The Marketing Mix
Product
Nintendo has taken a radically different perspective than Sony and Microsoft with the new console. The Wii is cheap, with no hard disk and DVD player, minimal connectivity and relatively low processor speed (Osterwalder, 2007). The main competitive advantage for Wii lies in its innovative motion-sensitive wireless controller, the Wii Remote. This unique technology recognizes basic tilts and motion and integrates the player’s movements directly in the video game, thus delivering a matchless gaming experience. With this feature Nintendo opens up the console world to a completely new public of inexperienced gamers (Ostelwalder, 2007). Moreover, the design of the controller has been further simplified making it less intimidating and at the same time engaging enough. To provide additional handiness to the Wii remote as well as to reduce the likelihood of accidents, silicon cases and a wrist strap have been added to the remotes. (Harris, 2008).
Aesthetical design has also been incredibly important for Nintendo in order to appeal to the wider audience. It has been designed with a sleek white exterior, instead of the bright, toy-like colours, previously used in the GameCube. As the device sits beside the TV, the design team have made it small: “Make it any larger and customers would hesitate to leave it there” (Gaudiosi, 2007).
It is also complimented by software and hardware sharing a similar ethos to the Wii brand in appealing to the wider market. A recent example of this is Wii Fit. This introduced the Wii Balance Board, essentially a scale that includes multiple pressure sensors so players can not only weight themselves, but also apply pressure to certain points on the board and have this be recognized. The Balance Board is widely used in Wii games including a variety of fitness activities across four categories, Yoga, Aerobics, Strength and Balance.
Packaging
The Wii package simply includes the console, relevant cables and controls, and finally the Wii Sports disc.
Wii Sports turned out to be a key strategic move in getting people to buy the system. The package strategy has turned out to be so successful that the core components have not changed at all for the two years on the market. (Harris, 2008).
The artistic design of the box is kept fairly simplistic. Strikingly clean, it features only the Wii console and Wii brand logo on a white background. The only other inclusion was the Wii Sports sticker, to showcase the games inclusion. This was later modified to include “Wii Sports” in the printing of the box, displayed more prominently. By making it a major part of the package art, Nintendo solidifies the Wii sports disk as an integral component of the Wii package, increasing the overall value perception for the end consumer (Harris, 2008).
Pricing
To reach out to this non-traditional market, it was imperative that Nintendo did overprice. To keep costs reduced, many features expected from the generational jump such as a Blu-Ray, Dolby 5.1 sound, high-definition game playback and a hard-drive were not adopted. Instead, Nintendo included older technologies, which were “good enough” to assure that there would be a price-advantage over its competitors and appeal to a broader customer base. Wii was launched at a very competitive price of $250 USD, nearly twice as cheap as its rivals Playstation and Xbox (Harris, 2008).
What is especially notable is that this selling cost was still significantly below cost-price, allowing Nintendo to make a profit on all hardware sold. It was estimated that the initial cost of manufacturing was $160 USD (Shilov 2006) dropped to only $88 USD (Harding 2009).
This is very uncharacteristic of the industry where consoles are usually introduced as loss-leaders and any profit is made through the sale of software and peripherals. It can also occur towards the end of the lifecycle of a product when cost of manufacturing has reduced.
Nintendo have adopted customer-based approach to set the price. The competition is making a loss for each unit sold by offering more expensive technology. Nintendo have offered a greater value to the consumer, through their innovative controller, software and intellectual property library.
This lower price has not only allowed for greater market-penetration to reach price-sensitive consumers immediately, but also have allowed them to receive very little competitive retaliation. The competitors have simply been unable to compete through price, as the cost-per product is already markedly higher than that of the Wii. This is a strategic plan that has allowed for Nintendo to remain competitive for the life-span of this “console-generation”.
Promotion
Hands-on –sampling
Nintendo has embarked on a vast marketing campaign in order to familiarize the broad public with Wii. Wii has appeared in a South Park episode, on the front page of The Wall Street Journal and in the gift guide issue of People magazine (Jeremy, 2009). The Wii Ambassador Program including 3 ambassador categories: multigenerational families, hard-core gamers and modern mothers, was aimed at providing everyday people with the opportunity to play the game for the first time and share their experience with others (Jeremy, 2006). Another initiative introduced is the Wii Mall Experience, which involved the setting up of interactive Wii kiosks in several shopping centers across the USA. Other initiatives include Wii Urban Tour, gaming hours during fashion and music events as well as advertisements in lifestyle and sports magazines (Jeremy, 2006).
Buzz Marketing
Wii’s MySpace page attracts millions of visitors and allows members to create their own Wii videos as well as to interact via the Wii forum. This allows Nintendo to build further awareness for its product as well as to acquire high value customers.
Brand Partnerships
Nintendo entered into partnership with BBC, announcing that the BBC iPlayer is to run on the Wii. This ultimately means that now one can use the streaming services to watch their favourite BBC programmes directly on their TVs via the console (Huggers, 2008).
Six Flags, Inc, the world’s largest theme park company, has expanded its partnership with Nintendo to provide its visitors with the opportunity to try the upcoming Wii Sports Resort(TM) video game (Daniels, 2009)
Nintendo has also entered into partnership with the Westin Hotels & Resorts. It has provided the chain with Wii consoles and Westin in turn has integrated the system into its "WestinWORKOUT" program. The hotel chain workout centers has added titles such as Wii Fit and Wii Sports, an idea that is assumed to be ideal for business travellers and families who want to stay fit while on the road (McWhertor, 2008).
Television Advertising
The ‘Wii Would Like To Play’ campaign chose not to embrace an obvious strategy, namely fawning over the traditional teenage male gamer. Instead, Wii targeted at other normal people by showing a varied assortment of people enjoying the Wii system, such as urban country ranchers, apartment-dwellers, grandparents, and parents with their children. (Effie, 2008) While the competition catered to a narrow audience, Wii invited everyone to play and covered a wide range of having fun.
Nintendo has also promoted its video game on TV Channels such as Discovery Channel, Animal Planet and Discovery Kids Network: The feature showcased kids, parents and teachers sampling Wii at a school event and sharing their experience (Jeremy, 2006).
Place
A big strategic advantage that Nintendo has is that it controls a greater part of its value chain as compared to its competitors (Sammartino, 2008). Much of the game development is done in-house, which allows them to reap greater benefits for every game sold.
Retail Locations
Wii can be found in many retail stores that sell electronics, video games and video game systems. This includes small retailers as well as large national chains.
Online Retailers
One can easily obtain the video game also online, via a wide range of online retailers that sell Nintendo Products. Part of the list includes Amazon.com, Target, Kmart, BestBuy, Toys R Us and many more.
WiiWare
Nintendo has launched a new online distribution channel for video games known as WiiWare. It allows games specifically developed for the Wii video game console to be downloaded over the Internet. In order to acquire the game, one must redeem their WiiPoints, which can be purchased at the Wii Shop Channel or at retail outlets.
Evaluation of the Wii marketing strategy
In order to gain the competitive advantage by targeting at casual game players, Nintendo has generally done a fantastic job in creating a consistent and appealing strategy in its marketing mix campaign.
Product
The aesthetics of the console and controller is one of the key factors in reaching the broader audience. The remote design together with motion control have aroused interests by removing the alienation feeling of a traditional controller. The sleek white color and small design of the Wii have given people the impression of sleekness and simplicity. This is what exemplifies that the Wii is truly for everybody.
Price
Low price is an important strategy in Nintendo marketing mix plan. Nintendo’s price strategy is value-based since it considers its target customer’s needs and expectations. Adopting low price strategy is consistent with Nintendo pricing objectives. As casual gamers have different needs and expectations, the removal of these technical features is not a major concern. The value is seen outside of the specifications, but rather in the simplicity and fun it delivers, especially with the comparatively low price. Compared to the competition, the Wii looks even more attractive due to the isolation effect; and the price is significantly lower (Merholz 2009). Purchasing cheaper Wii games will leave casual gamers delighted since they will perceive greater value from their lower expectations.
Place
Place and distribution strategy also contributes to targeting at casual gamers. Wii’s distribution systems are mainly comprised of physical distribution channel and online distribution channel. Fewer intermediaries would allow for greater power and control over the price and quality.
Nintendo’s physical distribution channel just consists of two intermediaries of agent centers and retailers. Nintendo has distribution centres around the world. Each centre distributes their region’s version of Nintendo’s systems or games. Retailers get their inventories from Nintendo and no middlemen are involved. Minimal profit is made with the sale of the Wii through a retailer, which also ensures the low price thus its competitive advantage to appeal the customers. The online distribution channel creates Wii’s brand image as well as reduces costs. Much of the profit comes from selling games and accessories through online distribution channels such as WiiWare and Nintendo’s website.
Recently, Nintendo have dropped the price of the Wii by $50 US after seeing sales slowly tail out (while still remaining significantly ahead of its competitors). Although it has been difficult to measure the actual success of this, on the online retailer Amazon, sales immediately jumped 1700% (Lai 2009)
Promotion
Nintendo has successfully promoted the Wii to its target market of casual gamers in respect of advertising, customer involvement and public relations.
The ‘Wii Would Like to Play’ campaign won a prestigious international advertising campaign award, the Effie. Since Nintendo catered to a much larger audience, including not just the teenage male gamer, but his whole family, this ignited a cultural phenomenon in how people experience video games (Plunkett, 2008).
Successful advertisements should be driven by promotion’s objectives. It is clear that this campaign was successful both critically and financially.
Positioning needs to be reinforced by all other aspects of promotion as well as advertising (Bell, 2009). After the laudable launch of ‘Wii Would Like To Play’ campaign, Nintendo has successfully adopted a series of promotions which get customers involved with the product and its promotion process. Promotions such as the Wii Mall Experience and their MySpace presentation help create excitement and anticipation about the product, which helps create a buzz around the Wii. This allows for further promotion of the product (Soh, 2009).
Nintendo’s Wii strategy has shaken $30 billion in gaming industry; it made Nintendo raised its annual profit forecast 42%, to $2.04 billion (Kiley, 2008). Wii has positioned itself in the market with the image of low-cost entertainment product that is more than a normal video game device. Even so, Nintendo may lose its edge to Sony Playstation 3 and Microsoft because Xbox 360 which are packed with top-notch hardware.
In conclusion, Wii’s marketing mix is consistent and interacted. The innovation product with low price, simplified distribution channel and successful targeting promotion has been sold out worldwide since the launch and ignited a cultural phenomenon in how people experience video games.
Recommendations for of the Wii marketing strategy
Wii has been a successful example of its marketing strategy featuring technology innovation, targeting at unconventional audiences successfully, low pricing and simplified distribution channel. The sales figures of the latest game console generations of Nintendo, Sony and Microsoft show that Wii has been in a leading role since it was launched. This is probably more impressive than it seems because one generation earlier Sony took out its two competitors by almost tripling their sales combined with Playstation2 (See Appendix figure 2). Moreover, taking into consideration that the only technological advantage Wii has over its competitors is the wireless handle that detects movement, it is reasonable to conclude that the marketing strategy of Nintendo’s over Wii has indeed been successful so far.
However, every product has its life cycle, and being in the fast moving technology-related industry, Wii will have a short one if it does not change its marketing strategy accordingly over time. From the previous parts, it is not abrupt to say that Wii’s success largely relies on the new experience it provides by combining physical movements with digital visual effects, and this was achieved by the wireless handle that senses movement. Unfortunate to Wii, this is not a technology that is difficult to master and develop. Wii has not faced any hard competition mainly because Sony and Microsoft stay out of its way and focus on traditional video games, which gives it opportunities to use lower-grade hardware and not being outsold. However, once its competitors decide to broaden their consumer bases and target at non-traditional gamers like Wii does, it is likely that Wii will be technologically challenged. To avoid a hard crashing competition and to win from it, the best way to prepare Wii is to better the product, i.e. upgrading hardware, adding features, increasing compatibilities, etc.
It may be hard for Wii to find incentives to do these changes to its products right now since they are selling at a low price and there are already plenty features in their products that are unique. Admittedly, the low cost of making the product and the low sales price in the market often go hand-in-hand to generate a profit. Nintendo has done extensively to cut the cost, which includes avoiding high-quality video hardware that is widely used in “real” video games, simplifying distribution channels and so on. More importantly, low pricing has always been one of the major factors of its high sales. However, staying unchanged in the gaming industry means death, and Nintendo is obviously aware of this point. It’s introductions of small softwares to go along with Wii range from WiiSport to WiiMusic, and it will not be long before they run out of the themes. It seems the best way out is to improve Wii itself, not just launching new mini-games.
Some examples of bettering Wii’s products include upgrading the hardware, which introduces an opportunity for Wii to launch a new model; improving the visual effects to match up with visually intensive games; increasing compatibilities with older software; etc.
Another possible improvement of Wii’s current marketing strategy is to target at working males of ages between 25 and 55. This group of consumers consists of a large part of hard-core video gamers; however, most men in this group are not fans of video games. (Said, Miszerski and Murphy 2002). As a matter of fact, a lot of them are occupied with work and has limited sources of entertainment. It is a good idea for Wii to raise the awareness of this specific group that they have a fun and healthy choice to spend their free time with Wii; and what’s more, they can do this at a low cost. If Wii can successfully break into this segment of the market, their profit will definitely increase by a large percent.
It is also strongly recommended that Wii keep carrying out the low pricing strategy and target at non-traditional gamers. Also, the mini-game softwares that come along have been important features and should be kept by all means. Overall, Nintendo Wii should keep what has been proven to work--innovation, low price and right consumer target, and strive for improvement always.
Appendix A: Graphs
Figure 1: World-wide console sales in millions – Current generation
Figure 2: World-wide console sales of previous generation in millions
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