Marketing Management BA3560

Samsung Mobile: Market Share and Profitability in Smartphones

Summary:

The major problem Samsung mobile faces is that despite of being the market share leader Samsung
accounts only for 14 per cent of smartphone profits. For the long time Samsung was focusing on growing
its customer base for future profitability. The question is if the time has come to take profits in such fast-
changing business field, otherwise it may be too late. Or the priority should still be being a market share
leader? If so, what should Samsung do.

Statement of problem:

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Samsung is losing profits as well as losing their market share not only to Apple which is their competitor,

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but also to other Android based smartphone companies. Many Samsung users from low involvements

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segments don’t even know the difference of Android OS of Samsung compared to other Android based

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Causes of the problem:
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Apple is their biggest competitor. It holds other 86 per cent of the profits. So Samsung invests billions in
their advertising and marketing budget- the largest amount among their competitors- and still manage
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to lose to Apple.

There are several reasons for that. First of all their OS provides a little control over the user experience.
In this market especially, it is important to be able to differentiate yourself from other competitors. Many
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of their potential clients do not understand that not all Android phones are the same. For the longest
time it has been that either you are an Apple or Android user. People associate IOS with Apple but they
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don’t associate Android with Samsung directly, there are too many options. It is easy for a smartphone
user to switch and try out another Android smartphone, when for the IOS user it is almost impossible, it
is too hard because the system is completely different. And of course, there is almost none computability
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of all Samsung products, while in Apple if you buy one of their product let’s say an Iphone you become
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an IOS user and you switch in a time all your technology to Apple products, chances are you will want to
buy a MAC laptop instead of Samsung. Samsung doesn’t fully appreciate their enormous product line.

Another reason may be that instead of focusing on Apple as their main competitor, they should focus
more on other small competitors. Focus to distinguish themselves from Android smartphones. For
example, they have completely different security systems but low involvement segments don’t know
about that.

Lastly, they have too many smartphone models. They don’t have a clear position in a consumer minds.
They position themselves as a high-tier, mid-tier, and low-tier smartphone vendor, all at the same time.
This is not a necessarily bad thing, you may choose a phone according to your budget you could think,
however when you don’t have a clear position in a consumer mind you lose.

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 Decision criteria and solution:

Large smartphone portfolio allows to target more consumer segments and capture a large market share,
but this also adds to its production costs. Samsung is over-positioning itself in the smartphone market,
which weakens its overall position against its rivals. We can see from the last years changes that the
company is now pursuing a different Apple-like smartphone strategy, streamlining its product offerings,
just as Apple is grappling with slowing sales and widening its range of products in search of growth.

Developing another OS may be an absolute solution to their problem, one may think, however it
requires enormous amount of money. And the opportunity cost of losing the current Google’s Android
users is huge. It will be too costly and Samsung may lose their brand in the process.

So maybe instead of completely changing their OS, they should Co-brand with companies like Audi,
Lexus and etc. and create a value in consumer mind as a more luxurious brand. Also, co-branding with
big fashion designers to develop Samsung cases for phones with their design may also attract completely
another market segment.

However developing and upgrading their current system so that all of their current products starting
from laptop to washing machines that could interact with each other, may bring them on completely

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another level. For example, according to ITU, the Internet of Things is “the interconnection of uniquely

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identifiable embedded computing devices within the existing Internet infrastructure”. In other words, all

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devices like cars, smartphones, computers, refrigerators, dishwashers, dryers and any other devices that

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are connected through Wi-Fi or Bluetooth can be called the IoT. The IoT market is a very lucrative

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market, in which all technology companies fiercely compete to gain market share.
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The main reason for this is Samsung’s loss of market share in China and other developing countries
where companies like Huawei, Xiaomi and Lenovo are expanding rapidly. In order to compete with these
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low-end smartphone vendors Samsung could introduce a cheap smartphone line and use a different
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approach for this ‘new’ brand to increase its market share in this segment.
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Augmented and virtual reality markets will become very profitable growth markets and Samsung should
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take advantage of this opportunity.

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Sources apart from case:

https://www.ft.com/content/35cb2a08-44f0-11e6-864d-01c0167ff470

https://www.ijariit.com/manuscripts/v3i5/V3I5-1269.pdf

http://aod.teletogether.com/sec/20131106/IM_JK%20Shin_Samsung%20Mobile
%20Vision&Strategies.pdf

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 www.samsung.com/in/smartphones/all-smartphones/

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