The Samsung Galaxy Note 7 with the “S Pen”
Amidst more reports of even more Samsung Note 7 catching on fire after the first recall, Samsung made a definite call to cease production of the phone on Octomber 10, 2016. Samsung also urged Note 7 users to immediately shut off their phone out of concern for their customers’ safety, even creating incentives of up to $100 for returning theirphone. Samsung is clearly attempting to perform damage control on the situation, but many people are speculating on whether the situation is salvageable or not. What implications do these events have on the Samsung brand and on its competitors?
Firstly, the immediate consequence of the Korean tech giant heading into the holiday season without a new flagship phone will deal great damage to its sales. Their other flagship phone, the Galaxy S8, is not slated to release until the spring of 2017. Michael Robinson, chief technology strategist at Moneymorning.com states that “they cant really rush [introducing new Note 7 handsets into the market]”, so Samsung will most likely have to face the most opportunistic time period of the year with a the Galaxy S7 and S7 Edge, phones which were released back in March. This is during a time when Apple’s iPhone 7 and the Google Pixel would be barely a few months old, which were slated to be the competitors for the Note 7. Samsung will miss when a customer
segment, the gift buyer, grows by a hundredfold in addition to current Samsung customers facing less of a switching cost moving to a new brand due to their ability to offer more recent hardware.
A Samsung Note 7 afflicted by the “exploding battery” defect
The effects of this disastrous release will remain within the company’s reputation for quite a long time as well. Edward Snyder, manager of Charter Equity Research states that “this has probably killed the [Note’s] brand name”. It is evident that not many people would not like to purchase a phone in which its predecessor has been reported to catch on fire and in some cases, explode. The Note line carries a lot of selling power with its name, being associated with the most current high end specs and the extremely intuitive S Pen. Consequently, this could mean a sharp decrease in sales for Samsung. In addition to this, the lasting effects of the brand being associated with unsafe products will likely stay for years to come. This release will definitely be in effect during the active consideration stage of many consumers looking to purchase a Samsung product.
Clearly, there is a heavy impact on Samsung’s brand as a whole as a result of the Note 7’s failure. However, Samsung is a giant and experienced company, and many (including I) expect them to comeback from this tragic release.
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