Samsung out-spent Coca Cola, Microsoft and Apple on marketing in 2012
Samsung’s marketing budgets are hurting its profit margins despite excellent sales for its Galaxy S3 and Galaxy Note 2 devices, according to one analyst
Samsung has had a great couple of years shifting tens of millions of its Galaxy S3 and Galaxy Note 2 devices but the company’s decadent marketing spends could be hurting the company’s profit margins, according to one analyst.
Samsung now spends more on marketing than Apple and Coca Cola, according to Asymco’s Horace Dedieu. The net result of this is reduced gross margins on its smartphones, according to Dedieu, which isn’t particularly good for the company’s profitability.
Samsung generates 17 per cent profit margins on its telecoms goods, which sounds reasonable. But compared to RIM (30 per cent) and Nokia’s (25 per cent) it's alarmingly low. And the reason for this is Samsung’s massive marketing spends.
‘One of the more remarkable aspects of Samsung’s success has been their willingness to increase promotional spending. It spends more than Coca Cola, a company whose primary cost of sales is advertising,’ added Dedieu.
Samsung spent £2,492,000,000 on marketing in 2012 alone, according to the analyst’s calculations. That’s more than double what Microsoft spent and around quadruple that of Apple.
No wonder Samsung is now the world’s biggest handset manufacturer.