Mobile device is the most important communication tools in the modern world. In Hong Kong, each person has over 1.5 mobile phones in average and monthly mobile sales quantity is around 400k. The position of mobile is not a communication tools only, it is a fashion. People will swap a new models even though the existing one still in a good condition. Base on the large market demand, many companies are fighting with the revenue and market share. Samsung is one of the mobile brands that success in these years. Compare with 2010, Samsung mobile sales quantity is triple in this year and achieves HK market share number 1 in the 3rd quarter, defeated the tradition brand Nokia and the new mobile brand Apple. Facing on the large increment of demand in the market, the stock supply and the logistic system of Samsung Mobile must be under a high challenging situation; especially mobile is one of the fast moving products with a short product life cycle. Hence, I would like to study how Samsung Electronics Hong Kong (SEHK) using the pricing strategy on the logistics and supply chain management among each stage of product life cycle, to maximize the profit and sustain the number one market share situation.
Operation feature of SEHK
SEHK, mobile team does not need to produce the product by herself while just need to place stock order from headquarter (HQ) in weekly basis. After placing order to HQ, the stock will be delivered to SEHK warehouse after one month. The core business of SEHK is selling products to end user. Since there is no any brand shops and online purchase service, SEHK need to rely on the third parties to sell the goods. Most of the selling points in Hong Kong are open channels, operators and individual shops. Therefore, SEHK need to work with these channels with different strategies and to keep the good relationship with them to maintain the contingency sales.
For every business, the final target must relate to the company profit & revenue. At least, need to keep the company survive in the industry. Many actions in the firm should link with the profit. In the supply chains, managing demand and supply is the basic but important tool to increase supply chain profits; Altering inventories and capacity can change available supply, to secure the contingency stock supply to the market, reduce the loss of profit; Advertising and marketing can be used to spur demand by shorten the growth stage and extend the maturity stage. Besides of these business tools, pricing strategy is also an important lever to increase supply chain profits by matching supply and demand. In every product life cycle stage, SEHK will apply different pricing strategy to increase both supply and demand.
Product Life Cycle
The Product Life Cycle (PLC) concept had been introduced for many years, describing the product with introduction, growth, maturity and decline stage. In Samsung mobile, it is similar with the product prelaunch, product launching, sustaining and product go into end of life (EOL). Some scholars also point out the other view on this theory, Chen et al. (2006, pp.65-76) mentioned that PLC could play two roles. When use PLC as the planning tool, it could describe the possible product policies, forecasting the demand and supply in different stages of PLC; when use it as the control tool, it helps the company to compare the product with the similar product in the market, forecasting the performance of the products that would be introduced to the market. In Samsung Mobile, there are many best practices to modify the product life cycle to match both supply and demand of the product in high quantity, and hence increase the revenue of the company and keep the inventory in a safety level. In every stages of product life cycle, SEHK would have several logistics and supply chain planning to make the sales in line with the forecast, by applying the theories of “7 R”, getting the right goods, to the right place, at the right...