The marketing strategy of Sony Ericsson

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The Marketing strategy of Sony Ericsson

Summary:

This Essay discusses the Marketing strategy of Sony Ericsson, past and future goals for the global markets, it is a joint venture of Sony corporation.

In the beginning, I have concentrated on the introduction and history of Sony Corporation which is the parent company of Sony Ericsson.

After which I have discussed about Sony Ericsson and its Financial Summary and to brief, I have also included few of the success achievements of the company, Followed by SWOT analysis and PORTER’s COMPETETIVE FORCES model.

To conclude I have put forward some suggestions to improve company’s sales in global Markets.

Introduction & History :

The first thing which comes to a person’s mind when one thinks of Sony, is high-technology-filled-with-gadgets electronic goods and innovation. “Sony is without a doubt one of the world’s largest global electronics group”. [1] How many other companies can boast of having invented completely new markets, such as the transistor radio, the Walkman and the Compact Disc? The

Sony Corporation was founded in “1946 by Akio Morita & Masaru Lbuka” under the name “Tokyo Tsushin kogyo” but because of the belief that a companies name is its trade, it was changed to “SONY” in 1958.Headquarter of Sony is located in Japan. “The present Chairman and Chief Executive Officer of Sony Corporation is ‘Howard Stringer”. With only 1, 90,000 yen as capital, the founders realised they would have to differentiate themselves from large competitors by developing more innovative products and with this the consolidated sales and operating revenue of Sony in the year 2008 was recorded as 7,730,000 million yen”[2]. Their constant innovations are an advantage for the consumer electronic goods. Internationally as well as in Japan, Sony was often first to market with technological innovations that set industry standards.

  • “In 1968, Sony’s sophisticated Trinitron technology expanded the colour television market”.
  • “In 1979, it launched the first Walkman, a light weight portable tape player with headphones”.
  • “In mid 1980’s Sony develop a compact size camcorder video camera”(3)

such innovations turned Sony into a leader in consumer electronics with FY 1995 worldwide sales over $43 billion. Through “Sony Ericsson a joint venture established in “October 2001 by Sony communication and Swedish telecommunications provider Ericsson”, Till now Sony has organised its business into “14 PRODUCT CATEGORIES” (4), including:

  • Television & projector : Bravia LCD TV, Business projector
  • Home Video : Blu-ray Disc Player
  • Home Audio: Hi-fi System
  • Home Theatre System: DVD Home theatre system
  • Digital SLR: Camera, Lens
  • Video Camera: Handy cam, Digital photo printer
  • Computer & peripherals: VAIO laptops, storage media
  • Portable audio: Walkman MP3, Radio, CD-player
  • Games: Playstation2, Playstation3
  • Phones: Mobile Phones, Accessories
  • In-car entertainment: Amplifier, speakers
  • Storage & Recording media: compact flash, video media
  • Battery & Charger : Battery, Charger
  • Accessories: Car accessories, Game accessories.

Their (Sony’s) aim is to fully leverage this uniqueness in aggressively carrying out convergence strategy so that they can continue to emotionally touch and excite their customers. Sony moves in five different segments: Electronics, which designs, manufactures and sells instruments, electronic equipment and devices for consumer and professional markets; Games, in which Sony Computer Entertainment Inc. produces, markets and distributes PlayStation2 ,PlayStation Portable and Playstation3 hardware and related software; Pictures, which encompasses motion picture production and distribution, television production and distribution, and digital content creation and distribution; Financial Services, which includes the activities of Sony Financial Holdings Inc. , and All Other, which comprises Sony Music Entertainment and Sony Music Entertainment (Japan) Inc. On October 1, 2008, it acquired Bertelsmann’s 50% interest in “SONY BMG MUSIC ENTERTAINMENT”. (6) “Although Sony is known for their advance technology range, they also are adapting to other strategies for expansion such as the new Sony Credit Card, as a standard VISA card like most other credit cards offer, Sony allow users of their credit card the bonus of generating Sony points in redeeming Sony products”(7).

I have selected the product Mobile Phones, Which now comes under the brand name Sony Ericsson which is a joint venture. “On 21st April, 2001 Sony Corporation of Japan and “Telefonaktiebolaget LM Ericsson of Sweden” signed a memorandum of understanding expressing their motive to start a 50-50 joint venture”(9). The reason for this collaboration was to put together Sony’s consumer electronics expertise with Ericsson’s technology in communication sector. From that time onwards both the companies stopped making their own Mobile Phones. “In October 2001 Sony Ericsson began its operations”. (3) The company is dealing in over 80 countries. The initial days of the joint-venture was not very successful and Sony Ericsson’s global market share dropped down from 7.4% to 4.8% at the end of September 2002 but in mid 2003 when they launched a high-end colour screened mobile phone that was a joint technology from Sony’s cyber shot digital camera business it turned out to be a huge success for Sony Ericsson and the joint-venture was finally able to announce its first profit’s in the third quarter of 2003(10) Sony Ericsson’s global management is based in London but has Research and Development team in Sweden, Japan, China, The United States, Germany, India, Pakistan and The United Kingdom. “Their vision is to be the communication entertainment brand; they encourage their customers to do more than communicate, they empower everyone to compete and compose in entertainment experiences, Experiences that soften the lines between entertainment and communication”(11). In just the time spam of seven years it became the fifth largest manufacturer of mobile phones in the world after Nokia, Samsung, LG and Motorola. Ericsson has the “man power of around ‘9400 employees’ and ‘2500 contractors’ worldwide as on 18th July, 2008” (12). The management team is led by the President of Sony Ericsson Hideki Komiyama

Sony Ericsson has a variety of phones like “talk and text phones, music phones, camera phones, touch phones and web and email phones” in different styles. Sony Ericsson currently focuses on the section of design, camera, music, business and budget-focused phone. Five main groups of Sony Ericsson are: the “W series music phones walkman” launched in 2005 which are first music-centric series mobile phone; the Cyber-Shot brand Mobile phone launched in 2006 which concentrate on the quality of camera; the Bravia brand phones launched in Japan in 2007; the “UIQ” smart phones launched with “P” series in 2003 with touch screen and they have now been stretched up to the M & G series phone; The Xperia range that was launched in feb,2008 which is a windows based phone. “The Walkman and Cyber-shot sub-brands are leading the joint mobile company close to its goal of being one of the top three in five years”(14).

Some of the top phone models in each section are:

  • Top Business phones: P1i, Z55a, P990i
  • Top Trendy phones: Z555i, S500i, K790a
  • Top camera phones: C902, K850i, Z710i
  • Top music phones: W350a, W760i, W380a

The Sony Ericsson phone models are named according to the category to which they belong for example, the music phones are of the “W” series, camera phones are of “C” series, all round performance phones are of “K series” etc”(15).

Sony Ericsson’s Media Marketing is innovative as well as effective. The proof of which is that-

“The company won “PPA Marketing’s” Best use of magazines in a mixed media campaign 2005 on 17th March, 2006″ (16), this award was for Sony Ericsson’s “K700i” camera phone. For the launching of this phone the company choose magazines as their marketing medium and through this they attracted various gadget lovers who could form an emotional bonding with the product. To target their audiences they used distinct approaches to each magazine. This type of campaigning is called “Viral Marketing”.

Recently to promote their new “C905 Cyber-shot” handset, the company through its innovative idea shot the whole campaign on the mobile phone camera. “This is an amazing opportunity for us show off the capabilities of our new phone,” saysSony Ericsson UK & Ireland Marketing Director, David Hilton”(17).

Financial summary

“The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the first quarter ended March 31, 2008 is as follows:

Asia recorded 24.1% of the total revenues in FY2008: Revenues from Asia reached $3,990.3 Million in 2008 with a decrease of 23.6%.

While America recorded 22.8% of the total revenues in FY2008 : Revenues from America reached $3,775.5 Million in 2008 which is a increase of 23.8%.The overall sales in the first quarter of 2008 is 2702 Euro m which is very much less then the quarter4 sales of 2007, which shows that the company’s sales is declining.

Despite of the fact that other handset companies are capturing the profits and market share of Sony Ericsson by duplicating but the journey of phoenix and innovation that Sony Ericsson has followed cannot be copied.

SWOT ANYLSIS

According to the SWOT analysis on Sony Ericsson as a mobile phone manufacturer its main Strength lies in Innovation and creation of illusive product.

  • Technological advantage as Ericsson being the amalgamation of telecommunication technology and the advantage of Sony’s dynamic brand image in the entertainment and consumer goods section; this is distinct advantage over other mobile phone manufacturers for Sony Ericsson.
  • Sony Ericsson, though at some cost, has absolute connection to brands of its parent companies For example; the company offers mobile phones under the series like “Walkman, Cyber shot and Play station”, as well as uses technology such as, “Smile Shutter”, which is Sony’s intellectual property. Sony Ericsson has diverse operational alliances from its parent companies, which enable it to compete effectively and introduce new mobile phone in the market.
  • The company’s sound financial position and financial backing by parent companies will allow it to grow and boost investors’ confidence.

Weakness

Late entry(Sony Ericsson) into the mobile market as compared to companies who were by that time in there second half and were still fighting to exist, also as Sony Ericsson is a joint venture so there is a cultural integration, thus Asia and Europe’s corporate cultural differences will surely strike the companies alliance. Sony Ericsson has a delicate product portfolio as compared to its main competitors. Although it was one of fresh company of mobile phone vendors that capitalized on imaging and music offerings and gained market share but it was too late to catch on to the demand of touch-screen handsets. While its competitors such as “Apple”, “Samsung”, “RIM (BlackBerry)” and “HTC” kept on progressing to gain market share during the same period for the touch-screen Products. The company is making attempt to build up its portfolio by launching new products but this would take time to become an asset for Sony Ericsson.

Opportunities for Sony Ericsson in the mobile phone market will further increase with the

  • Improvement in technology, “MMS, Hi-pixel camera’s, colour screen, dual mode, windows mobile” and television like features, also the companies method of doing things adversely in whatever they do, the company could be agile to attain market liberty where the opponents may be moving slow. In 2008 Sony Ericsson came out with a number of new phones, including “Xperia X1”, a “Windows Mobile-based” multimedia handset and “C905 Cyber-shot”, an eight-megapixel camera phone. In January 2009, the company launched its first mobile phone with Smile Sony Ericsson, “In June 2009, it released its first mobiles as part of Greenheart portfolio strategy, C901 Greenheart and Naite” [18].
  • The company’s increasing new product portfolio could allow it to gain market share and revenues in future.

The Threats primarily seems to be originated from the

  • Opponents like “Nokia & Samsung” who are targeting the low-end section, “Motorola” who is strengthening target on customer’s understanding and fulfilling customer’s demand. Some of the other competitors are the local manufacturers, “HTC, Apple, LG, blackberry” etc.
  • In the low end division, it has been fighting with South Korean mobile phone manufacturers like “LG” and “Samsung”, although it continues to compete with “Motorola and Nokia”, among others. In the high end mobile phone division, the company is confronting close competition to Nokia, Apple, HTC and Samsung.
  • It is also facing competition from mobile network operators offering mobile phones under their own brand like “Vodafone”.

Sony Ericsson’s revenue and market share have been greatly influenced by the strong Competition in recent time.

Now with the “Porter’s competitive forces model”, we can illustrate that the “Competitive Rivalry” is from all over the world like “LG from Korea”, “Sharp from Japan” and almost every mobile phone brand has its own unique selling point like Nokia is assumed to be of reliable quality also new mobile phone models are discharged regularly by other manufacturers. The supplier power for Sony Ericsson is that it is internationally reputed brand, has comparable admirable market scope in the world as compared with “LG, Samsung and Sharp”, it is quick in responding to the market needs and produces product with latest design. The substitute products like Nokia and Motorola are more formal as correlated with Sony Ericsson’s fashionable and trendy mobile phones. Customer power: Sony Ericsson manufacturers a vast variety of phones from high to low category which gives the customer amble alternatives to match to their need and it characterize its brand with innovative mobile phone design’s and through this it has gained a large market share.

New entrant: To compete with Sony Ericsson very high establishment cost and high technology would be required.

CONCLUSION & SUGGESTIONS

The change is desired in Sony. In my opinion in order to overcome those threats and weaknesses

  • The organisation should mainly focus on controlling and establishing its distribution channels, should work hand in hand with the mobile phone operators and run friendly promotion plans for example providing phone and card wrap promotion for the new subscribers.
  • Sony Ericsson should also progress on customer services to fight against the lower price competitors for example they should establish more customer services plans like bringing-up self-installed software so as to let the consumer upgrade their mobile phone without taking guidance from the service centre. This could help and safeguard total customer satisfaction.
  • The Sony Ericsson name is generally described as expensive and high-profit end; therefore the company must also stretch its product area by providing lower priced with simpler feature product line that can fight against the other low-end manufacturers of mobile phones. With these low priced line mobile phones; Sony can also raise its market shares.
  • At present, the consumer has a vast selection power as they can choose among various brands of mobile phones and the fight of these mobile phone manufacturers in the market is brutal. The competitors are also able to copy the phones in a much shorter time. To discover huge profit margins, Sony Ericsson should focus and make optimum use of the R&D Department, without delaying for price cutting and technology adaptation to fit the common consumer needs. This would also make the company less dependent on the coming up products with a steady stream and relatively short-lived hit products.
  • With the strategic and structural changes, the Sony’s liveliness of innovation should remain untouched as this is what made Sony expand and can make it firm.

REFFERENCES:

1. Shu Shin Luh (2003), Business The Sony Way: Japan

2. Sony corp.(2009) Sony corp.info (available at www.sony.net/SonyInfo/CorporateInfo/) (28 Nov 2009)

3. Corporate Info(2009)(www.sony.net/SonyInfo/CorporateInfo/History/history.html)

4. Products(2009) (www.sony.co.in/section/product)

5. www.sony.net/SonyInfo/(2009)

6. The New York Times (17 Nov 2009)

7. www.oppapers.com/essays/Joint-Venture-Sony-Ericsson/170319

8. Harvard business school review(12,Nov,2008) Sony digital entertainment: Japan

9. Sony Ericsson: Marketing the next music phone (Case study, Asia Case Research Centre, The University Of Hong Kong.)

10. Business Week (April 2004),The High-Tech Marriage is Working http://www.businessweek.com/magazine/content/04_15/b3878075_mz054.htm

11. http://www.sonyericsson.com/cws/companyandpress/aboutus/mission?cc=US&lc=en

12. http://www.sourcewatch.org/index.php?title=Sony-Ericsson

13. http://www.sonyericsson.com/cws/corporate/company/aboutus/profile

14. Business week (Jan,2007)

15. http://www.ericssonphone.net/(28-11-2009)

16. PPA Marketing(2008) http://www.ppamarketing.net/cgi-bin/go.pl/case/article.html?uid=61 Mobile Marketing Magazine (Oct, 2008)

17. http://www.sonyericsson.com/cws/corporate/press/pressreleases/pressreleasedetails/key.PreResource.Greenheart_release_final-20090604

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