Sy guy I cant find subject to put this, so I put under Econ subject: Marketing q

Question

Sy guy I cant find subject to put this, so I put under Econ

subject: Marketing question

Passage:- Question 2

Samsung, Apple under pressure to cut phone prices

As the smartphone action shifts to the mass market, leaders Samsung Electronics and Apple are under pressure to make their high-end phones more affordable to revive sales. They are now competing with Chinese brands, such as Huawei and Lenovo, which have been growing their market share as they acquire technical and design expertise to add to their low production costs and attractive prices.

Samsung has knocked around a tenth of the price of its Galaxy S5 in South Korea in the first such move for a marquee smartphone launch. The S5 price cut suggests that Samsung wants to encourage users to trade up to a fancier phone- at a potential cost to its margins. “It reflects how much Samsung is agonising to secure margins. It is now offering premium models at lower price as the demand outlook for high-end phones remain uncertain,” said IBK Securities analyst Lee Sung-woo.

The mass market- where a smartphone can be had for as little as US$25(S$31) – is the new mobile device battleground, as high-end growth eases off with sales slowing inmature markets. Premium smartphones, like Apple’s tend to be priced above US$300 and pack in more features, such as more processing power and high-resolution displays. “Samsung needs to be very clear about the market segment it’s pursuing.” Said Forrester Resarch analyst Clement Teo. “Take Apple – it didn’t drop prices o its iPhones, even wioth new models. This helps it maintan a margin premium and attracts a certain loyal user base.” Basically Apple thrives on its equality and premium positioning and does not intend to deviate from its path.

Question:-

a) Based on your understanding of the case, discuss the type of pricing objective and pricing method applied by Each of the following brands:

1) Apple

2)Huawei

3)Samsung

4)Lenovo

b) To compete with Chinese brands smartphones, Apple may need to engage in line stretching

i) Explain line stretching

ii)Demonstrate how Apple can make use of line stretching to reach out to the lower-end of the smartphone market. Discuss 2 reasons to explain why Apple may potentially need to take this course of action.

c) Using examples from the company you work for or from a company you are familiar with, discuss 2 possible strategies that the company has executed or can use to build customer loyalty

Explanation / Answer

The pricing objective and pricing method applied by following brands:

1) Apple: Price Skimming pricing method and the objective is to make more profit and retain its loyal customers.

2) Huawei: Economy Pricing method and the objective is to make more sales and to stay affordable in the market.

3) Samsung: Pricing for market penetration, the objective is to gain more and more market share.

4) Lenovo: Economy pricing to attract more price conscious customer.

Line stretching:

Line stretching is a strategy followed by companies where more products are launched under same product line with added features or benefits which offers customer more options to choose from.

Example: Apple iPhones now has Apple iPhone 8, iPhone 8 Plus, iPhone 10 or X, iPhone SE etc. under same product line, earlier there was only two products under the iPhone line like iPhone 6 and iPhone 6 Plus. At Apple Tim Cook has followed the strategy of line stretching to offer more options to customers.

Apple can make use of line stretching because customer nowadays are looking for more and more options to choose from, also by adding more affordable products in the same line will make its share in the smartphone market bigger as people will be able to afford and iPhone. By launching affordable models apple can offer the iPhone tag and reach out to the lower-end of the smartphone market where Apple has very less share.

Apple may need to take this action because the market share of Apple in the premium smartphone market is shrinking as companies like Samsung offers both premium and low end products whereas Apple has only iPhones are higher end phones.

Apple in order to increase its market share and to increase its sales in developing nation may opt this strategy.

Customer loyalty can be built on certain factors, by providing incentives, excellent customer service, timely transactional updates, maintaining relationships and many more.

For Example:

Vodafone India has used customer service and timely transactional updates as the key to create and maintain customer loyalty.

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