Why Samsung is unstoppable: $11 billion spent on marketing, $10.6 billion on R&D in 2012

March 6, 2013

Samsung Galaxy Logo aa - 600px

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-electronics-advertising-1

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?

Comments

  • Babylonbwoy

    “$10.6 billion on research and development” Wonder where the money went ? They copied other manufacturer design, build plastic phone and spend that money ? What did they develop ?

    • http://AndroidAuthority.com/ Bogdan Petrovan

      flexible panels and octo-core processors?

      • Jusephe

        Flexible Displays were first made in 2005 i think, no revolution happened just like with youmm
        Octo core processor was a really really hard thing to research, they just take ARMs big little and quadruple number of processors for marketing purposes.

        • fgrgerh

          No revolution, but a pretty significant evolution of the tech.

        • Cyprian Bergonia

          chip design and manufacturing is an expensive process, copied and or derivative designs are no exception. Not to mention the fact that Samsung deals in more than just phones.

    • http://petercast.net Peterson Silva

      They used to* copy; In 2012 that has changed significantly.
      Plastic phones = Stop whining about plastic. It’s durable, nice to touch and just as beautiful as anything else, if well built (what Samsung does with its flagship devices).

      • http://www.facebook.com/ashad.mamood Ashad Mamood

        Well built! Good joke!

  • Jason Bailey

    Are those figures across samsung as a whole? If so they are very misleading as they make far more than phones and tablets :-)+

    • Bone

      All across the board. I wouldn’t be surprised to find Samsung barely breaking even in other areas than the successful mobile division, but with all those house machines and electronics, sound, photograph and screen devices, SSDs, HDDs and BR stuff everywhere in every store is advertising of the brand alone.

  • MasterMuffin

    Me waiting for a computer with AMOLED display

    • http://www.facebook.com/ashad.mamood Ashad Mamood

      Horrible! Me waiting for a true oled display!

      • MasterMuffin

        True oled display? AMOLED means active-matrix OLED, so it’s true oled display. Or do you mean PMOLED?

  • jay

    when was samsung ever second rated electronic company? unless your speaking strictly mobile? or unless your knowledge of the electronic in only limited to mobile as well.. that was a dumb statement

    • gegga

      It once was in the days of the first galaxy S and S2.

      • jay

        like i said.. that is looking at it from mobile perspective.. they were always leading the way in television, and other technology.

    • http://www.facebook.com/ashad.mamood Ashad Mamood

      Before it started copying other companies tech and then making the same thing cheaper!

      • Jordan Awkward

        Can you gtfo all you do is talk crap please tell me what they copied

        • john

          Well all companies had a period where all they could do was catch up to the modern market and compete with affordability rather than cutting edge. Believe it or not, Sony, Samsung, LG, Sharp, and many Asian electronics companies spent either a) manufacturing for the more prominent western companies at the time like IBM, b) making cheap copies/imitations of the more popular products.

          It is impossible for anyone to grow so big without these kind of humble beginnings, I mean why re-invent when you are already behind and market is flooded with much better devices? I think R&D is a stage of development which occurs when you are up to the market expectations.

          You can still make a start up with an original idea, but unless you are blazing successful the only way you will grow bigger is by being incorporated into one of the bigger companies.

          Fun Fact: Samsung used to manufacture noodles, other food stuffs, and other every day products in Korea.

          • Jordan Awkward

            I like the point you come from but that’s not what he is getting at but thank you

          • jay

            actually, when america was making things big.. like big cars and big computers. Asian companies made them smaller.
            fun fact: samsung does a whole lot of other businesses that are not related to technology in korea.. even now..

        • http://www.facebook.com/ashad.mamood Ashad Mamood

          Have you seen the Galaxy S? If that wasn’t copying I don’t know what is!

          • Jordan Awkward

            I have a galaxy s and it looks like a s3 shape with a keyboard and a four inch screen. That’s sounds like copied so much

  • Long John

    well if you are the leader you can afford to lose some cash
    it does not really hurt, and speaking of plastic phones, what do people use
    those aluminum phones for, you use the phone for a year or two and you dump it
    somewhere, how about making a phone from gold, to me its waste. The plastics
    are ok the rate and speed of new phones coming up there’s no need for expensive
    materials

    • http://twitter.com/piyushr21 Piyush

      I dont know about you but i love choices ,if alumium gives a premium look i am sold , why are you getting angry that people hate plastic, thats there choice.

  • http://petercast.net Peterson Silva

    “you could fill your home with nothing but Samsung products.”

    When did they start making furniture, mattresses and clothes? oO
    Do we get to have a Galaxy Wardrobe? =D

    • http://www.facebook.com/ashad.mamood Ashad Mamood

      Tuck! Now that’s a repulsive thought! You can be as big as you want but you can’t teach style which Samsung products always lack!

      • Jordan Awkward

        Their T.Vs are beautiful so they do have style

  • Emma

    They do produce a LOT of gear though. Largest sellers of flat screen tvs for example. Takes a lot of dough to market that. Plus I’d argue that some/most of the money spent is for raising brand awareness and not direct marketing of specific products per se. Remember the Olympics last year? Know how much they spent to be designated official partners of the Games? Also endorsement deals such as that with Chelsea fc.

  • john

    Samsung used to have a very decent CS and software engineering departments-I guess they still do. I wish they could be as successful in software business as in the hardware.