Marketing Audit Analysis: The Sony Corporation - Assignment Example

Marketing Audit Analysis: The Sony Corporation BY YOU YOUR SCHOOL INFO HERE HERE Marketing Audit Analysis: Sony Corporation Situational analysis Once a pioneering innovator in the consumer electronics industry, Sony is now struggling to capture market share against main competitors such as Samsung, Microsoft, and Sharp. In the 1980s, Sony launched the Sony Walkman, an innovative music-listening device that revolutionised music-listening for consumers, allowing them to make music portable and mobile in a fashion that had not been conceived of prior. However, Sony has had considerable difficulty in recent years maintaining this pioneering brand reputation with less emphasis on developing and launching products with unique benefits and features. In 2012, Sony reported a massive loss of 67 billion Yen (Hirai 2012). In 2011, the company reported an even larger loss of 200 billion Yen. Sony is not keeping up the proper pace of innovation in the smartphone industry and with other consumer electronics, allowing companies such as Samsung to seize more market share and gain a reputation for pioneering product development with many different target consumer segments. If Samsung fails to innovate, it will continue to report massive losses and difficulty in recapturing its once-heralded reputation in innovation. Sharp, a major competitor associated with consumer television products, recognises the demand for technological change in its many international markets. Sharp, as a result, recognised that main competition in this industry were not effectively developing 3D television technologies and determined that significant capital investment in R&D would assist in allowing Sharp to capitalise on this innovation. Sharp reported revenues of $24 billion USD in 2011 as a result of 3D television innovations (Sharp 2013). Furthermore, another main competitor, Sharp, is also adept at exploiting technological change in the market in order to pioneer many different consumer electronics products. Sharp recognised that its competitors were not capitalising on 3D television technology and devoted considerable R&D-related resources on this emerging technology. As a result, this firm achieved revenues of nearly 24 billion USD in 2011 (Sharp 2013). Microsoft, the producer of the pioneering gaming console, Xbox, also continues to be a competitive, innovation-focused market threat for Sony. With each new version of the Sony Playstation, the first real innovation for Sony in well over two decades, Microsoft times its launches of its own innovative changes to the Xbox, serving as a brand threat for the Sony Corporation. Furthermore, Microsoft has begun an acquisition strategy to capture new markets, recently purchasing the gaming software manufacturer, Mojang, which created the highly successful game Minecraft. This game is so popular that it has sold 12 million copies throughout the world. Microsoft’s acquisition of Mojang, at a cost of $2.5 billion USD, is expected to provide Microsoft with billions upon billions of dollars in revenue. Sony, the producer of the Playstation console, is not effectively exploiting similar, potential acquisitions to improve its reputation in the gaming industry. Sony has long maintained a very autocratic organisational structure, founded on traditional Japanese values, where there is considerable power distance between managers and subordinates, which limits team-working and shared decision-making that is so critical for innovation production and development. This hierarchy-driven model asserts the importance of employee compliance to policy and regulations whilst also building a culture of risk avoidance. In fact, Japanese companies often demand in-depth feasibility reports be constructed before even making small-scale decisions, as part of risk mitigation focus. Macko and Tyszka (2009) iterates that the most successful firms must be willing to absorb potential risks to take advantage of opportunities when they present themselves. Sony, in order to improve its revenues and its diminishing brand reputation as an innovator, maintains an organisational goal of decentralising Sony Corporation to facilitate a culture of innovation that will improve the firm’s market reputation and more effectively position against Sharp, Microsoft and Sony as a market pioneer. This is critical for Sony to achieve profitability after years of massive financial losses. 2. Analysis of firm strengths and weaknesses Sony does maintain several strengths that could contribute to the ability to become a market innovator and build a new reputation for pioneering products. The firm maintains a very well-recognised brand identity throughout the globe in many, many foreign and domestic markets. This gives the firm moderate brand equity and Kotler and Keller (2007) suggest that this can equate to higher revenues as compared to firms without strong brand recognition. Sony also maintains significant production capabilities that can facilitate rapid product prototyping and production. Coupled with internal staff expertise in various areas of specialised knowledge (i.e. technology, design and marketing), the firm is positioned for potential exploitation of the innovation process. The firm’s main weaknesses is the highly-autocratic management structure that is still part of the Sony Corporation business model worldwide. This type of culture is known to diminish creativity. Research also identifies that managers accustomed to having strong power distance will often resist change when their authority and power are perceived as being threatened (Skarlicki and Folger 1997). Coupled with a lack of investor confidence in the securities market, Sony maintains difficulty raising appropriate capital for expansion and business model improvement; in an environment where revenues and cash flow are not positive for innovation production. 3. Exploring potential marketing objectives In order to achieve a market reputation as a pioneer, the firm must consider the following marketing objectives: Reallocate internal resources toward product development and R&D to exploit opportunities for innovative product launches. Utilise more effective public relations mediums and other promotional communications that continue to assert Sony’s efforts at innovation to regain trust and confidence of consumers and investors. Acquire business or establish joint ventures with gaming industry developers that can facilitate improved Playstation capabilities and uniqueness, whilst also allowing the firm to more effectively compete with Microsoft and improve its long-term revenue stream. The aforementioned marketing objectives will ensure that the firm regains its market reputation as pioneer, restructure the business to facilitate more creative and innovative product launches recurrently, and improve the quality of brand management necessary to ensure many different target segments believe that Sony can, again, be a market innovator. The smartphone company Blackberry failed to properly innovate, which led to consumers now believing it was an outdated and irrelevant brand, virtually destroying its market share in a short period of time (Paul 2013). Sony cannot afford the same fate as Blackberry that continued to fail to keep pace with companies such as Apple and Samsung in terms of innovation which has significantly impacted Blackberry’s corporate life cycle; longitudinally. 4. Outline of marketing activities to achieve objectives Product and promotion are the most significant marketing activities that will assist in repositioning the brand as a market innovator. Research uncovered no evidence that pricing was a major factor in competitive rivalry and no evidence that markets in smart phones and gaming technologies are price-sensitive. Place, additionally, is not relevant as Sony’s products are available in retail outlets throughout the globe and online, which requires no marketing emphasis. The first marketing activity is to re-allocate value-chain related resources in a fashion that promotes the development of project teams to brainstorm innovation ideas, ensure their prototyping and development, and subsequent market launches throughout the world. It would be highly beneficial for Sony to exploit opportunities to educate investors and target consumers about Sony’s efforts at new product development and publicise when these products will reach their market fruition. Utilising routine press releases and even webinars, which Apple performs regularly to update consumers on what innovative products will be launched, will assist Sony in capturing market attention. Concurrently, executives at Sony should conduct feasibility reports and in-depth competitor and market analyses in order to identify potential joint ventures or acquisitions in the gaming industry. The Playstation’s newest version, today, has given Sony a 65 percent revenue increase (Parfitt 2014), hence this is one of the firm’s most valuable products with ample consumer demand. Using effective communications/promotions, Sony can build a reputation as a gaming industry expert and promote its customer-centric values to improve diverse demographics’ gaming experiences. Timeline for marketing activities 1. Reallocation and restructure of R&D and changing internal cultural mindset to embrace team-working and collaboration – Six Months: June-December 2015. 2. Press release and promotional development to educate on Sony’s innovation processes – Immediately upon project launch and running through the duration of launch: Approximately nine months: July – April 2016. (This activity, too, can serve to improve investor confidence that will improve stock value needed for capital production). 3. Conduct market analysis to identify joint venture partners or acquisitions in gaming industry – Three Months: June-August 2015. 4. Launch the joint venture or incorporate the acquired model to improve consumer gaming technology development and service – August 2015. 5. Conclusion It is critical that Sony changes its cultural mindset and decentralises to facilitate the collaboration and team projects needed to create innovations in smartphones and the gaming industry; as well as potentially television technologies. Sony is a slow-to-change culture, however executives in the firm are now realising that removing layers of bureaucracy are critical to becoming a market pioneer again and sustain a reputation for this with desirable consumer target segments. This strategy, also catering to mass markets rather than as a niche provider, gives the firm a differentiation strategy opportunity, rather than focus strategy, which will gain more diverse consumer demographic demand based on behavioural factors and psychographic characteristics. Reallocation of capital and labour-based resources in operations with support activities along the value chain will ensure more collaboration occurs and that new products can be conceived, prototyped and launched in an acceptable and recurring timeframe. Having new product benefits and features, especially if a radical innovation that disrupts the market, will give Sony a better brand reputation and more brand equity if the business seeks, long-term, a diversification strategy. Brand equity is substantial for a firm in terms of revenue growth and the ability to enter new markets, hence innovation as a brand goal maintains ample profit and image-related benefits. Through effective use of promotion and focus on product as innovation, Sony can begin to seize market share from major competition such as Samsung, Sharp and Microsoft. Promotion of all internal activities that are facilitating innovation will have multiple benefits, including attracting more investors in the securities market and differentiating the firm against competitors that also recognise the importance of innovation as a marketing tool. An acquisition in the gaming industry, additionally, will give Sony more bargaining power in the gaming industry which has implications for cost-savings and the ability to leverage the firm’s scope and size. References 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 30 April 2015). Kotler, P. and Keller, K. (2007). A Framework for Marketing Management. Pearson Prentice Hall. Macko, A. and Tyszka, T. (2009). Entrepreneurship and risk taking, Applied Psychology, 58(3), pp.469-487. Parfitt, B. (2014). Playstation revenues up 65 percent following PS4 launch, Sony confirms Vaio sell-off, The Market for Computer and Video Games. [online] Available at: http://www.mcvuk.com/news/read/playstation-revenues-up-65-following-ps4-launch-confirms-vaio-sell-off/0127760 (accessed 1 May 2015). Paul, D. (2013). The importance of brand in technology purchasing – UK: Mintel Report, Mintel Group Ltd. Sharp Corporation. (2013). 2010 Form K – Sharp Corporation, Google Investor. [online] Available at: http://www.google.com/finance?q=PINK:SHCAY&fstype=ii (accessed 30 April 2015). Skarlicki, D.P. and Folger, R. (1997). Retaliation in the workplace: the roles of distributive, procedural and interactional justice, Journal of Applied Psychology, 82, pp.434-443. Read More