Marketing Strategy of Samsung Tablets - Case Study Example

Marketing strategy – Samsung Tablets nsert Name Institution Instructor Date Marketing strategy – Samsung Tablets Introduction Currently, Smartphone and tablets are among the most commonly used technological gadgets as far as communication is concerned. Speaking of tablets and Smartphone, Samsung Mobile and Apple Inc are the most prominent household names in the manufacture of the same. The two organizations have been recognized as the fiercest of competitors in all industries (Schneiders, 2011). On the 29th day of July 2013, Samsung overtook Apple Inc as the most profitable company in the Smartphone and Tablets industry globally. With this news, one cannot help but get curious on how and why Samsung could overthrow such a renowned company from the top position. For the purposes of this paper, The Samsung Tablets and Smartphone are taken as the products of central focus. An Overview of the Samsung Group Founded in 1938 by Lee Byung-chull, The Samsung Group is arguably one the biggest companies in the international scene today. Going by the revenue of the year 2012, The Samsung Group is the biggest information technology organization globally. The organization began as an all manufacturing and processing organization in South Korea. Three decades after its incorporation, the organization ventured into various businesses including, electronics, food processing, ship building and so on. Over the years, Samsung has endeavored to embrace specialization as a way of concentrating on one area and emphasizing quality (Michelle 2010). Today, Samsung is synonymous with breakthrough technology in computers and telecommunication industries. With such products as the novel android cell phones, Samsung can only be rivaled by such giants as Apple Inc. Mission:  to keep pace with our growing global operations, rapid changes in the world economy, and escalating competition from well-established rivals. Vision: Inspire The World, Create The Future. Objectives: 1. Maintain market leadership and increase our market shares. 2. Loyalty and commitment to our Customers. 3. Build alliances with the leading manufacturers in the industries we serve. 4. Keep investing in People, Systems, Facilities and Distribution Systems with a long term view. An analysis of the Smartphone and Tablet industry The Smartphone and tablet industry is one of the industries that best define the progressive trend of technology in the modern world. This industry is quite competitive, with the key players being Samsung Mobile and Apple, Inc. for the purposes of this paper, Porter’s Five Forces Analysis will be employed. Porter’s Five Force Diagram The smart phone and tablet industry are prominently dominated by such organizations as Samsung, sony and Apple Inc (Chang, 2011). Samsung’s competitiveness in this industry can be analyzed based on porter’s five forces analysis, which include competitive rivalry, power of the buyers, power of the suppliers, new entrants, as well as substitution threats. Bargaining Power of the Suppliers There is a high bargaining power in the smart phone and tablet industry. Not only Samsung, but other producers of the smart phone and tablets as well, usually outsource various components from external sources. However, rarely can you find all these components related, since they are manufactured and supplied to Samsung by different companies. It is also worth noting that, due to the nature of their products, other players in this industry have fewer suppliers as compared to Samsung. Consequently, it can be argued that there is a medium supplier bargaining power in the case of the smart phone industry. The Samsung Company has succeeded in creating a deep association with its major suppliers, implying that its bargaining power is a bit higher than that of the suppliers (Allen et al, 2010). Additionally, the company is assured of supplies from its reliable suppliers, more especially for the production of Galaxy phones. The fact that there are numerous suppliers in the tablet and smart phones industry minimizes any chances of Samsung being under the control of any supplier. As such, the company has a higher bargaining power than its suppliers, and can obtain its supplies from various sources, wherever the deal seems to be better. Besides, the company has an option of further reducing the power of the suppliers by obtaining a given percentage of supplies from different companies, eliminating reliance on certain suppliers at one given time. Threat of New Entrants Based on the nature and cost of the technology applied in the tablet industry, it is not easy for the presence of new entrants to have any considerable impact in this industry. Currently, Samsung is the market leader within the smart phone and tablet industry, and it’s among the few companies which have a significant share in the computer and digital music devises industries. Thus, for the new entrants to have a competitive advantage over Samsung, they will be forced to incur a considerably huge amount of investments in a number of areas. Although other manufacturers have the required technology in smart phone and tablets, it is only Samsung, Apple, Nokia, Google, Microsoft, and Research in Motion that have the software on which these gadgets run on (Ackermann & Eden, 2011). The rest of the manufacturers largely depend on Symbian or Android software. Besides the complexity and cost of the required technology, there are also other factors that limit the number of new entrants in this industry. To begin with, there are a number of legal issues that new entrants will have to address before they are allowed to participate in the smart phone and tablet industry (Rasheed, 2012). For instance, the new entrants will have to secure to approval of the communication technology regulatory agencies regarding the use of certain patents and copyrights. Secondly, it is challenging for the new entrants to feature into this industry based on the economies of scale factor. As mentioned above, being the market leader in the smart phone and tablet industry, Samsung has an upper hand when it comes to economies of scale. As a result of the experience base of the company, it is in a position to produce these devises in large quantities, which in turn reduces the overall cost of production. However, the new entrants lack enough experience and the necessary technology to produce such products in mass, implying that they incur a relatively higher cost of production as compared to Samsung. Samsung is one of the few companies in the smart phone and tablet industry that have been successful in diversifying their products. The products of this company are quite unique, starting from the technology applied in their production to the models, no company has ever succeeded in attaining this level. As a result, it is very challenging for new entrants to pose any competitive threat for the company. Additionally, Samsung brand is unique and well known in the world as a whole. This makes it easy for both the existing and potential customers to identify the products of the company. Lastly, Samsung has an advantage when it comes to distribution of its products. Perhaps, for the new entrants to pose any significant threat to the company, they must develop many efficient distribution channels for distributing their products to various parts in the global market. As compared to Samsung, which has already established such channels, it will be a bit challenging for the new entrants to do so. Again, it goes back to the availability of resources to be invested by the new entrants in establishing such distribution channels. Threat of Substitutes Arguably, unlike in the case of other industries, there is minimal threat of substitutes in the smart phone and tablet industry. Undoubtedly, although it is possible that in the future we are likely to have substitutes for phones and tablets, for now there are no feasible substitutes. This implies that Samsung, as well as other key players in this industry, are unchallenged from the substitutes perspective. The only possible substitutes are the laptop computers, which have limited features as compared to the tablets making them unattractive to the customers. Unlike the mobile telephone which is barely used for more than communication, the tablets have a wide range of features, meaning that they can be used for various functions besides communication. Thus, there are no or minimal threat of substitutes in the smart phone and tablet industry. Bargaining Power of the Customers Arguably, customers have a relatively strong bargaining power in the smart phone and tablet industry. Acquiring the loyalty of customers in this industry is not an easy thing, unlike in the case of other industries producing similar products. By their nature, consumers have the tendency of moving from one product to another, and from one brand to another, so long as the new product and brand appears to be satisfying their needs. Hence, not only in the case of Samsung, but also all other leading companies in the smart phone and tablet industry, acquiring regular customers is challenging. Strategic fit of Samsung Currently, Samsung is a defender and not a prospector because, undoubtedly, Samsung is the leader in the tablet market. While apple may be a worthy competitor, Samsung has emerged as the most profitable country in the global tablet industry. In order to gain customer loyalty, Samsung has adopted a customer relationship management model, through which it interacts with its customers towards initiating an emotional attachment with the clients. Attractiveness of the Market From the point of view of a prospector, the industry is not attractive considering the fact that the existing suppliers already have a high bargaining power. The amount of capital outlay – both financial and technological is too heavy for a small entrant. The existing firms have already established customer loyalty to such an extent that replacing or claiming their market share is quite difficult (Dlabay & Scott, 2010). However, for the risk taking firm, the fact that the bargaining power of the customers is high is a motivating factor. Samsung Tablets and Smartphone are not expected to face many challenges, save for the stiff competition from Apple Inc. Relevant of marketing research in strategic decision making The relevance of marketing research in strategic planning and decision making can best be understood through the marketing mix combination defined by the four Ps. Such P’s include Price, People, Promotion efforts and Place of distribution. Price strategy Price is a fundamental market defining factor that makes a difference between the market leader and the market follower. Worth mentioning is the actuality that customers will always associate high prices with quality (Lucas, 2007). Speaking of Samsung tablets, prices offered are far much friendlier than those provided by the major competitors, Apple Inc. prices influence the decision making of the buyer as it is a determinant of perceived quality. Promotion strategy Promotion refers to the collectivity of advertising and other ways of marketing. Worth mentioning is that penetrating the global market, where Apple and other competitor organizations have already created goodwill, calls for intensive marketing efforts. Such marketing efforts should endeavor to hit the target market, while trying to sway the loyalty of other existing customers (Hayes, 2008). As a way of promoting the Samsung tablet, the organization has insisted on the use of internet advertising because rationally, the target market for Samsung tablets is defined by the internet using population. Place strategy Place strategy refers to the distribution plans that the organization employs. Since most of the purchases are made through the internet, shipment is used to ferry the products from the point of manufacture to the premises of the buyer. This offers convenience for both Samsung and the customers. Product strategy Product strategy, also referred to as branding strategy is a comprehensive way of having the product brand gain favor in the eyes of the consumers (Hoyer & MacInnis, 2008). In straightforward terms, product strategy is aimed at giving a touch of quality to the product of an organization. Speaking of branding, Samsung is a brand name associated with reputation and quality. Importance of Segmentation, Targeting, Differentiation and Positioning Segmentation refers to the act of an organization breaking down the market into distinct sections for purposes of marketing. Through segmentation, the organization can effectively create various target markets, and this is common and beneficial to organization dealing in a number of products or variety (Ferrell & Hartline, 2011). Speaking of segmentation and targeting, Samsung Group effectively applies it in its marketing endeavors associated with mobile phones. It is important to mention that Samsung, unlike competitors Apple Inc, does not specialize in high end expensive phones. On the contrary, it also produces the low end phones. For purposes of marketing, the organization segments the buyers into various segments along income levels. Differentiation and positioning are closely related, especially considering that a highly differentiated product will be strategically positioned in the industry. As mentioned earlier, Samsung smart phones are highly differentiated through such factors as the operating system. References Kandula, S. R. (2006). Performance Management: Strategies, Interventions, Drivers. New Delhi, Phi Learning. Dlabay, L. R., & Scott, J. C. (2010). International Business. Mason, Ohio, South-Western. Michelle, T. (2010). Samsung Electronics and the struggle for leadership of the electronics industry. Singapore, Wiley Lucas, L. E. (2007). Unpacking Globalization: Markets, Gender, And Work. Lanham [Md.], Lexington Books, A Division Of Rowman & Littlefield Publishers. Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia, South-Western Cengage Learning. Hayes, B. E. (2008). Measuring customer satisfaction and loyalty: survey design, use, and statistical analysis methods. Milwaukee, Wis, ASQ Quality Press Hoyer, W. D., & MacInnis, D. J. (2008). Consumer behavior. Mason, OH, South-Western. Ackermann, F., & Eden, C. (2011). Making strategy: Mapping out strategic success. London: SAGE. Allen, S., Graupera, V., & Lundrigan, L. (2010). Pro smartphone cross-platform development: IPhone, BlackBerry, Windows Mobile, and Android development and distribution. New York, N.Y.: Apress. Rasheed, H. P. D. (2012). Innovation strategy: Seven keys to creative leadership and a sustainable business model. S.l.: Iuniverse Inc. Chang, S.-J. (2011). Sony vs Samsung: The Inside Story of the Electronics Giants' Battle For Global Supremacy. Hoboken: John Wiley & Sons. Schneiders, S. (2011). Apple's secret of success - traditional marketing vs. cult marketing. Hamburg: Diplomica-Verl. Read More