Channels of Distribution Crucial to Success? SAMSUNG ELECTRONICS

 

Samsung

If I ask anyone nowadays “What does Samsung make?’- the general response will be “electronics’. Well the truth is, Samsung is involved in much more than just mobile phones and electronics. Samsung is a massive company in Korea, and Samsung is involved in almost every area of business, including shipbuilding, aviation, heavy machinery, retail, apparel, finance, chemicals, food, electronics and more. They also have a non-profit arm in medicine called Samsung Medical Center which is one of the largest cancer centers in Asia.

But for this Blog I would like to concentrate on Samsung’s consumer electronics and mobile solutions market distribution channels, and how critical they are to its success.

Distribution Channels

Firstly distribution channels is defined as a “set of independent organisations involved in the process of making a product or service available for use or consumption by the consumer or industrial user” Kotler, Armstrong (1994, p. 395).

More over distribution channels come in 3 different forms;
1. manufactures sell directly to consumers
2. manufactures sell to retailers then retailers to consumers
3. manufacture sell to wholesaler who sell to retailers who then sell to consumers
Iacobucci (2014, p. 128).
channels-of-distribution-ppt-bec-doms-bagalkot-mba-marketing-11-728
Furthermore they can be Intensive designed systems, Selective designed systems, or Exclusive designed systems engaging in push and pull strategies to target consumers.

SAMSUNG distribution channel vs COMPETITOR APPLE

Apple sells their products through Telcos, Apple Stores the Apple website, and their retail distribution channels. Samsung sells their product anywhere they want as long as retailers are willing to take stock. Therefore Samsung can sell directly or indirectly to consumers.

Further compared to Apple, Samsung has the ability to quickly expand and saturate the market with their products anywhere in the world except America – as the telco relationship in the USA require that Samsung create different versions of their phone(s). Apple on the other hand, sells according to the country tiers where as in tier 2 countries such as Malaysia there are rumors that Apple is selling refurbished iPhones instead of new ones hence why Samsung is dominant in these markets.

In addition Samsung also has an existing distribution network from their existing businesses. This is of tremendous value because unlike Apple, Samsung does not need much in the way of resources to bring their phones and tablets to new markets and more importantly unlike Apple. These distribution channels will also be there for the future dissemination of other Samsung products. This means that if they want to, it’s easy for them to market more than just electronics.

Samsung innovative approach to NEW CHANNEL ACTIVITY

Samsung Electronics America is looking to expand its market presence, by making it easier for solution providers to source product and support through its new “Samsung Team of Empowered Partners” (STEP) program.

STEP is the cornerstone of a global effort by Samsung to consolidate resources and simplify accessibility for partners. Currently, Samsung’s channel efforts is divided by regions and product lines. So by consolidating, Samsung is making a concerted effort to bring more partners into and expose more opportunities to channel partners.

Further, Samsung leads the global IT industry by not only developing innovative products and solutions, but also investing in programs, like STEP which are essential to creating shared success with our partners,” said Richard Hutton, director of channel marketing at Samsung’s Enterprise Business Division.

In some regards, Samsung’s new channel effort could be called a “channelification” of the company. By nature Samsung does much of its business through partners, but in a fractured way. Thus STEP and its complementary support programs are designed to not just simplify and expand support, but make Samsung more approachable.

In essence STEP is Samsung’s effort to consolidate its channel resources and also serve as a launch pad for expanding its re seller network in the North America market of 13,000 partners by launching a recruitment campaign, which will be followed by a return to the channel program providing greater clarity to partners on product and services opportunities.

Further according to Richard Hutton director of channel marketing at Samsung’s Enterprise Business Division, Samsung is focused solely on a channel sales approach and continuously look for ways to improve its channel offerings by identifying new tools, technical expertise and marketing strategies to help its partners elevate their businesses competencies.

More over Samsung’s desire to build out its channel and drive more indirect sales puts it on a collision course with companies such as Dell Inc., Hewlett-Packard Co. and Lenovo, which are all leaning on their channels to drive growth. However Samsung’s advantage is brand leadership in smartphones and tablets, as well as a strong presence in ultra-books hence its future looks very bright.

SO HOW CRUCIAL IS DISTRIBUTION CHANNELS TO SAMSUNG’s SUCCESS ?

Well in the electronics market in the US Samsung has 30% of the market 2nd only to Apple due to strong US competition laws. However in the smart phone market alone, Samsung tops the world market with 22% with Apple coming 2nd with 16.1%.
Strategy-Analytics-Q4-15

The answer is obvious isn’t it.

 

By TREVZSAAGA ID 215007576

 

 

 

References

Chand, S 2015, Types of Distribution: Intensive, Selective & exclusive distribution, Smriti Chand Distribution, retrieved 14 May 2016, <http://www.yourarticlelibrary.com/distribution/types-of-distribution-intensive-selective-and-exclusive-distribution/5780/&gt;.

Iacobucci, D 2014, Marketing Management (MM), 4th edn, South Western, Cengage Learning.

Igbal, M 2015, ‘TECH CRITIC, retrieved 14, May 2016, <http://www.tech-critic.com/blog/bad-marketing-or-good-strategy-samsung-vs-apple/&gt;

Kotler, P, Armstrong, G 1994, Principles of Marketing, 6th edn, Prentice Hall of Australia Pty Limited, Sydney.

Marketing made simple.com, ‘Push and pull marketing strategies’, retrieved 12 May 2016, <http://marketing-made-simple.com/articles/push-pull-strategy.htm&gt;.

Randy, 2011, Why Apple is very afraid of Samsung, Android Authority, retrieved 12 May 2016, <http://www.androidauthority.com/why-apple-is-very-afraid-of-samsung-26459/&gt;

Rossignol, J 2016, ‘MacRumors’, retrieved 14 May 2016, <http://www.macrumors.com/2016/01/28/samsung-vs-apple-smartphone-sales-2015/&gt;

Walsh, L 2014, ‘Channelnomics’, retrieved 13 may 2016, <http://www.channelnomics.com/channelnomics-us/news/2369814/samsung-steps-up-channel-activity-with-new-program&gt;

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