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Pricing In Oligopoly
 What is Oligopoly
 Characteristics
 Barriers
 Pricing and Non Pricing Strategy
 Case Study
 Conclusion
Topics Covered
 Oligopoly is a common economic system in today’s society.
The word “oligopoly” comes from the Greek “oligos”
meaning "little or small” and “polein” meaning “to sell.”
When “oligos” is used in the plural, it means “few.”
 A situation in which a particular market is controlled by a
small group of firms
 An oligopoly is a market form in which a market or industry
is dominated by a small number of sellers (oligopolists)
What is Oligopoly
 Profit maximization conditions
 Ability to set price
 Entry and exit
 Number of firms
 Long run profits
 Product differentiation
 Perfect knowledge
 Interdependence
 Non-Price Competition
Characteristics
03/21/18
How prices are determined?
 Interdependent pricing
 Price wars
 Price Leadership
 Formal Agreement-Cartel
 http://www.slideshare.net/RajatSharma
34/pricedeterminedunderoligopoly
03/21/18
Why do Oligopoly Exists
Mergers
Economies of scale
Reputation
Strategic barriers
Government barriers
How do firms in an Oligopoly set price?
Most often they practice price leadership
03/21/18
Industries which fall under
Oligopoly structue
 auto industry
 cigarette industry
 Telecommunication Industry
 Soft drink manufactures
 Airliners-Boeing & Airbus
 Gaming console manufactures-Nintendo, Sony,
Microsoft
 Steel
 Operating System-Apple,Microsoft, Google
 Detergent Manufacturer- HUL & P&G
 Economies of Large Scale Production
 Network Effects
 High Set up Costs
 A strong Brand/ Loyalty
 Switching Costs
 Advertising
 Patents
 Product Differentiation
 Technology and Machine to create product
Barriers
 Predatory Pricing
 Limit Pricing
 Collude
 Cost-plus Pricing
Pricing Strategy
 Offer Extended Guarantees (Improve Quality)
 Spending on different Ideas
 Sales Promotion
 Loyalty Schemes
Non Pricing Strategy
03/21/18
Case Study
Structure & trend followed by mobile phone
industry in India
Players in the market (Add company logo's)
Nokia
Samsung
Micromax
Karbon
Apple
Sony
LG
03/21/18
Nokia-The market leader
 Strategy
 First mover advantage- 1995- 500 million mobile subscribers in India: The Indian market is
adding about 10 million users a month.
 An end-to-end player with a product for everyone (Rs-1,499 to Rs 45,000)
 Focus-brand-building,crucial distribution partnerships,brand-building, developing innovative product
features (mobile with flashlights)
 Invested-manufacturing, distribution and design R&D-more than $1 billion (2007) willing to shell out more.
Total prodtn-25 million handsets
 2006- revenues more than $3.5 billion
 R&D showed- In India, consumers tend to change their phones faster than in most other places. And
whenever they change their phone, 60% are willing to pay a higher price.
 Different price points and value propositions
 Market Leader- Show in pie chart
 In 2007- was a leader- market share-58%
 Competitor Focus- Scattered/flexible(Spread on other products)
 Nokia strategy was risky-rigid- focused on mobile phones
 Nokia Followed- REAPS model-rational, emotional, aspirational, physical and spiritual
 Call rates in India lowest in world- 2 cents compared to 4 cents in China
03/21/18
SWOT(Nokia Vs samsung)- Put
in box(for better presentation)
 Strengths
Innovation and design
Focus on environment
Low production costs
Ability to market the brand
 Weaknesses
Patent infringement
Too low profit margin
Main competitors are also largest buyers
Lack its own OS and software
Focus on too many products
 Opportunities
Growing India’s smartphone market
Growing mobile advertising industry
Growing demand for quality application processors
Growth of tablets market
 Threats
Rapid technological change
Declining margins on hardware production
Price wars
03/21/18
03/21/18
Battle of the Titans
03/21/18
Downfall of Nokia- Opportunity
for Competition
 Why Nokia's sales & profits dipped
 Slowdowns in both developed and developing markets
 Nokia’s price strategy: Rigid-struggled to maintain its dominance
 consumers preferance shifted- Price conscious not brand conscious
 Total market for high-end devices increased-Nokia’s high-end handsets did
not do well as compared to Apple’s iPhone and Research In Motion’s
BlackBerry.
 Nokia had a chance for turnaround but competition had flooded the market
with phone which had features like- dual sim, application & games
 2010
 Local manufacturers* have grabbed 17.5% market share [from 0.9%, a year
back]
 *Top 5 Local manufacturers – Micromax, Karbonn Mobiles, Spice Mobiles
Ltd, Videocon Industries Ltd and Lava International Ltd.
 Only 5 local manufacturers in 2008 and the number stands at 28 now
 Micromax leads the race and holds a market share stands of 4.8%
 failed to keep up with the changing tastes in India, the world’s second
largest mobile phone market with 900 million subscribers
03/21/18
Surge of Blackberry
Blackberry
2010
Market share- 13% market share- may 2011, slowing
inching close to Samsung with a market share of
20%(current smartphone market leader)
 2 major breakthroughs- emails on the go, QWERTY
keyboard
03/21/18
Samsung... How they got it
right
 Strategy
 Trumpcard-Not cheapest prices-new technology & better features at competitive
prices
 Came up & evolved the galaxy series(Android OS)- An Apple iphone lookalike
 one of first companies to offer smart phone and touch screen in India with Dual
sim option
 Range- Rs. 5000- Rs. 40,000
 2013-Samsung had 31.5% market share, while earlier title holder, Nokia,
contracted to 27.2% share. In the preceding year, Samsung and Nokia had
25.1% and 38% market share
 At least in India, major Samsung devices have hit the market within days of a
global launch
 In India, Samsung may not have invested much in its own stores, but it has
trained thousands of people in mom-and-pop phone shops so that they can sell
its message — and products — to consumers in a better way. The company has
worked with these small shops to make sure that Samsung phones are
displayed well and are available.
 Set an example-Insight for new entrants
03/21/18
Micromax strategy-
breakthrough
 Every product has a unique USP. The
USP is a concept that explains how
successful advertising must offer the
consumer a logical reason to buy their
product because of what differentiates it
from the other products in the market.
 Got an international brand ambasedor-
first time for a mobile phone company
03/21/18
Boom of Micromax & Karbonn
 Biggest USP
 Indian company
 Cheap phones
 longer battery life
 Reason for growth-better price points, after sales
service and visibility even in rural areas
 They are now third and fourth biggest mobile phone
companies in the market. Their success shows that
there is still lot of scope for competing on the basis of
price.
03/21/18
Karbonn
 With India's mobile phone market expected to grow by nearly a fifth
over the next five years low cost handset makers such as Karbonn,
Micromax and others are expected to ride this wave of consumer
demand
 "A start-up challenging major manufacturers was not possible 10-15
years ago," said Krishna Tanuku, executive director at Wadhwani
Centre for Entrepreneurship Development, Indian School of Business.
But now entrepreneurs with access to technology need to only
understand customer need, manage the supply chain, identify good
vendors and maintain quality
 Tiedup with Flipkart specially targeted at Tier II and Tier III cities for
four Android-based models - Karbonn Smart A52+, Smart A12, Smart
A11 and Smart A50S - priced in the range of Rs 2,699 to Rs 4,499.
03/21/18
Market Structure-
Comparision
2010 2011 2012
Nokia 76.1 38.5 41.8
Samsung 5.9 25.6 23
03/21/18
03/21/18
03/21/18
Barriers in a mobile phone
sector
 Barriers to entry in the mobile market:
 >differentiation
 > non price competition
 it probably takes a lot of time to design and perfect the
phones itself alone.
 1) Loyality- Difficult to break mind set- trust issue- have to
spend lot on advertising
 Futureistic technology-cost of developing technology along
with innovation
 Economies of scale-Large firms have expensive capital that
can lower average cost, but are unavailable to smaller firms.
When small firms enter market, large ones can force them
out by selling their product at a price that still gives them
profit, but its too low for new firms to cover their cost.
03/21/18
Conclusion
 Oligopolistic behavior includes both
ruthless competition and cooperation.
Hindu Business Line
Top five smartphone
players are
concerned, the list is
as follows:
Market share
Samsung-29%,
Micromax-18%,
Karbonn-, Lava and
03/21/18
Future & Forecasts
 India with 861 millions mobile phones holds the second position in the world
when it comes to total number of mobile phones.
 130 million: that's the current estimate of mobile internet users in India
 250 million: expected number of Indian mobile internet users by 2015
 10% : the percentage of Indian mobile users who now have
smartphones
 Oppo- Sources in the know say mobile brand Oppo is forking out Rs 22 crore for
the powered-by sponsorship; this will be the first time the Chinese mobile
company will advertise in a general entertainment channel.
 Chinese vendor Xiaomi, which has forged an exclusive agreement with Flipkart
to sell the Mi 3 devices, recently concluded its fifth flash sale selling 20,000
devices.
 Gionee
 Sources- economictimes.com,forbes,nielsen, businesstoday.in
03/21/18
THANK YOU

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Pricing in oligopoly

  • 2.  What is Oligopoly  Characteristics  Barriers  Pricing and Non Pricing Strategy  Case Study  Conclusion Topics Covered
  • 3.  Oligopoly is a common economic system in today’s society. The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few.”  A situation in which a particular market is controlled by a small group of firms  An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists) What is Oligopoly
  • 4.  Profit maximization conditions  Ability to set price  Entry and exit  Number of firms  Long run profits  Product differentiation  Perfect knowledge  Interdependence  Non-Price Competition Characteristics
  • 5. 03/21/18 How prices are determined?  Interdependent pricing  Price wars  Price Leadership  Formal Agreement-Cartel  http://www.slideshare.net/RajatSharma 34/pricedeterminedunderoligopoly
  • 6. 03/21/18 Why do Oligopoly Exists Mergers Economies of scale Reputation Strategic barriers Government barriers How do firms in an Oligopoly set price? Most often they practice price leadership
  • 7. 03/21/18 Industries which fall under Oligopoly structue  auto industry  cigarette industry  Telecommunication Industry  Soft drink manufactures  Airliners-Boeing & Airbus  Gaming console manufactures-Nintendo, Sony, Microsoft  Steel  Operating System-Apple,Microsoft, Google  Detergent Manufacturer- HUL & P&G
  • 8.  Economies of Large Scale Production  Network Effects  High Set up Costs  A strong Brand/ Loyalty  Switching Costs  Advertising  Patents  Product Differentiation  Technology and Machine to create product Barriers
  • 9.  Predatory Pricing  Limit Pricing  Collude  Cost-plus Pricing Pricing Strategy
  • 10.  Offer Extended Guarantees (Improve Quality)  Spending on different Ideas  Sales Promotion  Loyalty Schemes Non Pricing Strategy
  • 11. 03/21/18 Case Study Structure & trend followed by mobile phone industry in India Players in the market (Add company logo's) Nokia Samsung Micromax Karbon Apple Sony LG
  • 12. 03/21/18 Nokia-The market leader  Strategy  First mover advantage- 1995- 500 million mobile subscribers in India: The Indian market is adding about 10 million users a month.  An end-to-end player with a product for everyone (Rs-1,499 to Rs 45,000)  Focus-brand-building,crucial distribution partnerships,brand-building, developing innovative product features (mobile with flashlights)  Invested-manufacturing, distribution and design R&D-more than $1 billion (2007) willing to shell out more. Total prodtn-25 million handsets  2006- revenues more than $3.5 billion  R&D showed- In India, consumers tend to change their phones faster than in most other places. And whenever they change their phone, 60% are willing to pay a higher price.  Different price points and value propositions  Market Leader- Show in pie chart  In 2007- was a leader- market share-58%  Competitor Focus- Scattered/flexible(Spread on other products)  Nokia strategy was risky-rigid- focused on mobile phones  Nokia Followed- REAPS model-rational, emotional, aspirational, physical and spiritual  Call rates in India lowest in world- 2 cents compared to 4 cents in China
  • 13. 03/21/18 SWOT(Nokia Vs samsung)- Put in box(for better presentation)  Strengths Innovation and design Focus on environment Low production costs Ability to market the brand  Weaknesses Patent infringement Too low profit margin Main competitors are also largest buyers Lack its own OS and software Focus on too many products  Opportunities Growing India’s smartphone market Growing mobile advertising industry Growing demand for quality application processors Growth of tablets market  Threats Rapid technological change Declining margins on hardware production Price wars
  • 16. 03/21/18 Downfall of Nokia- Opportunity for Competition  Why Nokia's sales & profits dipped  Slowdowns in both developed and developing markets  Nokia’s price strategy: Rigid-struggled to maintain its dominance  consumers preferance shifted- Price conscious not brand conscious  Total market for high-end devices increased-Nokia’s high-end handsets did not do well as compared to Apple’s iPhone and Research In Motion’s BlackBerry.  Nokia had a chance for turnaround but competition had flooded the market with phone which had features like- dual sim, application & games  2010  Local manufacturers* have grabbed 17.5% market share [from 0.9%, a year back]  *Top 5 Local manufacturers – Micromax, Karbonn Mobiles, Spice Mobiles Ltd, Videocon Industries Ltd and Lava International Ltd.  Only 5 local manufacturers in 2008 and the number stands at 28 now  Micromax leads the race and holds a market share stands of 4.8%  failed to keep up with the changing tastes in India, the world’s second largest mobile phone market with 900 million subscribers
  • 17. 03/21/18 Surge of Blackberry Blackberry 2010 Market share- 13% market share- may 2011, slowing inching close to Samsung with a market share of 20%(current smartphone market leader)  2 major breakthroughs- emails on the go, QWERTY keyboard
  • 18. 03/21/18 Samsung... How they got it right  Strategy  Trumpcard-Not cheapest prices-new technology & better features at competitive prices  Came up & evolved the galaxy series(Android OS)- An Apple iphone lookalike  one of first companies to offer smart phone and touch screen in India with Dual sim option  Range- Rs. 5000- Rs. 40,000  2013-Samsung had 31.5% market share, while earlier title holder, Nokia, contracted to 27.2% share. In the preceding year, Samsung and Nokia had 25.1% and 38% market share  At least in India, major Samsung devices have hit the market within days of a global launch  In India, Samsung may not have invested much in its own stores, but it has trained thousands of people in mom-and-pop phone shops so that they can sell its message — and products — to consumers in a better way. The company has worked with these small shops to make sure that Samsung phones are displayed well and are available.  Set an example-Insight for new entrants
  • 19. 03/21/18 Micromax strategy- breakthrough  Every product has a unique USP. The USP is a concept that explains how successful advertising must offer the consumer a logical reason to buy their product because of what differentiates it from the other products in the market.  Got an international brand ambasedor- first time for a mobile phone company
  • 20. 03/21/18 Boom of Micromax & Karbonn  Biggest USP  Indian company  Cheap phones  longer battery life  Reason for growth-better price points, after sales service and visibility even in rural areas  They are now third and fourth biggest mobile phone companies in the market. Their success shows that there is still lot of scope for competing on the basis of price.
  • 21. 03/21/18 Karbonn  With India's mobile phone market expected to grow by nearly a fifth over the next five years low cost handset makers such as Karbonn, Micromax and others are expected to ride this wave of consumer demand  "A start-up challenging major manufacturers was not possible 10-15 years ago," said Krishna Tanuku, executive director at Wadhwani Centre for Entrepreneurship Development, Indian School of Business. But now entrepreneurs with access to technology need to only understand customer need, manage the supply chain, identify good vendors and maintain quality  Tiedup with Flipkart specially targeted at Tier II and Tier III cities for four Android-based models - Karbonn Smart A52+, Smart A12, Smart A11 and Smart A50S - priced in the range of Rs 2,699 to Rs 4,499.
  • 22. 03/21/18 Market Structure- Comparision 2010 2011 2012 Nokia 76.1 38.5 41.8 Samsung 5.9 25.6 23
  • 25. 03/21/18 Barriers in a mobile phone sector  Barriers to entry in the mobile market:  >differentiation  > non price competition  it probably takes a lot of time to design and perfect the phones itself alone.  1) Loyality- Difficult to break mind set- trust issue- have to spend lot on advertising  Futureistic technology-cost of developing technology along with innovation  Economies of scale-Large firms have expensive capital that can lower average cost, but are unavailable to smaller firms. When small firms enter market, large ones can force them out by selling their product at a price that still gives them profit, but its too low for new firms to cover their cost.
  • 26. 03/21/18 Conclusion  Oligopolistic behavior includes both ruthless competition and cooperation.
  • 27. Hindu Business Line Top five smartphone players are concerned, the list is as follows: Market share Samsung-29%, Micromax-18%, Karbonn-, Lava and
  • 28. 03/21/18 Future & Forecasts  India with 861 millions mobile phones holds the second position in the world when it comes to total number of mobile phones.  130 million: that's the current estimate of mobile internet users in India  250 million: expected number of Indian mobile internet users by 2015  10% : the percentage of Indian mobile users who now have smartphones  Oppo- Sources in the know say mobile brand Oppo is forking out Rs 22 crore for the powered-by sponsorship; this will be the first time the Chinese mobile company will advertise in a general entertainment channel.  Chinese vendor Xiaomi, which has forged an exclusive agreement with Flipkart to sell the Mi 3 devices, recently concluded its fifth flash sale selling 20,000 devices.  Gionee  Sources- economictimes.com,forbes,nielsen, businesstoday.in

Notes de l'éditeur

  1. How Did Nokia Succeed in the Indian Mobile Market, While Its Rivals Got Hung Up? Aug 23, 2007 By most accounts, India is among the world’s fastest-growing markets for mobile phones. The country has some 170 million subscribers and adds 6 million to 7 million more each month. (China, in contrast, adds 5 million subscribers, and the U.S. 2 million subscribers a month.) Recognizing this potential, several global telecom giants jumped into the fray when the Indian government first opened up the country’s telecom market to private enterprise in 1994. Among them, one company — Finland-based Nokia — forged ahead of rivals and today commands a 58% market share for mobile phones (also called “handsets”). In specific segments, such as GSM telephony, Nokia’s market share in India is as high as 70%. (GSM, which stands for Global System for Mobile, is the world’s most popular standard for mobile communications.) Nokia’s strategy combined focusing on the mobile phone market, establishing crucial distribution partnerships, making early investments in manufacturing and brand-building, and developing innovative product features — such as mobile phones that could double as flashlights. anybody could have succeeded if they had done the same things as Nokia did,” he says. “But all the other companies had something else to focus on, some other business. Nokia was completely focused on mobile phones; others had consumer electronics, home appliances, etc.” Nokia’s focus was not just on handsets, of course. The mobile infrastructure business — then part of Nokia India — was equally important. Being ahead of the curve was another component of Nokia’s strategy. “We invested before everybody else — in the brand, in people, in distribution,” says Shivakumar. Adds Pankaj Mahendroo, president of the Indian Cellular Association: “Nokia invested in each vertical of the handset ecosystem — manufacturing, distribution and design R&D.” Nokia has invested more than $1 billion in India so far, and company headquarters at Helsinki has repeatedly said that more funds will be made available if required. The Indian company had revenues of more than $3.5 billion in 2006, which means there is also money to be reinvested. (The company does not disclose its profit numbers.) The other big investment area that has set Nokia apart from other telecom firms is manufacturing facilities and R&D. Nokia has several R&D centers and labs in India. More importantly, it established a $150 million handset manufacturing facility in Chennai in 2005. The total production at this unit has crossed 25 million handsets. “Some 30% of our production is being exported to neighboring countries,” says Sachin Saxena, Nokia India director of operations in charge of the factory. Other companies, such as Motorola, LG and Samsung, have also lined up similar investments or are in the process of setting up manufacturing units, but Nokia has had a clear head start. Also, the Chennai factory is devoted to handsets, whereas other companies are planning to make a whole range of consumer electronics products. “Domestic manufacturing has worked to Nokia’s advantage,” says Ravinder Zutshi, deputy managing director, Samsung India Electronics. “Samsung India is looking at making its Chennai facility a global hub for its consumer electronics products.” Industry analysts note that Nokia’s strategy is potentially risky. When the going is good — as it is now — the company can do well. But Samsung’s approach is more flexible, these analysts note. If demand for mobile phones were to slump, Samsung could switch its manufacturing lines to other products. In contrast, Nokia India’s focus on mobile phones mirrors the priorities of its parent company. Nokia traditionally was in a whole range of businesses — from toilet paper to power. But in 1993, CEO Jorma Ollila decided to sell off everything else and concentrate on mobile telephony. The Nokia range available in India extends from Rs 1,499 ($37) at the lower end to Rs 45,000 ($1,125) at the high end. Marketing theory says a brand cannot be all things to all people Nokia India had revenues of more than $3.5 billion in 2006… Nokia brand in terms of his proprietary “REAPS” model, which takes into account five needs — rational, emotional, aspirational, physical and spiritual — of the Indian consumer. “Nokia as a brand has been able to address all the five needs to various degrees at various stages,” he says. “The rational need of quality versus price has been met across price segments with options. The emotional need of being able to keep in touch with near and dear ones during times of joy and sorrow is being adequately fulfilled. The aspirational need with the new models and features and the look-good approach has helped the brand become a sought-after, must-have brand. The physical need has been taken care of through size and comfort. And, finally, the spiritual need has been met through (local) languages and people –whether they are 18 or 80 — being able to greet one another via SMS [text messages] during religious festivals.” An Expanding Market The Indian market for mobile phones, in addition to its base of 170 million subscribers, is also one of the most cost-effective in the world. Call rates in India are among the lowest anywhere — making a mobile phone call costs two cents in India, compared with about four cents in China. The market also has tremendous growth potential. So far, most of the growth has been penetration-led, which means placing devices in consumers’ hands. The bulk of the growth going forward will be replacement-led, where consumers come back for more. In India, consumers tend to change their phones faster than in most other places. And whenever they change their phone, 60% are willing to pay a higher price. Nokia caters to the mass-market and also the high-end market and has a product for everyone. The company’s focus would continue to be driving demand and foster brand aspiration. In November 2008, in India, Nokia introduced handsets (prices ranging from €25 to €90 – Nokia’s lowest cost handset to date at €25) and a range of services (available from first-half of 2009). The services will be expanded to other countries in Asia and Africa later. Nokia’s service offerings The services being introduced include: Nokia Life Tools: Farmers and students can get relevant local information on seeds, crops, markets and weather through SMS. Advantages include information in two languages simultaneously, easy icon-based user interface and availability of critical information without a GPRS connection. Mail on Ovi: An email service directly on the mobile phone. No PC required. Education Services: Users can opt for an English word a day and learn how it is pronounced and its meaning in their native language. Nokia Life Tools: Farmers and students can get relevant local information on seeds, crops, markets and weather through SMS. Advantages include information in two languages simultaneously, easy icon-based user interface and availability of critical information without a GPRS connection.
  2. STRENGHTS Innovation and design. In 2011, Samsung ranked second on the list of US top patent assignees. More patents strengthen Samsung position among its competitors. The firm also won many awards for the design of its products, proving the superior advanatage over the competitors. Focus on environment. Samsung focuses on producing environment friendly products that are free from PVC and BFRs (currently only MP3 and mobile phones). It also develops various recycling programs that are awarded for their success. Thus, Samsung’s focus on environment gives it an edge over its competitors in the eyes of its customers. Low production costs. The company has set up its production facilities in low cost countries. This allows producing goods with low production cost and benefit Samsung as it can offer lower price and earn higher margins. Ability to market the brand. Samsung is named as top rising brand by Interbrand and is the 9th most valuable brand with value nearly $33 billion. It has risen by 40% from 2011 to 2012. This was mainly achieved due to company’s ability to market the brand in sporting events and social contributions. WEAKNESS Patent infringement. Samsung is infringing Apple’s and some other firms’ patents, thus, damaging its reputation and having to pay a huge amount of money in damages. Too low profit margin. Samsung Electronics is the largest technology business in the world in terms of revenues but it has a low gross profit and net profit margins. Although its smartphones business is quite profitable, Samsung’s profit margin is low due to its semiconductors sales and aggressive price cuts. Main competitors are also largest buyers. Apple, Sony, Dell, HP are the main buyers of Samsung Electronics products as well as the firm’s main competitors. Such situation would be favorable to Samsung (if competitors could not find complementary products and would form a relatively low share Samsung’s revenues) because it could use its bargaining power over competitors. Due to reverse conditions (competitors can find complements and they form a relatively high share of firm’s revenues) Samsung cannot use its bargaining power over competitors as it can easily lose its customers and sales. Lack its own OS and software. Software and OS production has a high profit margin, can increase integration of company’s products and brand loyalty. Without strong software and OS Samsung is at disadvantage over its competitors. Focus on too many products. Samsung Electronics serves 4 different industries with many different products in them. Samsung is at disadvantage over its competitors because it loses a focus when competing in too many industries and too many products. OPPORTUNITIES Growing India’s smartphone market. India’s smartphone market is one of the least penetrated among Asia/Pacific countries. Samsung has a strong presence in India’s market and could use this opportunity to expand its sales. Growing mobile advertising industry. The company could develop advertising platform for its mobile devices and significantly benefit from this lucrative market. Growing demand for quality application processors. Samsung is one of the key manufacturers of application processors for smartphones and tablets. The growing demand for these products requires more best quality application processors that only Samsung provide. Growth of tablets market. Tablets market is expected to grow in double digits over the next few years. Samsung business has a strong position in tablets market and could expand it by introducing newer, better quality tablet models, such as its current galaxy line. THREATS Rapid technological change. The serious threat that Samsung and the other tech companies are facing is a rapid technological change. Companies are under the pressure to release the new products faster and faster. The one that cannot keep up with the competition soon fails. This is especially hard when the business wants to introduce something new, innovative and successful. Declining margins on hardware production. Samsung is the second largest semiconductors producer where the profit margins are very thin, thus weakening the whole company's figures. Price wars. Samsung has a very low gross margin on many of its products and is already selling some of them with significant price cuts. Competitors could follow price cutting strategy too and induce price wars, which would erode Samsung’s profit margin to 0%!
  3. Nokia is the world’s largest handset manufacturer and the maker of four out of every 10 mobiles sold worldwide. In the past few months (fourth quarter 2008), the mobile phone market slowed dramatically and Nokia’s competitors Motorola and Sony Ericsson announced quarterly losses and even the sales of Apple’s iPhone slowed down. The slowing down could hit other handset manufacturers more severely and force them away from the market. However, this isn’t reason enough for Nokia to cheer as its sales also dipped particularly in large markets like China where sales came down by almost 35% from the last quarter. Some analysts even reported that the company’s operating profit margin on handsets was at its lowest point in 10 years. Why Nokia’s sales and profits dipped? Slowdowns in both developed and developing markets. Nokia’s price strategy: Nokia’s refusal to be drawn into a price war in developing countries. Nokia is clearly struggling to maintain its dominance in the face of aggressive price competition from its rivals. Cash-strapped consumers: In China, which is regarded as the company’s largest market, consumers are now increasingly being price conscious (due to the faltering economy, slowing exports and slumping real-estate market) and are preferring non-branded inexpensive phones. Competition: The total market for high-end devices increased. But, Nokia’s high-end handsets did not do well as compared to Apple’s iPhone and Research In Motion’s BlackBerry. Increasing sales of cheap lower-margin devices: In the fourth quarter of 2008, margins dipped because a large proportion of sales was of cheap lower-margin devices. Can Nokia turnaround? Nokia’s Strength and Opportunities Analysts feel that Nokia is in the best position to make a turnaround. With a huge market share it can manufacture at a lower cost per unit. It’s wide range of products can give it an edge over any competitor and it has one of the best distribution networks in the world. Nokia can certainly capture back share in the vital high-end devices market with new products such as it’s 5800 Xpress Music (a lower priced iPhone like touchscreen phone) and making more consumer oriented phones.
  4. BlackBerry's Success in India Research in Motion (RIM), the company that owns BlackBerry, has managed to achieve two things in the last 18 months. It has managed to grab a big chunk of the smartphone market in India. In 2010, its market share stood at 6 percent of the smartphone market in the first quarter. By the end of 2010, they had over 10 percent of the market. By May this year, it was at 13 percent. By the end of 2011, they are expected to have around 20 percent, which would be close to the market share of Samsung, the current smartphone market leader in India. In 2003 BlackBerry introduced the first of what we would think of as being the modern smart phone. This was a device that not only functioned as a telephone but also allowed for the sending and receiving of email and text messages as well as web browsing. One of the main focuses of the early BlackBerry's was to allow for mobile email. It was clear that this was a technology that was necessary since email had become so popular. Clearly people who were on the go needed a way to access their email without having to find a computer. One of the other features that appeared on the first models which has been retained over the years is the QWERTY keyboard. This is a necessity if people are going to use their BlackBerry to send email or text messages. There have been a couple of models that don't retain the QWERTY keyboard but the vast majority of them do as customers have made it clear that they prefer it this way. Since the introduction of the BlackBerry a lot of competitors have appeared on the market and this has really hurt sales since they are now competing with some of the biggest companies in the telecommunications industry. This competition combined with improving technology has resulted in a huge increase in the number of functions that you will find on your BlackBerry. The current models are not only a communication device but also a personal digital assistant and a multimedia player. In addition a number of apps have been developed by other parties that add even more features to the phone. The result is a device that is capable of an amazing number of things.
  5. trump card was not cheaper products, but new technology and better features in same products. This should be a lesson for all new entrants in Indian market. Indian consumers do not just vie for cheap products. Usually new companies try to attract consumers by offering products or services at a wafer thin margin or even at loss or they give hefty margin to dealers. This is only reason that world’s cheapest car, Tata Nano, has not been a hit in the Indian market.
  6. reports of CyberMedia it is revealed that Nokia has been steadily losing its market share in India, tumbling over the years from 55 percent in the year 2008 to 54 percent in 2009, it dropped straight to below 40 percent in 2010 and 2011. In addition, as per an April report by GfK-Nielsen, a market tracker, Samsung India also surpassed Nokia (in India) in general retail revenue. The Korean company in March 2012 had a 34.2 percent share of retail revenue in mobile phone against the Nokia’s 33.8 percent. Samsung’s share in India in the January-March quarter was 45 percent, way ahead of Nokia’s 25-30 percent. That means approximately 9 to 9.5 million smartphones of Samsung were sold in India in 2011.
  7. Counterpoint Research had completely different numbers for Samsung and Micromax in the overall mobile market. The research had said Samsung was in second place with a 14 percent share, while Micromax was leading with 16.6 percent. International Data Corporation (IDC) IDC’s Q2 2014 numbers, India’s smartphone market saw an 84 percent year-on-year growth. The report also notes that 71 percent of the market continues to be on feature phones. The overall India mobile phone market stood at 63.21 million units in Q2 2014, which was a 5 percent increase over Q1 2014, out of which vendors shipped a total of 18.42 million smartphones. Samsung continued its leadership in the Indian smartphone market with a 35 per cent share. Micromax has 15 per cent share, Karbonn 10 per cent, Lava 6 per cent and Nokia, just 4 per cent report notes that the sub-$200 category is gaining in the market and has a total contribution of 81 percent to the smartphone numbers. What this means is that cheaper smartphones are outselling the premium devices. The Indian smartphone market grew by 84 per cent year-on-year in Q2 2014. According to IDC Asia Pacific Quarterly Mobile Phone Tracker (excluding Japan), vendors shipped a total of 18.42 million smartphones in Q2 2014 compared to 10.02 million in the same period of 2013.
  8. It is expected that there will be more smartphones than humans around the world in the coming years. Mobile phones have seen a great change in its journey since its introduction. It was then when people used mobile phones merely for calling and texting and it is now when people search, explore, share, shop apart from just connecting to the people through mobile phones.