Translated from Indonesian to English - www.onlinedoctranslator.

com

SAMSUNG MOBILE: MARKET SHARE

AND PROFITABILITY IN
SMARTPHONES

Marketing Management
Group B of Weekdays A

CHARISMA OKTRIASIH 042024353014

DEWANGGA YUDISTIRA 042024353003
BEATRIXS SUGI SANTOSO PUTRI 042024353015
DESYNTA RAHMAWATI GUNAWAN 042024353028
 DEC 2015 SAMSUNG

responsible for
DJ KOH developing award-
54 YEARS OLD winning innovations Update Galaxy S6 and the
mobile payments received criticism in
Head of R n D the press for the way all-new Galaxy S6 Edge
Samsung platforms
PayTM they were handled
KnoxTM security platform

Samsung's demand
estimates for products
within those product lines Results? second quarter income
of 2015 dropped 38%.
turned out to be inaccurate,
smartphones = hypercompetitive product life cycles were tight
space consumer upgrades
of devices drove a
Market share second profitability substantial portion
quarter 2015
21.4% Samsung 14%
13.9% Apple 86%
PRICE
Reason?
Samsung = perceived lack of differentiation and
commoditization of Android phones PLATFORM – IOS vs Android
Description Average Price range
Price
Iphone/IOS US$687 $449 to $749 (Apple 6 models)

Android $254 $144 to $768 (Samsung 6

models)

smartphone product category was in an early enough stage in software applications

Strategy to
its life cycle that they prioritized market share (apps),
get device upgrades,
over margins
Microsoft-Nokia professed to be less concerned about income :
services,
profitability Complementary Products
 GROWTH RATES IN SMARTPHONE OWNERSHIP AND USE

2007 2015
limited connectivity
and functionality on
top of a wireless phone

introduction of the
iPhone and other
devices

promise to
consumers—truly
mobile computing
and connectivity

MASSIVE CHANGE
7.6 billion mobile subscriptions in the world
political, economic, social, and
technological 3.4 billion smartphone subscriptions or 45% of all mobile
devices.
Competitive Landscape

Sa Ap
th m p pl
sh e o sun r o e
ar ve g ma fit ru more than a thousand other
e, ra do rk ab led
ll e l
m min t. e h the companies competed in the
ar a ig space,
ke ted h-
t en
d
 Developed Economies (Developed Countries) US, UK
modest growth in
smartphone users at the
revenue?
lower end of the market.
subsidized consumer
purchases of phones
in exchange for
contract extensions
53%
replacements and
upgrades
Company paying up to $500
Consumer 100-250
Adding 25-30 in monthly bill
Platform upgrades
Upgrade IOS/Iphone new model release/carrier
permitted

Upgrade intention 42% upgrade android new model release/carrier

permitted
2% Upgrade when new model release
44% upgrade when permitted by their carrier.
Income level more than $75,000
54% upgrade when no longer functional
55% Owned Iphone
40% Owned Android
 Developing Economies (Developing Countries)
forecast to be the overwhelmingly
major source of Leading Strategy? value-driven, the
new smartphone lower-cost Android
customers phones
Apple Yes! For the top end of the market

dominating?
$16.8 billion in revenue in China (Q2 2015) = rise 71% Q2 2014
assured
future consistent,
significant
growth?
demands,
According to wirelessth inefrg acl
alsotbru tour company
Ericsson market

2.6 billion smartphone service subscriptions in

2014
growing to 3.4 billion the following year projected a
compound annual growth rate of 10%, adding three
billion new subs over next 6 years total to 6.4 billion
subscriptions in 2021
 Competition in the Asia-Pacific Realm
Asia-Pacific)

China and India are the markets with the most growth
fast for handset

The majority of Samsung's competitors offer low-end Android

and medium-sized enterprises designed to serve emerging economies in the
Asia-Pacific region

Samsung has a phone that is positioned for the low end,

middle and high
 Competition in the Asia-Pacific Realm
Asia-Pacific)
The top three best-selling smartphone brands in China and India in the second quarter of 2015

Xiaomi (16.6%) Samsung (23%)

China Huawei (15.9%) India Micromax (17%)

Samsung Intex (11%)

(10.8%)

Mid year 2015, Xiaomi In India, Xiaomi reach

ranks second in the world for the most sale smartphone 14%
highly valued start-up after Uber, and is at the end of 2015
the best-selling smartphone brand in
China.
Apple win platform-
switching battle with less than 4% of
Apple customers switching to another
platform, whereas Android loses 22%
and Windows loses 30%

Apple users upgrade their phones more

often than other platform users, providing
Apple with an additional source of sales.

Research market by Erricson

reveals that “switching” is much
lower for high-end phones
regardless of platform
 Operating System

One of the main problems Samsung is facing is operating

system.

Samsung has a phone with the Windows operating system, but still in
dominance with the Android system, where Android is the leading
operating system in > 80% of the smartphone world.

The addition of the Google brand is likely to provide value

towards Samsung handset customers, this makes it more difficult for
Samsung to differentiate itself from non-Apple competitors.
 Operating System

According to Alex Duncan, National Director of Sales for Samsung in North America, that
Samsung android phones have a significant difference with other android phones, namely
with the Knox security platform. However, some consumers are not aware of it.

John Jackson, research vice president of mobile and connected platforms

Industry research firm IDC added that Samsung's customization of the Android OS may only
be recognized by customers with higher engagement, such as businesses and consumers in
the innovator segment. Consumers with lower engagement tend to view all Android
operating systems as equal.
According to John Jackson too, Google Android has an app ecosystem, brands, and layers
services that provide real value to customers. Also, Samsung had to move away from
Android to be able to differentiate itself from the competition but this would cost a lot of
time and money.
 n money

Use smartphone for

voice calls show a flat trend, but there
is an increase in mobile data usage for
emailing, browsing and streaming.

Service applications that can be carried

out by smartphones such as starting a
car, managing household appliances, etc.
can be a point of differentiation for
smartphones.
 Mobile Applications and Services

The difference between Samsung and Apple in applications and services is that Samsung focuses
on products, while Apple focuses on platforms.
Each Apple device will strengthen the demand for other Apple products. Apple OS is at the
heart, so Apple products can connect seamlessly, which Android products can't do yet.

Annie, an App industry analyst predicts that global smartphone consumption will
increased from 2015 of $41 billion to +/- $101 billion in 2020.
Meanwhile, the use of paid, free, and e-commerce applications will grow
from 110 billion in 2015 to 284 billion in 2020.
From 2015 to 2020, mobile payments are projected to grow by 43%, or
to reach $4 trillion by 2020. Apple receives 0.15% of purchases made through ApplePay™,
while Samsung opts to cancel those merchant fees and opt for other revenue alternatives
such as advertising.
In the second quarter of 2015, Apple posted $5 billion in revenue from cellular services, while
Samsung did not release specific revenue from cellular services.
 Samsung Mobile In Porter's Five
Forces

Understanding and coping with competition requires strategy

in gaining an advantage over industry competitors.

Requires to include four related competitive forces customers, suppliers,

potential entrants, and substitute products which refers to Porter's Five Forces
.

Through Porter's Five Forces will be able to understand industry

competition and influence in serving customers which will lead to
profitability
 The Threat of New Entrants
New entrants to an industry can bring
new potential and options to increase market share
This can limit the earning capacity and
Profitability for Samsung's mobile market share posing new high
demand threat
Samsung must maintain prices or increase funding or investment to
prevent new competition.
Samsung must also be able to invest in product development to ensure
that it continues to be competitively differentiated from other
competitors at all times

In addition, Samsung also needs to increase the ability to invest in

marketing to strengthen customer loyalty
 The Threat of Substitute Products or
Services
The threat of high substitution will cause
low profitability because it can limit industry profits to place pricing
for fear of being substituted by other products

It also affects the growth potential of the industry

overall which will also reduce profitability margins

Samsung needs to integrate strategic marketing in forming emotional

relationships with consumers and strengthening consumer loyalty

Samsung must be able to focus on delivering consistently high quality while

maintaining strong customer relationships
 Bargaining Power of Suppliers
Strong suppliers have more power
to obtain considerable value for themselves by demanding high
prices, limiting the quality and quantity of products or services, or by
shifting costs to industry players.

Suppliers have the power in terms of pricing

raw materials and inputs used for business conditions

Samsung must be careful in investing in production facilities that will be

controlled by factories to maintain consistency in the best quality that
consumers need
 Bargaining Power of Buyers
Buyers who have strong bargaining power will
affect the profitability of suppliers operating in the market

It provides unfavorable conditions

for suppliers both in terms of price, quality, and service.
Thus, choosing a client is often important for
organizations to avoid situations that rely heavily on buyers.

Samsung needs to use economies of scale to manage production costs,

because when Samsung offers products at prices that are not too high
to buyers, Samsung will again be able to attract many buyers for its
products and can break high bargaining power.
 Rivalry among Existing Competitors
Competition among companies is known to help
in identifying industry advantages as firms compete to maintain
their strength in the industry.

Competition on Smartphones is based on diversity,

developments in the sector, and related barriers to market entry.

The competitive nature of the industry can also be caused by costs

high fixed prices and high bargaining power of buyers, which can
also lead to lower prices from producers
Samsung must be able to properly build a strong and loyal customer
base by focusing on quality and marketing strategy

Samsung may need to add a differentiating factor to its products to

shield it from influence
SAMSUNG Strategy
According to David
Taylor
A strong brand, Samsung has launched smartphones from 2009
to present
Distribution of newly developed areas, Samsung penetrated the whole
world from Asia Pacific, Europe, America, Africa but the best-selling are
in Asia and China.
New product innovation. Every year, Samsung always produces new
products, for example, the Samsung S5 and then launches it

S5 - S6
Leader Strategy
Market

• The market leader strategy of 40% • 20% are controlled by market follower
market share is controlled by the leaders,
products, namely Nokia, Micromax, Intex
namely Samsung and Apple

• 30% is controlled by market challengers,

namely Huawei, Xiaomi and Lenovo
Marketing Defense
- Position Defense: make the desired product
consumer

Flank Defense: maintain existing products

- Preemptive Defense: attack other products directly
guerrilla
- Counteroefensive Defense: counterattack the opponent
product

- Mobile Defense: market leader expands territory

and market diversification
- Contraction Defense: product subsidies. Weak products are
replaced with strong products by one brand
 Special Attack Strategy According to Theodore
Levvit

- Cloner : specify the name, packaging, and

variations. Using cloning technology is a
cheap clone.
Example: Xiaomi Smartphone
- Imitators: copy some of the market
leaders and innovate their products

- Adapter : take product from leader

then
 Product Life-Cycle Marketing Strategy
- Product life limited
- Product sales of different stages
(challenges, opportunities, problems)
- Profit up and down
- Products need marketing, manufacturing
purchases