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Baxter Looks To Hold The Line

Ridgefield Park, N.J. — Just 45 days into his new role as the sales and marketing executive VP of Samsung’s consumer electronics division, Tim Baxter has been handed the challenge of maintaining the company’s leading market share positions in key digital television categories.

Formerly the strategic marketing senior VP for Sony — a position he achieved during his 10 years with the CE giant — Baxter has now become a leader for his former company’s most direct competitor. And with Samsung showing strong market share gains in TV unit sales and dollar volume, Baxter now must defend his position with a target on his back.

In fact, Samsung and Sony were neck and neck for the top market share positions in several key television categories in 2006, according to market share reports from The NPD Group.

Samsung ranked No. 1 in total U.S. digital television unit sales with 20 percent share, total flat-panel [plasma and LCD combined] sales in both units (16 percent) and dollars (20.4 percent), and in LCD unit sales (15.1 percent for units 10 inches and larger).

TWICE caught up with Baxter to get his assessment of the role he has assumed and his expectations for the year:

TWICE: What are the strengths of the company?

Baxter: Clearly, it starts with great products and a great design. From a consumer electronics perspective, we have a brand that is growing quite quickly in its appeal to the active consumer. We are really gaining ground there, especially built upon the market share inroads that we’ve made. If you take it a step further, Samsung’s strengths come for the investments it makes in R&D, and the fact that in the TV category we are able to compete in all four key technologies of high definition — plasma, LCD TV, microdisplay rear projection and CRT.

TWICE: Where do you see the need to make improvements?

Baxter: Being here just 45 days, I’m still building a perspective. I have some thoughts on that, but in general the key opportunity is to build upon our leadership position in the broadest way, in terms of the way we go to market and making that a sustainable market leadership position.

TWICE: What are your goals for the first year, five years?

Baxter: Sustained market leadership is our goal first and foremost, followed by broadening that leadership and growth in our other related product categories including video products, home theater products and audio products.

TWICE: How do you assess the value and the cost of Samsung’s extensive brand advertising efforts?

Baxter: The value of our brand advertising efforts is clearly evident in our growing brand awareness and preference combined with great products and partnerships. This has allowed us to win at retail. We don’t quote the size of the investment we make in the brand but it is sizeable on both a global level and here in the United States.

TWICE: In recent years, Samsung has employed a somewhat unusual tactic of combining brand promotion with charity fund raising. How successful has that been in helping Samsung achieve its goals?

Baxter: The notion of cause marketing as it relates to my experience is something that is relatively new. I am quite impressed, however, with Samsung’s commitment to cause marketing with the retailers’ active participation. This allows Samsung to tie in cause-related efforts with brand promotion, while giving our retailers a chance to share in that good will and promotion. It makes people feel good about what they are doing.

Samsung remains very focused on maintaining this corporate citizenship strategy.

TWICE: What is the status of Samsung’s relationships with top national retail accounts today.

Baxter: I think we have excellent relationships with our retail partners. Arguably, they may be some of the most collaborative in the industry. The proof of that comes from the growth numbers we have posted and raising our market share position from 14 percent in digital television to over 20 percent market share.

TWICE: To what do you most attribute Samsung’s market share accomplishments?

Baxter: Beyond delivering the right products, the positioning and the brand, I think it’s focus. I think the focus we have on very specific and singular goals is what’s enabled us to achieve those. On a broader level within the context of R&D we have a vertically integrated business model that enables us to very effectively and profitably understand and control elements of the value chain. That includes the components that go into our products, most notably the displays that make up such a large part of the value proposition. We think that becomes more and more critical at the pace with which this industry continues to change.

TWICE: How do you respond to critics who say that Samsung’s recent successes have come from it “buying market share.”

Baxter: I don’t know where that’s coming from? Maybe it’s from frustration some have with our success. Nonetheless, as I said earlier, we are the only company that participates in all four key display categories. We have that benefit to start with. If you align the resources, focus and priorities with that, you are able to succeed in all of those categories, which we did. Our focus is on building our partnerships, and realizing and delivering what the consumer wants. That’s how we’ve been able to profit. I view that as anything but a buy-market-share strategy, especially when you consider that from an overall strategy standpoint we are not the price leader. We don’t lead price moves downward. We are, in fact, a leader in our marketplace and we will vehemently defend our market share position, but have no intention to lead prices down.

TWICE: What is your assessment of the heavy TV price promoting that took place during the recent Black Friday period, and where do you see that leading in 2007?

Baxter: This past Black Friday was the first time in my experience in the industry that tier one brands actively participated in Black Friday promotions. I am talking about, most notable TV, which has been the most critical and significant product category in general. We were not one of those that participated in the Black Friday activity. Interestingly enough, we were still able to achieve a No. 1 position without participating in Black Friday. One would argue that if you were buying share you would certain participate in that activity. The industry has gotten very aggressive, and Black Friday kicked it off in many ways. We expect, however, the market to stabilize some going forward. How people are going to use Black Friday this year is too speculative for me to comment on at this time.

TWICE: What are the key profit categories for Samsung this and in future?

Baxter: On a corporate level the drivers of the business continue to be digital TV and handheld phones. When you combine that with a very successful semiconductor business, you have the drivers for Samsung’s corporate business. In my area, TV has been and will continue to the key profit driver, and in addition to that we are looking at growth in our home theater products, home video products as well as our MP3 solutions.

TWICE: How important a role will Blu-ray Disc play in Samsung’s future?

Baxter: We have a commitment to the category and it is one of the growth segments we are looking to under the home video umbrella. We were the first to introduce a commercial player and we achieved market leadership in 2006 by way of being first to market with a compelling solution. We will also be the first to deliver a second-generation [Blu-ray Disc] player, starting in March for sale in April. We view Blu-ray Disc as a key component in the broad high-definition strategy for the corporation.