marketing mix strategies of apple and samsung

Introduction

Apple is an American multinational technology company that designs, develops, and sells consumer electronics, computer software, and online services. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell personal computers^. It was incorporated as Apple Computer, Inc. in January 1977, and was renamed as Apple Inc. in January 2007 to reflect its shifted focus toward consumer electronics. Apple is the world's largest information technology company by revenue, the world's largest technology company by total assets, and the world's second-largest mobile phone manufacturer, by volume, after Samsung. In November 2014, Apple became the first U.S. company to be valued at over US$700 billion in addition to being the largest publicly traded corporation in the world by market capitalization. The company employs 115,000 full-time employees as of July 2015 and maintains 478 retail stores in seventeen countries as of March 2016. It operates the online Apple Store and iTunes Store, the latter of which is the world's largest music retailer. Consumers use more than one billion Apple products worldwide as of March 2016. Apple's worldwide annual revenue totaled $233 billion for the fiscal year ending in September 2015. This revenue accounts for approximately 1.25% of the total United States GDP. The company enjoys a high level of brand loyalty and, according to Inter brands annual Best Global Brands report, has been the world's most valuable brand for 4 years in a row, with a valuation in 2016 of $178.1 billion.

Mission statement of Apple Inc

Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings.

Vision Statement of Apple Inc

According to Apple Inc (2012), “We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.”

Major competitor of Apple Inc

Samsung, Microsoft, Dell, HP are the competitors of Apple in the world. The major competitor of Apple among these companies is Samsung. Samsung is competing with Apple products as per the global market perspective. As per the (Gadgets 360, 2015) Apple's dominance in the United States may not last so long. Rival Samsung and other Android smartphone OEMs are slowly growing their presence in the country. The gap between the market capture of Apple and Samsung isn't that wide any more, as per the market research numbers for 2015.

Parks Associates, a research and consulting firm, reports that Apple dominates the market share in the United States with 40 percent capture in 2015. The company right below it, however, isn't so far away. According to the firm's numbers, Samsung accounted for 31 percent of the market in 2015. It adds that a third of iPhone users own a model that's more than two years old, compared to 30 percent of Samsung users.

               

Apple had a 44.1 percent share of the US market, and Samsung had 27.4 percent market share. This does hint a decline in iPhone's popularity in the United States. Other Android smartphone manufacturers are growing as well, it appears. LG has 10 percent control of the market while Motorola and HTC and other Android OEMs share about 5 percent of the pie. Though, Samsung and Apple alone assume 70 percent control of the market, and that should worry other players. "Apple remains the dominant smartphone manufacturer in the U.S., but Samsung is catching up," said Harry Wang, Director, Health & Mobile Product Research Park Associates.

Comparative Analysis of segmentation and positioning strategies of Apple and Samsung

STP Process

It consists of a set of three strategies namely (Segmentation, Targeting and Positioning) that Apple uses in developing marketing strategies for Apple's brand. STP analysis of apple is discussed below.

Segmentation- when the market is divided into sub groups, known as market segments, in order to create product differentiation strategies and to exploit these segments to the firm's own use. There are several segmentation techniques that can be used, like and which Apple is using.

ü  Demographic segmentation:

It is when the market is segmented on the basis of age, gender, education, income, occupation, etc.

o   Age--- Young children and kids – Teenagers – Adults

o   Education- College and University

o   Occupation – Business people

ü  Geographic segmentation:

It is when the market is segmented on the basis of city, state, region or country.

o   Looking into the geographical bases of Apple they have established their business all over the world like U.S., South America, Europe, Japan, and Australia and now going to start in India also.

o   Recently Apple chose to implement a vertical growth strategy and began expanding their retail stores. The company also sells its product via third-parties dealers, or via internet through their own website or through the iTunes online music stores.

ü  Psychographic segmentation:

It is when the market is segmented on the basis of life style, Social class (Upper class, middle class, lower class, blue collar, and white collar), behavior, opinions (liberal/conservative), values or ethics.

o   Looking into Apple the psychographic market segment is successful because they are developing products on the lifestyle of the people such as Mac book for the younger generation.

o   Apple having a very good brand image has very good value for its products as they are different and innovative.

Looking into the personality (style) sector Apple is providing their products with different colors for the people who like fancy colors.

ü  Behavior bases (product knowledge, usage, attitudes, and responses)

o   In this market segment Apple providing good product knowledge to the customers by advertising on search engines, T.V. as they have a very good brand image.

o    Using this brand image they are continuously coming up with new ideas and products and attracting the customers.

o   Apple has got a very good response rate as many of the customers are looking for new designs and innovative products which Apple is successfully delivering.

Positioning:

·         Apple's core competence remains delivering exceptional experience through superb user interfaces. The distinctive feature of each of Apple Pay and Apple Watch remains their ease of use and elegantly simple use

·         Starting with a major re-vitalization of the Apple brand when the iPod was launched in 2001, Apple has worked hard to migrate its brand and its product strategy in close harmony towards today's position.

·         Steve Jobs, Apple's co-Founder, described Apple as a "mobile devices company" - the largest one in the world. The company renamed itself Apple Inc. rather than Apple Computer. At the time, this was a significant move, signifying Apple's move beyond being more than a computer company.

STP Analysis of Samsung

Samsung has done its segmentation of the market based on the above categories. Behavioral and Psychographic happens to be the current segmentation strategy of Samsung.

Geographic

It sells their phones worldwide around 61 different countries by making slight changes according the countries need. It has divided the market into different regions of Asia such as northern, eastern and southern areas.

Demographic

Age

Samsung target Young People, Professional Businessmen and University students.

Family Size - Samsung products are available to every family size.

Income 

Samsung products are available to every income class with their own preferences. It has products for lower middle, Middle and upper middleclass. Samsung Galaxy range is very attractive to Youth because it has many features such as Great quality camera and multi task handling. It is also a good option for Businessmen.

Psychographic segmentation

Samsung mobile is available for those customers too who have their choice based on their lifestyle. Samsung came with some so fancy mobile phones especially for girls and cheaper touch screen stylish phones so that everyone can enjoy touch screen the rate of normal mobiles. Samsung has its range of mobile phones start from 1200 to 32,000+.

TARGETING:

After segmenting the market based on the different groups and classes, the targets need to be chosen. Samsung mobiles have the following target customers:

o   Trendy young people

o   Professionals of Large businesses

o   The common cellular phone users

o   Organizations such as: services to public safety, the government, and both utility and manufacturing enterprises.

o   Institutional sales for colleges

o    Target is not only number driven but also about acquiring and retaining customers.

Comparison of Samsung and Apple

There are three major segments which Apple targets. It generally uses lifestyle segmentation as Apple is the most premium brand out there. The segment is usually the urban population with enough buying power for purchasing Apple products. These are people who are early adopters in life but the brand equity of Apple is such that even laggards have started adopting the products. Apple being the world’s number one brand has the topmost mind positioning and there is no doubt that when someone talks about Smartphones or Laptop or Tablets, Apple is the first brand that comes to mind maximum number of times.

Apple Inc. divides its market into segments based on income, age and whether the segments are technologically inclined or not. The company’s primary segment is the age group 25-50, the group that can afford to buy luxury consumer products by itself. The market is further segmented based on profession. A visual artist or a graphics designer will need a high-end iMac more than a school teacher. The same goes for tech companies in comparison to call centers. After segmentation, Apple then hits the target market for the high end iMacs, which is the high income earning group between the ages of 25 and 50 working in fields requiring the use of the highest quality specifications for a computer like graphics design, architecture, visual art, photography and for those who simply want it and can afford to buy it.

When it comes to positioning, Apple is absolutely brilliant at it. Their products are wanted by everyone. The way their products are beautifully designed, their smart advertisements and website interface and the quality of the retail experience, everything absolutely sets them apart from the competition and is attractive to almost every consumer in the world. I know people who go to the Apple Store just to browse through their products on weekends when they have nothing else to do. That is how well positioned Apple is in the minds of the customer. The bottom line is that we have to understand that we might not be part of the target market of a particular product before claiming that it is too overpriced. The right reason to not buy something beyond our affordability range is that it is not meant for us. While as the Samsung segmentation and targeting are that Samsung products are available to every income class with their own preferences. It has products for lower middle, Middle and upper middleclass. Samsung Galaxy range is very attractive to youth because it has many features such as Great quality camera and multi task handling. It is also a good option for Businessmen. In simple words it can be said that while Apple leads to profits by selling the premium brands, Samsung leads by market share by targeting the whole segment. Samsung has been able to reach different market segments and price points, while Apple has remained restricted due to targeting the premium segment.

Apple used to dominate the tablet, Pc, smartphone markets but Samsung has now taken the lead. The two have been fighting battles over patents with Apple accusing Samsung of copying their product designs and ideas, and Samsung accusing apple as well. Samsung dominates the android market share by 65% of all android devices.

Product mix

Product mix, also known as product assortment, refers to the total number of product lines that a company offers to its customers. The four dimensions to a company's product mix include width, length, depth and consistency.

Width

The width of a company's product mix pertains to the number of product lines that a company sells. For example, if a company has two product lines, its product mix width is two.

Length: Product mix length pertains to the number of total products or items in a company's product mix.

Depth: Depth of a product mix pertains to the total number of variations for each product. Variations can include size, flavor and any other distinguishing characteristic

Consistency: Product mix consistency pertains to how closely related product lines are to one another--in terms of use, production and distribution. A company's product mix may be consistent in distribution but vastly different in use. 

 

Product mix of Apple

1.      Macintosh IPod.

2.      IPhone

3.      I pad

4.      I watch, Apple

5.      Software and services Innovative, well designed and researched products

Product mix of Samsung

White goods product line of Samsung

o   Refrigerator

o   Washing machine

o   Air conditioner

o   Micro wave

o   Dish washer

Brown goods Product line

o   Home theater

o   Bluetooth

o   Cameras

o   Speakers

o   Laptop

o   Printer

o   DVD player

o   Tablets

o   Television

o   Blue ray

 

Comparative analysis of Samsung and Apple product line and product Mix

 

The Samsung Company is having various products in their product mix as compared to Apple. While considering the products of Apple there are few products like iPod, iPhone, and I watch etc. The product line of Samsung carries large range of electronic products for each income class. But the apple has the products for upper middle class and upper class only. Apple is producing and changing their products with innovative ideas and believes truly on their innovations. Samsung product line consists of variety of products but in Apple there is not variety in their product line. The durability of the apple product is not comparable with Samsung, as Samsung products can be used for larger time period. In the product mix of Samsung the product line of mobile phones consists of various models and ranging from 1500- 40000 this helps the company to gain more market and encourages to compete with Samsung. It is true the apple is having huge profits because of their premium pricing and perceived quality but Samsung is also capturing the huge market share day by day.

The question here is not on who did it first but rather who revolutionized what the first has done. Apple's products are good. Build quality is much better compared to Samsung. However, it looks like iPhone releases a phone with only 3 or 4 qualities different from its predecessor compared to Samsung who tries their best in making every smartphone experience better, faster and more unique than the last one.

 

 

Apple distribution mix

 

Distribution channels is defined as a set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or industrial user. The company followed the hybrid distribution strategy and engaged the telecommunication service provider’s stores along with their online and own stores. So the customers are forced to enter into a contract for 18-24 months. The company is using two level channels for distribution of their product. 

Distribution mix of Samsung

 

 

Comparative analysis of Samsung and Apple distribution Mix

 

Apple sells their products through Telco’s, Apple Stores the Apple website, and their retail distribution channels. Samsung sells their product anywhere they want as long as retailers are willing to take stock. Therefore Samsung can sell directly or indirectly to consumers. Further compared to Apple, Samsung has the ability to quickly expand and saturate the market with their products anywhere in the world except America – as the Telco relationship in the USA require that Samsung create different versions of their phone(s). Apple on the other hand, sells according to the country tiers where as in tier 2 countries such as Malaysia there are rumors that Apple is selling refurbished iPhones instead of new ones hence why Samsung is dominant in these markets. Samsung also has an existing distribution network from their existing businesses. This is of tremendous value because unlike Apple, Samsung does not need much in the way of resources to bring their phones and tablets to new markets and more importantly unlike Apple. These distribution channels will also be there for the future dissemination of other Samsung products. This means that if they want to, it’s easy for them to market more than just electronics.

Samsung Electronics America is looking to expand its market presence, by making it easier for solution providers to source product and support through its new “Samsung Team of Empowered Partners” (STEP) program.

STEP is the cornerstone of a global effort by Samsung to consolidate resources and simplify accessibility for partners. Currently, Samsung’s channel efforts are divided by regions and product lines. So by consolidating, Samsung is making a concerted effort to bring more partners into and expose more opportunities to channel partners.

Comparative analysis of pricing strategies

 

Price: Apple in this case adopted the “best fit segment” pricing strategy (skimming), where the early adopters were targeted who are less price sensitive and want to receive the benefits of new technology. It allows more cash flow for the company and also conveys benefit perception to other target segments. The company started off with selling the product at $599 (8GB) and $499 (4GB) and later reduced the price of 8GB to $399 and discontinued 4GB model significantly. The company wants to target the mainstream users and can’t reply on early adopters (young techno savvy, professionals) for future growth. They tried skimming and versioning strategy. Now the pricing strategies of Samsung in comparison with apple are as follows:-

Because of its presence in different product categories, Samsung uses various pricing strategies. We can divide the pricing strategies and match it with the products that it is used for.

Skimming price – Samsung’s smart phones are one of the best in the market and are the market leader in terms of the features and USP’s that they provide. The recent Samsung Note 3, Galaxy J series is another entrant in the market which is catching people’s eyes. Thus Samsung uses Skimming price for these products wherein it tries to get a high value in the start before competitors catch up. Once the model is old or any competitor has launched a similar product, Samsung immediately drops the price.

Competitive pricing: For products other than smart phones, Samsung uses competitive pricing. Televisions, air conditioners, refrigerators and other products have competition in the form of Panasonic or LG. Samsung is known to be a great brand but it is not greater than LG for home appliances.

In fact LG beats Samsung where home appliances are concerned. Similarly in Washing machines – Whirlpool, and in Cameras – Cannon are the brands which are to be beaten. Thus in various categories, Samsung keeps competitive pricing so as to beat the competitor. Samsung as a brand hardly uses penetrative pricing because it doesn’t enter late in the market. In fact, it is present in most consumer durable segments in the market.

Comparative analysis of Promotional Mix

Apple has been most aggressive in terms of promotion as seen in figure, some examples are:

 

 

·         The company started with 4 TV commercials during the launch to flaunt the innovative gadget (original iPhone) which can fulfill all needs of entertainment and information sharing device. The company is focusing now to advertise their Face Time feature and recently launched 4 more TV ads. In July 2010

·         The press releases and blogs were posted and iPhone was in 60 million web pages across web. The news created rumors and the Advertising Age’s Marketer award winner (2003) company was again ready to offer new generation product after iPod.

·         With the support of 317 stores across the world (233 in USA, 84 outside USA) which contributed around 17% of profits. The company has done strategic partnership with Starbucks to offer free iTunes Wi-Fi music at 600 locations, which can later be downloaded from computers. Even the new iPhones 5 reveal the easiness to find people around the city, location of friends and other features which reflect the social integration aspect of the device. 

·         The company uses all forms of advertising to gain attention, they appear on a regular basis on newspapers, TV, billboards etc. Like Macworld Expo (conventions to launch products), coverage of major channels like Fox, MTV and Rolling Stones, Maxim etc. In-store promotion and awareness helps in personal selling where the users can touch and test. The company site is quite impressive with promotion codes issues to consumers from time to time.

·          Cross Promotions: the channel partners like Sprint, Orange, and Vodaphone etc. promote iPhone packages on their websites and from printed booklets.

·          Search Engine promotions; the company spend money on Ad words marketing), Pay per Click campaigns. The company purchases the keywords like iPhones, mp3phones etc. Banners and promotions on other sites is a regular from Apple.

·          The company sends email to iPod users, carrier consumers, and uses RSS feed of their promotions and events and blogs are done regularly.

 

 

Samsung promotional mix

 

 

 

·         Samsung uses multiple forms of promotions. Samsung as a company believes in pulling the customer to themselves through advertising but at the same time uses strong tactics to push the product to the customer through sales promotions.

 

·         Samsung uses various marketing vehicles across the year covering festive season as well as non-festive time. On the other hand, it gives many offers and discounts to its trade partners to motivate them to sell Samsung above competition. With such a strategy, Samsung’s brand is on the rise so that both, the pull as well as push strategy is working simultaneously in Samsung.

·         Samsung is known as mega advertiser and very active to online and offline to market its new products. Like Apple it organizes a mega launch event for its new phone launch which is followed by millions of people across the globe.

·         When Samsung Company decides to promote its TV product, it is imperative for the marketer to consider the target customers and the legal laws governing the promotion activity in a particular market. This action will protect the company from being prosecuted or charged for illegality in promotion ventures. In addition, when the company aims at getting the target market for the product it is vital to budget efficiently for the promotional campaign since through effective promotion the company with be able to get customers.  Furthermore, with adequate and efficient budgeting the company will avoid unnecessary loss of the funds aimed for promotions