Strong Marketing Game Drives Growth Among Leading Smartphone Players in the Philippines

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According to International Data Corporation’s (IDC) Asia/Pacific Quarterly Mobile Phone Tracker, 4 million smartphones were shipped to the Philippines in Q2 2017, posting a year-on-year decline of 10%. The smartphone market declined compared to last year’s number due to downscaled local vendors, except Cherry Mobile and Cloudfone, as they face tougher competition from Chinese vendors.

“OPPO and vivo disrupted the smartphone retail space through cash-rich marketing, aggressive sales promoter incentives and previously unseen levels of retailer support. This challenged the traditional vendor-dealer relationship smartphone vendors have been accustomed to, and while leading vendors have been able to adapt, smaller players with less marketing and merchandising budget on their disposal were unable to do so, thus suffering drops in market shares” says Jerome Dominguez, Market Analyst for Client Devices, IDC Asia/Pacific.

The rise of OPPO and Vivo further affirmed the importance of combining an expansive sales and distribution approach with strong marketing and advertising strategies to capture consumer mindshare. To preserve brand equity among consumers, leading global and local vendors who have previously cut down on marketing spend back in 2016 were seen to divert their resources to funding actively on integrated marketing campaigns this year.

“As the battle for mindshare intensifies, top global and local mobile phone vendors were left with no recourse but to double down on marketing spending to maintain the brand presence. Aside from the tried-and-tested formula of appointing A-list celebrity endorsers and conducting roadshows, new marketing strategies such as co-branding and strategic product placements are being explored by local and global vendors as means to remain competitive against Chinese vendors,” adds Dominguez.    

Local vendor share of the smartphone market was down to 41% in Q2 2017 from 49% during the same period last year. Despite the heightened competition from Chinese smartphone vendors, local vendors in the Philippines remain better standing relative to local vendors in neighboring Southeast Asia countries, reflecting the still solid affinity of Filipinos for homegrown smartphone brands. Local vendor shares of the smartphone markets in Indonesia, Thailand, Vietnam and Malaysia were now down to 19%, 11%, 6%, and 1%, respectively.

Global vendor shares of the smartphone market in the Philippines remained flat at 27% compared to a year ago, with only Samsung as the only strong performer. Meanwhile, Chinese vendor shares jumped from 15% to 22% YoY.

Q2 2017 Top 5 Vendor Highlights and Future Outlook

Cherry Mobile maintained its lead in the smartphone market, with below US$50 smartphones still driving its volume high. In response to heavy promotions from global and Chinese vendors, it further beefed up its marketing spend with more notable ad placements and airtime on popular noon-time shows.

Samsung came in at 2nd, with the J series making up majority of its shipments for the 1st half of 2017. It also laid more focus on improving above-the-line marketing and sales promoter incentives in light of the rapid rise of Chinese vendors.

OPPO finished as the 3rd biggest vendor as its growth was related to aggressive approach in marketing, merchandising and sales. Along with Samsung and Vivo, it has also benefited from its partnership with Home Credit, allowing it to offer its smartphones at 0% interest instalment without the credit card requirement, which made its offerings more accessible to mass market consumers.

Cloudfone ends at the 4th position. Its marketing and promotions focused on sports events given its partnerships with NBA and PBA. Its aggressive play on the below-US$25 segment drove its volume for the quarter.

Vivo takes the 5th position, growing 66% quarter-over-quarter. The Stephen Curry endorsement further helped cement its brand presence on the local scene. Roadshows were also aplenty, with Vivo Perfect Selfie Tour covering most of the major malls in Manila and other key cities.

IDC expects the smartphone market in the Philippines to stay subdued in Q3 2017 due to increase in component prices, weaker Philippines peso and impending exits of a number of smartphone vendors. Shipments are expected to pick up during the last quarter of the year as pre-Christmas buying season encourages healthier smartphone uptake.

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About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC