Why Samsung doesn’t beat Apple where it matters
Samsung’s competitors with Apple is on premium cellphone ($400+) market share, and Apple is crushing Samsung on this market.
Other market share metrics don’t actually matter all that a lot due to the straightforward indisputable fact that, in keeping with Counterpoint , Apple dominated the worldwide revenue share of cell phones, holding 65 p.c of the worldwide income with simply 9 p.c (!!) of the overall handset shipments throughout Q2 2017. Counterpoint additionally studies that over the summer time of 2016, Apple was promoting simply over 50 p.c of the worldwide premium smartphones, and Samsung was promoting just below 25 p.c. By December 2016, these numbers had grown to 70 p.c and 17 p.c, respectively.
Samsung spent an astonishing $10 billion on advertising in 2016, and whereas it doesn’t report how a lot of it was spent on advertising its premium telephones, it was probably within the billions — and possibly greater than what Apple has spent globally.
So why is Samsung’s premium cellphone market share shrinking? Why do shoppers with discretionary spending nonetheless desire Apple in such massive numbers?
The cause will not be the product. Samsung is a product innovation powerhouse, launching state-of-the-art units that compete face to face with Apple’s cellular merchandise and getting rave critiques. The cause for this broad hole within the premium handset market share lies elsewhere: in gross sales and advertising innovation — or lack thereof.
Samsung is a South Korean manufacturing firm, which depends totally on channel companions to promote its cellular merchandise. That implies that Samsung’s leaders see their companions as bearing the accountability for the shopping for and servicing experiences. Samsung has been specializing in offering huge advertising air cowl within the type of adverts, sponsorships and some other exercise that’s externalizing all of the creativity and innovation in gross sales and advertising to a third-party. Samsung simply likes to outspend its rivals with cash they provide to advertising businesses — cash that isn’t invested in inner capabilities.
But that simply doesn’t reduce it towards a complicated direct-to-consumer powerhouse like Apple. Apple has been launching state-of-the-art merchandise too, however it is matched by state-of-the-art direct gross sales and advertising capabilities. Apple is the world’s most profitable retailer (gross sales per sq. foot), by far. Apple can be displaying off these achievements and prioritizes them: In its 2017 occasion, Tim Cook opened the keynote and earlier than he introduced any of the brand new merchandise, he referred to as on Angela Ahrendts, SVP Retail, to point out off the innovation and superb new experiences of shopping for and immersing with Apple.
That was earlier than anybody talked in regards to the iPhone X or some other product. In a method, it confirmed that Tim Cook thinks that the expertise of shopping for from Apple has extra long-term affect on the enterprise than the subsequent model of the iPhone. The scaled private contact with Apple, the buyer interplay, is so vital — and it is the important thing to its continued wins over Samsung. Samsung management merely doesn’t care as a lot about it as Apple.
Case in level: In August, DJ Koh, Samsung’s president of Mobile Communications Business, went onstage throughout the Unpacked occasion of the Note8 and talked in regards to the product, solely to be adopted by Justin Denison, SVP of Product Strategy, to speak extra about, properly, the product. This sample is constant all through Samsung’s main keynote addresses at CES and MWC. With uncommon exceptions, and at all times low in precedence, Samsung’s leaders merely don’t showcase the expertise of shopping for Samsung or getting service at Samsung.
This tradition and technique distinction is also manifested within the innovation taking place throughout the model’s gross sales and advertising departments. It begins with buyer information. You can’t use the iPhone with out having an account with Apple, which implies that Apple is aware of quite a bit about you. In Samsung’s case, it has yielded the client information profit to Google, although the advantages of that call most likely outweigh the detriments.
The working system excuse doesn’t let Samsung off the hook. Apple is constantly bettering its inner gross sales and advertising capabilities as a result of it has a simple administration construction. Therefore, it can experiment as quickly right here as it does with its merchandise (and possibly sooner). Apple is making use of AI and different novel ideas in its operations. Apple was the primary among the many two to experiment with proximity in its gross sales operations, and its CRM system is state-of-the-art.
Contrary to that, Samsung depends upon its sister firm, Samsung SDS, for a lot of of its inner gross sales and advertising capabilities. This construction causes lots of friction, and innovation lags considerably behind Apple. Excluding its businesses, Samsung will not be utilizing AI in its gross sales and advertising operations and it has solely simply began experimenting with proximity (full disclosure: I initiated the event and supply of this functionality). Most of it is not any because of management in Korea however to the inventive advertising expertise right here within the U.S. that’s prepared to take dangers and craves to innovate.
In service, Apple’s Genius Bar and name heart is the usual to match. Samsung was nonetheless utilizing pen and paper earlier this 12 months in most of its customer-facing service operations in its flagship location at 837 Washington Street in NYC.
Samsung can shut this hole with Apple if its Korean management will change the tradition, prioritizing and investing in gross sales and advertising innovation. It also needs to think about breaking away from Samsung SDS or merging with it (shareholders are pushing for it), simplifying the administration construction over its inner IT methods.
Apple proved that so as to be the chief on this premium class, a model have to be investing and committing to offering one of the best procuring and repair expertise attainable. If Samsung may match its world-class merchandise with a world-class shopping for and serving experiences, it has an opportunity of leveling the taking part in subject with Apple within the premium handset market.
Featured Image: Chris Ryan/Getty Images