There is a suitable Samsung product befitting the budget constraints and specific usage requirements of a particular consumer. Remember that one of the strengths and sources of competitive advantage of this company is its diverse and expansive product portfolio that includes various product models and variants under each product category. Understanding the fact that Samsung aims to cater to a wider target market is essential to understanding the different elements of its pricing strategy.
Understanding the Key Aspects of the Pricing Strategy of Samsung and Its Specific Pricing Schemes
The pricing strategy of Samsung complements its entire marketing mix and its specific product strategy and promotion strategy. It is important to underscore the fact that the company does not use a single strategy or a particular pricing model due to the fact that it offers various product models and variants under each product category.
A particular product model is targeted to a defined segment of the target market. An example of this is the range of smartphone devices, including the Galaxy A series and Galaxy S series, under the Samsung Galaxy brand. The Galaxy A smartphones have more affordable price tags compared to the premium pricing of the Galaxy S smartphones.
The company also promotes its product ecosystem or encourages the sales of new products through product bundling and special and limited sales discounts. Newer smartphones are often bundled with wearable devices and accessories. Some of its smart TV products are bundled with sound devices like speakers or audio accessories.
Nevertheless, considering the fact that it has a diverse business and an expansive product portfolio, the pricing strategy of Samsung is complex. It uses different and more specific strategies or pricing schemes to address its marketing requirements and support or complement other elements of its overall marketing strategy.
Below are the key aspects in the overall pricing strategy of Samsung:
1. Competitive Pricing
An important aspect of the pricing strategy of Samsung is competitive pricing. This strategy involves selecting price points for its products based on the pricing schemes of its competitors in a particular market and specific market segment or niche. Take note that its implementation of a competitive pricing strategy involves using more specific pricing schemes.
The company uses price matching in several of its products. This means that it determines and sets prices based on how the pricing of its competitors. Consider its Galaxy S series product line as an example. The flagship smartphones from Samsung have almost the same premium price as top-tier or premium smartphones from other manufacturers like Apple.
Premium pricing and price matching have several advantages. A high-priced product enables Samsung to reinforce the message that its flagship or top-tier products are as premium as other alternative top-tier products in the market. It also allows Samsung to remain one of the price leaders in the market while maximizing its earning potential.
However, in certain instances, it uses above-the-competition pricing to assert superior product quality and promote its brand image. This has been demonstrated in its Galaxy A series line of mid-range smartphones. These devices are more affordable than the Galaxy S smartphones but are more expensive than mid-rangers from its competitors.
2. Value-Based Pricing
Samsung supplements its competitive pricing strategy and the more specific price matching, premium pricing, and above-the-competition pricing schemes with value-based pricing. This is a market-driven pricing strategy for setting prices for products based on the perceived or estimated value of the target market or members of the existing customer base.
The company has a favorable brand reputation. It is one of the largest consumer electronics manufacturers in the world known for manufacturing high-quality products with relatively excellent customer service and after-sales support. The perceived value of its products is high and favorable due to the established reputation of the company.
Samsung demonstrates this strategy by offering different product models and variants under each product category. Remember that its entire smartphone product portfolio includes specific models for the entry-level, mid-range, and flagship markets. It also has different TV products that come in different sizes, features, and technologies or unique selling points.
3. Price Bundling
Another interesting aspect of the pricing strategy of Samsung is price bundling or bundle pricing strategy. This involves combining two or more products under a single price point. The price of the entire bundle of products is lower compared to the individual product prices. This means that it is more affordable for customers to purchase a bundle.
There are different benefits to the aforesaid pricing strategy. Bundling products under a single price point promotes the sales of low-demand products by partnering them with high-demand products. This strategy is also ideal for clearing out its inventory, selling previous generations or older models, and encouraging demand for newer products.
It also enables to company to bring its customers to its entire product ecosystem. Remember that Samsung has a diverse portfolio of products that often complement one another. This is true for its portfolio of smart devices such as smartphones, tablets, and wearables. Bundling products help in building and maintaining a strong base of loyal customers.
The company has often rolled out bundled products with each new product release. For example, when a newer model of the Galaxy A smartphone is released in the market, it is bundled with a Galaxy Bud wireless headphone. Price bundling is also part of its specific limited promotional activities designed to encourage demand and purchasing urgency.
4. Price Skimming
Samsung also uses a price skimming strategy or skim pricing. This involves marketing newer products with higher price tags and subsequently lowering them as competitors enter the market. Take note that its first foldable smartphone was priced higher than the standard flagship but newer generations of foldable smartphones are now priced less.
The same pricing strategy has also been demonstrated in its newer models of home appliances built using newer technologies or equipped with newer features and novel selling points. Smart TVs from The Frame and Neo QLED lines have price points that are three to four times higher than the prices of average high-definition smart TVs.
Remember that there are customers who are eager to purchase the latest and most innovative products in the market at a premium. The company uses this price skimming strategy to generate the most revenue from experimental products or untested product categories while also giving them the opportunity to gauge market reception and market potential.