Samsung in China
In today’s China, one in five people have Samsung mobiles, however it is inconceivable five years ago. How could Samsung beat the rivals and gain a predominant status in China? We may explore the reasons in virtue of the article Competitor Analysis: Understand Your Opponents.
According to Ports, there are five factors a company should concern in order to govern the market – the threat of new entrants, the bargaining power of suppliers, jockeying for position among current competitors, the bargaining power of customers and the threat of substitute products or services. When we look at the strategy of Samsung, we may see a perfect application of the theory.
In the early 21st century, the focus of mobiles is to communicate, therefore, cell phone providers mainly emphasized the functionality of mobile phones. In order to increase market share, Samsung audaciously changed its strategy to develop smart phones. The strategic plan may not be perfect at that time, however, the innovation met consumer demand and unquestionably surpassed any other mobile phone providers.
Because of its provident strategy, Samsung exceeded Nokia in both sales volume and profit margin after the first quarter of 2012 and became the bellwether in the mobile phone market.
Consequently, an effective way to gain a competitive advantage over current competitors is to break new ground. Forecasting the market and making strategy could bring about opportunity and success for a company in the fierce competition.
On the other hand, faced with the threat of new entrants, like iPhone, Samsung stresses the significance of localization.
Contrary to Apple’s strategy of launching a certain model of iPhone in the market, Samsung introduced different models each year, covering all levels of specification and price.
In the low-end market, the price of its smart phones would be as low as $100 dollars. On the other hand, Samsung also launches one model of luxury smartphone only for Chinese (“heart of the world") and charges for $2,000 dollars. Even though the sales volume of “heart of the world" is not high, it does meet the needs of high-end market and therefore brings huge profits.
Besides that, Samsung also develop several features tailored for the local market, such as dual-card-two-standby function, Renren App and so forth. The localization strategy is effective and finally helps Samsung gain the predominant market in China.
Considering the above, only the company who shows great concern about the opponents as well as every tache of the supply chain can survive the fierce competition and succeed.