The Korean giant has a sizeable share of the Middle East market
Samsung Electronics Middle East and Africa has steadily gained market leadership in the region due to increased market demand and price erosion, particularly in electronic products such as LCD TVs, monitors and mobile phones.
According to Sun-Bong Kim, president, Samsung Gulf Electronics, Samsung's market share in the region for LCD TVs is around 34 per cent. As far as LCD monitors are concerned, Samsung has a 19 per cent market share.
In terms of mobile phones, especially with the increasing expatriate population in the UAE as well as the entry of a second service provider, Samsung's market share is now placed at 17 per cent.
"The performance index has been experiencing an upswing due to increasing market demand and price erosion. Moreover, Samsung has seen substantial business growth due to innovative design, technological superiority and excellent customer care," Kim said.
"Exponential market expansion for Flat Panel TV (LCD and Plasma) due to price erosion resulting from economies of scale and demand arising from parallel shift has helped augment business for Samsung in this category," Kim added.
Kim said mobile phones, Samsung's premier strength, have also seen a substantial rise in business and positive market feedback due to the introduction of a new range of Ultra Slim phones that offer a variety of choice and technical competencies for customers.
As a brand, Kim described Samsung's growth rate to be approximately 25 per cent between 2006 and 2007. This rate is a combination of all product categories offered in the market. He mentioned that other products such as CTVs, printers and mobile phones would experience even higher growth rates in the coming years.
"Over a period of time, Samsung has experienced steady growth in business turnover. We have our targets set over the next five years not only on a generic scale but also on individual product groups. We believe that CTV under Audio Video, mobile phones and printers could scale new heights," Kim said.
Briefly describing the Middle East market, Kim said the UAE was the top contributor for Samsung with the exception of the Kingdom of Saudi Arabia. This, he said, is brought about by the dynamic nature of the market and its role as the window to the region. In terms of distributors, Kim mentioned that Samsung has multiple distributors in each of the countries catering to their respective product categories.
"In the GCC alone, we have 14 distributors," Kim said.
Samsung considers the Middle East market as one of the most vibrant and growing markets in the world today. This, according to Kim, is driven mainly by purchase potential.
"As this is one of the fastest growing markets with a high influx of people from around the world, dynamic categories like LCD TVs, LCD monitors, mobile phones and MP3 players are expected to have a continuous dominance throughout the year. Certain products line ACs are more seasonal in terms of movement," Kim said.
He admitted that catering to the local market is key to the success of any brand. As such, certain finetunings are done to provide a localised flavour and to meet the local market demands, which include the introduction of region specific models that address specific segments in line with their preferences through color variations, technical specs or aesthetic appeal.
"This is also a strategic part of our business plan," Kim said.
With rapid development in the real estate and hospitality sector, Kim indicated that business generated from the vertical market has created new opportunities for sales of audio-video products, IT products and home-appliance products.
He also indicated that it is still quite difficult to put a number against the vertical market as it stands today as parameters like the number of rooms coming up within a defined time frame, the number of projects approved and completion timelines may define purchasing power.
"This market is very dynamic and difficult to accurately measure or estimate the existing potential till things are more stable," Kim said. "We approach this segment based on estimation. Real estate holds a high share in this segment. Plans of individual governments are important towards growth of this segment. To date, the UAE is the biggest market. The trend will definitely continue as what we are experiencing now is just the beginning."
"The vertical market business is a growing sector and has its specific needs. The retail channel is identified and we have an estimate of the width of the channel. However, the width of the vertical market is still not fully open and is growing every day. There cannot be a direct comparison between the two, at the moment, as the dynamics and behavioral pattern is very different," Kim added in response to a question comparing Samsung's retail and institutional markets.
Samsung's focus at present is to launch products in all categories with cutting-edge technologies, advanced features and designs, with an aim to have sustained growth in all product categories.
Overall, Samsung Electronics has four business categories: audio visual, mobile phones, IT and home appliances. As such, its schedule of introducing new products is driven by individual requirements of each business unit. Recently, Samsung introduced a new range of LCD TVs, a new edition of Ultra Slim phones and Air Wash, a washing machine with SilverNano technology.
"The introduction of the models is fueled by market demand in the region," Kim said.
"There will be further introduction of new LCD TVs, plasma screens, monitors, printers and mobile phones in the second half of the year as well," he added.
While Samsung traces its roots to Korea, the advent of globalisation has enabled it to compete on a global scale. "Samsung prefers to compete with brands which have made their impact in the regional market or global market, irrespective of the origin," Kim said.
He added that the challenge is to offer a complete package to the consumer which should consider the view of both the tangible and intangible benefits, thus catering to price sensitiveness and not compromising on quality and service. In addition, Kim indicated that healthy competition is always a welcome scenario as it helps growth in business and service. However, he also pointed out that to see competition as Korean vs Japanese or Korean vs Korean is just a perception.
Headquartered in Dubai, Samsung Electronics Middle East and Africa has been operational for over two decades and has 13 offices. Samsung MEA looks after the distribution of its digital devices across the Middle East and Africa. The company has also invested in a service subsidiary located in the Jebel Ali Free Trade Zone in Dubai which has been functional for over a decade and is among the largest within the GCC countries.
Samsung MEA has witnessed phenomenal growth in the past few years and has recorded a sales revenue value of $2.6 billion in 2006, a six per cent growth over 2005.
In order to address concerns from customers, Samsung has also initiated a Customer Interaction Centre (CIC) and the 800-SAMSUNG service. These are part of the company's customer relationship management (CRM) initiatives which are designed to help understand customers' requirements and subsequently fulfill their expectations.
By dialing the call centre at 800-SAMSUNG, customers can avail assistance on different subjects, including obtaining product information, logging their feedback and seeking after-sales support. Furthermore, customers can offer suggestions on what additional features they would like to see in Samsung products to ensure that upcoming products can be customised to include their wish-list.
Samsung has set new standards in the Middle East's consumer electronics industry with launches of several first-of-a-kind digital products. It developed the U-track feature, the first anti-theft system to be found on a mobile phone. Samsung was also the first to launch Blu-Ray disk players, the next generation HD storage format and continued its commitment to redefining the HDTV industry with the launch of the new M8 series - the thinnest, clearest, most elegant LCD TV as of yet. Other technological advances include the launch of an air-conditioner series that fights SARS, bird-flu and second infections.
In 2006, the Business Week upheld Samsung as the 20th Best Global Brand as well as the 12th most innovative company worldwide. Other recognitions include a number one ranking in 'Asia's Best Companies' by Finance Asia, and the fifth 'Most Admired Electronics Company in America' by Fortune.
In the MENA region, Samsung scooped the 'Manufacturer of the Year 2006' and 'LCD TV Manufacturer of the year 2006' awards by PC Magazine ME.
In June 2005, Samsung became the sponsor of Chelsea FC, one of Europe's most popular football clubs. Samsung also sponsored the Dubai Desert Classic, part of the official world golfing season, attracting world-class golfers, such as Tiger Woods and Ernie Els.
Samsung's sponsorship of the 2006 Asian Games marked Samsung's two-decade commitment as official sponsor. Samsung also had the honour of selecting the Asian Games' Most Valuable Player (MVP) by awarding the most deserving with the Samsung MVP Award. Samsung also hosted a digital gallery at the Samsung Lounge.
It has also extended its official sponsorship of the Olympic Games through to 2016.
By Albert Alba
© The Business Weekly 2007
