NIIT University

Electronic Media and Marketing Environment

The Electronic Media and the Marketing Environment

Course Instructor Date of Submission Dr Anurag Dugar 9th May 2011

Ashish Kumar Rahul Prakash Group 8 MBA (Finance & Banking)

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

1 Introduction
Electronic media are media that use electronics or electromechanical energy for the enduser (audience) to access the content. This is in contrast to static media (mainly print media), which today are most often created electronically, but don't require electronics to be accessed by the enduser in the printed form. The primary electronic media sources familiar to us are better known as video recordings, audio recordings, multimedia presentations, slide presentations, CD-

ROM and online content. Most new media are in the form of digital media. However, electronic media may be in either analog or digital format. Any equipment used in the electronic

communication process (e.g. television, radio, telephone, desktop computer, game console, handheld device) may also be considered electronic media. A market is a place for buying and selling, for exchanging goods and services, usually for price. The electronic media market is unusual because until early in the twentieth century it was dreamt that people with read newspaper or can communicate being far separated. As will be seen, great changes, mainly due to technology and increasing globalization, mean that we now have an electronic media marketplace open to everyone.

2. Evolution of the electronic media and recent development

2.1 Evolution of electronic media market

Evolution of entertainment media

In the last century, a revolution in telecommunications has greatly altered communication by providing new media for long distance communication. The first transatlantic two-way radio broadcast occurred in 1906 and led to common communication via analogue and digital media: Analog telecommunications include traditional telephony, radio, and TV broadcasts.

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

Digital telecommunications allow for computer-mediated communication, telegraphy, and computer networks. Modern communication media now allow for intense long-distance exchanges between larger numbers of people (many-to-many communication via e-mail, Internet forums, and teleportation). On the other hand, many traditional broadcast media and mass media favor one-to-many communication (television, cinema, radio, newspaper, magazines, and also facebook). As technology, situation and public awareness is changing; the electronic media market is getting evolved. Earlier people used to send postal mail for distant communication but due to technological advancement the same can be sent using email.

2.2 Recent development in electronic media market

We all know that electronic media market is very vast and comprises of different media. Thus, we will be focusing on smart phone segment for analysis in this article. Mobile handsets market has seen an exponential growth since its first commercial launch in 1983. There were 12 million global mobile phone subscribers in 1990 and by the end of 2010, the number of mobile phone subscribers reached 5.2 billion. However, the growth had slowed a bit between 2006 and 2009 on the account of economic slowdown and lack of strong telecommunication infrastructure in emerging countries. Smartphones are fast becoming a viable alternative to feature phones, PDAs and laptops, offering phone features such as voice and SMS coupled with mobile internet applications, multimedia functionality, high speed data processing capabilities, and inbuilt GPS capabilities. The smartphone market is currently witnessing high growth due to a host of factors, including lower production cost, improved handset design and functionalities, the expansion of global mobile email and browsing services, the emergence of 3G and 4G network technologies, the rising competition among mobile carriers, and the standardization and upgrades of operating systems. This report will identify the key players in each application market; focusing on their growth strategies and other developments such as geographic expansion and the development of patented technologies.

2.3 The smart phone market: size and structure

According to Deloitte forecast, smartphone sales will reach 375 million devices in 2011. Another mobile device, tablet, is estimated to reach 50 million in 2011. Combined sales of desktops, laptops and netbooks would be 390 million devices, it said. The surge of tablet market, coupled with strong growth of smartphone sales means in 2011, for the first time, sales of personal computers will represent less than half of total computing device market.

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

Research shows that the smartphone market is continuing to boom, as almost one in every five of all handsets shipped in the second quarter of 2010 was a smartphone device. Growth is being driven by the emergence of heavily subsidised smartphone pricing which is no longer considered a barrier to smartphone adoption, instead restrictive data plans are seen as more of an obstacle. The smartphone market is growing but many analysts feel the market structure cannot be sustained. With so many manufacturers and mobile operating systems competing in the market, it is thought that the only way the market can be sustained is for three or four key operating systems to dominate the market and reduce fragmentation of users. Nokia, Apple, HTC and RIM are leading the smartphone charge, posting impressive revenues and in some cases smashing sales records. The introduction of Windows Phone 7 could further increase smartphone demand or could instead help increase consumer confusion in a market dominated by so many brands.

3. Marketing Environment
In today world of cut throat competition Smartphones have undergone a radical transformation over the years. They have achieved a space where they are able to do almost all the tasks that can be performed by a computer. This has been achieved by the continuous enhancements being done on i.e. change, to satisfy the customer needs. Some changes are because of influences beyond the control of designers or manufacturers. These changes are all gathered together in what is called the marketing environment, as shown in Figure below. The marketing environment has a considerable impact on how the Smartphones market gets affected. Some changes occur very slowly while others can affect the market much more quickly; some are within a companys control and others are way beyond it.

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

The marketing environment. Adapted from Kotler, P. (1994), Marketing 8th Edition Management,. Factors which ideally are within companies control are to a greater or lesser extent their suppliers, marketing intermediaries (which help to get the goods from the factory to the consumer) and the consumers themselves. For customers the providers of Smartphones may seem to have a variety of sources, for instance the hardware designer who has the idea for the style, the manufacturer who makes up the equipment or the retailer to whom the consumer goes to buy the garment i.e. Apple Store.

3.1 Micro-marketing environment

Suppliers
The designers here refer to the hardware designers who come out with the outlook of the Smartphones. First impression has a huge bearing initially. If the styling is great then the customers have a liking for the product. On top of this if the software content is excellent then it is an enviable combination. This is where the Apple has been able to attract a huge loyal fan following. The safari operating system market share have been increasing over the years. Initially blackberry had a considerable market share. But with the advent of iPhone the shares of blackberry has taken a beating over the years. The figure below shows the increasing shares of Safari and Andriod over the years.

Manufacturers
The manufacturers have a key role in the growth of a product. Apple has been able to maintain an unprecedented demand for its product such as iPhone. They have been able to do so by maintaining

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Electronic Media and Marketing Environment

exclusivity about their offerings in the coming generations of the iPhones. Apple gets its hardware manufactured and assembled in china. China offers a cheap hardware production capacity. The chips are manufactured by Samsung while the screens are manufactured by Toshiba.

Marketing intermediaries
These are the main channels that help to get the goods from the manufacturer to the consumer. Their roles can be many and varied. The main ones are: Retailers, Agents, Distributors, Wholesalers, Advertising agencies, Market research agencies.

Consumers
Earlier when the Smartphone concept was new the customers had very little choices. But today they have a plethora of Smartphones available in the market to choose from. Each company tries to have some USPs for their product. Apple has been a game changer in this smartphone market. Earlier Blackberry was the eternal favourite but Apple realized the potential for change and used its ipod platform to build the hugely successful iPhone. While the market share of Blackberry have been declining over the years while that of Apples have shown a steady increase. This has happened due to a cult following for the apple iPhone. The device has been able to retain the customers desire for such a long, it is remarkable. Earlier the manufacturers made computers, when they understood that wanted a portable computer the Laptop came into existence. Now the customer wanted more powerful gadgets in their pockets which led to the development to Smart phones.

Competition
Apple incorporation has to now compete against their fast closing on rivals based Android powered phones. The Android phones though are just two years old they have been able to achieve exponential growth. The suppliers have also become competitors. Samsung is supplier to Apple. They make microchips for the iPhones. At the same time they have their own adroid powered smartphones which pose as a competitor to Apple. In this regard, Samsung Galaxy S and the tablet can be talked about. Their styling is almost similar to iPhone and iPad. Recently Apple filed a lawsuit pertaining to patent infringements against Samsung. Such kind of environment does affect each other market shares. Smartphones have affected the other electronic media such as TV. With coming of 3G and 4G technologies people have been able to watch TVs on them. Ring Central Survey Conducted recently points out that: Smartphones are also encroaching on computers as well, with 34% of respondents using the Smartphone more than the computer for business. In fact, 7% dont even take their laptop when they travel for business if they have their Smartphone. Is this the beginning of a coming dramatic shift? The majority (79%) of respondents cite the Smartphone as the phone they used the most to conduct business, as compared to an office phone or home phone.

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

Publics
Yet to be filled

3.2 Macro-marketing environment

Factors considered within the macro-environment affect not only the company, but all the other members of its micro-environment, namely its suppliers, consumers, etc. These generally have a much wider influence and their effects become apparent more slowly than factors within the company. Factors within the macro-environment are cultural and social, political and legal, demographic, technological and environmental.

Economic
The state of the economy, such as economic booms and recessions, also drives the smartphone industry. If consumers can't afford high-priced smartphones, companies must find ways to market the phones to the public, even when it means scaling back features, free applications and new technology. Likewise, wireless providers must pay attention to economic factors. If wireless service is too costly, consumers could pass on the mobile devices for which they provide services.

Technology
Smartphone technology changes frequently. Smartphone companies develop products continually to compete for sales among a global pool of tech savvy consumers who demand the latest technology. The development of new software applications, wireless technology such 3G and 4G, bluetooth compatibility, cellphone camera resolution, GPS technology and product development drive the competition aspects of the smartphone market.

Social
The family unit is usually considered to be the most important buying organisation in society. It has been researched extensively. Marketers are particularly interested in the roles and relative influence of the husband, wife and children on the purchase of a large variety of products and services. There is evidence that the traditional husband-wife buying roles are changing. Almost everywhere in the world, the wife is traditionally the main buyer for the family, especially in the areas of food, household products and clothing. However, with increasing numbers of women in full-time work and many men becoming home workers (or telecommuting) the traditional roles are reversing. The challenge for a marketer related to Smart phones market is to understand how this might affect demand for products and services. Usually young or children at home actively participate in providing

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Electronic Media and Marketing Environment

input or selecting smart phones, thus as a company a product catering young and middle aged need to be promoted.

Demographics
This is the study of changes in the size and make-up of the population. While these changes occur slowly and can be predicted well in advance, only the foolish manufacturer ignores the effect they might have on business.

iPhone vs. Android Don Kellogg, Senior Manager, Research and Insights/Telecom Practice, The Nielsen Company Whether its checking email on the go, connecting with friends through social networks or using turnby-turn navigation, the capabilities of smartphones are convincing more and more consumers to make the leap from a simple mobile phone to a more sophisticated device. As of Q1 10, Nielsen data shows that 23% of mobile consumers now have a smartphone, up from just 16% in Q2 09.

Ashish Kumar & Rahul Prakash

NIIT University

Electronic Media and Marketing Environment

Vying for their share of the smartphone market are two of the tech industrys fiercest competitors: Apple, with its iconic iPhone, and Google, with its fast-growing Android operating system. Between Q4 09 and Q1 10, Android and iPhones share of the smartphone market grew by 2% each. At the same time, smartphone leader Blackberry lost 2% share to fall to 35% of all smartphones while Microsofts Windows Mobile OS also lost 2% to fall to 19%.

Although Android and iPhone users both skew male (Android users show a 54/46 gender split compared to iPhones 55/45), there are some striking differences. Android users tend to be slightly younger than their iPhone peers- 55% of Android users are under the age of 34 while just 47% of iPhone users fall within the same demographic. As is usually the case, age is also a prime determinant of income and education, with Android users slightly less wealthy and less educated.

Perhaps what sets iPhone and Android apart from the rest of the field of smartphones is operating system loyalty. 80% of iPhone users want their next device to run iPhone OS while 70% of Android

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Electronic Media and Marketing Environment

users want another Android device. This is in stark comparison to other major smartphone players: only 47% of Blackberry users want another Blackberry while only 34% of Windows Mobile users want another Windows Mobile device. Among Android and iPhone users who would like to switch operating systems, the rate at which Android users would like to try iPhone is twice as high as that of iPhone users who would try Android. Given that iPhone penetration is three times that of Android, more iPhone consumers are willing to try Android.

Political and Legal

It is often a direct consequence of the political parties in power, which represents the popular opinion of the citizens of the region. If the citizens are, for example, pro-Big Business then probably taxation will be modest and there will not be a lot of stringent rules about environmental considerations. If the citizens are very concerned about safety issues, for example, then there will be a lot of rules and regulations governing things such as transportation safety, which will make it more expensive for some companies that have big shipping costs. Smartphone major RIM (Blackberry) face One trade barrier while trying to get it's Blackberrys into the Indian market was Indian security. Indian security officials demanded that the encryption used by the Blackberry network is lowered from 256 bits to 40 bit encryption. However, Rim refused this request saying that its data encryption is designed so that no third party or Rim itself can access the data being transmitted wirelessly. Furthermore Rim argued that four other mobile products providing similar services are not facing the same demands

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