Marketing research on example of Sony in USA

The spirit of philanthropy is deeply imbedded in the culture of Sony in America. They're proud of the dozens of programs and partnerships that have touched thousands of lives in all corners of the country and fill the pages of this brochure. Their 20,000 employees have responded positively to this spirit and have given generously of themselves. They've collected food for the hungry, built homes for the poor, cleaned polluted waterways, mentored the disadvantaged and helped in countless other ways that are detailed in the following pages.

Arts Education

Sony in America believes in the importance of supporting art in education. They feel that it is especially appropriate that they support the arts in the communities where their employees live and work. Nowhere is this more evident than in the many Southern California communities near the home of Sony Pictures Entertainment Inc. Sony Pictures Entertainment Inc. has donated Sony electronics equipment to the Sony Pictures Media Arts Program (SPMAP), a program of the City of Los Angeles Department of Cultural Affairs in partnership with the California Institute of the Arts (CAL ARTS) Community Arts Partnership (CAP) and Sony Pictures Entertainment Inc. The free program offers students between the ages of 11 and 14 living within the City of Los Angeles, fundamentals in animation and art technique. Classes are available in drawing, design, color approaches, animation and media technology. Instruction is provided on state-of-the-art computers and video equipment.

Grant dollars from Sony Pictures Entertainment Inc. provide support for Los Angeles' Museum of Contemporary Art Contemporary Art Start program, which allows for extensive training for public school teachers from Culver City High School and culminates in student exhibitions at the Museum. The support also underwrites two trips per year to the Museum for more than 250 Culver City public school students and teachers.

Other arts educational programs supported by Sony Pictures Entertainment Inc. include "Arts for All," the Los Angeles County Blueprint for Arts Education; the Armory Center for the Arts "Art High" program; Los Angeles Philharmonic Neighborhood Concerts program; PEN Center USA's "Emerging Voices" program; the Actor's Gang Student Education Initiative and "Innerspark," the California State Summer School for the Arts.

New York University's Tisch School of the Arts, one of the nation's leading centers of undergraduate and graduate study in the performing and media arts, has received generous support from Sony Corporation of America. In addition, Sony serves as the Lead Sponsor of the Online Community of The Weill Music Institute at Carnegie Hall. In its pilot season in 2008, the Online Community supported Carnegie Hall's Global Encounters (GE) Program, which provides public school students with the chance to explore world history through the indigenous music and cultures that have helped shape global perspectives. Specifically, the Online Community provided students with the opportunity to engage in meaningful cultural exchange with students in other countries.

Sony Pictures Entertainment Inc. and Culver City High School: Creating a Place Where Students Can Pursue Their Dreams

Since the cameras first rolled in Culver City more than 80 years ago, the motion picture business has been threaded into the fabric of this community of just over 40,000 in Southern California. But entertainment is not only a part of Culver City's past; it's an integral aspect of its future. Nowhere is this more apparent than at the Culver City High School Academy of Visual and Performing Arts. Established in 1996 with the financial and creative support of Sony Pictures Entertainment Inc., the Academy is a remarkable place where students from an ethnically diverse district of West Los Angeles are given the opportunity to pursue their creative interests. With an enrollment of approximately two hundred students, the Academy offers more than fifty courses in Theatre, Film and Video, Music and Visual Arts in both a practical and classroom setting. Within this dynamic environment, students learn to balance coursework while putting on more than twenty productions per year. After graduation, many Academy students go on to top arts programs or directly to work in the entertainment industry. Ongoing support from Sony Pictures Entertainment Inc. includes equipment donations, faculty training and student mentoring.

In the next three years Sony will spend approximately Ґ300 billion for restructuring measures centered on the Electronics business. For FY03, expenditures will be Ґ140 billion (Ґ130 billion in Electronics) and this is projected to result in annual cost savings of about Ґ75 billion from FY04.

Sony will further integrate its engineering and development resources to create a more efficient manufacturing platform for horizontal support (enhancing engineering base, reducing fixed and variable costs).

Increased selection and focus mainly in the electronics business in order to convert to a high-profit structure (exiting from unprofitable business lines, disposal and sale of non-strategic assets).

Further rationalization of production facilities, expansion of “multi-category” production, strengthening of module (key device block) production and conversion to “multi-functional” operation (design, call center, service center etc.)

Cutting fixed costs (including Sony Corp.) to rectify the current unbalanced group revenue/cost structure where yen-denominated revenue totals about 30%, while yen-denominated costs total about 50%.

Reforming Sony's domestic (Japanese) personnel system through stringent implementation of performance-based compensation and a renewed employment structure including further deployment of human resources from overseas.

Position in Audio-Visual Categories

Audio-Visual is a core business category, and here they will create a vertically integrated structure through the application of mechatronics and Sony key devices which will result in high added value and product differentiation. This will in turn realize high and sustained profitability. The shift of resources to growth areas like Flat Panel Displays, Optical Disk/HDD Recorders and digital imaging equipment will be accelerated. At the same time added value will be promoted through the application of broadband capability and key devices will increasingly be produced within Sony.

Creating New Product Categories through Integration of Game and Electronics Technology

PSX and PSP (due to debut at the end of Calendar 2004) will mark the beginning of a new series of products that will unite the most advanced Electronics devices with the leading-edge semiconductor technology associated with the Game sector. These products will create a new market based on a massive integrated platform where customers can enjoy the latest content (game, pictures,music etc.)

Eliciting the Growth Potential in IT/Telecommunications Sectors

In its role as a home network gateway, VAIO's functions will be strengthened and its links to peripherals and network services promoted in order to create a total business model that increases profit. Sony Ericsson Mobile Communications will strengthen product development in the mobile phone business, while reconfiguring their USA and China operations and focusing resources in strategic areas.

Enhancing Semiconductor Business

Semiconductors are key devices for adding value in order to differentiate products. Sony will continue to apply its unique and leading-edge technologies in this field to enhance the competitiveness of its products. R&D for system LSIs and imaging devices key to electronics products will be energetically promoted. Advanced semiconductor process technology and DRAM-embedding technology will be pursued and the development and investment in processors will continue. In CCDs, where Sony maintains a high market share, efforts will be made to balance external and internal sales, thus reinforcing competitiveness and securing profitability.

To support a growth strategy for electronics, R&D efforts will focus on the following:

Development of competitive key devices to maximize added value in products.

Imaging devices and peripheral devices.

Devices for next-generation Flat Panel Displays (OEL and FED) and projectors.

Development of next-generation processors, centering on CELL. Potential applications include:

Home Server

Broadband-capable Television

Core technology and components (architecture, OS, middleware, chipsets) to be standardized to create a strengthened, speedier development and engineering environment.

Develop IT technology related to content distribution

The Sony group plans to spend a total of Ґ1 trillion on semiconductor investment and R&D in the three years starting from FY03. Approximately Ґ500 billion will be spent on capital investment for semiconductors like CELL and imaging devices where major growth prospects are envisaged (Ґ175 billion in FY03). Approximately Ґ500 billion will be spent on R&D* for key devices for product enhancement (Ґ150 billion in FY03). * excludes R&D for prototypes

Group Strategy

1. Entertainment

Music

Under the new management structure, Sony Music Entertainment (SME) implemented a series of organizational changes designed to further intensify its focus on artist development, streamline operations, and position the organization for future growth. The company continues to focus its energy and resources on identifying and developing talent, as well as on developing new A&R sources in virtually every territory across the globe. As part of these changes, SME has created Sony Urban Music, a new division that is dedicated to identifying and developing the best urban talent.

Pictures

Sony Pictures Entertainment (SPE) will energetically promote new releases and develop its franchise strategy to reinforce its market position. Core programming for television will be strengthened and the rich library of assets leveraged to pursue new programming and business opportunities. At the same time, digital initiatives will help advance the broadband distribution of SPE content directly to consumers. Initiatives to promote maximum efficiencies and ensure sustained profitability will continue.

2. Personal Solutions Business Group (PSBG) and Network Application and Content Service Sector (NACS)

PSBG: PSBG will focus on the development of new services centered on individual customers. Cross-marketing opportunities with other Sony divisions will be explored with the aim of creating new customer-bases and business chances. In the longer-term, alliances may be created both within and outside the Sony group, based on proximity to the customer base, to provide integrated services to customers. NACS: NACS is responsible for leading the Sony Group to the early realization of its business model to integrate hardware and content. Through this Sony will be able to provide network services which offer customers new value for the broadband era. At the same time NACS provides horizontal support to NCs and Business Groups through its linkage with the Platform Technology Center.

Sony is the leading company in digital appliances with Sony Marketing (Japan) Inc. responsible for the marketing and sales of its products in Japan. However, today's digital appliance market has a number of characteristics never previously encountered by Japanese manufacturers..First there is fierce competition as new competitors can easily enter the market. Inparticular overseas companies and venture companies which excel at special technology or have new innovations are entering the market. Secondly the price of devices fluctuates from technological innovation and competitive change and creates swings in supply and demand. For instance, when HDD or liquid crystal panel prices rise, product profitability is put under pressure and cannot be guaranteed. Thirdly products quickly become obsolete and product life cycles become short.

If products in large production runs become stale, the manufacturer may have to hold large volumes of dead inventory.

So far, the key to success for manufacturers was fast large volume production with a quick sales turn around. But in the digital appliance business, carelessly planned large volume production and bad inventory can endanger the life of the company. When a sales downturn is judged production must be stopped immediately with quick action required. Measures to be taken include production stop, transfer of device inventories to other production lines, and the planning of new products. For this to succeed exact demand prediction is essential. And on this basis, a mobile and flexible manufacturing organization is also a necessity.

Mr. Shimada, the General Manager and project leader for business operations planning & management at Sony Marketing (Japan) Inc. says, “Shorter production life cycles are a kind of destiny for the digital appliance business. We must also maintain our profits in this situation. To tackle this Sony (Japan) Marketing is building a new sales platform.”

Fujitsu was selected for the requirement of building a high performance system in the shortest time

The project started in April 2001. For success, Sony Marketing (Japan) needed to work with other Sony group companies. Major groups involved included Sony EMC (EMCS), the division responsible for production and Sony Supply Chain Solutions (SSCS). But it was a big project where the whole Sony group became involved. sony marketing environment swot

The strategic systems at the core of the new platform were the Demand Information Creation system and Delivery Time Forecast system. The Demand Information Creation system predicts sales volumes and adjusts production within EMCS. Now all processes are performed online.

Previously account sales couldn't provide timely delivery times to their customers, so to improve service levels, a delivery time forecast system was built to answer delivery time questions immediately on order.

“These two systems embody special Sony unique and are the lifeline of the Device Chain Management's (DCM's). Sony initially planned to use an ERP package, but this was subsequently rejected. They decided to build their own special system based on ASCA instead” said Mr. Shimada. The ASCA, SCM system was built for sales of VAIO, Sony's PC and is excellent, being awarded `Best Solution in Sony Group'. Fujitsu supported the building of this system and Fujitsu also took part in the systems integration.

“Fujitsu had the experience and the reliability to lead this big project. A high performance system had to be built in a very short time. To accomplish this Fujitsu, as a provider of total solutions from hardware, OS, middleware, to application software, was the best choice.” Said Mr. Matsushita, General Manager of the ISS department in Sony Marketing (Japan) Inc., and also a system project leader on this project.

Sony Marketing (Japan) decided on Fujitsu in April 2002 and construction of the Demand Information Creation System commenced in May 2002 with the system going live in April 2003. The Delivery Time Forecast System followed this in Nov. 2002, which went live in May 2004.

Accurate delivery time forecasting with real-time link to orders system (ERP)

The Demand Information Creation System collects the actual sales data from Sony's volume resellers. By adding in the inventory and other related information the system predicts demand, for a period of 33 weeks ahead, for each product. These predictions are then transmitted to EMCS who are responsible for manufacture and production adjustments. The delivery time forecast system provides delivery time answers to order requests by collecting production plan and inventory information. If there is no inventory, it confirms the production finish dates by reference to the production plans in the factories. If there are no production plans, it searches for replacement products. When handling mixed orders, for instance PCs and Displays, whichever is the later product delivery time is the delivery time provided. The inventory database holds up to ten million entries and process one hundred thousand orders a day with the system calculating delivery times(including logistics lead times) within 0.1 of a second.

To ensure this level of performance, high performance UNIX servers were used. Each has 32 CPUs and 104 GBs of memory. The high performance however is not just a function of the hardware. Mr. Matsushita states “ In system design, we built a new business model with a total system architecture. Using this as the basis we create the applications. Importantly for future flexibility the application framework we created enables linear performance improvement in proportion to server hardware expansion. ”

The creation of a ubiquitous value chain to maximize synergy across all Sony services

Mr. Matsushita talking about future plans says. “This is a strategic system, so it will need to be improved to meet business environment changes. Evolution is our mandate, so we can't rest. We cannot underestimate the risk of a hundred thousand orders being stopped.”

Mr. Shimada also says that their goal is a ubiquitous value chain - a grand dream. “This system deals with the hardware product supply chain, but Sony's products aren't just limited to hardware products. There are also movies, music and insurance. We will accomplish the basis for Sony's electrical business support by maximizing the synergistic effects on the whole of Sony's services. This will be our value chain.”

The delivery time forecast system would be released as a packaged product of GLOVIA/SCP. Sony is pushing to create a new market with this. Fujitsu is supporting Sony with these IT perspectives.

Sony aims to create a workplace that inspires employees to pursue new challenges and grow by realizing their creative and innovative potential. Sony also strives to further enhance motivation and encourage personal growth through on-the-job learning, as well as access to a variety of programs tailored to different regional needs, including education for next-generation business leaders, management skill improvement training, and training aimed at enhancing the abilities and skills of individual employees.

With the dizzying pace of change in the operating environment, including the rise of global competition and the diversification of customer needs, companies are under increasing pressure to provide products and services that accurately reflect the customer's viewpoint, offer innovative ideas and create new value. By introducing the concept of diversity into our activities, Sony actively utilizes and nurtures the diverse characteristics and ideas of our employees in each region.

In 2007, SEL launched a Diversity Board made up of senior managers from the company's various business units. The Board serves as a forum for discussion on important strategies concerning diversity, integration, training and communication. For example, eight business units contributed members to the inaugural Board, made up 10 members. In conjunction with the Diversity department, the Board has already launched activities to attract the best talent available, drive retention through building an inclusive work environment, establish strong internal and external partnerships and brand Sony as a community advocate.

Japanese law requires that individuals with disabilities constitute at least 1.8% of the workforce of companies of a certain size. Consistent with this law, Sony Corporation in Japan strives to provide opportunities for disabled individuals in fields that maximize their work contributions, and to create a positive, accommodating work environment. In fiscal 2007, Sony Corporation employed on yearly average 321 individuals with disabilities, representing 2.17% of our workforce, well above the legal obligation.

In January 2008, Sony Taiyo Corporation, a domestic manufacturer of microphones and Sony's first special-purpose-subsidiary, commemorated its 30th anniversary. During its three decades of operation, Sony Taiyo has incorporated various concepts, from barrier-free and universal design to inclusive design*8, in order to build a working environment where anyone can work irrespective of whether or not they have a disability. With these activities contributing to improvement in productivity and quality control, and prevention of employees' diseases, Sony Taiyo was awarded for the 2nd Monozukuri Japan Award on 2007.

Harnessing its 30 years of knowledge and experience, Sony Taiyo conducts activities across the entire Group to promote Sony's basic philosophy of creating work environments where disability doesn't matter. Activities include training programs for representatives of Group companies and the Personnel Division. A specific example from fiscal 2007 was a training program designed to share knowledge on the employment of Sony employees with disabilities. Under the program, representatives from Group companies in Japan and the Personnel Division gained insights from the experiences of employees working for Sony Taiyo who seek to lead independent lives.

Two other special subsidiaries also provide work opportunities for the disabled who wish to work and take an active role in society. They are Sony Hikari Corporation and Sony Kibo Corporation, established in 2002 and 2003, respectively. We strive to expand the fields which best suite to each employees with various disabilities.

Sony strives to further enhance motivation and encourage personal growth through on-the-job learning, as well as access to a variety of programs tailored to different regional needs, including education for next-generation business leaders, management skill improvement training, and training aimed at enhancing the abilities and skills of individual employees.

Sony has consistently initiated new evaluation and compensation systems with a forward-looking perspective. Through the introduction of a system in which work contributions are reflected in compensation, Sony has built a framework that encourages individual employees to engage in new challenges. This is based on the concept of Contribution = Compensation (C = C). In addition, Sony has established periodic employee performance reviews by managers and, through open and frank discussions, is implementing a reward system that fairly evaluates the contributions of employees.

Sony University, established in 2000, offers a variety of programs to help develop future leaders of the Sony Group. In January 2008, Sony held our Sony United Leadership Program, a new initiative based on the successful Global Network Program held in the previous fiscal year. Twenty-three potential leaders from a range of business units in Japan and overseas took part in the program. With a strong emphasis on strengthening measures aimed at realizing unity across the entire Group, Sony's next generation of leaders held discussions with top executives and participated in simulated business scenarios. The overall aim of the program was to deepen understanding of corporate strategies and leadership and for participants to take a fresh look at their own action plans.

In recent years, Sony has implemented a variety of measures aimed at ensuring Sony's reputation for technological excellence. In fiscal 2003, Sony established the Sony MVP award, which honors individual employees who have applied specialized technology and knowledge to create enhanced value for Sony, and which is designed to help motivate employees to pursue greater challenges and achievements. In fiscal 2007, 24 employees from Sony Group companies around the world were certified as MVPs, bringing the cumulative total of employees so recognized to 150. In fiscal 2006, Sony introduced the special designation of Distinguished Engineer (DE) to acknowledge individual engineers who have played instrumental roles in the development of Sony's core technologies.

Sony has launched "Community" activities, in which engineers participate in free discussions with other engineers from across the organization involved in similar technical fields. These activities are founded on the "Three Values" of improving Sony's technical standards, realizing a Sony United where technology transcends organizational structures, and fostering the next generation of technical experts.

During "Engineer month," held in December 2007 in conjunction with "T-Week," Sony Group engineers got together to share ideas. Sony DEs also held "DE Sessions," in which they shared information on the latest technological developments from both inside and outside the Group and explained and discussed exciting technical innovations. The overall aim of this "Community" concept is to foster technical personnel with a view to the medium and long terms. For example, top executives working on the technology side were interviewed about their careers, while DEs introduced a series of in-house lectures, which started with DEs' awareness of the issues, on cutting-edge technologies. Meetings were also held in which President Chubachi shared information with DEs.

3. Marketing analysis of the company

Strategic planning is surrounded by a veil of complexity that many are unable to penetrate. The terminology outlining strategic options can be confusingly repetitive. The tools, options, and current buzzwords used in marketing strategy are reviewed in an effort to lift the veil of complexity surrounding marketing strategy. Conceptual tools used in the strategic planning process include: 1. business portfolio analysis, 2. the Boston Consulting Group (BCG) Growth Share Matrix, 3. company life cycle patterns, and 4. the new BCG Matrix. Corporate strategies may be classified under 4 broad headings: 1. stability, 2. growth, 3. retrenchment, and 4. combination. Market leader strategies include market penetration, market development, differentiation, and cost leadership. Market challenger strategies include product proliferation, diversification, and integration. Focus strategy and niche marketing are market specialization strategies.

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:

Internal factors - The strengths and weaknesses internal to the organization.

External factors - The opportunities and threats presented by the external environment.

SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.

I cannot say that Sony has any market share without saying in which market because they have products in many different markets. The poll on our blog shows that most people think of televisions when they think of Sony, so we will leave that market for last. A couple of other major markets that Sony participates in are the game console market and the communications market, specifically the cell phone market with their merger with Ericsson.

In the cellular market, Sony has only captured about ten percent of the market with the Sony Ericsson brand. But this industry is full of other giants that are currently leading the pack such as Motorola and Samsung. A quote from the president of Sony Ericsson concerning their fourth quarter results at the end of 2006:

“The fourth quarter saw Sony Ericsson finish a strong year with record volumes, sales and net income due to the soaring popularity of our imaging and music phones. Earlier investments in R&D and marketing have enabled us to expand the portfolio and strengthen the brand to increase consumer and operator appeal. Their target is to become one of the top three players in the industry, and the momentum we established in 2006 makes this an achievable ambition,” said Miles Flint, President of Sony Ericsson.

The video game industry has recently experienced a major shift. For years now, Sony has been the leader by staggering numbers because of the Play Station line. Originally released in the mid-90s, Play Station has not lost any momentum until recently. Even with Nintendo's launch of the GameCube and Microsoft's launch of the X-box in 2001, Sony did not lose too much of the market because they were well established. But with the most recent releases of the X-Box 360, Nintendo Wii and Sony's Play Station 3, they are losing ground. They are still maintaining the number one spot for quantity over all with over 100 million consoles sold since the launch of the Play Station 2. In fact, between 2000 and 2006, Sony had sold over 111 million PS2s, Microsoft only sold 24 million of the X-Box and Nintendo had only sold 21 million of the GameCube. But if you look at a smaller time frame more recently, specifically the month of April 2007, the tables are shifting. Sony only sold 82,000 PS3 while Nintendo sold 360,000 Wiis and 471,000 Nintendo DS (their handheld gaming console).

The biggest question is what will Sony do to ensure that they return to the top of the industry and do not lose too many customers. The next generation will be some of the most interesting to see how Sony responds to Nintendo's recent innovation and expanding market.

The television industry is a tough one because of so many competitors. But Sony has excelled here, which is obvious even when polling only a few people, this is what Sony is best known for and for good reason. They are the market leaders when it comes to LCD televisions but they also maintain the top position for television units overall in America. The following quote is from the Vice President of Industry Analysis for NPD: “Sony's leadership position in television in 2006 has been consistent over the past few years. What makes this performance impressive is the number of competitors in the TV space continues to grow at a staggering pace." Also, here is a quote from the Senior Vice President of Sony's Home Products Division: “Sony continued its leadership position in LCD and micro-displays in 2006, obtaining the absolute number one position in all the digital television categories in which it participates. When you combine the key digital TV categories, specifically LCD and micro-display, Sony's overall dollar share outpaced the closest competitor by 21 percent for January 2006 to November 2006."

Sony is a leader in many electronic and technological industries. They are willing to invest in research and development to increase their market shares also, as evident by their strides in the cell phone industry. Also, when they know that they have a great product, they simply enhance on that same product as shown with the Play Station line moving through the generations and being sure that they were always backward compatible. And they excel at quality, which is why they are so well known for the television industry and continue to strive there and maintain their customer base. They are a great example for a company that wants to strive in new markets and have a diverse product line up.

3.1 SWOT analysis of the Sony

Strength

One of Sony's greatest strengths is their ability to produce innovative, quality products. Sony's web page states “Sony innovations have become part of mainstream culture, including: the first magnetic tape and tape recorder in 1950; the transistor radio in 1955; the world's first all-transistor TV set in 1960; the world's first color video cassette recorder in 1971; the Walkman personal stereo in 1979; the Compact Disc (CD) in 1982; the first 8mm camcorder in 1985; the Minidisk (MD) player in 1992; the PlayStation game system in 1995; Digital Mavica camera in 1997; Digital Versatile Disc (DVD) player in 1998; and the Network Walkman digital music player in 1999” (Sony.com/en/corporate).

PC World published The 20 Most Innovative Products for the Year 2006. Sony's Reader was listed as number six and Sony's PlayStation was listed as number sixteen. Sony Corporation has managed to be competitive and stay a powerful organization by learning from past failures. Sony states the following: “Sony has learnt much from previous unsuccessful products. The Sony MSX home computer, for example, did not attain a satisfactory level of success. But it did teach Sony development engineers valuable know-how that would be applied in later years. In effect, these engineers became living resources, representing latent power within Sony that did not exist in other AV companies” (Sony.net).

Another strength of Sony is their ability to be successful in several different markets. They have made an impact in the video game market, the PC market, and especially the television market and there are still numerous others.

Weakness

Sony's biggest and most recent weakness is their lack of innovation with PS3. Sony focused on digital technology when building the PS3 and it has the ability to export video in high-definition. But this technology can only be viewed on a high definition TV so a lot of people will not even be able to see the full potential it has to offer. Another downfall to the PS3 is the price, which Sony has recently lowered by $100. Yet the weakness of the PS3 is even deeper when considering the range of video game selections. The majority of games available are all first-person shooter games, which appeal to a particular market. There are few games that appeal to a different section of video gamers. Sony executives made it clear that they know they need to do more than lower prices to woo consumers back to its flagging video game brand.

Opportunities

Sony seeks a lot of opportunities that utilize their strengths of innovation. At Sony Ericsson, design is about more than just a good looking product: it is integrated into every step of the process - intelligent features, user-friendly applications, innovative materials and, of course, attractive visual appearance. Design is the essential differentiator when comparing mobile communications products.

Sony's Reader, a device the consumer-electronics giant hopes is an early draft of how the world will read books in the future, is another innovation that Sony is using as an opportunity to enter a new market. The downloaded books generally cost 20 to 30 percent less than their dead-tree counterparts, which is also setting a standard on what is expected in regards to new products that encourage environmentally friendly devices.

One of the other CSL projects most likely to succeed was a nifty little piece of graphics software for cell phones by Ivan Poupyrev. It might not sound like much, but the ability to draw realistic icons and avatars directly on a standard (non-touchscreen) phone is sure to add appeal to users of mobile social-networking sites.

Although there was far too much on display today to cover in depth here, there was a clear emphasis on what many predict will be the boom technology of the next few years - social networking in all its forms.

Threats

A common threat facing any company in sales is competition. Sony's Vaio is its newest innovation in notebook computers. The various models range in price from $845 - $2300. However, Dell has a great reputation when it comes to laptops similar to the Vaio and has a broader range of notebooks to choose from, not to mention that Dell has also been a top seller when it comes to desktop computers. Additionally, the cost of a Dell notebook computer seems to have a lower price tag than many of Sony's Vaio models.

Sony's top competitors in the gaming industry are Nintendo and Microsoft. The PlayStation 3 sales have fallen behind recently. In 2007, 82,000 PS3s have sold and 360,000 Nintendo Wiis.

In the LCD television market, Sony excels but still faces some strong competition, including Samsung, Sharp, Panasonic and more. Many of these same brands appear in the DVD player market that Sony has to compete with.

Competition isn't the only threat Sony is facing. Sony most recently had to make a public apology concerning the use of a backdrop in a violent video game, "Resistance: Fall of Man." Sony used the Manchester Cathedral in northwest England in this video game, which features a bloody gun battle scene between American soldiers and aliens. Sony made a formal, public apology on July 6, 2007. However, when asked to withdraw the game or make donations to community groups, they have refused.

3.2 Boston consulting group growth share matrix

The Boston Consulting Group (BCG) matrix is also a useful tool for looking at Sony's position.

Assists marketers to identify high and low potential business units or products. This two-by-two matrix has, on the vertical axis, market growth rate, which provides a measure of market attractiveness and, on the horizontal axis, market share relative to the largest competitor, which serves as a measure of company strength in the market.

Autonomous divisions (or profit centers) of an organization make up what is called a business portfolio. When a firm's divisions compete in different industries, a separate strategy often must be developed for each business. The Boston Consulting Group (BCG) Matrix and the Internal_External (IE) Matrix are designed specifically to enhance a multidivisional firm's efforts to formulate strategies.

The BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate. The BCG Matrix allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization. Relative market share position is defined as the ratio of a division's own market share in a particular industry to the market share held by the largest rival firm in that industry.

Four categories are depicted in this matrix, briefly they are:

(1) Cash cows (low growth, high market share) produce large amounts of cash but future growth is limited. A harvest strategy is usually recommended, in that the organization is advised to reap whatever they can but not to resow the seed. Too many cash cows may indicate a degree of complacency on the part of the company. Exceptions are naturally to be found and McDonalds, in the United States, is a good example of a leader in a cash-cow market that is still heavily investing in new technologies and products designed to maintain market share and defend a dominant position.

(2) Sirs (high growth, high market share) are products that produce large amounts of cash in a fast-growing market, in which they hold a dominant share. An example of a star is the "Post It" produced by 3M. Clearly an investment and growth strategy is recommended, particularly as the direct competition for this brand is weak.

(3) Question marks (high growth, low market share) exist under higher risk circumstances, in that the products are profitable but only manage to secure a small share of the total market. Commonly, a build strategy is recommended although rapid growth may attract the attentions of the "big guns" who may convert a highly profitable niche into a fully-fledged segment of large volume, thereby frustrating the endeavours of lesser firms. The "big guns" frequently possess greater production and marketing economies, which make it difficult for a smaller competitor to gain market share.

(4) Dogs (low growth, low market share). Because of the limited share size and low growth, products or strategic business units which are "dogs" do not generate much revenue. A typical strategy would be to divest by selling off the "dogs" in order to release money to support the "question marks".

Company life-cycle patterns classify businesses into embryonic, growth, maturity, and decline stages. Utilizing the distinctions of market growth and market share, the model has some parallels with the Boston Consulting Group Matrix.

Updating the original matrix, the revised BCG matrix maintains that a company has to achieve a competitive advantage to enjoy sustained profitability, and that the means for achieving such advantage are conditioned by the way in which industries evolve.

This strategy occurs when an organization achieves a satisfactory performance under stable market conditions. The usual practices engaged in to achieve stability involve the maintenance of market share and return on investment through better serving existing client groups. In mature marketplaces, demonstrating low or no growth, marketers are expected to execute their strategic plans more incisively. Under these conditions, stability could be achieved through intensive distribution, thereby enhancing convenience and levels of service, or by rejuvenating the brand by adjusting its image or packaging.

So the BCG identified four product types. The star, a new, high-performing product, is genertes high revenues, offsetting development costs and leading to profits. The cash cow is an established product, generating steady revenues with little investment. The question mark is a new product that may become a dog or star. The dog has low market share and growth, and disposal may be the best option if it becomes unprofitable.

From Sony's own performance reports , its products can be placed in the matrix. Sony's new PSP (Playstation Portable) could be considered a star. Playstation 2 is losing star status, becoming a cash cow. PS2 software still has star status, but new games must be developed and marketed to maintain this, and as hardware is superceded, its market share will fall. Films and music have relatively little long-term success individually: a successful new film or album will be a star for a relatively short period. Sony has a number of products that seem to fall into the question mark sector, with investment made in development but relatively little profit recouped so far. Flat screen and LCD TVs are an example: although sales are increasing, the lines are not yet profitable due to development costs.

As most of Sony's operations are in areas where stars rapidly become cash cows, or even dogs, the need for product development and investment in bringing new products to star status is key for Sony's survival. The speed of fall of a product is evidenced by Bandai's Tamagotchis, one of Grant's case studies of excellence in new marketing approaches , which only briefly achieved star status (although it continues to sell).

Yet here lies Sony's problem: its organisational structure and diversity has affected its ability to move quickly and effectively in a rapidly changing market, with duplication increasing development costs. Its interest in music and film has made it anxious not to produce hardware that could enable file-copying or sharing. Sony's Connect site offers music downloads only in ATRAC format , used by most of its own devices, while iTunes uses AAC and allows conversion to the widely-used MP3 format . ATRAC compresses files to allow a greater number of tracks to be stored in the same amount of memory, and could therefore be seen as superior, but is not the most popular format.

Sony still appears to be focused on differentiation rather than working with competitors. In 2005, faulty protection software on CDs rendered many consumers' computers vulnerable to hackers. Sony have been faced with a number of legal challenges, a dent in their reputation and costs of reimbursing affected customers. Part of the strategy with the software was to prevent conversion of CD data to MP3 format, keeping it compatible only with Sony hardware. Sony is demanding consumers stay brand-loyal or lose elements of functionality, which is a risk for any organisation, but even more so for one that has lost market share to competitors and is no longer a leader.

Sony has suffered from non-standardisation before: its Betamax video format was a competitor to VHS. Although considered superior, Betamax lost out to VHS on cost and VHS became the standard by the mid-1980s. When CDs were introduced in the early 1980s, it was a joint project between Sony and Philips , reducing the risk for both of them and enabling them to invest in CD playing technology. This also helped consumers achieve compatibility between their CDs and hardware. Yet in recent years, the ATRAC focus reverses this approach and there are already echoes of the Betamax format wars.

Conclusions

Sony has had trading difficulties for several years and has identified many of its problems, addressing them to some extent in its latest strategy change. Although its recent results show an improvement, this are difficult to attribute to the strategy change. Fundamental to Sony's future success must be recognition that it is no longer a market leader so does not have its previous power to influence the direction of the market. Its policy of defending its many interests has proved problematic: maybe risking copyright infringements would be a overall more profitable.

Sony's fortunes since changing strategy have been mixed. The effect of the change on their success so far is difficult to assess as many changes can be attributed to developments predating the announcement of the strategy review.

Profits for the final quarter of 2005 were up 17.5% on the previous year: this could be attributed in part from the retrenchment of the previous two years, as well as the successful launch of PSP gaming hardware and rising sales of LCD TVs.

The strategy's focus on innovation seems to have been embraced in Sony's marketing. Marketing strategy has focused on viral marketing - campaigns encouraging word-of-mouth amplification of the message - with varying success. An advert for the Bravia TV gained a large amount of press coverage and is discussed on various blogs, showing that the campaign is generating word-of-mouth promotion.

However, other promotional innovation seems to have been less successful. The PSP was initially launched at upmarket arts events, positioning it as a `work of art' to attract the attention of influential `culture vultures', again attracting media attention and generating discussion, but perhaps giving a negative message to many potential customers for the PSP who would want information on functionality as well as a neat design. The PSP sold well, but not enough to sell out. Undersupply is the usual aim of many product launches to generate increased desire in the market for subsequent shipments, but was not achieved here.

Mintzberg, writing in the 1980s, encapsulated the approach necessary in 21st century markets:

“Strategies need not be deliberate - they can also emerge, more or less.”

The time taken to announce the new strategy suggests Sony is unable to respond quickly. Furthermore, its new organisational chart (see page 1) indicates that the Sales Strategy Committee is only now, in 2006, being implemented. There is still work to be done if Sony is to survive and regain its market-leading position.

List of used literature

1. Drawbaugh K (2001) Brands in the Balance (Pearson Education, Harlow)

2. Cairncross F (1997) The Death of Distance (Orion, London)

3. Grant J (1999) The New Marketing Manifesto (Texere, London)

4. Handy C (1995) Beyond Certainty (Arrow, London)

5. Kotler P, Armstrong G, Saunders J and Wong V (1999) Principles of Marketing 2nd European Edition (Prentice Hall, London)

6. Marcousй I, Gillespie A, Martin B, Surridge M and Wall N (2003) Business Studies 2nd Edition (Hodder Arnold, Oxon)

7. Mintzberg H (1989) Mintzberg on Management (Free Press, New York)

8. Naylor (2004) Management 2nd Edition (Pearson Education, Harlow)

9. Paprzycki R (2005) Interfirm Networks in the Japanese Electronics Industry (RoutledgeCurzon, Oxon)

10. Richards B, MacRury I and Botterrill J (2000) The Dynamics of Advertising (Harwood)

11. Rickards T (1999) Creativity and the Management of Change (Blackwell Business, Oxford)

12. Smith P (1993) Marketing Communications (Kogan Page, London)

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