SAMSUNG’s Competitive Advantages & Differentiation Strategy.

I. Competive Advantages:
1. A strong commitment to research & development:
Samsung always search and look for the needs of their customers ahead of the
rivals. They research and find the demands of the customers. Their engineers
try to develop innovative products which will meet customers’ needs. They also
work for new technologies to lead the future market. They respond to the
customers’ voice by designing and testing new products. Samsung invests over
80% of their revenues into R&D activities. Since Samsung continuous to
increase R&D spending, their commitment to leading technology
standardization and securing intellectual property rights remains strong.
2. Brand Image:
Brand image plays a central role in making a large and global business like
samsung successful. Samsung is a leading technology brand with a strong
presence in smartphone and tablet as well as consumer electronics and chip
industry. One major reason behind the global success of the brand is its strong
brand image. It is a customer centric brand that has consistently focused upon
the consumers’ tastes and preferences as well as overall customer experience.
All these things have together resulted in a strong brand image and brand
equity.
3. Supply chain:
A strong supply chain is also a determinant of the competitive  strength of a
brand. It enables faster production, smooth operations and faster delivery.
Overall, a strong supply chain is important for maintaining your leadership
position and a healthy bottom line. Global brands that have successfully
managed their supply chains have been able to reduce their operational costs
and pass on the savings to their customers. Samsung is a global brand and
sources its raw material from thousands of suppliers from around the world. It
has been able to manage its suppliers well using digital technology. Samsung
operates its supply chain with the help of around 2,500 suppliers from around
the world. Apart from focusing on sustainability in its supply chain, the
company has also built a code of conduct for its suppliers and provides them
the necessary support for compliance. The company has also started several
innovation initiatives for engaging its suppliers and for driving innovation
throughout the supply chain. It conducts regular audits of supplier factories
and also provides tools and training that make them more efficient and
productive.
4. Marketing Strategy:
 The marketing strategy of Samsung is also a primary driver of its growth and
profitability as well as competitiveness. Its marketing strategy is focused at the
customers as well as the quality of its products. Marketing plays a central role
in driving demand higher and growing the sales of a company as well as
creating a strong brand image for any product or business. Samsung invests a
large sum each year in marketing and promotions of its brand and products. In
2018, the advertising expenses of Samsung were around 4 trillion Korean won
and sales promotion costs totalled around 7.1 trillion Korean Won. Total
marketing expenditure of Samsung was higher than 9 Billion US dollars in 2018.
It shows how much Samsung spends on growing the sales and demand of its
products. Apart from that the brand is using digital technology heavily for
marketing and customer engagement. The result is higher customer retention
as well as faster growth of customer base. Overall, this has worked to make
Samsung’s position in a highly competitive industry and global market stronger.
5. Pricing Strategy:
Samsung’s pricing strategy is also an important support behind its competitive
strength and global leadership position. It  has brought products for both the
higher and the lower end market. Apart from the premium Galaxy models of
smartphones, the company has also brought a large range of affordable
smartphones to the market. This is an important reason behind the brand’s
competitive strength and a reason behind its large customer base. Apart from
the mobile phone segment, in the consumer electronics segment too, it has
brought products in both the premium and the lower end segment.
6. Customer Base:
Samsung is a global company and its products are famous all over the world.
Some of its market leading products like Galaxy smartphone and its range of
televisions are highly popular and have a very large customer base. The
company keeps releasing new features and models to keep its customers from
all over the world engaged. A large customer base also means higher sales and
revenue. Samsung focuses a lot on customer retention and for that purpose
invests a large sum each year in marketing as well as R&D. This enables the
brand to produce new market leading products and to engage its customers
better. In this way, the brand has kept expanding its customer base globally.
7. Customer loyalty:
Apart from having a large base of customers from around the world Samsung
has been successful at building high degree of customer loyalty as well.
Competition in the consumer electronics industry as well as the smartphone
industry has grown intense. Building customer loyalty requires a large
investment in research and innovation to remain ahead of competition as well
as a major investment in marketing to retain market share and for customer
 engagement. Samsung focuses on both promotions and customer engagement.
Therefore, the brand has been able to build strong customer loyalty. It’s a
major source of competitive advantage for Samsung.
8. Product innovation and design capabilities:
Samsung is capable of doing well designed and friendly products. Samsung has
got different awards for their innovative and well-designed products over the
years. The prestigious Consumer Electronics Show (CES) awarded Samsung for
their innovation and product design 13 years in a row. It’s commitment to
producing environmentally friendly products and to decrease greenhouse gas
emissions has been recognized worldwide.
9. Combining Japanese and American Strategies:
Another competitive advantage for Samsung is to combine strategies of both
Japanese and American. Japanese companies usually like to offer multiple
products whereas American companies are more focused and selective on a
small product range. By combining these two strategies Samsung uses
horizontal diversification and vertical integration. This means that Samsung is
diversified with a wide product range, but they are specialized in
manufacturing too.
II. Differentiation Strategy:
1. Differentiation vs. Cost leadership:
- The company has an experience of pursuing both, cost leadership as well as
product differentiation strategies during its lifetime.
- In 2010, the strategy was mainly cost efficiency prior to Asian Financial Crisis of
1997.
- With Eric Kim becoming chief marketing officer of the company, dramatic
changes were brought to the trategy of the company pursuing product
differentiation strategy.
- Samsung has successfully spread ít product line across both these dimensions.
2. Samsung’s Combined Low-cost/Differentiated strategy:
- Difficult to implement.
- Firms aiming to do this are often stuck in the middle.
- Firm’s products are too costly to compete with low cost provider’s product, and
too undifferentiated to command the price premium gained by the differentiated
firm.
Samsung’s success has been due to a variety of factors:
- Successfully customize product around core design.
- Large product portfolio (occupy the entire spectrum for a broad market play).
- Collaboration of fab and R&D facilities (internal converstion among engineers to
decrease time to market).
- Easy access to Asian market.
- Combination of educated guessing and pure luck (e.g. stack design vs trench
design).
- Talent pool strategy: Access to local talents, sponsoring employees for PhD and
MBA education.
- Availability of capital: from 1983 to 1985 during recession of semiconductor
industry, Samsung allocated significant capital to build capacity.
https://www.thestrategywatch.com/competitive-advantages-samsung/
https://notesmatic.com/samsung-sources-of-competitive-advantage/