A description on the propositions put forward by Sony and the rationale behind the stealth positioning

1. Section B
Harshan HashimPGP05068
Henna Bansal PGP05069
IlikaGrover PGP05070
Jayesh Nagpal PGP05071
Joel Daniel PGP05072
Sony AIBO Case
Group 4

2. Benefits
Sony AIBO: The Value Proposition
 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

3. 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

4. Stealth Positioning: The Rationale
Sony 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

5. 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.

6. 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

7. 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.

8. 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.

9. 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.

10. 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

11. 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.

12. The End