Samsung rides blue wave

With a £50m outlay, the electronics firm hopes to tap into Chelsea's success on and off the pitch.

Samsung's £50m five-year sponsorship of Chelsea Football Club, announced last week, is an alliance between two rising brands with global ambitions.

The agreement, starting on 1 June, is the biggest sponsorship ever signed by an English football club and Samsung's second-biggest after its sponsorship of last year's Olympics.

Chelsea's success on the pitch this season has brought a lot of media exposure, which looks set to continue, and Samsung hopes the association will make its brand appear sharper than manager Jose Mourinho's famous grey overcoat.

'Our marketing activities are very disparate if you look at them on a regional or global basis,' says Saul Pearce, vice-president of agency Cheil Communications Europe, which handles Samsung's marketing and is part-owned by the South Korean electronics giant. 'A core point of focus is very important to us. We had the Olympics last year and wanted something on a similar scale we could work with on an ongoing basis.'

This summer, the Samsung Mobile logo will appear on Chelsea shirts in time for the club's pre-season tour. Although the focus is on mobile handsets, the deal has been negotiated to run across all Samsung's product categories - including LCD TVs, MP3 players, IT and white goods - and a contractual clause gives it the freedom to change its logo to another product division after several years.

Pearce thinks this is unlikely to happen as other parts of the business will be able to leverage the sponsorship by using Chelsea-branded material at point-of-sale, and in trade marketing and corporate hospitality at Chelsea's Stamford Bridge ground, for example.

Mobile, adds Pearce, offers the biggest positive spill into other categories.

Youth Culture

'Samsung is partnering Chelsea to raise its brand awareness and brand equity in Western Europe and Asia-Pacific, where the Premiership is relatively popular,' says Neil Mawston, associate director of Strategy Analytics' global wireless practice. 'Through Chelsea, Samsung aims to more effectively target the younger, cooler segment of the mobile market. Sport and mobile telephony go well together historically. Vodafone and Ferrari in Formula One is a good example.'

According to Strategy Analytics' latest research, Samsung had a 14.2% share of international handset sales in the first quarter of 2005, up from 12.8% in the same quarter in 2004. This puts it in third place behind Nokia (31.3%) and Motorola (16.7%).

Research firm Mintel's recent report 'Mobile phones and network providers', reveals that the UK handset market was worth £1.1bn last year, up 11% on 2003. Volume sales also increased, by 13%, to 18m units. The good news for Samsung is that Nokia appears to be losing ground in a widening market. 'Samsung sees itself as the heir apparent to market leader in mobile,' says Pearce.

Andy Brown, head of European mobile devices research at IDC, adds: 'Technically, and from an innovation point of view, (Samsung has) been there for a while. But it has taken longer to build relationships with operators and provide them with the tools they need. Lately, Samsung has done a much better job of that. In the past, the right product was not always getting to the right customers, but the company has improved its supply chain management.'

Plaudits have flowed in for Samsung's D500 model, which was awarded best mobile handset by the GSM Association at the 3GSM World Congress at Cannes.

And the company is set to launch the E720 clamshell model, which will be supported by an integrated TV, press, online and outdoor ad campaign.

According to Eamon Collins, head of marketing communications at Samsung Electronics, marketing activity will not mention the Chelsea link until June, and the sponsorship is unlikely to be exploited until August, coinciding with the start of the new football season.

Package Offers

Collins admits that planning is still in the early stages, but thinks one element of the sponsorship will be once-in-a-lifetime packages for consumers, such as signed shirts, hospitality and Chelsea-related experiences.

'Although this is a global deal, the biggest beneficiary is likely to be the UK,' Collins points out. 'We've got a fairly long history in this country, but now we've got some much more aspirational products as a brand.'

Chelsea is also big on aspiration. Its goal is to become the leading power in European football and build a global fan base that matches the elite clubs of Real Madrid and AC Milan. To that end, Chelsea considers Samsung a better partner than its predecessor, Emirates.

'Samsung is a global brand; Emirates was not,' says Paul Smith, Chelsea's group business affairs director. 'Samsung operates in more than 200 countries, compared with 23 (for Emirates), and the primary business regions it is focusing on are the same areas in which the club is looking to develop its fanbase.'

The sponsorship fit looks good, but it is undoubtedly a big investment.

However, Pearce says: 'We are certain we will look back at the end of five years and say this was fantastic value for Samsung.'

He and his colleagues must be hoping that Mourinho will continue to weave his managerial magic.

TIMELINE

1938: Samsung - Korean for 'three stars' - founded by chairman Byung-Chull Lee. Trading as Samsung in Teague, Japan, it exports dried fish and vegetables.

1969: Samsung Electronics is founded and begins producing electrical appliances within a year.

1974: Biggest electronics company in Korea and acquires Korean Semiconductors.

1982: Samsung Lions pro baseball team founded.

1987: Byung-Chull Lee dies and is replaced by his son, Kun-Hee Lee.

1992: Samsung begins manufacturing in China.

1993: Wins contract to build the now world-famous KLCC towers in Malaysia and sets up the Samsung Fashion Institute.

1997: In a tough year for Korean industry, Samsung reduces its affiliated companies to 45 and cuts 50,000 jobs.

2000: Provides 25,000 telecoms units, including mobiles, for Sydney Olympic Games. It is also set to partner the 2006 Torino Winter Olympics and 2008 Beijing Games.

2002: Brand value reaches $8.1bn (£4.23bn).

2004: Becomes the third-biggest mobile handset company, behind Nokia and Motorola.

2005: Launches VoiceMode, the first speech-to-SMS mobile phone.

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