Samsung retooling marketing strategy

By Kim Yoo-chul

Samsung Electronics has launched a task force to prevent a further fall in the company's crucial smartphone business, sources said Tuesday.

"Samsung created a task force with marketing staff from the mobile, semiconductor and appliances divisions. The main purpose of the team is to come up with solutions to tackle the difficulties facing the handset business," said a source.

The company’s Future Strategy Office, the control tower for the group, is directly handling the team which will report to senior executives including office head Choi Gee-sung.

Samsung affiliates team up with the strategy office when the group faces business difficulties.

Officials say it's rare for the office to intervene in the business of an affiliate as the office normally functions as a coordination body to narrow different interests.

The team’s main task is how to reform the company's marketing strategy, as "heavy and cash-burning marketing plans" were blamed for rising inventories of Samsung tablets and smartphones and a decline in its market share.

Samsung faces growing challenges from budget Chinese vendors such as Huawei Technologies and Xiaomi.

The company's smartphone business division reported 4.4 trillion won in operating profit during the April-June period, a 31 percent drop from 6.4 trillion won a quarter earlier.

"There are a lot of factors behind the fall in profit. Samsung spent heavily on marketing in an attempt to cut inventories for the Galaxy Note 4 smartphones and tablets ahead of new product launches," said another source.

Samsung has shifted its focus toward phablets which the firm created in 2011 with its Galaxy Note series.

Its strategy marketing head Lee Don-joo recently told reporters that he remains bullish over the outlook for its latest Galaxy Note 4.

Samsung is taking every needed measures to reinvigorate its handset business, but analysts say a bit of squeeze will be unavoidable for the tech giant at the moment.

Nomura Securities cut its target on Samsung share prices by 11.6 percent to 1.37 million won from 1.55 million, expecting the mobile division to report 2.2 trillion won operating profit during the July-September period, a drop of 66 percent from a year ago.

Still, some retailers remain optimistic.

"Sales have been strong for us,” said Ashish Panjabi, the chief operating officer at Jacky's Electronics, which operates Samsung brand shops in the UAE.

"The iPhone 6 may take some shares of the overall phablet market, but Apple still fails to include features like dual SIM, which has been very popular on the Galaxy S5 Duos."