Analysis of Marketing Channel Structure of Sony - Research Paper Example

Analysis of Marketing Channel Structure of Sony Table of Contents Introduction 2 Channel Design 3 Service Outputs 4 Bulk Breaking 4 Spatial Convenience 4 Waiting Time and Quick Delivery 5 Breadth of Variety 6 Customer Service 6 Information Provision 7 Segmentation and Channel Flows 8 Efficiency and Effectiveness 8 Customer Demands 9 Varieties of Products vs. Speed of Delivery 10 Customer Delight 10 Conclusion 11 References 12 Introduction Sony, headquartered in Tokyo, Japan, was founded in 1946 as Tokyo Telecommunications Engineering Corporation by Masaru Ibuka and Akio Morita. The Japanese giant was renamed Sony Corporation (Sony) in 1958. Right from the time of its inception, Sony has wondered the world with numerous technological milestones. Being a truly international organization right from the start, Sony understands better than most of its peers the importance of a global market and the power that an established brand can exude (Sony-a, n.d., “About Sony”). Sony’s vision is, “To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services” (Sony-b, n.d., “Company Profile”). It is a highly simplified summary of the collective efforts that the organization continually gives in order to manifest customer delight. Quite obviously, the organization has to maintain a well coordinated network of marketing channels so that all the business processes can be aligned optimally with the marketing and sales objectives. A marketing channel can be defined as “A business structure, reaching from the point of product origin to the consumer, through which a manufacturer or marketer motivates, communicates, sells, ships, stores, delivers, and services the customer’s expectations and the product’s needs” (McCalley, 1996, P. 4). From this definition it can be clearly understood that a marketing channel is an indispensable business component which helps organizations achieve customer delight through strategically placing their products in the markets, selling them through easily accessible points of sale (POS), and enhancing customer satisfaction through efficient after sales service, in a cost effective manner. Hence, marketing channels should be synchronized properly with the corporate goals. The various activities that are involved in a typical marketing channel include communication to the channel members, selling the products through channel intermediaries, storing the products to ensure their availability and servicing the products as well as the customers. Channel Design Marketing channels have to be designed in accordance with the objectives that the organizations wish to achieve. While designing a marketing channel the various decisional criteria that are taken into consideration are analysis of customer needs, establishing channel objectives, and identification and evaluation of channel alternatives (Kotler & Armstrong, 2005, P. 409). Sony makes use of both traditional as well as online marketing networks to sell its flat screen televisions. The traditional networks consist of distributors, wholesalers and retailers. In order to ensure that each channel partner performs its job efficiently, Sony conducts extensive surveys with the key personnel of each channel. Performance ratings are conducted for aspects such as product features, pricing, etc. (Smith & Albaum, 2005, P. 10). Channel design plays an important role in determining the overall channel efficiency. It helps organizations evaluate various other performance parameters like sales promotion, product availability and even profitability. Service Outputs Service outputs are the end objectives of the marketing channels and hence have to be achieved by each channel partner in order to maintain congruence and to manifest customer satisfaction. The various service outputs that Sony takes into consideration to manifest its ultimate goal of achieving customer delight has been outlined below. Bulk Breaking By bulk breaking, organizations break down large or consolidated shipments into smaller components for finally delivering the products to the local points of sale (Swamidass, 2000, P. 66). Sony being an established business entity in the Austrian market can setup local warehouses for the purpose of breaking its shipments into moderate consignments. These warehouses will serve as local nodes and in turn will supply the products (flat screen televisions in this case) in even smaller batches to the points of sale. Spatial Convenience This aspect of service marketing ensures easy accessibility of products. If the products are strategically sold through convenient terminals, the customers will find it easier to locate, and travel to them. This in turn increases customer satisfaction substantially. In the Austrian market, Sony can achieve spatial convenience through its own showrooms and retail outlets as it has already done in the rest of the countries wherein it is doing business. It can sell its products directly through its exclusive outlets. At the same time, the company can enter into strategic tie-ups with various Austrian supermarket chains. Some such chains are Billa, Hofer (Aldi), Lidl, Merkur, Nah&Frisch, Penny, SPAR, Zielpunkt (List of Supermarkets in Austria, n.d., “Austrian Supermarkets”). Selling through supermarkets will also provide the company with maximum penetration owing to large number of customers that visit these outlets on a daily basis. It will also help Sony enhance brand awareness on a mass scale. Waiting Time and Quick Delivery Waiting time refers to period for which a customer has to wait between planning to buy a certain product and actually having it in his possession. As it has been already discussed, service outputs aim at enhancing customer delight. Hence, waiting time has to be ideally very short. For this purpose, organizations have to ensure quick delivery to the end users. This is possible only when organizations practice efficient customer relationship management (CRM) systems. The orders have to be processed fast in order to hasten the subsequent steps involved in product delivery. Sony has been observed to believe that, “if we build it, they will come” (Greenberg, 2009, P. 110). Owing to this fact Sony cannot cater optimally to the customer demands. Though demands are quite high for its premium products such as the Bravia series, Sony cannot sell sufficiently. This in turn increases waiting time, delays delivery and of course, demoralizes customers. Longer waiting time and delayed delivery may also shift customer loyalty and repel them towards rival brands. Being a market leader, Sony cannot afford to commit such a mistake. In order to overcome competition from players like Samsung who have a significant presence in the Austrian market (List of Companies, n.d., “SAMSUNG ELECTRONICS AUSTRIA GMBH.”), Sony should enhance production to meet the rising demand for its products. As Samsung plays an equally significant role in the product group of flat screens, Sony should be proactive in devising its competitive stratagem. Breadth of Variety Organizations should optimize their product offerings through extensive market analysis and determine the breadth of product portfolio. Product variety enables customers to choose from a wide range of alternatives (Marti, 2007, P. 57).in order to maximize sales organizations should introduce products which substitute for those of their rivals in every price category. Sony’s range of flat screen televisions comprises a strong arsenal of more than 150 variants (Unbeatable, n.d., “Sony LCD TV & Sony Bravia Televisions”) and thus provides a large number of purchasing alternatives to the customers. In order to enhance competitive advantage over Samsung which boasts of more than 200 variants in the same category, Sony should widen its spectrum and manufacture a line of cost efficient models to reach out to more customers. Customer Service Customer service represents the group of activities which eases the shopping experience of the customers and facilitates the overall purchasing process. Efficient customer service is perhaps the most significant cornerstone of marketing as it helps in escalating customer satisfaction and also in generating repeat business as well as referrals. Good customer service initiates brand promotion through word of mouth. Sony boasts of a strong customer service in the forms of online support as well as an offline team of skilled specialists. The online support that Sony provides to its customers is in the form of virtual company tour, production checklist, online ordering, online enquiry, etc. (Sony DADC, n.d., “A New Era of Customer Service”). Through these links the company allows the customers to have a comprehensive idea about its Austrian production process, price and product related information and also enables them to place orders online. Additionally, the company also enables the customers to report their problems and try to solve them at the earliest behest. Customer feedback is treated with great importance at Sony. Information Provision As part of marketing ethics, organizations should educate the customers about product features and should also give them proper guidance on handling and usage. The instruction manuals provided by Sony are multilingual and can be comprehended by eight major linguistic groups. Moreover, the company also provides a common warranty which enables the customers to receive after sales services in 46 countries. Through this international package, consumers may avail free services in any of the 46 nations without any discrimination or quality compromise (Sony-c, n.d., “Basic Info”). These benefits help in reinforcing Sony’s presence as a global leader in consumer electronics segment and also help the company achieve customer satisfaction at a transnational level. Segmentation and Channel Flows Sony has to undertake market segmentation to place its products profitably in the European markets. As it is a known brand in Austria, Sony should concentrate on the flat screen segment to understand its share in the pie. This should be done to ensure that the Japanese behemoth outperforms its Korean counterpart (Samsung) in the lucrative as well as futuristic flat screen television market. Though Samsung doesn’t parallel Sony in terms of technological excellence, its aggressive marketing strategies coupled with a wide range of variants, offers a tough competition to Sony. Moreover, LG is another Korean player that has a considerable presence in Austria. Thus Sony runs the risk of substitute products from these two companies and hence, has to augment its channel flows to ensure uninterrupted flow of shipments to the points of sale. A wider network of distributors, wholesalers and retailers will be necessary to maximize penetration and customer interface. Number of retail outlets has to be increased to enhance usage rate and accessibility by customers. The company should also undertake segmentation on the bases of customer preferences and market size. This will help Sony to assign specific channels to the different segments. Efficiency and Effectiveness Channel efficiency and effectiveness can be greatly increased by a large number of exclusive outlets. Another means to enhance these two parameters are extensive promotion. Sony already has a chain of retail outlets through which it communicates its brand values. Additionally, it can also escalate channel performance through strategic alliances with supermarkets, specialty stores and hyper marts. Through negotiations and financing, Sony can also increase the number of terminal channel partners. It can also employ commission based sales forces to reach out to untapped market segments. Channels play a dual role of sales promotion and sales realization, and hence, a wider channel network will help Sony achieve both these objectives. Periodic evaluation of the performance of the different channel partners has to be undertaken as an organizational responsibility. Standardized training modules have to be formulated and institutionalized for the channel members to ensure unity of objectives. Customer Demands Customers have certain expectations from the products that they plan to buy. When a company successfully caters to those expectations, the consumers’ expectations grow and reach the level of demands. Because of the fast technological advancements, customers demand state of the art features to be incorporated in the products of their choice. In the current business scenario, customer demands fluctuate on a very frequent basis and at the same time they are quite pressing on the delivering capacity of the organizations. The pressure is substantially high on Sony owing to the fact that it stands apart on grounds of technological excellence. Hence, the company should augment its product portfolio both in the premium category as well as the basic level in order to attract diverse consumer groups. Varieties of Products vs. Speed of Delivery As has already been discussed, Sony has more than 150 variants in its flat screen product group. It should increase this number to surpass Samsung. At the same time it should up the speed of product delivery to enhance customer delight. The company should keep a track of fluctuations in the market demand and optimize its supply accordingly. A just in time (JIT) approach can be adopted to reduce inventory and operational expenses. This can be manifested through a harmonized supply chain and distribution network. Customer Delight Customer delight is the end objective that an organization aims to achieve through all its operations. Customer delight and profitability are interrelated as the former enhances the latter through repeat business and referrals. In context of its Austrian business, Sony has an excellent customer service which eases the association of the customers with the organization. Moreover it boasts of a large number of flat screen variants which cater to the differential customer needs. On a global scale, Sony enjoys significant levels of customer delight, but it can escalate it to greater heights by enhancing its market presence in the form of exclusive outlets. The after sales customer support team should be periodically trained to handle technological advancements and cater to increasing customer demands. Conclusion Sony has a significant presence in the Austrian markets and its major competitors in this segment are Samsung and LG. though Sony has a more than 150 variants in the product group of flat screen television, it is vulnerable to stiff competition from its Korean counterparts as they have wider product portfolios. In order to gain competitive advantage over these close rivals, Sony should continually upgrade its core competency which is technological excellence. At the same time it should also aim at enhancing its market presence, profitability and customer delight by augmenting its marketing channels. Both the supply chain as well as the distribution network has to be diversified and widened to ease the procurement of raw materials, and to make the final products easily available in sufficient volumes to the end users. The channel partners have to be well coordinated through clear communication of individual as well as the ultimate objective. The management should try to enhance synergy among channel members by providing them with relevant training. Customer service can be further improved by employing larger support teams. Sony can also enhance customer delight by selling its products through a wider network of conveniently located exclusive outlets. Additionally, the company can also sell its offerings through strategic tie ups with supermarkets, etc. References Greenberg, P. CRM at the Speed of Light: Social CRM Strategies, Tools, and Techniques for Engaging Your Customers. 4th ed. McGraw Hill Professional. 2009. Kotler, P. & Armstrong, G. Principles of Marketing. 10th ed. Pearson Education Inc. 2004. List of Companies. SAMSUNG ELECTRONICS AUSTRIA GMBH. No Date. February 12, 2010 . List of Supermarkets in Austria. Austrian Supermarkets. No Date. February 12, 2010 . Marti, M. Complexity Management: Optimizing Product Architecture of Industrial Products. Springer. 2007. McCalley, W. R. Marketing Channel Management: People, Products, Programs, and Markets. Greenwood Publishing Group. 1996. Smith, M. S. & Albaum, S. G. Fundamentals of Marketing Research. SAGE. 2005. Sony-a. About Sony. No Date. February 12, 2010 . Sony-b. Company Profile. No Date. February 12, 2010 . Sony-c. Basic Info. No Date. February 12, 2010 . Sony DADC. A New Era of Customer Service. No Date. February 12, 2010 . Swamidass, M. P. Encyclopedia of Production and Manufacturing Management. Springer. 2000. Unbeatable. Sony LCD TV & Sony Bravia Televisions. No Date. February 12, 2010 . Read More