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PRICING AND PRODUCT STRATEGY
FOR GOOGLE NEXUS
Team Members:
• Vaneet Chaudhary
• Siddhant Sharma
• Jason D’souza
• Pranjul Misra
NEXUS
• Nexus, developed by Google, Inc. in 2010 is a line
of smartphones and tablets that run the Android
operating system.
• It is the first physical initiative of Google to enter the
smartphone market.
• Nexus phones have had a brand image of being
pure, fast and affordable.
MORE ABOUT NEXUS
• Google, Inc. issues a tender/contract to one out of
multiple companies vying for it annually.
• The chosen partner Original Equipment
Manufacturer (OEM) designs and produces the
phone under Google's guidelines.
• Google itself indulges in developing and marketing
of the product.
PARTNER OEMS
Nexus One, Nexus 9: HTC
Nexus S, Galaxy Nexus, Nexus 10 : Samsung
Nexus 4 and Nexus 5: LG
Nexus 7: ASUS
Nexus 6: Motorola
BRAND EXTENSION
Line Extension
Brand Extension
Multi Brands
New Brands
Existing E
xis
ting
NewN
ew
BR
AN
D N
AM
EPRODUCT CATEGORY
ENDORSING BRAND STRATEGY EXECUTED BY GOOGLE
Google Search
Source: Strebinger, A. (2004). Strategic Brand Concept and Brand Architecture Strategy–
A Proposed Model. [online] www.acrwebsite.org. Available at:
http://www.acrwebsite.org/volumes/v31/acr_vol31_181.pdf
3 LEVEL ARCHITECTURE
Google phone uses 3 level brand architecture
3 names involved: Google, Nexus, Partnering OEM
This strategy practiced by Google to survive in the
phone industry
NEXUS ONE
Partner OEM: HTC Corporation
Launch: January, 2010
Price: Contract - $179 (T-mobile)
Full Retail - $529
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
0
0.2
0.4
0.6
0.8
1
1.2
Droid iPhone Nexus One
Launch Sales Comparison through day 47
Launch SalesComparison through day47
$ (
Mill
ion)
Farago, P. (2014). Day 74 Sales: Apple iPhone vs. Google Nexus One vs. Motorola Droid.
[online] Flurry.com. Available at: http://www.flurry.com/bid/31410/Day-74-Sales-Apple-
iPhone-vs-Google-Nexus-One-vs-Motorola-Droid#.VO2sSfmUdqU
Nexus One My Touch Droid iPhone 3Gs
Launch Date Jan 5, 2010 Aug 5, 2009 Nov 5, 2009 June 16, 2009
Countries 1 1 1 8
Generation 1st 1st 1st 3rd
Installed Base 0 0 0 27 million
Week 1 Sales 20,000 60,000 250,000 1,600,000
Source: Farago, P. (2014). Flurry Special Report: Google Nexus One Launch Week Sales.
[online] Flurry.com. Available at: http://www.flurry.com/bid/29658/Flurry-Special-Report-Google-
Nexus-One-Launch-Week-Sales#.VIiHxzGUdqU
HTC
Motorola
SonyEricsson
Samsung
Others
HTC
Motorola
Samsung
LG
SonyEricsson
Others
20102009
Android Market Share by OEM
Source: Farago, P. (2014). Android Special Report: Is Samdroid the new Wintel?. [online]
Flurry.com. Available at: http://www.flurry.com/bid/54035/Android-Special-Report-Is-
Samdroid-the-new-Wintel#.VO2s5PmUdqU
NEXUS S
Partner OEM: Samsung Electronics
Launch: December, 2010
Price: Contract - $199 (T-Mobile, Sprint)
Full Retail - $529(3G), $555(4G)
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
SWOT FOR NEXUS S
Strengths
• New and improved representative of
Google’s own Android series
• Sudden growth in the android
industry
• No bloatware
• Samsung increased it’s market share
Opportunities
• Samsung was continuing to grow
it’s market share
• The smartphone industry had
started to grow
Weakness
• Did not satisfy consumer’s demands
• Highly priced
• Lack of marketing lead to lack of
awareness
Threats
• Apple recently launched an improved
version of the iPhone 3
GALAXY NEXUS
Partner OEM: Samsung Electronics
Launch: November, 2011
Price: Contract - $199.99(LTE; Sprint)
Full Retail - $399(GSM), $699(LTE)
Google Play - $399(GSM)
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
Top 10 Android Devices (Global)
Samsung Galaxy S3
Samsung Galaxy S2
Xiaomi Mi 1S
Samsung Galaxy Note
Samsung Galaxy Note 2
Samsung Galaxy Tab 2
Nexus 7
Htc One X
Galaxy Nexus
Sony Xperia S
Others
Source: Steineman, K. (2014). Android Market Share – Leaning towards Galaxy S III and
Nexus 7. [online] Mobile Minute. Available at: http://mobileminute.info/android-market-share-
leaning-towards-galaxy-s-iii-and-nexus-7/
Source: Steineman, K. (2014). Android Market Share – Leaning towards Galaxy S III and
Nexus 7. [online] Mobile Minute. Available at: http://mobileminute.info/android-market-share-
leaning-towards-galaxy-s-iii-and-nexus-7/
NEXUS 4
Partner OEM: LG Corporation
Launch: November, 2012
Prices: Contract - $199 (T-Mobile)
Full Retail - $499 (T-Mobile)
Google Play - $299 (8GB), $349 (16GB)
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
PENETRATIVE PRICING STRATEGY
0
100
200
300
400
500
600
700
iPhone 5 SamsungGalaxy S3
Google Nexus4
Production Cost ($)
Launch Price ($)
These are approximate
Smith, C. (2014). Awesome interactive chart shows the cost of building every iPhone and
Galaxy phone. [online] BGR. Available at: http://bgr.com/2014/12/05/iphone-6-vs-galaxy-
s5-price/
NEXUS 5
Partner OEM: LG Corporation
Launch: October, 2013
Price: Contract - $149 (Sprint)
Full Retail - $449 (T-mobile, Sprint)
Google Play - $349 (16GB), $399 (32GB)
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
PRICING & PRODUCT STRATEGY: IMPACT OF NEXUS 5
Penetrative pricing strategy - a winner
Considered as the highest commercial point of the Nexus series
"Nexus 5 has been a very strong performer for Google" - Patrick Pichette, CFO, Google, Inc.
Noticeably strong contributor to Google's Q4 2013 revenue of $16.86 billion as compared to $14.4 billion in Q4 2012
Although a success for LG Corp. as well, the Nexus 5 failed to prevent them from posting a loss of $59.1 million in Q4 2013, completely reversing the previous year's profit of $205.8 million
Source: Cheng, R. (2014). LG swings to Q4 loss, but G2 and Nexus 5 drive phone sales - CNET.
[online] CNET. Available at: http://www.cnet.com/news/lg-swings-to-q4-loss-but-g2-and-nexus-5-
drive-phone-sales/
NEXUS 6
Partner OEM: Motorola Mobility
Launch: November, 2014
Price: Contract - $0-299 (All major US carriers)
Full Retail - $649 (32GB), $699 (64GB)
Google Play - $649 (32GB), $699 (64GB)
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
WHY DID NEXUS GO PREMIUM?
May, 2012 - Google, Inc. purchases Motorola
Mobility for $12.5 billion
October, 2014 - Google, Inc. sells Motorola Mobility
to Lenovo Group Ltd. for $2.91 billion
November, 2014 - Nexus 6 is released for $649
(32GB)
Google incurred a loss of $1.245 billion in the fiscal
year of 2013 alone caused by Motorola
Google acquired most of Motorola Mobility's patents
before its sale to Lenovo Group Ltd.
Since Nexus 6 was the last Google phone
manufactured by Motorola, no option other than
changing their strategies and policies was left at
Google's disposalSources:
• Investor.google.com, (2014). Google to Acquire Motorola Mobility – Investor Relations –
Google. [online] Available at: http://investor.google.com/releases/2011/0815.html
• News.lenovo.com, (2014). Lenovo Newsroom | Lenovo to Acquire Motorola Mobility from
Google. [online] Available at: http://news.lenovo.com/article_display.cfm?article_id=1768
PRODUCT & PRICING STRATEGY: DYNAMIC
CHANGE
Nexus 6 - First Nexus phone available through all 5
major US carriers, besides being sold unlocked
Decision to reap in more profits from the get go
Premium price for a premium phone
Adopted the 'Price Skimming' strategy
Manufacturer pressure
Change in marketing - going traditionalCarrier
concessions
Source: Devine, R. (2014). Nexus 6 set for all the major U.S. carriers. [online] Android Central.
Available at: http://www.androidcentral.com/nexus-6-set-all-major-us-carriers
Source: Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
CONCLUSION
The Nexus smartphone line saw a switch from price
skimming to penetration pricing, which then
switched back to skimming with a product justifying
that move
Segmentation Stages: Android Aficionados-->Wide
Consumer Base-->Lower Segment Consumers--
>Premium Segment Consumers
The Nexus series has witnessed relatively less
success than Samsung and Apple's flagship
smartphones, but has proven to be a great brand
representative for Android and Google
REFERENCES: BOOKS
Hoang, P. (2007). Business & management. [Melton, Vic.]: IBID Press.
Kapferer, J. (1994). Strategic brand management. New York: Free Press.
Kotler, P. (1980). Marketing management. Englewood Cliffs, N.J.: Prentice-Hall.
Kotler, P. and Armstrong, G. (1991). Principles of marketing. Englewood Cliffs, N.J.: Prentice Hall.
Woyke, E. (n.d.). The smartphone.
JOURNALS
Aaker, D. (1996). Misconceptions about brands. J Brand Manag, 3(4), pp.212-214.
Bansal, R. and A., Y. (n.d.). The Asset Pricing-Macro Nexus and Return-Cash Flow Predictability.SSRN Journal.
Barazza, S. (2012). Apple v Samsung: a preliminary injunction against the Galaxy Nexus smartphone.Journal of Intellectual Property Law & Practice, 8(1), pp.6-8.
Hecht, J. (2014). All smart, no phone. IEEE Spectr., 51(10), pp.36-41.
The Teardown: 4G Samsung Galaxy Attain. (2012). Engineering & Technology, 7(10), pp.94-95.
WEBSITES
Barranger, K. (2014). History of Nexus Phone Pricing – Why the High Price for the Nexus 6? | Droid Life. [online] Droid-life.com. Available at: http://www.droid-life.com/2014/10/16/nexus-6-price/
Cheng, R. (2013). Here's why T-Mobile's Nexus 5 is $100 more than at Google Play - CNET. [online] CNET. Available at: http://www.cnet.com/news/heres-why-t-mobiles-nexus-5-is-100-more-than-at-google-play/
Cheng, R. (2014). Google's Android VP on why a pricier Nexus 6 may lead to higher sales - CNET. [online] CNET. Available at: http://www.cnet.com/news/googles-android-vp-on-why-a-pricier-nexus-6-may-lead-to-higher-sales/
Cheng, R. (2014). LG swings to Q4 loss, but G2 and Nexus 5 drive phone sales - CNET. [online] CNET. Available at: http://www.cnet.com/news/lg-swings-to-q4-loss-but-g2-and-nexus-5-drive-phone-sales/
Farago, P. (2014). Flurry Special Report: Google Nexus One
Launch Week Sales. [online] Flurry.com. Available at:
http://www.flurry.com/bid/29658/Flurry-Special-Report-Google-
Nexus-One-Launch-Week-Sales#.VIiHxzGUdqU
Goldstein, P. (2014). Report: Google to expand Nexus device
program to multiple OEMs. [online] FierceWireless. Available at:
http://www.fiercewireless.com/story/report-google-expand-nexus-
device-program-multiple-oems/2012-05-16
Graham, F. (2010). Google Nexus One review - CNET. [online]
CNET. Available at: http://www.cnet.com/uk/products/google-
nexus-one/
Welch, C. (2012). Official: T-Mobile to sell Nexus 4 for $499 off-
contract, available in 'select' stores. [online] The Verge. Available
at: http://www.theverge.com/2012/11/13/3642382/t-mobile-nexus-
4-to-cost-499-unsubsidized