Recently a report claimed that Google is planning to shift some of its smartphone manufacturing to India. This shows how serious Google is about the smartphone business. But focusing on R&D and manufacturing cannot help the company in the smartphone market until it learns the pricing strategy. This is where the company is failing and is still not learning.
Let’s talk about LG which was once making some really good smartphones. LG G series was well and received good reviews, but the company failed to impress consumers. The problem was not with the products but with the pricing. It doesn’t really matter if you put a high price tag until you are giving value. See Apple and Samsung that successfully sell smartphones at premium price tags. The real problem with LG was its sudden price cuts.
After launching a smartphone for a premium price, LG used to offer a big price cut in a month or two. So, the loyal LG customer actually felt cheated several times. After 3-4 such incidents, people stopped buying LG phones soon after the launch and started waiting for the price cut. One of my friends once went to a shop for buying an LG flagship and asked for a discount. The shopkeeper suggested him to give a booking amount in advance and wait for a month. He was sure that phone could get a huge price cut in a month. That was the reputation LG built by offering big price drops in a few weeks after the launch. It lost several loyal customers who felt cheated due to frequent price cuts.
Later LG also started doing experiments and most products felt like early prototypes. It was also slow in offering Android updates, So, people stopped buying LG phones. But the most obvious reason for losing customer base was pricing. A huge price drop soon after the launch was also a reason why LG smartphones used to have the worst resale value.
Now take an example of Pixel 6a. The phone was launched on July 21, 2022, and in less than 2 months, the phone will be sold at Rs. 34,199. That’s a huge price drop of Rs. 9800. With a prepaid discount of Rs. 3,500, the price effective price will become Rs. 30699.
Now think about the early adopters of Pixel 6a who trusted the company and bought the phone soon after the launch. Even if several people didn’t like the pricing, a lot of people trusted the company and paid this high price for Pixel 6a. They could save a huge amount if they waited for a few weeks. Now think about Pixel 7a. Next time when Google will launch a phone, people will actually wait for a price drop in place of rushing to buy the phone. A lot of these people could also buy any other phone if they get a good deal.
Google still has enough time to think about it. With the Pixel 7 series, the company could add the right price tag at the time of launch and then keep that pricing for at least 7-8 months before giving it a price cut.
