Samsung: The Mantra is Upsell

HIGHLIGHTS   Samsung Electronics India Information & Telecommunication (SEIIT) and Samsung Electronics India Ltd (SEIL) consolidated to form Samsung India Electronics Ltd (SIEL)   LCD TFT displays and laser printers brought in handsome growth   CRT monitor contribution to revenue dropped to 34% from 50% in FY 2002-03    Vast and extensive channel network   Strong brand recall and pull among end-customers   As pricing for branded PCs continues to come under pressure, growth may be limited by too much focus on components business

Samsung India went through a restructuring process in FY 2003-04 whereby both the consumer electronics business and the IT business were brought under one umbrella. Further, Samsung India got promoted to become the regional headquarters for all of south-west Asia. And it was also during the same fiscal that the company crossed the $1 billion revenue mark, with as much as 30% of it coming from the sale of IT products. Like in the years before, upselling continued to be Samsung's key strategy. On the displays front, Liquid Crystal Display (LCD) TFTs brought in as much as 16% of Samsung's overall revenue, while the contribution of CRT monitors dropped to 34% down from 41% in FY 2002-03. The early adopters among the business segments included BFSI, hospitality and BPO. The year that went by also saw Average Sales Values for CRTs stabilize with the acceleration in migration from 15” to 17” screens. On the optical disk drives front too, the same strategy held sway, and CDRWs outsold CDROMs by a factor of two. The next logical upselling point for Samsung was to push the DVD ROM, which sells at five times the price of a CD ROM drive.  KS Kim President & CEO,  South West Asia Vivek Prakash V-P (IT Products Division)

Sonal Anand National Products Head (IT Products Division) Aseem Kumar Product Manager (Printing)

But it was not roses all year long for Samsung. There was the fair share of hiccups. The BuildUrPC or BUPC initiative was dropped, since what the company was marketing as PC kits was being construed by the end user as a Samsung PC. Neither did the channel do anything to alleviate the confusion. All of this led to unaddressed service issues and a bunch of dissatisfied customers. But it was quick to react and withdrew the initiative. Lesson: a cluster strategy for selling is successful only so long as all the components in the cluster are under the company's direct control. The company now sells its monitors, Hard Disk Drives and Optical Disk Drives as a cluster and provides the customer a single window solution to address issues that might arise with respect to all or any of the components of this cluster. You don't have to be a rocket scientist to guess the results. Samsung also managed to challenge HP on its home front by introducing a sub 10k laser printer. This boosted laser printer unit sales that grew by 70%, as opposed to the 19% industry growth rate. Samsung will continue to upsell to its customers in the next fiscal too, as the company mandate does not allow a decline in ASVs.