Marketing of Samsung Smartphone in the UAE - Case Study Example

Marketing Report Samsung Smartphone in UAE (United Arab Emirates) Executive Summary Samsung is a headquartered in South Korea and deals with the manufacture and distribution of consumer electronics, semi conductors, telecommunication devices, digital appliances, media and network systems. On the key brands of the company is the Smartphone that has gained high popularity in various markets of operation. The brand experiences high customer satisfaction and loyalty due to its innovative features and excellent marketing strategies. However, the company is experiencing competition from Apple, Nokia, Blackberry and Huawei in the Smartphone market. The research report will analyze the Samsung Smartphone brand in United Arab Emirates (UAE) by focusing on the customer needs and wants, the market size and future customer needs. The report will discuss the micro and macro environment factors facing the brand and market segmentation variables of the brand. The report will further explore the product/market development opportunities and strategies that can be implemented to ensure market leadership. The report will offer recommendations on the company can utilize the marketing opportunities to attain competitive edge in UAE market. Table of Contents: Page number: 1.0 Introduction………………………………………………………………………….4 1.1 Market environment…………………………………………………………5 1.1.1 Smartphone market in UAE………………………………………5 1.1.2 Micro environment and Macro-environment factors……………..5 1.1.3 Trends affecting the brand………………………………………..6 2.0 Smartphone Market share in UAE……………………………………………..….7 2.1 Market segments………………………………………………………………8 3.0 Marketing Opportunities……………………………………………………………9 4.0 Analysis……………………………………………………………………………...10 5.0 Recommendations………………………………………………………………......11 6.0 Conclusion……………………………………………………………………….…..12 7.0 References………………………………………………………………………..….13 1.0 Introduction Samsung Company was established in 1969 in South Korea, but has expanded to become one of the leading global electronics companies that specialize in telecommunications, digital appliances, semiconductor, and media due to its innovative business approach (Russell and Cohn, 2012). The information technology and mobile division consists of handsets, digital cameras, network systems, and Smartphone. Samsung Smartphone originates from South Korea (Russell and Cohn, 2012). The main driver of the Smartphone success is the research and development capabilities of the company since there are 42 global facilities that are dedicated at setting new standards in mobile communication technologies and new product development (Russell and Cohn, 2012). Samsung Smartphones were launched in UAE in late 2005 and have enjoyed tremendous success due to their differentiated features such as high resolution touch screens and megapixel cameras (Michell, 2011).. The strengths of the brand include the hardware integration with most of the open source operating systems and excellent engineering that results to durability of the brand. The brand exemplifies excellent innovation and stylish designs (Woyke, 2014). The company enjoys low cost production. Samsung enjoys economies of scale in its production that entails low-cost manufacturing in countries such as South Korea, India and China. However, the brand faces certain weaknesses such as low profit margins due to the skimming and aggressive marketing strategy that includes huge discounts. The brand has attracted criticism due to breach of customer privacy and security and thus measures should be undertaken in order to prevent negative corporate image and costly lawsuits (Russell and Cohn, 2012). The company relies on open source software and supplier to provide the operating system and this could lead to costly delays in new product development. 1.1 Market environment 1.1.1 Smartphone market in UAE The Smartphone market is estimated at 5,000, 000 million units and is estimated to grow at an average of 27 percent in the next decade (Ilyas & Ahson, 2006). The Smartphones are distributed through sales and serviced dealers, retailers and own-branded outlets. The Smartphone is mainly used for communications, internet connection and entertainment (Hughes, 2011). The future customer needs and wants include high processing capability, larger memory, power-saving, embedded charging, dual-edge screen and rear-facing cameras. The extended brand product line consists of Galaxy Cio, Galaxy Mini, Galaxy SII, Galaxy 5, Galaxy s 4, Samsung s Duos, Galaxy Note, and Galaxy s 6. Samsung has strengthened its market presence in UAE through releasing A5 and A3 devices that are slim and have 5-megapixel camera that is designed to satisfy the needs of younger consumers who prefer taking selfies (Russell and Cohn, 2012). 1.1.2 Micro environment and macro-environment factors Samsung Smartphone has attracted high brand awareness and customer loyalty in UAE due to its reliability and innovative features (Hill & Jones, 2007). The company poses excellent research and innovative capabilities that facilitate new product development (Kotler & Armstrong, 2008). The brand has the largest market share due to the excellent marketing and distribution channels in UAE (Russell and Cohn, 2012). According to PESTLE (political, economic, social-cultural, technological, legal and ecological) environment analysis, the external environment is conducive for success of the Smartphone brand in UAE. The political environment in UAE is stable and political leaders encourage foreign direct investments in to the county due to trade liberalization. UAE is experiencing unprecedented economic growth that has led to high consumer incomes, stable income and high employment levels thus enhancing the demand for Smaartphones (Baines and Fill, 2014). The social-cultural environment will favor the brand in UAE since majority of the residents are working foreigners with favorable attitudes towards technology (Baines and Fill, 2014). The target customers have positive opinions regarding the brand since it offers high number of functionalities such as apps, internet, camera, and voice recording features, ultra-power saving and biometric security (Peng, 2010). The advancements in mobile computing technologies will facilitate design of slimmer devices that have added features since Samsung is committed to innovation. The legal environment presents challenges since companies must adhere with the legislation on product health and safety and protect the confidentiality of their customers. The ecological environment is characterized by demands for clean manufacturing, safe disposal of the scrape metals and efficient use of natural resources (Peng, 2010). 1.1.3 Trends affecting the brand The Smartphone market in UAE is increasing due to the high demand that has been occasioned by decline in mobile prices and increasing standards of living among UAE residents. The high internet penetration and usage in UAE has enabled consumers to use their Smartphones to read e-books, send e-mails, use networking sites and access premium online content such as movies (Hamill & Lasen, 2006). The popularity of large display mobiles and acceptance of Android mobile phones that have high resolution touch screen display and multi-core processer are some of the innovative features that are driving the popularity of Samsung Smartphones in UAE (Russell and Cohn, 2012). However, the market is facing privacy and security concerns since customers are concerned about the possible loss of personal data and information to unauthorized individuals while using the Smartphones. The company must protect customer privacy and implement advanced security features in their devices. The company should protect the environment through advocating for safe disposal of the scrape and old devices, efficient use of natural resources and clean energy use in order to protect the natural environment from pollution (Aswathappa, 2008). The rising popularity of Smartphones has led to stiff competition among the various manufacturers since Lenovo, Nokia, Apple, HTC, Sony, Blackberry and Motorola. iPhone is the most popular handset followed by Samsung Galaxy (Samsung Electronics, 2015). 2.0 Smartphone Market share in UAE The Smartphone market in UAE is forecasted to reach US $ 9.3 billion by 2018. Samsung Smartphone commands 35 percent of the market while Apple accounts for 24 percent of the Smartphones used in UAE. Blackberry represents 21 percent while Nokia accounts for only 16 percent of the market share. However, Apple’s iPhone 5 is the most common used Smartphone accounting for 2.8 percent of the market followed by Samsung SIII that accounts for 2.7 percent of the market share (Gazzar, 2013). 2.1 Market segments Market segmentation enables a company to customize the unique marketing mix to the specific target markets in order to satisfy the customer needs more effectively with a value proposition that is superior to that offered by the competitors (Hill & Jones, 2007). A market segment should be easily identifiable, accessible through promotion and distribution channels, substantial to generat5e revenues, measurable and stable (Hill, & Jones, 2007). Samsung Smartphone segments its market on psychographic variables that consider the buyer behavior such as the attitudes, opinions, lifestyles, interests and values of the customer (Hiriyappa, 2013). The Galaxy and Note Series customers are associated with favorable attitudes towards technology, stylish lifestyles and strong opinions regarding quality and thus Samsung targets this market segment through offering additional features and stylish design of the product in order to appeal to the target market. The target market is interested in playing games, surfing the internet, listening to music and chatting with friends and thus the Smartphone allows them to connect to both 4G and Wi-FI networks in order to communicate effectively (Russell and Cohn, 2012). A second form of market segmentation that is used by the brand is the demographic variables of the customer such as the age. More than 70 percent of the Smartphone owners are aged less than 34 years with about 60 percent of the customers being men (McNabb, 2013). The brand considers the education, occupation, income and family status of the customers since most of the customers of the Galaxy Series are educated individuals who can easily understand the usage of additional features and working middle income individuals who use the brand for their business communication (Ferrell and Hartline, 2012). The third variable that is evident in the market segmentation is the behavioral segmentation since Samsung considers the price sensitivity, usage rate and patterns, the pursuit of differentiated benefits and brand loyalty when considering the target market (Hiriyappa, 2013). 3.0 Marketing Opportunities for Samsung Smartphone According to Ansoff’s product/market expansion grid, there are various marketing strategies that Samsung can use to maintain market leadership position for the Smartphone inn UAE. Samsung can use a market penetration strategy to encourage repeat purchases and high rate of usage by the loyal customers and also attract the competitor customers (Ramaswamy, 2013). The company can use market development strategy in order to launch Samsung Galaxy s 6 in new market segments by expanding the distribution networks and selling the product in rural locations in UAE (Hiriyappa, 2013). Another viable strategy is the product development strategy that entails launching a new product in the current market (Hiriyappa, 2013). The marketing strategy will entail developing new features for the Smartphone, using different labels and using new technology. A fourth marketing strategy is the diversification strategy that entails launching new products in new markets such as developing new products for emerging new target market segments and developing new products using new technologies. (Ferrell and Hartline, 2012). Samsung should use a market penetration strategy for the behavioral market segment through encouraging repeat sales and high usage of the brand. This market segment is not sensitive to prices and is loyal to the brand and thus a market penetration strategy to convince the iPhone and Blackberry users to switch to the Galaxy smartphone series (Hiriyappa, 2013). The company should pursue a product development strategy for the psychographic market segment through developing new features, differentiating the designs and improving the communication and memory technology (Saxena, 2005). The target segment is interested in classic designs and stylish features due to the customer’s perceived status and lifestyles. The company should use its innovation capabilities to meet the future customer needs and wants for the brand through adding features such as stunning curved screens, utra-wide aspect ratio, wide viewing angles, front and rear facing cameras, stunning display and screen resolution features, power conservation capabilities, high processor capabilities, large memory and various design colors (Ferrell and Hartline, 2012). The company should pursue a market development strategy for the demographic market segment through expanding the distribution outlets across the country, selling the Smartphones to younger customers in rural locations and identifying new potential users such as students. 4.0 Analysis The brand experiences high usage across UAE due to its additional features and innovative engineering technology. The brand has attained high customer awareness and loyalty and thus Samsung should implement marketing strategies that aim at maintaining and expanding the current market share. The level of customer satisfaction is high, but the recent advancements in mobile computing technologies will require the company to continuously monitor the changing customer needs and wants. The stylish designs offer convenience while the open source operating systems enhances customer satisfaction. Samsung uses co-marketing with retail partners thus enhancing brand awareness unless Apple that relies on its own marketing efforts (Yeshin, 2012). The competitors’ brands that present considerable competition include Apple’s iPhone, Blackberry, Huawei Ascend G600, HTC Windows Phone 8S, LG Optimis L9, and Nokia Lumia Series. The customers current needs include quality, reliability, performance and durability and thus Samsung Smartphone has fulfilled the current needs (Hiriyappa, 2013). However, customers will demand higher screen resolution and display features, added apps, excellent memory and convenience in the future. The customers will need to access remote databases to store their digital information or conduct business using their devices. The future device should enable customers to access more data and share information thus enhancing the customer user experience. The customers are interested in personal health management feature that enable them use personalized applications to manage their health such as nutritional information, calorie intake, exercise information and lifestyle disease management information (Ferrell and Hartline, 2012). 5.0 Recommendations Samsung Smartphone brand has attained market leadership position in UAE due to its stylish design and differentiated features that offer reliability, comfort and convenience in communications, entertainment and access to online content. The company has excellent innovation track record and thus it is essential to monitor the changing customer needs and wants and respond with new product development. The company should use its innovative capabilities to pursue a product development strategy for the psychographic market segment since customers in this segment demand for additional features. The company should improve the display resolution, the camera capabilities, the internal memory capabilities, enhanced security features, improved internet use and standby time, increase the number of apps and ensure color variety. The company should implement a market development strategy through using integrated marketing communication strategies that will focus on the younger generation and rural areas in UAE in order to increase the market for the earlier Smartphone product lines. The company should focus on customer service and after-sales services in order to improve the market penetration through repeat sales and high usage of the brand. The company is capable of competing on prices due to low-cost and mass production capabilities and thus it should lower the prices for the brand series that has attained their maturity in order to encourage repeat sales. 6.0 Conclusion The demand of Smartphones in UAE is high due to the declining average prices, the high disposable consumer incomes and favorable attitudes towards stylish handsets. The advancements in technology will change the customer needs and wants and thus Samsung should engage in research and development activities that aim at new product development. One of the success factors of Samsung Smartphone is the innovative designs and functionality since the company has developed user-friendly and unique designs that offer customer convenience when travelling. The brand is faced with privacy and security concerns and thus Samsung must improve the security features of the handsets in order to retain customer loyalty. The product and market development strategies should focus on market penetration, market development and product development depending on the unique characteristics of each market segment. The company has a low cost production structure and thus should attain cost leadership in the mass demographic market segment and implement a differentiation strategy for the psychographic market segment that requires additional features. 7.0 References: Aswathappa, M. (2008). International Business. New Delhi: Tata McGraw-Hill. Baines, P and Fill, C. (2014). Marketing. Oxford: Oxford University Press. Ferrell, O.C and Hartline, M. (2012). Marketing strategy. New York: Cengage Learning. Gazzar, S. (2013). ‘Nearly half of all phones in UAE are Smartphones, TRA reveals’, Retrieved on 19th May, 2015 from http://www.thenational.ae/business/technology/nearly-half-of- all-phones-in-uae-are-smartphones-tra-reveals. Hamill, L & Lasen, A. (2006). Mobile World: Past, Present and Future. London: Springer. Hill, C & Jones, G. (2007). Strategic Management: An Integrated Approach. New York: Cengage Learning. Hiriyappa, B. (2013). Corporate Strategy: Managing the Business. London: AuthorHouse. Hughes, B. (2011). Samsung Galaxy S for Dummies. New York: John Wiley & Sons. Ilyas, M & Ahson, S.A. (2006). Smartphones. New York: Intel Engineering Consortium. Kotler, P & Armstrong, G.M. (2008). Principles of Marketing. London: Prentice Hall. McNabb, A. (2013). ‘UAE is world smartphone leader’, Retrieved on 19th May, 2015 from http://www.spotonpr.com/uae-is-world-smartphoneleader/. Michell, A. (2011). Samsung Electronics and the Struggle for leadership of the Electronics Industry. New Jersey: John Wiley & Sons. Peng, M. (2010). Global Business. New York: Cengage Learning. Proctor, T. (2014). Strategic Marketing: An Introduction. New York: Routledge. Ramaswamy, B. (2013). Marketing Management. New Delhi: Tata McGraw-Hill. Russell, J and Cohn, R. (2012). Samsung Electronics. 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