Sneh Srivastava
Minicase #2
11/29/12
For this minicase, I choose to canvas the iPhone 5 and the Samsung Galaxy SIII. These two smartphones
were released within months of each other of this year (the SIII came out in July, while the iPhone was
released in September). I choose these two products because they are considered direct competitors.
Both have very similar features, but different marketing campaigns and targets.
THE PRODUCTS
The iPhone 5 is the fifth generation of the innovative smartphone made by Apple, the first of which was
unique in its ability to allow multiple points of contact on the touchscreen (such as using two fingers to
zoom out or in, etc.). This latest model runs Apple’s iOS 6 processor. It is the first iPhone to have an 8
megapixel camera (which rivals the average camera), and features a 1.3 megapixel front facing camera.
The iPhone comes in white or black.
One intangible benefit the iPhone confers on its users is the idea that the iPhone is superior to all other
phones, and will continue to be better through its various generations. According to a study done by
Piper Jaffrey, there is a much higher sense of brand loyalty among those who have iPhones than those
who have Android phones. Of course, this study is biased—there is only one iPhone, and dozens of
Android-capable phones. However, it is telling that 94% of iPhone users would purchase another iPhone
in the future. The iPhone 5 is just another product that cements Apple’s reputation as an industry
leader, and allows it to build off the first iPhone’s first mover advantage.
The iPhone is also known for ease of use and simplicity. Its autocorrect appears to be more intuitive
when typing, so this makes typos and misspellings less likely than on the Galaxy SIII. Other products
produced by Apple, such as the iPad, are also known for being user-friendly. The iPhone’s other chief
quality is “beauty”. Though of course the term is subjective, iPhones (as well as other Apple products)
are often described as sleek and futuristic. One example of this is in the casing made out of smooth
aluminum. It is definitely “pretty”, but it also shows much more wear and tear than the Galaxy SIII’s
plastic exterior does.
The Samsung Galaxy SIII is a competing phone that runs on the Android 4.0 processor. It has a 4.8 inch
HD display and comes with either 16 GB memory or 32 GB memory. It also has an 8 megapixel camera,
and a 1.8 megapixel front facing camera. The Samsung Galaxy comes in white or blue.
The Samsung Galaxy SIII is better for personalization and sharing. The Gmail app on the phone recreates
a desktop-like experience, which makes emailing back and forth much easier than with an iPhone.
THE PRICE
iPhone 5: With a contract, the 16gb is $199, and the 32 gb is $299. Without a contract, it is rumored the
phone will cost anywhere from $649 to $849 depending on storage space.
Galaxy S3: With a plan, the 16gb costs about $199, and the 32 gb costs $249. Unlocked, the phone costs
$549.99.
The iPhone is about level with the Galaxy SIII in terms of contract prices with the 16gb phone. In all
other cases however, the iPhone is much more expensive than the Samsung phone. Apple can pull this
off because of the iPhone’s assumed better quality. This is also a trend they have kept consistently with
their products, and it would be out of character for their newest product to incorporate penetration
pricing.
THE PLACE
The iPhone 5 is sold through the Apple store directly, as well as through Verizon, AT&T, and Sprint. It is
available in physical stores, as well as online. Sites like Amazon also offer the iPhone 5.
The Samsung Galaxy SIII is available in most stores that sell cell phone devices. It also is available
through the site and store of Verizon, AT&T, T-Mobile, and Sprint. It’s also on sites like eBay and
Amazon.
THE PROMOTION
http://www.youtube.com/watch?v=QR8A3T6sPzU
The Samsung Galaxy SIII has had a popular, well-received campaign running for a few weeks with the
motto “the next best thing is already here.” Though it doesn’t mention the iPhone by name, it is clear
that is the product that is being parodied in the ad. These ads feature a group of seemingly brainwashed
men and women waiting in line for their new phone. These phone junkies are increasingly dismayed as
people walk by with a much cooler phone than the one they’re waiting for. In the ads, the people
waiting in line often talk to each other hopefully and console each other with the thought that the
Galaxy SIII’s features “will be in the next version” of the phone they are about to buy.
Obviously, this set of commercials is meant to poke fun at Apple addicts who are obsessed with
the iPhone and need each new version without fail. The implication of these ads is that the iPhone ship
has sailed, and that Apple has stopped being innovative and stooped to doing simple fixes such as
increasing the screen size. Samsung strives to topple Apple and become the new king of the industry.
This seems to be working, as the SIII has been competing well with the iPhone, and in certain cases has
outsold the iPhone entirely.
http://www.youtube.com/watch?v=3qBaTYNKluM
http://www.youtube.com/watch?v=8Rme3uZ_abc
The iPhone has more of a reputation to work with, and thus its ads seem to center on small
improvements that are meant to emphasize how superior the iPhone is to the Galaxy SIII. The iPhone’s
ads seem to have more of a “why fix it if it ain’t broke” sort of mentality, implying that Apple has
continuously provided excellent products to its customers and that little needs to be changed.
It is interesting to note that Samsung does not disable comments on their Youtube videos, while Apple
does.
Based on your analysis, are the products differentiated from each other? Why or why not?
After analyzing these two smartphones, I would have to say that when it comes right down to it,
these phones are not very differentiated. They target a very similar market base, and of course have
very similar features. There’s little about either phone that is very exclusive, as most apps that are
released are both iOS- and Android-compatible. Furthermore, though Samsung belittles Apple diehard
fans through the SIII advertising campaign, there are just as many diehard Android fans who will hate
anything produced by Apple regardless of quality or price.
Of course, the iPhone and its various iterations are always going to be for those people who
want what the mainstream thinks is best, while Android remains somewhat of a more “alternative”
option. Though apps are usually released for both processors, the iPhone usually receives the app first,
after which it is then developed for Android-based products.
One feature that is not often discussed is the iPhone’s Maps versus Google Maps. The iPhone
lets you have 3D satellite view, while Google Maps features Street View. For now, Google Maps far
outcompetes the iPhone’s version, as there are still many glitches Apple needs to work on. However,
there are other GPS apps available for both phones, and this most likely is not a major factor for a
customer in deciding which smartphone to purchase.
Overall, the phones have few differences besides price. As long as Apple can ride on its
reputation of superior technology and ease of use, it will be able to charge a higher price for the iPhone
as well as its other products. In terms of quality and pleasure in use, the phones are roughly equal,
neither being highly superior category in virtually any other category.
Based on your analysis of the products, what is the value discipline of each of the makers (product
leadership, operational excellence, customer intimacy)? Briefly defend your statement.
Apple of course is known for operational excellence. Apple products focus on the customer, and
they generally are known for constant improvement (though some of these improvements may be
minor.) It receives large discounts because of its size, and it controls almost every aspect of the supply
chain.
Samsung is better known for product leadership. The Galaxy SIII was released earlier than the
iPhone 5, . The company is the largest producer and vendor of mobile phones. Its product leadership has
allowed the S3 to maintain an aggressively competitive stance against the iPhone, even though the
company cannot rely as much on reputation. Samsung has also paired its product leadership with great
advertising that increases brand awareness as well as differentiates its products.
Do either or both competitors appear to be trying to create a “blue ocean,” or competing in a “red
ocean”? Briefly defend your statement.
Overall, the two companies seem to be battling it out in a red ocean. Apple is not going to stop
producing smartphones, and they are going to battle for market share as aggressively as they can.
Therefore, to compete, Samsung must do the same. Though Apple initially was able to rest easy with the
first few versions of the iPhone, where the technology was new and fairly exclusive, now other
companies have caught up and can produce a product that can perform as well or better than the
iPhone (as seen with the SIII). As the Samsung ad show, these two companies are direct competitors in
the smartphone market and always have to keep their rival in mind when producing products. When it
comes to smartphones, neither company can really create new demand because they are essentially
offering the same product, just with different marketing.
Bibliography
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http://www.statista.com/topics/870/iphone/
http://www.cbsnews.com/8301-205_162-57545109/apple-website-reveals-unlocked-iphone-5price/
http://reviews.cnet.com/smartphones/samsung-galaxy-s-iii/4014-6452_7-35326385.html
http://www.forbes.com/sites/darcytravlos/2012/08/22/five-reasons-why-google-androidversus-apple-ios-market-share-numbers-dont-matter/
http://www.phonearena.com/reviews/Apple-iPhone-5-vs-Samsung-Galaxy-S-III_id3142
http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers11032011.html