Preparing the Marketing Audit for Market Entry - Sony Corporation - Essay Example

? Preparing the marketing audit for market entry Executive Summary The company selected for the report is Sony Corporation. Being a premier segment company it always caters to creamy layer of the market. We have selected India as the country where it will launch a Refrigerator, named ZKool. It will have many extra features which are not seen in any existing products. This will enable them to attract more consumer than other competitors, like LG, Whirlpool, etc. Since Sony has its presence already in Indian Market it will help them to acquire distribution channel to reach the far flung areas of the rural India. Contents Executive Summary 2 Introduction 6 Main Findings 6 Product 7 Price 8 Place 8 Promotion 8 People 9 Processes 9 Physical evidence 9 McKinsey 7S of Sony Corporation 10 Strategy 10 Structure 10 Systems 11 Style 11 Staff 12 Skill 12 Shared Values 12 Value Chain Analysis of Sony Corporation 12 Firm Infrastructure 13 Human Resource 14 Technological Development 14 Procurement 14 Inbound Logistics 14 Operations 14 Outbound Logistics 15 Marketing and Sales 15 Service 15 SWOT analysis of Sony Corporation 15 Strengths 15 Weakness 15 Opportunities 16 Threats 16 CIM Model of Sony Corporation 16 Political Forces 16 Economic Forces 17 Social Forces 17 Technological Forces 17 Legal Forces 18 Conclusions 18 Recommendations 18 Reference List 19 Introduction Sony Corporation or Sony as it is known commonly is a Japanese multinational conglomerate which is headquartered in Tokyo, Japan. The company primarily focuses on electronic products in the consumer and professional markets. Sony has enough experience in launching new products in the overseas market. As the firm gains experience, it understands the global strategy more clearly. Early in his tenure Akio Morita, the founder of Sony developed business skills which allowed Sony Corporation to enter into foreign markets successfully. Initially he didn’t have such global strategy in his mind. He only operated in markets which he believed were important for Sony’s products to readily accept by the consumers of that market. Akio Morita understood that U.S. fulfilled the criteria for Sony to achieve those objectives. In 1960 Sony Corporation was formed in America. This was the first phase of Globalization by Sony. In this paper we will look at Sony’s Strategy in entering into Indian market with new Refrigerator. The name of the refrigerator is ZKool. Main Findings In my opinion Sony should sue segmentation approach to target the Indian market. Through mass marketing they can create the largest potential market, which will lower their cost and hence their margins will improve. Hence it is better that Sony use Segmentation approach which will create a product which can be more fine-tuned according to the target segment. Also this strategy will enable them to choose the best distribution and communication channels. Figure 1: 7Ps of Sony Corporation Product Sony’s product strategy is to deliver the best quality product with the latest technology. Hence it will support features like Frost Free, Refigerent-134a, 2 door bottom freezer, Triple Ice tray, Twin Bio attacker, Premium look and design, Quiet and more reliable compressor etc. Sony has to spend money on their R&D department who are mainly responsible for their innovation. Sony’s multimedia features in other characteristics which have to meet the needs of the customers. Sony refrigerators will be designed such that they work on five power levels, compared to one power level of common refrigerators. It will enable it to run the refrigerator on low power during the nights or times when it is used less (Luh, 2003, p. 128). There will also be an automatic system which will adjust the power according to the usage. It will have e a combination of temperature sensor, inverter compressor, microprocessor technology etc. It will give best cooling sensation at minimum power usage. Price Sony will offer best of technology with plenty of new features which will make its price more expensive as compared to its competitors. But like its other electronic products its high price is for the high quality it will give to the customers. Also Sony has to adapt its price according to a particular region in which it will operate. Sony follows a version pricing policy. Hence it will up to the consumers to decide whether they want to pay extra money for its extra features or prefer to pay lower price with less extra features. Place Sony wants to be the last player to release its refrigerators in the market. Sony has done the same thing with its play stations and other products. This gives them the advantage of coming out with products with the latest technology in the market. Sony has a powerful marketing tool which makes the early adopters of the market crave for their products. If Sony uses similar strategy, people will stand in lines for hours in front of their shops to get the new refrigerators (Flugge, 2008, p. 36). Promotion For its refrigerator Sony’s most powerful advertising tool is television advertisements and exhibitions (Ferrell, 2012, p. 243). They can also use newspaper, magazine, online, outdoor, radio and leaflets. Maximum amount of promotion should be done through T.V. People People are a vital part of any Strategy. Reputation of any brand rests on the people’s hand. Hence they must be appropriately trained to have the right attitude and know all about the features of the product (Mercer, 1998, p. 235). Also Sony must provide after sales support for their refrigerators so that the customers feels satisfied after buying the product. It will definitely give an edge over the other competitors because this has been a major factor for the number of consumers in India. Processes The process through which service delivery happens is also crucial for the customer satisfaction. Sony must take care of issue like waiting time, service delivery, and customer complaint redressal (Fifield, 2012, p. 124). No customer will look at the internal operations of the company. They will like at how efficiently the service is carried out. How the sales person interacts with them and answers their queries. Physical evidence It is important for any company to note that any service can’t be experienced unless it is delivered to the customers. Hence the company must make use of their brand name to give the costumer an idea of the level of service they are expected to get. Sony being a reputed organisation the electronic segment will help them in making the consumers believe of the level of service to be expected from them. Being a leader in consumer durables everyone will expect their refrigerators ZKool to give a better service compared to other players in the market. McKinsey 7S of Sony Corporation Figure 2: McKinsey 7S Framework Strategy Strategy is made to maintain a competitive position over other competitors in the market. The growth strategy of Sony should be to use their core competencies to make a refrigerator which has features far better than existing ones (Stadtler, 2011, p. 6). Sony’ score competencies is their innovation. Hence they must innovate to bring out new variants of refrigerator which has more space, more stylish. It may include features like built in inverter so that it can run even without supply of electricity for hours. This is important because in India load shedding happens quite often during the summer seasons (Joseph and Mohapatra, 2009, p. 59). They must also try making the product at an affordable cost to the consumers. They must strengthen their rural presence. Structure Figure 3: Organizational Structure of Sony Corporation It shows that Sony has different separate divisions for each organisations catering to their different business (Chadwick, Chaffey, Johnston and Mayer, 2008, p. 421). They have a separate structure or the electronics segment and separate for the entertainment segment. This helps them in making quick organisational policies and decisions. Entering for the first time in refrigerator business, they have to maintain a flexible organisational structure to help them in making quick decisions. Systems Sony must give importance to this so that their all their departments function in an efficient way to bring profit to the company. Initially they must give importance to advertising of their products and make the product known to all consumers. Style Style of Leadership is important because Indian market demands different types of strategy as compared to other countries. Leaders should strong ability to predict trends and avoid the bubbles. They must understand that Leadership is about thinking the future backwards and not the present forward. Staff Sony’s core competencies are their R&D department who innovate new products. Hence they must maintain an employee friendly atmosphere (Witcher and Chau, 2010, p. 248). They must try to impart training to their workforce so that the skill levels get improved and they are better at achieving their goals. Sony must recruit Indian staffs that are more comfortable with the regional language. Skill This is another important factor that needs to be understood. The company must conduct training o the employees at frequent intervals so that they are made aware of the happenings and their knowledge gets upgraded (Smith and Siguaw, 2011, p. 124). Also the company must make sure that the employees make the consumer understand the features properly so that they can differentiate them against their competitors. Shared Values It represents the super ordinate goals which the company values. Sony aims at delivering high valued refrigerator to its customers (Doole and Lowe, 2005, p. 154). Through this the company will create value for the consumers. Value Chain Analysis of Sony Corporation Figure 4: Value Chain Analysis of Sony Corporation The value chain analysis tells us the way a business acts as a chain of activities to transform the inputs into outputs and creates a value to the customers. Firm Infrastructure Sony already has their operations running in India. Since it will cost those more to import the products, they must try to manufacture them in India itself. Hence they must build infrastructure like setting up of R&D, setting up manufacturing establishment, they must build those infrastructure such that it would be strategically advantageous to them in procuring the raw material (Overbeck, 2009, p. 26). Human Resource Sony Corporation must recruit staff of India into their operational task, as they know the market much better than them. The compensation of the Indian workers would be comparatively much less as compared to their peers in other counter. Hence here it would save their cost. They must give importance to their hiring, recruitment which will develop the skill set of the employees. Technological Development Sony’s core competency is their innovation. Hence they have to bring out a refrigerator such which reflects their innovativeness. For that they must allocate higher amount for their R&D to develop new features which are new to the market (Bensoussan and Fleisher, 2012, p. 123). Procurement Sony must manufacture the refrigerator in India to reduce the cost. For that they need to procure the raw materials from the Indian market. Hence their manufacturing base should be located such that the raw materials can be procured in a cost effective way. Inbound Logistics With proper planning of inbound logistics they can reduce the manufacturing cost. Hence Sony should concentrate on procuring the raw materials like part components, items from vendors, storing, receiving and disseminating inputs from the suppliers etc. With India being rich in resource, Sony can easily reduce their manufacturing cost. Operations Sony must do operations like production, assembly, packaging, equipment maintenance, quality assurance and environmental protection efficiently (Vallespir and Alix, 2010, p.321). During refrigerator manufacturing the company must make sure they do these operations in a cost efficient way and try to minimise the spillage. Outbound Logistics Since Sony already has their distribution network setup in India it will be easy for them to distribute their refrigerators across India. Marketing and Sales Sony has strengthened their Marketing and Sales force recently for their Sony Vaio laptop products. They need to put additional efforts and spend higher amounts on these activities. They need to make the consumer is aware of the features which set them apart from their rivals. Service This is the most vital and often the neglected part of the VCA. A company having efficient after sales service can increase the consumer satisfaction level and as a result their revenue will rise. SWOT analysis of Sony Corporation Strengths Sony has distribution networks across India, both in the urban and rural areas. Sony is a well-known brand across India; hence their products will be readily accepted. Again the organized sector has increased its market share as compared to the unorganized sector. Weakness Demand of such white group products is seasonal in nature, with high demand during summer and festive season (Pahl and Richter, 2009, p. 35). Government spending is low in infrastructure. The purchasing power of consumers is also low in India. As a result high price goods are not purchased by Indians. Opportunities India is a developing economy which has high percentage of middle income group with their income level rising (Dealtry, 1992, p. 36). This presents an excellent opportunity to them to achieve profit. Threats In India Heavy taxation is one of the major problems. Presently the tax incidence in India is around 25-30 percent as compared to 7 – 17 percent. In India major population resides in the villages who still don’t know much about traditional refrigerators (Qin, 2010, p. 469). Also foraying into the rural markets needs considerable amount of distribution network which entails high cost. CIM Model of Sony Corporation Political Forces Indian being a democratic country has a stable political scenario. The government has changed the tariff structure to encourage the electronic manufacturers to set up bases in India. For example, From March 2005, the Customs duty on Information Technology Agreements (ITA-1) items has been abolished. It included 217 items in it. All the goods which are excluded from the ITA-1 agreement are exempted from customs duty (Gupta, Gollakota, and Srinivasan, 2007, p. 144). Again government has removed customs duty on specific raw materials used to manufacture electronic components. Protection of Intellectual property rights (IPR) has been enforced by Indian Government which is of prime importance for development of R&D. Indian Government has also developed a robust IP act which facilitates growth, innovation and development. Economic Forces India is a party to “Trade Related Aspects of the Intellectual Properties (TRIPs) Agreement” and hence has amended made it open to most of the companies to set up business easily in India. In India Foreign investment upto 100 per cent is allowed in the Indian electronics industry. Hence multinational companies can set up their bases in India. The suppliers can avail of the Deemed export benefits under the Domestic-tariff Area (DTA). Again the rise in disposable incomes of the middle class Indians leads to more demand for consumer electronics. For the outside companies, this growing Indian middle class is an attraction. With the rise in the organised retail sector the Indian consumer durables industry will grow. According to a research paper by Indian Council for Research on International Economic Relations (ICRIER), The organised retail sector grew from 4% in FY07 to 16% in 2012. Social Forces India is a land of many countries. Within India many types of Social structure resides. Each has their own need for consumer durables. According to National Council for Applied Economic Research (NCAER), India can be divided into classes based on their consumption indicator. There are five classes of consumer households, comprising of destitute to the highly affluent. All of them differ according to their consumption and ownership pattern of the goods they consume (Bode, 2003, p. 123). These classifications exist in both rural and urban households. In the consumer electronic segments there is intense competition in this sector. Technological Forces In India the IT infrastructure is not enough to support the activities. But slowly with the advent of new infrastructure the India is slowly building infrastructure which can support activities like R&D, manufacturing bases etc. in India (Keegan and Green, 2008, p. 339). Though Sony don’t have manufacturing base in India presently, they can set it up in India. Legal Forces In India, legal forces are very strong (Nathan, 2001, p. 137). It has a strong judicial system which will not allow any illegal activity to happen. Indian Government has amended many act for the betterment of the company like The Indian Copyright Act 1957 which was amended in 1999, Trademarks and Merchandise Marks Act 1959 which was amended to form Trademark Act 1999, the Patent Act 1970 was amended in 199&2003 (Carroll, 2003, p. 76). But still there are several issues like retrospective taxation, which is a major point of contention for the companies (Mercer, 1998, p. 1998). Conclusions Sony is a premier company is electronic products. Innovation being its core competence it should try to develop the product in such a way that it caters to the everyday needs of the consumers at an affordable cost. Sony has a powerful marketing tool which makes the early adopters of the market crave for their products. If Sony uses similar strategy, people will stand in lines for hours in front of their shops to get the new refrigerators. Hence Sony will generate a long line of people who will crave to buy the refrigerator no matter what the price of the product may be. Recommendations Three recommendations for Sony Corporation are as follows. They must concentrate on their core competencies in adding extra new features with the latest technology. They must concentrate on distribution channels for the rural market as well. They must invest heavily in the advertising to create more brand awareness as Sony will launch refrigerator for the first time in India. Reference List 1. Bensoussan, B.E. and Fleisher, C.S. (2012). Analysis Without Paralysis: 12 Tools to Make Better Strategic Decisions. New Jersey: FT Press. 2. Chadwick, F.E., Chaffey D., Johnston, K. and Mayer, R. (2008). Internet Marketing: Strategy, Implementation And Practice. New Delhi: Pearson Education India. 3. Dealtry, T.R. (1992). Dynamic SWOT Analysis': Developer's Guide. Birmingham: Intellectual Partnerships. 4. Doole I. and Lowe, R. (2005). Strategic Marketing Decisions in Global Markets. Stamford: Cengage Learning. 5. Ferrell, O.C. (2012). Marketing Strategy Text and Cases. Stamford: Cengage Learning. 6. Fifield, P. (2012). Marketing Strategy. Burlington: Routledge. 7. Flugge, J. (2008). Sony - a Japanese Company Going Global. Norderstedt: GRIN Verlag. 8. Joseph, P.T. and Mohapatra, S. (2009). 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