Aug 21, 2001 South Korea's largest electronics firm, Samsung Electronics, has raised its marketing budget this year by 20 percent to $940 million as it strives for brand promotion to counter slowing global demand, a company executive said on Tuesday.
The sum is the largest to be spent by any single Korean company to promote its identity and cultivate markets, Eric Kim, executive vice president in charge of Samsung's global marketing, told Reuters.
"We are committed to serious investment for brand promotion," Kim said. "Until the mid-1990s we were heavily dependent on original equipment manufacturing sales. But we are now trying hard to let consumers see that the Samsung brand passes for quality products."
About half the budget would be spent to beef up overseas marketing of the company, which is also the world's top-ranked memory chip producer.
The marketing budget represents about three percent of sales revenue. The share of original equipment manufacturing in the company's sales has dropped to about 30 percent from 45 percent in the mid-1990s, he said.
"We expect the percentage to fall further to about 20 percent in one or two years," the executive said.
Samsung Electronics still sells about half of its computer monitors and 30 percent of its video cassette recorders under the names of other brands.
U.S. PROMOTION
As recognition of its brand name grows, Samsung Electronics has started to provide a range of information technology products to U.S. consumers via computer chain CompUSA, pulling out of large-scale discount chains such as Wal-Mart
"We opened five stores inside the CompUSA chain in Miami and their initial success encouraged us to draw up a plan to do the same in New York and later in the entire U.S. market," Kim said.
High-quality IT stores in Europe, such as British electrical retailer Dixons Plc and Kingfisher Plc's French electricals unit Darty, began accepting Samsung-brand electronics products from this year as well.
"The fact that major electronics stores are selling our brand products is itself a great success," he said. "The emphasis on branding is our key marketing strategy."
U.S. entertainment content provider AOL Time Warner, which signed up to buy Samsung-brand set-top boxes in July, is in talks to expand its purchase agreement to wireless handsets that allow Internet access.
"With AOL Time Warner, we agreed to use joint brand names, a deal that we are focused on expanding as a key marketing strategy," Kim said.
Samsung Electronics' brand value was estimated at about $6.4 billion in 2001, up from $5.2 billion in 2000, according to a U.S. consulting firm Interbrand.
Among Asian electronics firms, the Korean company was the second ranked, behind Japan's Sony, valued at $15 billion.
Shares of Samsung Electronics declined 2.11 percent or 4,000 won to close at 186,000 won on Tuesday, while the broader composite index finished down 0.28 percent at 568.68.
Samsung Electronics Co., Ltd., with 1999 sales revenue of US$22.8 billion is a world leader in the electronics industry. Headquartered in Korea, the company has operations in about 50 countries with 54,000 employees worldwide. The company consists of three main business units: Digital Media, Semiconductors and Information & Communications Businesses.
