Q1. Conduct a 4C's Stakeholders Analysis of Nintendo in 2006
In 2006, Nintendo believed in a consumer market that distanced itself from gaming. It had a belief that existing games were difficult to play and understand and very complex in terms of operations. Their games emphasized fantasy with the major target being males (18+). They wanted to create a new consumer segment by encouraging non-gamers to enter into this sport. Concentration in the market was real life and simplicity game scenarios. Wii was designed and marketed as a devise for family entertainments that involved all gender and age groups. This included even those who like watching others as they play. It's not only young family members who were encouraged to buy gaming devise but also the younger generation. Wii and the way it was marketed managed to overcome a traditional negative barrier between "the parent" and "the child (Oppapers.com, 2010, p. 1)." There was a competitive edge that was realized for the female consumers. Casual gamers who were the main target in their strategy by then were influenced to enter into this market.
This company has been fighting for its survival since the entrance of new players Sony and Microsoft. For three consecutive years since 2004, sales for Nintendo remained static. Vision on Midterm exam 2 new leadership has been on the testing scale. The best change was manifested during launching of Nintendo Wii in 2006. Financial results shows there have been a tremendous growth and this is expected to triple in future. There has been a rise in stock received by customers.
Main competitors are Microsoft and Sony. Sony had been delaying release of its PS3. Sony PS3 was released one year after Microsoft's Xbox 360. This was also within a week after the launching of Nintendo's Wii. However, for Sony the results were not encouraging. Sony lost its dominant position in this console market mainly to Nintendo because the price tag was high and there were problems in its supply. Microsoft launched Xbox 360 in November 2005 and this was only a few months before their arch rivals Nintendo and Sony. Microsoft was using this strategy after Sony PS2 had captured the market by entering the market earlier than its rivals, Nintendo and Sony. However, the original Xbox for Microsoft had been a flop in Japan. The previous approach in the market for Microsoft (off-the-shelf parts) had been abandoned because there was lack of flexibility compared to its competitors. Much of the flexibility enjoyed by Nintendo and Sony was in costs reduction and increase in profit margin. Another major weakness for Microsoft's Xbox was that even though it was considered a success, a good number of the 18 consoles to be launched were sequels. A major indirect competitor for Nintendo is Apple's iPhone. The strength of Apple's iPhone made Nintendo to experience a 66% quarterly fall in operating profit. These competitors are influencing Nintendo to make changes in its strategy to introduce even more products that are appealing to the consumers.
Nintendo amusement park is itself a collaborator of Nintendo. It is a physicallyaugmented reality where props, mechanical systems and objects are used in transformation of the Midterm exam 3 real world to a fantasy. Creators of Nintendo amusement park are seeking Nintendo and Disney to be their collaborators so that they can take their prototype to another level. In fact, students have been using Nintendo name together with the trademarked characters. The reason why students have not desisted from using the Nintendo name in the amusement park is due to their belief that physically-augmented reality and haptic-winch technology have applications that are far beyond "Super Mario Bros". Complements in the market that interfere with volume sales of Nintendo are mainly Sony and Microsoft. But the main reason why most people are fond of purchasing Wii games instead of Microsoft and Sony is due to the fact that Wii games are more family friendly. However, they have been making sales of Wii to decline due to their stiff competition.
The positioning map below shows three products that are competing in high quality and high priced segment. It is taken that since Nintendo Wii has been selling at a higher price than Microsoft Xbox 360 and Sony PS3, it is overpricing. Since all these products are of high quality and are priced highly, they will all lie in the same segment as shown in the map. Sony has been competing with Nintendo especially by selling third-party titles while Microsoft is a strong competitor as well.
Midterm exam 4
Q2. Create a positioning map. Your map must include the Nintendo Wii, Sony PlayStation and Microsoft Xbox, and the target consumer segments you described in question 1.
Figure 1. A Hypothetical Product Positioning Map
- Nintendo Wii (has all consumer segments since the product is considered family friendly)
- Sony PS3(third party titles)
- Microsoft Xbox 360
As it can be deduced this map, the consumer segments want a game that is family friendly, an all inclusive family game. Customers favor high quality consoles that have a unique player interaction. This has been working for Nintendo. Since some segments (especially thirdparty developers) are lately opting for PS3, there is a clear indication that a competitor may come in to try and develop new consoles that are meeting the demand of the customer who are running away from Wii (Reisinger, 2010, p. 1). Sony PS3 is next to Nintendo in the map since it is the nearest or the most competitive compared to Microsoft.
Midterm exam 5
Q3. Describe Nintendo's Marketing Mix strategies for the Wii.
Wii's unique selling proposition that makes it different from other games is that it has a unique controller. This controller is easy to use for all regardless of their age and skill. It is possible to use any software that can allow the consumers to copy and burn games from one program. This eliminates the stress of contending with given software. They also have the Wii Fit Advanced. This is a product that took 5 years to be developed. Key to its success is the unique player interaction.
In 2006, the price of Nintendo Wii console in retail in United States was $249.99 (Sanders, 2006, p. 1). New Wii games would be charged $49.9 and this is $10 cheaper compared to Xbox 360 titles (this price of Nintendo is for first-party games). Wii remote cost is $39.99, classic controller ($20) and $19.99 for the nunchuck. As from last year, due to the decrease in prices of games by Sony and Microsoft, Nintendo had to lower its prices up to $199.99. Their pricing strategy is to sell every video game at the same price, like say $199.99. All other video games produced will also sell at this price. It has always been very competitive. This has made rivals to lower their prices.
Wii is sold through the normal electrical retailers. However, its availability became an issue after it was launched. This however worked in Nintendo's favor.
Midterm exam 6
This being the final element of marketing mix, it may involve anything from where the products are displayed to the targeted market. Due to its promotion strategy where it mostly relies on the word of mouth to convince its consumers, many have ended up believing that Nintendo has the most family friendly console. The major reason behind this perception is due its console strategy of emphasizing its family-friendly and low cost games. 65% of its GameCube games are "E-rated." Their aim in the market is to continue relying on their strategy of family friendly products. This is evidenced in the launch of the new gaming system "Wii". This is a word that is used in promotion to show that they want to continue creating games for everyone since the word Wii is pronounced "We". Their goal is to bring people together. The double "ii" in this console does not only stand for two people but it also stands for the two console controllers. TV adverts are used to promote a "lifestyle" approach to gaming. It was because of the shortage of consoles in 2007 that forced the company to use word of mouth in its promotional efforts. The marketing budget of 2006 was over $200 million (Sliwinski, 2006, p.
1). In 2009, the budget was $6.5 million in UK alone while in North America it was estimated to be $40 million.
Q4. (B). If you were the VP of Marketing for Sony, how would you respond to the Wii?
If I were the vice president of Sony, I would respond to Wii by improving on the sales of third party titles to beat Nintendo. This is because, even though Wii is the most popular console in the current generation, it has a major blow as it's only its first-party titles that are selling on the platform. Since there has been a clear indication that most third-party developers are opting for PlayStation 3 instead of Wii, more resources should be invested in third-party titles instead. Often, the best way to compete is to focus on the weaknesses of your competitor in order to Midterm exam 7 exploit them for survival. Nintendo has a big problem in its distribution/supply since after launching of Wii; many customers had to struggle to get their consoles. My supply/distribution channels would be designed in such a way that all my target segments are supplied in time and in the right quantity. Every customer segment must be provided with enough electronic retailers in order to make sure that PS3 is the most available product. Moreover, Nintendo has a pricing strategy that has allowed it to be the leader in the market. My strategy will be to lower the price of my consoles so that they are not only available but also affordable. Nintendo uses a unique player interaction. Copying what this competitor is doing and focus on doing better than them is a great idea. Sony consoles will also be designed for all. Marketing will be comprehensive to show the customers why they should buy from us. I will make sure all the electronic media is used to surpass the word-of-mouth efforts applied by Nintendo.
Midterm exam 8
- Oppapers.com. (2010). Nintendo Market Analysis. Retrieved 28th February, 2010, from http://www.oppapers.com/essays/Nintendo-Market-Analysis/253896
- Reisinger, D. (2010). Sony: Developers are moving from Wii to PS. Retrieved 28th February, 2010, from http://news.cnet.com/8301-13506_3-10455688-17.html
- Sanders, K., & Casamassina, M. (2006). US Wii Price, Launch Date Revealed, The news we've all been waiting for. Retrieved 28th February, 2010, from http://wii.ign.com/articles/732/732669p1.html
- Sliwinski, A. (2006). Nintendo Wii marketing to exceed $200 million. Retrieved 28th February, 2010, from http://www.joystiq.com/2006/11/12/nintendo-wii-marketing-to-exceed-200- million/