| March 12, 2014
In a recent post on iMedia Connection, Millward Brown Optimor’s Pandora Lycouri and Dmitri Seredenko conclude that Samsung can’t buy love. In “Can Samsung Buy Love?” they contend that simply outspending Apple is not going to overturn the strong emotional connection with users that Apple has earned through consistent innovation and iconic style. Maybe not, but it might help Samsung charge a price premium over other brands.
I have recently spent some time exploring how some brands manage to charge a price premium. Premium is the ability to command a price premium in any product category; it is not the same as luxury. Luxury brands practice an extreme form of premium marketing and additionally leverage the power of scarcity. Limited supply helps convey a perception of exclusivity.
In the course of my exploration, I have spent some time exploring the mobile phone category in the USA using BrandZ data and Euromonitor. Given the fast-paced nature of the market it is the marketing equivalent of studying how fruit flies evolve. Brands enter the market with something new, they evolve to fend off competition and then, like as not, die. Anyone remember Palm?
The fascinating thing about the entry of the Apple iPhone to the category was the way the brand immediately supported a price premium over the available brands because it was clearly seen to be different from them. Functionally and from a design viewpoint, it was unlike anything else and so it commanded a price point unlike anything else. This was apparent in our data from 2008 onwards even though the brand took a while to establish widespread salience.
At the time of the iPhone launch, Motorola and Samsung were the two largest brands by market share, but our data suggests that Motorola was more likely to be perceived as different. That, however, did not last long. By 2009, neither brand was perceived to be well-differentiated (Samsung never had been) and Motorola was beginning to suffer. The brand has never really recovered.
By contrast, Samsung has strengthened its brand significantly since 2009. The launch of the Galaxy in June 2010 was the turning point. The new smartphone challenged people’s perceptions of what Samsung was all about. Since then, the perception that the brand is setting the trends and has something unique to offer has improved each year as new models are introduced. In 2009, Samsung was more meaningful and salient than average. In 2013, it was more meaningful, different and salient.
The end result is that while Samsung may not quite match Apple for emotional appeal, our Premium score - a measure of the degree to which people believe it is worth paying the price they perceive the brand to charge relative to category alternatives – indicates that the brand is far better positioned to command a price premium than it once was.
The big question is will Samsung choose to leverage the perception that it has something different to offer into higher pricing or additional volume? What do you think? Please share your thoughts.