Sony Company’s Marketing Management Case Study

Sony Company’s Marketing Management Case Study

Background

Sony entered the video game industry as a supplier of different parts to Nintendo, one of the video game giants in the world. Sony was established in 1945 in Tokyo, and its focus in the development of radios, televisions, and small music gadgets led to fast growth. Sony produced the PlayStation to compete with other gaming giants like Nintendo and Microsoft. Over the years, Sony has faced numerous challenges with its innovative products.

The challenges include legal issues and poor reception of its products. Despite the challenges, the company has always looked into expanding its market share by fixing the issues and venturing into the production of quality products to compete with its closest rivals. Sony’s release of the PlayStation 3 is one of the challenging times that Sony has faced in the recent past. The PS3 console barely made the expected sales, and most of the buyers had to return the PS3 consoles because it did not meet their expectations. This paper looks into Sony and its marketing strategy with a close focus on the PS3 console.

Problem statement

When Sony developed a plan to revolutionise the gaming industry, consumers expected the products to live up to their expectations. PlayStation 1 and 2 made remarkable sales because they exceeded the expectations of the consumers. The quality of the graphics in the PS1 and PS2 was above the rival products, and this gave it an edge over the competing companies. When the company announced the release of the PlayStation 3 console, it created a halo effect in the market. Consumers across the globe could hardly wait to own a unit of the popular product. After its release, the PS3 console did not make the projected sales because its performance and graphics were similar to the Xbox 360, and there were many issues associated with the products.

Statement of criteria (objectives)

The main objective is to develop an understanding of the failure in sales of the PS3 console, and to provide viable recommendations to ensure the situation does not recur in the future. The failure in sales was a result of giving consumers the wrong information in the marketing process. The actual product was nothing like the product that Sony had advertised.

Situation analysis (SWOT)

One of the weaknesses in Sony is that most of its products are produced by external contractors. The capabilities of its supply chain limited its ability to produce the targeted number of consoles. The consoles also had many technical problems that delayed the release of the product, which further led to the loss of potential consumers. Another problem with the release of the PS3 console was the lack of an effective distribution channel for the product.

There were reported shortages of the PS3 consoles in some parts of the world. The European market also had a very poor reception of the PS3, and this had an adverse effect on the performance of the product in the continent. The threat of substitutes was also quite high, but the company had an opportunity to make high sales in North America where the demand for the PS3 console created a halo effect.

Internal and external constraints

The internal constraints involved the lack of capabilities to produce and distribute the product. It was also evident that the cost of production and the price of the product almost cancelled out, meaning that Sony made minimal profits from the PS3 consoles. Its cost was way above the Xbox 360, which could provide similar quality in gaming. Game titles for the PS3 consoles were also previously available for the Xbox 360, which meant that anyone with the Xbox 360 could have the same gaming experience as a person with a PS3 console. The external constraints included the availability of cheaper substitutes. The internal constraints of the company merged with the external constraints to fuel a crisis for the PS3.

Recommendations

Innovation is always the key to harnessing a larger market in the video game industry. The trick is to develop a product that offers better graphics than the existing products. Sony should look into developing products that are upgraded versions of the products existing in the market. The failure in sales of the PS3 was caused by the availability of a cheaper substitute, the Xbox 360, and the availability of other products that offered more thrilling games.

Analysis of alternatives

Sony concentrated on increasing the hard disk space and speed of their product, and they forgot to provide the consumers with unique game titles and better graphics. The company should also always look into developing products before making advertisements. The PS3 was advertised before the manufacturing companies could even test it, and this led to a false advertisement, which led to the high number of returns of the product by consumers. Sony should also consider using the halo effect strategy in marketing when they are certain that the company can satisfy the demand for the new products.

Implementation

Marketing products in Sony should be conducted with integrity, and the company should focus on providing genuine information about their new products. This goal can be attained through taking the new products through tests to highlight the performance details and to provide the collect information to the consumers. Sony should also be aware of its external environment with relation to the competitors, the quality of the rival products, and the availability of cheaper substitutes.

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