Samsung boosts marketing efforts in Indonesia

Johannes Simbolon, The Jakarta Post, Istambul

PT Samsung Electronics Indonesia has increased its marketing budget to promote its products in the local market, as it is striving to become the top brand here for electronics and information technology products.

While in the past the firm focused on the export market, the firm is now focusing greater attention on the local market on optimism that local demand will pick up this year thanks to the government's supportive fiscal policy and the country's improved economic performance.

"Our revenue target for this year is fifty-fifty from export and local markets," marketing director Lee Kang Hyun said in a recent annual meeting of Samsung worldwide producers and vendors in Istanbul, Turkey.

In 2002, Samsung Electronics Indonesia, which operates a huge factory here, exported US$800 million-worth of products and booked $300 million in sales on the local market. Last year, export revenue was targeted at $850 million.

Lee said that the company had allocated $23 million in marketing budget for this year, up from $20 million last year.

Thanks to a successful marketing campaign, Samsung managed to strengthen its foothold in the local market over the past few years, while other firms struggled to cope with the impact of the lingering economic crisis. For instance, in 2002, when Japanese giant electronic maker Sony Corp., which for decades had dominated the country's electronic market, decided to close down its manufacturing plant in Indonesia, Samsung reported an increased investment to meet growing demand on the export and local markets.

According to Lee, Samsung is now the top brand for computer monitors, CD-Roms, washing machines and DVDs in the country, while for color TVs, cell phones and freezers it ranks second in terms of sales.

In the past, Samsung focused its marketing campaign on cell phone and information technology products. This year, Lee said, most of the marketing budget would be spent on promoting consumer electronics as part of the company's ambition to reach the top position in the country's color TV market, and further strengthen its base in the freezer and washing machine markets.

Samsung, a global leader in the electronic chip industry, is known for its advanced, high-end digital products, including plasma TVs. But in order to boost its sales of color TVs in the domestic market, the company decided last year to enter the middle and low-end market segment by importing 15,000 conventional TVs from its manufacturing plant in India to Indonesia. The products, now being sold under the brand name Kibas, were equipped with a sound system capable of blaring out "powerful sound", which, Lee said, appealed to most Indonesians.

According to Lee, Samsung controlled 15 percent of the country's color TV market last year with total sales of 400,000 units. This year, sales are expected to increase to 450,000 units, which will enable Samsung to topple Sharp from its current No. 1 position.

Like other cell phone producers, Samsung finds Indonesia a very attractive market, given that of its 215 million population, fewer than 20 million already have cell phones.

Samsung entered the country's cell phone market in 1999, relatively late when compared with other brands. But within four years, due to intensive marketing campaigns, Samsung claimed to have reached second position in terms of sales last year, with total sales of 300,000 units. Above all, the firm has successfully created a brand image that Samsung is a premium product by releasing to the market expensive and technologically advanced products.

Late last year, Samsung introduced its latest handsets, the SGH E700 and SGH X600, which are equipped with digital cameras.

Budiarto Tanojohardjo, sales and marketing manager of PT Selular Nusantara Pratama, the sole distributor of Samsung handsets in Indonesia, said he was optimistic of increasing Samsung handset sales by 20 percent this year as Samsung had allocated $8 million in budget for their promotion.