Higher Profile For Samsung Garners Results

NEW YORK— Worldwide sales and profit for Samsung Electronics are rebounding this year despite lackluster world economic growth.

In 2001, the Seoul, South Korea-based company described its performance as "disappointing" as the company faced what vice chairman Jong-Yong Yun described as "a devastating crash in memory prices, a stagnant IT sector, and a global economic chill that turned even colder in the wake of the terrorist attacks in the U.S."

"Nothing could have prepared us for the challenges that the year would bring," he said in the company's annual report.

Despite the challenges, Samsung reported sales growth in its telecommunications, consumer electronics and appliance businesses, cushioning a double-digit decline in its semiconductor

sales and helping keep the company firmly in the black. In the first half of 2002, semiconductor sales resumed growth and sales growth in the other three segments accelerated. Samsung is the world's largest producer of memory chips, TFT-LCDs, CDMA mobile phones, monitors and VCRs.

For insights on why Samsung's sales and profit performance have spiraled up in the first half of 2002, TWICE interviewed Peter Weedfald, VP, North America strategic marketing and new media, for Samsung Electronics America. Weedfald oversees marketing, advertising and communication for Samsung's North American businesses, including consumer electronics, appliances, telecommunications, information technology and semiconductors.

Weedfald spoke with TWICE during the New York stop of the DigitAll Inspiration, Samsung World Tour. The event, which also travels to Beijing, Singapore and Paris, publicizes the company's initiatives, showcases Samsung's latest digital products and "restates the company's value proposition." He outlined the initiatives that have contributed to Samsung's recent successes despite severe economic challenges.

How has the economy treated Samsung Electronics?

In North America and the U.S., every division is increasing overall revenue and beating market share, revenue and profit-growth expectations in calendar 2002. Worldwide, we exceeded [sales and profit] expectations in the first and second quarters. And it looks like we'll do the same in the third quarter. [Samsung's third quarter performance, ended Sept. 30, are in the table, above right.] We also expect a very strong fourth quarter.

Our second quarter was the largest profit-making quarter [worldwide, in net profit] in our history.

Wireless is probably the fastest growing business, but Samsung consumer electronics has also done very well in the past couple of quarters.

How important is North America to Samsung?

About 30 percent of our global dollars in 2002 were in North America, including Canada and Mexico. We expect to accelerate and increase our rising overall market share in 2003. Success, in the form of market share growth in North America, is extremely important and valuable towards the overall growth and future of Samsung Electronics worldwide. In fact, it is as important as realizing our passion to ensure every consumer and every channel partner has a long-term and excellent relationship with our brand, our products, and our support.

Why are sales and profits rising?

Consumers have been voting for the Samsung brand because we have the coolest, newest products at price points in line with their expectations, coupled with superior service, support and follow-up. We design best-of-breed technology, then get it in the hands of consumers through our channel partners before the competition can react. We are in launch mode 365 days per year in all divisions. We are also in customer care mode 365 days a year, globally.

Another key component to our rapid sales and profitability rise is our very steadfast and integrated relationship with our very important channel partners. This partnership delivers aggressive and recurring market share advantages.

In addition, no competitor has the range of consumer and business technologies that we have, giving us, effectively, a multitude of shelf outlets within each retail chain. If, for example, you're buying a printer, you will notice other Samsung products such as cellphones, televisions, monitors or camcorders. This is what I call the "halo" marketing effect, real time, at the important point of sale. This varying array of Samsung business and consumer appliances under one roof gives us an aggressive brand advantage, reinforcing the high-value proposition of Samsung through an array of "wow" technologies throughout the store.

Also, our marketing, advertising and communications leadership has matured rapidly over the past 24 months, delivering accelerated brand awareness while simultaneously driving increased demand for our products. The latest Intrabrand study, recently revealed in BusinessWeek, indicated that Samsung's global brand value has increased 30 percent to $8.4 billion over the past 12 months.

In May, we launched a new $400 million global advertising campaign to extend our first global advertising campaign in 2001. Our media investments for 2002 include television and print advertising, online marketing, retail promotions, billboards, collateral and point-of-purchase displays. In addition, we are a major sponsor of the Winter Olympics, the LPGA golf tour, and a variety of other special events and trade shows.

In advertising, we haven't spent dramatically more [this year], but we are more careful, more maverick and frankly, more keenly focused on our most important narrowcast and broadcast opportunities.

What is Samsung's position in the market?

We aim to be a digital convergence leader and a strong digital lifestyle company that makes our private and business lives better in an information economy. We are a leader in consumer and business technologies. Our greatest asset is our keen product focus. Unlike several of our competitors, we are not in the content provision business, such as creating movies, or PC business applications or Internet sites. And we are also not in the communications "pipe" business, deliverers of bandwidth such as ISPs or CDMA carriers. We are in the product technology business. This product focus allows us to focus on delivering the best choices in visual devices to view and enjoy all forms of online and offline content. It also allows us to be more versatile and flexible information carriers than the competition. Our concentration and engineering prowess also allows us to become excellent partners with companies such as America Online for set-top boxes and with Sony for Memory Sticks.

Who is your target customer?

I am sure if you asked our competition this question, they would wrangle through an array of words beginning with "demographic, psychographic" threaded to "household income and age requirements, etc." As you may know, our mantle, our slogan clearly states; "Samsung Digitall, Everyone's Invited." Our No. 1 target customer is anyone who has already purchased a Samsung product because brand is nothing more than a promise of great technology, great ease of use, and great service and support. We believe we pay off on that promise each and every day, making our current family of Samsung buyers our most important target to evangelize our company and to consider purchasing other Samsung products.

There are millions of our consumers in the U.S. About 20 million alone have Samsung cellphones. We want to step up, thank and reward our existing Samsung customers with even more "wow" products, even better service and support. Our accelerating market share success proves this customer-centric, targeted, and focused program spills over quickly and efficiently to enlisting new consumer opportunities within our same targeted consumer profiles.

How does your market share stack up to the competitions'?

We are very proud to be the worldwide, No. 1 leading manufacturer of SRAM and SRAM, with more than 25 percent market share in units. In TFT LCD and CRT monitor manufacturing, we are also the No. 1 manufacturer globally. And we even hold the No. 1 manufacturing honor for microwave ovens.

In wireless, we are the No. 1 manufacturer of CDMA handsets worldwide, and in the first half of 2002, we accelerated from the No. 4 to the No. 3 global leader for all wireless handsets. About 2 1/2 years ago, we were No. 8 or 9 globally.

In DVD, we are the fourth largest manufacturer worldwide, and U.S. sales have accelerated to a highly competitive two-digit market share. We are also the No. 1 best-selling LCD and monitor brand through retail in the U.S. as of this year.