Marketing Strategy - Nintendo Gamecube

The three approaches can be thought of as a continuum, as shown below:

Product orientation

Asset-led marketing

Consumer orientation

At one extreme, firms tend to consider their strengths and assets (anything providing a flow of benefits to an organisation over a certain time period) when marketing decisions (product orientation), whilst at the other extreme the customer rules in every case. The central ground is taken by firms, which attempt to match the strengths of the company with the needs of the customer (asset-led). I think that the idea of taking a consumer orientated marketing approach will be the most appropriate for the Nintendo Gamecube. They need to be market oriented due to the current high levels of competition in the market with three consoles fighting it out for supremacy; customers have a wide range of choice from PC gaming to the Gamecube to the Game Boy Advance; and it is also possible to carry out effective market research via polls and surveys on the Internet, questionnaires and interviews carried out by Nintendo magazines and questionnaires carried out by a market research company. Nintendo's decision to produce Gamecube games on optical discs instead of cartridges is an example of a consumer-oriented approach. The original Nintendo console, the Super Nintendo and the Nintendo 64 all had its games on cartridges. I thought that they should have moved towards disc-based games at an earlier stage, but their decision to do this with their current console will be welcomed by many people, especially amongst teenagers!

The advantage of being market or consumer orientated is therefore quite clear - since the firm is always meeting the needs of the consumer, there ought to be a clear demand for their products.

(Sources used: pages 1 and 2 - Marketing: Everybody's Business by Dave Needham and Rob Dransfield, Chapter 1 - Marketing by Ian Swift, Nintendo magazines, and Chapter 8 - Advanced Vocational Business by Dan Moynihan and Brian Titley)

COMMUNICATING EFFECTIVELY WITH CONSUMERS

A great deal of information needs to be communicated quickly and clearly to customers about the goods and services offered by the business organisations. A business that fails to communicate effectively, or as well as rival firms, with its existing and potential customers will not be successful.

Business organisations can provide information to customers in a number of different ways. These can be oral communications with business employees and sales staff, or in written form. Examples of written communication could include a product brochure for Gamecube accompanying a video games magazine, showing the Gamecube hardware, launch titles preview, information about the console and future games for release; price lists and menus for the console, which are usually displayed in shops such as Dixons showing the price of the console as well as various special deals, such as the Gamecube console, two controllers, two games and a memory card for £280; product guarantees, which usually come with the console, its controllers and all games that are bought; and safety notices.

However, the main way businesses communicate with actual and potential customers is through promotions. Almost every organisation will at some time or another engage in promotional activities to let consumers know about the business and the goods or services it provides. These messages may be present in a variety of places such as posters and leaflets, in letters and catalogues, advertisements in newspapers and magazines, or on the TV or websites, even on footballer's shirts. They can be informative messages (such as the launch date of the Gamecube and opening times of shopping stores), or persuasive messages that try to persuade consumers that the product being promoted is better than rival products and is worth buying (such as the slogan "Always Coca-Cola" used with Coke adverts).

ACHIEVING MARKETING AIMS

All departments in a business will contribute to marketing and the achievement of business aims. For example, if Nintendo needed to intensify its promotional activities after the console's launch date, the finance department will have to provide more money for this to happen and the production department may have to increase the number of products produced if the extra promotion is successful in increasing demand for the console. These marketing activities need to be accounted for by the business along with costs (i.e. the aspect of management accounting that is concerned with the allocation of costs to different product lines) and revenues (i.e. expenditure on all costs other than fixed asset purchases). Additionally, if the marketing strategy is successful in generating more sales, customer service staff need to be on hand to deal with more enquiries and orders from customers. For example, within the first few weeks of X-Box's launch in Japan, many customers were complaining that the machine was 'scratching' the game discs. Customer services were therefore very busy during this period and the company was therefore forced to take back these 'faulty' machines and replace them for free. This, in my opinion, is therefore a bad example of quality, as this should have been checked before the console was launched! Such activities need to be co-ordinated well, otherwise marketing and the business will not be successful.

(Sources used: The Complete A-Z Business Studies Handbook by David Lines et al., and pages 227-231 - Business Advanced AVCE by Dan Moynihan and Brian Titley)

5.0 MARKET RESEARCH

A business will only be successful if consumers want and can buy what it produces both now and in the future. It is therefore true to say that market research has to be the starting point for business decision-making. However, this is only realistic if we accept the commonly held view that businesses ought to be market or customer oriented. Market research can reduce the risk of producing products that do not appeal to consumers by helping a firm to discover information about their consumers. Market research involves the gathering, collation and analysis of data relating to the consumption and marketing of goods and services. However, the gathering of data is not enough. Managers have to interpret this data to turn it into information. Information not data helps decision-making. The purpose of such research is to identify whether there is a want for a particular product - a gap in the market - or whether a want can be created among consumers by persuasive advertising.

STAGE ONE

Decide on the purpose of market research. What information do you need? What action will be taken as a result of research findings? For example, one purpose could be to see customers' reactions to the high price of the X-Box and then necessary action can be taken in the price setting of the Gamecube.

STAGE TWO

Decide the most appropriate methods of research given information requirements, time and budget constrains. For example, if sales need to be radically improved, then tactical research (defined later) may be necessary to solve its short-term problems.

STAGE THREE

To obtain the information required, how many people should you ask and what type of consumers should they be? For example, the consumers required for my research need to be those who play video games and have some knowledge about them, mostly teenagers and young adults.

STAGE FOUR

Undertake the research.

STAGE FIVE

Analyse the results, draw conclusions and make marketing decisions based on the findings.

(A diagram showing a summary of the stages of market research. Source used: page 236 - Advanced Vocational Business by Dan Moynihan and Brian Titley)

Organisations that undertake market research are more likely to know:

* How consumers evaluate their products or services against those of competitors. For example, when I was interviewed in Dartford High Street about snack foods such as Supernoodles and Pot Noodles, the interviewer discovered why I liked certain foods than others. In the interview, I chose Pot Noodles as the product I buy the most and know most about because I had never tried the others or heard about them before! This kind of information would be very useful for the interviewer, as they can make reasonable and sound judgements based on my responses.

* What consumers are looking for in this market and how far the firm is providing this effectively. For example, in the video games market, people are always looking for cheaper games consoles and games that accompany them as these products are often very expensive (the X-Box costing around £299 on release and the PS2 costing £199).

* How consumer tastes are changing. For example, next-generation consoles such as the Gamecube are now expected to deliver highly realistic graphics for the games it produces as well as a wide variety of games to choose from. People now compare the specifications of the various consoles on offer and the types of games that will be released on them. In the past, video games were just thought of as a means of entertainment and people were not concerned about which console they owned.

* What consumers are buying from whom and why. For example, Sony's Playstation beat Nintendo's previous console, the Nintendo 64 in sales and popularity, even though Nintendo brought out the console later than Playstation and had higher specifications. I will try and find out the reasons for this when conducting my own market research.

* How consumers will react to new ideas the firm had thought up. For example, I believe that Nintendo's decision to include more adult-oriented games such as Resident Evil, WWF Wrestlemania X8, Eternal Darkness and Burnout will attract more consumers in buying the console. This is because the majority of the games that Nintendo 64 offered were aimed at children.

* The extent of customer loyalty and retention. With every video games console, there are always loyal customers: they will always be those who consider Playstation to be better than anything Nintendo can produce and those who think that Nintendo produces the best games.

The above shows just how important market research is to a firm's success. Although it is self-evident that market research carried out by the marketing department is of great importance, we cannot say that this is the most important function of a business, as in reality, all aspects must be given sufficient weighting if the business is to succeed. Business decisions ought to be based on a sound knowledge of the marketplace, but without the right people to carry forward those plans, without the finance to put them into practice and without the machinery and plant to produce the products, the market research results would count for very little. Nevertheless, it is true to say that the sheer complexity of people and their behaviour make research very difficult. For example, some people that are interviewed may simply choose any answer at random. If this is the case, the company may receive false data. Therefore when I collect my data from market research, I think that it is very important that I interview and conduct questionnaires with customers who actually play video games and involved with them.

The two types of market research that I could carry out are as follows:

Tactical research: Most of the research that is carried out by businesses is tactical in nature. It tries to find out how consumers would react to a particular product or a product's name, inquiring after the buying habits of customers or potential customers. Many firms tend to concentrate on tactical research, looking for short-term solutions to short-term problems and issues. For example, X-Box sales in Europe were below what had been forecasted and the release of the Gamecube is not far off. The company had therefore decided to lower the console's price from £299 to £199 in an attempt to increase sales revenue.

Strategic research: This, on the other hand, takes a long-term perspective by looking at market segmentation or attitude surveys. Market segmentation means the analysing of a market to identify the different types of consumer. By matching the consumer categories to the types of product on offer, unfilled market niches (gaps in the range of products or services offered within a market) may emerge. This allows firms to build up a clear picture of motivations and the issues underlying the behaviour of customers.

Although tactical research is a popular method of market research amongst businesses, I would rather pay more attention to long term issues and the wider picture, as this would give a firm a clear competitive advantage. This does not mean to say that I will not include any forms of tactical research, but that strategic research will be the main focus leading up to the release date of the Gamecube.

(Sources used: pages 56-56 - Marketing by Ian Swift, page 235 - Advanced Vocational Business by Dan Moynihan and Brian Titley, and the video games website: http://www.gamespot.co.uk)

SOURCES OF MARKET RESEARCH

There are several sources of research data available to a firm. Decisions have to be made about the suitability and reliability of different sources as a basis for decision-making. The two main types of research are primary data (first-hand information that is related directly to a firm's needs) and secondary data (information collected from second-hand sources such as reference books, government statistics or market intelligence reports), which are summarised below:

PRIMARY

SECONDARY

Relevant to the firm and its issues. For example, when I carry out primary research, I will be able to find answers to exact questions that I am interested in from the appropriate customers (e.g. those who play video games).

Follow-up research may be possible. For example, if personal details are taken during the interview, I could contact the interviewee to see whether they would be willing to answer more questions take part in more interviews.

The source data is available if required. For example, the data will be stored on computers or on paper and can be used when necessary for interpretations or conclusions to be made from them.

Cheap to access. Unlike primary research, which is expensive due to the requirement of specialist researchers to generate accurate and useful findings, secondary research can be found cheaply via existing market research reports; annual reports; Internet data; stock movements; newspapers; and information from competitors (promotional materials for example).

Analysis will usually have been undertaken. For example, if a games magazine carries out a poll, they will usually then present analysis of it either by stating percentages, or by representing the results graphically

The format will make the data accessible to non-specialists.

(Diagram showing the advantages of primary and secondary data collection techniques. Source used: page 60 - Marketing by Ian Swift)

PRIMARY DATA

Primary data is information that does not already exist. In other words, it has to be collected by the researcher via field research. For example, I could not know the exact reason why my friends would buy the X-Box rather than a PS2. He may have bought it as it is has greater specifications and is designed by Microsoft; or because it has good games on offer; or because he is rich and buys the better console, etc. Primary research can either be carried out by a firm itself or by a market research agency. For example, when I was interviewed in the High Street about snack foods, it was not the companies of Pot Noodle and Bachelor's Supernoodle that conducted it, but a marketing agency called Millward Brown.

The main advantage of primary data is that the firm, which initially collects it, will be the only organisation with access to it. Primary information can therefore be used to gain marketing advantages over rival firms and so I will aim to collect enough primary data from customers and potential customers so I can make accurate conclusions and interpretations.

There are a number of different primary research methods a business can use:

Primary research methods

Comments and application to my market research:

Questionnaires. This is one of the most popular methods of primary research, as it is used within other methods such as personal interviews, telephone interviews and postal surveys. However, the designing of the questions must be considered carefully, because if the questionnaire is poorly designed, it may not obtain the results the business is looking for. Effectively collected data will allow market research to be very useful.

I will definitely use a questionnaire in my field research, as it allows me to target a specific audience. For my coursework, I need to question those who have an interest in video games and own a console such as the Nintendo 64. This way, the information I can obtain will be more accurate, rather than if I interviewed people who have had no experience and have never played video games. Since the questions must be carefully planned, I will therefore briefly explain the questions that I have used.

Personal interviews. This involves an interviewer who obtains information from one person face-to-face. The interviewer rather than the interviewee fills out the responses to questions on a questionnaire, which contains mainly 'open questions' (e.g. questions that do not have specific answers to be ticked. In this case, they are questions that demand more than just a factual answer).

I think personal interviews are a great source for primary research as it allows the chance for interviewees to give detailed responses to questions that concern them. In the unit one coursework, I carried out a personal interview with the manager of the Boots branch in Bluewater and I found this to be extremely beneficial as it gave me a greater knowledge of the company and what it does, etc. For this coursework, I hope to interview someone from Sony who has been involved with the Playstation and/or Playstation 2 to ask them how they went about their marketing strategy that made their console one of the best-selling ever. However, this may not be possible due to time constraints.

Telephone interviews. This method allows the interview to be held over the telephone.

For me, this method of research would cost a lot of money, as I would be using my home telephone or mobile phone to conduct this. However, due to time constraints, I may use the telephone to ring a few of my friends in order to ask them questions or to carry out my questionnaire. The disadvantage however, is that the public often distrusts this and it is only possible to ask short questions. On the other hand, it does have the advantage of allowing a wide geographical area to be covered.

Postal surveys. This involves the use of questionnaires sent to consumers through the post.

Although, this is often considered a relatively cheap method of research, I don't think that I will use this method due to the fact that not many people respond to postal questionnaires. Therefore, I will probably be wasting my time in creating all the questionnaires, buying the stamps and distributing them to the appropriate places. However, like the telephone interviews, it has the advantage of covering a wide geographical area and the fact that there is no interviewer bias.

Observations. This is a survey technique that requires the researcher only to watch and record behaviour rather than to ask questions. For example, observers in retail firms often look out for the amount of time consumers spend making decisions and how readily they notice a particular display.

I think that this is a good method of research that can easily be carried out, because I go to Bluewater quite often and see people playing and commenting with their friends about the console they are playing. For example, when I was in Electronics Boutique, there were quite a few young teenagers surrounding the Nintendo Gamecube with one of them playing it and the parents behind them seemed impressed with the graphics on display. This method does not involve any money and notes can easily be recorded after observing people's reactions while playing the consoles on offer in a shop.

Focus groups. This is an American term for group discussions, i.e. small-scale, in-depth research into the reasons behind consumers' habits and attitudes.

I don't think that this method is a suitable one for the Gamecube, because customers' attitudes and habits are continually changing and so results obtained from a focus group may not be reliable in say, a few months time.

Consumer panels. This is a group of consumers within a firm's "target market" used on a regular basis for market research exercises. A typical use of a panel is for product testing, using the known tastes of the panellists to decide on the qualities of new product ideas, or of changes to the composition of existing products

I think that this would be a useful method of research, because the panel would have some experience in gaming and would therefore be partly representative of public opinion. For example, the panel can be put to play a highly anticipated game to see what their reactions were. This information can then be used in improving the product.

(Sources used: Page 252-253 - Business Studies Second Edition by Carlo Raffo et al., and The Complete A-Z Business Studies Handbook by David Lines et al.)

After considering all of the possible field research methods, I have decided to use a questionnaire to obtain information from the public (particularly those who have a knowledge of video games and own at least one console) and observational techniques if I happen to be in a video games shop such as Dixons, Game or Electronics Boutique.

The questionnaire that I used was put forward to 25 people. A blank sample of the questionnaire is shown in the appendix along with some questionnaires that were filled out by students at Dartford Grammar School. Some of the results from my research are shown below and some conclusions made afterwards:

Results tables:

. What age group are you in?

Under 15 years

4

5 - 18 years

6

8 years and over

5

2. Which of the following consoles do you won or intend to purchase?

Playstation 2

7

Nintendo Gamecube

9

Microsoft X-Box

9

3. Which adverts for the following consoles have stood out for you?

Playstation 2

6

Nintendo Gamecube

9

Microsoft X-Box

0

4. When considering games consoles to buy, which of the following affects your decision?

Price

1

Quality of games available on release

6

Media reviews of the console

7

Screenshots of game graphics for the console

9

Friends' comments

5

The hype

3

Design on the console

9

The fact that you are a fan of a particular games company

2

5. Why do you think that the Playstation was such a major success?

Number of games available

2

Quality of games on release

7

The fact that the games were on CD-format

9

The fact that the games were cheaper

0

Friends' comments

4

Its advertising campaign

2

Design of the console

3

Unsure

0

6. How often do you surf the Internet a week?

Less than 5 hours

3

5 to 15 hours

9

5 hours or more

3

7. Have you ever bought products over the Internet or intend to buy any within the next few months?

Yes

4

No

1

8. How safe do you consider Internet shopping?

Quite safe

0

Not very safe at all

4

Depends on the site

21

9. What do you think of Nintendo's decision to produce games on CD format rather than cartridge?

Great idea

20

Preferred cartridges

3

Not bothered

2

0. Do you believe that Nintendo focuses it games too much on children and young teenagers?

Yes

5

Not really

3

Don't know

2

Some results displayed graphically:

From my results, I can make some conclusions. For example, the price of the console and the quality of games it has to offer were found to be the main decisive factors when choosing a console. Also, Nintendo Gamecube and the X-Box were found to be the most desirable consoles amongst those interviewed.

The questionnaire that I have produced is very useful for obtaining information that is specific to what I require. However, after looking back on the questionnaire that I have carried out, I have spotted some improvements that could be made to it.

SECONDARY DATA

This type of data is defined as the information collected from second-hand sources such as reference books, government statistics or market intelligence reports. Such data can provide information on market size and market trends for most product categories. It may be accessible publicly and therefore free, but is in any case not as expensive to gather as primary data.

Secondary data will also be available from sources outside the business. Individuals or other organisations will have collected data for their own reasons. A business might be able to use this for its own market research. For example, if I wanted to see whether Nintendo concentrates too much on children with its video games, I could check their reports on the games they have released and intend to release to see how many games are aimed at children and how many are aimed at teenagers and older players.

There are a number of different secondary research methods outside of the business that can be used:

Secondary research methods

Comments and application to my market research:

Information from competitors. This may be, for example, in the form of promotional materials, product specifications or price lists.

This method of research is very easy to do and does not cost anything. Even by surfing the Internet, it is possible for us to discover the price that Microsoft and Sony are selling their products at and their methods of promotion. It is also possible to find detailed explanations of their system and hardware from technology site such as www.cnet.com and www.zdnet.com.

Data from customer services on complaints that have been received about a product.

This can be useful, as we can learn from mistakes made by other companies and with our previous products to improve upon.

Retail audits. The widespread use of EPOS (electronic point of sale) has meant that it is now much easier to collect detailed and up to the minute data on sales in retail outlets such as supermarkets and other retail chains.

This is a good method of research, as it makes it possible for us to see how well the product is selling and where in particular it is doing successful. These results would also be useful in stating how many Gamecube consoles have been sold since the date of release, which is a piece of information, that the media would like to know as well as games magazines.

BENEFITS AND PROBLEMS OF MARKET RESEARCH

Benefits of market research

Problems of market research

The main benefit of market research is that it allows us to make more precise and accurate decisions based on factual and secondary information. This is especially important in dynamic markets. We therefore need to constantly change our marketing activities to suit events in the market.

Market research, though quite expensive will definitely reduce the risk for a business. Without market research, a product may be released with little success after vast amounts of money had been spent on it.

Carrying out market research may be good for the image of a business, as customers feel that their views are being considered and this may lead to 'corporate brand loyalty'.

The main problem of market research is the reliability of the data collected. Even though thorough market research has been carried out, the product may still be a flop. For example, when collecting data from the public, their behaviour is to some extent unpredictable as they may be truthful at the time of the research but may have different views within a few days!

Secondary data can also be unreliable as most of the data can be out of date as soon as it is published due to rapidly- changing markets.

6.0 ANALYSIS OF CURRENT MARKETING STRATEGIES

Arguably, marketing is becoming more important because of increasing levels of competition, ever faster product development, new ways of competing (e.g. via the Internet) and ever more demanding customers. Markets are fragmenting, customers expect higher standards of quality and with more and more trade barriers coming down, competition is often global. In such circumstances, the firms which best understand and work with their customers, the organisations which listen and react quickly and the businesses which build on their marketing assets are likely to be in a stronger position. A leading example of market-oriented company with an extremely successful marketing strategy is Nike. The company, in my opinion, has one of the best-known brand symbols in the planet, originally designed for a fee of $35! Nike's "swoosh" or "tick" is so well known that the company regularly run advertisements without reference to the Nike name. For example, in a sports shop, there are shoes, hats, and t-shirts produced by Nike with no brand identification other than the Nike "swoosh". All of this plays testament to the marketing skills of Nike, a truly market-oriented company.

Nike's strategy of designing and producing technically superior innovative products and linking these products to popular athletes, has changed the face of the sports equipment market. Nike spends hundreds of millions of dollars each year on big name endorsements, promotional events, and those attention-getting adverts in the media. Tiger Woods, Jordan and Sampras all carry the Nike 'swoosh'. Nike adverts have been in my opinion, very entertaining and even better for the company, persuades people to but their products so that they can connect to and link their aspirations with the excellence of Ronaldo or Tiger Woods. The thought process presented to us is Nike are athletes, athletes are sport, therefore Nike is Sport.

By constantly moving forward, 25% of Nikes approximate $8.8 billion turnover last year was in sports apparel often worn as a fashion item and not for sport. But the greatest potential for growth is football, the world's most popular sport. In comparison only 3% of Nikes turnover is generated in this huge market.

Nike has had an extremely successful marketing strategy and I believe that its next step into the football market will also be successful, as it is very market-oriented and provides us with a way of life - "Just Do It." Advertisements on TV and in the media are now becoming more entertaining and so I believe that more money must be spent on this aspect of marketing in order to make it stand out. From the research into Nike's successful strategy, it seems that getting big name endorsements may be worthwhile in persuading more customers to buy the product. On the other hand, it would be just as successful, if the adverts made an audience go "wow!" In my opinion, promotions used by Nike have been of a high quality, although there are very few adverts used. When one is used, it is highly entertaining!

With the marketing strategy of Microsoft's X-Box, they entered the video games market with a huge and strong advertising campaign, which meant that it was possible for you to know about the X-Box by watching the television; magazine advertisements; contests; and even sporting event sponsorships. X-Box has been intent on getting the word out about the release of the X-Box, and so their advertising has been everywhere! I don't really think that this much advertising is necessary, because the company did not produce anywhere near the number of consoles it expected to sell in the first week of release. No matter the size of the ad budget, success in the gaming arena depends on having compelling games to play. For its part Sony - the undisputed leader in the gaming arena whose PlayStation 2 model has sold more than 5 million consoles - is banking on games to retain its dominance. In addition, although advertisements are good, "hands-on" is better, especially for teenagers and those in the youth market. "Hands-on" is very important for a company such as Microsoft in the video games market as they do not have the brand momentum.

An aspect of X-Box's marketing strategy that I believe will definitely help the success of the Gamecube, is that there should be special events held across various venues in a number of important countries to showcase the console before its launch date. This way, customers are getting a "hands-on" approach and can experience what the console is like to play and then decide whether they should buy it or not.

(Sources used: company information and study room sections - www.businessteacher.co.uk, chapter 1 - Marketing by Ian Swift, entertainment and technology sections - www.bbc.co.uk)

7.0 MARKETING PLANNING AND THE MARKETING AUDIT

To help make marketing decisions, a business must plan effectively. Marketing planning is the process by which future marketing activities are systematically planned. Not all businesses have a marketing plan. Some smaller business for example, may make marketing decisions on a short-term basis or in response to changing conditions. However, planning has a number of benefits for the business, as we will see later. A business' marketing plan is influenced by the strategic plans of the business and the overall corporate objectives. Like all plans, marketing plans are concerned with:

* where we are at present. For example, Nintendo are currently in second position in the video games market behind Sony;

* where we want to go. For example, Nintendo want to move back into first place and also ensure that Gamecube is a major success as a next-generation console.

* how we are going to get there. For example, Nintendo could get there by planning an effective marketing strategy and also ensuring that the Gamecube will be successful.

* mechanisms for evaluating whether or not the organisation has succeeded. For example, Nintendo could check its sales figures with its competitors a few weeks after the launch of the Gamecube.

The first component involves a diagnosis of the present situation in relation to the product, company and market. A business can only plan where it is going if it knows where it is starting. Finding out where a business is at the moment involves a marketing audit. This analyses the internal and external factors, which affect a business' performance (see section 8.0 of the report). Most businesses analyse their current position by using SWOT analysis, which identifies the business' strengths, weaknesses, opportunities and threats. The aim is to identify the extent to which the current strategy of an organisation and its more specific strengths and weaknesses are relevant to, and capable of dealing with, the changes taking place in the external business environment. Having identified these, the firm can exploit its strengths and/or defend itself against its weaknesses. Firms, which do not undertake an audit, are likely to take greater risks in their planning, because the plan may bear little resemblance to the firm's abilities or resources. However, the benefits of the audit must be weighed up against the costs and time involved in the process. An example of a SWOT analysis is displayed below, where I have used the analysis for Nintendo:

STRENGTH

* Recognised brand name in the video games market.

* The Game Boy Advance is the world's best-selling video games system and is extremely popular amongst children.

* Excellent backing of third-party game developers such as Capcom and Rare.

* Offer famous gaming icons such as Mario and Zelda.

WEAKNESSES

* No DVD-player built into the console.

* From the market research carried out, it seems that Nintendo focuses its games too much on children.

* Only a few high quality games available for the consoles it has produced in the past, such as Mario, Zelda and Perfect Dark.

OPPORTUNITY

* Possible expansion in the number of adult-oriented games it produces.

THREAT

* Growing competition from Microsoft who have cut the price of their console and Sony, who will inevitably reduce their prices as well.

Having constructed a matrix of strengths, weaknesses, opportunities and threats, a business can make use of the matrix in guiding strategy formulation. The two major strategic options are as follows:

Matching: This involves finding, where possible, a match between the strengths of the organisation and the opportunities presented by the market. For example, Nintendo, in the above example, should use their strong backing of third-party game developers to produce more adult-oriented games, without bringing in new game developers.

Conversion: This requires the development of strategies, which will convert weaknesses into strengths in order to take advantage of some particular opportunity, or converting threats into opportunities that can then be matched by existing strengths. For example, a method of conversion that would be used in my marketing strategy for the Gamecube, would be to listen to game critics' opinions and improve on what they have to say in order to increase the number of high quality games available. On the Internet, news, screenshots, video footage and information about games and future games are readily available and are regularly updated. On these sites, there are often game critics who give their opinions on a sample copy of the game, such as how well it plays or what, if added could make it better. We should consider these comments and use the time before a game's release date to make the game as best as it can be from what game critics have said, as these comments would be similar to those of a customer playing the game.

The second component is a statement of the marketing objectives together with the overall corporate objectives. The objectives provide goals and targets for the business to aim at. For Nintendo, our main goal with regards to the launch of the Gamecube, will be to regain market share and become market leader.

The third component is the heart of the plan, as it details strategies and tactics for getting there. Strategies are the broad outlines of the methods to achieve the aims. Tactics are the specific programmes of action to be taken to make the plan work. Marketing strategies can be expressed in terms of the four P's (see section 9.0 of the report). So, if we intend to become market leader and increase our market share once again, we must make sure that the product is right, set at the right price, with an effective promotion and distribution policy. As I learnt in the previous section, sales for the X-Box were lower as expected. Relating this to the four P's, it seems that the reason for this is due to the company concentrating too much on promotion. Additionally the price was set very high at £299, a price that few customers were willing to spend on a games machine and they also experienced supply problems! Microsoft could have avoided this, if they ensured that all the aspects of the marketing mix complemented each other. For example, a short supply of consoles does not complement the approach of creating high demand through promotion.

The fourth and final component of the plan builds in a mechanism for evaluating progress towards the achievement of the marketing goals. It is essential that businesses evaluate the success of their marketing plans. This will provide them with information on which to base future plans. Businesses also need to know whether or not planned activities were carried out in the manner that was planned. The evaluation of marketing plans can take place both during the period of time in which the plan is being carried out and at the end of the time period (often one year) that the plan covers. Evaluation, which takes place during the period of implementation, may allow managers and directors to better control marketing activities.

It is important that marketing plans are evaluated against clear, measurable criteria. To do this, clear performance targets must be agreed and set during the process of market planning. Such performance targets are often time specific. For example, a possible target for Nintendo could be to have sold as much as or even more consoles than the Sony Playstation 2 by the end of Christmas 2002.

(Sources used: unit 47 - Business Studies by Carlo Raffo et al., chapter 23 - An Integrated Approach to Business Studies by Bruce R Jewell, chapter 12 - Advanced Business by Dan Moynihan and Brian Titley, and chapter 5 - Marketing by Ian Swift)

DEVELOPING A MARKET STRATEGY

Marketing strategies can take many forms, even within the same business. At any one time, a firm could be following different marketing strategies for each of its products. For example, the strategy that I will choose for the Nintendo Gamecube would be different to that of the Gameboy Advance (a well established product), as the market that the Gamecube is in is far more competitive than that of the Gameboy. It is the same with Microsoft: their marketing strategy for the X-Box was very different to that of their Microsoft Windows products. With the X-Box, it invested a lot of money into promoting the console and adverts for it can be seen everywhere. On the other hand, the Windows products have had few advertisements on TV, the media and on the Internet, due to the fact that it is the leading product in its market with very few competitors (the only real one being the Mac OS X system for Macintosh users, which still doesn't come close to the amount of Windows products that have been sold). It is very unusual for every product produced by a firm to have an identical marketing strategy

The first step in developing a market strategy is analysing the current and future state of the business environment, and identifying the strengths and weaknesses of the business. The next step is to use this information. The strategy should draw on the business strengths to make the most of its opportunities, overcome weaknesses, and reduce threats.

The Ansoff Matrix is a simple planning tool that can help with strategy development. It is based on the need for business organisations to do 'opportunity searching' and identifies four possible strategic directions. The Ansoff Matrix illustrates both existing and new products within existing and new markets, as well as some of the more common marketing strategies:

Products

Existing

New

Markets

Existing

MARKET PENETRATION

PRODUCT DEVELOPMENT

New

MARKET DEVELOPMENT

DIVERSIFICATION

Market penetration

Market penetration is when a business increases its share of a market in which it already operates. This is considered by many to be a relatively safe strategy: the firm is working in areas where it already has some knowledge, experience and understanding. For example, if I decide to choose this strategy after considering all the others, I would increase the market share by attracting more customers to the Gamecube than there were towards the Nintendo 64 and by encouraging our existing customers to buy our latest product. It is possible to achieve these targets by developing loyalty schemes (like the WHSmith Clubcard and the Boots Advantage Card) or work on promoting brand loyalty, either through the quality of the product or by creating a positive image.

Market development

This strategy involves finding new markets for the products a firm already makes. This new market could take the form of a different geographical area; a firm may decide to export products. Alternatively, it is possible to reposition a product to appeal to a new market segment, as football clubs have done to attract women and families to matches. Other examples, are that the Halifax has extended its banking activities to the Spanish market and Harvey Nichols, a retail outlet previously limited to London, has opened a branch in Leeds. Using this strategy, I believe we can extend our product's appeal into the market segment of mature teenagers and young adults. I have discovered from talking with my friends and reading Nintendo magazines that they loved the couple of adult-oriented video games that Nintendo brought out on their previous consoles, and believe it would be even better if Nintendo could release more games like them on the Gamecube. However, carrying this strategy out is highly risky, as the decision will be base almost entirely on external research into the market, rather than its own experiences, so the confidence levels associated with its forecasts will be much lower. Despite the risks, the rewards for successfully establishing the Gamecube in a new market segment are likely to be proportionally higher than the rewards for increasing the product's market share through a penetration strategy.

Product Development

This strategy involves the improvement of products over time to maintain their competitive position, e.g. marketing new or modified products in existing markets. A product can be developed by changing the existing product slightly, as Mars have done recently with their new taste Mars bar, or by the introduction of new, spin-off products, such as the Mars bar ice cream. Nintendo has already carried out this strategy with regard to its new console. All its previous consoles had games provided on cartridges, but the decision to produce games on small discs has proved very successful, as the results of my questionnaire has shown. This type of strategy is especially important in highly competitive situations.

Diversification

This occurs when new products are developed for new markets. Diversification allows a business to move away from reliance upon existing markets and products. This allows a business to spread risk and increase safety. If one product faces difficulties or fails, a successful product in another market may prevent the business overall facing problems. For example, Virgin has a lot of diversity in their company, with products and services in many markets ranging from mobile phone services to train services to entertainment stores. Nintendo also has some diversity, which I think has proven beneficial to the company: the difficulties that the Nintendo 64 had would have badly affected the company, but thanks to the enormous number of Gameboy sales in the hand-held video games market, it seem that this helped the company! Although, diversification usually takes a business outside its area of expertise, this does not apply to Nintendo's actions, as both the Gameboy and Nintendo 64 were game machines, and what Nintendo does best, is producing quality games!

(Sources used: pages 329-335 - Advanced Business by Dan Moynihan and Brian Titley, chapter 2 - Marketing by Ian Swift and pages 330-331 - Business Studies by Carlo Raffo et al.)

Overall, there is no perfect marketing strategy. Each situation demands a different strategy in response to the circumstances. When deciding on which strategy to choose, there are three general factors that need to be considered: the business strategy, the firm's strengths and the market situation. Nintendo cannot just go and start producing electronics such as televisions or cameras, because the firm's overall strategy is to provide a unique gaming experience. Therefore, a decision to produce other electronic products would not agree with Nintendo's overall objectives, as the marketing strategy has to be part of the firm's overall business strategy. For example, a Nintendo's aim to number one in the video games market seems to suggest a marketing strategy of penetration rather than diversification. Successful marketing strategies are likely to be asset-based in that they will use the firm's strengths as their basis whilst at the same time attempting to rectify perceived weaknesses. This must be taken together with the general principle of consumer orientation - it is not enough to produce the goods you are good at producing unless they also meet the needs of the consumer.

Though there is no perfect strategy, the key principle must be to develop the firm's existing strengths and try to eliminate its weaknesses, whilst still providing the customer with the products they wish to buy and taking account of the external environment (see section 8 of the report) in terms of opportunities and threats. For the Nintendo Gamecube, I think that the best strategy for the time it is released into the market is market penetration and market development. The advantages of market development for the Gamecube, are that Nintendo are working in a market where they have great knowledge and also have potential in increasing market share. Methods for Nintendo to penetrate the market to ensure a high number of sales is to launch the Gamecube at a low price, below any of the competitors; ensure high and effective promotional activities, and to ensure that there are continuous flow of the product into Europe if there is a high demand for the product during and just after the launch due to promotional activities and the hype. However, once the product has been firmly established in the market (e.g. after the Christmas period of 2002), I think that it is necessary for Nintendo to introduce some product development to the Gamecube to ensure that it remains as successful as it can be. This strategy would be used to improve aspects of the console. For example, we may decide to bring out the modem adaptors sometime in 2003 to allow Gamecube owners to play games with people across the world. However, this will depend on the number of people who have Internet or broadband connection. Before releasing this accessory for the console, it is of great importance that some primary research is carried out to see if it is worth it or not.

In short, the market strategy must be realistic for a particular firm in its specific circumstances at the time. There are no 'hard-and-fast' rules for choosing between alternative strategies, but a number of techniques have been developed, which can often be of some help. These include:

o Product life cycle theory: the theory that all products follow a similar life course of conception, birth, growth, maturity and decline, although products pass through these stages at different speeds)

o The Boston matrix: a method of analysing the current position of the products within a firm's portfolio, in terms of their market share and growth within their market-place.

PRODUCT LIFE CYCLE THEORY

Like people, products are born and will eventually die as consumer demand and technology move on. Goods and services change and develop during their lifetimes, and marketing objectives will need to change to match changes in the product. A major marketing tool to help a business plan for the future is the product life cycle. The product life cycle is a graph that illustrates the sales level of a product or brand over time. The idea is that, just as humans move through several stages in life, products also develop according to a certain pattern. The general pattern of sales is shown below:

Stage 1: Research and Development (R & D)

At this early stage, a business will research the market to find out what the consumer wants and whether it is possible to make and sell the product at a profit. R & D involves research into all aspects of the product, including technical aspects of production, packaging, pricing, and possible market segments. Additionally, the product is being designed at this stage and suitable ideas must be investigated, developed and tested. For example, Nintendo would investigate the design of the game controller to comfortably fit into a player's hand and also the design and components of the console itself. If an idea is considered worth pursuing, then a prototype or model of the product might be produced. A decision will then be made whether or not to launch the product. A large number of products never progress beyond this stage. This is because management are often reluctant to take risks associated with new products. During this stage, it is likely that Nintendo would have had to spend money to develop the product, e.g. buying in the materials and the components needed to produce the consoles and its accessories as well as paying for employees required to mass produce them. As there will be no sales at this stage, the business will initially be making a 'loss' on the product.

Stage 2: Launch

During this stage, the strategy to be followed very much depends on the type of product and its market. Costs are incurred when the product is launched and it may be necessary to build a new production line or plant, as the firm will have to meet promotion and distribution costs. For example, many people may have pre-ordered their console with a shop or ordered it through the Internet, meaning that they will be the first customers to receive the console. There then has to be enough of the product so that customers who physically go to purchase the product can get hold of one. As the video games market is very competitive, the best strategy for the Gamecube would be to attempt a high profile launch to produce rapid acceptance and to charge customers a low price for the product. This strategy would mean a high spend on promotions to inform customers as to when the console will be released and where it will be sold. As I have found when analysing X-Box's marketing strategy, it will be a good idea to give customers a 'hands-on approach' with the Gamecube, e.g. events should be held around densely populated locations across the UK allowing customers to play and experience the Gamecube.

Stage 3: Growth

During the growth stage, sales of the Gamecube can be expected to rise and advertising will have to shift from being primarily informative to persuasive advertising to ensure continued demand for the product. The persuasive advertising will mainly be for the Gamecube games, as this promotes both the game (with footage from it) as well as the console at the same time. The price of the Gamecube may also be further reduced, but this depends on the market: if X-Box further decrease their prices and Sony do the same, then it is inevitable that we will have to follow suit in order to enhance our competitive position. The success of this stage will show how well care was taken during the Research and Development stage and how effective the marketing strategy was.

Stage 4: Maturity

At maturity, the product should be well known and established, and reaching its maximum level of sales and profitability. Gamecube's strategy will be to maintain this stage for as long as possible to try and keep it more competitive than its rivals, perhaps moving to a higher level through product developments or finding new markets. Elements of the marketing mix (see section 9.0 of the report) can be changed to enhance the product and retain its market position. The best strategy in maintaining our position, would be to ensure continuous flow of highly anticipated and "big" games for the console such as Resident Evil, Super Mario: Sunshine and Perfect Dark Zero.

Stage 5: Decline

Eventually, sales for all products will start to decline. This can be caused by changes in fashion, or, more likely, by new technology which either replaces the product or allows competitors to offer a new and improved version at a lower price. For example, Nintendo 64, Sega Dreamcast and the Playstation 1 all entered this decline stage when the Playstation 2 was released. The Playstation 2 was the first of three next-generation consoles on release. Its high specifications and entertainment features were newer technology and the graphics were far superior to those of the older consoles. Therefore, the strategy for Nintendo if, for example, Sony brought out a new console in a few years time such as the Playstation 3, would be to work on a more powerful console and halt spending on the Gamecube. This stage is inevitable for a product. However, I think the best strategy to prevent this that a firm can take is to postpone this stage for as long as possible. A product is more likely to enter the decline phase quicker if marketing planning and tactics are poor, market research is poor, competition is fierce and if technology makes the product obsolete.

Although different products have life cycles of different lengths, it is true to say that on average, most life cycles are getting shorter and shorter. In consumer electronics, new models of camcorders, TVs, and DVD players are launched every three to six months. Another example is with personal computers. When I bought my PC, it was one of the best computers on offer but, within a few months, Intel Pentium 4 was introduced as Windows XP and there were new and higher quality computers on offer! Shortening product life cycles are due to rapid advances in technology and heavy international competition in markets where consumers expect to be able to buy the latest developments. Although the product life cycle is of very limited use as a forecasting tool, its real strength lies in it use as a means of planning and of control. It also allows the performance of current products to be compared with similar ones at the same life cycle stage in the past, to gauge how well the product is doing.

I would consider this marketing model for my the Gamecube fairly reliable, but like the Boston Matrix described on the following page, is at best a starting point for the decision-making process. The disadvantage of this model is that it is considerably difficult to identify with certainty the point a product has reached in its life cycle at any given time and, even if this is known, it says little about what the future holds for the product. I only think this model reliable if it is used carefully and not literally, as there is a real danger that the model becomes self-fulfilling: believing that products enter the growth stage after they are launched may encourage firms to put resources into promotion and distribution, which then bring about such growth; believing that decline is inevitable may cause firms to cut back on their marketing activities, therefore bringing about the fall in sales, which was initially expected. As the diagrams will show below, it is extremely difficult to predict how long each stage of phase of the life cycle will last:

(Sources used: pages 76-78 - Marketing by Ian Swift, page 333-335 and pages 288 - 290 - Advanced Business by Dan Moynihan and Brian Titley, and unit 42 - Business Studies by Carlo Raffo et al.)

THE BOSTON MATRIX

The Boston Matrix was developed by the Boston Consulting Group and is a useful analysis tool to understand the product/service portfolio in multi-product firms. With this model, Nintendo will be able to quickly assess the position of their products in their relative markets, and from this, make a decision as to how the product ought to be treated in the future. The labels used are deliberately humourous and help people to remember the model, as well as indicating the state of the product. Each circle in a diagram of the Boston Matrix (shown below) represents the position of a product and the area of the circle represents the product's turnover.

Market Share

High

Low

Market Growth

And

Market Growth Potential

High

Star

Problem Child

Low

Cash Cow

Dog

(The Boston Matrix diagram from page 74 - Marketing by Ian Swift)

The Boston Matrix suggests that there are four types of business or product. These are:

. Dogs. These have low expected growth rates and low relative market shares. A business should stop producing or sell of its 'dogs'. This is known as divestment, which means selling off parts of the business that no longer fit the long-term strategy.

2. Problem Child. These have a low market share compared with other firms in the same industry, but have good growth potential. They are currently at a competitive disadvantage and need investment to correct any weaknesses they have. As the Gamecube is only coming into the videogames market on May 3rd, after the releases of the Playstation 2 and X-Box, it will consequently start off with a lower market share. However, in this sort of market, the market share of a console can change within months depending on the types of games that are released. We can therefore put our resources into producing high quality games for the console and using effective promotion in making them well known amongst the public. If we do this, there is potential for the Gamecube to turn into a 'star' product by taking a larger share of the market and reconfirming Nintendo's dominance.

3. Stars. These have both a high market share and high growth potential. However, they will require significant cash investment to do this through product redevelopments and promotions.

4. Cash cows. These have a large market share in slow growing markets; they are likely to remain solid earners without the need for a great deal of investment. These products earn a business significant revenues and profits. They also have a strong position in markets that have reached maturity. These products can be 'milked' (i.e. maximising the profit from a brand or product, usually by pushing its price as far up as possible without forcing regular purchasers to switch to another brand) for profit because they require very little investment to keep them going. Nintendo's Gameboy Advance is a 'cash cow' as it has en extremely large market share in its market of handheld videogames with few if any products to compete with. I consequently believe that the Gameboy will be a 'cash cow' for some time. However, it is not so simple for Nintendo to 'milk' the Gameboy, because it would put potential customers off from buying the product.

(Sources used: page 74 - Marketing by Ian Swift and page 334 - Advanced Business by Dan Moynihan and Brian Titley)

As an aid to decision making, the Boston Matrix is quick, easy to use and allows generalised decisions to be made very quickly. It is therefore a fair starting point for decision-making. However, it also has some limitations. The model is based on two assumptions that do not always hold:

. 'The success of a product can be measured by its market share.' This may be true in some markets, but in many consumer product markets, a market share of 5-10% is considered a good performance. There are other measures of success, which may be a better guide to the future potential of the product, such as the attitude of consumers to the product or the product's quality. For example, some customers may not have bought the X-Box console because they dislike the company Microsoft, or some people will buy the Gamecube because they are huge fans of the Mario games and are looking forward to the highly anticipated Resident Evil game. People may already have made decisions on the product they are going to buy before it is released.

2. 'A fast growing market is the best place to be.' Whilst there are advantages to being part of a fast growing market, there are serious drawbacks as well. The rate of growth may attract heavy competition, and, if the number of competitors becomes too large, these products may require price reductions. This is what has already started to happen in the videogames market: X-Box has dropped the price of their console and it is inevitable that Sony will do something similar with their console.

As a tool for analysis for the Gamecube, I would not rely on this marketing model too much, as it only a simple model that only concentrates on the two dimensions of product markets, size and market share, and therefore may encourage us to pay too little attention to other market features such as constraints. The Boston Matrix, in itself is simply a diagram illustrating the existing position of the firm's products. This can help to highlight a particular position but it does not actually make any decisions - decisions need the skill, experience, vision and ability of the management.

The marketing models discovered in this section, are, in my opinion quite simple. The actual environment is far more complex than what these models suggest. If they are used, we may overlook the need to undertake rigorous analysis of the external and internal environment for formulating and implementing strategy. In addition, if Sony or Microsoft for example knows we are using a certain strategy, they can anticipate our strategic moves and be able to maintain a competitive edge over us. We must therefore not use models that other firms can use against us, but continually change strategies in relation to what is happening in the market. Competition and competitive behaviour is very dynamic. It is always changing, forcing us to think one step ahead if we want to remain successful. Markets are continually reshaping, changing the nature of the competitive environment.

8.0 EXTERNAL INFLUENCES

A business must take account of a number of constraints when designing and introducing a new marketing strategy. Any business that is not aware of these constraints is unlikely to achieve its business aims and, worse still, could end up appearing in law courts and being fined heavily and/or its owners imprisoned.

Business Stakeholders

All businesses have stakeholders - that is, people or other organisations who have an interest in or influence on the actions and performance of business. Stakeholders can, therefore, influence the design of marketing strategies. Stakeholders in business include consumers, employees, shareholders, communities and the government.

For Nintendo, the wants of consumers will dictate what and how to produce and at what price. For example, a poll carried out in a Nintendo magazine last year concluded that Nintendo owners were hoping that the company would produce games on CD format in the future. In addition, the reluctance to buy the X-Box at the expensive price of £299 indicated that customers were not willing to pay such a price, because when Microsoft cut their prices, their sales started to increase. The best way to satisfy consumers from the start, is to sell the Gamecube at a lower price than its competitors and give them what they have been hoping for, e.g. games produced on CD-format and a Resident Evil game! Rising consumer demand will benefit the business, but falling consumer demand can result in falling sales and profits, and possibly closure of many businesses. This is why promotional activities for Nintendo will have to be very effective.

Stakeholders also include people and organisations that provide businesses with the finance they need to start up and pay for day-to-day business costs, such as rents and business rate, wages and the cost of materials. A business may also borrow money from a bank or building society. These financial organisations will want to make sure the business they lend to will be successful. This, for Nintendo, will be fine as they have a long reputation for quality gaming in the market and the potential for their latest console to be successful is very high. If a business cannot repay a loan, it may have to sell off its stocks of finished goods and materials, machinery and premises to do so. This could mean the business is unable to continue.

We also need to recognise the importance of employees, as they are key stakeholders in business. The majority of successful firms recognise the importance of their staff to the success of a business strategy, and they spend a great deal of time and effort in training and developing their workforce and improving their working conditions so that their employees are happy and motivated. As I discovered in the unit one report on 'Business At Work', motivation is a key factor in the success of a company and its productivity.

Shareholders own limited companies and they will want to make sure their business managers develop strategies to maximise profits so that they will earn a good return on the money they have invested in their shares. This group of stakeholders will often vote on who they want to manage the businesses they own and how they should be managed. From the unit one report, I discovered that there are two approaches for a manager of a business to take: the shareholder approach and the stakeholder approach. Managers will always face some conflicts between the aims and needs of different stakeholder groups, at least in the short run. Attempts to please the customer may lead to les rewards for the owners. This is why conflicts between managers and owners of companies often arise. However, company managers depend on shareholders for their jobs and incomes. In the long run they must make their companies successful and profitable or will risk losing their jobs.

People who live in local communities and the national community also have an interest in the activities of firms, because they expect businesses to produce their goods and services without damaging the environment and the health and well being of people nearby. When businesses produce goods, they are primarily interested in their own costs, revenue and profits. They do not always consider how their production might affect people who are not their customers or how it will affect the community as a whole. For example, if a business, which receives its raw materials in cardboard boxes, cannot be bothered with the time and cost of recycling, it may simply burn them. This may cause air pollution and affect people in the neighbourhood who never buy this firm's products. So, developing good public relations can often be a key element of many marketing strategies.

Finally, the Government is an important stakeholder in business because it relies on the activities of business to create jobs, incomes and economic prosperity for the country. The Government also has an interest in business because it relies on them to produce the tax revenue with which it pays for the schools, hospitals and other provision of the public sector. The Government also affects business through the policies it uses to control price inflation and employment in the UK economy.

(Sources used: pages 335-339 - Advanced Business by Dan Moynihan and Brian Titley)

So, in order for Nintendo to be successful with its latest console and marketing strategy, we need to identify who our main stakeholders are and then act in ways that balance the need of the various stakeholders involved. However, the way that this is carried out depends on the relative strength of the group involved and different expectations within society. Sometimes, business organisations are forced by law to account for the needs of particular stakeholders. For example, the Government has passed a range of anti-pollution laws, in order to prevent businesses from damaging local and global environments, and other laws to protect the rights of consumers.

Legal Constraints

Because most businesses aim for profit, some may be tempted to mislead consumers about the prices, quality and availability of their products. They may also attempt to cut their costs by using substandard materials, disposing of waste in harmful ways and not ensuring high standards of hygiene and safety in their workplace or retail outlets. For example, in the news section of the BBC website (see appendix), there was an article talking about how Boots misled customers about its new LASIK treatment (laser eye surgery), by making exaggerated claims about the effectiveness of the laser eye surgery it offers. To prevent firms behaving in ways that are against the best interests of their customers, the UK Government has created consumer protection laws, and organisations to enforce them, such as the local Trading Standards Offices and the Office of Fair Trading.

Some of the main UK consumer protection laws are:

The Weights and Measures Act, 1963. This law makes it illegal for businesses:

* to sell goods as weights or measures that are less than they have stated;

* not to state or display what the weight or measure of a good is;

* to sell certain products in measures other than those permitted by law, e.g. most liquids must be sold in litres or millimetres.

The Trade Descriptions Act, 1968. This makes it illegal to:

* make inaccurate descriptions about products, e.g. Nintendo cannot say that the Gamecube will have a DVD player in order to attract customers if it does not actually have one!

* make misleading claims in advertisements;

* claim a product is in a sale unless it has been at the higher price for at least 28 days previously.

The Sale of Goods Act, 1979. This states that:

* goods must be of 'merchantable quality', i.e. good enough to sell without any major flaws, not damaged, etc.

* good must 'fit the purpose' - i.e. be able to do what they are claimed to be able to do. For example, if a seller of a car claims that the car will be able to carry a family of four comfortably, it must be able to do this;

* goods must fit the description given.

The Consumer Credit Act, 1974. This specifically protects consumer when they buy on credit and insists that:

* businesses offering credit or advising on credit facilities must have a licence;

* charges for providing credit must be reasonable;

* charges for providing credit must be clearly stated on all advertisements.

Laws and codes also protect consumers. Some of these make it an offence to:

* mislead consumers about the true price they will pay for a good or service, by excluding any hidden charges, interest charges or VAT. For example, if there is customers are charged for service in a restaurant, they need to be informed about this before they order anything!

* make false statements about price reductions, for example, by suggesting the sale price of a product is 50% off the recommended price when it is not.

* sell or possess goods for sale, which are unsafe.

* demand payment for goods delivered to customers who did not want them.

* prepare and sell food in unhygienic conditions, or with harmful ingredients.

* restrict competition, for example, if a group of firms agree to all charge the same high price or to work together to force new rivals out of business.

Governments also have various policies that they can use to control the economy. Some of the most important ones are described below with an explanation of how this would affect Nintendo's strategy and its decisions based on the policies.

Fiscal policy (i.e. the control of the economy through changing government revenue or government expenditure) generally changes the amount of demand in the economy. The main source of revenue for the government is taxation. When the government removes money from the economy through taxation, it takes away consumers' ability to buy goods and services. Consequently, demand decreases and Nintendo will have to lower their prices to keep their customers, as they will have a lower income due to taxes and if the government decide to cut their expenditure. Nintendo is very sensitive to this policy, as Gamecube is an income elastic product (i.e. is affected greatly by the change of people's income). On the other hand, when the government lowers tax rates or increases expenditure, this will give people more income and therefore demand will increase. Consequently, demand will increase and Nintendo would have to increase their output to meet the rise in demand. There would also be the possibility for Nintendo to take on new staff and increase their prices to satisfy suppliers and also increase their profits. However, I think that the extent to which they increase the price of the console would depend on the actions of Microsoft and Sony, as it would be unwise for Nintendo to raise their prices significantly if Sony and Microsoft have not done so.

For all businesses, indirect tax (a tax that is paid by the producer and is a cost for the business) are costs and therefore the taxes will decrease the supply. Since the demand for the Gamecube is elastic, it would be foolish for Nintendo to try to pass the cost on by raising the price to P1 (see the diagram on the following page). If they did, they would lose Q to Q1 sales. To try to minimise the effects of the tax on their sales they should put the price up only to P2, and lose only Q to Q2 sales. Nintendo would have therefore absorbed some of the costs. An alternative, but one that would produce less profits, would be for the company to absorb all the costs occurring from indirect tax.

When businesses are faced with increases in indirect tax, they will usually have to take one of the following actions:

* try to pass the cost on to the consumer;

* absorb the extra cost and reduce the level of their profits;

* find other forms of production that do not have the tax burden on them, as most producers of cigarettes have done;

* reduce the costs of production in order to compensate, e.g. cut wages or sack staff. However, this action may have an negative effect on the motivation of staff.

Diagram: Effect of indirect tax on the Nintendo and the Gamecube.

Another government policy that will affect Nintendo is monetary policy. This policy changes the economy by changing the amount of money that is available for people to spend. The government can do this in two ways: changing the rate of interest and controlling the ability of banks and other lenders to lend money. Interest is the charge that people, or businesses, have to pay if they borrow money. If interest rates are increased, people will have higher charges on their borrowing so they are less likely to borrow. This will reduce the monies that they have to spend and demand will decrease. For Nintendo, an increase in interest rates will therefore mean that the demand for their console and other similar products are decreased. It will also affect their supply if they are borrowing money to buy plants, equipment, etc, but also sometimes simply to pay wages and buy raw materials. Any increase in interest rates businesses will generally increase costs and this will decrease supply.

If interest rates were lowered, more people would be willing to borrow and this would increase demand. It would also lower the cost of borrowing for businesses and this would increase supply.

Marketing Standards and Codes Of Practice

Many industries have drawn up voluntary codes of good practice and organisations to encourage member firms to follow them. Examples include the Federation of Master Builders and the Association of British Travel Agents (ABTA). The advertising industry also has its own regulator, the Advertising Standards Authority (ASA). It advises on good practice and will investigate complaints from members of the public and rival firms.

(Sources used: pages 340-343 - Advanced Business by Dan Moynihan and Brian Titley , the Business and News section of the BBC website and worksheets on the competitive environment by Mr. Glover)

9.0 THE MARKETING MIX

In order to achieve its marketing objectives, as well as the overall objectives of the company, a business must consider its marketing mix. The marketing mix refers to those elements of a firm's marketing strategy, which are designed to meet the needs of its customers. There are four parts to the marketing mix - product, price, promotion and place. These are often known as the four 'Ps', as illustrated below. To meet consumers' needs, businesses must produce the right product, at the right price, make it available at the right place, and let consumers know about it through promotion.

Diagram: Elements in the marketing mix

PRICE

The pricing policy that a business chooses is often a reflection of the market at which it is aiming. The prices of all goods will also vary over time as market conditions alter and marketing objectives change from, say launching a new product to maximising profit from it. When a business does have scope to set its price, there are a number of pricing strategies and policies it might choose:

* Penetrating the market. A business may set its price in order to gain a footing in a market. It involves pricing a product at a low level so that retailers and consumers are encouraged to purchase the product in large quantities. I would definitely use this pricing strategy for the Gamecube, as it will offer customers extremely good value for money. Although it is a high-risk, high-cost strategy, I have found from the questionnaire I carried out earlier in the project, that price is a very important factor when customers are deciding which console to purchase. This was even more evident when Microsoft did not achieve the sales it wanted for the X-Box as it was at launched at a really high price, but when they reduced their prices, their sales started to increase. However, because the market that we are in is very competitive, a price war will inevitably break out amongst us, Sony and Microsoft for dominance in the market. Any rise in sales from low prices or price cuts may be short-lived, as rival firms slash prices in an attempt to retain their market shares. It is often said that only the consumer wins in a price war, but this is usually only temporarily.

* Destroying competition/capturing the market. A more drastic version of penetration pricing, destroyer pricing, is used when the objective is to destroy the sales of competitors' products, or to warn off new entrants to the market.

* Skimming or creaming. This pricing strategy is often used when there is little competition in a market. It involves charging a high price for a new product to yield a high initial profit from consumers who are willing to pay extra because the product is new and unique. As competitors enter the market, prices are reduced to encourage the market to expand. This strategy is normally used in the video games market, e.g. when Playstation 2 was launched, it was the latest console on the market with the highest specifications on offer and new technology and so was set at a high price. However, now that the X-Box has been released and Nintendo's console is being released in May, Sony will reduce their prices to expand and attract more customers to buy the product. Although this is a good strategy to gain high sales revenue at the start, I don't think that it will be good for the Gamecube, because of current competition. If we set the price of the Gamecube very high on its introduction stage, then customers will simply buy alternatives such as Playstation 2 or the X-Box.

* Price discrimination. This is used when a firm is able to charge different prices to different groups of consumers. For example, rail companies have different fares for peak and off-peak travel. Similarly, British Telecom charges different rates for telephone calls made at peak and off-peak times.

* Cost plus pricing. This involves calculating the cost of producing each unit of output, and then adding a mark-up for profit. For example, if a firm produced 10 000 units of a product costing £20 000, the average cost would be £2. A 10% profit mark-up would mean that units would be priced for sale at £2.20 each. Retailers often use this method of pricing. The advantage of this method is that it is a quick and simple way of setting a selling price. It also ensures that sales revenue will cover total costs and generate profit.

(Sources used: pages 269 and 288-293 - Business Studies by Carlo Raffo et al. and Chapter 10 - Advanced Business by Dan Moynihan and Brian Titley)

PROMOTION

Promotion involves providing information to consumers about products through a variety of media, and attempting to influence buying decisions by stressing certain features. 'Influence' may become 'persuasion' when firms attempt to stress product features, which may be more imaginary than real. For example, the image on the Nike adverts that seem to convey the image that you can do anything with Nike shoes. This image is also supported by the slogan 'Just Do It.'

Businesses often refer to promotion above the line and below the line. However, customers are more subject to promotion above the line. Above the line promotion aims at mass markets through independent media such as TV, radio, newspapers and press advertising. These allow a business to reach a wide audience easily. Most advertising is carried out 'above the line'. Below-the-line promotion refers to the use of media over which the producing firms have more control, allowing them to target their products more closely at particular customers. Examples include exhibitions, packaging, and in-store sales promotions.

Below is a table showing the advantages and disadvantages of advertising media involved in promotion above the line along with comments as to whether they would be used in the promotion of the Gamecube.

Medium

Advantages

Disadvantages

Comment

Television

* Creative advertisements can attract attention and have a great impact. For example, the Budweiser and Nike adverts.

* Advertisements can demonstrate the product in use. For example, a new video game can show the game in motion.

* Can reach a vast audience. For example, virtually everyone in the country owns a TV.

* Increased scope for targeting the audience, e.g. digital television. In addition, there are a growing number of channels.

* The message can be reinforced by continuous advertisements, such as the X-Box adverts.

* Relatively expensive initial cost.

* The message is short lived. For example, customers may go "wow" after an advert but may forget about it within a few hours.

* Viewers may ignore or switch over channels during adverts.

Television is a medium that has always been popular and so the Gamecube will also be advertised through this medium. The main reason is that people can see videos of the games on offer and the adverts can reach a wide audience from different areas. If adverts for the Gamecube are placed correctly, e.g. during an advert for a programme that is highly popular, then it could prove highly rewarding and beneficial. The only major disadvantage is the cost of advertising on this medium. Additionally, our advertisement for the Gamecube may be followed by an advertisement for X-Box. This would counter our advertisement, as customers will remember the latter advert more than the first one.

National newspapers

* National coverage.

* Reader can refer back.

* Product information can be provided.

* Relatively cheap

* Readers often ignore adverts.

* Usually limited to black and white.

* Individual adverts may be lost amongst large quantities of other advertisements.

It will be a good idea to advertise in national newspapers, as these are the papers that the country buys most. However, advertising in newspapers should have limited use as many people do not take notice of the advertisements.

Regional newspapers

* Good for regional campaigns and test marketing.

* Can be linked to local conditions.

* Reproduction and layout can be poor.

* Average cost per reader higher than national newspapers due to more limited circulation.

I don't think advertising in regional newspapers will be good for the Gamecube because we need to communicate with everyone on the quality of gaming that our latest console offers. If we advertise in the regional papers, the quality of our advertising space will be of very poor quality!

Magazines

* Colour advertisements possible.

* Adverts can be targeted in specialist magazines

* Magazines may be referred to at a later date.

* A long time exists between advertisements being placed and magazine being printed.

* Competitors' products are also being advertised.

* No movement or sound.

In my opinion, advertising the Gamecube in magazines is a definite medium to use, as many magazines have become popular amongst teenagers and young adults such as FHM, Heat magazine and specialist magazines focusing on a particular console. Colour can also be used, which will make the advert that much more appealing compared with the black and white offered by newspapers.

Cinema

* Colour, sound and movement can be used.

* Advertisements can be highly localised.

* Great impact on the consumer.

* Age groups can be targeted.

* Cinema is a very popular entertainment medium for the public.

* Limited audience.

* Message is short lived.

* Message may only be seen once.

Cinema has become, in my opinion very popular amongst people as an entertainment option. With increasing numbers of "big" movies such as The Lord Of The Rings, The Matrix Reloaded, Star Wars and Spiderman, more people will be flocking to the cinemas to watch them. Therefore, by advertising the Gamecube in cinemas before the movie, it will ensure that a large number of the public will notice it and may be persuaded to buy it.

Radio

* Enables use of sound and music.

* Most consumer groups covered.

* Produced cheaply.

* Growing number of stations.

* People who are driving on the road are likely to listen to their radio.

* Not visual.

* May not capture the audience's attention.

I believe that one of the best aspects of radio, is that there are vast amounts of people who listen to it everyday: when they wake up in the morning to driving to work with the radio on. Therefore, a simple advertisement, informing the public as to when the console is released will be effective, as many people will be listening. The only disadvantage is that radio is not a medium where you can catch someone's attention so it will be difficult to persuade people to buy the console via radio.

Posters

* Most groups covered.

* May encourage impulse buying, e.g. people will buy the product due to the persuasion from the poster.

* Seen repeatedly.

* Can be placed near to points of sale.

* National campaigns possible.

* Limited amount of information.

* Difficult to measure effectiveness.

* Weather and graffiti can ruin the poster.

Posters are an extremely effective method of advertising as well as communicating. With the Gamecube, it would be a good idea to put up posters informing the public as to when the console will be released, especially in electronics and games shops. Another advantage is that posters are put in more than one place so that people will not forget the product due to repetitive viewing.

Internet

* Relatively cheap and easy to set up.

* Number of 'hits' can be monitored.

* Can be targeted.

* Can be easily changed.

* Internet is worldwide and accessible 24 hours a day.

* Limited audience as not everyone has access to the Internet.

* Possible technical problems of connection, viewing, ordering and maintaining.

Although there are a limited number of people who have access to the Internet, it is true to say that this number is increasing. Schools are even connected to the Internet, allowing students to surf the "information highway". Advertisements are therefore going to attract people on the Internet if it is effective, well animated and persuasive. The advantage of this, I feel, is that adverts can be placed on particular sites and statistics can be easily monitored like how many people have clicked on the link. In addition, from the questionnaire I carried out in the market research section, I discovered that students in the age range between 15 and 18 years spend 5 to 15 hours on the Internet per week.

(Sources used: pages 295 and 297 - Business Studies by Carlo Raffo et al., and page 282 - Advanced Business by Dan Moynihan and Brian Titley)

Promotion will be a key factor in the success of the Gamecube. The more people that know about the Gamecube, the more potential customers there are that will buy the product. Advertising plays an important role in the strategy for the Gamecube as for most, regular exposure to advertising is unavoidable. As well as the above methods of promotion above the line, we must also consider methods of promotion below the line that can be used together with the above to create an effective and powerful advertising campaign. Below the line promotion allows us to aim our marketing at consumers who we know are interested our console. For example, in the video games market, there are always exhibitions such as E3, where the latest consoles are put on show with games that are not released yet so that gamers can experience them first to see what they think. This type of promotion is good because the majority of people who attend are interested in the products on offer, so will try all the products out. Therefore, this is why we must produce quality games for the console in order to show off the console's capabilities. Other methods of below the line promotion include:

Direct marketing and selling. This is a method of promoting products direct to consumers, for example, by mailing, mail order, telesales, and through home shopping via the Internet. Direct marketing enables us to deal directly with consumers without the need for retail outlets or wholesalers. According to the Advanced Business textbook by Dan Moynihan and Brian Titley and an article published by the Economist in 1999, this method of marketing is becoming one of the "fastest growing methods of selling products in the UK."

Direct mail has proved very popular and effective with some firms such as Dell, as it allows us to send information to the homes of many potential customers. However, with the Gamecube, I think it would be effective, if a brochure was sent to the homes informing customers as to what the product offers and the games that will accompany it rather than attaching a phone number and response form, expecting them to ring in order to buy the product. If a consumer likes the product, it is likely that he or she will buy the product from a local retailer such as Dixons.

Telesales will not be used in the marketing strategy of the Gamecube, as the success rate for this method is extremely low, as many people do not like the idea of being telephoned at home. From personal experience, I find that the most common product marketed through the telephone is windows and doors for the house. These calls are annoying because if you really don't need the product there will be many phone calls from different companies still trying to offer you the product!

Exhibitions and trade fairs. This is a method used by businesses to promote their products. This is particularly used with motor vehicles and electronics. This method can be very successful, as consumer reaction to the Gamecube and how well it plays can be tested before it is released on May 3. Since there is likely to be press coverage on the majority of exhibition, it is likely that the Gamecube will have some coverage in magazines, especially game magazines such as Gamesmaster and Nintendo Official Magazine.

Branding. This is a way of establishing an identity for a product in order to distinguish it from the competition. Successful branding adds value to an item and ensures brand loyalty, e.g. people will only buy consoles made by Nintendo due to the history they have had in the video game industry and the games that are exclusive to the product. I think the decision to name Nintendo's latest console the "Gamecube" was a good one, as people can associate the name with the slogan and the product. The word "cube" can easily be associated with the shape of the console and the word "game" can be associated with what it is built for and with the slogan, "Life's a game." Branding the product with the company name in front (e.g. Nintendo Gamecube), will make it easier for consumers to relate the product to the company and enable products to be more readily accepted by consumers if they already trust and are a follower of the existing brand.

Public relations. This attempts to communicate with groups that form a firm's "public". Such groups may include the government, shareholders, employees and customers. This, if used carefully, can increase the sales of the product by improving the image of the firm and its products. Businesses often use press conferences to attract publicity. These might involve inviting journalists to a company presentation, where they are given information. This is an opportunity for a business to launch a new or updated product. Other than conferences, other public relations activities that we may use are:

* Press releases. These are statements issued to the media, often offering stories and facts that can be treated as news items. For example, if we aim to sell the Gamecube at a low price so that we are able to good value for money, then this statement would be passed onto the media. In addition, figures on how much of the product is sold within the first week of its release may also be passed onto the media.

* Sponsorship. This type of public relations is especially popular in the sporting world, with Nike and Adidas becoming well known due to their sponsorships with sport and in particular, football and the World Cup. This type of public relation would be very useful for increasing awareness of our product and also in persuading the audience to buy the product. For example, if we attach our name Nintendo to a big event that attracts a vast amount of people such as the World Cup, the Olympic Games and so on, people might start to relate the event with the sponsor.

Merchandising. This is an attempt to influence customers at the point of sale. The point of sale is anywhere that a customer buys a product. Consumers are intended to buy what they see rather than from a sales assistant. The aim of merchandising is to encourage sales of a product and therefore to speed up the rate at which stocks are turned over (i.e. the measurement with which a firm sells out its stock). There are a number of different features of merchandising, but I think that the most important feature for the Gamecube is the following:

* Display material. This is another important factor that I believe will help the sales of the Gamecube. Without promotion, potential customers would not even know about the existence of the Gamecube. However, what matters more, is not necessarily the amount of promotion a firm undertakes, but the quality of the promotion, as was shown with the X-Box. Displays used in shop windows should attract attention and encourage the 'right frame of mind' to make a purchase. When I went past Electronics Boutique in Bluewater, I saw a very effective display material that was used. They used an electronic timer on the front of the store, displaying the time in days, hours, minutes and seconds until the launch of the Gamecube and it definitely caught my attention! In addition, there were other people who were also enticed by this display and wanted to find out more about the product inside the store. I believe that this method of display builds up a bit of hype surrounding the product, which is very good in attracting consumers.

Another good in-store material that is good in interesting consumers with the product is the ability to play the product before it is released. In the Dixons branch in Bluewater, consumers were able to play the X-Box and Gamecube consoles 'first hand' to see what they thought about it. This allows consumers to get a 'feel' of the console and then decide whether they would like to buy it.

(Sources used: pages 302-302 - Business Studies by Carlo Raffo et al., and page 284, 286-287 - Advanced Business by Dan Moynihan and Brian Titley).

PRODUCT

It is essential that we ensure our product is meeting the needs of the consumers. The Nintendo Gamecube has been made as a console focused purely on gaming and it has also been constructed in a way to allow game developers to make full use of the console's capabilities. Various factors must also be taken into consideration about the product like its colour, appearance, shape and so on. With the Gamecube, the console will be available in two colours: purple and black. However, more colours for the console will be released later in 2002. The console is also small and compact giving it a unique appearance compared with the other two consoles available.

A firm is not just selling a product, but a whole concept:

In addition to the above labels, there would also be after-sales service, customer help lines if anything goes wrong with the console and a guarantee for the console. The product would also be affected by the product life cycle, which is explained in section 7.0 of the report.

(Sources used: page 265 - Advanced Business by Dan Moynihan and Brian Titley and images from a link to Nintendo information on www.cnet.com)

As well as the support of an appropriate marketing mix, the one key factor that I see as being necessary for our success in the games market is the ability to differentiate our product from all the others that are available. By demonstrating that our product is different from the others, we are consequently providing consumers with a reason to buy our product instead of the Playstation 2 and the X-Box.

PLACING THE PRODUCT - DISTRIBUTION

An organisation can spend millions of pounds on developing and advertising products, but if the right product is not in the right place at the right time for the consumer to buy, then all this money and effort will have been wasted. The objective of distribution is to make sure this does not happen. Distribution is a significant element in a firm's costs and so will require careful management. When considering this aspect of the marketing mix for the Gamecube, we will need to consider physical distribution, storage and transportation of goods and services, and the various methods and outlets through which a good or service can be sold to a consumer. If these are not considered carefully, then it is inevitable that the customer will not buy the product. Place of sale is a key ingredient in the marketing mix and the success of a product overall depends on how well all aspects of the mix are handled.

Logistics is often called the science of moving things. Effective logistics in business is about managing the process of distribution so that the right goods and services, get to the right consumers, in the right place, in the right quantities and at the right time as quickly as possible. For example, if we expect that the Gamecube will be a huge success and we have not distributed enough of the product to the shops because of the high demand, then there will be angry customers due to the shortage of supply.

Logistic, therefore concerns:

* Controlling the availability of goods and services. Many large stores now have advanced computerised stock control systems linked to bar code readers at their cash tills. The bar code readers scan every item leaving the shop and automatically updates the central stock records, so that at any moment, the computer has a complete record of what is available in the store. For example, in Argos stores, it is possible to check whether the item you are looking for is in stock or not before you purchase your item. Consumers do this through a small interactive device that is available for use.

Sometimes, consumers require a very wide range of goods and services. In this case it is important for an organisation to operate a fast ordering and delivery service. However, it is pointless pretending to a consumer that a product can be obtained in a few days if it cannot.

* Improving speed of delivery. A business should always be honest to customers about when they can expect to receive the goods and services they have ordered. In the event of delivery being delayed, the same organisation should contact the customer in good time to arrange an alternative.

Delivery times may also be improved by changing the method used to deliver items, for example, by using special delivery and courier services rather than first or second-class post. Delivery by road may also be improved by planning ahead the best route to take. I feel that Internet shopping is becoming more and more effective as most shopping sites now offer 24 hours delivery rates. For example, when I ordered a few books from www.amazon.co.uk, the goods arrived within two days of ordering! Comparing this with when I ordered a book from WH Smith that was not available in the store, it took three weeks for the book to arrive! This shows how the power of distribution can be used as a competitive weapon. Amazon have differentiated their offerings and have therefore allowed themselves to make more savings and offer better value for money.

E-commerce is important because of the way it is impacting on the structure of business. It is bringing many organisations closer together with their suppliers, reducing costs and delivery speed, and improving the quality of shared information.

* Identifying and using the best channels of distribution to consumers (i.e. the stages of ownership that take place as a product moves from the manufacturer to the consumer). A channel of distribution refers to the route a producer uses to reach the final consumer of the product. The four main routes are illustrated on following page.

(Sources used: chapter 11 - Advanced Business by Dan Moynihan and Brian Titley)

(Diagram: channels of distribution)

I think that the best channel of distribution for the Gamecube will be the second one from the diagram above, because of the benefits of all those involved as well as allowing us to concentrate more on the product itself and the games for it. The advantages of using a wholesaler in this channel of distribution are as follows:

Advantages to the manufacturer:

Advantages to the retailer:

The wholesaler will:

The wholesaler will:

Buy in bulk and pay for storage

Bear cost of transport

Relieve manufacturers of the cost of administering orders to many customers over a wide geographical area

Provide a source of market research information from contact with retailers

Allow the retailer access to a wide range of products from different manufacturers

Provide a delivery service

Provide information on new product lines

Sometimes help with storage and give credit

Whatever the channel used to sell a product to the final consumer, most will require movement of goods from one place to another using various modes of transport. Firms will need to consider the relative costs of transport by road, rail, sea, or air, against the speed and possibility of damage, or deterioration of goods. For example, transport by air is very expensive for bulky items, but is a fast method of transporting smaller items over long distances, especially overseas. However, for the Gamecube, the method of air travel will be the most suitable as the product is not particularly large. In addition, the condition of the product can be kept undamaged if cushions are put inside the packaging of the product and around the box that it is put in for travel.

An organisation that fails to provide good customer service could end up spending more effort dealing with complaints than selling goods and services. Its customers will be lost to organisations that can keep their customers happy. Good customer service involves many aspects of the operation of a business organisation. For example:

Staff should be:

* well trained and motivated. For example, sales assistants in electronics shops need to know what the Gamecube offers in comparison with the other consoles available on the market. They need to have the knowledge to explain any queries that a customer has about the product, as a lack of product knowledge can put off customers.

* friendly and provide a prompt service. For example, as I learned when working for Boots, a sales assistant should always be smiling towards customers and be ready to help them straight away.

* able to provide information and advice. For example, a sales assistant should have knowledge about all three consoles and be able to inform a customer on the specification of each one, the big games that are available on each and the advantages each has over the other.

After-sales care should:

* provide a prompt and reasonable repair service. For example, if there is a fault in a Gamecube that someone has bought, it is our responsibility to fix the product and return it to the consumer as soon as possible.

* deal with customer complaints quickly and sympathetically. For example, when there were complaints in Japan about the X-Box machines "scratching" game discs, Microsoft received a bombardment of phone calls. They had to deal with this quickly and their solution was to repair the consoles free of charge or replace them with a new console.

* exchange goods and give refunds without any arguments.

0.0 SUMMARY OF THE GAMECUBE MARKETING STRATEGY

The following table illustrates the key marketing decisions I have made for Gamecube's marketing strategy throughout the report, with a brief reason(s) explaining each of them.

Decisions for the marketing strategy

Brief reasons for decision

Marketing approach should be consumer orientated

Due to high competition levels in the market, the fact that the Gamecube is income and price elastic and there are two other alternative products available, and market research can potentially be effectively carried out.

Carry out market research collecting primary data from questionnaires, personal interviews and observations; and secondary data from information from competitors, information from the Internet and retail audits. Results should then be analysed and interpreted and applied to the product where appropriate.

Due to market research being very important to a firm's success in the market. It also allows Nintendo to gain an insight into consumer tastes; what they are buying from whom and why; and to save time and money knowing that the product will appeal to consumers.

Marketing research should mainly be strategic in nature with some elements of tactical research used up to the release of the product.

This is because long term planning potentially gives Nintendo a clear competitive advantage and tactical research is usually used to solve short-term problems only.

As well as marketing the product to consumers through the usual of media of TV and radio for example, Nintendo should also market Gamecube through the Internet.

This is because my questionnaire showed that the majority spend between 5 to 15 hours on the Internet a week and have bought products through Internet shop sites such as Amazon. Therefore, since the people interviewed spend a lot of time on the Internet, then advertising through this media may prove to be effective!

In the weeks before the launch of the Gamecube, special events should be held around the country to showcase the console to the public.

When analysing the strategy of the X-Box, it seemed that this was a good idea, as the public can play and experience the console before they buy it. They can also play games that have not yet been released. This would especially be useful in changing the minds of consumers who are cynical about the product.

For the time of release, a market penetration and market development strategy should be used. Once the product is firmly established, some product development strategy should be used.

Nintendo are working in a market where they have been present for over a decade and will therefore have the knowledge to increase their market share. It would therefore be possible for them to penetrate the market, pricing the product at a low price, without consumers associating low price with low quality. This would ensure higher sales revenue. Additionally, price was identified as an important factor in deciding which console to purchase in the questionnaire carried out. Market development will aim to attract more young adults into purchasing the console, as this segment of the market is one where Nintendo could do better in. Product development needs to be introduced at a later stage to ensure that Nintendo remains at its competitive position

The Gamecube should be promoted commercially through the following media: television, magazines, cinema, radio, posters, the Internet and limited usage of national newspapers.

Promotion will be a key factor in the success of the Gamecube. The product should be advertised on the chosen media because the promotion is likely to be seen and heard by a large audience, especially through television and the cinema.

Brochures of the product should be sent directly to customers at home.

This would be a good idea, as Dell has used this strategy and this has proved very effective for them. It would provide them with information about the console, where they can purchase it and why they should buy it. The more people that know about the product, the more potential customers there are that will buy the product.

Nintendo should produce display material for use in retail shops and on their windows.

This should be done to remind customers walking past the shop about the product and when the product will be released. Without using display material, customers may never know if the product is available or not.

The channel of distribution that should be used by Nintendo to distribute the product should be: Producers to wholesalers to retailers to the consumers.

This channel of distribution has been chosen as it allows us to concentrate more on the product itself rather than worrying about all the hassles of distribution. Using a wholesaler has many advantages for both Nintendo and the retailer.

Advanced VCE Unit Three: MARKETING

Produced By Simon Ong