Samsung refrigerator

ASSIGNMENT OF

PRODUCT MANAGEMENT ON

SAMSUMG REFRIGERATORS

SUBMITTED TO:

SUBMITTED BY:

DR. T. GHOSAL

SRISHTI GOEL

PROFESSOR CENTRAL UNIVERSITY OF JHARKHAND

IMBA (VI SEMESTER) CUJ/I/2012/MBA/33

SAMSUNG REFRIGERATOR ABOUT THE INDUSTRY: Refrigerators have been manufactured in India since 1950s. Till the 1980s, players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the market. Earlier, the white goods sector was categorized as a luxury goods industry and was subject to oppressive taxation and licensing. The situation changed after the liberalization of the Indian economy in the early 1990s. The government removed all restrictions, and now there is no restriction on foreign investment, and licenses are no longer required. Post-liberalization, a number of foreign companies entered the market and many domestic players also diversified into refrigerators. BPL and Videocon who already had a presence in the consumer electronics market, leveraged their strengths to enter the durables sector. In India, refrigerators have the highest aspirational value of all consumer durables, with the exception of televisions. This accounts for the high growth rate of the refrigerator market. The refrigerator market has been growing at a rate of about 15% per year, while the consumer durables industry as a whole has grown at almost 8%. The size of the refrigerator market is estimated to be 3.5- 4 million units approximately, valued at Rs 50 billion. The domestic penetration rate of refrigerators is about 9%. The penetration of refrigerators is considerably higher in urban areas, which account for 75% of the demand, with rural areas constituting the other 25%. The demand is also higher in the northern and western parts of the country than in the east. The south also has high demand as the warmer weather of the south requires a refrigerator running throughout the year.

SAMSUNG GROUP: The Samsung Group was founded in 1938 by Lee Byung-chul (1910-1987). It was incorporated in 1951 as Samsung Corporation. The meaning of the Korean word Samsung is & quot;Tri-Star & quot; or & quot ;three stars".

Samsung Electronics was founded in 1969 in Suwon City South Korea as Samsung Electric Industries originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air conditioners and washers. CORE VALUES :In everything we do, we strive to help people live better lives. VISSION AND MISSION: SAMSUNG is dedicated to developing innovative technologies and efficient processes that create new markets, enrich people's lives, and continue to make Samsung a digital leader.

MARKET ANALYSIS Volume growth in refrigeration appliances is expected to improve from 2% in 2013 to 3% in 2015. It is expected that the Indian economy will improve over the forecast period because it is strong fundamentally as India is a young country with rising disposable income. Moreover, consumers, especially in parts of India with high per capita incomes, are gradually moving towards high-end, value-added products. Indian Refrigerator Market:    

Estimated mainly at Rs.2750 cr Catered by mainly 10 Brands Annual Capacity estimated around 4.15 million units Running head of demand of 1.5 million MAJOR PLAYERS: LG: The market share of L.G refrigerators is 61% in the all over market in the world and if we talk about the Indian market it is 36% which is a big market share right now. SAMSUNG: Born in 1996, Samsung, with 22% global market share has the second largest market share in the refrigeration industry. It enjoys 33% market share all over India in its appliances and in its refrigeration. The bestselling model being frost free refrigerator its one of the best quality and bestselling product in the market. Target Market Segment: The marketing strategy of Samsung refrigerators was to come up with a fresh product targeting the middle class audience and also targeting the lower middle class who do not have refrigerators in their homes or flats etc. With building a team called Samsung India refrigeration team it targets and sells its products in the market. WHIRLPOOL:- The third most eminent player in the market and being the best player in the market and having the third largest share in the Indian and the world with 12% all over the world and in India 31% . Target Market Segment: It follows full market coverage with its frost free and defrost fridges in the market. It target premium segment conscious about their life style and also the middle class and the lower middle class consumers present in the market. Whirlpool a German based company was born in 1997. GODREJ: Being the fourth largest player in the Indian market, it has 12% market share in India and 4% across the globe. Target Market Segment: Godrej targets the middle class and the lower middle class people. It drives its products in the way that the target consumer buys its products and also the consumers gets what is needed by him. The company is an Indian based company and was born on 1998.

CUSTOMER ANALYSIS: The first and foremost reason why the company operates is to earn profit and the way they can earn profit is through customers. Their ultimate aim at the end of the day is to either create or gain customers and keep them until they are profitable to the company. To do that the companies try to produce the products or offerings that people want and value them at prices that are more attractive than the competiton. Samsung mainly operates in the upper and middle segment of Socio- economic classification of the customers which includes the upper class and middle class. In the recent years Samsung has come up with different variants in the Direct cool refrigerators, Forst free referigerator, Side by side, French Door for the Upper middle class and upper class section people. MARKET POTENTIAL:

DATA FROM 2001 TO 2006 From the over analysis it’s visible that WHIRLPOOL was the market leader from 2001 – 2004 but by that time LG was gaining the market and hence from then onwards LG is the market leader in Refrigerator segment.

DATA OF 2013 The refrigerator industry is dominated by LG goods since last 10 years but the most noticeable thing is the growth of Samsung and Godrej to be on number 2 and 3.

DATA OF 2015 As of now even consumers are most satisfied with LG alone. LG is having a niche market which is differentiated and always ahead from its competitors.

KEY GROWTH DRIVERS Economic drivers: Increasing presence of organised retail • The Indian retail market is currently worth USD396 billion and is likely to expand at a CAGR of 12.0 per cent to USD574 billion by 2015 end. • The penetration of modern retail is 12.0 per cent in consumer durables segment Increase demand in rural sectors • The Indian rural untapped market now even has huge demand and due to this the market share of the refrigerator sector has increased in these areas. 100% FDI in electronic Home appliances.

Social Drivers: Brand image • Samsung has a huge reputation in the white goods market it’s having the 2nd most market share as in relation with its competitors. Focus on energy efficient and environment-friendly products • Samsung have introduced star-rated, energy-efficient refrigerators • Companies also plan to increase the use of environment-friendly components and reduce ewaste by promoting product recycling Increased affordability of products • Earlier only refrigerators with direct cooling feature were available but with the entry of frost free, side by side, French door, double – triple door facility the market size has increased as well as the demand in the market.

SEGMENTATION

DEMOGRAPHIC SEGMENTATION: 1.) INCOME:

LOWER: Direct cool MIDDLE: Frost free and Side by Side UPPER: French door and Food showcase

2.) OCCUPATION: For working women and men using side by side or French door is good and it provides with quick cooling and keeping things fresh for long.

GEOGRAPHIC SEGMENTATION: 1.) RURAL AREA: for rural area Direct cool refrigerators with less cost effective and power saving. 2.) URBAN AREA: All the type of fridge with all categories cater to the needs of the people having different expectations and usage.

PHYSIOGRAPHIC SEGMENTATION: 1.) LIFESTYLE: As per the modern customers and their diverse needs FRENCH DOOR with 4 door feature can be best suited. 2.) PERSONALITY: double door, triple door of four doors

BEHAVIOURAL SEGMENTATION: 1.) VALUE: Direct cool as well as frost free comes under this. 2.) BENEFIT SOUGHT: Samsung’s frost free model was maximum sold and has maximum benefits from its competitors.

POSITIONING Continuing to focus on freshness, Samsung is now using the thought of 'Frrrunch' to position itself with a promise to keep vegetables fresh and crunchy in an attempt to make the positioning younger and livelier for its target audience Samsung is going all out to drive home the positioning of the brand. Close on the heels of unveiling its new corporate tagline, Turn on tomorrow, Samsung Refrigerators has been repositioned with the thought 'Frrrunch', continuing its focus on freshness. Frrrunch, a marriage of the words 'fresh' and 'crunchy', is the new umbrella campaign that shall be used across Samsung's three categories of refrigerators - single door, double door and side by side. Each category will have one key feature that will help keep food fresh for long. In its new television commercial, the brand introduces the new feature of Unique Moisture Control (available in select models) in its refrigerators, which retains moisture and keeps fruits and vegetables fresh in the 'Frrrunch Box'. "Every refrigerator talks about keeping food (namely fruits and vegetables) fresh. With Frrrrunch, we gave it a measure to quantify. It is a promise to keep fruits and vegetables 'FResh' and 'crUNCHy'. In fact, that natural freshness can be felt with the first bite." Freshness has always been the positioning platform for Samsung refrigerators, which has earlier used concepts such as 'Bio Fresh', 'Silver Fresh', 'Fresh Tech' and 'Fresh Tech Ultima', each attributing to a unique technical feature in the product.

TARGETING SAMSUNG Vision 2020 -As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire the World, and Create the Future." This new vision reflects Samsung Electronics ‘commitment to inspiring its communities by leveraging Samsung's three key strengths: ―New Technology, Innovative Products and Creative Solutions.‖ -- and to promoting new value for Samsung's core networks -- Industry, Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better world and a richer experience for all. As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion in revenue and becoming one of the world‘s top five brands by 2020. To this end, Samsung has also established three strategic approaches in its management: Creativity, Partnership and Talent. Samsung is excited about the future. Samsung launched green management initiative that is intended to make Samsung a leading eco-friendly company by 2013. The 'Eco-Management 2013' plan seeks to reduce greenhouse gas emissions from manufacturing facilities by 50 percent, and to reduce indirect greenhouse gas emissions from all products by 84 million tons over five years.

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Samsung focused on creating a premium brand image by emphasising on the design and technology aspects of its higher-priced products and targeting a more affluent customer base. After 2005, the two have expanded the scope of their target markets and offer both functional and high-end products. Product innovation, heavy investment in R&D, and customer preferences have been the key factors behind the success of the Korean giant.

STRATEGIC BRANDING Energy management strategy: Samsung Home Appliances has adopted various measures such as high-efficiency facilities, energy management systems and training programs for employees to reduce energy consumption across all operations. Company has introduced an energy certification program for new facilities and buildings from 2010. The company established a working group for energy management which meets every two months to share best practices for energy saving and management throughout all business divisions. These activities encourage facilities to set up highly energy efficient equipment and technologies; low-power vacuum pump technology, energy efficient water humidification systems, and energy efficient process optimization, etc. Company is also committed to enhancing employees' awareness through diverse training, promotions and incentive programs to facilitate energy saving activities at workplaces. Compliance Management Strategy: Samsung has established a new compliance system to prevent and minimize business risks associated with issues such as collusion and violation of intellectual property rights. They have instituted a compliance program that includes preemptive and year-round training, control and supervision in order to ensure adherence to pertinent laws by the company and all employees and mitigate risks related to violation of laws and regulations. Their compliance activities are broadly classified into prevention, monitoring and follow-up processes. Prevention activities include employee education, distribution of manuals on compliance, system-based self-inspections, and operation of a help desk to respond to questions on compliance matters. We also keep up to date with the introduction and revision of various laws and regulations. There is a separate team dedicated to monitoring activities. After dealing with a compliance issue, we analyse the related process and outcome to find the fundamental cause and pursue improvement measures. Real life examples are used in training programs as a way of preventing recurrence of any compliance problems that arise. Climate Strategy: Samsung has been establishing corporate-level strategies to address its direct and indirect impact on climate change. Through this, Samsung strives to reduce direct and indirect emissions of greenhouse gases and prevent potential risks by carrying out initiatives in voluntary GHG reduction and the development of an inventory. Design strategy– Design strategy is a discipline which helps firms determine what to make and do, why do it and how to innovate contextually, both immediately and over the long term. This process involves the interplay between design and business strategy, forming a systematic approach integrating holistic-thinking, research methods used to inform business strategy and strategic planning which provides a context for design. While not always required, design strategy often uses social research methods to help ground the results and mitigate the risk of any course of action. The approach has proved useful for companies in a variety of strategic scenarios.

PRODUCT MARKET ANALYSIS PRODUCT LIFE CYCLE

Samsung Refrigerators: Introduction: Samsung FRENCH DOOR refrigerator It’s new in the market and basically targets upper segments for industry, hotels usage.

Growth: FOOD SHOW CASE & SIDE BY SIDE refrigerators It’s growing at a very fast rate covering those segments which earlier were targeted through frost free refrigerators.

Maturity: FROST FREE refrigerators It’s in the maturity stage as frost free exist since ages and is now towards decline as new featured products has captured the market

Decline: DIRECT COOL refrigerators Its one of the very first and very basic model that in now vanishing because of the drawbacks it had.

Features in Samsung Refrigerators: 1. Stylishly unique design Has a truly distinctive design that is available in a choice of varous colours. It’s softly curved, round-top shape and clean lines, without any extra doors, add a sleek and elegant look your kitchen. 2. Keeps it cool without power The Cool pack feature in the freezer of this Samsung refrigerator comes to the rescue during power outages. It keeps food frozen up to 9 hours, maintaining a temperature below 0 °C. 3. BEE certified energy efficiency High energy efficiency certified by BEE, so it saves 2000 INR a year by using less electricity* without sacrificing performance. Its BEE 5 star rating makes it one of the most energy efficient refrigerators available. 4. Clearly see inside and save The first single door refrigerator in India to use high efficiency LED lighting, which is slimmer, brighter and more power-efficient than conventional lighting, so it’s much easier to find what you’re looking for. 5. Protection from voltage fluctuation Its Stabiliser Free Operation means it works very steadily and reliably and prevents electrical damage or shorting if there are any voltage fluctuations.* If it increases too much it automatically cuts the power. 6. Safer and more durable shelves Has toughened glass shelves that are designed and tested to hold a weight of up to 150 kg safely. So even large vegetables, like marrows, or dishes prepared in heavy pots and pans can be kept cool and fresh.         

7. Some other features: Anti-Bacteria Protector Automatic Ice Maker Cool Pack Digital Inverter Compressor Easy Access Dispenser Easy Slide Moist Fresh Zone Movable Vegetable Box LED lights

MARKETING STRATEGY Products length & width: SAMSUNG has 5 categories in refrigerators: 1. FOOD SHOWCASE (2 models):  RH80H8130WZ - MRP Rs. 151,000/-*  RH77H90507H - MRP Rs. 210,000/-* 2. FROST FREE (40 models): Some are   

RT33JSRFESL - MRP Rs. 35,700/-* RT33JSRYESA - MRP Rs. 34,200/-* RT29JAMSERZ - MRP Rs. 32,250/-* RT33JSMFESZ - MRP Rs. 36,200/-* 3. FRENCH DOOR (1 model):

 RF858QALAX3 – MRP Rs. 210,000/-* 4. DIRECT COOL (26 models): Some are   

RR21J2835PX - MRP Rs. 15,800/-* RR19H1784UT - MRP Rs. 14,800/-* RR19J2784NT - MRP Rs. 15,800/-* RR19H1784NT - MRP Rs. 15,800/-* 5. SIDE BY SIDE (6 models)

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S552RAUA7E - MRP Rs. 87,000/-* RS21HSTWA1 - MRP Rs. 84,000/-* RS554NRAU1J - MRP Rs. 96,000/-* RS21HZLMR - MRP Rs. 121,000/-* RS21HSTPN - MRP Rs. 81,000/-* RS21HUTPN - MRP Rs. 96,000/-*

MARKETING MIX PRODUCT: 1. DIRECT COOL & FROST FREE: Traditionally the most popular style (largely due to its economical price), this is likely the refrigerator configuration you grew up with. The freezer compartment is positioned atop the fresh-foods compartment and typically claims about a third of the unit's total volume. Advantages: Familiar design; lower price than more feature-rich styles. Disadvantages: Among the least flexible configurations (along with bottom-freezer); items in back of freezer may be difficult to reach for children and shorter adults; requires wide, deep space to allow doors to swing fully open. 2. SIDE BY SIDE: In this style, the refrigerator and freezer compartments are more equal in size, with each taking up the full height of the refrigerator. The compartments are narrower, as a result, so are the doors. Adjustable shelves are a must for optimal flexibility. Some models offer amenities like through-the-door ice and water dispensers. Advantages: Convenient access to both fresh and frozen foods; abundant freezer capacity; ideal for narrow or galley-style kitchens because less space is required for door swing than with full-width-door models. Disadvantages: Narrower refrigerator compartment may not easily accommodate large platters; less overall fresh-food space than top- and bottom-freezer designs; pricier than topand bottom-freezer models. 3. FRENCH DOOR: This style combines the advantages of side-by-side and bottom-freezer configurations. The French doors at the top open to reveal a spacious, full-width fresh-foods compartment that easily accommodates large platters of hors d'oevres, pizzas and the like. 3door models sport a bottom-mounted freezer compartment; 4-door models are also available that offer dual freezer compartments, and advanced models offer a bottom-mounted freezer and a second, counter-height drawer that's temperature- and humidity-adjustable to accommodate changing needs. Through-the-door ice and water dispensers are offered on most French door refrigerators. Advantages: Elegant aesthetic and functional design; highly versatile to efficiently hold a wide variety of different types of foods; narrow refrigerator doors allow more flexible installation; advanced 4-door models deliver variable cooling zones for optimal food freshness. Disadvantages: Great looks and versatility come at a price.

PRICE: Because of its presence in different product categories, Samsung uses various pricing strategies. We can divide the pricing strategies and match it with the products that it is used for. 1. Competitive pricing: For products other than smart phones, Samsung uses competitive pricing. Samsung is known to be a great brand but it is not greater than LG for home appliances. In fact LG beats Samsung where home appliances are concerned. Thus in various categories, Samsung keeps competitive pricing so as to beat the competitor. Samsung as a brand hardly uses penetrative pricing because it doesn’t enter late in the market. In fact, it is present in most consumer durable segments in the market. 2. Skimming pricing: Samsung has skimmed its price in the French door segment and hence has the niche advantage. 3. Penetration pricing: Samsung has even kept prices low as 12,000 to penetrate in the market and capture lower segment as well.

PLACE: Samsung is present through various channels in the market. It works on the channel marketing concept wherein there are three segments. Sales and service dealers, Modern retail and Distributors. The sales and service dealers handle key accounts for Samsung and are involved in corporate sales. These dealers may also open exclusive Samsung showrooms. The Modern retail segment includes large retailers like Croma, Hypercity, Vijay sales, Vivek’s and any others who are present in the modern electronic retail chain. Samsung being such a branded product, the retailers are bound to keep Samsung as an alternative for their customers. The Samsung Brand shop network complements the over 8500 retail points for Samsung products located across the length and breadth of the country. Samsung plans to continue enhancing its penetration levels in the country to reach out to more and more Indian consumers

PROMOTION: Samsung uses multiple forms of promotions. Samsung as a company believes in pulling the customer to themselves through advertising but at the same time uses strong tactics to push the product to the customer through sales promotions. Thus on one hand, Samsung uses various marketing vehicles across the year covering festive season as well as non-festive time. On the other hand, it gives many offers and discounts to its trade partners to motivate them to sell Samsung above competition. With such a strategy, Samsung’s brand is on the rise so that both, the pull as well as push strategy is working simultaneously in Samsung. TAG LINE: Create wonders

SWOT ANALYSIS OF SAMSUNG STRENGTHS: Customers are loyal and appreciating the brand. Samsung is enjoying very good position against its competitors. The company is maintaining very good relationship with its suppliers. The company is also maintaining with labourers. Samsung is a financial strong and Stable. The production processes and procedures of inventory management are consistent with industrial standards.

WEAKNESSES: Samsung is facing hard competition. South Korea’s labour unions are strategically linked for collective bargaining and negotiation. Samsung need improvements in defining the vision, mission and strategic corporate objectives. Marketing management needs improvement in all the facts of marketing. HRM also needs improvement in all the facts of human resources management.

OPPORTUNITIES: The economic condition of South Korea seems favourable. Samsung is interiorizing the social shifts. It is having constant policy given by the government. Samsung is reasonable equipped to take care of technological changes. Samsung is maintaining good international relationship with other countries and the local.

THREATS: The legislation has been passed frequently related to industry. Technological transformation takes place in the industry was very high. Regulatory issues and safeguarding of property rights was main threats in legislations.

PORTERS FIVE FORCE ANALYSIS Threats of new entrants:

There is huge scope of new developments innovations and strategies that is the reason why Godrej which once used to be market leader is now no. 4 in refrigerator sector. L.G. has gained the customers and is the winner in terms of technology and newness.

Threats of substitute product or services:   

Despite the fact that refrigerators have immense utility to housewives and provide a solution to avoid food wastage, the penetration level is still below 20% and its market is growing at a very small pace. This may be because: People in small towns and rural areas do not consider it as a necessary product and are unaware of its utility value. Non-availability of power. Latest technological advancements and different pricing strategies.

Bargaining power of customers: Customers have huge choices in each segmentLower segment: Samsung v/s Godrej Middle segment: Samsung v/s Whirlpool Upper segment: Samsung v/s L.G.

Bargaining power of supplier:

Samsung services has made it unique

Samsung considers 'After Sales Service' as a key differentiator for Samsung products. The Samsung Service Plazas, as the Company owned Service Centres are called, are a first in the industry.

The Samsung Service Plazas serve as a one-stop shop for Samsung’s walk in customers. Customers also get a chance to see the Samsung range of products and interact with Samsung product specialists to know more about the company’s products and services. After Sales Service: Speed, Smile, Sure’ is the motto for Samsung Service, as the Company seeks to satisfy more and more of its customers with prompt and accurate service. A Service Helpline number gives access to Samsung Service throughout the country. Samsung India organises a Free Service Camp on an All India basis, every year, for proactively reaching out to customers and servicing their Samsung products. ‘10 second to lose a customer, 10 years to gain them back’ forms the guiding principle for Samsung Service Team as it strives to satisfy the growing expectations of Indian customers.

Intensity of competitive rivalry: Intense competition exist in this sector as the demand is not so high but supply is, so the company with the competitive edge can win this situation well.