Strategic Marketing Management of Nintendo - Case Study Example

? Strategic Marketing Management Case Study- Nintendo inserts his/her s Table of Contents Executive Summary 3 Introduction 4 2.Strategic vision/mission 4 3.Current marketing strategy 4 4.Target market and marketing strategy 5 5.Marketing strategy- Evaluation 5 6.Strengths and weaknesses of current marketing strategy 5 7.Strengths and weaknesses of current business strategy 6 8.Recommendations 6 9.Conclusion 7 Executive Summary The Japanese manufacturer of console-based games- Nintendo has established a strong heritage and brand identity for itself with the likes of Super Mario possessing high brand equity. However, the external environment for the company is turbulent with Sony and Microsoft emerging as strong competitors with the Play Station and Xbox respectively. Whereas Nintendo has traditionally targeted the young generation engaged in fairly simple console-based games, Sony has continually focused on developing and sustaining high quality. Therefore, Nintendo faces the challenge of overemphasizing on innovation per se while ignoring the needs of the mature audience that considers memory and storage capacity as important features of gaming hardware. Furthermore, customer lifestyle and trends are changing with majority of young audience switching to free-to-play versions of games on their smartphones. The report discusses the marketing and competitive environment with respect to Nintendo as well we its segmentation strategy and business strategy in the context or current dynamics. 1. Introduction Nintendo has gained the first-mover advantage in the interactive entertainment sector by providing both gaming devices and associated services since 1983. The Japanese manufacturer has evolved from its cult favorites “Super Mario” “Nintendo Game Cube” and “Nintendo 64” towards its more recent “Wii” and “Nintendo DS” (Kim, Lamont, Ogasawara, Park, & Takaoka, 2011). Although initially aimed at hard-core gamers, the company is aiming towards penetrating the market by appealing to more segments (including women and adults) and appealing to the mass market. It currently faces intense competition from Microsoft’s Xbox and Sony’s Play station. Furthermore, market trends are changing and the dynamics are clearly not the same as they were several years ago. The new generation of young customers is demanding free-to-play mobile games which are a major consideration for Nintendo in the revamping of its strategy. 2. Strategic vision/mission Nintendo’s vision and reflects its commitment to provide the “highest quality of products and support services” for customers by valuing customer feedback and encouraging teamwork amongst employees (Nintendo Games, 2013). The company’s strategy supports this commitment by providing gaming entertainment that is enjoyed by people of all ages (including women and adults). Keeping customer feedback in mind and the trend of games of smartphones, the company is currently rethinking its strategy to broaden its target market and include non-gamers compared to hard-core console gamers. Hence, Nintendo is aiming at penetrating the market and rethinking its strategy keeping in view the current market trends of the youth generation moving towards free-to-play games on smartphones (Negishi, 2013). 3. Current marketing strategy Nintendo’s current marketing strategy revolves around its commitment to deliver superior customer service and quality of products. The new console “Wii” includes a three month warranty along with easy to use interface and free games (Nintendo, 2013). With this, Nintendo has revamped its traditional strategy by positioning the Wii as a universal product suitable for use by all ages and gender groups. The company has capitalized the brand equity associated with the Nintendo brand by retaining the “console” and innovating by introducing entirely new product categories through its “motion sensor” technique (O’Gorman, 2008). 4. Target market and marketing strategy Although initially restricted to hard-core console gamers, Nintendo now targets a broad range of market segments including the whole family comprising of non-gamers (Aaker & Akutsu, 2010). Therefore, Nintendo seems to be following the “broader large-market strategy”. This involves engaging in differentiated marketing or catering to smaller segments with different strategies for each (Walker, Gountas, Mavondo, & Mullins, 2012). Although the company denies providing free-to-play games for smartphones and catering to the segment of the new young generation, it does not rule out the possibility of catering to such a market of players who enjoy quick fixes by playing simple games online (Negishi, 2013). This may require leveraging the organizational capabilities for achieving competitive advantage. Keeping in view intense competition from Sony and Microsoft, Nintendo is reconsidering its market targeting strategy to develop a unique competitive advantage. 5. Marketing strategy- Evaluation Unlike Nintendo whose core competency is based on innovative technology and differentiation, Sony focuses on quality in its marketing strategy. This is evident in Nintendo’s invention of a new product category (through its motion sensor technology in Wii) compared to Sony’s focus on compatibility with Blue Ray as well as high storage to enhance product quality . Unlike Sony which provides portability for “on-the-go gamers”, Nintendo’s marketing strategy focuses on providing unmatched gaming experience to those pressed for time (Nunneley, 2013). Although Nintendo denies focusing on portability of its gaming device, its strategy has been responsive to changes in consumer behavior. This is reflected in the introduction of its portable player 2DS which recognizes changes in gaming behavior of all-the-go gamers. 6. Strengths and weaknesses of current marketing strategy One of the major strengths of Nintendo’s marketing strategy is that it has the tendency to gain the loyalty of its customers at a very young age considering that it targets the younger demographic group. Not only has Nintendo capitalized on its heritage and strong brand identity attached to brands such as Super Mario, but also capitalized on its strength as a simple toy maker by offering no-fuss, simple games to the segment of non-gamers such as women and adults. On the other hand, its major weakness is limited genres of video games and lack of “role-playing games” for mature segments. Unlike its competitors such as Sony that focuses on storage capacity, Nintendo’s overemphasis on innovation rather than memory and processing power has lowered its popularity amongst mature audiences. 7. Strengths and weaknesses of current business strategy Nintendo’s current business strategy revolves around producing the gaming software for Nintendo’s own hardware only, thereby discounting the compatibility of such software with devices such as smartphones and tablets (Negishi, 2013). Nintendo has channelized its capabilities towards offering gaming experiences that are unique to its own hardware. By doing so, the company is avoiding the competition in the Smartphone-gaming market, thereby avoiding the risk of doing what everyone else is doing. On the other hand, such a business model that focuses on developing unmatched gaming device capabilities, poses the risk of not exploiting the vast untapped potential that lies in Smartphone-gaming segment. The less-than-forecasted levels of sales of Nintendo’s 3DS reflect what is known as Resource-Advantage Theory of Competition. This explains how competition is a continuous process that acts as feedback as the financial performance of a company vis-a-vis its competitor signals future allocation of resources (Hunt, 2011). Nintendo’s declining sales signal the need to revamp its current business strategy. 8. Recommendations In order to maintain its competitive advantage, Nintendo must develop greater games that involve role playing compared to basic games of puzzles and exercise. Therefore, by expanding its genres of video games, Nintendo may be able to have customers switch from Sony and Microsoft. This would require an assessment of market-attractiveness–competitive-position whereby both dimensions are identified in terms of being “weak, moderate or strong” (Walker, Gountas, Mavondo, & Mullins, 2012). With unmet needs of women and adults looking for low-involvement, quick-fix games for fun along with high growth in the segment of Smartphone games users, the market attractiveness for Nintendo seems to be high. In terms of the competitive- position factors, Nintendo’s opportunity for creating a unique position for itself seems to be high if it follows this strategy although it will have to alter its capabilities to focus on this segment of non-gamers and develop gaming devices accordingly. Therefore, the competitive position appears to be moderate. In such a case, it seems prudent to “Invest to build” or capitalize on the company’s strengths and leverage resources towards developing free-to-play games for Smartphone users. 9. Conclusion To conclude, Nintendo stands strong in terms of its strong heritage and brand identity associated with its business strategy of selling gaming software with its own hardware. It is recommended that Nintendo looks into the aspect of developing free-to-play games for Smartphones to cater to the newer, young generation while analyzing the risk of losing loyal, hard-core gamers by changing its brand image of solely providing console-based games. Nevertheless, Nintendo must recognize changing customer needs associated with behavioral changes in demographic groups such as women and adults. As identified earlier, a broader large-market strategy would be required. To compete with top players such as Sony and Microsoft, Nintendo must target mature audience and develop role-playing games rather than offering simple experiences. References Aaker, D., & Akutsu, S. (2010, October 30). Nintendo: Japan’s Brand Story of the Decade. Marketing News, pp. 12-12. Hunt, S. D. (2011). Sustainable marketing, equity, and economic growth: a resource-advantage, economic freedom approach. Journal of the Academy of Marketing Science, 7-20. Kim, S., Lamont, I., Ogasawara, H., Park, M., & Takaoka, H. (2011). Nintendo’s “Revolution”. MIT Sloan Management, 11-124. Negishi, M. (2013, June 21). Nintendo mulls free Steel Diver game, could be released next March. Retrieved from The Wall Street Journal : http://www.theaustralian.com.au/business/wall-street-journal/nintendo-mulls-free-steel-diver-game-could-be-released-next-march/story-fnay3ubk-1226667301756 Nintendo. (2013). U.S. & Canada Warranty (English). Retrieved from Nintendo: http://www.nintendo.com/consumer/manuals/warrantytext_eng.jsp Nintendo Games. (2013). Nintendo of America's Corporate Mission and Philosophy. Retrieved from Nintendo Games: http://www.nintendo.com/corp/mission.jsp Nunneley, S. (2013, August 29). Nintendo and Sony have “fundamentally different strategies,” when it comes to the handheld market. Retrieved from VG 24/7: http://www.vg247.com/2013/08/29/nintendo-and-sony-have-fundamentally-different-strategies-when-it-comes-to-the-handheld-market/ O’Gorman, P. (2008). Wii: Creating a Blue Ocean The Nintendo Way. Palermo Business Review , 97-108. Walker, O., Gountas, J., Mavondo, F., & Mullins, J. (2012). Marketing Strategy: A Decision Focused Approach. 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