Samsung is a global company which has aggressively grown its cellular phone business over the past few years. Despite cellular products being one of Samsung newer global lines, in the past few years it has been by far the greatest contributor to Samsung global sales (Samsung. Com). The Samsung Galaxy S Series of smart phones was introduced into the market in 2010 as their flagship smart phone product, running the Google provided Android operating system.
The original Galaxy was replaced by the Galaxy SSI and subsequently the Galaxy ISIS, both of which were extremely successful worldwide. The market has become a lot more competitive since the introduction of the original Galaxy S and much is expected from the latest n the S Series in their latest product the Galaxy SO. What is the product Samsung is offering? Describing the Galaxy SO per Jostler’s five product levels (Kettle, 2012), the benefit at its core is the ability to communicate through a multitude of means as well as perform computational type tasks while on the move.
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The basic product is a smartened. The expected product has a large touch screen, has good battery life and has many social, entertainment and business applications. At the forth level, being the augmented product the Galaxy SO offers some additional new features which previous smart phones have not offered in the past. Such as the ability to program the phone as an infra red remote controller and control movement on the screen without touching it and by merely waving ones hand in front on the device.
In South Africa, Samsung have decided to offer a two year accidental damage warranty on the Galaxy SO. This will greatly assist in creating additional perceived value to customers. On the final fifth level, potential product will include the future applications and software upgrades that will be developed for the Galaxy SO device ever the course of the product’s life. Based on the previous model, the Galaxy ISIS, there were many upgrades of the software which brought with it additional features and functionality which were not present when the device was first launched.
Customers have come to expect this as an additional value, part of the value proposition offered by Samsung flagship products. As the product is a new one, with a product life of no more than two years, the initial marketing plan should captivate both innovators and early adopters (Kettle, 2012). The product’s value proposition is By scanted one to status as his device will be one to the most technologically advance De devices available when launched. What is the current marketing situation?
In the past in South Africa, Samsung has done very little direct marketing to final consumers for their cellular device offerings and have left the consumer marketing to the cellular networks. As such Samsung has focused its efforts and conducted Business to Business marketing and relied on the four South African cellular networks and various brand stores to market their devices to final consumers. This has not lead to a very cohesive marketing plan as Samsung has very little input on hat the consumer hears about its products.
The plan for the Galaxy SO is that Samsung would like to engage in more Business to Consumer marketing to create more of a demand for its flagship product than has been the case in the past. Despite the poor marketing effort in the past the Galaxy ISIS still garnered significant interest in the South African market gathering nearly 50,000 unit orders prior to its release (apprehensiveness’s. Co. AZ). The previous practice of marketing at the cellular service providers would also be continued as they would still serve as the main retailers for the device.
What characteristics will be used to segment the market? The target market segmentation would include consumers with an above average income as the product is a flagship premium device which will be priced at the top end of the product scale. The age category or generation to be targeted would be the 18-49 year olds as it is believed that this the age category most interested in premium model smart phones. A specific subset target market would be the, technology Junkies, who are stereotypical first adopters of new technology.
Other subsets are existing smart phone users who are looking to upgrade their phones as ell as existing “feature” phone owners that are looking to buy their first smartened. In its cellular business Samsung has taken a differentiated marketing approach in attempting to provide a cellular device for everyone. Samsung has various models across the entire spectrum of price points. This is in direct contrast to one of their competitors, namely Apple, in that they only have one model of smartened, namely the phone which only competes in the premium smartened price category.
The Galaxy SO smartened is Samsung chosen product to complete against Apple’s phone offering. What does the Galaxy SO offer? The device offers a premium smartened experience with powerful hardware and a large, vibrant, full high definition touch screen and access to one of the largest app stores available for downloads of various types of applications. The detailed features, functions and benefits can be seen in table 1 below.
Table 1 Feature or Function I Benefits I bib RAM I Fast and fluid multi-tasking I 5″ Full HAD screen I Large visuals with excellent quality | 2,600 amah battery I Long lasting battery life even under heavy usage I Micro SD slot I Storage capacity expandable as users need | 13 MM primary camera I Extremely high quality hotplates I Secondary camera I Device can be used for video calls I Access to Google Play Store I More than 800,000 APS available for use on device I I Various high speed wireless connectivity options available Who are Samsung competitors in this market?
The smartened device market in South Africa is quite different to many other markets in the world in that Blackberry still holds the majority of the market. Research conducted by World Wide Word, a leading independent technology research and strategy organization, estimates that as at March 2013 there were 12 million activated smartened devices in South Africa (unbranded. O. AZ). This is shared as follows, 40% Blackberry, 30% Monika, 15% Samsung and 7% Apple.
In the broader South African smartened market Samsung is a follower but in the premium high end smartened market Samsung is a leader as the Galaxy ISIS was the best selling high-end Smartened in South Africa of all time (MGM. Co. AZ), selling 200,000 units in the nine months following its introduction into the country. Samsung direct competitors to the Galaxy SO in South Africa would be the Apple phone, the Monika Ammonia, Blackberry ZOO and other Android devices from Sony and ETC. What Channel Distribution should we use? Samsung would follow the status quo when it comes to distributing the Galaxy SO.
Multiple channels would be used to cater for the different target markets. The indirect channel to the cellular networks who would bundle the phone together with a “talk package” would form the majority of the volumes of sales of the device. This channel is favored by most consumers as many would prefer to effectively have the device financed over the 24 month cellular contract period rather than paying for the premium of an expensive device in a once off upfront payment. Cellular networks re also able to bundle the mobile device with free minutes and free 36 data together with the phone creating a better value proposal for the customer.
Other distribution channels would include the sale of the device to retail chain stores for customers who would prefer to purchase the mobile device without being tied to a long term contract. Finally, Samsung could offer the sale of the device on their website for those consumers wishing to buy the product directly. Samsung already has such an online purchasing website available and adding another product to it would not be problematic in any way. What are Samsung Strengths and Weaknesses? Samsung has a good established dealer network throughout South Africa.
They have developed a group brand name in the country for many years with their other product lines, such as their kitchen appliances and audio video products. They would already have existing relationships with all the cellular networks in South Africa and would easily be able to add another flagship product into that distribution network. No weaknesses in relation to the Galaxy SO could be identified. What are Samsung Opportunities and/or Threats? Samsung currently holds approximately 95% of the Android smartened market in South Africa (MGM. O. AZ), with Sony and ETC taking up the remaining 5%.
This means that Samsung has a far superior more established distribution network than its Android competitors. Samsung also has an advantage over the Apple phone in South Africa in that the tunes app store in South Africa is very poorly stocked. While many APS are available in other countries for both platforms, in South Africa many APS are only available for Android phones. Despite this the Apple phone remains a definite threat to the Samsung Galaxy S line to phones as they nave managed to market themselves as a premium product for all to aspire to.
However the current offering from Apple is the phone 5 which by technology standards is “old” as it was released more than 6 months ago. With the next Apple product not expected to be available in the market for another few months at least, this gives Samsung a healthy head start against their global rival within the South African market. Monika market share has dropped in the past 9 months (unbranded. Co. AZ) and this is likely to continue due to the fact that Monika has discontinuing their Simian operating system, which traditionally has been the favorite among South African Monika fans.
Monika will now focus solely on the Window mobile platform (enfranchisement’s. Com) which has not been well received in South Africa. Samsung biggest threat is Blackberry which up until recently have enjoyed unrivaled dominance in the smartened market in South Africa. Blackberry’s dominance in South Africa is largely due to the high 36 data costs, scarce availability of cheap WI-FL access points and Blackberry’s previous Black Internet Service (IBIS) which was an unlimited data service for a fixed monthly fee.
This provided Blackberry with a trump card competitive advantage over other smart phone manufactures in South Africa as they were the only provider that could offer such a value added service. This competitive advantage is now coming to an end as Blackberry is no longer offering this service on its newer model smartness, for example the ZOO. Users of these devices will now also need to pay for data in the same way that users of the Galaxy SO and phone do. A current threat in South Africa is the declining rate of exchange to Rand.
As all high end electronics are fully imported the cost of such devices increases with the depreciation of the South African Rand. If this depreciation continues the cost of providing the product in the country will begin to become unaffordable for many of the current members of the target segment. What are our marketing strategy objectives? Samsung goals are to increase their brand awareness in the South African market and increase their overall Smartened market share from the current 15% to 25% by the end of 2014. Achieving sales of 200,000 units in half the time (5 months) it took for the previous model, namely the Galaxy ISIS. * Achieving an ROI of the weighted average cost of capital for the South African operation + 5%. What is Samsung Positioning Strategy? Samsung should use a multiple segment product specialization. Samsung has smartened products ranging in price from under RARE to the previous Galaxy SO which launched at a price of approximately RE,OHO. They are able to offer a smartened solution at every price point.
They have full touch screen models as well as models with hardware keyboards. This is to offer a solution to the maximum number of consumers. The Galaxy SO will form part of the differentiated marketing campaign as this flagship premium product will be targeted at specific segments. However, the marketing campaign will also be used to create increased brand awareness and general consumer awareness of the flagship phone which will be marketed as the best smart phone currently available. As discussed in the SOOT analysis done above, Samsung has currently only a 15% market share for smartness.
There is a huge opportunity for growth especially when considering the two current biggest market snare holders, namely Monika and Blackberry nave both lost their current competitive advantage. Now is the time for Samsung to take advantage of the market situation. What is the Product Strategy? The Galaxy SO is a durable good as it will be used for some time by its consumers. It is a branded product as it will feature the Samsung name as well as Samsung specific touches, such as the Samsung app store and the Samsung specific virtual keyboard.
These touches are to differentiate the phone from its competitors such as the Apple phone and other manufacturers’ Android smartened offerings. The product will be differentiated from its competitors by its various features, some of which are present in its competitors but none successfully combine them all in one attractive package. What is the Pricing Strategy? As discussed above the distribution model, the Galaxy SO will be available for free to consumers signing 24 month cellular contract with any one of the four available network service providers.
Samsung will work with all of the service providers to ensure that all of the offerings for the Galaxy SO are fairly priced when considering the premium nature of the device as well as the monthly contract prices for the devices with which the SO completes directly for example, the Apple phone. Special deals will be negotiated with the service providers to create special SO packages that provide additional value to the final consumer. For example, Samsung could ensure that each SO contract contains more than the average amount of free monthly data.
As all Smartness use a significant amount of data and anyone buying a high end smartened would need data to utilize most of the semaphore’s features this would appeal to the segmented target market buying this device. The cash price for the device to be sold without a contract should be set in the premium range to prevent consumers thinking that the device is a low quality product (Kettle, 2012). Samsung would need to perform the calculations requires to ensure that they meet their ROI acquirement but I recommend a selling price slightly lower than that of the Apple phone as this is their main competitor in the premium smartened market.
If the content of the marketing campaign can send the message that the Galaxy SO has all the features that the phone has plus more and has more available APS and is still slightly cheaper, this will add to the overall value prospect message to consumers. As is normal with most high technology devices, Samsung can employ the Market- skimming pricing methodology (Kettle, 2012) whereby the price begins at a high point and decreases overtime.
While this practice runs the risk of alienating customers who buy the product at a higher price on in the products life cycle I believe it is worth the additional revenue gains. Pricing of competitor products should be closely watched for any aggressive moves so that the Galaxy SO price can be quickly altered should the need arise (Kettle). What should the distribution strategy be? No changes to the existing cellular device distribution strategy need be employed. The distribution channel as discussed above should be continued with the Galaxy SO.
What is the marketing communications strategy? The Galaxy SO is a new product and as such the first goal in the product adoption process is product awareness. The target for the initial campaign is a 50% awareness level among the identified target segments. A hybrid of both push and pull strategies will be used. The push component makes the device attractive for all the cellular networks to carry while the pull component creates a brand loyalty and awareness and desire for the specific product among final consumers.
If successful targeted consumers will request the Galaxy SO by name at their local cellular network shop. A full media campaign including television advertisements, Youth advertisements, radio advertisements and print advertisements in South African newspapers and technology magazines will be developed in conjunction with each other ensuring all reinforce the awareness message. The first message will be quite simply, “The Galaxy SO is coming”.
The targeted early technology adopters are expected to move quickly through the product adoption process, from awareness to interest and straight to adoption especially those consumers who already own a Galaxy ISIS. Prior to the official launch of the device being available, promotional intentions will be run on national radio stations which service the age demographic of our target market. The pay off line for these competitions will be “Be one of the lucky few to be the first to own the new Galaxy SO”. This is designed to create an interest and a desire to own among the target segment.
This will also create a sense of urgency to obtain the device now rather than later, that is, “Be one of the first to own this device”. This taps into one of the reason why people buy (Kettle, 2012). This can create a sense of status and be the target of friends and family envy. Those target market segments currently owning a different brand or platform of smartened will require the second phase of the communication strategy, namely the listing of the various new features that are included in the product offering such as the key features identified in Table 1.
During this part of the campaign it is planned to have a group of people using the device and giving feedback on Twitter about the phones many useful functions. The group should be identified as existing twitter users who have many existing followers that are estimated to be in one of our target segments. This will add to the awareness part of he campaign and also assist those buyers requiring a level of evaluation and trial before adoption.
Samsung is strongly positioned to take over as the market leader in the smartened market within South Africa from the likes of Blackberry and Monika. A highly effective, coordinated and well managed marketing campaign for their new flag ship smartened device will almost certainly guarantee exceptional growth in this market in the short term. References http://MGM. Co. AZ/article/2013-03-12-Samsung- raises-the-stakes-even-higher-with-the- so Samsung Raises the stakes even high with the S IV http://unbranded. O. A/ news/smartness/78775-blackberry-simian-still-lead-as-smartened-market. HTML Blackberry, Simian still lead AS smartened market http:// www. apprehensiveness’s. Co. AZ/marketing/Samsung-target-Africa-expansion Samsung Target Africa Expansion http://www. enfranchisement’s. Com/Monika- stops-production-of-simian-devices-28576/ Monika stops production of Simian Devices http://www. Samsung. Com/Africa_en Kettle, Keller. (2012). A Framework for Marketing Management – 5th Edition. Prentice Hall. Wood, M. B. (2011). The Marketing Plan Handbook – 4th Edition. Prentice Hall.