Samsung will next month launch (arguably) its most important phone to date, the Galaxy S8, as it looks to move consumer’s minds away from the widely-reported debacle of the Note 7, towards a plethora of new features it hopes will propel the brand to become the king of the smartphones.
When Samsung was forced to recall its Galaxy Note 7 last autumn after some of the devices caught fire due to a fault with the battery, the news was splashed across media outlets with the force of a hurricane. The electronics company was forced to stop production on the model, issue a product recall in October and send fire-resistant boxes to customers.
Following the chaos, Samsung took out full page ads to apologise for the incident in The Wall Street Journal, The New York Times, and The Washington Post, penned by Samsung Electronics North America president and chief executive, Gregory Lee.
Recalling the device was costly. Operating profit fell 30%, to $4.57bn, while Samsung's mobile division saw operating profit plummet by 96% compared to the year before. The Note 7 disaster cost Samsung 13.5% of its market share, which now stands at about 20% of all smartphones sold, according to IDC.
Such alarming figures should, on paper, have spelled disaster for the brand but paradoxically things on the sales front began to look up. The results of Samsung’s fourth quarter were some of the most pleasing to date. It reported a 50% year-on-year increase in operating profits, albeit it driven by strong growth of its memory chips and panel display businesses.
But the fact that its brand image wasn’t completely shattered following the incident is a positive starting point for the company.
“Following news of its product recall, Samsung’s Impression score (whether you have a positive impression of a brand) declined by 15 points,” said Russell Feldman, director of digital, media, and technology at YouGov. “Since that time, it has worked to regain trust and its overall Impression score has begun to recover, though it is yet to reach pre-recall levels.”
“While the public were very aware of the story, our data indicates that Samsung customers were not as fretful as one may expect. Indeed, Samsung’s Satisfaction score (whether you are a satisfied customer of a brand) is in more or less the same position as it was pre-scandal. Even its Impression score among this group – which did decrease by 10 points – has now fully recovered.”
Though the brand may have work to do to “win over some consumers that are still hesitant”, Feldman added that it can be confident its customer base remains strong as it launches the new model.
In anticipation of the Galaxy S8's arrival, Samsung’s January global TV advertising campaign focused on quality and the thorough nature of its testing process comprising a new 8-point battery check in an attempt to reassure consumers that it has taken extensive measures to ensure there isn’t a repeat performance.
Since then it has dialled back on safety messages and at an event unveiling the features of the handset on Wednesday (29 March), Samsung took an unprecedented marketing move of offering a three-month refund policy for those fans who buy the Galaxy S8. A strategy Ahmad Badr, strategy director at Siegel+Gale described as “a smart and bold promotional tactic to dissipate any fears on product malfunctions".
Feature wise, something Samsung will no doubt look to push hard in its marketing is the brand’s new smart voice assistant Bixby, launched to rival Apple’s Siri and Google Assistant. Setting Bixby apart from its competitors is that it is has “contextually aware” capabilities that enable it to offer personalised help based on what it continues to learn about the user’s interests, situation and location.
"Samsung is making all the right noises by emphasising the safety checks the phones have gone through," Joseph Evans, analyst at Enders. "The competitive environment it's launching into is also helpful. Most Android handsets this year have been pretty generic, but the S8 stands out, taking the small bezel trend to its logical conclusion months before Apple is likely to. This will outweigh the brand damage from the Note 7 fiasco."
To chime with the unveiling of the new handset, Samsung this week launched a new TV ad for the Gear VR featuring an ostrich that tries to fly, and succeeds, thanks to the brand's VR headset.
“Samsung has done all the right things to keep its reputation in check," added Badr. "The stellar end-of-year performance results of 2016 helped portray the brand in good health despite the Note 7 disaster. Sustaining that momentum means there is no room for mistakes anymore – and Samsung know this too well."
It's a sentiment that Evans echoed. "The one area of concern is that this phone has to be totally scandal-free, or Samsung's ability to paint it as a one-off will evaporate. People will be looking hard for any flaws, and any mass product is susceptible to unforeseen issues."