The Concept of Playstation - Coursework Example

?Consumers and Markets Executive Summary Sony’s PS3 (PlayStation 3) experienced multifarious problems such as high cost, delays and shortages of components among others. Its major rivals include Microsoft’s Xbox 360 and Nintendo’s Wii. The main competitor for Blu–ray is HD DVD. Though PS3 has countless impressive features, Sony has faced tough competition from its competitors. After implementing good marketing strategy now, Sony PS3 and Bly–Ray has evolved again and customers have started to prefer their technology. This is helping Sony to perform well in gaming and entertainment industry. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 PRESTCOM Analysis 5 Political 5 Regulatory 6 Economic 6 Social 7 Technology 7 Competitive 8 Organisational 8 Marketing 9 SWOT Analysis 10 Strength 12 Weaknesses 12 Opportunity 13 Threat 13 Conclusion 14 References 15 Bibliography 16 Introduction The computer games market in the entire world is worth about 27 billion USD in a year and it is experiencing a rapid growth. Sony entered into gaming market in the year 1994. The concept of PlayStation was originally discovered by joint partnership of Sony and Nintendo in late 1980s. However, when they wanted to announce their new hardware, Nintendo re-read the earlier contract and found the agreement to be unsatisfactory. Thus, Sony Corp. began working on their previous research and developed the PlayStation. Hardcore gamers are the major customers of PS3. The PS3 targets customer, who are usually 15 to 30 years. As the PS3 support the Blu–ray, secondary customers are also interested in PS3 because of its HD video quality (Brainmoats, 2008). PRESTCOM Analysis PRESTCOM analysis of Sony will help in analysing the external factors of their business. It helps to understand the new legislation and regulation of government, various business restrictions, and laws relating to tax, VAT, social change and technological factors. It is also used for market analysis. This will help the company to run the business properly. Company can develop new strategies according to the changes in business environment and develop productivity as well. The company can advertise their products and promote their brand. PRESTCOM analysis helps the company to predict the near future condition of business by using political, regulatory, social, economic, technological, competitive, organisational and marketing factors (Maqsood, 2010). Political Political factors consist of the laws of government and pressure group. It affects the company and company’s business in a provided market environment. The policy and rules of government can affect the productivity of Sony Corp. Sony Corp. must need to take permission from the government of a country where it is manufacturing its products. Sony Corporation must develop new innovations to stay ahead of its competitors. Many global policies and laws can affect the company’s regular operation. Government of any country can change or enact various trade restrictions which can make it difficult for products of Sony to survive in the industry. It can change the way Sony works. Government can raise various tax rates such as VAT, Sales tax, Income tax, minimum wage rates, which can hamper the company’s sales. Therefore, the company must prepare for any kind of circumstances (Maqsood, 2010). Regulatory There are various rules and regulations which can affect the company’s productivity. These are: Trade and Business restriction, Returning of product and Warranty regulations. Employment law is also an important factor. It can determine the cost of the product in a specific country. Appreciation of currency plays a significant role in company’s business. For example Sony’s hardware sales decreased because of appreciation of the Yen besides US Dollar and Euro. The sale of PS2 was decreased for this reason. In the year 2008, the sales of PS3 software had increased but despite these, the overall trade of software had decreased because of appreciation of Yen besides the US Dollar and the Euro. The software sales of PS2 were also decreased for this reason (Sony Corporation, 2009). Economic The economic factor consists of customer’s buying power and spending pattern. Before making any product Sony should put in mind that in which country they are operating. If it is not a rich country then promoting a costly product will not be a good idea for company. For example, the customers of Europe and North America have more buying power than the third world country. For this reason, after selling the PS3 in Japan the company decided to sell PS3 in the US (Maqsood, 2010). The present economy is not in a good condition. The economic growth has declined because of recession and thus financial growth is negative. Due to bad economic condition, government can modify any law of the country. Government can change the regulations relating to trade, interest rate and exchange rate, which could have an effect on company’s production. Since Sony is a global organisation, change in the ‘exchange rate’ will harm company’s business activity of that country. The company then has to set their selling prices again (Maqsood, 2010). Social Social factors consist of the forces such as people’s perceptions, preferences, religion and behaviours. Tastes and preferences of people belonging to different region vary from time to time. Keeping abreast with this change and taking advantage is one of the main agendas of Sony for maintaining its success (Asif, 2009). Technology Sony is popular because of good quality products and technology. Sony always improves technology for better competition against rival company. The company always wants to stay ahead in this segment. Sony depends on technology for efficient productivity. Whenever Sony launches a new product their prices are high compared to other same category products. The reason is that people will think that the technology which has been used is unique than other organisations. For example, when PS3 was introduced its price was 500 USD & 600 USD as compared to its rival Xbox 360 from Microsoft whose selling price was 300 USD. The company always wants to use and implement new technology for conducting their research in gaming sector which help them to create new and unique products by considering customer needs and preferences. For this reason they should conduct a good market research and employ new strategy (Maqsood, 2010). Competitive Sony is a multinational corporation thus it has many competitors in different segments. A few of company’s competitors are new and few are quite old. The rival company always wants to match equally with Sony’s products and services with respect to value and technology (Asif, 2009). In gaming business, Sony PS3 faced tough challenges from its competitors than its previous version PS2 in the year 2000. The two main competitors of PS3 are Nintendo and Microsoft. Nintendo is in the leading position in gaming market. The company’s sales of Wii are far surpassed than expected. In gaming segment Sony is no longer dominating the market. There are several methods Sony uses to compete for customers. Sony Corporation uses its brand name to get customer’s attraction. The developer of PS3 tried to differentiate its product and put more emphasis on video quality. Sony PS3 offers certain extra benefits which other competitors’ products don’t provide. The PS3 provide mobile platform, access to internet and download option of music or video files. PS3 has the Blu–ray player inside and company wants that people buys it no matter how much it costs (Bogner & Et. Al., 2007) Organisational Sony Corporation’s exact transformation had started with reorganisation of game businesses. The company undertook certain steps to improve their competitiveness, enhance profitability, and increase innovation and growth. For making the reorganisation process successful, the game business segment and the electronics vertical combined together and reconstructed two strong new groups which are ‘Consumer Product & Devices Group’ and ‘Networked Product & Services Group’. The first group signifies the conventional and important hardware and the second group represents network differentiation. By this reorganisation process Sony can strengthen their position in constantly changing business environment and evolving gaming industry (Sony Corporation, 2009). Marketing In the first year of launching PS3 the result was not at all satisfactory. The reason was the expensive cost of PS3. When Sony introduced PS3 it had two price categories in America, one was 500 USD and another was 600 USD, and in Japan the price was ?50,000and ?60000. At that time, the costs of Xbox 360 and Wii were 300 USD and 250 USD respectively, which was cheap than PS3. Subsequently, Sony lowered the price of PS3 for increasing the sales (The Economist, 2006). Sony then lost money on sales of each PS3 for several years until higher quantity and design improvement reduced the costs of production. Another reason for bringing PS3 into market was to launch the Blu-ray player. Sony Corp. wanted to ensure that Blue-ray triumphs over HD–DVD technology. This attempt of Sony was successful. Blu – ray has taken over the consumer’s choice with the help of new technology, 1080 pixel picture quality and onboard decoding (Brainmoats, 2008). Sony Corporation used various marketing strategies such as: Target Market Strategy: Sony PS3 mainly targets the men aged in between 15 to 30 years. But it can be enjoyed by person of every age group because it provides a good opportunity to enjoy movies as well. Product Strategies: The PS3 offers the most advanced video and audio quality. Several hard core players want to experience game in HD quality and Sony provided them exactly what they wanted. Pricing Strategy: Sony launched PS3 at an extremely high price and their games also cost high. The company expected that people will think that PS3 is unique and enjoyable than other gaming systems. Promotional Strategy: The main selling point of PS3 is the introduction of Blu–Ray player. Supply chain Strategy: Sony purchased the parts of PS3 from different suppliers. PS3 is manufactured and sold in Japan first and then in the US shortly after and from there the whole world (Brainmoats, 2008). SWOT Analysis SWOT analysis of Sony’s PS3 can help in identifying their strengths, weaknesses, opportunities and threats in gaming business. Studying the company’s strengths in the gaming sector will help in recognising their main traits which they can improve further. Study of weaknesses will help in revealing the limitations. Opportunities will help in recognising the future growth options and analyses of threats will help to know which product or company could cause harm to their business in near future (Maqsood, 2010). Strength The main strength of Sony PS3 is its high-end quality. Besides gaming it allows player to access internet and download or play any music, mp3 or video files as well. The processor of the PS3 is remarkable. This is the reason why many people prefer PS3 because its performance is excellent and it is durable as well. Finally, the key feature of the PS3 is its video quality. It provides the player with HD quality video (Maqsood, 2010). Weaknesses The weakness of PS3 is its high cost. Its cost is exorbitant compared to other gaming products. Sony wanted to incorporate Blu–ray technology into PS3. Thus, PS3 was too late to launch as compared to Microsoft’s Xbox 360 and Nintendo Wii. For this reason many players were disappointed and switched to other products because people associated with games are quite impatient and they don’t want to wait longer. Microsoft has sold approximately more than 10.6 million consoles compared to Sony which sold only 1.5 million PS3. Sony outsources the parts of PS3 from a Taiwanese firm. The limited supply of ‘blue laser diodes’ harmed the launching process of PS3. The PS3 included the Blu–ray player inside. This Blu–ray player not only provides the user HD quality picture but on the other side increases the cost of PS3. For these weaknesses mentioned above Sony is unable to make enough profit from selling PS3 (Maqsood, 2010). Opportunity The major opportunity of PS3 is that it can be modified and developed according to players’ desires. The PS3 is considered to be the newest and latest console. The console is popular because of its predecessors. PlayStation has many ranges of storage options. A player can store and save in PS3’s own storage media and can continue later at any time. It can provide new exclusive features to consumers such as multiple controllers with multiple games (Maqsood, 2010). Threat The main threat of PS3 is their competitors. Their main competitors are Microsoft Xbox 360 and Nintendo Wii. Both companies are powerful and can provide tough competition. The Xbox 360 has better interface and its consumer can also upgrade the Xbox 360 software. Most people prefer Xbox 360 and Nintendo Wii when compared to PS3 (Maqsood, 2010). Conclusion Sony wanted to convert the PS2 player to PS3 player. For this reason Sony promoted Blu–ray. In the year 2009, Sony reduced the cost of PS3 hardware. In the whole world PS had more than 24 million accounts. Through PS3 approximately 450 million downloads of contents have been made. Blu-ray has developed into the standard next-generation video format, which was good news for Sony as well as millions of people who love movies in the world. The number of Blu-ray players including PS3 and recorders are also increasing sharply and Sony is making profit out of it (Sony Corporation, 2009). References Asif, W., 2009. Sony like No Other. Sony-s-Marketing-Management. [Online] Available at: http://www.scribd.com/doc/25307645/Sony-s-Marketing-Management [Accessed March 4, 2011]. Brainmoats, 2008. Introduction to marketing Business 120. A marketing plan focusing on Sony’s PlayStation 3. [Online] Available at: http://brianmoats.com/Portfolio/Playstation_3_Marketing_Plan.pdf [Accessed March 4, 2011]. Bogner, R., & Et. Al., 2007. Sony Corporation and the Video Game Console Market: A Competitive Analysis. Sony Strategy. [Online] Available at: http://www.mcafee.cc/Classes/BEM106/Papers/2007/Sony_Strategy.pdf [Accessed March 4, 2011]. Maqsood, K. A., 2010. P4 – Marketing Research. Sony-Corporation-PEST-SWOT-Analysis. [Online] Available at: http://www.scribd.com/doc/26203913/Sony-Corporation-PEST-SWOT-Analysis [Accessed March 4, 2011]. Sony Corporation, 2009. Annual Report 2009. Financial. [Online] Available at: http://www.sony.net/SonyInfo/IR/financial/ar/8ido180000023g2o-att/SonyAR09-E.pdf [Accessed March 4, 2011]. The Economist, 2006. Sony Playing a Long Game. Case Study. Bibliography Armstrong, G. & Et. Al., 2009. Marketing: An Introduction. Financial Times Prentice Hall. Read More