Abstract
This paper will work to identify the appropriate pricing strategy and the channels of distribution that will work best for the Samsung Galaxy S5, one of the most popular phones on the market today. Through a careful analysis of each, it will be possible to determine how each of these two different options will work to add value to the company in terms of its profit margins and anticipated demand.
Keywords: pricing strategy, distribution channels, Samsung Galaxy S5
Paper On Product Pricing And Channels
Introduction
The Samsung Galaxy S5 has a wide range of features that make it appealing to its target audience; however in order to be able to truly work to capitalize on the products specific benefits, it is necessary for Samsung to select the most ideal pricing strategy and distribution channels for the phone itself, ensuring that the marketing aspect of the product is able to cleanly and clearly fall in line with the desires of the organization and the target market for the phone itself.
Pricing Strategy
When selecting the appropriate pricing strategy, it is necessary to take into account the cost to produce the product and the cost to design the product as well as the associated costs of distribution and promotion (The Marketing Mix, 2014). In addition, the organization must look at fixed and variable costs, the costs of the competition’s comparable products, the objectives of the organization, the positioning strategies that the company has selected for use, and the willingness of the target group to pay the prices set (The Marketing Mix, 2014). At the current time, the S5 is retailing for $199, with discounts of up to $50 being offered for getting a two year contract with purchase of the phone, depending on color and associated model number (Samsung Galaxy S5, 2014); looking to the competition, it is possible to see that this is currently in line with its main competitors, the Apple iPhone 5c and the Apple iPhone 5s, both of which are likewise retailing for $199, though discounts of up to $100 are currently being offered for signing of a two year contract with purchase (iPhone, 2014). As the discounts being offered are offered by cell phone carriers, as opposed to the manufacturers themselves, it is easy to see that the pricing currently in use is in line with the competition, but in order to make the S5 truly stand out, it is recommended to drop the price to $149, providing a slight edge over the competitors while still remaining in the price range that the target market and target demographic for this phone have come to expect.
Distribution Channels
There are several different distribution channels that Samsung may look into: retail distribution, wholesalers, distributors, and direct sales; the current method they utilize is retail sales (Burris, 2014). Given the fact that many users prefer to purchase a phone from their provider, knowing that the phone will be compatible with their carrier, and typically receiving some form of discount from their carrier for the purchase of the phone with the signing of a contract or an extension of their contract, it is unsurprising that this distribution strategy is the most lucrative for Samsung to utilize. Individuals are bombarded with information about the latest technologies and carriers work to ensure that their customers are informed of the fact that they are available, working to ensure that the continued purchase of upgrades, even when upgrades are not needed, occurs. It is recommended that Samsung continue to utilize this distribution strategy for this reason.
Conclusion
In working to understand why certain pricing strategies work, how they work, and the appropriate means of distributing a given product, it is possible to see why these pricing strategies and distribution channels have been chosen by Samsung and why they are the most successful options available to Samsung at this time. It is recommended that Samsung continue to keep to these distribution and pricing strategies, and as long as they have the technology to match, these strategies will allow them to continue to stay a forerunner in the cell phone industry.
- Bestbuy.com. (2014). iPhone. Retrieved 3 June 2014, from http://www.bestbuy.com/site/mobile-cell-phones/iphone/pcmcat305200050000.c?id=pcmcat305200050000
- Bestbuy.com. (2014). Samsung Galaxy S 5. Retrieved 3 June 2014, from http://www.bestbuy.com/site/samsung-galaxy/samsung-galaxy-s-5/pcmcat329900050025.c?id=pcmcat329900050025
- Burris, T. (2014). What Channels of Distribution Affect Marketing?. Chron.com. Retrieved 3 June 2014, from http://smallbusiness.chron.com/channels-distribution-affect-marketing-24224.html
- Learnmarketing.net. (2014). The Marketing Mix. Retrieved 3 June 2014, from http://www.learnmarketing.net/price.htm
