Samsung : The Lone Warrior
I have been following #Samsung as a smartphone brand since 2011. While they always had, and still have feature phones, I will be focusing on the smartphone category for this article.
The last 7 years have been tumultuous for the #IndianMobile industry, specially smartphones with #Nokia exiting (the Microsoft operating system was not able to stand up to the #Android OS). They are now trying to make a come back with their strategic tie-up with #HMDGlobal with their devices running on the mighty Android OS. A brand that commanded a 80% market share at one point, was down to none. And then a reboot with a fresh start.
A chronology of events in the last 7 years:
1. Rise of #Micromax (with its hero product #Canvas2) which went on to beat Samsung for some time. The other Indian brands also gained with the same strategy and the rub-off effect of Micromax. Off late, with the rise of the Chinese brands, the Indian brands have been losing share steadily and how do they plan to make a come back is something which needs to be seen. As of now keeping Q3 aside, the performance of Indian brands has seen its nadir.
2. The rise of online channel in mobile phones with the re-entry of #Motorola, the discounting done by them for some time which hit the offline badly.
3. Rise of #Lenovo online before losing out as fast as they had risen. Now trying to make a comeback with Moto in offline.
4. The optimum utilisation of the online channel by #Xiaomi with its #FlashSale model playing on the price spec game, which the Indian brands had played so well for 3 odd years, to start a new phase. They have been the no. 1 brand now for possibly the last 4 quarters including Q3, 2018.
5. The aggression of #OppoIndia, #VivoIndia and to some extent #Gionee in launching models at much higher prices but with disproportionate marketing budgets, giving excellent margins and supports to the channel with a quality product to the customer. As I write the channel margins have been squeezed and the tactical marketing spends also reduced substantially keeping the earlier spends as a benchmark. Of course, the long term tie-up as sponsors will continue for the duration for which they were signed. With the addition of #Realme with Oppo, both Oppo/Realme and Vivo have a couple of points in market share higher. How they will scale up to the next level is a question!
6. The quick entry and exit of LeEco and the exit of Gionee.
7. The entry of new brands like #Tecno, #Comio a year back, and lately #Homtom an #Mobiistar. Barring Tecno, which is backed by the Transsion group and may sustain with Itel doing well in feature phones and kind of alright in the low price smartphones, I’ve not heard great reports on Comio which has been there for a year now. While it may be too early to comment on Homtom or Mobiistar, one has to understand that both the brands do not feature in the top 5 even in their own countries which should be their major market to be able to compete in India.
So what is it that we are trying to derive? A lot of #smartphone brands have entered India, a lot will follow suit. A lot of brands have risen fast and lost faster, they’ve burnt their money with next to nothing ROI, and they’ll be exiting soon.
However, Samsung has stood strong holding its position as No. 1 in value terms which is normally not a data point shared. In volume, they may have slipped to no. 2, but they still occupy a 23-25% market share.If one has to analyse their market shares, volume-wise, in the last 16 quarters, the swing has not been substantial. Though they should be the most prone to a hit due to their high share, the next brand is only sitting at less than half of their share.
Why and how has this happened?
Samsung entered the Indian market in 1995 and has been a go-to brand for mobile phones for buyers and a must-keep for retailers ever since. The company started making in India in 2007 and is one of the few global companies in the country that has been populating Printed Circuit Boards(PCBs) right from its inception.
Well, to put it in a nutshell, Samsung has held its head up high because of the following reasons:
a. Deep understanding of the Indian offline market, having been present in the Indian market for the last 23 years.
b. World’s largest owned and not outsourced factory to meet the increasing demand.
c. Five R&D centres and one design centreto help them adapt products suited to India and its customers.
d. Aretail base of 1.5 lacs retailers, 3000 customer service points to offer better services across the geography.
e. Strong backend systems and procedures.
f. Financial strength of the diversified group, channel management and dedicated partners.
Well, the points listed above are really just a few of many.
Let’s start with technology which is the backbone. Some highlights:
- While people are just talking about #ArtificialIntelligence (AI), Samsung is launching the #Exynos9 series 9820 SoC which brings greater focus on AI and is expected to be in production by the end of the year.
- Replacement of the Notch by a hole to accommodate the front camera.
- #SamsungGalaxyS10 is expected to be a game changing bezel-less, notch-less display tech with ultrasonic in-display reader, new gradient colour schemes and 5G options.
To see the might of Samsung, let’s go through a couple of cases that will display the brand’s ability to absorb shocks, which could be devastating for other brands.
Case 1– Let us take the situation of a product failure like #SamsungNote7. Which other company except #Apple would have been able to take a decision and hit like that in a product recall? Maybe just the #BBKGroup. I doubt if anyone else could or can, as they make too less a margin to absorb such shocks. And if it can happen to Samsung, it could happen to the best.
Case 2– Let us take another case of stocks getting stuck at the company’s end. With most top 5 brands running small product portfolios and lower, and in some cases a very low retailer base, 1-2 products not moving could mean a lot of money required in flushing out stocks by them. With brands working on lean margins, the price drop hit or special price online to clear out the stocks would make them bleed. They may survive but come out of it badly scathed.
Samsung with its base of retailers or WoD, as it is popularly called in mobile phone industry, could manage to spread these stocks across without burdening anyone too much.
I was reading an interview of their mobile Chief D J Koh where he has mentioned that India being a growing market is an important one for them and that they have changed their strategy for the mass and mid-price phones to bring in innovation across its smartphone range and not limit them to premium flagships where they are already quite strong.
One can see a number of updates that were initially only available in their flagship smartphones, are now offered in their mid-tier handset #GalaxyJ8 like – Auto brightness, Dual VoLTE and AR emoji in camera.
We’ll soon see them announce/launch multiple devices across price points – both offline and online – which will be differentiated in features, functions and technologies including quad camera phones, the much-anticipated foldable phone with Artificial Intelligence installed in its devices.
With Indian brands losing out, Samsung is trying to project itself as "Indian at heart" in some of its communications. They want to be seen as an Indian Brand is what Ranjivjit Singh, senior VP for corporate marketing and CMO at Samsung India Electronics, has said in one interview.
Whatever be the case, Samsung enjoys a fabled history in India, and even now, it's right up there as far as offline sales and high-end flagship phone are concerned.
Don’t write them down yet even in volumes and market shares. The Industry has seen the best go down and also not seen a brand at the top for too long. Maybe the time is not far away for them to make a comeback. X/M/V/O, be on your toes!