Global warning

02 Jul, 13

Britta O’Boyle discovers how electronics giant Samsung has ambitions to take over home appliance market becoming number one, globally, by /2015

Perhaps a company best known for its TVs, mobile phones and tablets, Samsung is one of the world’s leading electronics companies. It has a number of accolades under its belt, including /27th in the ‘World’s Most Admired Company’ list by Fortune Magazine in /2005 and was one of the top 10 in the world’s 100 global brands in /2009. In /2011, Samsung Electronics was honoured with 37 CES /2011 innovation awards.

Now its focus has turned to home appliances. Russell Owens, head of sales for digital at Samsung, says: “In terms of digital appliance businesses, we posted a revenue of 13.95 trillion won, for the final quarter last year, which was /20% quarter-on-quarter. We have got to a market leadership position in mobile phones, gaining market share in tablets, market leadership status in TV, in AV and one of the biggest markets that we operate, which is home appliances, is the next growth engine for us in terms of becoming number one. We have got a stated ambition of becoming number one globally in the home appliance market by /2015.” He explains why the company is focusing on home appliances: “As we see markets such as TV and mobile phones moving to saturation in volume terms, the volumes and our positions in those markets mean that there tougher to significantly increase the amount of units that we ship, so therefore we look to other markets such as home appliances for us to provide a growth engine for the overall consumer electronics business.”

Focusing on Europe

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And it has set its eyes firmly on the European market to help the company achieve its aims, as it revealed at its recent European Regional Forum in Monaco. “Europe is a dynamic region which continues to be at the heart of Samsung’s business and a constant source of our inspiration,” said SP Kim, president and CEO of Samsung Electronics Europe at the event, which revealed its latest range of “Made for Europe” home appliances. For the last three years, the company has also been moving some of its production to a facility in Poland. Russell Owens explains: “One of the key things we are focusing on in Europe is utilising our production facility in Poland. We are now ramping up that to deliver us capacity for refrigeration and washing machine business that enables us not to target just the high and the premium sectors such as 1/2kg washing machines, or American side-by-side fridges, but core 7 and 8kg washing machines and core two-door combi refrigerators.”

He continues: “We believe the economies of scale which that facility will unlock, will enable us to drive our innovation into core categories, and also reduces the lead time for us to market. Where a couple of years ago we were reliant on far eastern manufacturing, the ability to be able to be flex the demand on requirement and consumer demand is very difficult when you are on a much longer lead time. So by fitting the capacity of these factories, it will enable us to react to market demand much quicker.”

Targeting specialist dealers

And to ensure Samsung is creating demand, the company plans to target independent retailers, particularly with its built-in appliances. Owens explains: “Retail is obviously very important as we look to drive our product innovation message. You need to be able to tangibly demonstrate that in store, or through training and in-store display solutions, but also as we target a different area of the market such as built in cooking, that then starts to play into the independent sector and kitchen specialists because it is a different market to that of freestanding major domestic appliances so we have to approach that in a slightly different way.”

He adds: “We are looking to add to our independents and specialist teams. So we are building resource here in the UK both from a sales point of view and a marketing point of view to gain that expertise and get people out there to understand these businesses. Because of the buying groups we have access to many independents. So our focus is on targeting as wide a sector of that market as possible through our buying groups, such as CiH and the Sirius Group, as we do in other categories. But also to hone in and directly target a group of independent retailers we can classify as specialist digital appliance centres who would benefit from personal area sales manager contact, access to our marketing and promotional campaigns, access to our training facilities, access to product information and staffing centre programmes. So it is a much more tailored proposition to those key specialist retailers.”

Specification drives sales

In a heavily populated and competitive appliance market, Samsung believes its competence in specification, which matches needs – derived from its consumer insight – will drive its sales. Owens continues: “Clearly there are a lot of established brands, Far East, Far East European and European brands out there. So there is a very complex competitor landscape we are up against, with a wide range of product propositions from entry level right the way up to premium. What we know is we are now in a position to offer highly specified core products in all categories that deliver the benefits of space efficiency and design. Our Digital Inverter technology gives energy efficiency, quietness of operation and durability, the inverter motors and compressors are guaranteed for 10 years. So things like food freshness and fabric care in refrigeration and washing machines respectively, are a fundamental part of our strategy that have been driven out of our consumer insight so these are the areas we are focusing on from a Samsung point of view.”

It will also follow a model used in its other businesses, to gain a global number one position in home appliances. This will include increasing the average selling price of appliances, through educating the consumer. Owens explains: “Given what we have done in all the other categories, gaining share from others, and increasing average selling prices by offering a very strong product proposition in the mid to premium categories, we hope to transition some of those sales up into those categories through communication of our technologies, above the line TV campaigns, training and below the line activities that the consumers can see the a true benefit of spending a little bit more on a Samsung product.”

Connection to future

And it believes, that ultimately, internet-enabled appliances and connection throughout the home, will play into this consumer electronics giant hands. Owens concludes: “What we see is that ultimately Samsung home appliances will benefit from the halo of effect of other categories. We have become renowned for technology, innovation and smart connected devices particularly in the mobile, tablet and tv space in the last few years. We are uniquely placed in that market because we can now offer the complete home and mobile smart experience. And we are now starting to see that technology cross over into home appliances. There is a wifi refrigerator available in the US, and we are looking at exploring the right time to bring that technology into the UK market. But in the future, we can very much see smart appliances being the direction that underpin the premium end of our innovation pipeline.”