Contemporary And International Marketing - Essay Example

? [Supervisor International Marketing by Sony This research paper aims at identifying the international presence of Sony Corporation and the marketing tactics the company has adopted to promote its products and services in respective markets. International Marketing When a company engages itself in producing or delivering products and services across its national borders, and promotes it according to the local requirements of respective markets, it is said to be engaged in international market. In simple words, international marketing requires an organization to implement more than one marketing mix into foreign markets, keeping in view the macro and micro environmental aspects of the respective markets (Doole and Lowe). Organizations engage in international marketing and business activities to expand their business size and ultimately the customer base for generating greater revenues (Onkvisit and Shaw). Introduction to Sony Corporation Sony Corporation is a Japanese electronic goods manufacturer having its headquarters in Tokyo, Japan. The company was founded by Masaru Ibuka and Akio Morita in 1946 and was initially engaged in producing telecommunication services and devices. Sony Corporation is divided into 6 segments, namely Consumer Products & Services Group, Professional, Device and Solutions Group which is providing products and services to other businesses, Pictures, Music, Financial Services and Sony Ericsson. Today, Sony Corporation is considered as one of the biggest and finest producers of televisions, cameras, semiconductors, telecommunication devices and services, batteries, chemicals, movies and music gadgets. Sony was ranked 73 in Fortune Global 500’s rankings with financial returns amounting around $ 86.64 billion in 2011 (Sony). Sony is present in more than 150 countries of the world with its products and services, and a diversified workforce of over 165,000 individuals make it possible that the quality associated with the name Sony is delivered to the customers (Frisch; Sony). Rationale for Internationalization Today’s technologically driven era requires individuals living in different societies in different countries to match their pace with the fast moving world. The impact of globalization has forced countries and the businesses to broaden their strategies and implement these strategies in other markets to expand the size of their business and economies. Moreover, televisions, cameras, telecommunication services and products and electronic gadgets are in great demand by consumers and businesses, who are involved in producing these products and services, see this increasing demand as a great opportunity to produce even greater revenues. The expansion of business can be in the form of foreign direct investments, Greenfield ventures, licensing and franchising or by opening up a subsidiary in cross border regions. Businesses can be involved in international markets for the sake of achieving benefits and significance of production based on the increased supply and demand in foreign markets (Lukac). In Sony’s case, the Japanese conglomerate decided to expand into international markets for the sake of delivering benefits of its products and services to the customers all around the base and in return, maximizing its annual revenues and shareholders’ wealth (Sony Corporation). Sony has divided its business into five geographic regions. These are Japan region, United States region, European region, Asia-Pacific region and Other Areas which include different markets in Africa, North and South America and Oceania. Sony makes its major profits in United States, Japan and European regions, thanks to the bulk selling of its communication gadgets and television in these regions. Sony’s annual revenues in 2011 were amounted to around 7,181,273 Japanese Yen which are -0.0045% lower than the revenues reported in 2010 (Sony Corporation). Sony considers four emerging markets as its future prospects for setting up factories and operational facilities in. These countries are Brazil, Russia, India and China. The main focus of the corporation is expanding the size of its business in India and China particularly, as these markets has shown great potential for growth in consumer goods manufacturing industries and the economic outlook supports the aims and objectives of Sony Corporation (Sony Corporation). Mode of Entry Adapted by Sony Corporation Sony Corporation has ensured that its business activities provide unlimited benefits to the consumers in order to satisfy the needs of the customers and build a stronger and reliable business segment. For this reason, Sony Corporation has established its business units all over the geographic regions where it is present with a variety of its products. At some places, Sony has merged its business with local vendors and producers of interlinked products, whereas the company has took over makers of electronic goods and appliances at some places. In some countries, Sony Corporation has issued license to local franchisees and collect royalty money in return. Having its core manufacturing plant in Tokyo, Sony Corporation has also setup various manufacturing units in Europe, North and South America, India, China, Malaysia and Taiwan. Sony Corporation has its manufacturing units, and acquired business units in United States of America, which includes Professional Audio Studios, Television manufacturing units, Video game development centers and Music publishing units. In UK, Sony has a video game development facility which was acquired in 2007, which supplemented to the acquisition of Hawk-Eye Innovations Ltd in 2011. Sony Corporation in India Sony has entered in India by opening up its flag carrying stores across the country, i.e. 270 Sony Stores in 450 cities of the country, with a large number of Sony service stations in order to facilitate the usage of its products by the customers. Sony has poured enormous amounts of investment in India which is evident from the number of warehouses, Sony holds in India, i.e. 30 warehouses dispersed all over India to avoid any discrepancy in the supply chain activities (Sony Corporation). The reason for investing directly into the Indian electronics market is the potential, Indian markets have shown for major industries all over the world. By setting up warehouses, production facilities and customer facilitation center, Sony aims at taking advantage of large geographical area which inhibits individuals from vibrant mixture of ethnicities. Moreover, the decision is also rationale, taking into consideration the enormous growth rate of electronics industry in India, even during and after the global recessionary period, i.e. from 2007-2010. Sony believes that by directly investing into the Indian market, it will be successful in establishing a highly favorable brand image for the sake of expanding its presence on global scenario. Moreover, by becoming an active player in the entertainment business and setting up a variety of Television channels, Sony reports that its sales has grown much faster than India’s electronic manufacturing, software development and entertainment industry’s sales per annum, and reflects that the company is still far behind what it aims at achieving in Indian market (Sony Corporation). Porter’s Five Forces Analysis of Sony Corporation Michael Porter’s Five Competitive Force’s analysis helps in understanding the different factors in macro or external environment that have impact on the business and business related activities of organizations (Porter). Threat from New Entrants The electronic industry all over the world experiences lower threat from new entrants mainly because the amount of capital required for setting up an electronic goods manufacturing business. There is a need for huge amount of capital which forces back the potential threat from new players in the electronics industry and thus enables already established brand to prevail the international market share. Moreover, the requirement of constant innovation to deliver technologically driven products and services also keeps new entrants away from easily entering in the industry, as innovation requires constant research and development and new organizations might not possess sufficient revenues to conduct research in their respective fields. Product differentiation is another factor which plays a crucial role in keeping new entrants away from entering, as a large number of sellers are producing and selling similar products and the customer base is loyal to particular brands only. Last but not least, the policies implemented by governments all around the world, for competition within electronic industry and minimum capital required also serves as a barrier to entry for new entrants (Tehraninasr, Tabrizi, and Ansari). Therefore, the marketing activities of Sony Corporation should emphasize highlighting the prominent attributes of its products. Bargaining Power of Buyers The bargaining power of Sony Corporation’s buyers in the world is high. This is because products that Sony offers to its customers possess almost no switching cost and Sony’s competitors at the market place are offering similar products either at lower prices or similar prices. Additionally, customers are now more aware of electronic appliances and gadgets, and their usage. Informational technology has opened doors for individuals to access cheaply priced electronic goods and acquire more information about its usage, which leaves no better opportunity for Sony than to price its products according to customers’ affordability and preferences. Moreover, the buyers of electronic goods all around the world are price sensitive, i.e. they demand high quality delivered to them at lower prices (Tehraninasr, Tabrizi, and Ansari). Therefore, Sony Corporation should communicate to the customers how its products are unique and better than the competitors’ products and the prices charged for these products are worth it. Bargaining Power of Suppliers Suppliers of the global electronic goods manufacturing industry enjoy a lower power over the electronic goods manufacturers. For Sony, suppliers usually show respect and keep a lower hand, given the corporate image and the size of business Sony Corporation has in the world. Another reason that Sony enjoys greater hand over the suppliers is the size of entity that each supplier possess, i.e. suppliers are way smaller business entities as compare to the corporate size and presence of Sony Corporation. Sony’s procurement and supply chain managers are trained for bargaining with the suppliers and to acquire best possible raw material at the lowest prices in the market place. Considering the massive operations of Sony Corporation, suppliers are pressurized either to cut down their prices or to bargain at a level, where both parties are happy (Tehraninasr, Tabrizi, and Ansari). Threat from Substitute Products Sony Corporation’s established corporate image and wide variety of products offered to the customers, makes it one of the world’s most successful brands. The products of Sony and technology used for designing these products attract customers and leave a very small room for substitute to take its place. The substitutes to the products offered by Sony uses obsolete technology and are not reliable or durable, which minimizes the possibility of high level of substitutes’ power over Sony Corporation and thus keeps the threat at lower levels. Last but not least, Sony has established a good corporate image by delivering environment friendly and technologically driven electronic appliances, which, in return, has helped the company to win customers’ loyalty? In this manner, it becomes difficult for customers to switch to another brand or substitute to Sony’s products (Tehraninasr, Tabrizi, and Ansari). It is hereby recommended to Sony Corporation that their international marketing activities should focus on developing marketing content that helps customers to identify differences among a genuine Sony product and a fake copy of these products. Competition in the Industry Competition in the electronic appliances producing industry is intense due to the presence of a large number of well established organizations from different countries of the world. For Sony, the major competitors are Samsung from South Korea, LG from China, Apple from United States of America, Haier from China, Nokia from Hungary, Phillips from Holland, etc. All these manufacturers of electronic appliances, informational technology products and gadgets possess a sufficient market share globally and possess a potential threat for swapping Sony’s share of market in one or several regions. These competitors are either equally balanced with Sony or they are penetrating successfully in regions which hold Sony’s focus over the years. The high level of competition places greater barriers on exit from the industry and requires constant innovation by conducting research and development activities, which, in turn, requires higher revenues to be spent on the development of new products. This is the reason that the growth rate of the industry in which Sony has established it is slower and causes Sony to lose profitability, as well as customer base lost to the alternative brands (Tehraninasr, Tabrizi, and Ansari). Competitive Strategies of Sony Corporation Sony’s competitive strategies revolves around regularly designing and producing electronic appliances which are innovative and help consumers meet their expectations and demands in a more convenient and satisfied manner. In some markets, Sony has focused on delivering products that are differentiated from the products that respective customers have previously used. On the other hand, in a few markets, Sony has focused on quality in cheap prices and provides customers with cost effective shopping solutions for electronic appliances and gadgets. Additionally, diversification has been the key element to Sony’s success over the years, which implies that the company is engaged in electronic goods manufacturing, financial services, informational technology business and entertainment publishing and copyright business. To stimulate the growth of its products and their effective promotion in front of target market, Sony has collaborated with various international bodies and events, for example, Sony is sponsoring Fifa World Cup 20, and recently sponsored Fifa World Cup 2010 in South Africa. Another strategy that Sony has adapted in recent years is the merger with electronic giants such as Samsung for producing and selling of environment friendly LCD televisions (Busacca, Logan, and Rimillard). Sony’s Marketing Mix A marketing mix analysis presents an organization’s approach towards what should be offered to the customers, what price should be charged for selling the product, how to promote the product and create awareness and the most suitable place for selling the product (Peng). Sony’s Strategy for Products Sony offers a variety of standardized products through the geographic regions in which it is doing business. These products can be classified as electronic devices, games and entertainment solutions. These categories includes a range of televisions and projectors, home theatres, cameras, laptops, games, portable entertainment solutions, cellular phones, batteries and chargers, peripheral devices and etc. Reason for producing and delivering standardized products to the target customers at dispersed locations is the high cost of producing and delivering differentiated products. Moreover, consumers’ preferences for electronic goods and gadgets are same all around the world which allows Sony to sell its trademark and standard products throughout (Kundi). Pricing of Products by Sony Sony’s pricing policies differ from region to region, which implies that Sony has adopted skimming pricing strategy in some regions, whereas at the same time, its pricing strategies aim at providing benefits to the customers in the form of cost effective pricing strategy. As the prices of electronic goods and gadget are directly associated by the customers with the benefits it will deliver, Sony charges a nominal price for its products which is advantageous for both customers and the company itself, which also implies that the company has adopted a mix of pricing strategies which allows it to price its products on the basis of skimming, penetration and competition based pricing strategies (Kundi). Sony’s Distribution Network (Place) Sony has adopted a one-level distribution channel strategy in the majority of the markets, which implies that there are only three members included in the distribution network of the company. The distribution channel of Sony Corporation consists of the following members: Additionally, Sony also places its products and services through multi level distribution channels, considering the market environment and customers’ preferences (Kundi). Promotional Strategies of Sony The promotional strategies of Sony Corporation revolve around several marketing tactics. These marketing activities include Electronic and Print advertising, Discount offers, additional incentives offered with a product to the customers, road shows, sponsoring events, charity based sponsorships, exchange offers, social networking marketing and online portal of the company. These tools and marketing mediums have enabled the company to attract customers and protect its share in the market. As a return to the high quality products delivered to the customers, Sony is also enjoying the benefits of word of mouth marketing, which has enabled the company to reduce its operational costs (Kundi). Conclusion The review of Sony Corporation’s business reveals that the company has established itself as the manufacturer of quality electronic goods and gadgets. The consistency in quality delivered to the customers and after sales service makes Sony the world’s largest manufacturer of electronic goods and a reliable name in the field, which helps the company to maintain the current market share and attract new customers. Moreover, the massive size of its business, which is dispersed in 5 regions of the world, helps Sony to outclass its competitors, which is supplemented by the strategies adopted by the company regarding its marketing mix. Works Cited Books Doole, Isobel, and Robin Lowe. International Marketing Strategy: Analysis, Development and Implementation. NY: Cengage Learning, 2008. Print. Frisch, Aaron. The Story of Sony. NY: Black Rabbit Books, 2003. Print. Lukac, D. Key success Factors for Foreign Direct Investment (FDI): The Case of FDI in Western Balkan. Hamburg: Diplomica Verlag, 2008. Print. Onkvisit, Sak, and John J. Shaw. International Marketing: Strategy and Theory. Florence: Taylor and Francis, 2008. Print. Peng, Mike W. Global Business. NY: Cengage Learning, 2010. Print. Porter, Michael E. On Competition. Chicago: Harvard Business Press, 2008. Print. Websites Busacca, Jennifer, Helms, Trevor, et al. "Sony." 2011. Web. www.slideshare.net. 17 March 2012 . Kundi, John J. "Sony Coporation's Marketing Mix." 29 August 2008. Web. www.scribd.com. 17 March 2012 . Sony. Corporate History. 2012. Web. 13 March 2012 . Sony. Financial Highlights. 2012. Web. 13 March 2012 . Tehraninasr, Ali, Reza S., Tabrizi, and Payam Ansari. "Sony: Enterpreneurial Firm." 17 May 2008. Web. www.slideshare.net. 17 March 2012 . Reports Sony Corporation. Annual Report 2011. Tokyo: Sony Corporation, 2012. Print. Read More