Samsung electronics – success by design

INTRODUCTION:

A Technology-driven company like Samsung Electronics uses product design as a tool to improve their products characteristics helping them to achieve a competitive edge within the market. For many of the world leading companies design plays a fundamental role in their success, for them to have a good design will make their products better, quicker and cheaper. If a company can achieve this, they can keep their production costs down, but this can also allow them to charge a higher ‘premium’ price for the successfully designed product.

Consumer Purchase Decisions

Do consumers make their purchase decisions solely based on the design aspect of a product? Does having a good designed product in the market place encourage the consumer to buy?

Successful design is a way to exceed the user’s expectations, keep them happy, this will encourage the consumer to purchase, come back again and recommend products to others. Design makes a persons life better by improving the quality of their interactions with the environment. “Design is a reflective conversation, a dialogue with a situation that involves people and their needs for artefacts that arise in their relationship with the global environment.” (Gowen, n.d)

Consumers purchase products that interest them, products that they are aware of, products that get their attention. Good design can improve the visual appeal, functionality or usability for a product delighting the consumer who merely expects to have their functional requirements fulfilled convincing them to purchase the product. A designed product can also appeal to the consumer’s emotional needs. People want fast cars: Ferrari, Lamborghinis, designer watches: Rolex, Breitling’s that they will likely want to open their wallets and buy the product, but only a few will as this type of product is a luxury item in a niche market. The consumer is emotionally attached to the product but will be less likely to buy these types of items because of the cost. Consumers buy based on the benefits the product brings them, a product that they perceive as having a value, a product that meets their needs. Design can also allow the control of an outcome. Will the consumer buy the product or not? A good design will arouse desire, engenders loyalty and forms indelible emotional bonds with the consumer. Once the consumer is emotionally interested in a brand they are convinced that they can’t live without it.

A Consumer is more likely to buy a product that appeal to both their functional and emotional sides. To achieve this companies brand their products through their design to make them sell, offering customers something extra.

A successfully designed product applies the power of the brand. One of Samsung Electronics initiatives was to globally brand their products through their ‘Global Brand Communication Strategy’. A strong brand identity encourages consumers to trust existing products and to try new ones. The brand gives a consistent message about the company and its products and services to the end user. A Consumer is more likely to purchase a product or range of products which have a reliably design, a good brand. The awareness of a brand in the design process enables the effective translation of the company brand into the retail environment and customer experience.

A good example of a product that appeals to both their functional and emotional sides of the consumer is the iPod from Apple. In the market place there are many hard-drive based MP3 players available to the consumer. Apple is able to dominate the market through their product design whilst selling its products at a significant price premium. Apple to date consistently produces a sleek and luxurious iPod design that portrays the power of their brand. Apple have made the MP3 player be more than a functional purchase, they have made it an emotional purchase.

A consumer is constantly engaged with design, sometimes without even realising. Every time a consumer carries out a task, checks their emails, go to their local supermarket someone has designed the experience you are having whether you have purchased a product or not. Successful design improves our day to day experiences by going beyond something’s functionality to make things look, feel, sound and work better.

The design of a product has values, beliefs, and the opportunity to make a difference to the life of the consumer and will always be an important aspect in their purchasing decisions. But the design will not always be the main reason for the consumer to choose which product they purchase. The cost and quality of a product and the technology used will always be a huge factor for the consumer to consider and will almost always be defined by the type of product and the purpose for buying the product. But as we advance into the twentieth century will not consumers expect a good design product? Walter Herbst, CEO of the product-design firm ‘Herbst LaZar Bell’, once said, “Good design is not good enough anymore.” (The Power of Design, 2007)

Design and Technology

Samsung Electronics is a global leader in more than sixty different products with their main business focus in the areas of Digital Media, Semiconductor technology, the telecommunication Network, and LCD Digital Appliances. As a business Samsung Electronic centre their efforts on producing these types of high technology products. The consumer uses the design of a product as one their main influential factors when purchasing these types of products. But does the consumer again apply the same thought process when buying a low technology product?

A product that is referred to as having a low level of technology will usually have been developed many years ago. Low-tech products can be purchased today but will work in the same manner as product that was manufactured 25 years ago. A good example of this is a manual tin can opener.

Consumer’s everyday are still buying low-tech products. The manual tin can opener can be found in the kitchen in many of our homes, but for a product that has a simplistic design does the consumer still base their purchase decision on the design of the tin can opener or is it the cost that sways their decision? Is it the operation of the tin can opener that the consumer is interested in? But can not the way that the tin can opener function be referred to as the design?

“In today’s modern society ascetics sensibilities are relevant to all products, regardless of their function” (Holbrook, 1980; Holbrook and Anand, 1992; Holbrook and Zerlin, 1985).

When a consumer is in the market for a low tech product the price must surely be an important reason for purchasing a product. If is understandably when a consumer purchases a high-tech product that they will pay a premium because of its technology. “When given a choice between two products, equal in price and function, target consumers buy the one that they consider to be more attractive” (Kotler and Rath,1984; Nussbaum, 1988).

When a consumer purchases a product do they understand the difference between a high-tech and low-tech product. “Low-tech products are not highly differentiated” (Shapiro, Slywotzky and Doyle, 1997) and a differentiated product is evaluated and understood buy the consumer differently than undifferentiated products. This may suggest that the consumer evaluates low-tech products, which are likely to be undifferentiated, differently than they evaluate high-tech products.

When the consumer makes their buying decision they evaluate high and low technology products differently to one and other but for both will usually make design the differentiator between competitor products. The design plays an important role in the success of a product and generates desirable consumption experience and favourably influences subsequent consumer behaviour.

Consumers do not buy products for sensible, value-for-money reasons. The consumer purchases a product because they like it and the product appeals to them and makes them feel good. Therefore this changes the way in which a business advertises their product with less focus on product features and more on the design and lifestyle that the user can enjoy. Purchasing a designed product is more than buying its function. It is buying into a vision of one self as one would like to be.

Samsung’s Design Delivery Process and Design Capabilities

Samsung Electronics Co. Ltd is a Korea-based consumer electronics company that has worked hard to refine its focus and alter its business strategies. Today, Samsung is one of the most successful global corporations, with high sales and earnings through its innovative technological design.

In the 1990’s Kun-Hee Lee (Group Chairman) made the decision to adopt design and use design as a differentiator and for competitive advantage. To do this Kun-Hee Lee (Lee) wanted to redesign Samsungs systems and processes to improve their design delivery process. This initiated a new management era for Samsung to open digital frontiers all over the world.

The leadership of Lee has been a key to Samsung’s success making Samsung one of the fastest growing brands. Samsung started its journey towards design excellence in 1993 and had its first design revolution in 1996.

At the beginning of Samsung’s design initiative they sent 17 of their designers to the Art Centre College of Design in California USA. This would broaden the designer’s ideas about design and help them to be creative. For Samsung this will help their employees to provide design solutions and to understand the process of product design commercialization. Samsung later hired the service of two consultants to help them start a design school to train their designers. In a constantly evolving, consumer electronics business Samsungs survival depends on their employees having the right skills to keep their products at the cutting edge of design and technology. The in-house school gave its designers the tools and confidence to risk think differently, it was vital for Samsung to pinpoint the right training for their employees through their own design school.

Samsung also tried to incorporate Korean values into their designs. A cultural identity was important for Samsung to meet the emotional needs of their customers. Cultural values are, regarded to as “the governing ideas and guiding principles for thought and action” in a given society and a powerful force shaping consumers’ motivation, lifestyles and product choices (Tse, D., R. W. Belk, et al. 1989). Further to this Samsung introduced a common “design language” where all product characteristics were to have consistent features and high levels of convenience. This would give the designers a common goal and help them to speak with fellow designers about their designs.

In 1996 Samsung engaged the services of Design Consultant, Tom Hardy to help improve their design capabilities. Hardy would assume the role of Corporate Design Advisor. Hardy was a design strategist and the creator of the Verbal-Visual Framework (VVF) methodology, his consulting work involved strategic brand design direction for Samsung intergrading business strategy to improve the customer’s desire for the product.

To Improve Samsung’s design capabilities the company also started sending their senior designers abroad to expand their knowledge and help them to come up with new ideas. They sent their designers to different diverse industries such as cosmetics, furniture and fashion to encourage different thought patterns enabling them to think outside of the box.

Samsung also opened six design centres worldwide which included research centres and design labs to help improve their design capabilities and encourage a global perspective. This changed Samsung’s engineering-driven culture; the designers had to find a way to put their boxes around the engineers’ devices. In today’s environment, designers often come up with product innovation, who then asks engineers to put their devices inside the designers’ boxes.

Lee’s design vision for Samsung was to create a design friendly culture to improve customer services and corporate spirit that contributes to the well – being of society. This helped to change Samsungs management and employees mind set of their product design from quantity to quality.

To improve Samsungs international design capabilities they also sent their designers on a world wide tour to help them understand the global market and expand their way of thinking. An overseas specialist course nurtured for the excellence of their employees.

Lee also broke down the Confucian hierarchies at Samsung. Designers were freed from dress codes and other constraints that hinder creativity. Lee also let younger designers take a larger role and encouraged them to challenge their superiors. All designers worked in common areas with hardly any segregation; functions were collaborated to improve functional communication. This improved team building and encouraged individuals to speak their mind and discuss their design ideas, team meetings were regularly held to assess new products and evaluate designs. The company also introduced the new position of Chief Design Officer to give greater voice for the design function.

Since re-designing Samsungs systems and processes to improve their design delivery process, Lee had more than doubled the ranks of Samsung’s designers by bringing more than 300 new recruits which was helped with a vastly increased design budget.

Samsung brought a lot of change to its people, processes and systems to improve its design delivery process to have greater design capabilities and a better design philosophy, since this change the Korean company has won 19 citations in the prestigious Industrial Design Excellence Awards (IDEA).

Samsung spend a lot of time and money to achieve design excellence but which part of Lee’s new management design initiative had the greatest impact on improving their design capabilities?

Before Samsung could become a world leader they needed good designers and the right people to achieve this, hence Samsungs educational approach to improve their design capabilities. Training their employees to be capably of good designs defiantly gave them an advantage over the competition which also helped them to develop and attract new people to the organisation. The design school could help their employees to learn and understand the company core values and the vision that Samsung were trying to portrait.

The design school would have had a critical impact on Samsungs successful product design; it would have enabled the designers to learn from other designs and each other. The designers would have learnt how to evaluate the quality of the product and how to maintain the quality throughout the design delivery process. If is important for the designer to identify the characteristics of a product that make it either a failure or a success. By educating in house Samsung would have also been able to control its quality assurance process better and reduce warranty issues. The design school would have helped the designers to study different products with similar features, through identification, analysis and evaluation before starting their design making the design capable of success with a competitive advantage of the competition. The design school would of increased experience and knowledge of Samsungs designers through the broad educational background of Samsungs design consultants which would have helped to educate and provide answers to diverse technical design problems. The design consultants would provided invaluable experience to the design delivery process.

A part of Samsungs educational program was to also send their designers on a world wide tour. This was the start of Samsung becoming a global company. It is important for Samsung to have key personnel with global competencies giving them the ability to understand foreign cultures and design.

Another key part of Lee’s new management design initiative which had a huge impact on improving their design capabilities was the change in design culture of the company. Lee achieved this by incorporating Korean values into their designs to meet the emotional needs of their customers, and broke down the Confucian hierarchies at Samsung. Samsung also introduced worldwide design centres to change Samsungs engineering-driven culture.

Business Culture brings together the techniques and strengths of a business helping it to think with the creativity and dynamism of the cultural world. Having a good culture at Samsung would have exploited their full potential and help to realize their aspirations. In today’s social and economic market there is a huge advantage in having business culture to develop greater communication and global strategies to achieve good design capabilities.

Samsung brought a lot changes into their design delivery process and all would have played a vital part in their success. To improve a companies design capabilities people, the designers, is key to the success. Nothing can be achieved in today’s climate without good people. For a company to have good people they need skills and education. Having a dedicate Design School to educate your people also had a great impact in helping the company improve its design capabilities.

The Future of Design

The term ‘design’ recently has become the buzz word for many people. Consumers are increasingly assessing products they buy on the basis of the design. In Corporate businesses like Samsung and even in small firms design is increasingly understood to give a company a competitive edge. A good design will also aid in improving production processes.

But as we move into the future will there be a time where design would cease to be a useful differentiator? There is an Increasing awareness of the meaning of design and what design actually is and what can the design industry offer.

In today’s economy many managers of business organizations need to be convinced of the business case for making investments in design. Many managers believe that the costs of the initial design investment will not be paid back through sales. But a designed product is usually matched sufficiently by increased revenue and sales paying back the initial costs.

The graph below represents a study carried out by the British Design Council of the share prices of 166 UK design-led companies.

The companies were grouped; Design Portfolio represented 63 companies who were chosen for their consistent showing in various design award schemes and Emerging Portfolio represented 103 companies whose awards success approached that of the Design Portfolio. If can be seen from the graph that both outperformed the FTSE All Share and FTSE100 which represent about 81% of the market capitalisation of the whole London Stock Exchange.

Companies like Apple and Samsung that use design for there future initiatives would greatly help the business case in making design investments and back the employing of professional designers. The design process can be very complex and successful design rests upon future investments in methods, techniques, education, people and time as seen from Samsung.

The start of the design era is relatively resent and the future of the design industry itself can take many forms and may be likely to develop. Many global manufacturers carry out their design work internally in their own design departments and are the leaders in the ‘design’ industry. As they carry out their design work in house there may be no need for them to hire designers from outside which may have an effect on the future of smaller designer firms. But on the other hand this will cause the global corporations to build up larger in-house design departments and increase their staff.

As we move into the future surely design will become more complicated and can no longer be simply or a product add-on. Instead design should be seen as having a good competitive characteristic for all products and services. All businesses want to compete in the market place and thrive on huge sales and profits, they want to sell the best product and want their customers to be amazed by their design. If this carries on happening at a global scale the design industry will grow to extend where design will always be the differentiator to the consumer. This would also create more jobs in the design sector.

Many companies carry out research on consumer spending and analyze future technologies, this helps anticipate future consumer needs and to determine future design requirements. While regular market and research data can help to identify consumer needs and future trends in order to determine future design requirements, specific future focused trend analysis is often used. This type of analysis will intend to include consumer behaviour, product preferences, new service needs and social, economic or environmental changes.

For design to be a useful differentiator in the future, consumers need to be spending money on new products and the development of new technologies is needed to be able to design new products. As years pass more products will start to become the same, and then it will become more important for products to be different. Good product design can help manufacturers to differentiate their products from their competitors and also define and reinforce the company’s brand. Norio Ohga, Chairman and CEO, Sony said “At Sony, we assume all products of our competitors will have basically the same technology, price and performance, and features. Design is the only thing that differentiates one product from the other in the market place”.

In the future things will start to change, tighter regulations will be put upon companies to design products to tighter requirements that are recyclable and reparably. Due to the environmental issues with pollution longer product lifetimes will be needed through more advanced design giving a better quality product. In the Future businesses must be able to take new design platforms to the next level and provide product life-cycle management and operational project execution. Businesses must be in the position to accept new technology and be able to integrated new methodologies, processes and systems. Failure to do so will low down the new and modern future of design.

Today and in the future design will always offer considerable benefits to businesses, consumers and products and will help them to:

§ Increase the perceived value of the product

§ Increase the aesthetic and visual quality of the product

§ Improve the ease of manufacture for the product

§ Reduce impacts on the environment

§ Improve the ability for business to market their product

§ Enhance corporate vision and successful branding for the product

Design will always be a useful differentiator for the consumer as Design is the planning that lays the basis for the making of every object or system. For design to cease as a useful differentiator the world would have to stop producing products. In price sensitive industries the design will act as a differentiator but may not be the main differentiator for the consumer. In the future design will not cease to be a useful differentiator, but design will change as technology becomes more advanced.

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