Management Strategy and Consumer Experience: Samsung Note 7 Crisis

This report provides a comprehensive analysis of the Samsung Galaxy Note 7 crisis, examining the factors that led to the product's failure and the subsequent damage to the brand's reputation. The report delves into the history of Samsung, its market position, and the specific events surrounding the Note 7's battery issues and recalls. It then proposes a detailed marketing plan designed to address the crisis, focusing on objectives such as financial recovery and customer retention. The marketing plan includes strategies for target market segmentation, product quality enhancement, price differentiation, distribution channels, and promotional activities aimed at rebuilding consumer trust and regaining market share. The report emphasizes the importance of quality control, customer experience, and effective communication in restoring the brand's image and ensuring future success. The marketing mix is explored in detail, with specific recommendations for each element. The report uses segmentation, targeting, and positioning theories to identify the target consumer segment for improving the company's position.

Running Head: MANAGEMENT 0
Management strategy and consumer experience

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Abstract
In this competitive and dynamic business environment, different market variables are placing
significant impact on marketing activities of an organisation. With this report, it is being
outlined that what are the different factors leading challenges and issues on one of the
renowned product of Samsung i.e. Galaxy Note 7. Furthermore, necessary suggestions are
also being placed helping company to overcome such failures. It is related to the crisis
concerning to this product arise in 2016 impacted company reputation. In support of the
research, several necessary theories are also being used in relation with segmentation,
targeting and positioning so as to recognise respective target consumer segment.

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Contents
Introduction................................................................................................................................3
Background of organisation.......................................................................................................4
History of the organization.....................................................................................................4
Market analysis......................................................................................................................5
Crisis and outcome.................................................................................................................6
Marketing plan...........................................................................................................................7
Objective................................................................................................................................7
Target market.........................................................................................................................8
Marketing mix........................................................................................................................9
Product strategy................................................................................................................10
Pricing strategy.................................................................................................................10
Placing strategy................................................................................................................11
Promotional strategy........................................................................................................11
Metrics of success................................................................................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
Industry in which an organisation exists and has been working is majorly impacting the
success and failures for a company. Moreover, market is a place where the stakeholders like
competitors, suppliers and consumers are playing major role while conducting marketing
activities. From this report the key purpose is to consider a failure case of a company, so as to
understand various factors responsible for the issues and reflect major learning for near
future. Other than this, the focus of the report will be on recommending a marketing plan that
will be helpful for the company to overcome such failures1.
For this report, the organisational case that is being selected for the discussion is Samsung
Galaxy Note 7 crisis that occurred in 2016 and has impacted the business at major pace. The
crisis reflected various mistakes acknowledged by the company, for which the proposed
marketing plan will be included in the report further. The theories used in the report included
segmentation, targeting and position in order to identify approachable target customer
segment for improving this circumstance for the company. The research conducted for this is
secondary research as the new article, government reports, company reports, and literature for
journal articles would be analysed2.
1 Adam, S., & Kotler, P. (2014). Principles of marketing. Australia: Pearson Australia.
2 Samsung. (2020). aboutsamsung/vision. Retrieved from
https://www.samsung.com/us/aboutsamsung/vision/philosophy/philosophy-goals/

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Background of organisation
Samsung group is South Korean MNC that includes various business activities, for which one
of the most famous one is electronic product manufactured and marketed globally. The
company initiated in 1938 in South Korea. Thus Samsung electronics has been manufacturing
smartphones, televisions, computers, and other electronic consumer goods. The company has
focused towards quality and current strategy of the company depicted large variety of product
with differentiation as the key competitive advantage. Considering the vision and goals of the
company, Samsung is dedicated to obeying with native laws and rules as well as smearing a
stringent universal code of conduct to wholly personnel. It considers that moral
administration is not merely a device for replying to the hasty changes in the international
commercial environment, nonetheless also a way for structure trust through its numerous
stakeholders comprising of consumers, stakeholders, workforces, corporate associates and
native societies. With an intention to develop one of the greatest ethical firms in globe,
Samsung endures to train its workers and function monitoring schemes, although committed
to reasonable and translucent business administration3.
History of the organization
The company has gone through various business strategies and activities in past, since 2005
in United States. For instance some of the popular occurrence included achieving first global
electronic company in 2010, merge with another company that is Samsung digital imaging;
integrate with android operating systems in order to launch smartphone series, which
reflected to be the turning point for the company. In 2015 the company sustained at first
position in television market for 10 years. Moreover, the company has continuously worked
3 samsung. (2020). aboutsamsung/vision. Retrieved from
https://www.samsung.com/us/aboutsamsung/vision/philosophy/philosophy-goals/

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towards innovation and technological change according to change in technological
environment and need in the market4.
Market analysis
Samsung is being operating in consumer electronic industry, where the crisis is specific to
smartphone industries. The major competitors of Samsung are Apple Corporation, Huawei.
The below graph reflect the market share from 2009 to 2019 for the smartphones company
across the globe. From this graph, it can be analysed that in initial years Nokia was one of the
major competitor to the company, which fail after 2012 and taken into account the statistics if
last five years, Samsung has been dominating the market at major pace5.
4 samsung. (2020). aboutsamsung/company/history. Retrieved from
https://www.samsung.com/us/aboutsamsung/company/history/
5 statista. (2020). global-market-share-held-by-smartphone-vendors-since-4th-quarter-
2009. Retrieved from https://www.statista.com/statistics/271496/global-market-share-
held-by-smartphone-vendors-since-4th-quarter-2009/

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Figure 1: (Source: (statista, 2020)
Crisis and outcome
In august 2016, the company comes with another model of galaxy note series that is galaxy
note 7 with various new and attractive features. In September 2016, the company identified
the case of manufacturing defect in the product due to excessive heating up of the batteries of
the phone and caused fire. The company acknowledge the mistake and replace the phones,
but the new piece also comes with major issues and thus the production by the company was
restricted permanently6.
It can be said that, batteries as of dual diverse producers had faults. The major source cause
of the main producer’s battery-operated issue (Battery A) was adverse electrode rebounds.
6 forbes. (2017). samsung-reveals-cause-of-note-7-issue-turns-crisis-into-opportunity.
Retrieved 2020, from
https://www.forbes.com/sites/maribellopez/2017/01/22/samsung-reveals-cause-of-
note-7-issue-turns-crisis-into-opportunity/#6ded938c24f1

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Another producer's manufactured goods (Battery B), agonized after nonstandard ultrasonic
welding burrs. Although the primary cause was dissimilar in every kind of the battery-
operated, the outcome was similar. A minor subsection of batteries might scorch and possibly
latch fire. It’s vibrant that the smartphone business’s longing for constantly thinner handsets
with extended battery lifespan has stressed battery developed procedures. The major impact
of this crisis on company was threat to brand image, decrease of sale, loss of the production
of model; research investment was goes into vein for the task. Thus, the major impact was
financial loss, reputation loss and consumer loss for the company. The company announced
profit warning for the company due to recall of flammable galaxy note 7 for millions of
handsets7.
Marketing plan
The proposed marketing plan is included in the various segments in the following headings.
This will be reflecting for the purpose of improving the company condition to decreases
negative impact of the issue.
Objective
The objective for this marketing plan for Samsung after galaxy note 7 issues included
1. Financial regain – One of the objectives is to revive the loss of the profit due to this issue
identified. As per this objective the marketing plan will be working to increase 10 percent
increases in profit of the company till next year.
7 theguardian. (2016). samsung-galaxy-note-7-smartphone-profits-warning. Retrieved
2020, from https://www.theguardian.com/business/2016/oct/14/samsung-galaxy-note-
7-smartphone-profits-warning

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2. Customer retention – Another objective and purpose of the marketing purpose is to
increase customer retention. The reason being the impact of the issue included decreases in
trust of the company among customer which may have impacted the customer retention level
in the market. Thus, the objective is to increase customer loyalty through customer retention,
which could be measure through repurchase level of the customer that is the repurchase of
this brand for Samsung galaxy note 7 consumers. The target is to retain 60 percent customer
for note 7 users8.
Target market
The targeting is one of the major strategies that could impact the marketing plan and make
the marketing strategy specific to the consumer behaviour. The target segment for this
marketing plan included
1. Demographic segmentation basis - Considering income as one of the factor, the customer
segment that would be targeted by the company through this marketing plan included middle
to high income group. The major reason for selection of this customer segment target is
considering note 7 consumer behaviour as the marketing plan is not only for the existing
customer, but specific to the note 7 users as well. Other than this, taken into account age
group in this segmentation basis is age group. This included targeting young and adult age
group. The decision making in electronic consumers are majorly adults and young age group
as it could be possible and feasible to attract this age group from promotions and marketing
activities by the company.
2. Behavioural segmentation basis – this included the attitude and perception of the consumer
towards the product, this included the business decision making for the consumers. The
8 Balmer, J., & Abratt, R. (2016). Corporate brands and corporate marketing:
Emerging trends in the big five eco-system. Journal of Brand Management, 23(1), 3.

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segmentation could be based on the users of the product. Thus considering this factor, the
potential and current users will be target for this marketing plan. The reason being the
company is willing to target the individuals who have faced major issue due to use of current
models and the potential users so as to increase the consumer numbers for the company.
3. Psychographic segmentation - This segmentation basis include factors like customer
lifestyle that will include the way a consumer is reflecting the need of the products and
expectations from the products are also understood. The lifestyle that will target for this
marketing plan would be business men and women, so as to reflect the working lifestyle.
Other than this conservative lifestyle will also be targeted through this marketing plan. The
key reason for selection of this consumer group is that this group will be more analysing
while making buying section making process. Moreover, this group will be more influence
through the consumer experience and express to other group as well. Moreover the company
has targeted this group for other smartphones as well so as to make the phones more
convenient for working individuals in job, business, or working online9.
Marketing mix
The marketing mix will include the marketing strategy pertaining to price, product, placing,
and promotional activities.
Product strategy
Considering the product the major aspect to be focus after this crisis is the quality of the
product. Thus the company will be focused of premium product strategy so as to make sure
that the quality constraint has not been compromised through the new product. The company
has already been working towards product differentiation and rapid new product
9 Finne, A. (2017). Communication-in-use: customer-integrated marketing
communication. European Journal of Marketing, 51(3), 445.

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development. Thus, the new product series will be majorly focused towards total quality
management and various test pertaining to the performance of the product before launching
in the market. Thus the new series will not only include range of designs but also invested
majorly in research and development so as to make sure that the product develop is accurate
when it comes to performance and quality factors10.
Pricing strategy
Price differentiation is the recommended strategy for this marketing plan. The targeted
consumers are from middle and higher income group. This depict that the product range must
vary according to the series range and features. Therefore, the most approachable strategy
would be price differentiation that is launch of various ranges product within one series. One
of the most important strategies is the price discounting plan for the ex-user of galaxy note 7,
moreover the exchange policy would also be applicable to the existing Samsung users to have
initial offer of exchange of the existing Samsung model with major discount in new product
purchase. The key reason for this strategy is that to achieve the objective of customer
retention and regain the trust of the customers of galaxy note 7 again11.
Placing strategy
The placing strategy of the company include distribution and the locational strategy/ the
placing of the product include various modes that is direct selling, retailing, through offline
mode and online mode. Thus the most approachable mode of placing would be online mode
through direct brand website and application and online retailing that would include
10 Gong, T., & Yi, Y. (2018). The effect of service quality on customer satisfaction,
loyalty, and happiness in five Asian countries. Psychology & Marketing, 472.
11 Chu, C., & Liu, S. (2017). Hedonic Pricing Method, the Third Law of Demand, and
Marketing Strategy: An Abstract. In Academy of Marketing Science Annual
Conference, 721.

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collaborating with various other brands and retailers like reliance, selling through amazon
and many other online platforms. However brick and motor is one of the traditional and
necessary modes of distribution, which may include direct store of Samsung all around the
world. This may also include exclusive services that are in case of exchange policy of
existing Samsung product. For this the delivery person will hand over the product to the
customer while also taking the used Samsung phone in exchange for a better price than the
market12.
Promotional strategy
This strategy includes promotion by the company in order to regain the consumer trust. This
includes using publicity as one of the major tool. The reason being news creative are the best
communication way to make the information reach to the customer. This may include press
release announcing the detection of all issues in detail and resolution of the same in new
models. Other than this tool, another key promotional tool will be social media marketing.
Facebook and Instagram will be the major platform use for the promotion13. This will include
video marketing releasing the launch of the products and consumer reaction to new models in
the market so as to influence the customer for the purchase of new models. The video will
have great impact of the consumer buying decision for the Samsung smartphones14. The
reason for this is the maximum time of the target customer is on social media platforms and
12 Doole, L., & Lowe, R. (2008). International marketing strategy: analysis,
development and implementation. Cengage Learning EMEA.
13 Oldham, G., & Silva, N. (2015). The impact of digital technology on the generation
and implementation of creative ideas in the workplace. Computers in Human
Behavior, 42, 5-11.
14 Stephen, A. (2016). The role of digital and social media marketing in consumer
behavior. Current Opinion in Psychology, 10(1), 17-21.