Nintendo released a kind of video game player that is played at home called Wii in 2006, but it has been available in 7th December 2007 in market. Nintendo has founded by Fusajiro Yamauchi on in September 1889 in Kyoto, Japan. Nintendo has 21 subsidiaries and 8 affiliates and also a common deponent in Video games industry. Its brand was established for the family entertainment. Nintendo’s history is a company for video games and toys with the reason for serve entertainment for every household.
After two years established Nintendo changed into American Inc. with USA market and then Nintendo has globalized successfully in Canada, German, Franc, UK and Korea. Wii is a kind of party game for two people, but can also for single, with a controller machine is put next to the screen. Player can use body touch instead of remote controller. As a seventh-generation smart invention, Wii has to compete to Sony Play Station 3 and Microsoft Xbox 360.
Since Wii has introduced, it become popular in entertainment and applications. Wii has a strong market and most of its consumers are middle class, especially in 2008. Although there are some complains about the speed of system and functions but Wii still develop in recent years. To maintain the competitive advance, Nintendo have to look forward the influence to the customers of Sony and Microsoft and understand what consumer needs and wants to improve the product and continue to develop innovation.
As same as another product, Wii player also has strengths and weaknesses. Every product cannot be 100% perfect and weaknesses will be improved after customers used.
- Motion control
- Price, lower cost than another deponents
- Variety of game titles
- Wii channels (Netflix, Hula Plus, News, Forecast and Photo)
- Nintendo brand for a long time
- Simplified and Social gameplay
- More function
- Not only for entertainment but also for treatment.
- Less online games
- Less major titles
- Poor graphics
- Menu navigation can be frustrating|
Understanding about current Nintendo’s competitive advantage with its deponents related to analyze its environment to identify threatens and chances of the company. There are three things have to be analyzed: General, Industry environment and Competitive environment.
In general, it mention about demographic, economic, political, socio-cultural, technological and globalization. Nintendo’s strategy in the past was uncared about the demographic: non-players and ages. That is why Nintendo’s target expands for all market. However, political or legal still face to Nintendo. Nintendo’s presence has provided every company many chances to continue to develop new products for every different market. Because each company provide a technology and it has to be improved. So, Nintendo has an opportunity to improve their products.
Nintendo operates in the industrial environment so there are five things that have to analyze: The threat of new entrants, the bargaining power of suppliers, and the bargaining power of buyers and threat of substitutes. Video games are an easy way to get the profit but the cost for marketing is quite expensive such as Sony and Nintendo. They have to promote their strengths of their products via marketing and price. Because the industry invent special product and were patented the technology certificate, providers in the industry should be reasonable.
All firms depend on game consoles such as computer chips and video cards. Moreover, the industry has to face to the hardware deponents to produce a game consoles. Buyers have a few of power in their money to buy a product for entertainment and relax themselves. Whereas Sony and Microsoft are have their own profit from another businesses. The main Nintendo’s profit is from video games. If customers choose PlayStation or Xbox then Nintendo’s profit will decrease.
In the other hands, the threat of substitute is very common in every industry. For customers, all the video games products just for the same entertainment. However, the only one way to reduce the threat of substitute is reduce the price cheaper than another product. Since Nintendo changed its price, Nintendo had a lot of advantages. Rivalry is very intense in Games industry. Nintendo, Sony and Microsoft are trying to make a difference then another one. So, if one makes a good technology then another one has to change and should be better than the old.
Nintendo knows how to understand its deponents by analyzing every strengths and weaknesses of each company. Sony reduce PlayStation’s price for $40 and discount for the “Greatest Hits” line of PlayStation games (Molina, 2011). Moreover, PlayStation still creates a new series of PlayStation called PlayStation Move to compete with Wii of Nintendo. In addition, Xbox 360 of Microsoft presents a new line of video games but it is controller-free. Nintendo’s competition is based on pricing. The price is lower than Xbox 360 and PS3; some family cannot afford to pay a huge money for entertainment even though they really want to get one for their family. Low price will be better to encourage them for a Wii accessory.
Nintendo has three promising in USA market
- Families with babies: This is a growth market and depends on a high population. This segment is for a household wants to pay money for good quality.
- Teenagers: At the age of 13 to 19. They would like to enjoy their time for entertainment with their friends. According to the research of Pew Internet and American Life reported in 2007 that 93% teenagers use Internet so that is a good choice for Wii. Teenagers would like to buy this product; it means their family should be a middle class.
- Pre-teenagers of working parents: Some parents are busy with their job so they have no free time to stay at home with their children. They buy this product for their guilty.
The target market is noted above have to analyze the customer. For the families with babies, the potential market size is reported in demographic report. Teenagers in current year use Internet for communicate. Nintendo Wii can also connect to HDTV so that this segment helps to reach the demographic. In the market potential for teenagers were estimated in 2007 is 28.9 million USD and will reduce 3,49% in four years later. Furthermore, pre-teenagers of working parents in this segment understand their children’s need and they have a good income to pay for entertainment. Some parents they feel guilty when they cannot spend their time with their children, thus they have their own Wii.
Sony and Microsoft are the major deponents of Nintendo. Sony has 70% shares in the market while Nintendo and Microsoft are rest of the market. Nintendo still continues to leader in market video games and have a low price of hardware. Nintendo also have a good relationship with outside parties. In general, companies who provide good graphic in video games can become a leader in video games sector. In other hand, company should care for the product by analyzing carefully the customer’s demand.
Nintendo’s current strategy focuses on creating a communication to customers who have not own Wii at home. The company’s important resource is developing team, marketing team, manufacturing process and management. Efficient manufacturing process is allowing Nintendo to reach scale of economic and console of product control Wii with the lower cost than different products from another competitors. Sony and Microsoft have introduced follow as the same Wii of Nintendo. That helps Nintendo’s products become rare and a volubility opportunity for Nintendo.
PEST Analysis of Nintendo
This is a categories environment influences into six important parts such as:
Factors about taxation policies, foreign trade rules and social welfare policies affect to games industry. Video games are an inclination towards a particular characteristic with the emotion of people who can threat peace and law and a multicultural country. Thus, the Government has to check and control the contents of games.
Countries such as USA and Japan have a lot of profit in Video games. Therefore, helps to contribute forward to their country’s GDP. The interest affects quite a lot in their business. The income of customers affect in the way they pay for the product. For example, for the low-income people, they cannot afford for the high price of video games player. Nintendo’s low manufacturing cost is a reason for the company sale their products, therefore increase its sales.
The socio factors, which is affecting to video games are demographic, population, income distribute, lifestyle changes, socio mobility, consumerism, level of education and consumer’s behavior. Nintendo opens the “World to Nintendo” to attract customers. However, video games influences to people’s culture, brings aggression in children.
The technology role is very important part in the video games to compete with deponents and try to have competitive advances. Every development uses new technology, although have some restricted changes in games industry and the speed of game transfer is faster. To upgrade the technology, the cost of hardware will increase. Nintendo Wii is a major change in technology of video game industry.
Video games industry has used a lot of plastic resources. Playing games on computer or TV does use a lot of power. Nintendo Wii is a machine that uses as less as energy than another machines. In addition, to protect the environment and practice the “Green” lifestyle is a lesson that parents are trying to teach their children follow. Thus. Nintendo create a lot of games with that message such as Super Mario Sunshine and Patrol Park that challenge player to protect the environment around them.
In legal issues there are some factors are related to trademarks, copyright, licensing, online ownership, demands of intellectual property and the revenue recognition. Another issues might be product and good for health. It has become a real thing to accept the hardware and recover for the loss by charging a huge of money for cheating someone’s creation.
With a very high cost to buy PlayStation of Sony and Sony dropping sale slightly because of that reason, Nintendo has a chance to sell more Wii. In every special occasion or festival, Nintendo tries to keep Wii in shelf to compete to Sony. Nintendo never stop making excited games to attract consumers, make their customers feel different in every game. Also, Nintendo give more capabilities with the device with IPhone and IPad and also for health conscious consumers.
Nintendo has consistently punctuated the important of entertainment, so Wii become a company’s philosophy straight ahead. In position statement, Nintendo provide a friendly controller for user and HD pictures. Wii shows its differences in attributes:
- Function Benefit: the quality of pictures will different than another companies and it can connect with products by the plug Nintendo has provided customers.
- Great design: Wii have colors suit with each family atmosphere and customer wants to get full set of Nintendo such as TiiVii.
In generally, Nintendo’s target market is for young people. However, Nintendo expands the market for every people all ages. While Nintendo is providing a kind of product that for the main target market, Nintendo still develops in the specific target. Since Nintendo would like to expand the target market for people all ages, Nintendo has produced the equipment suite for all customers. In current, Wii system has known as games, applications that Nintendo has produced. However, in Wii system there are many ways to control the equipment, especially is Wii promote is being taken in new application.
Moreover, playing Wii for doing exercise, fitness and loss weight in game applications. Wii also was designed a Wii Sports games and Wii Fit Packages. The researcher Alasdair Thin in Heriot Watt (in Scotland) has discovered Hula Popping in Wii is for doing aerobic (Thin, 2008). Mickey DeLorenzo also showed that if people have played Wii Sports for six weeks by doing exercise themselves, he or she would loose 9 pounds (Musgrove, 2007). Some people do that even though Wii just for entertainment and Nintendo’s initial conceptualization of Wii as “entertainment, not exercise” (Musgrove, 2007). Some retirement centers also use Wii for doing exercise although this number of people who are using Wii for this reason is increasing (Batson Jr, 2007 and Snider, 2008). In the recent year, Nintendo is continuing to create more games for doing exercise and this helps Nintendo to expand the target market.
Video games are used for medical in today’s world as well. Helping patients during in the treatment time. Wii is being chosen each application good for medical cares. To use Wii as the way to increase the patient’s participation, help to bolster rehab successfully (Coyne, 2008). For the social and fun is a part of interest in Wii, as well as easy to use.
While Nintendo trying to expand products for all ages, the company still tries to break the economy barriers as well. Xbox 360 and PlayStation 3 do not include games packages of their systems but the price is over than $350 and more than $500 for upgrade the equipment. Nintendo’s price is better than that. Nintendo’s Wii is humbly just $250 and attach a lot of games set.
- Nintendo buys parts of Wii from some companies such as ATI (graphics), IBM (processor), Panasonic (battery).
- Wii is assembled in Japan; Wii after tested will transfer to local stores in Japan and USA.
Focusing on TiiVii as an economic replacement but the quality of graphic does not change. It will be showed in the store that can connect to Nintendo Wii and playable to target the family segment. Every functions and applications will be described on the screen and ads in all popular magazines for households such as Digest Reader, Family Fun, Big W, as well as in every retail store where Wii will be sold such as Harvey Norman, JB Hi-Fi and Wal-Mart or in TV channel such as Best Buy, TBS and Fox. Moreover in all shopping malls for family easy to attract customers.
For everybody who is interested in TiiVii or any Nintendo’s product, Nintendo will give them 10% discount for Wii. This will encourage to the number of sale for Wii and easy to let customers know about Wii.
Product Benefits/ features
A good graphic will demonstrate the quality of the product with another deponents. Plexiglass cover helps to minimize the breakage of Wii promote. Wii allows user surf the web when they use Wi-Fi connection. HDTV will be made extra compatible with Wii system console with extra functions
Mission of Nintendo is allowed to present products are friendly with the environment will be maintained when they us soy ink for the introduction paper that have be attached with the box and try to reduce to use plastic for the products.
Nintendo Wii will be sold with the value price:
- Price to the customer: $199.99
- Retail margin: -12%
- Price to retailer: $175.99
The lower price will be better for the HDTV market because there is no
competitive in this section and customers are easy sensitive about the price.
- In the Demo-store with Wii connection: This will become a connection in the consumer’s though about the functional in Nintendo’s products.
- Have ads concentrate on Family for Entertainment: Stick Nintendo label with character “Mario”.
- Television: Ads in TV channels such as Best Buy, Disney Channel and Fox
Promotion: Customers will be received 10% discount if they owned another Nintendo’s product or have a receipt when they buy Wii and discount for the next purchase.
- Picking market: Nintendo serve for the family demographic through the way they service. The chosen segment for Wii such as teenagers, families and babies and pre-teenager working parents. However, users will choose which product they use.
- Positioning: Nintendo Wii provides users a lot of functions and applications. It includes the wireless network, a strong protection and a good graphics. Those are good quality to differentiate to competitors.
In the other hand, Nintendo has project teams and implementation team for manufacture, marketing and distribution. Marketing teams will take a responsibility to marketing strategies how to promote and attract customers. Moreover, they should have good communication skills to do a good customer service. Marketing team always working hard to improve and fulfill for the market needs for the next products. However, Nintendo also has a contingency plan for the number of risks in marketing. Everything is just estimated and nothing will be 100% right. The financial reports are based on that number. There are contingency plan that will be used in the future:
- Continuing to review every current needs and difficulties in the future.
- Factory power capacity will be increase.
- Always receive feedbacks from customers after used.
Understanding or analyzing customer’s behavior helps enterprises to growth up their products and an important way for Nintendo to analyze the satisfied of customers for them to easy to marketing the product and think of more strategies.
Understanding customer’s behavior in the games industry is depending on each leader’s opinions. The affective of consumer buying video games is may be either personal or social factors.
Segmentation in video games is related demographic, psychological and behavioral. In this period, demographic is quite important part, from teenagers to adults, girls or boys; video games industry has a wide market. Video games are necessary for entertainment and become a kind of fun with family and friends. However, the contents of all games have to be good for education, it should reduce the violence and wars because most of users are teenagers. Some games do not listen customer’s feedback so they fail because of the contents. They just release but no tested before show to the market.
- “Annual Report 2008”, Nintendo, viewed 6th April, 13 http://www.nintendo.co.jp/ir/pdf/2008
- “Consumer Lifestyles in the United States.” Euromonitor International, 1st January, 2010, viewed 6th April, 13 http://www.portal.euromonitor.com/Portal/Magazines/Topic.aspx
- “Nintendo Corporate.” 2007, Nintendo of American Inc., 12th February, 2008, viewed 6th April, 13 http://www.nintendo.com/corp
- Molina, B.(2001) Sony drops price of PlayStation portable to $130, USA Today, viewed 1st, April, 13
- http://content.usatoday.com/communities/gamehunters/post/2011/02/sony-drops-price-of- playstation-portable-to-130/
- Buerk, R. (2011). Nintendo bets on 3D gaming amid slumping profits, BBC News, viewed 3rd April, 13 http://www.bbc.co.uk/news/business-12593712
- Business Insider, Eric Krangel, 21st February, 2009. Sony Bleeding HDTV Market Share, viewed 9th April, 13 http://au.businessinsider.com/sony-bleeding-hdtv-market-share-2009-2
Cite this essay
Nintendo Product Planning in Video Games Industry. (2016, Mar 14). Retrieved from https://studymoose.com/nintendo-product-planning-in-video-games-industry-essay