A Marketing Plan for the Launch of Product into New Market Segment - Essay Example

The Sony “HMZ-T1 3D Personal Viewer” MODULE HERE HERE FAMILY HERE YOUR FIRST HERE SRN HERE Word Count 945 TABLE OF CONTENTS1.0 Introduction............................................................................................................... 2.0 Target market identification...................................................................................... 3.0 Market analyses......................................................................................................... 3.1 Cultural trends................................................................................................ 4.0 Cultural implications for Sony................................................................................... 4.1 Pricing structure............................................................................................. 4.2 Marketing strategy......................................................................................... 4.3 Budget............................................................................................................ 5.0 Summary.................................................................................................................... References 1.0 Introduction The Sony Corporation is a multi-national conglomerate providing a variety of electronic products for international consumer markets, including a portfolio that includes televisions, gaming systems, cameras and smartphones. Many of Sony’s historical product successes, such as the Sony Walkman (a highly profitable product defining the brand as a pioneering first-to-market innovator), have reached their decline stages. Other recent innovations have been consistently outperformed by major competition, including Samsung and Sharp, shortening their product life cycles and forcing the business to restructure and reallocate capital resources to develop revolutionary product innovations. In 2012, Sony reported a net loss of 67.3 billion yen (Hirai 2012). In 2011, Sony reported a loss of 199.8 billion yen, indicating a significant problem attaining revenue growth which is attributable to increased competition in the electronics industry and changing consumer preferences throughout the globe. Sony, to combat these significant financial losses, is to launch the new Sony HMZ-T1 Personal 3D Viewer, a head-mounted display device allowing consumers to enjoy three-dimensional video content that is akin to the three dimensional movie theatre experiences. This product, already accepted as a revolutionary product in a variety of international markets, fits snugly and comfortably around the users’ brow, offering an unparalleled, horizontal viewing range of 45 degrees. The device offers supplementary high-quality Surround Sound capabilities to enhance viewing experience. The objective of this new launch is to recapture revenue losses, disrupt the personal electronics market, and improve Sony’s brand image in the new Serbian market, a developing nation that can provide new profit opportunities for Sony. 2.0 Target market identification Sony has identified a distinct Serbian consumer market with the resources and characteristics most likely to be interested in purchasing, or influencing purchase decision-making for, the HMZ-T1. Luxury buyers – male and female demographics between 18 and 50. Serbia scores low on Geert Hofstede’s Cultural Dimensions Framework in masculinity, a cultural propensity to value achievement and personal success as primary lifestyle-centric drivers (Hofstede Centre 2012; Hofstede and Hofstede 2005). This makes Serbia a feminine society, one where citizens seek solidarity, consensus, and a cultural set of values about promoting equality for all peoples. These values are inherent in the luxury buyer segment, which is representative of upper- and middle-class consumers. Serbia maintains cultural characteristics that have many collectivist values, in which loss of face (reputational) is a significant consideration from a social perspective (Cheung et al. 2008). This collectivist mentality influences consumers to make purchasing decisions based on sentiment and opinion stemming from the social environment. Luxury consumers in Serbia are also driven to make purchasing decisions as a means of securing their identity through consumption practices, a form of conspicuous consumption. Conspicuous consumption is the process of purchasing luxury products as a means of displaying wealth and success (Eng and Bogaert 2010; O’Cass and McEwen 2004; O’Cass and Frost 2002). Thus, if the Sony HMZ-T1 is able to create effective promotional materials that are relevant to these lifestyle and conspicuous consumption characteristics, Sony can capture a new market of Serbian consumers that are drawn toward socially-relevant products. The HMZ-T1 provides ample capabilities for consumers to explore their feministic characteristics and collectivist values fully. 3.0 Market analyses The contemporary Serbian luxury consumer with the resources to purchase high-priced electronics is driving increased demand for recreational and entertainment-based products (Euromonitor International 2011). GDP in the country was reported at $81.6 billion USD, provided primarily by the service industry. Many of Serbia’s luxury consumers earn their wages in the service and manufacturing industries. These characteristics in which luxury consumers in Serbia seek Western import products to enhance recreation and improve their social image are advantageous for the HMZ-T1, as the product is a revolutionary concept in home and mobile entertainment in a country that is highly dependent on foreign luxury imports. Sony will be promoting the product as a holistic experience, rather than focusing on product benefits, in order to gain acceptance and interest with the target consumers. Thompson, Gamble and Strickland (2005) describe the work of Michael Porter identifying five market forces that serve to improve or hamper market success for multi-national businesses. Relevant to performing an industry analysis for the new 3D product is threat of substitutes and buyer power in the market. The HMZ-T1 represents a disruptive innovation, defined as a revolutionary value-adding product with the ability to generate significant net wealth and the ability to dislodge an established market (Christensen and Raynor 2003). This new Sony product maintains several substitute products that are available on the market from competition, including smartphones and video cameras. Though none of these products can match the dual functionality of the HMZ-T1, their presence as multi-media tools coupled with lower pricing structures, represent competitive threats. Sony must indicate the revolutionary capabilities of the product as a complete consumer experience in order to combat the perception that these inferior products could serve to outperform the functionality of the 3D Data Centre device. Serbian buyers also maintain a great deal of purchasing power in the market, as the switching costs for choosing one brand over another are relatively low. Though no competitor offers a similar 3D product, competition in the electronics industry in Southern Europe has been known to respond quickly to new innovative product releases and develop similarly-capable products within one to two years of competitive launches. Effective promotional strategy will determine the likelihood of success of this campaign, creating the perception that the HMZ-T1 can provide a unique brand experience. Benchmarking the success of Apple, Inc. in gaining brand loyalty through transparency and promotional strategy development, Sony will set barriers to consumer purchasing power by selling an experience. From a macro-economic perspective, the HMZ-T1 operates in a favourable environment where the Serbian currency continues to show strong growth in valuation (or at least annual stability) and where luxury products continue to contribute to competitor profitability. 3.1 Cultural trends Serbian consumers are some of the most risk-averse consumers on the planet (Hofstede Centre 2012). In social and professional scenarios, consumers want to know that a product will be viable, reliable and relevant before making consumption decisions. Consumers reject products and services that provide ambiguous integrated messages, therefore Sony must be diligent in creating marketing communications that address potential risks that could be perceived by buyers. Ambiguities are not tolerated by the consumer culture in Serbia, thus Sony maintains consequences if advertising ideology represents any variety of vagueness or uncertainty. It is likely Serbian consumers will reject this luxury product if it cannot be expressed how the product can provide value, satisfy the collectivist social condition, or improve social status. 4.0 Cultural implications for Sony Sony will be positioning the HMZ-T1 under quality-centric positioning strategy, designed to address not only brand erosion that has occurred in recent years, but also remove ambiguity from the relationship between promotional strategy, the consumer and the HMZ-T1 product. Quality positioning justifies a higher pricing structure and, if the product delivers on its brand promises, can build attachments to the brand. As Serbian consumers are highly risk-averse, Sony must utilise promotional strategies that illustrate dependability, reliability, and assurances of pricing that remove doubt as all segments in Serbia maintain these characteristics for avoiding uncertainty. 4.1 Pricing structure After addressing the costs of research and development, continuous product improvements and downloadable upgrading, as well as labour and manufacture, an appropriate pricing structure can be developed. Table 1: Pricing Structure for the HMZ-T1 HMZ-T1 Express Upgradability $ 2,559 HMZ-T1 Expert Series – 3D content upgradability, convertible 3D technology for home video production. $ 3,759 Sony is currently a leader in reducing operational costs associated with supply chain and inventory management (Sony 2013). This emphasis on cost control and efficiency in establishing appropriate manufacturing practices and resource capability will allow the business to establish pricing structures that are sustainable and provide a margin of 30 percent in relation to operational costs of production. The pricing is also aligned with the luxury buyer asset availabilities whilst also being affordable to middle-class luxury buyers that define their position or aspirations to improve social and professional position through conspicuous product consumption. It should be recognised that Serbian consumers are significantly impacted by loss of face in the social collectivist environment, in which conspicuous consumption is considered paramount to attain positive social status. As such, Sony must be aware that consumers with resources for either product model 4.2 Marketing strategy The first step in gaining consumer interest and removing perceptions of risk is to build relationships with the consumers. Boulding et al. (1993) have identified a significant correlation between service quality and consumer intention to provide word-of-mouth to their social environment. The most prosperous sales channel for luxury buyers is the department store in Serbia, a country where the service industry is the dominant industry. Sony will develop, at the time of launch, sales representatives that will be partnering with retail outlet leadership to provide in-depth demonstrations of the HMZ-T1 device. As it was identified that cultural characteristics of the Serbian target market is risk-averse, demanding an experience, Sony believes that the level of interactivity between competent demonstrator representatives and the consumer will build rather rapid trust in the Sony brand and eliminate concerns about the cost and functionality risks associated with the new device. Schiffman and Kanuk (2010) indicate that first impressions are critical in developing a perception about a product or brand. Demonstrators will also be equipped with incentive discounting, utilised during the initial launch period (four to seven weeks), a coupon offering between 100 and 200 dollars for both the pro and expert series’, respectively. Promotional strategy will consist of advertising utilising the current Make Believe branding strategy utilised by Sony, thereby strengthening existing brand reputation associated with a recent business repositioning to regain brand integrity in the market. Advertising will include celebrity endorsements relevant to the Serbian cultural characteristics. Sony will require the endorsement of big-name celebrities in this campaign with a positive reputation in Serbia and that represent the masculine characteristics highly-prevalent in the country. Sony will work cooperatively with Hollywood representatives in an effort to recruit relevant celebrity endorsers for the HMZ-T1. Supplementing celebrity endorsements, occurring on television, will be billboard advertising, radio and print advertising with a singular quality-centric brand conception. Serbia maintains a very contemporary theatre and musical (arts) culture that values foreign film and music imports. Thus, this cultural characteristic represents a significant opportunity for gaining market attention in a country that legitimately desires products from Western companies. 4.3 Budget Inclusive of celebrity endorsement contracts, the need for interactive salespersons, and integrated promotional strategies, Sony anticipates an initial launch budget (occurring over a three month period), of £7 million. With an estimated initial sales volume of the HMZ-T1 at 25,000 in the first six months of launch, Sony will recapture all initial marketing costs, plus boast estimated revenues at over £63 million. 5.0 Summary Sony believes that the relevancy of Hollywood endorsements and taking the Sony brand to a new level of interactive service, will assist in rebuilding a damaged international brand and satisfying Serbian luxury-centric consumers that demand high quality products at affordable prices or those products that can assist in presenting a successful and wealthy social and professional lifestyle. Serbian cultural characteristics in contemporary society are highly favourable for a successful launch of this disruptive innovation allowing consumers to enjoy a completely revolutionary viewing experience. The propensity of Serbian consumers, which are driven by feminine cultural values, to demand a holistic experience in consumption with emphasis on collectivist entertainment and recreation, gives Sony many opportunities to establish a better market position that will likely be sustainable or at least one to two years before competition is able to replicate the technology. References Boulding, W., Kalara, A., Staelin, R. and Zeithaml, V.A. (1993). A dynamic process model of service quality: from expectations to behavioural intentions, Journal of Marketing Research, 30(1), pp.7-27. Cheung, F.M., Cheung, S.F., Zhang, J., Leung, K., Leong, F. and Yeh, K.H. (2008). Relevance for openness as a personality dimension in Chinese culture, Journal of Cross-Cultural Psychology, 39(1), pp.81-107. Christensen, C.M. and Raynor, M.E. (2003). The Innovator’s Solution: Creating and sustaining successful growth. MA: Harvard Business School Press. Eng, T. And Bogaert, J. (2010). Psychological and cultural insights into consumption of luxury Western brands in India, Journal of Consumer Behaviour, 9(1), pp.55-75. Euromonitor International. (2011). Consumer lifestyles and trends in Serbia. [online] Available at: http://www.universalmedia.rs/sr/prez/consumer_lifestyle_in_serbia.pdf (Accessed: 2 April 2013). Hirai, K. (2012). Letter to Stakeholders: Operating Results in Fiscal Year 2011, Sony Corporation. [online] Available at: http://www.sony.net/SonyInfo/IR/financial/ar/2012/message/page02.html (Accessed: 1 April 2013). Hofstede Centre. (2012). What about Serbia? [online] http://geert-hofstede.com/serbia.html (Accessed: 2 April 2013). Hofstede, G. and Hofstede, G.J. (2005). Cultures and Organisations: Software of the mind, 3rd edn. McGraw-Hill. O’Cass, A. and Frost, H. (2002). Status Brands: Examining the Effects of Non-product-related Brand Associations on Status and Conspicuous Consumption, Journal of Product& Brand Management, 11(2), pp. 67-88. O’Cass, A. and McEwen, H. (2004). Exploring consumer status and conspicuous consumption, Journal of Consumer Behaviour, 4(1), pp.25-39. Schiffman, L.G. and Kanuk, L.L. (2010). Consumer Behaviour, 10th edn. Upper Saddle River: Prentice Hall International, Inc. Sony. (2013). Expanding business in emerging markets. [online] Available at: http://www.sony.net/SonyInfo/IR/financial/ar/2012/policy/page03.html (Accessed: 1 April 2013). Thompson, A., Gamble, J. and Strickland, A.J. (2005). Strategy: Winning in the marketplace, 2nd edn. New York: McGraw-Hill. Read More