Cultivating more consumers who buy more, more often, & tell their friends!
Last week, Samsung reported significant sales and profit declines due to softness in the Galaxy S5 business. As a result, the world’s largest smartphone maker by shipments is said to be evaluating their smartphone business going forward. While the Wall St. Journal reports pressure from Chinese vendors as a key factor, their smartphone marketing strategy seems at least as much a driver of their current situation. Their competition with Apple’s iPhones represents a crystal clear illustration of the power of brand strategy, even in categories heavily reliant on innovative technology and ‘whiz bang’ features.
Despite the recent iPhone 6 launch, many argue that Samsung still has feature and performance advantages over Apple. The Galaxy line has impressively addressed some of the most pressing smartphone performance issues. Where with just about any other phone, immersion in water means almost certain death, the Galaxy S5 is water resistant. In a world of exploding content, the Galaxy S5 has expandable memory via a MicroSD slot. Moreover, as smartphone users must be intermittently tethered to a power supply, with the Galaxy S5 you can just pop another charged battery in and not miss a beat. The phone also boasts a higher screen resolution and camera pixel count. To be sure, many reviewers have chosen the Galaxy S5 in head-to-head tests versus the iPhone 6.
The one obvious area where Samsung isn’t even really competing, though, is its brand. Against one of the strongest brands on the planet, Samsung demurs in this area; they fail to offer a strategic, emotionally resonant message about who it is, what it stands for, how it adds value to consumers’ lives, etc. It’s advertising, while well done, merely seeks to sell its phone, rather than build its brand. In consumer marketing, you’ve got to do both!
People make competitive buying decisions based on which product delivers the greatest overall value. This is a complex consumer calculus that includes consideration of both physical and emotional benefits. It includes what the product does and how it makes you feel. Too many tech companies - dominated internally by engineering-centric cultures - focus so heavily on the product side that they give short shrift to the complementary (and critical) role that a strong brand can play. Samsung’s financial report represents a gleaming example of what happens if you naively go down this path.
Samsung certainly could have worked toward building a strong brand. Marketing was a powerful force in rather quickly getting them to the top in smartphone unit sales. But even with an impressive $14 billion of marketing spend in 2013, they neglected to articulate a strategic positioning for the brand that carved out relevant and “ownable” emotional real estate in consumers’ minds. When you hang your hat solely on features and benefits, versus a brand that delivers both physical and emotional performance, you - effectively - elect to fight with one arm tied behind your back. Your product performance has to be greater than the combination of your competitor’s product performance AND whatever emotional value its brand delivers. And, oh by the way, the Apple brand is among the strongest on the planet!
Some might say that the power of the Apple brand is keeping their smartphone business afloat. Apple was a rather perplexing two years late in delivering against consumer demand for larger screens. And when they arrived, many consumers were disappointed at the upgrades that came with the iPhone 6 - particularly since they had to wait so long for them. But, the Apple brand has been so strong, for so long, that its brand equity overcomes whatever product shortcomings that may exist. Many millions of consumers didn’t just want a phone with a bigger screen, they wanted an iPhone with a bigger screen - and they were willing to wait for it.
On the other hand, since Samsung’s brand doesn’t offer anything like the emotional benefit that Apple does, there isn’t anywhere near the kind of brand buffer there to support the overall value proposition when the features/benefits aren’t as compelling. They launch a “ho hum” upgrade to the Galaxy line and consumers move on.
It amazes me that some companies still don’t understand this fundamental principle of consumer marketing. It’s simply not enough to merely tout what your product does. You’ve also got to paint a picture to your consumers of what and who it is, what it means, who it is for, and how it should make you feel. Even if your product is head and shoulders above the competition, creating a brand benefit makes it even more valuable and compelling. Apple continues to reap dividends from its commitment to brand advertising over the years. The ‘Think Different’ campaign, the famous “1984” Super Bowl spot, and the Apple guy vs. Microsoft guy campaign are all a part of the brand ethos that - along with their spectacular performance in other product categories - makes consumers feel good about their association with Apple.
Samsung has proven that they can create a competitive product - in both the smartphone and other categories. They are now talking about “fundamentally reforming” their smartphone business. Let’s hope that restructuring includes a ‘go to market’ strategy that more completely takes into consideration the factors that drive purchase. With the appropriate strategic direction, and by continuing to invest in healthy marketing budgets, they can absolutely get back in the game. This is particularly the case if Apple continues to be sluggish in its competitive feature set. I just hope Samsung still has something left in the till with which to do so.
For the fix to this predicament, please check out: The Samsung Solution.