Both firms use an array of distribution channels, focusing on large retail stores. There is an Internet strategy for both, focused on the presentation of information. Xbox also allows users to plug their system into the Internet and play games online. Sony runs a similar program called PlayStation Network. Both of these networks feed into the customer service strategy through the use of memberships. Beyond this, there is little in the way of relationship management.
V. The target of the Xbox website is the mass market. Images typically show families and multi-player scenes to reinforce the idea that the Xbox is for everyone. The main benefit being promoted is fun. There are few specific benefits listed and no testimonials on the website. There is only limited contact information provided. The PlayStation website is more focused on graphics and gameplay - indicative of their premium strategy and targeting of hardcore gamers. The main benefit promoted is a superior gaming experience. There is limited information touting the benefits and there are no testimonials. There is very limited contact information available.
Microsoft is very strong financially. They enjoy incredible margins on their products and have very strong returns on their equity, investment and assets. They are reasonably liquid, but have increased their debt significantly in the past couple of years. Sony, traditionally having been focused more on hardware than software, does not enjoy the same margins. Therefore, they are in a weaker financial position. They earn more modest returns than does Microsoft and are less liquid. They have, however, improved their bottom line in the past few years through incremental growth and cost controls. Sony has a higher debt-to-equity ratio than does Microsoft but has kept its debt ratio stable over the past five years.
VII. These companies collect significant amounts of information regarding their marketing activities. The entertainment software association publishes a detailed annual report on the video game industry, showing that industry firms do gather market information. Both firms gather demographic information with their membership programs...
In doing this, most of their information comes directly from customers. They also gather information when possible from their retailers.
VIII. The market positions of these competitors are unlikely to change, even with the next generation. Sony has adopted a premium strategy in recognition of the fact that the mass market is great for volume, but not profitable. They have taken the approach that a smaller portion of the market at a higher price point is ideal. They will therefore maintain their current market share rather than attempt to grow it. Microsoft, however, seems relatively unconcerned about losing money on the Xbox. They have plenty of money to lose on the console and appear willing to use it as a loss leader in order to acquire customers, to whom they can market more profitable products. The drawback for Microsoft is that with Nintendo changing the game with Wii, and Sony adopting a differentiation strategy, they may be insufficiently differentiated to grow their market share significantly. Furthermore, they do not compete overseas, which hampers their market growth. Both firms will remain within 5% of their current market position in the next five years.
Works Cited
Sony financial information from Reuters. Retrieved November 13, 2008 at http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType=ANN&symbol=SNE.N
Microsoft financial information from Reuters. Retrieved November 13, 2008 at http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType=ANN&symbol=MSFT.O
No author. (2008). 2008: Essential Facts about the Computer and Video Game Industry. Entertainment Software Association. Retrieved November 13, 2008 at http://www.theesa.com/facts/pdfs/ESA_EF_2008.pdf
Pham, Alex. (2008). Games for the Rest of Us. LA Times. Retrieved November 13, 2008 at http://articles.latimes.com/2008/jul/21/business/fi-games21
Shaw, Anne. (2008). The Gaming Console War is Still Undecided, Wii to Take Lead. eFluxMedia. Retrieved November 13, 2008 at http://www.efluxmedia.com/news_The_Gaming_Console_War_is_Still_Undecided_Wii_to_Take_Lead_14062.html
