Factors of Launching a Game Console in Context of Marketing Mix 4-Ps - Case Study Example

Key Success Factors of Launching a Game Console, in Context of Marketing Mix 4-Ps Framework: Place, Promotion, Production and Price The key success factors of launching any product depend on how pertinent that product is to the target customers, what substitutes are available in the market in terms of competition, whether the new product has radical innovation which helps it in breaking the clutter, whether its pricing strategy attracts the customers, whether it is easily available in the market, and whether the promotional strategy is effective enough to create considerable pull factor. The marketing mix or combination of strategies regarding Product, Price, Promotion and Place should be well balanced. The combined effect of these strategies should pull the customer in so that s/he acquires the product. In case of a gaming console, before it is decided what should be the successful marketing mix, it is important to be aware of the relevant demographics. Research reports have shown that the primary gamer group lies between the ages of 12 to 17 and 18 to 34 and is usually comprised of males (McCarthy C., March 2007). Marketing Mix 4-Ps in Context of Launch of Game Console Place: Owing to the demographics of gamers the distribution mode should be such that it attracts their attention. Obliviously exclusive brick and mortar shops should be promoted by the manufacturers but they should also supply their products at electronic and other big retailers, toy shops and alike. Also, online retailing should be leveraged owing to its broad reach and ease of payment. The exclusive store concept should be utilised in such a way that it creates a strong impact on the customer in terms of in-store experience which would help in creating a strong brand impression. Fig.1 Distribution Channel Promotion: Promotion could be before and after the launch. In fact, the before launch promotion plays a very important role in creating a positive buzz regarding the impending product and product launch in the target demographics. There are various gaming and electronic conventions which should be used to launch the gaming consoles. This would ensure that the message reaches the target consumer fast and direct. For example E3 which stands for electronic entertainment expo is a leading expo in the sphere of video games, consoles and peripherals. Its stature emanates from the fact that it is being organised by the ESA or electronic software association of the US which is devoted to serving the cause of the specific industry (About E3 expo, 2009). The CEA or the US based Consumer Electronics Association organises one of the biggest consumer electronic convention known as the CES and has membership of 2,200 corporate entities (About CES, 2009).These kinds of events can be leveraged to promote the gaming consoles as this would invariably introduce the product to a wider media from all over the world which would in turn translate into wide media coverage. Also, as a strategic marketing ploy, before the actual launch, senior management could choose to ‘leak’ console related information and photographs which would surely catch the avid gamers attention on the internet and that would create even more buzz about the brand through blogs, social networking sites or even through conventional media. Product: Products like Xbox 36 of Microsoft, Wii form Nintendo or Sony’s PlayStation series are some of the best selling consoles in the market. Each has its own positive points but the Nintendo Wii has been able to revolutionise the gaming market by its motion sensing technology. Any console, to be truly successful, and that too after launch, should come up with ground-breaking innovation much like the Wii to make an instant mark on the consumers and avid gamers. Price: Pricing is very important for any product to be successful and that is true in case of gaming consoles also. The pricing strategy depends on the overall strategy of the company and also the stage of business it is operating in. For instance, if the company is launching a console in the market then it might go for penetrative pricing just to build a customer base after which it might increase its price to increase revenue. Or, in some cases a company might reduce its price to instantly increase market share. But it is very important always to keep an eye on the competitor while deciding the price strategy. Some of the most popular gaming consoles are Microsoft’s X Box 360, Sony’s Playstation, Nintendo’s Wii. Each of them has their own prices and pricing strategies. Merits of Microsoft Launching Xbox 360 Several months before Competitors Microsoft Introduced the Xbox 360 in a special program on MTV much before the E3 expo, which was ordinarily used by its competitors to launch their products. Expos like these are used for product launches generally and the platform is used to build relationship with the hardware partners and alike by first showcasing the product them before it is shown to the ultimate consumer. But with the Xbox 360 launch through MTV (and not through the expo) and that too before its competitors’ consoles were launched, the company garnered certain strategic benefits. These were: I. This indirectly created considerable pressure on its competitors because announcing a new product always created a certain amount of excitement in the consumer’s mind and that was not viewed comfortably by Microsoft’s competitors. II. The gaming console industry has a five year life cycle which starts with early adoption and then travels through growth and maturity stages and ultimately ends with obsolescence. The time period which is being talked about was just 4 years after the launch of the original Xbox and so by launching the Xbox 360 before the usual five year was over Microsoft, actually altered the industry norms. Microsoft’s intention was to build a strong relationship with the consumer through the Xbox 360 before its competitors launched their new products. The company even hoped that this positive brand association would have a rub off effect on its core PC software business. III. By strategically using this moment to launch the Xbox 360 the company created a huge stir and excitement amongst the gamers and in the media as well.. This was further accentuated by strategically leaked information about the product by some sections of the company management itself. IV. The company, by using this spoiler tactics wanted to influence that section of the consumers who could be termed switchers i.e. those who are not loyal to any particular brand. First Mover Advantage There are various advantages pertaining to the first mover firm in product development. Some of these are: Switching cost- The first mover firm usually gains a healthy share of the customer base because it enters the market earlier or because it launches its product earlier. This makes it difficult for the late entrants to gain back the same customer base. Even if they are successful in doing so, they have to spend a considerable amount in getting the customer back in their fold. Also, the customer finds it difficult to switch brands once s/he has acquired products of the former brand recently. Moreover, the process also has cost repercussions for the customer. This is the switching cost and this usually discourages the customer from moving over to the late mover brands. High Attention- Psychological studies have shown that the first mover firm and its product receives huge attention from the consumer, which is often disproportionate. The media also plays its part and highlights the product and the brand quite profoundly. This in turn creates inquisitiveness in the prospective customer’s mind which ultimately increases portability of sales. Perception of Superiority- Even if the competing firms introduce products with same quality level later on, the consumer is seen to think of them as ‘me too’ products and usually bestows more importance to the first mover product and firm. It becomes difficult for the late entrants to achieve the same level of brand equity even with considerable amount of marketing and promotional support. Larger Market Share- It has also been noted that generally the first mover pioneering firms have greater share of the market than the followers or the late entrants, in consumer as well as industrial markets (Lieberman M.B. and Montgomery D.B., October 1987; Grant R.M., 2005). Marketing Strategies in the Product Decline Stage: Every product passes through different stages from its inception to decline and this cycle is known as product life cycle. After introduction, growth and maturity comes the decline stage. At this stage the interest in the product dwindles. This is reflected in sales numbers and revenue declines. However, there are strategic maneuvers which could be applied to arrest the decline at this stage. One of the most prominent ploys firms use is to decrease the price to entice the customer. They also cut expenditure and concentrate on that part of the customer base which is extremely loyal to the brand. This would ensure that the short term revenue and profit targets are maintained. Moreover the company could think of making improvements to the core product technologically and come up with a superior product offering. This is where a product moves into the next generation (Reid R. D. and Bojanic D.C., 2009). Examples: In case of Sony’s PlayStation 2 or PS2, the company started making enhancements to the product in the year 2003. The new PS2 had DVD drives which could play anything from DVD-R/RW to DVD+R/RW, i.e. all variants of DVDs. ‘Progressive scan’ technology was introduced which meant clearer images on the TV along with a new infrared receiver for a new remote control for controlling DVD play. This model also made 75% lesser noise due to better cooling technology being used. Sony revamped the design of the old PS2 and transformed its form, making it a sleeker and much lighter machine. It also put in built- in online game support with the introduction of a 56 Kbps jack and also one Ethernet port. The base price of the PS2 was also slashed to $99 to make it more affordable (Becker D., April 2003; Falcon J.P. and Carnoy D., July 2004). In case of Microsoft, the company launched the upgraded version of the Xbox, named Xbox 360, in November 2005 which was one year earlier than the competitors’ Play Station 3 of Sony and Nintendo’s Wii. By doing this the company became the first one to launch the technologically high end ‘next generation’ console. Some of the improvements over the prior version were upgraded video support through 1080p feature and HDMI output. Critics also point out that this model also had the best line up of games and also it had a HD DVD player with the option of downloadable TV shows and movies which were pay-per-view. The company also offered a three year warranty and the Xbox 360 arcade. The base model cost around $280. A new ‘Falcon’ CPU was also added which was better in terms of energy efficiency and also much cooler and lighter. The design made it sleeker than the previous model and changeable facelift options were also made available. Each of its three processor ran at 3.2GHz speed along with adding an improved better performing DVD reader. Xbox Live concept which was meant for online game play was also improved by fitting it to the dashboard. By paying a small amount as membership one could do video and voice chat with online gamers through the Live Vision Camera provided. The new version took care of many digital media needs by its connectivity capability to a windows PC through an USB port (Bakalar J. and Falcone J.P., 2005). Conclusion To maintain a good position in the market, Xbox 360 would have to be innovative not only in terms of design or hardware up gradation but also come up with features which have the potential of completely changing the gaming scenario. For example, when Nintendo launched its next generation gaming console Wii, with motion sensing technology, which could directly transfer the motion of the hand onto the TV screen, it made it possible to launch games like Wii Sports where a gamer could actually play games like tennis while holding the wand like controller in hand by replicating actual tennis shots. This was a revolutionary concept as far as game play was concerned and became a huge hit with the consumers. Within December 2008 the Wii sports actually became the bestselling video game ever, surpassing Super Mario Bros’ record by selling 40.24 million units. Nintendo also revolutionised the game controller by changing its usual shape to a hand like handheld remote to facilitate this new game-play. Xbox 360 would also have to think in these lines to alter the industry scenario even more in its favour (Greenwald W. and Falcone J.P., November 2006; Bremner B., January 2007). References: McCarthy C., March 2007, Study: u.s. Game Console Ownership Rising Rapidly, [Online], Available: http://news.cnet.com/Study-U.S.-game-console-ownership-rising-rapidly/2100-1043_3-6164274.html [May 8, 2009] About E3 expo, 2009, Electronic Entertainment Expo, [Online], Available: http://www.e3expo.com/content/1145/about-e3-expo/ [May 8, 2009] About CES, 2009, [Online], Available: http://www.cesweb.org/aboutces.asp#735 [May 8, 2009] Egan. C. and Thomas M.J., 1998, The Cim Handbook Of Strategic Marketing, Butterworth-Heinemann McDonnel F. and Jackson P., May 2005, Commentary: Microsoft's Xbox 360 spin, CNET, [Online], Available: http://news.cnet.com/Commentary-Microsofts-Xbox-360-spin/2030-1069_3-5706144.html [May 8, 2009] Lieberman M.B. and Montgomery D.B., October 1987, First Mover Advantages, Stanford, [Online], Available: https://gsbapps.stanford.edu/researchpapers/library/RP969.pdf [May 8, 2009] Grant R.M., 2005, Contemporary Strategy Analysis, Wiley-Blackwell Reid R. D. and Bojanic D.C., 2009, Hospitality Marketing Management, 5th Edition, John Wiley and Sons Becker D., April 2003, Sony tweaks PlayStation2 Design, CNET, [Online], Available: http://news.cnet.com/Sony-tweaks-PlayStation-2-design/2100-1043_3-996748.html [May 8, 2009] Falcon J.P. and Carnoy D., July 2004, Sony PlayStation2 (Slim Form Factor), [Online], Available: http://reviews.cnet.com/consoles/sony-playstation-2-slim/4505-10109_7-31125412.html [May 8, 2009] Bakalar J. and Falcone J.P., 2005, Microsoft Xbox 360 (20 GB), CNET, [Online], Available: http://reviews.cnet.com/consoles/microsoft-xbox-360-20gb/4505-10109_7-31355096.html [May 8, 2009] Greenwald W. and Falcone J.P., November 2006, Nintendo Wii, CNET, [Online], Available: http://reviews.cnet.com/consoles/nintendo-wii/4505-10109_7-31355104.html [May 8, 2009] Bremner B., January 2007, Nintendo Storms the Gaming World, Businessweek, [Online], Available: http://www.businessweek.com/globalbiz/content/jan2007/gb20070126_278776.htm [May 8, 2009] Read More