Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 10
Samsung Pay, the mobile payment 
service of Samsung Electronics, is to 
debut in the US on Monday, as the 
South Korean group looks to diver-
sify its features to revive slowing 
phone sales.
The world’s largest smartphone 
maker hopes its platform will have an 
edge of rival services from Apple and 
Google in the annual $67bn mobile 
payment market, as Samsung’s tech-
nology is designed to work with exist-
ing credit card readers.
Samsung rolled out the payment 
service in its home market last 
month and the South Korean com-
pany said its adoption was ‘beyond 
our expectations’ with about $30m 
transactions in its first month.
Samsung plans to expand the service to the UK, 
Spain and China, and is expected to adopt the pay-
ment feature to enhance its new low-to-mid-end 
smartphones next year.
However, analysts remain doubtful of the pros-
pects of Samsung Pay abroad, given the company’s 
relatively late entry market and weaker software 
ecosystem. Apple is leading the field but even the 
US company is still struggling to turn the mobile 
phone into a mainstream method of payment, with 
Apple phone users complaining that the service gets 
rejected at many merchants.
‘In the US, Samsung is facing stiff competition 
by coming late to the mobile payments scene,’ said 
Samsung to launch new mobile payment service 
in the US
By Song Jung-a in Seoul
Source
: REUTERS/Alamy Stock Photo.
Siyun Zeng, analyst at IHS. ‘Apple Pay has estab-
lished a lead in the US and Google is revamping 
Google Wallet to Android Pay.’
While Apple has accumulated 800m payment card 
accounts associated with iTunes, Ms Zeng said Sam-
sung lacks a critical element for its payment service 
to gain traction. She also cautioned that Samsung 
Pay’s co-existence with Android Pay, which was 
launched in the US earlier this month and works 
with a broader range of Android devices, could cre-
ate friction as Android users could get confused by 
the two payment options.
Still, Samsung is hopeful its payment system will 
become a popular choice, given its compatibility 

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USING ORGANISATIONAL RESOURCES TO CREATE SUSTAINABLE COMPETITIVE ADVANTAGE
Introduction 
Chapter 9 discussed the choice of target market suited to the strengths and capabilities of the 
firm. This chapter focuses on methods for creating a competitive advantage in that chosen 
target market. While few advantages are likely to last forever, some bases of advantage are 
more readily protected than others. A key task for the strategist is to identify those bases 
that offer the most potential for defensible positioning.
10.1 
Using organisational resources to create sustainable 
competitive advantage 
In Chapter 6 we assessed organisational resources. These we classed as three main types: 
organisational culture; marketing assets; and marketing capabilities. Any organisation will 
be able to create a long list of its resources, but some of these will be more useful than oth-
ers in creating competitive advantage. Fortunately, research under the resource-based view 
of the firm suggests that there are three main characteristics of resources that, when they 
coincide, help create a sustainable competitive advantage (SCA): that the resource contrib-
utes to creating value for customers; that the resource is rare, or unique to the organisation; 
and that the resource is hard for competitors to imitate or copy (see Figure 10.1 ) ( Collis and 
Montgomery, 1997 ).
10.1.1 Contribution to creating customer value 
The prime consideration of the value of any resource to an organisation lies in the answer 
to the following question: does this resource contribute to creating value for customers that 
can be leveraged to create value for the organisation? Value creation may be direct, such 
as through the benefits conveyed by superior technology, better service, meaningful brand 
with existing magnetic-strip card readers – Apple 
Pay and Android Pay require retailers to install new 
equipment compatible with their near-field commu-
nication technology. 
However, such advantage is poised to disappear 
as a new US standard requires merchants and banks 
to switch from a card system using magnetic strips 
towards chips until next month to prevent fraud. 
Analysts said that the diversification of services is 
a meaningful step for Samsung – one that could set its 
Galaxy smartphones apart from rival devices in the 
crowded handset market, although the new service 
will not generate direct revenues for the company. 
‘Samsung’s handset revenue has been declining 
[since] 2014; investment into software is a step for 
Samsung to offset [such] loss,’ said Ms Zeng. ‘Sam-
sung doesn’t have to rely on Samsung Pay as its core 
revenues [maker] but [it is] a means to tie users into 
the ecosystem.’ 
The company has been struggling to defend its 
market share, squeezed between premium maker 
Apple and lower-cost Chinese rivals such as Huawei 
and Xiaomi. Samsung’s global market share fell from 
26.2 per cent a year earlier to 21.9 per cent in the sec-
ond quarter, according to research group Gartner. 
Source 
: from ‘Samsung to launch new mobile payment service in the US’, Financial Times , 25/09/15 (Jung-a, S.).
Discussion questions
1 
What issues is Samsung trying to address?
2 
Why is Samsung launching Samsung Pay in the USA?

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