MAP violations, Despite falling short of its sales target, Samsung may remain the world’s largest smartphone company in 2023. According to the Korean media, the company is on track to ship over 220 million Galaxy smartphones this year, 50 million fewer than its original target. Shipments of its closest rival Apple may not exceed 210 million units, giving Samsung a narrow victory.
From its modest beginnings in South Korea, how did Samsung metamorphose into the world’s leading electronics conglomerate? How has it pioneered and set the benchmark in the digital era with its formidable e-commerce presence?
Well, a significant part of its e-commerce success can be attributed to its astute pricing strategies, notably its use of MAP (Minimum Advertised Price) policies, ensuring consistent pricing and preserving brand value across various platforms and retailers. Let’s find out.
History of Samsung
Founded in 1938 by Lee Byung-chul as a small trading company in Su-dong, South Korea, the business initially dealt in groceries and later diversified into areas like retail, securities, and textiles.
Source: Jean Chung / Stringer / Getty Images
Samsung first entered the electronics industry in 1969 with several electronics-focused divisions. Their first products were black-and-white televisions. During the 1970s, Samsung began to export home electronics products overseas. The 2000s witnessed the birth of Samsung’s Galaxy smartphone series, which became the company’s most-praised product and also the best-selling smartphone in the world.
Beginning in 2010, the Galaxy series expanded to tablet computers with the introduction of the Galaxy Tab and in 2013 to smartwatches with the introduction of the Galaxy Gear. Samsung introduced a foldable smartphone, the Galaxy Fold, in 2019.
Samsung’s Pricing Strategy: Upholding Brand Value in the Digital Age
In the complex universe of consumer electronics, Samsung stands as a beacon of innovation, quality, and value. Its strategic pricing models, rooted in the principles of Minimum Advertised Price (MAP), have been instrumental in maintaining the brand’s elite status. This MAP policy ensures that all of Samsung’s products, from smartphones to televisions, are advertised at a consistent price point across all retailers and platforms. Such consistency protects the brand’s image and assures consumers of the value they’re receiving. However, the rise of e-commerce platforms and global marketplaces poses a challenge, with occasional MAP violations threatening to undercut Samsung’s established pricing structure.
Samsung’s proactive approach to MAP violations helped them to ensure that the brand’s equity remains undiluted in the competitive market. This uncompromising commitment to upholding value has solidified Samsung’s dominance not just in brick-and-mortar stores, but in the e-commerce domain as well.
Ensuring that all retailers adhere to a standard minimum advertised price helps in:
- Maintaining Brand Value: Samsung’s products are seen as premium and cutting-edge. If retailers constantly undercut each other, it could erode the perceived value of Samsung’s offerings.
- Fair Play Among Retailers: No one retailer gains an undue advantage by advertising a much lower price than competitors.
- Consumer Trust: Customers feel more confident in their purchases knowing they’re getting a value-aligned price, irrespective of where they buy from.
Samsung’s Proactive Approach
Samsung’s proactive approach to MAP monitoring and enforcement can be broken down into several key strategies:
- Investment in Technology: Samsung uses advanced MAP monitoring tools that scan the internet daily, checking product listings against their MAP database. Real-time alerts notify the team of any violations.
- Retailer Partnerships: By building strong relationships with major retailers, Samsung ensures mutual understanding and respect for MAP policies. Regular training sessions and communications reinforce this.
- Clear Communication: Samsung’s MAP policy is transparent and widely available. Retailers are clear about the expectations and consequences of violations.
Samsung’s success isn’t just about producing world-class products. It’s also about understanding the market dynamics and ensuring that every touchpoint of the customer journey, including price, reflects the brand’s value. Through its robust MAP monitoring and enforcement strategy, Samsung continues to uphold its brand integrity, ensuring a consistent experience for customers worldwide.
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