Marketing Strategies of Samsung Electronics and Apple Incorporated - Essay Example

? Marketing Strategies of Samsung Electronics and Apple Incorporated Pinglongyu Chem 30106056 BUNKMT1501 Executive Summary Certainly, the electronicsindustry is a competitive one with the main companies operating in this industries being multinationals. Apple Inc. and Samsung Electronics are some of the major players with subsidiaries across the globe owing to their huge customer base. Apple Inc. mainly manufactures computers, mp3 players, and smartphones while Samsung Electronics is involves in the manufacture, distribution, and sale of a wide range of products including televisions, digital cameras, smartphones, audio and kitchen appliances. Due to the heightened competition, both Samsung Electronics and Apple Inc. have embarked in strategic marketing operations over the past five years in a bid to woo more customers. They have done this through the consideration of certain aspects of strategic marketing that include market segmentation into various unique products such as the smartphone for Samsung and the iPad for Apple. In this case, the companies consider special target markets for their products by looking at both the micro-environmental and macro-environmental aspects of their markets. The findings show that through strategic marketing approaches that include positioning and targeting strategies, the two companies have been able to stay afloat in the competitive market of electronics industry. Table of Contents Executive Summary 2 Industry background 4 Market trends 5 Market Structure 6 Company background 7 Macro-environmental forces 8 Political factors 9 Economic factors 9 Technological factors 10 Natural environmental factors 10 Micro-environmental forces 10 Competitors 11 Customers 11 Media 12 SWOT analysis 12 Market segmentation and target markets 13 Targeting and positioning strategies 13 Conclusions and Recommendations 14 References 15 Introduction Every organization that operates in the business environment understands the significance of applying good marketing strategies in order to gain a competitive edge in the market (Ottman, 2011). In most business enterprises, marketing comes in as a first priority as it ensures that customers are adequately satisfied through regular contends and improvements (Doyle, 2008). Although virtually every market environment experiences varying degrees of competition, the competition so encountered at the global market is normally intense to the extent that call for extraordinary marketing strategies (Groucutt, Forsyth, & Leadley, 2004). Concerning the multinationals that deal with a wide range of products, certain crucial marketing principles and practices give them an edge, as their main intention is to appeal to a diverse clientele across the globe (Park & Gil, 2006). With this in mind, it is prudent to define marketing as the whole process involves in the communication of certain values of products and / or services to target customers (Doyle, 2008). This is normally with the intention of increasing the sales margin and the customer base that are key aspects to any business enterprise (Burrow & Bosiljevac, 2012). Perhaps it is worthy to note that some of the renowned international companies have over the years engaged in intensive and extensive marketing effort in abide to lure more customers thereby increasing their sales and profit margins (Groucutt, Forsyth, & Leadley, 2004). These include but not limited to Samsung Electronics and Apple incorporated that operate on a global platform with most of their products being of electronic nature. While Samsung manufactures, distributes, and sells, electronic products ranging from computers, televisions, cameras, to radios (Park & Gil, 2006), Apple Inc. does the same with most of its branded products including the iMac, iPod, iPad, and iPhone (Apple Inc., 2013). The purpose of this report is to explore marketing strategies of Samsung electronics and Apple Inc. borrowing heavily from the theories and principles of marketing in the critical evaluation. Industry background The electronics industry is a wide and robust sector in that it encompasses several multinationals operating at various levels and producing more or less similar to diverse products (Singapore Electronic development Board [SEDB], 2012). Electronic products in this case may include radios, television screens, computers, mobile phones, and other sophisticated products (Viardot, 2004). The electronics business is a dynamic in that the products keep on changing with time as new trends set in (Ottman, 2011). Most of these products are phased out within short periods usually one year due to continual technological advances and therefore robust marketing efforts are required in order to clear the stock before the manufacture and sale of new models (SEDB, 2012). the electronics industry and specifically that which is consumer oriented came up in the 20th century with simple pieces of electronic equipment despite the fact that currently the industry is worth billions of Dollars with major multinationals operating in the sector on a global basis (Park & Gil, 2006). This is majorly because the modern world almost entirely depends on semi-automated or automated electronic gadgets for their everyday operations (SEDB, 2012). Although the industry has been able to amass great revenue, it is face with challenges of electronic waste disposal with climate change taking the center stage in industrial production (Vault, 2013). Some of the main products in the electronics industry are intended for office use, communication purposes, and entertainment and they include television sets, mp3 players, telephones, digital cameras, audio equipment, and calculators among others (Viardot, 2004). Apple Inc. mainly concentrates on manufacturing such items as computers and smartphones (Reppel, Szmigin, & Gruber, 2006). Market trends As far as the market trends are concerned, the electronics industry takes the lead in terms of the dynamic nature of the business (Ottman, 2011). Globally, the electronics industry changes faster than any industry ranging from the phones that have moved to be smartphones to the television sector that has now adopted the satellite technology (Shankar, & Carpenter, 2012). This is because the technological advances experienced in the industry tend to cramp more power and features on less space leading to efficiency in production and use and this process in under continuous mode (Shankar, & Carpenter, 2012). Indeed, invention plays a pivotal role in the electronics industry and therefore the electronics giants have to go the extra mile of marketing their sophisticated products in order to catch the eye of the target customers in the face of stiff competition (SEDB, 2012). Stiff competition is especially rampant in such products as the smartphones, computers, and television sets that most people use for entertainment and communication (Viardot, 2004). The products undergo revolution at a very fast rate with new inventions setting in as soon as the competition for the previous models reaches its peak (Reppel, Szmigin, & Gruber, 2006). This keeps the major electronic giants like Apple and Samsung on their toes, as they have to employ more robust marketing strategies than their competitors do in order to stay afloat in the turbulent competition (Kim, 2007). Although most electronic companies have shifted their attention to the manufacture and sale of smartphones as their main products, Samsung has specifically separated the LCD sector due to its ultra slim technology that has brought it high sales volumes (Hwy-Chang Moon, & Lee, 2004). Market Structure When it comes to the market structure, the major players in the electronics industry include Samsung, Apple, Sony, IBM, HP, LG, and Nokia (Reppel, Szmigin, & Gruber, 2006). Among these, Samsung is the only company that manufactures the largest range of products ranging from smartphones to kitchen appliances (Samsung Electronics, 2013). The industry is dominated by many sectors ranging from the IT sector with IBM being on top to the mobile phone market that has taken the order of the day due to the versatility of the contemporary mobile phones (Viardot, 2004). Other sectors include the medical industry, and the entertainment industries that have seen an acute rise in terms of technology and usage in the past ten years (Vault, 2013). The major reason for the proliferation of the electronic products and designs is the tremendous revolution in the manufacture of electronic chips that provide massive input into the electronic sector (SEDB, 2012). Although other continents are also a formidable force, Asia currently takes the lead in the production of PCB and memory chips that commenced through a successful Japanese project (Samsung Electronics, 2013). The US has a number of electronic giants like Apple Inc. to reckon with despite stiff competition from the Korean Samsung (Park & Gil, 2006). Since the electronic industry entirely depends on the semiconductor industry, any cost affecting the latter transfers the ripple effect to the former (Mallin & Finkle, 2011). Besides the optoelectronics and the logic, virtually all electronic companies suffered the 2012 pullback with all the products experiencing negative growth (Samsung Electronics, 2013). Company background This section explores the background information of Samsung Electronics and Apple incorporated clearly evaluating their product segments, market share, and a brief of the tow products chosen including the tablet for Apple Inc. and the smartphone for Samsung Electronics (Ottman, 2011). Apple Inc. started initially as Apple computer with computers being their domain of operation from the manufacture to the sale (Mallin & Finkle, 2011). Founded on April 1, 1976 in Cupertino, California, Apple continued with the manufacture of computers before being incorporated in 1977. With rapid expansion that has led to global operation of the company, the major products of Apple Inc. include the iPod, the iPad, and the iPhone (Apple Inc., 2013). This report mainly focuses on the iPad that is commonly known as the tablet computer (Reppel, Szmigin, & Gruber, 2006). Although the competition is stiff, Apple Inc. has managed to stay afloat due to its unique advertising campaigns, the aesthetic design of its products, and its long-held reputation as the consumer electronics giant (Mallin & Finkle, 2011). Part of the effort to safeguard its reputation is the devotion that the huge customer base has to Apple Inc. and its major brands more specifically in the US (Mickalowski, Mickelson, & Keltgen, 2008). According to Fortune magazine, Apple Inc. was the most admirable company in the US in the year 2008 and globally from 2008 to 2010 (Apple Inc., 2013). Samsung Group on the other hand is a South Korean electronics giant operating internationally with many subsidiaries (Samsung Electronics, 2013). With its headquarters in Samsung town in Seoul, Samsung Group has the largest subsidiary in Korea manufacturing a wide range of electronic products (Park & Gil, 2006). After being founded in 1938 by Lee Byung-chul, the group has increased the diversity of their products over the past three decades as to include textile and food processing appliances (Hwy-Chang Moon, & Lee, 2004). Among the most notable subsidiaries of Samsung Group are the Samsung Electronics that was the leading IT firm in 2012 by revenues, Samsung Heavy Industries that was declared the largest builder of ships by revenue in 2012, and Samsung Engineering that are among the leading construction companies (Samsung Electronics, 2013). Certainly, Samsung is one of the most influential companies in South Korea in terms of media, politics, culture, and economic development (Jones & Lee, 2006). In this regard, it is worthy to note that the Affiliate companies of Samsung produce one fifth of the total exports in South Korea with Samsung’s total revenue reaching the 17 per cent mark of the total GDP of South Korea that is about USD 1082 (Kim, 2007). In particular, Samsung Electronics has been on the overdrive as far as the manufacture and sale of electrical appliances with its 2013 ambition including the setting up of the largest mobile phone factory globally in Vietnam (Jones & Lee, 2006). This decision has been influenced by the predominance of Samsung smartphones in the mobile phone market especially due to the unique technology that comes with the products (Hwy-Chang Moon, & Lee, 2004). Macro-environmental forces Although the industry may be realizing great revenues from the high sales experienced throughout the year, it is vital to note that are a number of macro-environmental factors shape the marketing environment of the electronics industry (Groucutt, Forsyth, & Leadley, 2004). Macro-environmental factors are the elements that are within the control of the company in that the company can gather all the relevant information relating to the factors to enhance its marketing strategies (Viardot, 2004). Due to the ease in the manipulation, customers can easily gain satisfaction (Doyle, 2008). The electronics industry also faces some of these forces that majorly that are normally referred to as the PESTLE factors (Ottman, 2011). Political factors Perhaps politics is the greatest factor affecting the marketing environment of the electronics industry on a global platform (Ottman, 2011). The political factors may influence the marketing decisions of Samsung and Apple in that the political stability and attitudes of the concerned parties affect the business environment through legal implications and policies, the involvement of the government in most trading agencies, and the tax policies (Jones & Lee, 2006). Some of the legal factors under this concept include the international trade regulations, consumer protection, merger and monopoly rules, and employment laws (Mickalowski, Mickelson, & Keltgen, 2008). For instance, labor laws are strict in Germany leading to low predominance of Samsung products in that particular country. Economic factors According to Viardot (2004), the economic factors take into consideration the broader growth rates of the economy employment and unemployment levels, and monetary policies. In essence, the environmental factors take keen attention on the purchasing power of the concerned economy (Mickalowski, Mickelson, & Keltgen, 2008). Such aspects as the current prices, credit availability, and savings determine the marketing decisions in the electronics industry and therefore such companies as Samsung Electronics and Apple Inc. normally consider the spending patterns of the consumers and the income trends before embarking on a robust marketing campaign (Jones & Lee, 2006). Technological factors Another macro-environmental factor is the technological environment that includes new inventions, mobile technology, and information changes (Burrow & Bosiljevac, 2012). Such robust technological areas as digital and internet platforms shape the marketing environment of the electronics industry (Ottman, 2011). Technology has always been referred to as ‘creative destruction’ in that superior technologies kindle the economic activity and investment in the products thus satisfying the needs of the consumers (Shankar, & Carpenter, 2012). Although minor inventions have a tendency to fill the technological gap, new technology that comes with enormous research normally has unforeseeable long-term implications (Mickalowski, Mickelson, & Keltgen, 2008). Natural environmental factors Last but more importantly, the natural environment plays a major role as far as the shaping of the marketing environment in the electronics industry is concerned (Ottman, 2011). Such environmental impacts may include the shortage of natural resources used in the manufacture of electronic components, high cost of energy, the unpredictable role of government and the problem of waste disposal and recycling that leads to high pollution levels (Kinoti, 2011). The problem of electronic waste management has been at the center of discussion in major climate conferences and summits thus negatively affecting the marketing environment of the industry (Kinoti, 2011). Micro-environmental forces These factors have a close relationship with the electronic companies and may have direct impact on the successes and operations of both Samsung Electronics and Apple Incorporated (Ottman, 2011). The micro-environmental forces have a bearing on the value creation and customer service of concerned companies (Mallin & Finkle, 2011). This section presents a comprehensive analysis of the two companies as far as the micro-environmental forces are concerned (Groucutt, Forsyth, & Leadley, 2004).  Competitors Since the competition is stiff in the electronics industry, both Samsung Electronics and Apple Inc. manufacture and release unique products into the market to distinguish them from their competitors’ products (Viardot, 2004). Indeed, competitors present formidable force by affecting the profitability of the company and its productivity in the long-term (Ottman, 2011). As for Samsung Electronics, the major competitors for the smartphones include Nokia that recently unleashed the Nokia Lumia and Nokia Asha, Apple Inc., and LG (Kim, 2007). These companies manufacture smartphones that more or less have the same features (Jones & Lee, 2006). Therefore, Samsung Electronics has embarked on an extensive advertising campaign in addition to releasing sophisticated products in the Galaxy series (Hwy-Chang Moon, & Lee, 2004). Apple Inc. on the other hand faces stiff competition from Samsung Electronics, HP, Acer, and Dell in the manufacture of tablet computers, an issue that led to reduced profits in the 2011 / 2013 fiscal year.in order to stay ahead of the competition, Apple Inc. has resorted to extensive online marketing for its tablet computer brand, the iPad (Mallin & Finkle, 2011). Customers Since the existence of customers plays a major role in the realization of profits in the electronics industry, the major players in the industry are bound to up their advertisements and marketing in order to appeal to more customers (Ottman, 2011). The interest of customers comes first in any industry and organization, and therefore, the electronic giants have to uphold this concept in order to attract and retain more customers (Shankar, & Carpenter, 2012). This is because the feelings and perceptions of customers normally affect their buying behavior (Mallin & Finkle, 2011). Consumer behavior in turn influences the profitability of the companies operating in the electronics industry (Viardot, 2004). While Samsung Electronics maintains its large customer base through enhanced advertising and sale optimization in its many subsidiaries, Apple tries to achieve customer satisfaction through the manufacture of superior products (Groucutt, Forsyth, & Leadley, 2004).  Media Although most of the electronic companies like Samsung Electronics and Apple Incorporated majorly relay on the online platform for marketing, the print and televised media also play a significant role in influencing the public perception (Ottman, 2011). For instance, the introduction of the Samsung Note II by Samsung Electronics attracted a lot of media attention that in turn raised the public perception of the smartphone (Hwy-Chang Moon, & Lee, 2004). Apple on the other hand had had its fair share of media promotion through the sponsorship of various media programs (Viardot, 2004). However, negative media attention such as the focus on legal tussles concerning patents has affected the profitability of both Samsung Electronics and Apple Incorporated in the past (Kim, 2007). SWOT analysis The SWOT analysis gives a critical look at the strengths, weaknesses, opportunities, and threats of the two companies in the market (Ottman, 2011). The electronics industry is a complex market with heightened competition and since both Samsung Electronics and Apple incorporated have some element of these features, it is worthy to note some of them (Burrow & Bosiljevac, 2012). Concerning Samsung Electronics, the major strengths are a strong customer base, unique brands, and global presence through its numerous subsidiaries (Kim, 2007). However, its major weaknesses include relatively expensive products and targeting the high-end market (Viardot, 2004). The opportunities in this case include continual technological advancement and high appeal for the new smartphones. However, it faces a great threat of stiff competition from the Apple’s iPhone and Nokia’s Lumia (Apple Inc., 2013). Although the profit margins of Apple Inc. have been relatively stable over the years due to unique and sophisticated products, it has had several weaknesses including weak advertisement strategies and inadequate subsidiaries across the globe (Apple Inc., 2013). Nevertheless, some of the opportunities that exist for Apple Inc. include the customer appeal to its unique series of iPhones and tablet computers with iPhone 5 recording the highest sales (Mallin & Finkle, 2011). This comes with threats though including the heightened competition from other smartphone and tablet manufacturers with its main rival being Samsung Electronics (Mickalowski, Mickelson, & Keltgen, 2008). Market segmentation and target markets Both Samsung Electronics and Apple Inc. have aggregated their markets by considering the special needs of customers, their behavior, and perception (Groucutt, Forsyth, & Leadley, 2004). Considering homogeneity, Samsung Electronics manufacture smartphones that cater for the needs of internet and entertainment lovers while the main target market for Apple’s tablets are the professionals and students (McDonald & Dunbar, 2012). The two companies also offer unique products that separate their respective target markets while considering the customers reaction to the target market (Kim, 2007). Targeting and positioning strategies Concerning the targeting strategies, Samsung Electronics has selected the internet and tech savvy while Apple Inc. has selected the students and professionals for their respective products. While Mallin and Finkle (2011) claim that Apple Incorporated focuses on concentration marketing, Samsung on the other hand mainly adopts a differentiated approach in its marketing strategy (Doyle, 2008). A concentrated approach means that Apple Inc. mainly targets one specific and well defined customer group in the market this being the students and the professionals while Samsung’s differentiated approach targets the classy individuals(Jones & Lee, 2006). Positioning strategy on the other hand simply means the manner of communication of the fundamental benefits of the two companies (McDonald & Dunbar, 2012). While Samsung Electronics uses a positioning strategy based on product price and class, Apple Inc. uses one based on product class and process (Groucutt, Forsyth, & Leadley, 2004).  Conclusions and Recommendations In summary, the electronics industry is a competitive one that requires constant strategic marketing approaches. In this case, informed market segmentation will help both Samsung Electronics and Apple Incorporated to recognize the potential market and record higher sales. By expanding its market to include more segments, Apple Inc. will increase sales volumes by appealing to the target markets. Samsung on the other hand ought to embark on similar strategic marketing campaigns for other brands such as the LCDs in order to achieve higher sales and profits. References Apple Inc. (2013). iPad. Retrieved on 22 August, 2013 from http://www.apple.com/ipad/ Burrow, J., & Bosiljevac, J. (2012). Marketing. Mason, Ohio: South-Western Cengage Learning. Doyle, P. (2008). Value-based marketing: Marketing strategies for corporate growth and shareholder value. Chichester, England: John Wiley & Sons. Groucutt, J., Forsyth, P., & Leadley, P. (2004). Marketing: Essential principles, new realities. London: Kogan Page. Hwy-Chang Moon, & Lee, D. (2004). 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