SAMSUNG GALAXY SB New product making you happy

DECEMBER 10, 2014 JIE CAI (J-STAR)

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Contents

Definition of Happiness .............................................................................................................................. 2

Interview Outcome ...................................................................................................................................... 2

Idea of New Product ................................................................................................................................... 3

Features and Description of the New Product .......................................................................................... 4

Core Target Market & Size........................................................................................................................ 6

Rival Products & Product Positioning ...................................................................................................... 7

Distribution Strategy .................................................................................................................................. 8

Service Strategy ........................................................................................................................................... 9

Pricing Strategy ........................................................................................................................................... 9

Advertising Strategy ................................................................................................................................... 9

Sales Strategy ............................................................................................................................................ 11

Sales Promotion Strategy ......................................................................................................................... 11

Competitive Analysis ................................................................................................................................ 11

Estimation of Revenues ............................................................................................................................ 13

References .................................................................................................................................................. 15

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Definition of Happiness

If you ask someone’s understanding about happiness, everyone will have different answers. Over

the past decades in literature, scientists from different fields had different definitions.

Psychologists defined happiness as “subjective well-being” (Diener et al. 1999). This definition

indicated that happiness is highly distinctive to each individual (Gilbert 2006). Economists

suggested that happiness is someone’s income and the consumption (Sunyani-Unger 1981).

Neurobiologist, from biology aspect, understood that activating some regions of the brain would

make someone happy (Jean-Francois Bettingen, Marius K. Luedicke, 2009). According to the

Merriam-Webster’s Collegiate Dictionary, happiness is “a state of well-being and contentment; a

pleasurable or satisfying experience”. The concept of happiness has been the subject of research

within a field called “Positive psychology” (cf. review by Kesebir & Diener, 2008). Positive

psychology is considered a sub branch of psychology focusing on studying people’s feelings and

how to make them happy and positive to life (Maria Saaksjarvi & Katarina Hellen 2013).

Recently, researches on positive psychology have increased hugely because more and more

people realized the significance of happiness and cared about it (Kesebir & Diener, 2008; Kurtz

& Lyubomirsky, 2011). Marketing literature has been involved into happiness. There is a

research stream called “positive marketing”, which means to find out what makes customer

happy and do related research to understand the role of happiness in marketing context (Maria

Saaksjarvi & Katarina Hellen 2013). Maria and Katarina discussed three method for marketers

and designers to bring happiness to customers: “1) design for fostering social relationships and

belongingness, 2) design for meaning in life, and 3) design for making consumers active.

Interview Outcome

In order to complete this project, I interviewed 17 people about their understanding of happiness.

I asked them to use one sentence or some keyword to express their feelings about happiness.

Here are their answers. Happiness is:

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23

1

0

2

4

6

8

10

12

China America England Canada

Number

Number

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The way living yourself, making your mile

Playing computer every day

Fast car and family

Sleeping until naturally waking up, doing what you like, and knowing somebody standing behind

you and supporting you

Doing a good survey and getting a good score

Sharing wonderful things with someone I love

First, the health of my presents; second, freedom of body and mind; third, doing something

meaningful; fourth, not tired for the secular

Doing whatever I want, freedom

Ordinary and simplicity

Eating delicious food; having beautiful clothes; having healthy presents; having someone love

me

Having something to do; having some to love and be loved; having expectations

Democracy and freedom

Having something to be expected

When you think about someone and something in someplace, you cannot stop laughing

Receiving a message from a friend who haven’t been in contact for a long time

Living without stress and pressure

Eating, sleeping, playing

Participants are from a wide range of age and employee status. The youngest child is 12 years

old. The oldest is nearly 60 years old. From their responses, we can get some common attributes

or values. Because some of them described happiness so abstractly, and in contract, others did it

very concretely, we can summarize that they connected happiness with communication, health,

sleep, entertainment, freedom, and expectation. All are based on their individual experience and

well-being.

Idea of New Product

The next step is to think out a new product, a product that owns the attributes or can provide the

experience. Basing on the three factors for marketers and designers, the new product should

focus on social relationship, meaning for life, and customer activation. Then, I search from

Internet for a lot of attributes related to these factors and did the means and ends analysis. Here is

the result of means-ends analysis.

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The result shows that these attributes are highly related to happiness. Then I come out an idea

about my new product, based on the existing smart wrist band. The Samsung Galaxy Smart Band

(Samsung Galaxy SB). In the last year, when Samsung unveiled the flagship Galaxy S4, it

mentioned the Galaxy S Band, a wrist band like Jawbone band. But it finally released the Galaxy

Gear, and recently Gear fit, a smart watch instead of smart band. Now it is the time to create a

new product to hold more market share and compete with Fitbit and Jawbone.

Features and Description of the New Product

Samsung Electronics provided all kind of electronic products to fulfill customers’ needs. We all

know the Samsung Galaxy Tab series are transition products connecting mobile phones to

laptops. The Samsung Galaxy Note series are transition products connecting small-screen smart

phones to tablets. Now we can indicate that Samsung Galaxy SB is a transition product

connecting smart watches—Galaxy Gear series to smart phones—Galaxy S series and Note

series. Here is the correlation among them.

Good experience Freedom Convenient Health

Manage

your phone Track

exercise Track sleep

quality

Water-

resistan

t

Easy to

wear

Happy

Commun

ication

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Because the Galaxy SB is a transition product between Galaxy Gear and Galaxy S and Note

series, it should contain the function of both product. Here are the features of Galaxy SB.

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c

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Image Credit: cicret.com

The most innovative feature is the Pico projector to project your phone’s screen onto your arms

so that you can touch your skin to control everything you can do with your phone. The proximity

sensors will make Galaxy SB detect your finger position when you use it to manage your phone

call (Sarsha Punch 2014).

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Image Credit: cicret.com

If this product came into reality, we would not take out the phone when we were not convenient

such as driving, riding or exercising. One small band can control everything and give you

maximum capability to do whatever you like. You can share experience or contact with your

family, friends, and lover. The sensors in it will track your health, monitor your heart rate, and

report your sleep quality to your phone, tablet, or laptop. If you like, you can also use the

projector to play games on your arm through Bluetooth connection with your smart phone. It is

really convenient to wear or take off. You can also take it when showering or swimming because

its waterproof attributes. Anyway, this will be a cool and creative product of the Samsung

family.

Core Target Market & Size

Because this product is highly related to health and convenience, we target the niche market, the

consumers who are health-conscious, cutting-edge fans, active young people.

Regional portion of Revenue

2011 2012 2013

According to the annual report from 201o to 2013, the main market should focus on America,

Europe, Asia/Africa, and China. Especially, America is the most important market to keep.

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In 2013, 1.6 million smart bands shipped in the second half of 2013, after 200,000 smart

wearable bands shipped in the first half of the year. Below is the parentage of each brand in H2

2013. The half year growth is 700 percent (Matt Clinch 2014)

Image credit: canaclys.com

In the smart wearable hands pie chart, Samsung accounted for 54%, ranking on the top mainly

because it unveiled the Galaxy Gear—smart watch. Honestly, the Galaxy SB should be put into

the basic wearable bands because it looks similar to bands but more advanced and smarter.

Though there is only a relatively small group concentrating on fitness and health. Smart wearable

bands will make a difference. Researchers in Canalys indicate the smart band segment will reach

8 million by 2014, over 23 million by 2015, and over 45 million by 2017. So the market size is

huge. Opportunities and Threats co-exist.

Rival Products & Product Positioning

Jawbone, a wearable products company, develops wearable technology and has product Jawbone

UP 3 wristband, a highest level product.

UP 3 $179.99

Fitbit, an activity tracker company, develops wearable and wireless device related to fitness and

has the highest level product surge smart watch.

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Surge $249.5

These two companies both positioned themselves as a health-oriented brand, focusing on

tracking health. From the price strategy, they both positioned as medium, and target medium-

value consumers.

I choose these two product because they represent the highest quality of these brand. The retail

price also demonstrates their brand value. They are the most popular wrist band brand all around

the world in the relatively small market. However, Samsung is famous brand and has a huge

brand equity. The creative Samsung Galaxy SB is new product in a new area. Actually, it has no

competitors because it is a combination of basic wrist band, smart watch, and even the smart

phone. The price will be much higher and position will also higher than these two brands.

Distribution Strategy

Online store

Samsung Electronics has its own official website. All its new product will appear on the

homepage with big posters. Customers will easy find out this Galaxy SB and learn it through

video instruction just like the Galaxy Gear. All you need to do is choose and pay for the order

and wait for the package. This distribution will avoid the intermediaries, save cost, and at the

same time ensure quality.

Samsung retail store

Image credit: the Wall Street Journal

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Samsung Electronics had few own retail stores around the world compared with Apple. Facing

fierce competition, Samsung has taken actions to increase its retail store building. In Europe, it

will triple the 31 stores in the coming month. In Canada, it will open 90 kiosks within Best Buy

and Future Shop. In the U.S., it had set up 1,400 displayed kiosks in Best Buy ( Will Connors,

Sam Schechner 2014). For the Galaxy SB, Samsung cannot count on Carrier Company, which

made a great contribution to its smart phone sales. The reason is that the new product doesn’t

need sim card. Kiosks and stores are rational distribution for consumers to experience and buy

this product.

Service Strategy

Training employees to be professional

For a new product, the best method to publicize it is to invite customers to experience it. So the

first step is to invite some customers get into the store to experience it. The well-trained staff will

be prepared to help and instruct customers. A good attitude and patience will increase the

purchase opportunities and increase customer loyalty.

Document warranty

A promise or guarantee should be given to customers because, on the one hand, it shows you are

confident to your product, and promise a high quality, on the other hand, it gives customers a

feeling of comfort and safety. If there is an accidental damage within a time period, the product

will get repaired or replaced. This would increase the brand credibility.

Pricing Strategy

I already know my rival’s product and price, the Fitbit Surge is more advanced than Jawbone

UP3, and the price is $249.5. I can use Benchmarking strategy to set the original price $249.5.

However, Samsung Galaxy SB is more advanced than Fitbit Surge due to the cutting-edge

technology, the Pico projector that can even replace smart mobile phone to some extent. The

price should be higher than $249.5. Besides, the Brand equity of Samsung allows it to increase

price to a higher level. According to the analysis, I decide to set the retail price of Samsung

Galaxy SB $299.99. The reason why I didn’t set the price $300 is that $299.99 will give the

consumers an illusion that is less than $300 and have a stronger desire to buy one.

Advertising Strategy

Digital marketing

Samsung has already focused on its advertising TV, Internet and Radio，this preference should

keep on because recently data shows that they are still the most important channels to do

advertising.

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From the graphic, we can see that even though media consumption is decreasing recently on TV,

online and Radio. They are still the main media. In addition, media consumption on mobile is

increasing. It still belongs to digital marketing. Advertising investment should focus on them.

Image credit: Asymco.com

From this chart, Samsung spent more than $4,000 million on advertising in 2012, and we don’t

how much it spends this year. Keep this trend will have a great impact on sale of the new

product.

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Sponsorship

Samsung spent a lot of money sponsoring activities such as Oscar Reward, American Music

Award this year. All the celebrities standing the stage were holding the new Samsung Galaxy

Note 3. And the flowing posters of Galaxy Gear are appearing on the homepage of You Tube.

The investment on advertising built a strong brand image for Samsung. The same strategy will be

used to publicize the new Samsung Galaxy SB.

Sales Strategy

Relying on service strategy & distribution strategy

During the sales process, good employees play a critical role to determine the sale amount.

Providing training to staff and making them professional will help Samsung to increase sales. A

good staff will try to keep a long-term relationship with customers. If the loyal customer number

is huge, it is easy to persuade them and sell this new product.

With the expansion of Samsung’s retail stores and kiosks, sales from these distributions will

greatly increase. An experience and real store will be the first choice for consumers to get

touched the new product. Online purchase is easy and convenient, but you cannot touch and feel

a new product. So the Samsung Galaxy SB should first focus on retail stores sales before it

boosts.

Sales Promotion Strategy

Relying on pricing strategy and advertising strategy

The first way is to find excuses to provide discount if necessary. I set the retail price $299.99, but

no one can make sure that this price is reasonable and acceptable. If the sales amount is great, we

can make the sure price is suitable with a good quality. Word of mouth will help us do the

marketing. We don’t even need to make a promotion. However, if the sales is so-so, and it

doesn’t excess consumers’ expectation, we have to find out a way to stimulate sales. Most usual

and direct method is to reduce the price by discount.

If we want to use festivals as approaches to promote, digital marketing should focus on TV,

Internet, Radio, and Mobile. These are the media people often used to get information. Samsung

should design creative advertisement and distribute them through these media.

Competitive Analysis

Strong financial support

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2011 2012 2013

(In trillion KRW)

2011 2012 2013

Cash at beginning of the period 22.48 26.88 37.45

Cash flow from operations 22.92 37.97 46.71

Cash flow from investing -21.62 -24.85 -25.19

Cash flow from finance 3.11 -1.86 -4.14

Net increase/decrease in cash 4.40 10.57 17.05

Cash at end of the period 26.88 37.45 54.50

Net cash 12.23 22.55 43.34

From the annual report above, we can conclude that Samsung Electronics had a strong financial

support. The net cash increased significantly in recent year, and in 2013, it reached 43.34 trillion

KRW. Fitbit and Jawbone are both small company. More budget for Samsung Galaxy SB means

they can invest more and create better product with high technology.

High investment for research and development

R&D is at the heart of everything Samsung does. Ongoing investment in our collaborative global

research network plays a critical role in our ability to innovate products today that will enrich

people’s lives tomorrow. R&D is our key to responding to uncertain business environments and

an increasingly competitive market place. Each year we invest at least 9% of our sales revenue

into R&D activities with a commitment to leading technology standardization and securing

intellectual property rights (Samsung.com, 2014). Leading technology will help Samsung keep

competitiveness.

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High Brand value

Recently, Samsung has invested tremendous money to advance this brand to a higher level

through advertising campaign

Image Credit: Brand Finance

Research shows that Samsung Brand Value is $78,752 million in 2014, ranking the second all

around the world. A high brand value means high customer loyalty and low turnover. Fitbit and

Jawbone both are young and small brands and have a low brand value.

Estimation of Revenues

2011 2012 2013

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Based on the three year revenues from Samsung annual report, a linear regression model could

be built to estimate its revenues year over year. Before building the model, an assumption should

be made that during the three years Samsung has creative and new product unveiled, making the

revenue increase gradually so that the new Galaxy SB will increase its revenue, following the

increase pace. Here is the result

Coefficients

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) -63883.933 4936.923

-12.940 .049

year 31.850 2.454 .997 12.980 .049

a. Dependent Variable: revenues

At 95% significant level, the model is effective the equation is:

Revenues = 31.850 year – 63883.933

Hence, the 2014, 2015, 2016 year revenue estimation are below:

year Revenues (in trillion KRW)

2014 261.967

2015 293.817

2016 325.667

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References

Clinch, Matt (2014), “Wearable smart bands set for 350% growth in 2014,” (accessed December

8, 2014), [available at http://www.cnbc.com/id/101410507].

Connors, Will and Sam Schechner (2014), “Samsung Builds Retail Clout in Europe, North

America,” (accessed December 8, 2014), [available at

http://www.wsj.com/articles/SB10001424052702304899704579389843179905288].

Celan Bryant (2014), “Apple, Samsung, and Google: Most Valuable Brands for 2014,” (accessed

December 9, 2014), [available at http://www.fool.com/investing/general/2014/03/25/apple-

samsung-and-google-most-valuable-brands-for.aspx].

Diener, Ed, Eunkook M. Suh, Richard E. Lucas and Heidi L. Smith (1999), “Subjective Well-

Being: Three Decades of Progress,” Psychological Bulletin, 125 (2), 276-302.

Gilbert, Daniel T. (2006), Stumbling on Happiness, New York: Knopf.

Jean-Francois Bettingen, Marius K. Luedicke (2009), “Can Brands Make Us Happy? A Research

Framework for the Study of Brands and Their Effects on Happiness”, Advances in Consumer

Research, 36, 309.

Kesebir, P., & Diener, E. (2008). In pursuit of happiness: Empirical answers to philosophical

questions. Perspectives on Psychological Science, 3(2), 117-125.c

Kurtz, J. L., & Lyubomirsky, S. (2011). Positive psychology. In M. R. Mehl & T. S. Conner

(Eds.), Handbook of research methods for studying daily life (pp. 553-568). New York, NY: The

Guilford Press.

Punch, Sarsha (2014), “The Cicret Bracelet: Wearable Technology That Maks Your Skin

Function As A Touchscreen,” (accessed December 7, 2014), [available at

https://sg.news.yahoo.com/cicret-bracelet-wearable-technology-makes-040050935.html].

Sääksjärvi, M., & Hellén, K. (2013). How designers and marketers can work together to support

consumers’ happiness. International Journal of Design, 7(3), 33-44.

“Samsung” (accessed December 8, 2014), [available at

http://www.samsung.com/us/aboutsamsung/samsung_electronics/business_area/rd_page/].