Another reason which has helped to increase PlayStation’s profitability is the advertising campaign approached by Sony. The PlayStation is usually advertised through magazines and TV adverts. This time it did not aim at the traditional 8-16 years old demographic target audience. Although, this time the product was aimed at an older audience so that higher consumer awareness could be achieved. The good thing about the PlayStation’s TV adverts is that it tries to differentiate the product from the competition whilst also generating interest and awareness of the new product launch. Also, Sony tries to sponsor certain big and famous events such as 1995 MTV Music Awards and the UEFA Champions League in order to increase more profitability. Furthermore, all this advertising has helped to create a positive image about the company. This strong and positive reputation has brought customer loyalty to the company, which has helped to increase profits and therefore profitability. This successful branding has also allowed Sony a premium price for the PlayStation and PlayStation 2 when they were introduced. This again increased sales dramatically which lead to higher profitability.
However, when competitors had entered and established in the market, PlayStation started to lose its market share. This had been decreasing PlayStation’s profitability as sales and profits were falling. Sony responded with a brilliant strategy. They carried out Process Innovation. Process Innovation is defined as the development of new ways of producing an existing product. Sony applied an extension strategy to the PlayStation. It modified most of the 4 P’s so that they could re-launch the product with a new image. They redefined the whole design of the product making it much more compact, less weight and easy to carry. This new attractive design made the product more appealing than before. Moreover, they launched the product with a new name, instead of ‘PlayStation’, they took the product out as ‘PSone’. The price of the product was set again in order to make the product competitive. Competition pricing was used by Sony in order to regain market share. This relaunch of the product made a positive impact which helped to enhance sales and maximise profits and thus maintain the profitability level.
After the PSone was re-launched, Sony was ready to launch its second edition of the PlayStation called PlayStation 2. The PlayStation 2 had even better graphics and it worked with the DVD-ROM gaming technology. This meant that now much more data could be stored in the game such as special effects. Although Sega had launched the DreamCast, it proved to be a money losing venture for Sega. Sega had high costs in comparison to Sony. This was because Sega would buy their parts from outside the company which was very expensive while Sony would make everything themselves. This helped to reduce their average total cost which has made the PlayStation more profitable and therefore increase profitability.
Another reason which has helped to increase PlayStation’s profitability are the games itself. The PlayStation games have been considered as the most interesting, exciting and entertaining games ever made. Sony offers different games for different consumers. They have broken down the market for games in different segments. Among these segments lie the action and adventure games along with the sport games and other racing games. Some famous of them have been the Fifa Football 2005, Gran Turismo 4 and the latest GTA San Andreas. This benefit of segmenting the market has helped Sony to meet the demands of the consumer better. Market Segmentation has helped to increase the ability to have a significant position in the market as one single range of games cannot hope to meet the needs of all consumers. All this has helped to satisfy the demand better which has increased Sony’s sales and therefore led to higher profitability.
Apart from all these things, Sony’s PlayStation has had other innovative ideas which have increased profitability. The PlayStation 2 also has a DVD player incorporated with it. This means that now the consumers enjoy the added value of a DVD player and they do not need to have a separate one. Moreover, Sony was the first one to introduce more than four players gaming through the Multi Tap. This meant that now consumers could play with each other just using one console which helped to increase flexibility. Furthermore, it also introduced the Memory Card which allowed users to save their game data in it. Like this, the user could continue the game from last saved stage or could take it to a somewhere else and play there. What is more that, PlayStation’s remote control have more better design which make it easier to play and prove to be more comfortable. All these innovative ideas have helped to make the PlayStation much more appealing than the competitors’ products. The profitability has again been affected due to these factors by incrementing it.
