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Why did Bphone fail in the Vietnamese phone market?

Why did Bphone fail in the Vietnamese phone market?

Saturday 19, 09 2020
In the years 2016 - 2018, Bphone is expected to be one of the popular phone brands like Iphone. But why by 2020, the popularity of the Bphone is still not as expected?

 I. Company background

BKAV was established in 1995 by Nguyen Tu Quang, who is the current CEO of the company. BKAV is operating mainly in the areas of network security, software, Cloud computing service provider, smarthome and smartphone manufacturer. BKAV aims to produce high-quality smartphone with the criteria “Vietnamese people use Vietnamese product” which means that the product will be produced entirely by BKAV but still ensure the quality of the product for the consumers. In addition, BKAV wants to spread out their image to the international market through their products. In 2015, BKAV is working with Qualcomm Group and other mobile network operators to bring Bphone to India and US

 II. Product

➢   Features and design

Bphone has a flat design and it uses the operating system called BOS which is developed based on the Android platform and it has some apps that are designed by BKAV. BKAV gives out different versions of Bphone from Bphone 16GB, 64GB and 128GB with golden plating. Furthermore, BKAV claimed that the technical specification and the design of Bphone are as good as the smartphones come from other famous brands such as Samsung or Apple. Moreover, Bphone 2 now has the water-resistant standard which can protect the phone and keep it safe when falling into the water. 

➢  Brand awareness

Vietnamese people tend to use foreign products because of the quality and the brand’s name and most of the customers in Vietnam only know BKAV as a network security and software developer so it is hard for Bphone to compete with the products from other foreign brands. Therefore, the market share of new product like Bphone has not been really impressed

III. Target Customer

Target Customer
In 2016, with this price level, BKAV planted to join the high-end market segment and compete directly with other big brands. With the ambition to become a leading telephone company in the world, in the first product,BKAV has driven Bphone to target the customer segments with high income. In this segmentation, customers will have plenty of money to spend on experiencing a high-end product like the Bphone; more importantly, the demands of these customers for both entertainment and work are quite big and their need is a high quality of processing speed.

IV. Why is Bphone still unable to compete in the market?

To analyze why Bphone failed in the Vietnamese market, 4P theory will be used in this case.

1. Product

Like other smartphones from different brands, Bphone is a type shopping product. In contrast to convenience products, shopping goods take consumers quite a lot of time considering and comparing them with other products to make a purchasing decision. Customers make criterias to judge and compare the products. These criterias could be the usage, the features, the price and even the brand that provides the product. As for the Bphone itself, the criteria set by consumers could be the design, the hardware configuration, the features and the brand image of BKAV in their minds compared to other brands which are mostly international. 
In terms of hardware configuration and price, it is easy for customers to compare Bphone with other products from Samsung, Apple or Vsmart.

  • Branding strategy

BKAV has been operating with the branded house branding strategy since it was established. BKAV is now taking part in various fields such as internet security, software, governmental electronics, smart devices producing and cloud computing services. All of the activities in these fields use one representative name of a brand which is BKAV Corporation. 

  • Product life cycle

Being introduced 2 years after the first version of it, Bphone 2 is still in the introducing stage due to the fact that the Bphone 1 made very little amount of sales. Currently, Bphone is making no profits and BKAV is even subsidising their own loss to keep the price of Bphone 2 equal prices of other smartphones in the same product segment.

2. Price

Why is Bphone still unable to compete in the market? 
To compare with Samsung and Apple, BKAV is known as a new company in the Vietnamese smartphone market, but they are quite risky when using the market-skimming strategy by set high initial price for new product like Bphone. BKAV launched Bphone with the price about 10 million VND. And after one year, BKAV lowers the price of Bphone to 7.9 million VND to earn the initial profit. This pricing strategy is considered as the failure of BKAV because of several reasons. First of all, BKAV is known as the company that specializes in developing network security system and software and they just enter the smartphone industry recently so the image of the brand as a smartphone brand is not really well-known to the consumers as well as the quality of their products is not really impressive like Apple or Samsung which own a huge number of longtime customers because of the quality of their smartphones. Many people criticized that the price of the product is too expensive compared to its quality. Therefore, 10 million VND is an unreasonable price. Furthermore, there exist various smartphone brands such as Xiaomi or Lenovo who are targeting the low and mid-end smartphone market with an affordable price, coupled with the technical specification of their products are as good as  Bphone. For this reason, it is understandable that the consumers would definitely choose these brands instead of an expensive smartphone with the same quality. As a result, Bphone made many mistakes about approaching the domestic market which always requires a reasonable price and high quality.
In 2017, BKAV launched the latest version Bphone 2, which is regarded as an effective step from this  company after the failure of the first Bphone version  that is considered to be worth every penny about the high quality compared to the previous version. Moreover, in the days of modernization, the technological demand of the consumers is always changing which means BKAV has to release new products to meet the needs of the consumers. Applying the product line pricing is a good move for BKAV to ensure that customers can experience the product with the best quality.
Moreover, BKAV started a promotion program that allows customers to exchange their old smartphones for Bphone. In other words, they applied promotional pricing which is a good way to attract more customers and it can help raise the brand image and the brand awareness in the eyes of the consumers. In addition, this kind of promotion program is very famous to many retailers which help them increase their sales so it is reasonable that Bphone adopts this strategy.

Complied by Vietnam Credit

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