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Smartphone industry

Smartphone industry. Rachel Yan Temitope Tiamiyu Laura Battaglia Francesco Messina. Quick question. How many of you used smartphones 5 years ago?. How many of you are using smartphones now ?. Why smartphones?. Amazing product! Relevant topic for U.S. college students

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Smartphone industry

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  1. Smartphoneindustry Rachel Yan TemitopeTiamiyu Laura Battaglia Francesco Messina

  2. Quick question • How many of you used smartphones 5 years ago? • How many of you are using smartphones now ?

  3. Why smartphones? • Amazing product! • Relevant topic for U.S. college students - Smartphones vs Non-smartphones • Past vs Future - Technology - Global trends

  4. INDUSTRY STRUCTURE

  5. 1992: IBM developed “Simon”, the first mobile phone to incorporate PDA (personal digital assistants) features A short history • 1996: Nokia released Nokia 9000, a palmtop computer-style phone combined with a PDA from HP • 1997: Ericsson released the GS88, first device to be labeled as “smartphone”

  6. 2000: The touchscreen Ericsson R380 Smartphone was released. First to use an open operating system, Symbian Os A short history • 2002: RIM released the first BlackBerry, which was the first smartphone optimized for wireless email use • 2007: Apple released the first generation of iPhone, the first mobile phone to use a multi-touch interface

  7. … New Smartphone Generation

  8. A smartphone is a mobile phone built on a mobile operating system, with advanced computing capability connectivity.In addition to digital voice service, it usually provides: Text messaging and e-mail High-speed data access through Wi-Fi and mobile broadband Web browsing Video cameras MP3 player and video playback and calling Possibility to run free and paid applications What is a smartphone now?

  9. Hardware vs. Software Smartphone hardware manufacturers compete primarily based on one of two models: 1. manufacturing their own hardware and licensing the software that runs on the smartphone from another firm E.g. Nokia (Windows Phone) 2. manufacturing the hardware and developing the proprietary software that runs on the device E.g. Apple (iOS), RIM (Blackberry)

  10. Operating Systems (OS's): Three forms:

  11. Sales and market shares of smartphone manufacturers

  12. What we can see.. 1. The smartphone market is a growing market: It grew 41% from 2011 to 2012 2. Smartphones accounted for 39% of all mobile handsets sold 3. There are 1.31 billion active smartphones in the world 4. Samsung and Apple are the major players 5. Huawei makes strong gains and is World's #3

  13. Market shares of smartphone manufacturers: • HHI (of the first 10 players):1668

  14. Relatively high: 1. ECONOMIES OF SCALE 2. INTELLECTUAL PROPERTY 3. BRAND LOYALTY 4. NETWORKING barriers to entry

  15. But the degree of rivalry is high: • 1. DIFFERENTIATION: significant between home and business users • 2. ECONOMIES OF SCALE: almost no scalability to create more software • 3. PRICE: consumers generally value quality significantly over price • 4. PLAYERS: switching from traditional cellphone industry

  16. ADVERTISING STRATEGIES

  17. TYPES OF ATTRIBUTES • Search attributes • Online reviews • Experience attributes • Online reviews • Our focus is on these three players: • Apple • Samsung • Blackberry

  18. PERSUASIVE ADVERTISING • Advertising strategy deployed is to attract and retain their clients, building long term relationships with customers through “differentiation” • Ads emphasize on the perceived quality of both the phone and the brand

  19. Informative advertising • Based on the company’s competitive advantage • Samsung: Size, Ease of transferring files • Apple: “Incredible design”, “thin”, “smart”. iPhone trend • Blackberry: Culture, Diversity, Business • Product attributes: • Also via ads

  20. COMPARATIVE ADVERTISING • Samsung and Blackberry attacks Apple in order to steal market share • Apple doesn’t respond • Blackberry versus Apple http://www.youtube.com/watch?v=LwxNNsmGhVI

  21. Humour appeal • It comes very often when the ad is bundled with a network provider plan. • Usually it is a sketch or a short story.

  22. CELEBRITY INVOLVEMENT

  23. NETWORK CARRIERS • Bundling with network carriers • Ad is about a story or a sketch, at the end the smartphone is shown along with the details of the plan. • Direct Competition • All compete on price: Samsung and Blackberry • Advertising based on quality and reliability of network service: More so, true for the iPhone: • AT&T: “the iPhone downloads fastest on AT&T’s 4g” • Sprint: “truly unlimited data for your iPhone…only on Sprint”

  24. THE TWO MAJOR PLAYERS… captured 50% of all Smartphone sales in 2012

  25. ADVERTISING CAMPAIGN "THE BIGGEST THING TO HAPPEN TO IPHONE SINCE IPHONE" “ THE NEXT BIG THING” “FINALLY” “IT’S THE MOST AMAZING IPHONE YET”

  26. APPLE • Powerful brand: goes after the mainstream market • Top rising brand of 2012 • According to Interbrand, the Apple logo is now valued at $75.56million. • Advertising expenditures: $333M • Hardly responds to commercial attacks from competitors • Market share of 19.8% in 2012 vs. Samsung’s 31.4% • Huge sales in developed regions like North America • Limited presence in high-growth emerging markets such as Africa

  27. SAMSUNG • Rated second in phones • Top technology brand of 2012 • Advertising expenditures: $401M • Speed in launching new products • Of 700 million units shipped, Samsung shipped a record 215 million smart phones worldwide • Became more assertive with carriers – to distinguish itself from other android phones. • Captured 31.4% market share in 2012. • Mostly attacks Apple, in order to steal market share.

  28. interbrand best global brands, 2012

  29. RAW DATA ANALYSIS

  30. RAW DATA ANALYSIS • 27 TV adsanalyzed (source YouTube) • Playerstakeninto account: • Apple (11 ads) • Samsung (10 ads) • BlackBerry (6 ads) • Productsadvertized: • iPhone 5, iPhone 4/4S • Samsung Galaxy S3/S2, Note II, Nexus • BlackBerry Z10, Torch 9800, Curve Q8350

  31. Codingtemplate

  32. Approachof advertising [industry]

  33. Approachof advertising apple

  34. Persuasive or complementary? • Apple’s approachissometimescomplementaryratherthan persuasive. • Maybeitcouldbearguable, butwethinkthat the persuasive approachisprevalentsince the aimistocharge a very high price and changeconsumers’ preferences.

  35. Approachof advertising samsung

  36. Approachof advertising Blackberry

  37. ProductFeaturesdescribed in the ads

  38. ProductFeaturesdescribed in the ads Samsung • An ad withoutphonecharacteristicsisnotan ad forthis player! • Very hard tofind a Samsung ad with no featurespresented. • Reason: Samsung wantstocommunicate the technologicalsuperiorityofitsproducts.

  39. ProductFeaturesdescribed in the ads

  40. How many characteristics per ad?

  41. How many characteristics per ad? • WhyBlackBerry on averageshows more productcharacteristics in itsads? • Becauseitmainlyaddresses the target market segmentof business people, whodemandappsrelevanttotheirdaily job. • Hereis the incentive to show in detailmanyapplicationsof the phone.

  42. Comparative advertisements

  43. War ofcomparison • 5 directadswhere the competitor productis: • Mentioned • Shown • Criticized Ex: “iPhone 5 has a sketchybattery” by Samsung • 2 indirectadswhere: • They allude todistinctivecharacteristicsof the competitor. Ex. Sizeof the screenbetweeniPhone 5 and Galaxy S3 Apple claims (proportionateisgood) Samsung argues (big isgood)

  44. Brand focus

  45. High qualityperceived

  46. Last remarksfromouranalysis • Price is never mentioned in the ads, exceptforbundled ads with network providers • In the U.S. contractsmake people lessawareof the costof the phone • No tricks in the ads: long-term relations withcustomers

  47. Cornell Survey

  48. Did you buy your phone because someone recommended it to you?(friends, family, online reviews, etc.)

  49. If no people around you are using smartphones, would you still buy them?

  50. How well do you remember the iphone advertisements?

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