Nintendo differentiated the Wii from other gaming consoles available on the market. Unlike the competing companies Nintendo didn’t follow the usual path of incorporating greater hardware and more computing power. Nintendo focused instead on the gaming experience and developed new technologies such as wireless and motion sensor controllers. The new gaming technology meant the console was now more easy to use making it appeal to a larger market area and a new customer base. The console could also be used as a keep fit method with attachments for exercising giving the console an advantage over competitors.
A strategy employed by Nintendo was the Blue Ocean Strategy. Nintendo used advertising to obtain a new market space for the Wii which had not been previously tried [5]. Nintendo set a product strategy in place which was to make the Wii appeal to a large market of both male and female and of all ages at a low cost price. Pricing was also important for the target market so price bundles and deals where used where a console and fitness pack could be purchased cheaper as a combined unit. A branding strategy was also in place at Nintendo where the Wii was promoted as a cheap and fun party console with the advertising containing people and families playing and having fun with the Wii.
The gaming market is a highly competitive one with two other large companies competing namely Microsoft Xbox and Sony PlayStation 3. The Bertrand Model is used by Nintendo as a method for competition economics. Both competitors to Nintendo make losses on their consoles and make up for the losses through game sales.
Wii was launched at a new customer market rather than as a competitor to the other two products. Will was targeted at a wide market range for people and families of all ages. Nintendo didn’t focus on the high end graphics but instead on a simple, fun and easy to use console which could be used by all. Nintendo set about increasing the market to a wider range with more buying power than the traditional young market. The Wii Fit was launched as a healthy gaming option mainly targeting women. The Wii Fit was marketed as a method of preventing osteoporosis with mums and busy career women seen as being the main target market. Features ranged from strength training and yoga to aerobics and balance games.
Part 4
Nintendo is part of the video game console industry and underlined its position as an innovative design powerhouse with the introduction of the Wii. They took a risk and challenged the prevailing business model of the video game industry and introduced a product which went against the grain of thought from its main competitors Microsoft and Sony. Historically this market was incremental, with standard increase in sales with each new product which was released. Initially the Wii was competing with products which had a foothold in the market, products such as the Sony Playstation and the Microsoft Xbox along with variations of each.
What differentiated the Nintendo Wii from these other products was its ability to appeal not only to the traditional gamer but also to a much wider audience, an audience of non gamers’ who were previously neglected and could perhaps be a source for future growth. From what we have learned, in lectures [6], the advantage to this method of approach is that their market segmentation and customer focus is much broader than previously adopted by both themselves as a company and also that of their rivals. Nintendo have managed to open the gaming doors to people of ages from 3 to 112 years. With the introduction of the Wii Nintendo have managed to radically change the market to which they are associated with.
In attempting to do this Nintendo took a gamble. They initiated an idea which had first surfaced in 2001 and developed it into the opportunity which it became when launched 5 years later [7]. Their initial concept involved looking at a new form of player interaction in which console gaming power is not everything; a belief stated by their gaming designer Shigeru Miyamoto “too many powerful consoles can’t co-exist” [8]. Contrasting to their rival’s beliefs that they developed the Wii at a much lower cost and hence affording to sell it at a lower value than the more conventional, powerful and graphic laden consoles they were in competition with.
To briefly outline the consoles main features and benefits which will be expanded in further detail in section 6 the Wii is an Innovative and simple game-play console using a mix of motion sensitivity and aiming device technology. Even though it is the first of its kind to offer this it can be bought at a very affordable price which makes it appealing to a large audience of all ages.
Contrasting to the stereotypical image computer games portray it offers the chance for gamers to stay healthy while still having fun as an individual or as a group. This is reflected by their release of the Wii Fit range in December 2007 which was marketed as a way to get families exercising together.
Part 5
Differentiation strategy
On the Nintendo Wii homepage it states “Wii is social and active entertainment that brings the whole family together” [12]. The differentiation strategy used with this particular product was very cleverly put across. The Wii developed a new innovative technology which revolutionised the gaming world. The new technology gave the Wii the edge on the gaming world and allowed them to enter a new and unexplored market.
Generally video games were targeted to the younger marker between the ages of 5 and 22. Nintendo`s aim was to broaden the market to people of all ages in this particular instance. A feature of the product strategy was its redesigned controller which makes it easier and has a more natural feeling when playing games. Continuing on from this a number of addons have been created specifically for the console which portrays the unique image it has.
Not only did Nintendo manage to significantly widen the age group associated with the computer console industry they also attempted, and we think it is fair to say achieved to break the economic barrier aswel. Contrasting to their rivals Sony and Microsoft who were charging between $350-$500 for their products the Xbox and the Playstation [9]. Nintendo priced the Wii at a very affordable price of $250. It was this significant price difference accompanying the fact that the Wii games sold at $10 less which meant that they offered much better value.
As a promotional strategy Nintendo included a free game with each unit sold which was unlike their competitors. An interesting aspect of the Wii is that it offers WiFi connection where high speed internet is accessible. In 2010 Wii reached an agreement with Netflix which allowed Wii users to go live and stream thousands of movies and tv shows directly to their television.
Company advantage and possibility of competitor substitution
From the beginning Nintendo had the massive advantage of timing. By arriving with this new technology they instantly had the advantage over their competitors. As they proved to be so successful potential competitor substitution followed not long after.
Sony introduced the Playstation Move, a hand held device much like the Wii remote which could be used in the same manner. Despite being a more advanced version of the Technology used by the Wii they still cannot manage to get a foothold on the market stolen by it. Microsoft was slightly more creative and innovative and produced the Kinect. Unlike the Wii the Kinect was completely hands free. And Similar to that of Sony these sales are refined to their existing customers rather than stealing customers from the Wii. These products will be further developed upon in section 6.
Future actions
Carrying on from the worldwide success of the Wii will prove to be quite difficult. They now have a reputation gained and it is of paramount importance that they uphold it with using their innovation skills. Using the Wii`s success they continuously plan new, innovative ideas for the expansion of their Wii hardware. They also succeeded the Wii with a device called the “3Ds”, a portable gaming device that plays with touch screen in 3D.
Obesity is a huge problem in today`s society. Already the Wii has brought out games like the Wii fit for example. This has proved to be a huge success. We would recommend that they continue that trend and think of new innovative ways which the brand can be expanded in an exercise friendly manner. This would help combat the disease and ensure the longevity of their product.
Part 6
The three competitive products which can be compared are the Wii, Xbox Kinect and the PS3 Move.
The Wii does not have the advanced graphics like the two competitors but that was the aim of Nintendo. The Wii uses a wireless remote and motion sensing technology unlike its competitors which use a remote less sensor device which responds to movement’s, gestures and audio made by the user. The console comes complete as a motion sensing console unlike the other two consoles which require add-ons for the sensing technology. The Wii remote connects via Bluetooth to the console and is battery powered. The Wii unlike the kinect does not require a large clear space to move and play in [10].
The Wii has the largest selection of motion sensing games available unlike the Move and Kinect which have a limited number. The Wii has been around for longer than the other two consoles and has outperformed them in terms of sales. The Wii was a purpose built motion sensing gaming console. It is easy to use and has opened up gaming to people of all ages from 3 to 112 years [9]. The Wii offers users the chance for gamers to stay healthy while still having fun as an individual or as a group. Wii Fit offers the added benefit of helping fight against osteoporosis.
“The difference with the Wii is that Nintendo chooses a path astray from the arms’ race to better technology and builds a product that, although technically inferior, sets to capture the lion’s share of the market by focusing its firepower on factors besides the technical prowess” [5].
Wii is the cheapest console of the three competing in the market. Unlike the other consoles no extra sensing add-ons are required to be purchased separate from the console. For the Kinect an Xbox 360 is required and for the Move a PS3 is required adding the addition cost of the console to the sensing technology makes the Wii more attractive overall. A Wii typically retails for $149, the PS Move for $400 while the kinect for in the range of $300 [11].
Part 7
Strengths
The Wii has proven to be an innovative product through its design which incorporated simple and easy to follow gaming with motion sensing technology. Through opening up to a new market the Wii invited gamers of all ages from young to old. The affordable price of the complete gaming package along with the selection of game titles available meant it was a popular choice for family entertainment.
Weaknesses
During the period of 1996-2004 before the Wii was launched Nintendo were struggling in the gaming markets with the failure of the Nintendo GameCube and Nintendo 64 [9]. Due to the poor sales of previous consoles Nintendo didn’t forecast the success of the Wii correctly and when the Wii was launched Nintendo where unable to keep up supply for game consoles.
Before the Wii launch Nintendo where restricting the games which third party company’s could produce for their gaming consoles. However since the launch of the Wii Nintendo has managed to resolve issues with third party companies and now more titles are available for the Wii.
Nintendo aimed to produce a low cost gaming console this did however; impact on the gaming graphics which lagged greatly behind the PS3 which was launched at the same time.
Opportunities
The low cost of the Wii compared to its competitors has allowed the Wii to outsell all the other competition consoles in the market.
The vast age group using the console has meant that if Nintendo can keep the fun factor in the Wii it will stay a popular choice among its target market.
Threats
Due to the current economic climate rising oil prices could be a concern for the low priced Wii. The game sales could fall due to recession cut backs by struggling families. The rise in shipping costs could impact on the transport price of each unit meaning an increase cost to the consumer.
Part 8
References:
[1] , accessed 14/02/2012
[2] , accessed 14/02/2012
[3] , accessed 14/02/2012
[4] Truong, J. “It’s The Wii”, 2008
[5] O’Gorman, P. “Wii: Creating a Blue Ocean The Nintendo Way”, 2008
[6] Cormican, K., Lecture notes “Analyse Markets”, 2012
[7] Cormican, K., Lecture notes “Assess Opportunity”, 2012
[8] , accessed 14/02/2012
[9] Moats, B., Marketing Plan for Marketing Management, 2008
[10] , accessed 14/02/2012
[11] , accessed 14/02/2012
[12] , accessed 14/02/2012
