Only last week, both Samsung and Apple made it to the news when the companies decided to cut the prices of its mobile phones. However, as the competition is really hot, Samsung desires to regain its space in the premium market. Let’s dive into the strategy behind Samsung’s aggressive pricing and its implications in the smartphone market.
The Competitive Landscape
Apple has shipped 4.8 million iPhones in India during the first half of 2024, translating into revenue of $4.56 billion for the company. Meanwhile, Samsung sold almost twice as much but only earned $3.43 billion. This is a massive gap in revenue.
Variation in earnings differs from the ASP perspective. While Apple’s ASP is $942, Samsung’s ASP is very low at $349. This is one of the main reasons why the former is gaining significantly ahead of the latter, specifically against premiums.
It is fighting intensely in the entry-to-mid range segment. Brands like Vivo, Xiaomi, Realme, and OnePlus are snatching away market share. In fact, Samsung was the only brand that remained among the top five, which declined in Q2 2024. To combat this, Samsung has rolled out a dramatic strategy.
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The Price Cut Strategy
The festive sale by Samsung has cut the prices of its S24 series by 15-35%. It was just after new launches of Apple’s iPhone 16. These are available much lower than what the Apple iPhone 16 comes with. Take the example of base S24. It is going to cost a lot lesser than the iPhone 16. The S24 Ultra is going to cost even lesser compared to the iPhone 16 Pro Max: ₹34,901 less.
This is an aggressive pricing strategy targeting the consumer who wants premium features without the price at Apple. It also discounts lower-end models for Samsung. For instance, the Galaxy S23 5G that costs ₹89,999 will be reduced to ₹36,999 in this sale. That’s a great competitive advantage in the premium space.
Festival Season Haul for 2023
This festival season is a prime time for India when selling of the smartphones. These two festivals, Dussehra and Diwali, account for around 23% of annual sales of both Samsung and Apple. Being peak time for marketing and selling smartphones in India, Samsung needs to sell as many as it can in this festival season. With cooperation from various online websites, Samsung aims to tap more markets.
Online-exclusive offers would attract the younger set of consumers who generally buy digitally. This is also in tune with the rising trend of online shopping, especially with higher-value products. It’s a good time for the Korean multination brand at this festive season.
While trying not to lose grip over the ₹30,000-₹45,000 segment, Samsung is targeting the premium buyer. For this segment the pricing goes up to ₹80,000. These are the potential buyers who would come in from budget phones. Today, Samsung already dominates 40-45% of this category. And at this category, there is no presence of Apple as well.
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A Multi-Pronged Approach
In order to maintain its monopoly, Samsung has employed various strategies. The company sells everything from the S24 series to innovative foldables, all under the same price range. Thereby, various preferences of each consumer are met.
The financial strategies are also used to attract the customers. Almost 60 percent of Samsung phones are sold through no cost EMI schemes. Thus, high-priced products become available for a wider customer segment.
It will bring in new customers and make sure not to lose the ones it already has. This would be achieved through keeping Android users within the Samsung ecosystem. This is an important aspect for the company so that customers don’t shift to the competition or even Apple’s iOS platform.
The Bottom Line
The smartphone market will grow at around 3-4%. The high-end category, above ₹45,000, will be in double-digit growth at 15-16%. Samsung wants to regain leadership in the premium segment. It is working on ensuring it does not lose grip over the mid-range market as well.
But execution will be the real challenge going forward. Will price cuts help Samsung gain a much higher and significant share of the market? The question still remains: Will this strategy erode profitability in the long term?.
Overall, this aggressive pricing strategy from Samsung is going to redefine the competitive landscape. With its move in both premium and mid-range categories, Samsung is getting all set to fight a strong battle against Apple and other competitors. As consumers gear up for the festive season, they can look forward to loads of exciting options and potentially great deals.
