Samsungâ€™s Line Filling Strategy
Will Competitors Have To Fall In Line To Survive? Venkatesh Srinivasa
The “line filling” strategy has recently evolved to be one of the more popular approaches for market penetration. This strategy involves introducing new products in an existing product line to take advantage of marketplace gaps, thereby building greater competition barriers. Many businesses use this strategy to round out an already well-established product line, and increase the market prospects for new related products. Those who adopt this strategy, cover almost all segments of the market, offering a greater number of product variations across price points and feature sets/specifications. Overall, a line filling strategy helps business increase the depth of the product mix and gain higher market share and more substantial growth. Many companies have already benefitted from implementing a line filling strategy. For instance, after a two-way stretch of its hotel product line, Marriott successfully incorporated a line filling strategy and today it has 16 brands globally under Luxury, Lifestyle, Signature, Service, Extended Stay and Entertainment segments. Unilever also follows this strategy with their soap product line. Similarly, when Honda launched Passport and CRV SUVs, and the Odyssey minivan, to its range of automotive offerings, it followed a similar strategy. The addition of jalapeno flavored kettle chips to the Lay’s snack line is another good example. In the Indian automobile market, one of the most trusted car makers, Maruti, has close to a 43% market share and has long been a beneficiary of this strategy. Maruti launched several well-priced brands in the hatchbacks segment with clever overlapping amongst brands in terms of pricing and available models so the customer has a plenty of options to choose from. This empowers their sales reps to upsell effectively and enables the customer to upgrade their choice of vehicle if budget permits.
SAMSUNG’S SUCCESS Samsung’s recent success in the mobile phone market has been spectacular. The South Korean multinational conglomerate went from having almost no smartphone sales to selling over 50 million units per quarter in a matter of two years. Today more than 25% of the world's phones and close to one third of the world's smartphones are from Samsung (IDC, Q3'2013). A relatively late entrant into the smartphone business, Samsung offers a wide range of smartphones, adopted the line filling strategy and largely considered one of the key factors for their success. While Samsung is using the line filling strategy and continues to introduce a variety of smartphones at different price points, Apple, the other smartphone market leader, chooses to stay focused with very few options in the premium segment. Blackberry has also decided on a limited number of models. However, whether Apple has lost the smartphone battle to Samsung, is still debatable. Blackberry’s sinking fortunes, undoubtedly, have been only exacerbated due to the lack of variants especially at the mid and lower price tiers of the market. A few companies like LG, HTC etc. do provide some options across price ranges. However, they have not been able to keep up with Samsung’s wide range and frequent releases. Smartphone makers are paying close attention to developing economies and Samsung is no different. Samsung plans to make smartphones affordable on a global scale along with leveraging their line filling strategy. This move, so far, has not only helped the South Korean company to increase its consumer base globally but also deliver affordable, yet higher-end products, both smart and feature phones and hence appeal both the price sensitive demographies and those with aspirational needs for want of a premium smartphone like the Galaxy S4. There is a Samsung smartphone for every price point and a variety of display screen sizes with attractive features. One major disadvantage of the line filling strategy is that if overdone, there is a chance for internal cannibalization. However, Samsung has chosen to run with this risk and it seems it has paid off. The latest entrant in the U.S. smartphone market is the Microsoft-partnered Nokia. With its latest Windows Phone models ranging from Lumia 520 to Lumia 1020, Nokia might also attempt to duplicate the Samsung magic. When blueocean applies the same line filling strategy for the available Samsung smartphone models (in the U.S. using the Average Selling price and Display Screen Size dimensions) and map it against the available Nokia Lumia models, we notice a latent truth.
Screen Size in inches
6.0 5.0 4.0 3.0 2.0 1.0 0.0 $0.0
Average Selling Price ($)
Nokia Lumia 7.0
Screen Size in inches
6.0 5.0 4.0 3.0 2.0 1.0 0.0 $0.0
$100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 $550.0 $600.0 $650.0
Average Selling Price ($)
The above analysis is based on the smartphone models available in the US market during Q3â€™ FY13 (Jul, Aug and Sep 2013) across all the service providers without a contract Clearly there is a startling distinction of options available between Samsung and Nokia both in terms of price and display screen size. The number of models, available per price band for a particular screen size, is significantly higher for Samsung, providing the customer a broader range of options to choose from. Nokia, on the other hand, has fewer models available per price band for a particular display screen size.
The match up does not change when we take the battle closer and pit the two competing phone models Samsung's flagship Galaxy series and Nokia's Lumia. There are 40 different Galaxy smartphone models alone covering different price brackets for different screen sizes, whereas Nokia's Lumia series has only 12. This is possibly one of the reasons why Strategy Analytics (Q2â€™2013) reports that more than one out of every five smartphones in the world is from the Galaxy series. Below is the comparison using the line filling strategy for the Galaxy and Lumia series:
Samsung Galaxy vs. Nokia Lumia
Display Screen Size in inches
Average Selling price ($)
$550.0 $600.0 Samsung Galaxy Nokia Lumia
In order to be competitive, this Finnish smartphone maker needs to concentrate on all three broad price segments- low, mid and high. The gap that seems to be the more crucial, at least in the U.S. market, is the price band between $350 and $450, and in the >$500 segment. However, in a competitive market like India, Nokia has the Asha series compete with the low priced Android-based Samsung smartphones. Careful placement of smartphones across different price ranges and display screen sizes is important for Nokia to build up brand awareness and become part of the consideration set. Nokia has recently launched a few new models which aims to plug the >$500 gap. These include the Nokia Lumia 1520 in the US and the Nokia Lumia 1320 in China, Vietnam, India, and Europe. However, the mid segment still remains left open.
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