Case Analysis for SONY VAIO target consumers in China

KULDIP MEDHE
NORTHEND
CORE ISSUE
Which segments of population should Mr. Richard Lopez, the product
manager for Sony corporation target for positioning of its new brand of laptops
VAIO in the Chinese market.
CONCERNS AND OBJECTIVE
Mr. Lopez had too much data to analyze and draft his marketing plan. He was
working on three market research reports, a study on consumer values,
qualitative interview data, a segmentation study completed recently and a new
corporate study that segmented consumers at a global level. The Objective
for Mr. Lopez was to draft out a marketing plan based on these studies
individually or in combination to launch VAIO in China.
SONY HISTORY & BACKGROUND
[1]It

was in 1946 that Masaru Ibuka and Akio Morita together with a small team
of passionate and committed group of employees started to build Tokyo
Tsushin Kenkyujo (Totsuko), or Tokyo Telecommunications Research Institute
to the billion dollar global conglomerate that it is today. The main objective of
the company was to design and create innovative products, which would
benefit the people. The name "Sony" was chosen for the brand as a mix of
two words. One was the Latin word "Sonus, which is the root of sonic and
sound, and the other was "Sonny a familiar term used in 1950s America to
call a boy.
At the time of the change, it was extremely unusual for a Japanese company
to use Roman letters to spell its name instead of writing it in kanji. The move
was not without opposition: TTK's principal bank at the time, Mitsui, had
strong feelings about the name. They pushed for a name such as Sony
Electronic Industries, or Sony Teletech. Akio Morita was firm, however, as he
did not want the company name tied to any particular industry. Eventually,
both Ibuka and Mitsui Bank's chairman gave their approval. The first Sonybranded product, the TR-55 transistor radio, appeared in 1955 but the
company name did not change to Sony until January 1958 .[1] sony.com
THE GLOBAL IMAGE OF SONY
Although Sony made computers in the 1980s exclusively for the Japanese
market, the company withdrew from the computer business around the
beginning of the 1990s. Sony's re-entry into the global computer market,
under the new Vaio brand, began in 1996 with the PCV series of desktops the
PCV-90 was designed with a 3D graphical interface as a novelty for new
users. [2] Wikipedia, Sony

The first generation of Vaio laptop computers was released in 1997 and the
US$2,000 PCG-505 model was designed to be Super Slim, and was housed
in a four-panel magnesium body. The 505 were designed to be visibly
distinguishable from every other brand and model on the market, and was
therefore positioned as the statement computer. The most iconic was the
purple color out of the range of new colors other than the conventional grey
and black present in the market those days. The 505 were particularly
popular with the image conscious business people who cared about what their
computer said about them. As a result the VAIO brand established strong
associations with attributes of style and design, a brand image that Sony
continued to foster in subsequent years by emphasizing design clues and
reducing laptop weight and size.
HOW DO CHINESE CONSUMERS SEE SONY
The new laptop brand, VAIO was considered to be a powerful statement by
Sony. Vaio represents innovation, style, premium quality and Avant-garde
trends. Sonys revolutionary, customizable laptops were created to revive
Sonys market aspirations. Vaio computers were loaded with multimedia
software that a lot of other computers didnt have. They positioned VIAO as a
breakthrough computer. They also gave people a sense of style and
belonging. The Chinese consumers see Vaio as a premium product for which
they are willing to pay extra, even though pirated copycat products are
available for a cheaper price.
SEGMENTATION DATA ANALYSIS
Let us try to analyze the data that Mr. Lopez had with him and help him select
the best data for drafting out a marketing plan for VAIO in China.
1) The Shanghai report: In early 2010, with the help of a external market
research firm, Sony conducted research in shanghai to gain a deeper
understanding of the modern Chinese Consumers, who represented citizens
of the bullet train economy, their consumption behavior and usage habits,
including for laptop computers such as VAIO. Following were the significant
findings out of this data.
Exhibit1: demographic segmentation

40%
60%

OWNS A
LAPTOP
OWNS A
DESKTOP

Exhibit 3: sexes segmentation

exhibit2: incomes segmentation

23%

LOWER
INCOME
MIDDLE
INCOME

46%
31%

exhibit4: age wise segmentation

HIGHER
INCOME

57%

36%

43%

20%

22%
10%

MALE

FEMALE

9%

18-24 25-34
35-44 45-54
55-64

3%
65>

Exhibit5: market share of Sony vs. competition

%
6.1
5.9
5.3
10.8
3.9
4.3

23.7

18.9
20.3

12.3
9.7

2) Customer Interviews: A deeper understanding of Chinese laptop users.

To understand the laptop related perceptions and preferences in more detail,
Sony conducted interviews with 40 Chinese VAIO owners and 04 people who
owned a non-Sony laptop. As a result of these interviews, three key themes
were interpreted.
a) Brands are an extension of individual personalities.
b) Asking for a product advice was a way a buyer connected with the
product.
c) Basic users comprising of buyers who would buy a laptop to stay in
touch on e-mail, blogging, VOIP etc.
3) The CLUES report: This report provided Lopez with what were the key
similarities and differences among consumers in China, and what were the
different groups of consumers in china with different product preferences. How
big or small were these group and what were the market opportunities they
represented. A statistical analysis of the CLUES data yielded six Chinese
laptop user segments.
Heavy users
Entertainment lovers
Business focused
Family users
Tech enthusiasts
Fashion oriented

13%
18%
16%
22%
16%
15%

4) The COMPASS report: Project COMPASS was a massive worldwide

segmentation study that included data from more than 30000 respondents. It
represented a move to better align cross-divisional and cross regional groups
to customize marketing efforts. This report would help product managers build
a cross category cluster value by focusing on the same consumer target. The
analysis of the COMPASS yielded another six global consumer segments.
Techno socializers
Performance seekers
Status focused
Unfussy basics
Functional socializer
Quality of lifers

16%
17%
12%
24%
9%
22%

RESULTS OF THE ANALYSIS: THE BEST OPTION

Mr. Lopez should interpret the test results according to the goals the company
is trying to achieve. If Sony wants to control the Chinese market, and grow in
their market share significantly, they have to create a product that everyone
would need or be accepted by majority of the Chinese consumers.
Our suggestion would be that Mr. Lopez should use both the CLUES and
COMPASS studies in comparison to one another and use the best of both
these studies to draft a marketing plan for sale of Vaio in china.
However, these studies should not be taken as the only parameter for
preparing a plan. The Chinese market needs are completely different from
those of the rest of the world and therefor market segmentation by continent
and/or by country is a reasonable and logical approach.
Sony being a global firm as the expertise to create a homogenous product
that fulfills consumers needs and expectations, taking in to account the useful
marketing research studies that were conducted to come up with a strong
strategy to enter the markets of China.

TARGET SEGMENTS TO BE CONSIDERED FOR LAUNCH OF VAIO

After analyzing the studies what we have, we can suggest Mr. Lopez to draw
out his marketing plan based on the combination of the results of both the
studies, the outcome of which is given below. He should target the following
two segments for introducing VAIO in China.
1) FAMILY USERS- Laptops being a niche market for Sony, VIAO china
should target the family users with unfussy basics. This is the largest
segment combination of the CLUES and the COMPASS study.12% of
this segment rank Sony as their top brand.
Mr. Lopez should aim at marketing Vaio as a family laptop, as family
& cultural values are a significant feature in the Chinese cultures. We
also consider this segment, as these are users who are not interested
in what technology can offer and are contented with a stylish & a good
looking laptop. This segment comprises of mostly women who seek
stylish and colorful laptops who use laptops for staying in touch with
their family and friends.
The downside of this segment is that only 38% of people plan to
purchase a laptop in the next twelve months.
2) FASHION CONSCIOUS - Sony through their VIAO brand should
target fashion-oriented consumers, who look for stylish products and
image reflecting or an expression of individuals personality products.
92% of these consumers are planning to buy a laptop in the next 12
months.
The downside of this category however is that only 7% consider buying
a Sony as their preferred brand. Also it is difficult to compete with Apple
who is a style and design statement in the laptop industry.

MAJOR TAKEWAYS OF THE CASE AND METHODOLOGY USED

The various factors for segmentation that have been used in conducting the
research were demographic, Psychographic, Behavioral as well as benefit of
what consumers see in a product. The tools for segmentation like the market
size, addressable market, current market share and share of wallet all play a
vital role when we assess any data for coming up with a strategy for brand
positioning and drafting a marketing plan for the same.