It is the last thing most of us look at before we fall asleep, and the first thing we look for when we wake up. We take it everywhere we go (for some of us, this includes the bathroom!) and have experienced that feeling of dread when we can’t find it and fear it lost. It connects us with family and friends, puts any product of service purchase at our fingertips, entertains us with music and movies and occasionally even tells us when to take the third exit at the round about to get to our destination; our mobile phones.
It’s difficult to imagine that only 6 years ago, most of our phones did none of these things – we made phone calls, we sent text messages and we played snake. It wasn’t until the release of the original iPhone, in 2007 that smartphones (although already in existence prior to this time) become popularized and widely sought after.
In early 2007, only 4.7% of mobile phone users had smart phones; today this number has shot up to almost 80%, and Apple’s iPhone is undoubtedly a significant contributor to that statistic.
Fast-forward 6 years to now, and you could be forgiven (but mistaken) to assume that Apple has a monopoly on the smartphone market. Collectively with its biggest rival, Samsung, the company accounts for more the half of the global smartphone market, but Samsung is quickly etching ahead, having recently announcing their Q3 2012 earnings* of an impressive 89% surge in operating profits to a new high of roughly $8.3 billion U.S.
Sales also increased by 18%, with 215 million Samsung smartphones sold last year, in stark comparison to Apple’s 135 million. These results were almost completely driven by the demand for the Samsung Galaxy Note 2 and Galaxy S3 phones, the latter of which is the iPhone 5’s direct competitor.
While some analysts point to the technological superiority of the Galaxy S3 over the iPhone 5, many claim the company was the major beneficiary of the significantly slower-than-anticipated sales of Apple’s iPhone 5, which then raises the question; why is the iPhone plateauing in popularity as the Galaxy is growing? In an industry where branding is key, we need to look at the marketing strategies of these smartphone rivals.
Apple’s iPhone
Apple’s iPhone marketing and branding strategies share the same ostensible simplicity of many aspects of the smartphone, from its advertisements to its product range. Since iPhone’s inception in 2007, there have been only 6 versions released to market, 1 of which was released last year – the same year that Samsung released 37 mobile phone models. In an era where target segmentation rules, Apple have made the unconventional choice to only produce and promote 1 smartphone per year.
This move ties in with the ‘high demand, low supply’ marketing strategy that is implemented with every iPhone launch (think limited pre-orders, ridiculously long cues at Apple stores and the 1-week minimum waiting time the average person waits for replenished iPhone stock to arrive at their local mobile phone store).
By purposefully regulating the number of iPhone 5 handsets initially available in the market to below demand, Apple aims to increase desirability (and therefore sales), with the underwritten value-add of obtaining a new iPhone at release being bragging rights. I’ve used this strategy very successfully with numerous large brands- drive the demand, manage the supply.
Another unique aspect of Apple’s marketing strategy (and one that perhaps now more than ever is becoming glaringly ineffective) is their tendency to self-reference and benchmark only against themselves in their iPhone advertising. This strategy has been implemented with the majority of iPhone releases, with taglines such as ‘The first phone to beat the iPhone’ (for the second generation model), ‘The fastest, most powerful iPhone yet’, ‘The most amazing iPhone yet’ and most recently for the launch of iPhone in 2012, ‘The biggest thing to happen to iPhone since iPhone’.
This is carried through to benefits and features marketing with statements about the thinnest iPhone ever or the biggest iPhone screen ever – the point being that a comparison is only even drawn internally within the product range and not outward against the market.
Apple’s incessant self-referencing to previous iPhone models make sense when you remember that there was a time a few short years ago when there was relatively little competition in the smartphone market. However, given the current climate, and especially with the rise of Samsung, it may be time for Apple to take heed and realize that you can’t perpetually continue a marketing strategy based so heavily around past glory.
Samsung’s Galaxy
In contrast to the Apple-created marketing image of the ‘early adopter’ lining up for days for the new iPhone, Samsung have marketed their newest smartphone, the Galaxy S3 as accessible to the masses; with the tagline “designed for humans”, the company is clearly looking to pitch to wider segments of the market.
Unlike the iPhone 5, initial TV advertisements for the Galaxy 3S avoided mentioning specifications; instead relying on emotive messages and ‘everyday’ people doing ‘everyday’ things, such as reading a bedtime story, or spending time with family and friends. Even in their celebrity endorsement advertisements (David Beckham for the Galaxy S3 phone and LeBron James for the Galaxy Note 2), the phones are being used in everyday situations, with the focus always being on how the smartphone intuitively fits into your life, as opposed to how great the smartphone is in and of itself.
Another point of differentiation in the latest smartphone marketing strategy of Apple and Samsung is the latters willingness to use the former in its advertisements. In a recent tongue-in-cheek ad that went viral almost instantly, Samsung mocks the Apple diehards fans who line up for days awaiting the release of a new iPhone, and end on the tagline ‘the next big thing is already here’, referring their own Galaxy 3S (which was released 4 months prior to the iPhone 5) and playing on the iPhone tagline ‘’The biggest thing to happen to iPhone since iPhone’.
The video advertisement followed an earlier print ad by Samsung that took a stab at Apple for promoting technology only released in iPhone 5 model that had already existed in older Galaxy models. The tagline quite simply was; “It doesn’t take a genius”, another shot aimed at the commonly Apple-used ‘genius’ reference.
Samsung also capitalized on a rare hiccup by Apple after their iPhone 5 Maps disaster with a clever use of one of my favorite marketing strategies – Guerilla Marketing. After news of a group of Australians, relying on the iPhone 5 Maps, were left stranded in the middle of a national park with no access to food or water hit the airwaves, Samsung set up a display on Sydney’s busy George Street featuring a mud-soaked SUV surrounded by several pieces of ragged camping equipment. Next to the vehicle is a sign that reads, “Oops, should have got a Samsung Galaxy S3. Get navigation you can trust.”
Samsung’s recent impressive growth is no doubt a result of several interrelated factors, and marketing is undoubtedly one of them. According industry analyst Horace Dediu, Samsung spent a massive $4 billion on advertising in 2012 – around quadruple what Apple spent over the same period, and it appears their investment is paying off.
So what are the lessons you’ve learnt from Samsung and Apple? As a sole trader, SME or large corporation – dissecting the ‘top dogs’ is a must. It takes time and effort, but it will give you a competitive edge in your next marketing move.
Aaron Sansoni
*The results are all preliminary, however, and the Korean manufacturer has not released net income or divisional figures.
