Optimal Marketing: Maximizing Return on Global Marketing Investment

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Samsung spends $1 billion per year on marketing. How does it know it's putting every dollar in the right place?

When Eric Kim, executive vice president of global marketing operations for Samsung Electronics, joined the company in 1999, he faced a daunting challenge. He was under the gun to build the Korean manufacturer's brand into a force that rivaled industry leader Sony in revenue, profit and prestige. And he had only five years to do it.

The challenge was compounded by Samsung's image as a low-cost provider with low market visibility to match. Kim needed to make Samsung a household word synonymous with innovation and quality.

Selling 14 product categories in more than 200 countries, Samsung had to optimize its marketing investment across 476 category/country combinations.

Undertaking an intensive 18-month project, Samsung was able to determine accurately which markets should receive precious resources and which shouldn't. It created the process and achieved organizational buy-in to act swiftly. In short, it began earning a maximum return on its marketing investment.

Misallocating marketing resources is endemic to many large companies, particularly those that produce branded consumer goods. For many companies, determining where and how to allocate marketing budgets can seem virtually impossible.

But, as Samsung has illustrated, it is not impossible. A more rigorous, analytical approach can pinpoint a company's most promising opportunities to sell specific product categories in specific countries. It can also help companies determine how to best allocate scarce marketing resources. The Samsung case also illustrates that the inevitable organizational and political issues surrounding budget reallocation need not derail such an approach. Companies must anticipate the impact of the changes, then effectively eliminate the organizational barriers, helping those affected understand the reasons for the change and gain their support.

Jeffrey Merrihue is a global managing partner in Accenture's marketing sciences service line in London. He joined Accenture from Initiative Media Europe where he was UK CEO and regional director. He also brings deep marketing strategy experience based on over 20 years in international marketing including Kellogg's and Nabisco.

Marcel Corstjens is the Unilever Chaired professor of Marketing at Insead in Fontainebleau, France. He is a founder and director of Insead's Advanced Consumer Goods strategy program for senior executives. He is also the co-author of Store Wars: The Battle for Mindspace and Shelfspace.