Report on Nintendo plc Table of contents Table of contents2 Introduction3 Exchange process4 P. E. S. T. E. L Analysis5 Segmenting markets6 Marketing information and research7 Product Anatomy8 Product Life Cycle9 New product development10 References12 Introduction Nintendo is the worldwide innovator in the creation of interactive entertainment. Based in Kyoto, Japan, Nintendo, Co, Ltd manufactures and markets hardware and software for its Wii, Nintendo DS, Game Boy Advance and Nintendo GameCube systems. Since 1983, Nintendo has sold nearly 2. billion video games and more than 420 million hardware units globally, and has created industry icons like Mario, Donkey Kong, Metroid, Zelda and Pokemon.
Founded on September 23, 1983 by Fusajiro Yamauchi Nintendo has since The exchange process (Transactional marketing) The exchange process is essentially the “bottom line” when looking at the principles of marketing from an organisational perspective. Followed closely by profitability, transactional marketing can be recognised within both popular and accepted definitions of marketing. Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably.
(Chartered Institute of Marketing 2001) •Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchange and satisfy individual and organisational objectives. (American Marketing Association 1985) The exchange process is identified specifically within the (AMA) definition where it refers to exchange as a result or goal of correct practice of pricing, promotion and distribution of goods and services.
Below are a couple of examples of the transaction process when customers purchase Nintendo products. When a customer buys a Nintendo product they are entering into a luxury good transaction.
This means that the customer is spending a fairly substantial amount of money. With this in mind the customer must have preconceptions and expectations of what they will get from the product. These will either come from advertisements or past experiences. Specifically, if an individual is willing to pay over a hundred pounds for a pocket sized Gameboy, the product must in turn provide the desired output which in this case is fun.
Transactional marketing is simply the customer and organization entering into a deal where both parties receive something of value. Nintendo have recently expanded their market to include families and people of all ages. The reason for this expansion is the Nintendo Wii. This product can harbour up to 4 players and Nintendo have released an advertising campaign showing families enjoying product together. In exchange for their cash families and individuals are made aware that the Nintendo Wii will provide fun for years to come. P. E. S. T. E. L Analysis
PoliticalEnvironmentalSocioculturalTechnologicalEconomicsLegal Health and safety is a key area the government look for when scrutinising companies. A way in which they are doing this is to ensure that all products pass strict Quality standards. Like all other major corporations Nintendo is subject to intense global pressure to go “greener” and protect the environment. According to the official Nintendo website all factories and offices recycle paper, plastic and cardboard and In all their shipping they use recyclable goods. Nintendo have recently been targeting older markets with their DS console.
Games and applications such as brain age and Sudoku have been enticing sales from the over 25 market. (Note reference A. )During recent years Nintendo have had the majority market share of the portable videogame market. Yet it is currently in direct competition with Apple and the I-phone. (Note reference B)Nintendo’s quarterly profit rose by 31. 5 percent since last year, (2008) from 90. 63 billion yen a year earlier to 119. 19 billion yen. That’s roughly 500 million pounds. (Figures from www. itfacts. biz) Nintendo is involved with many legal issues to mainly ensure the safety of their products; Copyrights.
Trademarks Patents Counterfeits Liscences. Etc. British and Quality standards are safeguards put in place to ensure that any products released into the UK market are safe for use or consumption. Nintendo have to take into consider many things when concern with quality standards. Nintendo have contracts with vendors to ensure proper recycling of all electrical goods. Products no longer include styrofoam in either software or hardware. Nintendo have greater than 99% recycling rate of all product returns and repair parts. They also offer a take back programme with consumers for all older products.
The generic gamer market is males aged 18-34. After releasing the Nintendo Wii this market has expanded significantly. It is now common for a households and even pubs to incorporate The Wii entertainment system. Nintendo have been continuously innovative within the last 20 years and the technology introduced within the Nintendo Wii has proved highly effective in keeping ahead of its direct competitors; (Xbox, Playsatation 3)Sales of the Wii have jumped by 51 percent since Q1 2008 to 5. 17 million units since April. In the same quarter, PS3 sales reached 1. 56 million units and Xbox 360 shipments hit 1. million units. (Figures from www. itfacts. biz) A copyright gives the owner of the product exclusive rights to sell and reproduce it, Nintendo has copyrights over software, game visual display, game music, game characters etc. Two of the main issues associated with Nintendo’s products are ; Electrical goods and Safe for use of children. Nintendo also have their own company standards. (Ref D)Nintendo products tend to have long-lasting value, as many consumers hang on to them long after having upgraded to new consoles or hand held units, accessories or software.
For used, working Nintendo products, there are a variety of online options to sell these products to interested fans. Specifically Nintendo has approached the female market by introducing applications for the Nintendo DS where users can follow recipes and watch videos while doing so. It has been said that up to 80% of the Nintendo Wii users are female. The Nintendo Wii is the only games console to date where physical activity has been introduced. In many people’s opinions the Wii fit games have arrived at right time within a health conscious society.
Nintendo is taking up the largest market share of all the competitors within the global video game market, this recent influx is largely due to the success of the Nintendo Wii. A patent is a grant of the exclusive right in an invention for a period of time. Nintendo owns many software, hardware and design patents. (Reference A) ‘More than three million copies of Brain Age have been sold in Japan since 2004, and more than two-thirds of the buyers were older than 25. The U. S. version will cost $20 at Best Buy and other retailers. –SEAN O’NEILL’ Apr 2006. (Reference B) Nintendo, whose gadgets and software dominate the portable-videogame market, faces the greatest risk from the emergence of Apple’s iPhone and iPod Touch as gaming platforms. But Mr. Iwata says attempts to create a rivalry between the two companies make him “uncomfortable,” because he says it isn’t true. He argues the companies appeal to different consumers. Yet Apple has made clear that it intends to go after Nintendo’s turf’ (Daisuke Wakabayashi. Nov 11, 2009) (Reference C) This Official seal of quality shows the consumer that the product is authentic. Segmenting markets (Psychographic)
Geographic segmentation is dividing the market depending on its location. Nintendo is a worldwide corporation so it needs to be able to acknowledge all areas of the developed world. The global marketing strategy of the Nintendo Wii, is concentrated mainly on Nintendo’s three key markets of Japan, United Kingdom (UK) and United States of America (US). Demographic segmentation tells us specifically about the customer, they profile the customer into age, gender, race, income, occupation and social status. Nintendo have recently expanded their market targeting specifically women nd the over 25s. Geo-demographic can be defined by combining the above two segments. This particularly helps organisations to understand how and where their customers live. Behavioural segmentation takes into account the buyers relationship with the product. Factors such as benefits sought, usage rate, loyalty, attitudes and buyer readiness all come into behavioral segmentation. Multivariable segmentation refers to using a number of different variables and types of segmentation to develop a rich profile of a target group of customers.
Nintendo undertake this process to access any underlying target market. Psychographic segmentation is also known as lifestyle segmentation. Psychographics go deeper than other variables and attempt to engage the customer on more of an emotional level. ‘The term lifestyle is used in its widest sense to cover not only demographic characteristics, but also attributes to life beliefs and aspirations’ (Brassington and Pettitt 2008, p. 205) With this in mind the marketer can make calculated assumptions about a lifestyle group’s buying habits or traits.
In 2001 Mazzoli carried out extensive market research in France to identify and understand various lifestyle groups. After the research had been carried out he found that six lifestyle groups had emerged. (Brassington and Pettitt 2008 p. 203) Although the participants made up a small fraction of the French population, it was useful information because the groups clearly reflected a much larger number. It is also common for marketers to break this segment down into 4 bits; Activities, interests, opinions and demographics.
It is important for Nintendo to be conscious of its target market’s activities because this is essentially what they are tapping into and emulating with their products. When the Wii was first released it was targeted at the younger gamer market (Males aged 12-25). The games that were introduced at this stage included Wii sports, bowling, golf, and the generic Nintendo games such as Mario cart. By releasing games such as these Nintendo put themselves at risk of closing off large sectors of potential markets. With many consumers the Wii was perceived as a “kiddie console”, this was not their aim.
Nintendo has countered this by expanding their market to include older generations and females which they have done so successfully. So successfully in fact that the number of female users of the Wii now far surpasses males, (Note table A) Table A POLARIS MARKETING RESEARCH COMPANY2EUROPE INTERNATIONAL MARKETING RESEARCH COMPANY Customer satisfaction surveys. Polaris offers a service where they conduct a huge number of customer satisfaction surveys. This is done in a number of ways including telephone, internet, IVR, and mail.
This would be very useful to Nintendo because it would provide them with valuable customer feedback. 2Europe provides a full range of qualitative marketing research services across Europe including, focus groups, face to face and telephone executive depth interviews. 2Europe provides focus group venues of research partners in each European country, Nintendo are a global company so relations within foreign countries is very important. This will help to familiarise them with markets of different cultures and also public opinion.
Unlike Polaris, 2Europe can help the organisations with Business to Business interviews. This would be beneficial to Nintendo as deals need to be made with wholesalers and distributors on a worldwide scale. Brand research and planning, Polaris state ‘Brands exist in the marketplace and as such there are three separate sets of forces working on your brand and determining how it is perceived in the marketplace. First is your company and the actions you are taking in the marketplace, next is your competitors and the actions they are taking for their brands and against yours.
Finally, economic and social trends impact your brand. ’ Polaris claim to make your brand robust within current and future markets. Nintendo is one of the most successful brands in the world and thus does not require any external brand management. 2Europe also provides a range of qualitative research capabilities. These include face to face street interceptors, mall tests, Online surveys and telephone interviews. Quantitative research is predominantly the most reliable type of market research as it puts the company and its customers in direct contact.
The data collected will be put into manageable charts and tables so the company can understand the results. This type of research is often required when companies are trying out new products and because Nintendo is a continuously innovative organisation it would be essential for it to undertake some sort of quantitative research. Employee Surveys Measure Employee Satisfaction, Polaris will conduct employee satisfaction surveys that will measure the organizational communication of the company emphasizing the downward and upward communication in the organization.
This could prove very valuable to Nintendo as they are a large organisation and ‘it is an organization’s employees who influence the behaviour and attitudes of customers, and it is customers who drive an organization’s profitability through the purchase and use of its products. ’ (Research from Northwestern University)As indicated within the title, 2Europe are an international research company who attract businesses hoping to understand and work within the European market. This can at times seem like an insurmountable task and the barriers that often occur are languages, culture, local economy and lack of communication. Europe have put together a four step programme to minimise the risks. ‘Appoint an experienced project manager, Establish a clear ‘Implementation Process’. Create a baseline for analysis. Minimise the variables’ (2Europe marketing research official website) Nintendo are aware of their three most successful and important markets; Japan, United Kingdom (UK) and United States of America (US). In order to be more successful within central Europe It would be beneficial for Nintendo to incorporate a programme Similar to the one 2Europe offers.
Customer Retention part of Customer Lifestyle Research, A customer lifecycle market research survey program could included surveying prospective customers, competitors’ customers, new customers, loyal customers and previous (lost) customers. Conducting these surveys could possibly make Nintendo aware of why they have lost customers to their competitors. This is important information because in order to stay ahead of your competitors Nintendo must understand what they are doing to entice customers from the same market,Similarly to Polaris, 2Europe recognise the importance of employee loyalty and satisfaction.
Ways in which this can be measured is by asking employees for their feedback, Finding out how the employees rate key aspects of the organisation often provides the senior managers with valuable information on how to improve employee satisfaction. Nintendo currently have 3400 employees worldwide and to ignore their input would be counterproductive. With growing evidence to suggest employee satisfaction directly correlates with customer satisfaction it would seem wise for Nintendo to pay attention to this area of research. Anatomy of a product
When looking at the anatomy of a product for Nintendo or any other organisation, it important to break the anatomy down into four key sections; core product, tangible product, augmented product and potential product. Nintendo’s current core product is the Wii console. The console on its own is obsolete and without such augmented products such as games and controllers the customers will be distinctly unsatisfied. However, when the console is used in conjunction with these products the core benefit of the product comes to life.
As previously stated the Wii is an expensive luxury good and its main purpose is to provide the user(s) with endless interactive fun. The core product is a durable product meaning it will last for years and have multiple uses. Although the Wii is currently retailing at ? 169. 99 it is a relatively low risk product, this is because the customer will have used the product before purchase and Nintendo offers warranties and easily available repairs. With many customers the brand name Nintendo is linked with providing hardwearing quality goods, this is assumed by its millions of loyal customers worldwide.
The tangible product is essentially the marketer turning the core product into a real product which embodies the core benefit. In the case of the Nintendo Wii the tangilble product includes product features, quality level and branding and packaging. The features the Wii boasts are Wii sports, a set of interactive games that emulate real sports including golf, boxing and tennis. Quality level can be related to the visual display of the console. The graphics of the gameplay, clear crisp pictures are more likely to encapsulate the user. The augmented product represents add-ons to the existing product.
This is very important within the gamer market as successful augmented products can boost the sales of the core product. For example if a videogame is released exclusively on the Nintendo Wii and it brings in lots of revenue, customers who don’t own a Wii console will purchase one just to play this game. The Wii is often sold in packages including games and controllers. Customers are commonly subject to marketing ploys by Nintendo where they will have to buy various augmented products such as memory sticks and rumble packs. Customers are lead to believe these products will intensify the gaming experience.
The three previous sections have described the product as it is now where as the potential product describes the product as where it could be in the future. If we look at the Wii when it was first released it was directly aimed at the younger gamer. After Nintendo’s successful market expansion it is now used by people of all generations and genders. This is a result of correct use of product potential when the product was in the early stages. Product mangement (Product life cycle) There are four key stages within the product life cycle and it is important to think of the product’s life within the market.
These four stages are introduction, growth, maturity and decline. Introduction, when a product begins its life within a market, sales will be slow and profit will more often than not be negative. The speed in which sales and profit increase is a reflection of how well the product has been promoted and the levels of anticipation created. The marketer’s main aim within the introduction stage is to create wide spread awareness within the selected market it is essential that within the introduction phase the correct promotion is fulfilled because this could prove extremely damaging to sales and profit if the introduction stage is prolonged.
Then Growth stage is where the sales begin to increase significantly, this could be because product awareness is spreading rapidly and reputation is building. This is also the stage where profits begin to rise quickly, in many cases this can be due to repeat purchases, but in the case of the Nintendo Wii it is likely to be due to reputation and widespread promotion and awareness. Competitors will often try to combat an organisations product during its growth by releasing a similar product at a cheaper price. This will threaten to flatten the growth curve unless something is done to retaliate.
In order to maintain a growth curve the organisation may have to lower prices to compete. When the product reaches its maturity phase it has achieved the optimum sales and profit. This is essentially the stage where repeat and loyal customers have been established. There will be heavy price competition from competitors and the market is generally stable. There will be short run booms due to certain augmented products being released but the product will typically begin its decline hereafter. Once a product has reached its decline it is nearly impossible to stop it.
This stage is where the sales and profit slow down rapidly and most people who liked the product have already purchased it. It is of the discretion of the marketer whether they want to milk the product, which means withdrawing support of investment or promotions and try to get as much profit out of it as possible, or regenerate some sales by increasing advertising etc. The Nintendo Wii is in the maturity stage of the product life cycle. The product has been on the market for over two years and after a recent successful regeneration due to releases of Wii fit and fifa 10, the Wii will sit in the maturity stage until subsiding to a decline.
New product development ‘A market characterised by dynamically continuous innovation tends to involve new products with a significant degree of innovation’ (Brassington and Pettit 2008 p. 387) an example of a market that is dynamically innovative is the Men’s razor market. Companies such as Gillette, Mach and Braun are always competing for the next best razor. These are continuously innovative companies as roughly every 6 months they seem to release a razor that is different from the previous one.
It is however important that these new products still resemble a generic razor. Companies can put themselves at risks of alienating themselves within a market if a product is too distinct or complicated. This type of innovation definitely applies to Nintendo because they are always competing with Playstation and Xbox within the gamer market, The Nintendo Wii has was the most innovative console to date and Nintendo’s competitors are working harder than ever to combat irs success. Discontinuous innovation is by far the hardest and most sought after market to be in.
Usually linked with entrepreneurship, companies strive to come up with the next big thing. This type of market requires a whole new learning experience from the customer as they are dealing with something entirely new. Marketers have to make the customers aware of the product and try to explain it before purchase. This is extremely hard to achieve because if the product seems too complicated the company is at risk of losing a large customer base.
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