GSBS6041 Global Marketing Strategy and Planning
This report consists of a marketing plan on Samsung smartphones. There are different objectives discussed like sales, pricing and product objectives. The target market chosen for this particular marketing plan is United States. Below we have discussed about the product based on the market of United States.
Below it is discussed how Samsung has no specific target market to concentrate as the prices Samsung smartphones drop with the introduction of new models and how a loyal customer base is not maintained (Reuters, 2014).
Also it is discussed how Samsung can improve in some of the areas of the product in order to fulfil the demands of the consumer, battery life is the best example discussed below. And therefore by offering something that other competitors have not introduced first, Samsung can capture a new set of target market (Forbes, 2013).
Therefore it is concluded that though Samsung is already an established brand, it needs to sustain its success and market share as it has many strong competitors like Apple. This marketing plan has helped understanding where the company can make the weakness of other companies as its opportunity.
The purpose of the report is to have a marketing plan of Samsung for a target market country which is United States. The report covers which market segmentations become the target consumers for Samsung smartphones in United States. Also a business tool is used in order to understand the product or brand’s offering in the particular market. With the help of different data collected from online journals and newspaper articles, Samsung’s smartphone market position is verified in U.S. market. Also various competitive advantages of Samsung smartphones are discussed below.
2. Company Background
Samsung Phone Company entered into the market a decade ago where it developed the ‘lightest’ mobile phone in its era in 1993. The same model SCH-800 is still available on CDMA networks. Later Samsung came up with smartphones and a phone combined with music player towards the end of 20th century. Till the date today, Samsung has dedicated to the 3G industry and managed to dominate the market share in big markets like United States (Samsung, 2014b).
3. Marketing Goals and Objectives
The marketing goals and objectives set for the company are mentioned below and they are segregated in terms of sales objectives, pricing objectives and product objectives.
3.1 Sales Objectives
- From the figure above we understand that Samsung has consistence growth in its sales and continues to appreciate its sales by a considerable margin. In Samsung Electronics products, Samsung mobile phones rank 1st in both sales and marketing. Samsung has its maximum share of sales in United States (Samsung, 2012a).
- But when the sales figure of Samsung is compared to its competitor Apple in United States we see that Apple beats the sales figures of Samsung with a higher difference in the numbers (Patents, 2012). This can be explained well with the help of the figure below
- The figure above explains us the status of Samsung and Apple smartphone sales in United States and we can see that Apple had a lead over Samsung in the U.S. smartphone market in the first quarter and therefore Samsung needs to concentrate more on its marketing strategies applied in United States in order to boost their sales figure.
3.2 Pricing objectives
As smartphone action shifts to the mass market, leading mobile companies like Samsung Electronics Co Ltd and Apple Inc are under pressure to make their high end models at an affordable price in order to revive sales. And that may spell trouble for already-softening margins. According to the analyst Clement Teo (2014) analyst at Forrester Research in Singapore Apple didn’t drop its price on iPhones even with its new models which helped Apple maintain a margin premium and attract a certain loyal user base. Therefore Samsung should make sure of its pricing objectives in order to maintain specific target markets in United States (Reuters, 2014).
This pricing strategy will help the company have a specific target market and also the consumers won’t doubt the quality of the products just because the price has been dropped.
- Looking at the wants and needs of the consumers not only in United States but also all over the world, battery life is one of the aspects Samsung can focus on and give a better service in this part. As there is a combination of multiple radios inside the smartphones like GSM, GPRS, EDGE, GPS, Wi-Fi, Bluetooth which are all tugged to the battery life, consumers are addicted to their usage and therefore improved battery life is demanded.(Forbes, 2013).
- Also Samsung can have a better security system in its phone like Apple has come up with fingerprint security system as password can be shared or hacked (Forbes, 2013).
4. Consumer analysis
- The Brand Keys survey is a leading-indicator of customer loyalty to specific brands and it has highlighted Samsung as the number one mobile phone manufacturer in terms of customer loyalty. It was ranked number one as the customers felt Samsung was the best as it was able to meet or exceed their expectations. Samsung has been winning this award for three consecutive years (America, 2014).
- After sales is another important factor that makes a difference in terms of consumer satisfaction and Samsung has won top awards in seven categories out of nine, which includes after-sales service and best customer service provider (Samsung, 2012b).
- This is a plus point of Samsung as it would not face any issues and have a set of brand loyal customers in a market like United States.
5. Target market
- Companies can increase their profitability increasingly by using market segmentation in today’s multi-dimensional market. This segmentation of market helps companies to target the right consumers according to the products they offer and the needs of the consumers (Lin, 2002).
- Samsung targets a broader customer base with the help of its new phones and deals. Different target markets in United States are mentioned below.
- Samsung Sound Check, a proprietary concert series featured one-night events in around five cities where it presented its status of the inaugural Rock star Energy Drink Get A Life Tour, which visited 25 college campuses and it was also headlined by alt-rockers The used. It also used another two events to promote the Propel, which is an $80 phone launched in October. The model had a sliding keyboard to make texting convenient and in this way this affordable price was targeted at the consumers in their twenties (America, 2008).
- Samsung has been targeting a range of vertical industries which includes retail, hospitality, healthcare, education and small/medium businesses. Samsung has spent a huge amount on its advertisement and spent around $401 million in its advertisement for devices to its consumers in US in 2011 beating Apples budget of $333 million (Russel, 2013).
- This category of business consumers forms a major population in United Sates and therefore is a valuable target market (Russel, 2013).
- Samsung handset users include both males and females with the age between 45-54 years old who are medium to highly educated consumers having full time job. Most of them have above average income level (Hamka, 2012).
- This is a good target market for Samsung as this market would be ready to explore new devices when they are new in the market.
1. Social class
- United States is exposed to values like individualism, freedom, youthfulness, and directness. These cultural factors are influenced from subculture and social class. Therefore in United States about one per cent of the population falls under the higher class. This is the most valuable target market for Samsung especially with its high end models (Hamka, 2012).
- The brand personality of Samsung in United States is ruggedness which is seen as outdoorsy and tough. This is due to Samsung offering new line of advanced SD and micro SD cards that are ideal for digital imaging and mobile devices. Samsung has designed both lines of memory cards which are waterproof, shockproof, magnet proof and allows them to withstand some of the harshest conditions. In this way Samsung attracts a lot of consumers who have attributes of this personality and relate themselves to it (DPReview, 2012).
- In this aspect, we see how the American consumers reacted in a positive way to the smartphones Samsung offered. If you see the customer ratings on the official website of Samsung you see most the phones are rated 4.7 out of 5, which is a positive feedback on an average by the consumers of United States (Samsung, 2014a).
- It has been observed that more than 40% of rural wireless subscribers either are using wireless service exclusively or they plan to eliminate their wireline service within the next coming year. And at least half of the households in rural America will rely completely on wireless services for voice and data (Berry, 2013)
- Also on the other hand, in many other aspects, the rural markets in America are trying to copy European and developing markets around the world in case of wireless usage. This becomes a good target market for Samsung to capture in the coming years as it has opportunity to excel in the rural parts of United States (Berry, 2013).
- There was a competitive wireless analysis done in North America and it showed that the buying power of the consumers was more than $10 billion which is a significant opportunity for Samsung (Berry, 2013).
- Samsung should take into consideration that it is time for device manufacturers and retailers to study and realise the breath of the competitive wireless market. Also understand the needs and behaviour of consumers outside these major markets (Berry, 2013).
6. Marketing strategy
·Smartphone market trend in United States
Looking at the current smartphone market trend in United States we see that 21% of American wireless subscribers are using a smartphone in the fourth quarter of 2009 compared to 19% in the third quarter of 2009 and it was 14% in the end of 2008. Therefore it shows how the number of users increases considerably in a years’ time in United States. When a survey was done it was seen that the percentage of purchases for smartphones had increased by 29% in the U.S. (Entner, 2010).
By seeing the picture above we see fall in demand for feature phones in the U.S. market and the increase in demand for smartphones in the U.S. market. Also we see that there was never a fall in the demand for smartphone, it has been increasing considerably every year. Therefore this is a good sign and an opportunity for Samsung smartphones expands its business in United States.
· Analysing the Competition
- From the figure above we understand the status of competition between different smartphone companies in United States. And here we see that Samsung has continued to tighten its grip on the smartphone market and now from being the third-largest in installed based having 60.1 million users, it has been the leader where it has over 234 million users (Arthur, 2012).
- The next closest competition to Samsung is LG where it has 44.9 million users followed by Apple having about 35.1 million users (Arthur, 2012).
- Although Samsung is dominating the smartphone market, it is important for the company to sustain its sales and pay more attention in its promotional activities in order to appreciate the sales numbers which can be explained in the marketing mix strategies.
· Understand the consumer demands for smartphones in United States
- The most significant part of smartphones is its software applications or “apps” in today’s market. These “apps” constitute a complementary product to the smartphone with cross-elasticity of demand and it is a source of revenue for the company (Aviram, 2010).
- When observed, the U.S. market demands features like Wi-Fi, touchscreen functionality and location based services and the software plays an important role in mobile handset industry (Shein, 2010).
- This demand for smartphone is fuelled by a consumer desire for devices that support functions like camera/video support, dual sim card and integrated GPS (Shein, 2010).
- All the above demands are fulfilled by the phones Samsung offers and therefore U.S. market looks like a favourable market for Samsung.
· Research and development
- According to the report, it is observed that Samsung invests in both of the research and development areas like that are traditional and new areas for its potential growth (Samsung, 2013).
- In the United States, Samsung has managed to expand its software research and development centre in California Silicon Valley. This centre has the capacity to accommodate around 1000 world-class experts (Samsung, 2013).
- Therefore looking at the above activities we can conclude that Samsung is capable of and is trying its best to come up with innovative products for a market like United States.
· Competitors weakness becomes an opportunity for Samsung
1. Apple’s biggest weakness and Samsung’s biggest opportunity is women
- According to Mark Ryan (2013) women are slightly less eager about buying a new iPhone than men. About 64% of the women said they wanted to upgrade their phones to Samsung as they are comfortable with the operating system Samsung offers. On a scale from zero to ten , men rated iOS 7 an average rating of 8.24 whereas women rated the operating system at 7.22 (Johnson, 2013).
2. Sometimes Bigger is Better and One Size Does Not Fit All
Samsung produces all size phones, gadgets smaller, of Apple’s size and bigger than Apple smartphone. Samsung has gained more market share with the introduction of big screen phones like Galaxy Note 2. Also in price sensitive markets where consumers have been sold on the bigger screen of the iPad actually need a phone and cannot afford to have 2 wireless devices. Therefore Apple’s weakness of having standard size for its smartphone becomes an opportunity for Samsung to capture more consumers (Tokerud, 2013).
7. Marketing Mix Strategies
The marketing mix is a business tool which is used in marketing by marketers. And it is often crucial when determining a product or brand’s offer and it is associated with price, product, promotion, place, people, process and physical evidence (Ratzek, 2011).
- Samsung has featured a fictional design using its SAFE technology for business. This is an added security feature in its product which has helped Samsung stand out from its competitors (Russel, 2013).
- Samsung has introduced new camera features in its model S5 smartphone where there is a particular feature that allows you to defocus the area behind your subject (Davidson, 2014).
- Ice Cream Sandwich is the latest version of the Android platform for phones which delivers far better Web browsing speed (Segan, 2012).
- Samsung has begun to offer a free radio-streaming service in the U.S. today in order to attract and retain consumers for its Galaxy-branded smartphones (Edwards, 2014).
- Samsung achieved a 100% Good-Eco Product development rate and about 40% improvement in energy efficiency rate. Also in 2011, the Good Eco-Product and Good Eco-Device rates were increased to 97% and 85% respectively which had exceeded the 2011 targets. There was also an improvement in product efficiency by 25.6% in 2011 when it was compared to the level in 2008 which contributed to a reduction in GHG emissions (Samsung, 2012b).
- The points above show that the product has favourable chances to be successful as the consumers in United States are tech savvy and therefore these advanced features will attract a huge amount of consumers.
- The image above gives clear idea about the prices of smartphones in United States by comparing them by its competitors. And we get to know that though Samsung offers exceptionally extra ordinary features compared to its competitors, it still offers high end Samsung galaxy phones at a price which is less compared to that of Apple (Shanklin, 2013).
- Elasticity- Samsung products are elastic as there are no major differences in the price of the high end Samsung smartphones when compared to its competitors. Therefore it is a plus point for Samsung to have elastic products as it wouldn’t disturb the other competitors and enter into price war.
- Samsung also is in collaboration with many calling card companies, which helps the consumers to buy phones with the help of prepaid or post pay plans which makes it economic for the consumers to buy the phone and calling pan through monthly instalments (Daily, 2013).
- After a survey it was observed that the consumers 47% of the consumers in United States consider online shopping their favourite destination to shop. Therefore Samsung can improvise and work on its website to attract these consumers (Holliday, 2013).
- Over the past decade, U.S. E- commerce has increased by 18% a year and it accounts for 8% of total retail sales. Therefore in-stores are also another good option for Samsung to sell its product as the consumers in U.S do continue to shop in retail outlets though the fashion of online shopping has increased (MacKenzie, Meyer, & Noble, 2013).
- High Skimming Strategy- Samsung spent around $142 million on its promotional strategies which shows that Samsung is a company which spends more on its promotional strategies and is therefore categorized under High Skimming Strategy (Morrison, 2012).
- Samsung spent an estimated $20 million on ads to run during breaks in the Academy awards which was broadcasted in February 2014. This shows how Samsung has been consistent in its promotional activities and is the reason for having maximum market share in smartphone market (Vranica, 2014).
- Samsung also applies another strategy with the help of promotion where it offers $100 Gift Card Deals with smartphones. In this way Samsung was successful in promoting its smartphones by attracting a huge amount of consumers (Lugmayr, 2012).
8. Market Positioning
- Samsung maintained its leadership position by shipping more units than Apple, Huawei, Lenovo and LG. Samsung’s models received lion’s share of attention during the third quarter of 2013. There were more carriers adding the Galaxy S4 and a continued demand for Galaxy S3 and introduction of the Galaxy Note 3. Despite the popularity of these models, the company’s long line of mass-market smartphones helped fuel volumes to reach a new record level (IDC, 2013).
- According to the figure above, we get the data that Samsung has a maximum share in the smartphone market of United States. It estimates around 38% of U.S sales followed by Apple which has around 34% percent of the market. Therefore we get an idea of Samsung’s market position in United States smartphone market (Mick, 2013).
9. Competitive Advantage
- Though Apple is the world’s most profitable smartphone maker, there is one area where its top rival Samsung has a huge edge over Apple and other smartphone makers. A research firm IHS iSuppli issued its compulsory pre-launch estimate for the Galaxy S 4’s bill of materials. And according to that estimate, it was observed that the Galaxy S 4 costs Samsung about $236 per unit excluding its manufacturing costs. That figure is quite high compared to the estimated $207 Apple pays for each iPhone 5, but after a key observation made by Forbes Parmy Olson, it was seen that more than half of the cost of each Galaxy S 4 goes back into Samsung’s pocket (Epstein, 2013).
- Besides dollars and cents, this also gives Samsung a level of control over its devices that no other vendor can compete with (Epstein, 2013).
- Also Samsung offers a range of smartphones which are priced below $100 in places like China, India and Indonesia. Therefore Apple’s share of world-wide sales dropped to 14% in the second quarter from 19% the same time a year prior. And in the same period Samsung’s share rose from 30% to 32% according to market researcher firm Gartner(2013) (Worstall, 2013).
- Samsung is so much more than just a smartphone-maker. It is a multinational company, a manufacturer and the world’s largest chip-maker. There are many components in the smartphones which give a cost advantage and allows Samsung smartphones to be much more flexible in terms of what it produces and when. According to Christopher Mims (2013) , the company has a huge advantage in its distribution. The company’s new Galaxy S4 was available on 36% per cent more carriers and it was available in 55 countries more than the iPhone 5 (Nisen, 2013).
Therefore from all the data provided above we can conclude that Samsung Smartphone Company is leading the position in terms of its product features, services after sales and also innovation in its new designs. The plan made above gives us an idea the areas where Samsung can take advantage of the situation of its competitors and continue to hold the same position in the market. From the different data collected, we can conclude that Samsung is in tough competition with it competitor Apple by just a few units in having a market share in United States, therefore there are areas highlighted where Samsung can improvise and it has been seen that Samsung has managed to meet most of the consumer needs from different market segmentation.
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