Coordinating a marketing campaign (in-store, TV, print, OOH) is a hugely complex and costly task for mobile network operators and manufacturers – particularly when it needs to match the availability of new product. And addressing a rapidly saturating smartphone market presents a major challenge – consumers are becoming entrenched in an increasingly polarised market.
Consumers have good reasons not to change phones, but at the same time it is this churn which drives innovation forwards, so it is important to convince them to change. And for mobile network operators, traffic generates revenue so it is important to attract new consumers for them too. Perhaps these operators hold the key to the next battleground in the smartphone war? Maybe we’ll start to see more and more incentives for switching operators.
Many factors affect smartphone choice, including:
- Peer pressure and follower mentality
- Operating system
Many of these factors are becoming increasingly static, with little prospect of significant change. So it’s hard to know how to market a smartphone to appeal to anyone other than its obvious fan-base. Perhaps as multiple device ownership increases further we will see mobile network operators becoming a uniting factor – multiple devices, possibly from different manufacturers but with a common OS (and apps), serviced by a single operator.
For each of the above factors, the following paragraphs outline the reasons for them becoming stagnant – or at least factors unlikely to be the subject of any marketing effort.
Peer pressure and follower mentality. At the height of their popularity, Blackberry were a dominant force, aided by their BBM messenger service and trademark qwerty keypad. The keypad somehow identified the device as being serious, and BBM created a sort of “club”, membership of which was indicated by the “Sent from my BlackBerry” footer on every email. Apple has always had a tremendously loyal fanbase, and when people see their friends happily using iPhones, they easily feel that they can’t go far wrong with Apple.
Peer pressure and “follower” mentality is hard for competitors to overturn. If Apple did something seriously wrong (perhaps a major security breach, a huge product safety issue, or made a massive ethical misjudgment), perhaps the tide would rapidly turn. But even something as large as the BP Deepwater Horizon oil spill didn’t signal the end for BP. Conversely, if a competitor were to introduce a “must-have” killer feature (perhaps an entirely flexible or waterproof device, or near-infinite battery life) the effect could be significant. But right now such game-changers remain a fantasy and it looks as though the status quo will endure.
Pricing. Despite the huge economies of scale and advances in technology, smartphones remain expensive. Operator subsidies and contract tariffs have largely hidden the costs from the user, who has become accustomed to committing to pay a small monthly fee for perhaps two years, in addition to a one-off payment for the handset. In territories where the market is arranged differently, consumers are exposed to the full cost of the handset – something which would alarm those for whom a subsidised model is the norm.
Mobile operators usually have a range of tariffs to suit most budgets – the challenge for a consumer considering switching operators is:
- how to make sense of the bewildering array of plans,
- and to have confidence that their geographic coverage is good,
- and to be sure that the customer service and billing is good,
- and to know that the process of switching over is painless.
Unless convinced by compelling answers to these questions, we tend to remain where we are, and in the UK only 11% of us bother to look for a better deal when our contract expires. High street banks have noted the same effect, and some offer significant incentives to switch.
Brands. What they stand for, and how they are perceived by consumers. Smartphone brands have their followers – avid, passive or fickle. Tech discussion boards, forums and blogs publish 24/7 comment about every smartphone and brand, and for every positive there is a corresponding negative – Apple have the best user experience; Apple employs child labour; Nokia build quality and reliability is the best; Nokia have sold out to Microsoft; Google services are the best; Google doesn’t respect privacy; Samsung are the number one in smartphones; Samsung copies Apple.
The fact is that no brand is perfect, and each will always have supporters and detractors. Brand loyalty is something which neither consumers nor the brands themselves can rely on. Ardent Nokia supporters were badly hit when Symbian was abandoned in favour of WindowsPhone; and even the most loyal BlackBerry owners will consider jumping ship if they have to. Brand loyalty doesn’t count for much in this context.
Size. For more than a decade mobile phones shrank in size whilst battery life and the number of features increased. With mobile content consumption now being a significant requirement, the trend has reversed and size is back on the agenda again. The greater demand for larger screens has seen the birth of the phablet, and an increase in multiple device ownership.
If you stand in a phone shop and listen to consumers, you will hear comments along the lines of “that’s just way too big for my hands“; “how are you supposed to use that?“, and “this one would be great for watching videos and surfing the web, but I’d need something smaller as well to use as a regular phone“.
Design. In contrast to the way the industry looked only five years ago with multiple form-factors, phones are starting to look similar to each another. If you strip away the advertising and the demo screens you’d be hard-pressed to know the difference between many of the models on display in shops today. The fact is that there are few opportunities for manufacturers to express their design on a rectangular, glass-fronted slab. Colour is used as a differentiator most notably by Nokia with the Lumia range, and recently Apple with the iPhone 5c.
Furthermore, many users protect their phones with some form of cover, making the design all but invisible. Ultimately many consumers are not as driven by design detail as manufacturers would like to believe, and decisions about whether or not a particular design is appealing are ad hoc. Yes, there will always be the smartphone fans who note every tiny detail, but for most… well, it’s just a phone.
Availability. It is now normal for products to become available very soon after they are announced, and the manufacturer can use the marketing momentum to its advantage. Operator-exclusive products (perhaps specific colour-variant or memory configuration) can sometimes tempt consumers towards an operator – provided that they are happy about the prospect of switching. For non-movers, these operator-exclusives can be either good or annoyingly-bad news.
The disruptive effect of 4G rollout provides some new opportunity for consumers to consider switching. The challenge remains, of how to appeal to a consumer who has a perfectly adequate phone. The benefits of 4G can be easily dismissed by cynical consumers who have witnessed (and experienced) the battle of broadband speeds – whether or not they have met their expectations.
Specifications. Specs have always been an important part of product announcements – they are used to demonstrate improved value for the consumer and continued technology development by the manufacturer. They are used as a hook to tempt consumers at the time of their next purchase or upgrade. With all smartphones now providing “more than adequate” imaging features, web browsing experience, music capability, GPS, email, social media and phone services it is becoming ever harder to identify the real value of these differentiating characteristics.
Product specs have started to include reference to:
- Wireless charging
- 2.5D curved glass
- HD display
For the consumer considering replacing an otherwise adequate and fully functional phone, the question will always be along the lines of “Do I really need wireless charging [for example]? I’ve managed without it until now. Is it really necessary“? Samsung tackle this by launching a range of devices, see which “work”, and cancel the others. They attracted a lot of attention with the recent announcement of its curved phone, but it’s hard to see this as a game-changer. Maybe we will see more of this technology in years to come, but for now it looks like a solution looking for a problem.
OS entrenchment and the difficulty of switching. The personal computing world has been largely polarised into PC vs Mac camps for the past twenty years. And a similar situation pervades the smartphone market today. Android dominates with 79.3%, followed by iOS at 13.2%. WindowsPhone, BlackBerryOS, Symbian and Linux have a combined total of less than 8% [Source: IDC Worldwide Mobile Phone Tracker, 7 August 2013]. The relationship between OS and user is relatively static, partly for loyalty and familiarity reasons, but increasingly because of the difficulty of switching (purchased content, apps etc).
App wars. The rising number of apps available on each platform steadily rise every month – iOS and Android each have approximately 800,000 apps; WindowsPhone have roughly 160,000; and BlackBerry around 120,000. These figures say more about how developers see the market than anything else, but the availability of apps remains a key metric in the minds of consumers – so much so that Microsoft is reportedly paying developers up to $100,000 to get apps on Windows Phone 8.
The challenge of selling to a near saturated market is a problem for those in the industry. But it is also a problem for consumers, who need direction and hand-holding. Without that guidance and support, they fall victim to the follower mentality because it is the easy option. And when that happens, the market can quickly become polarised. This is a self-sustaining situation which is hard to break out of – unless some disruption occurs.
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- Apple vs Samsung: Who could win the smartphone war? http://www.forbes.com/sites/chuckjones/2013/08/20/apple-and-samsung-who-could-win-the-smartphone-war/
- Android now controls a breathtaking 80% of the smartphone market http://www.businessinsider.com/android-now-controls-a-breath-taking-80-of-the-smartphone-market-2013-8
- How BYOD has changed the IT landscape http://www.networkworld.com/news/2012/090512-byod-262146.html
- The false economy of handset subsidies http://www.mobileworldlive.com/false-economy-handset-subsidies
- Who’s winning, iOS or Android? All the numbers, all in one place http://techland.time.com/2013/04/16/ios-vs-android/
- The Mobile Consumer Report – Global snapshot Feb 2013 http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2013%20Reports/Mobile-Consumer-Report-2013.pdf
- These three game changers define the Apple vs Samsung battle http://www.forbes.com/sites/haydnshaughnessy/2013/04/12/these-3-game-changers-define-the-apple-vs-samsung-battle/
- How Samsung became the worlds no.1 smartphone maker http://www.businessweek.com/articles/2013-03-28/how-samsung-became-the-worlds-no-dot-1-smartphone-maker