Group 4

Section B
Harshan Hashim PGP05068
Henna Bansal PGP05069
Ilika Grover PGP05070
Jayesh Nagpal PGP05071
Joel Daniel PGP05072

Sony AIBO Case

Sony AIBO: The Value Proposition

Product
Benefits

Hassle free pet

True companion
with real emotions
and instincts

Entertainment

Customer

Experience

Fun of a living
creature

Features

Mimics the actions

of a dog
Can be trained

Communication
possible
Has a personality

of its own

Puppy love
and a pet
Intelligent
companion
Friend

Wants
Hassle Free
pet
Intelligent
companion
Intimate
friend
Pet with a
desired
personality

Needs

Fears

Need for
companions
hip

Need for
training

Need for
affection

Need to
replace after
a particular
time
Frequent
recharges
High
investment

Resonating Value Proposition

A robotic pet with the capacity to have characteristics of a real pet
without the inconvenience of having to own a real pet
Sony never competed with the features of its competitors in market at that
time. All its competitors were obsessed with the idea of functionality in a
robot.
Sony understood that peoples real need was to have the company and
affection of a pet without the hassle of owning a real one
It emphasized the advantage of having an AIBO over a real pet, which
obviously was its next best alternative in the market
Sony was successful in highlighting this benefit and won over the markets in
Japan and limited markets in US

Stealth Positioning: The Rationale

Sony had spent tens of millions of dollars to develop the first household robot,
with the goal of seizing a leadership position in the emerging field against
formidable competitors like Honda, Toyota, and Matsushita but Sony knew that
marketing an unreliable, humanlike household robot that couldnt handle even
simple chores was sure to backfire
Another important aspect guiding Sonys positioning was a thorough
understanding of the needs of the home market ie. Japan. People needed an
affectionate companion and was open to the idea of robots.
Positioning as an intelligent companion rather than a robot helped Sony cross
demographic barriers in its potential audience.
Even though basically a robot, Sonys AIBO never competed with any of its
competitors. It carved out a niche category for itself in the Robotics industry

Categories from which Sony was

facing competition
From the household robots which started emphasizing on the
necessity of functionalities in a high priced robot Robots are more easily perceived as functional household robots as
many competitors are working on functional household robots rather
than robots for entertainment.
Competitors working on such robots include Hyundai, Matsushita,
Toyota and Hitachi. Though no economically viable product for market
has been launched as yet, it still poses a threat for the future.
Cheap imitation toys which cost less than $50 while AIBO costs $2500
(Tekno, Poo-Chi, Rocket the Wonder Dog). The product features were of no
match to AIBO however these started to distort the customer
expectations.

Frame of Reference

Frame of Reference: Pet Dogs

Alternative Frame of Reference(that could have been used):
Functional Robot

Positioned as Companion/Robotic Pet

Benefit: Fulfilment of owning a pet without any hassle.
Point of Difference: Intelligent, alert companion. Without any toil, guilt and
fretting that usually go along.
Point of Parity: Goes through development stages of an infant, child, teen and
adult and evolve differently with each master.

Factors that affected Sony AIBOs

Market in America
AIBO created confused reactions for many customers. People didnt
understand the utility of the product.
It seemed that Americans were to be educated about the product
otherwise it might result in negative impact.
Older Americans believed that there is something dangerous or
threatening with something that is too lifelike.
Issue of pricing posed a threat on the success of the product in the
American market where the product is largely viewed as an
entertainment tool rather than a product which breaks even between
entertainment and functionality.

How competition Affected Sonys

Marketing Strategy
Sony marketed AIBO as pet robot or companion robot. Though they didnt
do much promotion of the product however the marketing strategy saw
various additions/changes with time and competition:
Consumer profile
In Japan all age groups were the target consumers. The product was
very popular among old people in Japan. However, in US only younger
generation were ready to buy AIBO. Older Americans believed that
there is something dangerous or threatening with something that is
too lifelike.
Distribution Channel
Initially AIBO was available only through internet. But 2ndgeneration
Aibo was also available through retail outlets including Sony style
stores, selected Neiman-Marcus stores and Sharper image retail
outlets and through hotline number rather than only through internet.
This was done to have better distribution and enhance reach.

How competition Affected Sonys

Marketing Strategy
Pricing strategy:
First generation AIBO was priced at $2500. But the second generation
was offered base price of $1500 with the option of up gradation if
consumers are willing to pay more.
Promotional strategy
Aibo sales in US and Japan had been primarily driven by publicity and
word of mouth.
Movie starring AIBO, AIBO comic books, AIBO video game other AIBO
related products were in the proposed pipeline to market AIBO.
However AIBO marketers were not sure if they should wait for further
maturity of the product or start mass advertising.
Colour Options: AIBO added more features and add-ons to promote
the product. They also introduced more colour options.

Reducing the price to $50?

Type of Product-Evolutionary
Value Proposition- A robotic pet with the capacity to have characteristics
of a real pet without the inconvenience of having to own a real pet
Cost- High cost of R&D on Robotics and Artificial Intelligence development
Initial target customers -Innovators and early adopters since the product
entered with a completely new value proposition
Positioning- Stealth positioning

Reducing the price to $50?

Pricing strategy- Premium pricing
Reducing the price to $50 will not be in accordance to the value proposition
we are trying to create
Also, the costs incurred by company on Artificial Intelligence are huge,
pricing the product at $50 would require mass selling of the product to break
even.

The End