Documents obtained by the Korean press show why Samsung Electronics is dominating the mobile market. The conglomerate spent a record $11 billion for marketing activities last year, and $10.6 billion on research.
To say that Samsung is dominating the mobile industry is an understatement. The Korean conglomerate became last year the world’s largest phone maker, and the world’s largest smartphone maker. Countless Galaxy phones and tablets are sold every minute, in almost every country on the globe, and to people from all walks of life.
So, how did Samsung managed to turn itself from a second rate electronics maker into the behemoth that it is today? It’s easy: marketing and research.
The Korea Times revealed today that Samsung Electronics spent a record-breaking $11 billion on marketing activities in 2012, along with an equally impressive $10.6 billion on research and development.
Back in November, industry analyst Horace Dediu from Asymco was estimating that Samsung would spend close to $12 billion on marketing in 2012. More about that here. The figures outed today are slightly lower, but very impressive nevertheless. Here’s a graph from Dediu that illustrates the enormous difference between the advertising expenditures of Samsung and of some other tech companies:
Samsung’s 2012 marketing war chest was 38 percent higher than last year, and a staggering 6.8 times larger than what the company spent back in 2005. To put this figure in perspective, the 2012 marketing expenses were 6.5 percent of Samsung’s total sales. Moreover, Samsung spent more money on promoting its products than HTC’s entire revenue in a year.
People at Samsung are aware that they owe their good fortunes to marketing:
“Samsung’s focus on marketing was the main reason the company was so successful last year,” said a source inside Samsung, asking not to be identified.
I completely agree to the above statement. Of course, Samsung Electronics sells much more than mobile devices. From washing machines to Chromebooks, you could fill your home with nothing but Samsung products.
But Samsung is not all talk. In 2012, the company spent on R&D almost as much as it shelled out on advertising and promotions. It does take an awful lot of money to have market-leading products in several areas, from flexible panels and octo-core processors, to mobile phones and TV sets.
Samsung is at the point where it can do whatever it wants. They have enough money to build and sell (probably successfully) almost any consumer device. Is this dominance good for the industry? That’s another question.
What do you think?