Rachel YanTemitope TiamiyuLaura Battaglia
Francesco Messina
SMARTPHONE INDUSTRY
How many of you used smartphones 5 years ago?
QUICK QUESTION
How many of you are using smartphones now ?
Amazing product!
Relevant topic for U.S. college students- Smartphones vs Non-smartphones
Past vs Future- Technology- Global trends
WHY SMARTPHONES?
INDUSTRY STRUCTURE
A SHORT HISTORY
•1992: IBM developed “Simon”, the first mobile phone to incorporate PDA (personal digital assistants) features
•1996: Nokia released Nokia 9000, a palmtop computer-style phone combined with a PDA from HP
•1997: Ericsson released the GS88, first device to be labeled as “smartphone”
A SHORT HISTORY
•2000: The touchscreen Ericsson R380 Smartphone was released. First to use an open operating system, Symbian Os
•2002: RIM released the first BlackBerry, which was the first smartphone optimized for wireless email use
•2007: Apple released the first generation of iPhone, the first mobile phone to use a multi-touch interface
… New Smartphone Generation
WHAT IS A SMARTPHONE NOW?
A smartphone is a mobile phone built on a mobile operating system, with advanced computing capability connectivity.In addition to digital voice service, it usually provides: Text messaging and e-mail High-speed data access through Wi-Fi and
mobile broadband Web browsing Video cameras MP3 player and video playback and calling Possibility to run free and paid applications
HARDWARE VS. SOFTWARE
Smartphone hardware manufacturers compete primarily based on one of two models:
1. manufacturing their own hardware and licensing the software that runs on the smartphone from another firm
E.g. Nokia (Windows Phone)
2. manufacturing the hardware and developing the proprietary software that runs on the device
E.g. Apple (iOS), RIM (Blackberry)
OPERATING SYSTEMS (OS'S):
Three forms:PROPRIETARY LICENSABLE OPEN SOURCE
• Developed in-house by smartphone manufacturers
• It allows to differentiate and integrate with the hardware
• High costs and time consuming
• E.g. iOS (Apple)
• Any manufacturer can use these OS on his devices
• Reduced cost of developing an OS
• Licensing can be expensive also
• E.g. Windows Phone (Microsoft)
• Free and freely customizable OS
• Highly developed OS at no cost
• E.g. Android (Google)
SALES AND MARKET SHARES OF SMARTPHONE MANUFACTURERS
BRAND 2012 UNITS SOLD
2012 MARKET SHARE
2011 UNITS SOLD
2011 MARKET SHARE
1. Samsung 215.0 M 31.4% 90.9 M 18.7%2. Apple 135.8 M 19.8% 93.1 M 19.1%3. Huawei 55.2 M 8.0% 20.0 M 4.1%4. Nokia 35.0 M 5.1% 77.3 M 15.9 %5. ZTE 34.9 M 5.1% 12.0 M 2.5 %6. RIM 33.2 M 4.8% 52.5 M 10.8 %7. Sony 31.9 M 4.6% 26.8 M 5.5%8. HTC 31.5 M 4.6% 44.6 M 9.2%9. LG 27.6 M 4.0 % 23.3 M 4.8%10. Lenovo 24.9 M 3.6% - -Others 93.2 M 8.9% 45.5 M 9.4%TOTAL 686.7 M 100% 486.0 M 100%
WHAT WE CAN SEE..
1. The smartphone market is a growing market: It grew 41% from 2011 to 2012
2. Smartphones accounted for 39% of all mobile handsets sold
3. There are 1.31 billion active smartphones in the world
4. Samsung and Apple are the major players
5. Huawei makes strong gains and is World's #3
MARKET SHARES OF SMARTPHONE MANUFACTURERS:
31.4%
19.8%8.0%
5.1%
5.1%
4.8%
4.6%
4.6%
4.0%3.6%
8.9%
SamsungAppleHuaweiNokiaZTERIMSonyHTCLGLenovoOthers
HHI (of the first 10
players):
1668
BARRIERS TO ENTRY
Relatively high:1. ECONOMIES OF SCALE2. INTELLECTUAL PROPERTY3. BRAND LOYALTY4. NETWORKING
BUT THE DEGREE OF RIVALRY IS HIGH:
1. DIFFERENTIATION: significant between home and business users
2. ECONOMIES OF SCALE: almost no scalability to create more software
3. PRICE: consumers generally value quality significantly over price
4. PLAYERS: switching from traditional cellphone industry
ADVERTISING STRATEGIES
TYPES OF ATTRIBUTES
Search attributes Online reviews
Experience attributes Online reviews
Our focus is on these three players: Apple Samsung Blackberry
PERSUASIVE ADVERTISING
• Advertising strategy deployed is to attract and retain their clients, building long term relationships with customers through “differentiation”
• Ads emphasize on the perceived quality of both the phone and the brand
Based on the company’s competitive advantage Samsung: Size, Ease of transferring files Apple: “Incredible design”, “thin”, “smart”. iPhone trend Blackberry: Culture, Diversity, Business
Product attributes: Also via ads
INFORMATIVE ADVERTISING
Samsung and Blackberry attacks Apple in order to steal market share
Apple doesn’t respond Blackberry versus Apple
http://www.youtube.com/watch?v=LwxNNsmGhVI
COMPARATIVE ADVERTISING
It comes very often when the ad is bundled with a network provider plan.
Usually it is a sketch or a short story.
HUMOUR APPEAL
CELEBRITY INVOLVEMENT
Bundling with network carriers
Ad is about a story or a sketch, at the end the smartphone is shown along with the details of the plan.
Direct Competition
All compete on price: Samsung and Blackberry
Advertising based on quality and reliability of network service: More so, true for the iPhone: AT&T: “the iPhone downloads fastest on AT&T’s 4g” Sprint: “truly unlimited data for your iPhone…only on Sprint”
NETWORK CARRIERS
THE TWO MAJOR PLAYERS…
captured 50% of all Smartphone sales in 2012
ADVERTISING CAMPAIGN
“ THE NEXT
BIG THING”
“IT’S THE MOST AMAZING IPHONE YET”
“FINALLY”
"THE BIGGEST
THING TO
HAPPEN TO
IPHONE S
INCE
IPHONE"
Powerful brand: goes after the mainstream marketTop rising brand of 2012According to Interbrand, the Apple logo is now valued at
$75.56million.Advertising expenditures: $333MHardly responds to commercial attacks from
competitorsMarket share of 19.8% in 2012 vs. Samsung’s 31.4%
Huge sales in developed regions like North America Limited presence in high-growth emerging markets such as
Africa
APPLE
Rated second in phones Top technology brand of 2012 Advertising expenditures: $401M Speed in launching new products Of 700 million units shipped, Samsung shipped a
record 215 million smart phones worldwide Became more assertive with carriers – to distinguish
itself from other android phones. Captured 31.4% market share in 2012. Mostly attacks Apple, in order to steal market share.
SAMSUNG
INTERBRAND BEST GLOBAL BRANDS, 2012
Apple Samsung
2012 Placement 2 9
2012 Brand value $75.56M $32.89M
2012 Units sold 135.8M 215M
2012 Market Share 19.8% 31.4%
RAW DATA ANALYSIS
RAW DATA ANALYSIS
27 TV ads analyzed (source YouTube) Players taken into account:1. Apple (11 ads)2. Samsung (10 ads)3. BlackBerry (6 ads)
Products advertized:1. iPhone 5, iPhone 4/4S2. Samsung Galaxy S3/S2, Note II, Nexus3. BlackBerry Z10, Torch 9800, Curve Q8350
CODING TEMPLATE
APPROACH OF ADVERTISING [INDUSTRY]
59.3%40.7%
InformativePersuasiveComple-mentaryMemory jamming
APPROACH OF ADVERTISING APPLE
27.3%
72.7%
Highly PersuasiveInformativePersuasiveComplementaryMemory jamming
Extreme strategy
Apple’s approach is sometimes complementary rather than persuasive.
Maybe it could be arguable, but we think that the persuasive approach is prevalent since the aim is to charge a very high price and change consumers’ preferences.
PERSUASIVE OR COMPLEMENTARY?
APPROACH OF ADVERTISING SAMSUNG
90%
10%
Highly InformativeInformativePersuasiveComplementaryMemory jamming
Extreme
strategy
APPROACH OF ADVERTISING BLACKBERRY
66.7%
33.3%
More balanced strategyInformativePersuasiveComplementaryMemory jamming
PRODUCT FEATURES DESCRIBED IN THE ADS
63.6%36.4%
AppleAds explaining phone characteristicsAds with no phone characteristics
SamsungAn ad without phone characteristics is not
an ad for this player!
Very hard to find a Samsung ad with no features presented.
Reason: Samsung wants to communicate the technological superiority of its products.
PRODUCT FEATURES DESCRIBED IN THE ADS
PRODUCT FEATURES DESCRIBED IN THE ADS
83.3%
16.7%
BlackBerryAds explaining phone characteristicsAds with no phone characteristics
HOW MANY CHARACTERISTICS PER AD?
Apple Samsung Blackberry0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2.27
3.13.5
# o
f ch
arac
teri
stic
s pe
r ad
(av
erag
e)
Why BlackBerry on average shows more product characteristics in its ads?
Because it mainly addresses the target market segment of business people, who demand apps relevant to their daily job.
Here is the incentive to show in detail many applications of the phone.
HOW MANY CHARACTERISTICS PER AD?
COMPARATIVE ADVERTISEMENTS
7
20ComparativeNon-compar-ative
27 ads
5 Direct
27 ads
2 Indirect
5 direct ads where the competitor product is :1. Mentioned2. Shown3. Criticized Ex: “iPhone 5 has a sketchy battery” by
Samsung
2 indirect ads where:1. They allude to distinctive characteristics of the
competitor. Ex. Size of the screen between iPhone 5 and
Galaxy S3 Apple claims (proportionate is good) Samsung argues (big is good)
WAR OF COMPARISON
BRAND FOCUS
Apple Samsung Blackberry0%
10%
20%
30%
40%
50%
60%
54.5%
20.0%
50.0%
% o
f ads
wit
h an
em
phas
is o
n th
e br
and
Mean
HIGH QUALITY PERCEIVED
Apple Samsung Blackberry0%
20%
40%
60%
80%
45.5%
70.0%
50.0%
% o
f ads
wit
h a
stro
ng
emph
asis
on
the
qual
ity
of t
he p
rodu
ct
Price is never mentioned in the ads, except for bundled ads with network providers
In the U.S. contracts make people less aware of the cost of the phone
No tricks in the ads: long-term relations with customers
LAST REMARKS FROM OUR ANALYSIS
CORNELL SURVEY
Smartphone Non-smartphone0
10
20
30
40
50
60
70
80
90
Do you have a smartphone or non-smartphone?
% o
f Res
pond
ents
DID YOU BUY YOUR PHONE BECAUSE SOMEONE RECOMMENDED IT TO YOU?
(FRIENDS, FAMILY, ONLINE REVIEWS, ETC.)
Yes No0
10
20
30
40
50
60
% o
f Res
pond
ents
IF NO PEOPLE AROUND YOU ARE USING SMARTPHONES, WOULD YOU STILL BUY
THEM?
Yes No Only at a cheaper price0
10
20
30
40
50
60
70
80
% o
f Res
pond
ents
HOW WELL DO YOU REMEMBER THE IPHONE ADVERTISEMENTS?
Don't remember at all Remember company and product but not ad
Remember ad0
2
4
6
8
10
12
14
16
Smartphone Non-smartphone
# of
Res
pond
ents
WhiteThinSimpleCool
SmartInnovativeSophisticatedBrilliant
USE ONE WORD TO DESCRIBE WHAT YOU RECALL FROM IPHONE
ADS?
Persuasive advertising:- All positive attributes and impressions
No comparative advertising- Do not compare itself to other brands
HOW WELL DO YOU REMEMBER THE SAMSUNG GALAXY ADVERTISEMENTS?
Don't remember at all Remember company and product but not ad
Remember ad0
2
4
6
8
10
12
14
16
18
Smartphone Non-smartphone
# of
Res
pond
ents
FastGoodBig
EasyFancy
USE ONE WORD TO DESCRIBE WHAT YOU RECALL FROM SAMSUNG
GALAXY ADS?
HumorHumorousSlogan:EvolutionThe next big thing is already hereComparative advertisingEverything the iPhone does and more.Apple
WHICH SMARTPHONE REPRESENTS HIGHER SOCIAL STATUS TO YOU?
iPhone Samsung Galaxy0
5
10
15
20
25
30
Smartphone Non-smartphone
# of
Res
pond
ents
InvestmentsAdvertising StrategiesGlobalization
RECOMMENDATION
APPLE INC.St
ock
Price
(US$
)
Time
SAMSUNG ELECTRONICS CO. LTD.St
ock
Price
(Kor
ean$
)
Time
Search attribute- features
Persuasive advertising- product differentiation- slogans
Better execution of advertisements (e.g. Blackberry)
ADVERTISING STRATEGIES
Successful story: SamsungAim for places with low brand loyaltyIntense advertising efforts
GO GLOBAL!
THE END
Questions?