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Sony marketing strategy_v9
1. Marketing Strategy: Sony Vaio Laptops
Dhananjay Sawant
Kaushik Thosani
Marcela Esteves
Shirly Aran
Vikram K.
Yael Granot
2. Introduction
Sony Corporation
Sony creates consumer electronics and content/entertainment.
Leader in product innovation in the 20th century / analog lifestyle (e.g., Walkman, Playstation).
Consumer lifestyle migrated from analog to digital.
Sony lost its reputation for hit products (e.g., Xbox gaming console, Canon digital
cameras, Samsung TVs, and Flip camcorders).
Challenge: Sony’s products are not connected to each other or to the company's
music, movies, and TV shows.
3. Introduction
Sony Corporation
“make.believe” brand communication:
Single message (electronics, games, music, mobile phones, network services).
Sony “transfuses imagination into reality”.
Products + technology + content + network services = unparalleled user experiences
Sony’s future: from manufacturer to a “software company”
Drive hardware value through software
“Sony User Experience”
Sony Online Service: integrate network service, hardware product, user-driven content
4. Introduction
Sony Vaio Laptops
Value proposition: sleek design + high quality technology.
Vaio sales:
2008: Significant decline in revenue of Vaio Laptops sales (economic downturn).
2009: Vaio sales rose 12% to 5.8 million units (global)
Laptop market expanded despite recession due to introduction of Netbooks.
2010: First quarter report indicates lower revenue (10.2% sales drop in total networked
products and services revenue). Target: 10 million units.
5. Introduction
Sony Vaio Laptops
Bring to market more powerful solutions;
Improve user efficiency;
Change peoples lifestyles.
Vaio is sold at a premium price in all market segments it competes in
6. Problem Identification
Sony Vaio is sold for a premium price, but the value is not perceived by the customer.
Other vendors offer similar specs and reliability for a lower price & design options. E.g Dell v13.
Dell Vastro v13
“…there has been a paradigm shift in the marketplace that has rendered Sony products to be
seconded guessed in terms of its competitiveness by consumers.”
---- Mike Abary, VP Sony Information Technology Products division.
7. Price Comparison
Specification SONY DELL TOSHIBA HP APPLE % Premium
Memory -- 1 GB
CPU -- Atom 1.66 Ghz 449 299 349 329 999 38.15
Screen Size -- 10.1''
Memory -- 2 GB
CPU -- Dual Core 1.3 Ghz 809 599 na 499 1199 47.35
Screen Size -- 14''
Memory -- 3 GB
CPU -- 2.4 Ghz 699 549 734 549 1799 14.59
Screen Size -- 15.6''
Memory -- 4 GB
CPU -- Core2duo 2.2 Ghz 999 659 799 849 2299 29.9
Screen Size -- 16-17''
Avg. Premium 32.49
8. Situation Analysis
Company
Premium features + design
Focus on home, travelling, gaming, small business.
Half of the series compete in premium market.
Vaio netbook = differentiated offerings (family, ultraportable)
Collaborators
Retailers: primary distribution channel
Intel, nvidia (graphics card)
Microsoft – Windows
Designers (“Sony Signature”)
9. Situation Analysis
Customers
Expects a lower laptop price (recession).
Personal usage trend: home, mobility.
Overwhelmed by mobile devices: smart phones, iPads, netbooks.
Less differentiation of vendors based on technical specs.
Desires an high quality user experience. (software experience)
Desires a differentiated design.
Competitors
10. Situation Analysis
Competitors (continued)
PC ASP = $569 vs. Mac ASP: $1,400.
Apple holds 90% of premium market (>$1k)
Apple lowered prices to address recession
Sales decrease (~6 months) in 2009, but it has rebounded.
Weak professional market affected PC vendors only.
Apple’s strengths not matched by PCs
Context
Laptop PC retail revenue (07/08): $330B in 2007
Forecasted US PC unit sales for 2010: 44M laptops vs. 25M desktops
Approximately ~17% of laptop market is taken by netbooks.
Emerging markets = 70% of next billion computers (desktop, laptop).
11. Situation Analysis
Context (continued)
Netbook PCs – lead to decreased margins
Lower price (~$350) forced laptop vendors into “price cuts” and profit loss.
Revenue from netbooks can’t offset drop in revenue from laptop sales.
May be replaced by new powerful, ultrathin laptops or by tablet PCs.
Cloud Computing (HVD) – require new business model
Approximately 25% of global PC market by 2014.
Professional market will demand less expensive computers, with lower replacement
Major impact on PC business model.
Tablet PCs – market in definition phase
Apple’s iPad had huge sales success
Competes directly with netbooks.
12. SWOT Analysis
Strengths
Brand is perceived as “cool” PC.
Product design stands out.
Technical quality is competitive.
Target on mobile computing.
Premium price strategy maintains margin.
Weakness
Value proposition is not recognized.
Brand is less known in the US markets.
Lack/limited of integration with other Sony devices.
Product line is not well defined.
Free trial applications clutter.
13. SWOT Analysis
Threats
Laptop market = commodity market.
Design competition from other vendors.
New competitors in netbook/ultra thin segment.
Customer pricing expectations.
No control over OS quality (e..g, Vista fiasco).
Opportunities
Unique user experience in PC market.
Leverage Sony content.
Out-of-box software focused on content.
Expansion of mobile computing.
Growth in home, youth market segments.
14. Conclusion
Survey Results
Cloud computing
•Sony will try to differentiate its service from iTunes. One example: Users will be able to upload videos
shot on camcorders, save photos taken with digital cameras, and post other digital content to their
personal online accounts. That's how Google's suite of Net-based services (such as YouTube video-
sharing and Picasa photo site) works. At some point down the road, Sony would consider letting
independent software developers create applications for the service, much the way Apple does for its
iPhone. "The new online service will be one key factor as we introduce new types of mobile products,“
Therefore develop software similar to iLife.
•In an AP interview, Sony executive VP Kaz Hirai declared the upcoming Sony Online Service, which
adds PSN-like features (possibly including game, music and movie downloads) to a wide variety of
Sony devices, a major selling point. "That's the kind of combination that I think is not seen anywhere
else," Hirai said. "That I think is where our core competence lies, and that's a differentiator for Sony.
more likely to continue purchasing media on that same account and buy more Sony devices to get
additional use out of it
•Dis for Sony content on Vaio only: spread efforts. Maybe auto register into existing PSP Network?
•Keep premium price policy to maintain margin and add value, since 30% will be on low cost. Ddon’t
go into price war + add value on software.
•Negotiate with distribution channel.
15. Survey Analysis
• Around 19% unaware of Sony Vaio brand / Sony makes laptops
• Repeat Buying – current Sony Vaio customers prefer Mac
• Repeat Buying – Dell/HP/IBM users more inclined towards Mac rather than Sony
Vaio
• Sony perceived as better brand but loses to Mac
• Specifications as Value – Sony lags even behind Mac, Dell & HP ahead – Lack of
options in specifications
• Finalizing Buying Decision – Majorly Self Research and Expert Opinion
• Approximately 50% prefer ‘High Quality Brand with 15% price premium’
• Ready to pay $100 price premium – Specifications becomes an issue
• Around 60% of the buyers would buy Sony Vaio laptops if Customized Professional
Software is provided
• Other Brands of Sony – Popular – Opportunity for Cross Promotion
16. Kano Analysis
Delighted Performance
Low High
Quality Quality
Disgusted
17. Perceptual Map
High Price
Low High
Quality Quality
Low Price
18. Alternatives
1. Lower Price
Lower price and compete below premium market:
Discontinue premium market series.
Add more alternatives in regular market.
Clearly define laptop series for small business and private market segments.
Advantages:
Price point becomes more competitive.
Less internal cost to add value to Sony Vaio laptops.
Disadvantages:
Doesn’t address market opportunity.
Sony’s positioning becomes similar to other PC vendors.
Reduced margins.
Switch in brand positioning can alienate current customers.
19. Alternatives
2. Add Value
Add value to Sony Vaio, maintain price point:
Add value, e.g., through software, customer service, content.
Added value justifies premium price.
Clearly define laptop series for small business and private market segments.
Advantages:
Respond to market opportunity
Differentiate Sony Vaio laptops from other PC vendors.
Maintain higher margins.
Maintain brand positioning as higher end PC.
Disadvantages:
Requires higher internal effort to add value.
Requires faster integration with other Sony products.
Higher risk: must deliver on the promise that a PC can delight.
20. Alternatives
3. Add Value, Reduce Price, Collaborate
Add value, reduce premium price, share premium with distribution channels:
Add value: same strategy as alternative 2.
Sell Vaio for a lower premium price.
Provide incentives to distribution channels .
Advantages:
Respond to customer expectation of lower laptop prices.
Keep brand positioning
Gain support of purchase influencer in critical timing for Sony Vaio brand.
Disadvantages:
Lower margins.
Difficult to remove incentive in the future.
21. Recommendation
Add Value, Reduce Price, Collaborate
Support complete customer experience across Sony Vaio lifecycle.
Become the first PC to delight. Move from PC manufacturer to experience enabler.
Product
Improve current Sony Vaio software (music, photo, movie, cd burning, home server).
Provide easy, preferred access to content (music, photo, movies, Tv shows, e-books).
Enhance customer service quality through in-person support with warranty.
Place: incentives to retailers to promote Sony Vaio quality (e.g., quotes, bonus per unit).
Promotion: leverage Sony content, online presence, integration with Sony hardware.
Price: maintain premium price in all market segments, but make the premium lower.
22. Recommendation
Short Term – Create Value
Improve and re-launch Sony Vaio software.
Remove “free-trial” applications clutter.
Option to auto-register Vaio into PSP network for content access.
Preferred access to Sony content (e.g., prior to DVD/cd release).
Provide incentives to retailers to promote Vaio’s quality.
Establish partnership with retailers for Sony “Genius Bar” experience.
Focus product line on specific market segments (e.g., home, business, mobile, gaming).
Clearly address: home server, youth/student, small business, mobile computing
Keep netbook differentiator.
Research tablet computing market.
23. Recommendations
Long Term – Expand Value
Integration with other Sony devices.
Provide direct access to Sony Online Store.
Invest and expand business in emerging markets.
Editor's Notes
Consumer electronics: TVs, digital cameras, camcorders, laptops, e-readers.Content/entertainment: Sony Music, Sony Pictures, sponsored TV shows.Very unique offering. Other consumer electronics companies do not offer content.Good even distribution across different markets (Japan, USA, Europe, Other).It is very impressive (in a negative way) that a company who created the Walkman and owned the music player market missed the migration from analog to digital format.In the 20th century Sony’s products: Walkman, Triniton TV, Playstation gaming console.In 21st century, as consumer lifestyle migrated from analog to digital, Sony lost its reputation for hit products (Xbox gaming console, Canon digital cameras, Samsung TVs, and Flip camcorders).Sony's tradition-bound mentality remained too focused on building excellent analog machines in an increasingly digital world.
TVs and game operations are major source of losses. Sony’s response:Make 90% of electronic products network-enabled and wireless-capable by March 2011“Networked Products and Services” (includes Playstation, Vaio laptops, and Walkman) division aims to leverage PSP content network across Sony devices.“Networked Products and Services” (includes Playstation, Vaio laptops, and Walkman) division aims to leverage PSP content network across Sony devices.Make believe direction / repositioning will guide the recommendation for Sony Vaio.Sony’s future:Leverage technical expertise for end-to-end 3D entertainment experience
Laptop market is typically segmented in: premium (>$1k) and regular market for business and private use (family/media center, students, mobility, gaming, high performance)Vaio originally stood for “Video Audio Integrated Operation. In 2008 it was repositioned as “Video Audio Intelligent Organizer”.Brand was launched in 1996 (“Video Audio Intelligent Organizer”), when major players in laptop market were already defined. Vaiois more expensive then competitors with similar specs.Club Vaio (Europe) promotes Vaio Software, contests, gaming, and personalization.Facebook promotes integration with other Sony hardware and with brand activities (e.g., commercials, contests, etc).In 2009: Sony launched netbook to try to boost sales to $6.2 million units.In 2010: 10.2% sales drop in total networked products and services revenue, which include Sony Vaio laptops.
Starting price clearly indicates premium price strategy.Unique focus when compared to other PC manufacturers: lifestyle and mobility. Other vendors also cater to power and efficiency. However, only Sony has consistently claimed lifestyle and mobility.
Vaio originally stood for “Video Audio Integrated Operation. In 2008 it was repositioned as “Video Audio Intelligent Organizer”.Brand was launched in 1996 (“Video Audio Intelligent Organizer”), when major players in laptop market were already defined. Vaiois more expensive then competitors with similar specs.Club Vaio (Europe) promotes Vaio Software, contests, gaming, and personalization.Facebook promotes integration with other Sony hardware and with brand activities (e.g., commercials, contests, etc).In 2009: Sony launched netbook to try to boost sales to $6.2 million units.In 2010: 10.2% sales drop in total networked products and services revenue, which include Sony Vaio laptops.
Offer “Sony Signature” with seasonal, limited edition designs. Green computer on top of screen (Caribbean green). Most expensive series (Z) starts at $1,900.Offering Chrome is a departure from Windows.Vaionetbook: positioning is on usage, NOT on price. Did NOT cut margins, instead created to most expensive netbook. W series: not focused on mobility or basic computing tasks). $100 more than other netbooks Sony Vaio P series: features = 3G, touchpad location. “Red” computer on top of screen. W series: family computer + mini entertainment. Sells for $100+ than competitors ($500). P series: lightweight, ultra portable, dedicated features. Sells for $1,000. Collaborators: can also buy online and on Sony outlet stores.
Gap between PC and laptop sales worldwide is smaller than in the US. This seems to be related to limited infrastructure in emerging/developing markets, which represents a huge potential for future laptop sales when the US market is exhausted.Very interesting switch between HP, Dell (recession affected business laptop orders) and between Toshiba, Apple (recession decreased sales of premium priced computers).
ASP = Avarage Selling PriceApple chooses not to compete at lower prices (all major Windows PC vendors also compete in the premium category.During economic downturn Apple chose to make its laptops’ high price lower, but still be within the premium market. Apple’s strenghts:Mac OS X, iLife and hardware design.Apple retail stores and customer service.Apple lifestyle and “cult”.Positive effect from satisfied iPod and iPhone customers.Focus on user experience and design quality (e.g., battery life). Forecasted Worldwide PC unit sales for 2010 (in millions): 170M laptops vs. 116M desktopsMature markets accounted for 58 percent of the first billion installed PCs, but would only account for about 30 percent of the next billion (Gartner)
Netbooks are smaller and cheaper than traditional notebook, optimized for simple tasks.Average price of $300 to $400 maintained laptop market activities in 2008/2009HP, Dell considering installing Android as OS in their netbooks.
Strengths Brand – associated with “design coolness” within PC market. Product design – stands out when compared with other PCs (“sleek”).Technical quality – specs are as good as PC competitors, no need to close “gap”. Target on mobile computing since Sony Vaio introduction in the market.Premium price strategy – higher margin in a “commodity” market.WeaknessValue proposition not recognized by customer.Brand – net well recognized within the US market. Product line is not well defined against market segments (e.g., students, gaming, etc). Lots of undesired free trial applications clutterVaio computers in relation to other PC makers. Lack of integration with other Sony offerings, specially content.
ThreatsPC laptop market is becoming a commodity market: all vendors offer similar specs with similar quality, so there is little differentiation among vendors.Other PC manufactures are developing PCs with similarly cool/skeek design to Vaio (Dell's Adamo and HP's new Envy line).New players who make fast processing chips for cell phones may enter the laptop market – Nokia is considering entering the netbook market.Netbooks cutting own margins.Sony has no control over Operating System quality, which is provided by Microsoft (e.g., Vista fiasco).OpportunitiesProvide a high quality user experience within the PC market.Expand social networking presence to reach younger audience and help set image “apart”. Be an approachable brand and in contact with customers. Home PC servers: high growth as households own multiple devices.netobooks, iPads, different computing seems to be emerging in are where Sony is strong.Deliver Sony content (e.g., movies, music, books) on Vaio.Software to support content creation/manipulation.
By 2012, at least 30 percent of all mobile PCs sold to consumers globally will be priced below US$300, offering market players new revenue opportunities, Gartner predicts. The Mobile Internet Device (MID) is similar to the netbook PC with an embedded broadband connection. The MID category has been articulated by Intel using its new low-power Atom microprocessor. The Smartbook is similar to the MID and is considered a cross between a Smartphone and a netbook. Smartbook and MIDs are likely to compete with high-end Smartphones. The Smartbook and MID are also expected to be a platform battle for Windows and Linux-based operating systems. Smartbook and MID products may also become a 3rd PC for many office workers or home users. The opportunity for Smartbooks and MIDs looks very promising. – Invest in small, mobile, powerful laptop.
Apple is the only vendor that is able to provide high quality AND delight customers. But Apple is not a Windows vendor, it has its own operating system (OS).Within the Windows PC market, all vendors are more or less the same, with little differentiation among the vendors in terms of quality and customer satisfaction. “Blob” of vendors below the performance line.It seems clear that there is no Windows PC vendor that is able to delight, which becomes a great opportunity for Sony.
In the perceptual map, price is analyzes instead of customer satisfaction.When comparing Kano and perceptual map, Apple’s price is very high, but its “delight factor” is also very high. The map shows Vaio’s higher price, but perceived value being the same as other competitors.In terms of perceived quality, Dell and HP are the same as Vaio, but Vaio charges a higher price.None of the PC vendors can charge a premium as high as Apple because none of the PC vendors are able to delight customers.
Apple has also made its premium price lower.
PC vendors deliver hardware with some service. Apple takes care of the whole experience. Partnership with customers. Includes purchase, use, maintenance, disposal.Cloud computing, commoditization of hardware indicates software is to add value to hardware. By 2012, at least 30 percent of all mobile PCs sold to consumers globally will be priced below US$300, offering market players new revenue opportunities, Gartner predicts. Apple benchmark“Apple” of the PCs. We will compete with Apple, expect to win some market share (PC/Mac switchers) but do not want to battle Apple.From complete portfolio, Sony corporation have the best chance among PC vendors to add value through experience.What is very unique to Sony is the content. Integration is a business unit and corporate level initiative.Full circle with company strategy of a “Sony User Experience”.Improve features, ease of use.Includes green product development, corporate initiative.
Current PC makers: limited communication with audience. Apple = “monologue”, customers wait for next product/what they will want next. Sony Vaio can differentiate by having open communication with customers, “conversation”, supported by make.believe brand initiative (“bring ideas into reality”).Currently most PCs are recommended for most uses.Consider renaming series as part of repositioning.Auto registration builds up SOS release later this year, aligned with Sony strategy. Update communication (e.g., website) to match focused offer.“all the single ladies” music video.Short term implementation of SOS, with Sony content only + early releases. E.g., get movie on laptop, stream to TV.