Samsung is reportedly seeing its product margins shrink just as its top-line product sales are slowing. Its most-recent quarterly profits were down, making it four consecutive quarters of such bad news.
This comes only few years after it was writing a far different story: Samsung was a name that claimed to make digital electronics products that were as good as the products we presumed were good, like Sony, only it charged less for them. It became a worst-kept secret that the company was building much of its inventory in the same back-room kitchens as its more-famous competitors, so it stole business and market share.
Now, it's Samsung's turn to feel the pain:
- There's a new I-make-the-same-stuff-only-cheaper darling, Vizio, which has teamed up with Wal-Mart (in the US) for distribution
- Consumers are even less loyal to brand names than they were a few years ago, as it's now common knowledge that most of the innards of electronics devices are interchangeable, if not identical
- Manufacturers haven't done themselves any favors by introducing ever-more complicated products, many of which offer slightly nuanced performance characteristics that consumers find debilitating more than motivating
People are confused and suspicious, and default to making decisions based primarily on price, if they decide to make purchases at all.
Samsung is in a bit of a pickle. The good news is that it hasn’t been singled out for this rude treatment; the bad news is that all of its competitors are contending with it, or will, soon.
All of these businesses have to answer a fundamental question: what, if anything, constitutes brand in a 24/7, transparent, consumer-empowered marketplace and, after that question, how do businesses deliver branding?
Solutions aren't obvious or inescapable. Nobody needs consumer electronics brands, or at least nobody thinks that they do. And the actions that are going to change their minds aren't going to come from the same folks who brought us Branding 1.0: marvelously funny or visually stunning TV ads, virtual showrooms in online communities and games, and ever-new ways to push garbage onto our mobile phones are just dancing around the central challenge, without addressing it head-on.
I bought my last flat TV (plasma, LCD, I don't know, and I don't care) online from newegg.com and, as I type this, I can't tell you the brand name on it. I don't think it's Samsung.
There's the rub. Making the name and logo mean something is the only way any of the CE companies will get out of this wired/tired routine.
And if all they can do is muster more brilliant branding communications, then I fear it'll just be deja vu, all over again.