Impact of Loss of Market Share

Today, the advancement in technology and its influence is so salient that social media plays a significant role in helping consumers decides between competing brands. The level of competition is so stiff, that the idea of brand loyalty or monopolizing market shares becomes a thing of the past. For instance, Nokia from Finland was once the leading brand for mobile phones, in the early stages of mobile phones but in this day and age where smart phones has become the norm, Nokia's market shares has since then taken a beating to the likes of the dominating Samsung of Korea and Apple from the United States of America. Once the loss of competitive attractiveness, consumers will lose interest in the products and it will make it more difficult to win back customers when you lose them.

Both Apple and Samsung are being squeezed as Apple and Samsung wins high-end users from one another and Xiaomi, Lenovo, HTC, Huawei and others pack advanced features into inexpensive models. They are not growing as fast as the global market, especially in emerging mid-market.

Even though Apple increased sales over year-over-year, but due to lack of innovation and loss of Steve jobs' leadership in Apple, competitors have chance to gain market share if they have new and innovated products. Apple has not shown new innovation in the pipeline and hence lost its shares to cheaper Android sets such as Xiaomi, Huawei in China. Apple needs to have product differentiation rather than a low cost product (iPhone 5C – a blotched case). A low cost product is not a good long term strategy for Apple.

Samsung too is facing slumping profit growth, even though the percentage of loss of market share is smaller as compared to Apple. Samsung is trying to make its mobile unit less dependent by shifting strategy. It will make an all-out effort to make the most of the lower-end market as it is the biggest and fastest maker of the cheap handsets as many competitors are able to mimic the newest and latest technology. Importance of a product specification is not as important as a differentiated marketing strategy for Samsung.

Competitors such as Xiaomi, it's strategy is to increase market share and hence designs its phones with high-end specs and sells them at midrange prices. Even though Xiaomi phones are not of the same quality category as Apple & Samsung yet, but the company entices its consumers at an affordable price, the principal factor for many consumers in China and emerging markets. However Xiaomi is still weak in terms of sales in the conventional market and through telecom channels and it will lose its pricing advantages if it has to share its profits with retailers.

With more competition from either ends, this could lead to lower pricing for consumers. The cost in production could increase for the fear of infringement of copyrights and hence lowering profits. An example would be the case of Apple and Samsung lawsuit case that’s ongoing.