Until recently, Samsung was the single biggest threat Apple faced in the smartphone market, beating it to its game quarter after quarter. However, since the last few quarters the tables have turned around and while Apple’s sales have propelled to new heights, Samsung’s phones are taking a beating. The company peaked with the Galaxy S4 and the next two flagships have failed to perform as well.
And while we’re not discussing what Samsung can do to plug this sales hole, we’re interested in one of Samsung’s existing strategies to ramp up sales. The company created a storm of sorts when it discounted the Galaxy S4 in India to a very affordable Rs 16,900 a few months back. And while it was believed Samsung was trying to clear unsold inventory, the masterstroke was followed by last year’s Galaxy S5 getting discounted to Rs 22,999 a few months back. For comparison’s sake, the iPhone 5s, which was released around the same time still retails for Rs 35,000, while the Xperia Z1, which is much older than the S5 has a higher MRP.
Surprisingly, that’s not the end of the story, since the company has also dropped the price of its current flagship, the Galaxy S6, by a whopping 20 percent in just a matter of few months since launch. While this might help the sales in short term, it could end up hurting the brand image Samsung has been able to create over the last few years.
One reason why Apple continues to sell so well even after pricing its products sky high is because users relate the brand with premium top of the line stuff. It’s more than the technical prowess of the phone that helps iPhone sell in such huge numbers. All the celebrities seem to carry one and that makes it even more appealing. Apple hardly brings the prices of its older phones below 50 percent of their initial price in the first few years, which helps the iPhone have a high value even after several months of use. Samsung users find them in a completely different situation just a few months after purchase and hardly ever get a decent price in the used market because of falling price of the new hardware.
Perhaps it is time for Samsung to take cue from its less successful Android counterparts such as HTC and Sony, as far as discounting older flagships is concerned. It’s already started loosing customer interest and such moves will only hurt it in the long run. Given the stiff competition from Chinese manufacturers, Samsung has already lost considerable foothold in the low and mid-end market. The company needs to maintain its share in the premium segment and such strategies don’t seem to strengthen that cause at all.