The Core Competency of the Company: Sharp - Case Study Example

13 August 2008 The Core Competency of the Company: Sharp Why has Sharp been so successful for so longSharp Corporation is a leading consumer electronics company founded in 1912. The success of the company is caused by its unique strategy and brands image, customers loyalty and high quality of products and innovative solutions. Sharp Corporation is a company that has successfully refined and deepened the meaning of its corporate brand. It began by offering technological innovations and unique solutions. When buyers learn, what they want depends on what they experience, and what they experience depends on the strategies brands advance. Thus, what buyers want depends on brand strategies. Sharp understand that when buyers learn, competitive strategy takes on a long-understood but little practiced role: teaching buyers. Brand strategies define buyer experience-through the products offered, the advertising messages conveyed, indeed through every interaction between an organization and a buyer-and through that experience buyers develop an understanding of brand differences (perceptions), form judgments about the value of brand differences (preferences), and create a logic for choosing among brands (brand choice strategies).We refer to strategies that teach buyers as market-driving strategies (Bearden et al 77). Because of the Japanese consumer's traditional focus on corporate reputations, Japan has been considered a tough market for individual brands. This rising importance of branding, segmentation, and positioning has created new opportunities. In addition to Asahi and Honda, other nimble companies are taking advantage of the changes in the market to identify and capture specific segments of the market. Given the need to balance corporate and product-level branding, Sharp is applying a variety of approaches. These range from the more traditional corporate branding to two-story branding to narrow individual brand positioning. Companies are also using more Sharp -style branding (Boone and Kurtz 72). High technology continues to have an intense attraction for consumers, who recently favored such products as wristwatch PCs flat-screen TVs, and satellite cellular phones. New product development in Japan used to be technology and shelf-driven. In this environment, Japanese firms developed an unparalleled capacity for rapid product innovations, churning out new products and variations at a breathtaking rate (Collis and Noda 5). Japanese companies continue to have tremendous capabilities in rapid product innovation. of new product launches is greater in Japan than in the United States. In other categories, such as household products, the number of new product launches relative to the size of the market is larger in Japan than in the United States. In a few categories, such as foods, Japan lags behind the United States in producing new products (Kotler and Armstrong 92). Core competencies of Sharp are unique approach to products and entrepreneur spirit, innovative and state-of-the-art solution. The choice criteria of Japanese consumers is complex and changing rapidly. The approach to such cross-sectional variability would be niche marketing. United States marketers would find segments of the market in which the company has advantages over rivals and concentrate on those markets. But because Japanese consumers have traditionally been hard to segment and consumer choices have changed quickly-and, in many cases, randomly- Japanese firms instead developed a "rapid fire" approach to marketing to deal with the tremendous variability of their markets (Kotler and Keller 62). 2.In what ways does being a Japanese company contribute to Sharp's success Traditionally, Japanese companies have focused on building large, ambiguous corporate brands, so the "what" of brand positioning has been very difficult to pin down. In a market perceived to be homogeneous, the "whom" of brand positioning has also been very difficult to determine. In effect, the "what" and "whom" of Japanese brand positioning-other than an overall sense of quality and stability-were essentially "all things to all people." Today, this is changing (Bearden et al 44). The declining importance of the "big and ambiguous" corporate brand can be seen in the decreasing size of corporate logos in advertising. Even as Sharp discovered the importance of corporate brand building, Japanese marketers were beginning to develop strong individual brands. Japanese companies began nurturing brands and decreasing the emphasis on the corporate logo. The brand name is three times as large as the corporate logo. In addition to creating more individual brands, companies are also building more personality into their corporate brands. In contrast to Western corporate brands that have clearly defined images, most Japanese corporate brands tend to have a much less obvious brand personality (Perreault et al 55). It must be admitted, however, that the technology levels are five to ten years behind those in the United States. This fact adds to the attractiveness of entry in Japan for companies from abroad with expertise in this area. Brands in Japan must still be balanced against the corporate image. Failure to see the continuing importance of the corporation can be just as damaging as the failure to see the increasing opportunities for creating independent brands. By emphasizing the brand too much, the company can alienate and confuse customers who are attached to the corporation. Following these ideas and strategies, sharp creates a strong brand image and position on the market appealing to global consumers as a leading electronics brand (Hollensen et al 82). One of the reasons for this rapid product development capability- or perhaps one of the results of it-is that being first to market in Japan is more important than in the United States. In Japan, the rule seems to be to enter first or not at all. A study of retail buyers sponsored by the Marketing Science Institute found that pioneer brands have an even greater advantage in Japan than in the United States. Product innovation also is seen as a key competitive weapon in Japan. Successful new product launches also reflected a high level of competence in competitive and market intelligence generation. The project development team understands the customer purchase decision and price sensitivity and is aware of competitors in the marketplace. In addition to quantitative research, equal emphasis is placed on qualitative approaches, including focus groups, observing and listening to customers, and visiting retailers and users' homes. Competitive strategies, therefore, drive the evolution of the rules of the competitive game (Collis and Noda 9). Hence, the term market-driving strategies. In contrast, traditional customer-focused strategies assume that buyers know what they want, which implies that the rules of the competitive game are established by buyers and remain unchanged as brands compete. For Sharp, the objective of competitive strategy is to give buyers what they want, and at competitive advantage-faster, more effectively, or for less than rivals. Market-driving strategies, however, create competitive advantage in an entirely different way. Competition is a battle over the rules of competition that result from consumer learning. Competitive advantage is created by shaping the rules of the game to the advantage of one player over another (Perreault et al 45). 3.What historic strategic technologies does Sharp choose to invest in The main historic technology are sharp is transistor diode electronic desktop calculator, LCD panels, solar panels, audio-visual entertainment equipment,, mobile and camera phones, photocopies, microwave ovens, flash memory, cash registers. Conducting R&D in Japan not only keeps the research closer to the market but also provides early warnings of new products developed in Japan. Although Japan may lag in Nobel prizes, as discussed above, it is a myth that the Japanese only copy existing products, as P&G and other companies have learned by hard experience. This myth may have held some truth in the post-war era and for a few companies (Matsushita's Japanese nickname means "products which have been copied"). However, this belief also tends to minimize the attention foreign companies pay to monitoring Japanese products and technologies Sharp's initial dominant position in disposable diapers in Japan was eradicated by aggressive product improvement, which launched a super-absorbent disposable diaper that gave it market leadership in Japan Sharp was surprised by the rapid and successful attack, but quickly rolled out its super-absorbent Ultra Pampers in the United States, forestalling a potential attack by Kao in its home market. It is unlikely Sharp would have responded so quickly if it had not seen the impact of the innovation in Japan (Kotler and Keller 87). In many cases, Sharp has clearer brand images abroad than they do at home. The company did not traditionally have that image at home, although it is working to change it. Sony, as a major global player, had been a pioneer in using this strategy. Its brand identity evolved from an image of "small, accurate, and high quality" products to an image of "digital dream kids" that describes the aspirations of its customers. Technological strategies create remarkable value. The least obvious case of consumer learning is when products and competitors remain stable, unchanging for years, perhaps decades. A lack of innovation and the absence of new competitors may lead you to believe that there is no buyer learning occurring. In both laundry detergent and ice cream, for instance, product benefits have remain unchanged for years, there have been few innovations, and virtually everyone is familiar with major brands in both categories. Despite that constancy, buyers continue to learn (Boone and Kurtz 76). 4.What is the main difference between Sharp today and 30 years ago The main difference between Sharp today and 30 years ago is its market position. today, Sharp is a market leader operating on the global scale. It increases its product lines and pay more attention to consumer electronic products and technologies. The initial full-line strategy was not a great success. The newly launched brands reduced the size of the corporate name on the labels and advertising. The launch not only failed to attract consumers, but actually eroded consumers' confidence in Kirin. The labels of the new brands were interpreted as the company's loss of confidence in its formula and its corporate name (Collis and Noda 3). In addition to e-commerce, Sharp has used information technology in other ways to transform marketing. Japanese firms have been leaders in developing products customized to individual customers. Marketing communications, pricing, interactive advertising, and distribution can be facilitated through information technology. Given the increased heterogeneity and emphasis on individuality in Japanese markets, the ability offered by technology to inexpensively customize is expected to be even more valuable. Today, marketing is moving from the periphery to the center. Marketing expertise, once an afterthought, is now a central strategic necessity in rapidly changing Japanese and Asian markets. The practice of branding and segmentation, pricing, new product development, advertising, and marketing research have undergone fundamental transformations. These changes have tremendous implications for the critical success factors in entering Japanese and Asian markets. A decade or two ago, domestic and foreign companies could succeed in Japan without a sophisticated marketing capability. A strong corporate image, technological expertise, local connections, and a broad distribution network were enough. It wasn't necessary to understand the customer or the market. Today, with increasingly demanding customers and savvy marketers in Japan, few companies can succeed without strong marketing abilities. These skills and insights are crucial to winning in Japan and Asia. Those companies that do not have a highly developed understanding of marketing are at tremendous risk. Those global competitors that have well-developed marketing capabilities have an unprecedented opportunity to apply these skills to their advantage in Japan and Asia (Kotler and Keller 82). Ultimately, the shift in the market calls into question how much of the conventional wisdom of the Japanese market is based on deep cultural values and how much is based on market structure. Many Japanese executives, like the Japanese manager who shunned market research in the exchange noted previously, attribute to culture what very well might be a result of infrastructure and tradition. The manager in that case made the assumption that there was no need for market testing because all Japanese consumers are alike. In fact, there was no need for testing because the views of consumers made little difference in a production-driven marketplace. The strategy of not testing may have been right, but for the wrong reasons. As regulations and infrastructure change, these mistaken assumptions may result in lost opportunities or costly mistakes. Many distinctive features of Japanese culture, business, and government continue to shape competition and marketing in Japan (Collis and Noda 8). Like customers in any other market, Japanese customers have unique demographics, culture, and history. Japanese businesses have distinctive approaches to competition and unique structures for competing. Japanese government continues to play a powerful role in the nation's economic development. But it is now clear that Japanese customers are no longer docile sheep, herded in the direction dictated by corporate leaders (Hollensen et al 72). Another success is a building brand identity at the product level. This lack of differentiation became a problem as customers became more price-sensitive. Without differentiation and branding, similar products could only be differentiated based on price. This led to destructive price wars that undermined profits. Tired of endless price competition, manufacturers finally became serious about building brands with a specific vision of a focused customer target segment. As price competition intensified, the need to build strong brands became more imperative. At the same time, product lines were pared back, so companies could no longer rely on innovation as a substitute for building brands. The new successes, as Asahi and Honda demonstrated, are "small and smart" strategies, using finesse to tailor the product to the specific needs of market segments with brands that say something about the product and the purchaser. In some categories, businesses in Japan have successfully moved from a mass-market single segment to a segment of one. Sharp, like other Japanese companies, has traditionally been masters of relationship marketing. Japanese marketers have just begun to use more high-tech relationship marketing approaches, making full use of information technologies. For Sharp, whether buyers face a new-to-the-world product or simply face an age-old choice for the first time, the process of buyer learning is similar (Boone and Kurtz 22). Sharp pursues create the buyer experience and, based on this experience, buyers learn three key things-how to perceive brands, how to value the differences among brands, and how to make a choice among the alternatives. These perceptions, preferences, and choice strategies become the essential rules of the competitive game. Those rules, however, are continually updated as buyers continue to learn. In contrast, under the conventional view of buyers-that they know what they want-the rules of the game remain fixed, or at least they are beyond the influence of competitors' strategies (Kotler and Armstrong 66). 5. Should Sharp enter into an alliance with Apple or Intel Sharp should not enter into alliance with Apple or Intel because it will threaten its leadership position on the market and unique brand image. With its short-term outlook in the business environment and its inability or unwillingness to implement long-term strategies, corporate America has taken hold of a strategy of growth through merger, acquisition, or alliance. What is clear is that tremendous pressure is at work to shrink, streamline, and restructure corporate business. In the wake of overcapacity and deflation, of slow growth and intense foreign competition, acquisitions and alliances may very well be the United States' route to economic and competitive revitalization. Emulating their American counterparts, foreign corporate raiders focus on short-term profits, even if it means heavy restructuring and selloffs. The net effect of all this restructuring is that corporate managers are devoting increased amounts of time toward protecting their own interests in the short term, rather than focusing on long-term growth (Collis and Noda 9). A possible alliance with Intel or Apple will have a negative impact on Sharp's brand image. Perceptions for brands in the same category are not necessarily of equal dimension or of equal perceptual intensity. This may be due to the fact that we have more experience with Volvo than Saab, due to Volvos greater sales or more intense advertising spending, or we may know more people who drive Volvos than Saabs. A different perceptual network is the fundamental basis for brand differentiation. The objective of brand strategy is to create vast differences in perception. Any difference can be valuable, even differences that, at first blush, seem to be negative (Kotler and Armstrong 92). Even if brands have similar associations, differences between brands can still exist in the minds of buyers due to differences in the vividness of brand associations. Levi's and Lee jeans have many of the same associations. Both are American, rugged, associated with the American west, and similarly designed and priced. Despite these similarities, the perceptions of Levi's are more powerful, more vivid. Those differences greatly favor Levi's in any competitive situation. unique association has been created over 30 years through consistent product development and advertising (Crawford 92). In sum, defining value creates enormous competitive advantages. In the poker analogy used earlier, the dealer defines the winning hand. In many cases, one brand establishes a standard for value. The Case of Sharp shows that in markets with no architectural control points, there are perceptual control points, psychological standards with much the same effect. The most dramatic and perhaps risky strategy is to redefine the standard entirely. One way to create a new standard is through product innovation. Choice, then, becomes a simple matter of selecting the highest scoring brand. But coming to that choice is a difficult task indeed. As a result, consumers often adopt a simplified version of this strategy, the equally weighted rule, in which all perceptions are given equal weights to reduce the mental cost of comparisons. Works Cited 1. Bearden, W. O., Ingram, Th. N., LaForge, L.W. Marketing, Prentice Hall, 2004. 2. Boone, L.E., Kurtz, D.L., Management, McGraw-Hill, New York, 2002. 3. Crawford C. Merle. New Products Management. Irwin-McGraw Hill. 7th edition, 2003. 4. Collis, D.J., Noda, T. Sharp Corporation: Technology Strategy. Harvard Business School. 1995. 5. Hollensen, S. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition, 2007. 6. Kotler, Ph., Armstrong, G. Principles of Marketing. Prentice Hall; 11th edition, 2005. 7. Kotler, Ph, Keller, K. Marketing Management. Prentice Hall, 2005. 8. Perreault, W.D., Cannon, J.P., McCarthy, E.J. Marketing: Principles and Perspectives. McGraw-Hill/Irwin; 4 edition, 2005. Read More