The findings will help evaluate how factors such as the external environment have on these figures and whether hey play a part into constructing the company’s achievements last year. Introduction Smartphones have become a phenomenon in the last decade; the competition between organisations has increased over the years as technology has advanced. An article published by BBC Business explains how Samsung managed to push profit margins up by E4. 5m, that being dominated by smartphone sales.
The article suggests some reasons into why some of Samsung’s marketing approaches and business ethic were responsible for the boom in profits. It is becoming increasingly difficult for market leaders in this field to remain dominant within their specified market. The purpose of this research is to evaluate key fundamental factors within the marketing field and how Samsung applied them to get results. A technological analyst report have studied the differences between the Samsung smartphone Galaxy to that of its competitor Apples iPhone.
A conclusion was conducted that the phones have differences and similarities and is something that is of a norm with direct competition. Although competition may be one of the key reasons into why Samsung had to increase their shares from 8%-20% in 2 yearsii, other factors including the macroeconomic environment could have had an ffect into the growth Of profit in the last year. TO evaluate these possible reasons, research objectives were made. Research Objectives.
To identify Samsung’s marketing strategies To understand the value of brand on customers The first objective is to understand Samsungs marketing strategies and how it was applied to reach the profits, it is also to evaluate if the chosen market strategies were the best option for Samsung to follow and why these strategies were implemented. This will explain how there is a substantial increase in market share, profits and brand expansion. It would also help with he understanding of how market strategy is vital to business’s that deal with direct competition, in a fast expanding market i. e. martphone technological market. The technology industry is highly competitive and fast paced. With the increase of globalisation, numerous organisations have become major competitors in the smart phone industry (iii). The second objective is to understand the consumer perception of Samsung’s brand. How branding plays a crucial part in the product life style and advertising for the company, this will also demonstrate how branding has an impact on direct competition and other macroeconomic factors. It will also be noted how branding is used on customers and if this relates to Samsung’s high sales.
The mobile phone industry has become malleable as cheaper options have been provided for the describable wants of customers of other mobile phone organisations. In this case, Samsung used their branding and this advantage to construct how they can appeal to customers and in turn increase their economy of scale. Critical Literature Review The buyer decision process This model demonstrates the process of what a customer goes through before deciding what product/service they would acquire from the business.
The customer realises that there is a difference where they are now, their actual state, to where they want to be, their desired state. (4) Choices are made to reduce the gap between the two states, and if the product they buy or service they use will help achieve the desired state. This ties close with MasloWs Hierarchy of needs (5), and whether the produce from the organisation fulfils any of the needs to the customer. The higher the need, the more the customer feels they need to purchase the product.
It is important that, when dealing with the buyer’s decision process that branding plays a art too. Lake (2013) suggested that branding is not about getting your target market to choose you over the competition, but it is about getting your prospects to see you as the only one that provides a solution to their problem(6). In regards to the buyers’ decision process, Samsung successfully managed to use their brand in two techniques. One, by offering customers something that is of similarities of its competitor.
Two, by renovating the brand to raise awareness to customers who may be in the mid stages of the buyer decision process. The model shows that the need for products can be timulated by external factors such as advertisement and social status. Especially in modern society, technology has become a social strata and the need for the latest technology has been influenced by factors such as the media. Mobile phone users are often stimulated by what new technology is available even if it may not be a necessity.
When the customer has recognized their need for a product or service from the business, research is then taken place to help address the problem, if the problem is persistent, not much research would have to be done as they already know what it is they are looking for. Masterson, R and Pickton D (2010) (8) suggested that the creation of awareness was through the research of information about the product and/or service. Samsung have succeeded into creating customer awareness as at the time Apple had a reigning dominance over the market share for a mere four years (9).
During this time, recession had resulted to people being reluctant to spending on desirable goods. Samsung set awareness for different consumer needs by presenting a cheaper but a similar product to that of its competitor, which opened the horizons to more consumers that were unwilling to pay the price Apple had set. After research has been conducted, customers tend to categorize themselves based on different values. Each customer may have a different need from another, some may care about the value of the product, and if it is worth the money they are paying; whilst others may care about purpose and whether it is for business or pleasure.
These different categories whereby the customer is thinking if the product is buyable or not, are influenced by the external environment; these may cause the customer to re-evaluate the situation. Samsung took the opportunity to identify what factors were influencing that market and added t to the specification of their phone, which creates an awareness set for the different consumer needs because of these additions that apply to more customers that went to other brands for other reasons. After all research has been conducted and the customer is satisfied with the product, a purchase will be made.
This is one of the last stages in the buyer decision process which is post-purchase evaluation; the customer will decide whether they are pleased with the product/sen/ice and consider if they would have a repeat purchase. In regards to the mobile phone industry- mobile phones are not ought on a regular basis therefore, this last stage of the process determines whether the customer is loyal, with the next purchase of a phone determines if the customer will buy it from a brand they bought it from before. This tied, with the new technology and other macroeconomic factors the brand has will enable to entice the customer once again.
The buyer decision process is effective because it enables an organisation to see from a customers point of view, and all the decisions that take place before a purchase is made for a product. When an organisation looks at the decision process that will allow hem to place their brand and create the essential awareness set. The decisions the organisation concludes to will affect all faculties ranging from finance, which would be responsible with promotions; to marketing who are responsible for correct advertising.
Looking into the buyers’ decision process, they could see that technology was a trend that would apply to the mass market and to successfully get the brand known as well as the competitions. It also allows a business to have a sense of future product planning, by helping lower the risks with newer products they may launch in the market. Samsung tapped into Apples idea of advancing to the touch screen technology 3 years after Apple, its main competitor had released 5 ofthe leading chain of iPhones. (appendix 1 i) This shows that the buyer’s decision process played a role into Samsungs innovation process.
However, the buyer’s decision process was criticised for the fact that it assumes all customers go through the same stages in chronological order, it was also criticised for not considering if the customer goes through the ‘research stage’ which is responsible for getting the brand known. Samsung took advantage of acroeconomics factors such as advertising and promoting, to avoid any risks of these possible disadvantages. Nonetheless, the buyer’s decision process doesn’t acknowledge that there may be other alternatives to gain the awareness set.
Pricing and product life cycle With Samsung approaching the market with its competitor Apple dominating the market share, strategic planning had to be done to locate the disadvantages of its competitor and use it as an advantage to attract the customer. With the effects of recession rising as well as the advance in technology business’s had to make sure they had a stable economy of scale. An economy of scale is when a business has higher produce than the cost of production. Samsung successfully got the message that they provide affordable, reliable and available product (1 2), which was key especially in the current economic climate.
When a product enters the market, it goes through a series of changes. This, in the business world is known as the product life cycle (Armstrong 201 1). Which, in the products life course it should cover the cost of production and leave the business with a healthy profit to provide a stable balance for the next product life course. However, ifferent products go through the life course at different periods in time, and it is hard to estimate how well a product will do in the market as factors that affect the market change consistently.
All organisations understand the inevitable concept Of product life cycle and comprehend that the life cycle keeps the market competitive. The usual product life cycle is as follows; (Rileys) a) Introductory stage- marketing here would have to be predominant; this is the launch and the beginning of the product in the market. b) Growth stage- This is an increase in the products life cycle, the branding is working, and evenue is increasing. c) Maturity stage- The period where sales are at its highest, but the rate of gronrth is decreasing. Normally, at this stage planning for the next life cycle begins. ) Decline- Sales have started to fall, there may be alternative options than the product or the product has become outdated. The product life cycle (Appendix ii) As the cycle writes itself during the life of a product in the market, it is difficult for organisations to gain understanding of how long the product will be at its peak time during its course. This is where it is essential that organisations trategically predict the life course so that it avoids the declining stage of the cycle and continue to grow or at least decrease to a stable level.
Nevertheless, it is not a disadvantage if the product comes to the declining stage, for the marketing department, it can help get better understanding of the markets requirement for the next product. As well as this, it can also be noted down what made the product reach the peak point at the Maturity stage; decisions will be made if the same strategy can be applied to the next product as well. Showing the importance of the life cycle for a company as it also represents he trends and changes in the macro-environment. Riley 2011) This can be a good model for industries that are constantly changing with the mobile phone industry- companies can look at other company product life cycle and allow them to take note of what made their product boom and/or decline, and apply it to their own product. However, the disadvantage of this model is that it is purely based on assumption of the product. Predictions are made, but sometimes, due to the rapid changes in the market, it would be difficult to analyse how successful the product will be.
This means that, if the decision hat a product is going into decline was to be discontinued, it is hard to say if the market would want that product to be released in the future or to completely discontinue the production process. However, in the mobile phone industry- majority of phones have the same product life cycle, as it is so competitive, it is unlikely for a phone to hit the market again after it has been in the declining stage, as newer technology would have replaced the old product life cycle.
John Howard (Buyers behaviour in marketing strategy, 1989) (13) stated how ‘Not all new products conform to this theoretical life ycle’. When Apple released their iPhone generation, the growth for Samsung’s products took 3 years to reach the product they released; the Galaxy that was an alternative option to the leading iPhone. Majority of early products Samsung had released in the beginning did not have the same introductory stage as the products they released when they were directly competing.
Another disadvantage is that there is no clear indication Of what classifies a product in each stage, for one organisation the product may be in its Maturity Stage, for another it may have entered the declining stage. Companies will have to identify the aspects of what makes a product enter declin ing stage and then differentiate that from the aspects that classify the product in the maturity stage. With Samsung, the use of buyer decision process, and tactical marketing planning have all played an impact for the decisions in innovation of new products, which is what was needed with Samsung’s boom in the market.
Porter’s Five Forces It is always important that organisations consider competition is considered throughout business activity. Considering this, they can apply the correct marketing strategies to compete back. It’s an advantage when an organisation stays ahead of competition it means they can gain the most revenue by being the only one who is ahead. Combining this and other marketing strategies can help business locate competitors and decide any decisions that would need to be made. This also helps the brand as it brings awareness to new Customers by always being innovative.
Micheal Porter came up with ‘Porters five forces model’ (competitive strategy, 2004) which looks at the macro and micro environment and how it affects the way organisations compete. This theory suggested that there are five elements that influence how a business perates. These five divisions of forces are as follows; a) Threat of new entrants b) Threat of substitutes c) The power of buyers d) The power of suppliers e) Current competition This theory expresses the significance of how the environment relates to the competitiveness that the business is in.
It also stresses that an organisation should find competitive resolutions that can influence the competition but not get affected by the competition as much. This means that this model helps a business understand its competitors and the factors affecting it. These five sectors help build an overall picture of the competitor by looking at he threat of substitutes as well as the threat of new entrants. If the correct research was not conducted, organisations can not pick up on other indirect competition.
Each force is carefully analysed with the competitor to build a picture of the different issues that are made by each force. The model was praised for allowing businesses to see the elasticity of a product and by trying to gain economies of scale so they can lead in the market. This model is helpful because it looks outside what may affect the business therefore creating a whole image of the competition and not just looking at factors such s products etc. However, with the market changing so quickly, it will be hard for this model to represent the external factors.
As Samsung is placed in the technology market, organisations such as this should not completely base their assumptions on the Porters 5 Forces. As technology has advanced so has the basis of marketing, other variables such as social networking sites, these variables did not exist when Porters five forces were made. Methodology 1) Approach. This research is being carried out because of Samsung’s increase in profits that were down to the release of Samsung’s Galaxy. In recent years, Apple as dominating the market share of mobile phone technology.
Samsung selectively picked up on technological advance to increase their market share by 20 % (11) SAMGUNG. The rise in competition between the two companies have become intense since the last year, Samsung sold a mere 44 million phones, whilst Apple sold 35 million. (Rheingold 2002). This research process will allow me to get an insight if the marketing strategies placed by Samsung have made an impact on customers. It will also allow me to see the value of branding, if this has an influence on the customer when buying a product in echnology. The first process Of this research will be to identify the philosophy.
The research will follow a positivists philosophy as it allows the use of scientific research methods such as questionnaires and sunleys and provide a form of quantitative data. These methods will allow the use of data to be collected and be analysed to show changes in the market. The research approach will be deductive, as this allows the data to challenge the theories and analyse what the outcome is. Explanatory research will be conducted to indicate why such figures from Samsung boomed last year. This research esign will enable the researcher to consider the effect of marketing in a fast paced market.
The research will be structured to ensure that it is unbiased and reliable. The key concept here is quantity, and numbers are used to express quantity. Therefore quantitative date is numerical. ‘ (Punch; 2005) (15) Quantitative research is good as it lets businesses clarify any potential questions they may have it also allows us to make comparisons with other quantitative data. In this research the questionnaire will recognise what marketing aspects affect the consumers and the several factors that may ave increased their net profit.
As a questionnaire is deductive it will give the researcher both qualitative and quantitative results because it offers a way to analyse trends by looking at the target population. Questionnaires are useful for marketing because it is cheap, effective and easy to distribute, as well as providing the researcher with raw primary evidence. These questionnaires will identify how many people use Samsung, or would use it, in contrast to that of its competition Apples iPhone. Questions considered for the questionnaire have to be chosen fairly, and the sample group should relate to he research question.
Data should be carefully and quickly analysed as quickly as possible to delay any setbacks, as the data will represent the market for that given time. Combining with these questionnaires, the researcher will include tertiary data from internet journals and articles. This methodology will provide the researcher with a more comprehensive approach to data findings. It is essential that the questionnaire design is clear and concise to make it easier for respondents to understand the question and the researcher so they can obtain the correct data from it. Most of the uestions are closed questions which allow just a yes or no answer.
These questions have to be carefully chosen to make sure that either both or one answer provides the researcher with a finding that can help the hypothesis. The other questions will ask about how they hear about the brand, which will provide answers about marketing practices. There will be a 7 questions to reduce time to a minimal and this will allow the researcher to easily analyse the data . These will be using a tick option with at least 5 answers and an alternative box which provides an answer ‘other’ which allows the researcher o see any other elements that bought the awareness of the customer.
For example, how do you hear about the latest Samsung products? A) Adverts B) Promotional offers C) People D) Internet E) Other. The respondent will have answer how they hear about the new products Samsung release, indicating what strata of marketing the business took. Ethical issues will have to be considered in the process of designing a questionnaire; the researcher has to ensure that private and confidentiality are taken into account of the respondents. These questionnaires are conducted anonymously to provoke he most honest response from the participants. ) Sample A sample is a fragment of the population that will allow the researcher to get an insight of what they are trying to identify (William 2010). The sample for the questionnaire will be from 20 respondents aged 16 – 40+, who were into the target group in the mobile phone industry. Purposive sampling will be used as this allows the sample to judge a small portion of the population. 3) pre-test Pre-test is a small scale study in which the results are only preliminary and intended only to assist in design of a subsequent study (William 2010).
Pre- esting with 4 respondents helps the researcher find any errors on the questionnaire. It was given to respondents just like a normal questionnaire, but on a smaller scale. After the pre-testing was conducted, questions such as; ‘Have you heard of Samsung mobile technology? ‘ was added. Some respondents may not have known the brand at all, which means they are unable to answer other questions such as Where do you hear about the latest Samsung technology? ‘ Ifthe respondent has not heard about Samsung, this will help with the data findings as it allows the researcher to query why they have not heard about the brand.
Data Findings The data collected from the questionnaire was analysed to show the changing trends Of the mobile phone industry and in prospects Samsung’s brand Status within that. To make the sample fair, the sample number was divided into two genders (1 0 men/women). This is because Samsung market applies to all genders; however results were collected separately to see if gender plays a role into the awareness set of the customer. This could indicate how branding may affect genders in regards to advertising, promotions etc.
The highest response rate was from candidates aged 19-30 which accounted for 62% of he sample. This was conducted in the town centre in Leicester so convenience sampling was used as this age group was available. 90% of the correspondents were in either employment or full time students, which can show the researcher that a form of lifestyle play a role in the choice of phone and as to why that specific phone would help them in their lifestyle. 35% of the business-people aged 25+ chose the Samsung Galaxy s3 for mainly email and multi-conference purposes (10).
These respondents were more concerned with the content of both phones which represents that they did go hrough a form research process, which was mentioned in the buyer’s decision process. Nearly half (50%) of the respondents claimed they would not spend dearly on a mobile phone as they feel mobile phones with upper market brands are overpriced. This could explain how Samsung reached their booming profits, as the price difference of a Galaxy note II and iPhone 5 is a mere E50-E70 cheaper depending on the tariff.
This could assume that Samsung took this into consideration when handling the price of the product to apply to more of the market, which also helped bring awareness to the brand and competition to Apple. Kwon Oh Hyun, the CEO of Samsung stated “The new innovation of Samsung products has always been a key factor….. As android was a key seller the only way was up”(Kwon Oh Hyun interview business insider) As Android was one of Samsungs biggest selling phones, the innovation of the new galaxy generation only meant an upgrade to what they had offered before, a typical product life cycle. 00% of correspondents were aware of the upgrades that were available with Samsungs technology, which shows that innovation plays a part into bringing awareness to the customer. 50% of the respondents were in fulltime education, and their reference over choice of phone was the Apple iPhone. From looking at their thoughts in buying the phone; appearance, the App Store and social status was apparent for the reason in purchasing an iPhone, contrasting in reason to why the business-people chose their phone of choice.
However, this is peculiar as the higher age brackets have more income to spend on the more expensive brand, but it seems the younger generation are willing to pay the price for external influences. This shows the effect of macro environmental factors, and how they influence the buyers decision into purchasing a product. When asked how they heard about the increase in Samsung’s branding, mass advertising was the most dominant. Factors such as word of mouth and the media have an impact on the consumers.
Advertising through events such as the Olympics have proved that advertising does bring awareness, this is also shown by the increase of El 3m on Samsung’s advertising budget. The data from the questionnaire shows that Samsung do provide a phone that is cheap and reliable. Out of the 25% of people who had a Samsung mobile claimed they were happy with the service and product. Which is a positive aspect as loyal buyers will be retained from keeping ustomers satisfied. By introducing new innovation product life cycles and the use of correct marketing strategies, Samsung have successfully secured a place in the uprising competitive market.
Conclusion The aim of the research was to find out what marketing strategies Samsung had placed in order for their profits to increase in the last year; it was also conducted to see if branding had an impact on consumers when purchasing a mobile phone. The objective was to find out what external influences may cause organisations to have a shift in marketing strategies. From the esearch that was done, it was clear that marketing had a vast role in increasing Samsung’s shares and net profit.
It allowed the researcher to see how even with the recession and other external factors that affect the organisation, that marketing still has influences into bringing new Customers. The firms that survived this consolidation will be the ones that understand their customer (Zeithaml 2006) (13). Samsung has done exceptionally well in increasing their share of the market. Other competitors such as Blackberry who had a dominating opposition to Apple in previous years have had a ownfall in the market due to new technology being offered to existing customers.
The questionnaire also showed that the mobile phone industry goes through a universal product life cycle, which explains the increase of competitors and competitiveness in the technology markets nature. In regards to the questionnaire (appendix iii), not many boundaries were faced. However, in the future it is recommended that some changes to the questionnaire should be made to increase validity and reliability. For instance, increasing the sample size will enable the researcher to get a larger scope of he changing trends that affect the market.
If the research was to be conducted again, it would be recommended that an interview to a worker from Samsung stores (i. e. the Samsung flagship store) should be taken, to see how they find applying the marketing strategies chosen by Samsung. Also, a more stratified approach to sampling would be necessary so that the researcher can form subgroups and analyse data accordingly. BBC Business. (2012). Samsung sees record profits on smartphone sales.