Online Extra: Samsung's Goal: Be Like BMW
Since BusinessWeek and leading brand consultancy Interbrand launched our annual ranking of the 100 largest global brands five years ago, no brand has dominated the list more than Samsung, the Korean consumer-electronics maker. In that time, no other global brand has risen as much in brand value -- 186%, to $14.9 billion, by the end of 2004.
Surpassed only by eBay (EBAY ) last year in brand growth, Samsung posted a 22% gain, overtaking Sony (SNE ) in overall brand value to become the leading consumer-electronics brand (see BW, 7/4/05, "The Best Product Designs of 2005").
How Samsung did this is a testament to a strategy of singularly focusing on one brand -- a "master brand." With so much media fragmentation and clutter, Samsung believes the master-brand strategy is the only way to reach the consumer today. A similar strategy is being followed by other top gainers on this year's list.
In an interview with Robert Berner, a correspondent in BusinessWeek's Chicago bureau, Samsung's Global Chief Marketing Officer Gregory Lee discusses in detail why Samsung made this shift, why design is a very important part of brand identity, and where the Samsung brand is still weak. Edited excerpts of their conversation follow:
Q: Samsung used to have a number of subrands: Plano, Tantus, Yepp, Wiseview. But the company has gone to a single brand. Why? A:
Q: Samsung used to have a number of subrands: Plano, Tantus, Yepp, Wiseview. But the company has gone to a single brand. Why?
A:It was a change in 1996 by our chairman, who wanted to build a brand, not just a product. There was an Asian economic crisis, and the company was in a crisis because it wasn't as efficient as it needed to be. And not having a strong brand was crippling. We also migrated to a premium-brand strategy, ditching low-end products that were selling well.
The story I'm trying to tell is about a big way of building a brand. It works because Samsung has one master brand as opposed to 50. We looked to the future to build the Samsung brand as iconic -- that everybody would want to have and love to have. That is what BMW has done well.
Q: What's the advantage today of having a single master, or mono, brand? A:
Q: What's the advantage today of having a single master, or mono, brand?
A:[You avoid problems with] fragmentation and not having enough money to support a lot of brands.
Q. Have you also increased spending behind the brand as a percent of sales? A:
Q. Have you also increased spending behind the brand as a percent of sales?
A:We don't release that, [but I can tell you] it has been going up pretty significantly. If you focus all that investment into one brand, you get a lot of brand leverage. We have really focused our communication around not just the uniform brand message, but around focused products, what we call flagship products. Mobile phones would be No. 1. And No. 2 would be TVs.
Q: Why those products? A:
Q: Why those products?
A:We have an advantage in those products around technology: digital technology, chips, liquid-crystal-display business, and traditional audio and video from making products for 30 years.
If you look at the future, it's very bright for TVs and phones. The TV is a window to a lot of things. When you look at TV, it's a window to another set of convergent activities. But it doesn't mean the business side of TV is going to be easy necessarily.
Q: Have you increased your focus on product design? A:
Q: Have you increased your focus on product design?
A:We have about 450 people on our design staff. Four or five years ago, it would have been 100 or less. We have six design centers around the world.
We're bringing design into everyday products such as mobile phones. There are many mobile phones that hip people want to have. We're able to bring coolness into the category and are also able to price up because of the coolness factor. Coolness is very much part of strategy.
Q: How else does design help the brand? A:
Q: How else does design help the brand?
A:You don't want all the designs to look and feel completely different. So when you look at a Samsung mobile phone or TV, you get that same black or silver -- a consistent look. On cell phones, there are similar user interfaces and tones.
Q: Even the sounds a machine makes? A:
Q: Even the sounds a machine makes?
A:We are tying to go to a multisensoral approach to design. That means when you open up the user interface, whether it is a phone or a TV, those user interfaces will signal the same sound.
For example, we introduced a global advertising campaign, called "Imagine," and at the end of the commercials there's a Samsung logo and a sound effect. And that sound is supposed to be the new Samsung sound. We will use that sound in all of our products. We have just started this.
Q: Please say more about how sound helps the brand? A:
Q: Please say more about how sound helps the brand?
A:The design isn't just the shape. It's the color, the feel, and the sound when you turn it on. We want to have the same kind of sound and look and feel throughout our products so it all works toward one Samsung brand.
Here's another way to think about it. If you had completely different sounds and color and look and feel, it would be very difficult to keep a common-brand essence. Sound works towards a common brand affinity.
Q: What is Samsung's brand essence? A:
Q: What is Samsung's brand essence?
A:What we are trying to stand for going into the future is technology, design, and sensation, human sensation. We are trying to bring those three things together so all the products work together.
Q: What are some of the problems you see with Samsung's brand image? A:
Q: What are some of the problems you see with Samsung's brand image?
A:Our brand awareness is very high, but our affinity, meaning preference [among consumers] is still not as high as it needs to be to become like a BMW.
You ask somebody, "What does Samsung mean to you?" A lot of people don't know. So with BMW, you would say performance. Or they might say a different thing but they all sort of talk in the same area -- we would call it brand essence.
That is a huge opportunity for us. Our next round [of communication strategy] is centered around our customers and the benefits we bring to their lives. In the past, our communication was all about the product. There wasn't a real story to it. We are really trying to tell a story about how it fits into a consumer lives in our newer communications.
When we do our studies, most people see our product and brand as cold -- and we are tying to move away from that. We want to be warm. But the most important thing is being relevant. I don't know if BMW is warm, but it's certainly relevant and it's cool, and you want to have it. That is the approach we want to take.
Edited by Patricia O'Connell