Samsung's Price Strategy: A Marketing Mix Analysis Report

This report provides a comprehensive analysis of Samsung's marketing mix, focusing on its price strategy. The report delves into Samsung's product strategy, examining its product classifications, product life cycle stages, brand strategies, and brand equity. It also explores the pricing strategies employed by Samsung, including skimming and competitive pricing, using the Galaxy S9+ as a case study. The distribution (place) strategy is examined, outlining Samsung's channel marketing approach and use of various intermediaries. Finally, the report details Samsung's promotion strategy, covering how the company communicates with its target audience and builds brand loyalty. The report draws on various sources to support its analysis of Samsung's marketing strategies.

Running Head: ORGANIZATION STRATEGY 0
ORGANIZATION STRATEGY

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Table of Contents
Introduction................................................................................................................................2
Samsung Product Strategy.........................................................................................................2
Samsung Price Strategy..............................................................................................................5
Samsung Place Strategy.............................................................................................................7
Samsung Promotion Strategy.....................................................................................................8
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
Samsung Group is a Korean Company founded 80 years back by Lee Byung-chul.
The company have their business in various areas such as electronics, medical,
telecommunication, apparels, equipment and home appliances. The company is known for its
quality product serving whole world with continuous innovation in the field of technology.
The company had earned consolidated revenue of 65.46 trillion South Korean won in the
third quarter of 2018.
For the purpose of expansion and diversification in the global markets, Samsung
group has done many joint ventures and acquisition so as to improve their brand stability. In
this report, the marketing mix of Samsung is stated below.
Samsung Product Strategy
Samsung spends lot in their research and development department to provide best
products to their consumers and users. They are also consisting wide range of products in
terms of different product categories. Their diverse offerings are divided into several
categories such as apparel, medical equipment, chemicals, automotive, mobile devices, home
appliances, TV/Av, Information technology and son on (Lee & Slater, 2007). The company
also provides various services such as advertising, hospitality, information and
communication technology, entertainment, etc.
In terms of smartphones, one of the major earning product was their galaxy series
handphone, which gives Samsung a platform of inception. In today market, Samsung S9 and
Galaxy Note 9 are the latest series phones enriched with many features and design like super
AMOLED display, huge 4000 many batteries and many more (Kim, Dwivedi, Zhang &
Jeong, 2016). To understand the stages from inception to maturity, it can better be explained
with the help of product life cycle.

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Stages Time Duration
Introduction 2001-2006
Growth 2006-2011
Maturity 2011- till now
From summer 2006, Samsung introduces various next generation mobile phones as
per the market trend of increase in the screen size. They come up with multiple designs like
Samsung F700 (Davies, 2012). In respect with Korean electronics giant, Galaxy S II was the
device that pushes Samsung to truly break the market. After that, Samsung starts selling
broad range of smartphones having different shapes, sizes and operating system (Segan,
2013).
3Cs of Samsung
Strong brands are clear about what they are and what they are not. They always have
a strong and unique value proposition, which differentiate them from their competitors.
Samsung is clear about their commitment to quality. This makes them asses every stage of
the smartphone manufacturing process with the 8-point battery safety check. Their batteries
Samsung
I7500
Galaxy
(Concept
Phones)
Samsung S9
(Smart
android
phone and
Galaxy
Series)
Samsung
F700
(Touch
Screen and
Dual Series)

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are also tested with the help of careful inspection through X-ray and this all fulfil their
commitment to the safer device now and in the future (Almitra & Salamah, 2017).
In addition, to being clear about who they are, Samsung is also consistent. They are
always what they say they are. For Samsung, they are always focused on quality and they
also do not change their centre from model to model (in any galaxy or note series). When
new models and series come out each year, they are also superior in terms of quality (Cole &
Matsumiya, 2007). Moreover, Samsung also communicates this aspect with the help of
various promotional tools and through their established brand image in the market. Even low
prices phones of Samsung are good in quality as per the various specifications like camera,
applications and battery.
In terms of constancy, Samsung as a global brand always visible to their target
audience. Moreover, Samsung always is there for the customers and prospects. Samsung has
a global network of 320, 671 employees work across Samsung Electronics (as of December
2017). They are also connected with customers and targeted audience with the help of
integrated marketing mix (Social Media). More than 47,424,864 people are following them
on Facebook as the company communicate various news as for spreading information or for
doing promotion. This helps the company to bring loyal customers and in creation of strong
brand identity.
In building and nurturing a strong presence in the market, Samsung has to lot more to
think about than these three C’s as this is an era of globalization which brings strongest
competitors from the various global markets.
Competitors’ differentiation and brand equity
In terms of strategy, Samsung differentiates themselves from the competitors by being
as a leader in the digital market (Ali, Muhammad & Park, 2011). As per their policy, they
devote out human resources and technologies to build superior products and services in
respect with the betterment of the global society. They also have differentiated themselves
from the competitors on three bases i.e. product attributes, firm linkages and firm customer
relationships (Macintosh, 2007).
The level of brand equity gained by Samsung can be justified with the help of Keller’s
Brand Equity Theory. The first fundamental element is the “salience” (Hur, Kim & Woo,

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2014). It is connected with brand identity and communication of the right messages. Samsung
always let their customers perceive its brand with noble quality products at a premium price.
Moreover, with their market growth it can be said that Samsung continues to be success in
their mission due to the acceptance of the price from the side of customers. The second level
is the “meaning”. It has two aspects – performance and imaginary. In addition, with the help
of CSR activities, Samsung brings high loyalty to the brand.
The third level is “Response”. It is related with the judgments and feelings and the
focus is on the reputation. Samsung keeps upgrading their brand position by introducing more
high quality products in comparison with their rivals like Apple and deliver them in
accordance with the needs and wants of the customers (Kim, Han, Holland & Byon, 2009).
The last level in this theory is “Resonance” which can also be said as “Relationships”. It
represents customer loyalty. Samsung definitely so successful to have several consumers
made communities under them.
Therefore, it can be said that Samsung has strongly organized themselves in according
to Keller Brand Equity Theory and this makes them be a highly valued company all over the
world.
Samsung Price Strategy
Having a wide variety of the products to offer to its consumers, pricing plays a
significant role in the marketing mix of Samsung. In respect with targeting several customer
segments, the company uses various pricing strategies and their marketing strategy revolved
around the pricing of its different brand's portfolio and models. The two major pricing
strategy use by them are – Skimming price strategy and Competitive price strategy.
In skimming price strategy, Samsung makes their product price higher so that fewer
sales are needed to break even. They believe that scarifying of high sales will bring high
profit to them in long term (Che, 2009). This strategy is generally used by the early adopters
of the product. Their new product launched in the market named as Galaxy S9 and S9+ also
use skimming pricing strategy and this holds quite a strong customer affinity. However, like
every time, they will drop the market price of these products when the competitors try to
enter into the market.

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Other than flagships products, Samsung also launches various number of smartphones
and for these products, the brand uses competitive pricing to compete with the various other
big brands like Huawei, LG, Nokia etc. on respect with brand value, price and features.
For the effective analysing of Samsung pricing strategy, Samsung Galaxy S9+ is
selected that is selling at a price of total $1,099.99 to the customers. As per the report by IHS
Markit, Galaxy S9+ material costs $43 more than previous versions. This cost is increased
due to the well imporved camera and advanced DRAM memory (Rassweiler & Larn, 2018).
In the new Samsung S9+, there is 64 gigabytes (GB) of NAND flash memory and this
represents a bill of material cost of $375.80, which is more than their previous series of
smartphone. The preliminary estimated total is $43.00 and it is higher than the Galaxy S8+.
As per the report, the unsubsidized retail price for a 64GB Galaxy S9+ starts at $839.99.

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The main objective of Samsung to launch Galaxy S9+ is to bring dual camera in the
new segment. The company also give a promotional title – “ReImagIned”. The company
always move up with the latest trends in the market. Moreover, there growth was shirnk by 1
percent last year, the company now focuses more on featured design so as to encourage
customers to ditch their old phones.
In addition, DJ Koh, Samsung president of IT also stated that one of the major
motives to launch this phone today is to adopt “visual communications” and thus Galaxy S9+
has been designed for the visual and social generation (Sandle & Lee, 2018). It comes with
improved cameras, voice tool powered with AI, upgraded social media functions and with
newer auto slow-motion camera.
In the future, Samsung will use skimming price strategy only and thus decrease the overall
price of the product by 15 to 20 % in the near future (two to three months after the launch).
As per the reports by Consumer Intelligence Research Partners, there was more
activation of Samsung Galaxy S9 + as compared to Apple. Their reports (March Quarter,
2018) states that Samsung accounted for 39% of US mobile phone activations in comparison
with the Apple accounting for 31% only. This shows that in future, their demand can be rise.
Samsung Place Strategy
In response to their distribution medium for their products, Samsung follows channel
marketing just like the other brands. The brand has various associations with many large and
small retail giants that can effectively hold the sales of company. In spite of these retail
distributors, Samsung have a huge base of their own sole distributors and these distributors
only sell Samsung products.
Samsung also utilizes the potential of various e-commerce channels like Amazon and
Facebook in respect to selling their products (Najmi, Hashmi, Malik, Rezgui & Khan, 2015).
They have an exclusive partnership with these brands that enable them to reach out to a larger
customer base in an economical manner. Moreover, if the retailers are ready to take out their
stock, Samsung can sell the products anywhere in the world. In this manner, the company can
sell their respective products in both direct and indirect manner to the customers.

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In addition, Samsung also has the caability to rapidly enlarge and saturate the market
with their products anywhere in the globe. The company also have an existing distribution
network from their current business. These distribution channels will also be there for the
future dissemination of the Samsung products.
Samsung as a brand also possess an advanced approach to a new channel activity and
this will make easier for solution providers to source product in respect with “Samsung Team
of Empowered Partners” (STEP) program. Currently, product line and efforts divide
Samsung channel efforts and it can be said as Samsung is making concerted efforts to get
more numbers of allies and thus exploit various number of opportunities.
In other term, Samsung’s new channel effort could be called a “channelification” of
the business.
While choosing an effective channel, there is various consideration adopted by
Samsung so that there will be no negative implications in future. Some of the considerations
are related with the products like unit value of the product need to be sold in the market,
nature of technology, etc. For example, if the product is technical in nature, Samsung will not
sell directly to the consumer and the user may not aware of the necessary technicalities of the
product. While choosing channel, Samsung also considers various market aspects, like
number of buyers, types of buyers, buying habits and size of markets (Mo Yang, Seok Choi,
Jin Park, Soo Suh & Chae, 2007). For example, if the number of buyers is large, the
company will take the help of intermediary’s services in response to the distribution of goods.
Samsung Promotion Strategy
Promotion and advertising play a key role in creation of awareness about the launch
of new products of Samsung. Various combinations of online and offline promotional
channels are used by Samsung for the promotion of their products. The company uses
combination of social media sites and channels, paid digital promotions, and product
advertisement to bring more awareness about their products in the minds of the customers.
With the help of various trade partners, the company also push their products to
offline channels. Samsung also does push marketing with the help of celebrity endorsements
and several events including sports and entertainment shows. The brand has also hold various

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accounts in social media sites like Youtube, Facebook and Twitter where they have millions
of followers (Lee & He, 2009).
In promotion strategy, Samsung also uses some sort of pull marketing efforts. With
the help of social media, the brand builds a long-term relationship with the customers through
a 24x7 hours online presence. Moreover, most of their advertisement initiates a system for
pull strategy.
In respect with product life cycle of Samsung, majorly there are four stages where the
company use various promotional activities. This is necessary for healthy success and the life
of the product.
The first phase is the Introduction where Samsung target audience of its entry so that
to push the product through the introduction stage of PLC. The main objective in the
introduction stage is to inform consumer in effort to increase their level of awareness. With
the launch of any new product like curve TV, Samsung always works with gaining new
coverage, online promotions and with the help of building social campaigns. The promotional
objective of this stage is – “To inform”.
The next phase is the growth stage where the snowfall effect occurs and the sales of
the product rise due to the awareness between the customers in relation to the benefits. In this
phase, Samsung tries to increase loyalty with the customers in respect with that new product
and persuade the consumer to buy that product. This phase also covers Samsung improved
latest technology such as its Galaxy products. Although Samsung will not change price point,
it could decrease or increase slightly as per the market demand and competition. Other
retailer locations as per the distribution channel include Wal-Mart, Best Buy and other online
retailers (Lee & He, 2009). Moreover, personal selling could also be proved to be an effective
tool in this phase. The promotional objective of this stage is – “To persuade”.
In the maturity phase, there is a highest competition-taking place. Moreover, Samsung
modified their product price slightly so as to achieve competitive advantage. They also
acquire number of distributors and offer various incentives who display and sell their
products to the customers. In addition, Samsung will also enhance the quality of service by
maintaining boosters both in international and domestic (Lee & He, 2009). The major
promotional activities used by Samsung in this phase will be sponsoring of events for
maintaining customer loyalty. In addition, they can also use direct mail technique, which can

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encourage repeat purchases. The promotional objective of this stage is – “To remind buyers
of the product existence”.
The last phase for Samsung will be declining stage where product sales will start to
fall off and here the company motive will different. In this stage, Samsung tries to innovate as
per the market trend and thus launch new series of their product portfolio, for example,
Galaxy S10 or S10+. In addition, they also spent little on the promotional mix. The
promotional objective of this stage is – “To phase out”.
As a global brand, Samsung disbursed 11.5 trillion Won (around 10$ billion) on
marketing its company and products to all over the globe. Also, they spent 4.4 trillion won
(around $4 billion) of its marketing budget on advertisements and it is 15 percent more in
comparison to the year before (Rutnik, 2017).

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Conclusion
The brand name Samsung has contributed to the latest technologies in various ways.
The company has been evolved in the technical world with their innovation and excellent
products. Every quarter or year, the company is coming with new product series in the
smartphone, which not only excites customers but also stimulates in satisfying their superior
needs.
Samsung has always been an excellent product with high quality features. However,
in this competitive market, Samsung need to be good at promotion as this will help in
increasing their sales with its featured products. Therefore, having an adequate marketing
plan can help company in increasing the customer satisfaction and give the company a
considerable success.