Transcript Apple Samsung

Smartphone Industry
Cole Bardreau
John Knisley
Laila Judeh
Teemu Tiitinen
Agenda
 Brief History
 Industry Analysis
 Apple vs. Samsung
 Advertising Strategies
 Raw Data Analysis
 Recommendations
Why Smartphones?
 Use the product everyday
 Global growth of 23.6%
 High Global competition; Mature US market.
 Global industry of over $265 Billion
 In 2015, 1 Billion Smartphones will be sold globally
What is a “Smartphone”?
 "a handheld device that enables users to store and retrieve e-mail,
contacts, appointments, tasks, play multimedia files, games,
exchange text messages, browse the Web, and more“
 Mobile phones with advanced PC-like capabilities
 Independent operating systems and allow for installation of software
applications by third parties
 Android, Windows Phone, and iOS
Brief History
 “Mr. Watson, come here. I
want to see you”Alexander Graham Bell
(March 10th 1876)
 Motorola introduced 1st
handheld mobile phone on
April 3rd 1973
 “Smartphones” came
around in the 1990s
SIMON
 Credited as 1st
“Smartphone”
 Sale to public August 16th
1994
 Touchscreen & email
 Only sold 50,000 units in 6
months of being on the
market
 Led the way for future…
The Evolution
 Term “smartphone” first
coined by Ericsson in 1997
 Apple is credited for
making it a mainstream
product
 Growing due to increased
income in emerging
markets
Industry Analysis
About the Industry
The Supply Chain
 Key Economic Drivers
 Disposable income
 Supply Industries
 Parts and manufacturing
 Demand Industries
 Consumers tastes and preferences
 Related Industries
 Telecommunications (Verizon, AT&T, T-Mobile etc.)
 Smartphone App Industry
The Supply Chain
Who are the players?
Global Market Share
 Samsung – 25.2%
 Apple – 11.9%
 Huawei – 6.8%
 Lenovo – 5.4%
 Xiaomi – 5.1%
 Others – 45.5%
Competition
 HHI
 Global- 902.07
 US-2787.7
 CR4
 Global-49.3%
 US-85.3%
 Fragmented so extremely
competitive globally
 US dominated by few firms
Around the World
SWOT Analysis
Market in the U.S.
 Apple- 42.5%
 Samsung-29%
 LG-7%
 Motorola-6.8%
 HTC-6.1%
 Blackberry-2%
 Nokia-2%
 Others-3.4%
U.S. Market
 After closer examination, it
is the Android products
that is majority
 Much closer in US than
globally
 Clearly dominated by 2
players
Industry Growth in the U.S.
 Innovators (2.5% of market)
 Early Adopters (13.5% of
market)
 Early Majority (34% of
market)
 Late Majority (34% of
market)
 Laggards (16% of market)
Future of Industry in U.S.?
 The number of new
smartphone users added
each year will be fewer
 The next 60-70 million users
will be older and have less
disposable income
 Sales will become driven by
replacement and upgrade
sales
 Importance of innovation
and advertising adding utility!
Advertising Strategies
Combative Advertising
 This type of advertising redistributes consumers among
brands but does not shift consumer preferences.
 Very common when two main competitors are competing
for market share.
Combative Advertising
 Prisoner’s dilemma
Market shares
25.2%, 11.9%
Apple would steal
market share from
Samsung
Samsung would steal
market share from
Apple
??,??
 Advertising could also be used to keep out new firms when
they enter
Persuasive Advertising
 Characteristic of mature
markets.
 Does not increase the
size of the “pie”.
 Ads are not informing
people about what
informative
smart phones are.
persuasive
reminder
Comparative advertising
Informative view
 Advertising is a means of conveying information to
consumers.
 Reduce consumers’ search costs
 Reduce price dispersion
 Direct vs indirect signaling
Informative view
 Leads to more consumers demanding the product 
$
more profit.
Demand with
high advertising
Profit
Demand with low
advertising
MC
Quantity
Direct advertising (Samsung)
 Price references imply value
 People will not search for
better deals
 People will assume it is the best
Indirect Signaling (Apple)
 Advertising can be used to signal quality
 Only high quality companies can afford to advertise a lot.
 Dominantly experience goods
 3 Reasons for indirect info:
 1) signaling efficiency
 2) match products to buyers
 3) repeat business effect
Persuasive View
 Advertising creates
product differentiation
 Demand becomes
more inelastic,
consumers have higher
WTP.
 Can lead to higher
prices  more profit.
$
Demand with low
advertising
Demand with
high advertising
Profit
MC
Quantity
Apple vs Samsung
Complimentary View
 Stable preferences
 May value prestige
 Product Placement
Raw Data Analysis
Overview
 Analyze Primetime Advertising Data 2014
 Industry’s Primetime Advertising
 Investigate Apple vs Samsung
 Similarities
 Differences
Primetime
Advertisements:
Industry
• Two Major Players – United
States
• Apple & Samsung
• 58% of Advertisements
• Consistent with smartphone
users
• Nearly 70%
• Apple: Nearly 900 Primetime
ads
• Samsung: Nearly 800
Primetime ads
Apple vs. Samsung
 Apple
 IOS operating system
 Apple iPhone
 Lifestyle
 Samsung
 Android operating system
 Samsung Galaxy
 “Be Different”
Primetime Advertising Expenditures - 2014
 Apple Expenditures
 Samsung Expenditures
 Total $ Spent
 Total $ Spent
 $162 M
 $124 M
 Average $ per Ad
 Average $ per Ad
 $193,107
 $174,788
 $ per second
 $ per second
 $4,214
 $4,956
Monthly Analysis
• Apple
• IPhone 6 release
•
September
• January, February, March
–Dormant
• 2015 trends
• Samsung
• Consistent
• Samsung Galaxy S5
release
•
April
• Similar advertising during
release
Day of Week Analysis
• Apple
• Beginning of week
• Decrease Friday &
Saturday
• Increase Saturday &
Sunday
• Samsung
• Consistent
• Weekend increase
Time of Day Analysis
• Apple & Samsung
similar strategy
• Target
• 8PM – 10 PM
• Weekly shows
• After dinner
Network Analysis
• Apple
• Consistent Advertising
• CW – Targets weekly
audience
• Samsung
• Targets 4 major
networks
• Popular shows
Type of Show Analysis
• Apple
• Targets: Drama
• Documentary
Advertising
• Samsung
• Targets: Drama, Reality,
Comedy
• Documentary
Advertising
In Depth
Average Spending: Type of Show
• Apple
• Leads every spending
category
• Sports, Reality, Comedy
•
High CPM
• Drama Spending
• Documentary Spending
• Samsung
• Sports
•
High CPM
• Consistent with number of
ads
What can we
conclude?
•
•
•
•
•
Apple dominates the primetime
advertising
Both similar time of day strategies
Apple’s spending is not consistent
with number of ads per type of
show
Samsung's advertising is consistent
Advertising war lies within the
commercial content
Recommendations
Recommendations
 Samsung could increase
product placement to
become more “prestigious”
 Global growth will continue
but North America market
share is dwindling
(compared to rest of world)
Recommendations
 Smartphones need to
expand to emerging
markets
 Focus on persuasive in US
 Focus on informative
globally
 App industry
(development)