Gaining competitive advantages is the major factor to be considered by the contemporary business organizations in order to stay ahead in the competition. This is due to the reason that gaining competitive advantages can help the business organizations in having distinctive competencies over their competitors (Schilke 2014). Moreover, the competitive advantages lead a business organization to success in the market. On the other hand, it should also be noted that different organizations are having different sources of gaining competitive advantages from the market. In the recent time, the two companies that have succeeded in the market hugely and gained immense competitive advantages over their rivals are Samsung and Apple. Both these organizations have created huge brand name and value in the market (Urbancova 2013).
There are number of journal articles being published regarding the sources of gaining competitive advantages of these two companies. This report will select two major articles and will discuss about the cases. In addition, the sources of competitive advantages for both these companies along with their marketing success will also be discussed.
Apple is a leading name in the electronic gadget market in the world. They are known for their innovative, aesthetic and one of kind products. They mainly cater to the premium customer segments with having products with higher price. According to Hinterhuber and Liozu (2017), Apple is one of the major organizations in the recent time that is changing the existing way of doing business. In this article, the authors stated that approach of doing business by Apple is different from that of their competitors. One of the major differences identified by them is in their price. They stated that in the current market scenario of the electronic gadgets, majority of the organizations are competing by offering ore features at lower cost but Apple is going opposite. They are charging double of their competitors and still getting huge sales volume from the market. The authors have identified a price innovation as one of the major sources of competitive advantages for Apple. It is also being stated in the case that innovation in product with innovation in price is helping Apple to maintain a complete different approach in the market. This case study is being chosen due to the fact that it is published in “Innovation and pricing, contemporary theories and best practices” book. This book is a known and reliable source in the field of marketing. Thus, the information to be gathered from this book will be reliable and authentic.
Samsung is another leading name in the global electronic gadget market. They are based in South Korea and are having their presence in the majority of countries around the world. They direct compete with Apple in smartphone category. However, the business approach of Samsung is different from that of Apple. According to Jung (2014), business strategies of Samsung is more mainstream compared to Apple due to the reason that objective of Samsung is to have the major market share in the global market by having higher product diversification and variants. The author has also stated that Samsung follows effective coordination among their internal management system, organizational vision and value chain. It is also being discussed in this case study that Samsung gains competitive advantages by offering diverse products and catering to larger customer sections compared to Apple. This case study is being selected due to the reason that it is published in an international journal that denotes its authenticity. In addition, this case study has discussed in details about Samsung and their sources of competitive advantages and business strategy. Hence, it is easier to have the idea about the strategy of Samsung from this case study.
Marketing success of Apple is depended on number of factors such as product innovation, different pricing strategies and different product strategies. When Apple first came up with iphone, the mobile device was flooded with large number of products from different brands. However, most of the existing models available in the market was affordable and for the mass market customers (Chen and Ann 2016). Thus, if Apple was to offer their iphone in affordable price, then they would have faced huge competition. Hence, they initiated the strategy of premium pricing and focused more on the building brand value. This enabled them to target the premium and top of the pyramid customers where the level of competition is lower. On the other hand, this strategy also helped them create exclusivity about their brands that enhanced their augmented product offerings to the customers. In the further stage, this strategy helped them to position their products not only as utility but also as lifestyle offerings (Khan, Alam and Alam 2015).
Initiation of premium pricing strategy also helped Apple to increase the profitability by having more average profit per unit. Another strategy by which, Apple gained success in the market is product strategy. The products of Apple such as iphone are positioned distinctively in terms of social value, innovation and aesthetic value. Apple products are known for their innovative features that are not being offered by their competitors. Apple first launched their iphone one in 2007 when the concept of smartphone was new (Dul and Ceylan 2014). This is helping them to offer their customers new and innovative features over their competitors and is attracting more sales revenue. Aesthetic value of their products is also helping Apple to have distinctive positioning in the market. Therefore, it can be concluded that though the market segment for Apple is small and limited but the increased average profit per unit is causing huge revenue and profit for them. Customers are getting more attracted by their premium positioning and spending more in order to have the access to innovative features of Apple.
The major marketing success for Samsung is their global presence and higher market penetration. They follow the strategy of increasing sales volume by means of offering diverse products and targeting customers from different segments. In accordance to this strategy, Samsung is having premium smartphones that are competing with Apple and affordable feature phones for the bottom of the pyramid market. This is helping them in having larger target customer segments and more sales revenue and volume (Contractor 2013). Another advantage being gained by them from this strategy is more exposure of brand identity across the global market. Average profit per unit for Samsung is low compared to Apple but the huge sales volume is compensating for that.
On the other hand, Samsung is also having their presence in other sectors also apart from mobile and music devices. They are having products also in the home appliance market. This is helping Samsung to have more extensive presence in the global market and having larger target segments (Moon et al. 2013). The major similar factor between the strategy of Apple and Samsung is product innovation. Similar to Apple, products of Samsung are also known for their innovative features. However, due to the effectiveness and efficiency of their value chain process, innovative features are being offered in affordable price rather the charging premium like Apple.
The major source of competitive advantage for Apple is niche marketing and market focus strategy. This is due to the reason that they target only the premium market and offer products as per the requirement and expectations of this particular market (Urde, Baumgarth and Merrilees 2013). Initiation of the market focus strategy is helping Apple to focus a single target market segment and effectively determining their trend and preference pattern. This is helping Apple to entirely put their effort and focus on this segment and come up with the products that will meet and fulfill the market requirement better than their competitors. This is also helping Apple to have more innovative products in the market by considering the requirement of a limited market segment rather than facing the challenge of meeting diverse preferences of different customer segments (Nylen and Holmstrom 2015).
The major source of gaining competitive advantage for Samsung is the cost leadership and differentiation strategy. This is due to the reason that Samsung offers majority of their products with having lower per unit profit and lower market price. This is helping them to cater the maximum customer segments and covering major market areas. This is also increasing the sales volume for them (Zehir, Can and Karaboga 2015). On the other hand, initiating differentiation strategy by offering innovative features and value with their products is also helping them in fending off the competition. Effective coordination between offering lower price and innovations is ensuring that Samsung is having competitive advantages in the market.
Conclusion
Thus it can be concluded that Samsung and Apple are having different sources of gaining competitive advantages. In this report, two major case studies are being selected that discussed about the competitive advantages of these organizations. It is concluded that Apple gains competitive advantages by their market focus strategy while Samsung gains competitive advantages by initiating cost leadership and product differentiation strategy. Both the organizations got succeeded in the market even though they are having different sources of gaining competitive advantages.
Reference
Chen, C.M. and Ann, B.Y., 2016. Efficiencies vs. importance-performance analysis for the leading smartphone brands of Apple, Samsung and HTC. Total Quality Management & Business Excellence, 27(3-4), pp.227-249.
Dul, J. and Ceylan, C., 2014. The Impact of a creativity?supporting work environment on a firm’s product innovation performance. Journal of Product Innovation Management, 31(6), pp.1254-1267.
Hinterhuber, A. and Liozu, S.M., 2017. Is innovation in pricing your next source of competitive advantage? 1. In Innovation in Pricing (pp. 11-27). Routledge.
Contractor, F., 2013. “Punching above their weight” The sources of competitive advantage for emerging market multinationals. International Journal of Emerging Markets, 8(4), pp.304-328.
Jung, S.C., 2014. The analysis of strategic management of samsung electronics company through the generic value chain model. International Journal of Software Engineering and Its Applications, 8(12), pp.133-142.
Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), pp.955-961.
Moon, H.C., Parc, J., Yim, S.H. and Yin, W., 2013. Enhancing Performability through Domestic and International Clustering: A Case Study of Samsung Electronics Corporation (SEC). International Journal of Performability Engineering, 9(1).
Nylén, D. and Holmström, J., 2015. Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation. Business Horizons, 58(1), pp.57-67.
Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic management journal, 35(2), pp.179-203.
Urbancova, H., 2013. Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness, 5(1).
Urde, M., Baumgarth, C. and Merrilees, B., 2013. Brand orientation and market orientation—From alternatives to synergy. Journal of Business Research, 66(1), pp.13-20.
Zehir, C., Can, E. and Karaboga, T., 2015. Linking entrepreneurial orientation to firm performance: the role of differentiation strategy and innovation performance. Procedia-Social and Behavioral Sciences, 210, pp.358-367.
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