TABLE OF CONTENTS
1 Executive Summary
2 Situation Analysis
2.1 Business and Product Description
2.2 Environmental Factors (PEST Analysis)
3 Competitive Analysis
3.1 Analysis of Competitors
3.2 Porter Five Forces Analysis
3.3 SWOT Analysis
4 Market Analysis
4.1 Market Size and Potential
4.2 Market Segments
4.3 Target Market
5 Targeting & Positioning
6 Marketing Objectives
7 Marketing Strategy and Action plan
7.1 Product Strategy
7.2 Pricing Strategy
7.3 Distribution Strategy
7.4 Promotional Strategy
7.4 Sales Strategy and Program
7.5 Customer Service
8 Budget and Implementation
8.1 Marketing Plan Budget
8.2 Marketing Plan Implementation and Control
Table of Exhibits
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1 Executive Summary
HTC quickly emerged on the smartphone scene with the remarkable success of The Sense, one of its first models, and broke many industry sales records. People were asking, “Who is HTC?” Our research indicates that HTC's rapid rise to success was because of innovation and technological capabilities. Even though the HTC brand was not widely recognized, its smartphones were generating interest. In our primary research, we discovered that some people owned an HTC phone but did not know that HTC was the manufacturer. Obviously, brand awareness was relatively low. For HTC to stay relevant in the hypercompetitive smartphone industry, it needs serious revamping of its marketing plan.
With smartphone market penetration increasing to more than 20 percent in the past five years and reaching 46.8 percent in Q3 2011, HTC has tremendous opportunities to establish a solid market position. After examining the market conditions and current HTC performance in the U.S., our team proposes that HTC position itself as a technological leader by targeting consumers ages 18 to 34. This promising segment has potential sales of $2,522.3 million.
We analyzed the industry and examined external factors that could impact HTC's bottom line. This analysis gave us crucial insight into the smartphone market. We also analyzed the competitive environment that includes Apple, Motorola, and RIM (Blackberry). HTC, which has a positive reputation on the merits of its technology, needs to boldly differentiate itself in the marketplace. Through market analysis, we discovered that HTC has a strong market size, market potential, and distinct target markets.
We recommend that HTC take specific steps through segmenting, targeting, and positioning to execute its marketing plan. We are confident that our plan can increase HTC's market share by 2 percent each year. By the end of 2012, our marketing abjective is to reach a 24 percent market share of the smartphone industry, which equals 18.7 million HTC customers. The plan includes recommendations and precautions at distribution channels so that HTC differentiates itself from the other brands. We developed a budget for the marketing plan and devised procedures to monitor each effort in order to reach our projected market share increase. We are confident that our marketing plan can take HTC from an emerging brand to a dominant market leader.
2 Situation Analysis
2.1 Business and Product Description
Overview of Company and Product
The company HTC Corporation was founded in 1997 in Taoyuan, Taiwan. Its core business is the development, production, and manufacturing of electronic devices that combine the attitudes of a mobile telephone device and a handheld computer. Chairwoman and co-founder of HTC since 1997 is Cher Wang. The development of the company has mainly been driven by Wang as well as by the other two co-founders HT Cho, Board Director, and Peter Chou, Chief Executive Officer. In the beginning, HTC was authorized to develop products using the new Microsoft operating system for consumer electronic products, Windows CE. HTC then developed the world’s first handheld personal data assistant (PDA) using Windows CE. The strategic partnership with Microsoft continues to grow and flourish and is as solid as it was in the beginning. Driven by Peter Chou, the company anticipated the growth potential in the sector of mobile telecommunication products and built partnership with Europe’s largest telecommunications companies: 0,(UK), Orange (France), and Т-Mobile (Germany).
HTC brought the mobile device industry to a new level by combining entertainment, video, and personal assistant functions and embedding it into a device with high resolution, brilliant colors, and multiple connectivity features to integrate into users' daily routines. HTC entered the global telecommunications market with a global sales and service network.
By 2007, the HTC brand was launched globally, which was another important step to maintain and stabilize the company’s business worldwide. HTC raised its recognition by releasing the new user interface HTC Sense in 2009, which distinguishes itself through a much more intuitive user experience, and by introducing its new advertising campaigns “Quietly Brilliant” and "YOU.”
Today HTC is an important player in global telecommunications, having major impact on the entire industry. Earning the “Device Manufacturer of the Year” award in 2010 by T3 Magazine and “Tech Brand of the Year” award in 2011 by the Mobile World Congress illustrates the company’s voice and growing recognition in its sector.
Currently, HTC’s main accomplishments include the process of product designing, developing instinctive usable user interfaces and software applications, and developing its own operating systems. The pursuit of innovation is reflected in the regularly updated product lineup. In 2011 alone, HTC released 16 new smartphones, 15 of which are using the Android operating system. Appendix 1 illustrates a fragment of HTC’s smartphone portfolio.
The segment of wireless telecommunication is still experiencing remarkable growth even though the market has existed for more than 30 years. An abundance of new products and services that aim to enhance the mobile telephone and Internet market are being introduced by companies worldwide.
Because smartphones are digital music and video players, web browsers, e-mail portals, highspeed Internet devices, gaming devices, and CPS navigation tools, the manufacturing process requires the coordinated efforts of various industries and numerous global concerns. HTC links those different industries of suppliers of hardware and software solutions. Gartner expects U.S. sales of smartphones to grow from 67 million in 2010 to 95 million in 2011, which makes it the highest-selling consumer electronic device category (Gartner, 2011). As comScore states, the U.S. audience for smartphones reached over 82 million people in July 2011 (Comscore (a), 2011). EMarketer forecasts smartphone ownership to reach 43 percent of the U.S. mobile population by 2015 (eMarketer, 2011). Sales of smartphones will increase by 63 percent in the next four years, reaching $102 million in volume sales in 2015. Wireless mobile access will continue to become more important as it impacts all aspects of consumer behavior. As high-speed connectivity becomes a requirement of both business and personal use, mobile phones will become a vehicle for not only personal communication but also mobile navigation, entertainment, social networking, and m-commerce, replacing comparable portable electronics in the process (Euromonitor, 2011, p.4).
Exhibit 1 illustrates the product lifecycle for the mobile device industry. We separated and narrowed down the lifecycle into three different segments: mobile phones, smartphones, and the company HTC. In reviewing the statistics and other empirical data, we see the mobile phone industry in the stage of “Saturation.” The market is exhausted for the most part with almost no sales increases expected. As for the smartphone market, the sales numbers are expected to increase in the future with growth numbers of over 60 percent in the next four years. The smartphone market, therefore, is considered to be in a phase between “Growth” and “Competition,” since many different companies are competing for market share. HTC is currently situated in the stage of “Growth” with the possibility of gaining additional market share in the future because it has not been in the U.S. smartphone market as long as most of its competitors.
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Exhibit 1: Product Lifecycle Curve
2.2 Environmental Factors (PEST Analysis)
Political, Legal, and Regulatory Forces
The political, legal, and regulatory forces surrounding the sale and use of smartphones could severely impact our ability to conduct business. Looking at the global market, we need to consider censorship in major emerging markets such as China and India. Because some governments put restrictions on Internet use, we have potential major problems selling HTC phones abroad. While for the purposes of our marketing plan, the political, legal, and regulatory forces do not have significant impact on our company as America supports a free market, the reliance of the development of the overall telecom industry could have an impact. Through lobbyism, smartphone manufactures have to make sure that telecom infrastructure is being further developed.
With the rise of the smartphone age, privacy concerns are also increasing among the public. Applications such as location monitor, e-mail, and data transfer can lead to both personal and business information leaking. New laws about protecting people’s privacy rights when using smartphones should also develop along with the technology development.
Economic Forces and Their Impact
The overall economic condition plays a major role in the profitability of the smartphone industry. Due to the elastic demand for smartphones, the current recession and high unemployment rates could affect sales numbers for all smartphone manufactures since personal income is declining and, in turn, consumers stop spending. People prefer to keep using their existing phones or consider buying feature phones, which are not as expensive as an average smartphone.
Social and Cultural Issues
Social issues for HTC could emerge because HTC is manufactured in Taiwan, and other countries may be skeptical about adopting these phones. However, society seems quite receptive to advances in technology. The rise of the “information society” has made the wireless telecommunication industry and especially the use of the smartphone more important or to a certain degree even necessary to society.
As for HTC, it has been involved with promoting character-building education for children and young people, working with cities and communities to show concern for disadvantaged groups by providing extra educational opportunities for their children, and providing equal employment opportunities for all applicants and employees (HTC, p.71).
Technological Issues and Forces
Since innovation is the major key for differentiation in the smartphone industry, it is always defined by radical technological modifications. The product lifecycle will be shorter,1 which causes faster new product launches. In addition, the battle for outstanding numbers for standard performance issues with new cell phone technologies like poor battery life and freezing/ crashing is highly competitive in the smartphone industry. One reason for this competitive situation is several lawsuits among smartphone manufactures2 about infringing patents related to the technological issues like user interface, underlying architecture, and hardware (McEntegart, 2011).
Internet speed is an important factor in influencing the smartphone market just like in the computer market. With the advent of 4G, everything is faster. For smartphones, the technology environment is more favorable; however, this leads to more intense competition. Smartphone manufacturers are constantly developing their products to fulfill the consumers’ speed preferences and demands.
3 Competitive Analysis
Analyzing competitors and the competitive climate helps to increase the understanding of market dynamics and anticipate what rivals will do. For this marketing plan, we start by identifying current competitors and possible sources of competition. During the competitive analysis, a better understanding about the unique competitive advantages of each rival will be gained.
The use of Michael Porter’s model of the competitive forces shows how forces such as the number of potential entrants, the power of suppliers, and the potential threat of substitute products affect industry profitability and the overall attractiveness of a market. (Burk Wood, p. 39)
3.1 Analysis of Competitors
The U.S. mobile phone market, and especially within the area of smartphones, is extremely competitive with four major brands competing for customers (Euromonitor, 2011).
In recent years, there have been a number of high-profile new product launches in the smartphone category. In 2010, Apple Inc. captured the largest share (27 percent) of the U.S. smartphone market due to its popular iPhone, narrowly overtaking Research in Motion Ltd. (RIM) and Samsung Electronics Co. (Samsung) (Euromonitor, 2011).
The perceptual map in Appendix 2 illustrates the industry competitiveness and visually displays the perceptions of customers or potential customers toward all major competitors in the U.S. smartphone market.
Because the smartphone category is so intensive and competitive, four main competitors were selected to be analyzed and examined, focusing on the benefits, both rational and emotional, the points-of-parity and points-of-difference, and on the brand values in the competition against HTC. The four main competitors in the smartphone market in the U.S. are Apple Inc, Motorola, Research in Motion, and Samsung.
In the following section, we will develop a brief positioning frame for the above-mentioned competitors.
Apple entered the mobile phone market in 2007 with the iPhone launch. The phone was originally designed as an extension of the company’s highly successful iPod media player. The Apple iPhone combines a mobile phone, a widescreen iPod with touch controls, and an Internet communications device in a single handheld product, which was a technical breakthrough at that time (Business & Company Resource Center, 2011). As a contrast to the business-oriented BlackBerry, the iPhone was introduced as a more media-centric smartphone. The fashionable design and aggressive marketing elevated the brand to an almost iconic status. The popularity of the brand is largely due to the fact that Apple has complete control over which file formats, programming languages, and third-party applications can run on the device, allowing Apple to have complete control over the user experience. Apple’s customer and product base is more widely spread than any other competitor, which makes the brand more significant and adds more brand awareness to the company and its products. The fact that the popularity of one product category can feed off to another gives the company increased brand loyalty. Within smartphones, their brand loyalty affects the perception of the company’s products and neglects the change in customer preferences toward their products, which can occur suddenly due to the short product lifecycles of smartphones.
Another company that could be a threat and competitor in the U.S. smartphone market in the future is the U.S.-based manufacturer Motorola Mobility, a spin-off of Motorola’s former smartphone section. Motorola Mobility generates about two-thirds of their total revenues in the U.S. market. Their main business segments are mobile devices, wireless accessories, set-top boxes, and video distribution system products (Hoover's Company Records, 2011). Most recently, Google announced an agreement about the acquiring of the company as well as a portfolio of patents from Motorola for $12.5 billion (Taylor and Walters, 2011).
The new Motorola Droid RAZR, which was launched in November 2011, is using Google’s Android-based operating system. The expectation is that the Motorola Mobility brand will fight back from its struggles during 2002-2009 because it is still one of the most recognizable mobile brands in the U.S.
Research in Motion (Blackberry)
RIM was founded in 1984, and it is a leading designer, manufacturer, and marketer of innovative wireless solutions for mobile communication. The company’s flagship is its successful wireless solution platform and handheld communication device BlackBerry. Throughout the 1990s and into the new millennium, BlackBerry was positioned as the most successful and best wireless email solution for businesses on the market. After a decade of tremendous success, BlackBerry needed to reposition its brand. The brand was about to become irrelevant since it only stood for technology and wireless e-mail functionality. Therefore, two major strategic shifts were made: (1) Broadening the brand’s range of authority beyond e-mail functionality to a promise of real-time, instant access, and connectivity; and (2) Defining a true brand personality to better enable an emotional connection between brand and user. (Landor, 2011) As a result of this repositioning, BlackBerry became one of the most popular and valuable smartphone brands and led the smartphone market until the end of 2010. Today its devoted costumer audience continues to prefer its functional and reliable qualities. In comparison to their key competitors, the BlackBerry brand remains the most powerful brand for the business segment. Although Black- Berry is a powerful brand with a high customer loyalty, it still has to focus on innovation to draw in a larger consumer audience, which will be their key for success in the upcoming years (Euromonitor, 2011).
Samsung is a South Korean multinational corporation with a wide range of electronic products. Within mobile phones, it has focused its development on smartphones, and it has been very successful with its line of smartphones based on the Android operating system.3 The company tops the overall smartphone market, but is still behind in the U.S. market, which is the biggest market worldwide. (Zeman, 2011) In the U.S. market, Samsung generally offers more low-priced models, bringing its average sales price below Android competitor HTC. (Culpan and Miller, 2011) Product differentiation is a big challenge for Samsung in the smartphone market because the brand, together with companies like HTC, LG Corp, and Motorola, has a wide variety of similarly functioned Android-based smartphones. In its attempt to differentiate, Samsung has largely failed to diversify on its software as the Bada OS remains a niche product in 2011 (Euromonitor, 2011).
Operating System Analysis
Many customers choose their smartphones depending on the operating system. Therefore, the battles for supremacy in operating systems will continue in the future, where Android-based operating systems seem to have the upper hand (Canalys, 2011). Apple will continue to defend its share of the smartphone market because of its large and loyal customer base. Further, it seems that smartphones with Google’s open-source Android will be a significant threat to the established BlackBerry OS and the promising Microsoft Windows Mobile OS. Nokia is another potential competitor with the introduction of its new and more competitive Windows 7 smartphone. However, the chance that Windows OS will make much progress against the surging Android platform is relatively small because of the negligible presence of Nokia in the U.S. market for smartphones.
To sum up the competitive analysis, we have enclosed a table in Appendix 3, where the competitive landscape and a detailed description of each company are summarized.
3.2 Porter Five Forces Analysis
To analyze the industry and business strategy of HTC and to determine the competitive intensity, the Porter Five Forces model gives an insight into the attractiveness of a market. Appendix 10 summarizes the conclusion of the analysis and provides a visual illustration.
Competitive Rivalry within an Industry: High
The rivalry in the smartphone industry among existing players is very high. With five companies having a market share over 5 percent, the pressure among competitors is very strong. Since only a few firms are concentrated in the market, intense price wars are driven by the major carriers of AT&T, Verizon, and Т-Mobile. The differentiation in product features such as camera functions, Internet accessibility, application availability, and messaging functions is relatively low. Therefore, brand name is a significant factor for success in the intense competition.
Bargain Power of Suppliers: Medium/Low
For HTC, the power of suppliers in hardware is considered moderately low mainly because HTC mostly produces its own hardware. The hardware that is not produced by HTC is delivered by a limited number of suppliers. In addition, HTC could find new third-party suppliers in the medium run, so the dependency of existing hardware suppliers is not considered to be high. Furthermore, HTC tries to “build and diversify” relationships with global suppliers in order to develop a secured supply stability (HTC, 2010, p. 82).
HTC did not develop its own operating system and has a dependency on other companies. Since HTC is using the operating systems of Google and Microsoft, these companies have bargaining power over HTC. Plans to develop its own operating system (PCWorld, 2011) would decrease or even eliminate the dependency on Google and Microsoft and, with that, the overall bargaining power of suppliers.
Overall, HTC has one supplier contributing to more than 10 percent of gross purchases (18 percent). The other 82 percent is allocated to suppliers with less than 10 percent of HTC’s gross purchases (HTC, 2010, p. 37).
Bargain Power of Customers: High
Analyzing customer power for HTC is problematic because the customers are end-users, service providers, and retailers. The impact of retailers and carriers is challenging for HTC because of the dependency on the carriers to add HTC products to their portfolios (Chip, 2010).
HTC’s customers have a wide choice of similar products. While it is possible to create differentiation for the brand,4 the differentiation among products is difficult. To maintain a leading competitive edge, HTC highlights innovation as its overall target. HTC emphasizes product differentiation and innovations in user experience in developing a wide range of products to meet diverse customer needs (HTC, 2010, p. 83).
Since smartphones imply an elastic demand (demand declines when price rises), users are likely to switch their smartphone brands if products are too expensive. The same result is implied by little or no switching costs. Also, there is no asymmetric information for the customer. All information for the buying decision is either available by searching the Internet or using in-store expert advice. The most important factor for brand loyalty in the smartphone market is the user experience. Unsatisfied customers will switch if the brand does not succeed in delivering a “feel-good" experience and are not likely to come back.
Threat of New Entrants: Low
Since substantial capital requirements are necessary for research and development tasks as well as for the operations level, the threat of new entrants is relatively low. The existence of economies of scale, which the big global manufactures favor, represents an entrance barrier for new manufacturers. As described above, product differentiation is extremely difficult in the smartphone market. New entrants would need to create product differentiation in order to establish brand awareness. Brand awareness and the customers' buying decisions are connected to brand familiarity, which further complicates entry into the smartphone market. Another important factor for new entrants is the access to distribution. New entrants would need to establish relationships with retailers and carriers to distribute their products.
Threat of Substitute Products: Low
Many products offer a variety of functions that overlap with a smartphone. These products include digital cameras for taking photos, CPS location services for navigation, PCs for Internet services, gaming consoles for gaming, basic phones for communication, and MP3 players for listening to music. Furthermore, substitute products like notebooks, netbooks, tablets, and PDAs offer almost all of the same functions of a smartphone.
On the other hand, it is more likely that people who can afford a smartphone will be using a smartphone because of its multi functionality. Smartphone usage in the U.S. is predicted to increase from 73 million users in 2011 to over 100 million users by 2015 (eMarketer, 2011).
3.3 SWOT Analysis
The following SWOT analysis examines the strengths, weaknesses, opportunities, and threats of the organization. The analysis helps to understand the company’s strengths, which can be exploited through marketing, and prepare to defend against vulnerabilities that competitors might use against HTC. The analysis is also a good measure to analyze external factors that might pose opportunities for profit and threats that might prevent the marketing plan from being successful (Burk Wood, p. 29).
As a company, HTC’s main asset is its strong focus on research and development. With about one quarter of its staff employed in research and development activities, HTC has several state- of-the-art innovation centers (Datamonitor, 2009). HTC was the first company to build phones based on Google’s Android mobile operating system, and its current generation of Android smartphones is able to compete with Apple’s iPhone on features and price. In 2010, the company introduced the EVO, the world’s first phone to take advantage of 4G network technology for lightning-fast Web browsing and applications like video chat.
In addition, HTC has strategic partnerships with Intel, Texas Instruments, Qualcomm, Microsoft, and Google. These partnerships with the world’s leaders in telecommunications help in understanding customer needs.
The flexibility and openness of the Android operating system encourages innovation and enriches the application experience available to end users. Android has attracted many developers away from the iPhone because of Apple’s restrictive software development kit (SDK).
One of HTC’s strengths, which also represents a competitive advantage over its competitors, is the wide product range in its smartphone portfolio. HTC also has a wide price variety that makes its products available to different social classes. As a result, its target market for consumer income is comparatively high. HTC's portfolio includes devices using 3G and 4G technology, CDMA and GSM protocols, and Android and Windows Phone 7 OS, making it well positioned for sudden changes in consumer preferences. By partnering with Beats Audio using Dr Dre headphones and specially built software, the HTC Sensation XL phone targets music lovers. The new release of the HTC Rhyme smartphone has an innovative docking station that turns a phone into an all-in-one alarm clock, music player, and picture frame.
HTC has significant market shares in all regions, which is what other smartphone hardware manufacturers like Nokia Group and Motorola Mobility, Inc. have failed to achieve. HTC can use its global presence to boost its brand in the U.S. market and to generate economies of scale.
1 See Chapter 4 for a detailed illustration and explanation of the product lifecycle.
2 Especially HTC and Apple (Haselton, 2011).
3 Samsung Corp in Consumer Electronics (World).
4 For example Apple manages to differentiate its brand not only through products but also through their brand image and brand personality.
- Quote paper
- Tobias Kleinmann (Author)Xin Chen (Author)Ben Jaderstrom (Author)Jolie Pinkerton (Author)Stephanie ONeil (Author), 2011, HTC Marketing Plan, Munich, GRIN Verlag, https://www.grin.com/document/189338