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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