4 ms·

I understand the point he is making, and I agree that the importance of advertising is declining. However, I wouldn't be able to explain Samsung's success witho

by josu 12y ago

I understand the point he is making, and I agree that the importance of advertising is declining. However, I wouldn't be able to explain Samsung's success without looking at advertising.

baddox 12y ago
How about economy of scale in manufacturing, and (mostly) competent design and engineering teams?
- josu 12y ago
  From a consumer's perspective all I see is a bunch of high end cell phones with very similar features and priced the same. Nevertheless, many people decide to buy the Samsung flagship phone over the Sony, LG or HTC. Better economies of scale could be the reason if they decided to price their phones lower, but they don't. So that it's not the reason why people are choosing Samsung. About the competent design, I don't see the Galaxy being superior to the HTC one or the Z2.
  - baddox 12y ago
    An economy of scale doesn't necessarily mean they price their phones lower. It could mean they offer more expensive products at the same price and with the same profit as their competitors, or offer equivalent products at the same price but higher profit than their competitors.
    - josu 12y ago
      That's right. But they do not offer a better product, the flagship phones are all pretty much the same. And there is no reason why a higher margin should turn into a higher market share.
Zigurd 12y ago
If that were mostly attributable to advertising, I think you would see an equivalent success built on a horizontal brand - that is, an OEM without Samsung's vertical integration. Otherwise an equally valid conjecture is that Samsung bought-in to the idea that the only way to consolidate success is through establishing a brand. As Intel did, for example. But I don't think anyone could argue that Samsung's ad campaigns are mostly cost-effective, coherent, and well-targeted. In other words, I don't think one can articulate a set of hypotheses that links the vast majority of Samsung's ad spending to Samsung's market success. Contrarywise, there is a pretty good theory that Samsung succeeded in PCs, before they cranked up the ad spending, by being vertically integrated in almost all high-value components except CPUs.
- josu 12y ago
  I agree that establishing causality is very difficult and especially when it comes to the advertising business. Nevertheless, my point is that when it comes to high end Android phones it is starting to look like a commodity market. So in my opinion the only way to explain Samsung's success is either their ad spending or sheer luck, which may as well be a really good explanation.
  - Zigurd 12y ago
    My point is that, as with PCs, which have been commoditized for decades, Samsung's success is mainly a product of vertical integration. In fact I'd cite their recent mobile handset launch events as a prime example of marketing and advertising spending gone off the rails. I also compared them with Intel for a reason. Intel wins because they can simultaneously push chip and chip fab technology. That's an explanation that can put most people to sleep by the fourth word. And yet, once it was a small enough part of their budget, they went into the ad market, spent tens of millions, and bought brand recognition. It was a check-off item.
- xenadu02 12y ago
  Huh? Samsung pays kickbacks to sales people and carriers. At least with regards to their top of the line phones, that's how they have muscled out all their Android competitors. It's a vicious cycle that you can't sustain unless you're a huge company that can subsidize the strategy with cash from profitable businesses. When the minimum-wage salesperson at the carrier store or mall kiosk gets $25 in their pocket for selling the top line Samsung phone and $0 for any other phone, the "choice" is clear: customers will be walking out with Samsung phones. That is a majority of their marketing budget, though they go through great lengths to bury the lead in what little numbers they release. Part of the reason Apple gets so much organic press is they're the only one to release actual hard numbers on a regular basis, though they are certainly coy in some areas.
davemel37 12y ago
Really? I could just as easily explain their success to an insane amount of press coverage.
rimantas 12y ago
Well… http://83-136-248-155.uk-lon1.host.upcloud.com/wp-content/uploads/2012/11/Screen-Shot-2012-11-29-at-11-29-7.22.07-PM.png http://83-136-248-155.uk-lon1.host.upcloud.com/wp-content/up...

by josu 12y ago

I understand the point he is making, and I agree that the importance of advertising is declining. However, I wouldn't be able to explain Samsung's success without looking at advertising.

baddox 12y ago

How about economy of scale in manufacturing, and (mostly) competent design and engineering teams?

josu 12y ago
From a consumer's perspective all I see is a bunch of high end cell phones with very similar features and priced the same. Nevertheless, many people decide to buy the Samsung flagship phone over the Sony, LG or HTC. Better economies of scale could be the reason if they decided to price their phones lower, but they don't. So that it's not the reason why people are choosing Samsung. About the competent design, I don't see the Galaxy being superior to the HTC one or the Z2.
- baddox 12y ago
  An economy of scale doesn't necessarily mean they price their phones lower. It could mean they offer more expensive products at the same price and with the same profit as their competitors, or offer equivalent products at the same price but higher profit than their competitors.
  - josu 12y ago
    That's right. But they do not offer a better product, the flagship phones are all pretty much the same. And there is no reason why a higher margin should turn into a higher market share.

Zigurd 12y ago

If that were mostly attributable to advertising, I think you would see an equivalent success built on a horizontal brand - that is, an OEM without Samsung's vertical integration. Otherwise an equally valid conjecture is that Samsung bought-in to the idea that the only way to consolidate success is through establishing a brand. As Intel did, for example. But I don't think anyone could argue that Samsung's ad campaigns are mostly cost-effective, coherent, and well-targeted. In other words, I don't think one can articulate a set of hypotheses that links the vast majority of Samsung's ad spending to Samsung's market success. Contrarywise, there is a pretty good theory that Samsung succeeded in PCs, before they cranked up the ad spending, by being vertically integrated in almost all high-value components except CPUs.

josu 12y ago
I agree that establishing causality is very difficult and especially when it comes to the advertising business. Nevertheless, my point is that when it comes to high end Android phones it is starting to look like a commodity market. So in my opinion the only way to explain Samsung's success is either their ad spending or sheer luck, which may as well be a really good explanation.
- Zigurd 12y ago
  My point is that, as with PCs, which have been commoditized for decades, Samsung's success is mainly a product of vertical integration. In fact I'd cite their recent mobile handset launch events as a prime example of marketing and advertising spending gone off the rails. I also compared them with Intel for a reason. Intel wins because they can simultaneously push chip and chip fab technology. That's an explanation that can put most people to sleep by the fourth word. And yet, once it was a small enough part of their budget, they went into the ad market, spent tens of millions, and bought brand recognition. It was a check-off item.
xenadu02 12y ago
Huh? Samsung pays kickbacks to sales people and carriers. At least with regards to their top of the line phones, that's how they have muscled out all their Android competitors. It's a vicious cycle that you can't sustain unless you're a huge company that can subsidize the strategy with cash from profitable businesses. When the minimum-wage salesperson at the carrier store or mall kiosk gets $25 in their pocket for selling the top line Samsung phone and $0 for any other phone, the "choice" is clear: customers will be walking out with Samsung phones. That is a majority of their marketing budget, though they go through great lengths to bury the lead in what little numbers they release. Part of the reason Apple gets so much organic press is they're the only one to release actual hard numbers on a regular basis, though they are certainly coy in some areas.

davemel37 12y ago

Really? I could just as easily explain their success to an insane amount of press coverage.

rimantas 12y ago

Well… http://83-136-248-155.uk-lon1.host.upcloud.com/wp-content/uploads/2012/11/Screen-Shot-2012-11-29-at-11-29-7.22.07-PM.png http://83-136-248-155.uk-lon1.host.upcloud.com/wp-content/up...