Marketing plan to improve brand of samsung washing machine (2011 2012)

TRƯỜNG ĐẠI HỌC MỞ TP.HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITY LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBMM4 Dang Thi Hoai An Marketing plan to improve brand equity of Samsung

TRƯỜNG ĐẠI HỌC MỞ TP.HCM

HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITY LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBMM4

Dang Thi Hoai An

Marketing plan to improve brand equity of Samsung Washing Machine (2011-2012)

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor’s name: Dr Nguyen Thang

Ho Chi Minh City

(2011)

DECLARATION

I declare that this thesis does not incorporate without acknowledgment any material previously submitted for a degree or diploma in any university; and that to the best of knowledge it does not contain any materials previously published or written by another person except where due reference is made in the text

Ho Chi Minh City, March 1st, 2011

………

Dang Thi Hoai An

Master of Business and Marketing Management

I also would like to extend genuine thanks to Mr Serge Bywalski and Ms Nguyen Thi Mong Thuy for their support during the implementation of my study

In summary, the thesis meets the requirement (both content and presentation) of marketing master thesis

I propose this thesis to be presented in front of examiner board of the Solvay-OU Master of Business and marketing Management Program

Ho Chi Minh City, March 1st, 2011

Dr Nguyen Thang

CONTENT

DECLARATION i

ACKNOWNLEDGEMENT ii

TUTOR’S COMMENTS iii

CONTENT iv

LIST OF FIGURES & TABLES vi

1 CHAPTER 1: EXECUTIVE SUMMARY AND PROJECT OBJECTIVE 1

1.1 Executive summary 1

1.2 Project objective 3

1.3 Scope and limitation 3

1.4 Project outline 4

2 CHAPTER 2: LITERATURE REVIEW 5

2.1 Brand equity and its importance 5

2.2 Positioning strategy 6

2.3 Research method & methodology 7

3 CHAPTER 3: SITUATION ANALYSIS - THE CASE OF SAMSUNG WASHING MACHINE 9

3.1 Market analysis 9

3.2 Samsung washing machine business 10

3.3 Samsung vs Competitors 12

3.4 Key findings from consumer research survey 15

3.5 SWOT and BCG analyis 18

3.6 BCG analysis 21

3.7 Summary 21

4 CHAPTER 4: PROPOSAL OF MARKETING STRATEGY AND PROGRAMS TO BUILD BRAND EQUITY 22

4.1 Business and marketing objectives 22

4.2 Segementing, Targeting and Positioning 22

4.3 The marketing programs to build brand equity 26

4.4 Communication strategy 31

5 CHAPTER 5: CONCLUSION & RECOMMENDATION 35

REFERENCES 37

APPENDICES 38

LIST OF FIGURES & TABLES

List of Figures

Figure 3.1: Market size and growth of washing machine market 9

Figure 3.2: Price class share by type 10

Figure 3.3: Market share by brand YTD November 2010 12

Figure 3.4: Brand equity evaluation – key factors influencing purchase decision 13

Figure 3.5: Brand equity evaluation- functional and emotional map 14

Figure 3.6: Brand equity evaluation- mind share 14

Figure 3.7: Key buying factors influencing purchase decision of drum vs top load 16

Figure 3.8: Brand image 17

Figure 3.9: Price sensitiveness – drum vs top load 17

Figure 3.10: Media habit 18

Figure 4.1: Competition base price analysis 29

Figure 4.2: Samsung distribution system 30

List of Tables Table 3.1: Segmentation mapping 13

Table 3.2: Brand awareness 14

Table 4.1: Segmentation mapping 22-23 Table 4.2: Core brand value 26

Table 4.3: Target profit- base price analysis 28

CHAPTER 1 EXECUTIVE SUMMARY & PROJECT OBJECTIVES

This chapter gives the general background, the rationale of this project, and then helps understand the problem statements Objectives and scope of the project is also defined

1.1 Executive summary

According to Consumer panel conducted by TNS in 2009, washing machine penetration

rate in urban Vietnam was around 23%, that was, among 6,174,132 urban Vietnamese households, 1,420,050 of them were using washing machine Give the fact that Vietnamese living standard keeps increasing, the penetration rate is expected

to reach 30% by 2015 GFK also announced market size of 843,000 in units and around US$ 191 millions in turn-over by 2011, increasing 11% and 6% respectively in comparison

to 2010 Although these figures showed it a potential market, it also unveiled fact that average market selling price only increased 1.8% Compared to 2010 CPI index of 8.9%

(according to National Statistic report 2010), this market seemed to be devaluated and

suffered from tough price competition

This project is to propose a marketing plan to build brand equity for Samsung washing machine in 2011-2012 Why is it relevant?

So far, Samsung has not performed well in this market In 2010, Samsung ranged No 3

with 10.6% market share after Sanyo and Toshiba who were two leaders taking account for 48% market share In term of brand image, consumers perceived Samsung as the brand of

promotion (according to Brand Attitude Survey 1H2010) It means consumers seemed to buy Samsung washing machine because of price

advantage Another fact was that average selling price of Samsung was only equal to 80%

total market (sourced from GSK report November 2010) Obviously, Samsung mostly

presented at low-end & mainstream segment The situation became worse when this business did not generate profits in 2010

Thus, to face with the vital decision if this business should be retained or not, the board management has a mission of making this business profitable from 2011 by all means Accordingly, marketing team should design a marketing plan to improve brand equity to drive financial performance of this category

Hence, where to find the source of profit?

Vietnamese living standard keeps increasing, housewives pursue for convenient solutions

to their daily chores Washing machine is one of necessary home appliances among their choices According to Consumer Panel research 2009, penetration of washing machine increase significantly from 23% in 2009 to 35% in 2011 It promises a potential market Washing machine is divided into to two main types: top-load and drum Top-load is volume driver which contributes 80% which has tough price competition with low margin However, drum is a new trend and perceived as new and premium technology Currently, competitions in this segment are not tough, complimenting with Samsung Global product strategy of drum prioritization So, improving performance in drum can be the right direction to improve profit and Samsung brand equity In short, this project is mostly to design marketing plan for drum

How to do that? The approach comes from theoretical concept and factual business problem Firstly, there are some literature reviews about brand equity and models to build brand equity which strengthens my later analysis and recommendations Secondary data are sourced to give thorough situation analysis of business performance, brand performance compared to competitors SWOT analysis & BCG models are two effective tools to find out indications for marketing strategy In addition, primary research including expert interview, qualitative and quantitative research is conducted to explore current key factors influencing purchase decision of consumer The top line result from survey shows that there are three key attributes including “durability”, “design” and

“washing performance” And one of the most driving factors that consumers look for drum

compared to top load is “less fabric damage” Based on such findings, I would propose the positioning of Samsung drum is “expertise in fabric care” Combining with other core value, suggested Brand Mantra is “Modern, Cloth-care Solution” targeting at young-minded, mid-high income housewives who look for convenient and comfortable life The marketing programs including three phases are designed to deliver the new positioning from 2011 to 2012, in which the first phase of launching Eco bubble drum is developed in details

1.2 Project objectives

The project aims to deliver the three following objectives

- To give an overview about washing machine market and Samsung brand equity in comparison to key competitors

- To explore Vietnamese consumers’ key buying factors of this category, which gives indications for new brand positioning and marketing plan to improve brand equity

- To design some marketing activities to improve brand equity

1.3 Scope and limitations

Samsung is global brand which brand and product innovation strategy has to be aligned Thus, this project mostly focuses on proposing marketing communication strategy fitting with local consumer insights based on availability of product strategy In this case, pricing and channel strategy also are taken into account

Given the time and budget constraint, all secondary data are utilized for analysis For primary data, the surveys are conducted in Ho Chi Minh City, the trading and economic center of Vietnam considered the most dynamics markets for washing machine The survey also suffers from certain inherent limitation of the convenience sampling method that may cause constraint of nationwide generalization

1.4 Project outline

Chapter 1 : Executive summary, project objectives and scope

Chapter 2 : Literature review of some marketing concepts and models that support

theoretical background for analysis and recommendations

Chapter 3 : Situation analysis including market analysis, Samsung band performance

compared to competitors, combining with SWOT and BCG analysis give indications for marketing directions The results of expert interview, qualitative and quantitative survey are summarized

Chapter 4 : Recommendations will include positioning strategy and marketing programs

to build Samsung brand equity Marketing mix model and integrated marketing communication is the key tool in this case

CHAPTER 2 LITERATURE REVIEW

The chapter addresses key concept and model used for analysis and recommendations It then provides theoretical background and arguments leading to the marketing strategy and programs This chapter is consisted of three main sections They are (1) brand equity and its importance (2) Positioning strategy and marketing programs to build brand equity & research methodology and (3) Research objective and methodology

2.1 Brand equity and its importance

There are quite many authors giving definitions and raising importance of brand equity in

different perspectives David A.Aaker in Managing Brand Equity (New York: Free Press, 1991) specifies that is “a set of brand assets and liabilities linked to a brand, its name and

symbol that add to or subtract from the value provided by a product or service to a firm and

/ or to that firm’s customer” J Walker Smith in Thinking about Brand Equity and the Analysis of Customer Transactions highlights it in financial point of view “the

measurement financial value in transactions that accrues to a product o service from successful program and activities” Later, definition seems to be more conceptualized and measured Kevin Lane Keller approaches it from the perspective of consumer “Customer-based brand equity is formally defined as the differential effect that brand knowledge has

on consumer response to the marketing of that brand A brand is said to have positive customer-based brand equity when consumer react more favorably to its product and the way it is marketed” In sum, there are 3 important in this definition (1) difference effects (2) brand knowledge and (3) consumer respond to marketing Firstly, the definition stresses the essence of difference cause if no difference occurs, the brand name product can be classified as a community or generic version of product Competition, most likely, would ten just be based on price Secondly, these differences in response are a result of consumer’s knowledge about the brand, that is, what customers have learned, felt, seen and heard about the brand as a result of their experiences over the time Thirdly, the differential response by consumers that make up the brand equity is reflected in perceptions, preferences, and behaviors related to all aspects of the marketing of a brand

This project will be based on the latest approach of Kevin Lane Keller to develop In the case, finding out an advantage difference via positioning strategy for Samsung drum is starting point, and then proposing marketing programs to register it in consumer’s mind

2.2 Positioning strategy

Al Ries and Jack Trout in Positioning-the battle for your mind starts with an aggressive

statement “what we have here is a failure to communicate “ and” we have become the world’s first over communicated society” and they stresses the importance of positioning

“a new approach to communication is positioning – it not what you do to a product Positioning is what you do to the mind of prospect That is, you position the product in the mind of the prospect” and clearly defines that “Positioning is an organized system for finding a window in the mind It is based on the concept that communication can only take place at the right time and under the right circumstances’

According to Philip Kotler, in Principle of Marketing, there are five key positioning

strategies (1) Product attribute position (2)Benefits offered (3) Usage occasions position (4)Users (5) Origin position

Kevin Lane Keller introduces a new model for positioning based on the concept of point of parity associations and point of difference associations

- Point of difference Associations (PODs): are attributes or benefits that consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with a competitive brand The concept of POD is similar to the notion of unique selling proposition (USP)

- Point of parity Association (POPs): are those associations that that are not necessarily unique to the brand but may in fact be shared with other brands There are two basic forms: category and competitive Category POPs are minimally at the generic product level and most likely at expected product level They represent necessary but not necessarily sufficient In the other hand, Competitive POPs are those associations designed to negate competitors’ point of difference

Such an approach can be suitable for high competition and /or products have complex of benefits and attributes There are 4 steps to apply this positioning model

- Defining and communicating the competitive Frame of Reference: to define category membership Membership indicates the products or sets of products with which a brand competes

- Choosing POPs and PODs: there are three key desirability criteria for PODs – relevance, distinctiveness and believability and three key deliverability criteria for positioning- feasibility, communicability and sustainability

- Establish POPs and PODs

- Updating Positioning over time

2.3 Research objectives & method

2.3.1 Research objectives:

- To review market context and brand equity

- To explore and validate key buying factors of Vietnamese consumers towards washing machine, especially drum and their media habits

- Primary research (used for objective <2>) to be used are expert method, qualitative method for exploratory stage and quantitative research to validate findings

+ Qualitative research includes expert interview and focus group The expert interview is preceded with marketing manager of Samsung Home Appliance, Sales Head and 4 key retailers Focus group conducted in Ho Chi Minh, taking 60 minutes, of which respondents are women who have owned washing machine

+ Quantitative survey is conducted in Ho Chi Minh by mail survey with sample size n

=211, convenience sampling Respondents were selected based on 2 screening questions: (1) whether the respondents used washing machine at home (3) whether the respondent were over 45 years old?

CHAPTER 3 SITUATION ANALYSIS

THE CASE OF SAMSUNG WASHING MACHINE

3.1 Market analysis

- According to Consumer panel conducted by TNS in 2009, washing machine penetration in urban Vietnam is around 23%, that is, among 6,174,132 urban Vietnamese households, 1,420,050 of them are using washing machine Give the fact that Vietnamese living standard keep increasing, the penetration rate is expected to reach 30% by 2015 GFK also has announced market size of 843 k in sale units and around US$ 191 millions in turn over in 2010, increasing 11% and 6% respectively in comparison to 2010 These figures unveil fact that average selling price only increases 1.8% Compared to 2010 CPI

index of 8.9% (according to National Statistic report), this market seems to be devaluated

and suffers tough competition on price

Figure 3.1 Market size and growth of washing machine market

Source: GFK report in November 2010

- In term of product type, the market is segmented into two types: single tube and double tube However, single tube is mostly preferred in Vietnam – contributing 95% of sales

volume, this project focus on analyzing this type There are 2 types within single tube is top load and drum, between which top load contributes the majority of 92% sales volume and 81% sales value Drum only accounts for 8% of volume but for 19% of values Drum also showed the most positive growth last year 29% in comparison to top load 8.1%

- In term of price segment, top load is positioned in low & mainstream segment while drum is 300% more premium at average 83% top load is from 3.5-5.5 million VND while 99% drum is from 8 million VND up (Figure 3.2)

3.2 Introduction of Samsung Vietnam and washing machine business

Samsung Vina, an affiliate of Samsung multinational company in Vietnam, is one of biggest company providing electronic appliances They deal in a wide range of categories

as below

Currently they are leading in Home electronic, semi-conductor and Hard-ware, holding No

2 position in Mobile device Home appliance is the category they aim to improve more, especially washing machine Samsung is the master brand of all categories, resulting in advantage and disadvantage Each category can take advantage of halo effects of existing marketing activities of other category However, many brand extensions might lead to vulnerability of brand equity when hardly find common things across category to build uniqueness Moreover, any crisis happening to any category can impact to the others

Washing machine, one business of home appliance, generating sales of $19 millions per year, contributes 26% to home appliance and 3% to total business With such minimal importance, this business, suffering “no profit” the last two year, raises a question mark to Board of Management of whether they retain it for complete product portfolio in Vietnam

or get rid of it for efficiency Thus, year 2011 and 2012 is challenging for business unit leader of this category when delivering profits is the must

Digital Appliances

IT Solutions

Mobile Communi- cations

LCD

Digital Imaging

up with Toshiba to reach 2nd position Samsung and LG performed at 3rd with around 10% market share

The picture nearly kept the same at top load segment except three top players performed a little bit better However, the situation changed completely in drum segment There was no presence of three top players; instead Electrolux dominated with 58.8 % market share LG held 2nd position with positive result of 31% Samsung contributed minimally with 7.6% market share

Figure 3.3 Market share by brand YTD Nov 2010

Source : GFK report Nov 2010

3.3.2 Brand equity evaluation

In comparision to other brands, Samsung had bottle-neck of low consideration rate in buying process with consideration index of 37% and low re-purchase rate with re-purchase index of 24% which was lowest among below analysised brands It indicated that Samsung did not created compettive advantage to faciliate consumer’s final purchase decision and was not successful in keeping loyal consumers (Figure 3.5)

Brand Funnel Satisfaction

Re-purchase Recommendation Aware Familiar Consider Purchase (5 point) ( %) (%)

Panasonic 97% 78% 32% 7% 4.19 43% 90%

Table 3.1 Brand equity evaluation – Funnel in purchase process

Source: Hankook research 2009

Futher investigating some key product attributes that influence consumer ‘s purchase decision, Samsung unveiled lowest satisfaction in among of three key attributes: design, quality and durability compared to other brands Electrolux proved to be the brand of strongest equity compared to other brands

Figure 3.4 Brand equity evaluation – key factors influencing purchase

Source: Hankook research 2009

So, not having clear in functional image, Samsung only owned emotional image of young

I do not like the design

The durability is not good

The quality is not good

Toshiba Panasonic LG Electrolux Samsung

Figure 3.5 Brand evaluation – functional and emotional map

Source: Hankook research 2009

Not own strong brand equity, Samsung’s mind share stagnated at 6%-10%, although the recent market share increased

Figure 3.6 Brand evaluations – mind share

Source: Hankook research 2009

According other research about brand power of SEA Market Research (TNS, 2009), Samsung was perceived young, feminine and of promotions

In summary, given above brand equity analysis, there gave certain conclusion that Samsung brand equity needs much improvement It can be the ultimate solution to release Samsung from price competition and to seek for consumer’s acceptance of price increase

3.4 Key findings from Consumers research survey

3.4.1 Brand awareness

Samsung showed minimal awareness in term of unaided awareness (21%) and top of mind (5%), compared to other brands

Table 3.2: Brand awareness

Source: Research analysis 3.4.2 Key factors influencing purchasing decisions, comparing between top load and drum

Among 10 below mentioned attributes, “durability ”, “washing performance”, “energy efficiency”, “advance feature”,’ easy to use” were 5 important factors that consumers considered the most when buying washing machine The differences of considering whether top load or drum were discovered that “washing performance”, “design” “less fabric damage” were preferred for drum “Easy to use” and “cheaper price” were more appreciated for top load

Figure 3.7 Key buying factors influencing purchase decision of washing machine

Source: Research analysis 3.4.3 Brand image

In compared to the two leading brands of top load (Sanyo) and drum (Electrolux) respectively, Samsung showed the advantage of price competitiveness Sanyo led in all

Durability washing performance

Energy effiency

Advance feature

Easy to use

Better & different design

Less fabric damage

Cheaper price

Less noise & vibration

Promotion

Top load Drum Total

attributes and seemed to be strong association with “easy to use” Except not having advantage of price competitiveness, Electrolux was perceived outstanding in some attributes and significantly dominate “durability” and “washing performance”

Figure 3.8 Brand image

Source: Research analysis

3.4.4 Acceptable price for specific capacity

Willing-to-pay price for top load of the preferred capacity from 7-8kg was around VND 3.5 - 4.5 millions while for drum was around VND 5.5-6.5 millions Thus, the premium-ness that consumers could accept to pay for drum is VND 2 million compared to top load

51.6 23.1 12.2 3.0 - 4.0 1.5 3.0 0.5 - - -

27.8 10.3

7 0.9 3 0.5 3

Drum

Figure 3.9: Price sensitivity- Top load of 7-8kg & Drum of 6-7kg

Source: research analysis

3.4.5 Media habits

“Recommendation from friends/ family”, “TV commercials”, “recommendation from Sales executive”, “Product display at shop” and “Brochure/ Leaflet” were top five sources of awareness of this category, among which “recommendation from friends/family” were the most important source The result was quite consistent with criteria “most impact source” Consumers tended to seek for advice from friend/ family who were assumed to have experience and knowledge about product However, at the moment of truth,

“recommendation from Sales executive” showed effective (importance index 31%) when consumers went to final purchase decision at store

Figure 3.10 Media habit

Source: Research analysis

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