Sony AIBO Case

Section B

Harshan Hashim PGP05068Henna Bansal PGP05069

Ilika Grover PGP05070Jayesh Nagpal PGP05071

Joel Daniel PGP05072

Group 4

Benefits Hassle free pet

True companion with real

emotions and instincts

Entertainment

Experience

Fun of a living

creature

Puppy love and a pet

Intelligent

companion

Friend

Features Mimics the actions of a

dog

Can be trained

Communication possible

Has a personality of its

own

Wants

• Hassle Free pet

• Intelligent companion

• Intimate friend

• Pet with a desired personality

Needs

• Need for companionship

• Need for affection

Fears

• Need for training

• Need to replace after a particular time

• Frequent recharges

• High investment

Product Customer

Sony AIBO: The Value Proposition

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 people’s 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 RationaleSony 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 couldn’t handle even simple chores was sure to backfire

Another important aspect guiding Sony’s 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, Sony’s 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

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.

Frame of Reference: Pet Dogs

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

Factors that affected Sony AIBO’s Market in America

• AIBO created confused reactions for many customers. People didn’t 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 Sony’s Marketing Strategy

Sony marketed AIBO as pet robot or companion robot. Though they didn’t 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 Sony’s 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