exchange rate inter-bank) applied on 11th Feb 2011 from 18,932 dong to 20,693 dong It should be stressed that a flexible exchange rate adjustment is a necessary and normal economic life

in the volatile market However, during the early and local levels, the adjusted rate may increase more or less the USD on the free market as well as increasing prices of goods and imported raw materials, thus production cost of enterprises was increased for

Electronics Company With such affect, this will be a threat for Samsung because all

materials have to import from oversea (Source: Vietnam Government Portal News)

Besides, in 2nd quarter of 2010, mobile phones have been included into imported limit group because it was imported rate was higher than the 1st quarter 2010, increased nearly 40% versus 2009 The Ministry of Trade has proposed to Ministry of Industry to put mobile phones into groups of products subject to excise tax However, up to now,

entrepreneurs still consider as an issue which they have to take care first This is also a

threat that Samsung has to pay attention to its business

So, there are two threats Samsung smart phones have to take care concerning

exchange rate adjustment and new tax regulation of Ministry of Industry

Economic factors:

Vietnam economic condition has a stable growth since 2002 year, emerging as a major financial hub in the region with strong and consistent growth over 8% during 2005-

2007 and sliding 6.23% in 2008, 5.23% in 2009 due to the global financial crisis

According to estimation of General Statistic Office, in 2010, GDP growth is 6.78% This

is an opportunity to prove that Vietnam economics gradually recover after crisis

Customer earns more money and then expenditure will be increased more

However, everything still depends on the ability inflation and the inflation rate of Vietnam dong, especially the surge in gold and the dollar in recent times Besides, while gold and dollar prices are racing such information on major price adjustment in electricity, water, oil and gasoline as well as concerns about food price situation will

increase to lead to a deluge (Source: The Saigontimes) Due to soar consumer price,

consumer confidence has been getting worse, including smart phone

With the above economic situations, there are both opportunity and threat to

affect smart phone business environment

Political factors:

Vietnam is one of South-East Asia's fastest growing economies Vietnam became

a WTO member since 11th Jan 2007 This creates many opportunities to attract more capital, goods and services on the world market The government will continue to make favorable conditions as international commitment

In 2011, as taxation reduction roadmap, electronics group and accessories

decreased from 1-3% compared to 2010 tariff (Source: Samsung internal report) This is

an opportunity because it helps electronics companies have good price compared to

previous year

Besides, on 28th Oct 2009, the Prime Minister Nguyen Tan Dung participated into the opening ceremony of a new mobile phone factory of Samsung Electronics Co., Ltd in the province of Bac Ninh, Vietnam Samsung tried to make great efforts in the mobile sector in general and in smart phone in particular

This will creates opportunities for Samsung in export and its competitive

advantages concerning taxation and dollar reservation

Technological factors:

Mobile phone is one of the intelligent products which affected the most by development of technology in the world That is operating system such as Android, Windows Mobile, or RIM Samsung knows very clearly and does not want to depend on other operating system suppliers by developing Bada operating system This operating

system will be applied for Samsung smart phones This is an advantage for Samsung

smart phone

Furthermore, in 2010, CNN has chosen the top hottest technology trends (Source:

Thanhnien Online) Facebook becomes, year of the Facebook, one of the most famous

social networks on the world Facebook became the subject of Hollywood film “The Social Network” with revenue of more than 90mil USD Times magazine awarded

“Person of the Year” for CEO and founder Mark Zuckerberg More than half a billion of

people participates in this social site This is a good chance for mobile phone

manufacture to integrate social network tool in its mobile phone

Thus, technological changes can affect to manufacturers Samsung has

opportunities to apply both common technology and Bada technology which Samsung

has to lead to innovation So strong customer demand is for innovative smart phone

2.2 Market Analysis

According to GFK, research in Jan 2011, the market size of mobile phone is around 12,383 mil sets/year in 2010, value about VND 22,946 billion Smart phones account for 9% total mobile phone market size for both hi-end and middle-end ones The future trend of smart phones will be a strategic product in next few years Smartphone is a trend of young consumers in the world in general and Vietnam in particular The reason is that the price of the smart phone decreased a lot within 6 years at 50% The smart phone currently integrates a lot of connective technologies like wifi, 3G third generations of integrated social networks and new applications to satisfy user

demand and new technological discovery of life Smart phone is being positioned as a

“mobile life” tool for business men and stylist young people Smart phone becomes more and more popular with many new applications have been applied so far.All things will be

"infrastructure" to develop properly the smart phone trend Thus, smart phone market is

in developing

Figure 2.2: Technology household penetration

(Source: Samsung internal report)

As chart above, the market characteristics of “technology household penetration”

of urban Vietnam is ready for digital marketing with 94% people owned smart phone in urban while in rural there is only 64% For detail, in Vietnam there are 10% people using smart phones in 2010 year versus 6% in 2009 year, 14 male versus 7 female

This is an opportunities for Samsung focus on smart phone easily because people

understand clearly what is mobile phone’s usage, how does it operate?

About distribution channel, there is the electronic purchasing movement from

traditional channel to modern trade channel in big cities However, the local independent shops are still more popular in country side

Online channel is still few as Vietnamese do not use to buy on internet and the Vietnam e-bank is not develop but there are a large number of youths like to search

information of mobile phone by internet So, threat of smart phone can be this issue

Technology household penetration

Non authority products are very popular in Vietnam, they are imported by

smugglers So that is one of threatens for authority mobile phone in which has smart

phone

As appendix 4, this is comparison between two key channels on the Vietnam market Total mobile phone universal market is around 6,287 shops in which organized

channel is 527 shops and independent channel is 5,760 shops (Source: Samsung internal

report) This gives opportunities of market, dealers for Samsung smart phone

For the weighted coverage between Nokia and Samsung showed a decrease trend and big gap

Product Brand 8-Dec 9-Dec 10-Jan FEB MAR APR MAY JUN JUL AUG SEP OCT

HHP Total Samsung 97 97 95 96 97 95 95 94 89 88 89 84

Smart phone Samsung 61 46 53 55 48 55 49 49 51 54 61 60

In smart phone segment, Nokia has good channel and relationship with its

distribution network It is difficulties for Samsung to approach dealer network to

encourage dealer business with Samsung smart phone

Besides, mobile phone retailers have 3 groups First of all, big group accounts for

around 30% market share with 10 stores up for each big retailer like Vien Thong A, The Gioi Di Dong, Phuoc Lap Mobile, Viettel, FPT and both Petrosetco and Nguyen Kim- key distributors of common electronics Secondly, for smaller stores with about 10% market share, there are such as Mai Nguyen Mobido (4 stores in Hochiminh), Nhat Cuong (4 stores in Hanoi) The remains market share is for small retailers or shops This

is one of the difficulties because big retailer will be threats in negotiation for Samsung

when Samsung discusses sales policy and support amount

Furthermore, MobiFone, Vinaphone and Vietnamobile are key telecommunication

providers in major in Vietnam It creates opportunities if Samsung smart phone applies

some cooperation promotion

As appendix 5, in-depth interview for market research which is using smart phone and non-smart phone which in customer characteristics, there are key perceptions toward

smart phones The key triggers impacting on smart phone purchase are high speed

internet connection and the ability to download applications Especially, while having

some awareness, operating systems are not key points of differentiation in terms of

Samsung smart phones have a lot of opportunities due to popularity of mobile

phone users, then user will be easy to switch upgrade to smart phone Besides, key telecommunication providers cooperate with Samsung in doing promotion programs

However, there are also many threats which Samsung has to overcome with the

its strong retailers, more and more customer demand

2.3 Competitors Analysis:

The purpose is to develop an understanding of the competitive environment in which the organization will operate in the market At mobile phone market, there are a lot top brands participate in For direct competitor, there are Nokia, Apple, LG, Sony Ericson For the Chinese brand and local name are F-Mobile, Q-Mobile, Mobell, Avio, HTC, etc

But in the smart phone market, the current market leader is Nokia with 69% by quantity Next positions are Samsung (12.5%), Apple (8%), LG (5.2%) respectively, etc

Figure 2.3: Smartphone market share Jan’11 (Source: GFK Jan 2011)

Now, Nokia is the most important brand which Samsung has to focus on There is

analysis between Nokia and Samsung to have more understanding Then some strengths

and weaknesses that Samsung have to know to increase in next future

Samsung smart phone’s opportunities include good design, nice screen color, and

reasonable price Samsung smart phone is a well-know brand name

For brand health check in appendix 7, Samsung has been gaining in

recommendation rate, on the way back to kick time at the expense of Nokia However,

LG and Q-Mobile are increasing in this index, the gap is still big It gives a weakness in

Samsung brand

Samsung shows noticeable increase from last year and threatens leading brand,

Nokia, in terms of unaided awareness As for the brand preference, Nokia shows increase

and consolidates its position as a leader in mobile phone market while Samsung is

decrease from last year

For in appendix 8 about brand preferred, Samsung still has big gap with Nokia in

young customer segment and high income

Furthermore, at the signing ceremony in the evening of March 2nd 2011,

representatives of Vietnam Government and Nokia inked a Memoranda of Understanding

to prepare for establishing and taking Nokia mobile phone making plant into operation in

2012 As the estimation, total investment capital for this plant is about 200 million euro and will increase following time This new plant of Nokia will contribute to expanding its network to 11 plants on the global market The target of this investment is bringing the

wonderful experience on modern mobile phone to all clients on global (Source:

Thanhnien) This factory is threat that Samsung factory will face in the future

2.4 Internal Analysis

What is smart phone

• As mobile phone stretching its functions beyond merely call and text, people

are getting more dependent to it, especially for smart phone users

• Smart phones provide convenience which enable its users to perform various

activities everytime and everywhere

• Strength:

• Durable (not easy broken

even the phone fallen down)

• Not good design

• Old operating system

• Resell value is low

• Smart phone is defined by its technology and features It uses the latest

technology and has most extensive features Its sophistication projects prestige which has to be reflected in its design

• The appearance would include everything that meets the eyes first time : shape, color (black, white and sliver) and design

• Touch screen makes smart phone looks cool and premium

However, care has to be taken on handling concerns over its downside This is especially on typing difficulty since people do it constantly

Additionally, Samsung is young smart phone manufacturer in Vietnam Vietnamese has loyalty in each brand which they used Operating system of Samsung, Bada has just developed, so customers need time to test and feel

Samsung Vina operation:

Samsung Vina was joint venture between Samsung Electronics Co., (Korea) and TIE joint stock Co., (Vietnam) from 15 Sep 1994 Up to 2002, Samsung mobile phone started selling at Vietnam market Total employee is 684 people including 670 Vietnamese and 14 Korean Samsung have one factory in Thu Duc District, Ho Chi Minh city and 4 sales offices including Ha Noi, Da Nang, Ho Chi Minh City (District 1) and Can Tho city After 16 years in Vietnam, Samsung Vina contributed a lot of remarkable records number one LCD television market share, the best LCD Monitor in 12 successive years, Certificate from Prime Minister in attracting foreign investment in Hochiminh, Certificate from Ministry of Health for remarkable contribution to innate heart patients Especially, on 28 Oct 2009, at Yen Phong industrial zone, Bac Ninh province, Samsung Electronics Vietnam opened with 2,300 employees and has produced 1.5 mil sets/month capacity The plant installed new equipment, application of modern technology today By 2012, it is expected the plant will provide 100 mil products each year, attracting over 10,000 workers and exports reach 4.5bil USD (Source: Samsung internal report)