The Case Study Of Panasonic Marketing Essay

The Electronic industry is highly competitive in worldwide. Companies use different types of corporate strategies and marketing strategies to improve organizational business performances. Business performance can be improved by using successful strategies. Product diversification strategy is a strategy, companies normally follow up. It is a form of business development. The diversification strategy advises the organisation to sell a new product in a new market. As a strategic option this should be carefully considered as this involves moving into entirely new markets with new products. Organisations that have enjoyed success with diversification usually enjoy the reputation of a very powerful brand and have an existing network of important customers. Small, medium and large companies that implement this strategy can diversify their product range by amending existing products or adding new products to the range. The strategy provides opportunities to develop the business by increasing sales to existing customers or through entering to new markets. Companies must develop strategies for a range of products and services within the organization. When considering about case study, Panasonic Corporation who is a giant in the World Electronic Industry use different competitive product diversification strategies to improve the business performance. This research study is used to investigate the product diversification strategy in Electronic industry as a whole, importance of diversification strategy on business performance, present product diversification strategies used by Panasonic, impact of product diversification strategy on market share of electronic industry and customer demand for different types of electronics products of Panasonic.

1.3 Organisational Background

Panasonic Corporation is a Japanese multinational Electroics corporation located in Osaka,Japan.Panasonic was established in 1918 by Konosuke Matsushita, a vendor of duplex lamp sockets.It is one of the largest Japanese electronics producers. Main competitors are Sony,Toshiba,Sharp Corporation and Canon. Corporation produces electronic products under the brand names of Panasonics and SANYO. In 1927, the company founder adopted the brand name “National” for a new lamp product and in 1955, the company labeled its export audio speakers and lamps as “Panasonic”, which was the first time it used the “Panasonic” brand name. Again the company began to use a brand name “Technics” in 1965.These multiple brands lasted for some decades. In 2003, the company announced “Panasonic” as its global brand, and set its global brand slogan, “Panasonic ideas for life.” The company began to unify its brands to “Panasonic” and, by March 2004 replaced “National” for products and outdoor signboards, except for those in Japan… In January 2008, the company announced that it would phase out the brand “National” in Japan, replacing it with the global brand “Panasonic” by March 2010

Mission of the company underlying company basic management philosophy is contribute to the progress and development of society and the wellbeing of people worldwide. Company aims to become the No. 1 Green innovation Company in the Electronics Insustry.Company consider environment as its heart in all the businesses and ensure to secure a sustainable society along with the business growth by promoting green life innovation to help reduce environmental impact of its business activities to a greater extent while recommending this kind of business style be taken up across the society. In 2012 company undertook a major reorganization of its group of business including Panasonic Electric Works Company Ltd and SANYO Electric Company Ltd. This reorganization has led the company to move from business model based structure to customer perspective. Through this new structure is focused taking every effort to create synergies that take full advantage of the Group’s products, systems and services. “Ideas for life” brand slogan of Panasonic ensures continuation of enriching the lives of people worldwide and contribution to the future of the earth and for the progress of the society. Company earns revenue of ¥ 7846.2 billions in 2012 and operating profit of ¥ 43.7 billion. (Panasonic Annual Report, 2012, P.1-4)

1.4 Rationale of the Research

Today almost every business and service organizations use corporate and business strategies to win the market. Likewise Panasonic Corporation, a major electronic industry players use strategic marketing tools and techniques. This research study helps to discuss about the product diversification strategy in Electronic industry, importance of diversification strategy on business performance, present product diversification strategies used by Panasonic, impact of product diversification strategy on market share of electronic industry and the customer demand for different types of electronics products of Panasonic. It can be argued about the practicality of the study because real life evidences will be used to discuss the problem in a meaningful manner. Hence it is clear about the rationality of the study.

1.5 Significant of the Research

The study provides knowledge and ideas for management of Panasonic Corporation and other electronic manufacturing companies in the marketplace about the appropriateness of identification of diversification strategies as a strategic planning aspect and its importance of use for the improvement of business performance and to be competitive. Further, different readers will be able to understand the benefits of identification of different product diversification strategies towards increment of organizational performance. The researcher will be able to get a better understanding about continuation of research work and gather knowledge regarding product diversification strategies, how companies adopt those strategies, impact of product diversification strategy on market share of electronic industry etc. Therefore, research study will be significant to undertake in order to improve knowledge, understanding, business decision making of different parties.

1.6 Statement of the Problem

Electronic industry has been too competitive in applying marketing strategies and major Electronic companies have faced lot of rivalry to be competitive in its marketing activities. Companies use different diversification strategies as a part of corporate strategy to improve organizational performance in terms of sales over the other competitors in the market place. Panasonic Corporation is a global major player in Electronic industry. Reason behind the success is the effective marketing strategies, including the product diversification strategies adopted by the company. Hence this research study helps to identify the product diversification strategy in Electronic industry as a whole, importance of diversification strategy on business performance, present product diversification strategies used by Panasonic, impact of product diversification strategy on market share of electronic industry and customer demand for different types of electronics products of Panasonic Corporation.

1.7 Research Aim

The researcher aims this study to investigate the impacts of products diversification towards market share of consumer electronic of Panasonic

1.8 Research Objectives

This study will be conducted;

To review the literature on product differentiation strategies in electronic market

To identify different types of product diversification strategies

To identify the importance of product diversification in consumer electronic

Industry

To analyses the relationship between product diversification and market share of Panasonic Corporation in consumer electronic industry

To investigate customer demand and satisfaction towards different consumer electronic products of Panasonic

To introduce suitable strategies to product diversification in order to improve the customer demand and market share

1.9 Research Questions

This research will attempt to answer;

What made Panasonic Corporation to be successful in electronic industry?

How Panasonic compete with its competitors using diversification strategies?

What is the relationship of product diversification strategies with business performance?

What is the successful product diversification strategies used in electronics industry?

1.10 Hypothesis

This research will assume following hypothesis,

H0: There is no relationship between product diversification strategies and market share of Panasonic Corporation

H1: There is a relationship between product diversification strategies and market share of Panasonic Corporation

Literature Review

2.1 Introduction

This section considers about specific literature about the research topic of “Investigation the impacts of products diversification on market share of consumer electronic industry: Case study of Panasonic”

2.2 Product diversification strategies in consumer electronic market

Basic concept of diversification concept was defined by Ansoff (1957) as product diversification means the entrance to new markets with new products. Later on, Dundas and Richardson (1980) specified product diversification as differentiation of markets and targeting of more than one target market. And Amit and Livnat (1988) expressed the motives for diversification and through that study he identified main motive is financial motive and identified the business diversification as the expansion of the size of business achieving economies of scale and generating a combined effect on overall oraganization’s performance. Furthur number of studies on the topic strategic management have analysed relationship between diversification strategy and organizational performance (Shen et al., 2011 and Burgers et al., 2009)

Kotler (2002, P.45) has identified three strategies a company can follow to grow the company fast. Intensive growth strategy is the identification of opportunities to accomplish more growth within the company’s current businesses. Integrative growth strategy means the identification of opportunities to acquire or build businesses that are already related to the company’s current businesses. Diversification growth strategy means identification of opportunities to add attractive businesses that are unrelated to the company’s current businesses.

According to Ansoff’s product market expansion grid it has identify three types of diversification strategies. The concentric diversification strategy the horizontal diversification strategy and conglomerate diversification strategy. In concentric diversification company looks for new products that have technological or marketing combined effect with existing product lines, though the new products are target to a different group of customers. In horizontal diversification strategy, the company seeks for new products that relates to its current customers but technologically unrelated to the current product line. The third strategy, conglomerate diversification strategy, seeks new businesses that have no relationship to the company’s current technology, products, or markets.

According to World Electronic Industries 2008 -2013 Report the electronics industry not only consists with mass market or consumer electronic products also includes electronic products used in transport such as cars,trains.planes etc, electronics used in defence equipment, in IT infrastructures, in manufacturing process or professional services used t to enhance productivity. In electronic Industry consumer products only represented 53% of the electronics industry in 2008.This report also has mentioned that in 2008 the electronics industry represented 1140 billion Euros and it is equivalent in size to Car industry which is 1800 billion Euros in 2008. Expansion of electronics and business growth cycles are the origins of such a fast development. Earlier in 60s and 70s government driven this, enterprises in the 80s and individuals started this in 90s to up to now. The electronics industry is re investing since its inception with huge Reasearch and Development investment to produce new products.

At present society concerns on energy, health and security and expects new electronic solutions that are not being developed yet providing long lasting growth perceptions for the overall industry for the coming decades.Eventhough the electronics industry exhibits more mature growth, still it is a fresh industry with upcoming major growth perspectives. Accordingly it can argue as the development in electronic industry has occurred due to heavy investments in research and development leading to new products confirming product diversification strategy.

Currently active process of change in the electronics industry has increased production of electronic products that are free of hazardous elements. A transformation has taken place with the support of almost all businesses to eliminate polyvinyl chloride (PVC) and brominated flame retardants (BFR), which has led to the introduction of many products free of PVC and BFRs. This is noticeable in mobile phones, computers with a little progress with TV. Several companies have had to revise their original deadlines for the elimination of the most hazardous substances. Companies are in the process of translating these commitments into products on the market, from individual components or some niche products and extends to the complete elimination of PVC and BFR from comprehensive product lines. Mobile phones have shown the most progress, with most market leaders now produce halogen free mobile phones, representing at least 60% of the market at 20,111, followed by the PC, in the phase of plans market leaders means that at least 53% of the market will be halogen-free in 2012. It is clear that technical barriers to eliminating PVC and BFRs have been mostly overcome, the iNEMI Industry Association has published a timeline showing that halogen-free components for PCs (laptops and desktops) will be widely available supply chain in late 2011, including the evaluation and qualification of the parts of printed circuit boards and high performance power cables 2. TV manufacturers have shown the least progress. The remaining block still uncertain availability of free components of PVC and BFRs across the supply chain. Only 21% of the TV market is expected to be PVC / BFR in 2011, and depends on the companies that meet its commitments. (Electronics Industry -Milestones on the Road to Greener Electronics,2010,P.1)

2.3 Product diversification strategies of Panasonic Corporation

According to Panasonic Website (2013) Panasonic carry out businesses in four areas, namely residential, non residential, mobility and personal. ‘Future Craft ‘the design philosophy of Panasonic which incorporates the spirit of creativity attached with in the heritage of Japanese craftsmanship adhere to principles of universal design and sustainability. Company design wide rang products for consumer electronics such as audio visual equipment, communication devices, home electronics, cosmetics appliances, lighting, cables, energy management, construction supplies, homes, buildings and retail environments. Company’s main mission is to supply customer satisfaction in terms of product design globally. Panasonic’s design centers spread in the world together expect becoming the number one Design Innovation Company by 2018.

It is clear that Panasonic look forward with an intention of doing product diversification in terms of product design through the Design Company. The latest concept of eco design of Panasonic supports customer’s maintainable lifestyle by imagining the energy or resource saving features of our products. Eg.Eco Navi Product Family of Panasonic .Eco Navi is a technology distinctive to Panasonic, in which the appliance self regulates itself when it identifies a chance to save energy. For example: A washing machine will prevent itself from over washing when it recognizes the soil level of the load. A refrigerator will recognize when the door has not been opened for a long time (in night) go on a power saving mode.

Grimm and Malschinger (2010:P.4-8) Specified six types of product differentiation strategies as product differentiation, unique characteristics, price differentiation,nitche offers, differentiation through services, differentiation through direct communication , and through packaging. So Panasonic Corporation should not limited its product diversification strategy only to the product differentiation through design concept.

In 2013 Panasonic has incorporated research and development Centre in its new washing machine factory in Vietnam. The new factory concentrate on the improvement of Panasonic’s advanced eco and smart technologies underlying its obligation for environmental sustainability. The factory focuses to achieve 50% of production for the local market and the rest 50% for export to other ASEAN countries. It targets manufacturing capacity of 600,000 sets of washing machines per annum employing around 300 locals by 2014. R&D integration within the facility serves as a launch pad for innovation as it develops advantage in home appliances with advanced designs designed for the local market as well as other ASEAN countries. This is also one step of product diversification strategy of Panasonic.

Panasonics’ ‘Modern Classic’ LED bulb recognised with iF Gold Product Design Award for second year running. Achieving brightness equivalent to that of a 40W incandescent light bulb, there is a wider possibility for application and in turn a significant contribution to energy save.The Gold design best 100 award was won by the company for the product series using recycled materials.A product group that utilizes recycled materials for their plastics and insulation. Product development initiatives considerate of the environment as well as attractive design were highly valued.Additionally Good Design best 100 award was won by Smartphone for the compact design featuring a large screen which is water and dustproof. Its design form and feel sit comfortably in one’s hand. Long Life Design Award achieved for Smart Archi Series, Pendant/Bracket Light for simple design that can use widely in various locations such as offices and stores. This features timeless design that followed ‘one with architecture’ concept. (Panasonic Website, 2013)

Full HD remote video camera got the Gold Award as it designed for usability. The directional shape of the lens unit enables a smooth remote operation as the user can see where the camera is pointing at. An easy maintenance is achieved through a removable cover which provides a wide opening. The neutral form ensures that it blends well into any environment wherever it is installed. Panasonic has won the Gold Award at the Design Excellence Awards 2012 (IDEA 2012) for Clear Glass LED Bulb also obtained a Gold Award at the 2011 Good Design Award in Japan and the 2012 if Product Design Award in Germany, widespread Gold awards at three competitive design contests in the US, Germany and Japan.

2.4 Product diversification strategies of Panasonic Competitors

A competitor of Panasonic, Toshiba of Japan is huge company operating in electronic goods. It manufactures different products or varieties of some products on the same assembly lines through a flexible manufacturing system. At Ohme it assembles nine varieties of computers on the same line and on the adjacent line it assembles 20 varieties of lap top computers. It is able to switch from one product or variety to another instantaneously at low cost and makes profits on low volume production runs. This flexibility of Toshiba to respond quickly and easily to the fast changing market demand is definitely one of its competitive advantages. Whereas its competitors make profits only through long volume runs of a particular model. (Strategic Planning, 2013).

Another competitor Samsung Electronics’ vision is, “Inspire the World, Create the Future.” This new vision reflects Samsung Electronics’ commitment to stimulating its communities by managing Samsung’s three main strengths: “New Technology,” “Innovative Products,” and “Creative Solutions.” and to promoting new value for Samsung’s core network: Industry, Partners, and Employees. (Samsung website, 2013). As per Annual report of Samsung (2012: p.1-5) Samsung Electronics at the lead of changes, delivering both exciting innovation and exceptional value to people and communities around the globe. Company’s obligation is focused on smart and genuine innovation, a transformational change that creates a well world. Samsung Electronics brand is gaining strength and value globally. In 2012, Samsung ranked first on the list of US top patent assignees. More patents strengthen Samsung position among its competitors. The firm also won many awards for the design of its products, proving the superior advantage over the competitors.

2.5 Market share of Panasonic Corporation in consumer electronic industry

In this reseach, objective is to see a relationship between the market share of Panasonic and company’s product diversification strategy. In 2011 Panasonic ranked as the fourth scoring 5.65 most admire electronic companies. In that list first place took General Electrics, Second Samsung Electrics and the third Sony. (World’s Most Admire Companies, 2011).There can be a positive relationship with the product diversification strategy and the organizational performance. However Kotler (2003) stated that business diversification not guarantees profit increase, but an important strategic management concept for achieving long term performance through risk reduction. Through diversification strategy, many manufacturing companies have diversified to benefit from diversified consumers group.

Also Li and Greenwood (2004) identified that product diversification can improve business performance while supporting demand. Basically cost and benefits attached with product diversification strategy determines the profit arisen from such strategy. And it will depend upon several other factors such as the type of diversification strategy, demand for the product, life cycle of product, brand recognition, competitive products etc. Additionally Kang et al. (2011) said that the results of examinations of the effect of product diversification on firm performance may be different from one factor to another. That is costs and benefits from product diversification can depend on factors as the type of diversification and the industry structure. So it cannot argue that there is an exact relationship between product diversification strategy and the market share increase.

According to the research done by Patrick (2012,P.230) on the topic of Product Diversification and Performance of Manufacturing Firms in Nigeria, findings indicates that the size of firms is positively at 5% significant level, assuming that as size of firms increases, manufacturing firms would differentiate their products more. Ownership structure of the firms is established to be negative but significantly related to performance of manufacturing firms in Nigeria. The finding suggests that increase in number of shareholders of firms may negatively affect diversification decisions of firms. Leverage measured by the ratio of total debt to total assets reflects a significant and positive effect on performance of firms. The positive coefficients indicate that total debt level of firms may influence firm’s decision to diversify which resulted in performance improvement.

2.6 Conclusion

Product diversification strategies used in consumer electronic industry are very competitive. With the intention of earning higher profits and sales companies use different types of product diversification strategies. Panasonic a major consumer electronics producer used different types of product diversification strategies in terms of design, features etc. Application of product differentiation strategy does not always guarantee a performance improvement. Impact of such strategy depends on several other factors. The attractiveness of product diversification strategies of Panasonic may have an impact on market share. But it is difficult to say that there is a direct positive relationship between the market share and product diversification strategy regarding Panasonic Corporation.

Methodology

3.1 Research Philosophy

As Esterby- Smith et al (2002: p. 342) there are two main research philosophies exist in the literature of methodology such as ontology or epistemology. The ontology will be used to continue research study with a commitment of the researcher and epistemology will apply to carry out the study discover particular knowledge from the field study. Therefore, epistemology research philosophy will be used to solve the research problem. Positivism research philosophical approach will be referred to investigate the research problem in order to study social reality behind the success of Panasonic in terms of using differentiation strategy. Because positivism research philosophy will use to collect data to identify causal relationships lying in the research problem such as the relationship between the product differentiation strategies and the market share of Panasonic Corporation.

3.2 Research Approach

As per Bryman and Bell (2007) there are two research approaches available in the literature such as deductive research approach or inductive research approach. The deductive research approach generates research hypothesis from theory, hypothesis test and explanation of relevant principles. But deductive research approach includes a collection of facts to achieve such principles. When consider about the research problem, deductive research approach will be used to investigate this research problem due to the availability of research theory regarding successful product differentiation strategies, importance of product differentiation strategy, application of differentiation strategy towards achievement of business goals and etc. These theories will be used to set particular research hypothesis and hypothesis testing will be done to identify research relationships. All these facts emphasized appropriateness of deductive research approach to solve the research problem.

3.3 Research Strategy

According to Creswell (2007: p. 112) the survey research strategy will be possible to investigate this research problem. Because survey research strategy aligns with data collection from larger sample population, data analysis, case study, survey questionnaire design, and etc. That means, survey research strategy will be possible to collect data from a large sample population of customers of consumer Electronic products of Panasonic. This case study method will be used as an analyzing tool to know the reason behind the product differentiation strategies prevailing in the industry. New product differentiation strategies are being used by the different companies including Panasonic Corporation. Therefore this research methodology will help understand the reason behind the new product differentiation strategies brought in to the practice by the different companies in consumer electronic industry. This particular research methodology has been used to analyses product differentiation strategies of Panasonic. The research methodology in this study use to identify successful product differentiation strategies applied as a corporate strategy by Panasonic and prevailing such strategies within the consumer electronic industry as a whole.

3.4 Data Collection Method

Data can be collected in two forms: primary and secondary data. The data collection methods used in this research consists of searching both primary and secondary data. Information collected by observing phenomena or surveying respondents. Primary data are originated by the researcher for the specific purpose of addressing the problem at hand. Also that obtaining primary data can be expensive and time consuming Amphora (2005). Since primary data is collected with specific purpose, it is the most significant. Depth interviews, focus groups, observations and surveys are the major methods of gathering primary data. In this particular study, depth interviews have been used as a means for obtaining primary data.

According to Amphora (2005), Secondary data are data that are collected for some purpose other than the problem at hand. Usually journals, existing reports, and statistics by public and private authorities are used collect Secondary data. Here, the secondary data have been collected using marketing journals and other existing reports that were based on the topic. Specifically a case study from Panasonic Corporation. Secondary data in this particular case helped the researcher to comprehend differentiation strategies implemented by Panasonic.

As said by Creswell (2007: p. 112) both primary data collection method and secondary data collection methods are possible to solve the research problem. Both of these data collection methods will be possible to collect both quantitative and qualitative data. Primary data will be collected from customers used electronic products. Quantitative data provides numerical information to the research findings and qualitative data provide detailed information to solve the research problem.

3.4.1 Sample

The sample will be used to collect primary data to solve the research problem. Customers who use Electronic products of Panasonic in UK will be selected as samples. However, the mobile phone users sample size will be determined as 100.

3.4.2 Data Collection Tools

As described by Saunders et al (2009) secondary data will gather from secondary materials, books, research papers, newspapers, magazines, websites and annual reports. Survey questionnaire will be handed over Panasonic electronic products users in UK and survey questionnaire will be used to interview Panasonic electronic products users in UK.

Since the objective of this research is to measure degree of success of product differentiation strategies implemented by Panasonic, it is very important to first identify the product differentiation strategies applied by Panasonic in UK. For this purpose, the best available sources are case studies, news articles and personal knowledge of the product differentiation strategies. After getting a complete picture of the existing scenario, there was a need to get the public interpretation of the brand and its value. For the purpose of getting more generalized view, the dealers of consumer electronic products will be interviewed since they deal with buyers and prospective buyers on a regular basis. Also it was thought that their personal choice will be considered for the same. Hence for a new research a primary research was conducted. A secondary research was also carried out to understand the diversification strategies and future in general.

3.5 Data Analysis Method

3.5.1 Quantitative Method

Quantitative research methods are the orthodox way of researching. In very technical terms, “Quantitative data is data expressing a certain quantity, amount or range. Usually, there are measurement units associated with the data, e.g. meters, in the case of the height of a person. It makes sense to set boundary limits to such data, and it is also meaningful to apply arithmetic operations to the data” (UNECE). Quantitative Research methods are important they are conventional form of data collection and analysis. Quantitative research delivers a more general result rather than more specific. Since the answer is made exactly to what the question is, there is no scope additional contribution from the interviewee. Also there is no personal force to encourage the interviewee to give concentration and giving answer. Another problem bein