After a meteoric rise, Samsung’s market share in the smartphone space has declined in July-September for the third straight quarter.
Samsung now lags behind Apple in the premium space and has been overtaken by Lenovo and Xiaomi in China at the budget end of the scale, Reuters reports, citing findings from analysts at Strategy Analytics.
After releasing its lowest third-quarter profit in three years, with a drop of 60 per cent from the same period in 2013, the South Korean chaebol has announced plans to revamp its more affordable line-up with higher quality components.
But does Samsung also need to take charge of its brand? The company may think so. On November 24, Samsung named its media solutions head, Hong Won-pyo, head of its global marketing strategy office.
Increasing competition across geographies, higher inventory in key markets and product cannibalisation by new categories are some of the key reasons for Samsung’s decline in revenues and profitability.
Samsung is one of the top spenders on advertising, as it has a very large device portfolio. Of late, it has had to spend even more on advertisements in order to clear its inventory which is stuck in channel, in markets which are quickly transitioning from 3G to 4G. On one hand, Samsung’s devices are finding fewer takers, while the brand is also spending more, so it’s no surprise profitability has been affected.
To move ahead and turn things around, Samsung does have a few options, one of which is to consolidate its product portfolio to some extent and a second is to focus on other existing businesses for growth.
As mobile devices quickly become a commodity product, Samsung is one of the market players, who is very well positioned to bring new and improved devices quickly and cost-effectively.
However, to be successful in the long run Samsung needs to build momentum in emerging markets, where local brands, such as Huawei, Xiaomi, Coolpad and Micromax, have become a popular choice for consumers.
As Samsung expands it needs to improve the design of its high-end devices and expand in services, apps and business space with BYOD programs via a consistent brand message across devices. Based on the Gartner Brand Strength Index, Samsung has high scores in technology and product design, brand awareness and purchase consideration in smartphones and ultramobiles, as well as on the ability to charge a price premium in smartphones.
However, Samsung can further improve its scores for social network engagement and support. Samsung integrates many new technologies into its products, but it needs to further improve the design of its high-end smartphones to better compete with Apple and HTC.
The expansion of services and ISVs will also help to create a better ecosystem around Samsung's devices and boost its brand in consumers’ eyes. Samsung’s presence is still limited in the business and education spaces, but it is expanding in this market by offering security enhancement for enterprise solutions, including Knox for mobile devices.
The business market presents one of the biggest expansion opportunities through BYOD programmes, if Samsung can address security and manageability concerns of enterprises.