Strategic Marketing Management of Nintendo - Assignment Example

? Strategic Marketing Management- Nintendo inserts his/her s Current business products/ product line Several gaming products currently dominate the Nintendo market while the variety differs from region to region. Theory suggests the use of corporate identity and corporate brand name as a source of synergy with dual branding carrying the name of the corporate brand as well as the individual brand (Walker, Gountas, Mavondo, & Mullins, 2012). Nintendo seems to have used the latter with majority of its products carrying the “Nintendo” label. The product lines include the Nintendo Wii U, Wii, Nintendo 3DS as well as services such as Club Nintendo and Video Games. The Nintendo Wii comprises is a hardware – game box that is motion controlled and allows users to play games (purchases at an additional cost) on it. Furthermore, the Wii box offers access to popular movie sites such as Netflix, thereby enhancing user experience (Nintendo , 2013). The “Wii U” is an extension of the “Wii” product line which is designed as the first of its kind product in the Nintendo range to support high definition graphics with high storage capacity and supporting features such as touch screen and HDMI input (Nintendo , 2013). This product line features products such as the Wii U GamePad and Wii U Pro Controller (Nintendo , 2013). The Nintendo 3DS product is a portable game console that projects 3D effects without the use of any special glasses (Nintendo , 2013). The result is an enhanced, intuitive gaming experience for users. Furthermore, the 3DS console offers wireless connectivity, thereby enhancing its ease of use and portability. The Boston Matrix classifies products as cashcows, stars, dogs and question mark whereby cashcows are primary generators of profit for the company and hold significant share of a low growth market (Walker, Gountas, Mavondo, & Mullins, 2012). To this end, the 3DS product can be classified as a cashcow as it occupies majority of the chunk of market for handheld devices. Finally, the company’s “Club Nintendo” is a loyalty program that offers rewards to its loyal customers as well as customers who provide their feedback upon purchase of Nintendo’s products. Rewards include tokens such as playing cards and bags as well as extended warranty and downloadable games for customers (Nintendo , 2013). Furthermore, members of this club have access to limited edition products that are not available to non members. Finally, the company sells video games that are segmented by games for Nintendo Wii, Wii U, DS and 3DS. Although majority of the games are sold through retailers, some are available for download on the company’s e-shop website. Current market/s including customer behavior issues, demand and trends The company uses differentiated positioning for its offerings. While the company has historically targeted the segment of gamers, it has recently shifted its attention to incorporate non-gamers. This segment comprises of families, women as well as individuals who are ‘not’ hard-core gamers. In other words, Nintendo now targets individuals who want quick-fix gaming solutions in addition to serious gamers (MaRS, 2012). This has been matched by a shift in the company’s value proposition which has evolved from the delivery of intensely realistic gaming experiences to providing fun-filled family entertainment. The company soon realized the changing customer demographics and saw a large potential in the market for women and pensioners. As of 2010, Wii was presented by 90% of primary console female players (ESRB, 2010). Overall, women account for 40% of video game players (ESRB, 2010). This has opened up new markets for Nintendo, thereby reducing reliance on the market for hard-core gamers which has become highly competitive. While price and performance plays a key role in determining customer response to the company’s products, emotional attachment to the product is just as important in order to capture customer value. Furthermore, the company’s use psychographic segmentation is reflected by the fact that in addition to producing video consoles that are targeted towards consumers with a lifestyle of home-based gaming (and one-on-one gaming), Nintendo now offers portable devices with collaborative user experience for the entire family(playing in groups) (Dahlen, Lange, & Smith, 2010). Distribution and Supply outline Nintendo outsources its production; that is, it makes limited term contracts with various companies that manufacture its products in their factories. This is because the company had initiated a blue ocean strategy whereby it attempted at broadening its customer base by going beyond its home market- Japan (O’Gorman, 2008). On the other hand, Nintendo has been criticized for mismanagement of supply chain which was evident when the company faced stock out and was unable to cater to the high demand for its Wii console as well as its DS gaming system. This was because the company failed to manufacture the amount of consoles demanded, resulting in stock out from its markets for almost a year (Iwatani & Wingfield, 2007). Part of the problem can be attributed to poor demand forecasting which is evident in the fact that the company has set highly conservative earnings estimates in the past such that the estimates were achieved in just a period of 9 months (Iwatani & Wingfield, 2007). As part of the company’s strategy to keep cash flow in check, the company has developed a supply chain strategy to keep inventory low. This strategy allows the company to not only reduce costs associated with inventory buffer but also create the positive psychological hype that “the customer is begging for the product” (Iwatani & Wingfield, 2007). This also reduces pressure on retailers as they do not have to squeeze their margins or offer excessive discounts to get rid of excessive inventory. Although Nintendo has traditionally relied on the use of retail channels, the company has recently explored the possibility of using “Nintendo Network” as a distribution channel with various services available through this connection (Nintendo, 2013). The company has also capitalized on the booming market for online commerce and growing acceptance of online purchases by customers. To this end, it uses a digital distribution channel whereby it sells gaming software through its e-shop. Competitive situation and current strategies Although the threat of new entrants is low (owing to high costs of research and development of gaming systems, production and marketing), Nintendo currently faces competition from already established players including Microsoft’s X-box and Sony’s Playstation. As of January, 2013, Microsoft’s X-box was the market leader with 44% of market share of the console market. The Wii U, on the other hand, sold only 57,000 units in the same period compared to281, 000 units for X-box (Nunneley, 2013). However, the competitive situation has been different in the market of handheld devices with Nintendo taking the lead from its competitors. Furthermore, the company’s Wii U has significantly lost consumer confidence even in its native land- Japan (Kuittinen, 2013). This is because Nintendo’s competitors have revamped their competitive strategies. For instance, Sony has introduced a game controller with motion-sensing technology to match the technology offered by Nintendo’s Wii console. Similarly, Microsoft has introduced its product line “Kinect” which has similarities with the Wii experience but does not require a controller (Snider, 2010). On the other hand, Microsoft suffers from an immature business model as the company, being the youngest player in the industry, has failed to capture economies of scale. Therefore, one may argue that, while Nintendo may secure a competitive advantage for itself by coming up with innovative products such as Nintendo Wii, its competitive edge only lasts until Sony and Microsoft launch comparable imitations. Sustainable competitive advantage can only be achieved if the company has resources that are valuable, rare and inimitable (Walker, Gountas, Mavondo, & Mullins, 2012). Nintendo can capitalize on its core competency of being the pioneer in the video gaming industry- a competency which is both valuable and rare, although not inimitable. References Dahlen, M., Lange, F., & Smith, T. (2010). Marketing Communications: A Brand Narrative Approach. Chichester: John Wiley & Sons. ESRB. (2010). How Much Do You Know About Video Games? Retrieved from Entertainment Software Rating Board: http://www.esrb.org/about/video-game-industry-statistics.jsp Handley, L. (2010, June 10). Games console at hub of family entertainment. Retrieved from The Marketing Week: http://www.marketingweek.co.uk/games-console-at-hub-of-family-entertainment/3014365.article Iwatani, Y., & Wingfield, N. (2007, December 7). Nintendo Plays It A Wii Bit Cautious. Retrieved from The Wall Street Journal: http://online.wsj.com/news/articles/SB119697501146616201 Kuittinen, T. (2013, August 5). Nintendo Loses Grip On Home Console Market. Retrieved from Forbes: http://www.forbes.com/sites/terokuittinen/2013/08/05/nintendo-loses-grip-on-home-console-market/ MaRS. (2012). Case study: Changing the game—Lessons from Nintendo’s Wii. Retrieved from MaRS: http://www.marsdd.com/articles/case-study-changing-the-game-lessons-from-nintendo-s-wii/ Nintendo . (2013). Nintendo. Retrieved from Nintendo: http://www.nintendo.com/ Nintendo. (2013). Nintendo Network Premium. Retrieved from Nintendo: http://www.nintendo.co.uk/Wii-U/Download-Content/Nintendo-Network-Premium/Nintendo-Network-Premium-672588.html Nunneley, S. (2013, February 15). NPD January: Xbox 360 moves 281,00 units – report puts Wii U sales at 57,000. Retrieved from VG 24/7: http://www.vg247.com/2013/02/15/npd-january-xbox-360-moves-28100-units-report-puts-wii-u-sales-at-57000/ O’Gorman, P. (2008). Wii: Creating a Blue Ocean The Nintendo Way. Palermo Business Review , 97-108. Snider, M. (2010, December 17). Microsoft's Kinect and Sony's Move take on Nintendo Wii. Retrieved from USA Today: http://usatoday30.usatoday.com/tech/gaming/2010-12-16-motion-gaming_n.htm Walker, O., Gountas, J., Mavondo, F., & Mullins, J. (2012). Marketing Strategy: A Decision Focused Approach. Boston: McGraw-Hill Irwin. Read More