Smartphone marketers are trying to be masters of what personal selling professionals call the "upsell". This is where sales staff trained in the art of consultative selling use various techniques to get the customer to buy more of an item or a more expensive option to fulfill the need. Upselling, like its cousin "cross-selling", is a vital part of the personal selling process.
But last year's re-designed smartphone offerings from Apple at $1,000 and Samsung at $700 plus which featured some of the highest prices we have seen in the industry, largely fell flat with users. Unit sales were unchanged from the previous year for both brands in part due to the rise of competition from Chinese brands Huawei and Xiaomi, which have a combined one-third of the global smartphone market. And the industry itself might have peaked, with global smartphone unit sales falling slightly to 1.472 billion from a peak of 1.473 billion. As discussed in a previous post, consumers are holding onto their smartphones a bit longer than in the past, which is also affecting sales of these ubiquitous devices.
So price might not be the only issue here, but one thing is for certain. Marketers at Apple and Samsung will have to do a much better job of convincing consumers that their new products are innovative enough to adopt without violating any "planned obsolescence" regulations, as they are now under investigation for doing. Forcing consumers to buy expensive new phones through delibrately making the phones slow down as they age is not going to sit well with the authorites. The industry will simply have to get used to longer new product introduction cycles.
One fact that must not be ignored is that after five years of 25% plus annual growth, the smartphone market faced its first decline, and the drop has been rather abrupt. This is rather worrisome to smartphone marketers, as it was to makers of devices like desktop and laptop computers so many years ago. This was a group of marketers who also had to face the reality that consumers eventually grow weary of having to replace their devices without the requisite innovative advancements in technology (features) that lead to benefits. Indeed upselling works best when there is something compelling to buy.
Discussion: Do you upgrade to a new phone every two years or so? Why? Would you welcome a longer product life cycle for smartphones? Explain.
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