Air Conditioner EU Launching Master Plan 2007 11

Air Conditioner EU Launching Master Plan 2007. 11. 30 Digital Appliance Division Strategic Marketing Team - Confidential -

Air Conditioner Contents I. Market Analysis 1. Market Situation 2. Competitor Analysis 3. Consumer Analysis II. Offering Strategy III. Offering Review IV. IMC Strategy 1. Communication Theme 2. Campaign Strategy 3. IMC Mix 4. IMC Material Output - Appendix - EU Marketing Calendar Confidential -

Air Conditioner I. Market Analysis Confidential -

Air Conditioner 1. Market Situation - Overview Demand Forecast Inverter On-Off WAC Trend CAGR 5. 9% q EU 4, 197 K q Inverter & Multi demand ↑ q Severe EER competition 3, 964 K q Art Cool design well received 3, 744 K 3, 537 K 47% 54% 17. 9% Issue in 2007 42% 39% q Inverter noise problem 59% 56% 51% 44% -3. 7% q Lack of Samsung A/C identity q Cost competitiveness Confidential -

Air Conditioner 1. Market Situation - Brand Image § Imagewise, Daikin outscores other brands for all the attributes and LG seems to be the next highest § Samsung generally has low score especially in terms of ‘high quality’, ‘value for money’ and ‘recommended by salesperson’ (n=400, %) Daikin Samsung Mitsubishi LG Haier Reliable 65. 8 41. 5 50. 3 50. 8 7. 8 Popular 46. 5 48. 5 41. 0 47. 8 4. 8 Best quality 51. 0 30. 8 39. 8 40. 5 5. 3 Various functions 49. 8 40. 5 42. 8 45. 5 6. 5 Best design/exterior 48. 0 30. 5 29. 5 3. 8 Value for money 43. 0 26. 8 27. 3 41. 0 5. 5 Product variety 45. 8 40. 5 39. 8 35. 5 7. 0 Haier ● Best quality ▣ Reliable ▣ ▣ Recommended by salesperson ▣ Advanced tech ● Mitsubishi ▣ A/S / Warranty ▣ Product variety ▣ Function variety ●▣Daikin Recommended by others ▣ Value for money ▣ Advertising Most preferred ● LG ▣ ▣ Best design/exterior ▣ PR activity ▣ Product display ▣ Ease of buying ● Samsung ▣ Popular Ease of buying 49. 5 44. 0 40. 8 45. 0 5. 5 Recommended by salesman 52. 3 29. 5 35. 3 3. 8 Product display 45. 3 32. 8 28. 5 40. 8 4. 5 Advanced tech 52. 3 38. 3 46. 8 44. 0 7. 5 A/S / Warranty 46. 5 29. 3 33. 8 34. 8 5. 0 Promotion activity 46. 8 32. 0 27. 5 32. 3 3. 0 Advertising 51. 5 33. 0 31. 3 34. 3 3. 5 Recommended by others 48. 3 27. 8 33. 5 37. 0 2. 8 Most preferred 42. 5 26. 3 26. 8 34. 8 2. 8 Confidential -

Air Conditioner 1. Market Situation - Key Success Factors : Top 5 Priorities Products Channels • Designs fitting to local specifics (regulations, customer taste towards aesthetics/fashion, etc. ) • Full lineup with flexible indoor System AC unit configurations • Differentiated product lines for retail and professional channels to avoid price conflict • Penetrate professional channels via installers and specialized distributors • Build network of loyal channel partners via competitive incentive policies, technical support, and marketing support Achieve Top 2 M/S Leadership Logistics and Services Branding and Sales capabilities • ATL critical to generate ‘pull’ from end users (Daikin’s “camel in uniform” campaign) • Dedicated sales force with industryleading incentive structures • Specific marketing programs (tradeshows, seminars, brochures, forums) for professional channel partners • Solid after-sales service infrastructure (e. g. prominent service centers) for commitment and branding to customers • Program of training, technical support, spare parts supplies for professional channels • Logistics efficiency to channels, especially during peak seasons Source : Mckinsey Recommendation Confidential -

Air Conditioner 2. Competitor Analysis § Focus on increasing profit with maximizing System A/C revenue (Daikin / LG) § Japanese focus on Inverter, differentiating from Korean & Chinese, trying to enter N. American & N. EU market Strategy LG §Increasing Plants (Poland/KSA) §Focus on System A/C P’sonic §Focus on Japan domestic MS No 1 §DC Inverter in Chinese market Daikin §Focus on Japan domestic MS No 1 (enhancing Heating COP) §Increasing plants(Czech, Belgium) §M&A OYL (Entering N. America) Melco §Focus on EU §Comp Reactor Change (Cu→Al) Fujitsu §Best Heating COP §N. America, E/W EU North America South America WAC Brazil EU CIS Priority 2 Focus on Entering Priority 1 (Inverter/ HP) Mini split EU S/E Asia China Japan Middle East Priority 1 (DC Inverter, China Priority 2 (인버터) (Australia) General Confidential -

Air Conditioner 2. Competitor Analysis – Products & Technology Compact Design & Diverse Color DESIGN Daikin DEPTH EER/COP 150 mm 4. 03/ 4. 15 P’sonic 139 mm 4. 48/ 4. 26 Melco 198 mm 4. 20/ 4. 35 Penetrating New Market with Hi-COP - Fujitsu General “ Nocria (8. 5 Kw), Daikin “Ururu Salala (COP 5. 14 ) - Stronger Low Ambient C/O (-10 ~46 ℃) / H/P (-15 ~24 ℃) Flagship with outstanding USP Daikin §Ururu Salala (De-/Humidifying) Siesta (IT) Specialized in Certain Channel P’sonic § Air purifying USP Patrol Sensor (Premium) Toshiba § Daiseikai (Flagship) Energy saving / Air Purifying Enhancing INV Lines (Prm/ Dlx/ Std) - Premium with differentiated Tech. & USP Standard with price competitiveness Deluxe with Standard + 1 USP - Diminishing On-off Lines Confidential -

Air Conditioner 3. Consumer Analysis - Key Buying Factors Cooling performance and economical factors are mentioned as basic attributes, followed by noise and air purification Rank 1+2, % Total ITALY SPAIN KSA IRAN (n) Cooling performance (1613) (400) (408) (405) 61. 7 53. 5 58. 0 77. 7 57. 5 Economical 57. 4 76. 3 63. 8 33. 6 56. 5 Noise of indoor unit 21. 3 19. 0 29. 3 9. 6 27. 7 Air purification 20. 6 28. 8 8. 5 32. 1 12. 8 Brand 15. 7 8. 3 14. 7 25. 4 Design 4. 8 4. 3 4. 0 7. 1 3. 7 Convenience 4. 2 2. 8 7. 8 2. 9 3. 5 Basic KBF § Energy efficiency is considered more importantly than actual price Factors needs to be developed 1 § Noiseless cannot be differentiated point due to advance technical development § Relatively latent needs are found towards air purification § The importance is actually ranked low, but includes attributes from other area Factors needs to be developed 2 § Considered as relatively less important factor, but can be visible differentiated point → Currently the design of RAC’s are very similar Confidential -

Air Conditioner 3. Consumer Analysis - Information Source § The importance of WOM is found in all countries, and Europe shows relatively high importance of stores than Middle East § However, the influence rate of sales rep is relatively low in Middle East, whereas promotion & advertisement is considered as relatively important in KSA Italy (n=400, Rank 1+2, %) Sales rep from store Spain (n=307, Rank 1+2, %) Iran (n=402, Rank 1+2, %) KSA (n=408, Rank 1+2, %) Real product from store WOM Promotion from manufacturer/ distributor Internet Advertisement Article Confidential -

Air Conditioner 3. Consumer Analysis - Segmentation By analyzing market according to consumers’ perception structure, Attribute Consequence • More importantly consider Noiseless factor • Other factors are less concerned • Prefer Japanese especially Fujitsu Price • Compare price and energy efficiency Value Powercool 15. 2% following segments are driven • Most importantly consider cooling performance • Prefer premium brands • More importantly consider additional functions related to health/hygiene Noisezero 7. 0% Puri-tech 9. 4% Wisebuy 13. 3% Trend-buy 27. 2% Value. Cool 27. 9% • Follow the trend in terms of design/function • Prefer secure brands • Less concerned • Consider only basic cooling performance Additional Function Note) It is only a Perceptual Map based on quantitative study Confidential -

Air Conditioner 3. Consumer Analysis - Targeting It is found that our design has relative competitiveness at current price, Power-cool & Puri-tech can be the target Powercool 14. 5% Montblanc Noisezero 7. 5% Puri-tech 11. 3% Price Wisebuy 17. 0% Value. Cool 20. 8% Trend -buy 28. 9% Additional Function Note) Above is a Perceptual Map based on quantitative study Confidential -

Air Conditioner II. Offering Strategy Confidential -

Air Conditioner 1. Product Strategy Pursue Global Top Class!! 2007 q New USP Launching - MPI zone - Good’sleep 2008 q Enhance Premium - Mont Blanc - USP (Auto Roof Shutter) - Unique Design q Dominate Market Premium - Compete with Japanese - Against Art-Cool diversity q Pursue Best Performance - The Best EER/ Noise q Improve Performance - Noise Quality - High EER (4. 31) - Competitive USPs vs. Others q Compact type models q Enhance Design Identity - Recognizable at a glance q Compact Technology - Slim Solution (Downsizing) 2009 q Enhance Mid & Low - New Vivaldi q New USP Launching q More Compact models Confidential -

Air Conditioner 2. RAC Line-up 2007 2008 INVERTER Non Inverter Confidential -

Air Conditioner 3. Price Positioning (EU) 2008 Samsung 2007 Samsung Daikin LG Panasonic € 1, 200 € 1, 000 € 800 On off € 600 On off € 400 On off (9 K, Prices in EU) Confidential -

Air Conditioner 4. Design Strategy § Soft Minimal § High-tech & Smart Simple SAMSUNG JAPAN Brand Reason Feeling LG Complex Trend Confidential -

Air Conditioner 5. Features in RAC Auto Roof Shutter MPI zone Good Sleep II DNA & Cathchine & Silver Deodorizing Coated Pre-filter Filter Silver Coated Eva. (9/12 K) Confidential -

Air Conditioner 6. USP Competitiveness § We have 3 best USPs BEST USP Cleaning/ Maintenance Auto Roof Shutter EZ take out Filter Air Purifying/ MPI zone DNA Filter Health Comfort Sensing Good’sleep AC Robot Neo Plasma Triple Filter e-ion Allerubuste r Sleep Sensor Intelligent § Affordable Auto Roof § Tangible Shutter § Harmonious Design with function MPI zone Good’sleep e-ion WHY BEST USP? § Performance § Visibility (MPI lamp) § Algorithm § Upgrade, Extension § Convince Sensor Intelligent § Energy saving Confidential -

Air Conditioner III. Offering Review Confidential -

Air Conditioner 1. New RAC Projects Mont blanc • New premium line • Unique aesthetics with Auto Roof Shutter & MPI lamp • High EER & Quiet Operation Vivace ’ 08 • Modified sub premium line • New Reddish Black Mirror & Dark Gray Thin trim • Improved Outdoor noise Neo Forte • Modified standard line • Upgrade Grille with Silver Decoration Band • Improved Outdoor noise Confidential -

Air Conditioner 2. New RAC Introduction (Mont Blanc I) Concept 9/12 K q Dust Free - Auto Roof Shutter q Fresh Air - MPI zone (MPI Lamp) - DNA Filter First Model RTS : Jan 30 th 2008 ’ 07 vs. ’ 08 Selling Points q Auto Roof Shutter q DNA Filter q Good’sleep II q MPI Zone New Upgrade ’ 07 ’ 08 C 4. 10 4. 31 H 4. 10 4. 31 Noise 21 d. B 20 d. B On-off Low Ambient C : 21~43℃ H : 0~24 ℃ C : 15~43℃ H : -5~24 ℃ 9 K Inv EER Confidential -

Air Conditioner 2. New RAC Introduction (Neo Vivace) Concept q Mirror - Shadow Mirror - Auto Tilting Grille - Hidden Display First Model RTS : Jan 20 th 2008 ’ 07 vs. ’ 08 Selling Point q Trimless Reddish Black q MPI Zone ’ 07 ’ 08 Black Mirror Reddish Black Mirror Gray Thin Trim q Good’sleep II q Shadow Mirror q Catechine Filter Design q Improved Inverter Noise Quality Confidential -

Air Conditioner 2. New RAC Introduction (Neo Forte) Concept q Value Cool - Silver Spray Deco-band - Flat Grille - Different from Forte First Model RTS : Jan 20 th 2008 Neo Forte Inv Selling Point q Good’sleep II q Stylish Flat Panel q Catechine Filter q 2 different Spec. - High EER model with Mont Blanc Outdoor Unit - Normal model with WW Outdoor ’ 07 Normal Hi EER C 3. 4 4. 08 H 3. 65 9 K Inv EER Confidential -

Air Conditioner 2. New RAC Introduction (Forte Smart) Concept q Slim Solution - Compact Type 9 K - Family looking with Forte Selling Point q Good’sleep II q Installation Efficiency - Light Weight - Small dimension q Loading Saving Ratio - 13% Loading Q’↑ (276 Unit / 40 ft) First Model RTS : Feb 20 th 2008 ’ 07 vs. ’ 08 ’ 07 ’ 08 C 2. 81 H 3. 22 Noise 24 d. B 25 d. B 40 feet (W/O Pipe) 240 276 9 K On Off EER Confidential -

Air Conditioner III. IMC Strategies Confidential -

Air Conditioner 1. Communication Theme Development (1) § Dust Free (Auto Roof shutter, EZ Filter) § Auto Roof-Shutter § MPI Zone § High Glossy panel color § DNA Filter § Blue LED MPI Lamp § Good Sleep II § Rounded body shape Design uniqueness Strengthening Health Features Healthy Life VS Design Confidential -

Air Conditioner 1. Communication Theme Development (2) Healthy Life or Design Need to divide the communication message to Main & Supporting theme. Confidential -

Air Conditioner 1. Communication Theme – Stylish Design Samsung AC’s design fit into your premium living area. “THE NEW SAMSUNG AIR CONDITIONER FITS INTO YOUR PREMIUM LIVING AREA & LIFE STYLE” Fit into your premium living area. Fit into your life style. ( Superb Design) Confidential -

Air Conditioner 1. Communication Theme – Healthy Life Samsung Split A/C offers new solutions for indoor air quality you living in. “THE NEW SAMSUNG AIR CONDITIONER LINEUPS GUARANTEE YOUR HEALTHY LIVING WITH MPI & MULTIPLE AIR PURIFING SYSTEM. Confidential -

Air Conditioner 2. Campaign Strategy Main MKT concept Supporting concept Design Healthy Life Confidential -

Air Conditioner 2. Campaign Strategy - Concept Design Healthy Life Look & Feel Confidential -

Air Conditioner 2. Campaign Strategy 1. Divided two categories. Category 1. Look: Talk about MB’s superb design. Look Superb Samsung AC’s Design. Category 2. Feel : Telling the Samsung’s unique & innovative technologies. Feel true refreshment with Samsung innovative technologies. 2. Matching all of marcom material’s tone & Manner: Look & Feel Confidential -

Air Conditioner 3. IMC Mix (1) Initiatives Materials Ads Detail Activity IMC mix selection guideline HQ Local TV Commercial Draw customer’s attention and enhance brand awareness O Print Ads - Printed advertisement material for lifestyle, interior, design Magazine O Outdoor - Outdoor banner at place with high traffic of Target segment. - Concentrate on initial launching stage. O PR Film - Educational, promotional film for variety of events and shop demo. Press Release - Press kit develop and release. - Generate customers’ interest mostly at initial launching stage through active Press launching event. PR O O Confidential - HQ+ Local

Air Conditioner 3. IMC Mix (2) Initiatives Materials Detail Activity Catalog/Leaflet BTL On-line/ PVI Event Sales Guide IMC mix selection guideline HQ Local - Brochure or leaflet with product info. Such as Specification and features. O POP/Demo Display - POP provided from HQ (Factory side) for the first 3 -6 months. Floor Salesman Education - Floor salesmen training. Microsite - A dedicated micro website for promotion (and events). PVI - Product basic information on HQ and local systems. Sponsorship - Allied promotion with recognized place, house builders and so on. O Trade Show / Road Show - Dealer event or road show to draw initial attention from buyers’ side. O - Demo display or demo kit to highlight USP. +Local O - Originally provided by HQ, localized and modified by local. - Sales guide and learning materials for product education and presentation, with basic contents and animated movies. HQ O O - Support buyers’ own training program (online & offline) O O Confidential -

Air Conditioner 3. IMC Mix (3) ATL BTL PR Activities Delivery Date Deliverables Responsible Deadline Local Customization TV-CF - - Local - - Printed Ad Early Oct Source CD HQ/Local Completed Outdoor - - Local - - Pr film Early Nov Web/Source CD HQ Completed - Sales Guide Early Oct E-mail / Web HQ Completed Y Leaflet Early Oct E-mail / Web HQ/Local Completed Y Catalog Early Oct Source CD/ Web HQ/Local Completed Y Press Release - - Local - Y Y Confidential -

Air Conditioner 4. IMC Materials Output (1) item Global Images Remark Catalog Light Version Completed Full version On Creation Leaflets completed Pocket Sales guide completed Print AD Posters completed Confidential -

Air Conditioner 4. IMC Materials Output (2) item Global Images Remark Sales Guide PPT + Package Completed POP On creation Shop display Production in progress Confidential -

Air Conditioner 4. IMC Materials Output – Mont Blanc item MB Images Remark Catalog Pocket Sales guide Print AD Data CD (Floor Sales men training material include) + Confidential -

Air Conditioner Appendix : Marketing Calendar Confidential -

Air Conditioner EU Marketing Activity Calendar § November Pan Europe- Delegation Event → Dec / Jan Installer , Dealer Convention Nov Event ATL BTL Training Dec Jan Dealer Invitation A/C Deleg -ation Feb Mar May June Road Show Strategy & Making; Theme Setting Media plan, Budget, Effect Making Plan & Tool April TV, Radio, Printing Send to Subsidiary Planning Tactics Dealer, Agent, Salesman Shop Display Floor Salesman, Promoter Confidential -

Air Conditioner End of Document Confidential -