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The mobile phone industry is one of the fastest growing industry in the world. The growth is even bigger in developing countries across Asia, Africa, and Southern America. It is estimated that there are about seven trillion mobile phones owned by people in the world. In addition to that, 5% of the people in the world own smart phones. Further research indicate that the last four years has seen the rise in mobile phones by 22% globally. With increasing trends in technology and innovation and competition for production of smartphones increasing the numbers are expected to escalate further (Goldstein & Lee, 2015). Mobile phone producers are now aiming at producing quality phones that have larger screen size, longer life battery, larger camera pixels and good connectivity and security phones. While that is ongoing the competition has been so stiff that mobile phone manufacturers are aiming at producing phones that are not easily imitated. With that in mind smartphone companies such as Samsung and Apple are producing phones with internally built battery to avoid imitations. The largest market share of mobile phones in the world is owned by two multinational companies. They include Apple and Samsung. The two companies have been in stiff competition for the last one decade and their rivalry does not seem to stop any soon. According to Molly Wood of New York Times most of the smartphones companies were forced to change their strategies in order to compete effectively with Apple Company (Wood, 2015). Other players in the industry include Sony, HTC, Blackberry, Nokia, amongst others (Warren).
As already mentioned the mobile phone industry is one of the largest and fastest growing industry in the world. That is because mobile phones have become the most important gadgets of communication in the world.
It is estimated that the largest market shares can be found in the most populous countries in the world. That include Asian countries like China and India. In addition, the largest market shares for mobile phones can still be located in developing countries in Asia, Africa and South America (Kane & Sherr, 2012).
The mobile phone industry has a wider potential of growth thanks to rapid innovation of science and technology. Currently, the mobile phone producing companies are geared to produce smartphones with the best connectivity 5G. It can be noted that the field is still wide and growth is mainly expected in mainland China, Hong Kong, Taiwan, parts of India amongst the other third world countries. The market share grew by 13% in 2015 with over 341.5 million smartphones being shipped to emerging markets in North America and Western Europe. Android operating system remained the pacesetter in the market accounting for 82.8% sales over the year 2015 (Albanesius, 2012).
The mobile phone industry experiences fastest trends of fashions and style. Currently Apple is producing and selling I6 while Samsung is producing the sleek S6 and S6 edge version of their smartphones. Other players in the industry like HTC have also joined the competition with their latest version of HTC8. Competition trends include size of the screen, screen type, connectivity, security, battery life amongst many others features (Jubak, 2014).
Samsung and Apple Company continue to remain the stiff competitors in the market. Over the last two years Samsung has toppled Apple in its sales of smartphones. However, other competitors like Nokia, Sony, HTC, Huawei, amongst others have also joined the recent trend of competition (Porter, 2008).
Samsung Company remains the largest threat and the largest market shareholder in the mobile phone industry. The company retained its position due to larger shipment of their products outside Europe to South East Asia, Middle East and Africa. The company also improved its streamlined portfolio devices hence gaining the largest market share (Smith, 2015). The second most competitive mobile phone producer is Apple Company. Its major success is the production of the iPhone 6 Plus that was major shipped in greater parts of China. The main attributing factor for the sales was the rapid adoption of 4G connectivity. Other competitors included Huawei that came in third with its main product being the Ascend Mate 7. Xiaomi and Lenovo followed closely completing the top five most competitive mobile phone manufacturers in the world.
Samsung Company topped the list with a market share of 21.4%. However, that was a decline of 11.5% from the previous year. Apple came in second in market share even though the sales also declined by 22.3% from the previous year. Huawei experienced increased sales even though the volume could not counter sales from Apple and Samsung. The company experienced an increase of 35.5% of sales. Lenovo Company also experienced 4.7% market share in the year 2015. That saw an increase of 36.2% in its sales of mobile phones (Wilson, 2015).
Using the Asnoff Matrix it is possible to establish some of the new entrants and the forces that have led them to acquire the market share in the mobile phone industry.
Fig 1. Asnoff Matrix (Wall, 1972)
New entrants like Huawei and Lenovo in the market have learnt on how to diversify their products. For example, Huawei was able to produce a series of Ascend Mate mobile phones that attracted many consumers. The same was experienced with Lenovo group Company taking advantage of the exit of Motorola Company in China. On the other hand Samsung and Apple were able to retain their positions due to their ability to penetrate wider markets and extend their products. It can be noted that iPhone 6 and Galaxy S6 series of phones are some of the smart phones that have enjoyed a longer extension in the market so far.
Every seller know that they have to influence the decision making process for the consumer in order to win the consumers. In most cases consumer making decision would be influenced through advertisements in the social media and through other communication models. However, for the case of Apple Company consumer behavior is influenced through custom made products. That has been the strongest and the most competitive advantage that the company enjoys. In addition, the company also set the prices of its products very high to deter other stiff competitors. That also influences the consumer’s decision making process (IDC, 2012). Consumers would also learn about new products from the social media. In addition, upon release of new mobile phones consumers would always abandon their old fashion phones and acquire new ones. That is because new model of smartphones come with superior features like storage capacity, better connectivity, and longer battery life amongst others.
Most of the smartphone consumers still believe that Apple is the best manufacturer of smartphones. That is because the company evolved from making computers and diversified into producing smartphones some of which still remain the best in the world. Samsung comes in second in customer audit considering that the company has been able to wrestle with Apple in its own field. The market strength of Lenovo and Huawei as new entrants in the industry has also improved their customer audit. Lenovo ranks above Huawei due to its production of computers which are cherished by its consumers.
Customer audit can be defined as to how consumers rate the company. As already indicated Apple is the best ranked company in terms of consumer audit. That is because of the Company’s founder Steve Jobs. Apart from being a pioneer in the company Jobs was also a good inventor and a hard worker who would convince the consumers about any new release the company’s products. Most of the consumers would assemble on each release of the iPhone series of smartphones and the ability of Jobs to convince the customers assured the company of many generations of customers trust.
The political atmosphere for the mobile phone industry depends on the countries in which the business is taking place. Most of the trade in the mobile phone industry takes place between Europe USA and Asia. The targeted countries have been those countries with good political stability. India and China have both enjoyed a good political stability making the countries a suitable place for competition. It is for this reason that Motorola Company announced that it will be launching its business again in China. Emerging markets in Africa and North America have also constantly enjoyed good political stability making sure that the mobile phone industry does not suffer any disturbances.
Economic factors like the 2008 economic crisis slowed business all over. Such factors reduced the growth and development of the mobile phone industry. The economic environment of the industry depends largely on the customer niche and customer share base. In most cases, Apple Incorporation enjoys a wider economic advantage due to its marketing strategy. The company is well known by its high prices. Most of the Apple products are very expensive and that has always given the company its competitive advantage. In addition, most of the sales for the company are found in America where its headquarters are found and larger markets like China, Brazil, India, and larger parts of Europe.
The social market for the mobile phone depends on the market niche and market share too. For most smartphone manufacturing company social sites and other features like camera forms the main competitive driving factor. Each company aims and targets the age group of 15-30years. At this age most of the consumers would wish to communicate and share information via their phones. In addition, the companies are also fighting to always acquire the best connectivity to ensure that consumers are able to share their information effectively. The social market is most favorable for companies that have already entered the emerging markets and are still penetrating the markets.
Technological advancement is the epitome of all the competition between Samsung and Apple Company. Technological advancement is also what wiped out the well-known Blackberry mobile phones from the market. It is also through technology that Huawei and Lenovo have also come up. However, for well developed countries like the US and Britain technology remains the main source of competition. Already, companies are in the process of releasing phones with 5G connectivity. Moreover, competitive companies have also diversified their manufacturing process to ensure production of high quality products (Goldstein & Lee, 2015).
With the largest market remaining amongst the most populous countries in the world Apple and Samsung the main competitors have established their bases in Asia. That is aimed at ensuring efficiency. Apple for example is producing chips and gorilla screen glasses in China while most of the assembly is also done there. That is to ensure efficiency and to reduce cost of production. With its headquarters already in Asian Samsung has wider branches all over the world in a bid to increase its productivity.
Natural factors have also affected the production and market trends in the mobile phone industry. Natural calamities like earthquakes and tsunamis have always slowed economic development. Areas affected are usually America and Asian continents. However, natural factors have very little influence on the mobile phone industry.
The mobile phone industry remains an open industry for improvement. However, that depends on whether the manufacturing industries have a well-developed and strong research and development policy. Technological advancement and constant innovation remains the main threat and opportunities that companies could use to secure their market share. Threats in the market include the high competition from already established and new entrants into the market. Other factors like the patent wars also remain threats to the industry. Economic like economic crisis also remain a threat in the industry. However, wider opportunities remain in the industry since developing countries are always laggards in terms of technological advancement (Smith, 2015). In addition, as the world population continue to rise so will be the demand for smartphones in the world.
Intermediaries include the people who host or help a company to conduct its business. Intermediaries have been the major contributing factor that has seen the rise of sale for Samsung smartphones. However, Apple remain rigid in terms of intermediaries. Most of the suppliers and intermediaries also shy away from Apple products because of their higher prices.
In order to remain competitive in the market all the mobile phone manufacturers have acquired suppliers. That is to help the companies to reduce cost of production and also to spread their risks in the process of production.
Mobile phone industries know that most of the people between 14-55 years are students and business professionals. For that reason Apple has a company has always located its stores in California, New York to prove that the company will always favor the high income earners with their lavish and posh lifestyles. Samsung Company targets people of age 16-29 years for the businessmen, youths and the middle class. However, the company is always concerned with the middle class and high class income market niche (Jubak, 2014).
For Apple Company most of its stores are mainly locate in most populous cities in the world. Currently, the company has around 88 stores in most populous and expensive cities. However, for Samsung Company they sell their products all over the world. The company has adjusted their language in their phones in order to meet the needs of the consumers. However, the universal face of the phone remains in all the products.
Apple uses this type of segmentation mainly. In most cases the company would produce its products according to the lifestyle of its consumers. Samsung produces most of the pink phones to attract ladies. The target consumers are also the middle aged youths who like fashion and technology and can always afford to buy these products. In addition, the company also produces stylish phones with good touch screens for the low income earners (Wilson, 2015). With Samsung also enjoying a wider range of other appliances the company also provide its consumers with the ability to connect with other appliances like television and music system. However, that is not the case with Apple for the fear of tarnishing its superior and most respected image.
Apple as a company also produces its products depending on the behavior of customer. For example, most loyal customers have their own preferences provided by the company. Samsung Company produces their products depending on the economic behavior. However, most of their products are not custom made compared to Apple.
For the two competing companies in the mobile phone industry the target market is usually the young and middle aged groups. That is because that is the group that is usually active socially. In addition, the middle aged group also forms the upcoming middle income earners. The manufacturers are always aware that the target group is always willing and able to purchase the phones. That group comprises of people aged 16-30 years. The secondary target market include people aged between 30-55years old. Most of these people are established business people. Even though they may not be having the vigor to communicate socially they have the ability to purchase some of the most expensive phones in the market (Porter, 2008).
For Apple Company, heavily controlled and user experience is their main strategy. In other words Apple would rather customize their products. However, Samsung prefer form rather than customizability. Samsung also enjoys a wider range of appliances and that gives its consumers ability to connect with their smartphones. That is not the case with iPhones for fear of tarnishing their image.
4.3 Position Map
Pricing strategy is the best position map employed by Apple Company. As already mentioned, Apple products are rather very expensive to an extent that no company would compete with them at that top level. With that strategy the company still maintains its brand name and legacy and still attracts most consumers. On the contrary, Samsung and other entrants use lower prices strategy to attract its consumers. Analysts are however warning that Samsung will face stiffer competition since they use the common Android App. It will be difficult to compete favorably since new entrants are also using the same app.
It is evident that the mobile phone industry is an open industry that is prone to constant innovation and advancement in technology. Wider opportunities are available in the market especially with emerging markets in Asia and Africa. In addition, the world population is also increasing and so will be the demand for mobile phones. However, in order to acquire a market share mobile phone manufactures will rely on strong research and development strategies in order to beat the already established giants like Apple and Samsung
With Apple struggling with sales of its products and Samsung dominating the market for the second year running it is recommended that the company use collaborators in order to increase its penetration into the market.
It is also recommended that Apple produce smartphones that are easily accessible and affordable to the middle and lower class consumers.
It is also recommended that Samsung find another app or patent the current Android app to avoid flooding in the market. With the strong competition coming from Lenovo and Huawei Samsung will be forced to share its market segment with the two companies because it will lack competitive advantage.
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