Marketing Environment Analysis Of Smart Phones Industry Report Sample
The global smart phone market has experienced extraordinary growth in recent times, with shipments rising by 40 percent in 2014 to surpass the 1 billion unit threshold and $ 266 billion in value (Ha, Oh and Lee, 2014). This report found out that these dynamics are caused by micro-environmental forces, for instance, markets, customers, competitors, and distribution/promotional approaches applied by firms in this industry. Additionally, these dynamics are also caused by macro-environmental forces such as demographic, economic, ecological, technological, cultural and political/legal.
The smartphone industry has become more complex, competitive and connected over for quite some good time. The industry is not connected not just in terms of sensor and connectivity improvement, but the smartphone segment’s interrelationship with other industry markets and business models. This section of the paper addresses the competitive conditions of firms doing in the smartphone industry. This will be discussed in the following sub-sections.
Total smart phone shipments that is, sales to the distribution channel from the manufacturers, also known as “sell in” in 2014 approached 1.83 billion units worldwide, a yearly rise of 6 percent in 2014 and 2013. Smartphone shipments surpassed the 1 billion unit threshold for the first time in 2014, meeting 1.03 billion units mark and accounting for 56 percent of total mobile phone shipments. This represented an increase of 40 percent on 734 million units in 2013. The smartphone market is, therefore, forecasted to have a growth rate of at least 21 percent in the next five years (Ha, Oh and Lee, 2014).
Even though, mature markets such as North America and some Western European markets are experiencing new force from network operators’ initial upgrade plans, smartphone surge in these markets is currently driven by replacement sales. It is estimated that replacement sales in 2014 were 40 percent of the installed base in 2013 in Western Europe and 60 percent of the installed base in 2013 in North America. Smartphone surge is currently heavily dependent on upcoming markets, notably China. China reported mobile phone shipments of 385 million units in 2013 in North America, or 21 percent of the global total (Ha, Oh and Lee, 2014).
The smart phone industry is impacted by the complex buying behavior of the consumers. This is where consumers’ involvement with the product is high, and the consumers perceive important differences among brands. The market of smart phone is segmented using variables such as ages of the consumers. Firms in this industry use methods such as internet to reach youths who makes up the greater part of the target market. Consumers here rate the competitors based on the performance and the battery life of the brand.
Recent times have witnessed a fundamental change in the structure and dynamic of the global smartphone industry. Apple is a conspicuous exception to this change but has nevertheless established an ecosystem in which its strength and services is helping to develop industry leading profit margins for its hardware. A host of established smartphone makers including Nokia, BlackBerry, LG, and HTC have been compressed between the rising of Chinese producers, the Apple’s ecosystem-based business, Microsoft, Amazon, Google, Tencent and the obvious merits that Samsung gets from the scope of its operations.
Coherent with the strong consumer association of smartphones with the likes of laptops and tablets, there is the trend that sees the purchase of smartphone quickly becoming the same of tablets and laptops. It is anticipated that in the immediate future there will be a highly competitive atmosphere, advances in hardware components that will reduce the barriers to entry and introduction of cheaper models by the largest companies. Three of essential trends are a greater segmentation of marketplace, a greater value orientation and increased competition (Blythe, 2006).
There are different methods that smart phone are distributed and promoted. They range from all forms of media: Television, Print, online and out of the home. Popular is the use of unique selling proposition strategies, co-branding, social media, and guerilla marketing to increase the buzz. The idea behind this strategy is that promotion should provide consumers with a compelling reason to purchase the product different from one of the competitors.
This section of the paper describes broad macro-environment trends. It concerns the demographic, economic, ecological, technological, political/legal, and cultural factors which are of relevance to understanding of the smart phone market.
Some of the demographic variables that affect the smartphone market include age, sex, income and occupation. These individualistic characteristics may shape behavior during a particular stage of the decision process. For instance, a young people take more time than adults to search information regarding smart phones. Therefore, this may influence firm choice, brand preferences and timing of purchase. Smart phone industries are also currently launching their handsets based on the occupation of their target market.
The economic environment includes variables that influence consumer spending patterns and purchasing power. Some of these factors include developments in income, prices, savings, and credit. Marketers must, therefore, pay close attention to key trends and consumer spending patterns. The economic system of a nation controls what brand of a smart phone a firm produces and also dictates what brand of a smart phone consumers can buy.
Ecological environment entails the outlook for the cost and availability of natural resources and energy required by firms producing smart phones. It also includes environment legislation or negative publicity that may be of issue. The smart phone industry is currently continuously advancing the environmental credentials of their entire product. This involves improving energy efficiency, applying smart packaging and renewable materials and producing eco-friendly smart phones (Ha, Oh and Lee, 2014).
The technological environment entails the major technological changes occurring that would affect business in the smart phone industry. Technological changes are likely the most dramatic variables influencing current marketing strategies. Variables that establish new technologies also result into new market opportunities and new products. The smart phones are currently packed with advanced tools that allow consumers do so much more. For instance, Samsung has launched smart phones with HD sensitive touch screen. Sony also launched a smart phone that is water and dust resistance.
The political/legal environment involves the laws or regulations being considered that could affect marketing strategy and tactics. The political/legal environment is also very critical from firm’s point of view since marketing decisions are heavily influenced by developments in the political/legal environment. Any political decision usually has an effect on the product market. For example, Nokia Company decided to decrease its market share in Libya and Egypt due to political riot. Samsung also violated a host of Apple patents and participated in “willful infringement”.
The cultural environment entails cultural or sub-cultural patterns affecting the public’s attitude towards the firms and products. The cultural factors heavily influenced how people think and how they consume. The cultural environment is composed of institutions and other variables that affect society’s basic perceptions, behaviors, values, and preferences. Smart phone industries function in a diverse number of cultures. Therefore, they have to align their marketing strategy according to the culture where they operate. They also have to adhere to other cultural patterns such as putting at least one local language in their smart phones.
Additional Application of Core Marketing Concepts
This section aims to address how the following core marketing concepts from the text or class discussions applies to the smart phone industry.
Product Life Cycle
Product life cycle is a very important marketing concept in the smart phone industry. This is mainly because the smart phone industry is highly affected by innovations. As consumers begin to embrace and admit an innovation, the smart phone which is new grows, finally entering maturity. With the availability of a better option smart phone or when the consumer tastes shifts, the product arrive a decline stage, probably closing with the demise of the smart phone (Kotler, 2000).
Pricing approaches is also a key marketing concept in the smart phone industry. The consumers have high involvement buying behavior in this industry; therefore, firms must consider the right pricing approaches if they want to sell their brands adequately.
Customer satisfaction is also an important marketing concept in the smart phone industry. Consumers of smart phones are usually satisfied if the phone can meet parameters such as performance and battery life of the smart phone.
Blythe, Jim. Marketing. London: SAGE Publications, 2006. Print.
Ha, Seong-Ho, Jun-Seok Oh, and Bong-Gyou Lee. 'The Analysis Of Advertisement Effect In Smart Phone Environment: The Comparison Of Users With Providers Of Commercial'. The Journal of Society for e-Business Studies 16.4 (2014): 221-239. Web.
Kotler, Philip. Marketing Management. Upper Saddle River, N.J.: Prentice Hall, 2000. Print.
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