Smartphones Industry

Introduction

The world is constantly changing on the socio-economic, technological, and cultural fronts. The effects of these rapid changes frequently manifest themselves in the business world in the form of hard competition and dynamic business environments. Markets, products, technology, and competitive conditions are rapidly changing. Therefore, all organizations should constantly develop effective marketing strategies to enable them to adapt to these changes and sustainably deliver goods and services of value to their customers.

Slow economic growth and international crises (as witnessed in the years 2000-2009) are some of the factors that force the organizations to change. Advertising, which is one of the marketing tools, has not been left behind. Advertising is now not just selling products alone but also selling information about products (Kotler, 2006).

Advancements in Information Communications Technology (ICT) have brought forth the emergence of smartphones hence promoting internet advertising. Most companies now advertise online using, for example, Google.com, Yahoo.com, Amazon.com, Alibaba.com, You tube.com, and affiliate marketing, which consists of banner advertisements, pay per click, pay per view, and pay per call advertising. In addition to this, interactive advertising, blog, or article-based advertising are also popular. For companies to keep up with the shifts in communication trends, there is a need to embrace ICT and make use of new media as much as possible. This will allow consumers to take part in market conversations in which products and services are reviewed, ranked, and evaluated based on consumer experience (Kotler, 2006).

In the current world technology, Smartphones have dominated the market and are expected to become one of the information centers and entertainment devices preferred by the majority worldwide. The technology used by the phone has attracted so much attention hence making the idea lucrative to the phone manufacture industry as well as the wireless industry. The rate of investments in shares of wireless technology companies and wireless service providers has proved considerably profitable within the current market.

For example, companies involved in making models such as AlphaProfit and Focus benefit a greater percentage of market share gain in Fidelity Select Wireless, concentrating investments in the wireless industry, which provides ample space for technological growth. The use of wireless technology has also created many business opportunities both in developed and emerging markets. The quality of the wireless industry continues to receive a high growth rate owing to improvement in current smartphone capabilities, making it possible for the usage of third generation wireless networks (Kotler, 2006).

Smartphone Features

Smartphones have got improved qualities compared to ordinary mobile phones. Their functions are in-built and capable of operating digitally. Smartphones are packaged with lots of features, making them capable of performing diversified functions such as entertainment and also acting as an information center at the same instant. Smartphones incorporate several feature operations such as web browsing, e-mail, and multimedia capabilities.

Currently, there are smartphone models with horsepower capable of running integrated software applications such as enterprise customer relationship software; it is also used in the automobile industry for the purposes of running navigation programs. They are identified with a fully equipped QWERTY kind of keyboard, provision of instant messaging, inclusive music players, and other important features that are normally identified in those sold in higher-end markets (Kotler, 2006).

The smartphone industry is experiencing rapid growth, especially the handset segment of the market. In the year 2004, smartphone sales rose to over seventeen million units representing 3% of the global sales, which was then over 650 million handsets. This is according to research conducted by Strategy Analytics. Predictions reveal an increase in demand for smart phones within the subsequent years. The level of demand was approximately 125 million units of the total handset sales globally. The growth represented 48% in the annual global smartphone market demand (Subramanian, 2005).Global Demand

Regional Demands

Research shows that Asia and Europe continents are the fastest in the adoption of smartphones technology. This is attributed to the fact that these regions have embraced the distribution of advanced wireless networks encouraging wide use of smartphones. Other regions, such as the Asia Pacific region, account for approximately37% of global smartphone market demand (Subramanian, 2005). Countries within these regions, such as South Korea and Japan, record a higher rate of smartphone usage. Whereas the European market accounts for about 27% of the total global demand for a smartphone, with demand in North America standing at 25%. However, the market projection predicts more demand from Europe than in Asia in the near future (Subramanian, 2005).

Smartphone Manufacturers

There several companies within the regions involved in the manufacture of a smartphone. One of the company’s, Nokia (NYSE: NOK), is considered globally as the dominant smartphone manufacturer. Others, like the Finnish company, currently command more than half of the global market share. Nokia unleashed new smartphones with unique features, i.e., Nokia 7710, which has a wider screen, full internet browser, upgraded music player, integrated in-built camera, and FM receiver radio (Subramanian, 2005). The Nokia 7710 smartphone has got the ability to post pictures and text directly to the websites using a feature known as Moblog.

There is also a Nokia 3230 smartphone, which is more up-graded since it also has a video recorder as well as a movie director. Such as technological advancement has made Nokia differentiate itself from the competitors within the mobile phone industry. This led to the signing of deals with media companies such as micro media and Real Networks, the technology is moving towards manufacturing handsets with wireless television feeds (Subramanian, 2005).

Business Opportunities

Several business opportunities could be realized with the emergence of smart phones. This is since the adoption rate within different regions is skyrocketing hence improving the smart phone industry. There are several other manufacturers coming up with new features in the smart phone, such companies include palmOne and Research in motion which recently introduced the GSM model of smart phone referred to as Treo 650 and BlackBerry 7100 series. The unique additional features displayed by the phone making it double as portable information centre as well as entertainment device of choice has made the market crazy.

The phone has also provided business opportunities to wireless service provider like Telecomm, Vodafone hence able to double their revenue in the recent past. It also provides fertile market to Telecommunication equipment makers. This asserts that the emergence of smart phones will encourage the implementation of 3G wireless networks for the benefit of wireless network equipment suppliers such as Ericsson and smart phone semiconductor chip manufacturers (Subramanian, 2005).

Internet advertising utilizes the power of electronic commerce to sell the market products. Electronic commerce refers to any market on the internet. Electronic commerce supports selling, buying, trading of products or services over the internet. Internet advertising forms a subset of electronic commerce. With growth in the internet, it is not just selling products alone, but in addition to this, information about products, advertising space, software programs, auctions, stock trading and matchmaking. There are newer marketing techniques being invented all the time. It is important to know how the trend would be.

Companies are inventing new techniques to find better ways to make revenue and establish their brand on the internet. Consumers are becoming more and smarter. They do not want to be a party to the internet advertising campaigns made by companies unless they get some incentive in doing so. They would be quite keen in participating in campaigns provided they are compensated in someway by the companies.

There are usually 2 or 3 parties involved in internet advertising. It is companies and end users or companies, internet marketing companies and end users. If it is a two party model then companies themselves directly get revenue from the end users. If it is a three party model then internet marketing service providers acts as intermediate revenue providers for companies (Subramanian, 2005).

One would wonder what would drive firms to pursue internet marketing effectively through phones and what size of firms would be interested in internet marketing. A lot of existing work in this area has been done that provides a valuable information in their publication regarding the factors that would drive companies to adopt to internet marketing. Their study states that different factors drive companies of different sizes to pursue internet marketing.

The drivers are willingn to cannibalize, entrepreneurial drivers, management support, and market pressure (Kotler, 2006). In their work, compares and contrasts between company’s motivation to choose between internet channels and traditional channels. They suggest web would be a serious alternative to traditional advertising and proper pricing by internet companies is what attracts the consumer. According to Christopher (2000), the type of supply chain that companies should choose depends on three factors, namely product variety, product variability and demanded volume.

The author sustains that supply chains are to be agile in unpredictable environments, characterized by a volatile demand and high variability of product demand (as is the case of personal computers). Others measure agile capabilities in the supply chain, and more recently, Kotler (2006), presented a model for assessing supply chain flexibility. There are some aspects where a lean approach is very important, in particular where demand is predictable and the requirement for variety is low and volume is high conditions in which Toyota develops the lean philosophy.

The supply chain within the smart phone industry experiences some common problems referred to as bullwhip effect. Even small fluctuations in demand or inventory levels of the final company in the chain are propagated and enlarged throughout the chain. Because each company in the chain has incomplete information about the needs of others, it has to respond with a disproportional increase in inventory levels and consequently an even larger fluctuation in its demand relative to others down the chain (Forrester, 1961). Several authors including Forrester (1961), have shown that the production peak can be significantly reduced by transmitting the information directly from the customer to the manufacturer.

Another problem is that the companies often tend to optimize their own performance, in so doing disregarding the benefits of the SC as a whole (local instead of global optimization). The maximum efficiency of each chain does not, however, necessarily lead to global optimization (Forrester, 1961; Kotler, 2006). In addition, human factors should also be taken into consideration: decision-makers at various points along the SC do not usually make perfect decisions (due to the lack of information or their personal hindrances); their decisions are also influenced by employee reward systems (Forrester, 1961; Kotler, 2006). Regardless of the number of difficulties and problems in SCM, the core concept of successful SCM is efficient information transfer/information sharing.

Emergence of the smart phone industry has led to several adjustments within the market including advertising models which are now changing from what was known as ‘interruptive marketing’, done through radio and TV. These ads were a source of interruption to programs, and also print ads interrupted reading processes amongst others.

However, engagement marketing promoted interactivity and dialogue between brands and audience, and was much more geared towards customer satisfaction, and used media which correlates with specific demographics’ behavioral patterns. Smart phones through their internet provision have allowed this by providing an interactive area which allows the chats, emails and even computer games. Marketers now have to track communication trends and establish positive relationships between customers and their brands (Kotler, 2006).

According to Michelle 2009, on the Case of Developing Countries involves assessment on the impact of ICTs (which includes the Internet, mobile phone, pager, personal computer, and telephone) on Gross National Income (GNI) per capita in developing countries in 2005. This study suggested that an increase in the adoption of smart phone, personal computer, and fixed-line telephone by one percent brings about an increase in average income per person in lower-middle-income and low-income developing countries by approximately 2.8%, 4.1%, and 6.3% respectively.

The absence of easily accessible Internet advertising may have brought about the absence of a critical mass in Internet adoption and usage. To maximize sales, smart phone companies pay premium for wide exposure through the mass media. The smart phones provide advertising space which is common, but not restricted to the realms of billboards, public transportation, movies, schools, clothing, even bathroom stalls carry ads and the industry is constantly finding new ways to advertise. The advertising process is influenced by the commoditization of products and blurring of consumer’s own perceptions of the companies’ offering.

In order to differentiate and position their products and/or services, today’s businesses employ advertising which is sometimes considered not only of bad taste, but also as deliberately intrusive and manipulative. Marketers within the industry are therefore advised to understand their “responsibility for the emerging portrait of future society” (Christopher, 2000). One of the main challenges facing the manufacture of smart phone is the general avoidance of creating “a happy customer in the short term”, because “in the long run both consumer and society may suffer as a direct result of the marketer’s actions in ‘satisfying’ the consumer” (Kotler, 2006).

Case: BlackBerry

Introduction

BlackBerry-RIM and other Phone Companies have made it possible for the consumer to access to internet. The internet can now be accessed almost anywhere through cheaper means, especially through BlackBerry’s mobile Internet devices. Mobile phones, data cards, handheld game consoles and cellular routers allow users to connect to the Internet from anywhere there is a wireless network supporting that device’s technology. Within the limitations imposed by small screens and other limited facilities of such pocket-sized devices, services of the Internet, including email and the web, may be available.

Service providers may restrict the services offered and wireless data transmission charges may be significantly higher than other access methods. In terms of advertising, the internet is the first mass medium that allows for two-way mass communication (Kotler, 2006). Whereas traditional advertising (For example radio, TV, newspapers, billboards) has often been based on mass marketing and push strategies in which fixed one-way messages have been targeted at potential consumers, internet advertising becomes increasingly based on non-push or pull-strategies (Kotler, 2006) and allows consumers to take part in market conversations.

Internet Application

The BlackBerry phones have many advantages and possess many comfortable services and functions that are so easy to use. One of the main function of such phones is attracting customers from all over the world by using the sources of the world international communication such as Internet. Advanced technology phones has made the practice of marketing products or service by means of promoting them on the Internet possible and accessible. With advancements in ICT, the global advertising industry has been tending towards creativity. With the outsourcing of the media buying function to the media agencies throughout the 1980’s and 1990’s, the advertising industry has been nurturing creativity as its core product (Pratt 2006).

The focus on creativity may also be seen as a response to advertisers’ wish to realign consumer skepticism towards traditional advertising through a stronger focus on creative, innovative and entertaining advertising campaigns (Leslie 1997). One may thus say that the core product of the advertising industry is creativity. The first ICT wave revolved around the convergent nature of new media (such as Internet and mobile telephony) through its ability to combine still and moving images, text, voice and music (Pratt 2006). However, this convergence was a part of a traditional one-way mass communication media paradigm. With the rise of web 2.0 and social media, internet advertising and market communication become more oriented towards a dialogue with the consumer.

Though most companies still advertise through traditional media-TV, radio, newspapers and outdoor media, internet advertising is now gaining popularity. The United Kingdom advertising association 2004, reports that in 2003 internet advertising expenditure has grown by 61.6% as compared to that of newspapers and radio which rose by 48.7% and 6.8% respectively (Egan, 2007). Common forms of internet advertising include: websites, banner adverts, pop-ups, spam e mails, e mail promotions, sponsored links (like goggle ads), and videos distributed on line such as you tube, MySpace, or through email. Internet advertising is also done through online social networks such as Skype, yahoo chats, face book, twitter and blogs. The convergence of the internet and mobile phones has also led to advertising through SMS, MMS, and mobile

Telecommunication network is a worldwide network of computer links, which connects hundreds of thousands of individual networks all over the world. This giant network of networks has become the primary infrastructure for both electronic commerce and electronic business (Egan, 2007). The internet can be accessed through an Internet Service Provider (ISP) commercial organization with a permanent connection to the internet that sells temporary connections to subscribers.

ICT is understood as a set of different tools that are commonly used by people with the purposes of searching for different information, analyzing this or tat matter, communication with each other, sharing point of views and thoughts with each other, mainly with the help of the social services that have been worked out especially with the purpose of contacting people from the different parts of the world. They are mediums that utilize “both telecommunication and computer technologies to transmit information, as hand- held devices like mobile phones” (Egan, 2007).

Internet can be regarded as a key technology, and as a general-purpose technology (GPT), that can be applied across the entire economy. Being a pervasive technology, the Internet represents not only a new industry itself, but new potential preconditions for social interaction, economic transactions and new approaches to production, marketing and Internet is often used by consumers to conduct pre-purchase information search (Kotler, 2006).

This search phase can both include becoming familiar with possible products on display, prices, and recommendations based on past purchases, but nonetheless also looking for good offers, being hit by or engaging with online advertising or by looking for other people’s experience with given products or services. Word of mouth (WOM) is traditionally seen as a powerful way to persuade consumers. On the Internet, the word of mouth (WOM) in the form of face-to-face conversation among consumers about their experiences with products and services become replaced by e-WOM, which is less personal but more ubiquitous.

Despite e-WOM being, impersonal research shows that online reviews have an effect on the decision making of the consumer. It is found that negative reviews have an effect on consumer decisions regarding utilitarian products, whereas positive reviews have an effect on consumer decisions regarding hedonic products.

SWOT Analysis

Strengths

The BlackBerry-maker RIM has incorporated several features on their phone that add the strength to the product. These include its unique look and feel accompanied by a mobile operating system. The phone has got sensors which work with the physical QWERTY keyboard which is currently one of the unique technologies within the industry. These new features are presented to a large and loyal user base that the company has accrued over the years.

Its marketing has been given a support from all over the internet, saving the company millions of shillings as advertising fees. Finally, the fact that the BlackBerry Company is amongst the first to deliver in this arena of smart phones is one of its greatest strengths. BlackBerry Enterprise Server (BES) makes it easier to push new emails out to other phones (Subramanian, 2005).

Weaknesses

BlackBerry likes any other product but within the market has a set of weaknesses. The BlackBerry is not a 3G device and will not work some of the technologically advanced regions such as Japan and Korea. All BlackBerry phones are 3G compliant. Some of its features do not impress at all such as the sub-par camera which is known to have the capacity of approximately 2 megapixels and having an in-built memory.

The prices seem moderately high and research reveals that 52% of consumers are happy with their current mobile device since BlackBerry is designed only for the high-end consumers. The BlackBerry-RIM choice of distribution channel has appeared quite challenging since it can only serve limited number of consumers. The phone’s ability to be used in corporate duties is not also satisfactory especially in the area of sending mails (Subramanian, 2005).

Opportunities

There is a demand within the market for better mobile computing experience which could be used to quicken the internet processes. The BlackBerry accomplishes this by incorporating both powerful computing as well as entertainment technology within one system. There is also the possibility of adopting desktop capabilities into the BlackBerry smart phone. The company has made a crucial step of providing an Internet Protocol-based network through their smart phones. The emergence of Wi-Fi networks has brought to the market the issue of having the visitor fees instead of provider lock in users. There is a possibility of eliminating monthly subscription fee through pay-per view system (Subramanian, 2005).

Threats

The majority of threats within the phone industry come from established companies such as Nokia, Sony, and Google with their respective products. Smart phones are one popular example that stands to compete against the BlackBerry. The fact that other companies manufacture phones run on the 3G network puts BlackBerry behind in terms of speed race. The economic down-turn presents a potential threat on the marketability of BlackBerry since consumers are currently very cautious about their spending their money (Subramanian, 2005).

Design of BlackBerry

The BlackBerry’s functionality is accessed through its QWERTY keyboard. It makes it possible to use finger commands hence enabling free navigation through the phones features. The phone has got larger capacity resolution per inch making the quality of its videos and photos very appealing. Its screen visibility is enhanced through an ambient light sensor which automatically adjusts the BlackBerry’s display brightness as well as saving power. The phone has got an audio standard headphone jack and a Bluetooth stereo transmission (Subramanian, 2005).

Features

Contacts within the BlackBerry phone are automatically updated with other associated networked devices as well as voicemail being accessible through email type list selection. BlackBerry’s in-built advanced features comprises of conference calling, a speakerphone, text and multimedia messaging and its proximity sensor is capable of detecting when being used and afterwards the device immediately turns off any display for the purposes of conserving power (Subramanian, 2005).

Wireless Internet Communication Device

The BlackBerry uses internet through Wi-Fi enabled Internet device that utilizes various available browsers to access tools such as Internet email, web sites, online maps, and search engines. The phone’s web capabilities offer a rich HTML email client with imbedded images which could be used automatically with a Mac or a PC. BlackBerry provides Google Maps directions, free push Yahoo email message forwarding and other internet widget applications connectivity such as Java which provides updated information on stock quotes, sports scores, weather reports, traffic conditions and other services. Other programs supported also include Bluetooth, and GSM (Subramanian, 2005).

PDA, Computer and Camera

The BlackBerry phone has got the ability to provide PDA features such as appointment calendars, contact lists, photos, emails and documents from the keyboard options. Soon the market is expected to receive new inventions from the developers having specific applications. The BlackBerry runs multitude innovative features capable of providing powerful applications in the future, especially as the world turns increasingly towards smaller mobile devices for a computing platform.

The BlackBerry’s in-built camera takes pictures at 2 MB resolution that can be stored in more than 2 GB flash memory cards or shared through other consumers phones. The phone has got an internal accelerometer with the capability of detecting the movement of the phone hence automatically changes the contents display appropriately. The video storage capabilities are excellent owing to availability of cheaper flash storage devices (Subramanian, 2005).

Problem

Modern telecommunications rely on modern technology and one of the most important elements of that technology is the computer applied technology. The computer has made it possible to send electronic messages anytime anywhere. This new technology has also changed the methods by which information is manipulated and stored; the way people do business, work, play, live and think. An example where ICT has powered advertisements through the use of phones is digital signage networks where adverts are served across different regions and managed via networks.

Improvising the use of ICT through phones has created totally new and innovative ways of reaching new and massive numbers of potential clients than ever envisioned by any other media form. Online search companies like Google with their ad programs-Ad words (Paid advertising solution for companies selling online), Ad sense (for web publishers to display ad content on their websites for a commission), social network advertising like Face book where ads can be targeted according to geography, interests and education levels of intended clients. The telecommunication industry is growing fast with players in the industry competing for market leadership with the highest numbers of account holders which has spurred the rise in advertisements by industry players.

Studies have been carried out in the past on the state of advertising in African countries. Research was carried out on “The state of advertising practices by private hospitals in Nairobi”. He found that Trade journals and newspapers occupied the most common advertising media at 41% and the least popular medium is internet with 12.8% of hospitals using it. The last five years have been characterized by the rapid advancements in ICT and these calls for research to assess the extent to which internet advertising is now used through the phones (Kotler, 2006).

Research done on ICT policy and ways of improving the existing policies in third world countries discovered that the national ICT policy recognizes the current ICT infrastructure as poor and in need of improvement. The last five years have been characterized by rapid advancements in ICT and this call for research to assess the extent to which internet advertising is now used. The study also assessed the relationship between flexible work practices and organizational performances in a survey of advertising agencies in developing countries. The findings call for reinforcement on the relationship between various dimensions of flexible work practices and organizational performance (Kotler, 2006).

Conclusion

The recommendations which can be utilized here indicate a knowledge gap on the extent to which the internet is used in advertising. This lays a basis for such a study since none of the major studies carried out reveals much on the use of internet advertising through smart phones in third world countries. This study therefore seeks to fill the knowledge gap and look at the in-depth analysis of the role the phone industry plays through the internet in advertising and how effective it is especially in the rapidly growing telecommunications industry that is experiencing tension in pricing mechanisms and the recent number portability wars among the players.

References

Christopher, M. (2000). The agile Supply Chain – Competing in Volatile Markets. Industrial Marketing Management, 1 (29), 37-44.

Converse T., Park J. & Morgan, C. (2006). PHP5 and MySQL Bible. New Delhi: Wiley.

Egan, J. (2007). Marketing Communications. Thomson Learning: London.

Forrester, J (1961). Industrial Dynamics. Cambridge: MIT Press.

Kotler, P. (2006). Marketing Management-Analysis, Planning, Implementation & Control. London: Prentice Hall.

Michelle, W. L. F. (2009). Issues in Informing Science and Information Technology. Victoria University: Melbourne.

Subramanian, S. (2005). Alpha Profit Investment, LLC. Web.