ASSIGNMENT 2

Submission Date: 06/07/2015

Group Chapter: Chapter 9. Designing a Customer-Driven Strategy and Mix

Name
Avelashmene Ravi
Deva Kumaran Gengadharan
Kiretharan Ramachandran
Puvanan Eswaran
Nor Farzana Syaza Bt Jeffri
Wan Nor Suhaili Bt Wan Zahari
Course Code
Course Name
Lecturer name

ID
21240
18852
21210
18926
19246
19141

Course
ICT
ICT
ICT
ICT
ICT
ICT

: GDB 20433
: Principles of Marketing
: Dr. Zullina bt Hussain Shaari

1) Executive Summary
Nintendo launch Wii which is a home video game console competing with Microsofts Xbox 360
and Sony PlayStation 3. They have their own distinguishing feature which is the wireless
controller that can be used to detect movement in three dimensions. Their target and concept
was to develop the concept further which more focus on new form of player than focusing on
power. They targeted a wider demographic than its competitors. They were not focus only on
males but they focus on attracting woman, grandparents as well as rural folk. Nintendo keep on
updating by adding more application to Wii. Through 2008 till mid of 2009, Nintendo produce
significant profit with each Wii sold. After mid of 2009, Wii sales started to flatter and they
announced their first price cut.

2) Current Marketing Situation

Nintendo was the pioneers of home video games consoles in early 1980s but in mid-1990s Sony
entered with PlayStation and Microsoft entered with the Xbox. Review shows that the first Wii
system software update (via WiiConnect24) caused a small number of launch units to become
completely unusable. This forced users to either send their units to Nintendo for repairs (if they
wished to retain their saved data) or exchange them for free replacements. As of March 31,
2015, the Wii has sold 101.52 million consoles worldwide. Since its launch, monthly sales
numbers of the console have generally been higher than its competitors around the globe.
According to the NPD Group, the Wii sold more units in the United States than the Xbox 360 and
PlayStation 3 combined in the first half of 2007.This lead is even larger in the Japanese market,
where it currently leads in total sales (having outsold both consoles by factors of 2:1to 6:1 nearly
every week from its launch to November 2007).In Australia the Wii broke the record set by the
Xbox 360 and became the fastest-selling game console in Australian history.

2.1 Market Description

Nintendo Wiis market consist of consumers that prefer for entertainment. Specific segments
being targeted to young males, women, grandparents as well as families. The revolutionary
motion-sensing wireless technology forces the gamer to get up off the couch and get into the
game. It is reported that pensioners as old as 102 and Queen Elizabeth II were playing the
Nintendo Wii in the U.K. On Norwegian Cruise Line vessels. The wireless controller allow s
players of traditional sports such as tennis or bowling to play the games if they were on a court
or in an alley.
Segment Needs and Corresponding Benefits
Targeted Segment

Customer Needs

Families

Corresponding Benefits/Features

Entertainment hub

Activities for the family

Online resources

Advertising and
sponsorship trade with
family products.

Women

Shopping

Increase usability of women

Beauty apps and advise

Large marketing, branding and

Alliances with brands

communications campaign
targeted
at women, mostly focused on

social networks

Grandparents

Population ageing longer life

Retired people have a lot of time
and money

the Wii

Advertising of products and alliance

with pharmacy companies

Activities and services through

Use the abilities of the Wii for

this target

Develop health and exercise

capabilities

Students ,Parents &

Special services

Wii Education

School

Different channel

Alliance with government

Different positioning

New marketing
communications and PR
campaign

2.2 Product Review

The Wii U Gamepad is a new controller exclusively for Wii U, which removes the traditional
barriers between games, players and the TV by creating a second window into the videogame
world. These are the following features for Wii U Gamepad:

Approximately 1.8 inches high, 10.6 inches deep and 6.75 inches long.

Approximately 3.5 pounds (1.6 kg).

The new console features a compact design that will make it a natural addition to any home
entertainment setup.

IBM Power(R)-based multi-core microprocessor.

AMD Radeon-based High Definition GPU.

The Premium Pack console has 32GB of internal flash memory, and the Basic Pack console
has 8GB. (Click here for more details about Wii U storage). In addition to the internal flash
memory, external USB storage can be used to increase maximum storage capacity.

SD Memory Cards up to 2GB and SDHC Cards up to 32GB are supported.

Wii U and Wii optical discs.

Wii U can access the Internet via wireless (IEEE 802.11b/g/n) connection. The console
features four USB 2.0 connectors two in the front and two in the rear that support Wii
LAN Adapters (sold separately).

Nearly all Wii software and accessories can be used with Wii U.

Uses six-channel PCM linear output via HDMI port, or analogue output via the AV Multi Out
connector.

Supports 1080p, 1080i, 720p, 480p and 480i. Compatible cables include HDMI, Wii
Component Video, Wii RGB and Wii AV.

The Wii U console is capable of supporting two Wii U GamePad controllers, up to four Wii
Remote (or Wii Remote Plus) controllers or Wii U Pro Controllers, and Wii accessories such
as the Nunchuk, Classic Controller and Wii Balance Board.

On January 31, 2010 the Wii became the best-selling home video-game console produced by
Nintendo, with sales of over 67 million units (surpassing that of the original Nintendo
Entertainment System).On March 31, 2010, according to Nintendo the Wii had sold 70.93
million units worldwide (including 20.53 million units during the 20092010 fiscal year.
Nintendo reported that on Black Friday 2011 over 500,000 Wii consoles were sold, making it the
most successful Black Friday in company history. In September 30, 2013, the Wii has sold 100.30
million consoles worldwide. As of March 31, 2015, the Wii has sold 101.52 million consoles
worldwide.

2.3 Competitive Review

Key competitors for Nintendo Wii are Microsoft and Sony. They used to target the core video
gamer, now aiming at becoming a family center hub and trying to get Wiis consumer. This were
their attempt to compete with Nintendo Wii :
SONY

MICROSOFT

Launched Move and failed

Reboot sales with Kinect

Sales have been declining

Large sales growth

Good video game offer

Impact in final profit

Online services with problems and

Market leader in 2012

hacking

Complete online service package

Has a good brand positioning

with console

Wide range of games

Nintendo announced the successor to the Wii, Wii U, at the Electronic Entertainment Expo 2011.
The Wii U features a controller with an embedded touch screen and output 1080p high-

definition graphics; it is fully backward-compatible with Wii games and peripherals for the Wii.
The Wii remote, Nunchuk controller and balance board are compatible with Wii U games which
include support for them. The Wii U was released on November 18, 2012 in North America,
November 30, 2012 in Europe and Australia, and December 8, 2012 in Japan.

2.4 Channel and Logistics Review

Nintendo products is distributed through a network of retailers in the top markets.
The Distribution Process
o Parts are bought from various suppliers and constructed at the Nintendo factories in
Japan
o The product is distributed to branches in the United States and Europe
Inspected and correct packaging applied
o Distributed to retailers

Channel Intensity and Levels

o Three Channel Levels
Manufacturer Wholesaler Retailer Consumer
o Wholesalers:
Mega Goods, Super UFO, Ingram Entertainment, Light in the Box and BRE
Software
o Retailers:
Wal-Mart, Target, Best Buy, Game Stop, Toys-R-Us

SAMPLE OF COMPETITIVE PRODUCTS AND PRICING

COMPETITOR

MODEL

MICROSOFT

Xbox

FEATURES

733 MHz x86 Intel Celeron/Pentium III

US$299.99

Custom Hybrid CPU

GB299.99

233 MHz nVidia custom GeForce 3

479,99

NV2A DirectX 8.0 based GPU

PRICE

64 MB DDR SDRAM @ 200 MHz; in

dual-channel 128-bit configuration
giving 6400 MB/s

VGA, Component (YPbPr), SCART, SVideo, Composite

SONY

1080i, 720p, 576p, 576i, 480p, 480i

PlayStation

8-Core AMD "Jaguar"

38,980

Custom AMD Radeon

US$399

18 Compute Units (1152 shaders) @

399

800 MHz

349

3. Strengths, weakness, opportunities, threats

STRENGTHS

OPPORTUNITIES

Revolutionary motion-sensing wireless technology Wii targeted a wider demographic so its force the
once sedentary gamer to get up off the couch and get
into the game. More inviting controllers - They
speculated that the familiarity a of TV remote would
be more inviting than the more typical and complex
video game controllers that its competitors had. New
application (Wii Shop Channel, Wii Fit) - Wii adding a
new application that can scan weather, news, and
website through a wireless internet connection.

Only three big companies in the game console sector Nintendo has been a household name in the video
games industry for three decades and its was one of
the pioneers home video game. Mid 90s, Sony
entered with PlayStation and Microsoft introduced
Xbox 360.Entering new markets - In 2006, Nintendo
introduced its Wii a home video game console
competing with PlayStation and Xbox 360.First
successful company in the industries - Wii exceeded
the record set Xbox 360 to become the fastest-selling
game console in Australian history.
THREATS

WEAKNESSES
Cut-price strategy - Nintendo announced its first price
cut. In the U.S., the price was reduced by $50 to
$199.99. In Japan, the price dropped from 25,000 to
20,000.Ignoring hardcore gamers - In mid-2011,
Nintendo revealed the next generation Wii U dispel
notions that its system is not up to par for "hardcore"
video-game players. Easy games - It allows players of
traditional sports such as tennis or bowling to play the
game as if they were on a court.

More advanced technology in the industry - Nintendo

stay away from a touch-panel concept that was
adopted by its DS gaming system so that both system
would not be identical. It happen some technical
glitches. High competitive market - The product was
losing its novelty and that heavy discounts from
competitors were eating into Wii's share.

4 Objective and Issues

Producing companies best products and support services available. Strongly commit to
provide products and marketing the best products to support service available. Believe
that essential not only provide products of the highest quality, but to treat every
customer with attention, consideration and respect. Listening closely to customers and
constantly improve products and services. Fell an equal commitment towards
employees. Wants to remain an atmosphere in which talented individuals can work
together as a team. Commitment and enthusiasm are crucial to the high quality of the
products and support services.

4.1 Issues

Does not have a third party title

No frequent release
Does not embrace the current reality technology
No launching

4.2 Marketing Strategy

Advertisement
Social Media
Roadshows
Launching
Promotions

4.3 Positioning

Nintendo first identified possible competitive advantages like price, exclusive features,
gaming style and social attributes. Then the organization select the right competitive
advantage which is FAMILY. It will relate all possible competitive advantages to the
family. It also Emphasize the Wii as a family product that is inexpensive, has more
family-oriented games and is easy for anyone to use. Lastly Nintendo communicate and
deliver chosen position with new slogan which is Wii produce the action, YOU produce
the fun!

4.4 Product Strategy

Shopping Product as in purchases for hardware, games and accessories are bought on a
casual yet infrequent basis. It also makes sure that the product reaches the maturity
stage in product life cycle. A new direction is formed by having more apps available on
the Wii. It also build co-branding relationship with Facebook, Twitter, YouTube, Tumblr,
Flick, Skype, Pandora and more which means large scale of promoting is been done
through social media.

4.5 Pricing Strategy

First of all it uses competition-Based Pricing price lower than Microsofts X-box 360 and
Sonys PS3. They keep it affordable for families .Their variety of tastes will encourage
the purchases of the many accessories Wii offers. They also implement bundle product
pricing like family bundle ( includes hardware, 4 controllers, the latest Mario Party game
and Sports), Fitness Bundle (includes hardware , 2 controllers, Wii Fit, Wii Fit Balance
Board and Wii Sports, Part Pack (includes hardware, 2 controllers, Mario Kart, Mario
Party and Dance Dance Revolution.

4.6 Distribution Strategy

The distribution process is been done where by parts are bought from various suppliers
and constructed at the Nintendo factories in Japan and the product is distributed to
branches in United States and Europe. Inspection and correct packing is applied. It uses
3 channel Levels which are manufacturer, wholesaler, retailer before it reaches the
customer. Their wholesalers are Mega Goods, Super UFO, Ingram Entertainment, Light
in the Box and BRE Software. On the other hand their retailers are Wal-Mart, Target,
Best Buy, and Game Stop, Toys-R-Us.

4.7 Marketing Communication

Integrated Marketing Communication is the approach to obtaining the objectives of a

marketing campaign through the use of different promotional methods that are
intentionally designed to support each other. It is also used when companies are trying
to attract new customers and retain them in the future. The stronger the brand value of
a company is the easier it will be for the company to retain customers. Nintendo worked
with advertising agency Leo Burnett for over seven years but in 2007 they decided to
break away from them. This resulted in a bidding war between advertising firms to
establish who would work with Nintendo. The marketing firm Karmarma outbid three
other firms with a bid of $13 million to become the current advertising agency for
Nintendo. Going out of their way to let people know they care about everyone, not just
their target market has allowed Nintendo to build up good relationships with all they
encounter.

Nintendo use the following ways to advertise their brand:

Internet
Having a market that is influenced greatly by technology and innovation,
Nintendo decided to put a big percentage into internet marketing. Placing ads
on popular websites such as YouTube, Google and Facebook will help to reach

the target market in a larger way. Also giving the consumer an opportunity to
purchase products online allows them to purchase at their own leisure.
Nintendo have set up contracts with some of the top gaming websites which
include gamestop.com, ign.com and cheatcodecentral.com. Exposure through
these leading websites will give Nintendo instant exposure and the ability to
reach the target audience quicker.

Interactive/Direct Mail
Direct and Interactive media is another way Nintendo can target a segment and
keep them interested. Demo booths set up in stores such as Gamestop will give
Nintendo give the market the ability to try out games before they buy them.
This gives them familiarity with products and decreases the chance of a
customer returning a game that they do not like. Interactive kiosk in shopping
shopping centers will also allow customers to get an idea of what the product is
about. Billboards promoting our Nintendo will generate a buzz and interest that
will have consumers talking and interested to see what the company has to
offer.

Television
Like any company, television is an important method to use for integrated
marketing program. A strong advertising message will be a strong component to
building solid ground within the market. Placement of commercials on stations
such as Cartoon network, MTV and ESPN will target a good part of Nintendos
target market. In saying this Nintendo will also broadcast advertisements on
channels that will target all types of consumers. The great thing about what
Nintendo are doing is that they feel gaming is for everyone to enjoy. To get that
information out to everyone Nintendo need to have an integrated marketing
communications approach that exceeds those that they have put out in the
past.

Magazine
Magazine is a media link that is not used enough by companies. Nintendo want
to hit the magazine market in a way that will brings positive feedback and

customers desiring Nintendo products. Bleed pages is a strategy that Nintendo

want to incorporate to grab the readers attention. Nintendo have set up
different structural measures with two of the most popular gaming magazines:
Game-pro and Game-informer. When reaching out to the older market or less
known markets, Nintendos strategy will concentrate more on the ability to
enjoy games at a certain age than the actual game they are playing.

Promotions
Nintendos promotion objective has less money thrown into it, but seems to
bring about the most interest. Coupons in magazines and kiosks placed in
shopping centers will have opportunities to get discounted items and other
bonus options. Combining the products in with different discounts of purchases
keeps customers happy that they get a help with pricing, but also keeps them
purchasing within the company. Such promotions as purchasing a Nintendo
game, you could get up to ten percent off your next video game.

4.8 Strategy

Blue Ocean Strategy

Swinging The Power
The What
Get their customers to think of themselves as vested in their interest. Ordinary
individuals can take control over their financial decisions.
The How
Nintendo Crowdsourcing which is vote up or down various elements of
upcoming games. Make suggestions directly to the on top of screenshots of
preview builds released by developers. The best ideas are fast-tracked to the
developer and either end up in the game or as an add-on. Users are able to
proudly display what they have contributed to Nintendo and are awarded by
being a beta tester for example.
The Why
Transparency is the key concept here. Customers want to have their say and feel
reciprocated, especially on an individual basis. Customers can take control of
their financial destiny by being couch-side developers. The basic architecture for
this is already in place. Using Nintendos Miiverse platform, players can upload
hand drawn sketches on the tablet. Comments are also heavily moderated for
the family-friendly factor. A likes system is already in place for generic posts
about games.

4.9 Marketing Research

It does research by having questionnaire with the customers in comparing sony or other
competitor. It targets the customer with the results of the research thus Nintendo is the
only game company that target ladies.

4.10 Marketing Organization

Genyo Takeda (Representative Director,IRD General Manager)

Shigeru Miyamoto ( Representative Director, EAD General Manager)
Reggie Fils-Aime (NOA President)
Satoru Shibata (NOE President)

4.11 Action Programs

4.12 Budgets

Total projected revenue for 2011: $2,178,770,000

The Tii Vii is estimated to generate $107.22 million in net income before income tax.
Break-Even: 6,420,789 units, $1,129,994,656 The Tii Vii will break even within the first
year. This is based on sales of 12.38 million units, which is 20% of target market
segments.

4.13 Controls

Nintendo will consistently review the success of the Tii Vii marketing campaign and work
to maximize efficiency and continually improve processes. Nintendo will measure
success via the following factors:
Annual plan:
Sales Revenue
Market Share
Profitability:
Contribution Margin
Net Profit Margin
Productivity:
Promotion Redemption Rate
Percentage of Shipments delayed or damaged
Production Levels meeting Consumer Demand
Strategic:
Customer perception of brand image - annually
Awareness of social responsibility campaigns annually
Marketing audit annually