Samsung Group to slash $US14 billion marketing budget ahead of holding company IPO

Samsung Group to slash $US14 billion marketing budget ahead of holding company IPO

Samsung is set to slash its massive marketing budget, estimated at around $US14 billion worldwide in 2013, as it undertakes a major restructuring and refocuses on increased R&D.

During 2013, the Samsung Group and its various affiliates – in particular smartphone and tablet maker Samsung Electronics – were estimated to have spent more than the entire GDP of Iceland on marketing.

According to a report in the Korea Times, a lack of recognition for the conglomerate’s products outside South Korea was the key reason behind its massive marketing budget.

Having boosted its brand recognition, one Samsung executive is quoted as saying the company is now looking to increase the effectiveness of its marketing, as it refocuses its spending on research.

“It’s very clear that Samsung’s heavy spending for marketing made a big positive impact. As the global smartphone market is being saturated and smartphones are no longer a huge cash-cow, we are rationalising spending on marketing as we are attempting to spend more on futuristic projects,” the executive says.

News of the refocus comes as The Chosun Ilbo reports Samsung Everland, the de facto holding company used by the Lee family to control the Samsung empire, is set to be renamed Cheil Industries ahead of its IPO.

The Everland theme park operations are expected to be spun out into a separate affiliated company ahead of the IPO, which follows a heart attack by 72-year-old Samsung Group chairman Kun-hee Lee.

Lee’s son Jae-yong has a 25.1% stake in Everland, while his daughters Boo-jin and Seo-hyun, each own an 8.37% stake, with the IPO likely to be central to be central to the family’s succession plans.

News about the restructure comes as separate reports in The Chosun Ilbo suggests Samsung Electronics is planning to produce a new e-book reader in conjunction with US book retailer Barnes and Noble, in competition to Amazon’s Kindle devices.

Meanwhile, in a blow to smartphone rival BlackBerry, Samsung devices running its Knox platform have received clearance to operate on US defence networks.


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