A comparative study between Apple and Samsung

THESTUDYOFSMARTPHONEINTHECITYOFMUMBAI

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“A STUDY ON PRICING STRATEGIES OF SAMSUNG AND APPLE”

PROJECT SUBMITTED TO:

UNIVERSITY OF MUMBAI

FOR THE

BACHELOR OF MANAGEMENT STUDIES

SEMESTER 5

SUBMITTED BY:

“VIVEK SHAH”

NOVEMBER 2014


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EXECUTIVE SUMMARY

The Apple brand and logo are currently more recognized around the Western world, and in London and New York, you cannot walk down the street without seeing a sea of white headphones and people playing with their iPhones. The Brand Finance Global 500 2013 puts Apple and Samsung right at the very top of the best brands in the world, ahead of Coca-Cola and Google.

Samsung smartphones are broadly comparable, feature-for-feature, with competitors like HTC, Sony, LG and now Nokia, so why has it become so dominant? A big part of the answer lies in its sheer marketing muscle – Samsung spends a bigger chunk of its annual revenue on advertising and promotion than any other of the world's top-20 companies by sales – 5.4%, according to Thomson Reuters data. Apple spends just 0.6%, and General Motors 3.5%.

Adverts mocking Apple fans, and heavy investment in product placement and in distribution channels have strengthened its Galaxy mobile brand. Samsung now sells one in every three smartphones and has more than double Apple’s market share.

Moon Ji-hun, head of brand consultant Interbrand's Korean operation, adds: “When your brand doesn't have a clear identity, as is the case with Samsung, to keep spending is probably the best strategy. But maintaining marketing spend at that level in the longer term wouldn't bring much more benefit. No one can beat Samsung in terms of ad presence, and I doubt whether keeping investing at this level is effective.”

Apple may sit in top position now, but has lost its mojo over the last couple of years through lackluster product releases and perceived lack of innovation. Samsung is catching up and is already no. 2. The Samsung brand can be improved and it isn’t loved by some like Apple, but I am impressed with the leadership team for seizing the opportunity to leapfrog all its other competitors, through investment and execution with conviction.


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TABLE OF CONTENTS

CHAPTER

NUMBER

CONTENTS PAGE

NUMBER

I INTRODUTION 8-11

II REVIEW OF LITERATURE 12-16

III RESEARCH METHODOLOGY 17-21

3.1 FORMULATION OF RESEARCH PROBLEM 17

3.2 OBJECTIVE OF STUDY 17

3.3 SCOPE OF STUDY 17-18

3.4 HYPOTHESIS 18

3.5 DATA COLLECTION 19

3.6 RESEARCH INSTRUMENT 19

3.7 RESEARCH DESIGN 19

3.8 SAMPLING PLAN/SAMPLING TECHNIQUE 20

3.9 TESTING OF HYPOTHESIS 20

3.10 RESEARCH LIMITATION 21

IV PRICING STRATEGY OF APPLE AND SAMSUNG 22-28

V THE GADGET WARS 29-30

VI DATA ANALYSIS AND INTERPRETATION 31-42


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VII TESTING HYPOTHESIS WITH THE HELP OF CHI

SQUARE

43-55

VIII CONCLUSION 56

IX RECOMMENDATION 57

X BIBLIOGRAPHY 58

ANNEXURE 59-64


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Chapter I – Introduction

Samsung and Apple are the two biggest smartphone companies with a combined market share of more than half the global smartphone market. Every year both the companies bring in new innovations in their smartphones, which greatly increases their smartphone sales. But in today’s market where there is cut throat competition it is given that each company will try to outdo the other in every possible manner. Hence I would like to discuss the fierce battle raging between these smartphone giants-Samsung and Apple. Apple created a boom in the smartphone market by launching the iPhone, which had more features and was the most advanced smartphone at that time. The company made a huge profit and Apple became a household favorite. But with the rise of competition and the growth of Asian giant –Samsung, Apple’s success was not to last forever. Samsung came up with the Samsung Galaxy S smartphone with identical features as that of the iPhone and slowly but steadily the sales of Samsung smartphones rose.

ABOUT APPLE:

Apple Inc. is an American multinational corporation headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software and personal computers. Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, and the iPad tablet computer. Its consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites.

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976 to develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. on January 9, 2007 to reflect its shifted focus towards consumer electronics.

Apple is the world's second-largest information technology company by revenue after Samsung Electronics, and the world's third-largest mobile phone maker after Samsung and Nokia. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world from 2008 to 2012. On September 30, 2013, Apple surpassed Coca-Cola to become the world's most valuable brand in the Omnicom Group's "Best Global Brands" report. However, the company has received criticism for its contractors' labor practices, and for Apple's own environmental and business practices.

As of May 2013, Apple maintains 408 retail stores in fourteen countries as well as the online Apple Store and iTunes Store, the latter of which is the world's largest music retailer. Apple is the largest publicly traded corporation in the world by market capitalization, with an estimated market capitalization of $446 billion by January, 2014. As of September 29, 2012, the company had 72,800 permanent full-time employees and 3,300 temporary full-time employees worldwide. Its worldwide annual revenue in 2013 totalled $170 billion. As of Q1


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2014, Apple's five-year growth average is 39% for top line growth and 45% for bottom line growth. In May 2013, Apple entered the top ten of the Fortune 500 list of companies for the first time, rising 11 places above its 2012 ranking to take the sixth position. Apple is the most successful start up company of all time, by market capitalization, revenue, and growth.

APPLE PRODUCTS:

§ Mac Books

§ iPads

§ iPhones

§ iPods

§ iMac

§ Apple TV

§ Softwares


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ABOUT SAMSUNG:

Samsung Group is a South Korean multinational conglomerate company headquartered

in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of

them united under the Samsung brand, and are the largest South Korean chaebol (business

conglomerate).

Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next three

decades the group diversified into areas including food processing, textiles, insurance, securities

and retail. Samsung entered the electronics industry in the late 1960s and the construction and

shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth.

Following Lee's death in 1987, Samsung was separated into four business groups – Samsung

Group, Shinsegae Group, CJ Group and Hansol Group. Since the 1990s Samsung has

increasingly globalized its activities, and electronics, particularly mobile phones and

semiconductors, have become its most important source of income.

Notable Samsung industrial subsidiaries include Samsung Electronics (the world's largest

information technology company measured by 2012 revenues, and 4th in market

value), Samsung Heavy Industries (the world's 2nd-largest shipbuilder measured by 2010

revenues), and Samsung Engineering and Samsung C&T (respectively the world's 13th and 36th-

largest construction companies). Other notable subsidiaries includeSamsung Life Insurance (the

world's 14th-largest life insurance company), Samsung Everland (operator of Everland Resort,

the oldest theme park in South Korea), Samsung Techwin (an aerospace, surveillance and

defense company) and Cheil Worldwide (the world's 15th-largest advertising agency measured

by 2012 revenues).


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Samsung has a powerful influence on South Korea's economic development, politics, media and culture, and has been a major driving force behind the "Miracle on the Han River". Its affiliate companies produce around a fifth of South Korea's total exports. Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP.

In 2013, Samsung began construction on building the world's largest mobile phone factory in the Thai Nguyen province of Vietnam.

SAMSUNG PRODUCTS:

Ø Samsung Phones

Ø Samsung Notes

Ø Samsung Laptops

Ø Samsung Desktops

Ø Samsung Softwares


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Chapter II – REVIEW OF LITERATURE

CASE 1: A new survey conducted by Consumer Intelligence Research Partner (CIRP) suggests that of Apple's iPhone customers between July 2012 and June 2013, an impressive 42% of them were upgrading from a previous iPhone. Better still, it compares Apple to Samsung, and shows that only 7% of Samsung's mobile customers moved across from using an iPhone. The key stats as presented to Fortune: • 42% of Apple's customers between July 2012 and June 2013 were upgrading from

another iPhone

• 43% of Samsung's customers had previously owned an Android phone, but not necessarily one made by Samsung

• Samsung drew more first-time smartphone buyers upgrading from so-called feature phones (37%) than Apple did (26%)

• Among buyers who switched brands, Apple took three times as many from Samsung (33%) as Samsung took from Apple (11%)

• Among switchers, Samsung drew more customers from HTC, Motorola (GOOG), and Nokia (NOK), while Apple drew more from Blackberry (BBRY)

All interesting factoids, and there's many a discussion we could have about each of them. It's interesting to see that Apple commands a greater share of the BlackBerry switchers, perhaps more comfortable with the stable environment and the ecosystem that Apple provides, and is more like the BlackBerry they know than what Samsung is serving up. Also good news for Apple is that their brand loyalty continues to be pretty high. Attracting new customers is always on the list, but you have to retain the ones you already have to stand any chance. The survey doesn't differentiate which of the Samsung customers came from another Samsung phone, just Android, so while their retention figures match Apples, it doesn't mean they as a brand are keeping as many of their customers as Apple does. Apple also took a good chunk more Samsung customers than Samsung did Apple customers.


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CASE 2:

NEW YORK, Nov. 2 (UPI) -- A customer satisfaction poll ranked tablets made by Korean electronics giant Samsung ahead of Apple's iPad but some tech analysts are questioning the finding.

The JD Power biannual customer satisfaction poll gave Samsung tablets 835 points, while Apple tablets got a score of 833, CNN reported Saturday.

Some were baffled at the result, given Apple's iPad scored higher than Samsung in four out of five categories, losing out in only one -- cost.

CASE 3:

A recent Counterpoint survey of October smartphone sales in 33 countries—including China—showed the Cupertino-based company's latest flagship, the iPhone 5S, dominated rival Samsung's Galaxy S4. Apple was able to put not one, but two smartphones ahead of the S4, as the chart-leading 5S was also followed by its predecessor, the iPhone 5. The data was compiled from surveys of both distributors and several major retailers across 33 countries, according to SlashGear. The top ten smartphones list: 1.) iPhone 5S 2.) iPhone 5 3.) Galaxy S4 4.) iPhone 5C 5.) Galaxy Note 3 6.) Galaxy S3 7.) Galaxy S4 Mini 8.) Nokia 105 9.) Galaxy S3 Mini 10.) Asha 501


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CASE 4:

Apple's flagship iPhone 5S, already draped in gold, has been voted the winning smartphone of

2013, taking home 27.64% of the 9,004 u Switch Tech users that participated in the poll. The

Samsung Galaxy S4 finished in a close second with 25.21% of the total votes, followed by the

new Samsung Galaxy Note 3, which finished with just 11.78% of the votes. The highly-praised

HTC One managed to finish fourth at 11.26% despite being named the 2013 u Switch Tech

Awards winner for best design. Apple's iPhone 5C finished just eighth. Below are the full u

Switch Tech smartphone of 2013 poll results:

1) iPhone 5S 2) Samsung Galaxy S4 3) Samsung Galaxy Note 3 4) HTC One 5) Sony Xperia Z1 6) Google Nexus 5 7) Nokia Lumia 1020 8) iPhone 5C 9) Nokia Lumia 920 10) BlackBerry Z1 Ernest Doku, telecoms expert at uSwitch.com, said of the results: "These results speak volumes as to both the enduring popularity of the iPhone, as well as the hugely positive reaction from customers to the Galaxy S4. "Critics might have found the S4 packed with gimmicks rather than must-have features, but sales have been massive and - in conjunction with a strong phablet sequel in the Note 3 - taken Samsung from strength to strength in 2013. "An interesting point to note is the relatively lacklustre showing from Apple's iPhone 5C, with its premium pricing unexpectedly making the 5S more appealing as a luxury device. "Whilst the flagship effort topped sales charts and polls alike, a modest placing for the iPhone 5C shows that Apple still has a way to go in courting the trendsetters of tomorrow." A new battery life test from Which? Tech Daily has deemed Apple's new iPhone 5S and 5C inadequate in comparison to several of the tech giant's Android competitors.


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The test examined eight smartphones running different operating systems to see just how much juice users can expect when making calls and browsing the Internet with 3G. Which? used a phone network simulator that levels the signal strength so that it was constant for each smartphone and used each on a "readable," rather than maximum, screen brightness level. Each smartphone was fully charged prior to the test.

CASE 5:

(CNN) -- Samsung tablets have edged out iPads for the first time in JD Power's biannual

customer-satisfaction survey; although some observers say the results don't quite add up.

Samsung topped JD Power's rankings with a score of 835 out of 1,000, narrowly beating out

Apple's 833. Amazon was third in customer satisfaction at 826, followed by Asus and Acer.

The rankings are based on the experiences of 3,375 tablet owners who responded between March

and August of this year, and don't include the new iPad Air and iPad Mini, which went on sale

Friday.

But some tech pundits questioned the market-research company's scoring system.

Survey respondents scored Apple's iPad higher than Samsung's tablets in four of five categories -

- performance, ease of operation, styling/design, and features -- while Samsung scored higher in

just one: cost.

A Samsung Galaxy Tab 3 tablet with a 7-inch screen and 16GB of storage sells for $199,

compared to $399 for a comparable iPad Mini.

"Reporters who got their hands on the attached chart were left scratching their heads," wrote

Philip Elmer DeWitt in Fortune. "The only category that Samsung beat Apple in was (duh) cost.

And cost, according to Power's press release, counts for at most 16% of the total score."

"Did J.D. Power overreach in giving its top customer satisfaction nod to Samsung instead of


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Apple?" wondered Don Reisinger of CNET. "So who's the real winner?"

JD Power did not immediately respond Friday to CNN's request for comment.

Apple in the past has trumpeted JD Power's rankings as evidence of its products' popularity with

consumers. At the company's Worldwide Developers Conference in June, Apple CEO Tim Cook

bragged that iOS devices have won nine consecutive JD Power awards.

JD Power's survey notes that Samsung is the only manufacturer to improve across all five

categories since its last survey in April.

The survey found that before buying their tablet, 50% of consumers rely on recommendations

from friends, family members or colleagues, while 49% gather information from the

manufacturer's website.

Other factors that determine tablet-buying choices include brand reputation (42%) and past

experience with the brand (32%).


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Chapter III – Research Methodology

(3.1) Formation Of Research Problem

The electronics industry in India is growing rapidly at a rate of 16% to 17%. The two major

players are Apple and Samsung with a combined market share of 90%. There is still scope in the

market for growth. Hence, the research problem is to find out which company is preferred by the

consumers and which company has a better opportunity to take advantage of the growing

industry and consumer preference and also has a greater market share in the future.

(3.2) Objectives of Study

• To study the current market position for the two companies and their products.

• To study the consumer preference for the two companies.

• To study out which company will do better in the market in future.

(3.3) Scope of study

• With an intention to study the electronic industry the researchers have restricted the study

to the city of Mumbai.

• Researchers have restricted their study to the two major companies, Apple and

Samsung.Within these companies, the research has been restricted to the following

products:

o Macbooks (Apple)

o iPads (Apple)

o Samsung Galaxy (Samsung)

o iPhones (Apple)

o Samsung Laptops (Samsung)

o iMac (Apple)

o BADA (Samsung)


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o iOS (Apple)

o Samsung Tabs (Samsung)

(3.4) Hypothesis

1. H0 – There is no impact of income on consumer preference.

H1 – There is an impact of income on consumer preference.

2. H0 – There is no impact of age on consumer preference.

H1 – There is an impact of age on consumer preference.

3. H0 – Future scope of Apple is not more than Samsung

H1 – Future scope of Apple is more than Samsung

(3.5) Data Collection

Primary Data: For the intension to complete the research project, an attempt was made to

collect primary data using a structured questionnaire. This primary data will be used in the study

for the purpose of the further statistical calculation. Primary data will include the interviews of

the ones who use Apple and Samsung Products.

Secondary Data: The survey will be the back bone of the entire research work. The secondary

data under consideration will be collected from different secondary sources namely newspapers,

business articles, internet, reference books, etc.


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(3.6) Research Instrument

To collect the data the researchers have used a structured questionnaire. The questionnaire so

formed has only close ended questions.

(3.7) Research Design

The researchers will use primary as well as secondary data as means of data collection. To

collect primary data the researchers will use surveys as an instrument and to collect secondary

data the researchers will case studies from the internet.

(3.8) Sampling Plan/Sampling Technique

The objective of conducting a questionnaire is to analyze the consumer’s preferences, needs and

thoughts. Their expectations from the brand are noted. The survey was conducted in Mumbai.

This was conducted to get the feedback of people from a variety of backgrounds and different

financial standing.

The objective of conducting a focus group is to learn the viewpoint of the consumers about the

brand in a personalized manner. They will be asked to freely share and state their opinions of the

brand and also to criticize it as well as state its benefits. The members of the focus group will be

briefed about the product range under each brand. The companies, their logo, punch line,

promotional collaterals and the marketing program strategies, shall be discussed with them. Their

feedback will be noted and their suggestions will be taken into consideration.

Sample size

The sample size of the questionnaire survey is 100 participants. For the intension to do the

survey the questionnaire will be distributed to 100 respondants from different stratas of society

mainly teenagers, businessmen, etc.

(3.9) Testing Of Hypothesis

The researcher has made an attempt to test the hypothesis using chi square.

(3.10) Research Limitation


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1. The sample size is limited to a 100 people and hence the result may not be accurate.

2. The sample only includes people living in Mumbai and their views might differ from the

people living out of Mumbai.

3. People may not have been in the right mind set during the focus group discussion and

hence their answers and views might be different.


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Chapter IV: Pricing Strategy Of Apple and Samsung

Pricing Strategy

In economics and business, the price is the assigned numerical monetary value of a good, service

or asset. Price is also central to marketing where it is one of the four variables (4 P’s namely

Product, Price, promotion, Place) in the marketing mix that business people use to develop a

marketing plan. Pricing is a big part of the marketing mix. Choosing the right price and the right

pricing strategy is crucial to the marketing process. The price of the product is not something that

is fixed .On the other hand the price of the product depends on many other factors. Sometimes

the price of the product has got nothing to do with the actual product itself .The price may act as

a way to attract target customers. The price of the product is decided keeping many things in

mind. These things include factors like cost incurred on the product, target market, competitors,

consumer buying capacity etc.

The US CSD market is mature. The industry sales growth is largely driven by population growth

as well as the amount of advertising and product innovation taking place in the industry. Given

the mature nature of the market, both Apple and Samsung have resorted to pricing discrimination

strategies to maximize the value of consumer demand. Direct Price Discrimination – the simplest

form of extracting customer surplus is charging customers with different prices based on their

location and purchasing power. This is evident in the international operations of both Apple and

Samsung. Apple prices in Mexico, Brazil and Eastern Europe are lower than prices in the U.S.,

even though the cost of the concentrate is practically the same. Domestically, direct price

discrimination is based on distribution channel.


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Apple – Price

Comparison-shopping for new electronics can be fun and addictive. With a bit of patience, some

luck, and an eye for good deals, you can find everything from TV sets to hard drives at a

significant discount. In fact, in our economy, discounts are one of the primary mechanisms that

retailers use to compete against each other.

But all bets are off if you happen to be in the market for a product made by Apple: Both iOS

devices and Macs seem to be impervious to the discount game. In fact it’s so rare to find a

significant price variance between retailers that, when it does happen, the event usually draws

considerable press coverage.

House Advantage

With so many laws regulating competition among retailers, how does Apple pull off this

amazing feat? It turns out that the company uses a fairly straightforward strategy, known as price

maintenance that takes advantage of the popularity of its products and exploits a quirk in the way

retailers are allowed to advertise their merchandise.

Most products move from manufacturers to retailers through a network of distributors. Even

though each product has a “manufacturer suggested retail price” (MSRP), each retailer is free to

set its own sale price. Thus, a laptop with an MSRP of $500 might cost the retailer $250 to buy,

and might carry a sticker price of $350, accompanied by a bold "30% Off!" announcement in the

store’s weekly flyer. A different retailer might offer an even lower price to attract more store

traffic, or conversely it finds itself in a weaker position due to lower sales volume and have to

charge its customers more for the product.

All of this price variability is possible because of the large difference (commonly from 30 to 55

percent) between the wholesale price—what the retailer pays the distributor for each unit of the

product—and the MSRP for each unit. That gap leaves enough room for each retailer to set its

own policies and generate a sometimes significant range of market prices for a product.

Apple, however, extends only a tiny wholesale discount on its Macs and iPads to your retailer of


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choice. The actual numbers are a closely guarded secret, protected by confidentiality agreements

between Cupertino and its resellers, but the difference probably amounts to only a few

percentage points off the official price that you find at Apple’s own stores. With such a narrow

gap to tinker with, most retailers can’t offer big discounts and still hope to turn a profit.

Carrot And Stick

The price maintenance approach cuts both ways: Retailers have relatively little incentive to carry

Apple products, or to dedicate precious retail and advertising space to them, if the potential profit

from sales is so low. On the other hand, large chains not uncommonly turn a barely profitable

product into a “loss leader,” selling it below cost to increase customer traffic or to boost sales of

ancillary goods, such as accessories and cables, that have a higher profit margin.

This is where the second part of Apple’s retail strategy kicks in: The company supplements its

tiny wholesale discounts to resellers with more substantial monetary incentives that are available

only if those resellers advertise its products at or above a certain price, called the “minimum

advertised price” (MAP). This arrangement enables retailers to make more money per sale, but it

prevents them from offering customers significant discounts, resulting in the nearly

homogeneous Apple pricing we are used to.

The strategy benefits Apple in a number of ways. First, the company makes more money on

direct sales and doesn’t have to compete against marked-down prices offered by its own

resellers. Since Apple’s own retail operations are among the most profitable in the world,

undercutting their prices for the sake of a wider distribution network would be

counterproductive.

Most important, the narrow range of price variability prevents any one retailer from establishing

a strong enough market position to give it an advantage in future negotiations with Apple. Big-

box store chains like Walmart are notorious for using their heft to extract higher and higher

discounts from manufacturers—even to the point of forcing the latter out of business. By keeping

its products' prices on an even keel, Apple reduces the potential for future conflict within its

distribution channels, which also helps keep its own retail operations operating in the black.


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When Good Discounts Go Bad

The situation with the iPhone is slightly different. Though the phone's retail price is in the

hundreds of dollars, most consumers buy it alongside a two- or (in Canada) three-year cellular

service plan. In exchange for the opportunity to charge their iPhone customers $70 or more a

month, the carriers subsidize the cost of the device itself, which consequently carries a much

lower price than it would if sold unlocked and contract-free.

For retailers, these phone-and-service-contract deals are profitable not because of the hardware's

selling price, but because of a commission that carriers pay them, depending on the length and

the cost of the mobile plan that each customer chooses. This helps explain why many stores will

sell you an iPhone at the discounted price only if you buy it together with “in-store activation”;

otherwise, they’d miss out on the bulk of their financial gain from the transaction.

This fact also helps explain why stores sometimes break rank and offer discounts on Apple

handsets. Such was the case with certain Walmart locations during this past holiday season,

which offered consumers an iPhone 5 for $127—a $70 discount from the normal $199 price. The

retail giant probably set up this special deal without Apple’s involvement, and it produced

repercussions in the marketplace as competitors attempted to match Walmart’s prices.

The End Of The Road

The pricing techniques that Apple uses aren't illegal, and most of them are commonplace in the

industry. MAP, for example, is almost certainly at play when an online retailer requires you to

add a product to your basket before revealing its price; and carriers offer kickbacks to resellers

for most smartphones. Apple has simply distilled these standard tactics into a retail strategy that,

so far, has worked out very well—aided, in no small part, by the public’s seemingly insatiable

lust for its products.

The cumulative effect of Apple's pricing policy on consumers is hard to nail down. On one hand,

we're deprived of the positive effects that price competition normally produces in a free market.

The familiar phenomenon that Apple products tend to be more expensive than their competitors

in the same market space doesn't just happen: You can easily find an inexpensive laptop, but it’s


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much harder to come across an inexpensive Apple laptop.

On the other hand, it’s also hard to come across an inferior Apple laptop—and this is true of

every other product that leaves the company’s manufacturing facilities: Generous profit margins

and a tight control over its distribution channels have enabled Cupertino to produce higher-

quality goods at prices that only modestly exceed those of rival products. Thus, arguably,

consumers enjoy a better overall experience, dollar for dollar, in the long term.

Either way, Apple’s pricing strategy is a fascinating aspect of the company’s notoriously

controlling nature. If nothing else, knowing that the prices of its products are so stable makes

shopping for them relatively stress-free: The only patience you need is the patience to wait for

the delivery guy to show up at your door.

SAMSUNG – PRICING

Samsung’s strategy was to build something similar to another company’s product but to make it better, faster and at lower cost. Heavy investments have not been a problem; it once secured low-cost loans from a government-controlled banking sector friendly to big businesses and now draws on its own coffers, which are sloshing with cash.

After the court victory, Apple lawyers sought injunctions against sales of Galaxy smartphones and tablets in the American market. But those products had already lived through their life cycles in Samsung’s fast-paced marketing plan, analysts and Samsung officials said. With characteristic speed, Samsung had already retooled its latest Galaxy S III smartphones to stay ahead of the patent battle. In South Korea, where Samsung’s achievements are a source of national pride, many perceived a bias against a foreign competitor in the American jury verdict.

Samsung Electronics is the flagship of Samsung Group, a family conglomerate that controls more than 80 companies that build oil tankers and apartment complexes, run hotels and amusement parks and sell insurance to housewives and artillery pieces to the military. The flagship’s operations are often faulted for their opacity. But analysts say that also allows Samsung to place huge bets and do so quickly.

Samsung makes not only hardware but also its components; it is Apple’s biggest parts supplier and its fiercest competitor in the completed smartphone market. In a way, its rivals help Samsung compete with them. Samsung’s handset business was its growth driver, raking in 20.5


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trillion won ($18 billion) in the second quarter.

The strategy worked well for the latest product it dominated — smartphones — until Apple declared war over intellectual property in April 2011, accusing the South Korean company of “slavishly copying” the feel and look of its iPhone and iPad.

Samsung appeared to consider the legal trouble a necessary cost of squeezing out a giant in yet another field it is fast dominating. Samsung’s smartphone sales in the second quarter grew 150 per cent to 50.5 million units, or a record 35 per cent of the market, according to the research firm Strategy Analytics. Apple grew 28 per cent, to 26 million units. Apple will attempt a surge back with its new iPhone model this year, but Samsung is ready to introduce the Galaxy S IV as a counter.

“The patent ruling and Samsung’s copycat image will have a negative impact on Samsung’s sales of cellphones and other products,” said Kevin Lee, an analyst at Korea Investment and Securities. “But Samsung will further widen the gap with Apple in the third quarter, though not as much as expected before the ruling.” Samsung is appealing the verdict, which it called “a loss for the American consumer.” Song said that despite the verdict, the fight for the smartphone market was over and had been decided in Samsung’s favour. In South Korea, where Samsung’s achievements are a source of national pride, many perceived a bias against a foreign competitor in the American jury verdict. Still, the ruling reminded South Koreans of something their country lacked, a shortcoming magnified by comparisons between Samsung and Apple.

Although the name Samsung is synonymous with sophistication among South Koreans, the company has never created a product so innovative that it has defined an era in consumer culture, like the Walkman or the iPhone.


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Chapter V: The Gadget Wars

Apple vs Samsung Law Suits

Apple Inc. v. Samsung Electronics Co., Ltd. was the first of a series of ongoing lawsuits between Apple Inc. and Samsung Electronics regarding the design of smartphones and tablet computers; between them, the companies made more than half of smartphones sold worldwide as of July 2012. In the spring of 2011, Apple began litigating against Samsung in patent infringement suits, while Apple and Motorola Mobility were already engaged in a patent war on several fronts. Apple's multinational litigation over technology patents became known as part of the mobile device "smartphone patent wars": extensive litigation in fierce competition in the global market for consumer mobile communications. By August 2011, Apple and Samsung were litigating 19 ongoing cases in nine countries; by October, the legal disputes expanded to ten countries. By July 2012, the two companies were still embroiled in more than 50 lawsuits around the globe, with billions of dollars in damages claimed between them. While Apple won a ruling in its favor in the U.S., Samsung won rulings in South Korea, Japan, and the UK. On June 4, 2013, Samsung won a limited ban from the U.S. International Trade Commission on sales of certain Apple products after the commission found Apple had violated a Samsung patent, but this was vetoed by U.S. Trade Representative Michael Froman.

The first huge patent trial between Apple and Samsung started in 2012 and its first verdict was

for Apple to receive $1.05 billion for the damages caused by its infringed patents. Samsung


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argued there were some discrepancies between the numbers the jury awarded Apple and after a

new trial Samsung's fine was reduced to $929.8 million.


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Chapter VI: Data Analysis and Interpretation

The results of the survey conducted (questionnaire attached in annexure) are as follows:

Q1) What is your age?

Findings:

1. According to the survey, the researcher has found out that majority of the people who responded to the survey are between the age group 10-20.

2. Out of 100 people, 30 of the people were between the age 11-20



5. Out of 100 people, 21 of the people were between the age 40 & above.


Page27

Q2) Do you use electronic gadgets?

Findings:

1. According to the survey, the researcher has found out that majority of the people who responded use electronic gadgets

2. Out of 100 people, 95 of the people use electronic gadgets.

3. Out of 100 people, 5 of the people were electronic gadgets.


Page28

Q3) What brand do you prefer for Mobile Phones?

Findings:

1. According to the survey, the researcher has found out that majority of the people who responded to the survey prefer Apple for Mobile Phones

2. Out of 100 people, 47 preferred Apple.

3. Out of 100 people, 35 preferred Samsung.

4. Out of 100 people, 14 preferred Nokia.

5. Out of 100 people, 2 preferred Blackberry.


Page29

Q4) What is your average monthly income?

Findings:

1. According to the survey, the researcher has found the average monthly income of the people who answered the survey.

2. 11 people earned from 0-10000. 3. 9 people earned from 10001-20000. 4. 7 people earned from 20001-30000.

5. 7 people earned from 30001-40000





10. 17 people earned from 80001 & more


Page30

Q5) what brand do you prefer in laptops?

Findings:

1. According to the survey, the researcher has found out that majority of the people who responded to the survey preferred Samsung over Apple for Laptops

2. Out of 100 people, 50 preferred Samsung 3. Out of 100 people, 30 preferred Apple 4. Out of 100 people, 15 preferred Dell


Page31

Q6) what brand do you prefer in desktops?

Findings:

1. According to the survey, the researcher has found out that majority of the people who responded to the survey preferred Apple in Desktops

2. Out of 100 people, 59 preferred Apple.

3. Out of 100 people, 32 preferred Samsung.

4. Out of 100 people, 9 preferred IBM.


Page32

Q7) what brand do you prefer in tablets?

Findings:

1. According to the survey, the researcher has found out that majority of the people prefer Apple in Tablets

2. Out of 100 people, 70 people prefer Apple.

3. Out of 100 people, 12 people prefer Samsung.

4. Out of 100 people, 18 people prefer Dell.


Page33

Q8) what brand has better features?

Findings:

1. According to the survey, the researcher has found out that majority of the people prefer Apple over Samsung in better brand features

2. Out of 100 people, 74 people prefer Apple Features.

3. Out of 100 people, 26 people prefer Samsung Features.


Page34

Q9) what brand has a better price?

Findings:

1. According to the survey, the researcher has found out that majority of the people said that Apple has a better price than Samsung

2. Out of 100 people, 59 people said that Apple has a better price.

3. Out of 100 people, 41 people said that Samsung has a better price.


Page35

Q10) Does the price of the electronic gadgets affect your brand preference?

Findings:

1. According to the survey, the researcher has found out that majority of the people get affected by their brand preference due to the price.

2. Out of 100 people, 70 people think the price of electronic gadgets affects their brand

preference.

3. Out of 100 people, 30 people do not think the price of electronic gadgets affects their

brand preference.


Page36

Q11) Which advertisements do you see more?

Findings:

1. According to the survey, the researcher has found out that majority of the people said Apple has more advertisements than Samsung

2. Out of 100 people, 75 people think Apple.

3. Out of 100 people, 25 people think Samsung.


Page37

Q12) Considering the whole product range, which company do you think will be preferred more in the near future?

Findings:

1. According to the survey, the researcher has found out that majority of the people prefer Apple over Samsung.

2. Out of 100 people, 35 people chose Samsung over Apple.

3. Out of 100 people, 65 people chose Apple over Samsung.


Page38

CHAPTER VII – TESTING HYPOTHESIS WITH THE HELP OF CHI SQUARE

QUESTION 1)

INCOME(IN THOUSANDS)

APPLE SAMSUNG WINDOWS NONE TOTAL

0-10 10 24 13 13 60 10-20 2 6 3 0 11 20-30 0 1 2 0 3 30-40 0 2 1 1 4 40-50 1 0 3 0 4 50-60 2 0 1 0 3 60-70 0 1 0 0 1 70-80 0 1 1 0 2 80+ 4 8 4 2 18 TOTAL 19 43 28 16 106

H0 – There is no impact of income on consumer preference

H1 – There is an impact of income on consumer preference

Observation O row total

column total

Main Total E (O-E)2/E

0-10+Apple 10 60 19 106 10.75471698 0.052962595

0-10+Samsung 24 60 43 106 24.33962264 0.004738921

0-10+Windows 13 60 28 106 15.8490566 0.512151842

0-10+NONE 13 60 16 106 9.056603774 1.71702044

10-20+Apple 2 11 19 106 1.971698113 0.000406247

10-20+ Samsung 6 11 43 106 4.462264151 0.529917428

10-20+ Windows 3 11 28 106 2.905660377 0.003062975

10-20+NONE 0 11 16 106 1.660377358 1.660377358

20-30+ Apple 0 3 19 106 0.537735849 0.537735849


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20-30+ Samsung 1 3 43 106 1.216981132 0.038686558

20-30+ Windows 2 3 28 106 0.79245283 1.840071878

20-30+NONE 0 3 16 106 0.452830189 0.452830189

30-40+ Apple 0 4 19 106 0.716981132 0.716981132

30-40+ Samsung 2 4 43 106 1.622641509 0.087757789

30-40+ Windows 1 4 28 106 1.056603774 0.003032345

30-40+NONE 1 4 16 106 0.603773585 0.260023585

40-50+ Apple 1 4 19 106 0.716981132 0.111717974

40-50+ Samsung 0 4 43 106 1.622641509 1.622641509

40-50+ Windows 3 4 28 106 1.056603774 3.574460916

40-50+NONE 0 4 16 106 0.603773585 0.603773585

50-60+ Apple 2 3 19 106 0.537735849 3.97633234

50-60+ Samsung 0 3 43 106 1.216981132 1.216981132

50-60+ Windows 1 3 28 106 0.79245283 0.054357592

50-60+NONE 0 3 16 106 0.452830189 0.452830189

60-70+ Apple 0 1 19 106 0.179245283 0.179245283

60-70+ Samsung 1 1 43 106 0.405660377 0.870776656

60-70+ Windows 0 1 28 106 0.264150943 0.264150943

60-70+NONE 0 1 16 106 0.150943396 0.150943396

70-80+ Apple 0 2 19 106 0.358490566 0.358490566

70-80+ Samsung 1 2 43 106 0.811320755 0.043878894

70-80+ Windows 1 2 28 106 0.528301887 0.42115903

70-80+NONE 0 2 16 106 0.301886792 0.301886792


Page40

80+ Apple 4 18 19 106 3.226415094 0.185479422

80 +Samsung 8 18 43 106 7.301886792 0.066744674

80 + Windows 4 18 28 106 4.754716981 0.119796346

80+ NONE 2 18 16 106 2.716981132 0.189203354

Total:

23.18260773

(r-1)(c-1)= (9-1)(4-1)= 27 degrees of freedom

X 2 critical= 40.11

X 2 cal < x2 critical, hence we reject H1

Thus there is no impact of income on consumer preference.


Page41

Question 2)

H0 – There is no impact of age on consumer preference

H1 – There is an impact of age on consumer preference

Observation O row total column total

Main Total E (O-E)2/E

0-10 & apple 0 2 18 106 0.339622642 0.339622642

0-10 & samsung 0 2 45 106 0.849056604 0.849056604

0-10 & windows 1 2 27 106 0.509433962 0.472396925

0-10 & none 1 2 16 106 0.301886792 1.614386792

11-20 & apple 12 60 18 106 10.18867925 0.322012579

11-20 & Samsung 23 60 45 106 25.47169811 0.239846261

11-20 & windows 18 60 27 106 15.28301887 0.483018868

11-20 & none 7 60 16 106 9.056603774 0.46702044

21-30 & apple 3 21 18 106 3.566037736 0.08984726

21-30 & Samsung 11 21 45 106 8.91509434 0.487581112

21-30 & windows 3 21 27 106 5.349056604 1.031596286

21-30 & none 4 21 16 106 3.169811321 0.217430368

31-40 & apple 2 5 18 106 0.849056604 1.560167715

31-40 & Samsung 3 5 45 106 2.122641509 0.362641509

31-40 & windows 0 5 27 106 1.273584906 1.273584906

31-40 & none 0 5 16 106 0.754716981 0.754716981

41-50 & apple 0 8 18 106 1.358490566 1.358490566

41-50 & Samsung 3 8 45 106 3.396226415 0.046226415


Page42

41-50 & windows 2 8 27 106 2.037735849 0.000698812

41-50 & none 3 8 16 106 1.20754717 2.66067217

51-60 & apple 0 5 18 106 0.849056604 0.849056604

51-60 & Samsung 3 5 45 106 2.122641509 0.362641509

51-60 & windows 2 5 27 106 1.273584906 0.414325646

51-60 & none 0 5 16 106 0.754716981 0.754716981

61-70 & apple 0 2 18 106 0.339622642 0.339622642

61-70 & Samsung 1 2 45 106 0.849056604 0.026834382

61-70 & windows 1 2 27 106 0.509433962 0.472396925

61-70 & none 0 2 16 106 0.301886792 0.301886792

70up & apple 1 3 18 106 0.509433962 0.472396925

70 up & Samsung 1 3 45 106 1.273584906 0.058770091

70up & windows 0 3 27 106 0.764150943 0.764150943

70up & none 1 3 16 106 0.452830189 0.661163522

Total

20.10897817

(r-1)(c-1)= (8-1)(4-1)= 21 degrees of freedom @ 5% los

X 2 critical= 32.67

X 2 cal < x2 critical we reject H1

Hence, there is no impact of age on consumer preference


Page43

Question 3)

H0 – Future scope Apple is not more than Samsung

H1 – Future scope of Apple is more than Samsung

When people were asked which company they thought would be preferred more in the near

future, 75% of the people have selected Apple out of the two companies. Therefore, the

researchers have tried to analyze the reasons for the same with the help of graphs and the results

of the survey conducted. The following results have been noted down:

Rating of scale 1-5 Number of people

1 3

2 5

3 8

4 33

5 51

• This table shows us how popular Apple is amongst the people surveyed by us

• 3/100 have rated the popularity as 1 which is the lowest

• 5/100 have rated it a 2

• 8/100 have rated the popularity of Apple as 3

• 33/100 people have rated the effectiveness of Apple’s popularity a 4

• 51/100 that is the majority of the people surveyed have rated it a 5 which means Apple is

very popular amongst the people


Page44


1 10

2 59

3 29

4 8

5 12

• This Table shows us how effective the features of Apple is

• 10/100 people have rated the features as 1, which means they do not think the features of

Apple is good enough.

• 59/100 people have rated the features as 2

• 29/100 have given the features of Apple a 3 out of 5

• 8/100 have given the features of Apple a 4 out of 5

• 12/100 people have rated the features as 5


1 3

2 18

3 20


Page45

4 22

5 37

• 3/100 people have rated the pricing of Apple as 1 thus these people do not think the

pricing is effective

• 18/100 people have given a 2, they are also amongst the people who think that Apple’s

pricing is not effective

• 20/106 have rated the pricing as 3, they say that the pricing is neither effective nor is it

ineffective

• 22/100 have rated it a 4, these people think that the pricing is quite effective

• 37/100 are the people who have rated the pricing as 5, they think the pricing is very

effective.

Mobile Phones Number of people

Apple 57

Samsung 33

Nokia 4

Blackberry 3

HTC 3


Page46

• This table shows us what brand the people will choose for mobile phones.

• 57/100 people have chosen Apple

• 33/100 people have chosen Samsung

• 4/100 people have chosen Nokia

• 3/100 people have chosen Blackberry

• 3/100 people have chosen HTC

Brand Number of People

Apple 75

Samsung 25

• This table shows us what has a brighter future Apple or Samsung

• 75/100 people think Apple has a brighter future

• 25/100 people think Samsung has a brighter future

From the above tables we can conclude that maximum number of people would purchase more

of Apple products than of Samsung products.

Thus it can be said that in the near future Apple will have an upper hand in the market due to its

popularity.

Considering all the above mentioned factors, the researchers have accepted the hypothesis H1.

Hence the researchers conclude that future scope of Apple is more than Samsung.


Page47

Chapter VIII – Conclusion

After conducting the research, with the help of secondary and primary data, the researchers have

found with that Apple and its products have an upper hand in the market. As per the secondary

data, the market share of Apple and its products is claimed to be 51%, while that of Samsung and

its products is 45%.

As per the data from the primary research conducted by the researchers, Apple products in the

electronics market has a higher market share, led by Apple Mobile Phones, a brand of Apple.

Similar is the case with laptops and tablets where Macbooks and iPads, both, products of Apple

have a higher market share compared to its rivals in the market. Hence, looking at the overall

data, the researchers conclude that Apple currently has a better market share and a better brand

image than its competitor, Samsung. This upper hand of Apple is mainly because of some of its

strong brands like iPhones and iPads.

While making an attempt to learn more on the future scope of the industry with respect to these

two leading players, the researchers have found that Apple has a better scope for the future than

Samsung. This is because of the strong product range and the brand image and the popularity

that Apple has built.


Page48

Chapter IX – RECOMMENDATION

There is a tremendous potential for further growth in the India market in the electronics industry.

Around 67% of the people have said that they have increased the purchase of electronic gadgets

in India. This shows that people like electronics in India. Looking at this, the researcher would

recommend these two companies to pay more attention in making more and better gadgets.

According to the survey Apple is more user friendly and less complicated in its software than

Samsung, so Samsung should improve their software i.e. BADA and make it better and less

complicated than Apple.

According to the survey people think Apple has a better price between both the two big

companies and also they see more advertisements of Apple than Samsung.

The survey also says that people think Apple has a better future than Samsung because of its

features,


Page49

BIBLIOGRAPHY

• en.wikipedia.org

• www.google.com

• www.apple.com

• www.samsung.com

• www.linkedin.com

• www.betanews.in

• www.debate.org

• www.papercam.com

• www.studymode.com


Page50

ANNEXURE

Apple v/s Samsung

Please take a few minutes to complete this survey. Your specific answers will be completely anonymous, but your views, in combination with those of others, are extremely important. This survey is regarding the brand preference of electronic gadgets consumers and the switching behavior of the customer. The responses given will be used for the academic purpose to complete my research work. Please tick mark where ever applicable. Product Range for Samsung includes:

1. Samsung Tabs 2. Samsung Mobile Phones (Galaxy, Note, S series, Corby) 3. Samsung Laptops 4. Samsung desktops 5. Bada

Product Range for Apple includes:

1. iPhones 2. iPads 3. Macbook (pro and air) 4. iMac 5. iOS


Page51

1) What is your name?

2) What is your age?

0-20

20-30

30-40

40 & above

3) Do you use electronic gadgets?

Yes

No


Page52

4) What is your average monthly income?

0-10000

10001-20000

20001-30000

30001-40000

40001-50000

50001-60000

60001-70000

70000-80000

80001 & more

5) What brand do you use in mobile phones?

Samsung

Apple

Nokia

Blackberry


Page53

6) What brand do you prefer in Laptops?

Samsung

Apple

Dell

7) What brand do you prefer in Desktops?

Samsung

Apple

IBM

8) What brand do you prefer in Tablets?

Samsung

Apple

Dell

9) What brand has better features?

Samsung

Apple


Page54

10) What brand has a better price?

Samsung

Apple

11) Does the price of the electronic gadgets affect your brand preference?

Yes

No

12) What advertisements do you see more?

Samsung

Apple

13) Considering the whole product range, which company do you think will be preferred more in the near future?

Samsung

Apple

Data & Analytics

A comparative study between Apple and Samsung