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Introducing a New Cell Phone to the Market

The global mobile phone market is huge. Cell phones, as technology innovations, have become daily necessities instead of just artifacts of status symbol. The successful global expansion of many cell phone manufacturers into new markets made the mobile phone industry a fast growing venture. By the end of 2008, 1. 18 billion mobile phone units were sold around the world worth $127. 3 billion in sales. The cell phone market is also fast growing. Estimates of the UN International Telecommunications Union show that the number of cell phone users around the world reached 4 billion by the end of 2008.

(Datamonitor, 2008) Although existing markets are becoming saturated because of the fast uptake of cell phones by the market and the entry of new competitors, there is still a wide room for market expansion. This makes the cell phone industry still a viable investment venture in the coming years. The cell phone market is highly competitive. Many mobile phone manufacturers engaged in product diversification to target a wider market, particularly the low to high end markets.

Trends in cell phone development included the development of basic phones at lower prices, mid-level phones with added features at moderately higher prices, and high end

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phones packed with innovative features that come at high prices. Apart from product diversification, cell phone manufacturers also come up with new phones and new features, which on the average were made annually. This is to encourage consumers to purchase new mobile phone units often. These marketing strategies were able to help mobile phone companies establish their market base and develop their competitive edge.

These strategies integrated cost effectiveness, differentiations, and niche marketing tailored to each firm’s goals. (Datamonitor, 2008) However, the economic crisis that was building up since the middle of 2007 has hit the mobile phone market hard during the first quarter of 2009 (“Worldwide mobile,” 2009). On the part of cell phone companies, these experienced significant declines in mobile phone sales leading to a technological slump (“Mobile phone,” 2009). The concern of many cell phone manufacturers is two fold.

One is ways of cutting down costs, which would significantly affect product innovation. The other is encouraging cell phone purchases. On the part of the cell phone market, majority of the median market and some percentage of the high end market have become sensitive to price (“Mobile phone,” 2009). In addition, the cell phone market has achieved a significant awareness of mobile phone technology and innovations so there is need to add value to existing cell phone features to motivate purchases.

Mobile phone companies know they have to introduce new cell phones to the market. However, the dilemma is developing a mobile phone that aligns the cost and value creation concerns of the company with the added value expectations of consumers in the context of the economic crisis. Cell phone manufacturers need to develop new mobile phones with new unique or outstanding features comprising sufficient incentives for consumers to make new purchases and shorten the phone replacement cycle.

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