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Table of Contents Executive Summary ...................................................................... i

1. Current state of wearables ............................................... 1

2. Competitive Environment ................................................. 2

3. Samsung IMC Strategy ...................................................... 3

4. Target Market Demographics ........................................... 4

5. Channels of Communication ............................................. 5

6. Central Theme of Samsung Wearable IMC ........................ 6

7. (Message + Channel) Mix .................................................. 7

8. IMC Utilization .................................................................. 8

9. IMC Strategy Evaluation .................................................... 9

10. Recommendations for improvement ................................10

“Organizations cannot afford not to be listening to what is being said about them, or interacting with their customers in the space where they are spending their time and, increasingly, their money too.” - Malcolm Alder, Partner KPMG’s Digital Economy Practice

Executive Summary Wearable Technology is being considered as the next major disruptive technology that will

impact the consumer electronics and computing technology industry. The disruptive nature

of technology in recent years can be attributed to the popularity of smart phones and tablets.

Realizing the need for connectivity, portability, and flexibility, mobile device operating

systems, such as Android and Apple iOS, are building support for wearable technology in the

operating system and making this available to hardware and software developers (such as

Samsung) so new tools and devices can be developed. In the current fragmented wearable

tech market that includes big name players such as Google, Samsung, and Apple, as well as

smaller players such as Jawbone, Fitbit and Nike, there is interest in reaching the target

market to create awareness focused on better lifestyle which will result in preference towards

a brand leading to purchase intention by consumers.

The purpose of this report is to provide an IMC audit for Samsung Electronics to shed light

on Wearable Technology segment that is currently an area of interest for Samsung as can be

evidenced by new mobile/wearable devices that are being announced on a regular basis.

i

1. Current state of wearables Samsung is an active participant in the marketplace for wearable technology. According to

Rizzo (2013), the wearable technology market is still in the early stage of evolution, but it

has demonstrated significant growth and adoption in various end user market segments. The

fitness, wellness, healthcare, and medical monitoring industries are best aligned to benefit

from wearable tech. Wearable fitness and wellness products include smart clothing, activity

monitors, sleep sensors and biometric scanners. The infotainment segment includes smart

watches, smart glasses and heads-up displays. Products such as continuous glucose monitors

(CGM), drug delivery, and wearable patches are increasingly being used in healthcare and

the medical sector. Hand worn terminals, heads-up displays and similar products are being

used in the industrial and military settings. Figure 1 shows market influencers for Wearable

Technology products. As can be seen from the landscape, market opportunities are

significant as new developments make devices more compact, portable and powerful.

Figure 1: Market influencers for Wearable Technology Products

2. Competitive Environment Samsung is facing formidable challenges from small and large competitors. The main worry

for Samsung is larger players such as Google, Motorola, Apple, and Microsoft which have

the resources to out-spend the marketing budget of Samsung. Figure 2 shows the challenges

that lie ahead for Samsung in the wearable ecosystem as each competitor is trying to acquire

or steal share from a niche segment that would benefit most from wearable devices produced

by the manufacturer.

Figure 2: Wearable Technology Landscape (Source: IHS Electronic Media)

With ABI Research predicting the global market for wearables in health and fitness to reach

180 million devices by 2017, Samsung needs to be aware of its main competitors to be able

to produce a Promotion Mix that will appeal to its target market.

Samsung should be poised to compete against the upcoming Apple iWatch that is projected

to garner the largest market share among all current manufacturers. The main differentiating

factors that Samsung can use are: culture of product quality, innovation, existing

hardware/software, and demonstrated integration with Samsung mobile devices.

3. Samsung IMC Strategy Focus Samsung is aggressively promoting its tech wearables using an effective IMC. This is clear

by analyzing its media, message, and channel choices.

The various components of its IMC Strategy (specific to wearables) include the following:

Dedicated Website (http://www.samsung.com/us/mobile/wearable-tech )

Advertisements (magazines, online)

Television Commercials

Trade Press

Sponsorships

Social Media

YouTube (see Samsung promotional video shown above)

4. Target Market Demographics Since wearables are extensions to smart devices, any consumer who has a smartphone is a

potential customer to companies like Samsung who manufacture wearable tech devices.

Manufacturer of smartphones are therefore extending the capabilities of smart devices to

include wearables.

According to Wearable Computing Report (2014), wearable computing products have been a

fringe market of curious devices that have been impractical, bulky and unaesthetic for

consumer applications. However, recent advances in materials sciences, electronics,

photonics and software are enabling a potentially vast range of new lightweight, wearable

computing products to emerge. These technology advances are not only growing traditional

non-consumer markets but are also enabling a number of new consumer applications to

emerge. Based on this data and industry trends in smartphone adoption, Figure 3 shows the

potential for mainstream wearables.

Figure 3: Target market for wearables

Wearables

Consumers

GamingAthletes

Smartphone_userFitness

Senior Citizens

Industrial

HealthcareManufacturing

Mining

5. Channels of Communication Collins and Shemko (2008) provide options that companies can follow for different channels

of communication. Within the broader categories of Internal and External Channels of

Communication, types of communication may include conference calls, presentations,

executive blogs, new releases, advertising, websites, and customer service blogs/phone

support/web/social media channel options.

From Figure 4, it can be seen that Samsung is leveraging multiple communication channels

including advertising, blogs, newsletters, and live letters. It has an excellent website that

provides information about wearable products and services. Further, there is a strong

commitment to Corporate Social Responsibility that is showcased as an integral part of its

communication message.

Figure 4: Samsung Channels of Communication to reach Stakeholders

6. Central Theme of Samsung IMC The central theme of Samsung Wearable IMC appears to be related to Actionable

Marketing. Cohen (2011) defines actionable marketing as, “..the ability to persuade

prospects, customers and the public to engage with your firm.”

Samsung has been able to do the following for its wearable technology:

“In the drive to provide demonstrable evidence of the effectiveness of their marketing communication programs, managers need to

investigate new processes and practices. IMC provides an opportunity for creating improved brand and communication performance” - Reid, M. (2005)

Journal of Advertising

KPMG’s Digital Economy Practice

7. (Message + Channel) Mix Since Samsung is selling not only a product but a concept (that will be integrated in devices

not yet released), the focus of current IMC seems to be very technology-dependent. The

majority of market segment consumers interested in these devices already has a smart phone

or are planning to get one. With the upcoming Apple iWatch that will bring more exposure to

the concept of wearables, Samsung is poised to deliver on the promise of wearables by

showing a consistent track record of devices, apps, online services, and social media

connections that are built on an existing infrastructure giving Samsung a first mover

advantage. Figure 5 shows the current Message + Channel Mix being used by Samsung.

Figure 5: Capitalizing on Multi-channel messages (Source: highoctanceboost.com)

One characteristic that is important in wearable technology is the Social Networking Effect

that will allow sharing of personal goals (e.g. health related data). App developers would be

wise to use these features for “gamification” of wearable technology. This would involve

consumers getting rewards, bonuses, upgrades, similar to games in the app store for Android

and iOS. Samsung can jump ahead of the competition by having a branded app in their

existing suite of apps that will encourage sharing of data generated by its wearable devices.

Although this can be done from a social/entertainment angle, it also has applications for

health professionals. Imagine your vitals being transmitted over a secure link to your doctor

who can monitor and track your progress for diagnosis/treatment!

8. IMC Utilization

Wong, Radel, and Roshnee (2011) emphasize consistency of message and complementary

use of media as antecedents for an effective IMC. The goal is to meet marketing objectives

by delivering coordinated messages to stakeholders. Strengths and weaknesses of each of the

promotion mix elements need to be evaluated for maximum efficiency in delivery of

messages. Some of these elements may include Online and interactive marketing, Publicity,

Sponsorships, WOM, Outdoor Media, Product Placements, Direct Marketing, and

Advertising in print and broadcast media.

Samsung Wearable Tech division has been able to provide strategic matching of specific

communications to clearly defined target markets. For example, the YouTube channel (see

Page 3) located at http://www.youtube.com/user/SamsungUSATube, consistently gets

millions of video views for promotional material placed on websites. Another interesting

observation is that the video clips usually tell a story about emotional involvement with the

brand or emphasizes relationships which use the brand as a part of the media message.

As recommended by Wong et al. (2011), and based on my research derived from Internet

search for message/channel consistency, it appears that Samsung is using SMART (specific,

measurable, achievable, realistic, and time-bound) marketing objectives to promote wearable

technologies. This is an effective IMC Utilization strategy by Samsung.

9. Evaluation of current IMC Strategy Samsung has tried its best to reach the target market using IMC plan. However, with a

shifting target, Rizzo (2013) identifies factors that include high price and lack of consumer

awareness as those likely to hinder market growth in the early stages. Wearable technology is

driven primarily by mobility and factors such as compactness, portability and ease of use,

along with increasingly valuable multi-functionality and increasingly smart applications

these products can execute.

Guglielmo and Olson (2013) state Samsung moved into wearables early to prove it could be

faster to market than archrival Apple. Despite problems (shown below), the IMC tried to

focus on issues that would benefit the brand by promoting an innovative product.

Samsung’s biggest challenge is balancing engineering and design. For example, aesthetic

appear of wearables issue is of greater importance for a bracelet or glasses than a smartphone

that stays in the pocket. Since form must meet function, Samsung is talking to fashion houses

and jewelry companies such as Swarovski to help make its smart watch look good. Despite

these challenges, the increasing adoption of such technically advanced products among

millennials, coupled with greatly increasing demand for real time and actionable data will

also fuel the growth of the wearable technology market.

So what does Samsung need to do next?

Problem

•Pricing

• Limited Utility

•Privacy Issues

IMC

•Promotion

•Marketing

Focus

• Sales

• Image building

•Create Need for product

10. Recommendations for improvement Based on information in earlier sections, the following recommendations are made to

improve/reinforce IMC to target customers so outcomes can result in brand awareness and

recognition, target market access, goodwill, increased purchase intentions leading to increase

in sales, improvement in brand image, and brand positioning (esp. compared to Apple which

is Samsung’s main competitor).

Wearable technology will always remain in a state of flux with the next generation of devices

just around the corner. Agile marketing is needed that can pivot and focus on pressure points

that cause the change and adapt to shifts in demand. For example, MaRS Market Intelligence

identified the following developments coming soon to the Future of Wearables: Predictive

Guidance, Multiple Functionality, Wearable OS, Competitive Pressures, Price Drop and

Shrinking Margins. In anticipation of these changes, the following action steps (shown in

Figure 6) are being recommended:

Figure 6: Action steps for improvement

Sources Cohen, H. (2011). Is your Marketing Actionable? Retrieved from http://heidicohen.com/is-

your-marketing-actionable/

Collins, K. M., & Shemko, J. (2008). Exploring business. Pearson/Prentice Hall.

Guglielmo, C. & Olson, P (March 3, 2014). The Case Against Wearables, Or Why We Won't

All Look Like The Borg This Year. Retrieved from http://www.forbes.com

Market Influencers: Wearable Technology Products (2014). Publisher: Transparency Market

Research.

Reid, M. (2005). Performance auditing of Integrated Marketing Communication (IMC)

actions and outcomes. Journal of Advertising, 31(4), 41-54.

Rizzo, T. (2013, January 22). Wearable Technology - The Next Mobility Market is Booming.

Retrieved from http://www.wearabletechworld.com/

Samsung Stakeholders and Communication Channels (2014). Retrieved from

http://visiblebusiness.blogspot.com/2014/03/samsung-stakeholders-and-communication.html

Wearable Computing: Technologies, Applications and Global Markets (2014, March).

Retrieved from http://www.reportlinker.com/p02042684/Wearable-Computing-

Technologies-Applications-and-Global-Markets.html

Wearable Technology Market Assessment (2013). Retrieved from

http://www.ihs.com/electronic-media

Wong, H., Radel, K, Ransaran-Fowder, R. (2011). Planning for Integrated Marketing

Communications. In Building a Marketing Plan. MA: Harvard Business Publishing.