Samsung Offers Users Discount as Profit Forecast Slashed

samsung galaxy note 7 fireThe global recall of Samsungs Galaxy Note 7 smartphones continues to impact the company, which has slashed its profit forecast following the highly-publicised safety crisis which saw lithium batteries exploding, injuring a number of users.

The South Korean technology giant has cut its Q3 operating profit estimate by a third, down to $4.62bn (£3.78bn) as new polling data suggests that the recall has had a significant impact on public perception of the brand.

The forecast update comes just a day after Samsung officially announced it was halting production and sale of all Galaxy Note 7 units until the safety issues are resolved, which Samsung initially blamed on “a very rare manufacturing process error” when the first malfunctions were reported in September.

Since then, in the wake of more explosions and injuries, Samsung has promised to review every step of its engineering, manufacturing and quality control processes, with South Korean regulators also looking into the incident.

However, even if a fix is discovered, Samsung will have considerable work to do to restore public trust in its devices. Polling data collected by YouGov BrandIndex shows that two key perception metrics have tumbled for Samsung since the beginning of the crisis.

According to Business Insider, Samsungs recommend score among US consumers, which tracks how likely people are to recommend the brand to a friend or tell them to avoid it, has dropped from 46 in June to 29 now.

The brands purchase consideration, which shows which brands consumers are likely to consider when next buying a new device, has also fallen from 42 per cent to 31 per cent in the same period.

Samsung is attempting to stem this tide a little by offering an incentive as part of its US refund and exchange program for the Note 7. Customers who exchange their recalled smartphone for any other Samsung device can claim up to $100 off.

Customers can already claim a $25 bill credit when either taking a full refund or exchanging for another brand of smartphone, as a gesture of goodwill, but is hoping that the larger discount will mean users stay with Samsung, despite multiple recalls and several weeks of mixed messages from the manufacturer.

At the moment, the deal only applies to the US recall program. Earlier this week, Samsung extended its refund program to Australia and parts of Asia, while the UK refund and exchange program only notes that consumers who swap for a cheaper device will be refunded the difference.

“We appreciate the patience of our consumers, carrier and retail partners for carrying the burden during these challenging times,” said Tim Baxter, president and chief operating officer of Samsung America. “We are committed to doing everything we can to make this right.”