Nintendo Business Strategies

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Abstract

Nintendo is a games manufacturing in Japan. It was started a long time ago in the late 1800s (1880) by a man named Yamauch as small company producing playing cards for the Japanese market (Iwata, 2006).It was until 1970 through to 1985 that Nintendo started producing electronic toys and video games.

Nintendo was the dominant player in the video gaming industry for decades soaring in the success of both consoles and hand held games. This lasted until the entry of other players who saw an opportunity in the gaming business.

Sony launched its PS in the mid nineties while Microsoft came in with Xbox in 2001.This completely changed the face of the gaming industry because there was increased competition in terms of quality and innovativeness.

Introduction

Nintendo had been in the gaming industry for many decades without any reasonable competition; they had almost total control of the market and therefore had conventional marketing strategies that perhaps were not as sophisticated as present day marketing strategies with so much competition in the market.

This analysis therefore seeks to critically look at the strategies employed by Nintendo before, upon the entry of competitors and any foreseen strategies that maybe employed. Microsoft and Sony’s strategies and mistakes will also be looked into and the some insight put on the way these strategies have changed the industry.

Stakeholder analysis

Stakeholder analysis is a means or strategy used to identify and closely look at the importance and influence of certain groups and/or individuals that could affect or get affected in some way by a particular project (Nager, 2009).

In Marketing, many groups are considered but the most important can be summarized in four C’s; Customers, Competitors, Company, Community (Nager, 2009). As Nager puts it” This 4C’s Analysis is based in part on the 3C’s Model of Dr.

Kenichi Ohmae, a senior partner at McKinsey & Company, who based his corporate strategies on the corporation, customer, and competitors. Marketers adopted and expanded this model to factor in the growing importance of the community, including the influential roles of regulators, the news media and interest groups”.

These are therefore considered the most important stakeholders and must be carefully assessed in order to come up with a winning strategy. Other factors such as context and collaboration have been used by marketers but these could easily be fitted into the class of community.

Nintendo had been a market leader for along time and used most conventional marketing systems until 2006. 2006 saw the introduction of a new and disruptive strategy by Nintendo after careful assessment of all the above stakeholders. Below is a more detailed analysis of how they did this under each of the stakeholders.

Customer analysis

A customer is ordinarily the end user of the company’s products. This group of stakeholders can be categorized as stakeholders of high importance and high influence. The reason for this is because they ultimately determine whether the product succeeds or not because the product affects them directly.

However, this group must be looked at with the proverbial third eye to ensure that the product is marketed to the right target group; students for example buy particular reference textbooks because their lecturers recommend them.

It would therefore be more appropriate to market the books to the lecturers rather than students. This is the strategy that Nintendo employed while marketing their Wii. They used an influential figure of the family, the mother, to spread the news about it.

In fact Nintendo were so strategic that they actually made the influential figure like and want to use the Wii! The mom who in most cases just buys the product after being convinced by the family was targeted to like the product. In this case therefore, she not only buys but also recommends the product to her family and others because she enjoys it.

This was a particular breakthrough point for Nintendo because it managed to capture the mom who in most cases was a non player. This became a family game that was easy to play and had some health benefits thereby capturing a whole new niche of the market.

Nintendo had taken care of not just the needs of its current customers but also a new crop that would increase its sales volume. Nintendo therefore simply identified who they wanted to have as their market and made sure they satisfied their needs relative to their purchasing decisions and budget.

Sony’s target consumer on the other hand was just the teenagers and the young adults with a bit of time and extra money in their hands. This would have normally been a wide market enough to drive sales. However with the introduction of the age limitless Wii, this became a narrow market that could not sustain Sony at the helm of the gaming market.

Xbox had a very similar target to Sony’s focusing to traditional gamers and paying little attention to non gamers or former gamers who had little time to spend learning the new and sophisticated games (Iwata, 2006).

Company analysis

Company analysis is basically an internal assessment of your company. While most companies strive to sell at whatever cost, it is essential for the product to reflect the company’s values and vision.

Marcus in reference to Neiman Marcus states that Neiman Marcus focused on satisfying high end shoppers who had lots of money to spend and therefore always maintained high quality and exquisite fashion. It is upon this standard that Neiman Marcus gained a national and international reputation (Marcus, 2006).

Nintendo put up a strategy to bring into the market a new game that could be enjoyed by people from any age group while adding some health benefits to their health. It is this innovation that saw it get ranked at number 7 in the worlds most innovative companies in 2008 up from 39 (McGregor, 2008).

Competitor analysis

A competitor is basically a company that produces a product that could act as a substitute for your product. In this case, Nintendo’s direct competitors are Sony and Microsoft who produce similar console games.

Despite these direct competitors, there are other indirect competitors in the industry like game boy or companies that produce regular pokers cards, computer games and so on.

Iwata states that “Traditionally, Sony, Microsoft and Nintendo would go into a new cycle or a new battle every five to six years, and in 2000, Sony’s PS2 had emerged as the clear winner.8 Since then, the focus of the industry had turned even more to the technological advancement of the console hardware, particularly in terms of faster processing speed, higher definition of video quality and increasing complexity of the games.

The relentless pursuit of superior technologies became the convention that drove the industry’s dynamics”. This was a description of how traditional competition was among the three game producers.

However Nintendo realized that they were loosing their grip on being the market leaders and came up with a strategy so disruptive that they reclaimed their position as the market leader.

Unlike Sony and Microsoft, Nintendo decided to put together a game that would unite the whole family in play and attract non gamers who had no time to learn the traditionally complex video games produced before.

It also incorporated a remote control that actually required that the user to perform physical functions similar to the real life situation. This not only made gaming easier but also fun and healthy.

Sony and Microsoft on the other hand stuck to the traditional games focusing more on sophistication, impressive graphics and technology.

This bias towards increased technology increased their cost of production, as would be expected, leading to production of very expensive consoles. This would later hurt them in sales because Nintendo’s Wii was a lot cheaper and simpler.

Community analysis

The community as whole has a lot of influence on how well a marketing strategy works. Nintendo in creating the Wii put collective interest in it by incorporating the Wii sport and fitness which was viewed by the market by a good health initiative.

The fact that the Wii was a family rather than an individual game was a good addition because it was a way of enhancing family bonds.

Positioning map

Figure 1

All the target customers share something in common although the new gamers generally appreciate good flexibility and games that are easy to learn and play.

The mature gamers on the contrary mainly focus on additional features and a good price tag. A console that plays cd and dvd movies is very appealing all the target markets because of the convenience it brings along.

Nintendo’s Marketing Mix strategies for the Wii

Nintendo’s Marketing Mix strategies for the Wii played a critical role in ensuring that the Wii remained at the top as the best selling game in its class.

Richtel in a year later reveals just how much demand was in the United States for the elusive Wii. Long queues were still being witnessed as people struggled to get a hold of the game well after its release.

Nintendo’s strategy varied from innovation in the development of simple games that were aimed at ’enriching the lives of the owners’ to the Wii which was a simple game that physically engaged the players and the use of word of mouth in marketing the product.

Nintendo turned away from the obvious way of fighting for the market; increasing sophistication and graphics. Another important thing to be noted is that Nintendo drastically cut down the cost of producing the Wii games thereby allowing them to capture the cost conscious market.

This drove its sales and ensured maximum tapping of the market. Nintendo also allowed a lot of diversity by allowing independent people to develop games independently which were then availed for download on the internet.

President of Nintendo of America Reggis Fils-Aime stated that “Independent developers armed with small budgets and big ideas will be able to get their original games into the marketplace to see if we can find the next smash hit.

WiiWare brings new levels of creativity and value to the ever-growing population of Wii owners” (Mokey, 2007). Nintendo’s Wii supply was also very limited; something considered a strategy by experts so as to keep the buzz about the Wii alive.

On marketing, Nintendo chose a clever and cheap form of marketing; mouth to mouth. This proved successful as the mothers were keen on not just getting the game for their children but also for their own enjoyment and family time. All these combined factors separated the Wii from the competition in terms of cost, innovativeness and flexibility.

The Wii was far more attractive in price, was better suited for both seasoned and new gamers and had some health benefit that was backed by doctors. Nintendo therefore clearly out marketed its competitors on this.

Conclusion

In this particular battle for supremacy, Nintendo clearly out shone all its competitors. However if I was Sony’s Vice president, I would take advantage of our superiority in production of electronics to develop a game that could neither be matched by Nintendo nor Microsoft.

With the emerging development of 3D televisions, I would urge my game developers to create a console that would be compatible with our 3D televisions that are projected to take viewing to the next level.

This would give the gamers the closest experience in gaming to real life than any other game ever produced. I would also borrow the idea of the remote control used by Nintendo to incorporate physical movements in this new game.

List of references

Iwata, S.,2006.GDC Keynote Address. Nintendo World Report. Web.

McGregor, J., 2008. The World’s Most Innovative Companies. Business Week. Web.

Mokey, N., 2007. Nintendo Launches WiiWare Channel, Digital Trends. Web.

Nager , J.2006. Who Cares And Who Matters: The 4c’s Stakeholders Analysis.

Richtel, M., 2007. A Year Later, the Same Scene: Long Lines for the Elusive Wii, The New York Times. Web.

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