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Product Differentiation: Smartphone Industry. iPhone vs Galaxy

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by

Ignacio Ghiorzi

on 29 July 2013

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Transcript of Product Differentiation: Smartphone Industry. iPhone vs Galaxy

Is it possible to increase profit margins while maintaining product differentiation strategy ?
Maintaining Brand Reputation & Loyalty
The need to continuously develop and implement new differentiation strategies to sustain
competitive advantage

a)
Product Differentiation
Hybrid Strategy
Free Riding on First-Mover's Investments
Smartphone Industry
iPhone vs Galaxy
Cost Leadership:
Quantity
Diversification
Strategy
Dependance on
Internal Markets
Traditional
Japanese
Strategy
Samsung's
Western
Strategy
Product Differentiation:
Quality
Focus Strategy
Dependance on
External Markets
CL

&
PD:
Quantity
+
Quality
Diversification
focused
within businesses
Internal

+
External
Apple
Samsung
Network Externalities
Lead in Technology
and Innovation
First-at Customers
70%
Production Cost: 203$
79.85$ + Lost Apps
+ Lost Media + Time
Switching Cost
Profit: 43 Cents per
Dollar Spent
237$
36 cents
First Mover
Follower
vs
R&D
Suppliers learning curve
Hire trained employees
Follower taking advantage of these
opportunities is a function of the first mover
product imitability
Processors
Memories
Displays
A)
Timing

First-Mover
"Need Seeker"
Samsung
"Market Reader"
Follower
vs
Resource
Capability
Product Mkt Position
Create
Value
Competitive Advantage
Advantage:
How can a follower
match first-mover's
market position
Apple
Apple
Samsung
Lead in Technology
and Innovation
First Mover
Follower
vs
Intellectual Property
Rotate by Twisting
Drag Documents
Bounce-back
Zoom by Pitching
Docs Scrolling
Square Grided Icons
Iphone Exterior Design &
Apple's
Law Suit
First-Mover
Advantages

First-Mover
Advantages

Follower's Advantages

Learning Curve
Global
Market Share
: Smartphone Industry
However, regarding
Profit Margin
...
Product Differentiation + Cost Leadership
Strategy
Why is this topic important?
Strong Brands. Strong Reputation. Loyalty.
B)
Reputation
Decline or erosion of the loyal consumer
Challenges
Strategic Alliances
"Once brand loyalty is developed, it alters the course of the demand curve for the product"
Loyalty
Richard Oliver
Recommendations
iPhone "Nano"
(250-350$)
Emerging Markets
focus on Core Competences
R&D
Vertical Integration
Developing own software
Strategic Alliances on Marketing
Target Young Users
C)
Distribution
Goods and services
Strategic alliances offer a way for companies to obtain a wide range of expertise to meet the challenges of globalization and rapid technological change. While there does not appear to be any universally accepted definition of strategic alliance, three characteristics serve to identify it:

1) The alliance must be strategic and not tactful
2) Alliance’s goals should have long time horizons.
3) It should be mutually beneficial.

Strategic Alliances
Apple's Strategic Alliances
Samsung's Strategic Alliances
Distribution Channels
Distribution Channels: Apple
Apple Store
Genius Bar
"The iStore Experience"
Apple Premium Reseller
Online iStore
Apple corner at BestBuy
Apple
Samsung
Distributors
Retailers
Wholesalers
Brand Loyalty
"Samesung"
Reputation
“….a typical brand can expect to retain
only two thirds of its loyal customers over five years.”
Ehrenberg Centre for Research in Marketing, London South Bank University
"iWork"
Ehrenberg Centre for Research in Marketing
Journal of Consumer Research
Deloitte 2013
b)
c)
d)
Customers
DISTRIBUTION CHANNEL
Costly to Imitate
Full transcript