Samsung wagers $80 mil to reach top-tier stature

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Samsung Electronics America will increase its marketing budget this year by some 40%, to $80 million, in a bid to bolster its brand in North America.

The South Korean electronics giant, which has struggled in recent years to build its presence in the U.S., vows to support state-of-the-art digital products with high-profile advertising.

The company recently kicked off a new ad effort via AG Worldwide, New York, showcasing its latest innovations such as portable digital music players and digital TVs (AA, Oct. 18).

"We think the North American market is the most important one in the world," said Sun Hong Lim, director-marketing communications, Samsung Electronics America. "We are confronting a great opportunity for our company."

INVESTING IN IMAGE

Samsung hopes to advance its brand into a higher tier among consumer electronics companies with leading-edge digital technologies such as smart chips, which are the brains of digital cameras and many other devices; wireless telecommunications; and display technologies.

Samsung -- along with competitors such as Sony Electronics, Matsushita Electric Corp. of America and Pioneer Electronics USA -- are transitioning from standalone products to networked devices and seeking to establish a digital lifestyle in the home, car, office and virtually anywhere people go.

"We're not a top-tier brand at this time, but we fully understand that brand image is important in the digital era," Mr. Lim said. "We are developing and investing in brand image."

According to Mr. Lim, consumers' awareness of the brand is in the 16% to 20% range. In 1998, he noted, 60% of consumers had a positive opinion of the brand, while in 1999, that number increased to 75%.

Brand awareness should increase with strategic marketing on new products such as the youth-oriented Yepp, a portable MP3 player, and digital TVs.

"They're betting on the right horses, and they have the goods; now they have to merchandise them well," said Richard Doherty, director of research at Envisioneering, a technology assessment and market research company.

There is some evidence to suggest that Samsung has the capacity to run with the big horses. Though Matsushita's Panasonic brand was the first to market with a next-generation digital TV in April 1998, Samsung was next with its Tantus line in September.

PANASONIC LEADS PACK

With emphasis on fourth-quarter 1999, sales, Envisioneering pegs Panasonic as having the No. 1 market share in digital TV, followed by Mitsubishi Electronics; with a dynamic race between Samsung, Sony, Philips Consumer Electronics and Thomson Consumer Electronics for the third through sixth positions.

Later this year, Samsung will cue up a campaign via AG on innovative flagship products such as FLCD, a more affordable display technology; Yepp MP3 players; flat-panel computer monitors; and Internet phones. These star products are likely to be incorporated into Samsung Telecommunications' global sponsorship of the 2000 Olympics in Sydney. Samsung Telecommunications is the global wireless sponsor of the games.

Samsung Electronics America also is a sponsor of the Grammy Awards. Other entertainment sponsorships, as well as marketing alliances with content providers, are under consideration.

"We would like to be a leader. We were a follower," Mr. Lim said.

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