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Samsung Televisions – A success story

Samsung Televisions – A success story

Bordeaux TVs (2.5 million sold in 2006), LED TVs (2.6 million sold in 2009), 3D TVs (3 million sales target for 2010)

Samsung Electronics has assumed the lead role in the global TV market, with its revolutionary Televisions being rolled out almost every year have become bestselling products since 2006. Samsung Electronics has held the No. 1 position in the global TV market since 2007, both in terms of volume and value. All this success has been achieved within a short period of 10 years, transforming Samsung Electronics into the hugely successful market leader.Samsung TV’s rise to the top in world’s largest TV market – North America, began in the year 2000, when Samsung transformed its operational methodology. At that time, the need to enhance its position was felt, because Samsung was ranked 12th in a study for evaluating the numerous TV-makers in the USA. This study was conducted by a local market research company.

As Samsung became increasingly consumer-focused and proactive, its innovations began to gain popularity at the CES – the world’s largest consumer electronics tradeshow held in the US. The real turning point came in 2005, when Samsung decided to foster new growth in its TV business to become recognized worldwide for quality and value.

The Television market has transformed during the past decade from analog to digital TVs and from brown tube (CRT) TVs to flat panel (LCD and PDP) TVs. Samsung Electronics believed that this was an opportunity to change the market landscape during such a big transition period. For capitalizing on this opportunity, the best resources were reallocated swiftly to the Visual Display unit to focus strategically in important markets.

Samsung moved 300 engineers away from its successful semiconductor business unit, and into the TV business. This was the best performing engineering team in the company. These newly deployed engineers in the TV division were given very healthy performance bonuses every year. This made the TV unit highly productive and competitive.

The newly structured TV business unit set up the technological basis for creating TVs that were differentiated from those of its competitors. Consistent research and innovations have led Samsung into becoming the first company to launch the 3D TV following its Bordeaux TV and LED TV range.

Back then, the competitors were buying standardized semiconductors for TVs from outside manufacturers. Thus, their ability to differentiate their TVs was very limited. Semiconductor companies had their own priorities to create universal semiconductors, rather than making specialized ones for only a few innovative customers. Samsung’s new organizational structure enabled the in-house creation of more specialized and differentiated Semi-conductors for its new breed of TVs.

Samsung was also producing its own LCDs, a core component for digital TV displays. This was a major competitive advantage based on Samsung’s vertical integration. More than 100 TV brands were competing in the North American market and most of them offered similar designs. Samsung elevated its product image with attractive and differentiating designs. The changing preferences of customers were proactively met by Samsung. The new trend was to put more value on TV aesthetics and designs, leading to the popularity of flat panel TVs.

Through these efforts, a sleek new product line, “the Bordeaux TV”, emerged in 2006. From a distance, its silhouette appeared like a wine glass. Its speakers were hidden under the smooth curves of the unit to make the display look wider. Its name was taken from Bordeaux, a famous wine region of the world. The Bordeaux TV broke the stereotype and immediately caught the consumer’s eye at large electronics stores. This technology also offered unmatched picture quality and amazing features.

The Bordeaux TV made a splash with 2.5 million units sold in 2006. Based on the success of the Bordeaux TV, Samsung rolled out another successful product, the ‘Crystal Rose TV’ in 2008, with the design and color impressions of a rose. Samsung TV unit also made extensive investments in buying special equipment and lending it to its suppliers. This bold step brought in a quick profit of almost 174,000 US dollars from the Bordeaux TV. Over 3 million units of the Crystal Rose TV were sold in 2009. After these huge successes, in the second half of 2008, a revolutionary new product, the LED TV was created.

With growing popularity and consumer awareness of Samsung TVs, employee confidence has also kept rising. Most employees consider it to be the most rewarding occupation, full of career growth opportunities.

The TV structure has two parts; the display where images are shown, and the light source at the back of the TV. Samsung focused on the light source and used an LED instead of fluorescent light. The LED enhances picture quality with more brightness and clarity, while using less power. Using LED technology Samsung was also able to dramatically reduce the TV thickness from 10 cm to 3 cm.

The higher manufacturing cost of LED TV makes it inaccessible for mid- and low-cost markets, where too many companies are fighting in a cut throat competition. Thus Samsung faced less competition in the high-end LED markets. As the world began to recover from the global financial crisis in 2009, the LED TV became a hit product. Various competitors responded by hurriedly introducing their own LED TVs, but the consumer had already formed the impression that LED TV is a Samsung brand, thus the Samsung LED TV sales kept rising, as Samsung was the first in the arena, reflecting its leadership in research.

With the success of fantastic 3D movies like Avatar, the 3D home entertainment trend is growing worldwide. This year, Samsung brought its complete focus on technological transformation to become the first developer of 3D TVs and home entertainment solutions. The cutting edge 2.5-D products by Samsung, introduced a revolutionary function that enables converting 2D images to 3D by clicking a button on the remote control. Global competitors bitterly regretted not developing the feature, as they realize that “New is the only way to survive”.

Due to these innovations, the sales figures of Samsung are showing consistent growth. Samsung also adopted a very sophisticated marketing strategy for 3D LED TV. A global launch event for 3D TV was held in New York, attended by James Cameron- the director of 3D film ‘Avatar’, where a popular American singer’s video footage filmed in 3D was also introduced.

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