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As the business wind of change continue to whirl, Sony electronic company has realised that it may need to boost its operations by initiating a play station business. These are the words of the senior computer entertainer, Ken Kutaragi. He adds that the initiative will give the firm a competitive advantage over other rivals like the apple Inc, Samsung among others. For these reason, the study seeks to shade light on the play station initiative and most specifically the play station 3 that the firm expects to boost its operations with. The firm seeks to achieve this by ensuring that it achieves the following objectives.
Increase the product awareness of the play station 3 to the casual customers;
Capture the casual gamers by creating a product appeal that is done through the adjustment of the marketing mix strategies
Work on a policy that seeks to Increase the general sales returns of PS3 in the UK and other regions
Offset the feasible drop of sales as a result of the initiation of PS3 consoles to maintain the firm’s productivity
Compared to the play station 2, play station 3 tends to have more features due its sophisticated nature, which aims at capturing the market share. Although the firm will face competition from other substitute producers, the paper will selectively identify ways through which the Sony will get along with these.
A play station is a product of the video game console of the Sony entertainment company, which has a series of video games and some having Wi-Fi internet connectivity. They are made in such a way that one can enjoy gaming, watch movies and store data. Without targeting any specific group, the product is aimed at entertaining both children and adults who prefer electronic gaming. As Haward stringer says, the product will help the firm dominate the gaming industry due to the blue ray and camera support gadgets that the product has. The truth in this is yet to be established from the report given by the analysis, (Levy and Serizawa, 2004, p. 1). Below is an analysis which explains how the company seeks to achieve it commercial objectives. The analysis includes the swot and prestcom analysing business tools. Alongside analysing the firm, a discussion and reflection over the same will then follow to establish how realistic it may be.
THE PRESTCOM ANALYSIS
Political and regulatory analysis
According to the industrial regulation in the UK, Levy and Serizawa observes that this region has least regulations in the business environment and for these reason; the Sony Company seeks to maximize on this opportunity by opening more branches in this region. This is so because the play station 2 consoles had not fully penetrated to the UK markets as the firm had planned. The censorship regulation had an effect on the firm’s selections of the products in order to ensure good service delivery, (Levy and Serizawa, 2004, p. 2). It therefore meant that the Sony Company should be more serious with the issuing of chart game to be accompanied with the play station in order for the consumers to enjoy gaming. This is a government regulation which seeks to root out imitations and also protect the rights of the firm.
The government also launched an anti piracy campaign where the Sony company in Europe was given to trace the pirated goods and report the results to the relevant authorities. This gave Sony a higher chance of monopolizing the market by supplying play stations and selling the product at a dictatorial price, (Bruner, 2004, p. 55). Other rival firms were not in position to change this. Notably, it is from the anti piracy regulations that many people were queuing out the Sony retail outlets to secure original units of play station 3 among other Sony products.
Although market competition remains to be stiff in the electronics industry, Sony should always strive and remain at the top. The central authority has power to change vital policies that affect the business sector and most specifically the electronics industry. For instance, the Sony Company is only supposed to sell certain hardware of the play station both 2 and 3 but specific hardware parts should not be sold as it will be selling its patents to outsiders. Designed by the central authority, these regulations will enable the Sony electronics company to enjoy high returns to boost its operations since it was facing an internal economic downturn.
The international trading policies also state that Sony Company should only sell its products through its outlets or franchises; this regulation gives Sony an upper hand in ensuring product distribution and marketing of the play station 3. Although all companies are subjected to taxation, Sony has a strategy (reducing its number of employee) which seeks to reduce the cost of producing the play station in order to compete effectively with substitute products from Microsoft Inc.
The economic recession affecting the United States economy has put pressure on the exchange rates; forcing them to decline over other currencies. Since Sony Company is an international firm, it has operations has been greatly affected by the situation. The credit crunch reduced the purchasing power parity of the consumers in most regions within the United States. This meant that most people could not have the propensity to buy Sony products among them the play station. As a result of this economic shock, the government has put in place economic regulations of which some of them will directly affect the market of play stations.
Bruner postulates that low and high interest rates create a strong ability to spend and save respectively. As a result of this, the consumers disposable income increases at times when the interest rates are low; sometimes this is usually not the case, (Bruner, 2004, p. 55). Consequently, the market share of play stations in the United States was lower than in the UK.
According to the research conducted by researchers, most of the consumers in the UK are fashion sensitive and as a result of these, the Sony Company has been able to increase its sales since the launch of the play station 3 in 2008. The product appeals by consumers also depend on the marketing mix; the pricing of the product of the play station 3 has lured most consumers to prefer the product over others even though their prices are low. Product loyalty tends to be higher for Sony play stations because of the class in which consumers feel they are in if they own any of the products. Socially, the young adults have a culture of listening to music anywhere and at any time.
This provision has been well taken care of because most of the play stations are small in size thereby easing mobility and usability. As this is not enough, others have adopted a culture of watching movies, the wide screen of the product and the long lasting lithium battery given users an opportunity to enjoy their leisure time as they wish. This implies that turning back on the production of play stations will not only boost the firm’s operations but also improve the social being of many.
The Japanese based corporation has improved its technological know-how on the play station 3 in order to achieve the cost reduction strategy. Play station 3 has an in built Wi-Fi connectivity that enables users’ access and downloads various supported applications to be enjoyed by the consumer. Among these applications are videos, pictures and media format files. This has made the corporation expand its operations especially in states and cities which play a major role in education and tourism London. Apart from these, other features common on the play stations is the wide screen and a sharp screen that improves viewing.
Additionally, the play stations have a voice-over-internet that enables the user to communicate with another user through the internet. Through such innovations, the firm has been able to compete effectively with other firms like the Microsoft and Samsung. The live streaming of television programs from the play station through the local network has increased the sales returns especially in the UK and china since many users would prefer a portable gadget with a lot of applications.
The new format of DVD within the play station has enabled the product store movies and software’s to be used by the user. The firm has banked on the product by investing a lot in terms of technology so as to offset the economic downturn the firm has undergone during the recession.
Competitively, the Sony Corporation has an upper hand to control the market as compared to Microsoft Xbox firm that produces the same product. There are other video applications which can only be supported by the Sony play stations 3 only. For instance, most of the substitute products do not support .flv and .avi video formats Sony does. This has given Sony opportunity to resist competition from all levels in the market. Apart from that, the economic regulation states that for any company to join this sector, it will need a high capital base so that it can compete effectively with Sony. Such firmly are hardly found and therefore Sony enjoys the monopoly of the market.
Due to the 1.9 billion dollars the firm underwent as loses made many people to lose their jobs from the Sony Company because this was an organizational strategy to reduce the cost of production and also improve efficiency. Apart from that, the firm is using intermediaries to distribute its products so that it can continue capturing a larger market especially that offered by school and college students. The firm has also partnered with another firm (Ericson) in order to sell its services even over the mobile industry.
The market of any industry depends on the ability of the firm to control the market and the consumer preference over the product. According to the loyalty consumers had on the play station 2, the firm doesn’t need to invest a lot in sales and marketing as its products are of high quality thereby increasing their own demand.
THE SWOT ANALYSIS
The firm gets its strength from the fact that it can produce good quality and sophisticated products which support various applications that substitute products don’t. For this reason, the firm has been able to control a larger market and therefore dictate the market prices of its products. Apart from that, the advancement in technology has enabled the firm reduce its operating cost thereby increase the profit margin. The PS3 is among the firm’s products preferred and appealed by customer. Bruner asserts that the government of Japan seems to favor Sony corporation as it usually protect its patents by ensuring that strict laws governs piracy, which hampers growth of Sony, (Bruner, 2004, p. 127). Away from that, the firm has a variety of consoles which gives an economic and financial support to the firm thereby strengthening its economic base. From the fact that the firm has enabled online services through the PS3, many consumers opt for these products than others.
The current innovation employed on the PS3 can only work on a high definition TV set because the play station cannot export video. As a result of this, most of the people don’t prefer PS3 when it comes to this application.
Another challenge the firm is facing is that of pricing the PS3 products; although the firm has lowered its prices by $100, the prices still remain high as compared to products from Microsoft Xbox.
The firm has an opportunity of employing its sophisticated technology on the Sony Ericsson mobile phones. This means that the diversification gives the firm a chance to provide an economic cushion to its operations (Bruner, 2004, p. 127). Comparably, Sony products especially the PS3 are user friendly and attractive in terms of appearance.
The Sony reader in the PS3 is able to read portable document files and online books, which other substitute products cannot. This has given the firm an opportunity to explore new markets in order to expand its operations.
A major threat in a business undertaking is always competition, Sony has invested in the production of notebook computers which dell computer firm has a monopoly. Along the same line, the its is not only Sony that manufactures plat stations since the Microsoft Inc also produces and sells them at a lower prices than Sony has. Nintendo has also sold many units of the gaming products compared to Sony simply because Sony has a poor marketing mix compared to those if its competitors
According to the above analysis, Sony corporations seem to succeed in its efforts to offset its economic and competitive downturn through the introduction of the PS3 product. It is true that the strategy will work only if the management sticks to their objectives. However, if the economic situation in the United States will not change then the firm will have it rough.
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