The CMO Interview

Now LED TV King, Samsung Looks to Brighten Brand

Marketing Chief David Steel Looks for Emotional Appeal as 3-D Looms

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NEW YORK (AdAge.com) -- Last year was a dismal one for the consumer-electronics industry, but not for Samsung. The Korean electronics giant managed to increase its share of U.S. TV sales from 30% to nearly 40%, according to NPD Group -- in one year. In a year when some of the competition throttled back on marketing spending, Samsung increased it in the belief that its backlit LED TVs would spur another cycle of set upgrades. It did. In a recession.

David Steel
David Steel
Now Samsung -- like just about every TV manufacturer -- is making a big bet on 3-D TVs as the feature to drive the next upgrade cycle. Unlike last year they can all point to a string of 3-D cinematic hits, including "Avatar," as evidence of the fact that consumers will pay more for the experience.

At the Consumer Electronics Show in Las Vegas last week, Samsung also opted to charge hard into new markets. It unveiled an e-reader, an app store à la Apple, and an SLR camera to take on Canon and Nikon.

While Samsung's e-reader leaves a little to be desired in content -- initially, it will only have access to Google Books, mostly comprising out-of-print titles and books in the public domain -- Samsung execs believe that the content will come, as the company would be able to strike deals with publishers similar to what Amazon's Kindle, Barnes & Noble's Nook and Sony's e-readers have done.

Samsung now sells more TVs and more cellphones than anyone else in the U.S., and the brand still has a lot of headroom to move from a symbol of quality and innovation to a brand that is truly loved by consumers. Think Apple or, well, Sony. Leading that charge is David Steel, an 11-year Samsung veteran and the first non-Korean to hold a senior executive post at the company. Steel, 43, who had worked for a decade for Samsung in Korea where he most recently headed marketing for mobile, was elevated to exec VP-marketing for North America, reporting to U.S. President-CEO CS Choi, just under a year ago. When Mr. Steel joined Samsung, it was an obscure manufacturer of analog TVs and microwaves. Now, its tentacles are in every corner of the CE business, its brand at the high end of the scale.

Mr. Steel said his charge is to "look across all our product areas and really focus on the Samsung brand," answering the question, "How do all of our different marketing activities ladder up to our overall strategy in the North American market (including the United States, Canada and Mexico)?"

In an interview with Ad Age at CES, Mr. Steel discussed how Samsung is selling a high-end TV in a recession, the marketing risks he's willing to take in 2010 and the opportunity that yet exists for the brand in a very competitive market.

Ad Age: How do you sell a very expensive TV in this kind of environment?

Mr. Steel: Overall the TV market was down in 2009, but we grew our business a lot due to the LED TV. Even though it was a premium product launched in a tough economy, it was very well-received and represented value for the consumer. That was the No. 1 factor, but it was helped by our growing brand. More and more consumers are going in and looking for Samsung products. They've done their homework.

Ad Age: Do you think consumers view electronics such as TVs and the like as discretionary or an essential household expense?

Mr. Steel: Home entertainment has become more and more important to consumers over the years as the quality of it and experience has gotten better. The mobile phone has really become indispensable in people's lives. As long as it is perceived to be very valuable, I think consumers respond to that.

Ad Age: What differentiates Samsung in the TV market?

Mr. Steel: In the transition from analog to digital, we saw the TV go from a box that was hidden away in the room to flat panels. A lot of our research was telling us that design was paramount. So we focused on design and focused spending on that.

Ad Age: This year you're touting a line of 3-D TVs, which aren't yet available. Is there a danger in over-promising on 3-D?

Mr. Steel: You are seeing that consumers are really hungry for 3-D. The home-entertainment experience has evolved so quickly with big screens, Blu-ray players. It's less about technology so much as, 'Is this an amazing experience for consumers?' The challenge for 3-D is content; that's what makes 3-D comes alive. That is why we are working with Dreamworks and Technicolor. It's the coming together of beautiful TV sets, great picture quality and the 3-D content that makes it come alive.

Ad Age: The forecasts for 2010 are slightly better than 2009. What do you need to achieve for the brand in 2010?

Mr. Steel: The brand is on a journey. We have built a very strong position in the U.S. market rooted in our products. We are well known for our TVs and cameras and increasingly for our appliances and cameras. The next opportunity for us is to take it to the next level and become a brand of strong preference, to have an emotional connection with consumers who go to stores with the sole intention of buying a Samsung because they've already had a great experience with us.

Ad Age: Any risks you're willing to take this year with your strategy?

Mr. Steel: Launching new technology is always a risk. A year ago when we announced we were going to bring LED TVs to the U.S. market a lot of people were questioning it; it was a really tough economy and you are launching a range of premium TVs? That's a major risk. Now, here we are: We've sold 2.7 million globally and have increased market share in the U.S. We feel very good if our products are delivering an experience to consumers; then we think it's less about risk and more about opportunity.

Ad Age: How do you think you'll be judged in your role?

Mr. Steel: A lot of it is the success of new launches and strengthening the brand in the U.S. with consumers. They understand who we are. When you look at our portfolio, being No. 1 in TVs and No. 1 in mobile phones, it is a unique position to build on.

Ad Age: When you joined Samsung a decade ago, it was hardly the powerhouse it is today. What was appealing about it?

Mr. Steel: When I joined in 1997, [it was in] the years leading up to the dot-com boom, and most of my colleagues from business school were going to startups for options packages. Why would I go to a Korean company known for semiconductors? I had grown up in Europe but wanted experience in Asia. Seems like it was a good decision now, doesn't it?

Ad Age: Do you think the brand has headroom?

Mr. Steel: We are still a young brand that is well perceived now in terms of what we brought to the market, and we'll take that brand into new markets.

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