The document discusses Samsung's product life cycle and marketing strategies over time. It notes that Samsung entered the mobile phone market around 2001-2006 as a new entrant, experienced growth from 2006-2011 as the market grew, and has been in the maturity stage since 2011. However, a recent recall has started to impact sales. The document also discusses how Samsung has used skimming pricing strategies and maintained competitive advantages through research and development, understanding customer demands, and outsourcing manufacturing. It outlines Samsung's use of customer relationship management and expanding its market through new products and targeting different customer segments.

1. Evaluation of actual marketing strategy relative to market
condition (new market entry; growth market; mature or
declining market).
Around 2001, Samsung mobile phone started to enter the
market, they introduced various types of mobile phone to the
market, and the new market entry stage is around 2001 to 2006.
From 2006 to 2011, Samsung is in the stage of growth market.
People are getting to know the brand and the product, so the
sales is increase during this few years. Starting from 2011 until
now is on the phrase of maturity, Samsung has their customer
loyalty, and more people try to purchase the product due to its
brand recognition.
Samsung product life cycle is currently at the maturity stage.
But recently, due to the galaxy recall incident, Samsung has
been starting to decline the sales, people who wish to purchase
a new product is also concerning in this incident and make them
considered before they purchase the products.
At each stage, the pricing strategy that Samsung use is
skimming price strategy. Samsung uses skimming price strategy
that low down the price in order to maintain sales. One way
they can lower down the price is when they released a new
model of mobile phone, they will decrease the price of the
previous model in order to attract for customer and make it
more affordable. The benefits of using skimming price strategy
is to create a more effective segmentation and maximize the
profit from each of the segment (Bhasin, 2016).
Before Samsung reaching the maturity, they have been through
the shakeout stage. During that time, there are many
competitors in the market such as HTC and Apple. Even though
there are strong competitors in the market, Samsung sold 60.2

2. million of mobile phones about 16 percent of sales increase at
the third quarter of 2009 and they are expected to achieve 20
percent of market share on the next quarter (Peddie, 2012).
There are some strategies to help Samsung to keep staying in
the mature market, such as maintain the competitive advantages,
low cost production, differentiation, customer loyalty, and
extending the profit opportunities.
According to Tibken (2014) Samsung manage to maintain the
competitive advantage through few ways. One of the technique
is to more focusing on the software and services in order to
increase the loyal users. Figuring out what is the end goal, for
instance they can choose the path that Apple made which is
keep the product price steady losing the lead position or they
can introduce the lower end devices but with high end specs
with a cut prices to gain the market share. In addition, in order
to maintain the competitive advantages, Samsung as far as
possible to understand the customers demand ahead of its
competitors, keeping input at least 9 percent of each year sales
revenue to department of R&D, remain their technology level
and intellectual property rights strong (Miranti, 2012). Samsung
also outsourcing the manufacturing of the lower end device in
order to get the higher profitability (Armasu, 2013).
In order to maintaining the customer satisfaction and loyalty,
Samsung using the Customer Relationship Management (CRM)
to keep track on the customer’s opinion. Samsung using social
media such as Facebook is a way of using CRM, they post the
latest news on the Facebook to let all the customer to receive
the information, and they also reply the question that customer
have in order to solve the problems (Rofizar, 2010). A higher
customer satisfaction is always accompanying with a good
customer services. Samsung settled down a wide coverage of
customer service such as online website, Samsung shop, mobile
center and other smartphone retail stores to support its customer

3. service (Anh, Quang, & Thang, 2016). These locations are not
only doing the after-sales services but also introduce the newest
feature to strength the relationship with existing customers.
Samsung is using few ways to extending the volume growth.
One way is increasing the penetration, there are different from
other mobile phone users in the current market. In order to
increase its market share, Samsung targeting different customer
segments. They developed the smartphones in different sizes,
shapes and technology input. Therefore, customers with
different income level can easily find out the one which can fix
their need (Anh, Quang, & Thang, 2016). Another way is to
expand the market, introduce some new functions or new design
to the market, such as Samsung released the VR to let the user
experience new technology and the world’s first curve shape
smartphone.

4. Reference
Armasu, L. (2013). Samsung to Chase Higher Profitability by
Outsourcing Manufacturing of Lower-End Devices |
Androidheadlines.com. AndroidHeadlines.com |. Retrieved 10
October 2016, from
http://www.androidheadlines.com/2013/11/samsung-chase-
higher-profitability-outsourcing-manufacturing-lower-end-
devices.html
Bhasin, H. (2016). Skimming price - Skimming pricing
strategy. Marketing91.com. Retrieved 11 October 2016, from
http://www.marketing91.com/skimming-price/
Peddie, J. (2012). Shaking through the mobile phone
shakeout. GraphicSpeak. Retrieved 10 October 2016, from
http://gfxspeak.com/2012/07/06/shaking-through-the-mobile-
phone-shakeout/
Rofizar, H. (2010). Customer Relationship Management (CRM)
at Samsung company.Henysunshine.blogspot.com.au. Retrieved
10 October 2016, from
http://henysunshine.blogspot.com.au/2010/12/customer-
relationship-management-crm-at.html
Tibken, S. (2014). Five ways Samsung can overhaul its ailing
smartphone business. CNET. Retrieved 10 October 2016, from
https://www.cnet.com/au/news/five-ways-samsung-can-
overhaul-its-ailing-smartphone-business/
Miranti, D. (2012). VALUE CHAIN AND COMPETITIVE
ADVANTAGE of Samsung. Retrieved from
http://dewimiran.blogspot.com.au/search?q=VALUE+CHAIN+A

5. ND+COMPETITIVE+ADVANTAGE+of+Samsung
Anh, L., Quang, T., & Thang, N. (2016). Customer Relationship
Marketing: Apple Vs Samsung. Customer Relationship
Marketing: Apple Vs Samsung. Retrieved 10 October 2016,
from https://htqvn.wordpress.com/
1
ECO 4386 Topics in Monetary Economics
Fall 2016
Homework #2
1. Take our benchmark model in which households maximize
utility, firms maximize
profits, firms and households interact with one another in the
labor market, goods
market, asset (loan), and money markets. Assume that wages
and prices are perfectly
flexible. Using diagrams of the labor market to determine real
wages, the goods
market to determine the real interest rate, and the money market
to determine the
price level use the model to make predictions what would
happen to equilibrium real
wages, real interest rates, output, consumption, investment,

6. work, and the price
leveleffort if the following events occur:
a. There is a permanent increase in productivity (but assume
that this increase in
productivity does not change marginal products of labor or
capital).
b. There is a temporary increase government spending financed
with lump sum
taxes.
c. There is an increase in the money supply.
2. Use the IS/LM model to predict what would happen to
equilibrium real and nominal
interest rates and output, if
a. There is a temporary increase in government spending.
b. There is an increase in the money supply.
c. Expected inflation (next period) rises.
2

7. 3. Consider the following model. There is an expectations
augmented short-run Phillips
curve:
)(
1 n
tt
e
+=
θ
ππ ,
where ty is (the logarithm of) output,
n
ty is natural level of output, tπ is inflation, and
e
tπ is expected inflation.
There is also an equation that describes the growth rate in
aggregate demand:
)( 1−−+= tttt yydg π ,

8. where tdg is the growth rate in aggregate demand.
a. Take the above two equations and derive equations that solve
for inflation ( tπ
) and output ( ty ) as functions of
n
ty ,
e
tπ , tdg , and 1−ty .|
b. Suppose that households have adaptive expectations, 1−= t
e
t ππ . Assume
0=nty . Let 1=θ . Using the equations solved for in part a,
answer the
following questions.
(i) Policymakers increase demand growth from 0 to 8 and keep
it there.
Complete the following table.
t tdg 1−ty
e
tπ tπ ty
0 0 0 0 0 0
1 8 0

9. 2 8
3 8
4 8
Based on the table is it possible of get output above the full-
employment level of
output? Is it possible get output above full-employment level
indefinitely? What
is the cost of in terms of inflation of trying to increase output?
(ii) Policymakers increase demand growth from 0 to 8 for two
periods and then
reduce demand growth back to zero in order to keep inflation
from getting
high. Complete the following table.
3
t tdg 1−ty
e
tπ tπ ty

10. 0 0 0 0 0 0
1 8 0
2 8
3 0
4 0
Based on the table what are the costs of temporarily trying to
increase output
above the full-employment level of output?
c. Suppose that households have rational expectations. Derive
equations for
equilibrium inflation an output. Hint: right in terms of
expectations of tdg ,
e
tdg , assume that households know 1−ty and
n
ty .
(i) Policymakers increase demand growth from 0 to 8 and keep
it there.
Suppose that the increase in time period 1 was not anticipated,
but was
correctly anticipated from time period 2, 3, …. Complete the

11. following
table.
t tdg 1−ty
e
tπ tπ ty
0 0 0 0 0 0
1 8 0
2 8
3 8
4 8
4
(ii) Policymakers increase demand growth from 0 to 8 for two
periods and then
reduce demand growth back to zero in order to keep inflation
from getting
high. Suppose that each time the change in growth was

12. unanticipated.
Complete the following table.
t tdg 1−ty
e
tπ tπ ty
0 0 0 0 0 0
1 8 0
2 8
3 0
4 0
Based on the table what are the costs of temporarily trying to
increase output
above the full-employment level of output?
4. Instead of assuming policymakers can control the growth
rate of aggregate demand
directly, assume that policymakers target interest rates. Thus

13. our model of the
economy is as follows:
Expectations augmented short-run Phillips curve:
)(
1 n
tt
e
+=
θ
ππ ,
where ty is (the logarithm of) output,
n
ty is natural level of output, tπ is inflation, and
e
tπ is expected inflation.
IS curve for aggregate demand:
t
e

14. tt
n
tt eRyy +−−−=− + )( 1 ρπσ ,
where tR is nominal interest rate,
e
t 1+π is expected inflation, ρ is the long-run real
interest rate, and te is a shock to aggregate demand.
Taylor rule for the interest rate:
)()( ** nttytttt yyR −+−++= γππγπρ π
5
a. Suppose people have adaptive expectations, so that 1−= t
e
t ππ and t
e
t ππ =+1 .
Combine the IS curve and the Taylor rule to get an equation for
inflation that is a
function of the output gap )( ntt yy − ,
*
tπ , and te . The resulting expression is our
new DG curve.

15. b. Use the new DG curve and the Phillips curve, find equations
that describe
equilibrium tπ and output gap )(
n
tt yy − .
c. Suppose 1=θ , 1=σ , ,0=ρ 5.1=πγ , 5.0=yγ , and 0=
n
ty . Suppose that in
time period 1, there was shock to aggregate demand. The shock
lasts only one
period. Fill out the table below to trace out the dynamics of
inflation, output, and
interest rates.
t te
*
tπ 1−tπ tπ ty tR
0 0 4 4 4 0 4
1 4 4
2 0 4
3 0 4

16. 4 0 4
What how did Fed interest rate target respond to this demand
shock?
6
d. Suppose 1=θ , 1=σ , ,0=ρ 5.1=πγ , 5.0=yγ , and 0=
n
ty . Suppose that
starting in time period 1, the Fed lowered its inflation target
from 4 to 0. Fill out
the table below to trace out the dynamics of inflation, output,
and interest rates.
t te
*
tπ 1−tπ tπ ty tR
0 0 4 4 4 0 4
1 0 0
2 0 0

17. 3 0 0
4 0 0
What happened to to interest rates when the Fed changed its
desired inflation
rate?
7
5. In the Excel spreadsheet 4386HW2F16.xls, worksheet “Q5.
Phillips Curve” contains
quarterly data on inflation and unemployment rate from 1960 to
2015.
a. Construct a scatterplot with inflation on the vertical axis and
unemployment on the
horizontal axis. From the scatterplot, what does the
relationship between the inflation
and unemployment appear to be?
b. To get a sense of the quantitative relationship, take the same
data plotted in (a) and
run a linear regression with inflation as the dependent variable
and unemployment
rate as an independent variable (be sure to include an

18. intercept/constant in the
regression). What is the sign of the coefficient on
unemployment rate and is this
coefficient statistically significant? To do this you need to add-
in the Analysis
ToolPak in Excel.
c. As the model suggests that one might want to control for
expected inflation, create a
measure of expected inflation that is a moving average of
inflation over the previous
four quarters: ))(4/1( 4321 −−−− +++= tttt
e
t πππππ . From this create, a column in your
spread sheet that represents inflation less inflation expectations:
ett ππ − . In another
column, create a variable that represents deviations of
unemployment from the natural
rate: ntt uu − .
Taking these new data series, construct a scatterplot with ett ππ
− on the vertical axis
and ntt uu − on the horizontal axis. What is the apparent
relationship between inflation
and unemployment as implied by the scatterplot? With these
same variables, run a
regression ett ππ − as the dependent variable and
n
tt uu − as an independent variable

19. (include a constant in the regression as well). What is the sign
of the coefficient on
n
tt uu − and is the coefficient statistically significant?
d. In addition to inflation expectations shifting the Phillips
curve, supply shocks might
shift the Phillips curve. In order to control for supply shocks,
run a regression with
e
tt ππ − as the dependent variable with
n
tt uu − and the average growth rate in oil
prices over the past year as independent variables (include a
constant in the regression
as well). To run this regression in Excel, add a new column
right behind the column
with ntt uu − that contains the average growth rate in oil prices
over the last four
quarters (including the current quarter).
What happens to coefficient on ntt uu − (compared to that
found in part c) and is it
statistically significant? What is the sign of the coefficient on
oil prices and is it
statistically significant?