In Australia Samsung has to lift its marketing game if it is to be competive and up alongside the performance of its US subsidary.

It has the technology and the brand, but it has to comuniate this to consumers in a believable manner.  In Australia LG was able to go very quickly from being Lucky Goldstar to a household brand that sold millions of dollars worth of products under the marketing slogan “Lifes Good”. Samsung has to find the right marketing formula that Paul Reeves the former Marketing director of LG found 5 years ago. He quit LG last year.

This year Samsung is staking a large part of its business on large screen flat TVs, and judging by the looks of awe from attendees at the recent CES Expo in Las Vegas, picture quality has improved and these ever-sliming Samsung devices will see continued demand from consumers in 2006. Recently Samsung appointed Mark Beard as the head of marketing for CE products. This follows the exit of several Samsung executives including former PR Manager Tara Bourne and short lived Marketing Manager Julian Tol who apparently left under a cloud of allegations. Beard is an experienced executive who over the past 18 months has done a good job of positioning Samsung Appliances.

 CE spanning TV’s home entertainment systems is a bigger task that calls for a totally intergrated approach spanning several marketing mediums. What Beard has the oppertunity to do if he gets the budgets is deliver a superb range of TV products that Companies like Sony, Philips, Acer and BenQ will struggle to compete agaist particulary if the pricing is right. Worldwide Samsung’s LCD business, one of its strongest units in Q4 2005, saw a 12 percent gain in sales to $3 billion a sign that despite price declines for LCD TVs, consumers spend is on the rise.

Joe Virginia, VP of Samsung’s LCD business said .”The CES show has been a very positive show and we pitched it strongly toward TVs,”he  said  “It’s more than just technology on display. These products are selling through the channel. They are going into consumers’ hands because we are generating the demand with strong marketing”.


“Traditionally in the past, the [LCD business] has been in the IT market, notebook computer displays and desktop monitor displays comprised the majority of all of our sales,” he continued. “Those are good markets, no question, but the real big nut right now is television. If you can crack into a 188 million unit television market, you are talking about a market that is larger than the combined notebook and monitor market. For manufacturers such as Samsung or any tier one manufacturer, that’s a market to be keenly interested in.”

According to DisplaySearch data from Q4, LCDs enjoy the highest growth rate of all displays, climbing at a compound annual growth rate (CAGR) of 41.5 percent for 2005 through 2008. In contrast, the firm predicts the overall display rate will be 14.8 percent. A key market for Samsung is the US where TV displays saw LCDs take 27 percent of the total TV shipments and 31 percent of total sales during the last two months of the year when most TV sets are sold, according to NPD December 2005 figures. That reflects a tremendous gain on 2004 .The figures also represent a gain on the plasma TV market, which saw a 5 percent shipment share and 22 percent sales share over the same period last year. Australia is a very small market for Samsung when compared to the US and Europe and often key products either don’t come into this market because of small shipment numbers  or are too costly for the Australian market.

In the US market where Samsung and Panasonic are witnessing record sales at the expense of manufacturers like Sony and Philips, Virginia credits the gains to price declines, particularly on larger LCDs, 26-inches and above, which pulled in $66 million in 2004’s five-weeks before Xmas period and recorded a 380 percent jump for the same period in 2005 to $318 million. “The ASP in 2004 was $1,649. The new price in 2005 dropped 22 percent to $1,283 [according to NPD] for 26 inches and larger,” he said. “So that’s a 380 percent growth in sell through, versus a 22 percent price decline. It is clear that we participate in a price sensitive market. That’s something LCD’s are pretty familiar with.”


Investment from powerhouses like Samsung, LG and Sony are also key. Samsung recently announced that its second Gen 7 thin-film transistor (TFT) LCD panel line began mass production. The company plans to invest a total of $4.1 billion (4.1 trillion won) in the line for the production of panels for LCD TVs of 32-inches and larger, with the investment covering two phases. Phase one includes a $2.4 billion (2.4 trillion won) investment to reach a monthly production capacity of 45,000 substrates, with an additional $1.76 billion (1.76 trillion won) invested in a second phase to add another 45,000 substrates to capacity for a full-scale production capacity of 90,000 substrates per month. Phase two is expected to conclude during the second half of the year.

Samsung also operates another Gen 7 line through its joint venture with Sony, called S-LCD. Production commenced at Line 7-1 in April 2004, with the full capacity of 60,000 substrates per month reached last October. Last November, the company said it would increase capacity at the line by another 15,000 substrates by July.

“Consumers are purchasing like you wouldn’t believe. Then you have companies like Samsung rapidly investing with our partner in Sony for even more capacity,” Virginia said, noting that the average fab price has jumped from $1.5 billion for Gen 5 to $3.3 billion for Gen 7.

Improved visual quality is also another factor in adoption, noted Virginia. This year’s CES saw LCD contrast ratios of 1,200:1, compared to 500:1 just a few years ago. Enhanced picture couldn’t come at a better time. The  FCC mandate moving TV from analog to digital is about to take affect; blue-laser DVD is on the horizon, demanding high-definition quality; and several sporting events, like the Winter Olympics and the World Soccer games, that pull in viewers by the stadium full are just around the corner.

“We’re really impressed with what we saw during the holiday season. There are a series of external forces that are just making our hands rub together at the thought of how popular these displays are going to be this year,” Virginia said.

Data on 2005 from DisplaySearch estimates that 20.3 million LCD TVs were sold, a number that is expected to see a CAGR of 57 percent over the next five years with a 40 percent share of the total TV market expected in 2009. The phenomenal growth has even suggested revisions of previous estimates. The firm had suggested 36 million LCD TVs would be sold this year, but reported at CES that it would be revising that forecast upward.
“You have to realize a year ago we were around 5 percent or 6 percent. By 2010, the real belief is that 100 million LCD televisions could be sold,” Virginia said.

“It’s a really hot market. It’s not a market for the timid. It’s not for those that don’t have the type of financial posture Samsung has. But it is a lucrative market,” he concluded.

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