Smartphone makers need to enhance value proposition through relevant collaborations

The premium smartphone users spend extensively on travel.  Bringing exclusive deals by smartphone makers in the segment will delight these users.

The smartphone makers all across look at the consumers through a single prism.  No doubt they differentiate the products through hardware, specifications and features catering to different segments of users. For instance, the specifications of a premium flagship smartphone will be top-notch against mellowed down specifications in the mid-range. 

On the software side, there are also some subtle differences. For example, as we go up the premium ladder, we see less of bloatware.  Some brands also ensure that their premium portfolio receives timely updates of OS and security patches.

But, when it comes to services and offers extended through collaboration with different service providers, there is hardly anything different to notice. At most we will see OTT subscriptions being offered to buyers of few smartphone models.  There is no data driven approach applied by any smartphone brand here in an attempt to offer more relevant services thereby enhancing the overall value proposition.

The recently announced Economic Value of a Smartphone section of Vivo India Impact Report 2022, gives us an interesting view of what users spend money on, using a smartphone.  These spends save money for smartphone users resulting in an economic value for them.  On an average, in India for every ₹1 spend on the smartphone ownership, there is a value of ₹6 that a user derives.  Now basis, this smartphone makers can create a custom ecosystem factoring the user segments.  For instance, the report suggests that the rich segment of users derive highest value of 22.5 against 3.4 in case of the aspirational section of the society.  Now this is interesting. How come users spending more on a smartphone are able to derive a higher economic value?  The answer lies in the usage of the smartphone.  Premium users buy a lot many services using a smartphone and hence make savings on travel, benefit from offers as well as save time that has an opportunity cost for them.

Overall, spending on services results in the highest economic value of 8.0 across a host of digital activities that smartphone users perform.  This includes buying several services through apps available on a smartphone. These include hiring of cabs, buying travel tickets, hiring services of professionals among others.  Rich people earning more than ₹30 Lakh per annum spend a lot on these services, primarily travel which also includes international travel.  Compared to this, the aspirational segment of our society, spends on digital payments paying for bills, utilities and other monthly commitments. The middle class spends on shopping, groceries, etc.

This means a premium smartphone user would not derive great value out of cashbacks and other offers that are offered by wallets.  In such offers and cashbacks, the smartphone brand has no say, as the apps decide offers on their own.  However, if the smartphone brands collaborate with these different service providers offering exclusive deals basis the user profile, the economic value will shoot up further.  In other words, if a luxe (> ₹50,000) smartphone maker collaborates with a travel booking app for this segment, it will be high on relevancy as a value proposition.  For the aspirants, a higher cash back on wallet payments would bring a delight factor. Even the report on App Store release by Apple few months back indicates that a significant portion of over $1 trillion generated by the store in 2022 came from travel.

Both the reports confirm that premium smartphone users spend a lot on travel.  This means the smartphone makers in this segment should forge exclusive deals with travel services providers and enhance the value of the overall proposition. Similarly, the Economic Value of a Smartphone segment of Vivo’s India Impact Report 2022 gives very specific insights into how the value proposition can be enhanced by forging relevant collaborations.  The time for looking all the smartphone users through a single prism is over.  Smartphone brands need to participate in digital activities through segment relevant collaborations with respective service and application providers to create a high order value proposition increasing the delight factor besides the economic value of a smartphone.