Introduction to Marketing - Using Sony/Sony Ericsson as an example.
Report
To: Sandra Oku
From: Amish Patel
Title: Introduction to Marketing
Unit: 11
Date: 22/02/2004
I have been requested by Sandra Oku to select a business organisation of my preference. Having selected an organisation, I will then have to choose a product that is about to be launched or has just been launched and will then further choose an additional two products under the same company brand name to investigate. Once having done that, I have been assigned to identify the legal constraints on marketing in relation to my chosen firm and define marketing.
Section 1 (P1)
Task 1a)
I have elected to analyse a company called Sony/Sony-Ericsson which is a global market leader with regard to electronics and the various marketing strategies they apply to the products they manufacture.
Moreover, I have opted to examine the Sony-Ericsson "T630" mobile phone which has recently crossed the launch threshold earlier this year in the mobile phone market. The other two products that I will be looking into will be the Sony "MZ N910" Net Minidisc player and the Sony "Playstation 1" games console which are existing products within the company.
Marketing
Marketing is the approach by which a company primarily strives to expose customer requirements.
Marketing provides a long-term understanding of customers continually changing requirements which is usually based on consumer trends concerning their individual specific 'needs' and 'wants'. 'The charted Institute of Marketing' definition of marketing is:
"Marketing is the management process that identifies, anticipates and satisfies customer requirements" 1
It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This key perspective is commonly known as the marketing concept. The marketing concept is about matching a company's capabilities with customer wants. This matching process takes place in what would be classified as being the marketing environment.
The primary concern of marketing is to identify and satisfy, or exceed the changing needs of customers.
Marketing, in fact, refers to any activity undertaken by a firm that has been designed to plan, price, promote and distribute ideas, goods and services to target markets.
These marketing activities are executed in order to create exchange which is that sales will result in the achievement of the firm's goals, both in the short-term and the long-term.
It is then clear that marketing forms an integral component of any business's operations.
In particular marketing activities attempt to increase a firms' revenue base, by placing a strong emphasis on enticing potential customers in target markets to purchase the firms' products in order to satisfy their wants, rather than those of a firm's competitors. Consequently, marketing directly contributes to the attainment of the financial aims of the firm.
Marketing as an activity entails several features, all of which are presented during the course of the marketing process. Such features include, firstly and most significantly, that marketing is a comprehensive process that begins with the creation of an idea and ends up as product that will be sold to satisfy a customer's needs.
Secondly, marketing is seen as a managerial process as it involves making managerial decisions about the particular mix of product, price, place and promotion in a firm. Marketing is perceived as a way in which firms are able to satisfy the needs of customers, and in turn achieve their own business goals.
Approaches to Marketing
Marketing provides the business with the ability to satisfy the changing wants of customers. In light of this, and the fact that businesses have become increasingly aware of the role that marketing plays in achieving success in a business, several approaches or philosophies to marketing have been developed.
There are five central approaches to marketing. The use of a specific marketing approach/s depends upon Sony's marketing strategy and the type of product being marketed. These different approaches are:
Marketing Concept: this approach believes that customer's want-satisfaction is the economic and social reason for an organisation's existence. This approach stipulates that all of the business's activities should be targeted towards meeting consumer wants, while at the same time meeting the organisation's goals.
In effect, this approach requires that Sony finds out what the customer wants, and subsequently develops a product to meet these requirements and then sell it at a profit.
Production Concept: this approach states that Sony will sell its product if it is both well made and affordable. Businesses utilising this approach require management to focus on improving production techniques and cost structures of the business. Consequently, this approach does not place stress on customer want-satisfaction.
Product Concept: this approach has the attitude that 'product is king' and focuses on the quality, features, and performance of the product.
This approach believes that if the product has more features or is of a better quality and performance compared to competitors, it will gain greater sales.
This approach is not customer want-satisfaction oriented.
Selling Concept: this approach focuses on developing sales techniques and promotional activities in order to entice customers into buying Sony's product, whether they want it or not.
Therefore this approach places a direct emphasis on customers, but, possibly not on their want-satisfaction.
Societal Marketing Concept: this is the latest marketing approach, it combines the main ideas of the marketing approach, that is, determining customer needs and satisfying Sony's goals, but also integrates social responsibility into the business.
This social responsibility includes increasing environmental awareness, which may include tackling the problems of pollution and the exploitation of non-renewable resources.
Modern day businesses such as Sony are under pressure to adopt this marketing approach, in order to become more socially responsible.
This approach not only focuses on fulfilling the customer's want-satisfaction, but also satisfying society.
Businesses such as Sony do not commence on marketing activities alone. They face threats from competitors, and changes in the political, economic, social and technological environment.
All of these factors have to be taken into account as a business tries to match its capabilities with the needs and wants of its target customers. An organisation that adopts the marketing concept accepts the needs of potential customers as the origin for its operations.
Success is dependent on satisfying customer needs because if they're needs are not met then they will not be content and so will choose not to purchase the goods/service and go to a rival competitor.
This brings me onto my next point, which is what makes successful marketing and to illustrate successful marketing, I have drawn a simple spider diagram below which looks at the 'American Marketing Association's 5 point marketing plan.
What Makes Successful Marketing
2
When bearing in mind the six rudiments within successful marketing which is shown above, it is vital that the marketing process is taken into close consideration. Marketing is simply just the process of anticipating the future and satisfying customers changing requirements.
The planning process creates a blueprint that not only specifies the means for achieving organisational objectives, but also caters as checkpoints from which performance can be compared with the plan to verify whether the current activities within the company are moving them forward into new light.
The basic goals of Sony will be the starting point for successful marketing planning. This is because they serve as signposts from which marketing plans are acknowledged.
These aims will provide a direction in all aspects for Sony as they serve as methods in evaluating the company's performance. In relation to this, objectives should be Specific, Measurable so that Sony can monitor the effectiveness and efficiency of how well they are doing and must have all aims applied to the SMART criteria.
Moreover, another two imperative terms that need to be understood in successful marketing are customer and competitor orientation and if products are to be developed to meet prospective customer needs and wants through market orientation, Sony will need to keep ahead of competitors i.e. Sony will have to acquire an understanding of what their foremost competitors such as Panasonic has to offer.
For example, if Sony do not attain what their opposition has to offer, then they're competitors will be in a healthier position to congregate customer requirements and Sony's customer loyalty base will start to get eradicated thus resulting in a loss of their sales and profitability levels. Due to this, Sony have invested heavily with regard to promoting their products to firstly ensure that they're products correspond and meet the needs and wants of customer's, and secondly to ensure that communication is efficient towards the customers so that they get exposed and informed.
Examining Sony's competitors will involve how they sell and distribute their goods and services, whether or not their competition have similar products and at what price they charge, and most importantly, it will be important to pose as customers to figure out how well the competition are performing. This can be identified through asking rivalry competitors customers what they think and through observing their activities i.e. the amount of people that go and buy products in the outlet in a given time.
Communicating effectively with consumers is extremely vital and probably much more important then any of the other five elements in successful marketing because it is about following up customer's orders to make sure that everything about the product is all well being and finding out what the company can do to improve the products even further. Communicating simply means keeping in touch with customers, knowing what they want and how to attract them to buy the product.
Co-ordinating of functions involves the simple principle of cautious planning using a blend of a swot analysis and the marketing mix. The overall emphasis of co-ordinating activities is for Sony to train and establish what customers are thinking and the importance of marketing.
The 3 Products That I Have Chosen (N.B...Applicable to P4 criteria)
Product 1 - Sony-Ericsson T630
Product Description
The Sony Ericsson T630 is a refined and streamlined version of the popular T610 mobile phone. The translucent keys and sleek design give it a cool retro impression which cannot be conveyed by photographs alone. A key disparity between the T610 and the T630 is the upgraded screen. The T630 is a sophisticated phone incorporating a built-in camera, Bluetooth(tm) wireless technology, a large full colour screen (65,536 colour pixels). It is distantly smaller than the T610, and its body build quality is better than the T610. The phone uses a TFT display which gives it crystal clear clarity and superb colour. The integrated camera can be activated in one click, with an incremental click to take a picture. Sony Ericsson's new QuickShare(tm) technology enables users to easily share pictures with their PC or other phones, using Bluetooth(tm), email, MMS or cable. Overall, the T630 is a success, building on a solid podium and recuperating the characteristics that needed to be enhanced of the T610.
Features of the Sony Ericsson T630 include:
> Colour display (65,536 colours, 128 x 160 pixels)
> Integrated Camera
> Bluetooth(tm), infrared and cable connectivity
> Multimedia Messaging Service (MMS)
> Downloadable 32-voice polyphonic & mono ringtones, plus ringtone editor
> Downloadable Java games
> WAP 2.0 (GPRS), email
> Speed dialling & voice dialling
> Predictive text (T9)
Price:
When initially launched into the phone market, Sony utilised pricing strategies in the form of psychological and skimming prices. The price of the phone at present time is arranged at '£179.99' 3at all major superstores and on the internet. This form of pricing seems relentless at first sight but is a clever marketing tool for Sony and have taken advantage it as it manipulates clienteles minds in the sense that the addition of 99 at the end of £179.99 makes the price of the phone seem as though it is much cheaper than £180 but in authenticity, is only a mere penny less.
Promotion:
To promote the innovative T630, Sony employed public relations as this is a very economic form promoting as it accumulates large word-of-mouth and also creates a good perception in newspapers to consumers. Free promotional methods such as competitions were used as a foil to attract people to the phone's launch, demonstration displays in phone shops were also used as means of creating the customers centre of attention because Sony knew that if consumers had a small taster of the phone through playing with concept models then it would make them start to relish the thought of buying the phone. Television, magazines, internet, national newspapers and billboards were used as well.
Place:
The T630 is available on purchase at most superstores within most urban towns. Large stores such as Argos, Index sell the phone. Other places of purchase include phone outlets such as T-Mobile, Orange, O2 etc. As well as these places in which the phone can be bought, the superhighway or otherwise known as the 'internet' is another source to buy the phone and may be more convenient for customers to purchase from as business to customer ordering is cheaper and the product gets delivered directly to their doorsteps.
Product 2 - Sony Playstation 1 (PS1)
Product Description:
The Sony PS One is compact, curvaceous and is the most recent version of the original PlayStation, the largest selling games console of all time. With its smooth and shiny finish the PS holds a salient metallic silver look to it.
The Sony Playstation 1 has had a radical restructure, but the PS one still embraces the same astonishing amount of power as its previous incarnation did, facilitating a 32-bit processor delivering stunning graphics and great gameplay. The PS one has the capability to engage in recreation audio CDs, so owners can play and reap the benefits from favourite tunes too. Moreover, the official Analog Controller (DUALSHOCK) has a built-in vibration function that delivers and envisages a super-charged experience.
Features of the Sony Playstation 1 include:
> The system consists of a 32-bit processor
> Has 34-MHz RISC processor
> Has16 Mbits of main memory
> Has 8 Mbits of graphics memory
> Has 24-channel stereo sound
> Has double-speed CD-ROM drive
> Measures a diminutive 7" by 5"
Price:
When initially launched onto the console market, Sony employed a skimming pricing strategy and then when the demand decreased, reduced the price of the console. The PlayStation 1 has been in the console market for 9 years now, and has seen substantial price modifications and has had a whole new makeover. Sony also employed a psychological pricing strategy for the console as well.
'On release the PlayStation cost a colossal £399.99, but swiftly came down in price - more than halving to £185.99 in 1997. The PlayStation is currently being sold for £79.99 in most retailing chains'. 4
Promotion:
To elevate awareness of the psone, Sony incorporated public relations, direct mailing, endorsement deals with the UEFA Champions League back in 1994, point-of-sale display stands, competitions and below-the-line means such as advertising via T.V, radio, specialist gaming magazines and radio. More than any other element of the promotional mix, sales promotion is about "action". It is about stimulating customers to buy a product. It is not designed to be informative - a role which advertising is much better suited to.
The reason as to which PR was used was because it helps to sustain goodwill because if the press write good reports about the console then many people will feel that the product is of good quality. Other means of promotion that Sony used were billboards, national newspapers and buses.
Place:
Like the T630, the psone is available to buy at major superstores within urban areas but is subject to availability as some stores have discontinued buying old stock. Large stores such as Argos used to sell the console. Other means of purchase include gaming outlets. The console can also be bought on the 'internet' and is probably the main source to buy the psone as the console is old and is starting to get replaced with newer, and more enhanced consoles.
Product 3 - Sony Minidisc Player MZ N910
Product Description
The world's fastest NetMD model, the MZ-N910 can transmit music files 64x faster than real time, meaning that five minutes of music can be transferred in just five seconds.
This model has a slim, full aluminium body and comes supplied with a charging cradle that has UBC connection.
For consolidated editing and operability the MZ-N910 has a jog dial, five-position control and a three-line Dot-matrix LCD display that allows easy searching and text editing.
Digital Pitch Control (DPC) allows the user to change the playback speed without altering sound pitch alteration.
The MZ-N910 boasts a battery life of up to 114 hours (rechargeable battery and external dry battery case is supplied) and is obtainable in both silver and blue.
Price:
Like all the other products/services that Sony provide and sell, the MZ N910 also made use of a skimming pricing strategy and was priced at '£249.99 when first introduced to the music market. When demand fell, the price of the product deflated in value to £179.99'5
Promotion:
The simple reasons as to why Sony opted to promote their MZ N910 was to create awareness of their new product, to heighten public reputation, name, character and construct a solid platform of brand loyalty by their prospective clientele.
The promotional techniques that Sony used were billboards, specialist trade magazines, competitions, T.V, point-of-sale-display stands, direct mailing and competitions, and the internet.
Place:
The areas in which the Sony MZ N910 minidisc player can be bought are the internet, electronic stores such as Dixon's and Curry's, and most large high street catalogue stores in urban areas.
Task 1b)
When contemplating about the legal constraints involved to which hinders firms from marketing their product/service to the way they please, it is important to assimilate the various bodies that regulate advertising and marketing activities.
Additionally, there are two bodies and various pieces of key legislations to which barricade the way businesses market their goods and services and these are the:
> Independent Television Commission - This body regulates television commercials and they have the authority to discipline and penalise any companies that do not comply with their principles.
The ITC will punish companies if their adverts do not meet their four principles which are:
. Advertising on T.V should be honest, legal and decent and most of all truthful
2. The detailed rules are proposed to be applied in every facet of the advert
3. The code of criterion and standard of ITC must be appropriate and evident when a company wishes to interleave any item of publicity during breaks or programmes regardless of payment in return or not
4. Adverts should comply with every aspect of the law
> Advertising Standards Association - This legal body is very much similar to that of the ITC but is dissimilar in the respect that this body ensures and makes provisions for companies to abide by press and poster advertisements rather than television commercials.
My chosen company which is Sony market their products in the light of legal constraints by ensuring that they comply and meet the requirements of both the legal bodies mentioned above.
However, to abide by the law, Sony makes certain that when they choose to advertise their product they act in accordance with various pieces of legislation.
For example, Sony ensure that the description of the product they are advertising is not by any means falsely described on the grounds of criteria such as the product that is being advertised has all the desired functions and features as the ones they have marketed and the ones that are being sold to the world at large in stores.
The law that monitors what Sony advertise on Television is the 'Trade Descriptions Act and it makes it a criminal offence if companies falsely describe their goods/services.
Similarly, the 'Local Authorities & Trading Standards Departments' is a department that a certain region of every part of the country has and investigates to make sure that companies do not have any misleading prices or offers. They also look at inaccurate weights and measures.
The act that governs weights and measures is the 'Weights and Measures Act' and assures that customers receive the actual quantity of a product that they are purchasing.
Sony will abide by the 'Weights and Measures Act' to avoid damaging their reputation and to reflect their brand name in the eyes of which consumers perceive them which is that they are honest, truthful and decent.
Another piece of legislation from which Sony must comply with is the 'Sale of Goods Act' and is an act that ensures that sellers supply products that are of good quality in the sense that they are not damaged or broken by any means.
If that were to be the case, then Sony will have manufactured goods/services that are not fit for purpose and the consumer will be permitted to receiving a replacement.
To see whether or not I have found out complaints in the way Sony advertise their products in the light of legal constraints, please view Appendix A.
Task 2 (P2) & (M1)
Marketing Research
Market Research is the collection of information about existing and prospective markets. The American Marketing Association defines market research as being:
'Market Research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services'6
Marketing Research can be segmented into five various elements. These chief ingredients are:
> Systematic - Sony must ensure that they are using a clear, logical and organised method or system.
> Gathering - This would simply be about Sony knowing what information or data to collect and how to collect the appropriate and relevant information.
> Recording - Recording means keeping clear and organised records of the information that Sony establish.
> Analysing - Sony must assure that they look in depth at the information they find out in order to achieve optimum results. It also indicates and makes sure the Sony are ordering and making sense of their findings so that they draw out appropriate trends and conclusions
> Problems relating to Marketing - This would chiefly be about Sony finding out answers to any questions which in turn will help them understand on a fuller extent what their customers demand relating to satisfying their needs and wants are, and what Sony can do improve on the areas that they are not doing so well in.
With regard to the above information said, it should be firmly noted that firms such as Sony which are electronic giants should not pursue marketing as a one-off based activity which only takes place as part of a new product development.
Marketing respectively speaking should be an ongoing and continuous process and should thrive upon feedback from what Sony's consumers reflect upon in order to be the most efficient company.
In relation, Sony's marketers should relentlessly be collecting and analysing information for feedback as mentioned previously for planning, control and resolution making purposes in terms of decisions.
Information obtained from market research can either be:
> Quantitative - this involves amounts such as the average number of customers that come into the shop at certain times in a hour or period of time.
> Qualitative - Involves customer opinions and views. Qualitative data is much more difficult to categorise and measure because it is based around customer thoughts and is at times quite subjective.
Primary Research
Primary research can be defined as being research that is field because organisations literally go out into the market and try to find out what customers think and feel towards a specific product.
Additionally, primary research is also research that is carried out for the first time to gather firsthand original information from what existing and prospective customers reflect their thoughts on.
By means of contacting Sony via email, I was able to obtain the primary research methods that they utilise. These methods are as follows:
> Focus Groups
> Surveys
> Product Acceptance Tests/ Field Trials
Focus Groups - During the product development stage of the Sony Playstation, Sony organised a compilation of about 8 gaming professionals that acted as representatives on behalf of the whole population as a means of feedback.
Furthermore, with regard to the focus group, Sony initiated the discussion through a specialist market researcher that specialised in the filed of consoles and the meeting was held within an informal environment. During the symposium, Sony presented a notion/concept model of the Playstation 1 to the 8 gaming professionals to try and floor out and eradicate any bad functions or elements that the console possessed.
In relation, focus groups would be particularly effectual as a means of understanding customer needs and wants because the discussions raised exploration in depth which means that the output gained from the conversation is fairly high and accurate.
This means that the 8 gaming professionals can receive instantaneous feedback and results. The other positive aspect concerning the customers is that they can contribute and put forward any ideologies that they have and adjust the product design to what would most likely drive them to make a purchase.
Disadvantages to Sony using focus groups would simply be that the people that they select to participate in the discussion group are only speaking on behalf of a lot of people.
This could pose to be a predicament to Sony because the company cannot say for ...
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This means that the 8 gaming professionals can receive instantaneous feedback and results. The other positive aspect concerning the customers is that they can contribute and put forward any ideologies that they have and adjust the product design to what would most likely drive them to make a purchase.
Disadvantages to Sony using focus groups would simply be that the people that they select to participate in the discussion group are only speaking on behalf of a lot of people.
This could pose to be a predicament to Sony because the company cannot say for certain that the people that took place in the focus group are thinking and feeling the same things as the rest of the people - feedback is limited to the extent that there is only a minimal amount people's reactions and thoughts that are being donated.
Surveys - The types of surveys that Sony conduct are in the form of postal surveys and personal interviews.
In specific the reason as to why Sony perform postal and interview based surveys are because these methods of field research have a dual focus into the motivations behind consumer attitudes and behaviour.
Consequently, the information attained from the survey will help Sony pinpoint customer tastes, preferences, tastes and buying habits.
In essence, although surveys may seem inevitably subjective, it will provide an insight for Sony into the behavioural patterns with regard to what drives customer purchases - interviews have a high response rate which can easily and flexibly be noticed through observing the consumer's body language.
Again like focus groups, postal surveys will give Sony the edge in the sense that customers can put forward their opinions and perspectives as to what would be their ideal product. This will also help put into clarity and point of view what the potential demand for a certain product that Sony are about to launch would be within the market - help them understand and forecast demand for the product
Drawbacks of Sony using personal and structured interviews would be that they are far too time and money consuming - i.e. interviewers that are Sony representatives have to be specially trained in order to have the right preparation to carryout the interview.
Product Acceptance Tests - Sony utilise this to find out what existing customers thoughts are on previous purchases that they have made after a period of time. For example, if a particular customer bought a Sony psone in the past Sony would approach them and ask them questions on how well they feel the product performed.
I.e. did it satisfy their needs and wants, did the customer incur any problems or inconvenience of some sort while the product was under their ownership. Customers here get a chance to express their opinions.
The information that Sony extract from this little test will go a long way in facilitating what the customer feels and wants done in the future if any new products are launched - they understand the customer's needs and as a bonus, get valuable input and feedback.
Secondary Research
Secondary Research is also referred to as being known as desk research as it is not original, new and firsthand data, but is contrastingly data that involves the collection, collation and interpretation of market data that has already been published.
Moreover, secondary data can be gathered from two sources which are either internally or externally. Internal information is the collection of data from within the organisation, and external data which is the congregation of information from outside the business.
Internal Sources
Internal sources of information is data that already seeks to exist and more imperatively, is held within the business where it is easily within reach. The internal sources of research that Sony incorporates are as follows:
> Accounts and Global Sales Trends/Record of Sales
> Product Life Cycles of Previous Products
> Previous Market Research
> Analysis of the Type of Customer
Accounts and Global Sales Trends/Record of Sales - The reason as to why Sony persevere on utilising previous and current sales figures of products is because the previous products that they manufactured and marketed will act as a stepping stone from which they can forecast how a new product that has just crossed the launch threshold shall perform with consideration to sales - how likely the product is to sell and how many units may be purchased.
For example, if the Sony-Ericsson's T630's predecessor did not sell to its optimum, then Sony can use the sales figures from their financial accounts i.e. through their respective annual reports to get feedback and improve the phone's functions through eliminating those body parts of the phone that are not aesthetically pleasing to the eyes of the customer.
Due to Sony's being a globally based company, they will analyse sales/growth margins via any specified product portfolio through continents i.e. measuring the sales or growth of the psone for example between 2 continents over a specified amount of
years. Looking at accounts and global trends will help Sony to understand the behavioural pattern of the market because the market will fluctuate in terms of sales and profit figures due to any number of market forces. The accounts and global sales trends will highlight how their competitors are performing because it will show the amount of profit/sales they have made.
Using this secondary method is an effective tool to Sony because it will help them to understand the competiveness of the phone market and how their competitors are performing. Negative factors of using this means of research may be that the data may be raw (unprocessed) which may make the task of gathering the data very time consuming. Another disadvantage could be that as Sony only collate data through accounts and analyse company sales on a worldwide scale, this may not produce enough accurate data based upon regional areas in certain countries.
Product Life Cycles of Previous Products - Sony have drawn on the usage of product life cycles because the creation of a product life cycle will be highly effective to the firm in the light that it might conjecture and help them find out the probable duration as to how long the phone remains within the phone market before sales start to mature and eventually decline. What this will do for Sony is that it will help them pinpoint how many individual units to manufacture.
It will also help them understand how customers buying patterns fluctuated during different stages of the product life cycle and will give Sony a good idea as to when the most likely or best period of time is to for e.g. boost advertising and promotional methods.
For example, if they did not implement PLC's, then they cannot for sure say how long the demand will be for the phone - if the demand is fairly low then they will have a good idea not to make many units.
So subsequently, the product life cycle will act as a marketing mechanism that will enable Sony to link their proposed marketing strategies to their desired marketing aims and objectives i.e. have a global logic focus.
A negative aspect of drawing upon previous life cycles of previous products could be that the data may be invalid when a new product is developed due to changes in market trends and there may also be external influences such as wars taking place which cannot be used an indicator to predict how the new product will span out in terms of sales - not very accurate as Sony cannot predict the long term effects of the external influence and cannot pinpoint customers buying habits.
Previous Market Research - Previous marketing research methods is simply the past means in which Sony used when preparing to launch a new product.
It is employed by Sony and will give them the advantage as they can identify any given problems that were spotted in prior products which once have had their faults rectified, and can steer Sony into the path to customer fulfilment as customers have given their feedback and views on what did not make that specific product good.
Using previous market research will also help Sony to find out what the previous customer market demand was for the Sony T630's antecedent which was the Sony T610. This consequently, will help to facilitate what the possible elasticity of the demand may be for the T630 and will further assist Sony on consolidating their marketing strategies through planning and organising.
A disadvantage of using previous market research data is that the data which was then collated may now be obsolete due to variations in market trends and possibly laws that govern marketing techniques/advertising. This data thus could prove to be invaluable.
Analysis of the Type of Customer - This type of internal data has a dual focus in specific to what experiences or past encounters customers have had with Sony and more significantly though, whether Sony have chased up any customer complaints and feedback from them. Sony here view customer profiles and try to see what improvements can be made to the way they designed a certain product for example.
To analyse and gain feedback from the customer, Sony use a technique called Customer satisfaction measurement. CSM studies typically involve quantitative market surveys, such as online surveys, phone survey, or other quantitative survey methods, to rate a product on key product attributes and brand equity image dimensions. Customer satisfaction data, when consistently repeated over time, can provide trend information and signal problem areas.
This is highly useful to direct new product development processes as well as Sony's advertising, and branding strategy programs. While these hard numbers and trends are useful, it is often the qualitative portion - the open-ended probing questions that can provide the most insight for strategy construction.
Verbal comments, suggestions, and complaint may point to changing needs which in turn may be kernels of new opportunities for strengthening competitive product and positioning advantage. In turn once the customer complaints/queries if any have been answered, Sony will have connected with the customer and will get an understanding out of them in the sense that the customers have given them enough information for Sony to proceed with making any modifications/alterations to their product.
Disadvantages of using this method may be that Sony may not have enough in-depth information upon each individual to make accurate analysis. I.e. there may be a gap in the number fields they have per customer i.e. such as annual spending habits and their income.
External Sources
External sources of secondary research is data that is collated from outside an organisation - it is only available to a firm in the external business environment. In other words desk research that is gathered externally, involves a study of external publications which is complied by experts in various fields. The external sources of information that Sony employ are as follows:
> Government Publications
> Market Research Organisations
Government Publications - Government Publications is collated information that has already been published by the government and comprises of social trends, the economical trends of the society, national income, statistics per family and family spending. This type of data will act as an outline to Sony and will give them a good idea as to what the state of the economy is because it will show them whether most of the population are in boom or if there is a recession taking place.
It will further help Sony identify how much customers can approximately spend on their product i.e. if there is a boom in the condition of the economy then Sony will recognise that people are earning more, thus they will have more disposable income and so they will know how much to charge their customers.
Government Publications will also assist Sony to discover what their customer's behavioural patterns are, what they like and what does not fulfil their needs and wants so Government Publications help Sony to comprehend their customer.
Disadvantages of Sony using this sourcing of research is that the data may be obsolete on the grounds that the government may not publish statistical information on a frequent basis - may not be updated regularly so Sony will find their information invaluable as times may have changed.
Market Research Organisations - These are specialist market researching companies that seek to endeavour surveys with regard to certain markets on a regular basis. Examples of market research companies entail of Keynote and Mintel (Market Intelligence). Mintel and Keynote are professional companies that supply many large firms with valuable data in the field of market research.
For large sums of money, they can provide tailor made market/financial reports within a specified market segment. Information obtainable will include current and financial forecasting, SWOT and PEST analysis and detailed information with regard to the specified market in terms of growth and or percentage sales. They can cater for Sony in the sense that they will create a competently prepared analysis with observation to the Strengths, Weaknesses, Opportunities and Threats that Sony face.
Subsequently this research will lend a hand for Sony to understand their competitors because the report will have covered information on what things they are efficient at, and oppositely, what they have obscurity and difficulty in. Drawbacks of Sony using market research organisations are that they may not make available enough in-depth data about the market and it is very costly.
Recommendations Based On Research Methods Sony Use
I will now analyse the research methods implemented by Sony and then provide appropriate recommendations with regard to improvement on the negative aspects of their researching methods. In order for Sony to reap the benefits of their research they need to decide what scale their primary research activities will cover (global, continent, or country specific).
The beneficial factor with consideration to how Sony performs their primary research activities is that their primary research is conducted on a global scale, utilising many geographic segments.
This in turn will provide Sony with accurate information indicative in relation to the country/continent. In summation, the information will be a snapshot of the needs and wants of consumers within a certain region.
The disadvantage of Sony doing all this is that it takes up a disproportionate amount of time to analyse and process. It will also cost a substantial amount of money to gather this data.
Recommendations For Primary Research Methods
Focus Groups
Focus groups as mentioned previously have the chief drawback that the number of people who contribute within the discussion itself is usually based around 7 or 8 individuals. This would be a unconstructive feature because the amount of people taking part are speaking on behalf of the whole population within the targeted category which could be a large number of people.
My recommendations to improve the viability of Focus Groups include:
> Smaller, informal groups of people within every continent - This would enable more valuable feedback as more geographical barriers are crossed so more potential clientele can get more input into the way a product get's designed as more vicinities are contributing their thoughts and opinions, rather than having one large focus panel that is expressing their views in one area - people in differing continents could hold opposing views on product designs. So it is vital to see what the rest of the global reflects.
> Having various focus groups at pivotal stages within the development phases of any new proposed product concepts. This could assist Sony in crucial stages of the development sectors of any given product. This will act as a blueprint from Sony could gain more output from customers as they will be analysing the way the product is being planned out rather than members putting their viewpoint across at the start.
> Video conferencing at these focus groups whereby the panel can engage in dialogue with a member of the technical department. This would be highly constructive and productive in that it would carve down the amount of time it takes to relay information, and also improve the quality of the focus group too as they will be communicating directly with a member of Sony's designers.
Surveys
Negative aspects of Sony using personal and structured interviews would be that they are far too time and money consuming - i.e. Sony interviewers have to be specifically skilled in order to have the right grounding to complete interviews.
My recommendations to improve the practicality of Surveys embrace of:
> Seeing as Sony currently conduct most of their interviews with open questions they could employ the usage of having more closed questions where customers only have to tick "YES" or "NO" instead of having to write long answers. This in effect would reduce the interview time process and input process.
> Another proposal that I believe may be more suitable for Sony is to not use interviews at all.
I think this because no matter how many interviewees' Sony interview whether it is 100 or 200, they may all have different opinions. In an ideal world everyone will have differing opinions and so Sony will not have time to take into account what everyone thinks.
Product Acceptance Tests/Field Trials
Unconstructive characteristics of Sony making use of Product Acceptance Tests/ Fields Trials are that they are carried out within a small geographical region.
This would be a setback in my point-of-view because Sony will not be able to ask customers about products on a larger magnitude in terms of area.
My recommendations to improve the practicability of Product Acceptance Tests/Field Trials consist of:
> Sony could test a new product of theirs on a large environmental scale. For example they could perform field trials throughout every single continent whenever they release a new product or need to carry out research & development. Thereby, this will help them receive more feedback from more people.
> Sony could also act upon product acceptance tests/field trials on a more frequent basis. By Sony carrying out regular analysis of their products they will get continual advice from their customer.
This in turn will help Sony act upon immediate changes/modifications that they may need to make concerning the products and the market it operates in - i.e. thinking of new product extension strategies if the market is saturating.
Recommendations For Internal Secondary Research Methods Sony Use
Accounts and Global Sales Trends/Record of Sales
Accounts and Global Sales Trends/Record of Sales as mentioned earlier have the downside aspect that the data may be raw (unprocessed) which may make the duty of gathering the data very time consuming. Another disadvantage could be that as Sony only collect data via accounts and extrapolate company sales on a worldwide scale, this may not fabricate an adequate amount of accurate data based upon regional areas.
My recommendations to improve the practicality of Accounts and Global Sales Trends/Record of Sales consist of:
> Sony putting into practice the usage of (MIS) management information systems in the sense that it will save them a lot of time in extrapolating data so long as they input data onto computers - it makes data much easier to view and analyse as charts/graphs and tables can be created. Data is also much easier to update so there is the increased likelihood of Sony reducing the risk of obtaining obsolete data
> Sony recording regional sales in key cities within each country could provide more accurate sales figures within that country. It will also help Sony understand on a much broader perspective what consumers buying and behavioural patterns are.
Previous Market Research/Previous Product Life Cycles
A drawback of using previous market research data as stated earlier is that the information which was then collected may now be out of date due to variation in market trends and maybe laws that preside over marketing techniques/advertising. This data consequently could show to be invaluable.
My recommendations to improve the bad aspects of Previous Market Research/Previous Product Life Cycles Consist of:
> I recommending that Sony when analysing previous product life cycle models, they forecast how a new one does, that they go back more than one year, maybe five to six years in order to get a truer reflection of how old products performed.
This will give them a broader view and put them in a much better scenario.
> Sony could also abide by the same principle with regard to previous market research and go back over the years to see what market research they did on successful products.
Once having identified that, Sony will be able to make relevant planning in order to put them in good stead when developing new products.
Analysis of the Type of Customer
Supporting what was said earlier a disadvantage of Sony utilising previous records/feedback of what customers felt about the products that they purchased is that there may not be a sufficient amount of ground covered in terms of information about each customer such as how much they earn and their buying habits on products.
My recommendations to improve the bad aspects of Sony using data that Analyses the Type of Customer that purchased their products take into account the following elements:
> I feel that Sony could take into account researching more categories with regard to information about them such as product bought, how much they approximately spend, what sort of good/service they spend their money on.
By doing this, it will give Sony a widespread and far-reaching amount of data that will give them a truer a manifestation of what their customers are like and so will make the task of designing any new products easier
Recommendations For External Secondary Research Methods Sony Use
Government Publications & Market Research Companies
A downside of Sony using this technique of research is that the data may be out of date on the grounds that the government may not publish statistical data on a regular basis - may not be updated frequently so Sony will find their information not very valuable as times may have changed.
My recommendations to improve the bad aspects of Sony using Government Publications & Market Research Companies take into account the following elements:
> I feel that Sony should not depend upon using government publications too much as mentioned in the passage previously, but what I feel would be more appropriate and suitable would be if they increased the usage of market research organisations such as "Market Intelligence".
Professional researching companies such as Mintel will provide in-depth and accurate data in all aspects of the market in which Sony operate in. What Sony could do is take the report that was created by the Mintel and take it one step further by picking out certain areas in the report that were covered and research them in more depth to suit the needs and wants of their company. Useful data Mintel will provide is that they will create a competently prepared analysis with observation to the Strengths, Weaknesses, Opportunities and Threats that Sony face.
The Effectiveness of the Research Methods that Sony have Used
With regard to the research methods that I investigated in the passages previously, I will now be evaluating whether or not Sony have overreached their underlying goal of succeeding in their market research methods. To find this information out I will be utilising figures from their annual report and financial highlights to support my conclusion in whether or not their researching ways have been effective.
Research and development expenses
& as a % of sales volume
The graph on the left evidently illustrates that in 1999 Sony spent around £380 million pounds on research and development and since then they have been spending more and more until 2003 where their R & D budget had climbed to £450 million pounds. In light of the information obtained from
the graph, it can be said that Sony's marketing research methods have not worked to their optimum level because the volume of sales has fluctuated from 1999 instead of steadily increasing which would have shown continual improvement in their sequence of sales. To emphasis this, in 1999 the % of sales was 5.8% which from that year went up to 6.3% in 2000
Research and development expenses
Percentage of sales
*
Year ended March 317
and then decreased to 6.1% for the 2 years running from 2001 to 2002. Only in 2003 Sony showed progression in their research methods as their sales volume increased to its pinnacle to 6.4%.
The graph overall reflects that Sony's research methods only worked when they spent more time on R & D and that in 2003 their research methods were the most effective they have ever been in comparison to the previous 4 years. A possible rationale as to why sales may have depreciated in 2001 is because the state of the global economy took a collapse after the terrorist' attacks.
This external influence caused a detrimental affect in the stock markets and affected the global economy. People and organisations have felt more vulnerable as such and are now less prone to spend their disposable income.
So when the Sony MZ N910 minidisc player was first launched in 2001 of late August Sony had no control over consumer's buying and behavioural patterns. Since that day vital determinants of Sony maximising their sales such as consumer's impulse buying methods have changed. So in view of the events that took place in Sony's second largest market, which is the USA, it can be assumed that people have started to move on and become less susceptible with regard to their buying habits. This could be a major explanation as to why Sony's sales figures started to level off in 2001 and why they only started increasing after those disastrous terrorist events.
Table Showing 5 Year Financial Summary of Sony's Global Profits After Tax and Sales Volume in Billions (Yen) For All Operating Divisions8
YEAR
999
2000
2001
2002
2003
Sales
6,804,182
6,986, 661
6,214, 824
6,478, 258
7,573, 633
Operating Income
338,061
223,204
222,346
34,631
85,440
The table above highlights the amount of sales and operating income after tax that was preserved by Sony in a five year chain between 1999 to 2003.
The graph above underlines that Sony's market research methods as a whole did not work to their potential. For example, in 1999 sales were recorded at 6,804,182 million and in relation to this their operating income was 338,061 billion in yen.
By 2000 Sony's sales figure showed improvement and was confirmed as being 6,986,661 million. Their operating income on the other hand did not show improvement and that took a downfall and went down to 223,204 billion in yen.
After the financial year ending 2000, Sony's sales figure plummeted to 6,214,824 in 2001 and as and when of then, their sales stature boosted to 7,573, 633 which was a comprehensible indication that their continual increase in researching and developing expenditure concerning both their products and consumer requirements had worked.
Sony's operating income though shows a differing trend. For example, in 1999 Sony's operating income was 338, 061 billion in yen and by 2002 their operating earnings went down to 134,631 billion in yen.
From the year 2002, Sony appeared to be making an improvement as their annual operating income increased to 185,440 billion in yen by 2003.
The graph implies that Sony must have got their researching techniques right due to the increase in sales but as the business guru Peter Drucker cleverly pointed out although sales may increase, the amount of profit made may go down as the product may be in a saturated market or dying field.
"By itself, volume of sales tells little about performance...A company's sales may go up and the company maybe actually heading for a rapid collapse. A company's sales may go down - and the reason maybe that its is in a saturated market" 9
Using this point it is obvious and a simple explanation concerning why Sony's annual operating income decreased.
In order to counteract the plummeting sales figure, Sony may have reduced a lot of the prices of their products or spent a considerable amount of money on research and development or other marketing activities such as associated advertising costs or promotional costs. This in turn would have an impact on the operating income.
Furthermore, the Sony PS2 which contributed vastly towards Sony's increase in sales was also the chief suspect in reducing their annual returns regarding their operating income.
For example, in 2000 when the Sony Playstation 2 was initially launched, Sony's profits at first sight went up.
However, by 2001 in November Sony met its match when Microsoft launched the X-box console and Sony needed to do something quickly to increase their sales as the X-box was leading the market.
Sony's drastic need to gain sales lead to lower unit sales of the PlayStation 2 in the U.S. and lower prices worldwide.
In other words the market had become saturated which explained their rise in sales (lower unit cost on a worldwide Scale) and a decrease in operating income.
Section 2
Task 3
The Product Life Cycle (P3)
The Product Life Cycle is a scrutinising marketing tool that is utilised to forecast the outcome with regard to the life expectance of a certain product on the market.
Figuratively speaking, a product life cycle can have anything between four to six stages with the maturity/saturation stage centring on product extension strategies to avoid the product reaching to the diminishing element of its life.
The product life cycle will facilitate Sony to plan alternative marketing strategies to address the challenges that their products will potentially face and is useful in monitoring and reviewing sales results over a long period of time and allows comparisons to be made to similar products.
Below is illustrated a typical Product Life cycle model, and the selected product I have chosen to devise the life cycle on is the newly launched Sony Ericsson T630 mobile phone.
Once having done that, I will do a related life cycle to a more established phone in the phone market.
Product Life Cycle For The Sony Ericsson T630
Stage 1: Development
Product development is the incubation stage of the product life cycle. It is here that the product is natured for and there are no sales as the product has not yet been introduced to the market. Sony at this juncture anticipated the overture of their notion which was the T630 with regard to the market environment and place. As the T630 progresses through its life cycle, changes in the marketing mix are habitually essential in order for the mobile phone to regulate and adjust to the continually embryonic challenges and opportunities that arise ahead of its preliminary conception.
In product development, Sony went through six main vital stages which were idea generation, screening, business analysis, development, testing and then further commercialisation which was concluded when the Sony T630 successfully completed all the stages in the product development phases and went on to full scale marketing.
Moreover, at this phase a substantial amount of market research is performed in order for Sony to establish whether there is explicit elasticity in terms of demand for their proposed notion.
This in actuality was recognised, and Sony found out that there was an unyielding demand for their planned product by taking their concept to prospective clientele to evaluate and analyse the concept in-depth in terms of technical specifications and stability issues. Sony established that there was a captivating demand and a want for their new invention and then commenced onto the launch phase.
Stage 2: Launch/Introduction
When the T630 was first launched from initial formation, the sales and profit margins were generally speaking low as Sony had envisaged due to poor customer awareness and the fact that at this period in time Sony had only just shown their product to customers - the particular benefits theT630 possessed were not clearly presented as the phone had just crossed the launch threshold.
Unlike rivals Nokia and Vodafone who normally choose to announce their phones before they are launched, Sony cleverly worked out that in such a fierce and competitive market such as that of the mobile one, such early announcements of the T630 may alert their respective competitors' attention and would then further result to eradicating the element of surprise which is a big giveaway.
In relation, Sony contemplated that the only way to elevate public awareness was to primarily spend a considerable expenditure in relation to advertising costs.
Typically promotional costs are high at this stage in order for Sony to rapidly increase customer awareness and to target early adopters.
To launch the T630 Sony brought into play the following fundamental marketing tools/strategies:
> Leaflets in phone outlets - As the opportunity to see is high, word-of-mouth spreads swiftly and is relatively economical
> Television - As the number of exposures and impact in terms of visibility and sound are high
> Sponsorship Deals - Sony maximised their promotional campaign impact of the T630 by sponsoring the MTV music awards earlier in the year as the MTV Europe awards has an estimated television audience of 1 billion viewers worldwide that is transmitted throughout several continents thus increasing the Opportunity to see and hear of the T630. 10
> Public Relations - As it creates a good perception and costs virtually nil
During the introductory phase Sony incurred a set of incremental costs associated with the initial distribution of the phone. These additional costs coupled with a low sales volume made the launch stage a period of negative profits.
Although having said that, Sony did incorporate a skimming pricing strategy to try and attain a high profit margin as in the early stages customers are anxious to buy the latest and newest phones and set the price of the 'T630 at £199.99 offline.' 11
This would help Sony to recoup the development costs that were primarily outlaid.
The distribution of the T630 was also selective and scattered as Sony had only just commenced with the implementation of their distribution plan of the T630.
Stage 3: Growth
The growth period is a phase where Sony would capture rapid revenue growth. Their individual sales should start to cultivate as more customers become brand aware of the reputation of Sony and subsequently gives flexibility for any new products they have introduced as they would now be renowned and prominent for providing quality associated goods/services.
To help Sony accomplish growth they could maintain their pricing strategy at a high price as the demand is high and so abiding by using a skimming pricing tactic will help them generate more profits. During the growth stage the ultimate objective for Sony is to gain consumer preference and maximise sales.
To do just this, Sony could modify and make alterations to the marketing mix. For example, Sony's electronic marketers may wish to expand the distribution at this point - sell the phones in more stores so customers have a wider range of shops to purchase from thus increasing sales and profit levels.
If they choose to keep the prices of the T630 high when the phone starts to grow, then this could create the perception that Sony's product is better than that of their competition. All promotion use should be increased to maximise sales and increase the company's opportunity to achieve growth.
The features of the T630 could also have a few supplementary characteristics and packaging options added on as a further improvement of the phone's product quality.
Sony could in addition instil a mindset which can be evoked to such an extent that the general public will be able to distinguish their product from competitors by having for example a strapline from which the targeted customers can recognise their particular product.
Stage 4: Maturity/Saturation:
This is the penultimate point in the product life cycle and is when a product has reached prosperity, in this case where the T630 is the most profitable it has ever been since its birth - at its pinnacle. Having said that, the profits may start to level off due to the introduction of more similar products entering the market.
Whilst sales start to climb, they will do so at a much faster pace as Sony's brand awareness for their T630 has gone from strength to strength which therefore no longer gives them the motive to have a large advertising budget.
Furthermore, at this stage Sony will have heightened the icon of their T630 by differentiating themselves from the rest of the market. The competing products in the market here try to 'imitate' the market leader and try to make some ground on Sony's new creation in terms of the phone's capabilities and functions.
This would then augment the complexity of Sony differentiating their T630 from the rest of the phones on the market as it has become so competitive.
Sony will try to endeavour in trying to encourage rival competitor's customers to switch, increasing the usage rate per customer, and converting non-users into users of the phone.
Sales Promotion will again be reintroduced to try and give Sony more shelf space over competitors.
During the maturity stage of the Sony T610 the predecessor of the T630, Sony had to try and maintain their market lead over their competitors so they extended the product life cycle of the phone.
With regard to the market mix and the T610, Sony embarked on the following pivotal decisions; they made changes to the T610 by altering and adding new highly redeveloped features, changing colour, design and renaming it to being the T630.
The pricing strategy that Sony should use here should be to resort to penetration pricing or those that are similar to that of their competitors to try and circumvent the possibility of price wars occurring.
Penetrative pricing will also enable Sony at this stage to put off likely competitors from entering the market and will allow maximum take-up of the T630.
In terms of the promotion used, that should have strong emphasis on differentiation as stated earlier and trying to build brand loyalty through offering incentives to customers such as 'buy the phone, get a 'x' free.'
New distribution channels may possibly also be used by Sony to avoid losing shelf space to competitors in terms of market share.
Stage 5: Decline
This is the final stage of a product in its existence. Sales and profit margins of the Sony T630 will have deteriorated either if the product no longer appeals to consumers' tastes/fashions or if there are more sophisticated mobile phones out on the market - via exhaustive competition.
The T630 will have become technologically obsolete.
To try and have a chance of remaining in the market, Sony could look into researching and developing the phone through seeking marketing assistance from the R&D department.
This way Sony can make any amendments if necessary.
If there is little demand or not any at all, then Sony could discontinue manufacturing the product and think of new innovative and original ideas on new phones.
Sony could also harvest the T630, reducing market support and coasting along until no more profit can be made.
The marketing mix at this stage may be modified at this period as follows:
> Product - The number of T630's in the product line may be reduced or they can all be rejuvenated to make them look more upbeat again
> Price - The price of the T630 is now set at '£169.99 offline'. This will aid Sony to liquidate inventory of old batches of stock12
> Place - The channels that are no longer profitable are phased out - it gets more selective
> Promotion - Expenditures of Sony should be lowered and be aimed at consolidating and reinforcing the brand image for continued product.
Product Life Cycle For The More Established Phone - Nokia 7650 (M2)
With regard to researching the techniques used by a comparable and more established product in the phone market, I have found out that a more suitable and renowned mobile phone would be that to compare the Sony-Ericsson T630 to the Nokia 7650.
Stage 1: Development
Quality and reliability of software is a significant issue in the tightening competition in today's telecommunication market. The shortening of product cycles creates pressure to decrease the time available for the software development, and at the same time the size and the complexity of systems grow rapidly.
"To meet the challenge of constructing large and complex systems cost-efficiently and still ensuring the high quality, Nokia and Tampere University of Technology (TUT) developed formal modelling, verification, and testing methods for to see whether or not there was a definite demand for the 7650. In addition, at this early stage Nokia evaluated the feasibility and scalability of their proposed notion by performing case studies and reports concerning the phone."13
Nokia's primary objective of the research cooperation at the development phase was to try and develop a service-oriented, component-based modelling methodology mostly for the design of mobile. They used the concepts of composition/decomposition and externally observable behaviour in refining a high-level requirement model to an implementation model, used for automatic code generation.
"To analyse the models on various abstraction levels and to generate the test cases for testing the generated code, Nokia ran formal verification and testing methods and algorithms. Also the traceability between the refinement steps for the 7650 was validated by using exploration testing (or model-based testing), a formal testing method which was carried out by taking the phone to a group of 8 people in forms of focus groups." 14
Once having acknowledged that there was an assured demand for their concept, they went onto launching their suggested 7650 phone.
Stage 2: Launch/Introduction
When the Nokia 7650 was launched, like Sony Ericsson's T630, the initial sales and profit levels were low due to the fact that the phone did not create much customer awareness as the phone's benefits were only just expressed to customers.
However, having said that a noticeable differentiable in terms of raising awareness to customers between Sony Ericsson's T630 and Nokia's 7650 was that Nokia a few months before launching their intended phone, started handing out pre-launch promotional leaflets about their new concept and demonstrated the phone on their website.
A good aspect about Nokia doing this was that it created an early demand for their phone as customers were notified at such an early stage, thus hyping them up and creating an exhilarating scene in anticipation to have built a solid/definite demand for their new product when it was launched. Also as the internet can be accessed throughout the globe, word-of-mouth can accumulate easily.
In relation, Nokia thought that the only way to raise public awareness was to first and foremost have an extensive advertising budget.
Characteristically speaking promotional costs were high at this period in order for Nokia to rapidly increase customer awareness and to target early adopters. To launch the 7650 Nokia employed the following essential marketing tools/strategies:
> Leaflets in phone outlets - As the opportunity to see is high, word-of-mouth multiplies speedily and is reasonably cost-effective
> Television - As the number of exposures and impact in terms of visibility and sound are high
> Public Relations - As it creates a good perception and costs practically nil
> Sponsorship Deals - Nokia launched a promotional campaign around the theatrical release of Minority Report featuring the Nokia 7650 in Europe, the Middle East, Africa and Asia Pacific. Minority Report, from Twentieth Century Fox and DreamWorks Pictures, was directed by Steven Spielberg and starred Tom Cruise. Signing an endorsement deal with a motion picture that was guaranteed box-office success on a worldwide scale, help Nokia a lot.
This is due to several significant factors such as the film distributors 20th Century Fox, the film company DreamWorks which is also owned by one of the greatest directors to have ever graced Hollywood and also the reputation and hype superseding Tom Cruise.
All these elements put together served as a cornerstone to Nokia's marketing strategies for the 7650. Sponsoring and endorsing The Minority Report was a big coup in realising Nokia's dream of raising and establishing the Nokia 7650 brand name on a global height simultaneously.
The advantages of adopting that method of marketing that phone was Nokia did not have to tailor their marketing strategies specifically for each target country.
During the launch stage Nokia, like rivals Sony-Ericsson incurred a set of incremental costs related to the early distribution of the phone. These extra costs together with a low sales volume made the launch stage a period of negative profits.
However, having said that, Nokia comparatively speaking like Sony-Ericsson did integrate a skimming pricing strategy to try and achieve a high profit margin because in the early stages customers were anxious to buy the latest and newest phones and set the price of the '7650 at £299.99 offline.' 15
This in turn would have helped Nokia to counteract the development costs that were mainly outlaid. The distribution of the 7650 was also selective and spread as Nokia had only just began with the operation of their distribution plan for the 7650.
Stage 3: Growth
The growth epoch was the point-in-time where Nokia yielded rapid revenue growth. Their individual sales started to heighten as more and more customers became brand aware of the reputation of Nokia and which consequently gave them scope for any new products that they may have wanted to introduce as they were notorious and well-known for supplying quality based goods/services. To facilitate Nokia accomplish growth they upheld their pricing strategy at a high price as the demand is high and so remaining with a skimming pricing approach helped them spawn more profits. For the duration of the growth stage the ultimate objective for Nokia like any given was to get customer preference and capitalise on sales. To do just that Nokia like Sony-Ericcson's T630 modified and made amendments to the marketing mix.
For example, Nokia's electronic marketers expanded upon the distribution - sell the phone in not only more stores so customers have a wider range of shops to purchase from thus increasing sales and profit levels, but also by supplying greater quantities of stock to each individual outlet to match demand.
In terms of the promotional outlook, Nokia increased upon all promotional mediums like and increased upon their usage of Television, National and Local Newspapers, Radio, internet and specialist magazines. By doing just that, Nokia maximised the impact upon more customers.
In addition, Nokia decided to vary the product mix at this stage i.e. they changed packaging colours/styles and also changed the colour theme of the 7650 as a manoeuvre to gain more sales/profits.
Stage 4: Maturity/Saturation:
In conjunction to the maturity/saturation point of the product life cycle, Nokia's 7650 here flourished on all grounds because it was here that the phone had received the most sales/profits because Nokia's brand label has become much more widespread. In relation, Nokia here no longer had a large promotional/advertising budget as their reputation had gone from strength to strength.
Furthermore, at this stage Nokia had heightened the emblem of their 7650 by differentiating themselves from the rest of the market.
The competing products in the market tried to 'mimic' the market leaders Nokia, and also tried to make some ground on their new conception in terms of the phone's abilities and functions.
The pricing strategy that Nokia used was skimming pricing to try and evade the prospect of price wars occurring.
Skimming pricing also made it possible for Nokia at that stage to put off likely competitors from entering the market and will allowed maximum take-up of the 7650.
In the context of promotion methods used, Nokia had a strong emphasis on differentiation as stated earlier to try and attract more customers and tried to build brand loyalty through offering incentives to customers such as 'buy the phone, get 'x' free.'
New distribution channels were also exercised by Nokia to steer clear of losing shelf space to competitors in terms of market share.
With regard to the market mix and the7650, Sony took on board the following fundamental decisions; they made changes to the phone by varying and adding new highly redeveloped features, changing colour schemes, design and upgrading the phone to the 3650.
Stage 5: Decline
In the ultimate point of the Nokia 7650's existence, the sales and profit margins of the phone depreciated because the product no longer appealed to consumers' tastes/fashions and because there were more stylish mobile phones out on the market - via comprehensive competition. The 7650 in other words, became technologically out of date.
To counteract this scenario and have a chance of staying in the market, Nokia looked into researching and developing the phone through seeking marketing assistance from the R&D department.
This way Nokia made any amendments if necessary. Due to the fact that there was little demand for the phone, Nokia discontinued manufacturing the product and introduced a new innovative and original idea by launching the Nokia 3650 which was the 7650's takeover.
The marketing mix at this stage was modified as follows:
> Product - The number of 7650's 's in the product line were streamlined/ reduced and were then eventually discontinued
> Price - The price of the 7650 was at '£169.99 offline'. This aided Nokia to liquidate records of old batches of stock16
> Place - The channels which were no longer profitable were ruled out - Nokia became more selective
> Promotion - Expenditures of Nokia were lowered and the promotion was aimed at reinforcing the brand image for continued products.
Comparison Between The Techniques Used By The More Established Product The Nokia 7650 In Relation To The Techniques Utilised By My Product The Sony Ericsson T630
To outline the techniques/approaches that my chosen company's competitor which is Nokia have used, I will analyse the various similarities/differences between the more established product which is the Nokia 7650 and compare/contrast it to the newly launched Sony-Ericsson T630 in conjunction to all the P's. In this comparison, I will make statements on all the good techniques that my chosen company's competitor have used to help the similar product succeed in the phone market.
Product Similarities - Both phones have a built-in-camera function present, have the capabilities to send and receive both Short Messages (SMS) and multimedia messages (MMS), both have WAP integrated options to check news/entertainment, have java enabled games, wireless connectivity including Bluetooth and Infrared to send and receive pictures/screensavers, Have voice dialling features, Voice recorders, Joystick navigation, Polyphonic ringtones, Quickshare, Email system, Theme selector, GPRS, Predictive Text Input, Vibrating Alert.
Product Differences - Only the Nokia 7650 has a handsfree system built in, Has graphical-user-interface, and the phone measures up to being 114 x 56 x 26 mm in comparison to the T630 which is smaller in size and is 102 x 43 x 17 mm. Further variations in both phone models are that the T630 weighs 92.5g in contrast to that of the Nokia 7650 which ways more and is 154g. The standby time on the T630 in terms of performance is also better as the standby time is 300hrs whereby on the other hand the Nokia 7650 only manages to last for 150hrs.
Price Similarities - Both Nokia and Sony Ericsson incorporated a skimming pricing strategy when both the phones were initially launched. By using a skimming pricing strategy both Nokia and Sony-Ericsson will have the following benefits to them:
> By charging high prices initially, Nokia and Sony-Ericsson can build a high quality image for their phones - charging high prices at first will give both firms the luxury of reducing them later when the threat of more competitors enter the market, by contrast a lower price first would be difficult to increase without the risk of losing sales volume
> Skimming can be an effective marketing strategy in segmenting the market - For example, by Nokia using skimming they can divide the market up into a number of segments and reduce the price at different stages in each, thus acquiring greater profit from each segment
> Where a highly innovative product has just been launched such as the Sony-Ericsson T630, R&D costs are going to be high as are the costs associated with promotion. Skimming will allow Sony-Ericsson to recoup the initial set-up costs
Skimming has helped Nokia succeed in the market as they have been able to divide up the market into segments and reduce prices at each stage which in turn tailored in more profits for them. Nokia and Sony/Sony-Ericsson also used psychological pricing during all phases of their product's life existence as it looks cheaper on the eye.
Price Differences - Although both the Nokia 7650 and the Sony-Ericsson T630 use skimming and psychological pricing ways, the prices of each handset in comparison to each other will be different as they owned by different companies and depending upon the area in which the phones are sold the pricing strategy will have to consider what the market type is in the country, peoples income and user rates.
The pricing strategy will also have to be one in which both companies must yield some degree of profit even if it just covers the R&D costs.
Promotion Similarities - Both Nokia and Sony-Ericsson used Television, Leaflets, Sponsorship's and Public Relations mediums to promote their phones as the word-of-moth is high and spreads quickly and the number people exposed to those methods of promotion is extensive.
Nokia's promotional ways have proven to be a success for Nokia as they have become the flagship label in the phone market as they are positioned number 1 in the phone market and their profits have increased - "Industry leader Nokia"
Promotion Differences - Sony-Ericsson when planning the promotional campaign of their T630 did not give out any leaflets/ teaser information in the early development stages of their product as it ruins the element of surprise.
Place Similarities - A similarity with regard to where the Sony Ericsson T630 and the Nokia 7650 are sold is that they can both be purchased from professional mobile phone outlets such as T-Mobile.
These stores are usually situated within urban areas (inner city) as these are the areas that are densely populated, thus there will be greater demand and where there are good transport links.
This could be a beneficial aspect to the customer because many phones will provide many incentives and allowances on the type of phone they purchase i.e. rental tariffs whereby customers are required to pay a small fee per month for the usage of their service and in return may get free minutes and free SMS text messages.
This could drive in customers. Both phone models are also sold at high street stores whereby expertise advice from salespeople/representatives is attainable so customers will receive all the information that they desire about the phones and can have any queries that they have fulfilled.
An Analysis Of The Marketing Strategies Employed By My Chosen Company (Sony/Sony-Ericsson) & The 3 Products That I Chose To Investigate (M3)
In context to this question, I feel that the most appropriate way to make an accurate analysis on whether the strategies described earlier in p4 have been successful, I will produce a study highlighting the various advantages and disadvantages of the marketing strategies that Sony have used in conjunction to the 3 products that I have been investigating.
This study will also include an investigation of the strategies at each stage in the marketing mix. For further information relating to the identification and description of the marketing strategies that were described and used on the products that im investigating please refer back to Task 1a.
Furthermore as the products that I have been exploring which are The Sony Playstation 1, Sony MZ N910 Minidisc player and The Sony-Ericsson T630 mobile phone are all mainly distributed within the same places, I will make a general summing up stating the advantages/disadvantages of Sony choosing to sell their products there and if for example, there are any products that are sold at different places, I will analyse that too.
The same aspect will apply to the promotional strategies that Sony have utilised - if there are any additional/differing promotional ways in which Sony have used to promote a product then I will state what it is and talk about the pro's and con's of promoting the product that way.
Marketing Approaches Adopted by Sony
The electronics firm, Sony, has expanded its operations from its establishment in 1946 in a 'bombed out department store', to become one of the worlds largest and most influential electronics firms. Sony, has furthermore, developed a worldwide reputation, as one of the worlds most innovative and technologically advanced firms.
Its success can be attributed to several internal factors, which include, the freedom of workers to experiment, the passionate decisions of management, the established corporate culture, and also chiefly due to the most excellent management that has integrated into the firm since its establishment that have carried out supreme marketing approaches.
The leaders of Sony, from its founders to the present-day management, have encouraged their product designers to express and prove their individual visions about the development of new products to the firm, as they have done so well previously with the Sony Walkman. In fact top management has been 'willing to join the creative fray', which has lead to the development of a cohesive and interrelated firm with a corporate culture.
This management style prompted the development of premium quality, unique, and futuristic products, and along with the establishment of a strong corporate culture, formed the basis of the firm's competitive advantage. These aspects gave rise to adoption of several marketing approaches during the course of Sony's life cycle. During Sony's period of establishment the marketing approach was the key approach, since the initial management of Sony decided that the only way to succeed was to discover a new form of technology and extend a product from it, which would satisfy the wants of customers - extend their product portfolio.
This was evidenced by the conception of the tape recorder, and the first pocket-sized radio, developed for changing lifestyles. This approach has continued to be used and still practiced today on the tape recorder but has insignificantly been reduced via the recent development of one of the products that I will be researching, the MZN910 Minidisc player Walkman. This product is regarded by millions of customers as a product that represents a new way of life. The marketing approach was influential in the marketing of the MZN910 Minidisc player, such a concept which originated from
a want of customers for a small, portable, tape/radio player, to replace the large, inconvenient players of the era.
Sony acknowledged this customer-want and the Minidisc player was introduced which in turn, became one of the firm's most flourishing products. In addition Sony has realised that consumer-want for electronics is apparent in all age groups and as such, it has developed several products for different markets. For example,
'My First Sony' 17was introduced for a younger target market.
Another essential marketing approach for Sony has been the product approach, unlike other firms in Japan; Sony prides itself in producing products which have incorporated unique plastic appearance and futuristic features with superior quality, and affordability of price.
These concepts have ensured that Sony's sales have outstripped both domestic and foreign, including Western, competitors. In fact, Sony has upheld these concepts, in regards to their products, to the extent that they cancelled the production of a new television, simply because a rival had placed a similar product on the market.
Coupled with the product marketing approach has been the design of products, which is a major feature in the marketing strategy of Sony, this is evident with the Sony Playstation, which has been carefully designed and uniquely developed for the younger target market.
In the future, with the dawn of the digital age, Sony must place greater emphasis on the product marketing approach to achieve sales and if they wish to maintain their market edge.
This requires, Sony, embracing sophisticated technology in the manufacturing of its products and heavily investing into researching customer needs and wants. The managers of Sony have realised the dilemma, that due to the speed of technological advancements, the products Sony release today will become obsolete rapidly.
Therefore, Sony is continually, incorporating innovation that is achieved via extensive research and development, to improve and expand upon its products to make them superior to competitors through increasing their respective product portfolio. The concluding approach to marketing by Sony has been the selling approach, Sony, as a multinational firm, has earned a reputation worldwide as being a superior producer market leader with regards to electronics produce.
The size of the company allows it to promote its product on a larger scale than that of many of its competitors. Potential customers are enticed to purchase the firm's product, even if they do not need it, by the array of commercials, catalogues, and other methods, which portray Sony product's as being superior. Further, the appearance of Sony's products is heavily marketed as being state of the art, everyone is aware of the black, sleek, elegant, and futuristic appearance of the Sony the products.
Marketing Strategies Utilised by Sony to Create More Demand for Their Products
Formulation of Marketing Strategy
Marketing planning efforts must be engaged in the direction of establishing marketing strategies and tactics that are efficient, flexible and most importantly, adaptable to adjust to the changing market environment from which such a large, demanding and competitive firm such as Sony operates in. Marketing strategy is the overall company devised plan that comprises on the 7 P's of the marketing mix. To do this, Sony will select a specific target market which then satisfies the consumers in that segment through observant use of elements within the marketing mix.
The particular target market to which Sony have targeted is a mature market because customers have reached the pinnacle stage as to where they have repeated trade with them and have become brand loyal. In relation, an effective marketing strategy will not be formed unless Sony fully come to some sort of understanding of the market it operates in, the competitors and customers which would then give them a sound and a feasible strategy.
Marketing Plans
Much of the planning efforts are devoted to the development of marketing plans because they are aimed at matching up product offerings to the needs of particular target markets. One strategy that Sony has thrived on since their establishment is differentiated marketing.
Firms such as Sony who manufacture numerous products within various marketing mixes designed to satisfy the needs and wants of smaller segments use differentiated marketing Sony feel that by employing this concept they are aiming to satisfy a larger portion of the entire market. For example Sony specialise in designing and manufacturing various types of Televisions to satisfy the needs of different clientele's lifestyle.
I.e. Sony's strategy is to segment the Television market, recognising that there is not only one type of lifestyle that is led by individuals, and therefore there is no one T.V that will satisfy all consumers needs.
By providing increased satisfaction with regard to each of the numerous target markets, Sony will increase the demand for their produce as they offer more than one type of Television for e.g. they will attract various different customers who have growing needs for different televisions to suit the way they lead their lifestyles. Thus, demand will elevate because products are specifically augmented in terms of their product portfolio which are then deigned to meet the needs of smaller segments.
The importance of product strategy is to generate demand for the marketing mix. This is Sony's ability to select the right product for the right market, a task that requires a lot of time, though, planning and active participation of the marketing team. Some products need further investment, whilst the movement of rivalry competitors entering or exiting the market also needs to be monitored and examined.
(PRODUCT STARTEGY) - Product 1 - Sony-Ericsson T630
With regard to the way in which the actual product has been marketed in the light to create more demand, then I would say that Sony has done an excellent job in doing so. This is for a number of reasons.
Firstly Sony-Ericsson have learnt from performing previous market research that the previous line of phones in the same tree as the T630 which was the T610 performed very poorly when the handset was exposed to sun rays. So an improvement that they have made to create more demand is by giving the newly launched T630 a new innovative and refined look - the phone has been fitted with a TFT screen.
The high-resolution TFT colour screen makes the T630 a visual delight. Indoors or outdoors, the colours and contrast remains sharp, bright and clear which boosts gaming performance and the ability to take pictures.
Another product augment that Sony has made with regard to the phone is that it has become slightly more compact. Sony have realised that in today's ever changing society, there is a growing demand that phones are built with high specification capabilities with the added bonus that the phone is compact enough to slip into a person's pocket or fit into the palms of their hands.
In addition, a noticeable enhanced feature of the phone is that the standby time on the phone has increased from 300hours in the T610, to 315hours on the T630. This is bound to influence greater demand as more and more customers throughout the globe will have the enjoyment of having longer one-to-one talking sessions with their loved ones.
By Sony adding these aspects to the T630, then the phone will be tailored to fulfil the needs and wants of their targeted segment thus will increase the demand for it.
A bad attribute of the T630 is that they have not made any additional changes to the T630 in comparison to the same line of phones such as the T610 - i.e. the T610 was java enabled, the talk time was 14hours, both had Bluetooth and Infrared abilities. This is a downside mark to the phone as the marketing mix centring around the product development has only slightly been modified.
(PRODUCT STRATEGY) - Product 2 - The Sony Playstation AKA The PS One
Some of the key advantages in the way in which the Sony Playstation 1 was marketed in terms of product functions and capabilities are that when the console was originally launched it was quite large and heavy in terms of size.
Through ongoing research Sony concluded that in order to create more demand for the product and to ensure success was if it had radical amendments made to it. The console is now compact and curvaceous allowing gamers to avoid the hassle of holding such a heavy object.
In addition, the psone was the first ever games console that had the aptitude to play audio CD's. This meant that the console incorporated more than one way in which gamers could relish the thought of playing on it - they could listen as well as play on a 32-bit driven central processing unit that delivered a dualshock effect to visualise real-time effects and conjure up a virtual-reality experience for the user. This was deemed as being Sony's Unique Selling Proposition (USP) and helped sway in greater demand for the product.
The downside to the psone was the limitations concerned with the colours and packaging it came in. For e.g. the product was designed as being only in grey which meant that it didn't look as though it could have done which was to be available in an assortment of colours.
If it was available in additional colours than more people will be attracted to the console as people have different fashion tastes therefore crafting more demand - the psone would be more aesthetically pleasing to the eye.
(PRODUCT STRATEGY) - Product 3 - Sony MZ-N910 Minidisc Player
The Sony minidisc MZ-910 has been highly acclaimed simply because of its size.
Its unique selling proposition which makes it so incomparable and distinguishable from others is that unlike a tape player, which produces a rather dilapidated sound in terms of sound quality, this minidisc player has no flaw.
The sound quality far surpasses that of CD's by comparison. As the MZ-N910 was the first minidisc player ever to utilise ATRAC compression technology, in theory it will reproduce better and more distinctive sounds than both a walkman and a CD player.
The player no longer requires a user the need of having to press fast forward or rewind because the MZ-N910 allows title inputting to facilitate song searching.
Tracks can further be edited through key options such as divide, combine, delete or move, directly off of the MZ-N910, something that not even most mp3 players can do in this day and age.
Other major merits of the MZ-910 in the way it has been marketed include its portability and design.
Most Minidisc players are equipped with 40 seconds anti-shock protection which allows Minidisc users to listen to "skip-free" music while engaging comfortably in almost any other activities.
This minidisc player however is equipped with 50 seconds anti-shock protection making it by some margin finer than that of others ones.
In the technological era that we live in today where the audio market is dominated by products made from economical plastic with silver paint, Minidisc is the defender for quality in every aspect from sound to style as it is made of aluminium which thereby boosts its durability.
The MZ-N910's versatile recording features along with its fashionable and resilient designs markets well amongst teenagers and professionals.
Almost all Minidisc users have realised that once they make use of this user-friendly and sophisticated technology to enjoy enhanced music, they can never turn away from the MZ-N910.
This is what the marketing strategies of Sony in terms of product development and design has thrived upon in order to help generate more demand -its compactability - its light weight and its unique sound features.
PRICING STRATEGIES Sony Have Used On All 3 Products
With regard to the pricing strategies that Sony has used to market the three products that I have been investigating, Sony on all three of the products made use of psychological pricing and for the two already existing products which are the Playstation 1 and the MZ-N910, used skimming pricing tactics too.
Skimming Pricing
Skimming as stated earlier, is when a firm sets the price of their new product high when initially launched and the objective concerned is to try and "skim-off" customers who are willing to pay more to have the product faster, then when the demand of the early adopters decreases, prices are lowered.
I feel that by Sony employing a skimming pricing strategy for the products that I have been investigating will be effective. Some of the advantages and disadvantages of Sony using this pricing strategy include the following:
> By Sony charging high prices for the Playstation 1, MZ-N910 and the T630 at first, they will be able to create a high quality brand reflection for themselves. For e.g. by charging the anxious customers £399.99 when the Playstation was first introduced onto the games market it will give Sony the competitive edge of reducing the price when more similar products arrive onto the market.
By distinction, a lower early price would mean that for such a highly technological product such as the ps one where the demand for it was highly commended would result in a lost opportunity for Sony to maximise their sales and profits.
> Setting high prices at the start when the T630 and when the other two products which are the MZ-N910 and ps one were launched, will also give Sony the benefit to recoup the extensive costs that were associated with researching and developing the products in earlier periods
> Another advantage of skimming pricing is that it can operate as an effective strategy for segmenting the market.
For e.g. Sony can segregate the market up into a series of segments and reduce the price at different phases in each, therefore enabling Sony to gain maximum profits/sales from each segment
> A drawback of setting the prices of the T630, MZ-N910 and the ps one high at first could be that it may dissuade many customers to purchase the product.
This is because if the prices were high then many of the customers may not have enough income/disposable income to make a desired purchase and will be uninterested
> Another disadvantage is that if Sony inadvertently position the price of the products high at first, then in the eyes of the consumers it will appear as though they are targeting the high earning individuals/families - i.e. those that are in the AB/C1 socio economic group. This could again result in a loss of sales and profits as only a small target market may be attracted rather than for a large proportion of the console market e.g. teenagers who were the target audience for the ps one.
Psychological Pricing
A psychological pricing strategy as stated earlier is also used by Sony/Sony-Ericsson. This pricing strategy is an ideology in marketing that prices of products are set intentionally to a round number such as £179.99 which was what the Sony-Ericsson T630 was priced at.
Thus these prices have a psychological impact upon the eyes of customers that drives a greater spiral of demand because they come into sight as to being cheaper than what they really are.
I feel that there are no disadvantages of Sony/Sony-Ericsson using psychological pricing tactics because of the way in which the human mind works. I.e. our evoke mindset instinctually tells us that £99 is better than £100 psychologically. The difference of £1 is massive in the sense that a two figure sum can become a three figures sum by a 1 pound increment in price.
An advantage for Sony/Sony-Ericsson in using psychological pricing strategies are that the addition of 99p to £179 will make the figure seem cheaper on the human eye, this may influence more customer purchases.
PROMOTIONAL STRATEGIES Sony Have Used On All 3 Products
Promoting a product entails of raising awareness and company representation. Consumers have to be aware of the product and the company that is selling it. It is the part of the marketing mix that is concerned with raising awareness which will help move a product through not only from the shelves, but also through the life cycle and diffusion segments.
So therefore taking into account what has just been said, Sony/Sony-Ericsson place a firm importance on getting their message across as effectively as possible to its targeted market to assist them in achieving their aims and objectives. The key is to have effective communication that utilises high exposure rates and low wastage ratios. The controllable promotional methods used to promote the T630, MZ-N910 and the ps one by Sony/Sony-Ericsson are advertising, sales promotion, public relations and for the Playstation 1 they used direct mailing for registered users who wished to have further information when it would be released.
With regard to advertising the T630 and Sony Playstation 1, a motive behind why Sony/Sony-Ericsson used television was because the reach of media was widespread. By this I mean some of the beneficial factors of using television are because of the exposure rates - television commercials have the ability to spread throughout many regions in an instant moment, thus more prospective clientele can be targeted. In relation, T.V commercials raise a lot of persuasive impact as it combines both visual and audio impact - creates a snapshot of the products in the minds of the customers and conveys a sense of atmosphere.
Downfalls of Sony/Sony-Ericsson using television to promote the T630 and ps one is that the wastage rate is high both in terms of cost wise and the fact that the whole country is targeted rather than the specified target market such as specialist magazines. So in effect, although televisions can conjure up a sense of atmosphere, it may be ineffective to Sony because it costs a lot and the whole country is targeted which means that a lot of wastage will occur.
Sony did not persevere in promoting the MZ-N910 through television because of the above statement which is seeing that the target audience of the MZ-N910 was the AB/C1 socio economic classed individuals, it would make logical sense if they used other means of promoting because they would be wasting lot of time and money as they are not targeting the whole country but only a small proportion of the country that can afford such a highly sophisticated device.
In conjunction to all 3 products, Sony/Sony-Ericsson used specialist magazines to promote their products because they are very effective. For e.g. they reduce wastage rate as the target sector that they are targeting will 100% receive the message in the sense that only their target audience receives the message and not anybody else unlike televisions. So Sony's efforts in conveying the message will be extremely efficient.
Another advantage of Sony using specialist trade magazines will be in terms of performance - magazine adverts score highly as the number of exposures and the length of time in which the message remains in the customer's mind is generally high as they are reading the data and so take it in.
Negative aspects of using specialist trade magazines are that Sony/Sony-Ericsson will have to pay a fee for the use of media space - the more picture insertions and text space taken, the larger the cost will be.
Furthermore the internet, billboards and national newspapers were also used to advertise all 3 of the products by Sony. Advantages of Sony making use of the internet is that the reach of media is unlimited as Sony can target anyplace within the globe 24/7 and that it is cheap in the sense that although Sony will have to pay a fee to advertise their products, it is usually nominal.
A negative attribute of Sony exercising the internet is that although the reach of media is unlimited, the message may not reach the intended target audience as effectively as it could have done. This is because advertising on the internet will mean that everybody will automatically be targeted whether they want to or not - the message gets communicated via one channel. This could like using the T.V to advertise, waste a lot of time.
A disadvantage of Sony using national newspapers to advertise is that the cost of making an insertion of either text/images is extremely expensive. A positive factor though is that national newspapers will mean that Sony's message to promote their products will have a national reach in terms of scale. This means that there will be a lot more individuals exposed to the advert, thus helping to contribute to more demand. Furthermore like specialist magazines, the performance of newspapers is good because it combines aspects of both images and text which helps create a sense of atmosphere and the information is more likely to sink into people as they are reading information rather than viewing.
Advantages of Sony/Sony-Ericsson using billboards to advertise their products, is that the visuality is good as imagery conveys and creates a frame of mind. Drawbacks are that the cost of using billboard means that the media cost involved will be high because billboards are usually fairly big. Other bad issues concerned with billboards is that the reach of media is poor as it cannot communicate throughout the entire country seen as it is situated in one certain area.
Moreover, Sales Promotion was also utilised by Sony when they were either just about to launch the products or after they launched all 3 products. This sales promotion came in the form of competitions. A good aspect of Sony using competitions is that it encourages consumption from more and more customers as the thought of them knowing that a free product is up for grabs will give them motive to buy/enter more competitions. In particular, Sony usually made their entries for competitions within specialist gaming magazines, national newspapers and the internet.
Competitions are also good to use because they will raise brand awareness for Sony and increase their company's reputation i.e. as they made competition admissions in national and specialist gaming magazines the reach of these medias are high as they are both available to the public throughout the country, thus more people will be informed of the competitions. A disadvantage of Sony/Sony-Ericsson using competitions is that they have to process the information of the entrance and this could be both very time-consuming and costly i.e. postal entries will take Sony time to collate the information as they could be dealing with many millions of applicants. For an example of competitions that Sony-Ericsson on the T630 have used please view Appendix B.
Also with regard to the Playstation 1, Sony promoted the console via sponsorships. In 1996 Sony Gaming Inc. signed a 5 year endorsement deal with the UEFA Champions league. The UEFA Champions League is the most prestigious club football tournament in the world.
The sponsorship as therefore helped Sony Playstation achieve global recognition as the UEFA Champions League has a world wide audience who watch the football competition. A disadvantage of Sony using an endorsement deal is that the initial costs of setting up the campaign were high and there was a lot of legal documentation involved that needed to be filled out, making the task of the sponsorship planning time-consuming.
Although the endorsement deal must have cost Sony a large deal of money, in the long run it actually strived to save them valuable time and money because they did not have to formulate an implement extensive marketing strategies within the many individual countries. The other two products that I am investigating did not perform/sign any endorsement deals.
In addition, when promoting all three products, Sony employed use of Public Relations. PR is the way in which Sony communicate to all those who come into contact with them and their products, as well as the way they relate to people who are an important to it.
An obvious advantage of the press writing and publishing a press release in newspapers for Sony would be that it is a free way of promoting themselves as they do not have to pay - Sony have no control/influence over what gets written. Another advantage is that if journalists write positive press released then it will help boost both product and company awareness and goodwill.
Disadvantages of public relations is that as Sony have no control over press releases, then they will not have the control to say what actually gets written about them - if the press write a bad release then it could severely damage Sony's brand name and could result to a loss in sales/profitability.
PLACE (DISTRUBITION) STRATEGIES Sony Have Used On All 3 Products
Having developed effective strategies in the other 3 P's, the issue of place which is concerned with Sony providing their products at the right place at the right time is the last stage in the marketing mix. Channels of distribution are the link between the producer (Sony), wholesaler, retailer and consumer. The specific channel of distribution that Sony choose is determined upon an analysis of various criteria including a study of market, product, producer and competitive factors.
The overriding influence of distribution channels will be based upon where, when and how consumers choose to buy Sony's products. So therefore all these factors need be taken into account as they are often interrelated.
As described earlier on in task 1a, I illustrated the specific areas to which the three products that I am investigating were distributed. I will now analyse the advantages/drawbacks of the places in which these products are sold. The degree of distribution intensity is best seen as being part of a continuum for Sony/Sony-Ericsson.
Having stated that, the type of distribution strategy Sony used on the three products I have been examining, is a distribution method known as exclusive distribution. This is where Sony grants exclusive rights to wholesalers mainly retailers, and give them the privilege of selling Sony goods in specific geographic areas such as the inner/urban areas.
Moreover, in exclusive distribution, Sony and the retailers co-operate closely in decisions concerning advertising and promoting the inventory to be carried out by the retailer. Sony usually sell a large batch of their products to these wholesalers and then sell it onto retailers. One of the key advantageous factors of Sony distributing their goods to retailers/wholesalers within the urban areas is that these geographical areas tend to usually be densely populated. With a large population at many of the retailers convenience that purchase goods from Sony such as Carphone Warehouse and the Link, it will create scope for greater demand because if Sony sold their products to retailers and wholesalers in rural (countryside) areas, then there will be less people to attract as those areas are less populated.
So in Sony distributing their products to the link and Carphone warehouse such as the ones I have been investigating in urban towns then there will be an increased likelihood of them in having greater purchases as there are more potential buyers.
A disadvantage of Sony selling their goods onto wholesalers and retailers in urban areas, may mean that as these locations are heavily populated, it will mean that the demand to supply goods to the them will be higher - Sony will have to manufacturer more units, therefore making the task of supplying to wholesalers and retailers, both initially time consuming and expensive.
Another drawback of Sony supplying goods to many highstreet stores or shops in shopping centres in urban areas is that because there is so many congruent stores -if for e.g. there are five main retailers who stock identical Sony products, than these five stores would be in direct competition with each other. Sony in turn may have to provide items at a reduced cost because of the direct competition of the retailers. This would be a disadvantage because it would eat into Sony's profit level margins per specific unit.
A further advantage of Sony supplying their products to wholesalers and retailers within urban areas is that they will have excellent transport links making the process of delivering items/goods to their destination simplified - I.e. many urban towns are often connected with many motorway junctions throughout the country - they have a lot of road links making the task of Sony supplying goods quicker. Also, many urban towns such as the capital, London, are linked to many leading airports such as Heathrow making freight to ship over goods/services much easier as Sony have a wide range of transport resources available. When transporting goods, Sony usually do it via road and is a beneficial aspect to them as it is cheaper then for e.g. importing and exporting.
Supported Recommendations for the Development of the Marketing Strategy Applied to My Chosen Company's Products
Having earlier conducted a serious of market analysis techniques which were carried out in the form of product life cycles, I will now make supported recommendations for the development of Sony's marketing strategy which is applied to not only all of Sony's products, but in particular recommendations on the MZ-N910 mini disc player, T630 mobile phone and the Sony Playstation 1 games console which were the certain products that I decided to investigate.
Furthermore, these recommendations will also be based from financial information such as five year summaries which will give me indication as to why Sony may not be or is performing to their optimum. To be even more accurate, I will also use market share figures from competitive companies such as Nokia to help make a comparison at first then make my solutions to help improve Sony's products a step further.
To simplify the process of making recommendations and make it more logical, I will go through all of the 4 P's of the marketing mix.
Product Strategy Recommendations (Sony-Ericsson T630)
With regard to making product recommendations, I have gathered a graph that illustrates the various firms that are the top 6 leading phone manufacturers within the phone market amongst a summary of the other ones too.
As you can see the graph clearly highlights
that there is something that Nokia are doing
much better than every other phone manufacturer within the phone market. It suggests that they are clearly the best by some margin.
They own 29.2% of the market in comparison to Sony-Ericsson's efforts which show that they are falling behind in the race for market leadership - they only have control over a mere 5.7% of the phone and are placed jointly at sixth in the market.
In light of this data, I feel that a variety of recommendations can be made to help the newly launched Sony-Ericsson T630 flourish in the market. As mentioned earlier, a similar and more recognised product which is the Nokia 7650 has additional extra features in comparison to the T630. Nokia are the leaders because they are producing "new" and "innovative" phones whereas everybody else is placing catch up and duplicating their phones and functions.
I feel that to help the T630 move forward and grow into new light both in terms of sales and profits, that a new feature could be added such as a video streaming capability. Video capture and playback will make the phone's features enhanced as users will have the opportunity to capture treasured moments and have them recorded on their phone for as long as they want which unlike a camera which can only take still shots.
This in turn may help generate more demand for the T630 just as the Nokia 7650 had done so and so help boost the overall performance of Sony-Ericsson as a whole.
I also feel that the T630 could be slightly smaller and lighter because it will give users the benefit of carrying an object that is easily held and not so much of a hassle to tuck away in their pockets - it will be light. By making the T630 even smaller and lighter, it will help create more demand as customers do not want too be carrying around a hefty object.
Based on my findings on the product life cycle on the more established product, I found out that neither the T630 nor 7650 are shock-proof so a supported recommendation from my research could be to design the body casing of the T630 as being shock-resistant. This as a result would give users the knowing security that if they accidentally drop the phone, then it will not stop working - it will enhance the overall durability of the phone.
Product Strategy Recommendations (Sony Playstation 1)
As described earlier, the Playstation 1 was only designed as having a 32 bit central processing unit. "According to NPD Group Inc., sales of the Sony's PlayStation dropped by 36% in 2003 and Nintendo's GameCube fell by 22%. The Xbox now captures 27% of the European Industry market share for the next-generation of consoles and is on track to capture additional market share by November 2004"18
In conjunction to the data gathered from above, a supported recommendation could be to increase the central processing unit power from 32bit to 64bit. By increasing the CPU power, it will produce superb graphics that will almost be realistic as well as the sound which will offer the user a fantastic array of music to listen to thus improving gameplay for them.
Another recommendation may be to add a DVD drive to the console. The inclusion of a DVD player will allow games to be run from DVD discs, consequently improving the overall package of the console as it will offer users more than one purpose for using it - a games console and a DVD player.
The combination of these aspects on the games console could be used as the playstation's unique selling proposition and may help create greater demand.
Product Strategy Recommendations (SonyMZ-N910 Minidisc Player)
"Minidisc is the leading digital music player on the market," said Robert Ashcroft, senior vice president for the personal mobile products division of Sony Electronics. Market statistics for the digital music industry appear to support that. Sony Minidisc accounted for about 40% of the market in July 2003, according to NPD Intellect. That is more than any other kind of device, and more than twice the share held by rival firms Panasonic and Sharp in that year."19
As you can see from the passage above, it is indicative that they way in which Sony minidisc players were marketed in 2003 were very good as Sony held their competitive edge over rivalry companies such as Panasonic and Sharp.
So therefore I have no criticisms about the way in which they market their minidisc players but can only suggest that they carrying on doing what they are doing which is being at the forefront of R&D thus ensuring cutting edge products and always being one step ahead of their competitors.
A suitable recommendation that could be applied to the MZ-N910 in particular could be that the product's body could be made out of magnesium rather than aluminium as magnesium is heavier and stronger, therefore making it safer in the manner that if it were to be dropped on hard surfaces, then it will minimise the damage incurred.
The battery life could also be increased from 114hrs to maybe 200hrs so that users can have the enjoyment of listening to music for longer periods of time.
Pricing Strategy Recommendations
YEAR
2002
2003
Sales
6,478, 258
7,573, 633
Operating Income in Yen
34,631
85,440
SOURCE: Five Year Summary of Sony's Sales & Operating Income20
As all three of the products that I researched all incorporated the same pricing strategies which were by Sony using skimming and psychological tactics, I have come to the supported conclusion that they carry on using these two pricing strategies because as the table above clears highlights, both Sony's sales and operating income margins are increasing in a logical sequence from 2002 to 2003 without fluctuating.
Thus by employing skimming pricing strategies Sony is able to recoup their initial R&D budget that they spent on their products - high prices will allow them in other words to get back what they lost.
As you can from the graph, it demonstrates that it holds Sony in good financial stead which also reinforces my choice of recommendations that they do not in anyway try to adjust their pricing strategies because if they do, then it may cause Sony in a decline in overall profits and sales.
Promotion Strategy Recommendations
YEAR
999
2000
2001
2002
2003
Sales
6,804,182
6,986, 661
6,214, 824
6,478, 258
7,573, 633
Operating Income
338,061
223,204
222,346
34,631
85,440
SOURCE: Five Year Summary of Sony's Sales & Operating Income21
Based on the table shown above, it is clear that in 2002 Sony suffered serious losses in terms of operating income as it went down from 222,346 million yen to 134,631 million yen. At the same time rival company, "Sharp announced on Mid August 2002 that it has signed a two year world wide image rights deal with England soccer captain and Manchester United star David Beckham.
The deal will allow Sharp & Vodafone to use Beckham in advertisements and generate content, like screen savers and mobile games. David Beckham will appear in a series of adverts for the phone, taking snaps of himself in cities across Europe to beam back to his family at home. Along with Michael Schumacher's image, it is hoped Beckham will help promote the camera phones22"
The information above clearly underlines that the main reason as to why Sony's operating income went down so severely in 2002 was because their competitor Sharp had signed an endorsement deal with David Beckham. The campaign that Sharp centred around David Beckham and his "brand image" was a vital coup because of what the name David Beckham means - Everything the name David Beckham symbolises a life full of success. This endorsement helped raise awareness for sharp and may also have caused Sony to have incurred poor results in 2002 as mentioned.
In relation to the above, I recommend that Sony try to endorse a world famous personality like Sharp did so and like they did with the Sony Playstation 1.To be certain, I recommend that to promote the MZ-N910 or the Sony-Ericsson T630, Sony sponsor a footballer such as Zinedine Zidane because everybody throughout the globe is aware of what that name represents. Benefits of Sony performing endorsements are that although the endorsement deal may cost Sony a large deal of money to initially set up, in the long run it in fact may save them valuable time and money because they will not have to devise and implement widespread marketing strategies within many individual countries.
Place Strategy Recommendations
My recommendations on improvements as to where the products I have been studying get distributed are that they get sold within rural areas such as the countryside too. For e.g. if retailers sell Sony products in the countryside then the cost of setting up there will be extremely cheap as they are not in the city where the costs of operating the premises are high.
Why Sony is a Successful International Business
As a conclusion, it can be said that Sony is a successful international business it has grown to become one of the world's largest and most influential electronics firms, due to its ability to meet consumer wants worldwide and its ability to constantly manufacturer "innovative" products.
This influence over the market is evident as domestic and international competitors wait for Sony to initiate a market trend via the introduction of a product, and then duplicate this, to benefit from Sony's success. Furthermore, Sony has come to possess a worldwide reputation, which rivals those of the other multinationals, like Nike and others, a reputation which has made Sony and its products synonymous with quality and superiority in electronics.
Sony's is also seen as being internationally successful as it has entered many export markets in the world, including Australia. Sony also has established several headquarters in different parts of the world, including America and Europe, which is a testament to its international success. This worldwide status has enabled Sony to discover changes in consumer wants, new product ideas, and the success of different marketing approaches worldwide. Sony's international success can be attributed to several internal factors, these in the passionate decisions of management, in that they allow the product designers the freedom to experiment and develop the ideas that may lead to a breakthrough for the firm.
Further, Sony's success can be attributed to the establishment of a strong corporate culture in the firm, which allows the goals of the firm to be achieved, as managers have ensured that everyone is able to focus on the overall portrayal of the firm.
Sony's integration of marketing approaches is another keystone to the firm's international success, as the simultaneous use of the strategies has allowed the firm to better satisfy customer wants, and in turn better achieve its own goals.
This success can be credited, largely, to the role of product marketing in the trade; the manner that 'product is king' has allowed Sony to develop a general path in which the firm is headed. The use of product marketing has resulted in Sony being able to use different methods, such as market research and R&D, to discover the wants of customers, and in turn develop products to satisfy these wants, all of which has enabled Sony to gain sales and become successful, internationally. Product marketing has also allowed Sony to maintain its edge in the electronics market.
As Sony's designers are using the market approach to continually develop, improve, and expand upon their products to meet the changing customer needs, this coupled with large-scale promotion of the product, itself, has allowed Sony to sustain its competitive edge over rivals.
This approach has also meant that any perceived predicaments with the products can be easily identified and rectified. Finally, the emphasis on product marketing strategies has allowed Sony to develop products which are encompassing the 'technology of tomorrow today' allowing, Sony to uphold its success well into the imminent future.
Charted Institute of Marketing.
2 American Marketing Association 6 point marketing plan
3 www.sony-ericsson.com
4 www.gamesinvestor.com
5 www.amazon.co.uk/electronic_devices
6 American Marketing Association
7 www.sony.com/corporate_info/r&dbudget
8 www.sony.com/corporate_info_five_yearsummary
9 Heinemann Book of Higher Business Awards 2002, Dave Needham, ET AL
0 www.mtv.com/musicawards 2003
1 www.carphonewarehouse.co.uk
2 www.carphonewarehouse.co.uk/sony-ericsson/t630
3 http://www.nokia.com/nokia_research/0,,5166,00.html
4 http://www.nokia.com/nokia_research/0,,5166,00.html
5 www.carphonewarehouse.co.uk
6 www.carphonewarehouse.co.uk/sony-ericsson/t630
7 www.sony.com/audio/history
8 http://www.scit.wlv.ac.uk
9 http://www.minidiscplayers.com
20 www.sony.com/corporate_info/five_year_summary
21 www.sony.com/corporate_info/five_year_summary
22 www.vodafone.co.uk/About_Us
Amish Patel
Sandra Oku
