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SONY AIBO
PPBM
Section A

Group 4

Camille Le Bian
Dhruv Bhatia
Niranjana Narayanan
Saswath Suresh
Srinithi S
Sundeep Allamraju
Umakanta Sahu

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Introduction of the AIBO

1999
2000

Introduced the Sony AIBO ERS -110

5000 initial AIBOs sold out
30000 additional AIBOs sold in Feb 2000, demand mainly in
Japan
Priced at $2500

November 2000, second generation AIBO (ERS 210)

Sold 50000 units worldwide, with major demand from Japan

The markets did not know how to categorize the product

While there was a hard core AIBO owner base in America, a
large chunk still do not understand the need for the product
Need to build a bigger customer base

First Generation AIBO

Independen
t manner

Remote
control for
commands,
but had its
own
personality
embedded
on an 8MB
memory
stick

Showed
emotion
through
musical
tones, eye
color and
body
language

AI software
made AIBO
learn about
its owner,
recognizing
rewarding
vs.
punishing
pats

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Consumer Reaction

Hit with Japanese market Lived in small apartments

where real pets were not allowed

Consumer AIBO communities were formed, such as AIBO

enthusiast website, birthday parties etc.

AIBO Town magazine a cross between a parenting and

technology manual

Popular among elderly population

appreciation from senior citizens

Robots as heroes in Japan, hence highly popular in Japan

Americans highly skeptical about robots distrustful of

the AIBO

letters

of

AIBO 2

nd

Generation

Lowered price to $1500

Voice recognition
Greater variety of emotions
More realistic movements
Personality modules (with varied functions)
Sold 50000 units
Created a new division Sony Entertainment Robot
Company

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Increased Applications
Development

of
Wireless
communicate with PC

AIBO messenger software

AIBO Navigator Software

AIBO Master Studio

Unveiled

system

to

entertainment architecture

Open R architecture
Planned to allow third party developers to create
applications for the AIBO
Ultimately, AIBO owners would be able to customize
the AIBO

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Americas Reaction

American adopters were just as passionate as

Japanese counterparts

Most

consumers however did not understand

the need

Introduction of cheap knock offs flooded the US toy

market

Customer base: Children below age of 12

Competitors

were working on developing robots,

but based on utility such as household chores
etc.

Hondas ASIMO

Matsushita, Toyota, Hitachi

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Problems

American Consumer market: Educating US market about

AIBO

Ability to sell it to the mainstream market

Positioning AIBO as a companion/pet OR a functional product

Potential threat from major technology companies & cheap

knock offs

Choice between way of promotional activities

Mass
advertising

Optimize
d
Strategy?

Publicity &
subsequent
WoM

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Challenges with the AIBO
innovation in US market
Characteristics
Relative Advantage

Compatibility

Challenge for AIBO

Often considered as an evil, fighting against mankind

Dangerous & Threatening

Uncomfortable with the idea of loving something which is not

alive
WHAT DOES IT DO?

Expensive product due to huge R&D investments

Cant be tried in phases

Low observability due to the fact that the product is mostly

used indoor & less prone to get noticed unless there is a party
or something
Relatively less penetration in US currently

Complexity

Trail-ability

As a functional ROBOT, AIBO lacks relative advantage

As a companion ROBOT, it has an advantage (Only advanced
product in the industry)

Observability

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Alternatives

Dont Enter American Market

Enter As functional ROBOT

Enter As an Entertainment ROBOT/

Companion

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Criteria
Sonys

overall strategy & competencies

Potential

of the market (Buyers

prospective)

Competition
Profitability

in the market

of the business: Short term

& Long Term

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Evaluation: Alternative 1
Dont Enter American Market
Criterion

Decision

REJECT

Rationale

Sonys Overall Strategy &

competencies

Wanted to put entertainment

ROBOTs worldwide

Potential of the market

(Buyers prospective)

There is a huge market base

Competition in the market

Profitability
Short Term & Long Term

NOT Applicable
Without tapping the market,
we lose the potential market
share and increase in bottom
line

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Evaluation: Alternative 2
Enter As functional ROBOT
Criterion

Decision

REJECT

Rationale

Sonys Overall Strategy &

competencies

Wanted AIBO to be a part of

the family as a companion/
pet

Potential of the market

(Buyers prospective)

Main
stream
America
wanted robots to assist in
serious household tasks

Competition in the market

Profitability
Short Term & Long Term

Already
established
Names in the market

big

Short Term: Good, as the

product
matches
what
consumers want
Long
Term:
AIBO
not
designed to be functional
product;
to
add
new
functionality, Huge cost &
time requirement

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Evaluation: Alternative 3
Enter As an Entertainment ROBOT
or Companion
Criterion

Decision

ACCEPT

Rationale

Sonys Overall Strategy &

competencies

Want to see AIBO playing with the

kids or family in every living room

Potential of the market

(Buyers prospective)

Effort required to change consumer

perception
is
high;
however
potential for ROBOT market is high
(Unique Product)

Competition in the
market

Unique high end product; but

competition from Cheap knock-offs

Profitability
Short Term & Long Term

Short Term: Medium, as we have to

change consumer perception and it
requires time & marketing effort
Long Term: Good, as we have the
required competencies & are the
pioneer of this market

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Marketing Mix

Price
Product
Keep the product as the same

1. Price it at $1500- $1600

2. Skim the price to $1000$1100 prior to launch of later
models

Promotion
Place
1. Launch in electronic retail
chains where people can
observe and experience the
emotional attachment
2. Retain online format as well

1. Through publicity and

subsequent word of mouth: Help
in forming and changing attitude
Interpersonal Channel
2. AIBO events like a pet show

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Promotional Mix
Advertisements
in Print Media,
TVCs
E-mail
Campaign to
Leads from Early
Adopters

Brochures &
Materials in
Online Stores

Ads in Movie
Halls, Shopping
Malls

AIBO Events

AIBO Web Sites,

Bulletin boards

WOM - Approach
Opinion Leaders

Thank you