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Marketing Analysis of Sony's Success in Gaming Market

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Introduction

In 1946, Tokyo Tsushin Kogyo K.K. Tokyo Telecommunications Engineering Corporation, the predecessor of Sony started as a small company with capital of just 190,000 yen and approximately 20 employees (Sony, 2018). In 1958, the company name change to Sony Corporation. SONY Corporation is a Japan multinational conglomerate corporation and the world largest media conglomerate. The Sony Corporation headquartered in Konan, Minato, Tokyo. The founder of Sony is the Masaru Ibuka and Akio Morita on 7th May 1964. By 2018, the total number of SONY corporation employees is about 117,300. Its principal business operations include Sony Corporation, Sony Pictures Entertainment, Sony Computer Entertainment, Sony BMG Music Entertainment, Sony Ericsson and Sony Financial Holdings. Its diversified businesses include consumer and professional electronic products, games, entertainment and financial services. SONY is a household name. In today’s world, SONY’s technology is everywhere. The company has the world’s largest music entertainment business, the biggest one of the biggest video game video game business and publishing enterprises, and is a leading professional manufacturers of electronic products for consumers and market, and a major player in film and television entertainment industry. In the 2018 fortune global 500 list, SONY ranked 97th and the total revenue is $77,116 million (Fortune, 2018). SONY was founded and eventually grew into a $60 billion global organization. SONY invented unique products to meet people’s needs. SONY implements the needs of people and improves the technology of our surroundings. Sony’s current slogan “BE MOVED” is a statement about the way Sony wants its consumers to feel towards it.

In 1979, SONY revolutionized music by creating the world’s first portable personal music player, the Walkman (Paul, et al., 2013). When Walkman was introduced, there was no existing market for portable music but it went ahead to became a very successful. SONY’s first big loss came in the early 1980s when it introduced Betamax for video recorders to compete with JVC’s VHS format. It was a huge learning curve for SONY, but they later discovered that Betacam’s market was still widely used in the film industry. In 1985, SONY introduced Handycam, which makes it easier for consumers to use their personal cameras. SONY’s products and revolutionary inventions are woven into almost every aspect of our daily lives. Today, the PlayStation 4 is in its fourth generation, and SONY has released worldwide sales figures for the PlayStation 4. Total PlayStation 4sales for 2018 have exceeded 86.1 million units (Purchese, 2018). Therefore, SONY’s success not only built on a breakthrough technology, and build on the innovation of marketing strategy. 

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The Ansoff Matrix is develop by Igor Ansoff in 1957, the Ansoff Matrix include four major strategic which is market penetration, product development, market development and diversification. Organizations can adapt their new or existing products to new or existing markets through these options. This matrix is used in the decision-making process of enterprises around product supply and market growth strategy (Ansoff, 1957).

Market Penetration

In market penetration organization pushing the existing product in their current market. Sony Corporation use market penetration to increase sales in current market. For example, SONY stepped up its marketing campaign to sell more PlayStation products and to attract more customer and gain a larger market share.

Product Development

Product development is developing the new products for the existing market. The product development is use to develop products better than the competition. For example, SONY continues to innovate its gaming products to beyond competitors.

Diversification

The last strategy of Ansoff’s matrix is diversification. This strategy requires the provision of a new product on a new market, usually in the market, with limited profit (Lynch, 2009). Sony has one of the successful product which is the Sony Walkman because when the Sony Walkman was introduced, there was no existing market for portable music but it went ahead to became a very successful. 

Key Success Factor

SONY is a global company that develops, designs, manufactures and sells electronic devices, instruments and equipment for consumer and industrial markets. With experience and excellence in product development and marketing, SONY has been a very successful firm, with a reputation and a prestige brand and image. The key success factors are as follows:

Technological and Innovative Activities

The first and key success factor of Sony is their technological and innovative activities. The Akio Morita has said that “Creative to make inventions” is the most important factor that makes the differences between Sony and other firms. Mr. Morita did not believe any market research, he said “Our plan is to lead the public with new product rather than ask them what kind of products they want” and “The public does not know what is possible, but we do.” (Akio, et al., 1986). SONY has always been committed to new inventions and to be successful in this products such as Walkman, Handycam, and PlayStation. Launching the right product at the right time can make any company successful. With its innovative edge, SONY has been a pioneer in almost every area of its business. Due to its innovative culture, Sony is able to sense the hidden consumer demand and develop new product before other companies could. For example when Sony launched Walkman there was no existing market for portable music but it went ahead to became a very successful innovation. In order to not lose the game market, SONY continues to launch a new PlayStation until today’s already launched the PlayStation 4. On the other hand, innovation, creativity and timing also give SONY a unique image in marketing and give Sony gain more market share. SONY’s business strategy is creative marketing, understanding market trends and understanding the difference between risk taking and gambling. These strategies expanded and permeated every aspect of the entertainment business, so that made today the successful company SONY (Emerald, 2011).

Human Resource Innovation

Since its establishment, SONY has been committed to staying at the forefront of technological development, constantly building on its achievements to provide new value to people around the world. For Sony, it considers the people who work at SONY its most important resource. In Sony, everyone respect each other and even colleagues like families from the board of directors and manager to normal workers. SONY’s biggest asset is human capital, especially engineers in its research and development division. For a consumer electronic company focused on audiovisual devices, constant innovation by engineers is critical. SONY wants to maximize the talent and innovation of each employee. Hence, SONY respects the diversity of employees including race, ethnicity, nationality, religion, beliefs, disability, gender, age and so on. SONY is also committed to providing a healthy and safe working environment for its employees (SONY, 2019).

Global Manufacturing and Distributor Network

Due to its good marketing strategy, SONY has entered into the global market, and the distribution and production over all the world. Therefore, SONY’s shops and products are found worldwide.

Challenges

Now a days, we live in a rapidly changing times, especially for businesses. However, not all challenges will bring bad results to the enterprise. Challenges can be a driving force for change. It depends on how the company overcomes the problem. SONY’s future brand success will depend on how the company responds to the challenges of change. SONY has been a market leader in innovation. But in a world of digital networking, product development is no longer just about hardware. Although SONY has many competitors and will not be affected by their competitors, they will improve the quality of their products and keep innovating. The main competitor of Sony as follow:

The first challenge is that SONY mobile phone sales are not good. The development of the SONY mobile phone quite slow. As we can see by figure 2 that Sony’s mobile phone sales performance deteriorating. The Sony mobile phone sales decrease from 2014 (39.1million unit) to 2018 (2 million unit).

The reason SONY mobile phones slipped down was that SONY mobile phones were not keeping pace with The Times. As this figure 3 we can see the Sony Xperia XZ2 is launched on 2018 but the Sony Xperia XZ2 has been pushing a large frame, but it’s now in full screen time. SONY phone unable to compete with other mobile phone such as iPhone and Samsung. SONY’s overall financial condition is good, but its long-term downturn in the mobile business may not last very long (Padla, 2018).

The second challenge of Sony is the sales of hardware is decrease from year to year. Sony want to increase the revenue from game subscriptions and entertainment. The new CEO of Sony Kenichiro Yoshida said that “the revenue from software, services, and subscription departments is important”. Because in recent years, hardware sales are falling. As figure 4 we can see that PlayStation, TVs, Digital Cameras and smartphones sales decrease from year to year.

When the sales of PlayStation are decrease but SONY’s revenue from online games is growing. In the case of a 20% decline in the PS4 hardware sales, SONY gaming division’s profits are still rising, due to the recurring revenue of SONY’s PlayStation network. Over the past two years, the number of paid subscribers to SONY’s PlayStation online network has grown 64 per cent to 34.2 million.

Conclusion

In conclusion, the key success factor of Sony is the technological and innovative because SONY has always been committed to new inventions and to be successful in this products such as Walkman, Handycam, and PlayStation. So Sony should keep innovative to produce new product in the future to provide innovative product for customer.

Since the Sony Corporation establishment, SONY has been committed to staying at the forefront of technological development, constantly building on its achievements to provide new value to people around the world. But the people who work in Sony is the most important resources. So Sony should provide a healthy and safe working environment for its employees.

In the future, SONY must constantly innovate its products to avoid being outdone by other competitors. SONY should also put more thought and money to create and produce better mobile phones to increase sales. Sony should also keep growing with the digital and internet era to gain more market share in the future.

Recommendation

Today’s mobile phone market is highly competitive, SONY needs to change if it is want to survive in the mobile phone market. First, SONY’s mobile phone must make a change from the appearance. For example, nowadays consumers like no frame design of mobile phone and also include face id and touch id. In addition the Sony phones also must make a change from within such as interface

On the other hands, the sales of Sony hardware is decrease from year to year such as PlayStation, TVs, smartphone and camera. Therefore, Sony should keep to innovate their product to increase sales. And the online game subscriptions is growing year to year so Sony can grow more online games in the future.

Lessons Learned

In this assignment I learn the key success factor of Sony. The important lessons for business is that first the employee is the most important resource of the company so business should a healthy and safe working environment for its employees. Second, any products need to constantly innovation because competitors will soon surpass. 

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