‘We don’t compete on price but value addition and proposition to consumers’

The Nigerian electronics market is awash with brands, each competing for a greater share of the market. Samsung is a front-liner, and in this interview, SUNIL KUMAR, the company’s Director, Consumer Electronics, affirms their leadership with total control of well over 40 percent of the market. He explains their success streak, highlights their challenges, and projects into the future. He speaks with CHUKA UROKO.

The Samsung family
The Samsung family is very vast. As a group, we are into a lot of activities, but here we talk about electronics and our activities are related to consumer electronics. All of these are aimed at addressing the needs of the market. Today, Samsung has become a household name in Nigeria and it gives us much pride to say that we have been able to make inroads into the minds of Nigerian consumers and also for the level of acceptance we enjoy from the market.
This was not just achieved over night. We have had to put specific strategies in place to be able to address the needs of the Nigerian market which entails making the product and the business relevant to the consumer. We did not just take products from Europe or US and brought them into Nigeria; we took we added some value to those products to make them relevant to the Nigerian market. This strategy has actually boosted our entry into the minds of the Nigeria consumer.

Samsung brand and Nigerian electronics market
Samsung’s business model is very clear. We believe in differentiated and innovative products that have relevance to consumers. When you talk about innovative products, if you look at our television,  for instance, the entire range are lightning, surge and humidity protected. If you talk about our air-conditioners, it is the same story.

Today, we are the only brand that you can use their air-conditioner without stabilizer. When you talk about refrigerator, it is the same story because our fridge can work without stabilizer. We are also the only one that gives a 10-year warranty on our compressor. These are some of the differentiations we do vis-à-vis competition.

Now, the question is:  are our products relevant to the consumer? I think the answer is already there because if you can use our television without a stabilizer which costs about N10,000, it means the product is cost-saving. Same for refrigerator which compressor has a 10-year warranty.
A year ago we decided that LCD TV should be replaced. So we are gradually dropping it from our range. We have discovered that there is a shift in market demand where people want to have large screen size TV. So, that is the way we sense the market and move ahead.    We don’t just focus on what is available and address it; we try to shift the market through innovations. Today, the market wants LED television and so our concern is how to shift the market  from LCD to LED. We are putting our strategy and innovation around it to make that happen.

Share of the electronics market
For security purposes, I would not like to disclose our share of the market, but I can tell you for sure that we are a clear leader in the flat television market. I can also tell you that our share of that market is in excess of 40 percent.

Safety of Samsung TV in the home
I had said earlier that this product is surge, lightning and humidity protected. Because of the power situation in Nigeria, you have frequent voltage surge, and most of the time adults are not at home when this surge occurs. Any voltage surge can cause damage to the TV. These protections built into the television are added advantage and are intended to make the product safe for use.

Making a difference
Apart from the built in protection I have just talked about, TV is a product that could be assessed from the viewing experience. When you put Samsung and any other brand side by side, when you view the same picture from both of them, because what is good to you may not be good to me, the difference the viewer will see in these two brands is the picture  quality and its resolution. We make a lot of investment in making sure that the consumer gets the best picture quality.
Other than that, though everybody would say my product is better than any other, but seeing is  believing, especially when it comes to television. Here, the only way you can differentiate two different products is through picture quality.

Whatever else you might say or see is subjective to the customer.
Apart from that, we have been trying to move the television away from just the viewing to actual experience for the customer and this is  where the features of smart TV come into play. In a smart TV, you can configure your whole programme for the day into the system. For instance, if you want to do an exercise, you can actually use the TV to control what you are doing, record it and make it an actual experience for you. So, we have taken TV beyond just watching news or movie on your screen. We have made it much more relevant to the consumer. There are various options now that enhance the consumer’s experience with the TV in terms of his daily life.

We are making massive investment in our technology. When it comes to smart TV, Samsung is a clear leader. We have introduced what we call evolution tips with which you can upgrade your TV to the most modern technology in the market. When it comes to picture quality, we are ahead on clarity, sharpness, clolour, motion and contrast.

Samsung is always innovating and we are one company that has all our components in-house. We don’t source any of our components from outside. We are already on a project  that will add more values to our customers in terms of educational programmes.

I am particularly fascinated by the evolution that you people have introduced into your operations. But in a market where the consumer is highly price-sensitive, don’t  you think you are putting your customers under undue pressure with you frequent change in your products?

Products evolution in a price-sensitive market
We have been working since the past couple of  years to guard against a situation where you buy a smart TV this year and by next year, another one comes out, making your TV outdated. We have actually come up with an evolution kit which you just plug to your TV and, in just a couple of minutes, your TV is upgraded in both software and hardware to the latest technology of the TV in the market.
What we are trying to do is actually to give our customers real TV experience and we are improving on the content to include educational content so that children, for instance, don’t just watch TV but also get educated from their experience.

Addressing specific consumer needs
The way we view our business in Nigeria is that we cannot develop products to address every single segment of the society because this is a country where we still have 70 percent of the society living below poverty line.
As an organization, we have a vision that does not allow us to get into that kind of space. So, anything that we do that is not relevant to the future is out of our portfolio and that is the way we work.  But we are not only addressing the premium market; we are still selling our LCD model to our customers but that is not our focus because we cannot compete with other brands who are more price-focused.

We believe that business is done first to give relevant products at affordable prices but, as an organization, we should be healthy because only then can we continue to drive our innovations and technology. If we are not healthy, we cannot invest in our needs and the activities of the market. Globally many companies are in the red in terms of the health of their business. Samsung is the only company that is making profit in the electronics industry. Now, you might say that since we are making profit, our prices should come down, but that is not true because we cannot sustain it.

Investment in human resources
I won’t be able to give you figures on the investment we have made and have continued to make, but as you rightly said, resources are  the key to executing our plans. For instance, in 2010, our total employees were just 15 people, today, as we speak, we are 142 employees. When you add the number of people who are indirectly employed by Samsung including partnerships, you will be looking at about 10,000 people. That is where we are and this started just three years ago. The only statement we make here is about people, people, people. That, for us, is the key to our growth. We can make the best of products but if we don’t have the people to take them to the consumer and do so in the right manner, then such products are of no use.

Market expectations in the short to medium term
The market will continue to see our brands of products. The way we have structured our market, even if we decide to take away the LCD or the LED, for the next six months, you will still see those products in the market. We will be able to plan to shift the market to the next level of products that we want to expose. What determines this is consumer experience. Consumers are moving more and more into large screen sizes. When you talk about smart and large screen size TV, they know that what Samsung can offer cannot be got from any other competitor.

What is interesting about our product is that here you find all the features you get in Europe and America plus added features that make the product relevant in this environment. We don’t compete on price, but the differentiation we make in our products. We believe there is value addition and proposition to the consumer that makes him buy our product for 5-10 percent extra cost.

Challenges in the market
I think the slow growth of infrastructure in this country, without sounding negative,  and to a large extent, the slowness in the economy, form part of the challenges we face in this market. Security situation is linked to different issues for everybody not just for our organization. These are actually impeding our growth. We are growing but we could have grown more if things were different. If you take the issue of roads for instance, you find that transporting  products from Lagos to Port Harcourt, Abuja  or Kano is not an easy thing to do. The roads are not good and a lot of risks are involved.

Future Projection
Not only from our perspective, but also from global headquarters, we clearly see Nigeria as the future in Africa. South Africa is saturated and so, the focus is on Nigeria which adds pressure on us. We know this is a market that its potential is not fully tapped. By the time the economy gets on track and the infrastructure improves, we are going to invest more in building our human capital tool. This is directly relevant to us and to the society vis-à-vis our future strategy.