Initially Samsung was on the top of the game in emerging markets but from the past two years it has been experiencing dwindling sales in China, India, Indonesia due to emergence of inexpensive technology providers and more reliable and cheap brands like Huawei setting foot in South East Asian markets. Samsung is now cutting the prices to attract customers is the same regions as it previously used to do. For instance, low-priced J series come with some high-end specs and give premium experience to users.
Samsung Regaining its foot in emerging markets.
However, lowering the prices does hit the profit margins of the company. Hence according to Wall Street Journal cutting prices could be a temporary solution to the company. Samsung 2015 fourth quarter profits dropped to 60% as compared to two years for the same period.
Samsung gross profit margin also dropped to 8.9% in 2015 as compared to its biggest competitor Apple which is 40%. In 2013, Samsung gross profit margin was 16.1%. Samsung executive says they can do it by cutting the production cost and discontinuing the various unnecessary model but we all know this does not happen overnight.
More over cutting prices could be a quicker solution to grab more market share and become the top manufacturing brand in a region but doing this might mean digging your own grave in terms of profit margins.
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