Using Concept Testing and Nielsen Bases, defined new tablet product and launch strategy

1. THE ULTIMATE MOBILE ENTERTAINMENT EXPERIENCE
THAT’S AFFORDABLE
Subbu Subramaniam
Satish Mandalika
Rajeev Kalavar
Praveen Kudithipudi
Divyang Agrawal
New Product Management

2. Agenda
 Market Overview
 Product and Value Proposition
 The Concept
 Marketing Strategy
 Tactics and Launch Plan
 Summary
Overview Product Concept Strategy Launch Plan

3. Tablet Industry
 The iPad was announced on January 27, 2010
 In Steve Job’s words - a ‘magical device’
 Initial reviews mixed - “an oversized iPhone”
 Most Analysts projected modest sales
 Apple released the iPad in April 2010
 Sold 3 million of the devices in 80 days
 iPhone 1M, DVD player 350k
 In Q2 ‘10, Apple sold 4.19 million iPads around the world
 Adoption Rate Fastest Ever, Passing DVD Player
 Foundation for an entirely new Industry & Eco-System
Overview Product Concept Strategy Launch Plan

4. 75%
22%
3%
iPad
Android
Others
Overview Product Concept Strategy Launch Plan
Tablet Market Share – Jan 2011
Industry Growth

5. Tablet Competitive Landscape
Overview Product Concept Strategy Launch Plan

6. Target Universe
• Households with Income > 50K
• Households with WLAN connections at home
• 110 MM Households
• 47% Households > $50k
• Total # HH > $50k => 47%*110MM = 51MM
• WLAN penetration 30% of all Households
• Total WLAN’s HH = 30% * 110MM = 33MM
• Others
• Non-overlapping % of 3G users, other consumer
types = 15% of HH = 17MM
• Total Target Universe = 33 + 17 = 50MM
Overview Product Concept Strategy Launch Plan

7. Customers
Overview Product Concept Strategy Launch Plan

9. Samsung Business Objectives
Brand
Leadership
Consumer
Electronics
Leadership
Sustained
Profitability
$$$$
Ubiquitous
Computing
ProductOverview Concept Strategy Launch Plan

10. ProductOverview Concept Strategy Launch Plan
Large 10.1”
HD
widescreen
Display
Dual-Core
1GHz CPU
Android 3.0
– Designed
for Tablets
2MP WebCam
8MP Camera
1080p Video
Capture &
Playback
HALO

11. ProductOverview Concept Strategy Launch Plan
http://www.youtube.com/watch?v=M-
80QD5Zjyc&playnext=1&list=PLE7FACA97F
433720B
Introducing Android 3.0

12. Value Proposition - I
Cinematic
Hi-def
Experience
with HDMI
ProductOverview Concept Strategy Launch Plan

13. Front and
Rear Facing
2MP/8MP
Camera
ProductOverview Concept Strategy Launch Plan
Value Proposition - II

14. Universal
Web Browsing
with Adobe™
Flash Player
ProductOverview Concept Strategy Launch Plan
Value Proposition - III

15. Higher
Productivity
with Seamless
Integration to
the Cloud
ProductOverview Concept Strategy Launch Plan
Value Proposition - IV

16. Bridging the
gap with
traditional
PCs
ProductOverview Concept Strategy Launch Plan
Value Proposition - V

18. Concept
ConceptOverview Product Strategy Launch Plan

19. Purchase Intent from Concept
20.0%
42.0%
24.0%
10.0%
4.0%
Definitely would buy
Probably would buy
Might/might not buy
Probably would not buy
Definitely would not buy
17.0%
29.0%
30.0%
15.0% 9.0%
• Measure consumer
interest, motivation and preference.
• Help validate that the defined need
can be met through the proposed
concept.
ConceptOverview Product Strategy Launch Plan

20. Adjustment for
Need and Timing
Overstatement
Adjustment
Adjustments
Concept Testing Results
Product 1
Sample Size (N) 305
Price $450
Overstatement
elasticity 1.00
% Need 49.0%
Timing of purchase 59.0%
Purchase Intent PI (%) Conv. Rate
Weighted
PI Adjusted PI
Definitely would buy 20.0% 28.7% 5.73% 1.66%
Probably would buy 42.0% 16.9% 7.10% 2.05%
Might/might not buy 24.0% 7.5% 1.79% 0.52%
Probably would not buy 10.0% 5.9% 0.59% 0.17%
Definitely would not
buy 4.0% 4.4% 0.18% 0.05%
Total Weighted PI 15.4%
Concept Testing Results
Product 2
Sample Size (N) 310
Price $550
Overstatement
elasticity 1.05
% Need 40.0%
Timing of purchase 50.0%
Purchase Intent PI (%)
Conv.
Rate
Weighted
PI Adjusted PI
Definitely would buy 17.0% 27.3% 4.6% 0.93%
Probably would buy 29.0% 16.1% 4.7% 0.93%
Might/might not buy 30.0% 7.1% 2.1% 0.43%
Probably would not buy 15.0% 5.6% 0.8% 0.17%
Definitely would not
buy 9.0% 4.2% 0.4% 0.08%
Total Weighted PI 12.7%
ConceptOverview Product Strategy Launch Plan

21. Product Category Comparison
<=20 21-40 41-60 61-80 81-100
Weighted PI 2 1
Intensity of Liking 1,2
Price/Value Mean 2 1
Uniqueness Mean 1,2
1 = Priced @ $450
2 = Priced @ $550
• Comparative Quintile Ranking in Category
ConceptOverview Product Strategy Launch Plan

23. Marketing Strategy
Customer
Innovative
“Product”
Brand Awareness
with unique
messaging
“Promotion”
Superior
distribution
channels
“Place”
Value
“Price”
StrategyOverview Product Concept Launch Plan

24. Distribution
Walmart, 15%
Target, 7%
Costco, 20%
Best Buy, 25%
Frys, 10%
Amazon.com, 1
5%
Other, 8%
Total Channel Dist(%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% (ACV) Low Spend ($10k) % (ACV) Medium Spend ($30k)
% (ACV) High Spend ($50k)
Distribution vs ACV
StrategyOverview Product Concept Launch Plan
• Channel spend allocation
(High, Med, Low)
•Overall Channel Distribution
across retailers

25. StrategyOverview Product Concept Launch Plan
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
50,000.00
TV Advertising Print/Other
advertising
Internet Ad Radio Ad Consumer
Promotion
Trade
Promotion
Ad Spend Across Media Channels
Low
Medium
High
Media Buy
TV Advertising Quantity
Total TV Ad Budget ('000) $46,000
Cost /GRP ('000) $5
Q2 Q3 Q4 Q1 Total
Quarterly Spend 50% 25% 5% 20% 100%
Total HH GRPs ('000) $23,000 $11,500 $2,300 $9,200 $46,000
Target GRPs 4,600 2,300 460 1,840 9,200

26. Price: $450 or $550
StrategyOverview Product Concept Launch Plan
Product 1 - Price: $450 ($$ in '000)
Spend Type Trial Rate # Units Revenue Ad Spend Distr Spend EBITDA
Low 0.33% 166 $ 74,511.40 $ 50,000.00 $ 10,000.00 $ (19,604.78)
Medium 1.32% 662 $ 298,045.60 $ 70,000.00 $ 30,000.00 $ 62,580.89
High 2.32% 1,159 $ 521,579.80 $ 100,000.00 $ 50,000.00 $ 134,766.55
Product 2 - Price: $550($$ in '000)
Spend Type Trial Rate # Units Revenue Ad Spend Distr Spend EBITDA
Low 0.18% 90 $ 49,397.52 $ 50,000.00 $ 10,000.00 $ (29,565.21)
Medium 0.72% 359 $ 197,590.09 $ 70,000.00 $ 30,000.00 $ 22,739.15
High 1.26% 629 $ 345,782.65 $ 100,000.00 $ 50,000.00 $ 65,043.50

27. Analysis and Forecast EBITDA
StrategyOverview Product Concept Launch Plan
166
662
1,159
0
200
400
600
800
1,000
1,200
1,400
Low Medium High
# Units('000)
# Units('000)
$(19,605)
$62,581
$134,767
$(40,000)
$-
$40,000
$80,000
$120,000
$160,000
Low Medium High
EBITDA('000)
EBITDA('000)
• Negative EBITDA for Low Spend, does not make sense
• Target higher profitability, not market share

29. Tactics
 Channel Distribution (HIGH SPEND)- $50M
 Shelf space in retails and mass merchandise
 Retail promotion
 Advertising (HIGH SPEND)- $100M
 TV Advertising
 ESPN, American idol, CNBC, MSNBC
 Print/Other advertising
 Gaming, Wired, New York Times, Wall street journal, outdoor display, display in malls.
 Internet Ad
 Electronics blogging sites, Facebook , twitter, Amazon.com promotion
 Radio Ad
 Popular radio channels in metro areas.
 Trade Promotion
 Retail booth, CES
Launch PlanOverview Product Concept Strategy

30. Launch Plan
June July Aug Sep Oct Nov Dec Jan Feb Mar April May Total Spend(MM)
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
TV Advertising
$46
National cable
$16
National network
$30
Print/Other advertising
$20
Wired
$10
Gaming
$10
Internet Ad
$20
Radio Ad
$2
Consumer Promotion
$0
Trade Promotion
$12
$100
Launch PlanOverview Product Concept Strategy

31. Ongoing Metrics and Mktg ROI
Launch PlanOverview Product Concept Strategy
Ratio Value
ROMI 44%
ROMI Ratio 1.44
Payback/Breakeven (for ongoing
efforts)
.35
ROMI= Marketing
generated
Contribution/Mar
keting Investment
 Brand Awareness & Positioning
 Brand Consideration
 Purchase Intent vs Non Purchase Intent
Payback/Breakeven
(on ongoing efforts):
Expense/Return *
Time Period

32. Summary
 Launch Date: June 25, 2011
 Price point: $450
 Units Manufactured: 1.15M
 Color(s): 60% Silver (690K) 40% Black (460K)
 Pilot: Nationwide Launch
 Media Channel: Spread
 Tagline: Premium Product, Value Pricing
Cheap Ain’t Never Been This Good! 
Overview Product Concept Strategy Launch Plan

33. Product Management Team
 Product Planning - Subbu Subramanian
 Brand Management - Rajeev Kalavar
 Marketing Communications - Divyang Agrawal
 Product Marketing - Praveen Kudithipudi
 Sales Management - Satish Mandalika
Q&A
Overview Product Concept Strategy Launch Plan

34. Backup Slides

35. Concept Test Results
Concept Testing Results
Product 1 Product 2
Sample Size (N) 305 310
Price $450 $550
Overstatement elasticity 1.05
Purchase Intent PI (%) Conv. Rate Weighted PI PI (%) Conv. Rate Weighted PI
Definitely would buy 20.0% 28.7% 5.7% 17.0% 27.3% 4.6%
Probably would buy 42.0% 16.9% 7.1% 29.0% 16.1% 4.7%
Might/might not buy 24.0% 7.5% 1.8% 30.0% 7.1% 2.1%
Probably would not buy 10.0% 5.9% 0.6% 15.0% 5.6% 0.8%
Definitely would not buy 4.0% 4.4% 0.2% 9.0% 4.2% 0.4%
Total Weighted PI 15.4% 12.7%
Key Measures
Product 1 Product 2
Scale Value % Value Value % Value
Weighted PI 15.4% 12.7%
Overall Liking Mean 6.0 4.2 70.0% 4.1 68.3%
Price/Value Mean 5.0 3.6 72.0% 3.2 64.0%
Uniqueness Mean 5.0 3.3 66.0% 3.3 66.0%
Believeability Mean 5.0 3.4 68.0% 3.4 68.0%
Intent to Recommend Mean 5.0 3.5 70.0% 3.4 68.0%
% Need (Yes %) 49.0% 40.0%
Compared to Similar Product - Better 59.0% 50.0%
Timing of Purchase (within 6 months) 52.0% 42.0%
Comparative Quintile Ranking in Category
<=20 21-40 41-60 61-80 80+
Weighted PI 2 1
Intensity of Liking 1,2
Pric e/Value Mean 2 1
Uniqueness Mean 1,2
1= low price
2=high price

36. Product 1 – P/L
Concept Testing Product 1 ($450)
Unit Price $450
Spend Low Spend Medium Spend High Spend
Weighted purchase intent 15.4% 15.4% 15.4%
* Year 1 ACV distribution 42% 68% 84%
* Year 1 awareness 20% 50% 70%
Adjustments
* Need 49% 49% 49%
* Timing of purchase 52% 52% 52%
= Year 1 trial rate 0.33% 1.32% 2.32%
* Trial units / purchase 1 1 1
* Target universe 50,000 50,000 50,000
= Year 1 estimated # units sold ('000) 166 662 1,159
# Units 166 662 1,159
* Unit Price $450 $450 $450
= Revenue ('000) $74,511 $298,046 $521,580
Ad Spend $50,000 $70,000 $100,000
+ Channel Spend $10,000 $30,000 $50,000
= Marketing Spend ('000) $60,000 $100,000 $150,000
# Units 166 662 1,159
* Cost/unit $200 $200 $200
= COGS ('000) $33,116 $132,465 $231,813
Revenue $74,511 $298,046 $521,580
- COGS $33,116 $132,465 $231,813
= Gross Margins('000) $41,395 $165,581 $289,767
- Marketing Spend $60,000 $100,000 $150,000
-G&A/R&D Spend $1,000 $3,000 $5,000
= EBITDA('000) ($19,605) $62,581 $134,767

37. Product 2 – P/L
Concept Testing Product 2 ($550)
Unit Price $550
Low Spend Medium Spend High Spend
Weighted purchase intent 12.7% 12.7% 12.7%
* Year 1 ACV distribution 42% 68% 84%
* Year 1 awareness 20% 50% 70%
Adjustments
* Need 40% 40% 40%
* Timing of purchase 42% 42% 42%
= Year 1 trial rate 0.18% 0.72% 1.26%
* Trial units / purchase 1 1 1
* Target universe 50,000 50,000 50,000
= Year 1 estimated # units sold ('000) 90 359 629
# Units 90 359 629
* Unit Price $550 $550 $550
= Revenue ('000) $49,398 $197,590 $345,783
Ad Spend $50,000 $70,000 $100,000
+ Channel Spend $10,000 $30,000 $50,000
= Marketing Spend ('000) $60,000 $100,000 $150,000
# Units 90 359 629
* Cost/unit $200 $200 $200
= COGS ('000) $17,963 $71,851 $125,739
Revenue $49,398 $197,590 $345,783
- COGS $17,963 $71,851 $125,739
= Gross Margins('000) $31,435 $125,739 $220,044
- Marketing Spend $60,000 $100,000 $150,000
-G&A/R&D Spend $1,000 $3,000 $5,000
= EBITDA('000) ($29,565) $22,739 $65,044

38. Why 6-month timeline

39. Distribution – Low Spend
Channel Distribution LOW SPEND
Ch. Dist (%) Ch. Penetration ACV Factor ACV % Dist. (ACV)
Penetration Factor 0.5
Hyper-marts
Walmart 15% 70% 1.4 47% 7%
Target 7% 70% 1.1 39% 3%
Costco 20% 80% 1.1 44% 9%
Electronics
Best Buy 25% 80% 1.0 40% 10%
Frys 10% 70% 1.0 35% 4%
Internet
Amazon.com 15% 100% 1.0 50% 8%
Other 8% 60% 1.1 33% 3%
Total Distribution 100% 42%

40. Distribution – Medium Spend
Channel Distribution MEDIUM SPEND
Ch. Dist (%) Ch. Penetration ACV Factor ACV % Dist. (ACV)
Penetration Factor 0.8
Hyper-marts
Walmart 15% 70% 1.4 76% 11%
Target 7% 70% 1.1 62% 4%
Costco 20% 80% 1.1 70% 14%
Electronics
Best Buy 25% 80% 1.0 64% 16%
Frys 10% 70% 1.0 56% 6%
Internet
Amazon.com 15% 100% 1.0 80% 12%
Other 8% 60% 1.1 53% 4%
Total Distribution 100% 68%

41. Distribution – High Spend
Channel Distribution HIGH SPEND
Ch. Dist (%) Ch. Penetration ACV Factor ACV % Dist. (ACV)
Penetration Factor 1.0
Hyper-marts
Walmart 15% 70% 1.4 95% 14%
Target 7% 70% 1.1 77% 5%
Costco 20% 80% 1.1 88% 18%
Electronics
Best Buy 25% 80% 1.0 80% 20%
Frys 10% 70% 1.0 70% 7%
Internet
Amazon.com 15% 100% 1.0 100% 15%
Other 8% 60% 1.1 66% 5%
Total Distribution 100% 84%

42. Advertising – GRPs and
Competition
Advertising Spend Budget
Low Medium High
Advertising Spend ('000) $50,000 $70,000 $100,000
Awareness 0.20 0.50 0.70
Competitive Ad Spend Analysis Apple (10k)
# Products Budget ('000)
Budget in 2008 4 $486,000
Budget in 2009 4 $501,000
Budget in 2010 5 $691,000
% ad spend growth /yr 10%
Budget in 2010 $691,000
- Budget in 2009 $501,000
= Budget increase in 2010 $190,000
- Ad spend increase of 2009 products $50,100
= Budget for new product (iPad) $139,900
Media Ad Spend Distribution for Category (source : Ad age)
Media Channel Spend (%) Spend
Print 32 18%
TV 64 36%
Radio 16 9%
Internet 25 14%
Other 39 22%
Total 176 100%
TV Advertising Quantity
Total TV Ad Budget ('000) $46,000
Cost /GRP ('000) $5
Q1 Q2 Q3 Q4 Total
Quarterly Spend 50% 25% 5% 20% 100%
Total HH GRPs ('000) $23,000 $11,500 $2,300 $9,200 $46,000
Target GRPs 4,600 2,300 460 1,840 9,200

43. Advertising – Low, Med, High
Advertising Spend Distribution LOW SPEND
Total Ad Spend Budget $50,000
Media Channel Category Avg. % Dist. Spend ('000)
TV Advertising 36% 46% $23,000
Print/Other advertising 18% 20% $10,000
Internet Ad 14% 20% $10,000
Radio Ad 9% 2% $1,000
Consumer Promotion 11% 0% $0
Trade Promotion 11% 12% $6,000
Total 100% 100% $50,000
Advertising Spend Distribution MEDIUM SPEND
Total Ad Spend Budget $70,000
Media Channel Category Avg. % Dist. Spend ('000)
TV Advertising 36% 46% $32,200
Print/Other advertising 18% 20% $14,000
Internet Ad 14% 20% $14,000
Radio Ad 9% 2% $1,400
Consumer Promotion 11% 0% $0
Trade Promotion 11% 12% $8,400
Total 100% 100% $70,000
Advertising Spend Distribution HIGH SPEND
Total Ad Spend Budget $100,000
Media Channel Category Avg. % Dist. Spend ('000)
TV Advertising 36% 46% $46,000
Print/Other advertising 18% 20% $20,000
Internet Ad 14% 20% $20,000
Radio Ad 9% 2% $2,000
Consumer Promotion 11% 0% $0
Trade Promotion 11% 12% $12,000
Total 100% 100% $100,000

44. Sales – Forecast (competition)
Sales Research and Projections
2010 2011* 2012*
Sales (MM) % of total Sales (MM) % of total Sales (MM) % of total
Apple iPad 9.2 89% 19.4 80.83% 30.1 74.14%
Samsung Galaxy 1 10%
Dell Streak 0.1 1%
US Tablet Installed base, 2010-2012
Year # in millions % of population
2010 10.3 3.03%
2011 24 7.60%
2012 40.6 12.80%
Source: http://www.emarketer.com/Article.aspx?R=1008098

45. Questionnaire - I
 Assuming you were going to purchase a new Tablet, how likely would you be to purchase
this product if it were available in a store where you normally shop, at a price you would
normally pay.
 Definitely Would Buy
 Probably Would Buy
 Might or Might not buy
 Probably would not buy
 Definitely Would Not Buy
 What, if anything, do you particularly LIKE about the Tablet?
 What, if anything, do you particularly DISLIKE about the Tablet?
 Which statement describes how much you like or dislike the product? Select 1 answer.
 Like extremely
 Like very well
 Like quite well
 Like somewhat well
 Like slightly
 Do Not like at all

46. Questionnaire - II
 In general, how do you feel about the value for money of this tablet?
 Very good value
 Fairly good value
 Average value
 Somewhat poor value
 Very poor value
 How new and different, in general, do you think this tablet is compared to others on the
market?
 Extremely different
 Very different
 Somewhat different
 Slightly different
 Not at all different
 Does this Tablet solve problems or fulfill needs you have now?
 Yes
 No

47. Questionnaire - III
 Assuming this tablet was available in your area, which statement best describes how soon
after you became aware that it is available you would make the decision to purchase?
 Within the next 30 days
 31-60 days
 3-6 months
 7-12 months
 1-2 years
 More than 2 years
 Don’t know
 How does the tablet compare to other offerings now on the market?
 Better than other products now on the market
 The same as other products now on the market
 Worse than other products now on the market
 At what type or types of stores would you expect a new Tablet to be sold?
 Hypermarkets
 Electronic retail stores
 Online

48. Questionnaire - IV
 How believable, in general, do you think the product offering is?
 Extremely believable
 Very believable
 Somewhat believable
 Slightly believable
 Not at all believable
 How likely would you recommend this Tablet to friends?
 Definitely would recommend
 Probably would recommend
 Might or Might not recommend
 Probably would not recommend
 Definitely would not recommend
 If a friend recommends this product how likely would you buy it?
 Definitely would buy
 Probably would buy
 Might or Might not buy
 Probably would not buy
 Definitely would not buy