Pricing Strategies and Pricing Model
Samsung’s pricing strategies are based on the target market segments for multiple product
lines. In the marketing mix or 4Ps context, multiple pricing strategies apply to the
information technology company because of its multiple product lines and the diversity of its
target customers. Samsung uses the following strategies to set price ranges and price points:
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Premium pricing
Value-based pricing
The premium pricing strategy applies to Samsung products that are marketed as high-end. For
example, some Galaxy smartphone models have premium prices that compete with the most
expensive iPhones. In its marketing mix, the company applies premium pricing to reinforce
its branding strategy for Galaxy devices. On the other hand, the value-based pricing strategy
considers product value and customer perception in setting the prices of the company’s
information technologies and home appliances. In the marketing mix, value-based pricing
allows Samsung to set attractive prices based on target market segments and customer
profiles. The strategy enables the consumer electronics business to optimize its profit
margins. Thus, Samsung’s marketing mix involves the premium pricing strategy to reinforce
premium branding and achieve high profit margins; and the value-based pricing strategy to
optimize prices based on customer perception and willingness to buy.
In terms of pricing models, Samsung uses a market pricing model. In market pricing, the
prices of the company’s smartphones and tablets change according to market dynamics,
including the introduction of new products and the market performance of competing
products. Despite market changes, this pricing model ensures revenues and profits, and
contributes to the success of Samsung’s marketing mix.
Samsung’s prices are based on competition, which creates strong external pressure on the
business. For example, the company sets its prices to make its Galaxy smartphones
competitive against iPhones. Thus, the company’s pricing strategies and pricing model
respond to the respective pricing strategies and marketing mixes of competitors and other
industry players, such as Apple, Google (Alphabet), LG, Huawei, Motorola, Lenovo,
and Sony. The marketing mix combines Samsung’s pricing strategies (premium pricing and
value-based pricing) and pricing model (market pricing) to maintain the company’s market
position despite such a competitive landscape.