PGBM 15 Marketing Management

Marketing of mobile phones

Name: Xiaoqian Ma
Student Number: 109998230
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Contents
Title ------------------------------------------------------------------------- 2 1. Introduction ----------------------------------------------------------- 2, 3 2. Dynamics and trends of mobile phone market ----------------- 3-9
2.1 Development of mobile phones --------------------------------------------- 3, 4 2.2 Emergence of smartphones ------------------------------------------------- 5, 6 2.3 Changes of leadership in the mobile phone market -------------------- 6-9

3. The importance of marketing management --------------------- 9-12 4. Marketing of Samsung ----------------------------------------------- 12-17
4.1 Marketing mix at Samsung -------------------------------------------------- 12, 13 4.2 Samsungs message ------------------------------------------------------------ 13, 14 4.3 Advertising at Samsung ------------------------------------------------------- 14, 15 4.4 Sales promotion at Samsung ------------------------------------------------- 16 4.5 Sponsorship at Samsung ------------------------------------------------------ 16, 17

5. Conclusion -------------------------------------------------------------- 17-19 Reference ------------------------------------------------------------------- 10-25

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Title: Marketing of mobile phones

1. Introduction

Over the years, all kinds of organisations have been undertaking varies of marketing activities in order to increase their competitiveness in the market, which allows them to sustain their market shares and achieve organisational goals in the business world. In order to achieve different kinds of objectives, all marketers need to work hard to develop systematic plans to make sure they can be effective. In the meantime, they also have to critically evaluate the results of all marketing plans so that they can continuously identify issues, analyse the root causes and find solutions to improve the effectiveness of all plans. Therefore, the marketers and the marketing have been playing an essential role in the organisations.

In this paper, the writer has chosen mobile phones as a research topic to discuss its markets and trends in todays rapid development of technology world. In the meantime, the writer has divided this report into three key sections. Firstly, the writer discusses the dynamics and trends of the marketing environment of the mobile phones. Secondly, the writer discusses the importance of marketing mix and product innovation in the mobile phone industry. Finally, assuming as a newly appointed marketing manager of Samsung smart phones, the writer will discuss varied kinds of

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marketing techniques to improve market shares, profitability and sustainability of Samsung. At the end, there is a conclusion section to summarise the whole report.

2. Dynamics and trends of mobile phone market

2.1 Development of mobile phones

In our real life, mobile phone have quite a long history since the first mobile phone was invented in early 1900s.

(http://chroniclingamerica.loc.gov/lccn/sn85042462/1906-05-21/ed-1/seq-7/) Despite of the early invention of mobile phone, the commercial used mobile phone did not become our daily usage until 1970s when Motorolas researchers started developing the first hand-held mobile phone that can be used on a cellular network. (Wall Street Journal, 2009) In light of this, it is easy for us to understand that the traditional mobile phone industry consists two key sections, one is the mobile hand-held phone, and the other is the operating network on which the mobile phones can be used.

Hence, the development of the mobile network has been growing since 1970s, and the first commercial used network was launched by NTT in Japan in 1979. (http://www.ntt.co.jp/index_e.html) Since then, more countries have launched their mobile networks, such as Denmark, Finland, Norway and so on. In the meantime, the
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first generation network was developed and used in 1983. This is the so called 1G network on which the oldest cellular phone was operated.

(http://www.msnbc.msn.com/id/7432915/ns/technology_and_science-wireless/t/first-c ell-phone-true-brick/#.T2o-y3mP5JE)

Along with the high demand of the mobile phone market, the 2G (second generation) network technology was launched in Finland in 1991. After ten years, the 3G (third generation) was launched in Japan. (http://www.umtsworld.com/umts/history.htm) With the rapid development of the new generation mobile technology, the competition of mobile phone industry has become more intense. Both network operators and mobile phone manufacturers have been investing huge amount of money to develop new and advanced products to capture more users so that they can be profitable and sustainable in their businesses.

In recent years after the launch of 3G technology and 3G mobile phones, it is very obvious that new generation technology will be necessary for the huge growing demand for higher speed of data transfer and more applications on the mobile phones. In the meantime, the mobile phone manufacturers have also launched new series of mobile phones to satisfy growing demand of more consumers. Thus, the mobile phone industry has been developing very rapidly.

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2.2 Emergence of smartphones

Along with the development of mobile phone, internet and personal computing devices, a new internet world emerges, i.e. mobile internet. (Funk, 2001) In light of this, there is a new name for mobile phones that can effectively access to the internet, i.e. Smartphone. Nowadays, smartphones can not only provide users to use traditional wireless voice talk, but also allow them to access to the internet and use varied kinds of software applications, which is very important feature of smartphones that differentiate themselves from traditional mobile phones.

Because of the development of smartphones, the whole industry has been changed rapidly, and has attracted great attention of all kinds of business players related to this industry, which includes mobile phone manufacturers, internet service firms, personal computing device manufacturers and so on. In light of this, the smartphone actually forms a new way of competition in the mobile phone industry. Nowadays, many companies have believed that it is important for them to provide services or products in the smartphone industry in order to create new business opportunities for their future growth and profitability.

There is lots of evidence that the smartphone industry has been rapidly growing. For example, according to Gartners statistics (2010), there were over 1.28 billion sets of
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mobile phone sold in 2010 per se, and the percentage of smartphones accounted for over 20% of total amount. In the meantime, the growth of sales of smartphones has been over 100% over the past years. By 2012, it was estimated that the total sales of smartphones would be more than those of PCs in the global market. In addition, the Gartners statistics indicate that by 2014, the total revenues generated from all mobile devices, including smartphones, e-books, and related services applied on these devices, would be more than US$1.0 trillion. Furthermore, by 2015, the total number of smartphone users would be more than 2 billion based upon the forecasted growth rate of smartphones and the forecasted declining costs of all kinds of components.

From the above, it is very obvious that the traditional mobile phones have been replaced by smartphones in a rapid way. Although this trend just started several years ago when Apple Inc launched its first iPhone in 2007 (www.apple.com), the speed of change has convinced the market that the future of mobile phones belongs to smartphones. Accordingly, the competition of the industry has become more complicated and intense because of the emergence of smartphones.

2.3 Changes of leadership in the mobile phone market

There are numerous manufacturers of mobile phones around the world. Before 2010, the leading manufacturer of mobile phone is the Nokia. According to the Gartners
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statistics (2010), Nokias market shares of mobile phones was about 60% of total global sales during its peak performance. Nokia has long been considered as a leader in the low-end markets, where it has dominant positions and markets are mostly in the developing countries. Despite of its strong positions in those low-end markets, statistics show that Nokias market shares in those markets have decreased to less than 30% by 2010.

In fact, Symbian is Nokias operating system that has long been used on many smartphones. According to Gartners statistics (2010), over 60% of all kinds of smartphones used the Symbian as their operating systems in the year of 2007, when the Windows operating system only accounted for about 11% of the total market shares, and the iPhone operating system only about 6% of total amount. At the time, Nokia was the true leader in the smartphone industry in which it alone had more than 50% of the market shares all around the world.

However, Nokia has been losing its leadership position in the smartphone industry, according to Gartners statistics (2010). By 2010, there were only about 36% of all kinds smartphones using its Symbian as the operating system, while Googles Android accounted for about 26% of the total, and iPhone accounted for about 16% of total.

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When it comes to iPhone, it is the first real smartphone launched in the market in 2007, which in fact has great impact on the whole mobile phone industry. Apples iPhone indeed recreates the mobile phone standards in the history. It does not only provide an easy and friendly user environment that allows all to browse internet on the iPhone, but also it has leverage all different systems in the Apple devices and applications, which has namely been called the ecosystem. According to Salazar et al (2010), the key reason why iPhone has great users acception and adoption is because of innovations on iPhone in many ways. From a media and digital device provider to a smartphone provider, Apple has an unique ecosystem that includes several platforms, on which iPhone can leverage successfully. This has in fact great barrier for other competitors to follow and react to it. (Cusmano, 2010) Therefore, the launch of iPhone has indeed taken away many market shares of key players in the industry, including the old time leader, i.e. Nokia.

As for Google, it has its own unique business model as well, which is different from others. It did not enter the smartphone industry until it acquired the operating system, i.e. Android. Since then, the Google has successfully entered the smartphone industry by allowing all software developers to play on the Android system. Because the Android is a open system, it has then attracted not only software developers, but also weaker mobile phone manufacturers that have great intention to develop their own competitive smartphone products, which include Samsung. With the quick expansion
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of Android system, the Google rapidly captures the market shares in the smartphone industry, which accounted for about 25% of the total in 2010. With its Android, the Google has won the confidence of most mobile phone manufacturers around the world, according to the statistics of the Canalys. (2010)

3. The importance of marketing management

The marketing guru, Philip Kotler, has contributed to the development of marketing management in our modern world. According to his early publications, the marketing definition is "the human activity directed at satisfying needs and wants through an exchange process." (Kotler 1980) Along with the development of the market and management theories, Kotler and other marketing professionals added more meanings into the definition of the marketing: "Marketing is a social managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others." (Kotler et al., 1999)

In fact, the American Marketing Association has its own definition of marketing, which considered marketing being an organisational function and a set of processes for creating, communicating and delivering value to customers, and for managing customer relationships in ways that benefit the organisation and its stakeholders

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There is no doubt that marketing has long been playing an essential role of developing all kinds of businesses for all organisations. Without proper marketing management, all kinds of businesses would have difficulty in developing effective marketing plans, implementing their marketing activities to capture more customers and market shares, and eventually helping to improve their business performance in our rapidly-changing market environment around the world. The global market has been changing so quickly that leads to more uncertainties than ever before. In light of this, it is very critical for all kinds of businesses to have effective marketing management in place to help organisations to respond and react to the ever-changing environment.

There are two kinds of environment for all kinds of businesses, i.e. external and internal environment. Both of them can have great impact on all business organizations, the market places where they run businesses, and the co-relationship among all factors. (Jobber, 2006) In light of this, it is very important Thus, understanding environment and using the environment scanning are important activities for all marketers and organizations. Denis, A at al. (2001) argued that "the marketing environment factors are often referred to as Social, Technological, Economic, and Political varibles (PEST)." In reality, the PEST framework for environmental auditing has been widely used in business work.

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After analysis the external environment, marketers can make decisions and take relevant approaches to allow organizations to identify and capitalize opportunities. (Kotler et al, 1999) Based upon this, marketers can then conduct necessary research to indentify the market segmentations. Marketing research is an essential tool for the marketing manager in helping to define and locate market segments and understand their needs and wants. (Jobber, 2006)

Fill (2009) argues that segmentation is necessary because a single product is unlikely to meet the needs of all customers in a mass market. Thus, with proper segmentation, organizations can effectively satisfy targeted customers needs.

After the segmentation process, marketers can move forward to utilize the techniques of marketing mix to carry out the whole marketing activities. For most physical goods, the marketing mix consists of four elements, product, price, place, and promotion. For services, the marketing mix can be extended to seven elements with the addition of people, processes, and physical evidence. (David Jobber, 2006)

Whether marketers can effectively communicate messages to targeted customers or audience is closely related to the promotion, i.e. the marketing communications, which describe the most important areas of marketing. (Pickton & Hartley ,1998) And the marketing communication mix consists of five communication channels:
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advertising, public relations, personal selling, direct marketing and sales promotion.Fill, C. (2009)

With the systematic planning and effective implementation of relevant marketing techniques, marketers can ensure the products or service being successful in the market.

4. Marketing of Samsung

Samsung is one of the largest technology companies in the world founded in 1938. It has almost 16,000 employees in the world and its revenue for exceeds $117 billion in 2009. In the world most countries have Samsung Company. Its headquarters are located in Seoul, South Korea. Samsung has a big range of home appliances and consumer electronics. The company famous products in the world are TV, Galaxy tablet, and mobile phones. Now Samsung is the biggest mobile phones company in the world.

4.1 Marketing mix at Samsung

For the definition of marketing communications, so far there is still no strict standard. According to Fill (2009), he declares that marketing communications is a manageme
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nt process, in which an organization engages with its various audiences. This include s various kinds of activities. From the view of Egan (2002), he thinks that marketing c ommunications are the methods by which the suppliers who provide the goods, value s and/or ideas, services shows themselves to their target audiences aiming to stimulate the dialogue successfully and form a better commercial or other relationships. In oth er words, marketing communications are those things which can be transmitted from t he company to the target audience. Fill (2009) once says that there are four major func tions to differentiate, to reinforce, to inform and to persuade. Selecting the first lette rs of these four functions we can get DRIP. Marketing communications are part of the marketing mix which consists of Price, Place, Product and Promotion or the four Ps. According to Fill (2009) they consist of tools, media and messages.

4.2. Samsungs message

Message can be defined as a set of symbols, words and visual material (pictures, photos) that is sent to the target audience. The company (in this case Samsung) could be a sender as well as its brand name or someone who is advertising their products (football players, celebrities etc.) (Kotler , 2005). Kotler also argues that a message is said to be good if it is easy to be understood by the target audience.

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Samsungs brand main point is turn on tomorrow but sometime the company develop is not follow its brand. It stresses on the innovativeness of the companys products. The old message was everyones invited but now the company does not use the old message anymore. The company has divided its messages to the target audience in terms of the product range. The main message that is attached to Samsungs new Galaxy tablets is Life without limits. All other messages regarding this product range are related to the freedom that they provide. In the USA the message is feel free to Tab. On the Samsungs YouTube page one can see the same messages.

Samsungs messages are emotional rather than rational. That because the nature of the Samsungs products. But there is a little of rational messages like featuring a 7 screen, which are necessary to show the product what the different between other competitors. I think that this type of messages is appropriate to be used. If just use emotional messages the customers may not know what exactly makes Samsungs products different than the others.

4.3. Advertising at Samsung

Advertising is defined as any paid form of non-personal communication about an organization, product, service, or idea by an identified sponsor Belch & Belch
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(2002). When using advertising the message is normally transmitted via mass media TV, radio, newspapers etc. A strong feature of advertising is that is can reach many people sometimes even millions at the same time. This is why it is used by large companies (like Samsung) which aim to reach the mass market. The company has good control over the message and its design but there are almost no opportunities for a feedback from the target audience. Blythe (2006) argues that advertising has lower credibility compared to the other marketing communication tools. Therefore there is no warranty that advertising will make the customers to buy the particular product or service. But it is an excellent tool for informing the target audience. It is the most expensive tool but has lowest price per customer reached. Companies still spend millions on advertising each year.

Samsungs advertisements are mainly emotional stressing the freedom that the products provide but have a rational element stressing on their functionality. Same product carries the same type of information but stresses on the innovative technical features (Google Maps with voice search etc.) which explain why it is alleged to be the best Android based smartphone in the world.

4.4. Sales promotion at Samsung

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Belch & Belch (2002) define sales promotion as those marketing activities that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales. They key word here is immediate, customers are inclined to act here and now. Sales promotions aim is to achieve short-term increase in sales. Baker (2007) argues that their credibility is at medium level and the message is well controlled. It is important for the sales promotion to continue for a short period of time. If it continues too long the customers may assume the discounted price as a normal one and to postpone their buying decision until next promotion.

You can find all Samsung promotions on their website. The customer can change the country of residence to see the local promotions. But the sites are different. Due to nature of the products the vast majority of sales promotions are of a lottery type where there a big prize is won. In my opinion the company uses this way not because to increase its short-term sales but to increase the brand awareness and increase new subscribers that who e-mail addresses will be used for direct marketing purposes.

4.5. Social media at Samsung

Social media is a new phenomenon; it develops speed very fast and more and more important for the companys marketing communication. The most powerful feature of
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social networking is that it allows the customers and the company to into a dialogue. Word-of-Mouth that is spread around the social networks is another advantage. Samsung uses social media for both engaging with its customers and advertising. It has several Facebook pages, divided by country and by product. Galaxy product range has fan pages but other products do not. Similarly Samsung has fan pages in many countries. In my opinion, Samsung still have many things can do by social media.

5. Conclusion

Over the years, all kinds of organisations have been undertaking varies of marketing activities in order to increase their competitiveness in the market, which allows them to sustain their market shares and achieve organisational goals in the business world. Along with the development of mobile phone, internet and personal computing devices, a new internet world emerges, i.e. mobile internet. In light of this, there is a new name for mobile phones that can effectively access to the internet, i.e. Smartphone.

About the definition of IMC, still no common agreement exist (Kim et al, 2004). Som e scholars think that IMC is a new concept while for others, they support that the idea of IMC is not new but just a more efficient way to manage the marketing communicat ion tools (Kitchen & Schultz, 2009). In order to convey the messages clearly, it is nec
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essary for the customers to see and hear the same message. This could be achieved onl y if the different marketing communication tools support each-other.

As we all know, the company of Samsung owns more than $117 billion revenue in 20 11 with global technology (www.samsung.com) so much evidence about the integrati on of the different communication tools could be found. First, the logo and the key me ssages are globally standardized. The Galaxy S tablet message is similar freedom, live without limits. Other similar messages related to the feeling of being free are al so attached to Galaxy S tablet worldwide.

There is also a powerful integration between the different marketing communication t ools and media. For example, integration between traditional and online media. In ma ny countries all sales promotions are integrated with direct marketing customers are required to provide their basic details and e-mails. Social media is also very well integ rated with sales promotions. Print adverts are also integrated with sales promotion and direct to the Samsung website.

In an company such as Samsung the main thing creating difficulties is its size. It is dif ficult to co-ordinate the marketing activities in a company with nearly 160 000 emplo yees. Samsung has several official websites the main site (Samsung.com), a site dev oted only to mobile phone users in specific countries This could lead to confusion for
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the customer and currently Samsung is merging these local sites with its global websit e.

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