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Brand Audit Nintendo

Brand Audit Nintendo

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Published by Yegor Bryukhanov
Our group project in the framework of the course in Brand Management at Aalto University School of Economics (former Helsinki School of Economics)
Our group project in the framework of the course in Brand Management at Aalto University School of Economics (former Helsinki School of Economics)

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Published by: Yegor Bryukhanov on Apr 21, 2012
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2011  

Nintendo  
[Brand  Audit]  
  [This  is  a  comprehensive  brand  audit  of  Nintendo,  one  of  the  most  recognizable   brands  in  the  corporate  World  today.  It  contains  company’s  historical  background,   the  brand  itself  and  the  associated  products.  The  audit  sums  up  with  the  analysis   of  the  brand  and  then  some  suggestions  for  the  future.    

Daniyal  Raza,  Yegor  Bryukhanov,  Oskari  Elojärvi,  Linda  Nummelin,  Hao  Chen   Aalto  University   1/19/2011  

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BRAND  AUDIT  
Nintendo    

CONTENTS  
Introduction.......................................................................................................................................... 2   Brand  History  and  Ownership............................................................................................................... 2   Brand  Inventory .................................................................................................................................... 3   Industry  Description ......................................................................................................................... 4   Brand  Portfolio ................................................................................................................................. 5   Integrated  Marketing  Communications  (IMC).................................................................................. 9   Brand  Exploratory............................................................................................................................... 10   Sources  of  Brand  Equity ................................................................................................................. 10   Threats  to  Equity ............................................................................................................................ 13   Recommendations  and  Conclusions................................................................................................... 15   Bibliography........................................................................................................................................ 18   Appendix............................................................................................................................................. 19  
       

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  Introduction:  
Nintendo   is   one   of   the   biggest   brands   today.   The   success   story   of   the   company   is   a   long   one   yet   where   many   lessons   can   be   learnt.   Interbrand   listed  Nintendo  as  one  of  the  “Best  Global  Brands”   in   2010,   in   a   list   where   top   100   brands   were   Figure  1:  Nintendo  Brand  Logo   assembled.1   The   planning,   execution   and   implementation   of   Nintendo’s   business   strategy   is   fascinating.   It   is   astounding   to   see   how   Nintendo   was   able   to   build   such   a   unique,   strong   and   powerful   brand.   The   company   has   an   impressive   line   of   well-­‐known   brands   and   clearly   Nintendo   is   the   brand   story   of   the   decade   from  Japan.  So  let’s  get  to  know  how  Nintendo  accomplished  this  feat.    

Brand  History  and  Ownership:  
Nintendo’s   history   spans   more   than   a   120   years,   which   is   very   impressive.   It   all   began   when   Nintendo   was   formed   in   1889   by   Fusajiro   Yamauchi   as   a   card   manufacturer;   it   used   to   produce   handmade  hanafuda  playing  cards.  The  name  Nintendo,  literally  translated,  means  “leave  luck   to  heaven”.    The  cards  became  really  popular  and  Nintendo’s  business  grew  steadily.  In  1951,   the   name   of   the   company   was   changed   to   Nintendo   Playing   Card   Co.,   Ltd,   and   the   following   year  they  built  their  headquarters  in  Kyoto,  Japan.  Meanwhile,  the  Nintendo  also  entered  many   different   markets;   the   aim   was   to   find   other   segments   also   than   just   manufacturing   playing   cards,  such  as  cab  company  and  love  hotels.   2  Later  on,  Nintendo  left  these  fields  and  decided   to   adopt   a   more   strategic   plan   and   focus   on   video   games   and   entertainment.   In   1953,   they   became  the  first  company  to  succeed  in  mass  production  of  plastic  playing  cards  in  Japan  and   later   in   1959;   they   entered   into   partnership   with   Walt   Disney   and   started   manufacturing   children’s   playing   cards.   This   was   a   successful   strategy   because   these   children's   cards,   which   featured  Disney’s  characters  on  them,  sold  over  600,000  packs  that  same  year.  3   The  company  was  listed  on  the  stock  exchange  in  1962  and  the  name  was  changed  to  Nintendo   Co.,  Ltd.  This  was  done  to  reflect  the  new  scope  of  the  activities  of  Nintendo  as  the  old  name   was   restricting   its   image   to   just   a   playing   card   company.   The   business   still   sold   playing   cards,   but   they   had   started   selling   games   and   toys   also.   During   the   early   part   of   1970’s,   the   growth   of   the   business   continued   smoothly,   and   the   business   came   up   with   major   innovations   after  
                                                                                                                         
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 http://www.interbrand.com/en/best-­‐global-­‐brands/best-­‐global-­‐brands-­‐2008/best-­‐global-­‐brands-­‐2010.aspx    http://www.n-­‐sider.com/contentview.php?contentid=34   3  http://www.n-­‐sider.com/contentview.php?contentid=34  

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another.  1977  Nintendo  developed  their  first  home  video  game  machines,  TV  Game  15  and  TV   Game  6.  By  1982,  they  had  established  Nintendo  of  America  Inc.  in  Seattle,  Washington.  Then,   the  following  year  Nintendo  was  listed  on  the  first  section  of  Tokyo  Stock  exchange  and  they   released   the   home   video   game   console:   Family   Computer   System   which   had   a   CPU   (Central   Processing  Unit).  This  was  sold  as  the  Nintendo  Entertainment  System  (NES)  in  the  US,  where  it   was   introduced   1985   with   Super   Mario   Bros.   The   expansion   continued   when   NES   was   soon   introduced  into  Europe  as  well  in  1986.  The  company  continued  its  run  during  the  end  of  the   80’s  and  the  beginning  of  90’s  spawned  new  milestones  for  Nintendo.   Nintendo  introduced  the  famous  Gameboy,  which  is  a  hand-­‐held  game  system,  entered  the  16-­‐ bit   game   console   market   with   Super   Famicom   in   Japan,   established  Nintendo  Europe  GmbH  in  Frankfurt,  and  then   went   on   to   release   the   Super   Nintendo   Entertainment   System   (SNES),   all   in   a   span   of   4   years   from   1989.   The   following  year  Nintendo  opened  subsidiaries  in  France,  UK,   and   Netherlands   etc.   and   then   released   Super   Gameboy.   Nintendo   64   was   launched   in   1996   and   the   famous   Pokémon   TV   started   in   19974.   The   turn   of   the   new   millennium  proved  to  be  good  for  the  business.  The  rest  is   history:  Nintendo  went  on  to  launch  several  innovative  and   distinctive   products,   Gameboy   Color   and   Advance,   Nintendo   GameCube,   Nintendo   DS   and   lastly   Nintendo   Wii.   These   innovations   of   Nintendo   started   a   new   era   in   the   company.   It   is   very   impressive   for   a   company   that   started   as   a   mere   playing   card   manufacturer   to   become   one   of   the   world’s  leading  video  games  and  entertainment  business.     Now,   we   will   look   at   some   of   the   factors   that   took   Nintendo  right  to  the  top  and  made  it  what  it  is  today.  
Figure  2:  Brand  Japan’s  annual  survey  of   result  for  Nintendo’s  rankings    

Brand   Inventory:   This   part   includes   a   comprehensive   analysis   of   brands   related   factors  
internal  to  Nintendo.  

Industry  Description:    
Nintendo  primarily  operates  in  the  industry  of  video  gaming.  Video  gaming  industry  consists  of   producing   and   selling   game   consoles,   games   for   them,   various   attributes   for   them   as   well   as  
                                                                                                                         
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 http://www.nintendo.co.jp/ir/pdf/2010/annual1003e.pdf  

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games   for   PCs.   The   competition   in   the   industry   is   steadily   heavy   and   there   are   three   main   players  on  the  market:     • • • Sony  (Playstation  3)   Nintendo  Co.Ltd.  (Nintendo  Wii)     Microsoft  (Xbox  360)    

Production  and  development  of  consoles  and  games  is  affiliated  with  technological  innovations,   so  companies  have  to  invest  very  much  in  Research  and  Development,  and  the  product  life   cycles  are  relatively  short  and  vary  from  2-­‐3  years.  Consoles  that  support  high  quality  graphics   and  superior  games  usually  dominate  the  market.  The  industry  is  characterized  by  high   switching  costs,  because  manufacturers  design  games  to  be  played  only  on  their  consoles,   which,  given  an  average  price  of  500$  for  a  console,  makes  it  difficult  for  the  customer  to  switch   from  a  particular  brand  of  console.  That  is  why  every  console  guarantees  sales  of  the  games.  In   our  view  the  key  factors  for  success  in  this  industry  are:     • • • • Ability  to  establish  strong  brand  name   Ability  to  quickly  adopt  new  technology   Ability  to  take  advantage  on  economies  of  scale   Anticipate  competitors’  moves    

Therefore,  we  conclude  that  it  is  essential  for  players  on  the  market  to  attract  new  customers   and  retain  them  or  search  for  new  untargeted  market  segments  in  which  their  competitors  are   not  yet  involved.      

Brand  Portfolio:  At  the  moment,  Nintendo  has  two  major  products5:  Wii  and  Nintendo  DS.  
Nintendo  also  develops  and  releases  new  games  for  their  consoles  from  time  to  time.  Let’s   have  a  look  at  Nintendo’s  product  line,  one  by  one:  

                                                                                                                         
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 http://www.nintendo.com/  

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Wii      
Launched  in  2006,  Wii  is  one  of  Nintendo’s  prime  products.  The   product   was   a   huge   success   and   gained   unprecedented   popularity.   The   success   of   Wii   not   only   depended   upon   a   great   product,   but   Wii   had   several   distinguishing   features   which   made   it   better   than   many   of   its   competitors.   The   wireless   controller   can  be  used  as  handheld  pointing  device  and  thus  it  can  detect   movements   in   three   dimensions.   The   name,   Wii,   conveyed   the   product’s   image   but   it   went   on   to   be   symbolic:   Wii   was   for   everyone,   not   only   for   professional   gamers,   and   it   created   an   association   with   Unity,   exclusively   targeting   a   broader   market   especially  families.     Figure  3:  Nintendo  Wii       The   main   competitors   of   Wii   are   Microsoft   Xbox   360   and   Sony   PlayStation   3.   Both   of   them   were  already  established  in  the  market  and  Nintendo  couldn't  compete  against  them  because  it   didn't  have  good  enough  products.  When  Nintendo  was  launching  Wii,  it  realized  that  Sony  and   Microsoft  have  equipment  that  has  better  technology—higher  performance,  higher  resolution   and   higher   quality   that   appeals   to   heavy   users   such   as   younger   segments,   especially   teens,   and   professional  and  traditional  gamers.     So,  Nintendo  spotted  the  marketing  opportunity.  Thus   firstly,   instead   of   going   head-­‐to-­‐head   with   Xbox   and   PS3,   Nintendo   moved   away   from   competing   on   high-­‐ tech   innovation.   It   decided   to   focus   on   quality   with   lower   technology   console,   which   could   priced   significantly   lower   than   their   main   competitors'   consoles,   plus   it   would   not   have   more   complex   programs   to   write   for6.   Secondly,   and   brilliantly,   Nintendo   targeted   a   different,   broader   market.   This   increased   the   scope   of   the   sales   of   the   product   Figure  4:  Console  Sales  for  first  six  month  totals.   because  Nintendo  moved  their  target  from  young,  game-­‐ loving  males  to  a  larger  segment.  They  wanted  to  create  a  console  aimed  also  at  the  older  and     younger   audience   and   provide   a   complete   family   entertainment   which   could   also   serve   as   a   social   tool.   The   idea   was   to   enhance   social   experience   with   friends   and   family   instead   of  
                                                                                                                         
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  http://www.marketingpower.com/ResourceLibrary/Publications/MarketingNews/2010/10_30_10/Aaker%20on%2 0branding.pdf  

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isolating   the   gamer.   For   this   purpose   Nintendo   created   social   games   which   would   be   easy   to   play.     It  might  also  be  interesting  to  add  here  that  Nintendo  also  targeted  Wii  generally  to  females,   especially   to   mothers.   As   the   traditional   game   market   is   generally   assumed   to   consist   of   “hardcore   male   gamers”,   this   created   a   point   of   difference   for   their   product.   As   mentioned   above,  games  that  are  easy  to  play,  low  price,  complete  family  experience  and  all  these  other   positive  attributes  created  points  of  differences.  Points  of  parity  with  competitors  were  that   Wii  was  a  console  that  was  popular,  reliable,  and  enjoyable  and  of  a  good  quality.   Lastly,   Nintendo   developed   a   new   trend,   and   applied   it   specifically   to   Wii.   Nintendo   launched   a   new  category  of  games  called  "casual  games".  These  games  required  less  skill  and  experience   of   video   games,   and   were   aimed   to   appeal   to   a   wide   range   of   family   members.   Nintendo’s   creative  design  group  created  amazing  games  to  enforce  this  strategy.  The  new  casual  games   category   went   from   1%   of   the   market   to   more   than   20%   by   2005,   as   published   in   a   study   of   popular   gaming   magazine   Enterbrain   Inc.   That’s   why,   Wii   sales   shot   up   quickly   and   exceeded   the  sales  of  other  consoles  until  that  point.  See   Figure  4.    

Nintendo  DS    
Nintendo  DS  is  a  hand-­‐held  gaming  console,  an   essential   part   of   Nintendo’s   brand   inventory   and  is  considered  to  be  successor  of  Game  Boy.   Game  Boy  was  the  first  console  to  ever  create  a   market   for   hand-­‐held   gaming   devices   in   1989.   When   Game   Boy’s   product   life   cycle   was   coming   to   an   end,   Nintendo   released   DS   in   January  2004.  Console  targets  gamers  in  the   Figure  5:  Target  Market  of  Nintendo  DS. age  group  from  five  to  seventeen  years  old,   by  offering  high  degree  of  involvement;  touch  screen  stereo  support  and  ability  of  multiplayer.   According   to   Simmons(need   a   reference),   among   households   with   children,   those   with   children   age   of   12−17   account   for   38%   of   users   of   Nintendo   DS,   and   those   with   children   6−11   for   another   33%.   Conversely,   households   of   1   or   2   persons   (generally   meaning   those   without   children)   strongly   resist   ownership.   The   primary   competition   rises   from   the   introduction   of   PSP   console   (Portable   Sony   PlayStation)     by   Sony   in   2005.   However,   PSP   was   targeting   older   audiences   and   heavily   relayed   on   advanced   technology,   therefore,   the   price   for   PSP   was   higher   than  for  Nintendo  DS.  

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Nintendo  was  able  to  beat  its  competitor  with  lower  prices.  In  the  targeted  age  group  parents   are  buying   consoles   and  games   for   their   children,   and  they   tend  to   be  more   aware  of   the   price   rather   than   technology.     Therefore,   Nintendo   DS   is   a   current   market   leader   in   its   category.   Nintendo   added   several   extensions   to   its   product   range,   for   example   Nintendo   DS   lite,   which   was   thinner   version   of   DS   and   Nintendo   DSi   that   added   two   digital   cameras   and   enabled   Internet   connection   with   Nintendo   online   store.   These   features   were   designed   to   enhance   personalization  and  encourage  every  family  member  to  buy  a  console,  at  the  same  time  leaving   the   primary   target   market   at   its   initial   level.   In   addition,   Nintendo   is   planning   to   launch   the   newest  version,  Nintendo  3DS  in  February  2011,  which  will  support  3D  format  without  a  need   to  use  special  3D  glasses  and  will  make  web  surfing  more  convenient.    

Nintendo  Games  
Nintendo   has   a   history   of   producing   high-­‐quality   and   unique   games   for   consoles.   The   world-­‐ famous   ones   include   super   Mario   series,   sonic   series   and   Donkey   Kong,   etc.   Now   Nintendo   focuses  on  product  games  for  Wii  and  Nintendo  DS.   In   comparison   with   its   competitors,   like   most   computer   games   and   PS3   or   XBOX   games,   Nintendo’s   games   have   their   unique   features:   they   tend   to   be   more   fun   and   cartoon-­‐like.   They   attract   people   by   the   pure   fun   from   game   experience   rather   than   by   best   graphic   performance   along   with   stimulating   realistic   features.  Moreover,  the  game  experience  is  totally   different   compared   to   traditional   games.   The   games   in   Wii   are   more   physical,   requiring   body   movements,   and   the   games   in   Nintendo   DS   use   a   Figure  6:  Super  Mario  Bros  for  DS   touch  style  and  enable  more  people  to  play  at  the  same  time.  The  target  markets  of  Nintendo’s   games   vary   from   kids   aged   5   to   the   fun-­‐loving   gamers   including   teenagers   and   adults,   who   would  like  to  play  for  entertainment.   Another  different  feature  is  that  the  games  are  specially  designed  only  for  its  own  consoles.    It   means   that   Nintendo   could   perfectly   combine   the   game   characteristics   with   the   console’s   feature.   Sony   and   Microsoft,   their   games   are   produced   by   the   third   party.   Usually,   the   game   producers   will   launch   their   games   on   PC,   Xbox   and   PS3   at   the   same   time   and   therefore,   customers   have   wider   choice.   On   the   contrary,   Sony   and   Microsoft   will   compete   with   each   other  because  their  games  are  supplied  by  the  same  producers.  

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The   biggest   threat   is   that   other   games   have   better   graphic   performance   and   are   more   exciting.  This  encourages  only  professional  gamers,  teens  and  hardcore  heavy  user  to  play.  On   the  other  hand,  Nintendo’s  games  are  designed  such  that  they  appeals  to  a  wider  audience,  and   one  of  the  aims  is  to  attract  the  non-­‐gamers  to  start  playing  games  and  have  fun.  

Nintendo’s  marketing  strategy  
Nintendo’s  branding  strategy  relies  heavily  on  traditional  channels.  They  have  mostly  used  TV   commercials,   promotion   events   and   nowadays   also   web   advertisements.   A   big   part   of   Nintendo’s  strategy  is  to  create  great  brand   awareness   through   word-­‐of-­‐mouth   marketing.   Because   the   parent   company   owns   many   games   and   the   characters,   it   has   made   those   characters   the   ambassadors   for   the   whole   brand.   Therefore  Nintendo  commercials  often  use   Super   Mario,   Donkey   Kong   or   Pokémon   when   advertising   the   game   consoles.   Nintendo   has   been   a   big   part   of   people   who   have   been   born   in   80s   and   90s,   and   Figure  7:  Nintendo  Marketing these   people   have   grown   up   with   NES   and   SNES.   Now   Nintendo   is   able   to   create   nostalgic  and  warm  feelings  for  them  and  at  the  same  time  attract  new  generations  to  the  joy   of  playing  with  Nintendo.     Nintendo   has   achieved   a   role   of   being   suspicious   and   not   revealing   too   much   about   what   is   happening  inside  the  company.  Nintendo’s  ability  to  keep  secrets  can  be  almost  compared  to   that  of  Apple’s,  for  example  introduction  of  Nintendo  3DS  managed  to  surprise  fans,  analytics   and  journalists  totally  in  the  spring  2010.  It  has  benefited  from  this  distant  image  by  creating   lots   of   buzz   and   rumors   about   future,   and   it   helps   the   brand   to   create   and   maintain   brand   resonance.  Sometimes  Nintendo  has  faced  difficulties,  too,  for  example  in  pre-­‐Christmas  season   2006   when   they   had   to   replace   Wii   ads   with   Nintendo   DS   ads   due   to   low   stock   of   the   Wii   consoles.  Nintendo  hasn’t  jumped  into  the  social  media  yet,  which  is  very  surprising.  There  are   neither   official   Nintendo   nor   Wii   pages   on   Facebook,   and   even   though   Nintendo   America   tweets   regularly,   there   are   only   around   48,000   followers.   Wii   has   an   unofficial   page   on   Facebook   with   more   than   1.   1   million   fans,   but   the   page   has   no   content.   Also   Super   Mario   (443,000  fans)  and  Mariokart  (1,004,000  fans)  have  popular  unofficial  pages  on  Facebook.  

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Integrated  Marketing  Communication  (IMC)  analysis  
We   decided   to   use   the   Integrated   Marketing   Communication   (IMC)   program   to   analyze   some   marketing   tools   which   Nintendo   uses   for   its   consoles   and   games.   IMC   program   has   been   developed  to  build  brand  equity  with  “mixing  and  matching”  different  communication  options.   Examples   that   we   chose   for   the   analysis   are   TV   advertising,   event   marketing   and   word-­‐of-­‐ mouth   marketing.   After   analyzing   Nintendo’s   current  methods,  we  provide  our  own  proposal  on   how   to   build   even   more   brand   equity   by   adding   some  elements.   Nintendo  has  used  TV  advertisements  to  introduce   new  consoles,  games  and  to  create  awareness.  Its   TV   advertisements   are   often   creative   and   they   concentrate   on   showing   people   enjoying   their   time   instead   of   showing   the   actual   gameplay.   Nintendo  uses  the  famous  characters  often  in  the   Figure  8 advertisements   to   enhance   brand   awareness.   TV   advertisements   cover   the   target   market   well,   especially   for   Nintendo   Wii,   because   the   consumers   will   need   a   television   in   order   to   play   Wii   and   they   are   likely   to   either   own   or   purchase  it.  However,  TV  advertising  is  extremely  expensive  and  it  has  low  versatility,  meaning   that  it  can  be  effective  only  for  very  specific  target  groups.   Advertising  in  different  events  provides  an  opportunity  for  consumers  to  see  actual  gameplay   or   try   it   themselves.   It   allows   educating   consumers   how   to   use   the   consoles   and   it   also   introduces  them  to  games  which  they  have  not  tried  yet,  and  organizes  creative  competitions.   For   example   Nintendo   Wii   Fit   has   been   promoted   together   with   Adidas   running   shoes,   and   Nintendo   has   organized   online   competition   where   the   consumers   had   to   animate   their   own   Super  Mario  movie  using  the  original  music  and  imagery  of  Nintendo.  Promotional  events  and   competitions  can  be  really  effective  in  covering  the  target  markets  and  attracting  them,  and  it   complements  very  well  with  other  marketing  channels.  However,  it  is  very  expensive  and  the   events  should  be  chosen  carefully  so  they  are  in  harmony  with  the  Nintendo  brand.     Word  of  mouth  –marketing  is  really  not  an  independent  tool  but  more  a  result  of  marketing.   Nintendo   has   been   able   to   raise   great   awareness   and   create   positive   experiences,   and   therefore   many   consumers   have   become   “ambassadors”   of   the   brand.   As   long   as   the  

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consumers  are  telling  positive  things  about  the  brand,  it  is  very  effective  and  believable,  but  on   the  other  hand  it  is  impossible  to  control.     In   general,   Nintendo   covers   its   target   markets   well.   For   example,   when   it   launched   Wii,   it   advertised   successfully   the   console   for   family   mothers.   This   was   very   smart,   as   Wii   became   the   first   console   for   the   whole   family,   connecting   different   generations   and   bringing   family   together.   The   advertisements   are   consistent   with   the   brand   and   games,   consoles   and   characters   all   participate   in   building   brand   equity   for   each   other.   However,   there   is   a   danger   that  Nintendo  leans  on  their  old  characters  and  forgets  to  educate  possible  new  consumers.  A   problem   for   Nintendo   is   also   the   lack   of   big   communities.   Nintendo   has   an   official   Nintendo   Club,   but   it   mostly   provides   only   technical   support   and   information   on   the   products.   What   Nintendo   is   missing   is   clearly   an   official   online   society   of   Nintendo   lovers,   sharing   and   caring   about  the  brand,  participating  and  living  the  brand.  What  Nintendo  should  add  to  its  marketing   mix  is  discussed  in  the  final  part  of  the  brand  audit  report.  

Brand  Exploratory:   This  explores  the  sources  of  equity  of  the  product  from  the  consumer’s   point  of  view.   Sources  of  Brand  Equity  
In   our   opinion   the   main   sources   that   determine   current  strength  of  Nintendo’s  brand  equity  are:   Nintendo  Generation   Its  iconic  game  characters  (Mario  Brothers,   Zelda,  Megaman,  Donkey  Kong,  etc.)   • Nintendo  Wii   Now,   we   are   going   to   discuss   each   one   of   the   attributes   in   more   detail   including   certain   associations  and  perceptions  that  consumers  have   developed  towards  each  of  the  categories.     • •

Figure  9:  Brand  Ingredients

Nintendo   Generation:   The   launch   of   Nintendo   Entertainment  System  (NES)  in  1986  turned  the  whole  industry  around.  Sales  of  over  61  million   units   before   1995,   helped   the   company   to   create   brand   awareness   and   strong   brand   associations   with   the   product.   Being   the   first   console   of   its   kind   Nintendo   Entertainment   System   was   able   to   attract   vast   number   of   customers   that   nowadays   are   referred   to   as   Nintendo   generation,   the   pioneer   gamers   that   had   a   chance   to   try   out   the   first   Nintendo  

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consoles.   According   to   Michael   Critz,   an   Emmy   winning   designer:   “The   Nintendo   Generation   constitutes  the  same  group  of  people  who  are  old  enough  to  remember  the  Soviet  Union  yet   young  enough  to  master  the  Internet:  roughly,  people  who  are   now  between  the  ages  of  25  and  37.”     For  these  people  Nintendo  is  an  iconic  and  lifestyle  brand  that   resembles   their   nostalgic   feelings   about   their   childhood   and   fun   they   used   to   have   playing   their   first   NES   or   SNES   (Super   Nintendo   Entertainment   System).   These   positive   associations   of  already  established  group  of  loyal  customers  help  Nintendo   in   building   its   brand   equity   at   the   level   of   personal   affiliation   and   resonance.   Slogans,   being   chosen   for   the   promotion   of   NES:  “Have  you  had  your  fun  today?”  and  “Now  you  are  playing   Figure  10:  Nintendo  Generation   with   the   power”,   clearly   illustrate   the   core   values   communicated   by   the   brand.   The   primary   message   sent   by   the   brand   was   designed   to   leverage   concepts   of   fun,   entertainment   and   to   highlight   the   product   as   a   pioneer   and   powerful   one   in   contrast   to   those   of   its   competitors.   Also,   Nintendo   was   able   to   sustain   its   image   of   vintage   and   nostalgia   when   introducing   new   products,  even  though  the  company  might  not  have  wanted  it.     The   concept   of   Nintendo   Generation   was   described   in   the   literature   by   David   Sheff,   who   wrote   the   book   titled   “Game   Over:   How   Nintendo   Conquered   The   World”.   The   book   described   the   history  of  the  company  as  well  as  the  tools  company  used  to  establish  strong  brand  resonance   among   customers.   Although   the   book   was   written   in   1994,   when   Nintendo’s   brand   was   exceptionally   strong,   the   fact   that   the   book   was   written   shows   that   the   brand   was   able   to   create   resonance   and   was   highly   recognizable   around   the   world.     So,   in   our   opinion,   the   concept   of   Nintendo   Generation   and   a   status   of   a   pioneer   brand   in   the   industry   contribute   strongly   to   the   brand   equity   of   the   company   in   the   positive   way.   Along   with   the   launch   of   NES,   the   company   created   several   game   characters   for   the   console   and   was   able   to   leverage   their   image  in  the  future.     Characters:   On   a   par   with   the   introduction   of   NES,   Nintendo   introduced   several   game   characters  that  along  with  the  brand  growth  escalated  into  indivisible  parts  of  Nintendo  brand   identity  and  are  major  contributors  to  the  brand’s  equity  today.  Zelda,  Super  Mario  Brothers,   Donkey  Kong  and  Link  were  essentially  developed  for  the  NES  and  after  console’s  tremendous   success  became  associated  with  it.  It  was  the  NES  that  made  Super  Mario  Brothers,  Zelda,  and   Megaman  kitchen-­‐table  names.  Needless  to  say  that  those  iconic  characters  are  a  huge  source   of   Nintendo’s   brand   equity,   due   to   their   visibility   and   Nintendo’s   strategy   of   continuous   leveraging   of   their   images.   “Super   Mario   Brothers”   is   known   worldwide   and   even   included   into  

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the  Guinness  Book  of  Records  as  the  most  sold  video  game  in  the  history.  Mario  is  considered   to  be  one  of  the  most  recognizable  artificial  characters  ever  created7.   Nintendo  leverages  the  image  of  Mario  Brothers  in  almost  every  advertising  campaign,  even  in   case   of   Wii,   which   is   going   to   be   discussed   further;   Mario’s   image   appears   even   though   Nintendo   is   struggling   not   to   associate   Wii   with   its   own   image.     Moreover,   customers   tend   to   associate   themselves   with   their   favorite   characters,   because   of   the   strong   commitment   to   the   heroes.   Undoubtedly,   there   is   a   resonance   towards   Nintendo   game   personages,   which   can   be   compared   to  the  resonance  of  Disney  cartoon  heroes.   Combined   with   heritage   associations   of   “nostalgic   brand   identity,   Nintendo’s  
Figure  11  

characters   are   probably   the   strongest  

indicators  of  company’s  strong  brand  equity.     While  Nintendo's  main  brand  and  industry  competitors  do  not  have  such  famous  and  branded   characters   in   their   games,   they   have   established   other   points   of   difference   that   will   be   discussed  further.  Considering  the  fact  that  in  gaming  industry  sold  consoles  almost  guarantee   the   sale   of   games,   it   is   a   huge   competitive   advantage   of   Nintendo   in   having   customers   that   are   loyal   not   only   to   technological   innovations   but   also   to   the   game   characters   and   their   image.   Game  characters  support  customers’  associations  that  arise  from  the  Nintendo’s  image  of  fun,   entertainment   and   nostalgia.   However,   being   constantly   updated   and   enriched   characters’   image   reflects   fashionable   and   trendy   appearance   at   the   same   time.   Moreover,   Nintendo   actively  franchises  brand  identity  of  its  characters  to  other  companies  in  various  industries.  This   move  by  Nintendo  only  supports  the  widespread  knowledge  and  awareness  of  its  game  heroes,   contributing   to   the   brand   equity.   On   the   Internet   we   can   see   a   huge   number   of   forums   dedicated  to  the  discussion  of  Nintendo  brand  and  its  characters.  It  is  common  to  see  a  forum   or   an   article   titled:   “Which   of   Nintendo   characters   are   you?”   What   else   is   that   if   not   a   brand   resonance?  Finally,  Mario  Brothers,  Donkey  Kong  and  Zelda  appear  in  renovated  image  in  the   games  designed  for  new  revolutionary  console  that  was  launched  in  2006  in  order  to  fight  back   Nintendo’s  leading  positions  in  the  industry.    
                                                                                                                         
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Wii:  Pronounced  like  “We”,  supported  by  the  slogan:  “Wii  would  like  to  play”  and  symbolizing   community   spirit   and   group   entertainment,   and   involvement,   Nintendo   Wii   is   one   of   the   greatest  sources  of  equity  for  the  brand  of  Nintendo  nowadays.     The   product   was   able   to   combine   the   abovementioned   sources   of   Nintendo’s   brand   equity   in   it   in  a  very  successful  manner.  Now,  Mario  Brothers,  Zelda  and  Donkey  Kong  were  able  to  move   according   with   the   player’s   body   motion   due   to   the   technologically   innovative   attributes   called   “sensor  bar”.  By  targeting  very  wide  range  of  customers  in  completely  different  age  categories   “Wii”   added   associations   of   sport,   motion   and   represented   new   activity   of   socially   and   physically   interactive   entertainment   for   any   age.   From   now   on,   Nintendo   was   no   more   an   outdated  and  obsolete  brand,  which  it  was  perceived  after  the  failure  of  GameCube,  now  it  was   brand-­‐new,   family-­‐oriented   and   trendy   brand   that   combined   almost   incompatible   associations.   Nostalgic,   but   modern;   family-­‐oriented,   but   trendy;   cheap,   but   high   performing   –   all   these   associations  were  new  to  Nintendo  and  the  industry  on  the  whole.  The  name  “Wii”  was  easily   pronounceable   in   all   languages,   contrary   to   Xbox   that   was   often   mispronounced   in,   for   example,   Japan.   Also,   the   white   color,   used   for   the   console   symbolized   peaceful   sense   and   family  environment,  unlike  Sony,  that  looked  like  high-­‐tech  beast  for  hardcore  gamers  with  its   black  color.     Target   market   that   “Wii”   chose   was   absolutely   untraditional   for   the   industry;   therefore,   a   number   of   new   perceptions   and   associations   were   formed.   “Wii”   with   all   its   advertisements   and  promotional  campaign  encouraged  people  to  move  and  be  active,  treats  that  have  never   been   leveraged   before,   because   gaming   has   always   been   considered   rather   static   form   of   entertainment.   Strategic   launch   of   the   product,   during   the   holiday   session,   created   agiotage   about  the  brand.     Nintendo’s   cooperation   with   major   retailers   and   specialty   electronic   stores   around   the   globe   made  the  product  visible  and  available  for  the  potential  customers.  Combined  with  affordable   price   and   visibility   of   the   brand   Wii’s   launch   turned   out   to   be   a   boom   in   the   market.   Numerous   promotional   campaigns   contributed   to   the   brand   equity   of   the   product   very   much.   Nintendo   Wii  was  able  to  combine  vintage  associations  of  the  brand  that  arouse  from  the  phenomenon   of   “Nintendo   Generation”   with   renovated,   but   easily   recognizable   characters   that   were   still   included   into   the   games   designed   for   Wii.   Wise   combination   of   all   possible   images   and   associations  enabled  Nintendo  to  boost  its  equity  and  relive  the  brand  for  the  customers.    

Threats  to  Brand  Equity  
Greenpeace   Ratings:   The   Greenpeace   ratings   received   by   Nintendo   have   in   the   past   hovered   around   zero   out   of   a   maximum   score   of  

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hundred.  This  is  a  serious  threat  to  the  brand  equity  of  Nintendo  as  contemporary  consumers   are  more  aware  how  environmentally  friendly  they  want  their  purchases  to  be.  The  loss  of  the   environmentally   conscious   gamers   could   cause   serious   damage   to   the   brand   equity   as   the   demographic  is  getting  larger  over  time.  Overall,  getting  a  zero  for  environmental  friendliness   from   a   prominent   environmental   protection   organization   is   a   bad   press   and,   hence,   is   a   serious   threat  to  the  brand  image  of  Nintendo  unless  Nintendo  begins  proactively  improving  the  eco-­‐ friendliness  of  their  products.     Failure  to  Utilize  Well  Established  Sub-­‐brands:  In  the  modern  gaming  market  gamers  are  being   exposed   to   lot   of   new   characters   that   take   their   minds   off   of   previously   existing   ones.   This   means  that  Nintendo  will  need  to  place  extra  efforts  on  keeping  the  gamers  interested  in  their   games  through  marketing  sub-­‐brands,  such  as:  Super  Mario.  If  a  population  of  gamers  begins  to   forget  what  Nintendo  is  because  they  are  not  marketing  themselves  enough  by  using  all  their   sub-­‐brands  and  the  umbrella  brand  itself,  then  the  value  of  the  brand  will  depreciate  and  result   in  lower  brand  equity.     Failure  to  Supply  Customers:  Nintendo’s  previous  failures  to  supply  their  customers  with  their   products   due   to   demand   spikes   has   left   consumers   bitter   as   they   have   had   to   purchase   their   Nintendo   products   online   for   two   to   three   times   of   the   retail   price.   This   results   in   bad   publicity   as   consumers   are   paying   sky   high   prices   for   their   products   due   to   the   demand.   Bad   publicity   always   results   in   a   decrease   in   brand   equity   and   hence   this   can   be   considered   a   threat   to   Nintendo.   This   has   previously   occurred   due   to   dependency   on   secondary   manufacturers   of   components  not  being  able  to  supply  Nintendo  on  time.       Failure   to   Meet   Quality   Standards:   This   has   not   previously   occurred   to   Nintendo,   but   if   it   does   it   will   scare   the   consumers.   Nintendo   has   never   had   a   promise   of   quality   standard   for   customers.   They   have   only   used   a   Nintendo   Seal   of   Quality   that   does   not   give   any   real   guarantee  of  product  quality,  but  rather  indicates  that  the  product  is  from  Nintendo  and  hence   quality  should  be  expected.  This  is  a  problem  as  customers  are  becoming  more  and  more  aware   of   quality   products   and   expect   a   guarantee   of   quality,   not   just   an   assumption.   If   Nintendo   happens  to  face  a  quality  problem  and  the  consumers  do  not  feel  as  they  are  appreciated  by   Nintendo  (due  to  them  not  guaranteeing  their  products),  then  Nintendo  will  face  a  loss  in  brand   equity  because  of  a  damaged  brand  image.     Deviation  from  Brand  Identity:  Nintendo  should  not  begin  to  deviate  from  what  it  has  always   done:  provide  games  and  consoles  to  the  consumers.  Nintendo  should  not  start  extending  the   brand   to   non-­‐related   areas   as   they   have   previously   done.   An   example   of   this   is   when   Nintendo’s   sub-­‐brand   Super   Mario   was   used   to   extend   the   brand   into   children’s   books.   This   brand   extension   proved   to   be   damaging   to   the   brand   equity   as   the   company’s   brand   identity   is  

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not   about   children’s   books   and   learning   processes.   If   Nintendo   does   the   same   mistake   as   mentioned   previously,   then   Nintendo’s   target   segment   will   begin   to   change   gradually   along   with  the  brand  identity.  This  results  in  the  loss  of  customers  and  a  change  in  brand  equity.    

Recommendations  and  Conclusions:  
After   having   researched   the   brand   of   Nintendo   and   having   identified   main   sources   of   brand   equity  and  threats  to  the  brand,  we  recognized  several  recommendations  for  the  company  in   order  to  struggle  existing  challenges  and  anticipate  the  upcoming  ones.   1.  Develop  the  market  for  elderly  customers.   Nintendo  Wii  positions  itself  as  a  family  oriented  brand  that  brings  a  sense  of  community  into   the   gaming   process.   Newly   coined   Nintendo’s   target   market   not   only   values   physical   involvement   promoted   by   Wii,   but   also   wants   to   challenge   itself   with   brainwork.   Elderly   audience   may   enjoy   playing   Mario   Brothers   with   their   grandchildren   using   all   the   benefits   of   Wii’s   motion   sensor   bar,   but   at   the   same   time,   when   grandchildren   went   to   bed,   they   might   want   to   do   some   crossroad   puzzles   or   Sudoku,   or   play   some   strategic   games   that   involve   thinking.   Therefore,   our   recommendation   number   one   is   to   develop   stronger   presence   among   older   group   of   customers   by   evaluating   their   needs   and   come   up   with   games   that   will   be   good   fit   for   them.   Nintendo   might   be   interesting   in   developing   games   that   would   be   aimed   at   relaxation   and   leisure.   Elderly   people   tend   to   spend   a   lot   of   time   at   home,   our   view   this   is   a   great   opportunity  for  Nintendo  to  leverage  their  elderly  audience  by  providing  games  for  them.   2.  Be  aware  of  emerging  sources  of  competition   Nintendo  should  clearly  identify  its  competition  on  all  the  levels.  Although  in  this  paper  we  have   examined   only   direct   competitors,   we   should   not   forget   that   Nintendo   operates   in   the   entertainment  industry,  where  the  competition  is  much  wider.   Essentially   Nintendo   competes   with   anything   that   may   fill   their   customers’   spare   time.   This   could   be   books,   news,   cartoons,   magazines,   computer   games,   Facebook,   Twitter,   etc.   In   our   view,  Nintendo  should  keep  track  of  the  competition  on  every  level,  undoubtedly  paying  special   attention  to  their  brand  competitors.  The  company  should  find  a  way  to  communicate  its  brand   as   the   only   possible   entertainment   option,   in   order   to   differentiate   itself   from   all   levels   of   competition.  However,  at  the  same  time,  Nintendo  probably  will  have  to  add  some  extensions   to  its  brand  portfolio  in  order  to  support  the  image  of  overwhelming  lifestyle  brand.    

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We   view   Apple   Inc.   as   a   competitor   of   the   future.   Nowadays,   with   the   development   of   smartphone   industry,   its   main   players,   particularly   Iphone   offers   a   number   of   attractive   applications  to  its  customers  to  choose  from.  Although  Iphone  does  not  offer  the  same  degree   of  involvement  as  Nintendo,  but  Iphone’s  application  may  be  a  great  threat  in  the  future,  due   to  constant  technological  innovations.  If  they  become  more  sophisticated,  then  Nintendo  and   the   console   industry   may   experience   severe   problems.   Moreover,   with   the   launch   of   Ipad,   a   new   threat   for   Nintendo   emerges.   Although   Ipad   does   not   support   Flash,   there   have   been   a   number  of  applications  developed  specifically  for  it.  Higher  resolution  and  the  size  of  the  screen   in  Ipad  enable  players  to  be  involved  in  a  full  manner.   In   our   view   Nintendo   should   find   ways   to   anticipate   possible   threats   from   competing   companies   on   all   the   levels   by   constant   screening   and   strategic   planning   of   the   market.   Benchmarking  of  its  competitors  is  especially  essential.  In  our  view  one  of  the  main  competitors   is   Apple   Inc.   and   Nintendo   should   be   aware   of   it,   because   it   may   revolutionize   the   whole   industry.   3.  Anti-­‐piracy  issues.   Piracy   problem   is   very   serious   in   developing   countries   such   as   China,   Vietnam   and   it   caused   huge  profit  losses  for  Nintendo  (citaton  needed,  seems  like  off  the  head).   Even  through  the  piracy  is  not  only  for  Nintendo’s  games,  it  extends  to  PC  software  and  harms   some  of  its  competitors  like  PSP,  Nintendo  still  should  take  some  action  to  protect  its  brand.  For   example,   Nintendo   could   use   more   advanced   secret   codes   to   develop   its   software   so   that   it   can’t   be   easily   broken   into   and   illegally   copied.   Successful   brand   should   be   legally   protected;   therefore  Nintendo  should  treat  this  issue  very  carefully.   Nintendo   could   also   build   in   some   chips   to   make   its   game   consoles   support   only   official   software’s  and  encourage  legal  downloading  of  its  games  from  the  Internet.  Besides,  Nintendo   could  operate  with  international  or  local  NGOS  to  put  pressure  on  government  for  piracy.   4.  Building  brand  equity  with  marketing   Nintendo   should   definitely   start   to   use   social   media.   The   fact   that   they   have   already   millions   of   fans   on   Facebook   without   doing   anything   shows   that   there   is   a   huge   potential.   As   other   companies   have   proved,   social   media   is   a   great   channel   in   attaching   customers   to   the   brand   tighter  than  ever  before,  and  that  is  exactly  what  Nintendo  wants  to  do.  Even  though  Nintendo   has   already   achieved   the   goal   of   bringing   families   together,   it   can   also   bring   larger   groups   together.   The   company   might   be   worried   about   revealing   secrets   and   being   open,   but   we   believe  that  it  is  possible  to  join  the  social  networks  without  giving  out  confidential  information.  

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Marketing  in  social  media  is  of  course  costly,  but  comparing  to  TV  advertising  it  is  really  cheap   and  effective.  People  who  join  the  pages  are  doing  it  voluntarily  and  they  want  to  participate.   Establishing  a  Facebook  page  is  essential  in  our  opinion.  There  should  be  regular  updates  and   interesting  content,  and  Nintendo  should  take  part  in  discussions  that  rise  in  the  page.  A  good   way  to  add  more  value  for  consumers  and  create  a  community  would  be  to  arrange  events  and   competitions  on  the  web  page  and  asking  consumer’s  opinions  about  the  Nintendo  games  and   consoles.   A   Facebook   page   would   be   a   way   of   showing   how   the   company   cares   about   the   customers,  and  it  would  strengthen  the  brand  resonance.   Nintendo  could  join  also  YouTube  and  use  it  as  a  channel  to  show  the  expensive  TV  ads  it  has   created,  as  well  as  including  some  interviews  from  CEO  Satoru  Iwata.  As  there  is  already  “Iwata   asks”   –category   on   the   official   website   which   is   really   hard   to   find,   this   could   bring   more   viewers  and  followers.  At  the  moment  there  are  some  Nintendo  videos  on  YouTube,  but  they   are  not  organized  in  any  way  and  they  all  have  one  common  feature:  low  watch  rates.   5.  In-­‐game  advertising.   Already  established  strong  brand  equity  of  Nintendo  opens  tremendous  opportunities  for  the   company   on   the   in-­‐game   advertising   market.   In-­‐game   advertising   refers   to   the   form   of   advertising   which   gamers   are   experiencing   while   playing   certain   games   on   computers   or   consoles   Nintendo’s   games   are   bestsellers   and   its   characters   are   iconic.   To   our   mind,   Nintendo   should   leverage   predicted   growth   of   the   in-­‐game   advertising   market   as   a   source   of   revenue   for   the   company.     However,   an   ideal   balance   should   be   found   in   order   not   to   damage   the   brand   equity   with   too   much   advertising,   because,   otherwise   Figure  12:  In  game  advertising  market  in  the  US   customers   may   be   unsatisfied   with   Nintendo’s  excessive  concentration  on  advertising  in  its  game.  Although  Nintendo  has  already   implemented  this  concept  into  some  of  its  games  such  as  Pikmin  2  or  Madden  NFL;  we  think   there  is  still  a  room  for  development  in  this  industry  for  Nintendo.  

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Bibliography  

"Best  Global  Brands  Ranking  for  2010."  Interbrand.  N.p.,  2011.   <http://www.interbrand.com/en/best-­‐global-­‐brands/best-­‐global-­‐brands-­‐2008/best-­‐ global-­‐brands-­‐    2010.aspx>.  Rpt.  in                                Interbrand.  N.p.:  n.p.,  n.d.  N.  pag.  Interbrand.  Web.  18  Jan.  2011.     • • • • Nintendo.  N.p.,  n.d.  Web.  18  Jan.  2011.  <http://www.nintendo.com/>.     "The  Lucky  Birth."  N-­‐sider.  N.p.,  2010.  Web.  18  Jan.  2011.       Nintendo.  Annual  Report  2010    (2010).  PDF  file.                http://www.nintendo.co.jp/ir/pdf/2010/annual1003e.pdf     "Nintendo:  Japan’s  Brand  Story  of  the  Decade."  viewpoint:  n.  pag.  PDF  file.                           http://www.marketingpower.com/ResourceLibrary/Publications/MarketingNew s/2010/10_30_10/Aaker%20on%20branding.pdf   Simmons  Market  Research  Bureau.  (2002).  Simmons  national  consumer  survey.  New   York.  18.  Jan.2011.   "Best-­‐Selling  Video  Game."  Guinness  World  Records.  N.p.,  2005.  Web.  18  Jan.  2011.                                                                                       <http://web.archive.org/web/20060317005503/http://www.guinnessworldrecor ds.com/content_pages/    record.asp?recordid=52404>.     Who  Are  Nintendo’s  Competitors?.  CNBC.  13  Nov.  2009.  Siliconera.  Web.  Transcript.  18   Jan.  2011.              <http://www.siliconera.com/2009/11/13/who-­‐are-­‐nintendos-­‐competitors/>.     Hartley,  Matt.  "Why  Is  The  Nintendo  Wii  So  Successful?"  SMARTHOUSE.  N.p.,  12  Sept.   2007.  Web.  18              Jan.  2011.  <http://www.smarthouse.com.au/Gaming/Industry/F4U3N4C3>.     "Building  Brand  Association  through  In-­‐Game  Advertising."  Tata  Consultancy  Service   (2008):  n.  pag.    PDF  file.        

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  Appendix  
Figure  1:  Mental  Map  

 

         

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Nintendo  

  Figure  2:  Customer-­‐Based  Brand  Equity  pyramid  of  Nintendo      
 
• • • millions  of  Facebook  fans   webpages  created  by  fans   consumers  recommend  Nintendo     products  to  their  family  and  friends       “ambassadors”  

Resonance  

 

               Judgments  
• •

High  quality,  reliable   and  durable  consoles  • Nintendo  is  seen  as   expert  and   trustworthy  in  their   field  

Feelings  
Often  perceived   as  fun,   entertaining,   exciting,  creative,   approved  

Nintendo  has  been  able  to  fulfill  the   • consumers’  needs  and  go  beyond  the   • expectations   Wii  has  proven  to  be  reliable,  durable   • and  service  (Nintendo  Club)  is  available   as  well  

Performance  

Strong  brand   Consumers  perceive  playing   games  favorable  and  enjoyable   Nintendo  provides  unique   experience  of  fun  time  with  family   and  friends  

Imagery  

Salience  
• • Very  high  brand  recall  and  recognition   Breadth  of  awareness  –  competes  with  all  free-­‐time   services  and  products  and  does  well  

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