Samsung Galaxy SII- Market Segmentation
Samsung Electronics (Mobile Division) operates in one of the most competitive markets of the world. According to the US Federal Communication Commission 67 new Smartphone devices are introduced every year. Samsung’s mobile Galaxy SII is competing against world leaders such as Apple, BlackBerry, HTC, LG, Motorola, Nokia, and Sony Ericson. Microsoft also has joined the market by establishing a partnership with Finland’s giant Nokia. Google, even though still is Samsung’s software partner, has acquired Motorola’s Mobile Division. In a smaller proportion but very competitive are Chinese’s ZTE, China Mobile and Baidu (leading Chinese search provider) with billions of dollars invested in research backed by the Chinese Government. Forbes Magazine has listed China Mobile as the number 1 Chinese company in the world. Under this Oligopolistic Competition, Samsung invests a significant amount of their annual budget in Marketing in order to get a strong Share-of-Voice and distinguish itself from the Noise of competitors. Their Coverage Strategy is arguably a Differentiated Marketing strategy as they have an Extended Product Line with separate offers for each of its segments. An example is Samsung’s Mobile division there is: Galaxy Gio, Galaxy Mini, Galaxy Ace, Galaxy SII, Nexus S, Galaxy 551, Wave 723, Galaxy S, Galaxy 5, Galaxy 580 and Omina 7. Some may argue that Concentrated Marketing is the actual strategy of Samsung’s Mobile Division as the market is Mobile Phone and Smartphones is the submarket. However it’s clear that with many different products under the Samsung brand (i.e. mobiles, smartphones and tablets) the strategy is to: Differentiate and target different segments in the Mobile Market.
Samsung traditionally had a conservative image that focused on low-price products for the lower end of the market. With low prices it was able to compete in the lower-market whereas in the upper market it had lesser penetration. To penetrate the upper-market Samsung had to give up their lower-market position and focus on innovation and perceiving a higher brand value. As higher quality was eventually perceived Samsung’s prices also risen. With the introduction of the Apple iPhone and technology now been widely available Samsung has again repositioned as High Perceived Quality but the Galaxy SII, as a new product, is directly positioned against the iPhone 4. With its benefits and features matching the iPhone 4 but with prices slightly under the iPhone price Samsung believes it has a Competitive Advantage over its competitors. Based on recent Marketing definitions, Behavioural and Psychographic Segmentation are the definitions that best represent Samsung
current Segmentation Strategy (Kotler, Brown, Adam, Burton and Armstrong 2007, p.346). Although Geographic and Demographic are highly important in Samsung’s Segmentation Strategy the emphasis is on Behavioural and Physiographic Segmentation. The Australian Bureau of Statics shows that Smartphone Demographics are 20-40 years, with an income of 51-100K and Geographically located in urban city areas. As the whole market is concentrated in those Geographic’s and Demographics, Samsung has to focus on the physiology of Consumer Behaviour in order to differentiate itself from the market Noise. As consumer scepticism towards advertising is in its all time high, Samsung also focuses in direct interaction with its customers in order to influence others in their peers group.
Dr. Philip Kotler says that “the best advertising is done by satisfied customer” (Armstrong and Kotler, 2002).