The word Samsung means “three stars” in Korean. Samsung is known globally for its electronic products and it is one of the successful brands in the electronic industry. It is an established company almost all around the world. While the Samsung Electronics is a South Korean multinational electronics and information technology company headquartered in Samsung Town, Seoul. It is the flag ship subsidiary of the Samsung Group. With assembly plants and sales networks in 61 countries across the world, Samsung has approximately 160, 000 employees.
In1938, the Samsung’s founder Byung-Chull Lee set up a trade export company in Korea, selling fish, vegetables, and fruit to China. Within a decade Samsung had flour mills and confectionary machines and became a co-operation in 1951. From 1958 onwards Samsung began to expand in too the industries such as financial, media, chemical’s and ship building. In1969, Samsung Electronics was established producing what Samsung is most famous for, Televisions, Mobile Phones (throughout90’s), Radio’s, Computer components and other electronics devices.
In 1987, Byung-Chull Lee passed away and Kun-Hee Lee took over as chairman. In the 1990, Samsung began to expand globally building factories in the US, Britain, Germany, Thailand, Mexico, Spain and China until1997. On the other hand, Samsung has developed the ‘lightest’ mobile phone of its era. Then they developed smart phones and a phone combined mp3 player towards the end of the 20th century. To this date Samsung are dedicated to the 3G industry such as making video, camera phones at a speed to keep up with consumer demand.
Introduction of Product Brand Line A product line is a group of products that are related and manufactured by the same company. Product lines are not to be confused with product bundling, which combines various items into one type of product. For example, Samsung home appliances product line might include refrigerator, washing machine, air conditioner, vacuum cleaner and others. Other example, Samsung’s mobile phones are divided into product lines based on the following features; touch screens, slider or folders, QWERTY keyboards and ar phones base on the product price, product quality, who the product is aimed at target group, and product specification. Product lines help to manage their products as product strategy can be designed around product lines. Samsung has offered more than one product line with the product that are all closely related. Different type of product line might toward different type of segmentation based on the customer. Samsung try to expand its business is by adding to its existing product line. This is because people are more likely to purchase products from brands with which they are already familiar and confident.
Product Introduction The introduction of Samsung Galaxy Note in the year 2011 popularized the term Phablet, mainly because of its large display screen. Now, the updated version of Galaxy Note is released. The Samsung Galaxy Note 2 comes with many high end features and it runs on Android 4. 1 (Jelly Bean) OS. The phone is powered by a 1. 6 GHz quad-core processor. The Samsung Galaxy Note 2 is wider than the previous version. The display screen measures 5. 5 inches and it offers visuals at a resolution of 720 x 1280 pixels. The phone weighs about 180 grams and it is 9. mm thick. The super AMOLED display screen of the phone is protected by Corning Gorilla Glass 2. The phone sports an 8 MP camera for capturing images at a good resolution. Users can also record HD videos using this handset. The Samsung Galaxy Note 2 also comes with a 2 MP secondary camera. The powerful 3100 mAh battery in the handset offers ample talk time and standby time. The phone comes with 16/32/64 GB internal memory capability. This is expandable further up to 64 GB through a microSD card. The Samsung Galaxy Note 2 has multiple platforms for connecting to the internet.
High speed internet is possible through 3G, 4G and Wi-Fi connectivity. The phone has Bluetooth and micro USB port for file transfer with other devices. The A-GPS feature can guide you when you are lost in an unknown city. The phone comes with a stylus stick and it offers many high end features for users. Samsung Product (Luxury Product) Samsung Galaxy Note 2 is a luxury good. A luxury good is a product that not necessary but which tend to make life more pleasant for the consumer, often more expensive and primarily purchased by people with more wealth and income.
In other words, as people receive more income, they devote an increasingly larger share of income to the purchase of luxury goods. This is because Samsung Galaxy Note 2 has just concentrated on market segment that are high income. People will purchase the Samsung’s product although with a high price as their income increases. Samsung Galaxy Note 2 has a many competing brands in the market such as Nokia, Apple and HTC. These alternative brands also offer the same products but with different features. Complement and substitute
Substitution effect is always negative for Samsung, that is because consumers will always switch from spending on higher-priced goods to lower-priced goods ones. For example, if they are not satisfied with the price of Samsung Galaxy note II, definitely they will seek for other products which have same function and cheaper than Samsung’s smartphone such as Sony Ericsson, Iphone5, Nokia N9. Those competitors’s product is strong enough to compete with Samsung because their products are quality and cheaper than Samsung Galaxy note II.
In conclusion, those threats will definitely decrease the demand for Samsung Galaxy note II. But, the one reason which differentiates the Samsung Galaxy note II with another product is their complementary products. The complementary products which exist in Samsung Galaxy note II is a removable battery, memory expansion via a micro SD slot and a built-in stylus, The S pen, that help users work well in their handwritten note and simple drawing. Those complementary products helped in increase of the demand of Samsung Galaxy Note II.
Market Structure Samsung Company had been categorized as oligopolistic market structure because they have only a few sellers such as Nokia, Apple, Sony Ericsson and HTC. Even with such small amount of firms, they manage to control all the market. Other than that, Samsung products are classified as differentiated product because they set the price on different product with different design. This market structure had high barrier to entry because it is too costly or difficult for potential rivals to enter the market. Besides that, irms that are interdependent such as Samsung and LG are mutual interdependence. A firm operating in a market with just a few competitors must predict the potential reaction of its closest rivals when making its own decisions. For example, if Samsung Company wishes to increase its market share by reducing price, they must also predict the possibility that close rivals such as Nokia and HTC, may do such action too. Furthermore, the firms under oligopoly market structure are price maker; this is because they set the price by themselves, not determine by the government.
The Samsung company also do a lot of advertisments to promote their products so that the comsumers will know about their products through multimedia such as televesion, radio, newspaper and internet. Part 2 Compare the price of Samsung Galaxy Note II with Nokia N9 The price of Samsung Galaxy Note II with 1 year contract is about RM 1899 than will be higher the Nokia N9 for RM 699. The price of Samsung Galaxy Note II without contract is about RM 2299 and for Nokia is RM1199. The price gap between the Samsung Galaxy Note II and Nokia N9 will be RM 1200 with contract and RM 1100 without contract.
The reason the price of Samsung Galaxy Note II will higher than Nokia N9 is the technical specifications of the phone. The product differentation would be Samsung Galaxy Note II is counting on a totally different approach across the entire Android ecosystem with diversity but for the Nokia N9 is just using the normal windows software as the processer. This cause the Samsung Note II became the world best smartphone for now and the customers will be proud and happy when using the phone. Besides that, the Samsung Galaxy Note II has a Quad-core 1. GHz Cortex-a-9 chip as the processor and with 2GB of RAM as for the Nokia N9 used 1 GHz Cortex a-8 ship as the processor with 1GB of RAM.
Obvious the Samsung Galaxy Note II will react faster than the Nokia N9 because of the internal build-in. The customers now a day would prefer better and faster software even through the price will be higher but they will statifisfy with it. Other than that, will be the advertisement of Samsung Galaxy Note II and Nokia N9. The Samsung Galaxy Note II was released at 30 August 2012 that will be 1 day before Merdeka day. The Samsung Company rabs this opportunity to promote their new product by giving discount to attract more customers in the day of Merdeka. They also promote through television, internet, newspaper and as a banner at roadside. With this huge promotion, they are able to profit their sales. As for the Nokia N9 was released at 21 June 2011. At that time the Nokia company do not promote their new product rapidly and there are just several people know about the Nokia N9 and also don not notice that it was quite a useful smartphone. Because of the lack promotion of Nokia Company, they are not able to set the phone at higher price.
Furthermore, in this modern world the Samsung Company already achieved a standard brand name compare to Nokia Company because the qualities of the products is better. The Samsung product automatically will have a greater cost of production than Nokia product. The costs of production of Samsung Galaxy Note II also higher than the Nokia N9. Because Samsung Galaxy Note II is more advance in design, body shape, internal software used and better sound system than Nokia N9. So the cost of production also will be higher. The Samsung Company is willing to produce and sell a greater quantity of Galaxy Note II because the product price is high.
Samsung Company hopes that the brand new Galaxy Note II will be the greatest smartphone for the year so they put effort on it. Conclusion is that Samsung Galaxy Note II is better, faster and performance well than Nokia N9. Samsung company promote their new product but Nokia company do not and with the reason above will be why the price of Samsung Galaxy Note II will be higher than Nokia N9. Part 3 The market structure of Samsung company is oligopoly which proven by a few characteristic. The first one is a few sellers which control the most of the market. It sells differentianted and high barriers to enter the market for new firms.
From the Samsung firm’s viewpoint, there are a few advantages and disadvantages of being an oligopoly. The first advantage for the firm is high barriers of entry for new firms. This is because the exclusive financial requirement to start the business which can prevent the small firm from entering the market. This can avoid the profit being shared to other new firms. The company also needs to spend money on the Research and Development (R&D) to do new products which needs large money. This is to prove that the new entrants no easily if they want to enter the market.
Secondly, oligopoly encourages firms to make efforts to innovate and produce more advanced product because all the firms are crazy about winning a more competitive place in the whole market. For Samsung Company, it tries to design the phone that suit for most of the consumers with the latest technology and resources they have. For example, Samsung galaxy note II is a popular phone among the consumers because of the design, the function, and the size of screen which preferred by the consumers. This can increase the profit of the Samsung Company when the sale of phone is increasing.
On the other hand, the disavantage from firm’s viewpoint is high cost spent on adverstiment and Research and Development for the product. This can increase the input cost and the firm will set higher price for the product to cover the cost. The company has to spend money to develop a new product. After developed a new product, the company has to promote the product through television, internet, newspaper and radio. This is to inform the consumers that there is a new product launched by Samsung Company. Furthermore, there are strong competitors like Apple Company, Sony Company and somemore which can compete with Samsung Company.
Some of the consumers like to buy iphone and some like to buy Sony phone. Samsung have to launch new products which can give the cosumcers high satisfaction to maintain the position in the market. If other company able to produce a new phone which bring higher expactation than the consumers expact, the consumers will buy the new phone. This can reduce the buyers to buy the Samsung Company’s product. In the consumer’s viewpoint, the advantages of buying a product under oligopoly market structure is the consumers can easily make price comparison among the few companies.
Consumers can compare the phone price between the phone companies such as Samsung, Nokia, Iphone, Sony and somemore. As comparison done, they will choose the phone with suitable price which equivalent to the quality of the phone. For example, the consumers will think about the features of the phone and look at the price. When the consumers are the office workers, they will prefer Samsung Galaxy Note II because the screen is bigger and there is a pen used to write things on the phone which makes the phone act like a note book. The second advantage for the consumer is the consumers can expenrience new phone with different features.
Because of strong competitors between these companies, the companies have to design new phone with the features that can attract consumers to buy it. This can make the consumers have many choices of phones which have different features. However, the disadvantage of consumers buying the product under oligopoly market structure is the firm is a price maker which means the companies can determine the product by themselves. This can harm the consumers because as the company is a price maker, the company can set higher price to earn more profit. But this can make the consumers have to pay higher price.
Besides, the disadvantage for consumers is the differentiated products. The consumers have to choose which one phone is better. Sometimes, it will be confusing when chosing the phone with different brand, different quality and different price. At this time, they have to think deeply before purchasing a phone because one phone is very costly. Part 4 In conclusion, the assignment is very useful to us. we find out that Samsung Company is operated under oligopoly market structure. Byung-Chull Lee has set up the Samsung Company with small business and takes over by Kun-Hee Lee after Byung-Chull Lee has passed away.
The business start to expand globally at the end of 20th century. This can show that Samsung Company is slowly developed and required a large financial requirement. Under Samsung Company, it sell different types of products such as refrigerator, washing machine, air conditioner, vacuum cleaner and others. But in this assignment, we only focus on the Samsung mobile phone. In mobile phone market, there are only a few sellers such as Samsung, HTC, Apple, Nokia and Sony who control most of the market. Samsung Company is selling differentiated products which mean the phones have different in term of price, features, design, and quality.
This can let consumers have different choices of chosing a phone. Samsung Company is a price maker which means the company can determine the price of the phones by themselves. Under oligopoly market structure, there is high barriers to entry for new entrants because the start-up cost requires large money to set up the company. Samsung Company also do a lot of advertisment when a new phone is launched through television, radio, internet, newspaper and the banners along the road. In my observation Based on the research done on this assignment, we find out that the concept of oligopoly can apply on he realistic life. The characteristic of a firm under oligopoly is shown as above and is applied in real life. Besides, we have come out an assumption about the price changes and the demand. If the price of the product increases, the quantity demanded for the product would decrease. Using the logical thinking of a consumer, people would definitely buy more of a certain product if the prices were lower. Besides that, according to the law of diminishing marginal utility, buyers would receive less satisfaction when they buy more units of a product.
Hence, consumers would only buy if the prices were lowered. Another reason is because when the price increases, the buying power of consumers would decrease as they are unable to buy as many at higher prices as at lower prices. This is basically known as the income effect of a price change. Besides that, if the price of the product increases, consumers could choose and buy other substitutes available in the market. Hence, the quantity demanded would also fall. This is known as the substitution effect. As for the supply, if the price of the product increases, the greater the quantity supplied.
This is because the higher prices are an incentive for the producers to produce more of a good in the form of profits. My empirical findings in this research does not fulfilled my expectations regarding economics. This is becauset the concept of price decrease and demand will increase will not very appliable in real life because there are many factors to influence the decision of consumers to buy a new phone which are brand, quality, the features, the income of the buyers, and the promotion such as free gifts and free vouchers.
Better quality of phone even though with higher price, the demand of the phone still increase. Phone with many features will cost higher price. If we intend to establish a company, we will chose to enter oligopoly market. This is because the market is only a few sellers but many buyers. With the characteristic of a few sellers and many buyers, we can control most of the market and earn profit in the long run. Our company also sells differentiated products like phones which can give consumers a lot of choices to choose the phone which suit them.
Our company also needs to advertise our products to stimulate the awareness of the consumers through television, radio, internet, newspaper and banners along the road. Even though oligopoly market structure has the characteristic of high barriers to entry for new entrants, we can start from a small company and slowly become a big company like Samsung Company or we can team with other people to set up one big company and divide the profit equally.
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