Sony High Fidelity System - Term Paper Example

? of the of the Number Sony Hi-Fi System Table of Contents The Executive Summary 3 Industry Analysis 3 Company Background 5 Marketing Strategy 6 I.Marketing Strategy Overview 6 a)Marketing Strategy Statement 6 b)Objectives 6 II.Strategic Marketing Components 6 a)Branding 6 b)Image & Positioning 7 c)The Target Market 7 d)Sustainable Competitive Advantage 7 III. Marketing Tactics 8 a)Product Issue 8 b)Placement/Distribution 9 c)Pricing 10 d)Advertising and Promotion 10 e)Service Elements 11 IV. Implementation 12 a)Resources Required 12 b)Time-Line 13 V. Contingency Plan and Evaluation 13 Works Cited 14 The Executive Summary After two years of consecutive negative growth, the consumer electronics industry of UAE has experienced solid growth. The sector has been growing at a rapid pace since the last few years, but 2012 was a breakthrough year, as during this period, the industry generated the highest ever revenue. However, the most alarming fact about the consumer electronics market of UAE is that, it is mainly driven by the tourist segment. Hence, the dependency on the tourist segment is extremely high. The local consumers on the other hand are more cautious when it comes to the purchase of electronics product or any other luxury goods. This study will investigate about the possibilities of Sony to gain success in the UAE market. The company is currently dealing with several external business challenges and to curb those issues, they are recommended to launch a new product i.e. a Hi-Fi system with affordable price. The financial crisis of UAE and weaknesses in Dubai is also a cause of concern for the industry. The financial crisis has compelled local consumers to spend in a vigilant way. Despite the stern situation, UAE still remains an attractive market for the companies belonging to the consumer electronics segment. According to the industry experts, the spending on AV products will gain strong momentum, especially in the higher end category such as LED TV or 3D TVs. Apart from that, the luxury mobiles, SLR and tablets will also experience a solid growth. The experts also mentioned that the demands will start to increase as soon as the country gets rid of the financial depression. Another set of industry experts mainly put emphasis on the fact that price cuts and product innovation will act as a major driver of the industry. (Hsu 223) However, due to stable political scenario there is hardly any external disturbance for the companies operating in this industry. Another beneficial factor is that the people of UK are music-lover and 84% are urbanized population. Around 13.8 % and 61.5 % people belong to the age group of 15-24 years and 25-54 years, who are the potential customers of this industry. With a developed logistics infrastructure (42 airports, 4,080 km Roadways and 61 merchant marines) (“Middle East: United Arab Emirates”) the distribution of the products will not be a cause of concern. Hence, the country will offer favorable business condition for the new product of Sony. Industry Analysis The high scale of sophistication among the consumers of UAE fuels the demand of new and innovative electronics item. The demand of cutting-edge editions of the electronic products has more demand in UAE and Middle East than anywhere else in the world. However, one of the major constraints of the industry growth is high price, at least for a certain segment of customers. Hence, launching new and innovative products at an affordable price range can be extremely beneficial for the companies. Since, the recent past another trend being identified in the consumer electronic industry is the shifting distribution pattern. Most of the retailers are trying to establish online shopping platforms for the purpose of reducing their cost of operation and distribution. The UAE consumers are demanding products that which has better connectivity, high-end features, and better performance, quality, speed and convenience. The market size of consumer electronics industry of UK is extremely large. The buyers can be found from every section of the society. For that purpose the demand for both higher end products as well as lower end products is high. Moreover, the large size of the market is allowing every player to operate effectively in the market. Some of the major players of the market include Sony, LG, Samsung, Hitachi, Videocon and Philips. However, the share of market is mostly in the hands of Samsung from an overall point of view. If the individual product categories are considered the market leaders will differ. For example, as per the recent survey, Nokia is the market leader and is reportedly holding half of the market share (“Nokia remains mobile market leader in UAE”). On the other hand, half of the market share is being held by Samsung when it comes to television sales. In the similar way, the market of hi-fi systems is being mostly held by Philips, Bose, Sony, and Samsung and to some extent the local players of the country. The market share graph of the major players of the industry in various segments is presented below. From the perspective of the buyers, their bargaining power is considerably high. One of the reasons is the availability of multiple options. The presence of established players along with the local players has allowed buyers to choose from a wide range of options. Moreover, the switching cost is also negligible or even at times the switching cost is less. As a result of that, companies are always in a process of creating and launching new and innovative products to meet the changing needs of the consumers. The suppliers of this industry include the companies supplying semiconductors, mother boards and LED or LCD screens among others. In UAE, the suppliers of such products in UAE are large in numbers. Moreover, nowadays such products can be also purchased online and hence the number of suppliers is adequate. In addition to this, companies operating in this industry are mostly established and have agreement with certain suppliers. Hence, there is no scope of increasing the power of suppliers. However, the industry is highly saturated and there is a strong intensity of competition among the exiting players. Hence, the threat of existing competition within the industry is very high. With strong competitions within the industry, the companies always try to come up with new and innovative products in the market and also offer competitive pricing because of the low or negligible switching cost. The threat of new entrants in this industry is assessed to be low. One of the major reasons behind low threat of the new entrants is the high start-up cost. The cost to be incurred by a company before starting a business involving manufacturing and marketing of technology products is extremely high. In addition, a new company also needs to spend huge sums of money for creating awareness about their product. With the presence of established players such as Sony, LG and Samsung, it will be extremely difficult for a new entrant to make its position strong in the market. Moreover, there are several obligations that a company needs to fulfill before starting business in the markets of UAE. There are hardly any substitutes for an electronic product in the market. Hence, threat of substitutes for this industry is low. From an overall point of view the consumer electronic industry of UAE is highly attractive for the established players due to its large market size and presence of high scale of sophistication among the consumers of UAE which greatly fuels the demand. Company Background Sony Corporation, commonly referred to as Sony, is a Japanese multinational company involved in the business of manufacturing and marketing of electronic appliances. The company was founded in the year 1946 by Masaru Ibuka and Akio Morita. It is currently headquartered at Minato, Tokyo, Japan. The company has a diversified business line and principally focuses on games, electronics, entertainment and financial service sector (Barringer and Ireland 180). Sony Corporation represents the electronics segment of Sony Group. Apart from the electronic segment, the company also operates in the music, motion pictures and the financial segment. These make the company as one of the most comprehensive and complete entertainment organizations of the world. Some of the best-sellers of the company television set (Bravia), game (Play station and play station portable), mobile (Xperia), digital camera, music system and laptop (Viao) among others. Sony has presence in almost every part of the world and employs around 146,300 people. The company operates with franchisee business model, which allows them to adapt to the local culture and serve products as per the needs of the vicinity thereby making them as a “glocalized” company. The company is ranked at the 87th position in the list of Fortune Global 500 companies. Sony is also enlisted among the top 20 semiconductor selling companies and is the third largest marketer and manufacturer of television sets just after LG Electronics and Samsung Electronics. Sony Corporation started its business in UAE in the year 1974 (Kaushal 105). Within a short span of time, the company started thriving. With the passage, the company further strengthened its market position and went to become one of the leading electronics companies of UAE. According to reports, Sony currently holds 30 % share of market in digital camera segment (“Lowe”) and around 14.5 % market share in television sales of the UAE market (“Samsung enjoys 27 per cent market share”). Hence, these figures clearly depict the strong position of the company in the markets of UAE. Despite of the strong position of Sony in the UAE market as well as good reputation, the company in the last few years has lost certain percentage of market share in different categories. This is probably due to relentless competition from the established players such as Samsung, LG and Videocon. In addition, the UAE electronics market is highly saturated. As a result of that companies are adopting various techniques and strategies to sustain in the market place. In the context of Sony, a new and innovative product may greatly help in serving the purpose. The product recommended to the company for launching in the market is a new type of Hi-Fi set. The subsequent sections of the study will put emphasis and throw some light on the marketing strategies that can be pursued by the company in order to sell the products properly. Marketing Strategy I. Marketing Strategy Overview a) Marketing Strategy Statement The analysis of the industry as well as a thorough look through at the company suggested that it has been dealing with several issues. However, the major concern in the UK market is the low market share of the company in certain segments. In addition to this, due to the ongoing financial crisis and problems in Dubai the local customers are cautiously spending money. As a result of that, the dependency has been much more on the tourist segment. The changing need of customers is also a cause of anxiety for the company. Customers nowadays require products that offer wide features, have long life, innovative, better performance as well as offer quality after sales service. The affordability of products is another major factor. Therefore, to deal with the ongoing concerns and satisfy the requirements of customers, Sony is recommended to launch a new product that offers various features as well as remains affordable for the middle class. The product recommended to the company for launching in the market is a new type of Hi-Fi set. The product should be having several features and must be affordable. A combination of quality and low price will surely act as they key to success. b) Objectives Every strategy is formulated and implemented keeping in mind about certain goals and objective. The objectives for this product are as follows: - To acquire a market share of 5 % market share by the end of 1 year. To generate a revenue of $100,000 by the end of 1 year. To reduce the promotion budget by 5% by the end of year 1. To provide strong after sales support to the customers of the product. II. Strategic Marketing Components a) Branding Branding is an important aspect of marketing. It significantly helps companies to create awareness about their products and services (“Bergstrom”). The importance of branding is far more for a new product. In addition, branding is also crucial towards differentiating the product and giving an identity to it. The visibility and credibility of the products also increases to a large extent (Beh 355-358). The main element of branding for the new Hi-fi system will be logo of Sony and the unique positioning statement. Along with that a tagline will also be used. Moreover, displays with the help of danglers and posters alongside media commercials, the product are expected to gain high visibility. b) Image & Positioning The positioning and the image of a company are the two extremely important factors for a new product. The product which is being discussed here is the hi-fi system of the company. The product is also kept affordable for the middle class. The product should carry an image of affordability and wide range of features. Hence, to support this image, following is the positioning statement used by the company. Positioning Statement “To tech-savvy, urban-dwelling people who likes partying and want their home to resemble a studio or concert hall, Sony Hi-Fi system is the answer”. c) The Target Market Targeting is one of the most important elements of the marketing strategy of an organization. It defines the market size of a product and also helps in identifying the need of the customers (Gummesson 328-333). Companies often carry out in-depth market research about the needs of their target market and come up with products on the basis of that. In the context of Sony, the product recommended to them is a mid-ranged Hi-Fi set. The target customer for this product is generally the home users. Although, the product can be beneficial for commercial purposes, but commercial customers is not the primary target of the company. The segmentation of the market has been done on the basis of usability reflecting psychographic segmentation. One the basis of the features and price the following are the target customer groups of the company. Target I Home User. Target II Commercial Users. d) Sustainable Competitive Advantage It is necessary for every company to achieve sustainable competitive advantage (Thompson and Coe 70-79). As without being able to achieve suitable competitive advantage, companies will not be able to mark their presence in the market for a longer period of time (Sengupta and Chattopadhyay 332-335). The sustainable competitive advantage of the product lies in its features and also price. In addition, location and unique merchandising along with customer incentives is a source of sustainable competitive advantage. III. Marketing Tactics a) Product Issue The new product recommended to Sony is an innovative and affordable hi-fi system. The product is mainly intended for home users and therefore only those features will be present which serve the purpose of a home user. In addition, more emphasis will be laid on the design of the product and ensuring smaller footprints to comply with the preservation of the environment (Hart 6-12). The new hi-fi system from Sony will have two components namely the Hi-Fi unit and the remote controller. In order to meet the dynamic needs of the UAE consumers and satisfy their sophistication towards electronic products, this system will have the following features. CD, DVD, and Blue Ray player. Supports most of the media formats such as mp3, mp4, wav, avi, vob mkv, wmv, 3gp among others. FM Radio Voice Recorder Bluetooth, USB ports (2), plug & Play socket (for mobile and ipod). Dynamic Sound Generator X-tra (DSGX) LCD Display Total 10W RMS 8cm speaker unit size DSGX Bass boost function Figure 1 – The proposed look of the product With these numerous features, it is believed that the product will do well in the UAE market. In addition to the design and product features, emphasis and thrust will be also given on the product packaging. The outlook of the packaging will be made attractive and it will consist of both primary as well as secondary packaging. Figure 2- Proposed Packaging b) Placement/Distribution Since, the product is targeted for home user as well as intended for the mass, exclusive distribution will not be a feasible option. On the other hand, intensive distribution is also not necessary for this product. Therefore, the company is recommended to follow selective distribution model. Sony is recommended to distribute the product only to those outlets which are currently retailing. The distribution channel currently used by Sony is wholesalers and distributors. Hence, for this product also the same channel must be used. In addition, Sony is also recommended to make this product available in their exclusive stores “SONY WORLD”. c) Pricing The pricing for the HI-Fi system needs to be done intelligently as there are issues related to price in the UAE market. The pricing of the product will be done by using cost plus pricing method. Hence, the pricing is entirely dependent upon the total cost incurred for manufacturing. However, to make the price affordable for the middle class, the company must limit and control the cost of manufacturing. Once pricing method is selected, the next task is to select the pricing strategy. The hi-fi systems market in UAE is fiercely competitive in UAE and there are several established players. Therefore, the only way for Sony to attack the loop-hole is to consider penetration pricing strategy. Moreover, the product is positioned as one which offers value for money and targeted for the middle class. Hence, the company is compelled to pursue penetration strategy. The product price is given below: - Price: - Dhs 1200/- ($328.77 approx) d) Advertising and Promotion Advertising and promotion is a way by which awareness about a product is created and its visibility is increased. This product will be promoted by employing several techniques. The allocation of resources will be mostly on television and news paper advertisements. Both the media have mass reach and have the ability convey the offerings of company efficiently. Apart from that, social media will be rigorously used for product promotion (Lefebvre 55-58). The company is also recommended to make in-store promotions. This will be done with the help of kiosk selling, wallpaper display, and offering customer incentives in the form of discount coupons (customers will be offered a scratch card with every purchase and will be gives discounts accordingly). The company is also recommended to launch referral programs, where customers will be provided flat 5% discount on every product of Sony for referring friends and relatives. Furthermore, as an introductory offer, 5 free music CDs will be offered. Since, EMI (Equated Monthly Installment) options will be offered catchy taglines such as “Pay AED 400 and take home the new Hi-fi system” will be displayed in-store. Figure 3 – Proposed Advertisement Flyers e) Service Elements The delivery of service is another important element of business. The success of a product is greatly dependent upon the after sales support and the service delivery (Zineldin 12-14; Zineldin and Philipso 229-235). The sales personnel will be trained by providing them in-depth knowledge about the product, so that they can assist the customers in the buying process. Free home delivery of the product within a certain range will be also provided for gaining competitive advantage. However, the core competency for the product will be the availability of EMI facility which will be offered in collaboration with Sony Financial Holdings Inc. The EMI scheme for the product will be offered as follows: - Down Payment = Dhs 400* (100*4) Monthly EMI = Dhs 100 (for 8 months). * Additional processing fee has to be paid by the customer. IV. Implementation a) Resources Required The resources required for launching the Hi-Fi system and effectively marketing it, the resources required are additional human resource and additional funds. An estimate of both is presented below: - Human Resource Requirement Sales personnel 5   Supervisor 1   Deliverymen 3   Trainer 1     10   Funding Required Particulars Amount (in Dhs) Promotional Cost 100,000 Distribution Cost 45,000 Training Cost 5,000 Customer and Distributor Incentive 15,000 Miscellaneous Cost 5,000 170,000 b) Time-Line Activity/Timeline Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Market Survey                         Fulfilling the Legal Duties                         Product Development                         Pilot Study                         Product Launch & Distribution                         Media Promotion                         Starting Store Operation                         In-store Promotion                         selective Distribution                         Analysis of the Result                         V. Contingency Plan and Evaluation Despite the efforts, if the product fails following are the contingency plans to be employed: - New Features will be added to the product and will be targeted to the commercial users. Direct Selling as well as personal selling techniques will be utilized. More Distributor and customer incentives will be provided. Intensive Distribution will be made to make the product more visible. Works Cited Barringer, Bruce R. and R. Duane Ireland. Entrepreneurship: Successfully Launching New Ventures. 3rd ed. New Jersey: Pearson Education Inc, 2011. Print. Beh, Kevin I. N. “E-branding strategies of internet companies: Some preliminary insights from the UK.” Brand Management 12.5 (2005): 355-373. Print. Bergstrom, Alan. "Cyberbranding: leveraging your brand on the Internet." Strategy & Leadership 28.4 (2000): 10-15. Print. Gummesson, Evert. "Practical value of adequate marketing management theory." European Journal of Marketing 36.3 (2002): 325 – 349. Print. Hart, S. 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