Team Samsung. If you are thinking now of Virendra Sehwag, sailing off a cliff to catch the ball hit by Rahul Dravid, or other members of the Indian cricket team whom Samsung India is sponsoring for the forthcoming World Cup, think again. Given the appalling performance of the Indian team in NZ, cricket is the last thing we would talk about.

Yet, we are talking Team Samsung—the real Team Samsung. A group of people in Samsung Electronics India Information and Telecommunication (SEIIT) who have made the company a force to reckon with in the Indian IT industry. And this has been done in the short span of seven years Speed has been the hallmark of the Korean subsidiary and that’s what its slogan for the current year is too—SPEED... Solutions, processes, e-drive, excellence and drive... and passion toward work. But we’ll get to that later.

A ton a year
What a performance! In the seven years since its entry into the Indian IT market, the company has been growing by an annual average of Rs 150 crore in revenues. And it has market leadership in almost all the categories it has forayed into. For example, in the hard disk drive segment, Samsung leads the pack with a 50%-plus marketshare.

This success should be viewed against the backdrop of the global market, where Seagate and Maxtor lead the HDD segment, while Samsung figures at the bottom-end of the top five players with single-digit marketshare numbers. According to Samsung, it leads in the monitors segment with a similar majority and has a marketshare of over 55-60%.

It started from scratch, and is now the market leader. While today, this may not seem great, given the high-profile branding of Samsung, when the company entered the Indian IT market with its offering of color monitors, a majority of the monitors sold were monochromes. The scenario is not different in CDRs and CDRWs—where the name Samsung commands respect similar to what Intel enjoys in the processor space. The only segment where it still far from dominating—the HP stronghold, laser printers.

Having talked numbers and performance, let’s come back to where we left off—SPEED. Again for cricket enthusiasts—we are not obsessed with Javagal Srinath’s 135-miles-per-hour bowling, but Samsung’s internal slogan SPEED. The stupendous performance so far could not have been possible without the ED—excellence and drive. Given the average age of 29, team leader Vivek Prakash is a hard taskmaster and wants nothing less than excellence, drive and passion from his fellow-workers... and it has paid off handsomely. Irrespective of the business model, Samsung had a per capita productivity of Rs 46 crore for FY 2001-02. If that seems high, compare it to competitors like HP with a per-person productivity of Rs 4 crore or the Rs 3 crore for Compaq.

The genesis
So when did the Samsung IT journey begin in India? In October 1994, the Korean conglomerate picked up Vivek Prakash, general manager, SEIIT, to launch its Indian operations. Given Samsung’s product portfolio, the company decided to initially launch color televisions in the country. Since MNCs weren’t allowed to trade directly, Samsung India entered into a joint venture with the Dhoots of Videocon fame and commenced operations in India.

Next, the company zeroed in on the fledgling Indian IT market. The company had already formed a relationship with Modi Xerox for marketing fax machines. A year down the line came the first serious move on the part of Samsung—when the company launched its color monitors. Comments Prakash—"It was a big decision, given the fact that the market was primarily monochrome." But success came and soon, the company expanded its product portfolio as it made inroads into the HDD space in 1997, and optical disk drives segment in 2000.

Channel management
In 2002, when Monider Jain, national marketing manager, was receiving the DQ Channel India’s (DQCI) Silver Award, he remarked, "Next year, Samsung will be here to collect the Gold..." Sure enough, in the current DQCI ratings, Samsung earned top honors, edging out HP for the coveted throne of ‘Channel Champion, 2003’. Talk of Team Samsung’s confidence and commitment to the cause. Talk to any SEIIT employee and none can help but attribute the company's success and runaway growth to a single factor—effective channel management. Be it schemes, incentives or products, Samsung has been ahead of its competitors in its channel management strategy. And the reason is not too difficult to figure out—unlike consumer electronics (where the purchases are usually made on the recommendation of friends and relatives), IT selling is a different ballgame altogether. A majority of the purchases are still dependent on dealer recommendations—as they seem to be the only experts around for the end-user. And examples abound. When global HDD leaders Seagate and Maxtor reduced their warranty on HDDs from three years to one year, Samsung continued with the three-year policy for its HDDs. Channel players agree that Samsung has attractive schemes and a well-defined replacement policy compared to competitors. Other partners comment that Samsung may not be as strong as other players technically, it has still managed to upstage the others purely because of service offerings and marketing policies.

“When we launched our own brand of desktops, there was quite some noise—that we would now compete with the assembler community. Why should be cannibalize on our own customer base?” Vivek Prakash, GM, SEIIT

Another factor that has worked in the company’s favor is following the strategy of uniform price policy across the country. Prakash is cautious of playing favorites—"If I play favorites and the news is out in the market, it will crumble our channel network." Samsung decided to fix the volume that each distributor could sell in a particular time-frame and each of them was offered an equal share of the market to discourage individual players fomr trying to edge out others in a bid for supremacy in the channel space. This also meant that none of these distributors were left with incentives to competitively play on pricing.

At the core of their entire channel management initiative is the ‘e’ of speed. The first rule is—everything has to be done online. Be it ordering or sorting queries, the guideline is "online". And it has not been an easy task for Team Samsung. To begin with, dealers were not too comfortable with the idea of going online. Samsung officials had to work hard at convincing them. Thrown in were benefits about going online—like the dealer could get his queries answered, given the high level of traveling by Samsung employees, new schemes/incentives or any channel initiatives by the company can be quickly circulated to the dealer community. Slowly and steadily, the company rolled out it’s e-initiative... today, it has over 6,000 dealers connected online. If information is the driving force behind current economies of scale, then Samsung is an apt example. Today, the company can pinpoint sales volume—city-wise, district-wise, and state-wise—at the click of a button. And this has helped the company introduce schemes accordingly. Comments Jain—"What we have achieved is a dream come true for any vendor, but a nightmare to implement. We faced our nightmare."

And the e-drive is not just restricted to the dealer community. Any customers taking part in any Samsung scheme can go through the website. Ponder this. According to industry estimates, Samsung has an installed customer base of between 3 million and 5 million. Samsung intends to use this base for up-selling other products. With the information captured online and from dealers, the team is e-driving and e-mailing customers about upgrades, offers and, of course, cros-sell. Another interesting feature of Samsung has been its high-decibel marketing blitz. Remember the recent combo CDR advertisements?

The strategy has been similar to that followed by Intel. The ‘Intel Inside’ campaign ensured that consumers buying a desktop would want an Intel processor, irrespective of the fact that they can never see it. Prakash and his team have followed a similar strategy. Samsung too has created a high mind share amongst consumers and today, they ask assemblers for Samsung products to be included in their desktop bundle. In short, a double whammy—ensure a high number of dealers for the push factor and a high-decibel marketing campaign to lure in the customers.

And now we come to the remaining elements of speed—solutions and processes. Samsung has launched its own brand of desktops. That’s the solutions bit. Initially, assemblers feared that Samsung would leverage on its own products and price them at a lesser premium to their’s. "No way," says Prakash. "There was quite some noise that we would compete with the assemblers. Why should be cannibalize on our own customers," he questions. "We are selling desktops priced at a level similar to any branded desktop."

Probe further and he replies that the desktop was launched to expand the Indian desktop market. However, expanding the market has a small twist. Samsung is not targeting metros or Class ‘A’ cities. And Samsung desktops are only available are smaller ‘C’ & ‘D’ class cities. "We are already serving the ‘A’ & ‘B’ class markets. So there’s no point taking on this market," says Prakash.

Samsung wants to be in the smaller cities and offer solutions, rather than configurations, and its communications stress on aspiration and usage.

And now for the last element—P, or processes. Samsung is going in for Six Sigma certification and one of the KRAs of each employee is to become a green belt. Also, people are taken in with the perspective of strengthening company processes. For example, given the channel focus, Samsung has been losing out on institutional sales. The answer—take in people from HP and Canon to beef up the same!

Yograj Varma In New Delhi

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