Executive Summary
The dawn of the digital and information age in the 21st century has also become a new battleground for brands. Here, we pertain to the smartphone war between Samsung Electronics Co. and Apple Inc. The battle has extended to various product lines such as the Galaxy Tab and iPad. Both are known global tech companies. Thus, innovation could not be more emphasized in such a competitive and fast-paced industry.
For this case, we look closely at the strategy of Samsung. It has been receiving patent lawsuits for the past years. Although it is currently the market leader, the company faces a threat of losing the confidence of its investors. One of the reasons is the fluctuating customer base. Moreover, people mistake its product for that of Apple’s gadget.
In order to alleviate these problems, this study utilizes the Lean Six Sigma Project in creating a business plan. The particular process used is the DMAIC, which stands for Define-Measure-Analyze-Improve-Control. It is found that the company lacks a stronger brand recognition and loyalty.
Product innovation that would become the signature of Samsung is the final goal. This is achieved when customer relationship is strengthened. This is because knowing and fulfilling the needs and wants of the customers would be the basis for a successful innovation. We also aim to establish an IT system, which will enable the company to leverage on what social media can bring.
The tools on each DMAIC phase are not limited to what is indicated in this study. Future researchers may develop more if they would help in increasing the clarity and depth of understanding of the problem and the solution. Nevertheless, the tools can already illustrate the position of the company and help the company determine the areas it should improve on.
The Problem
For the past three years, Samsung went head to head against Apple. It may have successfully led the market share with 31% against Apple’s 15%, but Samsung has yet to win the war. Apple banks on brand loyalty, a strategy that is a must in an industry of rapid gadget replacements. With this, Apple wins 42% against Samsung’s 38% of retention rate. Also, Apple is able to switch 19% of the customers into its brand while Samsung only converts 7% of Apple consumers (Jones, 2013; Decker & Satariano, 2014).
Samsung is recently not doing well with stocks falling by 11% this year. As reflected in its financial projection, its profit may decline by 26%. The company is having a difficult time pulling in interest from the European and Chinese markets. Other than Apple, Samsung has to compete with Lenovo, ZTE, and Huawei. Despite the popularity of its smart devices, especially the Galaxy series, which command most of the shares, investors are still uncertain about its strategy in a red ocean market. Since it is playing in the field of smartphones, innovation is key. With tech companies encouraging its customers to buy the same products, the differentiation boils down to updating the product versions (Solomon, 2014).
However, this is the problem Samsung is facing. Samsung has not been innovating such that it has undergone patent lawsuits (Eichenwald, 2014; Welch, 2014). According to Eric Jackson, the company has a vertically integrated conglomerate. Thus, it utilizes price and volume. As such, it tries various works and whatever product would be well received is considered a success. Jackson cited the big screens of Galaxy and Note as examples. These are their biggest selling points. Samsung is faster at following than at realizing what the consumers want from a product. They then make separate versions until some gets traction. The other companies, too, are following this trend. Therefore, it wouldn’t be much of an advantage for Samsung soon (Decker & Satariano, 2014; Jackson, 2014).
Furthermore, not only the design and software were in question. Even the ads barely set the brands apart. Worse, Apple gets recognized the most. Based on the company’s internal research, 89% of the consumers confuse Galaxy Tab for iPad (Sandoval & Lowensohn, 2012). According to Hal Poret, the consumers have already singled out the appearance of smart gadgets with Apple in merely a few years. Also, it was noted that “Samsung are liked but not loved”, as its product has no design statement (as cited in Sandoval & Lowensohn, 2012).
The Process
With the use of the Six Sigma DMAIC process, which stands for Define-Measure-Analyze-Improve-Control, we would be able to establish a business strategy fit for innovation. First, the Define phase sets the framework for the strategy. Here, we look into the status of a company and its operations. Market and economic conditions are also considered. Next, we go into the Measure phase through quantitative measures such as financial statements, the stock market, and market research data. The third part of the process is the Analyze phase. The data from the previous phase must be read and interpreted carefully and clearly. This would become the basis for the kind of execution that must be done. This is followed by the Improve phase. From this, the company would know which aspects to work on. Lastly, we arrive at the Control phase. During the execution of the recommended improvements, it is important to monitor the performance so that goals and changes are truly achieved (Jordan, 2010).
Define phase
Voice of the Customer
Based on studies, brand recognition and loyalty is lacking. For Samsung, their primary customers are its current smart gadget users. The secondary customers are the aspiring smart gadget users. The company is leading in the market. It just has to maintain a relationship with its current users. It is also important to be distinct when the aspiring users eventually have their own gadgets.
In this case, the voice of the consumer signifies the need for a clearer identity of the brand. With this, the brand would present an image that the customers would identify and relate with. This means that the customers have to gain a positive and unique experience with the brand and include the product as an essential part of their lifestyle.
Project Charter
The need from the voice of the customer would be addressed through a brand experience project. A simplified project charter is shown in Table 1.
Measure phase
Critical to Quality Characteristics
Before executing any process, it is a must to determine and measure the defect, unit, and opportunity. According to Kerri Simon, we need to know the needs of the customers first through the Voice of the Customer in order to pinpoint process defects. After gathering comments, they are turned into issues and specifications in the form of product characteristics that satisfy the customers’ needs (Simon, n.d.).
In the case of this project for Samsung, there can be 2 Critical to Quality (CTQ) characteristics. The first is increasing media exposure through events. The other CTQ is engaging people to sign in and subscribe to the company’s official website and its other social media accounts such as Facebook and Twitter.
CTQ Measurement
The first given CTQ would serve as a head start in achieving the first, second, and third goals. This is tied-up with the second CTQ, which would aid in the achievement of all the goals. Through holding events, the media would cover these events and invite people to participate. At the same time, people would be encouraged to follow the online accounts of Samsung. With these efforts, we build a relationship with the customers and increase brand recognition. Moreover, the kind of event may have creativity as a theme, depending on the teams that would plan them. This is when the company could consider the input of the people about the kind of features they want to have in their gadgets. Certainly, we would also know the kind of IT infrastructure that the company would need, given the surge of social networking data. Having at least 3 major and 9 minor events in a year, with each event garnering at least 5, 000 likes or sign-ups, would be the specific measurement for the CTQs.
Analyze phase
5 Whys
This phase is about determining the root cause of the defects. Using the 5 Whys, we could get into the bottom of the scenarios. The number indicates the average count of questions asked in a problem statement to determine the cause of the problem. It may not be through the use of statistical tools but it is most effective when human interactions surround the problem. It is simply done through a loop of observations, examinations of previous data, and writing down of the issues (iSixSigma, 2014).
Since the problem surrounds brand recognition and loyalty, it would likely deal with the feelings and experiences of the customers in relation to the brand. In this case of Samsung, we would look into each subject, including the product design, its software capability, and its functionality for the customers. Below are examples of the 5 Whys with problem statements.
Process Mapping
Samsung has various products that are possibly overlapping one another. Moreover, it is likely that one product undergoes a slightly different manufacturing process. This may affect the costs. Thus, the company can be releasing almost the same products at different prices. In turn, this can be adding to the burden of managing the products, which in turn hinder improvement. In this regard, process mapping can simplify the product line and the processes, as it eliminates the non-value aspects after it has identified which in the table are valuable and which are not. Most importantly, upon analyzing the defects, improvements move forward. Here, the unique attribute of the brand comes up.
Improve
In this phase, the area to improve based on the previous phases must be clear. In the Define phase, the Voice of the Consumer tells us the needs for brand recognition and loyalty. In the Measure phase, the Critical to Quality Characteristics quantify media exposure and social media. In the Analyze phase, we contemplate on the reason behind the problem. We integrate what we found from these phases to form an idea, a plan to execute, and to launch an idea.
Brainstorming
Brainstorming is one of the tools used in the Improve phase. It’s a talk session where suggestions flow continuously to nurture a creative idea. To keep the discussions focused, ground rules are set (iSixSigma, 2014). In the case of Samsung and the DMA phases, we set that the subject is about customer relationship. The outcome we would want to achieve is a campaign that involves events and social media. Desirably, the outcome should be something that would address the problem of brand recognition. With every suggestion from the team involved, the gap between customer relationship and brand recognition is narrowed and linked. An example of words and phrases that may appear during a brainstorming session in relation to the subject is shown below.
Control
The performance and effectiveness of the idea launched in the Improve phase is monitored in the Control phase. Through all the planning and processes, it must be certain that the company would work towards leadership. At this phase, we review our performance, prepare for unexpected business turns, and assess the strategy.
In recent years, Samsung has belonged in the top 10 electronic companies worldwide. Together with this milestone, the company has the best operating profit ratios and fiscal soundness. The debt to equity ratio is low, with earnings of $2.2 billion, from a total revenue of $24.4 billion and capitalization at $43.6 billion (American Society for Quality, 2002).
The most important aspect of this phase is the time and frequency of meetings to discuss the progress and review the strategy. For this case, it is a must to have monthly meetings among the green belt and the experts. The green and black belt must have quarterly meetings while the black belt and sponsors can attend semi-annually. The schedule is applicable on events and social media activities. However, teams must meet often when it comes to product development.
Conclusion
The Six Sigma DMAIC process would make a difference in the system of Samsung. Fortunately, the company keeps busy while waiting for the ongoing patent lawsuits. In this manner, Samsung would be able to pull itself out of negative circumstances while solving its true issue even before the litigations are finalized. Through addressing brand recognition concerns, Samsung also pushes from the other end. Sooner, the goal of true uniqueness would be attributed to the brand and lawsuits would no longer chase the company.
The initial successes include the Digital Director, Matthew Moller. He considered the Create an Account process in developing a connection between the people and the products. Creating new accounts is made easier. Existing social profiles from Facebook and other social websites are allowed as the way to log in to the company website. Other than the use of social media, e-mail marketing is key in the overall plan. With this, the company’s relationship with the customer becomes direct and personal. Approximately 34% of login users actively open their emails while 63% click links on emails. The surprising result is that 50.6% of login users are likely to write product reviews (Janrain Inc., 2014).
The given results have not included the like and shares, as well as the media exposure, that the company\s events generate. If the company decides to push through with the events, they will hopefully come up with a contest for app conceptualization or something similar. This would hit all the goals set in the Define phase of the project charter.
References
American Society for Quality. (2002, November). Samsung uses six sigma to change its image. Six Sigma Forum Magazine. Retrieved from http://www.juran.com/elifeline/elifefiles/2009/09/Samsung-Uses-Six-Sigma-to-Change- Its-Image.pdf
Decker, S. & Satariano, A. (2014). Smartphone war: What was it good for? Absolutely nothing. Bloomberg website. Retrieved from http://www.bloomberg.com/news/2014-08- 06/smartphone-war-what-was-it-good-for-absolutely-nothing.html
Eichenwald, K. (2014). The great smartphone war. Vanity Fair website. Retrieved from http://www.vanityfair.com/business/2014/06/apple-samsung-smartphone-patent-war
ICMR. (2006). Samsung electronics: Success by design. IBS Center for Management Research. Retrieved from http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/Samsung%20Elect ronics-Operations%20Management%20Case%20Studies.htm
iSixSigma. (2014). Determine the root cause: 5 whys. iSixSigma website. Retrieved from http://www.isixsigma.com/tools-templates/cause-effect/determine-root-cause-5-whys/
Jackson, E. (2014). Samsung has an innovation problem, not Apple. The Street website. Retrieved from http://www.thestreet.com/story/12761105/1/samsung-has-an-innovation- problem--its-not-apple.html
Janrain, Inc. (2014). Samsung case study: Market leadership through customer relationship. Retrieved from http://www1.janrain.com/rs/janrain/images/Case-Study-Samsung.pdf
Jones, C. (2013). Apple vs Samsung: Who could win the smartphone war. Forbes website. Retrieved from http://www.forbes.com/sites/chuckjones/2013/08/20/apple-and-samsung- who-could-win-the-smartphone-war/
Jordan, C. (2010). Using six sigma dmaic for creating business strategy. iSixSigma website. Retrieved from http://www.isixsigma.com/new-to-six-sigma/dmaic/using-six-sigma- dmaic-creating-business-strategy/
Sandoval, G. & Lowensohn, J. (2012). Samsung studies show people confused Galaxy Tab with iPad. CNET, CBS Interactive Inc. Retrieved from http://www.cnet.com/news/samsung- studies-show-people-confused-galaxy-tab-with-ipad/
Simon, K. (n.d.). Customer CTQs: Define defect, unit, and opportunity. iSixSigma website. Retrieved from http://www.isixsigma.com/new-to-six-sigma/sigma-level/customer-ctqs- defining-defect-unit-and-opportunity/
Solomon, J. (2013). Samsung has a smartphone problem. Cable News Network CNN Money. Retrieved from http://money.cnn.com/2014/07/08/investing/samsung-profit-warning/
Stroud, J. D. (2010). More value: Value stream or detailed process mapping. iSixSigma website. Retrieved from http://www.isixsigma.com/tools-templates/process-mapping/more-value- value-stream-or-detailed-process-mapping/
Welch, C. (2014). Inside the great smartphone war between Apple and Samsung. TheVerge website. Retrieved fromhttp://www.theverge.com/2014/5/6/5687192/inside-great- smartphone-war-between-apple-samsung
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