Samsung's global gamble

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Think about Samsung Electronics and recall a buff male model caressing a microwave oven, or a chic uptown girl toting a notebook PC as if it were a Fendi bag. Those images are courtesy of AG Worldwide, New York, which spent seven years crafting Samsung's image in North America.

But now Samsung, the world's No. 4 consumer electronics marketer according to Cahners Research, wants to boost its sales and spread a consistent brand image around the globe. This month, it hired FCB Worldwide, New York, to tackle the branding challenge (AA, Dec. 11). Samsung is betting $400 million next year to associate its brand with innovative products such as the MP3 wireless phone.

In Interbrand's 2000 World's Most Valuable Brands survey, Samsung ranked No. 43, right after Philips Electronics, the No. 3 consumer electronics marketer in global sales. Samsung, projected to end the year with $28.5 billion in sales, wants to climb up the brands list.

Advertising Age reporters Tobi Elkin and Richard Linnett recently interviewed Eric B. Kim, senior VP-global marketing operations, Samsung Electronics, about his vision for the brand. Mr. Kim, who grew up in California and has a Harvard MBA, earlier ran his own software company and worked for Lotus Development Corp. Hired last February as Samsung's first global marketing executive, Mr. Kim brought FCB on board and will lead the brand push.

Advertising Age: Where's the brand in North America now, and where does it need to be?

Mr. Kim: In North America, our brand position is what I would call a solid mid-tier brand. Our brand position is much stronger in Europe, and it's very strong in Asia, and in fact we are the No. 1 brand in Russia and South America. So on a global basis, we are sort of [an] upper-tier [No.] 2 brand position.

AA: How would you characterize all the brand image work that's been done by AG for the last several years in this country?

Mr. Kim: AG was very effective through very creative campaigns and positionings to sort of have Samsung be recognized. It was principally a North American effort, although we used some of it in other parts of the world. AG was our creative agency. We never had a global agency, a true global agency.... In 1999, we did about $22 billion in revenue on a global basis. This year, up to the third quarter, we actually surpassed our last year's performance in terms of revenue and profit. So our view is that we are ready to truly embark on a global branding strategy.

AA: Is there any sort of conflict between Samsung and Compaq Computer Corp., which also uses FCB? At least from what we see in this country, Samsung is increasingly marketing convergence devices at retail, and so is Compaq.

Mr. Kim: Both Compaq and our conclusion is that the competition right now is quite contained. We have a very robust PC, IT business in Korea. We are, in fact, the market leader in Korea. And Compaq clearly has a presence in Korea as well. They [Compaq] consider Korea one of their major growth markets. But in Korea, the global agency relationship is not covered by FCB, it's covered by Cheil [Communications, a Samsung Group company]. So there's no conflict there.

AA: But what about in other parts of the world, this country?

Mr. Kim: In this country, our focus is principally in consumer electronics and PC peripheral products, such as monitors [and] printers, and so those are the products that we actually partner with Compaq.

AA: It's also true that Samsung Electronics could market a handheld product similar to the [Compaq] Aero.

Mr. Kim: If you're asking about speculation, in today's world of digital convergence and competition and cooperation, we're confident that with a strong and excellent partner like Compaq, we'll be able to manage this to the mutual parties' satisfaction. Today there is no conflict-I can tell you that with strong assurance. There may be in the future-who knows? I mean, the whole industry's changing very fast, but one thing that is for sure is that given the level of cooperation that both companies have, we will resolve any potential issues.

AA: Do you expect to continue Samsung's Olympic association?

Mr. Kim: We've had the association since 1998.... Absolutely. We find that kind of a global sporting event to be very effective for us in raising our brand awareness and brand credibility.

AA: As you build the brand, will you be re-examining everything from the logo to the tagline?

Mr. Kim: Our overall brand position, the brand essence and the tagline will stay. Because we think what we have established last year is solid, and we find it to be very effective. Our direction to FCB is to take that and really come up with a real focused and hard-hitting, meaningful strategy and execution.

AA: You mentioned global agency management.

Mr. Kim: As you know, one of the reasons we chose FCB is because they have strong presence in almost all markets that we're in. So our expectation is that over time, what we currently do with other local agencies will move over to FCB.

AA: Besides moving up on Interbrand's chart, do you have a vision of Samsung being in the top 10 by 2005?

Mr. Kim: Within our category, consumer electronics/digital convergence, we're in the top 5 right now. Our ambition is to be No. 1 by the year 2005 in our category. But in terms of Interbrand's brand ranking, it has all other companies like Coca-Cola, McDonald's.

AA: Wouldn't you like Samsung to be up there, too?

Mr. Kim: Yeah, it would be great, but it's hard for me to compare Samsung with Coca-Cola, for example, in terms of brand value. But clearly, in the categories where we compete, our aim is to be No. 1.

AA: What do you think needs to change, what do you think is going to make the difference so that Samsung becomes more of a household name?

Mr. Kim: We think we are very ideally positioned to tackle the challenge of the digital convergence era where traditionally distinct segments are merging and re-merging based on a different mix of capabilities. That's what's happening right now. Samsung is unique in that we have strong technology market presence in a number of key components of digital convergence. One is wireless, with wireless becoming a fundamental capability in almost all digital products right now. Second is the consumer electronics piece.... Thirdly, the key driver of this digital convergence is the degree to which you can put these powerful capabilities into silicon.... The siliconization of capabilities is what the game is all about.

AA: It seems like all your competitors want to claim a lifestyle positioning.

Mr. Kim: There is a lot of hype and lot of claims in this industry. What we do is focus on the fundamentals and continue to deliver better products at a better value, and we gain market share. Wireless is a classic case. [Editor's note: Samsung is No. 4 in wireless handsets globally.] We intend to leverage our products, our capabilities [and] our technology to establish our strength and also establish emotional bonding with our customer base.

AA: What would you say Samsung's core brand attributes are, and what would you do to fine-tune them?

Mr. Kim: Our full brand attribute is using innovative technology and superior design to deliver truly useful, fun and enjoyable products that enhance people's lives. Our target audience is what we call sensible brand buyers. These are buyers who want the trust and the security of a brand, but they also want superior value, as compared to those people who want premium brands period, regardless of price or those people who want price regardless of brand.

AA: What other kinds of brand attributes would you like this campaign to deliver?

Mr. Kim: We think design is going to become very, very key. Because you're talking about impacting people's lifestyles, it has to be attractive to people. These are no longer technology gadgets; these are life-enhancing items. And as such, design has a major impact. It's a little-known fact that we are the second most awarded design company in the world.

AA: What's the first?

Mr. Kim: Apple [Computer]. We're No. 2. The reason why our products are doing well in the market, especially the wireless phones, is because we have superior product design.

AA: Will you be touting design more, then?

Mr. Kim: There is a spectrum of activities we need to engage in. Clearly we need to continue to articulate and show our vision that is exciting and is compelling. But that by itself is not sufficient. We need to at the same time deliver really useful and value-laden products that customers prefer, and we need to continue the cycle all the time. Some companies tend to do a better job of envisioning and hyping, but they don't do such a good job in market performance, and some companies tend to do better in market performance but not much in the vision. But you need to do both.

AA: What's Samsung's weakness right now?

Mr. Kim: Our weakness has been we have not been telling our story very effectively. As a matter of fact, it's been quite recent that we've felt that telling our story would be a key priority for us.... Until now, our strategy was to kind of let each country take care of its own, and each product take care of its own, so fundamentally we had a very fragmented message to the world. That was okay as we were emerging from being a pure manufacturing-oriented company. But now that we have achieved significant market position, with proven products and market performance, the next step is clearly to have far more effective communication.

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