Both companies will hurl almost everything they have in their advertising budget into a short, sharp burst of promotions as they seek to influence buyers seen to be emerging from slump-induced austerity — car sales for instance have picked up in the last five months. Diwali falls on October 23.
As much as Rs 200 crore will be pumped into ads for the four products. According to trade partners and media planners, Samsung has lined up around Rs 100-120 crore on a big-bang launch of the two devices.
Q3 Earnings to Plunge 60%: Samsung
Apple is going to spend around a70-80 crore along with its two telecom partners, Reliance and Airtel. Experts say this is among the highest amounts spent on new launches in India fs consumer goods industry. The iPhone 6 has a 4.7-inch screen, the same as the Galaxy Alpha, while the 6 Plus has a 5.5-inch display compared with the Note 4 fs 5.7-inch size.
The South Korean company has booked front-page jackets in all leading newspapers and primetime spots on television channels well in advance, forcing Apple to focus more on digital media and below-the-line activities such as in-store branding and product demonstrations that will be extended even to some small, neighbourhood stores.
Apple's media agency and company officials are also negotiating for prime space in leading newspapers. gSamsung has progressively increased their booking of advertisement spots during Diwali and they have indeed picked up huge ad inventory, h said a senior sales executive at a leading broadcaster with multiple television channels across genres.
To be sure, Samsung needs to push products harder to gain an edge over Apple because of the US company fs skill at creating a media splash and generating public interest in its products. Meanwhile, Samsung also needs to counter the slowing demand for high-end phones, given the perception that newer devices in the high-price band only offer incremental advances. That trend has been bolstered by Chinese companies such as Xiaomi offering phones with advanced features at lower price tags. Such phones also include those made by Motorola and Micromax besides the recently launched Android One handsets.
In fact, parent Samsung Electronics warned on Tuesday that its thirdquarter earnings would plunge 60% from the year before because of competition from Chinese rivals, Bloomberg reported.
"It appears that Samsung has been cutting prices to maintain market share but has lost market share anyway," analyst Richard Windsor told Bloomberg. "If market share continues to fall... Samsung will come closer to joining the long-suffering ranks of every other Android handset maker."
Samsung will also be keen to avoid the fate of Nokia, once the world's leading cellphone maker, which was unable to cope with competition as iPhones and devices made by the South Korean company gained popularity. In 2013, Apple spent $1.29 billion (or 0.6% of sales) globally on marketing campaigns compared with Samsung's $14 billion (5.4% of sales), although this includes spending for the latter's vast range of electronics goods such as televisions and appliances.
At the premium end, Samsung's last major release, the Galaxy S5, failed to generate high demand. According to the latest figures from market tracker IDC, Samsung's share of the Indian smartphone market dipped from 31% in the second quarter last year to 29% in the same period this year. As per estimates, Apple is the market leader in the Rs 30,000-plus smartphone segment in India, controlling almost half the market followed by Samsung with around 25% share.
"In the premium segment, Samsung is facing intense competition as most of the international device vendors have aggressively revised their pricing strategies," said Karan Thakkar, senior market analyst, client devices, at IDC. "On the other hand, in the affordable segment, most of the international brands are challenged by Indian and Chinese vendors, who attach a value-formoney proposition. The latest price reduction by Samsung for most of its products is one step to retain the leadership position."
A senior executive with a leading retail chain said Samsung would price the Alpha and Note 4 cheaper than Apple's two new devices to get the attention of consumers.
"Since Monday, after Apple announced the India launch of the new iPhones, the Samsung sales force has been meeting all trade partners to boost confidence in the two new models. In the same way it wants to bombard consumers with far more communication than Apple for topof-the-mind recall," he said. Samsung and Apple will be deploying the bulk of their ad budget for the year in a short period, a reflection of how critically both sides regard Diwali sales.
"The presenting sponsor of the Indian Premier League spends Rs 50-60 crore in 60 days," said a media planner. The two companies will spend almost 60% of their total budget in the first six weeks, while the rest would be spread over the next few months.
Samsung has told trade partners that while the Galaxy Alpha will hit stores this week at around Rs 39,990, the launch of the Note 4 will be on October 15-17 and is going to be priced at Rs 50,000-Rs 52,000. Apple's two new iPhones will be launched in India on October 17. The iPhone 6 will start at Rs 53,500 and the biggerscreen iPhone 6 Plus at Rs 62,500. A Samsung India spokesman said the company would announce the launch dates of the Alpha and the Note 4 in a few days. "We are working on the pricing formula for Note 4. But yes, we have been aggressive on media buying this festive season since it's a good time and would be launching new products," he said. Apple didn't respond to an email query as of press time.
Samsung is going to become a highly visible brand this Diwali and may draw more eyeballs right from outdoor activations to in-store promotions, said D Sathish Babu, founder of leading cellphone retailer Univer-Cell. The intense competition will see demand revive across the board, he said. "Of course, the iPhone will have its own dedicated customers. It's going to be an interesting fight and would revive smartphone demand since after almost 10 months some good models are going to hit the market," Babu said.
Apple started taking bookings for the iPhone 6 and 6 Plus on Tuesday, generating a substantial amount of interest. Industry executives said all top retail chains have ordered a few hundred devices each, while more than 1,000 have been booked at Infibeam. com, which is Apple's official e-commerce partner in India.
Going by the pre-order numbers, Infibeam expects demand to exceed that for the iPhone 5s and 5c launched last year, said a spokesman for the site. He, however, refused to share any numbers. However, sources said Infibeam has already received more than 1,000 orders. Samsung too is planning to start pre-orders for Note 4.
Both Samsung and Apple have assured trade partners that they would ration stocks and supply strictly in line with actual sales to ensure that there is no online discounting by any seller. "However, there will be no shortage of inventory at anytime," said a senior executive at a top retail chain.
-economictimes
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