Apple and Samsung both announced a decrease of market share. What are the consequences of this loss of market share for themselves, competitors?

As what Strategy Analytics had announced last week, Apple and Samsung saw their smartphones market share declining when in fact the global shipment grew. It seems to show that the smartphones market are getting competitive. Apple and Samsung, being the market leaders, could no longer stay on their pedestal perhaps any much longer, compared to a few years ago.

No doubt, the two heavyweights are still the top two in the smartphones market, but the other players are catching up pretty well. Such examples are Huawei and Lenovo, players from China. As with any technology, new players are entering the market or old players who are catching up in technology, brought with them more choices for the consumers.

Both Apple and Samsung have in fact, their own pain points. Samsung, for example, is facing tough competition from Apple at the higher-end market and faces Huawei at the lower end. As for Apple, they are losing volume in the fast-growing emerging markets due to the lack of a ‘budget iPhone’. Even with the introduction of the iPhone 5c, it is still considerably not affordable for the masses in emerging markets in Latin America where Apple has seen a drop in shipment volume to this market which on the other hand result in tremendous growth for Huawei and Lenovo instead.

Huawei, as reported by CNET.com, has also been expanding swiftly in Europe while Lenovo has been aggressive outside China, especially Russia. Amongst the growth, the most growth seen are really not the top four but other small players in the market.

This is understandable, especially so since Apple and Samsung has by far been largely catered to the developed market, while it is still seen as too expensive for the emerging countries, notably India, China and Latin America. In contrast, the small players has seen growth in volumes in these emerging markets.

We could also see that there is little growth in the developed market at this point. Practically, almost everyone now has a smartphone and it has reached its saturation point. The only way for Apple and Samsung to overcome this stagnation would probably be to innovate and come out with something new or start making cheaper smartphones for the masses, to really overcome the drop in market share. 

What are the benefits and drawbacks of a search marketing

SEM is a form of targeted marketing that allows us to be able to advertise our business on search engine results pages. This involves bidding on keywords so that our ad is shown when those particular keywords or phrases are searched.  We then pay the bid amount every time someone clicks on the ad. SEM is advantageous because it allows us to target very specific audiences who are actively searching for our offering.

Advantages:

Get in front of a large audience

Search Engine Marketing gives us the ability to get our company name and services in front of a large, interested audience. In Google, alone there are over 400 million queries a day. Obviously not all would apply to our business, but we can get an idea of how many people we may be able to reach. The more visible we are to interested searchers, the more opportunities we’ll have to capture new customers.

Be as targeted as you want it to be

One of the main advantages to SEM is that it can very targeted.  Besides being able to bid on specific relevant keywords and phrases, platforms like Google Adwords allow us target based on specific devices, locations, times of day, and languages.

Cost effective

SEM can be very cost efficient. It’s cheaper than traditional forms of advertising such as TV or Radio, and it’s also better targeted. Since we’re only paying for clicks to keywords or phrases relevant to our business, it allows us to spend our marketing dollars wisely.

Disadvantages:

SEM requires time and ongoing maintenance

Search engine marketing requires that we monitor and update our campaigns constantly. It takes time to figure out the right combination of ad text, targeting, and bidding. That’s why testing is a critical aspect to SEM, in order for our campaigns to ultimately be successful and profitable. Whether it’s making sure our spend isn’t getting out of control, or testing different ad copy to see what works best, we could be missing out on opportunities if we’re not constantly monitoring and analyzing our results.

Can be cost prohibitive

Even though we previously stated that SEM was cost efficient, it can also be cost prohibitive depending on our space/ industry. Popular keywords can be very expensive sometimes costing $30 dollars or more per click. Since PPC advertising is essentially an auction system, it may be tough to out bid competitors with deeper pockets and larger budgets.

Also if we don’t have the necessary expertise, which most people don’t, we may not be running our campaigns as best as we could and therefore be overspending. We may need to invest a little time getting up to speed.

Conclusion

Having a well-rounded online presence is essential to our business growth and SEM is a great way to do it. The advantages of SEM can outweigh the disadvantages, but every company is different. SEM is definitely worth trying out – Use a small test budget to see if it works for our biz. By focusing on longer keyword tail phrases, we may be able to narrow in on more profitable phrases with less competition, therefore keeping our marketing spend down.

Apple and Samsung both announced a decrease of market share yesterday, what are the consequences of this loss of market share for themselves and for competitors?

Apple and Samsung both announced a decrease of market share yesterday, what are the consequences of this loss of market share for themselves and for competitors?

Market share losses are signs of long-term problems that require strategic adjustments. For tech giants like Apple and Samsung, this is an early indicator of future opportunities in a new market - wearable technology.

Why? To retain their existing share of high-end smart phone market, a truly revolutionary product will need to be developed and be integrated with the existing high-end smart phone user experience. This means a wearable device that will alter the way we use our smart phones (e.g. health monitoring, nutrition management). Samsung has already started working on wearable devices and in this month, they have released two smartwatches and an activity tracker. The world's largest online retailer, Amazon, just launched a new section for wearable device shopping where consumers can learn more about the possibilities of wearable technology - a clear sign of the next big thing in digital technology.

The loss of market share is also an indicator of both tech-giants problems in the entry-level smart phone market.

The iPhone5C was a flop for the low-end smart phone market. It is a cheaper iPhone but not cheap enough. With 2^nd tier brands like Xiaomi and Huawei entering the mid to low-end market, Apple and Samsung will need to continue to drive true innovation in this market segment and offer truly competitive prices. This will have to be faster than the growth rate of these 2^nd tier smart phone brands in the market.

As for the competitor brands, they will continue to enjoy the free-rider effects just by studying the market leaders’ technology and strategies. They will still be able to provide quality smart phones at unbelievable value-for-money prices at their local market. Perhaps this is why the patents infringement lawsuit is so important to Apple as a message to the rest of the other players in the market. And perhaps that is why Xiaomi never compared itself as China’s Apple but more like Amazon where they monetise their audience quickly through selling services to its users.

Now, the winner shall be the one who has the more popular hardware and the backend infrastructure that can support convenient services like e-commerce and mobile payments in our daily activities. Too bad iPhones don’t come with Near Field Communication (NFC) chips. Yet. There are already many NFC-enabled mobile phones in the market, but there was never one that had a large enough consumer group that could drive the need for NFC-enabled point-of-sale systems on the supply side. 

Search Marketing...

The wins for Search Marketing

Ability to target

The ability to segment, target and zoom in on the right audience is the key to success for any marketing campaign.

Marketers are increasingly excited by ways which they could target their audience and techniques like programmatic targeting and re-marketing provide additional firepower for marketers.

Measure, tweak and adjust almost instantly

In the past, it took a long time to even gather results and some results are often aggregate results based on extrapolation and/or approximation (e.g. AC Nielsen TV ratings, circulation audits of publications etc.). The time lag between measurement, understanding the numbers and follow-up marketing actions allowed for very little flexibility for marketers.

Never has there been a time when marketers could monitor almost real-time results, make necessary tweaks to their marketing campaigns and adjust their tactics/plan almost instantly. Marketers can look at keywords used, monitor web traffic and make any adjustments they want and opens up many possibilities to test/optimise different creatives, messages, offers with their target audience.

Draw-backs or pitfalls...

Complexity and Effort

Search marketing is getting or already complicated. Understanding how to optimise sites and/or wanting to improve SEM and persistently wanting to do it well is becoming extremely complex.

Trying to improve one’s ranking for natural search at any point in time is already complex enough. It does not help that internet is really a big battlefield where everyone is trying to game the rules and search engines are also constant changing the rules to ensure fair play and marketers can get caught out. Keeping up requires understanding of these complexities and when the goal posts are shifting.

Wanna find out more about complexities of optimising? Check out how "animals" like Penguin or Panda could possibly penalise you rightly (or wrongly). Even big brands get it wrong amid the confusion and even Google themselves get penalised... (what irony)

Costs

If your marketing budgets are small, it will be bare register a ripple in the water (see Mistake no.9). It’s unlikely that marketers are able to carry out all the optimisation themselves for search marketing themselves without hiring consultants/agencies. Being successful requires high level of persistence and it’s not a one-time effort for any marketer.

The website experience, your product or service still matters

Yes, search marketing isn’t the silver bullet that will end the war, while marketers can do excellent work in search marketing and bring people to your site. Having a bad website that gives a bad experience, poor content will put all the work into waste.

It’s also important for marketers to remember that the product/service still matters, the end goal is still to convert traffic into leads/sales!

Both Apple and Samsung reported a drop in their market share

Samsung shipped 89 million smartphones worldwide and captured 31 percent marketshare in Q1 2014, dipping slightly from 32 percent a year earlier. Meanwhile, Apple shipped 43.7 million iPhones worldwide for 15 percent marketshare in Q1 2014, falling from the 17 percent level recorded during Q1 2013.

The reason behind the dip could be due to market saturation and competition. While things are slowing down at the high-end of the smartphone market, there is intense competition from the lower-tier smartphone brands.

Saturation – In need of product innovation

Consumers are become more reliant on their smartphones as days go by. While both Apple and Samsung have been launching new models, each new model comes more as an “enhancement” rather than with “ground-breaking technology”. This lowers the motivation to upgrade or switch to another phone.

Consumers are seeking for a better entertainment experience – for viewing and gaming. Perhaps a 3D experience (be it in area of viewing or printing) would create a big buzz. Also, the society is moving towards a cashless society. Hence, it will be beneficial if the smartphone which they are holding could allow consumers to experience easier in-store transactions, example “scan to pay” or “click to pay” within premises. Wearable gadget is also another area to explore.

Consumers are expecting a lot more and companies that pursue innovations will thrive in this smartphone war.

Competition – Price factor

While smartphones are common in our everyday life, smartphone adoption is very much still on the rise in fast growing emerging markets like China, India and Latin America. There are many consumers who will be shopping for their first-ever smartphones. Hence, a lack of presence in the entry-level category continues to cause both Apple and Samsung to lose volumes in this area.

Strong competition in the emerging markets include Huawei and Lenovo. And Lenovo continues to grow aggressively outside China into new regions such as Russia. If the recent Lenovo takeover of Motorola gets approved by various governments in the coming months, this will eventually create an even larger competitive force that both Samsung and Apple must contend with in the second half of this year."

Strong support for operator subsidies in these markets is also important as this will determine the price factor for smartphones. Having low-priced smartphones are particularly critical for generating growth in the market and fuelling a switch from even lower-cost feature phones.

How to make a cheese wall?

When you walk into a DIY shop and you are looking for “that thing that has a handle and that screw thing that spins and goes grrr grrrr” Search Marketing is the salesman that will tell you: “drill ah! Power or Hammer?” You reply with a “make hole in my wall” and he will tell you “power drill”. He continues to ask you what type, how often you are going to drill etc” 

Source: ergoemacs.org

The salesman continues to bombard you with questions and provides a more specified type of drill catered to the cheese wall you have planned for your wall. He is your Search Marketing. He is trained to know what you are looking for in your simple terms. This is the benefit of search marketing. The salesman would not waste your time showing you the hammer or the toolbox. After you buy your drill, he shows you the drill bits expansion set, or even another set that can double as a hammer drill known as the combo drill. This is another benefit of Search marketing; it tries to predict what else you might look for as well.

In the first place, for all the above to happen, the salesman has to be trained. He has to know the products that he is selling well. All of this is time and money invested. The shop would have to spend resources training the salesperson in order to secure sales. Just like search marketing, he has to know which drill would make holes in walls and which drills would drive the screw in. This constant updating and monitoring of new products is time-consuming. But changes would last a long period of time and often producing a long term result. And if the customer is happy with the service and product, it would return as a customer, hence driving free traffic just like how search engine optimization works.

Of course a shop must exist for the customer to walk in. Just like how businesses must have online presence tied it with a good website to drive people to their site. The advantages of SEM can outweigh the disadvantages, but every company is different. It all boils down to meeting the needs of the customers. The “thing that has a handle… and make holes” etc are all search keywords for search engines to drive these people to websites that sells drills. Business will need to know the language of the customers and this could prove to be the most difficult yet most essential.

And now, I have two drills at home, feel free to borrow!

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.