Can The Galaxy S5 Release Realign Samsung Owners' Loyalty?

Posted: Feb 6 2014, 5:36pm CST | by , Updated: Feb 6 2014, 5:40pm CST , in Mobile Phones


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Can The Galaxy S5 Release Realign Samsung Owners' Loyalty?

As we await the announcement of the latest and greatest from Samsung – the suspected Galaxy S5 – later this month, I thought it would be interesting to take a look at continued battle between this smartphone giant and that other giant, Apple. While Samsung’s global market share remains intact, according to our latest insights, Apple is the dominant player in the smartphone market stateside, with 43.7% of U.S. adults 18+ owning one, with Samsung resting in second position (25.7%). Combined, these two Goliaths account for more than two-thirds of U.S. smartphone ownership among adults, ahead of smaller players like Motorola (7.5%), LG (7.0%), HTC (6.6%) and BlackBerry (3.0%).

What’s interesting about these two big competitors, though, is the loyalty between the two brands when shopping for a new smartphone model – and how much this loyalty is worth. Among current Apple owners planning to purchase a new smartphone in the next six months, more than four out of five (81.4%) are eyeing Apple again. However, flip the scenario to current Samsung smartphone owners considering a new phone in the next six months, and just seven out of 10 (71.3%) are looking at Samsung models. So Samsung owners have less “consideration loyalty,” if you will.
We continue to build the case for Samsung owners’ wavering loyalty when evaluating their propensity toward considering brands beyond Samsung and Apple. Compared their Apple-wielding counterparts, Samsung owners are much more likely to consider the HTC One, Motorola Moto X or DROID as well as Nokia Lumia smartphones.

However, while the loyalty risk is greater for Samsung, Apple has more at stake financially in its efforts to entice current customers to repurchase. Given the higher percentage of Apple iPhone ownership among U.S. adults (the aforementioned 43.7% versus 25.7% ownership for Samsung), Apple has more to lose in terms of sheer number of customers, therefore smartphones – and of course, dollars. Although the Cupertino-based giant boasts an 81.4% “consideration loyalty,” according to our calculations of percentage ownership, plans to buy, and the average price of smartphones, the 18.6% of current Apple customers NOT considering an Apple smartphone repurchase puts an estimated $160 to $630 million at risk for Apple in terms of potential revenue over the next six months.

While the estimated lost opportunity for Samsung is less than Apple, there is a substantial sum at stake in this scenario as well; the 28.7% of current Samsung owners NOT considering a Samsung for their next phones represents a potential $135 to $540 million in revenues up for grabs for competitors.

If that reported Galaxy S5 lives up to the hype, Samsung will likely see a strong conversion of consideration loyalty to repurchase loyalty – and perhaps convince some shoppers to reconsider Samsung as a smartphone option. The challenge for Samsung, Apple, and others will be to effectively reach and speak to potential buyers to incite a purchase, minimizing those million dollar opportunities lost to competitors.

We’ll see what the next quarter brings.

Connect with me on Twitter: @PJGoodfellow. Check out this month’s Consumer Snapshot and discover more: Prosper Insights & Analytics™.

Source: Forbes

This story may contain affiliate links.


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