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A Case Study of Sony and Sega

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Introduction

A Case Study of Sony and Sega Expectations are growing as Sony and Sega begin a mass marketing scheme to try to ensure that their console is the one that everyone wants this Christmas with each one promising something that the other doesn't. Sony and Sega both operate in the public sector and their companies can be classified as in the secondary part of the market as they are producing goods to be sold through retailers to the customer. There are many factors affecting demand for the Playstation 2. Some of the factors that are increasing the demand for the Playstation 2 are: 1. Sony has launched a massive marketing campaign, the biggest of it's kind and it boasts, "Our message will reach 90 percent of the population of Europe". The marketing campaign will cost Sony an estimated and will include television advertising, billboard posters, and sponsorship of popular events e.g. the F.A. Premier League. 2. It is the sequel to the most successful and popular video games console ever. It is very desirable and "everyone wants one". It is this year must have item and is being marketed as "A multimedia entertainment device", it is also being aimed at people of all ages instead of just children. ...read more.

Middle

One of the problems Sony is currently facing is that people in Japan were buying the Playstation 2 mainly for it's DVD capabilities and they were not selling many games in relation to the number of actual systems. The problem with this is that every console makers actually looses money on every console they sell (the production costs etc are higher than the price they sell the systems) and to regain the money and to make a profit they must sell a lot of software. Sony must sell at least four bits of software with every console; three to cover the costs and the fourth is profit (these are not the exact figures) but if people are buying it to only play DVDs Sony will loose a lot of money. One theory is that the pre-ordering scheme is there to stop people from doing the above. Another way Sony is trying to deter people from buying the system for the sole purpose of playing videos is that they are trying to get as many games as possible onto the market, they are giving anyone who wants one a software licence. This 'flooding' of the market could have catastrophic effects and we could see another collapse of the video games market very similar to what happened in the late 80's when games producers and developers buried millions of copies of various games in the Arizona desert. ...read more.

Conclusion

They should make people very aware that the RRP for a Dreamcast is �149, half the price of the Playstation 2. * Sega should also look at what resources they have accumulated in the 18 years that they have been in the business and use them to there full advantage. By this I mean they should build on popular brands like Sonic. * Sega should also create a business plan. In the long term I believe that Microsoft's console (the Xbox) will be the most successful snd Microsoft the most successful business for the simple reason of money. Microsoft has resources like no other company and they do have enough money to ensure the long-term success of their console. Sony has a lot of problems with it's new console and these problems were created through arrogance and poor planning. The believed that the original Playstation was in such a strong position that a sequel would sell well no mater what. This is however untrue as people are very careful on what they spend their money on. Sega have never been in the position to be market leaders, they have had years of making a loss due to their last two consoles failing ( Saturn and the Game Gear). The only company that may be able to threaten Microsoft is Nintendo as they are promising similar things but they have the advantage of being the most experienced. ...read more.

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