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Samsung Electronics was the first company to come out with the idea of 3D LED TV where in the LED is used as backlight and they are mounted just behind the screen. This produces clarity in picture. Samsung is the first company to come up with the world’s first touch screen remote control for the TV with a three inch color display.
These incomparable features give Samsung an advantage over the others in the television industry. Samsung also boasts of the first-mover advantage. In the sense they were the first to come out with such a TV. They are also the current market leader as they have sold more than 2.5 million such TV’s in the first year and they are targeting more than 30 million customers in the year 2011. This proves that they are highly driven towards achieving a greater market share and would continue to dominate the market with their ardent marketing. They believe in capturing the wonder and excitement to the customer. They set up their launches on a tree or a floor or a street so that an ordinary mundane life of the customer gets enriched by the wat their products capture the 3D view of the objects. This excitement and hype created by their products makes for a great marketing technique.
Some of the marketing techniques they have adopted include:
Premium Pricing Strategy:
When they first introduced the 3D LED TV, Samsung had premium pricing. This means that their price was above the industry average and this was well justified by the fact that none of the other companies offered such an innovative product along with so many sophisticated features. But recently, Samsung has been forced to slash their premium pricing to a more affordable pricing. Even with their initial premium pricing there were many takers. But now as the bargaining power of the customers has increased with the entry of Sony and LG into the market with the same model of televisions, it is imperative that they reduce the price to attract more customers.
At present there are 3 companies that produce 3D LED TV’s including Samsung. Samsung 3D LED TV was introduced in February 2010 and LG soon followed with its TV in March 2010. Though Sony and LG have been fast followers, Samsung still has the edge over the others because of its innovative design, sophisticated features and having the first mover advantage. It may not be for so long as Sony is planning to exploit the reputation it has earned for itself as a strong quality and technology provider. This poses a threat to the position that Samsung currently enjoys. Sony has built its reputation on providing premium pricing products and when they offer normal pricing to a product which at present has premium pricing this is a definite threat to Samsung that cannot be ignored.
SEGMENTATION TARGETING AND POSITONING:
Samsung targets those customers who are willing to pay the premium pricing and those are highly interested in buying innovative technology. Those who would like to possess the best in technology and those who are early adopters of new technology and innovation are their main target. The current positioning of Samsung 3D LED TV series is that they are market leaders with close competition from Sony and LG.
SEGMENT: Early adopters of new innovation and technology
TARGET: Those willing to pay the premium pricing for new technology products and are highly involved for a rich entertainment experience.
POSITION: Currently market leaders with a major market share and recently have been forced to cut prices following tough competition from other contenders like Sony and LG.
This targeting and positioning might change both ways even if any of one of the following happens:
If there are further innovative features offered by Samsung, they can retain the customer base and maybe even attract a few more. But if not and those features are provided by other companies, it can pose a threat to the current position.
On the other hand, any reduction in the pricing might also favour Samsung. That being said, it is also important they offer the product at an industry average. Too much of a price cut might also backfire in that the quality might come under question.
Financial implications of a product are far and wide. It includes the cost involved in the making of the product until the time it reaches the customer and also the pricing strategy followed by the company. 3D LED TV is a result of state of the art innovation and research by various technologists and scientists. So obviously there is a huge scientific and technological cost involved in the making of this product. There is also the cost of supply chain where the chain starts with the suppliers, manufacturers, buyers, wholesalers, retailers and customers. The price of such a television is finalized keeping all these financial costs involved. It becomes almost necessary that a company offer such a product at premium pricing.
Effect on the Company:
Company incurs various costs such as the technological costs and research and development cost. Also any change in the market might have an effect on the company. If there is a new feature that is provided by other competitors, others should also try to compete on an improved level. This might further increase the manufacturing cost. A normal LED TV has around 1000-1500 light emitting diodes and even if one of them is dismounted or repaired the cost of replacing them is high. If this problem is encountered too soon, it might affect the reliability of the product both financially and sales wise.
Effect on the Customers:
Customers are those who are making use of this television and any change in their preferences or wants or needs might have a change in the financial aspects of the company. If the bargaining powers of customers increase due to the availability of more such 3D LED televisions, it might to lead to price reduction by all the competitors to capture a huge part of the market share. If there are many such products then the customers have more options to choose from. Another interesting aspect of the financial implication is that when the target customers need further technological innovation then it increases the technological cost incurred. There are some customers who might be willing to pay the premium pricing even though there might be other options at different pricing. This should also be taken into account when fixing the price.
Production cost includes the cost of technological innovation and the manufacturing cost until the finished goods reach the end users; in this case the customers. The production cost might increase depending up on the various features as requested by the customers. At present 3D LED’s are available around 5000-6000 USD.
Gagnon, Director of North America TV Market Research. “However, the increased level of competition among manufacturers in 2010, with LED models comprising more than 50 per cent of some lineups, will drive that average premium down to less than 70 per cent over 40-inch and as low as 17 per cent at 22-24-inch. Overall, this should push the LED-backlit LCD TV market to more than 35 million units or 20 per cent of total LCD TV shipments worldwide.”
Factors Affecting the Cost:
There are many factors that affect the cost. They include any technological innovation, change in customer needs, special features in competitor’s television model, any change in the patents filed by other scientists, economic growth etc.
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