Earlier this year, Samsung had the highest market share in the smartphone market, with a market share of 28.8%, followed by Apple with 23.2%. Samsung's Galaxy phone had a 30% raise in sales from 2015 to 2016. Samsung was doing very well as a company, and worked hard to compete against Apple.
However over the past few weeks, Samsung has faced a major loss within the company. Samsung's biggest competition is Apple, and with the plans Apple had to release their iPhone 7 in September, Samsung worked as fast as possible to have their new Galaxy Note 7 out on the market before the iPhone 7 release.
According to marketing analyst Tim Bajarin, "Samsung did not do the type of quality assurance and testing to make sure the Galaxy Note 7 was designed properly and totally safe." Samsung rushed their release of the new Galaxy Note 7 in hopes of stealing Apple's costumers, but things went awry.
The first reports came out in the middle of September saying that the new phone's battery caused the phone to burst into flames. This wasn't just the case with one phone, but it was the case with many. As a result, Samsung created an "exchange program" where those who had purchased a Galaxy Note 7 were able to go into stores and exchange their phones for a replacement device, which many had believed to be safe.
Many people had attempted to trade in their phones in hopes that the replacement phones would work better and because Samsung had great customer loyalty. Samsung was known for a high customer satisfaction rate as well as positive customer experiences, so by offering the "exchange programs" they thought customers would be happy and that they would forget about their old phones bursting into flames.
An issue arose when these replacement phones ended up having the same issues, and also caught on fire. It wasn't until about a week ago when Samsung finally made the announcement that they would discontinue the Galaxy Note 7.
The Galaxy Note 7 was a major failure for Samsung, and ended up hurting them as a company. Galaxy Note 7s were not allowed on airplanes unless they were fully powered off, and there were often reports of the replacement phones catching on fire.
Samsung had to refer their Galaxy Note 7 consumers to other Samsung products, or to Apple products. By referring customers to Apple products and previous loyal Samsung consumers, Samsung has a $2.3 billion lower profit than anticipated, which will hurt their company tremendously. Their brand loyalty will be hurt as a result of the first Galaxy Note 7 and the replacement phones catching on fire. When consumers are in the market for a new smartphone, they may not consider Samsung in their consideration set because of the bad publicity Samsung has received over the past month.
If Samsung had handled this situation better and the replacement phones didn't catch on fire, then I believe that Samsung would still have a relatively high market share and good brand loyalty. However, now that the news has gone viral about Samsung phones overheating and catching on fire, consumers will be a lot more hesitant before purchasing a Samsung phone, even if that consumer has been a Samsung customer for many years. Although there is still an opportunity for Samsung to recover, they will have to do it properly and make sure that they reaffirm the company's good intentions and great customer experience.
http://www.samsung.com/us/images/common/samsung_logo_seo.jpg
http://www.digitaltrends.com/mobile/samsung-market-share-march-2016/
http://i2.cdn.turner.com/money/dam/assets/160902121639-samsung-galaxy-note-7-fire-front-780x439.jpg
http://www.telegraph.co.uk/content/dam/technology/2016/09/07/107814864_The_Apple_iPhone7_and_AirPods_are_displayed_during_an_Apple_media_event_in_San_Francisco_C-large_trans++dNLuJDSj-bduoIdVkVeVwcxqszAJoGYGBIC1-5m7MOA.jpg
http://etfdailynews.com/2016/10/16/samsungs-debacle-could-turn-the-tide-for-apples-smartphone-market-share/
https://www.youtube.com/watch?v=kBuHgvJi2qI
https://www.youtube.com/watch?v=7fwbtZUk8vw
https://www.fastcompany.com/3064569/how-did-samsung-botch-the-galaxy-note-7-crisis-its-a-failure-of-leadership
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