Life Cycle and the Smartphone

Many products and services often pass a life cycle while there are many shapes depending on their industries. They newly emerge in the society, start to sell to be widespread, become saturated in the market and then gradually get out of date. This sequence of product and service is called the product life cycle. Smartphone also passes such natural path. According to the next web (2011), first smartphone brand was Ericsso’s GS88 in 1997. A touchscreen smartphone, which is widespread now, was launched by Apple a decade after the first smartphone brand was launched (ibid).

The iPhone was the smartphone which a consumer would really desire at that time (ibid). There was a big difference between old smartphone and a touch-panel smartphone such as iPhone. Therefore, new product life cycle may be considered to start since iPhone emerged. In theory, the product cycle is divided into five stages: development, introduction, growth, maturity and decline (Lee and Carter, 2012 and Gerry et al, 2010). In development term, a new product concept, which is different from ones in the market, is developed (ibid).

In introduction phase, a new product is launched with large cost on advertisement yet its return is quite small. In growth stage, its quality is improved and booming the product and attracted buyers by it lead to its increasing sales while competition is increasing (ibid). In maturity period, its sales are the highest however its sales growth rate is decreasing. And also its marketplace becomes saturation and more competitive and then consumers purchasing power become stronger (ibid).

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In decline stage, its sales began to fall and also its price decrease to be very competitive (ibid).

The smartphone would be between growth stage and maturity stage nowadays because the sales amount of touchscreen smartphone increase. For example, iPhone’s sales as of 3nd quarter in 2012 went up by around 30% over 3rd quarter in 2011 (knowyourcell, 2012). Galaxy’s sales are also in the similar condition. Yet, at the same time, many competitors such as Lenovo, ZTE and Xiaomi. swwwww entered in this market, which is characteristic of maturity stage (Beer, 2012). Hoffer (1975) argues that the life cycle is the fundamental framework in order to understand market and build adequate strategies in each stage.

According to Hoffer (1975), on a product introduction stage, building on advertisement is important. An informative advertisement would be essential to make a targeted market aware. And also high pricing are pointed out as strategies in this stage (Wind, 1981). Anderson (1984) argued that a strategic segmentation and production and marketing efficiencies might be essential in growth stage. In addition, catching customers’ needs would crucial to be initiative in the markets. In addition, MacMillan et al. 1982) state that satisfying demands is crucial in high growth stage and then a wide range of products targeting many consumers will emerge in low growth stage. Based on Hall (1980), focusing on efficiency achieving the low cost and the highest product, service and quality differentiated position is important in maturity stage. As strategies in declining stage, continuing productions without existing in some industries would be pointed out and having advantages including good relationship with consumers and vertical integration might be build (Harrigan, 1979).

Both Apple and Samsung have done the well-built strategies based on life cycle theory although their strategies are quite different. The advertisement of the first model of iPhone, which is the introducer of touch-screen smartphone, was good at noticing and instructing new product (YouTube, 2007). It advertised new product telling consumers that there have never been eye pad you can do like this. It taught people how to turn on iPhone, listen to music, watch video, call, and brow internet using iPhone (ibid). On the other hand, Samsung Galaxy started to sell since 2009 after iPhone gradually stared to be known in the market.

It has many range of product such as Galaxy S, R, W, M and Y targeting many layer of people (Samsung, 2012), which is proper strategy to growth stage based on MacMillan et al idea (1982). The numbers of adopter of new products diffuse at different speed with affecting to products sales amounts. This diffusion process is explained as Innovation diffusion curve defined by Rogers (1962). This cave is also categorised in five stages similar to the product life cycle: Innovators, early adopters, early majority, late majority and laggards (Baines et al, 2011).

Innovators are the first group of users and customers of the new products and services (ibid). These people are interested in innovative and technological products (ibid). They are often young, high educated, in good living standard and confident (ibid). The number is so small and only 2. 5% of the population of buyers (ibid). However they are important because they are the people who cutting edge the process (ibid). According to Roger (2003), they often have innovative idea and share their idea, time and creativity with people. They can act the tipping point to widespread the products in the society (ibid).

According to Rogers’ theory, iPhone users are innovators or loyalty users, who transferred from iPod. In other word, they may be considered as ‘cool people’, who were often attracted by Apple’s hip hop advertisement (Berinato, 2011). According to Berinato (2011), Apple’s target is mentally ‘Tan’ people who like to be a cool. It is possible to argue that these ‘cool’ people become a tipping point to popularise a touch-screen smartphone. Then, what is considered as conflict between Apple and Samsung?

Why Samsung use obviously attacking advertisement against Apple? YouTube, 2012). Such advertisement implies that Samsung targets would include the Apple users, who are considered ‘cool’. And also it may be possible that Samsung want its brand image to be ‘cool’ as attaching Apple. Apple is struggling to keep its users by using many marketing strategies while Samsung also use every possible means to gain Apple’s users. They are competing with each other using their own marketing strategies, which will be explain in the following sections, in order to differentiate from others in a smartphone market.