Samsung (wrist) slapped with $340,000 fine for fake comments campaign It is not uncommon that Samsung smart phones are u

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Samsung (wrist) slapped with $340,000 fine for fakecomments campaign
It is not uncommon that Samsung smart phones are usedeverywhere in all walks of lives, including students, workers andofficers. Its advertisements of the newest model of smart phonesare also shown on TV, on social media, in magazines (etc.) most ofthe days; if not all.
Samsung is one of the largest information technology companies,sharing almost all markets with Apple, its major competitor.With making US$30 billion dollars net income per year, however, itmay be hard to imagine that Samsung is submerged in some unethicalmarketing practices.
However, in October 2013, the unthinkable occurred. A shockingnews story reported in October of 2013 grabbed attention all overthe world, including that of Samsung’s customers and itscompetitors as well. Taiwanese regulators eventually fined Samsungthe equivalent of US$340,000 for an astroturfing campaign directedagainst HTC.
How did we get here?
Although Samsung has such a large market share in the smartphone industry, with almost half of it, their marketers were stillnot satisfied with it and wanted to further enlarge its share inTaiwan. The marketers used hired writers to post fake commentsabout HTC (one of the competitors of Samsung) in different forumsin Taiwan. The objective was to persuade potential consumersnot to buy HTC smart phone products.
Back in April (2013), Taiwan’s Fair Trade Commission opened aninvestigation into Samsung’s advertising practices, after newsbroke that a local marketing company working for Samsung had hireda large number of writers to post negative comments against HTC andother competitors. Not only did the writers postnegative comments about HTC, a Taiwanese company that manufacturessmartphones, they did the converse. They wrote positivecomments about Samsung products in Taiwanese forums.
The anonymous commenters, who were unmasked turned out to bestudents, bloggers and designated employees of Samsung. Theywere paid to badmouth competitors and praise Samsung’s ownproducts; a practice that is not only unethical, but alsoillegal.
How did they do it?
The FTC found that Samsung went through one of its Taiwan units,called Opentide, to pull off the marketing ploy, accordingto Agence France-Presse (AFP). The paid writers,hired through a third-party marketing company, and Samsungemployees hid their true identities as they posted negative reportsabout One, HTC's flagship cell phone.
"This is the first case of its kind in Taiwan that a company hasconcealed its genuine status while attacking a rival," commissionspokesman Sun Lih-chyun told AFP.
"The deceitful behaviour has negative impacts on market orderand violated the fair trade law."
Following the opening of the investigation, Samsung announced itceased all marketing activities involving comments and claimed thecampaign was a mistake caused by “insufficient training”.The AFP reported at thetime that Samsung was risking a fine of up toUS$835,000.
When the investigation first started in April, Samsung issuedthe following statement:
"Samsung Electronics Taiwan (SET) has ceased all marketingactivities that involve the posting of anonymous comments, and willensure that all SET online marketing activities will be fullycompliant with the company's Online Communications Credo," thestatement read.
While the fine (US$340,000) is a significant amount, it’s justpocket change for the largest smartphone manufacturer in the world,widely expected to announce another quarter ofmulti-billion profits in 2013.
Unethical marketing practice
Samsung was fined US$340,000 for this unfair marketing strategy.The unethical marketing practice performed by Samsung was said tobe a deceptive practice. Since Samsung paid many bloggers orwriters to blacken the image of its competitor, HTC, in order toattract potential customers away from HTC to its own brand.
The innocent customers may have blindly believed in the massivefake comments as these comments appeared in many phone-relatedwebsites and they could not reasonably ascertain the identity ofthe writers of the comments.
Therefore, the customers may have a worse image of HTC andswitch to another brand, which might most probably be Samsung’s.The marketers of Samsung use such an unethical marketing method totry to cheat the customers by providing misleading and deceptivepromotions in an indirect way should not be appreciated. Indeed,profitable customer relationships are built with value andtrust.
Samsung products do have their value and own relatively highquality compared with its competitors. Therefore, there is noreason for Samsung to destroy the image of others by spreading fakerumours through the Internet. The trust between the company andtheir customers will be deteriorated and it would be really hard toreconnect the trust between them once it is broken. In the future,Samsung should put much emphasis on its value and trust betweencustomers to bring itself back to the right track.
Public image
The insult of getting caught red-handed is probably much harderto stomach for Samsung than the fine, at a time when its publicimage has been tarnished by benchmarkrigging, the region locking debacle,and, most recently, rumours of a clampdown onunofficial accessories. Moreover, Samsung has sufferedfrom criticisms for their planned obsolescence.
Samsung like Apple have been criticized for the obsolescencethat they planned with the sole objective of making more profit byselling more models of their phones. Both of them persistentlyintroduce new models of smart phones every year. Plentyadvertisements are made in different channels to transmit theinformation of the new products to the public.
Although the changes in both outer look and inner equipment donot have a big difference when compared with the old one, manypeople are excited with the announcement of the new products andwanted to buy one once they have been launched. Price was not afactor. Since the whole society is submerged into materialism,people are judged by what they own, while the makers of Samsungsuccessfully grab the weaknesses of the consumers and persuade themto buy the latest in order to keep themselves trendy or looksfashionable.
Therefore, it creates a trend of obsolescence that people stillconsume the newest model even if the one they own is still fullyfunctioning.
Indeed, the unethical marketing practice harms not only theircustomers, but also the society. The waste that plannedobsolescence created, most likely the electrical wastes, containsmuch toxic chemical material which may badly affect the soil of theland and also last long for hundreds of years. People may bepoisoned when the wastes are not treated properly. The social costshould also be considered when making marketing decisions. Thingscan be done better by Samsung given the criticism of plannedobsolescence.
This should include having a balance struck between the productsthey introduce and the impact to the whole society.
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