Global smartphone sales fall for the first time in more than a decade

A customer purchases the new iPhone X at an Apple store on November 3, 2017 in Palo Alto, California.

A customer purchases the new iPhone X at an Apple store on November 3, 2017 in Palo Alto, California.

Global smartphone sales fell by 5.6 percent in the fourth quarter of 2017 — the industry’s first decline since 2004, according to a study from research firm Gartner.

Chinese smartphone makers Huawei and Xiaomi were the only vendors in the top five to experience year-over-year growth in the quarter, respectively by 7.6 percent and 79 percent.

“Upgrades from feature phones to smartphones have slowed down due to a lack of quality ‘ultra-low-cost’ smartphones and users preferring to buy quality feature phones,” said Anshul Gupta, research director at Gartner. “Replacement smartphone users are choosing quality models and keeping them longer.”

“While demand for high quality, 4G connectivity and better camera features remained strong, high expectations and few incremental benefits during replacement weakened smartphone sales,” Gupta said.

Samsung maintained the number one spot for global sales, growing market share from the fourth quarter of 2016, despite a 3.6 percent dip. Apple sales fell 5 percent year over year and Oppo sales fell 3.9 percent.

All five top vendors grew in global market share in the fourth quarter of the 2017, widening the gap between the leaders and the rest of the industry.

Smartphones sales for all of 2017 increased by 2.7 percent from the previous year to 1.5 billion.


Byron Sharp’s new ‘marketing’ textbook is a fiery trip down under

That’s not a marketing textbook. This is a marketing textbook. Or so Byron Sharp might say.

After university, my first full-time job in 2002 before I became a reporter was as a staff assistant at the Beacon Hill Institute, an economic think tank at Suffolk University in Boston. The organisation – like the executive director, economics department chair Dr David Tuerck – has an extremely libertarian and laissez-faire point of view.

One day, when the staff were having some beers after work, I asked him why the department’s textbooks and institute’s reports did not give equal consideration to all other economic systems – such as socialism and communism – as well.

“Communism doesn’t work,” he replied. “It’s been proven. There is no reason to consider it. Would we offer competing ideas to the theory of gravity just to be neutral?”

All professors must decide how to educate the next generation. Should they be neutral and let students make up their own minds or advocate for the positions that they think are wise and correct?

Some years later, when I studied and then went into marketing after my time in journalism, I read marketing textbooks such as those by Philip Kotler that took the neutral approach. As usual, the theories, models, and case studies were typically presented from various sides without opinion.

Now, Sharp, the director of the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, has done something similar to what my former boss does. He recently released a new edition of his Marketing: Theory, Evidence, Practice textbook and, upon request, sent me a copy for review.

“Current textbooks don’t cover important issues like media, shopping, and metrics – things that marketers have to know about to do their jobs,” he told me in an interview. “They also tend to be ‘theory’ heavy, such as on the product life cycle, and short on facts and patterns.”

The Ehrenberg-Bass Institute aims to be “the home of evidence-based marketing” and uses its methods to answer questions such as “Are big brands dying?” and “Does the iPhone defy the double jeopardy law?”

Sharp, whose previous work includes How Brands Grow, includes many of the institute’s findings in his textbook. Of course, the book contains all of the material that these texts always have. But what makes this one different is that it advocates for opinionated and controversial ideas on a wide variety of topics.

If you agree with Sharp, the book will be the best thing to come out of Australia since Kylie Minogue. If you disagree, the proclamations will paint with too broad of a marketing brush and leave a bad, Vegemite-like aftertaste. Regardless, the book’s assertive tone adds some Jungle Rain chilli sauce fire to the usually dry material in marketing textbooks.

Note: the paperback version of the text is 796 pages. For brevity, I will focus on the book’s take on some of the topics that I have discussed in this column over time.

Consumer behaviour is mindless and habitual

In an early chapter, the textbook discusses how everyday people – those who do not work in marketing – approach brands.

The findings: most purchasing is mindless repeat-buying. Loyalty programs do not work. Buyers do little research themselves, even with the internet today. Product loyalty comes naturally with use because people gravitate towards the same brands to simplify their lives.

“Many marketing textbooks tend to gloss over these facts about habitual buying, overemphasising rational decision making and thinking,” the text states. “For the majority of brand buying and store choice, habit and convenience drive our behaviour.”

There is a cafe close to my flat in Tel Aviv where I eat lunch, hold meetings, write columns and prepare conference presentations in my work as a marketing speaker. I have gone there for almost three years now – longer than all of the workers and managers except for the owner.

Why did I go there the first time? It was close. The food was good, the people were nice, and it was not too loud to work, so I kept going back. One day last year, the manager told me that I would get a 10% discount every time. As a consumer, I took the offer and thanked her kindly. But as a marketer, I knew that I would cost them 10% in unearned revenue with every order. I would have continued to go there without the discount.

In a larger example, I usually fly on Turkish Airlines for conferences and clients because I think the company has the best lounge and business class in the world. Of course, I joined the loyalty programme. But I would have continued to fly with them without getting a free flight once in a while and costing them unearned revenue.

Secondly, many marketers – especially in the digital world – believe that consumers want to have “relationships” with brands, that people often research products extensively before purchasing, and that brands should take positions on the political and cultural issues of the day.

The text implies or outright states that all of those ideas are utterly wrong: “Marketers have to accept that our brand is a small part of the lives of most of our customers.”

We need “sophisticated mass marketing”

One of the battles in marketing is between the ideas of segmentation versus penetration.

In basic terms, segmentation aims to divide the market into some number of targeted customer groups based on sets of characteristics. Penetration argues that the best results come from broad and repetitive mass marketing to anyone who might be relevant. Segmentation tends to create individual marketing mixes for each group while penetration will usually use take a one-size-fits-all approach.

For those who might not know, Sharp is one of the fiercest advocates of penetration.

“Segmentation encourages managers to think of differences rather than look for bigger commonalities or look for ways to be inclusive,” the textbook states. “This is anti-scale and potentially anti-growth, and could reduce competitiveness.”

“Brand-specific segments generally do not exist – rival brands usually compete as perfectly interchangeable options in what for them is a single, unsegmented mass market. There is no support for the idea that competing brands each appeal to a unique subset of users that look different from the customer bases of competitors. Unfortunately, few marketers are aware of this fact.”

Sharp also criticises the use of database-driven targeting to focus on the customers who purchase the most. “The logic is wrong: marketing efforts should not be concentrated on the heaviest, most profitable customers, but on those who collective will have the biggest differential reaction.”

A common idea is that 20% of customers are responsible for 80% of revenue and that marketers should focus on that smaller group. But in the textbook’s opinion, the key to growth is not to focus on getting existing customers to purchase more but on convincing those who are not customers to buy a product one time. This idea informs many of the book’s ideas on numerous topics.

Sharp argues that marketers should not be over-targeting and instead do “sophisticated mass marketing”. The text’s 11-step process for doing so can be summarised by the idea of segmenting only when absolutely necessary – when the differentiating characteristics relate directly to buying behaviour. Men and women, for example, buy different clothes, so that differentiation is usually important. Location and income, in contrast, are usually less relevant.

“Segments that are non-intuitive, complicated, or mysterious are unlikely to be of practical value,” the text states.

The reality of online versus offline

In this column and at marketing conferences, I frequently discuss the merits and drawbacks of direct response versus advertising. In terms of long-term ROI, Sharp’s textbook argues for advertising.

“While the likes of direct mail offers or programmatic buys online appear to give high returns on investment numbers, they typically skew to those who already buy the brand and are thus inefficient to underpin a strategy of growth,” the text states. “So, for most marketers interested in growth, mass marketing is more cost-effective than targeted approaches.”

Sharp, for example, writes that television advertising costs two to three cents per person, which seems to be a reasonable expense when the alleged fraudin online display advertising is taken into account.

Further, Sharp’s textbook states that as for online retailing, “in some categories, it seems to have reached its peak”. In the UK, one chart reports, only 24% of households shopped online for groceries in 2014. Those households shopped online an average of 14 times that entire year. That does not bode well for those who insist that marketers should be digital-first or even digital-only.

In the chapter of media mixes, the text notes that Australians watched 20.7bn minutes of the 2016 Summer Olympics in Rio de Janeiro on traditional television compared to 325m on digital video and 68m on social media. That is billions compared to millions. Clearly, television is not dying.

In addition, the chapter lists the pros and cons of various traditional and digital media – as well as a section on the aforementioned online ad fraud. Sharp is dismissive of “earned media” on networks such as Facebook – the unpaid posts that reach a company’s followers – because “research showed that such earned media was not of high quality as it only allowed brands to reach their most heavy buyers – which were the easiest audience to reach anyway.”

What the book misses

No textbook is perfect, and each one will always demonstrate the biases of the author – especially in this case. That being said, there are a few issues that I would like to see addressed in future editions.

The book is heavily biased towards marketing in fast-moving consumer goods (FMCG) companies. Most of the examples involve large consumer brands even though, in one example, Forrester estimates that the B2B e-commerce market in the US will be twice the size of B2C e-commerce by 2020. Most of the B2B examples are small blurbs at the end of sections or chapters. Furthermore, Sharp’s textbook does not discuss marketing in the high-tech, SaaS, or startup worlds– where the practices, for better or worse, are often radically different.

Public relations is barely mentioned. There are entire chapters or large sections devoted to the advertising, personal selling and direct response tactics within the promotional mix, but PR is mentioned almost as an afterthought on only a few pages. And when PR is discussed, it is only in the context of media relations and publicity – even though that is only one type of PR. (Too many marketers think PR and publicity are the same things.)

While Sharp discusses social media and search engine advertising, I am still waiting for a textbook that covers “organic” search engine optimisation. It is an important topic because, in one analysis by Moz co-founder Rand Fishkin using data from marketing analytics platform Jumpshot, 95% of the clicks that follow Google US searches are in organic results and 5% are in search advertising. An analysis of the top 10,000 websites in the world by SEMrush, a competitive marketing intelligence platform, found that 87% are in organic results and 13% in search advertising. I will probably wait for such a textbook for a long time because while most marketers understand the principles of media mixes and advertising waste, few know about technical SEO concepts such as schema code and robots.txt files. (For a primer, see this prior column of mine.)

Many of the case studies consist of Australian brands. Examples are easier to understand when the companies are known, so the textbook might be less valuable for the men at work who are not from the Land Down Under. However, it is undoubtedly a culturally positive thing for people to have more knowledge about Australia than what comes from Crocodile Dundee movies.

I have always argued that marketers of all experience levels should read less of the fluff in the blogs of too many marketing companies and more trade publications and quality textbooks. Sharp’s new tome certainly qualifies. But just remember that his strong opinions are not the only ones out there.

The Promotion Fix is an exclusive biweekly column for The Drum contributed by global marketing and technology keynote speaker Samuel Scott, a former journalist, consultant, and director of marketing in the high-tech industry. Follow him on Twitter and Facebook. Scott is based out of Tel Aviv, Israel.


PepsiCo steps up marketing investment on its ‘big brands’


PepsiCo has revealed that it would be increasing its advertising spend behind its “big brands”, such as Pepsi, Gatorade and DEW. This is with expectations of positive impact, said Hugh F. Johnston, vice chairman, CFO and executive VP at PepsiCo.

Johnston added that the brand’s strategy in the beverage business is focused on brand building.

The brand’s strategy in the beverage business is focused on brand building.

He added that it is also focused on innovation and execution in the marketplace. However, “like most advertising campaigns, that will take several quarters to fully realise the impact”, he explained.

“So we expect sequential improvement in each of the quarters, starting with Q1,” Johnston said.

According to Indra K. Nooyi, chairman and CEO of PepsiCo Inc, the company looks to step up investment spending in advertising, marketing, frontline workforce training, digital capability, data analytics and e-commerce. The move comes as its investment in e-commerce across multiple channels, from e-grocery, to direct to consumer, to pure play, helped drive exceptional growth in 2017, Nooyi said. As a result, PepsiCo’s e-commerce business is now approximately US$1 billion in annualised retail sales.

“We are leveraging big data and predictive analytics to sharpen real-time marketing messages, dynamic merchandising and tailored offers. And we’re increasingly collaborating with retail customers to make e-commerce a point of differentiation for PepsiCo,” she added.

The company also has “robust marketing innovation lined up for 2018”. This includes the launch of its Pepsi Generations campaign and the launch of Mountain Dew Ice, featured with Doritos Blaze at the Super Bowl. Other initiatives include the introduction of its new sparking water bubly, and further marketing support and packaging innovation. This comes as LIFEWTR enters its second year from launch.

“Furthermore, as a company, we will double down on new capabilities in areas such as e-commerce, digital and brand marketing to make us even more competitive,” Nooyi said.

Regarding its pricing strategy, PepsiCo expects its pricing to be competitive in the marketplace. However, pricing lower is not part of its strategy to gain market share.


Bond yield rises 4 bps to 7.80%, banking system liquidity under pressure

The yield on the benchmark bond rose to 7.80% on Monday, up four basis points over Friday’s close of 7.76%. After rising to 8.23% in September, its highest level in four years, the yield fell 17 basis points in October, its first decline in three months.
Meanwhile, the Reserve Bank of India (RBI) continues to infuse liquidity – the central bank bought `86,000 crore ($11.8 billion) of bonds between May and October. It has planned to buy another `40,000 ($5.6 billion) crore worth of bonds this month. Liquidity has been drained by the central bank’s defence of the currency and the festive season, analysts at

Nomura wrote.
Money market experts said yields at the short end — across treasuries, commercial paper (CP) and certificates of deposits (CD) — have seen a slight decline in November after increasing 20-25 basis points in October.
One reason for the shortage of liquidity is that foreign portfolio investors (FPIs) have been pulling out money from the bond markets – withdrawals since April so far are $7.76 billion. However, in the first six sessions of November, FPIs have bought Indian debt worth $721.6 million in six trading sessions.
“Money market deficit will average `50,000 crore in the December quarter even after `90,000 crore of OMO and `10,000 crore cut in the net borrowings by government in H2FY19,” Indranil Sengupta, economist at Bank of America, wrote.
Banking system liquidity in recent weeks was pressured by the continued intervention in the forex market to stem the rupee depreciation and a mismatch in assets and liabilities of NBFCs.


Concerns also remain about relatively weak NBFCs being unable to roll over their commercial papers (CPs). Risk aversion has risen and lenders are funding only better-rated NBFCs and HFCs; for many NBFCs and HFCs, it is feared, are staring at an asset-liability mismatches resulting from borrowing short — from mutual funds — and lending long. With lenders becoming choosier now, corporate spreads are widening.
On the other hand, the cost of borrowing for corporates in the bond market has been rising in recent months as reflected in the increase in yields. Analysts at CARE Ratings observed there has been a notable increase in secondary markets yields of corporate bonds since November 2017.
They explained the average corporate bond yields — across maturities — rose to a near two-and-a-half-year high of 9.20% in October.
The rupee on Monday breached the 73 mark in intraday trade against the greenback before recovering at the close of the session to 72.89. Currency experts believe the immediate cause for the rupee decline is the increase in crude oil prices. Glob


Japan to Probe Debt Market’s Big Secret

Japanese regulators are starting to look into underwriting practices in the nation’s corporate bond market, where banks routinely say deals are successful even in cases when they are under-subscribed

The move suggests that the potential damage to some investors in Japan’s 76 trillion yen ($669 billion) company note market is getting too big for the government to ignore. Bloomberg reported last month that underwriters in Japan failed to fully sell at least 29 percent of corporate debt offerings in September, twice the average over six months, based on interviews with investors, underwriters and issuers.

Hidenori Mitsui

Source: Financial Services Agency

As part of its regular discussions with market participants, the Financial Services Agency plans to ask whether domestic brokerages often get stuck holding onto company notes they couldn’t sell as a result of mispricing, according to Hidenori Mitsui, director-general of the policy and markets bureau.

Officials may “encourage” relevant players to improve their practices if they find that underwriters are indeed often failing to sell all of the debt, he said in an interview. The FSA will likely do so if officials find structural defects in the market that could hold back growth, according to Mitsui.

“I don’t mean to say a lot about individual deals that went unsold, but I am very interested in the phenomenon from the perspective of how we can make a better market,’’ Mitsui said.

In all the cases that Bloomberg has reported on, underwriters said the deals were sold out, in claims that people familiar with the matter said may be intended to hide a lack of demand and ensure good relationships with bond issuers. The brokerages often sell the leftover securities to favored clients later at a discount, hurting investors who paid more for the bond at the initial offering, the people say.

Still, the agency has no intention to try to forcefully correct market practices that generate unsold bonds, and those practices aren’t against the law, he said. The questions are part of the FSA’s efforts to improve the functioning of Japan’s corporate debt market, Mitsui said.

Bond deals by some of the nation’s biggest companies have failed to sell out recently, including those from Japan Airlines Co., Japan Tobacco Inc., Honda Finance Co. and Idemitsu Kosan Co., according to information obtained by Bloomberg. Spokespeople for those four companies said their banks told them that all of the debt sold.

The percentage of deals with unsold bonds rose further last month, to at least 31 percent, according to Bloomberg interviews with market participants.

Takahiro Oashi, a senior fund manager at Asahi Life Asset Management in Tokyo, said that fixing Japan’s unsold bond practices would increase transparency in the company debt market.

“It’s hard to make investments unless there’s a single price for a deal,” Oashi said. “If this gets corrected, that would be a genuinely positive factor.”

Japanese regulators’ deeper interest in corporate bond offerings comes as the FSA pledges to study ways to help the nation’s credit market gain more depth, according to annual policy guidelines released in September. Those are in line with Prime Minister Shinzo Abe’s broader goal of making Japan an international financial center.

The nation’s corporate bond market is dwarfed by its U.S. counterpart, even relative to the size of the economy. Its market of less than $700 billion is equivalent to about 14 percent of gross domestic product. Outstanding U.S. notes come to $10.3 trillion, or about half of American GDP, according to Bloomberg-compiled data.

“We should aim to create a market in which a variety of players participate and prices are set through appropriate risk-return considerations,” the FSA’s Mitsui said of corporate debt. “If there is a good market, I think everyone will participate in it.”

From The Web

PG Diploma in Machine Learning & AI. Prepare for the future job wave!Amity Online

15 Forbidden Destinations You Can Never VisitFar & Wide

Choose a plane and play this Game for 1 MinuteDelta Wars


What New Alamance County Bonds Mean For Schools, Taxes

Story image for What New Alamance County Bonds Mean For Schools, Taxes from

Big changes are coming to several Alamance-Burlington schools after voters approved new education bonds in the election last week.

Alamance County School Bonds, totaling $150 million, passed by about 70 percent of voters.

ABSS has already broken down where that money will be going. Some of the upgrades include:

  • About $67 million for a new high school that will go in the Mebane area. The goal is to help alleviate overcrowding Eastern Alamance and Southern Alamance High Schools.
  • Cummings High School: about $10 million will go toward a new auditorium lobby, new equipment for the Fine Arts program and other building upgrades
  • Eastern High School: about $11.6 million will go toward cafeteria expansion new classrooms and other building upgrades
  • Graham High School: $7.6 million for renovations like new flooring, carded entry locks, ADA compliant cabinets among other items
  • Southern High School: $20.6 million for cafeteria expansion, new classrooms, a new campus canopy walkway system, roof replacements in certain areas
  • Western High School: $12.4 million for cafeteria expansion, classrooms, resource rooms and a new technical lab
  • Williams High School: $4.6 million for upgraded school security system, window replacement, auditorium upgrades, roof replacements where needed
  • Pleasant Grove Elementary School: $6.4 million for school safety improvements, new flooring, upgrades to the HVAC system and fixes to erosion issues
  • South Mebane Elementary: $8.4 million for new classrooms, cafeteria expansion, kitchen renovations and school safety improvements

Many of these projects are expected to take several months to several years to complete. Citizens in Alamance County also voted in favor of about $40 million bonds for Alamance Community College for upgrades and new programming. Mac Williams, President of Alamance Chamber, says he thinks all the upgrades will help boost the economy and make it a more attractive place to work.

“After a company that’s looking figured out their real estate need, they’re next issue is the labor force,” Williams explains. “So, for us it’s about establishing the labor pipeline and facilities have a lot to do with the quality of the education that’s provided. That’s where the teachers teach and the students learn.”

Williams also says it’s a good sign when a community chooses to invest in itself. Money to fund the bonds will come from a property tax increase. The county set a cap on the increase amount at $7.88 per $100 of property value.

There was a third bond to slightly raise the sales tax to help offset and reduce some of the hike in property taxes. That bond did not pass.


Morales & Besa Advises Ingevec on Bonds Issuance and Registration

Morales & Besa has advised Ingevec S.A, a publicly held corporation, in the issuance and registration of a $53m line of bonds due to 2028, and in the placement of series B bonds, issued pursuant to such line of bonds for the same amount.

Founded in 1983, Ingevec S.A., a Santiago-based company, specializes in engineering and construction of public and private infrastructure in the country.

The funds obtained in the placement of the serie B bonds are going to be used, in part, to finance the prepayment of the outstanding serie A bonds of the company, improving its long term debt structure.

Partner José Miguel Carvajal, assisted by senior associate Andrea Díaz and associate Mariana Schnettler, acted as legal counsel to Ingevec.


Reliance Industries raises Rs 3,000 crore via bond sales

Reliance Industries

Top-rated Reliance IndustriesNSE 1.80 % added some much-needed sparkle to an otherwise sluggish debt market on Diwali, raising about Rs 3,000 crore in bond sales Tuesday.

Those papers offered 8.95% with 10-year maturity at a time when investors are mostly seen shying away from making new investments due to liquidity concerns.

ICICI BankNSE 2.43 % has helped arrange the issue as it initially subscribed to papers on the electronic bidding platform. Later, top mutual funds and insurers were seen buying the long-dated Reliance papers from the bank.

“The company has obtained fair pricing for the bonds. Yields could be about five-six basis points higher than its secondary levels,” said a domestic investment banker, who was not involved in the fund raising.

Capacity additions and higher utilization could see Reliance’s consolidated operating profit rise 18% in FY19, the management hinted earlier in October.