brand audit nintendo

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.

2011

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 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 1 http://www.interbrand.com/en/best-‐global-‐brands/best-‐global-‐brands-‐2008/best-‐global-‐brands-‐2010.aspx 2 http://www.n-‐sider.com/contentview.php?contentid=34 3 http://www.n-‐sider.com/contentview.php?contentid=34

Figure 1: Nintendo Brand Logo

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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.

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

4 http://www.nintendo.co.jp/ir/pdf/2010/annual1003e.pdf

Figure 2: Brand Japan’s annual survey of result for Nintendo’s rankings

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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:

5 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.

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 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

6 http://www.marketingpower.com/ResourceLibrary/Publications/MarketingNews/2010/10_30_10/Aaker%20on%20branding.pdf

Figure 3: Nintendo Wii

Figure 4: Console Sales for first six month totals.

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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 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.

Figure 5: Target Market of 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

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.

Figure 6: Super Mario Bros for DS

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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 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.

Figure 7: Nintendo Marketing

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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 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

Figure 8

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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.

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

Figure 9: Brand Ingredients

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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 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

Figure 10: Nintendo Generation

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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

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.

7 http://web.archive.org/web/20060317005503/http://www.guinnessworldrecords.com/content_pages/record.asp?recordid=52404

Figure 11

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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 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.

Figure 12: In game advertising market in the US

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Interbrand. N.p.: n.p., n.d. N. pag. Interbrand. Web. 18 Jan. 2011.

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• 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>.

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19 Nintendo

Appendix

Figure 1: Mental Map

20 Nintendo

Figure 2: Customer-‐Based Brand Equity pyramid of Nintendo

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

services and products and does well

Performance • 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

Imagery • Strong brand • Consumers perceive playing

games favorable and enjoyable • Nintendo provides unique

experience of fun time with family and friends

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

Resonance • millions of Facebook fans • webpages created by fans • consumers recommend Nintendo

products to their family and friends “ambassadors”

brand audit nintendo

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