Marketing Communications in Sony PS3 Review - Case Study Example

MARKETING COMMUNICATIONS REVIEW (Sony's PS3) Introduction In the cutthroat world of business, sustainable advantage is an oxymoron. Competition is worldwide, products are getting commoditized, and customers enjoy an overabundance of choices. And yet, particular business firms stand above the multitude of profit-generating corporations. As airlines declare bankruptcy, Jet Blue thrives and as private labels grabbed share from consumer packaged goods companies, Procter & Gamble delivers strong revenue and profit growth. What separates these leading companies from their less profitable peers It is believed that marketing excellence makes the difference. These leaders thrash their competition through superior customer insights that have been translated into compelling value propositions and superior customer experiences. Marketing has never been more significant as business firms scuffle and skirmish to differentiate themselves from competitors and obtain organic growth and financial success. Some of the world's most revered business corporations that include GE, Microsoft, and Intel, recognise the importance of marketing as a top line growth driver. At GE, where marketing was the "lost function" under Jack Welch, Jeff Immelt has invigorated the marketing organisation. At Microsoft, Steve Ballmer repeatedly stressed the marketing organization's lead role in making the company's "value propositions shine through for customers." And at Intel, Paul Otilleni fundamentally and drastically departed from the engineering-driven mindset of relentlessly increasing microprocessor speed to a marketing-led approach designing microprocessors for specific customer end-use applications like mobility and entertainment. While marketing is more influential and strategic at a few firms, the state of marketing at most firms is lacking. There are two evident problems with how marketing is practiced today-the role of the marketing organisation and the value that marketing is perceived to add to the firm's bottom line. Additionally, business firms, most especially huge organisations, employ an extensive array of marketing communications tools and methods to promote their companies, their products and services. Examples of these tools include brochures, mail shots, websites, TV ads and the like. The objective of all these is ultimately to achieve sales, customer base expansion and eventually market supremacy. Therefore, it is imperative for firms not just to be able to communicate effectively but to know what appropriate methods to use and determine if the segment they're trying to reach is really the sector they need to communicate their messages to. Integrated Marketing Communications This is a concept designed to unify all facets of marketing communication such as advertising, sales promotion, public relations and direct marketing. The goal is to fuse them into one working activity rather than permit each one to work in isolation. Basically, it aims to create and sustain a single look or message in all elements of a marketing campaign. However, practitioners remind clients that IMC should permeate every planned and unplanned communication at every contact point where the customer or prospect may receive an impression of the company. Practically, IMC must assimilate the corporate mission, the compensation plan, the management style, and employee training. It likewise includes packaging, positioning, promotions, pricing, and distribution. In its entirety, a successful integrated marketing communication plan should customise what is needed for the client based on time, budget and resources to reach targets or goals (Kotabe & Helsen, 2004; Young, 2005). Product Overview The PlayStation 3 trademarked PLAYSTATION3 but more commonly known as PS3 is the third video game console of the PlayStation brand from Sony Computer Entertainment. It is the successor to the highly sucessful PlayStation 2. It competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles. This is a fully featured multimedia device, capable of handling not just astounding games, but also photos, music, movies, downloads and even the Internet. Considered a revolutionary digital entertainment hub, at its core it is designed to provide the best possible gaming experience. It has a built-in and expandable hard disk drive allowing for the easy storage, transfer and management of digital photos, video and music. PS3 adopts Blu-ray Disc technology, enabling more storage of gaming content and the ability to playback high definition movies which has a 1 giga bit Ethernet Port and built-in wireless connectivity (Wi-Fi), and a comprehensive web browser allowing one to surf the web from TV. It supports a variety of inputs from USB to Bluetooth which allows everyone to plug in everything from a keyboard to a digital camera. PLAYSTATION 3 is viewed to be the most advanced computer entertainment system ever created, featuring new technologies and capabilities like the Cell Broadband Engine, Blu-ray Disc, HDMI output and 1080p resolution and also comes with an internal 60GB hard drive, the new SIXAXIS motion-sensor controller and free network game play, everything that will make the system relevant for the next decade. As it is, PS3 is set to change the videogame console to a living, growing entertainment system. Online connectivity and a standard built-in hard drive mean the capabilities of the PS3 can be dynamically expanded at any time. Such updates will bring further interactivity with PSP and increased multimedia functionality. The community environments found on the PS3 will continue to expand, creating online worlds for consumers to explore, create and share user-created content. Brief Product History Sony officially unveiled the PlayStation 3 to the public on May 16, 2005, during the 2005 E3 conference. A functional version of the console was not present at E3 2005 nor the Tokyo Game Show in September 2005, although at both events demonstrations were held on devkits (e.g. Metal Gear Solid 4: Guns of the Patriots) and comparable PC hardware, and video footage based on the predicted PlayStation 3 specifications was also shown (e.g. Mobile Suit Gundam). It was not until E3 2006 that games were shown on actual PlayStation 3 systems. At E3 2005, the PlayStation 3 would have two HDMI and three Ethernet ports. This was later reduced to one of each, presumably to cut costs. The PS3 is capable of HD video output at resolutions of up to 1080p (1920 by 1080 progressive). Both models of the PlayStation 3 ship with a built-in 2x Blu-ray Disc drive. In preparation for launch, Sony demonstrated 27 playable PS3 titles during the Tokyo Game Show in September 2006 on final hardware. The console was released on November 11, 2006, in Japan; November 17, 2006, in the United States, Canada, Mexico, Hong Kong and Taiwan; March 7, 2007 in Singapore; March 22, 2007 in the Middle East; and on March 23, 2007 in Europe, Australia, South Africa and New Zealand; and April 27, 2007 in India. It is available in two initial configurations, the 20GB Basic model and the 60GB Premium model. However, Sony discontinued the 20GB model in the US on April 11, 2007, citing a lack of consumer demand. The 20GB model is still on sale in Japan, but has yet to be released at all in PAL territories. Publicity and Reception Microsoft's MSN reviewed the PlayStation 3 saying "The PS3 is a versatile and impressive piece of home-entertainment equipment that lives up to the hype ... the PS3 is well worth its hefty price tag" (Carnoy, 2007); CNET awarded it a high score of 8.8 out of a possible 10 and voted it as their number one-must-have gadget (CNET, 2006), praising its robust graphical capabilities and stylish exterior design while criticizing its limited selection of available games. The Register reviewed the PAL version of the PS3, giving it a 95% rating and commenting, "It's no snip at 425, but it's gonna blow your socks off" (Snowden, 2007). On his SuperSite for Windows, Paul Thurrott said in a review of the PS3 that Sony "absolutely has a winner on its hands" and that the console "has the technical prowess to not only compete, but win this round" (Thurrot, 2007). Hexus Gaming reviewed the PAL version and summed the review up by saying, "...as the PlayStation 3 matures and developers start really pushing it, we'll see the PlayStation 3 emerge as the console of choice for gaming" (Haywood, 2007). Digital Spy likewise commented, "PlayStation 3 is the winner in the latest console wars - at least from a technical viewpoint" (Gibbon, 2007). At GDC 2007, Shiny Entertainment founder Dave Perry stated, "I think that Sony has made the best machine. It's the best piece of hardware, without question" (Gibson, 2007). Finally, T3 Magazine considered the PS3 "the most important home entertainment device since the TV." Further, both Home Theater Magazine and Ultimate AV have given the console's Blu-ray playback very favorable reviews, stating that the quality of playback exceeds that of many current standalone Blu-ray and HD DVD players (Chiarella, 2006; Buettner, 2006). Sales By March 2007, PS3 in conjunction with heavy pre-orders, broke UK sales records by selling over 165,000 units in its first two days on the shelves (BBC, 2007). It is the second-fastest selling home console in Britain with a software attachment rate of 1.65 (Gamasutra, 2007); however, some British retailers claim that the PS3 was subjected to as many as 20,000 pre-order cancellations. Other retailers cited a huge demand for the console (Financial Times, 2007). In Europe, Sony sold over 600,000 consoles in two days estimating that about 400 million revenue was generated by the hardware and software combined on opening weekend. According to Sony, France PS3's sales were "around half of the UK, with Spain and Portugal slightly behind that. Germany, too, saw strong sales of around the 50-60,000 mark." In Spain, 100,000 of the 110,000 units delivered were sold in the first week. Moreover, in Australia, over 27,000 units were sold over the course of the first ten days of sales and nine of the top ten best-selling games, including consoles and handheld; overall, software and hardware sales resulted in A$33 million netted for Sony. An analyst called it "a spike in retail spending not previously witnessed at the launch of any other console in Australia." In New Zealand, over 4,800 units were sold in the first week generating over NZ$6.8 million dollars in hardware and software retail sales. Brand Identity / Strategy Simply put, the PS3 is about more than just gaming for Sony - tt's about selling high-definition DVDs and televisions and about improving a once-admired brand that's been badly tarnished over the past year by the recall of hundreds of thousands of laptop batteries, the controversial installation of so-called rootkit software on music CDs, and a government investigation into the company's static random-access memory (SRAM) business. The new campaign, featuring the tagline "Play Beyond," utilizes innovative advertising, viral and online components as well as promotion and retail activities, to educate and inspire consumers as they get ready for the next era in digital entertainment. With 'Play Beyond' Sony invites consumers to think beyond what they might typically expect in a videogame and entertainment system. The provocative campaign will help create a distinct brand identity for PS3, while at the same time start an animated "discussion" among consumers that this isn't an average console. Basically, the PS3 marketing effort builds upon the long-term strength and consumer loyalty of the PlayStation brand. The campaign features a variety of media and advertising components including national television, print, Web and out-of-home advertising vehicles. The initiative started with out-of home advertising, including billboards and bus shelter ads in major metropolitan areas and each ad depicts a stark white room with various objects acting in a surreal manner when experiencing the advanced abilities of PS3 and its components, such as the Cell Broadband Engine and Blu-ray Disc (BD) player. On the other hand, the television ad campaign features a similar white room motif, with real world objects reacting instinctively to the power of PS3 and its components, such as the Cell processor, BD player, SIXAXIS wireless controller and the vast library of launch window software titles. The spots will run on major national broadcast and cable networks across a wide variety of time segments and shows. The new television ads have already been a hit with consumers logging more than 500,000 hits on the video site YouTube.com. In the print media, the campaign topped 40 million impressions and ran in several different national monthlies, weeklies and dailies. Online ads reached 150 million impressions and appeared on gaming, sports, music and lifestyle websites. Finally, in true PlayStation fashion, a secretive interactive, viral layer has been added to the ad campaign to engage the loyal fan base. All the ads will point consumers to www.playbeyond.com, a newly created website that features unlockable information about PS3 and its games. The PlayBeyond.com site is also accessible through the PS3 system's free network capabilities utilizing the system's built-in Web browser. In essence, the objective with this campaign is to demystify those technologies, utilising enticing and easy to comprehend visuals to articulate the benefits they deliver to the consumer. As it is, it is designed to be an "experience 'beyond' games, harnessing the power of imagination." Marketing Push Sony took a rather different approach to marketing its new console, with social networking sites and Web 2.0 destinations like YouTube crucial to the platform holder's approach. The firm has chosen 12 individuals and organisations - ranging from club promoters to artists, fashion industry insiders, Dazed & Confused magazine and even the BBC's 1Xtra - and gave them a free hand to create original content inspired by key characteristics of the PS3. Each will then distribute content digitally across a wide range of outlets including their own contacts and fanbases, social networks such as MySpace and Bebo, websites, blogs, and by email. Basically, the more 'traditional' avenues of advertising and PR aren't enough to communicate PS3's appeal. Obviously, Sony's idea is to use physical space, blogs and other forms of digital networking to inform, entertain and encourage interaction and debate about all the different things the PS3 can do. Marketing Drive With pre-orders at a record high, Sony Computer Entertainment rolled out its 'This is Living' creatives in cinemas followed by TV commercials and a pivotal online push all part of the marketing blitz. The firm aimed evolve the PlayStation brand from its gaming roots to more of an 'entertainment supercomputer,' Essentially, PS3 group wants to review the emotional relationship between consumers and the PlayStation brand and that the 'This is Living' campaign will promote a rational role for the PS3 in people's lives. And hinting at the provocative nature of the campaign, people behind Sony's PS3 don't want the ads to be ever passive; they want to get people involved. Strategic Moves Sony opened a branded venue in London's East End called Three Space where it runs product briefings and demonstrations by day and a diverse array of live entertainment events by night. Many of the latter have been conceived by its 12 independent content and distribution partners, the first of which - a PS3-inspired fashion shoot styled and staged by multimedia art, design and fashion magazine KCTV - took place earlier this month. Audiences for these events include journalists, art, design and fashion industry insiders and ordinary consumers, all carefully selected for their interest in capturing, recording and distributing their experiences digitally. Each event is also filmed, photographed or recorded by its organiser with edited highlights distributed via their own networks. Another move was KCTV's fashion show which took place in front of 120 guests who have all blogged and distributed content relating to their experiences. Edited highlights have been sent out to KCTV's thousands of subscribers worldwide and will shortly appear on KCTV's MySpace page. A movie version is also being produced to go out on YouTube. In addition, user-generated content (UGC) also features in the Sony strategy. Another of its creative partners, fashion and style publisher and consultancy Marmalade, is launching the first user-generated magazine in partnership with MySpace. There will be staged a multimedia showcase at Three Space to highlight the best UGC. This, along with content created from the event, will appear on MySpace. COMMUNICATIONS PLAN Objectives (NOTE: the figures can be substituted) 1. Increase sales by 20% 2. Increase gross margin to more than 25%. 3. Increase accessory sales to 65% of the total. The ultimate goal is to build a product so distinct from other brands and promote it in a way that consumers will be willing to pay a premium; in essence, the long term objective is to build a market that is not entirely based on price. Target Audience(s) Must influence: Game players/kids & adults Parents of young game players CEOs of big businesses; advertisers People in the entertainment industry; media (those who support and those who are critical) Critics Game Board officials Key Messages There are many ways of communicating about the product. It is imperative to know which words will resonate with the target audience; which words or ideas the intended public will embrace. It must be borne in mind that a social marketing approach recognises that individuals take action only when they believe it is in their interests (Andreason, 1995). Likewise, social learning theory underscores the fact that campaign messages must: 1) provide the knowledge and skills needed to be able to understand and use the product in question; 2) indicate that by performing these behaviors, the product will be more useful, more enjoyable and those who use the item will be less likely to experience any harm/disappointment; 3) boost individuals' confidence in their ability to use and enjoy the product. In effect, the messages to be drafted must be in consonance with the concepts mentioned. "Hook" - that it is more than just a game; it is a "way of life" Use specific phrases and words that capture the message most clearly and simply - "More than just a Game" / "Gaming Beyond Your Wildest Imagination" / "To Play is to Live" Strategies Employ a fusion of "pull, "push" and profile stratagems Must be proactive; people must be involved; Needs to be high profile; must create a "buzz" within and outside of the industry Should operate nation-wide and internationally Take notice of "opponents" and draft advance "responses" to their "maneuvers" Utilise media coverage, pres conferences, specific reporters/writers must be employed to give more "depth" to the campaign Releases must be properly timed Employ celebrity endorsements Capture the "hip-hop" and "yuppy" sectors Tactics *There has to be an activity every month so that the new strategies can be perfectly instilled in the consumers' minds; 1st Quarter - Press releases; print media blitz; TV commercials; stickers; direct selling 2nd Quarter - Employ the services of 3 famous celebrities to endorse the product; "bombard" market with additional information about the stability and dependability of the company and how the company works for the satisfaction of its consumers - old and potential 3rd Quarter - Massive surveys purpose of which is to get accurate feedback from consumers; since this is proactive, consumers must have their day 4th Quarter - Concerts and road shows; sponsorships (sports and entertainment) Control - Evaluation How customers receive marketing communications. (Source: Schultz and Kitchen, 2000, p.110) By being aware of how customers receive product messages, marketing group can assess how the marketing initiatives have been conducted or if they have been effective. In cases where the effort has not been effective or does not deliver the desired result, management can think of ways on how to improve the specific marketing effort that isn't working or maybe propose for its elimination from the entire plan. Conclusion From the Sony PS3 analysis, it can be deduced that selling through price manipulations alone is bound to lose, that working in isolation only helps the competition and that the most important lesson is to recognise the fact that it is possible to expand market position only with innovation and correct marketing. Likewise, global entrepreneurs need to realize that quality alone still does not assure success on the market, that is, companies need to employ branding professionals and crisis experts to better maneuver the business especially in tight situations. In addition, understanding the customer is more significant than ever in today's marketing. It necessitates meticulous, profound understanding of not just behavior, but also attitudes, beliefs, emotions, and values. Firms need to conduct custom qualitative marketing research and seek quantitative marketing research solutions to gauge customer needs and assess new market opportunities. References / Readings Andreason, A. (1995). Marketing social change: Changing behavior to promote health, social development, and the environment. San Francisco: Jossey-Bass. Bandura, A. (1977). Social learning theory. Englewood Cliffs, NJ: Prentice-Hall. Graydon, S. (2003). Made you look - How advertising works and why you should know. Toronto: Annick Press, Kotabe, M. & Helsen, K. (2004). Global marketing management, 3rd ed. John Wiley & Sopns, Inc. Mulvihill, D. F. (1951). Marketing research for the small company. Journal of Marketing, 16, 2, pp. 179-183. Weinreich, N.K. (2003). What is social marketing http://www.social-marketing.com/Whatis.html. Wernick, A. (1991). Promotional culture: Advertising, ideology and symbolic expression Theory, culture & society. S.London: Sage Publications Fill, C. (2002) Marketing communications: Contexts, strategies and applications, 3rd edition, Harlow, Financial Times Prentice Hall. Schultz, D. and Kitchen, P. (2000) Communicating globally: An integrated marketing approach London: Macmillan Business. Wilson, A. (2001) Creating a Climate for Change- The Case for Media Neutral Planning and How to Get There [online], ATG UK. Available from: http://www.marketing-society.org.uk/downloads/climate-change-mnp.pdf Young, C. E. (2005). The advertising handbook. Ideas in flight. Seattle, WA Carnoy, Dave (March 2007). PS3 Reviewed. CNet.co.uk. CNET Staff (2006). Top 10 Must-haves. Snowden, Scott (2007). Sony PlayStation 3 5 of 5. The Register. Thurrott, Paul (2007). Sony PlayStation 3 Review. Penton Media. Haywood, Nick (2007). Review:Sony PlayStation 3 6 of 6. HEXUS.gaming. Gibbon, David (2007). Close-up look at the PlayStation 3. Digital Spy. Gibson, Ellie (2007). GDC: What's Next for PS3. GamesIndustry.biz. Chiarella, Chris (2006). Sony PlayStation 3. Home Theater Magazine. Buettner, Shane C. (2006). PlayStation3 Blu-ray Disc Player 4 of 6. Primedia Magazines, Inc. Gamasutra (2007). PlayStation 3 Launch Conquers UK Sales Chart. Financial Times. (2007). Sony's PS3 has record launch in Europe. Appendix SWOT ANALYSIS Read More