Samsung’s growth in Middle East – CE giant hopes to expand its brand

The number three consumer electronics firm is on its way up in the region, with growth and products to match

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This September in Berlin, in his keynote address at IFA 2006, the world’s largest consumer electronics exhibition, Samsung President and CEO Gee Sung Choi reviewed the tremendous success enjoyed by his company over the past few years and highlighted several exciting new developments on Samsung’s horizon. With 2005 parent company sales of $56.7 billion and net income of $7.5 billion, and powered by a staff of approximately 128,000 people in 57 countries, Samsung has rapidly risen to the position of global powerhouse, leaping from 34th place in Interbrand’s 2005 ranking of global brands (based on brand equity) to 20th place in 2006. (To give some more perspective, parent company sales in 2001 were valued at $24.4 billion, and net profit at $2.2 billion—values that more than doubled and tripled, respectively, by 2005.)

Leadership matters

Mr. Choi’s leadership has played a large role in these impressive strides; in his speech, Choi recalled his comments at IFA 2003, when he coined the term “digital renaissance,” predicting the growth of the consumer electronics industry and a global transition towards digital technology that have since been realized. With this in mind, his concept for the next step in the “digital renaissance,” an era of “rich digital experiences,” carries extra weight; delivering such experiences to end consumers will play a key role in Samsung’s strategy for further consolidating its market leadership.

Although the Middle East is not Samsung’s largest market, it is one of its fastest-growing, and is poised to play an increasingly significant role in the company’s global strategy. In terms of brand power, Samsung is the #3 consumer electronics company in the Middle East and Africa region, with a high level of brand awareness and overwhelmingly positive consumer feedback.

Headquartered in Dubai, Samsung Middle East and Africa (MEA) operates through ten branches and two subsidiaries in the region, with a permanent workforce of 434 employees. Although the brand’s leadership position is more recent, Samsung has a 20-year history in the Middle East.

MEA is no exception to Samsung’s global growth trend, and represents one of company’s fastest-growing markets along with South East Asia, Latin America, Europe and China. Since 2001, average annual revenue growth has been 24%, with 2005 revenues for MEA reaching $2.5 billion. According to MEA Corporate Marketing Manager Haris Munif, expected growth for 2006 is 18-20%, with expected revenues for the year as high as $2.9 billion.

“Our sales and growth rates in the MEA region are very much on track with other markets,” notes Munif. “In absolute terms, Samsung MEA contributes approximately 5% to global sales. Sales contribution is higher in some other markets as they are huge customers of Samsung B2B products like LCD screens and semiconductors.”

Samsung’s best-sellers in the MEA market reflect the diversity of the company’s offerings. According to Munif, AV (in particular, their flagship ‘Bordeaux’ LCD TV, which is a regional market leader) and home appliances have proven some of Samsung MEA’s strongest categories, along with the mobile phone sector—where Samsung, with its 20% market share, commands 3rd position in the regional market.

According to Munif, Samsung “has been the pioneer in introducing the era of digital convergence to the MEA consumer,” through its popular, innovative and intuitive products. Among its recent accomplishments, Munif cites Samsung’s key role in introducing “the dawn of smart home technology in this region, by displaying the first home networks in collaboration with Etisalat.”

Universal appeal

Although Samsung strives to achieve a universal image (at IFA 2006, a central section of Samsung’s expansive hall featured a display of “lifestyle concept” rooms, including Scandinavian, Asian and Mediterranean interior designs, to highlight the ease with which its digital products blend seamlessly in any home setting), partnerships play an increasingly significant role in the company’s corporate strategies, and Samsung has not missed the opportunity to draw on its two decades of experience in the Middle East when it comes to branding. “Samsung has a predominantly centralized approach to marketing; however, we do have an effective mix of global and local marketing campaigns,” explains Munif. “This ‘glocal’ marketing approach touches the local sentiment but does not compromise on global brand equity. A very good example is the upcoming Doha Asian Games campaign, for which Samsung has created an entirely local campaign for its global flagship ‘Bordeaux’ LCD TV.”

Samsung MEA may be part of a global brand, but according to Munif, MEA’s ultimate commitment is to its local end users:

“Our goal is make Samsung the most preferred and loved brand in the region. We aim to achieve this by focusing on our consumers’ needs, and delivering localized products and solutions to fulfill them.”