Demand of Smart Phones

Topics: Smartphone, Mobile phone, Supply and demand Pages: 9 (3004 words) Published: September 5, 2012
Samsung Smartphones|
Managerial Economics Assignment|
By Group A5Abhimanyu AnchaAkshya PuriAniruddha KulkarniHiten BachaniRahul AgrawalSai Sundeep| |


Product Type2
Factors Affecting Demand2
Price Elasticity of Demand3
Nature of Demand of the Product4
Diminishing Marginal Utility in case of Samsung smart phones:5
Consumer Surplus6
Competitive environment of smartphone market in India:10
Top 3 strategies adapted by Samsung to answer the competition and gain market share:10
Price Discrimination:12

Product Type
Smart phones are something which are becoming the centre of the cell phone industry these days. So, they are classified in the normal and the superior products. Some products which are affordable and come with limited features such as Galaxy Y S5360 and Galaxy Ace will fall under the normal category product while Galaxy S2 and Galaxy S3 falls under Superior Products. Factors Affecting Demand

Top 5 factors affecting Demand of Samsung Smart Phones
1) Price of the Product: One of the major factors affecting the demand of the product is Price. Since mobile phones come in a category which is not very expensive in most of the cases. Hence the price of the product plays a very important role in deciding the demand for the product provided the product is competent enough in case of features with other products in similar category present in the market. 2) Income of the Buyer/Consumer: The income of the buyer plays a significant role. The amount of disposable income determines the demand of smart phones since it is not one of the essential needs of the customers. Hence, more is the disposable income of the customers – more will be the demand of superior smart phones 3) Taste and Preferences of the Customers: The demand of smart phones changes drastically with the change in taste and preferences of the customers. Today, the customers are becoming more and more technological savvy. Hence, any new technology when comes to the market; it has a cascading effect on the demand of the existing products using old technology. 4) Prices of Rivals: Due to stiff competition in the smart phone industry, the demand is significantly dependent on the prices of the rival companies such as HTC, Apple, LG etc. 5) Number of consumers in the market: Demand for the smart phones also depends on the number of consumers in the market, since if the number of customers are more; there is more opportunity for the company to sell more products in the market.

Qd = f (P,I,T,R,N)
Qd = a + bP + cI + dT + eR + fN

Price Elasticity of Demand
The following table shows the change in price of Galaxy Y and Galaxy S3 with the respective change in demand Galaxy Y| Galaxy S3|
Price | No. of Units Sold (In India)| % change in price| % change in sales| Elasticity| Price | No. of Units sold (In India)| % change in price| % change in sales| Elasticity| 8900| 26563| | | | 43470| 3367| | | |

8320| 49674| 6.51| 87| Rel. Elastic| 39590| 7467| 8.92| 121.77| Rel. Elastic| 7780| 98275| 6.49| 97.83| Rel. Elastic| 37870| 8369| 4.34| 12.07| Rel. Elastic| 7340| 147835| 5.65| 50.42| Rel. Elastic| 36200| 9926| 4.4| 18.6| Rel. Elastic| 7190| 265658| 2.05| 79.69| Rel. Elastic| 35444| 11234| 2.08| 13.17| Rel. Elastic|

Sales vs Price for Galaxy Y
The following graph shows the change in the demand of Galaxy Y with the change in the price of the product.

Figure 1: Sales vs Price for Galaxy Y

Here it can be seen that with small amount of change in the price, there is huge change in the quantity demanded. Hence, the demand of Galaxy Y is relatively elastic. Sales Vs Price for Galaxy S3
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