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Brand Value & Pricing

Commanding A Premium Price

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Samsung Apple Brand Strategy

In a recent post on iMedia Connection, Millward Brown Optimor’s Pandora Lycouri and Dmitri Seredenko conclude that Samsung can’t buy love. In “Can Samsung Buy Love?” they contend that simply outspending Apple is not going to overturn the strong emotional connection with users that Apple has earned through consistent innovation and iconic style. Maybe not, but it might help Samsung charge a price premium over other brands.

I have recently spent some time exploring how some brands manage to charge a price premium. Premium is the ability to command a price premium in any product category; it is not the same as luxury. Luxury brands practice an extreme form of premium marketing and additionally leverage the power of scarcity. Limited supply helps convey a perception of exclusivity.

In the course of my exploration, I have spent some time exploring the mobile phone category in the USA using BrandZ data and Euromonitor. Given the fast-paced nature of the market it is the marketing equivalent of studying how fruit flies evolve. Brands enter the market with something new, they evolve to fend off competition and then, like as not, die. Anyone remember Palm?

The fascinating thing about the entry of the Apple iPhone to the category was the way the brand immediately supported a price premium over the available brands because it was clearly seen to be different from them. Functionally and from a design viewpoint, it was unlike anything else and so it commanded a price point unlike anything else. This was apparent in our data from 2008 onwards even though the brand took a while to establish widespread salience.

At the time of the iPhone launch, Motorola and Samsung were the two largest brands by market share, but our data suggests that Motorola was more likely to be perceived as different. That, however, did not last long. By 2009, neither brand was perceived to be well-differentiated (Samsung never had been) and Motorola was beginning to suffer. The brand has never really recovered.

By contrast, Samsung has strengthened its brand significantly since 2009. The launch of the Galaxy in June 2010 was the turning point. The new smartphone challenged people’s perceptions of what Samsung was all about. Since then, the perception that the brand is setting the trends and has something unique to offer has improved each year as new models are introduced. In 2009, Samsung was more meaningful and salient than average. In 2013, it was more meaningful, different and salient.

The end result is that while Samsung may not quite match Apple for emotional appeal, our Premium score – a measure of the degree to which people believe it is worth paying the price they perceive the brand to charge relative to category alternatives – indicates that the brand is far better positioned to command a price premium than it once was.

The big question is will Samsung choose to leverage the perception that it has something different to offer into higher pricing or additional volume? What do you think? Please share your thoughts.

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3 Comments

Franklin Grippe
Twitter: Grippe_LLC
on March 19th, 2014 said

This is a great example of why design thinking matters, especially with regard to how a brand is visualized. Luxury brands are a great example of this.

Because at the end of the day you can map out and employ all kinds of strategic chicanery, but the meaning that is carried with “bad design” infects your brand like a virus. Like a kind of brand TB or something; your brand never loses its cough… It stunts growth and potential.

Samsung will never “leverage the perception that it has something different to offer…” by mimicking Apple. And that is exactly what they do. Just look at their website. It looks like the Apple website with cheesy photography and a different font. Even the interfaces of their products are clunky and crowded compared to Apple. A shame because the technology is very good.

It also speaks volumes about the culture of a company and its leadership. It reflects the organizations skill and understanding of how to tell its story to its customers, the meaning that comes with even subtle changes in style, and the important role early adopters/influencers play in the life of the group/tribe, among other things.

It is the cognitive shorthand of our day. In a ever-growing sea of messaging. What your brand looks and feels and sounds like means more than ever.

Hilton Barbour
Twitter: ZimHilton
on March 23rd, 2014 said

Its convenient to look at both Apple and Samsung as mobile phone/device manufacturers only. That obscures the reality that Samsung is known for devices at the edges of an ecosystem while Apple (and Google, even Amazon and Nike) has an ecosystem which links – and increases the “value” of the devices attached to it.

iTunes (and the App Store) is the backbone that adds disproportionate value to the various Apple devices. That’s a huge contributing part to the preference and love Apple has created.

Sure Samsung connects to the Android ecosystem but they don’t own it or determine its evolution. There is no denying Samsung’s devices have gotten sexier and they’ve perpetually pushed the envelope. They deserve kudos for that. The core issue – and one which will directly impact their ability to drive premium pricing – is how they deepen the “value” beyond just the latest snazzy form factor.

Maciej Fita
Twitter: 36creative
on March 26th, 2014 said

Both brands have very different mindsets when it comes to branding their products. One is mostly self contained to a specific design shrouded in secrecy and the other is much more open to the developing community. Samsung might in the end inch out from Apple only because their wingspan in the phone market is wider from a product standpoint. Many phones, many carriers. Funny thing is nobody gives a hoot regarding the story behind Samsung but with Apple the story is what the brand was built from.

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