Marketing Management

Module Code: MRKT0371

Strategic Marketing Audit on Sony

Incorporation
BSc in International Transportation Management and Logistics
Dalian Maritime University

Submitted by Group Number 02

Submission Date : 30th January 2021 Lectures’ Name : Mrs. Anushka Gunawardana

Word Count: 3505

 Index Numbers:

Abhishek Chelaka Dabare BScC-550/18-13/0020 (Group Leader)

Sachindra Chamod BScC-550/18-13/0018
Sayuru Layan Neunhella BScC-550/18-13/0040
Sahan Parakrama Jayasekara BScC-550/18-13/0044
Manesh Oshitha Silva BScC-550/18-13/0045
Thinija De Alwis Gunathilake BScC-550/18-13/0019
Demintha Nanayakkara BScC-550/18-13/0054

1
 ASSIGNMENT SUBMISSION/FEEDBACK SHEET

This section is to be completed by the student before submission. Use block capitals.

Module Code and Title: Marketing Management-Module Code - MRKT0371

Assignment Title : STRATEGIC MARKETING AUDIT ON SONY INCORPORATIO

Date of submission : 30th January 2021

No Student's Name Student ID Student Signature

Abhishek Chelaka Dabare BScC-550/18-13/0020

Sachindra Chamod BScC-550/18-13/0018

Thinija De Alwis Gunathilake BScC-550/18-13/0019

Sayuru Layan Neunhella BScC-550/18-13/0040

Sahan Parakrama Jayasekara BScC-550/18-13/0044

Demintha Nanayakkara BScC-550/18-13/0054

Manesh Oshitha Silva BScC-550/18-13/0045

I confirm that the work submitted has been produced through our efforts.
Group Leader’s Signature:
………………..

2
Conditions:

There will be automatic deductions of 10% for work, which is 10% over or under the

word limit. Errors in referencing will result in up to 10% deduction of marks.

Plagiarism will be dealt with through the formal institute disciplinary procedures. If
permitted to resubmit, a maximum of 40% will be awarded.

Work not submitted on time without prior approval will be failed and a maximum mark of 40%
awarded for the resubmission.

This Section may be used by tutor/lecturer for General Comments or Feedback on

Assignment (continue overleaf if required):

Lecturer's Signature: .......................................................

Mark: ........................

Date……………………..

3
 Acknowledgement

I would like to express my special thanks of gratitude to my teacher Mrs. Anushka

Gunawardhane, who gave me the golden opportunity to do this wonderful project of Marketing
audit on Sony, who also helped me in completing my project. I came to know about so many new
things I am really thankful to them. Secondly, I would also like to thank my group members who
helped me a lot in finalizing this project within the limited time frame.

4
5
Contents
Introduction .................................................................................................................................................. 8
Internal analysis ............................................................................................................................................ 9
Mckinseys 7s ............................................................................................................................................. 9
Strategy ................................................................................................................................................. 9
Structure ............................................................................................................................................. 11
System ................................................................................................................................................. 11
Skills..................................................................................................................................................... 13
Staff ..................................................................................................................................................... 13
Style..................................................................................................................................................... 14
Shared value........................................................................................................................................ 14
BCG Matrix .............................................................................................................................................. 14
External analysis.......................................................................................................................................... 16
Pestel analysis ......................................................................................................................................... 16
Political environment .......................................................................................................................... 16
Economic environment ....................................................................................................................... 17
Socio Cultural environment ................................................................................................................ 18
Technology environment .................................................................................................................... 18
Ecological Environment....................................................................................................................... 19
Legal Environment .............................................................................................................................. 19
Porters Five Forces .................................................................................................................................. 20
Threat of new entrants (Low) ............................................................................................................. 20
Threat of substitutes (Moderate) ....................................................................................................... 20
Power of suppliers (Low) .................................................................................................................... 21
Competitive rivalry (High) ................................................................................................................... 21
Power of the buyers. (High) ................................................................................................................ 25
Conclusion ............................................................................................................................................... 27

6
List of figures

Sony organization structure 10

Sony Porter five forces analysis 15
Perception map on Camera market 17
Perception map on console market 18
Perception map on TV brands 19
Monthly percentage of change in disposable personal income 20
Growth rate of the consumer electronics industry in the United States 21

List of tables

Competitive analysis on camera market in the United States 17

Competitive analysis on console market in the United States 18
Competitive analysis on television market in the United States 19

7
Introduction
Sony Corporation, usually referred to as Sony and stylized as SONY), is a multinational Japanese
conglomerate with its headquarters in Minato, Tokyo. The group is one of the world's largest
manufacturers of consumer and specialist electronic goods, the largest video game console company, the
second largest video game publisher, the second largest record company, and one of the largest media
firms in the world, becoming the largest Japanese media conglomerate by size, overtaking the privately
held, family-owned Yomiuri Shimb. With its 50 percent market share in the image sensor market, Sony is
among the semiconductor sales leaders and, by annual sales estimates, the world's fifth largest television
manufacturer as of 2015. It is the flagship product in the luxury TV segment in the world, a television
market of at least 55 inches with a price above $2,500. Sony Corporation, which comprises Sony
Electronics, Sony Semiconductor Solutions, Sony Pictures, Sony Music, Sony Digital Entertainment, Sony
Financial Holdings and others, is the holding company of the Sony Group.

Sony Corporation is a large enterprise with many industries and market sectors. To do a marketing study
for such a huge business organization is very difficult to do because there are many places to cover and
the Sony company's consumer market is gigantic and spread across the world. So, this marketing research
is only linked to the consumer electronics industry within United States consumer market.

The attractiveness and characteristics of a special sector within a particular industry are analyzed in a
market study. It is part of the study of the sector and therefore part of the global analysis of the
environment. The strengths, weaknesses, opportunities and challenges (SWOT) of a business can be
identified through all of these studies. Market analysis is also known as a recorded market investigation
that is used to inform the planning activities of a company, particularly around inventory decisions, buying,
expansion/contraction of workforce, expansion of facilities, purchases of capital equipment, promotional
activities, and many other aspects of a company. In this report internal environment is analyzed through
Mckinseys 7s framework and external environment through PESTEL analysis and Porters Five Force matrix.

8
Internal analysis
Mckinseys 7s
The SONY McKinsey 7S model helps to illustrate how the organization has aligned seven individual
components in order to increase effectiveness. Mckinseys 7s model can be subdivided on to two
segments, hard elements consist of strategy, system and structure which is more tangible and easily
defined as well as directly influenced by the management of the company whereas soft elements which
is less tangible broadly defined consist of four elements shared values, skills, staff and style.

Hard elements

Strategy
The strategy of Sony is to position itself as an innovator and a high-quality product manufacturer that
allows it to offer its goods at a higher premium price than its rivals. The company's innovative technologies
are generally accompanied by huge and zealous marketing campaigns to achieve these goals, which have
helped establish many popular sub-brands like PlayStation, Walkman etc. In exchange, these
achievements further reinforce the "Sony" brand.

However, Brand development, production and marketing are all well known, but the business lacks any
long-term formal direction. Sony's initial mission statement is also obsolete since it applies to W.W.II. As
there is little focus on benefit and transparency for R&D activities, the short-term approach is also lacking.
As a result, while Sony has strong components, Sony is unable to organize to reach its full potential in a
coherent manner. But these businesses seem to have learned the significance of concentrating on core
competencies and cutting back, channeling their energy into one or two prevailing businesses. Sony's
smart phone brand Xperia and laptop brand VAYO is becoming a burden for Sony’s business strategy. For
example, Sony's competitor apple has focused only on several segments but enjoys tremendous success
with them.

9
In addition, the company lost over $10 billion in 8 years in the TV industry alone because of Sony's rigid
and non-visionary strategy. Initially, because of better technology, Sony had a competitive advantage over
its rival, but they did not make considerable efforts to further develop the technology and anticipate
future consumer demands. Instead, they imposed reduced production costs on the same technology,
which gave the competitors free hand to freely come up with better value-added technology, and this
market gap was successfully filled by Samsung and LG which left Sony in the dark.

1Global market share by LCD TV manufacturers (2008-2016)

10
Structure

2Sony Organization Structure

The organizational structure is largely focused on the purpose and form of product/business of the
organization. Some managers lead different departments or classes. The Research & Development
division, Energy Business, and Storage Media Business of Sony, for example, are under the same executive.

The limited flexibility of regional units and geographical units of the company is a drawback of Sony's
organizational structure. There is no coordination between the U.S. content creators and the Japanese
technological wizards. Though Sony has a separated regional unit in United States, by increasing the
autonomy of some of its groups, such as the sales and marketing functions in United States, Sony can
strengthen its organizational structure.

Divisional structure failings that include duplication of functions at various "levels" leading to high costs
in maintaining the management structure; business units of Sony enable compartmentalization to settle
in that lead to a lack of communication and cooperation. This, in turn, runs the risk of its products and
services being incompatible.

System

Sony’s long-term growth prospects relies on smooth running of extensive range of systems. These include
employee performance appraisal, employee recruitment and selection system, team development and
orientation system. Value chain system, customer relationship management system as well as business
intelligence system. The competitive advantage of most prestigious electronic brand of the world is based
on innovative new product development systems to a greater extent compared to other systems.

It was concluded that there is usually a lack of communication and cooperation in communication system
because of the compartmentalization, a disadvantage that the divisional structure brings between the
Sony business units. This runs the risk of Sony's products and services being incompatible. In order to help

11
develop camaraderie and team spirit, Sony top management should therefore promote more
opportunities for its business units to interact and cooperate through improved communication system.

Back in 2008 Sony initiated their value chain model which made changes in workforce composition that
could ultimately influence employee morale and boost financial performance; however, 2009 recession
triggered the consolidated drop in revenue, impacting the company's fiscal position, highlighting
loopholes in the Value Creation Model.

Obviously, this research paper may indicate that Sony needs to emphasize the management of quality
control. Back in 2012, Sony's products were criticized when Sony itself admitted that over 535,000 VAIO
laptops had a manufacturing flaw and were overheated due to a fault in the temperature gauge. In 2008,
due to "problematic image pick-up” Sony recalled 8 different digital camera model ranges. Sony should
ensure that essential steps are taken to ensure that the quality of the products complies with the
requirements and that the finished products are free of defects. As shown in the figure, Sony currently
has a very centralized quality control System, they should delegate this authority and have a very
intelligent decentralized quality control system to ensure that regular checks are conducted at every
production stage.

12
Soft elements

Skills
Sony has more than 100,000 workers worldwide and gained wide variety of skills, experience and
information from them. Sony was able to use its human resources efficiently, which was reflected in its
delivery of quality goods and services, by strategically integrating workers in different areas of the
business and encouraging them to regularly share ideas. Sony need their employees to maintain individual
capabilities and specialized knowledge of their respective area from electronics to music and movies and
intend to use those to manufacture products that reflects value for customers.

Sony had critical skill gaps within its organization throughout the past decade concerning about their
software development. Their software was buggy and not optimized meeting its hardware potential. In
an interview a Sony executive pointed out that they need to close this digital skill gap by integrating with
universities and recruiting more digitally skilled youth who are familiar with software development from
their young age.

Staff

Sony employs 114,000 people in 38 countries. In order to promote the development of human resources,
Sony offers more than three thousand staff training programs, including general training, e-learning, and
on-site training for its employees. Sony has also expanded the optional training options, which can
improve the job performance of employees as well as provide them with self-learning and personal
development support. Such efforts helped Sony save a significant amount of the cost of human resource
development (Sony Corporation, 2016).

However, Sony lost a lot of talent because it had

recently laid off staff to address financial issues.
Although the remaining workers have to do more
work for the same pay, many of them have opted to
leave including employees who were there over a
decade with their expertise in the field. Sony can,
therefore, become less imaginative and inventive. It
is crucial that poor performance is the root of the
problem that has led to the loss of economic
problems and talent. If Sony is unable to address the
operational problem, such as delivering new goods or
competitive advantages to meet consumer needs, the
situation can only get worse and worse.

Apart from that, in Sony's upper hierarchy, there is a

massive "Fat Cat" issue in which the executives 3Total number of employees in the Sony (2007-2016)
receives several unjustifiable financial advantages,
i.e. despite Sony's harsh time, the new CEO Mr. Hirai received a huge $4.9 million raise (Blair, 2016) for
the year end of March 2016, in addition to Sony MR's CFO (Chief Financial Officer). Kenichiro Yoshida also
received $960,000 compensation.

13
Style
Sony Corporation's co-founder, Akio Morita's leadership style included the ability to imagine, design,
introduce and create new products, marketing, brand management strategies, and human resources
skills. Akio Morita resigned from the position of Chairman, placing Sony as the most profitable consumer
electronics company in the world. On the Fortune 500 global list, Sony was rated 37. Sony developed
several new products and innovations under Morita's leadership. One of Sony's other main success factors
was Morita's individual skills and his trust in his staff. After Morita's death in 1999, Sony continued its
history of offering creative products.

But currently Sony leadership style reflects bureaucracy with most of the divisions develop strict rules
implemented just to survive in the industry than to valuing innovative product development and
efficiency. However, many ex-employees complain that the communication between higher management
and staff is weak and the top management lacks knowledge about software which is a major shortcoming
of the whole corporation.

Shared value

Strategic level management at Sony seeks to promote the principles of commitment to work, ingenuity
and laboriousness among the workers. Sony Shared principles are well associated with its mission as a
business “Creating unique new cultures and experiences which fulfills customers curiosity”

Howard Stringer's, (Sony USA head) had the obstacle to decide whether to force a Japanese corporation
on Western culture when he became the first American CEO of Sony USA. Traditional values that
emphasize hard work and information are still a common practice in Japan because of its religious
influences, but the common values were creativity and innovation in the U.S. Therefore, risk-taking is
highly observed in the U.S. So difference organizational cultures creates a different atmospheres within
the organization.

BCG Matrix
For conglomerates such as Sony, which comprises of diversifying divisions or segments, the BCG matrix is
an essential tool. Established by a private consulting firm based in Boston, the BCG matrix is one of the
methods for top level managers that can be used to develop plans according to their needs for each
section. According to its market share and industry growth rate, this structure is the four quadrant graph

14
with each quadrant reflecting different segment categories. The four components of the matrix are below:
Question Mark, Cash Cow, Stars and Dogs.

Dog

Due to low market share and a low growth rate, a commodity neither creates nor uses significant sums of
cash that item can be seen as a Dog product. Walkman and VAIO laptops can be included in the dog
category. Laptops under VAIO's brand struggled to fulfill consumer expectations and there were several
product defects, so the company failed to gain market share in the computing industry. Some analysts
claim that the excessive emphasis of Sony on the maturing market of consumer electronics (profit margin
below 1% in 2012-17), combined with growing competition in the consumer electronics industry, had a
serious effect on its profitability.

15
Question Mark

When they have a smaller market share and they do not produce much profit or cash, a product becomes
a Question Mark. The semiconductor, blue ray player and Xperia Smartphones are Sony products that fall
under this group. The Sony Mobile Contact Division is part of the Question Mark group. Every year, the
mobile phone industry is growing, but unfortunately, the Sony smart phone product line produced under
the Xperia brand name stalled behind in competition. These goods did not make as much sales as they
planned due to aggressive competition from their rivals such as Samsung Apple and other Chinese OEMs,
and their market shares are now between 04-12 percent. If Sony wishes to remain in the smartphone
industry, the company must focus on product growth, it should formulate the product development plan
for the segment of mobile communication.

Cash Cow

When the product shows signs that the return on assets is higher than the market growth rate, and makes
more cash than it consumes, we assume a product is a cash cow. In case of Sony Alpha DSLR cameras and
Bravia TV still holds up as cash cows as these products still make profits though there were less
differentiation involved in recent years. Sony music can also be taken as a Cash cow because Sony still
holds largest BGM record studios though the industry growth is somewhat questionable.

Star

The BCG Matrix's fourth part is the stars. Stars comprises those categories that compete and have strong
relative market share in the high revenue growth industry. It is possible to include Sony's electronics
division in the star group. PlayStations are the topmost contenders under this category. Newly released
PlayStation 5 went stockout only through pre orders setting a world record. The PlayStation brand has the
largest market share in console games, so Sony's game and network division which includes video games
and network sales comes under this. Apart from that Sony is the second largest camcorder producer only
being behind Panasonic, their Japanese rival. However, with the introduction of GoPro Sony created a
trend among adventurous youth boosting sales. Sony pictures network is another contender to this
category with the success of new Spider Man movies

External analysis
Pestel analysis
According to Investopedia, “PEST Analysis (political, economic, social and technological) is a management
method whereby an organization can assess major external factors that influence its operation in order
to become more competitive in the market. As described by the acronym, those four areas are central to
this model.”

Political environment
The world has recently experienced an economic decline that has had a negative effect on almost
everything around the world, including Sony's income, especially in the United States. As a Japanese

16
corporation, because of the policies developed by the government, Sony was not authorized to set up
broadcast networks in the United States specially during the time president trump addressed at G summit
"If we're attacked, Japan doesn't have to help us at all," Trump said. Japan, he claimed, "can watch it on
the Sony television, okay, the attack." He specified Sony due to the fact that Sony media network offered
no support for Trumps election campaign. President Trump always prioritize US companies than the
foreign companies by implementing sanctions leaving Sony at risk. The US government has also failed to
give meaningful action to counter the problem of counterfeit products and piracy, causing Sony
electronics and movies to lose billions of dollars a year and lose competitive advantage on their consumer
electronics as well.

Sony was also involved in controversial matter between North Korea and United states where North
Koreans claimed the movie “The interview” indirectly insults president Kim Jong Un. Initial oppression was
followed by a system wide cyber-attack leaving entire Sony network at a risk thus questioning consumers
privacy.

Economic environment
The downturn in the IT industry during 2018 seriously affected Sony, leading to a drop in demand for its
computer-related goods. As a result, Sony made a net loss in the third quarter 2018, bringing its losses for
the year to date to Y50.9bn ($544m). In contrast to US equity rules, Japan has very distinct and special
equity law, which enables Sony to have higher debt levels, over the last few years the business has been
running in negative equity, i.e. known elsewhere in the world as bankruptcy.

4Sony's net income (2008-2017) source:Statista

17
The economic damage left behind by the COVID-19 pandemic is driving United States deeper and deeper
into recession considering the fact that it is severely impacted than any other market. In times of economic
distress, costly premium products such as Sony's products that are not necessary are typically the first
casualties.

After the Plaza Accord, the strengthening of the yen

against the dollar and the subsequent volatility in the
exchange rate exposed Sony to financial
shortcomings as a Japanese exporter to the United
States. Average US consumers have to pay more to
get the same products or services. Sony products
which already offers premium prices with less
differentiation factors recently will deviate more
from consumers mind after increasing the prices.

Socio Cultural environment

People in the United States have with them a growing amount of disposable income. Even governments
increasing tax collection, demand for consumer electronics is not affected. The ability to purchase a more
sophisticated home appliance is made possible by taking a loan for the same with ease. They see luxury
premium goods as a symbol of social status and these customers are fashion conscious. Sony products
were always considered as premium products and they even designed their products more ergonomically
and uniquely, hence gaining the upper hand on subject.

A Goldman Sachs survey found that 60% of Americans played video games and 61% of these game-buffs
were adults; 43% were women and their average age was 28, suggesting that this type of entertainment
is now popular. Sony’s PlayStation clearly got an advantage in the segment beating all the substitutes.
Growing online gaming acceptance and improving the distribution of wealth create more possibilities for
Sony to raise its revenue from the selling of its gaming goods.

Generation Y who holds the buying power as for now is looking to increase their ownership of innovative
products over the years. This presents an opportunity for all media and technology businesses to increase
their revenues by offering reasonably priced innovative products and services. Though reasonable pricing
by Sony leaves a question mark on consumers mind innovation is always they’re with the company
strategy. Sony Bravia TV was the first to introduce 4k ultra HD definition, Sony Cameras featured
mirrorless feature as well as Walkman and PlayStations clearly built their own legacy.

Sony had its hands-on Black lives matter movement by releasing themes and video game backgrounds
designed on the subject and openly had express their stance against racism thus gaining a favorable
attitude within US customers however there are still considerable number of American citizens who backs
racism against black people leaving Sony loose popularity among them.

Technology environment
New services such as Internet telephony and the growth in the usage of telephony services Sony offers
telecommunications services (such as online shopping) with the opportunity to exploit emerging
technology to raise their income. In addition, other areas from which Sony can derive ancillary revenue

18
are e-commerce and internet-based operations (such as online banking and insurance purchases). Better
still, in some cases, technological innovations often mean having ways to minimize operational costs as
transactions are made online, such as savings on commissions for sales agents.

With the increasing technological development many organizations involved in consumer electronics are
able to produce any kind of electrical equipment with less costs even without spending large sum of
money on research and development. Sony must be mindful of the fact that other electronic companies
could copy the technology of Sony in a much shorter period while offering more affordable prices.
Typically, it usually takes a few years for a product to grow, but the time is left to reap the results and
profits which be much smaller. As seen in the example of the VTR, Sony created both the VHS and the
Beta. In a short period of time, however, Matsushita came up with a competitive product based on the
technology of Sony. Same thing happened with Sony’s 4k TVs (TLC and JVC came up with same products
offering much less price) Therefore, the margin for technological development is shrinking.

Ecological Environment
Health-related issues First, there is a common belief that regular gaming has an effect on the health of
young people. Eyestrain, headaches, chest pain, exhaustion and mood swings have been discussed about
by players. However, this view can shift when research shows contradictory findings that such side effects
are perceived to be 'relatively minor or temporary' and that playing video games is equivalent to a
moderate intensity exercise: playing does not enhance or damage physical health with regular use.

Similarly, air pollution is a serious environmental factor that, through decreased employee efficiency, may
affect Sony. It has been estimated that in New York, air pollution is responsible for 656,900 sick days a
year. Employee productivity would improve by around 4 percent per year across 190 Chinese cities where
Sony has their manufacturing facilities, if the amount of fine-particle air pollution is decreased to fall below
the requirements of the World Health Organization.

Legal Environment
Creation of intellectual property and intellectual property rights, as well as commercialization and security
have given Sony an important source of comparative market advantage. Target Technology Firm,
however, argues that the Blu-Ray discs from Sony use materials protected by US patent law and filed a
lawsuit in US court.

In 2017 Sony faced a massive breach in to their PSN network. A complaint against Sony over the hacking
of its PlayStation Network has been filed in the US court. Judicial action by a user of a PSN argues that
Sony did not do enough to protect its customers' private data. It also calls for compensation and for Sony
to pay for surveillance of credit cards to spot whether stolen information is used fraudulently. Personal
information was collected, including name, address, e-mail address and PSN login details. Also, Sony said,
while credit card data was encrypted and there was no proof that it was stolen, it was not possible to rule
out manipulation of the data.

19
Porters Five Forces
Porter's Five Forces is a model that recognizes and analyzes five competitive forces that form each market,
helping to define the vulnerabilities and strengths of an industry. To recognize the degree of competition
within the industry and increase the long-term viability of a business, Porter's model can be applied to
any segment of the economy.

Porters Five Forces on Sony

Threat of new entrants (Low) Porters Five Forces on Sony

The threat of new entries is low since to be competitive in this market, every beginner would need
economies of scale. Good relationships with suppliers and successful production processes would be
needed for a small player, otherwise it will not be possible for him to produce at a low cost. This may
result in losses being sustained and not gaining greater market share. In addition, sophisticated
Porters Five Forces on Sony
technology and well-developed R&D units will be needed for any business that wants to succeed in this
market. In addition, it is regulated that before the company is permitted to operate, any potential entrant
is required to obtain approval from the relevant authority of the country in question. Any new entrant
who has broken into the territories of the major players should expect heavy retribution from
Porters Five Forces on Sony
them. Consequently, it also functions as a deterrent effect for future entrants.

Threat of substitutes (Moderate)

The number of substitutes for products manufactured by SONY is less. However, because the cost of
switching is low, this leads to a rise in the degree
Porters of threat
Five Forces from replacements. The low switching costs
on Sony
facilitate the movement of customers from the products of established firms like Sony toward available

20
Porters Five Forces on Sony
substitutes. “Substitute products limit the potential return of the industry by controlling the prices that
can be charged. People will buy substitute products if they are cheaper and have a similar effect” (Porter,
1980, Pg. 23). There are also variables that restrict the danger from the alternatives. The brand image of
SONY, the quality of its products and the low degree of differentiation currently are such factors. Sony has
achieved an impressive degree of brand loyalty with a great amount of investment in marketing and
advertisement. Some of SONY's goods, such as its Play Station and GoPro, mitigate the danger of
substitutes through their popularity and uniqueness. In this way, the overall danger from replacements
remains moderate.

Power of suppliers (Low)

Because there are so many suppliers, their bargaining power is low. Electronics industry companies are
searching for cheaper imports from nations. Many are relocating production facilities to these nations, as
price competitiveness is growing. Because of the price war, manufacturers are forced to slash their prices
because their clients will go to other suppliers that bid cheaper prices. Moreover, manufacturing has
shifted from brand owners to mass logistics manufacturers to reduce production-related costs (Sony,
2009). Large businesses from similar industries can now enter this market, which is why suppliers'
bargaining power is low.

However, when considering PlayStation there exist a risk coming from Game developers regarding
exclusivity. Some game developers like Naughty dog, CDPreojektred, Rockstar etc. holds a reputation
among consumers so their decisions affect sales drastically.

Competitive rivalry (High)

The consumer electronics industry has a number of rivals, such as Apple, Samsung and LG. Some of the
rival sizes are fairly equal. For example, the market share of LG and Sony in the TV industry is very similar;
the market share of Sony, Canon and Nikon in the digital camera industry is also comparable. PlayStation
has the most intense rivalry in modern digital world, Xbox. In these sectors, therefore, intense rivalry is
expected as these businesses try their best to grab the competitors' market share.

The consumer electronics industry's product differentiation is mild. The danger is spread, as this industry
has so many goods. For example, for TV or audio devices, there is low product difference, but for gaming
consoles and digital camera, there is high product distinction. The competing brands product diversity is
limited since most of the rivals are targeting and following the same target in the comparable market.

Detailed competitive analysis is given below under several product segments considering brand and
industry competitors.

21
Competitor analysis in digital camera market

Perception map on Camera market

22
Perception map on Camera market
Competitor analysis in console market

Figure 5Perception Map on console brands

23
Competitor analysis in television market

Perception map on TV brands

24
Power of the buyers. (High)

Price sensitivity of US customers

While the size of each individual order might not be important, price sensitivity is high, and by selecting a
better-priced alternative, consumers have the potential to influence businesses. Furthermore, U.S.
customers continue to reel from a stressed job market and rising prices, particularly in key consumption
products such as fuel. Conspicuous consumption is on the decline; the order of the day is to replace luxury
goods with cheaper variants and even delay consumption. Spending on CE products by the average U.S.
buyer household fell 14.5% between 2017 and 2018, according to the Consumer Electronics Association.
With better technology and graphics, Sony tries to differentiate its brand, but currently, goods in these
industries are not much differentiated.

9Growth rate of the consumer electronics industry in the United States from 2012 to 2021
source:statista

Number of customers. A growth in the number of households will lead to increased demand for consumer
electronics. Recent social patterns have shown that consumers are increasingly concerned with long-term
personal wealth development and that marriage is frequently postponed until later in life. This has
contributed to low-density living, which has raised household volumes. It is projected that the number of
households will increase in 2019.

Ability to substitute - Consumers have substantial power in these industries. With online reviews of
products, the ability of a potential buyer to gain information is quite easy. With this data, and less
switching or transaction costs, a buyer may shift from one brand to another. The majority of customers

25
are now shopping online and using mobile phones to shop. A customized shopping experience is what
every customer needs. Transaction costs basically drop to zero, especially if consumers purchase online,
which is becoming increasingly common.

Order Quantity - Retailers such as BestBuy, Walmart, GameStop etc. which has long-term relationships
with global brands such as Sony have high purchasing power as it offers great value to customers by
checking the prices of competitors and securing exclusive deals from key manufacturers and deciding
which product to choose. The moderate purchasing frequency has a small effect on the business of Sony.
Typically, a higher volume of transactions leads to a higher intensity of consumer effects on the
environment of the industry.

Ranking of leading US CE stores source: ecommerseD8)

10US adults Shopping trends

Source:ecommerseD8

11US adults Shopping trends

Source:ecommerseD8

12US adults Shopping trends

Source:ecommerseD8

13US adults Shopping trends

Source:ecommerseD8

14US adults Shopping trends

26 Source:ecommerseD8
 Conclusion

This marketing audit of Sony determines external factors and internal create opportunities and threats
significant in the consumer electronics This study perfectly explains how seven individual components
have been aligned by the company in order to maximize productivity. Sony's strategy is to position itself
as an entrepreneur and a producer of high-quality products that allows it to sell its products at a higher
premium price than its rivals. Sony was able to use its human capital effectively, which was reflected in its
delivery of quality goods and services, by creatively incorporating and enabling staff in various areas of
the organization to exchange ideas regularly. By addressing the external variables and related issues in
the remote or macro-environment of its company, Sony Corporation continues its global success.

The world has recently undergone an economic recession that has had a negative impact on almost all in
the world, including the income of Sony. The downturn in the IT industry during 2018 seriously affected
Sony, leading to a drop in demand for its computer-related goods. For goods produced by SONY, the
number of substitutes is less. However, since the cost of switching is minimal, this leads to an increase in
the degree of danger from replacements. Apart from that unrelated diversification, laidback marketing
effects and premium prices without much product differentiation are among shortcomings that Sony need
to answer.

Most of these external and internal variables provide opportunities that can be taken by Sony. The
recommendation is that the organization should increase its product innovation activities to boost its
environmental impact and competitive advantage, while addressing product regulation concerns. Though
Sony's PlayStation gains a massive success and be the gold mine of the company it is not enough to
overcome every drawback. It is evident that every user who owned at least a single Sony product back in
the time like to watch Sony gaining back its lost glory.

27
 References

UKEssays. November 2018. Sony Corporation Research and Development. [online]. Available from:
https://www.ukessays.com/essays/business-strategy/sony-corporation.php?vref=1 [Accessed 29 January
2021].

H. Tang R. Misra (2013) 'Sony Corporation’, (), pp. 12-13 [Online]. Available
at: https://vdocuments.mx/strategic-marketing-audit-sony.html (Accessed: 25th January 2021).

Woo Gim Chuan Marcus (2010) STRATEGIC ANALYSIS ON SONY CORPORATION, : .

Sony (2003) Press Releases: Transformation 60 – confirming Sony’s position as a leading consumer
brand in the 21st century [online]. Available from:
http://www.sony.net/SonyInfo/News/Press_Archive/200310/03-047E/ [Accessed 4 January 2021]

Sony (2010) Sony Annual Report 2003 pp5-management discusses key issues [online]. Available from:
http://www.sony.net/SonyInfo/IR/financial/ar/Archive.html [Accessed 17 January 2021]

UKEssays. November 2018. An Analysis and Case Study About Sony Corporation Marketing Essay.
[online]. Available from: https://www.ukessays.com/essays/marketing/an-analysis-and-case-study-about-
sony-corporation-marketing-essay.php?vref=1 [Accessed 19 January 2021].

Datamonitor (2010), Sony Corporation-Company Profile, pp4, 5 and 21, Publication date: 12 Mar 2010

UKEssays. November 2018. Environmental factors that influence Sony Corporation. [online]. Available
from: https://www.ukessays.com/essays/marketing/environmental-factors-that-influence-sony-corporation-
marketing-essay.php?vref=1 [Accessed 29 January 2021].

CSIMarket (2020) SNE Sales vs. its Competitors Q1 2020, Available at:
https://csimarket.com/stocks/compet_glance.php?code=SNE (Accessed: 26th January 2021).

Mark Sweney (2020) Sony comes back from the brink, Available at:
https://www.theguardian.com/technology/2017/nov/04/sony-record-profits-spider-man-playstation-crown
(Accessed: 24th January 2020).

UKEssays. November 2018. Analysing Structure Changes due to Sony in Restructuring Mode. [online].
Available from: https://www.ukessays.com/essays/business/structure-changes-due-to-sony-in-
restructuring-mode-business-essay.php?vref=1 [Accessed 27 January 2021].

UKEssays. November 2018. Business Analysis Of The Sony Corporation. [online]. Available from:
https://www.ukessays.com/essays/business/business-analysis-of-the-sony-corporation-business-
essay.php?vref=1 [Accessed 29 January 2021].

28