By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Samsung Telecommunications America has raised its U.S. market share by expanding into GSM technology, adding new carriers, concentrating on mid-to-high-tier products that increase airtime revenue, and developing extensive sellthrough programs that competitors lack, company executives said.
Just as important, they said during a press/analyst briefing here, Samsung has been accelerating its new product rollout. The company shipped about 12-14 new products in North America last year and plans to accelerate that to about two per month in 2003, said Randy Smith, product marketing and new business development VP. To keep up with the pace, the company is expanding its factory capacity, said Pete Skarzynski, sales and marketing senior VP in the mobile terminals division.
Samsung's handset sales growth will continue to outpace the industry's growth, Skarzynski said. In 2001, global industrywide sales slipped about 6 percent, but Samsung sales rose 32 percent. In 2002, Samsung forecasts industrywide growth of less than 1 percent to 5 percent to 390-410 million units, but Samsung forecasts its own growth at 45 percent to more than 40 million units from 2001's 29 million. Samsung sales were 22 million and 17 million in 2000 and 1999, respectively, the company said.
In the first two quarters of this year, Samsung ranked third in worldwide sellthrough to consumers with 9.6 percent and 9.5 percent of global sales, respectively, up from sixth place in 2000 at 5 percent. This year, only Nokia and Motorola, in that order, have higher worldwide shares, Samsung said in citing Gartner Dataquest statistics.
Samsung's share of mid- to high-tier products is even higher. In 2001, Samsung had 7.1 percent unit share worldwide in all types of phones, but in the mid- to high-tier market, which comprises 30 percent of industry sales, Samsung's share was 25 percent, the company said, citing Gartner.
Upscale share: Pointing to a new study by J.D. Power and Associates, Samsung claims roughly 45 percent of the $150+ handset market in the U.S. The recent study also found that Samsung's phones led the industry in terms of customer satisfaction and product design, Skarzynski said.
Samsung's focus on mid- to high-tier products is helping Samsung gain share, and the strategy is right for the times, Skarzynski said.
For one thing, the large installed base of wireless subscribers is increasingly looking for upgraded phones to replace their current models, Skarzynski said. "People want step ups now."
Second, "carriers tell us they have a lot of selection at the low end and want to keep subscribers on the network by offering higher end phones," Skarzynski continued. Churn, said Smith, "is significantly less" among users of mid- to high-end phones.
Third, "as people pay more for a phone, they use it more," Skarzynski said in citing a J.D. Power survey. Smith added, "If you pay $100 for a phone, you try a little harder to use it [to justify the expense]."
Carriers aggressively promote Samsung phones, Smith added, because higher end phones generate more revenue.
Although mid- to high-tier phones still account for a minority of industrywide sales, Smith noted, "Our strategy is to increase demand at the high end."
Helping ratchet up sales was the company's GSM diversification. For the first time in 2002, Samsung will sell more GSM phones worldwide than CDMA phones. Samsung sold its first GSM products in 1997 in Europe and its first in the U.S. in September 2001 to T-Mobile, followed this year by sales to Cingular.
In Korea, rapid new-product introductions also help accelerate sales by enticing "users to change phones more frequently than before," said Muzibul Khan, VP of product management and engineering.
Phones have "become more like personal electronics," Skarzynski noted.
Because of Samsung's reputation for first- and best-in-class products, ease use, and stylish design, he continued, the company has come about above average in a J.D. Powers survey in minutes of use, repurchase intent and actual repurchase rate.
Marketing approach: Samsung's two-tier approach to marketing also boosts the company's share, Smith said. "We are unique as a handset manufacturer because we co-market with carriers, and we have a marketing strategy to reach carriers and a marketing strategy for consumers."
The co-marketing approach with carriers yields "strong and deep relationships," he continued. Representatives of both companies sit down and talk and ask, "What is your key selling message, and how can I craft my message to reinforce that?"
Samsung also has direct marketing relationships with all major retailers, he said.
"Carriers like our focus on sellthrough" to prevent inventory buildups, Smith added.
Citing one example of a sellthrough program, Smith pointed to a midyear NASCAR-race promotion with RadioShack, which experienced its highest wireless monthly sales during the promotion. In snagging Britney Spears to endorse Samsung phones exclusively through January 2004, Samsung was able to further penetrate affluent youth and teens who were "traditionally a stronghold of Nokia," Smith said.
"When we use her image on an end cap, sales go up 20 percent," he said. "Love her or hate her, you stop."
Future growth: To increase share in the future, Samsung will offer enterprise solutions for the first time in 2003 for "corporate warriors" who essentially want a "five-ounce notebook computer," Smith said.
Samsung will continue to ignore the prepaid market, however. "Low-end, featureless, generic product ... is not our heritage," Smith said.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.