Sony Computers Entertainment: Playstation Vita - Case Study Example

EXECUTIVE SUMMARY This report provides a complete understanding of the marketing strategies of Play Station Vita, a product launched in 2011 by Sony Computers Entertainment and which brought a revolutionary change in the gaming market. The report highlights the various stages of a product life cycle along with suitable strategies that the company can implement to maximize gains and mitigate risks and threats. Currently Play Station Vita is operating in the growth stage of the product life cycle and growth strategies like market expansion; confrontation strategy etc has been explained in context to the company and its products. The company is more likely to follow a pioneer or a leader strategy with increasing market share, innovations and increased market penetration. The report also highlights the marketing plan of Play Station Vita through a SWOT analysis to identify its potential threats and convert the same into opportunities. Contingency plans for the company has been discussed with marketing metrics to follow. The company is likely to follow matrix form of organizational structure to ensure easy decision making and clear communication of decisions along with participative management from its employees. Finally the report is concluded with marketing audit tools most appropriate for the organization in order to ensure transparency, check and fair dealings in its day to day activities. It is to be noted that the complete report is prepared to throw light on both theoretical and practical approach of the company in a systematic and coordinated manner. TABLE OF CONTENTS Introduction 3 Basic Idea about Play Station Vita 3 Product Life Cycle (PLC) 4 New Market Entry 6 Pioneer or a Follower Strategy 7 Growth Strategy 9 Shakeout, Mature and Decline Phases 10 New Economy Market 13 Organizational Structure 14 Marketing Plan 15 Marketing Metrics 16 Marketing Audit 17 Conclusion 18 References 19 INTRODUCTION This report has been prepared with prime objective of developing marketing strategies for Play Station Vita a gaming product manufactured, marketed and sold by Sony Computers Entertainment. Play Station Vita has been successful in creating a new gaming experience to people fond of playing computer games. This report throws light on the various stages or phases of the product life cycle and suggests strategies most suitable to be implemented to mitigate the changing risks in different stages of product life cycle and ensure better success. Current operating stage of Play Station Vita is identified and operating strategies are recommended. The report than moves on to identify whether Play Station Vita follows a pioneer or a follower strategy along with a study of the organizational structure of the company. A SWOT analysis is further prepared to throw light on the potential strengths and threats from both internal and external factors. Finally the report is concluded with a marketing metrics and marketing audit techniques best suitable for the company to ensure proper check points and evaluation criteria and achieve higher returns and better growth of the organization. BASIC IDEA ABOUT PLAY STATION VITA Play Station Vita is a handheld gaming device manufactured by Sony Computers Entertainment. The product came into existence a decade back during December 2011 and was a grand success with over 2.2 million devices being sold. The product brought a new revolutionary change in the gaming market and was appreciated, liked and enjoyed by over 2 million customers. The product was developed internally by Sony Computers Entertainment with all exclusive rights and patents and by use of the best latest technology in terms of its hardware and software components. Best processors were used with huge spending on effective designing and graphics to make its users experience a real time gaming adventure. Microsoft and Google have also developed their own processors with high quality speed gaming and emerging as a tough competitor to Play Station Vita. It is be noted that distribution system of Play Station Vita is managed by excellent networking system of Sony and the product has been able to create a brand image of its own under the head Sony, a leading electronic brand which customers trust and rely upon. The product has been launched globally with its presence in Japan, Australia, United Nations, parts of far European countries and some parts of Asia. Further the company is constantly looking to add new features to gain a competitive edge over its rivals and ensure higher growth and success of the organization PRODUCT LIFE CYCLE (PLC) A product life cycle represents the entire life cycle of a product which mainly consists of four different stages which are introduction, growth, maturity and decline. It is important for any organization to understand the position in which its product lines since each stage is characterized by its own features and management need to develop strategies accordingly to make optimal utilization of its available resources and ensure smooth running of the business with regular flow of returns. The different phases or stages of a product life cycle are discussed as under. Introduction Stage: This is the first stage of the product life cycle and begins when the product is actually launched or distributed in the market. This stage includes a building phase where huge investments are involved along with large promotional offers to penetrate into the market and make the users aware of its features, advantages and availability of the product (Gabbot, 2004). Returns are on the lower side which is not much a concern for the management as the real focus is to create a market for the product and enjoy higher returns during the later stages of the product life cycle. Growth Stage: This is the stage that management constantly seeks to achieve as the same is characterized by low investments and supernormal profits. The product life cycle curve shows a sharp upward trend indicating market expansion, growth, higher returns, brand building with low cost and investments (Gabbot, 2004). This stage further involves optimal utilization of resources and the organization enjoys economies to scale advantages. Maturity Stage: This stage is characterized by the product reaching its peak and fear of declining profits in future years to come. Business is stagnated and profits are saturated. There is constant endeavor to revive the product back to growth stage by developing strategies which are inclined towards new innovations and added features (Gabbot, 2004). Market expansion, increased penetration etc are some of the common strategies deployed during this stage to shift back to the growth stage. Decline Stage: This stage involves a sharp dip in the product life cycle curve characterizing lower profits, lower returns, funds blockage etc. The product is often regarded as obsolete and faces intense competition with more advanced similar products. Management tries to come out of this stage by adding new lines of products and improving the features of its existing product (Gabbot, 2004). However many a times organizations decide to shut down business to save more than wasting time to revive the product and looks for a complete new product or business to start the game again Play Station Vita with its revolutionary change in the gaming world and advanced features with its presence all across the globe and highly appreciated, loved and loyal customers is likely to be in the growth stage where the company enjoys supernormal profits. Further the company is looking to add additional features to make the device thinner, lighter and more compatible. Life of battery is to be extended and memory devices are to be expanded to let its users enjoy more exciting games. Further the device shall come in more different variants and the company is to incur huge funds in R&D to make its users experience a real time gaming experience. All this shall add to the existing features and is certain to boost up sales of the company and make the organization achieve economies of scale with higher profits, returns and growth for the company in future years to come. NEW MARKET ENTRY New market entry always involve a crucial decision for management as the failure to do so may shorten the product life cycle of the product and an inappropriate manner to enter into new market may involve huge blockage of funds and generate higher losses for the company. Since Play Station Vita lies in the growth stage, the management should consider to enter into new markets to generate higher revenues, product presence and growth of the organization (Walker & Mullins, 2011). An organization may enter a new market by completely targeting a new market or by targeting a new customer segment of the customer pyramid to enlarge its customer base. Extending the product line, cost reduction and market expansion are some more techniques to gain entry into new market. The best suited strategies or techniques to gain new market entry has been discussed as under. Play Station Vita should follow a dual strategy to reposition its existing products and target female section of the existing market as well. Research shows that males spend 70% more time in games than females however there has been a rise in female gaming lovers which provides more expansion opportunities for Play Station Vita. Further the company in order to reposition its products should look to new innovations with latest technology (Dimitri, 2002). The company has already taken steps for the same by announcing more features in its products and making its products thinner, lighter and more compatible. Further new software are to be developed with expanded memory and additional battery life to provide its customers a real time gaming experience. Play Station Vita should look to new market entry by new market expansion particularly in the European and Asian markets. The company needs to develop a systematic and large networking system to make its products available with ease. Further to capture a global market the company can open its own internet portals and enter into tie-ups with online shopping companies to target a larger market and ensure higher sales, growth and returns for the company in the long run PIONEER OR FOLLOWER STRATEGY Every organization builds on its strategy as per its requirements and future needs, an organization through its risk taking abilities and competitive environment along with innovations either follow a pioneer or a follower strategy. A pioneer strategy is more pruned to risk takings with constant efforts to bring a revolutionary change in the market by new innovations. A pioneer emerges as a business icon and sets examples for others to follow. Since the risk involved is higher rewards for the same is on the higher side with higher growth, higher returns and higher developments in its products and services offered. A follower on the other hand is risk averse and follows the direction already successfully implemented by the pioneer. With lower risks, returns are lower but probability of failure is on the lower side since it generally follows a business model already in existence. Play Station Vita can be regarded as a pioneer since the company is constantly engaged in latest use of the technology to develop new products and services. Play Station Vita has been successful in bringing a revolutionary change and management can be credited to bring a complete new market of games in the modern world. The pioneer strategy most suited for Play Station Vita to ensure higher growth and returns is discussed as under. Niche market: Play Station Vita should look to target the niche market to develop a larger pool of loyal customers. The company is constantly looking to bring new innovations in its products with the use of modern techniques, methods and technology. A smart move by the company to make its products lighter, slimmer and compatible with extra memory space and extended battery life shall ensure higher success of the product and help company achieve higher returns with brand recognition of its own. Skimming strategy: This strategy shall help Play Station Vita to target its niche market in a more logical, coordinated and systematic manner. Skimming strategy shall enable the company to gain a competitive advantage over its existing rivals and its most recent emerging competitor which includes the android market. Further innovations and huge spending on research and development shall be fairly rewarded and it shall provide Play Station Vita a desired direction to achieve its organizational goals and objective with lesser efforts. GROWTH STRATEGY Growth strategies provides an insight to the organization to achieve higher returns with opportunities for market expansion and future developments inclined towards achieving organizational goals and objectives. Based on the ability of an organization to take risks and innovation capabilities an organization can either be a leader of follower. A leader is someone who is a risk taker and constantly looks to convert potential opportunities into real strategies through its pro active planning and innovation skills (Roger, Hartley, Barkowitz & Rudelius, 2006). A leader usually follows the following growth strategies like confrontation, market expansion, fortress and contraction strategies. A follower on the other hand is risk averse and follows business models and strategies already successfully implemented by the leader. Since the risk of failure are lower, returns in contrast to the same are also lower. A follower is more likely to follow the following growth strategies like gorilla, leapfrog, frontal, flank or encirclement strategies. Play Station Vista has always been a pioneer and follows a leader strategy. The company has been able to set standards which are regarded as benchmarks for others to follow and achieve the same. Play Station Vita is looking for market expansion to make its presence felt in the European countries and parts of Asian countries as well. The growth strategies most appropriate for Play Station Vita have been discussed as under. Market Expansion: Play Station Vita can be regarded as a market leader in countries like Japan, Australia, United Nations etc however, the company still has ample opportunity to tap the European countries and parts of Asian country. With its new features and modern technology the company aims to strives maximum customer satisfaction and attract a larger pool of customers (Shah, 2005). The company can look to tie-ups with other major competitors or can make tie-ups with popular online shopping companies in its target market to expand its market base and deliver best of its services. Confrontation Strategy: Sony Computers Entertainment should look towards confrontation strategy to boost up sales of Play Station Vita. The company should aim at providing better quality products and customer satisfaction. More service centers should be in operation to handle minor issues with the product. New innovations and product repositioning shall further add to the success of the company in the longer run. SHAKEOUT MATURE AND DECLINE PHASES A product life cycle is characterized by various stages or phases and management need to develop strategies accordingly with a pro active planning to ensure success in the long run. Different strategies which are most suitable for Play Station Vita during different stages of a product life cycle have been illustrated as under. Shakeout Strategies This stage is usually a threat for any organization as the organization suffers from dropping profits and intense competition from rivals with difficulty in sustaining the business. Play Station Vita through its innovative strategy should look to develop the following strategies to mitigate the risk of shakeout stage and provide a desired direction to its plans for a successful long term operation with optimal gains. Market Share: Play Station Vita should look to strengthen its market share by making its products available to larger segment of customer pyramid. It should look to reposition its products and develop games for female section of the society. Further making its products available through online shopping companies will ensure a larger market share with higher sales and returns (Barratt and Oliveira, 2001). Competitive Strategy: Play Station Vita faces tough competition not just from its rivals like Microsoft but also from Google and other android games. It is to be further noted that with new market expansion it is more likely to attract more competition and company needs to develop a competitive strategy to face the potential threat with a pro active outlook (Stephanie & Timothy, 2005). Play Station Vita should look towards promos and offers with exciting discount offers and new features to gain a competitive advantage over its rivals. Maturity Strategies This stage acts as a future fear for management as the product reaches its zenith and the management could feel a sense of declining profits in the near future with intense competition from its rivals. In order to fight against the same Play Station Vita should look to develop the following strategies. Increased Penetration: Play Station Vita should look towards increased penetration by targeting different segments of the customer pyramid and launching different variants of the product as per current market needs to ensure highest customer satisfaction and increased sales (Mintel Reports, 2005). Further the company to penetrate new markets should look towards exciting offers and schemes. Distribution system should be strengthen to ensure easy availability of the products. Market Expansion: Play Station Vita during the maturity stage can look to enter into tie-ups or partnerships with other companies in order to ensure market expansion. Further targeting a different segment shall help in market expansion. Play Station Vita in order to further expand its business can look to target European countries with market penetration techniques and ensure higher returns with growth and revive its products back to growth stage. Decline Strategies A decline stage is characterized by lowering profits, intense competition and the product becoming obsolete with considerable threat of declining market share and exit from the market. Play Station Vita needs to crucially design pro active plans to mitigate the rising risk of declining stage since the company is based on technology and a sharp exit for the company shall attract huge losses. In order to fight against the same Play Station Vita should look to adopt the following strategies. Maintenance: Play Station Vita should look to maintain the quality of its products and ensure customer satisfaction even in the declining stage. Efforts should be directed towards more liquidity in the financials to introduce new offers, promos and exciting schemes to attract more customers (Finlay, 2000). The company should further target to maintain its loyal customers with software up gradation free of cost and added features to its existing products. Niche: Play Station Vita even at the declining stage should continue to target the niche market to hold grip on its loyal customers and further expanding its market share. Efforts should be directed to act as a differentiator and indulge in proactive planning to make optimal utilization of its available resources and revive its products back to growth stage and enjoy higher returns and success in the long run. Thus, we see how Play Station Vita can look upon different stages of its product life cycle and develop strategies accordingly with a proactive outlook and giving its business a different dimension to act as a leader and ensure higher growth and returns with equally converting the potential opportunities into real strategic plans. NEW ECONOMY MARKET With rapid changing environment and technological advancement internet has been the latest buzzword connecting people all across the globe and making the world a global market easily accessible to people from any part of the world. Play Station Vita in order to keep in pace with these dynamic environment and technological advancement should look to draw upon the following new economy market strategies and ensure optimal utilization of its available resources and gain a competitive edge of its over rivals. Increased Product Promotion: Promotions acts as a tool to boost up sales and generate higher profits with deeper market penetration. Play Station Vita needs to develop its own brand image apart from the added royalty advantage it gains from Sony. Promotional tools such as new market offers, free gifts, schemes etc shall help the company to cater the needs of its customers in the new market economy and gain edge over its rivals (Bloom and Perry, 2001). Products should be upgraded with latest technology and at no cost quality should be compromised to ensure maximum customer satisfaction. Customer Satisfaction: It is to be noted that success of Play Station Vita depends on its ability to attract more loyal customers and deliver maximum customer satisfaction. In order to ensure same Play Station Vita needs to upgrade its products with latest technology and open exclusive service centers to cater the small technical issues which its customers may face while operating its products (Lee, Smith, Grimm & Schomburg, 2003). Ensuring maximum customer satisfaction shall indeed help the company to mitigate risks at all stages of its product life cycle and prolong its growth stage to enjoy higher super normal profits in the long run. ORGANISATIONAL STRUCTURE Organizational structures are developed on the basis to make a formal channel of hierarchy to ensure making crucial decision regarding plans and goals in a logical and systematic manner with communication of the same in a correct manner (James, 2004). Depending upon the organizational requirement an organizational structure may range from matrix to functional and from operational to product. Play Station Vita in order to ensure coordination and equal monitoring of its operational activities are more inclined towards a matrix organizational structure. This form of organizational structure provides an opportunity for all employees to communicate their views, ideas and opinions in a logical manner (Arnett, Menon and Wilcox, 2000). Matrix organizational structure further help in participative management and bring new innovations in its products and working style. The same shall be accompanied by a vertical approach to make managers at all level being accountable and responsible for their decision making. A matrix form of organizational structure will ensure that individual goals are directed towards organizational objectives and create a win-win situation for both organization and its employees. MARKETING PLAN Marketing plans help in developing future strategies to enable organizations to taste success for a longer period of time. The marketing plan of Play Station Vita can be more precisely understood by the help of a SWOT analysis which has been discussed as under. A SWOT analysis helps an organization to find its strengths, weaknesses, opportunities and threats from both internal and external factors and develop strategies accordingly. Strengths Pioneer in developing a new product for game lovers. Known for its high quality products and with highest customer satisfaction and customer service. In house research and development department who constantly keeps the product in pace with the latest technological advancements. Large pool of loyal customers with rapid increase in the same. Weaknesses Difficulty in controlling and monitoring its huge market globally. Increased conscious towards competitors move. High infrastructure cost. Opportunities Huge opportunity to expand market in European countries. Develop more variants to capture larger customer base. Increasing demand of play station games among female members. Opportunities to enter into new partnerships and tie-ups with other companies Threats Rising competition from Google and other android markets. Rising inflation with global slowdown. New industrial policies and stringent rules of copyrights and infringements making the business model more complex. Thus, we see Play Station Vita has its own threats and opportunities which through proactive planning can be used to develop contingency plans. Contingency plans are prepared as back up to meet contingent situations (Johnson, Scholes and Wittington, 2005). Contingency plan for Play Station Vita includes promotional tools like schemes, discounts etc to boost sales during contingent situations. Further contingent plans include negotiations with other companies to mitigate the risk of losing market share. It also includes cost reduction techniques to enable the company enjoy similar returns even in contingent situations. MARKETING METRICS Play Station Vita in order to make market expansion in European countries and parts of Asian countries and create a brand presence of its own with higher sales need to develop on its customer satisfaction. Customer satisfaction is one such tool in the hands of the company that can attract a larger pool of customers and let Play Station Vita enjoy supernormal profits for a longer period of time (Achrol and Stern, 2008). Play Station Vita should further look to implement new innovations and promotional tools to boost up sales and provide superior quality products with latest and advanced technology to gain competitive edge over its rivals and emerge as a market leader with real time gaming experience to its customers. MARKETING AUDIT Marketing audit is a tool to evaluate and check a company’s performance against its own and industry standard and which assures transparency and fair work in its day to day operations. Play Station Vita should look upon the following marketing audit techniques to ensure higher transparency and fair work in its dealings. Objective Audit: Pay Station Vita in order to achieve its organizational goals and objectives should look upon objective audit to ensure that small goals are directed towards organizational goal and the firm maintains transparency in achieving its organizational goal (Hochwald, 2000). Further this shall provide a desired direction to Play Station Vita to synchronize both organizational goal and individual goal and create a win-win situation for both. Ethical Audit: It is to be noted that Play Station Vita has its operation all across the globe with employees from different culture and varied diversity thus leading to cultural conflicts and ethical dilemmas (Hochwald, 2000). Further in a large organization like Sony Computers Entertainment it is important that the company is free from unethical issues. Conducting an ethical audit shall ensure transparency in ethical issues and help in mitigating ethical conflicts to a considerable extent. CONCLUSION This report provides a complete understanding of the market scenario of Play Station Vita and its future probabilities. The report focuses on the different stages of a product life cycle along with different strategies that the company can implement in order to mitigate its risks and gain optimal utilization of its available resources. Currently Play Station Vita operates in the growth stage and suitable growth strategies like market expansion, confrontation strategy has been explained in detail. Further the company acts a pioneer and leader is prune to higher risk takings with higher returns as rewards. Innovation and customer satisfaction are two pillars of company’s success. A SWOT analysis has been prepared to understand the marketing plan in a better way with identification of potentials threats and opportunities. Finally the report is concluded with a marketing metrics and marketing audit tool most appropriate for the company to ensure transparency and fair work in its daily operations. REFERENCES Achrol, R. S. and Stern, L W. (2008). Environmental determinants of decision-making uncertainty in marketing channels. Journal of Marketing Research, 25 (1), 36-50. Arnett, D. B., Menon, A. and Wilcox, J. B. (2000). Using competitive intelligence: antecedents and consequences. 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