Samsung’s human touch
Last year, Samsung Electronics celebrated its 20th year in Canada. It’s been a highly successful market for the Seoul, Korea-based global conglomerate, which started out as a manufacturer of mid-level TVs and VCRs and now stands as not only a market leader but a design innovator for a vast range of products for home and office, from camcorders and smartphones to printers, music players, digital cameras and refrigerators. In fact, just in time for this month’s Consumer Electronics Show in Las Vegas, it was announced that Samsung had won an unprecedented 46 CES Innovations Awards in categories including mobile phones, TVs, cameras, washing machines and monitors.
Part of the reason for that turnaround has been a global brand renovation that began five years ago. At that time, Samsung was perceived around the world as a mid-quality brand, and head office wanted to reposition in the premium category. There were two elements to the strategy: increasing the brand’s worldwide presence through sponsorships like the Olympics, and investing in innovative design for new products. ‘There was a need to build greater awareness of Samsung as a global brand,’ explains Howard Thomas, director of corporate marketing at Mississauga Ont.-based Samsung Electronics Canada. ‘That’s why we got into the Olympics in a big way, because it’s a great platform to give a brand a worldwide stage.’
Samsung had been a local sponsor of the 1988 Seoul Olympics, but ramped up to become a major worldwide sponsor for the Beijing Games, where it launched three new phones and provided schedules, weather, results and text messaging through its Wireless Olympic Works system.
Seeing an opportunity to increase the brand’s relevance to consumers in this country, Samsung Canada CEO Benjamin Lee – who has worked in sales, marketing, manufacturing and supply-chain management for the company since 1984 in Korea, the U.S. and, since 2005, Canada – embarked on a program to embed Samsung with Canada’s favourite game. In September, Samsung Canada signed Canadian hockey stars Jarome Iginla and Hayley Wickenheiser to sponsorship deals as part of a massive program building up to the 2010 Games in Vancouver. It also sponsors the Montreal Canadiens and Wayne Gretzky’s charitable foundation.
‘The advantage of sponsorship is that you get a high level of visibility, and generally we can activate with a partner and get exposure we wouldn’t get through normal advertising,’ says Thomas. ‘In Quebec, we stepped up with the Canadiens. We’re in the Bell Centre, and partners like Best Buy are as well, so it’s good for us strategically.’
Meanwhile, the new global emphasis on design innovation has also been leveraged by Samsung Canada to polish its brand image here. ‘We invested heavily in design,’ says Thomas. ‘The category was becoming more lifestyle-oriented, and our brand had significant design advantages, so it was the right time for it all to come together. And now Canada has some of the best brand scores in the Samsung network.’ It also exclusively offers the Cleo, a smartphone for fashionistas that resembles a makeup compact and is available in a gift set with Cake lip gloss.
The new brand attributes have been celebrated in a number of attention-getting campaigns created by agencies including Samsung Canada’s AOR, Mississauga-based Cheil Worldwide Canada, which also manages global Samsung ad initiatives from Leo Burnett.
‘When we launch a product in 15 or 20 markets, we want a global campaign that’s relevant locally,’ explains Thomas. ‘What people see here is 60/40 global vs. local, the global being primarily TV. Local efforts include the ‘Express Yourself’ wireless campaign, as well as print, sponsorships, online and PR. Our involvement with the Canadiens is a good example of how we differentiate in local markets. In the U.K. it’s soccer, in the U.S. it’s the NFL, and in Korea it’s soccer and speed skating. The activation dollars are generally the local dollars.’
The ‘Express Yourself’ campaign featuring robot hands formed from Samsung phones making various gestures has created a stir on TV and digital OOH screens since its June debut, and the company has also delved into other nontraditional spaces for local efforts. For instance, the Instinct phone was launched with a video series using YouTube’s new ‘annotations’ technology, which allows users to choose the outcome of a storyline.
‘We have an extensive investment in below-the-line, non-mass media,’ says Thomas. ‘The challenge is that as these channels get more segmented, sometimes it’s actually more efficient to buy mass properties. But social media is where the relevance is really driven home. The problem is staying ahead on that, because what’s in this month is gone next month.’
Strategy sat down with Lee and Thomas to find out how they manage technological change, their brand portfolio and economic and environmental pressures, as well as their plans for the run-up to the Olympics.
What did you see as your main challenge when you started at Samsung Canada?
Benjamin Lee: We try to see a common trait in any country where we operate. Canada is multi-ethnic like the U.S., but the U.S. is a melting pot, while this is a kind of punchbowl. People maintain their original culture and are connected to relatives still living [in their home country], whereas in the U.S. they are just Americans. So, for example, since Canadians travel overseas more than Americans, global roaming is a necessity if you want to do well in the Canadian wireless market.
Do you have products that are unique to Canada?
Lee: The Cleo phone is one example. And we launched Olympic phones with Bell – they’re an Olympic sponsor at the local level and we’re at the international level, so it worked well. We applied different designs and put Olympic logos on it. Moving forward, we might add more Olympic-related content.
How did innovative design emerge as a priority for Samsung?
Lee: When it comes to product innovation, the majority of the implementation is done in Korea, with input from us. About 15 years ago, Samsung was the first Korean company to realize the future importance of design. We had considered it as an adjunct to the basic functionalities, but after that we brought in designers from Korea. Then we needed input from broader resources, so we established design centres in San Francisco, L.A., Milan and Britain, and we started working with Porsche. We are not manufacturing cars, but we thought, if we bring Porsche design into our monitor, how would it look? It looked metallic and simple, and people really liked it. Now everybody has copied that design.
What design innovation are you most proud of?
Lee: Three years ago we came out with the Bordeaux TV, with a colour that emulated the red wine of Bordeaux. It caught the market off guard, and that’s how Samsung started catching up with Sony in the TV category. It’s not painted; the colour is blended into the mould so it’s not intrusive. If you paint it on, it will eventually lose its luster, but this keeps shining. And we have a follow-up design coming next year. So we are kind of leading industrial design these days.
Does the emphasis on design carry across all the categories?
Howard Thomas: Yes. You even see it in laundry, a pretty utilitarian category. We have products I’d be happy to have on the main floor of a condo. This category used to be black or white boxes, big and bulky, but now they’re different colours, they’re stylish. People are going crazy for our fridges, not just for the features but for the design.
Are condo dwellers an increasingly important market segment?
Thomas: We have products for everyone, but our global target is 18 to 34. That’s our sweet spot, the youth-minded consumer who has really accepted technology.
Lee: Samsung is a very dynamic company, so naturally we associate ourselves with the younger generation. But when you emphasize digital, you can lose the human touch. And recently we realized that it’s not just young guys who want that lifestyle, so we changed our target segment from the young generation to the young-minded generation. We identified five categories they share: sports, music, fashion, design and social responsibility, and we focus on those to address this market.
Thomas: We call those five categories cultural passion points. Whether it’s in Russia or Canada or Africa, they cut through demographic, income, etc., so that’s where we try to drive the relevance. That’s where you make that deep emotional connection with people, and that’s where we get the win. And it’s working. We’re number one or number two in market share in pretty much every category in Canada.
What kind of research do you conduct to back up your initiatives?
Thomas: We do institutional research, and we have a tremendously talented field marketing force, so we’re getting good intelligence. We’ve got a panel of 1,800 Canadians that measures 219 brands. Because it’s weekly, we can respond quickly.
And you’ve obviously perceived that one major Canadian trait is an obsession with hockey.
Thomas: It’s big. There’s a lot of passion around the Olympics, and a fanatical interest in hockey. After the disappointment of Torino, we knew Vancouver would be big, so we locked up a long-term deal with Hockey Canada a couple of years ago, and signed Jarome Iginla and Hayley Wickenheiser. We’re extraordinarily well positioned, and not just for those 17 days. We’ve launched Hayley and Jarome already, and we’re launching a grassroots program this month. The third phase will be the experience of the Games, and then a post-Games phase. So it’s more than a 17-day investment; it’s really a 20-month marketing program.
Which media will you concentrate on?
Thomas: It’s a North American time zone, and as much as we do a ton online, I think this one is going to be through the roof on TV audience because of Iginla and Crosby and Luongo and Hayley’s swansong. So we’re expecting a disproportionately high TV audience and a very high online one as well. And it’s going to be very multiplatform with CTV, because they have so many channels for distribution and content. We’re in discussions with them now.
Lee: But what’s more important than just being involved in sports is how we blend into Canadian society. A big mantra for Samsung is localization – how do we manage this global operation as a single entity while localizing our message and operations? That’s difficult. As part of the localization, I really want to get rid of this ‘Korean company’ concept for Samsung Canada, and help it blend into Canadian society. So what game is most enjoyed by Canadians? Hockey. Hockey Canada is using a maple leaf with hockey on it, so placing the Hockey Canada logo next to Samsung gives an impression that we are part of the Canadian community, not some foreign company operating here.
That’s the symbol, but there has to be substance beneath it. So we are getting involved in grassroots programs and our Four Seasons of Hope charity with Wayne Gretzky. Last year we also supported the Saku Koivu Foundation, helping hospitals in Montreal buy equipment for detecting cancer. And we are trying to make our employees more actively involved in the community. We have a one-day-off policy for employees involved in community activities. These things are the substance beneath the branding, and the two should go hand in hand, if you want to truly be a premium brand in Canadian society.
How do you keep up with the speed of change in the telecom industry?
Lee: It requires the coordination of a lot of internal resources, starting with the collection of the voices of customers and aligning our R&D policies.
In the past we’d customize phones and design platforms to carriers, which works well in North America. But Nokia’s strategy is based on platforms, so they generate models based on platforms. Samsung is adopting both strategies. In Europe you can sell a phone to the open market without being tied to a specific area, so the platform strategy works well. But in North America it’s based on carrier, so you need to customize software. That’s why even though Nokia is number one in the world, Samsung is number one in North America.
Thomas: Samsung as a culture puts a high value on speed. People think since it’s a big global company it must be very bureaucratic, but decisions are made quickly. The category demands it, so the systems are built that way.
Lee: We are one of the best companies when it comes to supply chain management. All the information is captured and shared from the junior level to the CEO in real time, on the same screen. So you save time in making decisions and explaining situations.
How do you market all the products separately and yet under the same brand?
Thomas: The brand is the common denominator, and it’s united in the promise of an experience beyond their imagination, whether it’s a cell phone or a kitchen stove. Our home appliance division is segmented around moms, and we’ve got a partnership deal with Cityline, because we know that the TV audience is strong, but it also includes the interactive audience that goes with it.
TV has historically been a male category, but now with design and innovation we’re getting a large number of females driving the purchase. This is the convergence of design, innovation and efficiency in the category, and you have to be mindful that there’s women buyers, men buyers, ethnic buyers, even kids. You have to look for common denominators, and a strong brand name transcends all that.
Lee: We have three slogans: insight, synergy and execution. Insight includes feeling the pulse of the market; execution is decision-making based on this information. Synergy is tough to implement in Canada. We have such a wide portfolio – how can we coordinate people’s needs with marketing activities so we can send a more consistent, powerful message to the market? Each product group has its own marketing functions, but making synergies out of it is Howard’s main job.
Will you be continuing with the robot hand theme in your advertising?
Thomas: It’s under review. It’s garnered lots of awareness, and the good thing about it is that it’s carrier agnostic, so we’re not offending anyone when we run it.
Lee: Even though it got a lot of attention, I asked my people to use more of a human touch in the future. We are a very advanced company in terms of technology; now it’s time to go beyond that. Why does technology exist? To make our lives happier, so I want to address that further. We need to pay attention to the real benefits our products and activities bring to people.
What kind of environmental initiatives are you involved in?
Lee: Our TVs’ energy consumption is the lowest in the industry, and we are developing a cell phone with components made of corn so it’s biodegradable. That kind of effort is critical not only from a marketing point of view but for human beings. Samsung has been making things green for decades at the manufacturing level. We have invested in green processes, but never advertised it before. Now we have real substance behind our green marketing, so we are thinking a lot about this. It is top secret, but this year will bring a new green emphasis in our marketing.
Thomas: Vancouver is part of that because they promised the IOC to present the greenest Games ever. So it’s a real opportunity for us to showcase green. Used properly, it will become a competitive advantage and a strong attribute to build into the brand, so we will be dialing that side of it up dramatically.
What other new initiatives are planned for 2009?
Thomas: We don’t break new TV advertising until April, but we will be doing a lot of ramp-up for the Olympics, built largely around Hayley and Jarome at the grassroots level. We’re doing a rebranding of the printer business, and will launch several new phones. The sponsorship side will be robust, and we’re probably increasing online spending 20% year over year.
Do you believe in spending more to increase share in tough economic times like this?
Lee: We went through this 10 years ago during the Asian economic crisis. Now it’s on a worldwide level. In the current uncertainty, it would be irresponsible to spend more. But are we going to cut back? No. We’re going to watch the market. We believe we are doing better than our competitors. And there is always demand for consumer electronics, so we’ll come out a winner. We had a target for 2009, but it is not that meaningful. What’s important is, what would make us do better than the competition? Mostly it’s people. We rely on our employees, so we are paying attention to retaining talent, maintaining stability and improving morale.
Thomas: I think it’s going to come down to management capability. And we have a competitive advantage because we have a particularly smart work force. In turbulent times, you have to fly by your instruments. You can’t look out your window and say, ‘That looks like a safe place to land,’ only to hit a mountain. So you’ve got to have strong systems and processes that are time-tested, and we have that. It’s easy to manage during the good times; you show
up and the business rolls along. Now you have to manage your people differently, because there’s no precedent for these times. The winner is the one who’s smarter, faster, has better intelligence and can react quickly and really focus on where the opportunities are.