Samsung currently has 40% of the smartphone market, up from 20% in 2011 and well ahead of Apple’s 25%.
With the company announcing decelerating demand and analysts suggesting that Samsung has reached a market cap, it’s time for Samsung to focus on long term sustainability and that starts with the youth market.
Liked by many, Loved by none?
Being “liked” no longer means anything if your brand is “loved” by none. Data on US smartphone ownership shows that Samsung is equally “liked” across board, with Golden Generation and Older Boomers having the highest ownership rates (26% & 27%), but does it have any Beachheads in the market? A handset brand that is equally liked by everyone can only maintain its performance if it spends increasing amounts of money. More advertising at this stage will only yield diminishing returns.
What Samsung needs is to convert “like” into “love”.
The rise and fall of Nokia should serve as a cautionary tale for Samsung. Nokia was the dominant player in the mobile industry for years but it quickly lost ground because it never developed any relevance with the youth market. Irrelevance feeds through the age groups and now the few Nokias you see are in the hands of aging 60 year olds.
When your Beachhead are the Boomers, you’ll struggle to launch new products.
Samsung’s current trajectory follows that of Nokia’s, but at an increased pace. Nokia’s rise and fall from grace took several years. Samsung, on the other hand, quickly captured market share with aggressive advertising and sales promotion. Its fall from the perch could prove just as rapid.
Samsung’s biggest risk is now in becoming a commodity. If this happens, it will need to compete at two ends of the market: with Apple on innovation and Chinese manufacturers on price. This could spell trouble for the whole of Samsung Electronics, as smartphone sales are main drivers of revenue for the company.
Mobile brands are built in the youth market
As covered in the mobileYouth 2013 Report the key to sustainable growth in the mobile market is in developing the youth market. Apple’s significant share in the mobile industry was built on the foundation of their relevance with students. It’s not something that can be built overnight, but it will yield long running results. Unless Samsung starts focusing on developing Beachheads in the youth market, it opens itself to a potential race to the bottom with ever cheaper Asian manufacturers.