SAMSUNG ELECTRONICS CO., LTD. AND GALAXY S5 UK 2015 MARKETING MIX AND PROMOTIONAL MIX

REPORT ON MARKETING MIX AND PROMOTIONAL MIX OF (SAMSUNG ELECTRONICS CO., LTD. AND GALAXY S5 UK 2015)

For this particular report I will be conducting my research based on the Samsung Galaxy S5 smartphone manufactured by Samsung Electronics Co., Ltd. For this particular product I will be assessing the marketing mix used by this product covering information about price strategy, product, place and promotion. In addition to the marketing mix I will describe the purpose of each element of the promotional mix including advertising, sales promotion, personal selling and public relations. Furthermore, I will explain the importance of selecting an appropriate promotional mix as well as evaluate how effective the branding is for the Samsung Galaxy S5 product.

The purpose of this report is for general or academic use by interested members of the public or students creating an accurate research and report on Marketing Mix, Market Segmentation & Promotional Mix.

Samsung Galaxy S5

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Marketing Mix for Samsung Galaxy S5
Marketing mix refers to a set of actions and methods that businesses uses to promote their branded products or services in the market. These actions can be categorized in four different areas such as the four Ps which refers to the Price, Product, Place and the Promotion of a product.

Product - A product exists within a life cycle which can vary in length depending on the efforts of the business, the quality of the product, the public preference and perception of the product etc. The product life cycle is composed of the development/introduction stage where a product is being developed and then introduced into the market. At this stage costs are high and revenue is very low to none. Growth is the stage where a product is being increasingly demanded and therefore supply increases in turn as a result of a successful launch. At this stage revenue is increasing and costs may decrease depending on the speed and success of growth. When the product reaches the Maturity stage, sales growth slows down however, customers become loyal at this stage. A product is finally reaching the Decline stage where the market is saturated and sales decrease if sales decrease significantly the business has the choice of implementing an Extension Strategy. An extension strategy is a way of increasing the life of a product by either recreating its image or quality.

Samsung Galaxy S5 uses the latest technology available in order to increase its performance which will lead to an increase in its quality. The Galaxy S5 is known for its outstanding quality which outperforms other competitive smartphones, excluding the Apple iPhone which is Samsung’s highest competitor. The design if this product proves to be highly innovative and also useful, not just for aesthetic purposes.

The Unique Selling point (USP) of Galaxy S5 is that the smartphone has the first built in heart rate sensor which enables customers to view their fitness performance in real time with their smartphone. The GalaxyS5 is also waterproof using IP67 Water & Dust Resistant technology which is different than all the other smartphones. It also provides the highest level of security protection using the lasts version of Knox which is a Samsung brand offering a trusted mobile security, management and productivity solution for work and play.

Samsung Galaxy S5 comes with a number of Augmented Products such as the Samsung Gear 2 which is a smart watch that can only function with the Galaxy smartphone in order to answer calls, receive texts and notifications on the watch.

Price - Samsung uses a limited range of price strategies for the Galaxy S5 smartphone however, the most popular strategy is Price Skimming. Samsung relies on their established popularity for their products as having highly performant smartphones situated among the top technology companies. This enabled Samsung to gain increased brand loyalty and consideration which generates high demand for their newly released products.

For this purpose Samsung charges the highest initial price that customers are willing to pay for the Samsung S5. As the demand of the first customers is completely satisfied, Samsung lowers the price of this product in order to access the potential customers who are price sensitive. This way Samsung can reach as much part of the market as possible and maximize their revenue.

Place - Samsung is operating worldwide and in the United Kingdom they have established themselves in a wide range of modern retailers. Samsung access its customers through indirect distribution channels using major mobile phone and electronics retailers such as Carphone Warehouse, Currys PC World, Argos, Sainsbury’s, O2, and EE etc. These retailers advertise the Galaxy S5 through large posters inside and outside the stores, as well as putting the smartphones on display for the public to physically see and try the device; customers can purchase the smartphones in stores after trying it.

Samsung also sells its Galaxy S5 through their online store which can be found on their official website as well as in their high street stores; one of these Samsung stores is located in Oxford Street, London which is a very well chosen location with a very good economy. These direct channels of distribution can be very effective customers can purchase the Galaxy S5 directly from Samsung saving extra costs and time.

Promotion - Samsung promotes its Galaxy S5 mainly through Push and Pull tactics. This refers to the action of advertising their product through above-the-line advertising such as television, newspaper and radio advertising. When this is carried out, the company pushes the message towards the consumers without the possibility of directly communicating together. The consumers are being informed about the product and in many cases they can be influenced towards buying the product. Pulling is when the advertising worked and consumers demands the product. In this case, the company can communicate directly with the consumers in order to make the purchase.

Samsung’s advertising campaign also consists of street, buses and other outdoor advertising methods. Samsung is also sponsoring the Premier League football club Chelsea, is featured in magazines and articles, advertising in store of retailers etc.

Commercial on Samsung Galaxy S5 waterproof feature

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Promotional Mix for Samsung Galaxy S5

Advertising – Samsung will spend 5.4% of their annual revenue on advertising and promotion which is more than the top 20 most countries (£8.5 billion). Samsung’s Galaxy S5 (as well as other Samsung products) is often featured on television, newspapers and outdoors such as on buses, bus stops and building walls. In their television advertising, Samsung attempts to inform the public of their Samsung Galaxy S5 through a television advertising which shows its new features, great design and usefulness.

Price Promotion – The price promotion refers to offers created by reducing the price for a certain period of time or if customers meet a specific criteria such as being a student. This form of sales promotion is most beneficial for B2B markets where businesses can buy in bulk and receive certain discounts depending on the amount of products bought (the larger the amount, the bigger the discount). Samsung don’t offer discounts directly to customers however, they do offer price reductions to wholesalers or retailers when buying in bulk. Then, the retailers can offer their own price promotion to students or loyal customers depending on their business strategy.

Coupons – This is a highly popular form of price promotion where businesses offer gift cards, and tickets which can enable customers to purchase products at discounts or even for free. These coupons are often given to customers when purchasing a product, when winning promotional competitions or for being loyal customers making repetitive purchases.
Samsung don’t offer coupons for their smartphones or for their accessories therefore the Samsung Galaxy S5 doesn’t come with coupon promotions. However, Samsung does offer coupon promotions for smartphone accessories and other devices and electronics.

Money Refunds – The money refunds scheme refers to the return of a portion of a product’s cost over a period of time such as one year. As this might be popular for products such as cars and mobile phones, it is clear that Samsung does not seem to offer a cashback offer for its newest smartphone Galaxy S5 at this stage of the product life-cycle. However, as the Galaxy S5 will approach the stage of saturation where customers and the general public are very familiar with the product, Samsung might introduce money refunds schemes in order to attract more customers. Furthermore, Samsung have a different approach to pricing, as described above, which is to lower prices when the market becomes saturated.

Loyalty Incentives – Samsung does offer limited loyalty incentives to loyal customers however these incentives are not of a major value. The offers involve price discounts on accessories, price reductions for monthly payments such as the $5 monthly payment instead of the initial $20. The most common loyalty incentive is the ‘Upgrade’ deal where customers can upgrade their smartphone deal with a different one for the same price and oftentimes even less at the end of their contract.

Samsung can rely on their store representatives located in their Samsung stores across the world (one located in Oxford Street, London) to deliver great face to face sales to interested potential customers.

Telephone – Samsung conducts part of their B2B sales through the telephone in order to provide technology retailers with its latest devices including the Samsung Galaxy S5. This often saves the company time and effort when making a deal.

Public Relations – Public relations is when businesses carry out activities to reach customers that does not involve paying for media companies for advertising. However, the main point public relations activities is to attract as much attention from the general public, as well as from the media without paying for it directly or paying a significant amount of money. When carrying out public relation activities, businesses get involved with the public and also generate interest from others.
Although this promotional method might sound extremely effective, it has its own negative effects.

Businesses using this method might not have any control over the message that the public receives. Therefore, the intended message might not be transmitted or perceived by the public as the business intends with little control over what the media is going to publish about a business public relations activity. There are numerous of public relations activities that business can conduct such as:

Exhibitions – An exhibition is an event where one or more businesses and entrepreneurs gather together to display their latest products. At exhibitions businesses have the chance to present their product to potential customers, retailers, entrepreneurs etc.
Samsung does attend to annual exhibitions such as the Samsung stand at the IFSEC Exhibition, Design, Build & Project Management where Samsung displays its latest products however, Samsung displays very little their Galaxy smartphones.

Sponsorship – Samsung is well-known for their sponsorship of the Premier League football club Chelsea where Samsung is currently paying Chelsea an estimated $16 million a year shirt deal. Therefore, every Chelsea football shirt has the Samsung brand printed on the chest. This means that every time the football team makes an appearance on the stadium, Samsung is advertised in front of millions of people. However, the sponsorship deal is due to be terminated in the upcoming season as Chelsea is demanding a total of $32 million per season which Samsung denied.

Jose Mourinho (left) and Chief Executive Peter Kenyon 2005

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Press Releases – The press releases can be very beneficial for businesses as it can draw significant attention and recognition from the public avoiding extreme costs. Press releases involve writing statements about a new product or about the business that media companies can use in their news articles. Newspaper companies can include a business statement if it is relevant with the article they are publishing.
Samsung releases numerous press releases a year dedicated to their latest products and company events. For example, when Samsung unveiled their Galaxy S smartphone in Barcelona, Spain, February 24, 2014, the company has released press releases regarding the device and the accessories that accompany the smartphone. The Galaxy S5 was featured on numerous technology websites, informing the public that the device is available for purchase, its aspects and what it can do. (Link can be found at references)

However, Samsung as a technology company also arranges inauguration events for their latest products where they unveil the product to the world. For example, when Galaxy S5 was unveiled in Barcelona, Samsung had an audience composed of technology experts, technology critics, media and also the general public who could watch the inauguration through a live stream on the internet. This can draw major attention from the public if the company created enough interest before the unveiling of the product through their marketing dexterity.

Samsung Galaxy S5 unveiling February 2014

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Importance of Promotional Mix for (Samsung Galaxy S5)

It is highly important to choose an appropriate promotional mix for a specific product or range of products. The promotional mix can decide whether a brand will be successful and therefore generate sales or not and this is why it should be crafted very carefully. The promotional mix can decide whether a brand is being acknowledged and chosen by the public in order to generate sales. A successful promotional mix can also convince and influence the audience to purchase specific products and to even remain loyal customers.

Relevance of Market – Samsung targets its Galaxy S5 mainly to consumers which makes this product a B2C item. The relevance of this type of market is greatly appropriate as the consumers that the smartphone is targeted at are the general public such as teenagers, students, parents, business people etc. Consumers are interested in the benefits and the design of the Galaxy S5 which Samsung proudly presents. Whether an individual that is an entrepreneur chooses to use the Galaxy S5 for business purposes does not change the market type that the product is categorized in.

Market Segmentation – This is the action of identifying and targeting groups of people with similar interests and characteristics in order to improve the process of matching a product with specific groups of people in order to fit their needs and character. Market Segmentation benefits businesses as it allows money to be spent more efficiently and to increase the chances of the product to be purchased by people in the targeted segment of the market.

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Lifestyle - The Samsung Galaxy S5 smartphone is targeted at consumers based on their lifestyle as the product inspires fitness and wellbeing through the built in heart rate sensor and the fitness programme integrated in the smartphone’s software. Samsung highly focuses on this feature of the smartphone as a unique selling point but to also sell their smart watch through which the smartphone can record the heart rate of the consumer.

Income – This product can be considered as highly expensive by the average public as a result of Samsung’s pricing strategy which demands high prices for their most demanded products. Therefore, the Galaxy S5 is targeted to the working class which can generate enough disposable income to pay for the product. However, retailers such as Carphone Wahrehouse offer the Galaxy S5 with deals combining telephone networks with the smartphone which is paid for every month. This enables consumers with lower income to purchase the smartphone together with the network bundle at an affordable monthly rate for example, £28 per month.

Attitude - The Galaxy S5 is also targeted at consumers with the attitude of spending significant amounts of time on their smartphone as the increased battery life and the ultra-power saving feature of this smartphone enables consumers to carry out their daily activities on the smartphone for longer.

The smartphone also satisfies consumers who carry out complex tasks on their smartphone such as creating Excel spreadsheets, composing business emails or using other complex applications and features. The reason for this is that the Galaxy S5 has an improved processor which allows applications and features to run at an increased speed and performance efficiency.

However, Samsung seems to be targeting the Galaxy S5 to the market who prefers Design, Speed of Connectivity, Camera and Fitness which shows that the public attitude regarding smartphones are directed towards practicality and eye catching features.

Samsung Galaxy S5 exhibition

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Strengths and Weaknesses of Promotional Mix

Attention/Attract & Interest – As our environment becomes more crowded with media-filled factors, businesses have to deliver a greater effort in attracting the attention of consumers. Samsung attracts consumer’s attention through large advertisements as well as television advertising. However, this process is highly costly and at times the highly expensive advertisements can go unnoticed by the public. Samsung gains the public’s interest by appealing to their needs and wants promoting their great smartphone performance and design. Using personal selling in stores, Samsung representatives gain the interest of potential consumers by talking about their latest products and using persuasive verbal and body language to keep the potential consumers interested.

Desire & Action – The Galaxy S5 is highly desired by consumers as the smartphone proves to be one of the leading smartphone devices in the world with high hardware and software performance and great design. Samsung’s significant advertising creates high awareness and interest from the general public worldwide imprinting its brand image in the minds of consumers. Samsung is very clear when guiding customers towards taking action (purchasing their products) through adverts and through their store representatives.

Effectiveness of Branded Product
The findings described in this report are based on fully functional promotional strategies which have generated Samsung 200 million customers worldwide. This means that Samsung successfully managed to create significant public awareness of their Galaxy S5 through above-the-line advertising and to also convince the public to purchase this product. The success of Samsung’s advertising campaigns is based on the large amount of capital invested for this particular area of their promotional mix.

Samsung is a well know public relations Company with sponsorship of football teams such as Chelsea and other events such as technology exhibitions, concerts etc. This shows that the company does become involved in social events and sports, where they have the chance of showing their brand to the world. Sponsoring a football team has been very beneficial for Samsung as Chelsea team play in football matches in multiple countries and they are watched by millions of people at home and on the stadium. Samsung has managed to become a major player within the technology industry with its smartphones being demanded by 200 million customers around the world. They manage to maintain their position within the market with spectacular inaugurations after lengthy moments of suspense and speculation and expectation regarding a specific product.

Samsung strives to meet customer needs, wants and expectations by conducting thorough market research and identifying exactly what the market wants. Therefore, based on these findings Samsung shapes their products to fit the majority of market needs and wants and this is where their target market is born. For example, the Samsung Galaxy S5 is aimed towards design, speed, camera and fitness which what the majority of the market prefers and expects from a smartphone.
Samsung has managed to communicate to their target market by finding out what the market is and what they want and as a result of this, Samsung has managed to deliver what the market demands.

Samsung developed their advertising campaign successfully with a mixture of advertising methods such as television advertising, newspaper and ambient advertising. As the company invests a significant amount of money into advertising their products, this also means that they create an increased level of awareness worldwide. Samsung chose and manages this promotional tool successfully as it generates customer awareness and it also influences customers to purchase their products as well as informing the public about what the product is and what it does.

Samsung has also managed to create successful public relation activities for their brand and for their products as a technology company by attending to technology exhibitions and providing numerous press releases, offering insights regarding their newest products, company progress etc. Samsung maintains a good relation with the media entities as the company is often featured on technology news websites and blogs as well as on technology television programs, magazines and newspapers.

However, I do believe that Samsung should consider the fact of introducing more sales promotions such as price reductions for their smartphones for students or for specific seasons as this can attract the student market into purchasing the smartphone and it can also attract the rest of the public who are more price sensitive.

Samsung’s vision is to generate new technology, innovative products and creative solutions. This company aims to “Inspire the World and to Create the Future” as quoted directly from their mission statement. Samsung manages to bring in new USPs (Unique Selling Points) with their latest smartphones and other products and by bringing in new technology (often created by Samsung), the company also manages to differentiate its products from other products on the market. For example, the Samsung Galaxy S5 is created with a waterproof technology which no other smartphone has achieved. Samsung has achieved their intended image of a professional and innovative technology company where people perceive their brand as a trustworthy company.

Conclusions
In conclusion it is important to mention that Samsung Galaxy S5 is in the maturity stage in the product life cycle where sales are not increasing anymore. It proved to have an effective marketing and promotional mix which made this product such as success though its choice of pricing strategy, and through its significant awareness raised through advertising. I don’t know what the future holds for the Galaxy S5 but my prediction is that the product will hit the decline stage in the product life cycle where sales will decrease and where Samsung will implement and extension strategy.

Bibliography
(Many thanks to Google Images)
http://en.wikipedia.org/wiki/Samsung_Galaxy_S5
http://economictimes.indiatimes.com/definition/marketing-mix
http://www.samsungmobilepress.com/unpacked2014/main.asp
http://www.ibtimes.co.uk/samsung-14bn-marketing-budget-biggest-history-525979
http://uk.businessinsider.com/samsung-ending-sponsorship-of-epl-club-chelsea-2014-10
http://www.footyheadlines.com/2013/12/exclusive-chelsea-14-15-home-and-away.html
http://www.trustedreviews.com/samsung-galaxy-s5-review
http://www.carphonewarehouse.com/basket