(Have you ever imagined your child suffer burns due to a phone explosion? Well 6 year old boy from Brooklyn has been treated for skin burns, when his Samsung note 7 exploded while he was watching a video(2). This is not the first incident after the launch of Samsung’s note 7.
Samsung’s latest phone was released on 2nd August, and it was disclosed that the battery of the phone was defective, causing the device to overheat and explode. The company has confirmed 35 cases of note 7 catching fire(3).
However, Samsung officials have gracefully taken the blame and have done everything in their power to fix the problem. For example customers are receiving replacement phone and note 7 has been removed of the shelves in 10 countries (2.5 billion phones), including South Korea and USA(3).
Yet it is not been effective, as the company has lost money and brand image. Firstly, Samsung has lost $26billion in brand value, as its brand image has been damaged(1). This can result in the reduction of loyal customers in the short run, because the industry has a large number of substitutes. Like Apple, Sony, LG, Google Nexus and etc. Plus the industry is highly competitive and evolves rapidly, therefore cost of brand switching is minimum. Thus resulting in loss of revenue and customer base.
Secondly, I believe, that the Note 7 experienced this problem, because Samsung did not take part in sustainable competition. In class 10 of comm101, we learned that sustainable competition is a long-term intangible asset that cannot be easily duplicated by competitors. Like brand, network effect and etc. Samsung did not take part in this business activity, because it was in direct competition with Apple. Just like Apple, Samsung wanted to release a headline product once a year. In doing so it failed and put its R&D and quality control group in jeopardy. Building on Surja’s blog, I believe that this reflects badly on Samsung and gives Apple a competitive advantage, as the media is going to question the quality of Samsung’s products for a long time.
In order to solve this problem the marketing department can rebrand Samsung’s image. This can be done in terms of allowing customers to test the phone before buying it. In this case no one loses. Furthermore, the company can also change its promotional strategies from just an innovator to a company that pays attention on innovation and “quality”. This form of promotion has worked in the past when Cadbury was scrutinized for quality of their chocolates.
Lastly I would still buy Samsung products because I know the company will fix the problems, due to the status and power.
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Works Cited
1) Quartz, Samsung has lost $26 billion in value since it recalled the […] published on September 12, 2016, by Josh Horwitz, accessed on October 16, 2016 (http://qz.com/779270/samsung-has-lost-26-billion-in-value-since-it-recalled-the-galaxy-note-7/ ).
2) @maggie_reardon, By Marguerite Reardon. “Exploding Samsung Phone Burns 6-year-old.” CNET. N.p., 13 Sept. 2016. Web. 17 Oct. 2016.
3) “Samsung Recommends to Exchange Galaxy Note 7 Due to Explosion Risk.” RSS. World News, 01 Jan. 1970. Web. 17 Oct. 2016
4) https://blogs.ubc.ca/surajjangvarma/2016/10/02/innovation-the-modern-david-and-goliath-story/