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Smart Phones in India : Samsung Essay

Introduction:

India is today one of the largest telecom markets in the world, with an addition of more than 18 million subscribers every month. Telecom sector has continued to emerge as the prime engine of economic growth, contributing to nearly 2% of the Indian GDP. Indian telecommunication sector has undergone a major transformation through significant policy reforms, particularly under NTP 1999. Driven by various policy initiatives, the Indian telecom sector has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future.

The industry is expected to reach a size of 344,921 Crore (US$ 68.81 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. This has in turn propelled the rise of mobile manufacturing companies also significantly with Nokia and Samsung the largest players in the organized sector. In the recent years, Samsung has aggressively marketed its mobiles and captured a huge market share. Through this report, we have tried to understand the market and consumer of Indian mobile phone users which will help Samsung strengthen their marketing plan.

Consumer Analysis:

We know that the principle of marketing is essentially to engage customers with a brand and attract them to buy the product. For this purpose, the most essential component is Consumer Analysis through which we can position the right product at the right place & price to acquire new customers, retain them and subsequently use them to promote our brand. In order to develop a marketing plan for Samsung mobiles, we involved in studying a diverse group of mobile users.

Considering the fact that Samsung has a wide range of mobiles, starting from the basic essential phones to the high end tablets, we tried to interact with consumers across the Socio-Economic Classes and understand the perspective of each customer. As part of the consumer analysis, we interviewed five mobile users, including both users of Samsung mobile handsets and other competitor’s handsets. Apart from the interviews, we also asked consumers to rank different mobile manufacturers according to specific parameters through an online survey to get a quantitative aspect to our research. Most of the survey respondents were students who own a mobile.

Analysis of the Interviews:

India has grown immensely as a mobile market in the last five years. All our interviewees used at least one mobile handset before the current model. Mobile handsets are not just a means of communication only for most of the users. The price range of most Samsung mobiles used in India varies between Rs 1100 to Rs 35000. Because of the price and the longevity of the product, it is a high involvement buying on the part of the consumer. Also, considering the significant difference across models, if we map it in the significant difference between brands quadrant, we realise mobile phones are bought for extended problem solving.

Accordingly, buyers follow a rational approach in most cases while buying mobile handsets. The brand recognition of Samsung was found to be very high. All the persons we interacted with were aware of Samsung mobiles. In fact other than Nokia, Samsung was the only brand which was recognized by consumers across all segments. Based on the inputs we got from the interviews, we realized the main factors considered by a customer while buying a mobile phone are as follows:

a) Price
b) Battery Life
c) Sturdiness
d) Sales and Service network
e) Additional features like camera, music player, internet etc f) Screen size and interface

In today’s Indian mobile market, there are an umpteen number of players who try to satisfy these different needs and hence it is important for Samsung to differentiate its brands from the others. One advantage of Samsung is its unique presence across all different segments, including CDMA and GSM handsets as well as dual-sim mobile phones. This diversification strategy has helped Samsung immensely to increase their market share. For a detailed understanding, we summarize the insights of different interviewees against each parameter. Value for money: Most of our interviewees believed Samsung was the best value for money phone, especially in the lower and medium segment.

The perception of Samsung was it offers a bunch of features at much lower prices than its competitors. Samsung through its “Corby” range of phones introduced smart phones in India at 30-40% lower than competitors. One security guard we interviewed upgraded from his existing basic Nokia phone to Samsung GTS 3850 model by paying only Rs 6000 to use different features like internet, camera etc. However, among the brands Nokia, Samsung, Sony, HTC and i-phone, Samsung was ranked 3rd in the survey results in value for money. This was because it compared the high end Samsung smart and tablet phones with the competitors, where the reliability of Samsung phones affects its rating.

Battery Life: This is another extremely important factor mentioned by most consumers, as charging frequently becomes a hassle. The battery life becomes a determining factor in rural areas, where electric power is irregular. But in cities where people have access to power, consumers treat this as a threshold limit and don’t treat this as a proportional factor in their buying decision. In this front Samsung was ranked lowest among all other brands in the survey as well as the interviews. Brand value: Though mobile buying is a high involvement purchase, often it is not possible for consumers to go through the complete rational decision making model. Hence they rely their purchase based on brand value they associate with mobile. From our survey and interviews, we found that Nokia has the strongest brand value. This brand value was built from personal experiences as well as inputs from friends and families. During our interviews we met a cook and a photocopy shop worker who declared that everyone in their family have always bought Nokia and are not interested to shift from the brand in the future prices.

Samsung ranked second in brand value at the lower and medium segment. At the top end models, Apple i-phone has the highest brand value, followed by HTC and Samsung. Variety across price range: As discussed earlier, this is one strong point for Samsung as they have come up with many models for different segments. Among the renowned brands, only Nokia and Samsung are present extensively in the lower segment. The other players in the lower segment are Micromax, LG etc and other non-branded mobiles. Sales and Service Network: The availability of the phones across retail stores in various cities and towns often become an important factor in buying decision, as no one is ready to wait. Mobile being a consumer durable electronic product, the service network also becomes important.

While top end brands like HTC or i-phone have limited service centres and spares availability, Nokia and Samsung have invested heavily in increasing their presence all across India. This we perceived became a very important factor for consumers in their buying decision, especially for repeat purchases. Sturdiness: Consumers wanted a phone which is sturdy and can resist damages from mishandling or dropping. All the interviewees we met used their phone extensively and have dropped it at least once. In this aspect, Sony and i-phone were ranked higher in the smart phone segments and Nokia was more trusted in the basic phone segment. Samsung had low reliability in this aspect but all interviewees using Samsung phones confirmed that other than minor bruises in the cover, their phone was working perfectly even after dropping it. Screen Size, User Interface etc: With more and more consumers upgrading in terms of mobiles, the user interface and screen size are becoming important parameters.

For buying smart phones, customers prioritize applications, operating system, screen size etc over basic functions. Samsung is immensely popular in this attribute in the top end models after their launch of Corby and Galaxy models. Added entertainment features: Mobile consumers these days look at mobile as a complete solution and so want to ensure most communication and entertainment facilities are available in their mobile. This holds true especially if consumers are moving beyond the essential mobile segment. Across different models of various mobiles in India, consumers have got the facility of internet browsing, music player, camera, FM radio, voice recorder, games, torchlight etc.

With telecommunication service moving to 3G now, these factors are becoming more and more important for a consumer while choosing a phone. In fact for one security guard we interviewed the trigger for purchase of his Samsung mobile by selling off his previous Nokia basic phone was to use his phone to access free internet at the campus and play mobile games. This was also understood as the latent needs of most college students and working professionals to whom mobile phone meant much more than making calls and sending messages.

Factors influencing Consumer Behaviour:

We discussed above the main attributes a consumer look for while deciding to buy a mobile. While making his choice, we realized the importance of certain factors which we summarize below: Social: Mobile is increasingly becoming a status symbol and so people often get influenced by his immediate society at home and office to decide on the kind of phone to buy. An interesting point to note is this is the precise reason for decline in use of ‘Chinese’ unbranded phones over the last two years. Personal: As discussed earlier, mobile is now seen as a complete solution to our daily communication and entertainment needs.

So, personal choices of entertainment needs and life-style become important while choosing a particular mobile. While people from older generation prefer more durability and clarity in the phone, people from younger generation go for improved connectivity features. Corporates prefer to give their employees Blackberry phones to stay connected with official e-mail communications. Psychological: The brand perception plays a major role here. While many consumers want to try a new brand of mobile after using a particular brand because of variety seeking behaviour, certain other customers avoid experimenting as the purchase is a high involvement one.

Consumer Decision Making Process:

Buying mobile is a relatively high involvement purchase for extended problem solving. So, most consumers do research to some extent before finalising on the brand. Three out of our five interviewees decided on their brand after extensive discussion with friends and family. They initially decided a price range and shortlisted the available options. Then according to the attributes listed above, they evaluated the options before final decision. It is because of this reason promotion plays a significant role in mobile marketing. Unless a prospective consumer comes across any advertisement about a particular mobile phone model, he/she doesn’t even consider it as an option.

The major channels of marketing and promotion of mobile phones in India are through television advertising, newspaper, internet, billboards etc. One of the other interviewee who was more technologically bent himself researched on the available mobiles from internet and read about feedback of each option from different forums. He wanted to avoid any sort of heuristic or bias of his friends while deciding on his purchase. The last interviewee chose his mobile because it came at a heavily discounted price when he bought it along with a contracted service connection.

He accepted that he was not impressed by the features of the phone but as price was his main criteria, he settled for this phone as it came bundled with a service network one year pack at much lower rates. This gives us another insight about the kind of promotion mobile manufacturers often engage in by using service network providers also as their distribution channel. Overall we can summarize the purchase decision process of mobile phones as following: i) Need Recognition – why he wants to buy a new phone

ii) Information Search – what all available options satisfy his budget and needs iii) Evaluation of alternatives – rating the options based on priorities and physically (or virtually in case of online purchase) seeing the models at the retailers end. iv) Purchase Decision – Finalizing the model based on personal perceptions and primary and secondary feedback received about the mobile v) Post Purchase Behaviour – ensuring he gets authentic spares and service centres locally and at convenient timings when needed

Company Analysis

Company Overview:-

Samsung Group is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand. Samsung Electronics commenced its operations in India in December 1995 and is today a leading provider of Consumer Electronics, IT and Telecom products in the Indian market. Samsung India is the Regional Headquarters for Samsung’s South West Asia operations, which provides employment to over 8,000 employees with around 6,000 employees being involved in R&D. Samsung India is a market leader in product categories like LED TVs, LCD TVs, Slim TVs and Side by Side Refrigerators. While it is the second largest mobile handset brand in India, it leads in the smart phone segment in India.

Vision and Goal:-

Samsung India states that

“Our aim is to gain technological leadership in the Indian marketplace even as our goal is to earn the love and respect of more and more of our Indian consumers.” It aims to be the ‘Best Company’ in India -‘Best Company’ in terms of the internal workplace environment, the manpower, the products as well as the efforts to make customers happy through products and services. Samsung aims to grow in India by contributing to the Indian economy and making the lives of its consumers simpler, easier and richer through its superior quality products.

Company’s Analysis of Samsung Mobiles:-

Samsung’s chief executive officer, Jung Soo Shin had clearly notified to The Mobile Indian, “India is one of the most important markets for us and Indian consumers will always be the first ones to get Samsung’s latest devices.” Following his promise the flagship smartphone of Samsung, Samsung Galaxy S3 which was launched in May 2012, was made available to Indian consumers in the first phase itself.

Samsung considers India to be a very important market since it is the third largest mobile phone market in the world. In 2012, Samsung is looking at a growth rate of 25-30 per cent in India, driven by mobile phones and notebooks. The company had registered a turnover of Rs 20,000 crore last year in India. As per estimates Samsung has a market share of 44.7 per cent in the smartphone segment, while in the overall mobile handset category, it has 34 per cent share, India is the second country, after Singapore, where the company has set up its br1and store. The stores are created primarily to cater to the mid- to high-end products of Samsung. The company operates via more than 260 smartphone cafes across the country and through various franchisees. It has a significant presence in around 90,000 multi-brand retail outlets in the entire country.


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