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Sony

Sony

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11/18/2015

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MARKETING STRATEGY

Strategic

management

decisions

have

multifunctional

and

multi-business

consequences, this kind of decision require broad consideration of the firm's external and internal environments, and it may affect the firm¶s chance of prosperity. It is important to know what strategy is about, what can it do help the company prosper, what will happen if not used properly, what are the advantages and disadvantages of having a strategy. Strategy is a plan that assimilates the company¶s major target; policies and rules; decisions and sequences of action into organized whole. Strategy is a combination of the company¶s objectives, policies and decisions to be done in unison or contingent upon each other. Marketing strategy thus refers to how a company¶s products or services its trade is presented to consumers in an effective manner as to gain loyal customers. Strategy can be used in different ways, one of which is through marketing. Using strategy in marketing makes it more convincing and effective. Strategy makes sure that nothing wrong happens in the marketing process in the company. Marketing strategy is a way to capture a niche in the consumer market. Businesses utilize it to gain following and exploit their maximum and/or optimal profit capabilities. Strategic marketing is the way company sells the product it has with less difficulty and more readiness to face competitors. Strategic marketing makes sure that the company uses all of its resources to counter its competitors. Strategic marketing planning is a procedure wherein the strategies used to sell product is carefully studied and analyzed so that the company can compete well and have advantage with rivals.

CORPORATE Vs COMPETITORS

All firms have strategic windows and some of these windows open out on to markets that are shared with other firms. Where windows share views over the same market, competition exists. It is important to understand how different firms view the same market since their perceived and actual windows of opportunity will not all be the same. The nature of competition and the factors which influence it are explored along with how firms identify competitors and how they use product positioning to obtain a competitive advantage. Attention is paid to how firms define their marketing strategies and analyze the competitive positions of rivals. Consideration is given to the various sources of information available to firms that enable them to gauge competitor¶s strengths and weaknesses. Success in the market place depends not only on the ability to identify customer wants and needs but also upon an ability to be able to satisfy those wants and needs better than that competitors are able to do. This implies that organizations need to look for ways of achieving a differential advantage in the eyes of the customer.

The differential advantage is often achieved through the product or service itself but sometimes it may be achieved through other elements of the marketing mix. An important thing the company should be wary of is to understand competitors. Gaining knowledge against competitors helps in creating measures to gain advantage against competitors. To know and to have an in depth knowledge of the competitors, the company can use different kinds of strategy such as porter¶s generic strategy. Determining and having added knowledge about the competitors help in planning marketing activities through distinguishing and forecasting what activities rivals may use and what strategy they might implement. Having added knowledge creates a way for the company to prepare for anything competitors might do and it helps in planning marketing activities that focus on having contingency measures against competitors.

Sony although being a well known and successful company still uses strategic marketing planning that keeps the company alive in its industry. This strategic marketing planning keeps Sony alive against its competitors. Sony should still know and acquire all information they can with regards their competitors. The competitor¶s activities, background and actions should be known by the company so that in planning marketing activities they know which things will be done by the competitors, what kind of actions the competitors will do in certain situations, and what future things the competitors might do. Sony should not be complacent with the things they know about the competitors. They should strive to find out things about the competitors that cannot be visibly noticed. Through the use of certain strategies like porter¶s generic strategy the company might be able to know more about competitors and through such information they can plan strategies to conquer this competitors.

Historically, Sony's marketing strategy was to position itself as an innovator and a maker of high quality products which enabled it to sell its products at a premium to their competitors. However that strategy is in disarray because it has ceded the perception of being an innovator to companies like Apple. The perception of high quality, while not diminished, has been largely equaled by its competitors.

Let us understand Sony¶s Marketing Strategy with an example of Sony MiniDisc product launch and promotion.

1. TARGET MARKET

When Sony introduces a new product, they do not believe in product research before the launch. They believe that if the product is going to be a success, the customers will decide. When the MD was introduced in 1992, the target market was the µMTV Generation¶

(Trachtenberg, Wall Street Journal, 24/07/98). Due to the fact that the first and second launches was extremely unsuccessful, a Sony executive ±Mark Viken, admitted that for the third launch, Sony had done its research and that the target market was people aged 18 to 34, who buy twelve or more CDs a year and who have a higher than average income ($50,000). In 1998, 3.5 million people in the United States fitted into that category.

2. PRODUCT

The MiniDisc looks similar to a CD but is half the size (2 ½ ³). It is magnetically encoded that makes it more shock-resistant than the CD. Sony developed a system called the Adaptive Transformer Acoustic Coding (ATRAC) which only records audio sounds and then compresses them, thus enabling 74 minutes of high quality music on one small disc. The MD is similar to a computer disc in the fact that the music is stored in segments, and has a table of contents. This enables the user of the MD to edit and erase whole tracks or even just small sectors of specific songs. Today, a MD Walkman with batteries weighs on average between 83g and 142g. The latest innovation from Sony is that of a network MiniDisc that can be connected to laptop computers, and also a PC kit that enables users to download digital music files stored on their computers hard drive on to a MiniDisc.

3. PROMOTION

With a product that was such a major success in Japan, Sony knew they had a worldclass product. December 1992 saw the launch of the MD in the USA. This proved to be a failure. This was because of the high prices aimed at a young market, and the CD was still in the introductory stage of its product lifecycle. Two years later in 1994, the MD was relaunched and named The Media Blitz Campaign. It was regarded as one of the biggest ever music giveaways. It lasted eight months and saw extensive magazine advertising. The Rolling

Stone Magazine published coupons redeemable for MiniDiscs and had a giveaway program called µSony Mini Music.¶ It gave those who purchased a playback model, $300 of MD music. Sony also gave away over a million MDs. Although MD sales had rose to 400,000 units being sold (Seong-Shin Hong, 2000), it was still a considerable amount less than the million units sold in Japan in the same year. Sony concluded that the reason for this is that people saw the MD as a replacement for the CD and not the cassette as intended. A factor that made things far more difficult for Sony was the lack of support from the record companies. They did not support pre-recorded MDs due to the lack of demand from consumers. Support from Sony Music and also Time Warner meant that by 1999, there were only 500 pre-recorded MDs available compared to thousands of CDs (Seong-Shin Hong, 2000). 1996 saw the third attempt by Sony to increase America¶s awareness. Entitled µWhere the Music Takes You¶. Sony¶s Vice-President of Personal Audio, Robert R. Nell stated that this was the µmost aggressive and largest advertising and promotional campaign that has ever been conducted by Sony¶. The focal point of the campaign was declining cassette sales and that the MD was not a replacement for the CD µThe horse, the automobile. The typewriter, the computer. The cassette tape, the digital Recordable MiniDisc¶ (Sony 1996) Nell stated that 50% of Sony¶s total print advertising was spent on the MD. 1996 also saw more of a focus on portable MD players. At this point Sony believed the only reason for poor sales in the US was due to poor marketing. 1998 was dubbed µThe Year of the MiniDisc¶. By this time only 25% of American adults were aware of its existence (Wichner, 1999). However Mark Viken announced that this was to be the µbiggest campaign in audio history of the US¶. The LA Times estimated that Sony would spent $30 million on the campaign including standard print, TV advertising, retail promotions, sponsorships and co-branding opportunities.

Increased competition from companies such as JVC, Sharp and Pioneer meant that there was more support for the product that saw sales increase. Since 1992 Sony worked hard to try and convince the US market that there was a need for the MD. The main aim of the marketing from the beginning was to show people that the MD was a cool product, which was the way of the future and is a product that fits into our new digital age. In 1987, the Smithsonian Institute in Washington DC recognised the Walkman as a cultural icon, and so since 1996 when the main focus of the campaign was the portable units of the MD player, Sony have tried to focus on the points that made the Walkman so successful. With a redesigned Walkman logo, Sony has highlighted many similarities and differences between the MD Walkman and the original. Also the use of the Sony Walkman brand name has been used to suggest that the MD Walkman is an upgrade of the original for the future.

With adverts such as µgo create¶ and µcreate the soundtrack to your life¶ the MD is aimed at the fashion conscience, youth culture and to µcool¶ people emphasising features such as portability, mobility, edit features and superior sound quality. Finally the American people are becoming aware and converting their cassettes to MDs with sales up 35% between 1999 and 2000. (Iverson, 2000)

4. PRICE

Each time Sony re-launched the MD prices were cut as they realised that the price was limiting sales, however they were also aware that it would take sometimes before the MD would become affordable to the public. Sony used a price-skimming strategy charging the highest possible price for the MD. This strategy worked in Japan. Due to the fact that in Japan CD prices are extremely high, it was more cost effective for the Japanese to buy a MD and to then hire and copy to MD. Demand therefore increased allowing the price to fall due to

economies of scale. In America on the other hand CD prices were low and therefore there was no demand for a high-quality recording device.

Another theory is that the people of America have less disposable income as they tend to spend more on real estate and larger products for the home (Popular Mechanic, 1998). The price of the MD has clearly been reduced since the introduction making the MD more affordable to the target market. Today the cost of a blank MD is less than that of a high quality cassette.

5. PLACE (DISTRIBUTION)

1998 saw an unexpected acceptance of the MD by several large scale retailers who dedicated displays that were built with Sony¶s support. By 1998 over 9000 retailers were selling the MD. Sony also has a number of independent dealers who deal only in Sony products. Products are distributed to these dealers through a central distribution warehouse who order the products when needed. MDs are widely available on the Internet too.

GLOBAL PARTNERS AND SCM Sony Marketing Asia Pacific picked mySAPŒ Supply Chain Management (mySAP SCM) to deliver on that global positioning. mySAP SCM supports Sony¶s supply chain of 11 sales and distribution companies in Pan-Asia and 20 factories that supply virtually the entire range of Sony products ± more than 10,000 stock-keeping units (SKUs) ± to more than 80 countries. Adding to the complexity is the fact that product life cycles range from as short as three months for some offerings to about three years for high-value broadcast products. ³The main objective for the SAP® supply chain solution is to improve financial performance

through increased sales turnover and inventory optimization,´ says Poothankotil Muralidharan, assistant general manager of area IT planning. ³Currently, we have individual sales companies in each country, each with their own initiatives. These efforts are not integrated and do not take advantage of a sophisticated tool like mySAP SCM.´ The PanAsian supply chain improvement effort will reap big rewards. These inventory-reduction gains will go straight to the bottom line as profit. The combination of revenue enhancement and inventory cost savings will be built around more sales opportunities through optimum inventory, liquidation cost savings, less dealer stock compensation, fewer sales incentives and unnecessary promotions to move overstock, as well as administrative, warehousing, and bank-interest cost reductions. What¶s significant is that the inventory savings won¶t come at the expense of delivery compliance and customer service ± in fact, Sony Marketing Asia Pacific plans to dramatically reduce lead times and backorders. This is especially important in the consumer-products marketplace, where constantly changing economic and lifestyle trends and competitor initiatives fuel a rapid pace of product introductions. GLOBAL DEMAND AND SUPPLY PLANNING The company is focusing the implementation around mySAP SCM capabilities for demand planning (DP) and supply network planning (SNP). Demand planning will enable Sony sales companies in the region to use sales history to build a customer-driven demand plan, down to the ship-to level, which is then ³smoothed´ by demand planners and adjusted by the sales force. The SNP capability will combine purchasing, manufacturing, distribution, and transportation data and constraints within a single tactical model to plan supply requirements. With the new supply planning process enabled by mySAP SCM, Sony Marketing Asia Pacific¶s larger sales companies will continue to ship directly from the

factory. Supplies to companies with small volume sales will be via the bigger sales companies. These bigger sales companies will thus serve as a ³hub´ to the smaller sales companies. ³This will smoothen uneven demand and enable us to take care of all of the small company requirements,´ says Shusuke Oshima, director of the Pan-Asia Area Management Office, Sony Marketing Asia Pacific. The company launched its first mySAP SCM prototypes in Australia, Singapore, and the Middle East. Those sales companies feed transaction data to SAP Business Intelligence (SAP BI). ³On a daily basis, we collect all of the relevant data from the sales companies,´ Muralidharan says. ³This is pumped into SAP BI and will be used in mySAP SCM.´ mySAP SCM is running in a single instance in Singapore on IBM servers, the AIX operating system, and an Oracle database. As part of the implementation, sales companies that Sony Marketing Asia Pacific oversees will shift from monthly to weekly forecasting to keep up with the pulse of the market. ³The starting point for our supply chain is the dealers and distributors. We will be collecting much more information from our dealer networks ± a weekly snapshot of stock-onhand, a forecast going forward, sell-through data of what they have actually done. This information will get aggregated and the sales and marketing groups will µwork¶ it to arrive at a commonly agreed forecast. The forecast will be sent to our distribution hub for further finetuning, providing us with a final consensus number that will drive supply planning.´ Says Muralidharan. MATCHING EXECUTION WITH DEMAND This continuous monitoring of market conditions ± using daily sales, inventory, and dealer information ± will tightly align supply chain replenishment planning with real-time customer pull. This will enable the company to move toward just -in-time supply to its

markets and establish better control over the cut-in and phase-out of products, accelerating launches and reducing obsolescence. As such, the mySAP SCM implementation is directly aligned with Sony¶s global corporate strategy. As part of this strategy, Sony created Engineering Manufacturing and Customer Services (EMCS), which is Sony¶s unique manufacturing system combined with engineering and customer-service activities. EMCS enables more flexible and efficient processes, as well as a speedy response to the rapidly changing business environment. Sony plans to make EMCS global and seamless to become even more competitive. mySAP SCM is a key component in the Pan-Asian region of the most recent Sony initiative toward global integration ± replacing sales activities divided along national boundaries with interlinked sales organizations in six regions: Japan, the United States, Europe, Latin America, East Asia (including China), and other areas in Asia. This integration will allow global data sharing between marketing and sales and a worldwide linkage among sales forecasts, purchase planning, and production execution. It will also enable Sony worldwide to track key performance indicators (KPIs) rolled up from the transaction data: demand-forecast accuracy, customer fill rates compared to actual dealer orders, day¶s sales outstanding (DSO), and various financial measurements. ³Sony Marketing Asia Pacific views SAP as a global-alliance partner,´ Gollakota says. ³We have a lot of expectations from SAP to help us improve our supply chain and business processes.´

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