Samsung Galaxy versus Apple iPhone - Essay Example

Samsung Galaxy vs. Apple Iphones Introduction Samsung Galaxy phones are manufactured by Samsung Electronics Co. Ltd was formed and incorporated in 1969 under the Korean laws.1 The company operations are divided into two distinct business units namely the Digital Media and Communications (DMC) and Devise Solutions unit. DMC unit is further divided into Consumer Electronics (CE) and Information technology and Mobile Communications (IM).2 The products produced under the CE section include digital televisions, monitors, air conditioners and refrigerators. IM unit is responsible for manufacture of various products such as smart phones, 3G phones, printers, computers and telecommunication systems. Additionally, the devise solutions section is divided into either semiconductor or LCD division. The company has grown significantly both in profitability and innovations with new products being released year in year out. As it celebrated its 40 years of operations in 2009, Samsung Electronics was ranked first among worldwide IT companies; a fete that the company had not achieved previously.3 In 2010 Fortune 500 ranking, Samsung was placed twenty second and this was a rise with ten places and became the ever best placed Korean Company. Samsung Galaxy phone is among the most recent product released by Samsung Electronics as it continues to offer its customers products that are update with changes in technology. The first Samsung Galaxy phone in the series was released in June 2009. On the other hand, Apple iPhone is produced by Apple formed in 1976 by Steven Wozniak and Steven Jobs. For a long time during its existence, Apple concentrated in manufacture of computer although in the past decade Apple stopped specializing in computers alone positioning it to compete with other players in the industry.4 For instance in 2001, Apple produced iPod and since then the company has become a major producer of music players. In 2007, Apple Company entered into the mobile phone sector with release of its Apple iPhone. Apple operates under the philosophy of “comprehensive aesthetic design” and uses unique advertising campaigns and this has enabled the company establish a strong reputation in electronics industry and retain a strong consumer base.5 This report compares and contrasts management strategies used by Samsung and Apple Inc to distribute their smart phones in an international market. Samsung Galaxy and Apple iPhone In July 2009, Samsung Electronics released its first smart phone; Samsung Galaxy, model i7500. Samsung Galaxy is a series of different models of phones manufactured to run on Android operating system (OS).6 The fact that these phones are developed to operate on Android OS allows them to run different applications giving users different functionality. The move to manufacture Galaxy phones were changes in technology and availability of Android which is an open source OS, that is, it can be accessed freely from the internet. Additionally, Samsung wanted to offer to its consumers a product which can run an array of applications. By using Samsung Galaxy phones, users are able to download materials using high internet downloading capabilities, can access libraries from their phones and a large internal storage space.7 Samsung Galaxy also offers customers high quality music and pictures given that they run various music players. Samsung Galaxy phones have a relative small dimension that therefore a user can carry it a round comfortably in the pocket.8 Following the release of the first Galaxy phone, Samsung Electronic has continued in innovating and has been releasing a new model into the series. For instance, in November 2009, i5700 was released and this was followed by the introduction of Samsung Galaxy S (i9000) in June 2010.9 Samsung Galaxy S III (GT-i9300) is latest Galaxy phone to be released into the market in May 2012. Galaxy phone are categorized in different classes defined by letters S, R, W, M and Y. Galaxy phones in the S and R classes are meant for the high end market. Class W Galaxy phones target the middle level customers while phones in M class are designed for low market end. When releasing Y class Galaxy phones, Samsung seeks to reach out to its young customers. On the other hand, Apple released its first smart phone in June, 2007 and its series of smart phone are marketed under the name of iPhone. The phone can be used as a video camera, media player and for browsing the internet. The interface with the user is achieved through a touch screen and a virtual keyboard. In contrast to Samsung Galaxy, iPhone was built on Mac OS X. Mac OS is used in computers and therefore it had to be remodeled to allow usage in mobile devices.10 Mac OS X was preferred as it offered a chance to the developers come up with a device that can perform complex functionalities including networking, multitasking, security and graphics management. The OS system used like iPhone has been experiencing change to support more applications and offer great satisfaction to customers.11 After the release of the first iPhone, Apple has released other models in the series which include iPhone 3G, iPhone 3GS, iPhone 4 and the lasted is iPhone 4S.12 These phones built the previous release including new features which makes the phones more appealing. Apple Inc decided to venture into mobile phone industry to diversify its products and therefore increase profitability. Moreover, growth in technology motivated the company to take up the challenge and started producing mobile phones.13 The uptake of Samsung Galaxy and Apple iPhone have been enhanced by changes in the lifestyle of the customers as more people have gone beyond purchasing phones for the convectional calling and text but are used for music and videos, accessing the internet and social networks.14 The strengths of Samsung Galaxy phones and iPhone are that they are aesthetically appealing, have large internal and expandable memory and are up to date with current times. The phones also give customers different functionalities and can upgrade their applications from the internet. However, purchasing of the smart phones is limited due to cost, battery life and application is limited to individuals having knowledge on technology.15 International Marketing of the Samsung Galaxy and Apple Iphones Market Segmentation Different consumers value different aspects of products which can be categorized into three groups. These groups include the price conscious customers, loyal customers and reality and quality dependent customers.16 Through marketing research, companies have become conscious of these groups and focus on them when releasing products to satisfy their needs. A market segment refers to a section of the target market sharing similar needs on a particular product and market segmentation refers to the process of subdividing market into recognizable segments based on the characteristics of the consumers.17 Market segregation is a break from mass marketing philosophy which was used previously by companies that have mass production, distribution and promotion. The advantage of market segmentation is that it allows marketers to tailor promotions to the specific needs of their customers. Segmentation enables managers to define the objectives of marketing and to effectively allocate resources. Selection of correct segmentation characteristics is important as failure to do so can lead to waste in resources and opportunities. The main characteristics used in segmentation include geography, behavior, demographics and psychographics. Samsung has used various characteristics to define its target customers and segment them into different groups. One of these characteristics includes consumer behaviors and this is known as behavioral segmentation. Behavioral segmentation refers to dividing the potential customers into classes in accordance to their usage, brand familiarity and buyers who may be influenced to purchase due to particular occasion.18 Samsung has used this criterion when segmenting its customers and defining its target customers. The target market for Samsung Galaxy is divided into different groups, for instance, primary target which include males and females aged between 23 and 44 years. Members in this group are young professionals, family formers and established professionals.19 In addition, Samsung has also has secondary targets who are girls and boys aged between 13 and 17 years. This group refers to generation Y and has passion in technology and therefore they can influence their parents to purchase Samsung Galaxy. In addition, Samsung uses physiographic characteristics of its target customers when developing Samsung Galaxy phones. As discussed earlier, phones in the Samsung Galaxy series are categorized in S, R, W, M and Y series. S-series stands for super smart while R-stands for royal-series phones. These two classes target high end consumers, that is, customers who have adequate money to spend. W-class series which stands for Wonder target middle class and are therefore sold at a standard price. M-series refers to Magical and are usually relatively inexpensive targeting low end customers.20 Lastly, Samsung markets Y-series Galaxy phone which target young users. Generally, Samsung Galaxy phones are developed targeting youths and this is defined by their behavior as they are always trying to get new features from their mobile phones. Moreover, they target professionals and to satisfy their needs, Samsung Galaxy is able to support different applications according to their needs of such as banking applications, weather and calendar.21 Geographic and demographic characteristics are also important in segmentation efforts of the Samsung Galaxy. The Australian Bureau of Statistics acknowledges that the target market is individuals aged between 20 are 40 years and mostly those living in urban areas.22 Moreover, to manage the international market Galaxy market, the market has been subdivided into regions such as the American and African regions. Moreover, Samsung has penetrated into different countries to market its Galaxy phones and compete with other companies selling smart phones. Like in the distribution of the Galaxy into the international market, Apple uses marketing segmentation as a critical component of its marketing strategies. Like Samsung, Apple has defined its target market into two; primary buyers and secondary consumers. The primary consumers are individuals in the middle to the upper market end especially the professional who require iPhone to plan their schedules and communicate with family, friends and colleagues. Moreover, the company has defined a secondary target market that comprises college and high school that require iPhone to access multiple functionalities from one device.23 Additionally, the marketing segmentation is influenced by the behavior and physiographic characteristics of the target market.24 The young professionals need to stay connected even when they are on the move and therefore iPhone satisfies their need by giving them a chance to email and instant messaging from their phones without having to carry their laptops around. To professionals working in corporate organizations, iPhone allows them to add and access data to an exchange server. To students, Apple realized that such individuals prefer to perform a myriad of tasks without having to carry many devices around and their interests are served by iPhone. Moreover, students need to remain stylish and iPhone facilitates this feeling. Geographic and demographic characteristics are also used in market segmentation by Apple in marketing of its smart phones. Geographically, Apple like Samsung concentrates in urban elites and has its presence in different countries globally to reach out to more customers. Further, the segmentation is age conscious where emphasis is laid upon the young population as they form the major segment of the population that is conscious about changes in technology.25 Organization of the Management of the International Market To effectively operate in a global market, it is critical to develop a well organized system which gives the company a chance reach out to all customers. Samsung Electronics operates under 199 subsidiaries throughout the world involved in production, sales, distribution and research. Furthermore, Samsung has opened up regional headquarters in different countries such as Korea, North America, Europe, Southeast, Southwest Asia, Latin America, Middle and Africa.26 Decentralization of its operations allows the company to serve the interests of its customers better and get closer to them to increase brand perception and loyalty. In every regional office, Samsung has sent its employees to manage sales, distribution and production. A headquarter was opened in Africa in 2009 given that economic development occurring in the continent positions it as an emerging market. Once the company set up a subsidiary in Nigeria and hired employees from Africa, they went to Korea to be trained on the organization culture and vision.27 The release of iPhone is carried out under high secrecy in contrast to Samsung Galaxy which is released amidst intense media coverage. Unlike the international distribution strategy adopted by Samsung to open up different subsidiaries in different regions, Apple does not have subsidiaries to carry out its operations but forms partnership with dealers in different countries where its products are marketed. This means that the company does not have its direct employees helping customers on issues that could arise in usage of its products.28 This creates a fundamental difference in the distribution strategy used in distribution of Samsung Galaxy versus the strategy used to distribute Apple iPhone to the global market. Strategies used in marketing Samsung Galaxy and Apple iPhone In marketing of Samsung Galaxy phones, the company uses the concept of marketing mix. Marketing mix consists of four Ps of product/service, price, place and promotion. Product has a wide range of handsets to its name as described earlier. Presently, there are more than 135 Galaxy phones in the market. Additionally, Samsung Galaxy is marketing Samsung Galaxy Tab which is marketed in different countries around the world. By producing different products within Samsung Galaxy series, the company is able to reach out to different customers with different requirement.29 Moreover, diverse products are able to serve the interests of different groups. Samsung Galaxy phones are released annually which ensure that the company keeps innovating better products for the customer to retain them. The other critical component in marketing mix is price. To retain and attract customers, price needs to remain fixed in a way that makes customers get an assurance that it is the perfect for the product. To set the price of a product, a company could use to methods; penetration and skimming. Penetration pricing refers to setting the price of a product lower than the price of commodities in the market and this leads to greater sales. On the other contrary, skimming refers to setting the price of a product higher than that of the of products from competitors makes customers perceive such a product to be of superior quality compared to competitor’s products and leads to higher sales.30 Samsung employs the two pricing strategies where it prices some of its products highly while the others are sold cheaply. This is done with an intention to wrestle customers from its main competitors Apple iPhone and HTC. Products from the competitors are priced highly and therefore by introducing a product and selling a product at a lower price, Samsung is able to deny them some of their customers. Furthermore, some products are priced based on the target market where for instance Samsung Galaxy y series targeting the youths are sold at a low price given that the group targeted is not economically stable. In some cases, Samsung Galaxy products are sold at higher price compared to those from competitors for the simple reason that most people associate expensive with quality. In addition, such products when sold expensively are able to fulfill the needs of customers who buy smart phones for snob appearance.31 The other factor of critical importance to Samsung in marketing Galaxy phones is the place factor. Place refers to a consideration made to ensure that the product is brought near the customer. Samsung fulfills this factor by ensuring that it centralizes its operations by setting regional offices in different continents. Additionally, the company has presence in most countries and this gives customers to not only access the products but to also receive support services. Promotion is the last factor in the 4ps marketing effort where the intention is usually to get consumers aware of the product. Samsung spends a considerable amount of its revenue in global promotion to enhance brand perception. The company’s allocation to advertisement is shown in the table below. Media Percentage budgetary allocation Total amount in USD Television 19 46,550,000 Out-of-Home 3 7,350,000 Magazines 6 14,700,000 Newspapers 6 14,700,000 Radio 7 17,150,000 Samsung also invests in sales promotion such as rebates which receive 5 percent of the total budgetary allocation for promotion, contests take up 4 percent which offers are allocated 9 percent.32 Given the rise of social media and effectiveness in marketing given that they facilitate interactivity Samsung has a turn to use of social sites such as Facebook to promote Galaxy phones. Moreover, the company has an interactive websites intended to promote the products. Samsung is also involved in personal selling whether it reaches out consumers and convinces them to buy them. Samsung partners with superstars and footballs club where for instance the company erects large billboards in strategic places showing Chelsea players using their products.33 Packaging is a critical aspect in marketing where consumers would want to receive products packaged in attractive manner that positions a product to be of premium quality. Samsung is alive to this requirement and the packaging used in Samsung Galaxy phones reflects excitement and is stylish to go with the status of the product. Samsung strives to ensure that the consumer fulfills delighted when handling the box.34 On the other hand, Apple uses a different approach rather than price to ensure that it attract customers once it releases a new product. Prior to the release of a new iPhone, Apple keeps its development as a secret in contrast to other companies which inform customers of what to expect. Once the phone is released, customers are anxious to test it and this leads to mass sales in the period preceding the release. In addition to creating anxiety among customers, secrecy ensures that the product under development cannot be copied by competitors. Nevertheless, Apple also relies on the marketing mix to ensure that it reaches out to its customers. The company invests many resources in time and finances to come with superior smart phones which can compete effectively with smart phones from other companies. Creative and innovative nature of the Apple iPhone makes it desirable product in the market and gives the company an edge over its competitors. Moreover, before a product is developed, Apple assesses the needs of its customers and then embarks to the development.35 When considering the price factor in its marketing mix, Apple relies on price skimming which positions its iPhone as being of high quality compared to those produced by competitors. However, use of price skimming strategy may negatively affect its sales given that they may not be able to distinguish original products from clones and therefore customers may get cheated into buying the cheap cloned phones.36 In distribution of Apple iPhone, the company uses dealers located in different parts of the world to stock their products. By bringing products closer to the customers, iPhone is able to get wide recognition and result to higher sales. The closer the products are closer to the customers the more the customer feels that they are receiving real value for their money and this leads to customer loyalty. Lastly, in contrast to Samsung Galaxy promotion campaigns which are carried in different media, Apple does not use many channels in advertising. The company concentrates on promoting its product to the high end market which forms its target. Conclusion The strategies used in distributing and marketing Samsung Galaxy series and Apple iPhone show some similarities although they also have differences. The two companies rely on behavior, demographics, physiographic and geographic characteristics to segment their target market. However, Samsung goes further to subdivide its market into high, mid and low end market. In addition, Samsung produces a specific Galaxy series targeting the young. The two companies have however segmented their target market into two distinct markets; primary and secondary customers. Primary customers comprise the young professionals and students in high school and colleges who use smart phones to accomplish myriad activities given that they support different applications. Secondary consumers are young customers aged between 13 and 17 and they influence their parents to purchase smart phones. In contrast to Samsung which has concentrated in decentralizing its operations by opening different regional offices in different countries, Apple does not have subsidiaries but works with different dealers. Decentralization gives the company a chance to get closer to the customers thereby leading to better customer to company relationship. The two companies rely on marketing mix to ensure that their smart phones get higher sales. The marketing mix encompass pricing the product highly in a strategy known as price skimming or lowly which is described as penetration. Apple in selling iPhone relies on price skimming where its products are priced highly and this is interpreted by customers as a sign of quality. The companies also carry out promotion campaigns, package the products attractive and bring them closer to the consumers through dealers. 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