Brand Management of Nintendo - Essay Example

?Brand management and research Table of Contents Brand management and research Table of Contents 2 Introduction 3 Company Background 4 Brand Position 4 Brand Image 7 Brand Value 9 Conclusion 12 Recommendations 12 References 14 Introduction The twenty first century has often been stated as the age of consumers and competition. The aspect of globalisation has led to business organizations expanding their businesses beyond geographical and political boundaries in an attempt to reach out to new markets with large scale potential. This has also triggered a wave of competition among the business organizations as they are trying to use every possible resource at their disposal to attract customers. This increased wave of competition in the business markets has forced firms to devise strategies that tend to enhance their competitive advantage in the market. The increased wave of competition in the market has enhanced the importance of branding and brand image towards generating competitive advantage. The aspect of branding assumes even more importance as customers largely use the brand to distinguish between products and services of different market players. Firms are therefore trying out different strategies that tend to increase their brand value so as to gain competitive advantage. The aspect of branding has assumed so much importance that well known brand like Apple are being valued in billions for their brand image and their image on the minds of the customers. Aspects like brand equity which involves the extra value addition in the product or service offering have also assumed large scale importance for business organizations (Stadtler, 2010, p.1). The present study would try to analyse the different dimensions of branding including elements like brand value, brand image and brand positioning. The organization selected for the study is Nintendo which is an organization that deals with the manufacture and sales of gaming consoles in many nations across the world. The study would highlight the relative strengths and weakness of the organizations with regards to the aspect of branding. Company Background Nintendo is a Japanese organization that deals in the manufacture of gaming consoles. The company started its business in the year 1985 as a manufacturer of games and gaming consoles. The initial operations of the firm were restricted to Japan. After initial success the company expanded into different nations like USA, UK and is presently operating in about 20 nations across the globe. The company’s initial products of Mario and Zelda became instant hit with the target audience and still continue to be largely popular among the members of the target audience. The company by virtue of its highly innovative products has established a strong brand image in the minds of the customers. The other products of the company include Nintendo Ds, Nintendo Game cube which have been huge hits with the customers across the world. In the year 2006 the company launched the Nintendo Wii that was a revolution in the world of gaming industry which had exiting and unmatched product features. The core competence of the firm includes its innovative product line and a continuous and uniform diffusion of innovation that helps it to establish itself as a unique brand in the minds of the customers (Nintendo, 2011). The subsequent sections would try to analyze the different aspects of branding including the elements of value, image and positioning towards generation of competitive advantage. Brand Position Brand position implies the image of the brand in the minds of the target market audience. Knox (2004) undertook a study on the aspect of brand positioning and stated that in order to stay competitive firms need to look beyond the realm of the product and service mix so as to generate greater value and image of the brand in the minds of the consumers. The author cites the example of Coca Cola by stating that most of its value comes from its brand image rather than its other existing assets (Knox, 2004, p. 105-106). Grad et.al (2005) conducted a brand audit of Nintendo and found that Nintendo as a brand was largely positioned as a fun filled, adventurous, innovative and youthful brand in the minds of the targeted customers. The company is desperately trying to reposition its image so as to capture the attention of the older and mature target audience. The authors also identified the aspect of family branding as one of the aspects that are associated with the Nintendo brand. The long association with the industry has boosted the brand image of the organization mainly towards the younger generation. The main issue however with the brand is that it is still regarded as a family based brand with relatively lower influence on the mature and older generation. This is posing issues for the organization as it is desperately trying to capture this segment as its targeted market audience (Grad et.al, 2005, p.8-11). Figure 1: Brand Association and Positioning of Nintendo (Source: Grad et.al, 2005, p.11) The family based positioning is also impacting the aspect of point of parity with regards to brand positioning. This is largely because the younger generation does not find it necessary to include this element as a vital point in their purchase decision. The issue of real life graphics in the products of the organization also takes a toll on the brand position as both older and younger generations are more attracted towards the aspect of these elements in their decision making. The main competitors of Nintendo in the international markets include Sony and Microsoft which score relatively higher on these aspects thus giving Nintendo a run for its money. Aspects like multi player options, real life characters are making these brands score high on their aspect of brand position with respect to the target market audience. This gives the positioning of its brand image as that of a toy rather than that of a gaming console. However the company scored a high ranking in terms of brand position with regards to the pricing of its products as customer largely perceive he brand to be largely affordable thus providing an edge towards its other competitors which are largely positioned as high priced with regards to their pricing strategy. This analysis therefore calls on the need for Nintendo to craft a suitable repositioning strategy that helps it to not only leverage on its present strengths of brand positioning but to also target diversified market segments so as to garner competitive advantage and to improve its brand position in the minds of the customers (Grad et.al, 2005, p.10-11). The main competitors of Nintendo include Sony and Microsoft. The two companies have entered the market following Nintendo but have gained significant market shares with regards to their expertise and innovative products that mainly includes multi player options and real life characters in the products. This has been an instant hit among the customers and Nintendo with its imaginary characters and traditional formats scored low in terms of brand positioning as compared to its two major international rivals in the market. The launch of Nintendo Wii has somewhat helps in repositioning the image of the brand in the minds of the customers. Nintendo has a brand positioning that is largely based on its dichotomous approach whereas the competitors of Nintendo mainly Microsoft and Sony have their brand positioning based on the aspect of innovation and user friendliness. Nintendo has a largely differentiated brand positioning with different products having a different position which is largely the reverse case in case of its competitors. The company scores high with regards to its positioning on the basis of pricing strategies employed by the organizations. The products of the company are priced on a relatively lower margin as compared to its competitors in the market. The long association with the industry has ensured that the current positioning of its brand as trustworthy and fun filled stays undeterred and also ensures that the present positioning of its brand is not threatened by the competitors who are comparatively new in the market. The positioning of Sony and Microsoft on the other hand are focused towards aspects like technological innovation and uniqueness in product attributes. However they score poorly in terms of price as customers often perceive the brand to be relatively higher priced as compared to Nintendo (Bogner, Hung, Wang & Wang, 2007). Brand Image Rotfeld (2008) conducted a research into the aspect of importance of brand image towards generating competitive advantage and stated that there was a strong positive correlation between the element of brand image and competitive advantage. The author in his research cites the examples of Cingular as an organization that has generated competitive advantage based on the aspect of brand image. The author also argues for a strong backing for organizations that spend heavily on the aspect of brand image (Rotfeld, 2008, p, 121-122). Nintendo as a brand has a formidable brand image owning to its long time association and being one of the pioneers in the industry. Products like Mario and Zelda are still popular among a section of the target audience which helps provide it a formidable brand image among the members of the target market audience. The trademarked characters of the organization also contribute towards the brand image of the organization. The company also has a formidable image in terms of innovation in the product lines. However the brand is largely perceived as a childish brand as most of its characters are largely fictitious. Elements like Nostalgia and being placed on the top of the minds also lead to high stakes for the organization in terms of its brand image (Arena, Pontillas & Wells, 2005). The brand image of the organization was also boosted with the launch of Nintendo Wii that had the unique ability of players engaging in an interactive session. The unique looks of this product has also contributed towards generating a formidable brand image of the organization. In addition to this the marketing strategy of the firm including aspects of advertising has largely influenced the image of the organization. The individual product based branding strategy of the organization also has certain drawbacks as customers do not find consistency of the brand image with the host of its products available in the market. Other that the newly launched Nintendo Wii, most of its other exiting products do not have the favorable appeal towards the younger generation who generally perceive the Nintendo as being childish in nature. The non uniformity in the brand image poses serious challenges before the organization with regards to its sustainability and issues of large scale competition in the market fueled by its competitors namely Sony and Microsoft in the international markets. The co-branding strategy of the firm in which it has tied up with the chip manufacturer ATI has also generated a good image as the name of ATI is largely mentioned in the packaging. The company must therefore try to draft a suitable repositioning strategy that would tend to rebuild its brand image. Focus should also be made to communicate this message to the customers through an effective promotional campaign strategy (Pilcher et. al, 2009). Brand Value Brand value is defined as “the value of trademark as the sum of its present discounted added profits” (Soto, 2008, p.16). The global competitiveness and the importance of brands as a distinguishing element among the different competitors have largely helped in development of brand value as a major asset for any organization. Successful brands like Apple, Dell are being valued in billions just on the basis of their brand values. Brand valuation is a complex term and includes both behavioral as well as financial aspects of an organization. Figure 2: Analysing and Determining Valuation of a Brand (Source: Soto, 2008, p.15) Brand value is a complex term and is analyzed and calculated in a different fashion by business organizations and customer. On one hand business organizations largely try to analyze the monetary value of a brand based on behavioral and financial elements whereas customer generally try to figure out the value of a brand on the basis of the perceived values and tradeoffs which includes the expected and actual values and attributes offered by a firm and that of their expectations. The figure shown above depicts a framework to analyze the brand value of an organization. The framework shows that brand value is a sum of behavioral as well as financial aspects. The value of a brand is largely been stated as a large asset for any business organization as it denotes the popularity and effectiveness of the firm with regards to its business prospects and strategies adopted in the global marketplace. The customer’s perspective of brand value is largely based on the common proposition which states that a customer actually goes in for purchase of a bundle of attributes rather than purchasing an individual product. These bundles of attributes often include the actual and perceived value of the goods and services offered by a business organization. The customer values a brand on the basis of the net value of tradeoffs incurred and comparing them with the actual values obtained by the organization. The perception of the customer largely plays an upper hand in determining the brand value of the organization (Snoj, Korda & Mumel, 2004, p.157-158). Nintendo with its long term association and a formidable brand image is among the topmost rated brands of the world. A report published by Millward Brown Optimor puts Nintendo on the list of billion dollar worth brands. The company’s brand has been placed on the 32nd number for the year 2009 which shows the immense value and potential of the brand (Millward Brown, 2009, p.1-2). The table below shows the comparative analysis of Nintendo along with its top competitors for three consecutive years. Figure 3: Comparative Analysis of Brands (Source: Entertainment Retailers Association, 2011, p.28) The brand image of Nintendo was at an all time low till the launch of the Nintendo Wii, the newest kid in the Nintendo block. The unique aspects of the product helped the firm to bounce back on its fortunes and re-emerge as one of the valued brands of the world. Nintendo used this product to enhance its brand value and image while keeping its initial and long term positioning of being simple and friendly. The simple, fun filled and unique nature of the product helped it to score over its competitors in terms of brand value as they increasingly put their focus on using high end technology and graphics to position their brands in the minds of the target customers. This strategy helped Nintendo to capture the younger customer segment who largely considered the brand to be too childish as compared to its rivals in the market. The unique blend of innovation and simplistic nature helped in reviving the image of its brand as simple and fun loving elements with a unique blend of innovation and technology. The challenge for Nintendo with regards to its rand value remains to integrate the different product under a single perceptual image. This is largely because of the dissimilar nature of brand values for its different products. Incorporating them under a single perception would help the firm to not only enhance its brand values but to also score over its competitors thereby providing it with a sustainable competitive advantage in the market. Conclusion The analysis conducted above reveals a strong brand positioning of Nintendo as a brand. The study leads to a general conclusion that Nintendo is largely perceived to be a brand that is simple, fun loving in nature. This combined with the long term association with the gaming industry helps the firm to reap competitive advantage. Nintendo’s brand positioning is also largely distinctly from its competitors who have positioned themselves as innovative and technologically superior brands. The challenge for Nintendo however lies in its brand being largely positioned as a childish brand among the younger and mature segments of the target market population. This poses a challenge for the firm as it is largely trying to reposition its image and also include the members of the younger and mature age groups in its target segments. The brand value and image have been largely bolstered following the successful launch of Nintendo Wii which has the aspects of being technology driven yet being simple and fun loving in its attributes. Another distinct advantage with Nintendo lies in its brand image of being placed in a better position as compared to its competitors over the element of pricing. The unique pricing strategy of the firm gives it an edge over its competitors which are generally perceived to be adopting a high price approach. This study finally leads to a general conclusion that there are large areas of strengths as well as opportunity with regards to its brand image however certain challenges must be overcome so as to help it being placed as one of the best known brands of the modern day business world. Recommendations The analysis of the study reveals areas of considerable strengths as well as opportunities. In order to successfully reap the advantages of the globalised market environment the firm must try to ensure a single image of the brand rather than the differentiated brand image of the company. A suitable repositioning strategy would help the firm to retain its existing customer base as well as capture new market segments. While undertaking a repositioning strategy the firm must be careful of the fact that there is no confusion among the customers. A suitable repositioning strategy for the firm would involve manufacturing products with innovative approaches which includes multi player gaming options, use of real life characters while keeping its pricing structure unchanged. This would on one hand bolster the image of the firm among ht minds of the younger and mature customer segments while also retaining the existing ones. The repositioning strategy must also include a proper promotional plan covering all areas including internet which has a widespread influence on the mature and older target market segments. This would help the firm to shed its tag of being largely childish in nature while keeping its other strong and unique aspects like fun loving and simplistic nature intact. Inculcating these strategies along with proper monitoring and evaluation would help in generating long term sustainable competitive advantage for the organization in the turbulent and highly competitive business environment. References Arena, N., Pontillas, J.R., & Wells, K. (2005). The Brand Analysis of Nintendo Before Release2006 Market Introduction of Wii During R&D stage(2003-2005). [Pdf]. Available at: http://www.nicolearena.com/files/Nintendo-Wii-Brand-Analysis-Final.pdf [Accessed on May 04, 2011]. Bogner, R., Hung, P., Wang, G., & Wang, S. (2007). Sony Corporation and the Video Game Console Market:A Competitive Analysis. [Pdf]. Available at: http://www.mcafee.cc/Classes/BEM106/Papers/2007/Sony_Strategy.pdf [Accessed on May 04, 2011]. Entertainment Retailers Association. (2011). Games. [Pdf]. Available at: http://www.eraltd.org/downloads/stats/GamesMarket.pdf [Accessed on May 04, 2011]. Grad et.al. (2005). Nintendo of America Brand Audit. [Pdf]. Available at: http://www.excition.com:8080/~john/Nintindo_JFM_excerpt.pdf [Accessed on May 04, 2011]. Knox, S. (2004). Positioning and branding your Organization. [Pdf]. Journal of Product and Brand Management Vol 13, Number 2, 2004, pp.105-115. Millward Brown. (2009). BRANDZ TOP 100 MOST VALUABLE GLOBAL BRANDS NOW WORTH $2 TRILLION. [Pdf]. Available at: http://www.wpp.com/NR/rdonlyres/6F494692-14D0-4E39-A227-29EA4BA9BD5A/32103/millwardbrown_pressrelease_brandz_apr09_guid23d06d.pdf?pageContent_PressRelease [Accessed on May 04, 2011]. Nintendo. (2011). Company History. [Online]. Available at: http://www.nintendo.com/corp/history.jsp [Accessed on May 04, 2011]. Pilcher et. al. (2009). Nintendo Wii. [Pdf]. Available at: http://public.wartburg.edu/ba325/fall09/weisertk/Marketing%20Paper.pdf [Accessed on May 04, 2011]. Rotfeld, H.J. (2008). Brand Image of company names matters in ways that can’t be ignored. [Pdf]. Journal of Product and Brand Management 17/2 (208) pp.121-122. Snoj, B., Korda, A.K., & Mumel, D. (2004). The relationships among perceived quality, perceived risk and perceived product value. [Pdf]. Journal of Product and Brand management, Vol 13, No 3. 2004, pp.156-167. Soto, T.J. (2008). Methods for Assessing Brand Value. a Comparison Between the Interbrand Model and the Bbdo's Brand Equity Evaluator Model. Diplomica Verlag. Stadtler, R. (2010). Celebrity Scandals and their Impact on Brand Image: A Study among Young Consumers. GRIN Verlag. Read More