Samsung

The Samsung Group is a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is the world’s largest conglomerate by revenue. The Samsung Group is composed of numerous international affiliated businesses, most of them united under the Samsung brand including Samsung Electronics, the world’s largest electronics company, Samsung Heavy Industries, the world’s second largest shipbuilder and Samsung C, a major global construction company.

Samsung has been the world’s most popular consumer electronics brand since 2005 and is the best known South Korean brand in the world. Samsung Group accounts for more than 20% of South Korea’s total exports and is the leader in many domestic industries, such as the financial, chemical, retail and entertainment industries. Samsung India Electronics Private Limited (SIEL) is the Indian subsidiary of the US $55. 2 billion Samsung Electronics Corporation (SEC) headquartered in Seoul, Korea. Headquartered in New Delhi, SAMSUNG India has widespread network of sales offices all over the country.

Samsung India is the hub for Samsung’s South West Asia Regional operations. The South West Asia Headquarters looks after the Samsung business in Nepal, Sri Lanka, Bangladesh, Maldives and Bhutan besides India. Samsung India which commenced its operations in India in December 1995 enjoys a sales turnover of over US$ 1Bn in just a decade of operations in the country. From being a virtually unknown entity in the Year 1995, brand Samsung today enjoys an awareness level of over 65% and a positive opinion of over 80% in the country today (source: BAS 2007).

Initially, a player only in the Color Televisions segment, it later diversified into color monitors (1999) and refrigerators (2003). Today, it is recognized as one of the fastest growing brands in the sphere of digital technology. SIEL is the market leader in high end digital television (Plasma, LCD).

Stp approach of Samsung: Segmentation: Segmenting is the process of dividing the market into segment based on customer characteristics & needs. Segmenting consists of:

• Geographic segmentationation: it is nearly present in 14 countries but has maintained a nearly same price and quality tag worldwide.
• Demographic segmentation: it has motto of ‘everyone’s invited’ so it produces goods for nearly every segment, from tech-savvy to gamers to middle class family. It has something in sort for you. Targeting: Is the process of focusing on a particular market with a particular product. Samsung produces goods for both tier1 and tier 2 cities and its nearly all electronic goods are available in both cities. The differences can be seen is the in tier cities it has exclusive Samsung showrooms while in tier and below cities it usually shares counter with other competitors .

Also goods like smart phones and android phones, expensive models of TVs like 3d etc are found in tier1 cities . in tier2 and below cities it becomes a mass producer of electronic items at reasonable cost. Positioning: Samsung has positioned itself as “Digital technology leader”. In 1990 group chairman, Kun-Hee Lee(Lee), initiated transformation from a low-end OEM into a world-class electronics company and now Samsung came to be perceived as a company with exciting product portfolio. TOP Olympic Sponsor for the 2008 Beijing Olympics and Olympic Partner for the 2008 Olympic Torch Relay.

Manavjit Singh Sandhu was its Olympic Brand Ambassador and launched the program ‘Spread the Olympic Flame. Apoints olympic gold medalist abhinav bindra as brand ambassador for its consumer electronics business appoints aamir khan as its brand ambassador for mobile phones. New, spunky, tagline – ‘Next is What? ’ It is being used in all of ‘Samsung Mobiles’ communication material. Product Strategy: Samsung Electronics India manufactures a wide range of consumer electronics and home appliances.

These products include:

1. Mobile phones with the accessories
2. Television, Audio player, Video player
3. Camera, Camcorder
4. Home appliances
5. PC, Peripherals and Printers. In the mobile phone industry, Samsung has the second largest share in the market with 19. 6% as per November 2010 consensus. The mobile phone market share is shown in Annexure 1. In the Indian mobile market, Samsung is the second largest player after Nokia with product line extending to over fifty products. The product line includes some of the most preferred mobile phones like Samsung Guru series, Corby series and many more.

Recently Samsung has launched its Samsung galaxy series in the Indian market. Samsung is also into manufacturing televisions, audio players, video players, blu-ray players, home theatres and multimedia players. In India, Samsung is the first to bring the concept of LED technology in televisions. Samsung’s products, in this category, are known for their innovativeness and technology . These products are the first preference of the consumers who seek technology at an affordable cost. Samsung also manufactures digital cameras and camcorders.

This product category includes world class products like Samsung NX series. Samsung digital cameras offer a diverse product line equipped with the most sought after features. Samsung cameras have always been recognized for their fine technology and optical innovations in such things as auto focus and “optical zoom” capabilities. These products, though, high on technology are an affordable option for those who have an edge for their photography hobbies. In the home appliances segment, Samsung manufactures refrigerators, microwave ovens, smart ovens, air conditioners and washing machines.

All of these products define Samsung’s competitiveness and vision in terms of product innovations like silver nanotechnology, twin cooling etc. At present, Samsung is the leading home appliances manufacturer and many of products are the best in their respective sub-segments. Personal computers, peripherals and printers are also the part of Samsung’s innovative and high-end technology product line. These include laptop notebooks, VDAs, music speakers, Internal and external hard drives, optical disc drives and printers. Though, Samsung is not yet a leader in this segment but its inclination of high end technology shows into these products also.

For Samsung, there is still scope for improving their products quality in the Indian market. The products sometimes develop technical flaws like display in the mobiles, gas kit leakages in frost-free refrigerators etc which are to be improved. Since, Samsung competes on the basis of the innovation and technology in the current market scenario; this plays a very important role in their major sales not only in India but in the whole world as a whole. As far as the after product service of Samsung is concerned, it needs major improvement in terms of contacting with customers.

Since service is intangible, it needs to be provided as quickly as possible. Reducing the retention time in providing value to the customers can add to big advantage for Samsung considering the current market conditions. Place strategy: Samsung electronics employs different place strategies for different products. When we talked to marketing representative he said the whole of Samsung electronics India has divided its distribution systems into various regions on basis of demand and number of dealers per region for example we visited what he called the vidharba region.

Samsung uses supply chain to enhance differentiation, increase sales and penetrate new markets and channels. It efficient supply chain is transparent, so that all the players in the supply chain have the right information at the right time about the movement of the products within the chain. This means lower inventories, elimination of waste, and reductions of costs. In addition to the intangible benefits like quick feedback from customers help in launching new products. Samsung has 24 state-level distribution offices and a direct dealer interface.

The direct dealer interface helps the company to get quick feedback from dealers, and enables it to launch products according to consumer needs. Samsung also believes in JIT (Just-in-Time) concept to its dealers. To minimize time overruns, Samsung delivered its products directly from its factories to its Regional Dispatch Centers (RDCs) and from there to dealers.

SIEL is having three types of distribution system:

• A one-level channel contains one selling intermediary, such as retailer.
• A two-level channel contains two intermediaries. In consumer markets, these are a wholesaler and a retailer.
• A three-level channel contains three intermediaries.

Other strategies:

• Shop-in-shop: Samsung is ensuring a presence in most big malls and multiplexes; even in the multi-brand outlets, as the focus there is to create a shop-in-shop atmosphere. In the shops where we conducted studies we found around 30-50% of counter share was of Samsung. Thus Samsung believes in “jo dikhta he vo bikta he”.
• The exclusive showrooms: Samsung India has set up a widespread network of over 80 exclusive showrooms comprising Samsung Digital home (focusing on high-end digital audio-video products such as MP3 players, camcorders and LCD/plasma/3D TVs). The Samsung Digital home goes beyond the concept of a Digital Plaza or a Brand Shop because in it, they are trying to create a more interactive environment and providing a more lifestyle orientation to the display, so that the customer can visualize the products in his/her own home settings. Samsung will add another 30 showrooms to its existing 100-odd this year.

Over the next few months, the existing Samsung Digitall Homes will all be rebranded Samsung Plaza, in keeping with the global practice. Until now, India was the only market where Samsung followed a dual showroom strategy – larger (2,500 sq ft and more) outlets were dubbed Samsung Digitall Home, while smaller showrooms were called Samsung Plaza. It is not just about a name change, though. Samsung India also wants uniformity in appearance and sales experience at each of these showrooms – that means an emphasis on product demonstration, not just display.

Pricing Strategy:

Samsung believes in providing good products at reasonable prices to its customers. Samsung’s technology plank communications helped the company to gain market share, even though it did not offers any discounts or exchange scheme when it entered India. Samsung focuses on cost-cutting measures to keep its price low which helps to combat the discount schemes of the local companies. Samsung drastically reduced its operational costs which enabled the company to keep low prices for certain products and extract higher profit margin from premium products.

Samsung India posted revenue of $2. 2 billion last year and this is expected to go up to $3. 5 billion this calendar year. Samsung’s global revenue is $116. 8 billion. The focus of its competitors is to penetrate in the rural and semi-urban mass markets. But Samsung insists that it’s a high end technology driven player. That’s why the urban areas are still a focus area for it and only 30 per cent of revenue comes from rural and semi-urban India. Howsoever in past few years samsung India..

Deputy Managing Director, Ravinder Zutshi says “Still, focusing on the premium customer will get you only so far – India is still a market powered by volume-growth the current strategy is to gain greater reach among the masses – not through pricing, but through product innovation”. he vehemently rejects the price warrior tag, though. “Samsung is not a price warrior but today we are as competitively priced as our rivals. The focus is on expansion and deeper market penetration,” he adds “We are aiming at market leadership not only in the premium category of products but also mass categories like flat televisions”

It is difficult to achieve the ambitious targets keeping in mind the pricing strategy of Samsung. But, they believe that it takes time to ensure your supremacy in market share. Once you get your brand perception right in the minds of the consumers as a brand that delivers the best technology and gives you value for money, then ultimately market share goes up. Now Samsung has changed its policy a bit and instead of just remaining a high-end technology driven brand it tried to change its image to sell products to the huge number of middle income families in India.

It started pricing its products on the “value for money” concept, keeping in mind the price sensitivity of Indian consumers. But still Samsung has the repute of being a premium brand, aggressive in launching newer models with the latest technology and at economic costs throughout the world.

Promotion Strategy:

• “Turn on Tomorrow”
• “We are investing aggressively in marketing to transform our company to be truly market driven and to establish our Samsung brand as the most trusted and preferred brand in the market. ” – Vice-chairman & CEO, Samsung Electronics

Promotion stands for various activities the company undertakes to communicate and promote its products to the target market. The Making of a Global Brand When Samsung decided to become globalized, it acquired a new corporate identity by changing its logo and that of the group. In the new logo, the words Samsung Electronics were written in white color on a blue color background to represent stability, reliability and warmth. The words Samsung Electronics were written in English in process of globalization drive. The logo was shaped elliptical representing a moving world – symbolizing advancement and change…

To capture the retail market for consumer electronic goods, such as TVs, washing machines and microwave ovens, it formed partnerships with retailing giants like Best Buy. Advertising and Promotional Strategies To promote the ideas, goods or services advertising is important and in this course it launched promotion depicting product transformation into more advanced models, in course of time. This depicts the importance that they give to the research and development and making people understand that they are not just trend followers but are trend setters.

Samsung launched corporate advertisements highlighting its technologically superior goods as they entered into the Indian market, and positioned itself in the mindset of consumer as the products are known for its quality like: •Samsung branded its products as superior technology and environment friendly ones with refrigerators and ACs incorporate with revolutionary new technology called Silver Nano Health System that ensures freshness and bacteria free environment. Also, it launched the “Bio” range of products.

Launched a special marketing campaign for Flat Tvs including a focused advertising campaign “Duniya Hai Gol, TV Flat” and attractive exchange offers. Adding to these, Samsung launches an extensive ad campaign in all sorts of media (like print, electronic) whenever a new product is being launched. These create public awareness and add to these media hoarding at major junctions and displays at point of purchases are done.

Also, it offers special incentives like price off, patronage rewards, etc during festival season in order to create an incentive to buy the product, and a special ambience is created during the festive offers at the point of purchases to give the feel of Indian nativity of the company. Samsung built trust and confidence by their active promotion and advertising. Associations with various others across the world made the globally known and built its image on its association. •The partnership between Samsung mobile and SSAFW (Sanlam South African Fashion Week) shows the fusion of art, fashion and technology. It radiates technological elegance and stylish panache, by joining forces off SSAFW and enhances techno-fashion centered brand.

Samsung India associated itself with the ruling passion of Indian consciousness: Cricket. It launched a Team Samsung campaign, which caught the imagination of the entire campaign. Also, in 2004 it bought biggest spectacle debate of this decade to India vs Pakistan cricket series – “The Samsung Cup”.

Not confining itself to cricket, Samsung sponsors the Indian contingent to the Olympics and the Asian Games. It also ran training programmes for deserving Indian athletes under the Olympic Ratna banner. Samsung also helped India to bring the Olympic torch relay to India.

Samsung also brings the World Cyber Games, which is regarded as the Olympics of the Cyber World to India every year.

In mobile phones, Samsung tied up with a noted painter Satish Gujral for his paintings to be available as downloads on Samsung mobile phones.

Product pla bcements were done in movies and popular television serials where Samsung products were set in lifestyle environments. For microwaves, Samsung ran a Kitchen-on-Wheels programme where mobile kitchens with microwave ovens went to various localities demonstrating the advantage of microwave cooking.

Sports Partnership (Globally):

Samsung sponsored Olympic Winter Games in 1998 and will officially sponsor bOlympic Games and Olympic movements for the next 8 years and this would only enhance their global image. Samsung was official sponsor of telecommunications equipment category from 1998 to 2010.

Sponsors of English premiership club Chelsea FC, the premiership known globally and attract a good number of audiences all across the globe. Samsung also signed a partnership deal with Mexican football Team Club Deportivo Guadalajara for six years in 2008 and provides plasma and LCD screens for team’s new stadium Estadio Chivas, indirectly promoting the brand.

In 2009, signed a 3 year deal with Brazillian Football Team Palmeiras, having their logo on shirts and products to the club. Samsung Super League with International Federation for Equestrain Sports and FEI Nations Cup, the world’s oldest and best renowned equestrian series. Also sponsors rugby league team Sydney Roosters in Australian National Rugby League. It is the sponsor of Essendon Football club in A – League. Sponsor of Nascar Nextel Cup, French People’s Baseball Team, running festival in Taiwan, and professional StarCraft team (Samsung Khan).

Official HDTV sponsor of the National Football League (NFL). Official IAAF (International Association of Athletics Federations) partner of 2009 (Berlin, Germany) and 2011 (Daegu, South Korea), IAAF World Championships in Athletics and 2010 IAAF world Indoor Championships. Brand Ambassador: Samsung in India have various brand ambassadors for various divisions.

Aamir Khan for mobiles, Priyanka Chopra has been recently chosen as brand ambassador for home appliances, Olympic Gold Medalist Abhinav Bindra for consumer electronic business. Aamir Khan was apart a various ad campaigns like Next is What, Wave, Galaxy series and so on. He is known in the industry as Mr. Perfect and they are using that indirectly to show that their mobiles are perfect. Also as Samsung is sponsor for Olympics the image of Abhinav Bindra, who is the first Indian individual Gold Medallist at Olympics.

Annexure:

Samsung Product Line Samsung India product line as on the Samsung India website: The product line has been divided into five main categories as shown in the above figure. The mobile phone category has been divided into eight different sub-categories: The Tv/Audio/Video category is divided into five sub-categories: The Camera/Camcorder category contains: The Home appliances category has five main sub-categories: The PC/Peripherals category includes:

This model’s one of point of difference is multi-window. Users can goggle seamlessly between applications without closing the window, allowing for enhanced productivity and collaboration across programs. Another unique function among smartened from the table above is enhanced S pen function, the most officer friendly function already. S pen function consists of five things: Action Memo, Scrapbook, Screen Write, S Finder, Pen Window.

Action Memo can convert handwritten notes into contacts information, words on browser and tasks in a to-do list.

Scrapbook enables users to track down and save content on screen after circling the content.

Moreover, Pen Window enables users to open small application windows or a true multitasking experience without pausing current activity on the screen. S Finder expansively searches for content on their device regardless of the type, as well as symbols and formulas. The Screen Write feature captures the full screen image of the current page on the device and allows users to write comments or additional information onto the captured image. This model price is lower than its biggest competitor I phone in the same capacity BIBB.

According to figure below, Samsung is smartened market leader.

It has Weaknesses: However, there are some weaknesses. Samsung camera is not as well as I phone as.

Firstly, from two models’ sample photo, AY chip in I phone as with f/2. 2 aperture and true tone flash reflects much higher light sensitivity and photo details handling ability.

Secondly, Because of technological problems, operation speed is little bit lower than other competitors although Note Ill can run multi-APS together fluently. For instance, customers need to wait gallery opening for five seconds.

Thirdly, same as most smart phones in the present market, Samsung note Ill is not waterproof. Customers would feel inconvenient in humid heathers.

Opportunities

From the forecasting below, mobile commerce in China will rocket in times. China will also overtake the U. S as the largest smartened market in the globe.

Threats

Rise in feature phone market poses threats on smartened market. In the largest phone market, feature phone market, more than one fourth feature phone users are active online users and dominant feature phone seller Monika maintains second mobile seller in the world.

Founded Samsung Introduction-2 Important points, 1970’s subsidized, In 1938, Samsung began as a small business trading produce and consumer goods. Almost 70 years later, Samsung has transformed itself into a global powerhouse whose superior products and services now range from semiconductors and LNG ships to fine chemicals and financial services, just to name a few. 1938-1970 Samsung Beginning On March 1, 1938, founding chairman Byung-Chull Lee started a business in Taegu, Korea with 30,000 won (South Korean currency).

At first, Mr. Lee’s little business was primarily in trade export, selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing. But in just over a decade, SAMSUNG – meaning literally “three stars” in Korean – would have its own flour mills and confectionery machines, its own manufacturing and sales operations, and ultimately become the roots of the modern global corporation that still bears the same name today. 969-SAMSUNG-Sanyo Electronics established (Renamed SAMSUNG Electro-Mechanics in March 1975 and merged with SAMSUNG Electronics in March 1977) 1969-SAMSUNG Electronics Manufacturing incorporated (Renamed SAMSUNG Electronics in February 1984) 1970-1980 Samsung Industrial Era Throughout the 1970s, SAMSUNG laid the strategic foundations for its future growth by investing in the heavy, chemical, and petrochemical industries.

The company’s second “Five-Year Management Plan,” announced in August 1973, targeted these industries and also introduced SAMSUNG to the shipbuilding industry Another burst of growth for SAMSUNG came from the burgeoning home electronics business. SAMSUNG Electronics, already a major manufacturer in the domestic (Korean) market, began to export its products for the first time during this period. Another significant development was SAMSUNG’s 1974 acquisition of a 50 percent stake in Korea Semiconductor, further consolidate SAMSUNG Electronics’ reign as a leader in semiconductor manufacturing. 980-1990 Entering the global technology marketplace The late 70s and early 80s represented a time of increasing diversification and global growth for Samsung’s core technology businesses. In 1978, SAMSUNG Semiconductor and SAMSUNG Electronics became separate entities as new products were introduced to the global market. SAMSUNG Precision Company (established in 1977) laid the foundation in another high-tech industry – aerospace.

Renamed SAMSUNG Aerospace Industries in February 1987 (now known as SAMSUNG Techwin), SAMSUNG has been developing its aerospace capabilities with unprecedented speed ever since. Future plans include the development of future space stations – and even space facilities for the Moon and Mars in the early 21st century. SAMSUNG’s increasing focus on technology led to another key development in the mid-80s with the creation of the company’s two Research & Development institutes, SAMSUNG Economic Research Institute (SERI) in 1986.

SAMSUNG Advanced Institute of Technology (SAIT) in 1987. Together, these two pioneering R&D organizations have helped SAMSUNG expand its reach even further into electronics, semiconductors, high polymer chemicals, genetic engineering, optical telecommunications, aerospace and new fields of technology innovation from nanotechnology to advanced network architectures. On November 19, 1987, SAMSUNG’s founding Chairman Byung-Chull Lee passed away after almost fifty years at the helm of the company. His son, Kun-Hee Lee succeeded him as the new Chairman.

On the 50th anniversary of SAMSUNG’s founding in 1988, he announced the “Second Foundation” of the company, directing SAMSUNG’s growth towards becoming a world-class 21st century corporation. For this “Second Foundation,” SAMSUNG challenged itself to restructure old businesses and enter new ones with the aim of becoming one of the world’s top five electronics companies. The merger of SAMSUNG Electronics and SAMSUNG Semiconductor & Telecommunications was undoubtedly a key strategic moment in the progress towards this goal.

For the first time in the group’s history, SAMSUNG was now in a position to maximize its technological resources and develop value-added products. 1990-1997 Leaping onto the Global Stage New management Era New Management is more than a mere re-engineering of SAMSUNG but rather an entire revolution dedicated to making world-class products, providing total customer satisfaction, and being a good corporate citizen. In retrospect, New Management was a decisive turning point for SAMSUNG, the moment when the entire company was repositioned on the basis of “Quality first. During this period, 17 different products – from semiconductors to computer monitors, TFT-LCD screens to color picture tubes – leaped into the ranks of the top five products for global market share in their respective areas. There is no doubt that part of SAMSUNG’s success in these areas is due to its rigorous enforcement of quality control at all its plants across the world.? Thanks to the “Line Stop” system, any employee can shut down the assembly line when inferior products are discovered.

Production is simply halted until the problem is solved. SAMSUNG also adheres to the “Six Sigma” concept of total quality management. 1997-2000 Digital Frontier 1997 was a dark year for nearly all of Korea. That year, nearly all companies in Korea shrank. SAMSUNG was no exception. The company restructured by reducing the number of its affiliated companies to 45, decreasing personnel by almost 50,000, and improving the soundness of its financial structure.

Although the news was bleak, SAMSUNG was one of the few companies able to continue growing thanks to its leadership in digital and network technologies, and its steady concentration on electronics, finances, and related services. 2000-Present Pioneering the Digital Age With the start of the second millennium, SAMSUNG begins its second century. The digital age has brought revolutionary opportunities and changes to global business. The SAMSUNG Group has responded to these changes and is currently upgrading its business structure, management perspective, and corporate culture to meet global standards.

Our commitment of being “World’s Best” has won us the number one global market share for thirteen of our products. We succeeded in achieving the global competitiveness through continually improving our financial structure and profitability, as we examine the structure of our own organization. The quick pace of our development is reflected in our management philosophy “We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society. “

Tech giant Samsung Electronics Co. Ltd. said on Wednesday shipments of the Galaxy Note 7 smartphone are being delayed as the firm conducts additional quality control testing for the premium device.

“Shipments of the Galaxy Note 7 are being delayed due to additional tests being conducted for product quality,” Samsung said in a statement to Reuters. The firm did not elaborate on what it is testing and to what markets shipments are being delayed.

Local media reports have said some users of the Galaxy Note 7, which launched in South Korea and other markets earlier this month, have claimed that the battery for their phones exploded.

Quality control problems, if confirmed, could deal a major blow to the world’s top smartphone maker as the firm is counting on the sales of the new device to maintain sales momentum for the mobile business in the second half of this year.

Samsung has previously said demand for the new Galaxy Note phone is far exceeding demand, creating a supply shortage and forcing it to push back the launch of the phone in some markets. The firm has said it is utilizing all possible means to boost production.

Production problems for the curved displays for the Galaxy S6 edge phone resulted in disappointing sales last year, and some investors fear a repeat if Samsung does not move quickly to meet Note 7 demand.

The Galaxy Note 7 retails in South Korea for 988,900 won ($887.63) without subsidies.

Samsung’s other premium smartphone models that launched in March, the Galaxy S7 and S7 edge, have been huge hits with customers and helped boost its earnings in the first half of 2016.

Samsung Electronics on Thursday offered financial incentives for U.S. and South Korea customers who exchange Note 7s for other products or refund them, as the tech giant scrambles to shore up its reputation in the wake of a damaging safety crisis.

The consumer electronics company is also expanding a U.S. recall of the fire-prone model to a total 1.9 million Note 7 phones, which includes the 1 million Galaxy Note 7s it recalled on Sept. 15.

The South Korean giant is in damage-control mode as rivals like Apple Inc. and LG Electronics try to steal market share from the global smartphone leader after it was forced to scrap its latest high-end device.

Samsung is boosting its marketing and promotional efforts around other Galaxy-series smartphones to cushion the blow from the demise of the premium Note 7, which it finally abandoned this week after failing to resolve overheating problems which caused some of the phones to ignite.

Samsung said on Thursday it is offering up to $100 in bill credit to consumers who exchange their Note 7s for any Samsung smartphone in the U.S.

U.S. customers who exchange their Note 7s for a refund or other branded smartphone will receive $25 in bill credit.

“We appreciate the patience of our consumers, carriers and retail partners for carrying the burden during these challenging times,” said Tim Baxter, president and chief operating officer, Samsung Electronics America.

“We are committed to doing everything we can to make this right.”

The U.S. Consumer Product Safety Commission said on Thursday the Note 7’s “battery can overheat and catch fire, posing serious fire and burn hazard to consumers.”

It added that Samsung has received 96 reports of batteries in Note 7 phones overheating in the U.S., including 23 new reports since the Sept. 15 recall announcement.

In the U.S., Samsung began sending fireproof boxes and protective gloves to customers returning potentially explosive Note 7s, drawing humorous barbs from social media commentators.

The company has commenced offering similar financial incentives in its home market of South Korea, which it says would compensate consumers for their “big inconvenience.”

After days of heavy losses, Samsung’s shares ended 1.4 percent higher on Thursday while the broader market fell 0.9 percent.

On Wednesday, the firm slashed its quarterly profit estimate by $2.3 billion to reflect the impact of the Note 7 withdrawal, giving some investors hope that the financial cost of the debacle had been largely accounted for.

“We are confident the 3Q 16 re-statement puts to bed the direct financial impact of the Note 7 recall and termination,” UBS said in a report.

“In the near-term, we believe investors will re-focus on shareholders returns ahead of full 3Q results Oct 27th.”

Nokia, Blackberry

Customers will have plenty of choice in the weeks ahead, with South Korean mobile carriers including SK Telecom planning to take pre-orders for Apple’s iPhone 7 starting Friday. LG Electronics also recently launched its V20 smartphone.

Many analysts say the real risk to Samsung lies in the reputational damage it suffers in a cut-throat industry rather than financial costs.

“Industry experience, such as the decline of Nokia and BlackBerry, shows how successful manufacturers can lose market share particularly quickly in the handset business,” Fitch ratings agency said in a report on Thursday.

Moody’s also said in a report that day that the Note woes are “credit negative” and “threaten to have a more lasting negative effect on the Samsung brand and would require significant marketing expense to regain consumer confidence.”

Meanwhile, South Korea’s central bank said the Note 7 failure could undermine economic growth, although it needed more time to assess the effects.

(By Hyunjoo Jin; Editing by Stephen Coates and Sam Holmes)

Samsung Electronics Co. Ltd. has suspended production of its flagship Galaxy Note 7 smartphones, a source said on Monday, after reports of fires in replacement devices added to the tech giant’s worst ever recall crisis. Top U.S. and Australian carriers also suspended sales or exchanges of Note 7s, while major airlines reiterated bans on passengers using the phones, after smoke from a replacement device forced the evacuation of a passenger plane in the United States last week. Fires in phones that were meant to replace devices that had been recalled because of their propensity to explode would be a disaster for the world’s largest smartphone maker, suggesting it had failed to fix a problem that has already hurt its brand and threatens to derail a recovery in its mobile business. “If the Note 7 is allowed to continue it could lead to the single greatest act of brand self-destruction in the history of modern technology,” said Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants.”Samsung needs to take a giant write-down and cast the Note 7 to the engineering hall of shame next to the Ford Pinto.”In a regulatory filing, Samsung said it was “adjusting” shipments of Note 7s to allow for inspections and stronger quality control due to some devices catching fire. It did not comment on the production halt or the cause of the fires, while the source — who declined to be identified because they were not authorized to speak to the media — did not explain whether specific problems had been identified or when production was halted. A Samsung official told Reuters earlier on Monday it was investigating reports of “heat damage issues” and would take immediate action to fix any problems in line with measures approved by the U.S. Consumer Product Safety Commission.

On Sept. 2, Samsung announced a global recall of 2.5 million Note 7s due to faulty batteries which caused some of the phones to catch fire. It ordered new batteries from another supplier and started shipping replacements to customers just two weeks later. But similar problems arose with a replacement Note 7 on Oct. 5, which began smoking inside a Southwest Airline flight in the United States. Samsung shares, which have rebounded after an initial sell-off on the recall, closed down 1.5 percent, compared with a 0.2 percent rise for the broader market. “I think the cleanest thing to do is to give up on the Note 7,” said HDC Asset Management fund manager Park Jung-hoon, whose fund owns Samsung shares. “What’s scary is that this is causing people to repeatedly doubt Samsung’s fundamental capabilities, so it’s important for Samsung to get past this issue quickly.” Samsung’s recall crisis has coincided with pressure from one of the world’s most aggressive hedge funds, Elliott Management, to split the company and pay out $27 billion in a special dividend.

Airplane ban

Major airlines, air regulators and airport authorities reiterated bans on passengers using the phones, saying Note 7s should not be powered up or charged on board. A South Korean government agency said it was monitoring reports of the fires and warned that the recalled Note 7 devices should not be used or charged inside airplanes.

Mobile carriers also took action. Verizon Communications Inc., the number-one U.S. wireless carrier, said on Monday it would suspend the exchange of replacement Note 7s, and would allow customers to exchange the replacement for another smartphone. AT&T Inc., the number-two U.S. wireless carrier, said earlier that it would stop issuing replacement Note 7s and would let customers with a recalled Note 7 exchange that device for another Samsung smartphone or other smartphone of their choice. Number-three wireless carrier T-Mobile U.S. Inc. also said it was temporarily halting sales of new Note 7s as well as exchanges while Samsung investigated “multiple reports of issues” with its flagship device. T-Mobile offered customers who brought in their Note 7s a $25 credit on their phone bill. Australia’s largest carrier, Telstra Corp., said Samsung had paused supply of new Note 7s, while fellow Australian carriers Optus and Vodafone said they had stopped issuing new Note 7s. South Korea’s two largest mobile carriers, SK Telecom and KT Corp., said they were monitoring the situation.

The recovery in Samsung Electronics Co. Ltd.’s mobile business suffered a blow on Thursday as reports of exploding batteries forced the firm to delay shipments of Galaxy Note 7 smartphones, and knocked $7 billion off its market value.

Investors drove the stock to two-week lows after the global smartphone leader told Reuters late on Wednesday the shipments had been delayed for quality control testing, and that shipments to South Korea’s top three mobile carriers had been halted.

Faults with the new premium flagship device could deal a major blow to the South Korean giant, which was counting on the Galaxy Note 7 to maintain its strong mobile earnings momentum against Apple Inc.’s new iPhones expected to be unveiled next week.

“This is some major buzz-kill for Samsung, especially given all of the hard-earned excitement that products like the Note 7 have been garnering lately,” IDC analyst Bryan Ma said.

“The pending Apple launch puts all the more pressure for them to contain this quickly. The timing of this couldn’t have been worse.”

Samsung did not comment on what problem it was trying to address or whether other markets were affected besides South Korea.

Sister company Samsung SDI Co. Ltd. said that while it was a supplier of Galaxy Note 7 batteries, it had received no information to suggest the batteries were faulty.

Several people posted images and videos of charred Galaxy Note 7s online and said their phones had caught on fire.

“Be careful out there, everyone rocking the new Note 7, might catch fire y’all,” one user said in a YouTube clip showing a burnt Note phone. It was not immediately possible to confirm the veracity of the clip.

Samsung’s shares, which hit a record high of 1.694 million won last week, fell 2 percent, and Samsung SDI tumbled 6.1 percent, versus a 0.1 percent fall for the broader market.

Several South Korean media reports, without citing direct sources, said Samsung will soon announce a plan to recall affected Note 7 phones and replace their batteries as opposed to giving the users a new device. A Samsung spokesman declined to comment on the reports.

Damage control

Last year, production problems for the curved displays for the Galaxy S6 edge model resulted in disappointing sales, and Samsung risks a repeat this year if it cannot address the Galaxy Note 7 problems quickly.

Its mobile profit is on track to post annual growth for the first time in three years, thanks to robust sales of the Galaxy S7 and S7 edge devices that it launched in March to critical acclaim.

The Galaxy Note 7 received similar praise, raising expectations for strong sales in the second half. Samsung said in August demand for the new handset, priced at 988,900 won ($882) in South Korea, was far exceeding supply, pushing the firm to delay the launch in some markets.

HDC Asset Management fund manager Park Jung-hoon said it now appeared inevitable that Samsung’s smartphone average selling price and profits would miss lofty second-half expectations.

“Apple is supposed to show off the iPhone 7 next week and this issue has emerged, so the current state of things do not look good,” he said.

Though a components pick-up will buttress overall profits, Park said mobile operating profit might decline by up to 200 billion won for July-September.

The mobile division accounted for about 54 percent of Samsung Electronics’ January-June operating profit of 14.8 trillion won.

Hyundai Securities said in a report that the Galaxy Note 7’s problems should be resolved within a “few weeks”.

The brokerage retained its third-quarter operating profit forecast of 8.5 trillion won.

(Reporting by Se Young Lee; Editing by Stephen Coates and Simon Cameron-Moore)