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Pricing Case - Strategic Fit with Samsung

Essay by   •  September 11, 2011  •  Case Study  •  2,945 Words (12 Pages)  •  1,455 Views

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India has employee strength of about 1600 working throughout its offices. Almost 18% of this number is in the Research and Development wing of the company.

Strategic Fit with Samsung

The Samsung Group is an international conglomerate of companies that is based out of South Korea. Their headquarters are located in Samsung town. The group has come a long way in the growth of its brand name and success. There is an international presence that the company enjoys and its range of products is always appreciated by users. The Samsung Group in India is also well known for its range of advanced and attractive electronic home appliances. These are available with technological finesse and at competitive prices. It has created a niche for the company in the arena of consumer good with some of the best designs and technology in mobile phones and tablet PCs and laptops.

Marketing Objective

Digital Interactive Board is a new product line in the consumer electronics and Audio - visual business segment of Samsung India Electronics Ltd. (SIEL). Samsung Group, globally, has a strategic objective of achieving 400 bn USD and becoming one of the top five brands in the segment. Thus, in order to augment Samsung Group's business objective, SIEL has an objective of generating about 15 per cent of its revenues from its new products.

The new product Orion Smart Board has a marketing objective of maximizing sales revenue, primarily from sales in India. Estimates of total revenues from Orion Smart Board are based on total estimated sales of more than 1500 units to educational institutes (as estimated in phase 1) and additional sales that will come from businesses such as service units and manufacturing units.

We expect that the company will see a compounded annual growth rate (CAGR) in sales of the product at 40 per cent.

CUSTOMER-COMPANY-COMPETITOR ANALYSIS

Customer Analysis

In order to understand the markets, we conducted some interviews with people who had a superior understanding of the potential segments that we were looking at. These people, coming from schools, institutes, corporate and industry, were primarily involved in teaching or training to teams of size ranging from 5 to 50 people.

Refer to appendix for questions

Insights

We obtained the following insights from the interviews.

1. Educational Institutions

a. In schools, it was only the premium category which would be willing to go for such a high-end product because of the cost considerations. Other private schools also showed an interest in such a product, but were too restricted from by the financial constraints.

b. The primary usage of such a board would be to show application of the basic concepts of physics and chemistry in a virtual environment.

c. They also said that students always paid more attention on taking down the notes rather than listening, and therefore, if the notes and discussions as written on boards could be saved as digital files, it would make the task of students much easier.

d. Class discussions often required them to go back to things or figures that were discussed some time earlier, but are no more there on the board.

2. Businesses

a. In case of manufacturing, technology to see the technical impact of a new mechanical design was considered as the most important feature desired from a smart board.

b. Going back to previous notes, ideas and figures was sighted as the next most important usage as sighted by respondents.

c. When taking training and seminars, a lot of new ideas come up, and there is lack of superior technology to share these notes with the participants.

d. The move to such smart boards could only happen if the product was not too costly making a dent in the budget, and easy for use by everyone

Company Analysis

We have tried to do an internal and external analysis of the company using SWOT and PESTLE frame work respectively.

SWOT Analysis

Strengths

* It is for the first time in India, that a low-cost interactive board is going to be launched. Currently most of the smart-boards launched in India are priced above Rs 60000.

* Huge number of educational institutions which are looking for innovative solutions to enhance the quality of imparting education

* Manufacturing industries are also trying to train their staff in better ways

* Customised features based on the requirements of the client. This feature has not been exploited by any other interactive board providers yet in India who more or less sells a standard version of the product.

* Easy maintenance of the product as the components used in this board is relatively cheaper.

* It is being launched by a company which has strong track record of providing technically efficient products

Weakness

* Unawareness about the product is a major hindrance

* Reluctance of senior-age teachers to adopt technology as a medium of education

* Thought it is cheaper, yet the competitors provide a whole range of technical features

* Training the teaching staff to use all the features to provide a holistic learning for the students

* Since we are using this technology for the first time, patent complications can arise and due to the weak patent infrastructure, the problem can be exacerbated

Opportunities

* Government is also looking for new ways to promote education. Samsung can tie-up with government agencies as a distribution channel.

* Initial low cost allows us to ramp up the features and cost later and capture latent markets

* Integration of e-learning modules in-built in the white boards can become an effective differentiating factor for the product

* Premium private schools are aggressively looking

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