Sunday, October 28, 2012

Samsung's New Marketing Strategy

This article is taken from The Star E-newspaper which was published on 5th of October 2012. This article is talking about Samsung will be selling its product in Tesco Extra Malaysia. The new market channel which using by Samsung will influence both Tesco and Samsung’ sales and economy.

Samsung’s products are selling in many merchandise and retail shops in Malaysia. Samsung are trying to make its products available in every place. This can easy its customers to buy its products anywhere. In order to gain the market share, Samsung has been partner with Tesco Extra Malaysia, so their products can be selling in this hypermarket.

‘The Star’ newspaper had published a new about Samsung Company will sell all their products at Tesco Extra. Samsung has partnered with Tesco Malaysia to introduce Samsung World shop-in-shop (SIS) concept retail experience in a hypermarket. This collaborate strategic is known as a good channel for Samsung to promote its product. In a same time, Tesco Malaysia also gains benefit also because of the new department will be set up in Tesco Extra and this can attract many consumers come to visit Tesco. Samsung had mentioned all the latest innovative products will be exhibit at designated Tesco Extra stores. It aims in providing all the customers with a different experience and understanding about all its smart living solution.
The success of Samsung Company because of it had archived and answered the 2 big economic questions. The first question which was already answered by Samsung Company, how do choices end up determining what, how, and for whom goods and services get produced.  In the question of what to produce, Samsung had produced many varieties of goods and services to the customers like audio-visual studio, digital appliances, cameras etc. The variety of the goods and services to the customer is complex and all is focusing on electrical and electronic devices. In order to increase its products, Samsung need to increase the price. This is one of the disadvantages to produce more the products. When the price increases, the demand of Samsung’s products will be decreased. In the question of how to produce, there are several factors of production are grouped into 4 categories which are land, labor, capital and entrepreneurship. Samsung chose Malaysia to produce its products because it feels Malaysia is a prosperity country and the rental is cheaper when comparing to other countries. Set up a new Samsung store which collaborate with Tesco is also a new strategic and channel which can help Samsung to gain more profits. But, it can also increase the Samsung expenses. In order to cover its expenses, Samsung need to increase its price to get profit. When its price increases, the demand of Samsung’s products will be decreased. When the supply is higher than demand, surplus of Samsung’s products will be occurred. Although ‘Samsung World’ which allocates in Tesco extra Malaysia is an good idea to promote its products, I feel there are not many people will buy Samsung’s product at there. Firstly, the price of the Samsung’s products will be higher than other retail shops because Samsung needs to pay Tesco a high rental fee. Thus, Samsung need to impose the rental fee to its products and the price of the products will become higher. In order to achieve the market equilibrium, Samsung needs to decrease its price by decreasing supply. When the price of Samsung products decreasing, the demand will increase. 

Today, Samsung is a well-known Korea company which product many range of home appliances and electronic devices. As we know that, most of the electrical and electronic devices are considered as luxury goods. Besides this, Samsung Company does not just only selling smartphone, it also provides several kinds of home appliances and electronic products, and it’s ranging from mobile phones, digital appliances, digital imaging devices, IT products and audio-visual studio. That means Samsung Company do not provide only 1 kind of product, they will price their products at the cost from low to high according to consumers’ needs. This can be concluded that the demand of consumers to the Samsung products is quite high. But, when Samsung set its price above the market equilibrium, the demand of Samsung’s product will be decreased.  This is because there are many options that provided by other company to satisfy the consumers’ needs. Just like LG and Panasonic can be substitute for Samsung’s products. When the supply of Samsung is decreasing due to need to decrease its own price and the demand will become high, the shortage will be occurred. There will be a lot of black market appear in this time. This is because many people wonder to buy it and the demand will become very high plus the restriction of production, so this can give other seller opportunity to increase the price of the products to get more profit. The higher of the shortage will cause more of the black markets appear.  

The substitution effect of demand also indicates that consumers have many choices, once they find out some of the products of Samsung is not suitable to them due to the price is too high they can seek for another products to replace the current 1 which is more cheaper and able to satisfy their needs. LG and Panasonic also provide wide range electrical and electronic products which can substitute for Samsung products. If Samsung set its price higher than these companies, consumers might switch their products to another brand. As a result, there will be a decrease of demand for Samsung’s products. Besides this, the complementary products of Samsung should be increased. This can increase the demand of Samsung’s products. Samsung and Tesco should provide more complement goods and sell them in Tesco Extra. For example, Samsung sell their latest innovative product in Samsung World, in a same time, Tesco can sell its accessories like cable, screen protectors, extension cable, casing etc. This can increase both Samsung and Tesco sales.
Now, I would like to talk about the price elasticity of Samsung and Tesco’s product. Most of the Samsung’s products are electrical and electronic devices. As we know, the values of the electrical and electronic devices are very volatile and flexible. If you buy a latest smartphone which cost around RM2000, after 1 year it will drop a 50% of its original price, it may only cost around RM1000. So, Samsung’s products are very elasticity. If the products which selling in the ‘Samsung World’ is higher than other retailer, its sale may drop due to all the consumers do more prefer cheaper product. In addition, the consumers will also make the price comparison before they buy a product. Unlike Tesco’s goods, it provides our daily necessity like sugar, flour, food etc. Thus all its products which provided by Tesco are inelastic. If Tesco increases its products’ price, the demand of the consumers will not change too much. This is because all the people also need to consume food for survive. As a result, there’s a good strategy and partnership between Tesco and Samsung to promote out their products. 

In a conclude sentence, I would like to give some comments in order to increase both Tesco and Samsung performance. Firstly, we know that Tesco is one of the largest retailer hypermarkets in Malaysia. Retail Samsung products in Tesco are one of the best channel for them. If Tesco can give a good deal for Samsung to promote its products, there’ll be increase the sales of Samsung. This is because Samsung can sell its products in a lower price. This is not only can benefit the Samsung can also Tesco itself. I feel that the increase of the demand of Samsung products in Tesco will also help Tesco to increase its consumer. 

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