The results are in, and the winner is – Samsung ! That is for marketing expenses anyway. Many have said that Apple’s success is all down its marketing but, in reality, they spend far less than any of their competitors on a yearly basis . Samsung spend the most ; in 2012 alone they have spent an estimated $12 billion dollars on marketing and it isn’t even the end of the year yet, with final expenditure figures being published after year-end. This is already a huge increase on the published figures for 2011, with Samsung’s marketing expenditure in that year standing at around $8.2 billion. And they spend even more than soft drinks giants Coca-Cola whose main income is from advertising.
However, a closer look shows that, for all of their expenditure, their profit margin fluctuates between just 11 and 17%. This is quite low when you consider that Apple’s margin is around 45% and Nokia, at its best, was celebrating a 25% profit margin. Nonetheless, their prices have increased by 54% from 2007 prices and it does seem that they are more willing to spend out on advertising than anyone else. As their sales have increased, so has their spending whereas, with Apple, their SG&A expenses have decreased as their sales have gone up.
On the face of it, it would appear that high marketing and SG&A expenses have taken a big toll on their profits. However, it must be said that they are clearly doing something right. They are still at the top of the list of mobile manufacturers in the US and it looks as though most of their advertising is for their mobile products. Everywhere you look there are ads for Samsung, in particular their Galaxy range. So it does look, to all intents and purposes as if the old saying is right – you really do have to spend money to make money.
Source : Asymco.com