PCs and laser printers to drive Samsung’s growth

Laser printers
Though still the dominant force in the Indian laser printer market, HP’s dominion is gradually getting segregated among other players with competition on the rise. One player, which is making most out of this is Samsung. Within two-and-a-half years of beginning its printer business operations the company has emerged large enough to be considered a tough challenger to the printer pasha. Its laser printer business grew by almost 300 percent last year. And going by Samsung’s aggressive laser printer strategy experts are of the opinion that it is set to give HP a tough fight.

The laser printer segment forms a significant part of the Samsung’s growth strategy and is being targeted as its focus business area for the next few years. Moninder Jain, national marketing head at Samsung Electronics India Information & Telecommunication (SEIIT), points out that a substantial chunk of investments will be directed towards the printer business. This is understandable, considering that this product is touted to provide the peripherals major a strong foothold in the corporate market segment. The company is relying heavily on this segment to lead the high-end brigade and establish its presence in the corporate market.

Outlining Samsung’s laser printer strategy over the next 1-2 years, Jain explains that the entire strategy rests upon expanding the laser printer market as a whole. Presently, it is a small proportion of the overall printer market. As a result, over the next one year the company will be investing in customer education and awareness programmes, which will include newsletters, leaflets, technology seminars and direct calling. “Many other players in the printer space are primarily inkjet vendors, and consequently this dilutes the focus on laser printers. This is hampering the growth of the laser printer market,” he adds. The company will be leveraging on the advantage of its exclusive laser focus.

As part of its strategy vis-à-vis HP, Samsung has dismissed competing on price points and will be positioning its offerings on ‘more features for less.’ The key here will be upgrading the customer up the technology value chain. In this direction the company will be shifting its entry-level offering from the present 12 ppm to 17 ppm (which is currently its mid- range) in the next few months. The company claims that HP’s entry-level is a 10 ppm at a price-point comparable to Samsung’s 12 ppm (which is around Rs 13,000). Samsung is planning to bring down the price for its 17 ppm to Rs 15,000-Rs 16,000 from the present Rs 20,000 price-point within the next three months. On the other hand its high-end 21 ppm is likely to move to the mid-end price range. However, being the dominant leader, HP could play on price too.

While Samsung had been concentrating largely on entry-level and mid-range printers so far, in the next one year, it will be upping the ante on the high-end laser printer front. Therefore, it is planning to launch three new models of high-end laser printers, thereby competing with HP on all counts. High-end printers are estimated to contribute almost 20 percent of the company’s total laser printer business by the year-end and are estimated to touch a 35 percent share by 2005.

Experts feel that Samsung’s strategy to make inroads beyond A class cities has worked to the company’s advantage. However, the company will have to contend with the traditionally strong and well-established channel base of HP.

Having launched three new models within three months into the year and another five planned for release by the year-end, Samsung has set the pace for things to come. This coupled with its traditional strengths of aggressive pricing, marketing and promotions, innovative bundling and combo offers, should see excitement in the laser printer business rising to a new pitch.

Personal Computers
In a market already dominated by assemblers on one hand and well established players like HP, HCL, IBM and Zenith on the other, and at a time when the market was experiencing an all-time low, Samsung’s entry into the Indian PC market was bound to raise a few eyebrows. The viability of the initiative was questioned. What few have failed to realise is the fact that the company has skilfully prepared the base to go for the kill.

Considering that it already caters to 70 percent of a PC’s components, Samsung has tactfully created a new market without giving up the assembled PC market. According to Princy Bhatnagar, SEIIT’s national sales manager, branded PCs will effectively complement sales made into the assembled market. With the missing link in hand, enabling Samsung to push from both ends—assembled and branded—the impending pressure on traditional branded PC players is quite evident. And the pressure will further build up over the years as the company’s branded PC initiative matures and stabilises.

PCs will form a key business focus for the company. In the first phase of operations the company has already covered around 52 cities, covering the North, East and parts of the West. The company is mainly targeting D & E class cities, taking advantage of the absence of branded players in there. As part of the second phase of its expansion, starting from April this year, Samsung will build its presence in the top 10 cities, along with strengthening its presence in the Western and Southern regions of the country. In terms of market segments, the PCs are being targeted at the home and SOHO and the corporate segment, both contributing equally to revenue share. Going forward the company will continue its focus on these segments, apart from aggressively targeting the government and educational institutions.

The investments, points out Bhatnagar, will primarily go into market development exercises in terms of creating awareness and education. Channel development work, which has already been initiated, will be intensified further over the year. While Samsung will be pushing PCs to the home and SOHO through large retail partners, the corporate segment will be addressed through direct sales and a corporate reseller programme called SPEAR.

Positioning the product as an aspirational PC, Samsung is pegging its growth strategy on expanding the PC market by creating a value offering for the PC user. Moving the market up the value chain forms an integral part of this growth strategy. The key to Samsung’s success will lie in how finely it is able to maintain a balance between its two completely opposite market interests.

— Shipra Arora