Stratagem: Can Samsung keep its edge in smartphones?

The South Korean player enjoys a clear lead over its Finnish rival in the smartphone sweepstakes currently but there are quite a few curveballs to come in the hyperactive mobile phone market before a clear winner can emerge. Until as recently as 2008, Nokia had an invincible lock on the mobile phone market in India. The Finnish giant was by far the strongest Richmond in the field, controlling a humongous 75% of the Indian mobile handset market by volume. 

But over the next couple of years, even as the handset market was going through a watershed technological change and churn, Nokia made the mistake of taking its eyes off the emerging market trends and has had to pay a heavy price for the lapse. By the time it realised its mistake, the South Korean major Samsung had already taken the market by storm, introducing a whole new dynamic to the Indian mobile phone market: smartphones, which have operating systems just like PCs (with Android being the most popular). 

The past two years have seen Samsung make hay and sunshine of the Indian handphone market while Nokia has been left to nurse a bloody nose in the smartphone sweepstakes. From the staggering peak of its market leadership four years ago, it has seen a heartbreaking fall with its current market share declining to 31%. In comparison, Samsung’s share in the volume game has moved up from 5% to 28% over the past two years alone, according to a research report by Cyber Media. The cardinal sin Nokia made was to forget that technology is ephemeral in nature. So when smarphones became the hottest flavour in the handset business, Nokia was caught napping. 

So far it had played the market on the strength of its feature phones and had nothing equivalent to offer in the sizzling smartphone category. Its Symbian platform looked antediluvian and anachronistic in comparison to Samsung’s offerings on Google’s Android. Unlike Nokia, Samsung had abandoned the Symbian OS early on and succeeded in developing leadingedge handsets using multiple operating systems. At the same time, it developed its own operating system – called Bada – to push smartphones into the mid-market and cannibalize the feature-phone segment. It was also quick to launch several attractive models on Google’s Android platform, which helped it gain global market leadership in the smartphone segment. 

The Korean tech giant with an estimated revenue of roughly $200 billion globally started its tech world ascendancy in late 1980s till’90s as a component manufacturer and supplier of DRAMs, and other flash memory chips for companies like GE and (its love/hate partner/foe) Apple Inc. In the ’90s, once it got the hang of basics like DRAMs, and LCD displays, it quickly scaled its electronics business, investing big sums to create economies of scale and outprice the competition. On the strength of its broad product portfolio, differentiated retail and multiplatform strategy Samsung has, in recent years, gone about breaking Nokia’s hegemony and its premium brand perception. Nokia’s fortunes have been in reverse gear as it’s two biggest markets – China and India – have gone on to lap up the feeding frenzy over smartphones. Today, Samsung has a clearly established lead in the lucrative and rapidly growing smartphone category with 43% market share as compared to Nokia’s 23%, according to a CyberMedia Research report. 

The saving grace for Nokia is that it’s still the overall market leader in the Indian mobile handset market with Rs.119.25 billion revenue and a 38% overall handset market share, compared to Samsung’s 25.3% share and Rs.78.90 billion in revenue. But there is no denying the fact that the tide has clearly turned Samsung’s way, as there’s no good alternative yet to its smartphone dominance in the Rs.312.15 billion Indian mobile handset market (some other industry estimates put it around Rs.550 billion). Clearly, Samsung’s ascension to the market throne and its emergence In the rapidly growing smartphone category, Samsung leads with 43% market share as compared to Nokia’s 23% as the biggest smartphone manufacturer globally is not a case of overnight success.There is a lot that it has done to differentiate itself from other handset players to claim the throne of the biggest smartphone manufacturer globally. 

Like Apple, Samsung has overlaid Android with a distinctive user interface, which offers consumers a delightful experience. From the beginning, Samsung has remained a pure-play touchscreen player in the smartphone category, which has burnished its premium brand image. “All our products have a simple DNA of innovation, differentiation and quality. Our products are designed with the aim to simplify technology and ease of use for consumers,” says Ranjit Yadav, Country Head, Mobile & IT, Samsung India. 

In the smartphone segment, Samusng has consistently offered global standards and innovative features. For instance, its latest launch S3 comes with retina scan and other such first-in-class features, making it a truly global product. At the same time it has also ensured that its lowend feature phones have good localised applications. Samsung’s strategy has been simple – waiting for the right moment to open up in the market and quicikly moving in to seize the opprtunity with both hands. Experts say Samsung’s success has come from spotting technology trends in the initial stages, in areas where the growth is rapid and development capital-intensive.

It has invested heavily in such areas to make it harder for rivals to keep up. For example only when LCD displays got to 40 inches did Samsung move in to turn them into televisions around 2001. It’s a ‘quick follower’ (less of an innovator like Apple), and has great execution skills. That remains the hallmark of its continuing success over the years. Today, Samsung accounts for almost 13% of South Korea’s exports. Believing in the philosophy of constant ‘change’, as envisioned by its founder, Samsung now has set its ambition to become a $400-billion company by 2020. 

It will invest into still nascent but fast emerging techChange of guard: P. Balaji, the new Nokia India MD, comes in from the erstwhile Sony Ericsson; Can he propel Nokia to become the frontrunner in the smartphone business by taking on Samsung on its strong turf? “The market is fast evolving in the digital communication devices space and no player can afford to be content about its products and their positioning” amandeep kalsi, direc- tor, protiviti india Samsung vs Nokia September 2012 83 nologies related to the healthcare and environment space like medical equipment, LED lighting, solar panels et al.

In India, Samsung has succeeded by becoming a full range smartphone player. It has 19 smartphone models available across varied OS platforms – across Android, Windows and Bada. The company has flooded the market with phones at every price point conceivable, making it easier for aspiring young consumers to jump to their next level of technology experience, as per their needs and affordability. It has priced its products extremely competitively, thus outsmarting the competition. 

Katyayan Gupta, analyst with Forrester Research, says, “Samsung has won because of both its hardware as well as software innovations. It introduced multiple smartphones at quick intervals and varying price-points.” So we have a Samsung Star and Champ models starting around Rs.6,000 to S3 and Note at Rs.35,000. “Samsung offers consumers choices and value for money. It ensures a smooth path for consumers to jump to the next level of smartphones by having products at almost every price point. Nokia phones don’t have so much variety,” adds Gupta. 

Besides, the company hasn’t ignored the feature phone category, which has helped it increase its penetration and build brand awareness in tier 2 and tier 3 towns among consumers, who would become future smartphone users. Though Nokia is still the overall leader in the Indian mobile phone market and has a formidable presence with close to 200,000 service outlets, Samsung has ensured that the brand enjoys strong visibility albeit with lesser number of outlets. With 100,000 distribution centres that cover most parts of the country, Samsung is focused on better control on service quality and maintaining a ‘premium brand’ edge over Nokia. 

So even in smaller cities it runs better designed and illuminated outlets. This ensures that the Samsung brand isn’t just a metro phenomenon like an Top smartphone OS’s shipments & market share, Q2 2012 units Android is ahead by miles, while Windows (expected to grow steadily) lags majorly Source: IDC report HTC, BlackBerry or Sony Ericsson. To cement its long-term trust and relationship with consumers, the company has invested heavily in setting up a strong after-sales service network with trained professionals and responsive call centres, which ensure customers have a good experience. 

These measures have helped Samsung gain strong ‘word of mouth’ publicity and get repeat buys from older customers, who feel the brand cares for them. It has also ensured that Samsung, which started in India as a consumer electronics players at a distant No.2 to LG, has not only emerged as a strong and credible challenger to global tech giants like Apple and Nokia but also become capable enough to beat them at their own game. 

The success of its handset business has ensured that almost 55% of its India revenues of over Rs.200 billion comes from the mobile phone division. In contrast to Samsung’s steady march in India, Nokia’s biggest problem has been its lack of a strong smartphone range in its portfolio. To make amends for its shortcoming, Nokia has, over the past year, started moving (rather late though) aggressively by teaming up with Microsoft to offer Windows OS-based ‘Lumia’ range of smartphones. It has announced slowly phasing out its Symbian phones and would focus on pushing its Lumia and Asha-series range of smartphones in the country. The response so far has been encouraging but not enthusiastic enough.

 On the other hand Samsung, though still on a strong wicket, has come up against legal troubles that have the potential to upset its smartphone business. The past month has been a particularly bad one for the company, which has been asked by a US district court to pay $1.05 billion as damages to Apple in a patent infringement and copyright related lawsuit. The court held that many of Samsung’s Google Android-based phones infringed Apple’s patents. The indictment comes as a dampner as it can dent Samsung’s image as an innovator company. To ensure that its brand image remains intact, Samsung will have to focus on creating a strong future product line-up as well as ensure that it doesn’t get caught in more such high-profile legal contretemps.

Says Amandeep Kalsi, Director, Protiviti India, “The market is fast evolving in the digital communication devices space and no player can afford to be content about its products and their positioning. Market positions are up for grabs every couple of years and so be it Apple, Samsung, BlackBerry or Nokia, none can afford to take it easy.” While it’s true that nobody can predict how the tech scene will unfold in the future, a wrong move by Samsung at this stage or a right strategic push by Nokia now can yet again reconfigure their stakes in a rapidly changing market. Though there’s no strong alternative for Samsung at the moment, multiple scenarios have begun to emerge, especially in the aftermath of the US court verdict against Samsung. 

More and more smartphone makers may turn increasingly to Windows devices because of the legal uncertainty surrounding Android phones. Right now, Nokia is the primary manufacturer designing for Windows phone. But Samsung may actively now weigh in big time in favour of Windows. It has already surprised the market by unveiling a new Windows phone, called ATIV S. 

The move seems like pre-emptive action on the part of Samsung and designed to steal a march over Nokia whose own Lumia line of smartphones using Windows Phone 8 is slated for release in New York on September 5. Nokia expects its services bundled with the Lumia, such as Nokia City Lens, Transport, for public transport information, and Nokia Music with Mix Radio, a free mobile music streaming and offline listening apps, to be a big hit with consumers. So even though Samsung enjoys the whip hand in the smartphone market currently, the future is not without upside possibilities for Nokia. The brand continues to retain a huge fund of goodwill and trust among Indian consumers and enjoys an enviable reputation. Millions of Indians who continue to use Nokia feature phones could be potential customers for its superior smartphones.

But in a hyperactive market that demands constant innovation, the player that is more innovative and can play the pied piper to the consumer will win the game. With the smartphone market set to grow to 30% by 2015 from 11% currently, the fight for the smartphone market pie is still largely open and the player whose offerings best meet the market pulse and satisfy customer expectations will get to hit the home run. 

Interview:

Ranjit Yadav, Country Head, Mobile & IT, Samsung India,

He talks about the reasons for the success of its smartphones and the strategy for the future. 

                                “55% of our India revenue comes from mobiles”

B&E: Samsung has had a meteoric growth in India in the smartphone segment. What are you doing to create more traction for your products in the future?

Ranjit Yadav (RY): Samsung is a full range player in India offering products for all kinds of consumers, with products starting at Rs.1200 for a basic phone and going up to around Rs.40,000 for some of our latest smartphones and tablets. We are a fully committed player in the Indian market and have over 2500 service centres all over the country. All our products have a simple DNA of innovation, differentiation and quality. Design too is one of our key product differentiations. Look at the design and ergonomics in the S3, which (we say) is ‘designed for humans, inspired by nature’. 

B&E: What’s in the S3 that is different from other smartphones? RY: It offers a great user experience and is probably the best smartphone around. It goes much beyond simple performance and specifications; it’s about simplicity in technology. It’s intuitive, and very easy to use. B&E: What’s your marketing strategy for smartphones? 

RY: It’s based on creating the right consumer experience. We will be very strong in digital and experience-based marketing. Like for our S3 range, you can experience the product in-store and outside as well, to demonstrate what the product can do for you. We believe consumers are available across the country for our higher range phones and not just in the metros. So we will take our marketing campaign across the country, rather than limit it only to top cities.

B&E: What has been the impact of the current economic slowdown on your smartphone business? 

RY: Slowdown is a risk that we all have to face. In the mobile phone industry sales are flat and volumes are not growing any more. Going forward there’s a risk of growth dropping off. Though, we have been growing even during the current slump, the key is to differentiate and we are good at that. 

B&E: What is Samsung’s share of the smartphone market in India? 

RY: I can’t give you an exact number but we are already over 26% in volume sales in the overall handset market, and above 40% share in the smartphone segment. We dominate the smartphone market. Today the mobile division contributes more than 50% of Samsung India’s annual revenue. 

B&E: How do you look at the competition from players like Nokia, Sony, et al? 

RY: We only focus on our products, through which we try and simplify technology and ease of use for consumers. We don’t focus much on what the competition is doing. 

LINK OF THE STORY ONLINE:

{http://www.protiviti.co.in/India-en/Documents/can-samsung-keep-its-edge-in-smartphones.pdf}

Need the lady who can even sell memory to you!!

Flash memory maker SanDisk India’s country manager Manisha Sood belongs to that rare breed of woman achievers who have successfully broken through the glass barrier. In the highly competitive and male dominated consumer technology space, Sood has risen to the top by dint of her determination and hard work. She has been a technology leader for over 20 years now and helmed the operations at Canon India, before joining SanDisk in 2006. At the time she left the Japanese camera maker, it was the No.1 digital camera brand in India. That same momentum she has now brought to bear on SanDisk, which today sells two million flash memory chips per day, or roughly 750 million annually. “That makes us one of the most deeply penetrated brands in the world. Anywhere there’s a mobile being sold, or a digital camera or a laptop, SanDisk will be present there,” says Sood, who was born and brought up in Mumbai.

Her new mission statement is to make SanDisk an iconic global brand as far as flash memory is concerned. From its humble start SanDisk has grown to operate in more than 200 countries, with over 2.5 lakh retailers stocking its products. Last fiscal it clocked roughly $5.8 billion in revenue. In India it retails through 20,000 outlets. The company, born in 1988, is currently led by Sanjay Mehrotra, who was among its original co-founders.

The first major invention by the company, Sood informs, was CF (compact flash) cards, which are used as a memory storage card for digital cameras. Ever since the company has gone for several other tie ups with leading tech companies, and has had a hand in several inventions and co-inventions. “Like the SD (secure digital) card, used in cameras today, is a co-invention of SanDisk with Canon. Then the Micro SD card was also invented by us for Motorola phones and now it has become an industry standard. We have all the formats of memory cards, and even the pen-drive was invented by us,” says Sood. No wonder SanDisk has more than 2800 patents, and gets almost 8-10% of its revenue from royalty through these patents. R&D is another big focus -- last year the company spent $550 million. It also has an R&D centre in Bangalore with a 250 staff strength, and is part of SanDisk’s global R&D network, which also spans other places like Israel, Japan, and Korea.

For SanDisk India is a priority market, what with its 200 million annual mobile sales and a vast youth population. “Today, the phone has become the central device for everything – entertainment, data and information – and almost 90% of mobiles have a SD card slot, and hence a big opportunity for us,” Sood says. Her company currently makes three lines of products – camera cards, USBs or pen drives, and mobile cards. To popularise usage, the company has established strong channel partnerships, and provides its dealers with training on SanDisk products. It also rewards high performing retailers through its loyalty programs.

For mobiles, SanDisk offers memory cards from 2GB onwards right up to 64 GB. There are also base level and ultra-speed cards meant for smartphones. According to Sood, usage of high-end memory card is more in the tier 2 and tier 3 towns. “In the metros people have access to multiple digital devices – like laptop, radio, Internet, TV, camera – while for people in tier II & III towns, mobile is the central device, which everyone can afford.” For the camera segment, the company has three levels of products on offer. There’s the basic card, meant for point-and-shoot camera, the ultra-cards meant for HD video cameras with 30MB per second speed, and an extreme card, which comes with 100 MB per second, for functional, sports photography, and burst mode, and can work in temperatures ranging from -20 degree to +85 degree.
 
On the marketing front, SanDisk has been doing a lot of push and pull activities. The company ensures that its channel partners are constantly engaged with the product and there are loyalty programs to incentivise customers and distributors. “We have a team of 23 people who go out in the market to train the distributors and sales staff. In the top 14 cities of the country, we ensure the retailers are well merchandised and have all the training material, as he is the link between the brand and the consumer,” informs Sood. In terms of working on the pull factor in the market, SanDisk, in a global first, launched a TVC in December last year, and did a massive Diwali promotion for consumer engagement.

Retail contributes 38% of SanDisk’s overall revenue while OEM sales contribute 62%. Sood is part of the retail sales, and her mandate is to grow this pie rapidly. Overall, Asia contributes 21% to SanDisk’s top line, and India and China are the two leading markets for SanDisk in Asia. As people in these regions move to buy their 2nd or 3rd phones, the demand for memory is bound to grow by leaps and bounds in smaller cities too. “Whether taking a picture, making a video, everything is memory hungry, and you can’t have a hard disk in it. So every portable digital device in the consumer space, be it a camera, laptop, mobile, projectors, smart TVs, are memory hungry and can’t do without flash memory, which is slowly replacing traditional media like floppy drives and CDs,” says Sood. Looking at consumers’ fascination for digital products, SanDisk looks set to become a force to reckon with.

Onkar Pandey, 7 August 2012

MARKETING: McDONALDS Vs. KFC

Can Zinger become the Big Mac in India?

Shrugging off its early failure, kfc from the stable of yum! brands is now eyeing to replicate its chinese success story and trump mcdonald’s in the indian market. but the question remains – can it beat mcdonald’s first mover advantage in this market, and of course its robust supply chain?

It’s 9 am on a wintry Sunday and despite the chill and a holiday, a few young couples could be seen taking a relaxed breakfast at a KFC outlet in New Delhi’s Connaught Place. Whether they are pressed for time or it’s their love for KFC morning offerings, is not known. But certainly the ubiquitous Louisville, Kentucky-based chicken specialty restaurant from the Yum! Brands stable, has caught the fancy of urban youth. So much so that the well-entrenched McDonald’s known for its family and kids TG, has revamped its offering to orient itself to the young adults.

Starting in 1996, after a slow and circumspect start, today KFC is Yum! Brands’ best performing subsidiary in India, well ahead of Pizza Hut – once the flagship for the US-parent company in India. It is worth noting that with KFC Yum! Brands is hoping to create a China like success story in India. Today KFC is 80% of the Yum! Brands’ over 4,200 outlets in China – a market which contributes 33% of its global revenue. That is because while India being a chicken loving country, the chances of KFC’s continuing success becomes stronger, more so as offerings like Zinger Burger, and the trademark KFC hot and crispy chicken offerings, are gobbled by urban India. Officially the QSR chain is growing at a blistering 70%. And the company has already started eyeing for bigger targets. When asked about the company’s target to hit Rs 10 billion turnover in India, Dhruv Kaul, Marketing Director, KFC India says, “With the kind of growth and expansion we are having, that looks a very humble figure, we are aiming much higher in the coming years.”
However, to achieve these bigger targets, KFC has to take the game away from McDonald’s, which has a very strong presence across the country. Certainly, the QSR that believes in finger licking taste has outlined few key growth areas to take the matter forward. While keeping its great taste USP alive by further expanding and localising its menu is its primary strategy, increasing its footprints to roughly 50 cities, increasing the serving hours and thus drawing a broader customer base – especially among the Indian youth – are the key focus areas for the company now. Working on the lines, the company recently introduced Streetwise range starting at Rs 25 to cater to the college going youths, and lure the mass that have been loving McDonald’s happy price menu (starts at Rs 20) so far. KFC now aims to expand to 100 items serving all kind of customer needs from health to indulgence.

McDonald’s on its part knows that KFC is the one to watch out for. As such the Big Mac maker is on a good move growing at 35% over a revenue base that’s much bigger than KFC in India, and doubling its revenue every three years. But then the fact that the past couple of years have seen KFC’s aggression bringing it good dividends is something hard for McDonald’s to ignore. A serious competition is already in place. The flow at which both players have started offering new products to hit the other’s menu, explains how spicy the chicken and the burgers have become in the board rooms.

Outside their menus, both players are busy in outpacing each other in terms of reaching out to the mass. While McDonald’s led by its first mover advantage in India is leading the pack with around 250 restaurants across 50 cities, KFC’s ambitious expansion plan is targeting to increase the tally to 500 outlets by 2015 from 150 in 35 cities at present. Interestingly, 50% of the 1,000 stores Yum! Brands wants to open in India in the next four years will be KFC. The overall strategy is in line with Yum! Brands’ ambition to hit $1 billion turnover in India by 2015, and KFC will lead the charge. The parent company is set to pump in an investment of $150 million for the cause. But then McDonald’s has no intention to lose its numero uno spot as the QSR has already put forward its own expansion plans to scale up its number of restaurants to 1,000 by 2020 with an investment of Rs 10 billion. However, spokespersons from both the company’s mute the competition by saying, the market is too big and un-tapped for several players to co-exist. The big fight between the two best burger makers is gaining momentum, at least in India.

Experts opine that when it comes to preference, KFC is the winner with its unique chicken-based offerings. McDonald’s having more variety doesn’t have novelty factor for Indian consumers taste. Agrees Akshay Bhalla, MD, Protiviti Consulting, “KFC clearly has the consumer preference. But it has to work hard on its real estate locations and supply chain. If it gets these two things right, it’s a serious threat for McDonald’s with its great product line.” As of now, McDonald’s supply chain is more robust and its store locations are much better than KFC. And the Golden Arches is leaving no stones unturned to turn more enviable by innovating across various formats like drive-throughs, highways, and important locations. Something which KFC haven’t been able to do, as its focus on ambiance and a certain type of store look and feel curtails its expansion anywhere and everywhere. Probably that’s where the key lies too as Ray Croc, the McDonald’s founder once said, “We are primarily in the real estate business.”

There is no doubt that India’s rapid economic growth and integration with global economy has ensured that out of home consumption of food market grows as well. According to a RNCOS research report, the Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during 2011-2014. And organised retail accounts for only 2% of the roughly $90 billion Indian food industry pie providing both these players ample opportunities to thrive. But they have to deal with a stiff competition to be the market leader. In this while McDonald’s has the first mover’s advantage, KFC has the love of its trusted TG. But it is to be seen as to who will emerge as the eventual winner of the Indian QSR story.

So even as KFC will take heart from the fact that it has trumped McDonald’s in the China market, and might repeat the same in India as well, McDonald’s must be banking on its two franchisers (North & East) (South & West) to keep their smile intact from their knowledge of the Indian market.

ONKAR PANDEY | Dated: March, 2012, New Delhi
Tags : zinger | KFC products | MC Donalds | |
The Sunday India Magazine

MARKETING: PIZZ HUT BRAND TRANSFORMATION (LINK)

BY ONKAR PANDEY

PITCH MAGAZINE, AUG. 2008

http://www.slideshare.net/udaykarthiknaidu/pitch-pizza-hut-brand-transformation

Bit chatty, bit catty, Indian women's radio meows

India's first women-only radio has hit the airwaves, promising to play the perfect agony aunt to the modern Indian woman and offer a spot where she can talk, share and gossip in between some film music.

Called "Meow", the new FM station airs programmes that concern only women's issues -- be it about work, home or marriage or a harmless dose of lighter talk on fashion and movies.

Instead of a regular hi or hello, the station that opened last week greets callers with a catty "meow" as an instant ice-breaker.

"Meow can translate to any emotion, it makes you uninhibited and breaks the ice faster," said Anil Srivatsa, chief operating officer of Meow radio.

"In real life we all have secrets. We talk about it and bring it into the open. The anonymity of radio allows that."

Now available only in New Delhi, Meow radio hopes to eventually target the urban Indian woman -- from the traditional housewife and career woman to the single mother and the youngster -- in all the big Indian cities.

An auction of around three dozen FM licences in 2000 started what is now being called India's "radio boom", with the number of stations set to swell by about 245 as the country implements the second phase of its FM expansion plan.

The deregulation of airwaves has led to intense competition among radio stations, each vying to attract listeners with various programming packages and marketing gimmicks.

"Meow" radio, whose catch line reads "Thodi Meethi, Thodi Catty" or a little sweet, a little catty, hopes to attract listeners with programmes on family, marriage, kids and adult issues like affairs and sexual taboos and problems.

Its late-night show "Meow between the Sheets"is already quite popular.

"We are for the women who think and everyone else who think about women," said Srivatsa.

"Every woman wants to let loose and unwind, we provide that platform."

But some media analyst doubt if the approach will work for the new station.

"It sounds like a gimmicky channel mainly for the young and trendy," said media columnist Sevanti Ninan.

The radio station's other uniqueness is its policy of airing every caller interaction live and unedited.

"We don't fake, we have real views on real issues," said Srivatsa.

"It's a real-life drama and everyone wants to be part of it."

BY ONKAR PANDEY

REUTERS, MAY 2007