<Lecturer’s Name and Course Number>
Influence of PESTLE 3
Economic factors 4
Social factors 4
Technological factors 4
Legal factors 5
Environmental factors 5
Concept of Positioning 5
Stages of product life cycle 7
Introduction stage 7
Growth stage 8
Maturity stage 8
Decline stage 9
Influencing factors 9
Product-Oriented Factors 9
Target Market and Direct Competition 10
Marketing Strategy 10
Budget allocations and Resource availability 10
Reference List 12
Samsung Electronics have launched hundreds of latest smartphones including Galaxy J7, Galaxy Xcover 3, Galaxy Grand Prime 4G phone, Galaxy S5 Plus, Galaxy S III Mini Value Edition and lots more. These products have now become an essential part of our lives. Everybody has a smartphone and Samsung is world’s largest selling company. This paper analyzes the influence of PESTLE on Samsung’s strategies and decision-making. The concept of positioning and its benefit to identifying target market is also explained. Further, this paper includes stages of Samsung’s product life cycle and factors that can influence the choice of marketing communication tools.
Influence of PESTLE
Electronics industry is playing a vital role in today's modern era. It dates back to 1984 when the electronic sector started to be owned privately. Before 1984, all electronic companies were primarily under government’s authority. After that in 1991, everyone encouraged private as well as foreign investment (Jr., 2005). It was the era of rapid growth in the electronic industry; it promoted market capitalization, the increment in the size of the industry, created various employment opportunities and provided many benefits to producers and consumers. Various factors such as political, economical, social, technological, legal, and environmental, contributed to this rapid growth (Baxter, 2015). Let us understand this with an example of Samsung, a leading electronics company, which deals in consumer appliances and consumer electronics.
Political factors include governments’ initiatives to boost their economy by inviting national and foreign investments. Investments from national and foreign companies give a big helping hand to boost the economy of any country. Political legislation of a country strives to improve all areas of a country including education, health and country’s infrastructure (Newton, 2014). When Samsung invests in any country, it contributes to the economy and along with that, it becomes subject to various political risks. The risks can vary country to country, and they become favorable in some countries like China and India while difficult in other countries like South Korea.
The economy consists of financial and monetary resources of any country, and economic factors include interest rates, foreign exchange rates, economic development, inflation, taxation dynamics, etc. These economic factors have a big contribution to profit and loss of any company. The increase in interest rates decreases borrowing capacity of a company and inflation results increase in salaries of employees, which ultimately increases the expense of a company. Keeping these factors in mind Samsung decides its policies and target consumer market. When a country has a good economy, it means people have disposable income to spend. Samsung always require consumers with disposable income and products at their preliminary stage as its improved modern products can be sold at a big amount.
The social environment of any country includes customs, traditions and practices. They can vary from group to group, but the almost entire country keeps same social and cultural thought. As aged people want products to be relaxed and younger people, want modern and fashionable products. Considering these factors, Samsung has made its policies and has achieved its goals. Further social deviant factors like bribery, etc. also have affected the strategies of the company.
Technological factors include various aspects relating to technology like modern designs, specifications of products, latest devices and more. The advantage that technology provides is to cut down the cost and improve quality. Considering day-by-day changing technological factors, Samsung launched smartphones and hit the markets where these products were at their preliminary stage. Adopting the latest technology and offering the needed products made the company world's leading smartphone brand.
Legal factors include the policies of government like minimum wage policy, for a company to be operated under it. The policies can be favorable as well as difficult for a company like if a company is new in any country, it does not generate good income, and if minimum wage policy suits the company then it can go into loss. On the other hand, if policies become favorable for a company it will generate more revenue.
Environmental factors include weather and climate variations and it affects a country by various means such as good weather attracts tourists, and bad weather makes people limited to them. It further affects industries like transportation, which result in the need for better vehicles. Further companies should have to use environmental friendly equipment and designs, so the Samsung does, as it is defined in its Corporate Social Responsibility.
Concept of Positioning
The word positioning implies the act of putting something according to set criteria, but its concept in marketing is to identify the appropriate target consumer area for a product or service (McGhie, 2012). Various authors have defined the concept of positioning in their own words, but none of those definitions is final and complete. Ries and Trout’s gave its basic concept in the book “Positioning: The Battle for Your Mind” (1981). The main theme of this concept is to make an effort to attract consumer thought to the specified product or service, making them much better than available competitors in the market. In the next stage of positioning, it is differentiated that what things should be followed to make the product completely different from others and consumers just want to buy the specified product. The findings are then included in the positioning statement, which then guides how to make the product better in order to leave the competitors behind. Positioning plays a vital role in an organization’s achievement of goals like increasing sales volume, beating competitors, brand recognition, etc.
Positioning can be taken in other sense that is repositioning; it means to carry out positioning by making changes according to the identification of market factors. When factors are changed such as demand or foreign exchange rates, then the company needs to establish new plans to carry out in order to earn maximum profit. Another sense, in which positioning is carried out is depositioning. Depositioning is an attempt to hit the competitor's product by changing the mind of buyers about its attributes. This attempt may work more effectively when buyers already have changed their perception regarding the quality of a product (Böhm, 2005).
Positioning is an analytical approach that can help Samsung in various ways to find out its target market. It ensures that whether the target market is already set to launch the product or you are going to introduce a new product. It further provides information about the current size of the target market, competitive position, cost to reach, compatibility and expected growth (Taderera, 2010). When carrying out positioning these five things ensure that you have selected the best target market for your products:
Size – Identify the size of a target market, does it worth pursuing.
Expected Growth – Regardless of size, the market can grow, and profits can be increased. Here the expected future growth in the target market in identified.
Competitive Position – What is the number of competitors already available in the market? What is the probability of your success? Lower competition indicates higher success.
Cost to Reach – Does this market match with the strategies you follow? How much will it cost to reach the market and generalize your product?
Compatibility – Here you identify the compatibility of the market with your product. If you are going to sell laptops, a person must have knowledge and demand about them if they do not know what computer is then the target market is incompatible.
Stages of product life cycle
Product life cycle is a way to understand any product, from where it started, how it grew, what is its maturity level and why does it decline. These all four stages help define any company’s potential from starting to current position/end (Saaksvuori, & Immonen, 2010).
In 1983, Samsung initiated its telecommunication business and hired forty engineers with a background of telecommunication industry. At first the engineers got idea that “how a phone works” from Japanese car phone. Samsung launched its first built-in car phone, named SC-100. After a disastrous result from first experience, Samsung decreases the number of engineers to ten. Ki Tae Lee, current president of the Telecommunications Division, at that time, was head of the Wireless Development Team, asked Samsung to buy ten Motorola. After disassembling many phones, they finally come to know about product design, quality, durability, and optimal environment for communications. Thus in 1988, first mobile phone was developed and name SH-100. In 1993, a member of its marketing team, while hiking noted that his Samsung phone was unable to make a call, but another person was calling from his Motorola mobile. This event led Kun Hee Lee, to introduce the concept of “New Management”.
In a meeting, Samsung decided to launch a mobile, in 1994 comparable to Motorola. After that in November 1993, the development team revealed a new model, the SH-700, which could endure the pressure of the body, even a man step on it. In connection to that, the SH-770 was unveiled under the brand name “Anycall”, in October 1994. This phone had all the characteristics that the best phones had at that time. After a great success of this model, in March 1996, Samsung introduced its first CDMA mobile phone, SCH-100. Various Personal Communication Services (PCS) providers were working in the market at that time, and it was the need of that time to step into CDMA field. After CDMA, Samsung launched its first PCS phone the SCH-1100, in partnership with KTFreetel and Hansol PCS. The PCS phone was equipped with various features including enhanced battery life, lightweight body, and the ability to capture delicate sounds. After it, Samsung focused on latest features such as voice recognition feature. After just a year of the launch of PCS phones, Samsung made it achieve 58% in the PCS market and 57% market share in the CDMA cellular market.
Before Samsung decides to move in digital TV and smartphones, it established a computer-programming laboratory in 2000. The laboratory provided Samsung a pathway toward latest electronics. Considering the needs of the day, Samsung introduced various mobile phones with different features for different users. Moving to smartphones and just focusing on it made Samsung become world's largest mobile phone producer, in the first quarter on 2012. This achievement overtook Nokia, which was dominating the market since 1998. Converting its half of its Austin chip manufacturing plant to make more profits Samsung invested 3 to 4 billion dollars, in late 2013. Samsung launched various smartphones in its Galaxy series, and a controversy remained there between Samsung and iPhone. Putting a focus on just smartphones, Samsung decided to shut down its streaming service on 1 July 2014. Samsung is now planning to a number of new services by the end of 2015 ranging from technical support to security solutions.
Taking all these facts in mind, decline of Samsung can be seen. Every rise has fall, so let us see how much progress Samsung can have.
There are various marketing communication tools available in the market, but you must have a look at the factors that can influence the choice of the tools.
Product-oriented factors are consumer knowledge, information about product and consumer need. While selecting communication tools, it must be kept in mind that whether the consumer knows about the product or not, if he knows, how much (Brown, 2012). Another thing, what information do you want to convey to the consumer and how much does a customer needs your product. Considering these factors would help to select the proper communication tool like advertising, in-store sales promotions, etc. Samsung, in this case, should prefer these both channels because advertising would provide information to customers, and in-store sales promotion would encourage customers to buy the product easily.
Target Market and Direct Competition
The target market is about selecting the area where you have to launch the product, and direct competition is a process to compete with already available companies that sell the same kind of product. These are two critical things to keep in mind while selecting communication tool. What is the type of target market? What is its size? Is there any trend prevailing regarding the product, which is to be launched? What is the number and strength of competitors? These all things must be considered, and communication tool must be selected in accordance with them, if the size were small, a simple tool like organizing just an event, would cover it, but if it is big in size, then a number of tools will be selected to cover it (Baack, 2012). In the same way, if competitors are low in number that you will not have to put great efforts, but if competition is tough, then the strategy would be defined in accordance with that.
Marketing strategy influences the choice of communication tools at a big level. Every marketing strategy follows different tools. There are two common marketing strategies: push strategy and pull strategy. A push promotional strategy is used to create demand among the customers for a specific product. If one has to follow this strategy, then he must choose direct selling and trade promotions as communication channels. While, a pull promotional strategy is used to draw the customer in order to increase the demand. If one is choosing this strategy, then he must have to choose product promotions and mass media advertising as communication tools (Eagle et al., 2014).
Budget allocations and Resource availability
Whether you are going to launch a campaign or advertise in a simple newspaper, both things require a budget. While selecting communication tool, an annual marketing budget must be kept in mind. Before selecting you should think, how much each promotional campaign would cost and which tools may be beneficial and cost effective. After considering the budget, availability of the marketing resource must be taken into consideration (Shimp, 2008). Advertising into a newspaper is much less than the production of an advertisement and running it on television. In this connection, you have to keep it mind that what is the number of circulation of the newspaper and what areas does it cover. The resource you are using as a communication tool, what is the ratio of its availability (Grigsby, 2015).
Samsung, starting as a cheap electronic producer has become world’s largest smartphone brand. It is due to its good and timely decision-making. Analyzing political, economical, social, technological, legal, and environmental factors, Samsung has taken outstanding steps. Utilizing the concept of positioning in the way as it is required; it has made a place in the hearts of customers. From 1938 to 2015, a never giving up spirit has brought Samsung at this stage as it has left Nokia and Apple behind. Choosing right marketing communication tool to convey a message to consumers has also helped the company. It is quite a big achievement to take steps professionally and wisely and be the world's leading brand.
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