The global smartphone industry is fiercely competitive. Such companies which dominated the industry in previous years as HTC are now recording disappointing sales. In the last few years, HTC has seen its stock price plummet in response to the decline in sales and the exit of some of its executives (Nunns, 2013). The problems that HTC faces underscore the importance of product differentiation. This strategy is concerned with making alterations to the properties of a product or service in an effort to help it stand out from other products in the market (Barney, 2011). In such a competitive industry as the smartphone one, a company cannot hope to succeed without product differentiation.
The decline of HTC must have surprised many. This is because before 2011, the company shipped millions of smartphones. Only Apple performed better than HTC in terms of smartphone sales (Doo & Poun, 2013). In the years that followed, HTC has continued to record poor sales. One of the factors that have received blame for the company’s troubles is poor marketing strategies. The firm failed to aggressively promote its products. Given the high level of competition in the smartphone industry, aggressive marketing is an imperative. Another cause of the decline in HTC sales is shipment delays (Doo & Poun, 2013). The firm failed to deliver products to its customers in good time. These customers simply purchased products from other smartphone makers who demonstrated greater dedication to making timely deliveries. The emergence of new players in the smartphone industry is yet another factor that set the stage for the decline in HTC’s sales (Doo & Poun, 2013). New entrants which offered quality products at lower costs attracted customers away from such companies as HTC. The strategy that these companies implemented underscores the value of product differentiation. The balance between pricing and product quality is among the critical components of product differentiation. If firms wish to boost sales, they should deliver affordable products without compromising on quality. HTC’s competitors managed to do this. Legal battles over patent infringement and unfavorable alignments in the smartphone industry also caused the decline of HTC (Yoffie, Alcacer & Kim, 2012). The company spent huge amounts in court to defend itself against allegations of patent infringement that Apple Inc. had made. HTC also lost the support of such companies as Google who established closer ties with some of HTC’s main competitors.
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Before the decline in sales, HTC had enjoyed years of success. A number of factors colluded to end the string of successes that the firm had witnessed. Poor product development strategy is among these factors. The company developed and sold too many models of its smartphones (Nunns, 2013). This led to confusion among customers. While the wide range of models may have been an attempt on HTC’s part to differentiate its products, this strategy clearly failed. The essence of product differentiation is to spark customer interest in the products of a firm. HTC clearly went too far with its attempt at product differentiation. Failure of leadership is perhaps the most significant cause of the decline in HTC’s sales and market share. A number of the company executives face accusations that they manipulated expense accounts and stole the company’s secrets (Nunns, 2013). When the leaders of an organization sabotage the operations of the organization, it is nearly impossible for the firm to register any growth. It is therefore little wonder that HTC lost a significant portion of its market share. Distribution challenges and high inventory costs are other factors that played a role in causing HTC to lose much of its market share (Nunns, 2013). If a company is unable to deliver its products to the market, it should simply brace for a decline in sales and market share. High inventory costs serve to compound the challenges that a company dealing with distribution challenges is grappling with. Overall, HTC’s struggles are the result of a combination of internal blunders and a harsh operating environment. If the firm truly desires to revive its sales and regain its market share, it needs to implement the product differentiation strategy. Through this strategy, the firm will be able to offer customers a reason to purchase its products.
References
Barney, J. (2011). Product Differentiation. In Gaining and Sustaining Competitive Advantage. Upper Saddle River, NJ: Pearson.
Dou, E. & Poon, A. (2013). How HTC Lost its Way with Smartphones.
Nunns, C. (2013). A Long Fall for Taiwan Smartphone Maker.
Yoffie, D. B., Alcacer, J. & Kim, R. (2012). HTC Corp. in 2012.
