Competitive Analysis of Pricing and Quality Decisions in Industries with Strictly Complimentary

Products- A Case of Samsung

Research Proposal
By
[Your Official Name]
[Degree Title], [University], 20XX
[Name of program]
[Name of University]
[Last month of quarter you plan to graduate] 20XX

Pricing and Quality Decisions

Table of Contents
Introduction..................................................................................................................................1
Organizational Background.........................................................................................................1
Research Aim...............................................................................................................................2
Research Objectives.....................................................................................................................2
Problem Statement.......................................................................................................................2
Research Questions......................................................................................................................3
Rationale of the Study..................................................................................................................3
Significance of the Study.............................................................................................................4
Literature Review.........................................................................................................................4
Competitive Analysis................................................................................................................4
Competitive Analysis and Strategy Formulation......................................................................5
Competitive Analysis, Pricing and Quality..............................................................................6
Research Methodology................................................................................................................7
Hypothesis and Variables.............................................................................................................7
References....................................................................................................................................9
Appendices....................................................................................................................................14
Appendix A: Survey Questionnaire........................................................................................14

Pricing and Quality Decisions

Proposal Topic: Competitive Analysis of Pricing and Quality Decisions in Industries with Strictly
Complimentary Products- A Case of Samsung
Introduction
Today the issue of making pricing and quality decisions is of great concern for the
company. Pricing is the process of determining the benefits that a company receives in return for
its products or services. Pricing is determined by many factors, such as manufacturing cost,
brand, quality, marketplace, market condition and competition. In micro economics of price
allocation theory, one of the key variables is pricing determines that the decision making
principles of consumers. Amongst 4Ps price is the only revenue generating element.
According to Mark (2012, p.12), pricing has traditionally been considered an important
variable in marketing strategy. The purpose of pricing is to provide sufficient return on the
investment, as it is the only income generating source.
It has been researched that satisfying the consumers demand and maintaining the quality
of the product are the two prime functions of the manufacturers. Giri, Chakraborty and Maiti
(2015, p. 194) defined product quality as the fulfilment of customers expectation. Different
expectations exist for different products. For instance, a product expectation for mechanical or
electronic product may be safety, reliability, appearance and durability and for a food product
may be taste, nutrition and hygienic. Those products which fail to meet consumers demand are
termed as low quality products. Thus the product quality and pricing are the two factors which
are equally important for the success of a product.
In this competitive world, it is important for the companies to produce and formulate
those business strategies which focus on product quality and pricing strategies and results in an
overall performance of the particular company. For this purpose, the researcher plans to
determine the role of pricing and quality decision while analysing the factors that affect the
decision making of Samsung Corporation in the business process.
Organizational Background
Samsung is amongst the leading companies of electronic markets and was founded in
1939. The main focus of Samsung is on digital media and appliances, semiconductors, memory
and system integration.Samsung is a business which produces diversified products with chips,
displays and other technology. To promote its quality vision, Samsung introduced Pledge 2009

Pricing and Quality Decisions

under the slogan Perfection in Quality beyond your Imagination, which shows that providing a
quality product is their top most priority. Samsung Corporation developed and implemented a
five point code of conduct which includes Customer centric, True to basics,
Professionalism, Quality workmanship and Creating customers for life. Their strategy to
satisfy the requirements for customers and retain them for life time in this competitive world is
through quality accountability and prompt handling of customer demands.

Research Aim
The aim of this research is to analyse the competitive position of pricing and quality
decisions in industries with strictly complimentary product through the case study of Samsung
Corporation in UK.
Research Objectives
The objectives of the proposed study includes

To identify the factors that affect quality and pricing decision of complementary products
To analyse the role of quality and pricing decision on sales of complementary products
To study the role of quality and pricing decision in complementary products of Samsung

Corp in UK
To provide recommendation regarding ways to improve decision making process of
Samsung Corp in relation to complementary products.

Problem Statement
The problem which will be addressed in this research is the role of pricing and quality
decision in the case of complementary products. Pricing decisions are important for the company
as it directly affects the purchasing behaviour of the consumers (Hollensen, 2015, p. 54). Quality
factors are equally important, as all consumers are attracted to better quality products (Giri,
Chakraborty&Maiti, 2015, p. 192), and whether the price is charged high or low, if the quality is
not satisfactory then the product is likely to fail (Armstrong & Chen, 2009, p. 41). Therefore,
price and quality are the areas of great concern, and it is important to see what price should be
charged and what quality should be delivered in order to accomplish the goals of the company
(Chiu, Choi & Li, 2009, 56). Pricing and quality decisions are even more crucial for the case of

Pricing and Quality Decisions

complementary goods, as the price of one product affects the demand and usage of the other
(Giri, Chakraborty&Maiti, 2015, p. 3; Chiu, Choi & Li, 2009, 42, Hollensen, 2015, p. 54).
Hence, the present study will examine and perform a competitive analysis of pricing and quality
decisions inindustries with strictly complimentary products with specific analysis of the case of
Samsung.

Research Questions
1.
2.
3.
4.

What is the relationship between price and quality?

What are the factors that affect quality and pricing decision of complementary products?
What is the role of quality and pricing decision on complementary products?
What is the role of quality and pricing decision in complementary products of Samsung

Corp?
5. What is the recommendation regarding ways to improve decision making process of
Samsung corporation with reference to complementary products?

Rationale of the Study

The main aim of the proposed research is to investigate the decisions carried forward by
the industries based upon the pricing and quality of the strictly complimentary products. This
research aspires to articulate the competitive analysis of the industries that deals in the
complimentary products. The rationale behind proposing a comparative study is backed up by
the aim to gather bilateral dimensions of the decision making process that revolves around two
basic phenomenon which includes pricing and quality(Godey, 2012, p. 146).
The decision making of pricing and quality in the industry with strictly complimentary
products is an issue because of the emergence of highly saturated markets that ultimately leads
the corporations towards the generation of bottle neck profits (Haucap and Klein, 2012, p. 521,
Chioveanu, 2012, p. 23). This issue is considered as one of the most significant aspect of
companys performance which needed to be highlighted. Therefore, this research aspires to
identify the processes and procedures of decision making with regards to complimentary
products.
Pricing and quality decisions in industries with strictly complimentary products, is
considered as the most significant issue of the present day world. This is because of the
technological improvements and enhancements through which a particular commodity becomes

Pricing and Quality Decisions

obsolete (Godey, 2012, p. 146). Therefore, the out-dated technology results in deriving the prices
of the goods, hence the current research will gather and examine the in depth details regarding
the decision making process of consumers with regards to complementary products.

Significance of the Study

Pricing decisions are very important for the company as it affects the profit margins
(Elmaghraby, et.al, 2015, p. 67). Higher prices with low costs lead to higher profit margin for the
company (Haynes, 2015, p.12). On the other hand, higher prices can also affect the sales volume
and wipe out the profits of the company, as fixed cost per unit increases with fewer units (Zhao,
et.al, 2012, p. 409). In the case of complementary goods, higher prices of one product will affect
the demand of the other products, as they are used simultaneously. Increasing or decreasing the
prices of the product, will decrease or increase the sales volume respectively. The price set by the
company also creates a perceive value for the customer, and its unique position sends a message
to customers about a product of the company (Haynes, 2015, p.12). The price set by the company
also affects the market share and in order to gain market share, some companies deliberately
decrease the prices of the products. This is also known as cost effective strategy (McCann &
Vroom, 2013, p. 99). Therefore, with the changing market, it is vital to analyse pricing and
quality decisions in industries.

Literature Review
Competitive Analysis
Today, businesses are facing the toughest competition ever because of increased
globalisation and technological advancement. In order to succeed in the fiercely competitive
market of today, companies are required to shift from the philosophy of product and selling to
the philosophy of customer and marketing (Kotler & Armstrong, 2012, p. 76). Winning in
todays marketplace requires the companies to become competent in managing products and
customer relationships with regards to competition and challenging economic situations.
However, understanding customers is not enough (Healey & Gomez, 2013, p. 12). To build
lucrative customer relationships and gain an edge over the competitors, businesses should
provide more satisfaction and value to the consumers as compared to their competitors. To devise

Pricing and Quality Decisions

competitive marketing strategies, it is important that competitor analysis is carried out in order to
identify, assess and select the key competitors (He, Zha& Li, 2013, p. 72).
According to Kotler and Armstrong (2012, p.121), competitor analysis is a process where
key competitors are identified, their objectives are assessed, and their strategies as well as their
strengths and weaknesses are identified so that companies can select which competitors should
be attacked or avoided. Ghosh&Galbreth, (2013, p. 260) defined competitor analysis as the
assessment of weakness and strengths in strategic marketing of present and potential
competitors. It is important for businesses to identify their current as well as potential
competitors, collect information about them and establish an information system to monitor the
market trends and moves of the competitors (Healey & Gomez, 2013, p. 10).

Competitive Analysis and Strategy Formulation

Competitive analysis serves as the keystone of effective and efficient strategy formulation
and implementation in an organization (Peteraf, Gamble & Strickland, 2012, p. 45). Through
competitive analysis, managers are able to understand and forecast the strategic actions of their
competitors. It also assists the managers to test, develop and select appropriate strategies for their
own brands. According to Healey & Gomez (2013, p. 8), companies needs to pay close attention
to their competitors and regularly compare their prices, products, promotions and channels with
their key competitors so that areas for competitive advantage can be identified and exploited. In
order to identify the opportunities and threats, businesses can conduct competitor analysis in two
different strategic contexts i.e. by engaging in marketing strategies that are offensive and
defensive (Karakaya&Yannopoulos, 2011, p 172). The offensive context enables the company to
capitalize on its strengths and exploit the opportunities. On the other hand, the defensive context
enables the company to counter the threats posed by competitors more effectively, while
overcoming the weaknesses.
Rivalry happens when one or more competitors either see an opportunity or feel the
pressure to enter a new industry or to improve its competitive position within the current industry
(Peteraf, Gamble & Strickland, 2012, p. 46). To respond to the challenges and threats posed by
the competitors, companies engage in counterattacking through increased advertising, reduced
prices, increased innovation and creativity, launch of new products, etc.
(Karakaya&Yannopoulos, 2011, p.180).

Pricing and Quality Decisions

Competitive Analysis, Pricing and Quality

According to Czerny and Lindsey (2014, p. 21) the competitive analysis of a competitor
gives the strategic background of the aggressive and defensive criteria of the threats and
opportunities. Competitive analysis is an important element of corporate strategy and majority of
the organizations do not conduct competitive analysis systematically. As an alternative, most of
the organizations goes with the impressions that are informal, related to intuition and guesses. In
the result, traditional scanning of environment takes place when most of the organizations are at
risk and it is because of the absence of strong competitive analysis.
Pricing plays a vital role for product because a product survives if there are more sales
with maximum profit within the same amount of investment on the product. Pricing can be used
as how customers consider the product to be, and develop their opinion about the product after
evaluating the price. One of the major factors for customers to consider the product is pricing.
Some studies have had prior research about the pricing strategy considering a single product or
substitutable products. Wang, Zhaou and Wei (2014, p.38) has discussed the pricing decisions of
two complementary products in detail. While analysing the differences of optimal retail pricing
of two complementary products, a centralised pricing model is established. Organizations use
captive product pricing for complementary products and charge high price for these products
(Gamble & Thompson, 2014, p. 45).
The quality level of a product that is offered to customers is an important feature of
competition in most of the markets. Furthermore, quality concerns are regularly driving the
improvement inside the market, thus, increasing dynamic effectiveness. However, there are
hurdles in respect to quality measurement, defining the impact of quality aspect within the huge
competition background. Therefore, majority of authorities related to competition would
recognize the main role of quality (Curzi&Pacca, 2015, p. 158) Furthermore, organization
struggles to increase the quality of product that is connected to modernization and consequently
to the growth of economy. The significance of quality is certain but presenting a complete
definition of quality is moderately complicated as it can be termed differently in different
aspects. In general terms, quality is known as the service flow, or the level of worth that
customers originate from the product. Quality of a product is an independent concept as diverse
customers may recognize or give value to a specific attribute of quality to a different amount
(Haucap& Klein, 2012, p. 521).

Pricing and Quality Decisions

Research Methodology
As the research approach is centred on quantitative inquiry, measurements and
observations; therefore, the positivist philosophy will be utilized in this study since the research
aim is to find the correlation between price and quality with strictly complementary products,
through the formulation and testing of hypotheses.
The current research will use quantitative research design in order to conduct the research
study. The main advantage of selecting quantitative research design is that it enables the
researcher to gather large amount of data from the respondents which can be analysed through
the statistical tests. Through help of quantitative research, the researcher is able to take sample
from large number of respondents through the help of survey questionnaire.
Moreover, this research will be explanatory based on the hypothesis that examines the
competitive analysis of pricing and quality decisions in industries with complementary products.
The reason for selecting this research approach was that ample amount of secondary data was
present on the topic already therefore, researcher developed hypothesis to study and test the
relationship and impact of dependent and independent variables. The present research will be
based on the deductive research approach as it gathers relevant data from already presented
secondary data. For the purpose of this research, the author collected data from secondary
research, developed a research hypothesis to test the impact of dependent and independent
variable.
The current research will adapt the non-probability sampling method for the purpose of
selecting research respondents. The sample size of the study includes 100 employees who use
Samsung mobiles and other Samsung appliances.

Hypothesis and Variables

The testing of hypothesis includes two types of variables: the independent variable (IV)
which is controlled by the researcher and the dependent variable (DV) is one on which the effect
of IV is calculated.
The hypothesis and variables involved in this research are:
Hypothesis 1

Pricing and Quality Decisions

H11: Pricing and Quality decision affects complimentary products.
H10: Pricing and Quality decision doesnt affect complimentary products.
Hypothesis 2
H21: There is a positive impact of pricing decision on complimentary products of
Samsung in UK.
H20: There is no impact of pricing decision complimentary products of Samsung in UK.
Hypothesis 3
H31: There is a positive impact of quality decision on complimentary products of
Samsung in UK.
H30: There is no impact of quality decision on complimentary products of Samsung in
UK.
Independent Variables

Price
Quality

Dependent Variable

Complimentary products

Pricing and Quality Decisions

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Appendices
Appendix A: Survey Questionnaire
Competitive analysis of pricing and quality decisions in industries with strictly complimentary
products - a case of Samsung UK
Questionnaire
Demographics:
Gender
a. Male
b. Female
c. Other

Age
a.
b.
c.
d.

18-25
26-30
31-36
Above 36

Educational background
a.
b.
c.
d.
e.

High School
College
Bachelors
Masters
Other

Pricing
1. Pricing strategies are formulated in our organization in consideration of the
complementary products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
2. Customer purchase decision is influenced by the pricing of a complementary product.
a. Strongly Disagree
b. Disagree

Pricing and Quality Decisions

15

c. Neutral
d. Agree
e. Strongly Agree
3. Samsung engages in price bundling strategy with respect to the complementary products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

4. Captive pricing strategy is more effective in the sale of complementary products.

a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

5. Two part pricing strategy is more effective in the sale of complementary products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

Quality
6. The quality of Samsungs complimentary products depends on their pricing.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
7. Consumers perceive the value of a product based on its complementary products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

Pricing and Quality Decisions

8. The complementary products of Samsung are symmetric in quality through R&D.

a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
9. Maintaining quality is important because the value is shared between the base and the
complementary products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
10. The quality of the complementary products of Samsung is affected by those of the
competitors.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

Complementary Products
11. Complementary products attract the customers because of their quality and price.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
12. Complementary products positively influence the brand equity.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
13. Complementary products increase the purchase intention of the customers.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree

16

Pricing and Quality Decisions

e. Strongly Agree
14. Complementary products increase the sales of base products.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree
15. Complementary products enhance customer satisfaction and loyalty.
a. Strongly Disagree
b. Disagree
c. Neutral
d. Agree
e. Strongly Agree

17