jose l. rivera marketing 310 / 6385 umuc 2015 professor peterson
TRANSCRIPT
Xbox & Xbox Livea Marketing Strategy
Jose L. RiveraMarketing 310 / 6385
UMUC 2015Professor Peterson
Executive Summary
Key Findings: Sony has dominated the market in the last two fiscal years due to their ability to provide video games on several mobile platforms, their "backwards" compatibility on gaming consoles, and their lower prices
Marketing Mix Recommendations: Xbox is dominating the "home space" with their "all-in-one" Xbox One console; however, in order to increase market shares it must move into a new market segment by introducing a new hand-held mobile gaming device similar to those of its competitors
Table of Contents
A.1. Market Description A.1.a. Description of Market Segments A.1.b. Current Marketing Targeting
Strategy A.1.c. Value Proposition A.1.d. Factors Influencing Consumer
Behavior A.1.e. Buyers Decision Process
A.2. Product Review A.2.a. Levels of Product/Service A.2.b. Type of Product/Service A.2.c. Product/Service Lifecycle A.2.d. Benefits/Features Analysis A.2.e. Differentiation A.2.f. Branding Strategy
A.3. Competitive Review A.3.a. Competitive Analysis
A.3.b. Market Share
A.3.c. Competitive Positions and Roles
A.3.d. Strategic Sweet Spot
A.3.e. Positioning
A.4. Distribution Review A.4.a. Current Supply Chain Members
and Roles
A.4.b. Value Delivery Network Analysis
A.4.c. Current Type of Distribution Strategy
Part B. SWOT Analysis B.1. Microenvironment
B.2. Macroenvironment
Section A. Current Marketing SituationPart B. SWOT Analysis
Table of Contents, cont.
C. Objectives and Issues C.1. First Year Marketing Objectives C.2. Issues That May Hinder Objectives
D. Marketing Mix Tools (Recommendations) D.1. Positioning Strategy D.2. Product and Branding Strategy D.3. Pricing Strategy D.4. Distribution Strategy D.5. Marketing Communications Strategy D.6. Marketing Research
Part E. Action Programs E.1. IMC
E.2. Message Design, Content and Structure
E.3 Media Choices
E.4. Promotion Mix Tools
Part F. Budgets F.1. Objective / Task Method
Part G. Controls G.1. Metrics to Monitor Progress
Section C. Objectives and IssuesSection D. Marketing Mix RecommendationsPart E. Action ProgramsPart F. BudgetsPart G. Controls
Section A
Current Marketing Situation
A.1.a. Market DescriptionDescription of Market Segments
Presently, the product reaches the following market segments:
Demographic: Gender non-specific, children and adults of all ages, who are able to afford the Xbox system and an online membership
Psychographic: Those who have a “gamer” lifestyle or just do it as a hobby
Behavioral: Persons interested in customer loyalty rewards and accolades
A.1.b. Market DescriptionCurrent Marketing Targeting Strategy
The current Marketing Targeting Strategy is: Undifferentiated: Xbox is going after every
market without any segment differentiation
A.1.c. Market Description
Value Proposition
The current value proposition is “More for More”.
Xbox provides a higher upscale product at a higher cost
A.1.d. Market DescriptionFactors Influencing Consumer Behavior
Price Promotions: Different models of the same console are offered at different prize ranges
Peripherals: The Kinect, and other peripherals are able to recognize user's commands and allow for interactivity
Online Features: Video, television ,and music apps offered with all online memberships
Game Quality: Only the highest graphics interface used to develop the most exciting game franchises
A.1.e. Market Description
Buyer Decision Process
Customers are most likely to engage in Complex Buying Behavior
They expect game consoles to last longer with each newer model and to deliver on its promise
They recognize the brand and want to experience and learn more about it “first hand”
They evaluate alternatives, and decide to purchase the product after learning about its benefits and features
A.2.a Product Review
Levels of product/serviceCore Customer Value
Entertainment for the whole family Access to online features, apps, and reward points
Actual Product Brand Name: Microsoft Xbox and Xbox Live Quality Level: Highest Features: Kinect and online features
Augmented Product Product Support: 24/7 online and phone support Warranty: 1 year
A.2.b Product Review
Type of product/service
Shopping
Customer Buying Behavior: Less frequently purchased, is compared to other brands for quality, price, and style
Price: Higher price than competitors
Distribution: Selective distribution through e-commerce, retailers
Promotion: Advertised and re-sold by consumers and manufacturers alike
A.2.c. Product Review
Product/Service Lifecycle Currently in the Growth Phase with newer model
Sales have increased due to new features on the Xbox One
Customer Acquisition Cost: Average
High profits margins: 5.6 billion in the 3rd Quarter of FY12
Most customers are “early adopters” and owners of previous models
A.2.d. Product Review
Benefits/Features AnalysisTargeted Segment Customer
NeedFeatures/ Benefits
Gamers: Gender Non-specific, children and adults of all ages, who are able to afford the Xbox system and an online membership
Accolades, Recognition and Interactivity
Provides rewards as Microsoft Live points, game achievements ,and accolades; enhance user experience through devices like Kinect
All in one entertainment center
Access to television, internet, and radio from one console
Personalization Avatar and voice recognition
Technical Support 24/7 online and phone access
Online access to Internet Apps
Hulu, Netflix, Crackle, WWE, and others
A.2.e. Product Review
Differentiation
Product: The product continues to be innovative and exciting
Services: Online services, multiple Xbox live memberships, and consoles
Channel: Direct seller to buyer channels, e-commerce
People: Only the hardest workers with the best customer service skills are hired
Image: Continuous consumer satisfaction, recognizable, and reliable brand logo
A.2.f. Product Review
Branding Strategy
Microsoft is a highly recognizable brand with high-brand value and a loyal customer-base
Xbox and Xbox Live are part of Microsoft's product line of entertainment services
Easily recognizable from competitors; positioned to reach maximum target market
A.3.a. Competitive Review
Competitive Analysis
Specifications
Xbox One Sony PlayStation
Nintendo Wii
Price $499 $399 $299
CPU MS (64-bit) AMD Jaguar (64-bit) IBM (64-bit)
Core 8 core 8 core 3 core
RAM 8 GB 8 GB 2 GB
Features Live TV, Internet Apps,Kinect
Internet Apps Internet Apps
Storage 500 GB Sold Separately 32 GB
Ports HDMI in-out HDMI, Ethernet, Optical
HDMI out
Media Blu-ray / DVD Blu-ray / DVD DVD
A.3.b. Competitive Review
Market Share (Xbox – Blue Bar)
Photo courtesy of Statista.com
A.3.c. Competitive ReviewCompetitive Positions and Roles
Sony is the market leader for FY14, with Nintendo, and Microsoft as market challengers
Sony’s marketing strategy and positioning includes a variety of platforms, including handheld devices
Nintendo marketing strategy includes families, as well as a variety of platforms, including handheld devices
Possible Vulnerabilities: advertisement, distribution, and maintenance cost due to high volume of products
A.3.d. Competitive Review
Strategic Sweet Spot
Xbox One is sold for $349 without the Kinect, competitors can’t afford to lower their prices
Xbox one is an all-in-one system that combines television, games, and the internet
There are exclusive video game franchises that are only available on Xbox
A.3.e. Competitive Review
Positioning
In the mind of the consumers, the Xbox is a serious, but fun video game console that offers the flexibility and performance other competitors do not
The Kinect voice recognition gives customers a more personalized experience
Multiple screen-views makes it possible to watch live television while playing video games
A.4.a. Distribution ReviewCurrent Supply Chain Members and Roles
Producer: Finances product and gathers information about consumer needs, production and specifications requirements
Manufacturers: Produce, assemble, box, and ship product to wholesaler
Wholesalers: Sells product to retailers
Retailers & Online Retailers: Stock, promote, display, and sell product, either through floor sales or e-commerce
Consumer: Buys, enjoys, and provides feedback about product
A.4.b. Distribution ReviewValue Delivery Network Analysis
Microsoft uses a Conventional Distribution Channel to get the Xbox in the hands of the costumer
This distribution channel is appropriate and keeps the cost of production and distribution stable
The consumer is able to get a good quality product at a reasonable price
A.4.c. Distribution ReviewCurrent Type of Distribution Strategy
Currently, Microsoft uses the Intensive Distribution Strategy
Stocking Xbox in as many outlets as possible, i.e. Walmart, Best Buy, Target, and Amazon.com
Diagram courtesy of Business–Science.blogspot.com
Part BSWOT Analysis
B.1. SWOT Microenvironments Strengths: Long standing profitable relation
between marketers, suppliers, and consumers, makes for a reliable distribution channel
Weaknesses: Inability to cater to all publics; competitors fighting and winning over market shares
B.2. SWOT Macroenvironments Opportunities: Bridge generational gaps by
introducing and simplifying new technology; make environmentally aware choices by using recyclable materials; introduce handheld devices
Threats: Demographical shifting of population, natural disasters, economical, and cultural barriers of expansion
Objectives and Issues
C.1. Objectives and Issues
First Year Marketing Objectives To become the market leader by increasing
market shares
Provide a more versatile option by introducing a new handheld mobile device for gamers
Sponsor "Beta" testing events and collect feed back from participants
Collect, analyze and compare the manufacturing costs of similar products from competitors
C.2. Objectives and IssuesIssues That May Hinder Objectives
Limited market share and shelf-space
Previous reputation with "Zune" device could result in Market Resistance
Failure to reach profit maximization: (Marginal Revenue = Marginal Cost)
Section DMarketing Mix
Recommendations
D.1. Marketing MixStrategy Recommendations
Positioning Strategy
Continue with current positioning strategy which allows for maximum product exposure
Continue to provide online services and multiple Xbox live membership accounts plus trials
Introduce the new handheld gaming device as a more innovative, "trendy“, and reliable option
Include "backwards compatibility" for older-games in newer models, this is a big factor in the market leader's success Appeal to "vintage" and "nostalgic" gamers who would like to
play older video games in newer console versions
D.2. Marketing Mix Strategy Recommendations
Product and Branding Strategy
Core Customer Value Continue to provide "all-in-one" solutions to home entertainment Keep up with online "trends" and update online features, apps, and
reward points accordingly
Actual Product Brand Name: Do not make any changes to the recognizable brand
name and logo at this time Quality Level: Continue with quality assurance of future products Features: Kinect should be reduced in size to aid with its portability
and aesthetic appeal
Augmented Product Product Support: 24/7 online support and telephone help desk will
continue to provide a "peace of mind" to consumers Warranty: 1 year for parts is adequate
D.3. Marketing Mix Strategy Recommendations
Pricing Strategy
Continue to use a mixture of "Cost-based Pricing" and "Value-added Pricing"
D.4. Marketing Mix Strategy Recommendations
Distribution Strategy
Continue to use the Conventional Distribution Channels
Ensure “plenty” of supply available at all levers of the distribution chain to fulfill orders during product debut
Maintain shelf and floor space through all distributors and retail stores
D.5. Marketing Mix Strategy RecommendationsMarketing Communications Strategy The Marketing Communication Strategy should remain a "pull"
strategy in which the customer is "drawn in" to our amazing product
Our main objectives should be to: Increase awareness and knowledge of the product by looking at the
Buyer's-readiness stages
Design a message which appeals to the emotional side of customers by choosing the right media and message source, i.e. the web, and television
Collect feedback from customers in order to improve future products
D.6. Marketing Research
Conduct “Test Marketing" on new hand-held mobile gaming device
Conduct feedback assessment on brand awareness and recognition
Research and analyze individual and competitor market share statistics
Part EAction Programs
E.1. Action Programs
IMC
Continue to release new advertisement and promotional products year-round
Emphasize on the summer months, where most of the target market goes on vacations and has more free time
New hand-held gaming device should debut in the months prior to the holidays
E.2. Action Programs
Message Design, Content, and Structure
Enforce message ideas by holding the consumers attention and arousing their desire
Appeal emotionally to the consumer with a "feel good" and “feel free” attitude towards the product
Emphasize the product “strengths” in the structure of the message
E.3. Action Programs
Media Choices
Choose previously proven smart, and effective forms of media such as: buzz & television
Show TV adds during sporting events (large amount of viewers) & primetime TV shows
Online advertisement through social media sites like Facebook and Twitter
E.4. Action Programs
Promotion Mix Tools
Advertising Television adds: Show how much fun and easy it
is to use the new hand-held gaming device In-store displays: Display posters and other
visual aids Website: Dedicated to the product, it shows
every little detail and specifications Product Placement: Product could be integrated
into movies and TV to connect with the audience
Public Relations▪Support product launch, sales, and address any issues
regarding the product's image
▪ Sales Promotion▪ Stimulate consumer purchase by using "Midnight" releases;
provide bundle packages that include one or more video games
Budgets
F.1. Budget
Objective / Task Method
Budget Percentages
AdvertisingPublic Rela-tionsSales Promo-tion
Advertising: Creating awareness and anticipation about the product before it launches should be the #1 priority
Public Relations: Creating an image and maintaining a good reputation is integral
Sales Promotion: After creating awareness, give the customer an incentive to buy the product
70%
15%
15%
Controls
Track the number of sales and the number of "hits" on the product's website, + the average time spent per customer
Consult consumer reports and independent statistics collection agencies to identify changes in market shares
Track the number of sales and future demand by using:
Q = n x q x p
Collect feedback through surveys before and after the product launches
G.1. Controls
Metrics to Monitor Progress
Xbox & Xbox Livea Marketing Strategy
Any Questions?
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