Initially, Nintendo was not lucky and owes its survival and strong market position to the Wii console strategy. Nintendo also started to feature some of its high-tech amusement arcade games on the Wii platform. Wii employed a new strategy by realising that the firm could do more with less input.
Therefore, it successfully employed combination of low powered processors and a standard optical disc drive, compared to the powerful chips and high definition lasers in Sony’s PS3 and Microsoft’s XBOX 360. The strategy utilized motion sensing wireless technology that compels one to get up and in to playing the game. Wii controller resembles TV remote controllers.
The designers speculated that the familiarity with TV remote could be more appealing than the more complicated video game controllers. The strategy was a success. It is due to these strategies that the firm managed to survive and become the most successful video game company in terms of revenue and profits earned.
The Wii game console was termed as an immediate smash hit by industry analysts. They dared and questioned its potential to remain relevant and successful in the market. However, their fears and speculations subsided when retailers started to have troubles in keeping the product in their stocks for more than a year.
The firm defeated its competitors with 24 million purchases completed in a period of 18 months as compared to only 19 million complete purchases of Xbox 360 from Microsoft and only 12 million complete purchases of PS3 from Sony for the same period of time.
In addition, Wii game console has the capability to scan weather, news, and websites through wireless internet connections; a tool that fuels a continued sale of Wii in the market. Therefore, Nintendo was able to put into rest the doubt that the Wii product was just a short-term event (fad).
In the product life cycle, Wii can be classified to be in the Maturity stage, this is the second last stage in the product cycle. It can be argued that the game console is moving towards the decline stage. Therefore, at maturity stage of any product in market, the most delicate stage, the company has to put stringent measures and strategies to give the product a competitive advantage.
Evidently, Nintendo is employing good strategies that are keeping Wii in the market. The fact that Nintendo has always emphasized on innovation positions the firm stronger in the market. For example the critical interface in gaming has always been the success determiner and as the case suggests Nintendo is currently putting in place developers to think about how interaction uses motion on gaming consoles.
In fact, Nintendo’s success can be attributed to creative leadership and willingness to do things differently. As long as Nintendo stays focused it will be successful for many years to come. Wii’s next life cycle phase is ‘decline’ and therefore it will require stringent measures and strong strategies in order to avoid a decline or its death in the market.
The point means that the company must prolong its maturity stage through effective initiatives. Some of the strategies that can retain Nintendo’s leadership position include:
To provide new games which are relevant and appealing to the non-traditional gamers
They should also produce more serious games that capture the hardcore gamers; a thing that they have not invested on.
Nintendo should also invest on producing easy-to-play games which can be used to capture new and non-traditional gamers.
In addition, the company should contract other companies that do game publishing in order to provide newer and interesting games.
Finally, Nintendo should reduce the entry barriers to their download channel to ease the access of their products.
Since Nintendo Company was established in the game console market, it has targeted children and teenagers. The company has remained strong in that demographic ever since. Now that the age of gamers has changed to the more mature category of gamers, the market is characterized by middle aged gamers.
Therefore, any company that wishes to remain strong in the market including Nintendo must change its target segments and focus on respective consumers. The potential threats to Nintendo include competition from new companies such as apple as well as other Smartphone makers.
The competitors are threatening the gaming industry with advanced technologies especially when they consider entering this market. Their smart phones are being created with an experience like no other product by incorporating gamer’s doc interfaces with wireless and hdmi alongside the normal cell phone user interfaces.
In addition, the competitive position of the company is threatened by the shifting age of the consumers. It means that the competitors are able to discover the customer desires and preferences. Another threat is the increasing production of games which are meant for a single system.
Therefore, it is much unlikely that Nintendo will be able to compete on price effectively. It appears that the company may eventually lose the strong market position.
Situation Analysis. When Nintendo Company was initially launched in 1800s, it was manufacturing and selling playing cards. The company diversified its production line later to produce electronic games to overcome the stiff completion it was facing by then.
Nowadays, the company specializes in designing and selling of motion-sensor control games mainly for children. The company produces Nintendo wii, Nintendo DS video consoles, Nintendo 64, Virtual boy, Pocket boy, color boy among other children games. The company had dominated in children games as early as in 1970s. Nowadays, the company has started producing games for older people.
Nintendo is a Japanese founded enterprise and it mainly sells its products to local customers from its local agents as well as to its international clients who are based in U.S. and Europe. Prior to last summer, the company had strategized appropriately and released 16 million units of video-games that it had anticipated to sell during the peak session of Christmas through its selling agents as well as online to its overseas customers.
However, the sales of 3DS failed to sell as anticipated despite 3DS products having ever recorded a great performance for the past 30 years. The company did not record satisfactory sale of its product, despite the Company offering its products on the eve of Christmas which is the peak period for sale the of the 3DS games.
Despite the management cutting down the prices considerably to encourage its customers to purchase the 3DS games, the sale of the products was low. The following discussion will comprise on the 3DS market, competition, distribution channel, microenvironment as well as its historical performance (Reisinger par.3).
Market Summary
Nintendo Company sells its products to its local customers as well as its international customers who mainly reside in Europe and United States. Despite the recent decrease in its sale, Nintendo was placed the 3rd best company in performance in 2009.
The company is the market leader in the video gaming industry. It recorded a sale of over 30 million copies of New Super Mario Bros, Wii Sports Resort as well as wii fit Plus. The reason behind the decrease in the sales of the company’s profit in the recent past years is the continuous decline in the sale of Wii hardware as well as the DS software.
The sale of the Wii hardware has been eroded by emergence of rival products such as PS3 and Xbox that are better in performance. The Nintendo management complained because of a decline of $ 9000 million in 2009 as a result of decreasing demand for Wii as well as DS and 3DS hardware and software (Aaker 10).
Market Demographics Market Geographic
Nintendo Company produces games for children as well as older people such as Nintendo wii, Nintendo DS video consoles, 3DS, Nintendo 64, Virtual boy, Pocket boy, game boy color among other children games. The company mainly sells its products to its customers in; Asia, United States, Africa as well as in Europe. Market Psychographics
The Nintendo products mainly target the rich and average earners who reside in urban areas and who are economically well up to comfortably afford to buy games for their children. The company sells games to its local customers as well as to its international clients over the internet or through it agents (Lake 1).
Market needs
Recently, there has been a high increase in the demand of games among the older generation. This is the reason why there has been a great demand of the smart phones as well as smart televisions.
Market Trends
The introduction of video gaming in smart phones as well as smart TVs has greatly affected the demand of Nintendo video gaming negatively. The decline in the demand of Nintendo products has been noted by a great decline in the sale of its games and especially the DS, 3DS and the Wii (Calver par.3).
Market Growth
Nintendo Company should consider collaborating with the mobile phone manufacturers and start supporting mobile phone gaming like iPod and iphone because smart phones are nowadays the battlefield in the gaming industry (Hernandez par.2).
The organization of any theme park is a complex issue that demands numerous resources and unusual approaches to attract customers and guarantee the preservation of a stable level of interest. As for Super Nintendo World, it could also be considered a hard challenge that incorporates several innovations to be able to remain competitive and attract visitors. There are different types of innovations that are used there.
However, these are hardly radical ones. The fact is that radical innovation presupposes the creation of a completely new dominant design and new concept that will be later explored to develop a project and guarantee the appearance of new radical changes. Moreover, radical design presupposes that it will alter the public opinion towards the organization of certain events, ventures, etc. Super Nintendo World will become highly competitive and innovative; however, the idea is not new as many theme parks are starting from Disneyland in the USA and ending with the Harry Potter theme park in London (Universal Studios Japan introduces Super Nintendo World 2017).
For this reason, we could not admit radical innovations when speaking about Super Nintendo World. This could be determined as incremental innovation as Nintendo has great expertise in the creation of virtual reality and games (Smith 2009). The company will be able to create a popular theme park using the motifs of popular games. Furthermore, architectural innovation could also be observed here (Smith 2009). The company preserves traditional patterns used for theme parks, but it introduces technological advances to alter the way they are designed to work together. In such a way some unusual attractions, elements, etc. will be presented in the Super Nintendo World. It will help the company to attract new customers.
Role fans in innovation
One should perfectly realize the fact that running a new business or creation of a new business venture is a complex process that should be precondition by the investigation of the market and deep analysis of the most popular tendencies. The fact is that only the consideration of current needs along with the demands of the target audience will help to attain success. For this reason, Super Nintendo World should also incorporate some innovative ideas to guarantee success and be ready to attract new customers. Fans are the most obvious source for innovative ideas that look forward to the creation of the given park and will visit it during the first days.
For this reason, it is crucial not to disappoint them as this category comprise the target audience. In such a way, they should be provided with an opportunity to describe their ideas. The website could help to do it. It will become an endless source of innovative ideas. Fans have their vision of a new theme park. Because of their outstanding knowledge of the issue and great devotion their ideas will have a great positive impact on the theme park and contribute to its blistering rise.
Another source of innovative ideas could be found in the leading designers who have outstanding approaches that should be realized to alter the image of all theme parks and contribute to their unique innovative character (The 7 sources of innovative opportunity n.d.). These two sources could guarantee a constant torrent of new ideas that will help Super Nintendo World evolve and become one of the most popular theme parks in the world.
New Innovative Decisions and Approaches
The opening of Super Nintendo World is a great event that will attract numerous visitors. For this reason, the company could expect high revenues. However, the situation remains complex, and the sphere of entertainment is characterized by extreme rivalry. In this regard, some new innovative decisions and approaches should be introduced to guarantee the success of the venture (What is the role of innovation at different stages of development? n.d.).
There are several suggestions. First, the product performance model should be boosted. It will help to create a unique environment characterized by the outstanding quality of suggested services as well as some unusual products that could be found only within this very theme park. For instance, goods representing the Super Nintendo franchise should be suggested to all visitors. Additionally, the majority of attractions should also have a specific character that will reflect their orientation and attract new customers. Second, service innovations should also be explored. It is extremely important to provide visitors with unique products and offerings that could be found only in Super Nintendo World (Smith 2009).
Reference List
Smith, D 2009, Exploring innovation, New York, NY, McGraw-Hill.
Nintendo Wii U console is a High Definition Video Game Console manufactured by the Nintendo Company. The product was released on the 18th of November 2016. Grubb indicates that the console is neither supplemental to the basic Wii device nor can it be used with the original Wii platform (par. 3). Nonetheless, original Wii video games can be played on the console. However, despite many attractive qualities of Wii U, the new Nintendo console is seen as a failure (Steinberg par. 1).
Brief Chronological Overview
The intention to release a new console was announced by Nintendo in 2011 which would be the first Nintendo device that could play 1080p video games and had a processor powerful enough to compete with the leading brands in the given market segment. After the press release conference, many Nintendo enthusiasts were reported to have been rather confused as to whether Wii U was a new platform or a new Nintendo controller. Thus, the new console raised many questions from the beginning. Nunez mentions specific problems with the product that occurred in the first launch week, including insufficiently developed web features, inefficient production capacity, technical difficulties reported by the customers, a lack of a user-friendly interface and a rather unappealing design, and a disappointing Wii U Gamepad (Nunez par. 3). The limited backward compatibility and a disappointing user interface and design were reported as the principal problems that discouraged customers. Therefore, it was clear that the product is bound to face more difficulties unless the mentioned features are improved. The mentioned problems pertained to the aspects of promotion and advertising, organizational aspects, and the issues with the product itself.
In 2014, with sales difficulties, these problems remained, including the branding issue. The choice of name was confusing, as it was unclear whether it was a new product line or an addition to the existing one (Wood par. 6). The author also indicates poor advertising strategy that did not offer a clear presentation of the console’s features and characteristics, leading many to believe it to be merely a new controller instead of a new video gaming platform (Wood par. 7). Meanwhile, Steinberg emphasizes that pricing is unsuitable for the product, with 299 dollars set as a price point (par. 6). Moreover, the author points out that the company chose an unfavorable launching time, as its launch was followed by the consoles with which Wii U could no longer compete (Steinberg par. 8).
Recommendations
Considering all the mentioned aspects that contributed to the failure of Nintendo Wii U, it is possible to suggest that the product hardware, pricing strategy, marketing strategy, branding, production capacity, and internet features should have been developed more thoroughly. When developing the Wii U branding strategy, the customers’ perception of the name should have been taken into consideration. Conducting focus group meetings could have helped reveal the confusion the name caused. Moreover, the decision to develop the tablet controller was unnecessary, as it led to the product losing a competitive advantage in the market (Steinberg par. 16). Pricing strategy should have been more realistic and based on the customers’ demands and expectations correlated with the actual merit of the product. Moreover, the time of the product launch should have been chosen more carefully so that Wii U would not be outshined by the consoles that followed its release, including PS4 and Xbox One (Steinberg par. 9).
Conclusion
Nintendo Wii U console released in 2012 faced many difficulties from the very beginning. Many aspects of the product development were significantly flawed, including the pricing strategy, marketing, advertising, launching time, branding strategy, web features and design. In order to avoid the problems that occurred, Nintendo should have thoroughly analyzed the market situation, customer expectations, and customer perception.
First of all, it is necessary to state, that Nintendo Company Ltd. is a Japanese multinational corporation established on September 23, 1889, in Kyoto, Japan by Fusajiro Yamauchi to manufacture handmade hanafuda cards. In the mid-twentieth century, the corporation made attempts to get engaged in several small niche spheres, such as a love hotel and a taxi company. Eventually, it became a video game corporation, growing into one of the most influential in the business and Japan’s third most precious listed corporation with a market value of more than U$85 billion. With the exception of video games, Nintendo is also the preponderance possessor of the Seattle Mariners, a Major League Baseball team in Seattle, Washington, USA.
In 2008 Nintendo was respected at the 59th Annual Technology & Engineering Emmy Awards for originating the development of handheld games with its Nintendo DS system, and for the exclusive user interface of the Nintendo Wii.
Wii Release Effect
It is significant to note there are differences among various electronic hardware. Electronic games can be console-grounded or computer-grounded. The newest generations of consoles include Microsoft’s Xbox 360, Sony’s Playstation 3, and Nintendo’s Wii along with handheld gadgets such as the Nintendo DS and Sony PSP. While some games are console precise, lots of games can be played on multiple platforms. This frame purposely addresses electronic-centered gaming, in spite of whether it is on a handheld, a console, or a PC.
Most of the study stated within these frames is located within its own linked theoretical backdrop. Nevertheless, a common strand within gaming is the concept of play as symbolized by the work of Piaget and Dewey. These academics are constantly cited relative to electronic game gaming, thus, it is necessary to apply some of their notions describing the effects of the Wii release by Nintendo. The cohesions of these notions of gaming entail the vigorous nature of the apprentice within the practice-grounded learning surroundings and the aim of negotiating by the means confronts and impediments offered in an attempt to make some reasonable meaning. Piaget argued on the matters of the role of gaming as serving a significant function in infancy, providing the beginner with an anxiety-free occasion to exploit existing skills to assist the acquirement of new knowledge. Electronic gaming surroundings offer learning capabilities for kids, where their psychological states can be contested and states of disequilibrium determined to keep knowledge attainment. Activity theory, as presented by Cole (1996) exemplifies the role of these symbolic gadgets as interceding tools for an individual’s structure of knowledge within the community.
Studying those results from the contact of a personality with their surroundings is also dependable with Dewey’s (1938) theories of gaming. Educational playing surroundings offer the space where the person’s purpose within them consequences in concrete skills that are basing on studying. These surroundings also support the individual’s succeeding likeness and repeated submission of the skills to make it tangible. The hypothesis of gaming based in the field of education maintenance the application of electronic gaming technologies by justifying the edifying assessment of gaming itself.
The junction of personal and social expansion with electronic gameplay is dependable with their depiction in classical theories of gaming. In order to converse the charge of electronic gameplay in relation to the classical theories, an introductory description of play that supports both must be identified. Some researchers define gaming as choice-based, where the action is unconcluded within the surroundings that are not grounded on veracity which is simultaneously rule-governed and doubtful. This description of play offers a context for making links with the classical hypothesis. Skills are expanded as electronic game surroundings encourage energetic, experience-centered commotion within the boundaries of the setting. The play-centered appointment in electronic gameplay is philosophical of John Dewey’s (1938) stance regarding the relations of knowing and doing, where gaming supports this communication and promotes the development of characteristics that are charged not only in schooling but also in the community
Throughout the year 2007, the Japanese financial system went on showing a pattern of recuperation despite apprehensions over crude oil price tendencies and rising interest charges. Strengthened capital ventures due to upgrading in commercial activities, as well as stabilized consumer expenditure ruled by developments in employment, helped to keep the Japanese financial system. Taking into account the foreign experience, it is necessary to mention, that, in the U.S., the financial system went on revealing stabilized performance kept by the preferred consumer expenditure and capital speculations although early notions of the financial holdback. As for the European economy, the business gaming environment revealed signs of moderate enhancement. In the video game sphere, the handheld market development overturned its long beg off, while the console market branch was advancing to the period of being revived with the start of the new game instruments by each hardware developer. In such circumstances, Nintendo incessantly performed its strategy to increase gaming to the groups and achieved great progression in cultivating the console gaming industry and implementing the innovative technologies into it. Until now, this strategy has been less applied in games, however, with the starting of the “Nintendo DS” project and its software arrangement known as “Touch! Generations”, Nintendo has productively expanded the description of video games in numerous software releases. Moreover, Nintendo’s new console, “ Wii ”, offers intuitive functioning and controlling technologies and unprecedented playing style with the application of the Wii remote, and is attracting enlarged audience demographics as well as unadventurous gamers following last year’s launch, and therefore is gaining prevalent reputation. The video game production sphere is now on a new expansion path with a strong presence in both “Nintendo DS” and “Wii”. In Japan, the general game market is increasing.
Financial Accounting
Merged net sales for the year 2007 upshot in 9,3 billion USD, entailing overseas sales of 6,1 billion US Dollars, which resulted in 66.5% of total deals. Profits before income taxes and unexpected expenditures were 2,8 billion USD. Net income was 1,6 billion USD. Taking into account the sales by business sphere within the electronic activity inventions separation, “ Nintendo Wii” sold a total of more than 2,3 million units worldwide since its release, showing the increased rate of sales, outlining from incessant robust sales of Nintendo Wii after its release in Japan and strong vends following its June discharge in foreign sales. Additionally, Nintendo software also experienced an increase in deals and vends. For example, “New Super Mario Bros”, the side-scrolling action game with simple admission and user-welcoming functioning and control, sold 9.5 million items on in the whole world, and ” Brain Age: Train Your Brain in Minutes a Day!”, which was presented abroad after achieving reputation in Japan, has developed a new video game market of brain training overseas. “Brain Age” has sold a total of 8.08 million units in the whole world comprising its development version presented in Japan (12 million items life-to-date). “Nintendogs” went on enjoying sympathetic vends abroad, attaining a total of 6.95 million sales items (13.6 million items life-to-date). “Pokémon Diamond and Pearl”, the newest series of “Pokémon” launched last September in Japan, sold 5.21 million items and has yet to be presented abroad. Consequently, the significant number of innovative software titles and long-term vending titles has augmented, providing an essential increase in handheld software vends. As for the console business, “Wii” hardware got off to a constructive start with sales of 5.84 million items within the original five months after launch. “Wii” software, such as “The Legend of Zelda: Twilight Princess”, which permits the player to sense the virtual world come animated by hand ruling the Wii remote as swords or bows and arrows, and “Wii Sports”, which consists of five various games simulating real-life sports sold tremendously well. Consequently, net sales in the electronic amusement inventions distribution were 9,7 billion USD, while trades in the other production division were 200 thousand US Dollars.
Taking into account the results by geographic section, vends in Japan were nearly 9.1 billion USD comprising inter-section trades of 5,5 billion USD. Operating profit was 2,2 billion USD. Sales in the American continents totaled 3,4 billion USD, comprising intersegment vends of 220 thousand USD. Operating profit accounted for 1,3 billion USD. European sales were 2,6 billion USD. The total income resulted in 1,7 billion USD.
Nintendo will go on chasing the development of the gaming populace, with a different software schedule, and through the increase of the classification of video games. Nintendo will offer a variety of new amusement that takes ground in our everyday lives, as has previously been attained with the “Touch! Generations” software sequence. As for “Nintendo DS”, by positioning it as “a appliance that augments the owner’s daily lives”, Nintendo aims to speed up the recent sales thrust of “Nintendo Wii” from “must-have for every family” to “must-have for everyone”. Nintendo also has positioned “Wii” as “a device that puts smiles on the people’s faces”. In particular, Nintendo will not just supplement the appropriate package software array for “Wii” but will further strengthen Wii’s “Channel” notion which previously entails the abilities for the “Wii” possessors to create their sketches, inspect weather forecasts, news, and surf the web. “Wii” will inspirit communication among family members as each of them is now able to sense something applicable to them and be stimulated to turn on the power every day in order to get amused with the “new life with ‘Wii’”. With regard to combined performance estimates for the year 2008, with some reasonable expectations of “Wii”, which donates to operating presentation for the full-year, and additional increase of “Nintendo DS”, net vends are planned to get 1,140 billion yen, operating profits 2,7 billion USD, income before profits taxes and unexpected items 2,9 billion USD, net income 1,8 billion USD. The exchange rates used for the forecast are 115 yen per U.S. dollar and 150 yen per Euro. Foreign exchange defeat of just about 20 billion yen is approximated as the exchange rates for the predict are set at a yen-valued level as contrasted with the swap rates as of the end of March 2008.
Cash Flow Index Trend
Cash flows from operating activities: Net cash from operating actions increased by 2,7 billion USD mainly due to augments in income before income taxes and minority attention and notes and trade explanations billed.
Cash runs from investing activities: Net cash from investing activities lessened by 1,7 billion USD centrally outlining from the reduction in time dumps exceeding the augment.
Cash flows from financing activities: Net cash from financing activities diminished by 0,5 billion USD mainly due to reimbursements for cash payments.
As of March 31, 2003
As of March 31, 2004
As of March 31, 2005
As of March 31, 2006
As of March 31, 2007
Capital adequacy ratio
82.0 %
88.1%
81.4%
83.9%
69.9%
Capital adequacy ratio at market value
118.8
139.1
134.4
194.0
278.0
It is the Company’s key policy to inside provide the capital essential to fund future increases, including capital Speculations, and to keep a strong and gooey financial location in preparation for modifications in the business situation and intensified opposition. As for direct profit revisits to our investors, dividends are paid on the basis of profit levels attained in each fiscal period.
The annual payment per share will be stated at the superior of the amount calculated by dividing 33% of combined operating profit by the total numeral of outstanding dividends, excluding reserves stock, as of the end of the fiscal year rounded up to the 10 yen digit, and the total calculated grounded on the 50% consolidated net income standard encircled up to the 10 yen digit.
Consequently, the bonus for the fiscal year 2007 has been instituted at 690 yen (interim: 70 yen, yearend: 620 yen) and dividend for the fiscal year 2008 will be 700 yen (interim: 140 yen, year-end: 560 yen) if earnings are in line with the financial forecast herein.
Preserved earnings are preserved for efficient use in the investigation of new machinery and the progress of new creations, capital speculations and securing textiles, enhancement of selling power including announcement, and common stock exchange whenever deemed suitable.
Works cited
Cocheo, Steve. “Can Community Banks Win over the “Nintendo Generation” While Still Appealing to Their Grandparents?.” ABA Banking Journal 92.9 (2000): 66.
Dipietro, Meredith, Richard E. Ferdig, Jeff Boyer, and Erik W. Black. “Towards a Framework for Understanding Electronic Educational Gaming.” Journal of Educational Multimedia and Hypermedia 16.3 (2007): 225.
Guilloud, Sam. “Video Games: Video-Game Virgin Alert! Never Played Video Games before? Two New Electronic Hotties Will Be Battling It out for Your Attention This Holiday Season. So Dust off the Top of Your TV and Make Room for Sony’s PS3 and the Nintendo Wii.” The Advocate 21 Nov. 2006: 50.
“Let the Gaming Begin.” USA Today (Society for the Advancement of Education) Nov. 2007: 80.
Blue ocean strategy proposes great opportunities for organizations to tract new target markets and attracts wider target audiences. An opportunity involves feasible change, in a favorable direction, to reach a desired future state. Feasible refers to technical and economic factors, whereas desirable involves more subjective preferences. Nintendo Wii is a home video game console. Nintendo developed this product in order to attract new customers and appeal with new value proposition. In contrast to similar products manufactured by other companies, Wii has a wireless controller (Blue Ocean Strategy 2007). Also, this product can be used as a printing device and can detect physical movements. Nintendo followed a blue ocean strategy creating a new industry for its [products. The approach selected by Nintendo can be characterized as: ”the set of managerial actions and decisions involved in making a major market-creating business offering” (Kim and Mauborgne, 2007).
Main body
The case of Nintendo Wii shows that opportunity is clearly a relativistic concept: what is desirable or feasible for one person or company may not be desirable or feasible for other persons or companies. First of all, from a marketing and entrepreneurship perspective, the blue ocean strategy must be defined as having sustainable profit potential, beyond pure windfall profits, and “one-shot” deals. Second, the blue ocean strategy must be defined as a market position, that is, a field of activity in which a company is competitive beyond the short run, and able to reap a profit. A market position can be viewed both from its value context and from the perspective of competition. The marketing problem is to find the shortest way from natural resources to finished products, that is, the optimal combination of sorts and transformations. The transvection is a useful concept in this respect, because it encompasses what is needed in the total marketing process disregarding ownership factors (Nintendo Wii. Home Page, 2008). Often exogenous technological progress or changes in market structures create opportunities that can be exploited through entrepreneurial behavior. For Nintendo Wii “strategy is essentially a choice between differentiation and low cost. But when it comes to creating blue oceans, the evidence shows that successful companies pursue differentiation and low cost simultaneously. To see how this is done, let us go back to Cirque” (Kim and Mauborgne, 2007).
The video game console industry is a dynamic one influenced by rapid technological developments and changes. Processors, memory, storage and video play a determining role in product price and market image. This basic technological change (beyond the firm’s control) was very important in making opportunities available. Similarly, this firm now believes that the internal market will change the structure of many markets, resulting in opportunities for entrepreneurial firms. Everyone in the firm has been placed on an alert to possible openings for the firm’s capabilities to exploit. The importance of environmental change in making opportunities available has also been noted by other researchers. The availability of opportunities depend on the level of activity, and as activity expands opportunities proliferate (Blue Ocean Strategy, 2007). The presence of profound technological or market knowledge is in many cases a prerequisite for the ability to identify specific opportunities. The abovementioned manufacturer of video game console already had a strong market presence in technological systems when the opportunity to enter the business was identified. The knowledge accumulated through the other two businesses was an important factor behind the identification of the video game business (Nintendo Wii. Home Page, 2008).
One of the direct competitors which follow a red ocean strategy is the Xbox 360. This company does not create a new market for its products but follows the same product design and market strategy developed by PlayStation. Apparently, the resource requirements in a start-up phase can be limited by using external resources in this way. The ability to use external resources also tends to expand the opportunity space by making more opportunities feasible. Personal networks often play an important role in making external resources available. In contrast to the Xbox 360, Nintendo Wii creates a new market and new niche for its product. Xbox 360 has lower profit potential than Nintendo Wii. In its turn, Nintendo Wii’s profit potential leads to a potential for more successful ventures. These same barriers to entry take on another role when considering the initiation of a new venture in an existing market. It takes time, money, and energy, or a novel idea or concept, to surmount high barriers without a large expenditure of funds. A final consideration under the category of competitive dynamics is the product line growth path for the venture (Blue Ocean Strategy, 2007).
Conclusion
In sum, the blue ocean strategy follows by Nintendo Wii allows the company to sell more products than the Xbox 360. and PlayStation 3. This strategy allows the company to become a market leader and occupy a new market niche in video game console market. The importance of strategic thinking can lead one to expect that strategic planning is found to be extremely important in the opportunity identification process. The blue ocean behavior in itself will not be enough, that is, behaving entrepreneurially in the way we have described is not a universal formula for identifying opportunities. It is only when an environmental change is combined with the presence of profound knowledge, entrepreneurial behavior, and strategic thinking, that opportunities become identified.
Nintendo is an arcade and console game manufacturer which has launched five successive gaming consoles which fall under the category of Wii. There exist many different gaming consoles which are popular amongst the consumers, like Microsoft’s Xbox 360 and Sony’s play station. However, the target market of the Wii is much more diverse and broad as compared to other gaming consoles as it targets the young as well as the older generation of gamers in the market.
The Target Market
As mentioned earlier the target market for Nintendo Wii is very broad and diverse as compared to the other consoles like Xbox 360 and Play Station which have the target market of 10-35-year-olds. “Aiming to entice a demographic of five to 95-year-olds, the latest console from Nintendo encourages multi-player interaction by bringing features such as a bowling alley, a golf course and a tennis court into the living room. Among its target audience are non-gamers and hardcore gamers.” (Bond, 2007) The Nintendo Company has actively pursued marketing activities to target cruise ship vacationers, mothers as well as grandparents, and families as a whole to promote its product as a console gaming item that can be utilized by the whole family. Adding on a new twist to it the company has also added a virtual gaming option on the console which allows the consumers of Wii to play active sports games like bowling, tennis, golf as well as other sport-based hyper-realistic games These games provide the customers of Wii with an active cardiovascular workout which enables them to shed weight. This is a strategic SPU of the product which is significantly different from the characteristics of other gaming consoles in the market which tend to promote problems about obesity amongst the users as well as high blood cholesterol and fat content due to inactivity.
Nintendo’s Marketing of Wii: Online
Nintendo has been using very diverse online marketing strategies to attract the market and promote Wii to its target market. The company has allotted a substantial portion, which amounts to about $10 million, of its marketing budget to online marketing. The strategies employed by the company for the promotion of Wii include using standard online marketing tools such as advertisements on the net, banners, and drop-down ads in the popular search engine-based mailing systems as well advertising on online communities and forums. The above-mentioned online marketing strategies which were highlighted come into the push marketing strategies. The pull strategies that are being used by the company about investment in a MySpace page for Wii where it encourages Wii fans to submit content online which is published by the company on the MySpace page. Moreover, the page also provides information about Nintendo’s product of Wii while providing teasers about upcoming launches. Aside from this, the company has also established a website for providing its customers with free content and downloads of sample and trail games to promote its console.
Another innovative strategy that is being employed by the company to attract the target market for Wii is divulging new mediums of promotion and communication. The company has invested significantly in an online gaming show which is aired on xleague.com. The how is named ‘The Casual Gamers’ and was launched in August 2007. The show depicts competitions and contests between families on a series of Nintendo Wii console-based games.
Nintendo’s Marketing of Wii: Print
The company simultaneously is marketing Wii though, above the line advertising, word of mouth, PR events, brand building as well as activity-based programs. The print advertising that is being utilized by the company.
The print-based marketing campaign which is launched by Nintendo for includes posters, magazine ads as well as a periodic newsletter for the current customers of Wii. “The hands-on experiences of thousands of consumers, along with tie-ins with brands including 7-Eleven, Pringles and Comedy Central, were complemented by a clever TV and print campaign from Leo Burnett USA, Chicago, that featured two Japanese gentlemen traveling across America in a Smart car, ringing doorbells and politely inviting us all to join them with the signature phrase, “Wii would like to play.” Publicis Groupe sibling Starcom handled media buying.” (Bulik, 2007) Additionally, the company has also invested in a Nintendo Wii Like Magazine which it devotes to the Wii products and provides an avenue for Wii fans, enthusiasts, and gamers to collect information and updates about Wii as well as contribute their knowledge by providing this content insertions and feedback. Information about the different Wii-based games and an upgrade is provided through this magazine to the target market along with news of Nintendo Wii-based events in different localities. This is an interactive strategy based on magazine advertising that helps in retaining current customers for Wii while establishing new ones as well through word-of-mouth association and promotions.
References
(2007), News brief: Nintendo to launch first TV program online, Marketing, p35-35, 1p, Web.
Bulik, B.S., (2007), Nintendo Is Ad Age’s Marketer of The Year, Advertising Age, Vol. 78 Issue 41, p1-48, 4p, Web.
Bond, C., (2007), The Nintendo Wii, Event, p19-19, 1p, Web.
The success of the Wii was as a result of the strategies established by Nintendo. Therefore, the company was not lucky to win the market. The company conducted a lot of research before introducing the product. For instance, the company consulted the potential customers about their needs. This information helped the company with developed consumer oriented products. The company has developed strategies to manufacture the Wii product at a reduced cost.
This strategy has improved the pricing strategy of the company. The Wii has a price of $250 while the PS3 has a price of $599. Nintendo has managed to offer low prices because it has established efficient production strategies. The consumers are ready to buy the Wii at a lower price because it has unique features and has high quality.
Question 2
The fad question has been answered because the Wii product is there to stay. The company has adopted the strategy of improving the Wii to capture the demand of many customers. Nintendo has operated in the market for a longer time than any other company in the industry. Therefore, the company has adequate experience to maintain the demand of the product for a long time. Nintendo produces the Wii product in large volumes, and this strategy has improved the efficiency of the company. Therefore, the company can sell the product at a low price. In addition, the company has started to differentiate the Wii product. For example, the Wii Fit was introduced to serve he needs of women.
Question 3
The Wii product is at the maturity stage of the product life cycle. This is because he costs of producing the product have declined as a result of mass production. The sales of the company have increased tremendously. The customers are aware about the product in the market. New players have entered the market, and competition is stiff. Price decline has been experienced because competition has increased. Nintendo has differentiated its products to attract many customers. For instance, the company has introduced the Wii Fit, to capture the demand of women.
Nintendo is employing a good marketing mix strategy because the products of the company have superior quality and are offered at a fair price. In addition, the products are located in strategic marketplaces because the company has developed online stores to sell the products. The company also conducts intensive promotion approach to ensure that the consumers get information about the products of the company.
Question 4
Nintendo should develop a cost-based pricing strategy because the next stage of the Wii is decline phase. It is expected that the sales of the Wii will decline, and the cost of production will increase. The distribution efficiency will also decline, and the company will experience losses if the same price is maintained. Therefore, there is a need to differentiate the product. This can be achieved by adding new product features, and increasing the prices of the Wii.differentiating the product will improve its market position because the renewed brand will capture the demand of new customers.
In addition, the company should focus on selling the product to a niche market. The niche market should consist of the people who might not have experienced the Wii product. This strategy will help the company to sell the Wii product at a higher price because a niche market is unique. Therefore, niche pricing strategy should be applied once the company identifies a niche in the global market.
Question 5
Nintendo is experiencing the threat of price wars in the market. Even though the competitors in the market sell their products at higher prices, there is a threat that the prices of similar products might decline. The price of the Wii is $250 while the price of the PS3 is $599. As competition increases, other companies will identify efficient processes of manufacturing, and they will cut the production costs. This will help reduce the price of the products. This scenario will force Nintendo to further reduce the price of the Wii.
