AST Research is slashing ad spending, abandoning retail sales and honing in on a segment of the business market. Owner Samsung Electronics is betting that strategy will put the beleaguered PC maker back in the black.
To control costs, AST next year will slash U.S. ad spending to about $10 million, vs. the $20 million AST had been spending before management began to pull back.
STICKING WITH ANDERSON
AST for now plans to stick with agency Anderson & Lembke, San Francisco, according to Tom Scott, a former general manager of Toshiba America's computer business who joined AST in November as senior VP-worldwide sales and marketing.
Mr. Scott said he wants to make sure AST communicates its new strategy to the agency and see how it executes. "Then I'll make my decision" on the agency, he said.
AST topped out briefly as the nation's No. 4 PC maker early this decade, but it has long since dropped out of the top 10. But Samsung, a power in consumer electronics, sees the AST brand as central to its ambition to be a top-tier player in the global PC market, part of its broader goal to be a force in the converging multimedia market.
Samsung rescued AST with a cash infusion in 1995, and it took full control last August.
Over the summer, Samsung phased out its Samsung line of PCs in all markets except Japan and its South Korean home. AST, meanwhile, in July pulled out of the cut-throat U.S. retail market to focus on the small- and medium-sized business market, where distribution is handled by resellers.
But other PC makers--including No. 1 Compaq Computer Corp.--are aiming at small business.
Top PC brands are growing at the expense of lesser brands and PC clones. Because of the industry's shrinking margins and growing efficiency, top brands needn't cost more than lesser brands, which gives buyers less reason to opt for a brand like AST.
PROFITABILITY BY `99
AST's new president-CEO, S.T. Kim, vows an emphasis on quality and its target market will put AST back in the game. He said his plan is to reach profitability by the end of 1999.
"The problem with AST is there really has been no clear strategy in sales and marketing," Mr. Kim said. "I'm going to focus on what we're good at. If we're good at it, market share will follow."
Copyright November 1997, Crain Communications Inc.