Just about every manufacturer wants the word “premium” attached to its brand. It’s a common refrain from vendors, particularly during quarterly earnings calls, who want to increase their margins and shift away from solely competing with rock-bottom prices. Though few have actually succeeded, it has been a relief to watch Samsung execute its strategy and take the notebook industry by storm over the last year.
With notebooks, Samsung started as a price-focused brand and largely concentrated on affordable netbooks. Then, in 2011, Samsung made an incredible transformation and is now considered one of the most successful premium notebook brands in the industry. In fact, the company went from 12 notebook placements in the retail channel at the beginning of 2011 to 24 placements now, boosting its average selling price from $504 to $782. Doubling shelf presence and increasing ASPs by 55%? I think most manufacturers would take that!
So how did they do it? Here are the 6 ways Samsung has cultivated its premium image over the last year:
1. Divested from netbook market faster than any other manufacturer
Samsung rode the netbook wave to gain share as it entered the notebook market, but was equally opportunistic with its exit. In March 2011, 10-inch netbooks accounted for 33.8% of Samsung’s retail notebook assortment. By July, only four months later, netbooks accounted for just 4.8% of Samsung’s retail presence. That’s 33.8% netbooks to 4.8% netbooks in four months. Getting out of the cheap, underpowered netbook market was critical to boosting Samsung’s brand image and proved wise from a business sense as well… Dell and Lenovo later pulled the plug on netbooks and Acer continues to suffer from its high proportion of the low-margin devices. The speed at which Samsung shifted their assortment to full-sized notebooks proved to be an important step in changing perceptions.
2. Focused on design
Marketing departments can only work with what you give them. Samsung made a commitment to R&D and its marketing branch is now working closely with engineers, which has resulted in innovative technologies and premium, sleek designs. Samsung borrowed from their TV division and focused on developing products with beautiful screens, where users interact with the product, and weren’t shy about touting their ultra-bright notebook displays at CES. Samsung’s Series 9 laptop line shocked everyone with its thin form factor and sleek curves. The line was the first true competitor to Apple’s MacBook Air and was essentially an ultrabook before Intel even invented the term.
3. Owned all components
Samsung jokes that they own nearly everything in their supply chain, even the ships that transport their components (fact check: this is partly true). Owning the components gives Samsung more control of supply chain and allowed them to be faster and more responsive with product launches and applying feedback.
4. Chose resellers wisely (and excluded some)
In early 2011, Samsung notebooks and netbooks were already available at Best Buy, Fry’s, MicroCenter, and Sam’s Club. Those retailers would refresh their assortments with higher-end Samsung laptops, but the most impressive part of Samsung’s move to the premium space was revealed when the company chose new retailers to expand to. Of the five remaining major retailers that were not yet carrying Samsung notebooks, the company strategically rolled out notebooks to new retailers in an order that corresponded with the retailer’s average notebook price, starting at the chains with the highest ASPs.
- April – Added to Costco – $747 avg price
- June – Added to Staples – $665 avg price
- Oct – Added to OfficeMax – $658 avg price
- Nov – Added to Walmart – $448 avg price
This was no accident. So why did Samsung choose not to add Office Depot, the final major retailer lacking Samsung notebooks? A member of their marketing team flatly said, “we don’t need to be in all three office stores right now.” Unsaid was that Office Depot is extremely slow to refresh their laptop assortment and doesn’t attract the premium customers Samsung is looking for. Once the two favorite office stores were hooked, Samsung was ready to land a whale. By the time November came around, Walmart knew exactly which manufacturer to go to when looking for high-end notebooks to compliment its more affordable options. After making its debut at Walmart with laptops ranging from $498-$648, Samsung caught the industry by surprise early this year when its Series 7 Chronos line was added to Walmart’s shelves for $1,000, nearly $300 above the next highest model at the time.
5. Added marketing material to reseller websites (including pictures and videos)
It’s relatively easy to make your product stand out on shelves, but how do you make your product stand out on websites? Samsung has been relentless in providing spec sheets, pictures, and even videos for e-commerce resellers. Check Amazon, check Newegg, check Walmart.com. Nearly every Samsung laptop page is full of content to inform and get the customer excited about the product. Style and aesthetics are important to the Samsung brand so this allows Samsung to be defined by their own pictures, videos, and message, rather than just the reseller’s text.
You can’t have a premium brand with boring products. Samsung unveiled three innovations that oozed “premium” last year:
- Brushed Black Metal Casing – You’ll see a lot of copycats this year, but Samsung made its thin brushed black metal casing popular with its Series 9 laptops in 2011. The company’s new Series 9 line includes a similar casing and is the thinnest 15-inch laptop in the world.
- ExpressCache Technology – Flash memory on the motherboard that dramatically speeds up web browsing and reduces resume times.
- Battery Life Plus Technology – Keeps 80 percent of the cell’s original capacity lasting up to 1,500 charging cycles, up to five times longer than other notebooks
These are the specs that don’t make it onto the price tag at Best Buy, but keep customers happy (and impressed).
Moving forward, Samsung will continue to build its premium brand. However, with the rise of thin ultrabooks, other manufacturers will have their shot at going premium. In the retail channel, only Apple and Sony command higher average notebook prices. It will be interesting to see how Samsung applies its strategy to its other product categories and how competitors emulate these moves in search of higher margins. There are only so many shelf slots for $1,000 laptops, particularly as the economy is slow to recover, so the vendors who follow Samsung’s example and cultivate a premium brand will have the best shot of succeeding.