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Strategic Marketing

Assessment of why the Sony Walkman brand lost out to iPod in terms of its position and level of demand in the marketplace

by Markus Baum (Author) Marco Hackstein (Author) Marcel Mehling (Author)

Scientific Essay 2009 24 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

CONTENT

1 INTRODUCTION

2 ANALYSIS
2.1 Market analysis
2.1.1 Macro environmental PEST-Analysis
2.1.2 Market profile and prospects
2.2 Analysis of Apple’s iPod and Sony’s Walkman
2.2.1 The case of Apple’s iPod - key factors of success
2.2.1.1 Product
2.2.1.2 Integrated System
2.2.1.3 SWOT - iPod
2.2.2 The case of Sony Walkman - key factors of failure
2.2.2.1 Product
2.2.2.2 Integrated System
2.2.2.3 SWOT - Walkman
2.3 Conclusion

3 RECOMMENDATION
3.1 Repositioning strategy
3.2 Marketing Mix
3.2.1 Promotion
3.2.2 Product
3.2.3 Price
3.2.4 Place

4 REFERENCES

5 APPENDIX
5.1 Results of own survey on brand Walkman

1 INTRODUCTION

In 1979, Sony introduced its first Walkman and thereby created a new market. The product and brand grew into a worldwide success (350 million units worldwide by 2004 (Sonyinsider, 2006)) and became the generic name for all portable audio cassette players. Through the 80’s and 90’s it remained the global symbol of Sony’s technical prowess and an icon of the modern lifestyle. Unfortunately, when it came to navigating into the digital future, Sony lost its market leadership very quickly to Apple’s iPod.

By using the tools and theories of PEST analysis, SWOT, Porter’s generic strategies, Jobber’s repositioning strategies, Marketing mix and positioning maps this report analyzes why Sony’s Walkman lost out to Apple’s iPod, as concluded from a general market analysis. It focuses on the major reasons for their respective success and failure. A repositioning strategy for Sony, based on the evaluation, is then recommended.

Table 1 presents the key facts pertaining to both companies.

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Table 1: Key facts: Sony and Apple (Sony, 2009b; Apple, 2009; Interbrand, 2008)

2 ANALYSIS

2.1 Market analysis

2.1.1 Macro environmental PEST-Analysis

According to Kotler and Keller (2009, pp. 112-114) it is critical for a company to understand the key parameters that affect a market. The following PEST analysis details relevant political, economic, sociological, technological and legal factors.

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Fig. 1: Macro environmental PEST Analysis (Euromonitor, 2006; Euromonitor, 2008a; Euromonitor, 2008b; Euromonitor, 2008c; Euromonitor, 2009a; Euromonitor, 2009b; Lloyd, 2009)

2.1.2 Market profile and prospects

From 2000 to 2008, the consumer electronics sector increased by 118% at a CAGR1 of 10% in volume and by 89% at a CAGR of 8% in value resulting in a market size of 2,721mn SKU and 738,972mn USD in 20082 (Euromonitor: ‘Consumer Electronics’, Euromonitor from trade sources/national statistics, date exported (GMT): 24/07/2009 09:23:10)

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Fig. 2: Consumer Electronics, Portable Consumer Electronics, Portable Media player development 2000-2008: (Euromonitor: ‘Consumer Electronics’, Euromonitor from trade sources/national statistics, date exported (GMT): 24/07/2009 09:23:10)

Portable media players, being the fastest-growing sub-category that allows people greater mobility, soared globally by 76% in volume and 162%² in value in the period between 2000 and 2008, with slight regional variations (see figure 3):

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Fig. 3: Portable media player development 2000-2008 in USD² (Euromonitor: ‘Consumer Electronics’, Euromonitor from trade sources/national statistics, date exported (GMT): 24/07/2009 09:23:10)

Consumers’ desire for all-in one communication-entertainment systems has driven overall sales of MP3-players and feature-packed mobile phones (Euromonitor, 2008b).

Demand for portable consumer electronics is predicted to continue growing, though, despite the iPods tremendous success, the differentiated profile of MP3-players, mobile phones, digital cameras and portable multimedia players will become gradually more distorted. Portability, convergence and interoperability are the core drivers behind manufacturers’ positioning of mobile phones as fully integrated multimedia devices (Euromonitor, 2008b).

2.2 Analysis of Apple’s iPod and Sony’s Walkman

In this section, the key factors of Apple’s success with iPod, and Sony’s failure with Walkman, are analysed. The focus is on product and integrated systems. A summary is then given in the form of a SWOT-Analysis.

2.2.1 The case of Apple’s iPod - key factors of success

2.2.1.1 Product

Apple introduced its first iPod in October 2001. With regard to technology,3 they applied different strategies in comparison to their competitors. Apple used an ultra-thin hard drive with skip protection, an energy efficient battery and installed an easy connection to the integrated system (see 2.2.1.2).

A unique design is often the best way to differentiate a product from the competition (Kotler and Keller, 2009, p. 365). Apple’s key innovation was a simple but easily recognisable design. With its typical white ear buds and the simple quadrate form (small and sleek) without any superfluous accents, the new “iPod-Design” was created and was a stark contrast to its competitors in the MP3-market. The research of Reppel, Szmigin and Gruber (2006) points out that the design of the iPod is very important to the user and makes them proud of having such a “cool” product and “helps them feel individual”.

Short learning curve and generally user-friendly interface were Apple’s other important goals. To this end, they developed the Click-Wheel, which allows easy scrolling with just the thumb (target: just three clicks to start a song). Compared to the iPod-concept, all competitors’ players appear extremely complicated.

2.2.1.2 Integrated System

With iTunes, Apple developed innovative and user-friendly software, which offers the easy administration and maintenance of digital medias like music and video. Apple was the first major provider of such a type of software, and it was available for free. This and the user- friendly interface are the reasons why iTunes still fits the skills and demand of the public.

The next part of the combination was the integration of Apple’s online music store into iTunes. Apple realised that there was a demand in the market for easy access to legal and cheap digital music provided over the Internet. Apple managed to get agreements with the most important music labels to sell their music digitally via the iTunes store, prior to their competitors. The agreement with Apple was the response of the music labels to the loss of revenue through illegal music sharing websites like Napster etc. (Meyer, 2006). A 2 Consumer Electronics, portable consumer electronics and portable media player: (Euromonitor: ‘Consumer Electronics’, Euromonitor from trade sources/national statistics, date exported (GMT): 24/07/2009 09:23:10); Note: Historic regional/global values are the aggregation of local currency country data at current prices converted into USD using fixed 2008 exchange rates.3 Detailed technological specifications for the first iPod: 5 GB hard drive storage for 100 songs, 20 minutes skip protection, batteries with 10 hours operating time, ACC data format (Advanced Audio Coding) = digital music format into which each common format is convertible, and which makes it impossible to share files over the internet outside Apple’s tools and hardware.

[...]

Details

Pages
24
Year
2009
ISBN (eBook)
9783656198505
ISBN (Book)
9783656199960
File size
1.1 MB
Language
English
Catalog Number
v194552
Institution / College
The University of Surrey – School of Management
Grade
Tags
Sony Apple Ipod Iphone analysis SWOT position mapping strategy strategic implications market analysis macro environmental PEST market profile key factors of success integrated system repositioning strategy marketing mix promotion product price place 4P survey Porter's Generic Strategies

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Title: Strategic Marketing