MARKETING PLAN OF SAMSUNG SMARTPHONE

Contents
Introduction...........................................................................................................................................2
Current Position of Samsung and the Market Outlook..........................................................................2
Planning Aims and Strategic Focus.......................................................................................................4
Marketing Mix Elements (4Ps) Strategies.............................................................................................5
a. Product..........................................................................................................................................5
b. Price...............................................................................................................................................6
c. Place..............................................................................................................................................6
d. Promotion......................................................................................................................................7
Performance Metrics.............................................................................................................................8
List of References..................................................................................................................................9

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Introduction
The smartphone industry consists of companies which are either categorised as manufacturers
or sellers of smartphone to the customers. The smartphone industry is also characterised with
large scale and rapid market pace. Innovation also serves as a prominent success factor in the
industry, while product offerings are constantly changing and updated with the technological
changes in the industry and that they are relatively easy to be imitated, causing the products’
life cycle to become rather short. Furthermore, this industry is also characterised with
aggressive pricing between competitors and highly price-sensitive customers.

This market characteristic had implied a continuous problem for sellers and manufacturers,
especially in the short product lifecycles, decreasing market base from new user segments,
substantial imitations and substitutions. In this sense, the marketing planning should also
accounts for strong competition and focused on the establishment of strong brand loyalty
while maintaining profitability of the company.

Current Position of Samsung and the Market Outlook

Oremus (2013) reported that in 2013, Samsung had gained constant improvements in terms of
market shares and poised as the global market leader of the smartphone industry with the
overall market share of 33%. However, as implied by Kenney and Pon (2011), there are
rising competitions in the market, especially with the rises of minor smartphone
manufacturers, especially low cost manufacturers in China which captures a large percentage
of the market share of Samsung.

However, being a prominent smartphone brand with adoption rate of more than 30% in the
global market could be utilised as a strategic advantage for Samsung; especially considering
that widespread adoptions in the global market could strengthen brand value (Kapferer,
2012).

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 Source: Oremus (2013)

Most recent report released by Lomas (2014) highlighted that in the first quarter of 2014;
both Apple and Samsung had been losing their market shares. However, the global
smartphone shipments indicate growth by 33%; implying that there are increasing market size
and that the loss of market shares may imply increasing competitiveness of the industry.

In general, the market can be segmented into two general categories: high-end customers and
low-end customers. The former represents limited customer classes with substantial
purchasing power and seeking prestige and premiums from ownerships of particular branded
products (Cravens and Guilding, 2000); the latter class represents substantial amount of
customers with lower purchasing power and having stronger emphases on the utilisation
value of the products (Mosley, 2007).

Samsung’s smartphones are actually developed for both high-end and low-end market
segments and it has equal attention to target both segments. However, such orientations
actually create additional pressures for Samsung to maintain competitiveness in both
segments. For instance, their smartphones for higher-end customer segments are threatened
by Apple’s premium positioning in the market, whereas their low-end customer segments are
also being attracted by low-cost Chinese brands, particularly by Huawei or ZTE.

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In the high-end, premium smartphone user segments, Apple continues to maintain its strong
presence with its premium pricing and exclusive promotions, which bestowed it with more
favourable responses from rich customer segments. This sole positioning however, indicates
that there will be less pressures on the entry-level market segments and indicating that Apple
may have been abstained itself in fast-growing emerging markets in South America and Asia
where the customers possess limited amount of budgets in acquiring smartphones; yet are
very eager to own these products (Gerogiannis et al., 2012). These segments could become a
ripe target market for Samsung, which is also characterised with high-quality smartphones
yet cheaper in comparison to Apple.

At the same time, Samsung’s planning should also accounts for the presence of low-cost
smartphone manufacturers that targets lower-end segments, particularly Huawei, Lenovo or
other inexpensive Chinese smartphone brands which sell their smartphones at extremely low
prices. However, these competitors’ product qualities are relatively low (Sonobe et al., 2004),
this actually represents substantial weakness, as the low-end customers actually prioritise the
utilisation value of the products aside from the low prices. This could actually be exploited by
Samsung since Samsung possess substantial market presence and strong brand reputations on
the quality in the customers’ perspectives.

Planning Aims and Strategic Focus

The main aim and objective of this planning is to ascertain the position of Samsung as the top
smartphone company. In general, this could be achieved by improving the market coverage
between high-end smartphone users and refocusing marketing attentions to cover most low-
end customers’ needs and capitalising from their rapid demands.

The alteration of focus to the low-end customers is also intended for Samsung to explore the
potentials of the fast-growing markets in the developing countries. Basically, this could allow
the company to gain more widespread market adoptions which would in turn, improving its
overall brand value and positioning to capitalise from its brand popularity. We believe that to
achieve such strategy, market skimming pricing approach should be adopted as the unique
selling proposition. Under this pricing strategy, Samsung smartphones should be priced using
premium prices during the initial launches and gradually lowered over time as the products
are being phased out by new innovations (Kotler, 1965). The initial offers using premium

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pricing could are intended to attract the premium smartphone users, whereas the reduced
price would later be used to attract low-end customer segments afterwards.
We consequently argue that this pricing mechanism would not reduce the premium prestige
of the product for the high-end segments, since the products are regularly being ‘phased out’
by new technologies and innovations. Hence by the time that the models had been phased
outs, Samsung could have applied the premium pricing on the newer product models.

At the same time, the lingering, favourable brand value and strong reputation of Samsung’s
high qualities could be used to establish greater customer awareness for the low-end
customers and encouraging them to purchase Samsung’s products instead of the Chinese
competitors’ models, strengthening its competitive positions against Chinese low-costs
competitors in the process.

Marketing Mix Elements (4Ps) Strategies

a. Product
Samsung’s smartphones are generally categorised as communication devices; with the
most prominent brand image driver being the Samsung Note Series or Samsung Galaxy
Series. This product type still experiences substantial challenges against conventional
communication devices such as the cheaper mobile phones. Within its own class,
Samsung’s smartphones might also experiences challenges from low-cost competitors,
particularly from the Chinese mobile phone manufacturers.

However, Samsung may possess competitive advantage in terms of product trusts from its
customers, especially due to the favourable performances of Samsung’s products in the
market, as compared to its low-cost competitors and the widespread adoption in the
market. Additionally, Samsung’s products possess favourable qualities and with it,
Samsung’s smartphones had also attained the role as customers’ status symbol. Another
favourable feature of Samsung would be its quick service for its products, making the
product portfolio becomes one of the core competitive advantage points for Samsung.
Serving large markets also indicates that Samsung should also improve its supply chain by
inducing more service centres and more outlets than before to sustain their market
coverages.

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b. Price
Since Samsung possess different product orientations, there are various pricing strategies
which had been adopted by the company. However, for its smartphone categories,
Samsung had associated its pricing proposition with skimming pricing strategy. This is
based on the consideration that Samsung’s smartphones possess considerable level of
quality and it has served as market leader in both of its product features and user services
available. In fact, this pricing method had been applied as Samsung launched its Samsung
Note 3+ Gear, where the company attempts to capitalise on the substantial customers’
attention to the product. In this sense, skimming strategy would be useful to establish an
image of high value to the customers before the competitors offering similar product
(Besanko and Winston, 1990). It also bestows more strategic flexibilities as it is easy for
Samsung to reduce their price for any outdated Smartphone models or to tackle the
competitive pressure from its low-cost competitors afterwards.

c. Place
Samsung possesses substantial presences in diverse market channels. Particularly
however, its smarphone products are marketed through three general segments:
distributors, modern retailers and sales/service dealers.
First of all, the distribution network employed by Samsung represents a pattern of which a
single distributor is appointed to serve the market in a particular territory. Most often these
distributors are investors who possess substantial amount of investments in Samsung, or
those which are bounded to distribution contract with Samsung. These distributors are
responsible in distributing various Samsung smartphone products and its spareparts or
materials to retailers in the region they serve.
Secondly, the retailers are large public retailer or modern electronic retail chain, which
sells Samsung’s products to improve their overall merchandise compositions, such as
Hypermarkets. Most importantly however, to serve the objectives of increasing market
coverage, Samsung should reconfigure its product coverage to ensure that its products are
also available through small businesses which act as sales and service dealers to maintain
Samsung’s product services while also involved in corporate sales. Additionally, these
dealers are also permitted to open their own, exclusive Samsung showrooms to improve
the smartphones’ coverage in the market. Such distribution and business model had been
contributing in saturating the overall market with Samsung’s products while maintain the
easiness of control in terms of supply chain managements (Yang et al., 2007).

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d. Promotion
The promotional aspect of Samsung smartphone represents a dual mechanism; in which it
utilises various forms of promotions, but it gears its product and customer coverage in
equal manners. In this sense, while Samsung believes that it is necessary to pull
customers’ awareness about the product through advertisements; it also employed
additional strategies to push the products to be purchased by their customers through sales
promotions.
Such inclinations can be readily exhibited from various marketing approaches it utilises all
over the year, which accounts not only festivity seasons, but also to boost sales during
non-festive seasons. For instance, while Samsung boosts its sales through various
customers’ promotions in festive seasons, it also provides various offers and privileges to
its trading partners to enhance their motivations in selling Samsung’s products beyond the
company’s competitors. In this sense, Samsung is able to maintain steady rise of its
branding proposition in all market situations.

Samsung could also exploit the possibilities of attaining cheaper promotions by employing
promotions and communicating their promotions directly with their customers through
their smartapps. For instance, offering free, complementary apps for Samsung smartphone
owners, or developing exclusive apps only available for Samsung smartphones. The main
aim of this promotion should be geared on the establishment of the brand value of the
customers instead of purchasing sales of a particular smartphone model. This is based on
the orientation that the product life-cycles are relatively short, hence substantial
promotional focus may imply that the company would constantly be required to procure
substantial amount of advertising expenses, in line with constant developments of the new
smartphone models in the market. This could help the company in retaining its current
customers to maintain their market coverage, while providing additional attractions to
motivate new customers to select their products.

We believe that this initiative could help Samsung to integrate its products and developing
customers-products ecosystems; exclusively available only to Samsung. The presence of
brand ecosystem would become the strategic marketing conversion tool; which is
employed to increase customers’ switching costs and provide reasoning as of why new

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 customers should select Samsung in comparison to its competitors (McAlexander et al.,
2002).

Performance Metrics
Action Plan Measurement Indicators Responsible Entities Metric’s
Update
Periods
- Applications of - Contribution margin - Marketing Managers Annually
Skimming Price per new unit should - Outlet Managers
be set between 25%- - Trading Partners
35%
- Contribution margin
of an old model unit
should be set between
10%-15%
- Establishments of - The amount of new - Marketing/Sales Monthly
New outlets and business partners Managers
SME coverage as should be at least 20 - Finance Departments
business partners units per annum in a
particular country,
with increasing
market share by 15%
respectively.
- Development of - There should be at - IT Teams Monthly
exclusive/free apps least 20 new apps - Marketing/Promotion
for Samsung developed per annum Managers
Smartphone with download rate
coverage of 85%

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List of References
Besanko, D., & Winston, W. L. (1990). Optimal price skimming by a monopolist facing
rational consumers. Management Science, 36(5).

Cravens, K. S., & Guilding, C. (2000). Measuring customer focus: an examination of the
relationship between market orientation and brand valuation. Journal of Strategic
Marketing, 8(1).

Gerogiannis, V. C., Papadopoulou, S., & Papageorgiou, E. I. (2012). Identifying Factors of

Customer Satisfaction from Smartphones: A Fuzzy Cognitive Map Approach.

Kapferer, J. N. (2012). The new strategic brand management: Advanced insights and strategic
thinking. Kogan Page Publishers.

Kenney, M., & Pon, B. (2011). Structuring the smartphone industry: is the mobile internet OS
platform the key? Journal of Industry, Competition and Trade, 11(3).

Kotler, P. (1965). Competitive strategies for new product marketing over the life cycle.
Management Science, 12(4).

Lomas, N. (2014). [Online]. Smartphone Market Leaders, Samsung And Apple, Both Lost
Share In Q1, Says Analyst. Available at: http://techcrunch.com/2014/04/29/strategy-
analytics-q1/ [Accessed November 24th, 2014].

McAlexander, J. H., Schouten, J. W., & Koenig, H. F. (2002). Building brand community.
Journal of marketing, 66(1).

Mosley, R. W. (2007). Customer experience, organisational culture and the employer brand.
Journal of Brand Management, 15(2).

Oremus, W. (2013). [Online]. Samsung Is Crushing Apple in Smartphone Sales. Available at:
http://www.slate.com/blogs/future_tense/2013/04/26/samsung_smartphone_sales_rise_t
o_double_apple_s_market_share.html. [Accessed November 23rd, 2014].

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Sonobe, T., Hu, D., & Otsuka, K. (2004). From inferior to superior products: an inquiry into
the Wenzhou model of industrial development in China. Journal of Comparative
Economics, 32(3).

Yang, H. M., Choi, B. S., Park, H. J., Suh, M. S., & Chae, B. K. (2007). Supply chain
management six sigma: a management innovation methodology at the Samsung Group.
Supply Chain Management: An International Journal, 12(2).

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