Abstract

Samsung Electronics, one of the leading players in mobile sales in India, was faced with a boycott threat from its distributors in India in 2014. The dealers raised their voice against the price discrimination followed by Samsung in online sales where the mobile sets were offered at a discounted price when compared to offline prices. They felt that this had led to a fall in the sales of the models offline, and they were incurring losses due to this price discrimination by Samsung. While the growth in the number of online shoppers in India was increasing, the dealers of Samsung sent an ultimatum to Samsung that unless it took action to safeguard their interests, they would boycott its products. In response, Samsung announced that it had decided to extend exclusivity of selling rights of 48 models, including its much-awaited Galaxy Alpha and Note 4, to offline retailers. While the dealers welcomed this decision, industry observers felt that the decision was regressive and might hamper the sales of Samsung in future given the rise in the trend of online shopping. Some of its rivals had already tasted success by opting for an online-only distribution model.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issues and challenges involved in designing effective distribution and channel strategies.
• Understand how to prevent or deal with channel conflicts that arise due to changing trends in the market.
• Understand the changes in the tastes and preferences of consumers in the era of rapidly changing technology.
• Analyze the pros and cons of Samsung’s decision to favor the offline channel.
• Explore ways in which companies can tackle the online-offline channel conflict.

Keywords

Channel Strategy, Channel conflict, Distribution, Online-offline channel conflict, Consumer behaviour, Competitive strategy, Predatory pricing, Mobile phones, e-commerce, Samsung, India