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The number two crown in the handset mart is a slippery devil. But for now, it seems that incumbent (albeit distant) Samsung Mobile may be here to stay for the long haul!
Markets, like life, are unpredictable and often unforgiving. A couple of years ago American handset maker Motorola was basking in the reflected glory of its successful model RAZR. After Nokia, it was a clear number two in India’s cluttered handset mart. But the picture changed fast and in just the next ten months, Sony Ericsson found itself sitting tight on the number two throne. Unlike Moto, Sony Ericsson’s claim to fame did not begin and end with one blockbuster model. The company had gained prominence in an entire segment viz. the mid-end market (between Rs.6,000 – Rs.12,000) through its powerful Walkman series and had Hrithik Roshan tapping sinuously to their thumping tones. But, the Sony Ericsson euphoria was short lived and lasted for just about a quarter. Last year, Korean giant Samsung Mobile swooped in to snatch away the crown.
Compared to Motorola and Sony Ericsson, Samsung Mobile’s stability at the number two spotlight seems more lasting, largely because of its two fold game plan. First, the company has made a great impact in the low end market through its Guru series of handsets. Secondly, its effectively priced touch offerings have made it the strongest handset maker in the mid-end category. Apart from effective marketing and robust distribution, to succeed in the Indian handset industry, critical touch points include having an efficient component sourcing, low cost product manufacturing and low cost engineering design. And Samsung has been getting all these right in recent years. Already a strong player in terms of manufacturing and component sourcing, Samsung also seems to have got its distribution strategy in place now. The missing link has come into place in their latest lifestyle positioning with Aamir Khan as brand ambassador. Given that Shah Rukh Khan was endorsing Nokia, Bachchan Junior was professing his love for Motorola and Hrithik Roshan’s loyalties were enmeshed with Sony Ericsson, Samsung too needed a powerful face to promote the brand. And with Aamir they seem to have found just that.
“Another factor that helped Samsung in marketing of its low-end portfolio is that the company offers a wide variety of feature rich phones at competitive prices,” offers an industry analyst. Factor this: Samsung is currently offering as many as 15 products in the entry level portfolio as opposed to 13 being offered by market leader Nokia. Though the difference here might be insignificant, but the distinguishing factor for Samsung’s entire portfolio comes from design. This is unlike Nokia’s strategy, wherein most of its entry level phones look almost similar. Samsung through its communication for the Guru series has also focused on highlighting features like loud sound, flashlight, et al, which are relevant to Tier II and III consumers. And that’s apart from loading these phones with features like mobile phone tracker and fake call activation, normally associated with mid or high-end phones. The fact that these phones are moving off the shelf fast is also delighting distributors and vendors alike. Unfortunately, this is where the good news ends. Samsung’s share in the category is under 10%, whereas Nokia commands a whopping 58% of the market. Besides, smaller and nimbler players like Fly, Intex, Spice and Micromax are a clear and present threat. With Nokia on top and these players below, Samsung Mobile’s No. two position is literally being squeezed from both ends. To counter competition, the Korean major is planning to launch about six to nine new handsets at under $100 to boost its portfolio.
In a bid to woo the well-heeled consumers, Samsung also entered the high end touch-screen category last year with the OMNIA and has kept the excitement going with the subsequent Pixon, Beat DJ, Star, Jet and the latest Android powered Samsung Galaxy. Says Asim Warsi, GM-Marketing at Samsung India Electronics Ltd., “In India, we are currently offering about 11 touch screen devices and would be looking at launching many more in the times to come including some more Android devices in this year itself.” Given that Samsung Mobile expects the market for touch screen phones to double this year and has enhanced its product offerings accordingly, they estimate that touch screen phones will contribute “around 10% of (their) total mobile volumes this year,” says Ruchika Batra, spokesperson, Samsung Mobile.
“Most companies offer top end products to balance their product portfolio and the same strategy applies to Samsung. They have a decent line up which they would soon enhance with more Android devices,” shares the CEO of an organised mobile retailer. The only stumbling block in Samsung’s smartphone journey could be the unavailability of applications and softwares. To deal with that eventuality, the company would be soon offering its own application store (like the Apple App Store or Nokia’s Ovi) that would offer free and paid content for most of their portfolio.
But climbing and winning the handset market mountain in India is a distant dream for Samsung Mobile. For now, the biggest challenge it faces is to maintain its current momentum through aggressive marketing and fine tuning of its distribution line-up. With local and smaller brands becoming more aggressive and Chinese price-warriors like ZTE and Yulong (in partnership with Reliance Communications) jumping into the fray, Samsung will have to ensure that it keeps its costs in check. It’s well known that manufacturing costs in Korea are 25% more than China, but the success of Samsung’s latest Star series has proved that this Korean has learnt the fine art of value pricing for the Indian consumer. Perhaps that learning alone is enough to help them warm the number two seat for much longer than some of its worthy peers. Maybe!?
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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